UBS Group AG reported on Tuesday that it swung to a profit after two quarters of losses, beating first-quarter forecasts on higher wealth management revenue.
The stock was up 9% at 8:48 a.m. London time, recouping some of April’s losses. UBS shares soared 51.7% last year, but 2024 is off to a bleak start.
Lower expenses and integration benefits from the acquisition of Credit Suisse in June 2023 also helped the bank post a net profit of $1.8 billion in the first quarter, above the consensus forecast of $721.4 million in an LSEG poll.
The Swiss banking giant is continuing a massive consolidation of its former rivals. The company said on Tuesday it expected to complete the merger of UBS and Credit Suisse into a U.S. intermediate holding company in the second quarter and the merger of its Swiss entities in the third quarter.
Group revenue in the first quarter totaled $12.74 billion, also higher than expected and up from $10.86 billion in the fourth quarter of 2023. Dollar.
The bank’s CET1 capital ratio, a measure of liquidity, was 14.8%, compared with 14.4% in the previous quarter.
“We are very happy because we are making very good progress with our integration plans,” UBS CEO Sergio Ermotti told CNBC’s Silvia Amaro on Tuesday.
The bank has simultaneously returned to strong net profit and underlying profitability while strengthening capital, Ermotti said, adding that “there is still work to be done in the remainder of the year.”
Morningstar analyst Johann Scholtz said investors were particularly pleased with UBS’s strong revenue growth.
“The market was initially concerned that the Credit Suisse merger would result in a revenue drain that would leave cost cutting as the only lever to drive earnings growth,” Scholz said.
UBS may now focus on balance sheet management and accelerate the reduction of Credit Suisse’s legacy trading positions to free up significant capital, Scholz continued.
Combined with a potential increase in future fee income due to net wealth management inflows, this would be “sufficient” to meet the potential increase in capital requirements imposed by Swiss regulators, he added.
During the bank’s investor day last month, UBS Chairman Colm Kelleher criticized the proposals as he argued the institution was not “too big to fail”.
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