On October 30th, according to foreign media reports, Swiss banking giant UBS announced a significant profit report on Wednesday, after completing its first wave of customer migration after merging with domestic competitor Credit Suisse.
The quarterly report shows a net profit attributable to shareholders of $1.43 billion, while the average expectation of LSEG survey analysts is $667.5 million. The group's revenue was $12.33 billion, which was also higher than analysts' expectations of nearly $11.78 billion.
Other highlights of UBS's third quarter performance report include:
The pre tax operating profit was 1.93 billion US dollars, compared to a loss of 184 million US dollars in the same period last year. The tangible return on equity reached 7.3%, lower than the 5.9% in the second quarter. The core capital adequacy ratio, which measures a bank's solvency, is 14.3%, lower than the 14.9% in the second quarter.
UBS stated that it expects to complete its planned $1 billion stock buyback plan in the fourth quarter and intends to continue repurchasing in 2025.
UBS turned losses into profits in the first quarter of 2024 after two quarters of losses due to its acquisition of struggling Credit Suisse. The Organisation for Economic Co operation and Development (OECD) has warned that the Swiss economy will face "new risks and challenges", and the government is concerned about the capital requirements of the resulting banking giants.
UBS has also argued that it is not "too big to fail".
The banking union has urged UBS to cut expenses, and the banking giant stated in its second quarter financial report that it expects the transaction with Credit Suisse to save a cumulative $7 billion by 2024, with a target of saving $13 billion by 2026.
However, according to Reuters earlier this month, UBS still faces the daunting task of integrating its IT systems with Credit Suisse, as well as customer migration - the latter's transition will take approximately 18 months. UBS announced on Wednesday that it completed the transfer of global wealth management client accounts from Luxembourg and Hong Kong to the UBS platform in October, and plans to transfer global wealth management client accounts registered in Singapore and Japan to the UBS platform by the end of this year.
After a year and a half of strong merger between UBS and Credit Suisse, UBS CEO Sergio Elmotti now has a responsibility to steer UBS onto the right path of development amidst geopolitical turmoil, declining interest rates, and pressure to maintain double-digit profit growth with US competitors such as Goldman Sachs and Morgan Stanley.
Within Switzerland, the Swiss economy is performing strongly. The country's annual inflation rate dropped to 0.8% in September, which has raised questions about the Swiss central bank's further relaxation of monetary policy and the impact of inflation
Before UBS announced its performance, Germany's largest bank, Deutsche Bank, announced a profit that exceeded expectations last Wednesday. This week, European banks including BNP Paribas and Santander have released their third quarter financial reports.