UBS second-quarter earnings 2024

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

Internet 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.

UBS shares have been 2.35% larger at 9:10 a.m. London time.

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

Within the financial institution’s international wealth administration unit, income elevated by 15% to $6.053 billion, which UBS mentioned 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 in addition I believe that we’re making good progress in de-risking in our core and taking down price there,” UBS CEO Sergio Ermotti informed CNBC’s Silvia Amaro in a Wednesday interview.

On the revenue beat, Ermotti mentioned: “It is a mixture of fine momentum on the top-line, but in addition 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 12 months since UBS formally took over Credit score Suisse, triggering an enormous integration course of and making a wealth administration juggernaut. UBS mentioned at the beginning 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 — not existed as a separate entity.

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

UBS mentioned 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 tip of the 12 months.

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 just a few years of labor. We’re nonetheless far-off from the profitability UBS had earlier than being requested to step in and rescue Credit score Suisse,” Ermotti informed CNBC, including that the financial institution’s process now features a give attention to the U.S. and Asia-Pacific area.

In a be aware overlaying Wednesday’s outcomes, analysts at RBC Capital Markets mentioned: “UBS is delivering quicker on the components it may management – price financial savings and [non-conforming loan] run down – which ought to present some buffer in opposition to regulatory headwinds and a probably tougher working surroundings.”

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 cheaper price than the financial institution’s worth in a deal facilitated by Swiss regulators.

Shares have since dipped 3.75% this 12 months, partly 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 shouldn’t be “too massive to fail” — as alleged within the report — and would curb Switzerland’s international competitiveness.

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

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

He added, “One has to most likely 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.”