In the morning trading on the Swiss market and during pre-market activity on the NYSE, UBS Group AG shares rose approximately 3 percent. This followed an announcement by the Swiss banking giant indicating significant growth in its underlying profit before tax for the second quarter. The substantial increase primarily stemmed from the full-quarter consolidation of Credit Suisse revenues. However, net profit and pre-tax profit saw a marked decline compared to the previous year.
Looking ahead, UBS forecasts positive investor sentiment and sustained momentum in client and transactional activities in the third quarter. The company anticipates roughly $1.1 billion in integration-related expenses for this period, accompanied by a slight sequential decline in the rate of gross cost savings.
The bank acknowledged that the macroeconomic landscape remains uncertain due to ongoing conflicts, geopolitical tensions, and the impending US elections. These factors are expected to continue driving higher market volatility compared to the first half of the year.
Sergio Ermotti, Group CEO, commented, "We are well-positioned to achieve our financial targets and return to the profitability levels we maintained before stepping in to stabilize Credit Suisse. We are now entering a crucial phase of our integration, which will be key to unlocking further substantial cost, capital, funding, and tax advantages."
UBS has successfully completed several key mergers, including the integration of UBS AG with Credit Suisse AG on May 31, the transition to a unified US intermediate holding company on June 7, and the merger of UBS Switzerland AG with Credit Suisse (Schweiz) AG on July 1.
The company now anticipates realizing approximately $7 billion in gross cost savings by the end of 2024, which represents about 55 percent of its target of $13 billion in savings by the end of 2026.
In the second quarter, net profit attributable to shareholders plummeted 96 percent to $1.14 billion from the previous year’s $27.33 billion. Earnings per share dropped to $0.34 from $8.51. The prior year's results included a negative goodwill of $27.26 billion.
Profit before tax fell 95 percent to $1.47 billion from last year's $27.70 billion. The latest quarter's results included $780 million in Purchase Price Allocation (PPA) effects and other integration items, alongside $1.37 billion in integration-related expenses and PPA effects.
Underlying profit before tax reached $2.06 billion, up from $891 million a year earlier, demonstrating the strength of the client franchise and effective execution of strategy and integration plans.
Total revenues increased by 25 percent to $11.90 billion from $9.54 billion last year, largely driven by the consolidation of Credit Suisse revenues. However, net interest income decreased by 10 percent year-over-year to $1.54 billion. Net fee and commission income surged 27 percent to $6.53 billion.
Underlying revenues were $11.1 billion, up from $9.16 billion last year.
Global Wealth Management (GWM) reported a 15 percent year-over-year increase in total revenues to $6.05 billion. Personal & Corporate Banking (P&C) revenue growth reached 27 percent to 2.06 billion Swiss francs, and Asset Management (AM) revenues rose 32 percent to $768 million.
Investment Bank (IB) revenues also saw a significant rise, increasing by 38 percent to $2.80 billion due to higher Global Banking and Global Markets revenues.
As of the last update, UBS Group shares were trading at 25.90 francs in Switzerland, marking a 3.1 percent increase. In pre-market activity on the NYSE, the shares were at $29.99, a 2.5 percent rise.
