UBS Reports Strong Earnings Amid Credit Suisse Integration
Swiss banking giant UBS announced on Wednesday that its earnings exceeded expectations, largely due to cost reductions associated with the integration of Credit Suisse. The bank reported a net profit of over $1.1 billion for the second quarter, from April to June, significantly surpassing the median analyst forecast of $608 million.
However, it’s important to note that these results are not directly comparable to last year’s figures, where UBS recorded a staggering $29 billion profit in the same quarter, attributed to a one-time accounting gain following its acquisition of Credit Suisse.
For the second quarter of this year, UBS experienced a 7 percent decline in revenue, totaling $11.1 billion. This drop was primarily driven by lower interest income, which was only partially offset by increased revenue from capital markets and investment banking activities.
The bank reported an additional $900 million in cost savings from the absorption of Credit Suisse, following a $1 billion reduction in the first quarter. This brings the total savings from the integration to $6 billion. UBS is aiming for $7 billion in total cost reductions by the end of 2024, which constitutes just over half of its $13 billion target set for the end of 2026.
“Our first-half results reflect the significant progress we have made since the closing of the acquisition as we deliver on all of our commitments to stakeholders,” stated Director General Sergio Ermotti in a press release. “We are well positioned to meet our financial targets and return to the levels of profitability we delivered before being asked to step in and stabilize Credit Suisse.”
The acquisition of Credit Suisse was prompted by Swiss authorities in March 2023 to avert a potential banking crisis. The emergency merger was finalized in June 2023, resulting in a substantial accounting gain due to the disparity between the assets held by Credit Suisse and the $3 billion Swiss francs (approximately $3.5 billion) acquisition cost.
