UBS shares surge as bank returns to profit following takeover of Credit Suisse

By Louis Goss

UBS on Tuesday posted a return to profit from two consecutive quarters of losses, as the Swiss bank massively outstripped analysts' forecasts while benefiting from its ongoing takeover of rival Credit Suisse.

The Swiss bank's balance sheet was boosted by the addition of $3.83 billion in revenue from Credit Suisse, following its state-backed acquisition of the financier in March 2023 which saved it from the brink of collapse.

The addition of Credit Suisse's assets, paired with UBS' own push to cut its operating expenses by $1 billion, saw the banking giant swing back into profit in the first quarter of 2024, as the increase in its revenue outpaced the increase in costs linked to its $3.2 billion takeover.

This saw UBS massively beat analysts' expectations in posting pre-tax profits worth $2.37 billion, compared to the $1.04 billion expected by 13 company watchers polled by the Swiss financier itself.

UBS (CH:UBSG) shares, listed on the SIX Swiss Exchange in Zurich, surged 8% on Tuesday having gained 52% over the previous 12 months following the bank's state-backed takeover of its main rival in March last year.

The Zurich headquartered financier reported a 46% year-on-year increase in revenue, to $12.74 billion, largely as a result of the addition of $3.83 billion in revenue from Credit Suisse, which was mainly derived from the bank's wealth management and retail divisions.

UBS' global wealth management arm saw the addition of $27 billion in new assets from the Credit Suisse takeover as the bank also benefited from taking on its rivals' clients.

This increased revenue led to a 59% surge in UBS' pre-tax operating profits, to $2.38 billion, as the increase in the Swiss bank's revenue outstripped a 42% increase in its costs, largely related to Credit Suisse's personnel.

Looking ahead, UBS warned that Switzerland's March interest rate cuts could lower net interest income from its global wealth management and personal & corporate banking divisions in the second quarter.

-Louis Goss

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05-07-24 0451ET

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