UBS sees itself on track with the integration of Credit Suisse
Published: Wednesday, Aug 14th 2024, 14:20
Updated At: Thursday, Aug 15th 2024, 01:59
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UBS remains on track with the integration of Credit Suisse, which it acquired last year, and can once again report a profit in the billions. The big bank has even made somewhat faster progress than expected with the targeted reduction of its cost base.
From April to June 2024, Switzerland's largest bank generated a net profit of 1.14 billion dollars, according to the quarterly results published on Wednesday. Although this was less than in the first quarter (1.76 billion), it was more than analysts had estimated. Meanwhile, a comparison with the same quarter of the previous year makes little sense: in the second quarter of 2023, UBS posted a record profit of 29 billion dollars due to one-off effects from the CS takeover.
Progress in the settlement unit
In the second quarter, the big bank benefited from a favorable environment on the capital markets, which led to better figures in Investment Banking, for example. The result was also supported by the progress made by the "Non core and legacy" (NCL) wind-up unit.
UBS CEO Sergio Ermotti told the media that he was satisfied with the past quarter and also with the CS integration process. "We have already dramatically reduced the risks from the takeover of Credit Suisse," he emphasized at the presentation of the results. UBS is now entering the "next phase of integration".
In May, the big bank completed the merger of the Group companies UBS AG and Credit Suisse AG and also merged the country organizations UBS Switzerland and CS Switzerland at the beginning of July. The migration of around 1 million Swiss CS clients to the UBS platform is scheduled to begin next year and last until the beginning of 2026.
Further cost reductions
In wealth management for wealthy private clients, UBS was meanwhile able to record further inflows of new money amounting to 27 billion dollars. However, profits in UBS's core business were down on the previous quarter as costs rose. In the Swiss retail business (Personal & Corporate Banking), the bank also earned less than in the first quarter, citing the renewed decline in interest rates and increased liquidity requirements.
UBS has made further progress with the targeted reduction in costs. For the second quarter of 2024, it was able to report savings of around 0.9 billion dollars, which now amounts to around 6 billion dollars gross on an annualized basis. By the end of 2026, UBS aims to reduce costs by USD 13 billion, using the combined cost base of UBS and CS at the end of 2022 as a comparison.
Further staff reductions
The number of full-time equivalents fell by a further 1558 to 109,991 in the second quarter, as can be seen in the interim report. A year ago, at the end of June 2023, the figure was 119,100.
Job cuts are likely to accelerate following the merger of the units. Meanwhile, UBS is still planning to cut 3,000 jobs in Switzerland, as confirmed by the CEO. The job cuts are to begin at the end of 2024 and then extend over the years 2025 and 2026. Ermotti reiterated that the reduction will be implemented primarily through natural departures and retirements.
The UBS results were well received on the stock market. The resumption of the share buyback also helped: the big bank has already realized almost half of the targeted buyback of 1 billion of its own shares. UBS shares rose by 3.5 percent to CHF 26 in the early afternoon on Wednesday.
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