UBS beats market expectations with billion-euro quarterly profit
Published: Wednesday, Oct 30th 2024, 08:10
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UBS generated a billion-euro profit in the third quarter of 2024 and once again significantly exceeded market expectations. The big bank continues to make rapid progress with the restructuring and integration of Credit Suisse.
UBS generated a profit of 1.43 billion US dollars in the months of July to September 2024, as announced on Wednesday. In the third quarter of 2023, the bank had still suffered a loss of USD 715 million, mainly due to high integration costs following the takeover of Credit Suisse.
But in the first two quarters of 2024, the combined banking group had already generated profits in the billions (Q1 1.76 billion; Q2 1.14 billion). UBS put its pre-tax profit in the quarter under review at USD 1.93 billion; adjusted - excluding the costs of the CS integration - it was as much as USD 2.39 billion. All of these figures were well above experts' estimates.
At 12.3 billion dollars, operating income was 5.5% higher than in the same quarter of the previous year. The cost/income ratio, which is important for financial institutions, was 83.4% (adjusted: 78.5%).
High inflow of new money
In its core business, global wealth management, UBS attracted net new assets of 24.7 billion US dollars. As a result, the entire Group had assets under management totaling 6199 billion dollars at the end of September, also benefiting from the positive market trend.
The bank also made further progress with the integration of CS. UBS CEO Sergio Ermotti was quoted in the press release as saying that the implementation risks were being actively limited and that the cost and efficiency targets were also being pursued in a "disciplined" manner. As a result, risk-weighted assets in the settlement unit were further reduced and the bank continued to cut costs.
In the third quarter, gross cost savings amounted to 0.8 billion. UBS expects to achieve around 7.5 billion of the total targeted savings of around 13 billion (58%) by the end of 2024. The bank also believes it is "well on track" to achieve "further significant savings" towards the end of 2025 and in 2026.
The bank also emphasizes that it intends to stick to its dividend and share buyback targets for 2025 and 2026 thanks to its continued strong capital position.
UBS is cautious as usual in its outlook for the operating business. Clients continued to be active in the third quarter and the market environment was positive, but characterized by phases of increased volatility and distortions. This environment continued at the beginning of the fourth quarter, supported by a soft landing of the US economy. In the other regions, however, the economic outlook remained gloomy. In addition, the geopolitical conflicts and the upcoming US elections are causing uncertainty.
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