UBS Q3 2023 earnings

UBS on Tuesday reported a larger-than-expected third-quarter net loss of $785 million as it works to integrate struggling rival Credit Suisse.

Analysts polled by Reuters expected the Swiss banking giant to record a net quarterly loss of $444 million in a survey conducted by the company.

The loss was driven by $2 billion in expenses related to the integration of Credit Suisse, with the bank reporting underlying pre-tax operating profit of $844 million.

Here are some other highlights:

• Total group revenues reached $11.7 billion, an increase of 23% from $9.54 billion in the second quarter.
• The CET1 capital ratio, a measure of banks’ liquidity, was 14.4%, unchanged from the previous quarter.
• Credit Suisse Wealth Management achieved net new positive cash flows for the first time since the first quarter of 2022, contributing $22 billion in inflows to UBS Global Wealth Management.

“We are implementing the Credit Suisse integration process at a rapid pace and have achieved underlying group profitability in the first full quarter since the acquisition. Our clients have continued to place their trust in us, contributing to strong flows across our wealth management and Swiss franchise,” CEO Sergio Ermotti said in a statement.

“We are optimistic about our future as we build a stronger, safer version of UBS that was called upon to stabilize the financial system in March, one that all of our key stakeholders can be proud of.”

UBS completed its takeover of its stricken local rival in June and announced in August that it had terminated the CHF9 billion loss protection and overall liquidity support agreement of CHF100 billion that had been put in place when the emergency rescue was agreed in March.

The bank’s shares rose to their highest point since late 2008 in August after it reported second-quarter earnings results of a net profit of $28.88 billion as a result of negative goodwill in the Credit Suisse acquisition.

Negative goodwill represents the fair value of assets acquired in the merger in excess of the purchase price. UBS paid a discounted sum of 3 billion Swiss francs ($3.33 billion) to acquire Credit Suisse in March, in a deal brokered by Swiss authorities to prevent the collapse of the storied but scandal-plagued bank.

Since then, the stock price has fallen slightly, but remains up more than 27% over the year.

UBS is also in the process of fully merging Credit Suisse’s Swiss banking unit – a major profit center – and is expected to cut a significant proportion of the legacy bank’s workforce.

UBS announced net new deposits of $33 billion across its global wealth management, personal and corporate (P&C) banking divisions, with $22 billion coming from Credit Suisse clients and positive deposit flows into P&C in September, a month after UBS announced the decision to merge the local bank.

The bank also announced earlier this year that it is targeting total cost savings of at least $10 billion by 2026, as it hopes to complete the integration of all Credit Suisse Group businesses.