London
CNN
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UBS has reported its first quarterly revenue since shopping for ailing rival Credit score Suisse, marking a pointy turnaround from six months of losses that instantly adopted the closure of the rescue deal.
Shares within the Swiss lender surged 10% in Zurich Tuesday after it posted internet revenue of $1.8 billion for the primary three months of 2024 — a 71% enhance from a yr in the past. Mixed losses for the June-to-December 2023 interval totaled nearly $1.1 billion.
CEO Sergio Ermotti mentioned the most recent efficiency was “a testomony” to the power of the financial institution and its “capacity to ship important progress” on its integration plans.
Johann Scholtz, an analyst at Morningstar, famous that the outcomes have been “a lot stronger than anticipated.”
“The market was initially involved that the Credit score Suisse merger would result in income attrition, which might have left value discount as the one lever to drive earnings development,” he mentioned in a observe.
In actual fact, income surged 45% from a yr in the past to $12.7 billion and UBS attracted internet new cash of $27 billion into its world wealth administration enterprise, the financial institution’s largest division, within the first quarter. It additionally realized value financial savings of $1 billion, including to value cuts of some $4 billion final yr.
UBS pledged in February to slash costs by $13 billion by the top of 2026, together with by reducing 1000’s of jobs, as it really works to verify the mammoth deal pays off.
The financial institution purchased its crosstown rival in March final yr in a government-orchestrated rescue geared toward stopping a world monetary disaster. The deal was accomplished in June, however the technique of integration is anticipated to take at the very least one other two years.
Ermotti, who was introduced again for a second stint as CEO to supervise the emergency takeover, has beforehand mentioned that this yr will likely be “pivotal” to the mix, which includes merging operations throughout greater than 50 nations.
On Tuesday, Ermotti mentioned UBS was “on monitor” to attain “important integration milestones” this yr, together with the merger of the 2 banks’ operations in Switzerland within the third quarter.
Shares in UBS have risen greater than 54% over the previous yr however not too long ago suffered a selloff after Switzerland’s finance ministry proposed important will increase to the amount of money and different liquid property the financial institution should maintain to soak up potential losses.
Swiss finance minister Karin Keller-Suter later mentioned the extra capital necessities may quantity to as a lot as 25 billion Swiss francs ($27.5 billion).
UBS has raised serious concerns concerning the proposals and on Tuesday Ermotti reiterated the financial institution’s view that it wasn’t lack of capital that left Credit score Suisse needing to be rescued.
“Whereas some modifications to the regulatory regime could also be vital… the dialogue round capital needs to be primarily based on info that embody a full and clear account of what led to the idiosyncratic failures of Credit score Suisse,” he instructed analysts on a name.
He mentioned UBS was already including nearly $20 billion to its capital buffers on account of the takeover of Credit score Suisse, partly due to the financial institution’s elevated market share and stability sheet dimension.
“We will likely be constructively contributing our views to the related authorities… and I stay looking forward to a proportionate end result,” he added.