UBS first-quarter profit tops expectations amid ongoing Credit Suisse integration

Investing.com — UBS Group (SIX:) has reported a first-quarter net profit attributable to shareholders of $1.8 billion, far above analysts’ estimates of $602 million seen in a company-provided poll, sending shares in the Swiss lender higher on Tuesday.

The return, which was also an improvement from a loss of $279 million in the prior three-month period, marked the first quarterly profit for UBS since it acquired archrival Credit Suisse in a government-brokered deal in 2023. Since then, UBS executives have said that they have been working to integrate Credit Suisse into its operations, but have flagged that the process could take some time.

UBS’s wealth management division was the standout performer, raking in $27 billion in net new assets — a total that the company said was a sign of renewed “client momentum” in the wake of an exodus following the Credit Suisse takeover.

The quarter is “a testament to the strength of our business and client franchises and our ability to deliver significant progress on our integration plans while actively optimizing our financial resources,” UBS Chief Executive Officer Sergio Ermotti said in a statement.

Ermotti, who is now on his second stint at the helm of UBS, has previously said that 2024 is shaping up to be a “pivotal year” for UBS.

The bank noted that, along with its integration plans, it faces “uncertainty” in both the macroeconomic and geopolitical outlooks. In the current quarter, UBS expects to post a low-to-mid single-digit decline in wealth management net interest income due to “moderately lower lending and deposit volumes and lower interest rates in Switzerland.”

“We believe these results show the group is executing on its franchise-transforming acquisition,” analysts at Bank of America Securities said in a note to clients. However, they warned that a recent proposal by the Swiss finance department to sharply raise UBS’s capital requirements presents a “key constraint” on the bank’s valuation.