UBS Reports Strong Q2 Profit

UBS has reported a second-quarter net profit of $1.14 billion, significantly surpassing analysts’ expectations of $520.8 million. This marks the first set of results since UBS completed its merger with Credit Suisse in late May. The merger, orchestrated by the Swiss government in March 2023, represents the largest banking merger since the financial crisis.

CEO Sergio Ermotti stated that UBS is “entering the next phase” of the Credit Suisse integration and expressed confidence in returning to pre-merger profitability levels. The bank has already reduced Credit Suisse assets marked for wind-down by 42% since Q2 2023, including $8 billion between April and June 2024.

UBS plans to repurchase up to $2 billion of its shares by 2026, with $1 billion targeted for this year. The bank also achieved $900 million in additional cost savings in Q2, reaching 45% of its 2026 cost-cutting goal. However, integration-related expenses of $1.1 billion are expected in Q3, and the pace of cost savings may slow slightly.

UBS’ wealth management division attracted $27 billion in net new assets during Q2, though its pretax profit of $871 million fell short of expectations, partly due to increased financial adviser compensation. Meanwhile, UBS’ investment bank exceeded forecasts with a quarterly pretax profit of $477 million, driven by strong revenue growth in global markets and banking.

Looking ahead, UBS expects higher market volatility due to ongoing geopolitical tensions and the upcoming U.S. elections. Swiss regulators have proposed stricter regulations for the enlarged UBS, potentially requiring up to $25 billion in additional capital.