FX.co ★ UBS Stock Climbs On Q1 Results, Sequential Return To Profit

UBS Group AG saw a market increase of about 8% in its morning stocks in Switzerland and during pre-market activities on the New York Stock Exchange (NYSE). This increase followed the Swiss banking giant's report of notably higher revenue and profits in the first quarter. For the first time since acquiring Credit Suisse AG, UBS also made a profit. The company announced plans to finalize the merger with Credit Suisse by May 31.

UBS Group's CEO, Sergio Ermotti, commented, "Just over a year ago, we took on a crucial task of stabilizing both the Swiss and global financial systems by taking over Credit Suisse. I am proud to say that we are fulfilling our commitments. This quarter signifies a return to our reported net profits and further capital accumulation. This serves as proof of the resilience of our business and client franchises, and of our capacity to deliver considerable advancement on our integration strategies while optimally utilizing our financial resources."

UBS predicts a modest single-digit drop in net interest income in Global Wealth Management for the second quarter. This forecast is due to slightly lower lending and deposit volumes and lower interest rates in Switzerland. Additionally, it expects a moderate-to-high single-digit decrease in net interest income in Personal & Corporate Banking in US dollar terms.

More so, UBS aims to achieve approximately $1.5 billion in gross cost savings by the end of 2024 and anticipates finishing the merger with Credit Suisse on May 31, pending further regulatory approval. The company is set to transition to a single US intermediate holding company in the second quarter of 2024, with the merger of Credit Suisse and UBS Switzerland AG slated for the third quarter, subject to further regulatory approval.

UBS stated that achieving these significant milestones would aid in client migration to UBS platforms later this year and unlock the potential for cost, capital, funding, and tax benefits from the second half of 2024, which will last until the end of 2025 and into 2026.

In other news, the Financial Times reported that Ulrich Korner, Credit Suisse's final CEO, is expected to depart from UBS in the following weeks. To add, UBS refunded 9 billion Swiss francs of the ELA central bank liquidity facility on May 6, which amounts to a total repayment of 29 billion francs until now. The remaining 9 billion francs is anticipated to be paid off within the next few months.

In this year's first quarter, UBS's net profit attributed to shareholders soared by 71%, amounting to $1.76 billion, up from last year's $1.03 billion. Share earnings rose to $0.52 from $0.32 the previous year. Its preceding fourth quarter saw a net loss credited to shareholders of $279 million or $0.09 per share.

Operating profit before tax for the first quarter was $2.38 billion, up from $1.50 billion during the same period last year. The underlying profit before tax increased to $2.62 billion from $1.57 billion last year.

Total reported revenues for the first quarter totaled $12.74 billion, a 46% increase from $8.74 billion in the previous year. Group underlying revenues reached $12.0 billion. Total revenues also experienced a sequential increase of 17%.

For this year's first quarter, net interest income rose by 40% to $1.94 billion on a year-over-year basis, and net fee and commission income growth saw a 41% increase to $6.49 billion.

In Swiss market trading, UBS Group shares rose by 8.3% to 26.96 Swiss francs. During pre-market activity on NYSE, the stocks grew by 7.6% to $29.70.