UBS, the Swiss banking giant, has reported its first quarterly profit

 

UBS, the Swiss banking giant, has reported its first quarterly profit since acquiring its ailing rival Credit Suisse, marking a significant turnaround from six months of losses. The bank's net profit for the first three months of 2024 was $1.8 billion, a 71% increase from the same period last year.

The results were much stronger than expected, with revenue surging 45% to $12.7 billion and the bank attracting net new money of $27 billion into its global wealth management business. UBS also realized cost savings of $1 billion, adding to cost cuts of $4 billion last year.

CEO Sergio Ermotti attributed the strong performance to the strength of the bank and its ability to deliver significant progress on its integration plans. The bank's shares surged 10% in Zurich on the news, marking a significant increase from the past year.

UBS acquired Credit Suisse in March last year in a government-orchestrated rescue aimed at preventing a global financial crisis. The deal was completed in June, but the process of integration is expected to take at least another two years.

The bank has pledged to slash costs by $13 billion by the end of 2026, including by cutting thousands of jobs, as it works to make sure the mammoth deal pays off. Ermotti has previously said that this year will be "pivotal" to the combination, which involves merging operations across more than 50 countries.

Despite the strong results, UBS faces regulatory risks, with Switzerland's finance ministry proposing significant increases to the amount of cash and other liquid assets the bank must hold to absorb potential losses. The bank has raised serious concerns about the proposals, which could amount to as much as 25 billion Swiss francs ($27.5 billion).

Ermotti reiterated the bank's view that it wasn't lack of capital that left Credit Suisse needing to be rescued, and that the discussion around capital should be based on facts. He added that UBS was already adding almost $20 billion to its capital buffers as a result of the takeover of Credit Suisse, in part because of the bank's increased market share and balance sheet size.

The bank's strong results and progress on its integration plans are a positive sign for investors, but the regulatory risks and potential capital requirements remain a concern. UBS will continue to work with the relevant authorities to ensure a proportionate outcome and maintain its position as a leading global bank.