UBS falls into the red due to CS integration
Published: Tuesday, Nov 7th 2023, 14:01
Updated At: Wednesday, Nov 8th 2023, 00:53
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The integration of former competitor Credit Suisse has left UBS in the red in the third quarter. However, the big bank also reported a stabilization in the CS business and high cost savings - not least thanks to the reduction of more than 4,000 jobs in the quarter.
UBS reported a net loss of 785 million US dollars for the period from July to September, as announced on Tuesday. This is the first time that UBS has included Credit Suisse, which was officially acquired in June, for a full quarter.
Adjusted for the integration costs, however, the big bank reported a pre-tax profit of 844 million dollars. It thus exceeded its own targets: It had previously forecast only a balanced adjusted pre-tax result for the third quarter.
The figures are hardly comparable with the previous quarter: in the second quarter of 2023, UBS reported a massive profit of almost 29 billion dollars. It benefited from a high book profit because the valuation of the assets acquired from CS was significantly higher than the purchase price.
Almost 116,000 full-time jobs
UBS is apparently making rapid progress with the integration: it put the gross annual savings achieved in the quarter under review at 3 billion dollars, which means it has already reached the target it set itself by the end of the year. UBS aims to reduce its annual costs by more than 10 billion dollars by the end of 2026.
Staff reductions also contributed to the cost savings. With the 4,000 jobs cut in the third quarter, the reduction since the beginning of the year now amounts to around 13,000 jobs - including external workers and consultants, it said. On a full-time equivalent basis, UBS now reported 115,981 jobs at the end of September, down from 119,100 full-time equivalents at the end of June 2023.
Departures of management personnel
In view of the ongoing unrest surrounding staff cuts, which has been reflected in the ongoing reports of managers and entire teams leaving the company in recent months, Ermotti appeared calm. "I am convinced that we can retain and attract good people," he said at a media conference. Of course, people who UBS would have liked to keep have also left, he admitted.
The departures of asset managers or entire asset management teams from the former CS in Switzerland and abroad do not seem to worry the UBS CEO either. It had become apparent that the outgoing advisors had "difficulties" in taking the client assets they managed at UBS with them to their new employer.
New money inflow
In the important wealth management business, UBS reported a net new money inflow of 22 billion dollars in the third quarter. At the end of September, the merged bank managed client assets totaling 5.37 trillion dollars across all divisions, compared to 5.53 trillion dollars at the end of June, although the decline is likely due to market developments.
Net inflows also returned to CS Asset Management, UBS executives emphasized. This was the first positive quarter since the first quarter of 2022.
In addition, UBS again recorded inflows of client deposits of around 33 billion dollars in wealth management and the Swiss business in September - 22 billion of which came from CS clients. At the end of August, UBS announced its decision to integrate the businesses of UBS Switzerland and CS Switzerland.
Share rises
UBS made further progress in winding down the CS businesses to be divested. Risk-weighted assets (RWA) in the run-off unit ("Non-Core and Legacy", NCL) fell by 6 billion dollars to 47 billion dollars in the third quarter. According to the bank, some positions were liquidated prematurely at favorable conditions.
The UBS figures were well received on the stock market on Tuesday. At around 2 p.m., the shares were up 2.7 percent at 22.46 francs. In initial comments, analysts praised the rapid progress following the CS takeover. However, the management still faces a "huge task", they said.
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