After two quarters in the red | UBS returns to profit

(Zurich) The banking giant UBS published on Tuesday a quarterly profit well above expectations thanks to cost cuts and an increase in revenues, returning to profitable territory after two quarters in the red.

The Swiss group – absorbed by the integration of its ex-rival Credit Suisse – announced that it had generated a net profit of $1.8 billion in the first quarter. These figures are difficult to compare with those of the same period last year, namely a net profit of just over $1 billion.

In March 2023, UBS was in fact forced to buy its former rival under pressure from the Swiss authorities to avoid bankruptcy. The first quarter of 2023 therefore reflected its performance as a single entity, the merger having been formalized in June 2023.

UBS Chief Executive Officer Sergio Ermotti told a conference with analysts that it was still “too early to speculate” on the impact of looming regulatory changes in Switzerland, one of the points on which investors were hoping first elements of answers.

Over the first three months of the year, UBS’s turnover increased by 46% to $12.7 billion, including growth in investment banking, the largest integration project. of Credit Suisse.

Forecasts “massively” beaten

In investment banking, its revenues increased by 16%, driven among other things by the good performance of IPOs and mergers and acquisitions.

The bank shattered forecasts.

Analysts surveyed by the Swiss agency AWP expected on average a net profit of $637 million, after a loss of $279 million in the fourth quarter and $785 million in the third. The turnover was for its part expected at 12.1 billion dollars.

Shortly before 10:30 a.m., the stock climbed 8.07% to 26.91 Swiss francs, supporting the SMI, the benchmark index of the Swiss Stock Exchange, up 0.90%.

The return of UBS to positive territory was expected, in light of the figures already published by American banks, but UBS “massively” beat forecasts, reacted Andreas Venditti, analyst at Vontobel, in a market commentary, thanks to the increase in revenues but also to cost reduction projects which are “on track”.

During the first quarter, the bank made 1 billion dollars in additional savings, the cumulative since the merger amounting to 5 billion, or almost 40% of the objective of 13 billion targeted for 2026.

By the end of the year, the group hopes to achieve another $1.5 billion in savings.

15 to 25 billion in additional liquidity

Financial analysts also hoped to take advantage of the publication of these results to obtain more information on the amounts that the bank will be obliged to set aside.

At the beginning of April, the Federal Council (government) unveiled a project aimed at toughening the rules applicable to banks while the merger of the country’s two largest banks has brought about a colossus whose size in relation to the Swiss economy is worrying.

“This is an important discussion to have for the country,” acknowledged Mr. Ermotti during the conference with analysts. “But it is still too early to speculate on its impact,” he added, saying he hoped for a reasonable outcome at the end of this debate.

According to calculations by some experts, UBS may have to build up an additional liquidity cushion of $15 billion to $25 billion, amounts that Finance Minister Karin Keller-Sutter had described as “plausible.”

During the bank’s general meeting at the end of April, its president, Colm Kelleher, however affirmed that this is a “bad remedy” which risks above all undermining the competitiveness of UBS compared to its international competitors. , according to him.


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