Net income at UBS triples predictions
UBS yesterday reported net income for January-march that was nearly triple estimates as the bank logged its first quarterly profit since taking over fallen rival Credit Suisse.
Shares in Switzerland's biggest bank jumped more than 6 per cent in early trade.
UBS' wealth management arm also reported $27 billion in net new assets for the first quarter of the year, compared to $22 billion for the three months prior.
The bank, however, flagged that lower lending and deposit volumes as well as lower interest rates in Switzerland could impact the bank's wealth management division.
"In the second quarter of 2024, we expect a low-to-mid single-digit decline in net interest income in Global Wealth Management," the bank said in a statement.
Net income attributable to shareholders came in at $1.8 billion, better than a company-provided consensus estimate of $602 million and a profit of $1 billion in the same period a year earlier.
Analysts said the better-than-expected result was mainly driven by parts of the business inherited from Credit Suisse but which UBS wants to exit, as well as by cost
UBS said that it had achieved an additional $1 billion in gross cost savings in the rst quarter, taking total savings since the merger to $5 billion. It is aiming to achieve another $1.5 billion in savings by the end of the year.
cutting.
Pre-provision profits in UBS core businesses came in 10 per cent above expectations, while revenues in asset management and investment banking fell short of forecasts, RBC analysts said.
UBS said that it had achieved an additional $1 billion in gross cost savings in the first quarter, taking total savings since the merger to $5 billion. It is aiming to achieve another $1.5 billion in savings by the end of the year.
The historic merger of two global systemically important banks orchestrated by Swiss authorities who feared that scandal-ridden Credit Suisse was on the brink of collapse - was completed last June and was followed by two quarters of losses for UBS as it absorbed its rival.
The merger of UBS AG and Credit Suisse AG is expected to be legally completed on May 31, and the merger of its Swiss branches in the third quarter.
Despite the shotgun nature of the takeover, investors have been upbeat about UBS'S prospects given the low acquisition costs and its huge increase in assets. Shares in the bank have climbed some 40 per cent over the past year.
isnedxpected
This year to be a pivotal year for UBS as it tackles
some of the trickier stages of integration such as combining separate IT systems and legal entities, migrating clients from Credit Suisse to UBS and cutting the banks' workforce.
With the merger, UBS'S balance sheet has expanded to more than $1.6 trillion, nearly twice the size of Switzerland's economy and worrying regulators who fear huge consequences should the bank run into trouble.
Switzerland's government recently laid out plans for how to police banks deemed "too big to fail" and tougher capital rules are expected sometime in the next few years.
UBS said its current financials will allow it to execute on its 2024 capital return targets.
This includes a plan to repurchase up to $1 billion in shares this year as well as increase last year's dividend of $0.70 per share by a mid-teen percentage in 2024.