UBS second-quarter earnings 2024

Swiss banking big UBS on Wednesday smashed web revenue expectations for the second quarter, amid cost-cutting steps and swelling income on the lender’s world wealth administration and funding financial institution items.

Web revenue attributable to shareholders got here in at $1.136 billion for the interval, versus a company-compiled consensus forecast of $528 million.

Revenue was nonetheless decrease than the $1.755 reported within the first quarter, as anticipated by analysts.

Group income additionally beat forecasts within the second quarter, coming in at $11.904 billion versus an LSEG-compiled ballot of $11.522 billion.

UBS stated robust capital markets exercise had partially offset a drag from web curiosity earnings, which it had beforehand flagged can be weaker attributable to decrease lending and deposit volumes and decrease Swiss rates of interest.

Within the financial institution’s world wealth administration unit, income elevated by 15% to $6.053 billion, which UBS stated was largely because of the consolidation of Credit score Suisse. Income within the funding financial institution unit leapt 38% to $2.803 billion.

“Throughout the board we confirmed fairly good resilience, in funding banking, in wealth administration, but additionally I believe that we’re making good progress in de-risking in our core and taking down price there,” UBS CEO Sergio Ermotti instructed CNBC’s Silvia Amaro in a Wednesday interview.

On the revenue beat, Ermotti stated: “It is a mixture of excellent momentum on the top-line, but additionally good progress on price reductions.”

He added that the financial institution was seeing good momentum from shopper exercise and transaction volumes in wealth administration, although some headwinds on its margins from decrease web curiosity earnings.

It has now been over a yr since UBS formally took over Credit score Suisse, triggering an enormous integration course of and making a wealth administration juggernaut. UBS stated at first of July the merger course of had accomplished and that Credit score Suisse — the Swiss financial institution which spectacularly collapsed in March 2023 after years of monetary scandals — now not existed as a separate entity.

Shedding risk-weighted belongings — a significant a part of Credit score Suisse’s enterprise — has been a key a part of that course of.

UBS stated it now expects to finish 2024 with cumulative gross financial savings from the Credit score Suisse deal of $7 billion, out of a goal of $13 billion by 2026 in contrast with a 2022 baseline. It had beforehand aimed to ship $6.5 billion in financial savings by the top of the yr.

The financial institution had swung again to revenue within the first quarter 2024 after two quarterly losses associated to the price of the combination.

“What’s subsequent is a number of years of labor. We’re nonetheless distant from the profitability UBS had earlier than being requested to step in and rescue Credit score Suisse,” Ermotti instructed CNBC, including that the financial institution’s process now features a deal with the U.S. and Asia-Pacific area.

In a be aware overlaying Wednesday’s outcomes, analysts at RBC Capital Markets stated: “UBS is delivering sooner on the elements it will possibly management – price financial savings and [non-conforming loan] run down – which ought to present some buffer towards regulatory headwinds and a probably tougher working atmosphere.”

UBS shares rocketed 51.7% larger in 2023 as traders eyed the benefits from the acquisition of Credit score Suisse, for which it paid a a lot lower cost than the financial institution’s worth in a deal facilitated by Swiss regulators.

Shares have since dipped 3.75% this yr, partially rattled by new banking laws proposed by authorities in Switzerland in an April report that will see UBS and three different “systemically related” banks face harder capital necessities with a view to defend the broader financial system.

UBS has strongly criticized the proposals as pointless, arguing that the financial institution will not be “too large to fail” — as alleged within the report — and would curb Switzerland’s world competitiveness.

Ermotti instructed CNBC on Wednesday UBS was “a part of the answer” to banking instability in its rescue of Credit score Suisse, relatively than exacerbating the issue.

On resistance to banking consolidation in Europe, Ermotti stated Wednesday that “the need for Europe to have bigger monetary gamers to have its personal independence in monetary issues is a given in my standpoint.”

He added, “One has to in all probability acknowledge that post-Monetary Disaster, Europe went too far in fragmenting or not permitting consolidation within the system which is now penalizing Europe and its monetary system.”