Market: UBS shares jump after strong Q1 figures
Published: Tuesday, May 7th 2024, 10:00
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UBS shares started trading on Tuesday with a jump. The major bank published its quarterly figures in pre-market trading and massively exceeded analysts' estimates.
At 09.45, UBS Namen gains 8.9 percent to 27.11 francs, the high for the day so far is 27.20 francs. This also boosts the market as a whole, which gains 0.9 percent on the SMI. Having been 4.6 percent below their level at the end of 2023 before today's trading day, UBS shares are now trading well above this level again (CHF 26.10)
Following a loss in the fourth quarter of 2023, UBS clearly returned to the black at the start of 2024. It performed significantly better than expected in terms of revenues as well as operating profit and net profit, in some cases pulverizing analysts' estimates. Pre-tax profit, for example, was around twice as high as forecast (AWP consensus), while net profit was almost three times as high.
Analysts are also positive in their initial comments. The results show that the bank can both increase income and reduce costs in line with expectations in an improved environment, write the ZKB experts in their assessment.
Vontobel speaks of a massive jump in profits thanks to higher income and lower costs. However, the analyst in charge notes that income was mainly generated in the settlement unit (NCL) and is therefore of lower quality. However, all operating units delivered "solid results", he continues, and sees corresponding upside potential for his profit estimates.
The analysts at US broker Jefferies also emphasize the strength in the main business, for example in the core business of global asset management, but also in the Swiss business.
"On the right track" with the CS integration
The progress made in terms of cost savings is also rated positively. A total of around 5 billion of the 13 billion in cost savings targeted by the end of 2026 have already been achieved. The bank therefore still appears to be on track to implement the integration of Credit Suisse in line with the plan, ZKB added.
Only the issue of capital repayment is causing some uncertainty. Earlier information on the targets for the capital distribution in 2024 was confirmed overall (dividend increase in the mid-teens and share buy-backs of up to USD 1 billion).
However, earlier statements on share buybacks in the years thereafter were not mentioned, at least not in the press release. However, Ermotti confirmed this ambition in the analysts' call that began at 09.00 a.m.: in 2026, buybacks should exceed the original levels from before the CS takeover. However, the UBS CEO qualified that future decisions regarding additional capital requirements could have an impact on UBS's return of capital to its shareholders.
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