Swiss banking giant UBS has significantly surpassed profit expectations following its merger with the now defunct Credit Suisse, revealing robust third-quarter results. UBS reported a net profit of $1.43 billion, outdoing the $667.5 million anticipated by analysts. Revenue reached $12.33 billion, topping expectations of $11.78 billion. Highlights for the quarter included an operating profit before tax of $1.93 billion, a reversal from a $184 million loss in the previous year, and a return on tangible equity of 7.3%, an increase from 5.9% in the second quarter. However, its CET 1 capital ratio slightly dipped to 14.3% from 14.9%.
CEO Sergio Ermotti attributed this success to UBS’s diversified business model and its ability to seize market opportunities despite challenging conditions. The Investment Banking division excelled with a 36% rise in net income year-on-year, thanks largely to strong equity derivatives and foreign exchange performances. Conversely, Global Wealth Management saw a 6% decline due to lower deposit margins.
UBS has embarked on an extensive migration of client accounts, completing transitions in Luxembourg and Hong Kong, with plans for Singapore and Japan by year’s end. The merger has prompted UBS to target significant cost savings, expecting to save $7 billion by the end of 2024 as part of a $13 billion goal by 2026.
The strategic trajectory set by Ermotti faces challenges posed by geopolitical volatility and declining interest rates in Switzerland. Yet, UBS remains optimistic about future performance, viewing lower interest rates as an opportunity for increased client leverage and transaction volumes.
Despite uncertainties surrounding its “too big to fail” status, UBS’s results, bolstered by merger synergies, are seen as strong by analysts, who predict continued positive client activity. This profit beat follows strong earnings reports from other European lenders, reflecting a broader trend of strength in the sector.
Original Story https://www.cnbc.com/2024/10/30/ubs-earnings-q3-2024.html
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