Swiss bank UBS smashed third-quarter expectations with $1.4 billion in profit

The Swiss banking titan UBS It posted a large profit beat on Wednesday, completing the first wave of client migration following the merger of its collapsed domestic rival Credit Suisse.

Net profit attributable to shareholders rose to $1.43 billion, compared with an average forecast of $667.5 million in an LSEG poll of analysts.

Group revenue was $12.33 billion, near analysts' expectations of $11.78 billion.
Other third-quarter highlights include:

• Operating profit before tax was $1.93 billion, up from a loss of $184 million in the same quarter last year.
• Real equity hit 7.3%, compared with 5.9% in the second quarter.
• The CET 1 capital ratio, a measure of bank solvency, was 14.3%, down from 14.9% in the second quarter.

The lender said it will complete its planned $1 billion share buyback program in the fourth quarter and intends to continue repurchases in 2025.

UBS returned to profit in the first quarter of 2024 after two quarterly losses linked to its takeover of Credit Suisse – an intensive, now-completed process that has caught up with OECD warnings of “new risks and challenges” posed for the wider Swiss economy and government as a result of the banking juggernaut's capital needs. concern UBS defends that it is not “too big to fail”.

The banks union has prompted UBS to cut costs, with the banking giant saying in its second-quarter earnings release that it will end 2024 within a target of $13 billion from the $7 billion Credit Suisse deal by 2026. Statistics compare to 2022 baseline.

UBS still faces the uphill task of integrating its IT systems with Credit Suisse, along with shifting clients — the next transition will take about 18 months, Reuters reported earlier this month. The bank said on Wednesday that it completed the migration of its global wealth management client accounts in Luxembourg and Hong Kong to the UBS platform in October and intends to migrate global wealth management client accounts booked in Singapore and Japan by the end of the year.

A year and a half after UBS's strong-armed merger with Credit Suisse, it's up to CEO Sergio Ermotti to set the bank's course against a landscape shaped by geopolitical turmoil, falling interest rates and the pressure to keep up with the double-digit. A number of US rivals, such as Goldman Sachs and Morgan Stanley, saw profits rise. Internally, UBS operates within an economy defined by a strong Swiss Franc And subdued annual inflation, which fell to just 0.8% in September, has raised questions about further monetary policy easing from the Swiss National Bank – and the impact of such intervention on the profitability of commercial lenders.

The UBS results came after Deutsche Bank, Germany's biggest lender, missed a profit last Wednesday and were joined by third-quarter reports from European lenders including BNP Paribas and Santander this week.

This breaking news story is being updated.