Company Reports

A 53% jump in equity trading and 22% growth in wealth management transactional income drove UBS' second-quarter underlying pretax profit 12% past consensus. The debate has shifted from capital and the Credit Suisse integration to revenue durability.

UBS has made significant progress with its integration of Credit Suisse, and completion remains on track. The merger has delivered the expected cost savings, and UBS is on course to restore its premerger operating margins. Concerns about market share losses have not materialized, and markdowns of the value of Credit Suisse assets have been limited.

SpaceX has filed for one of the largest IPOs in history, with Anthropic and OpenAI expected to follow in the most significant fundraising cycle in years. No European bank holds a lead equity arranger role; that honor belongs to five US banks.

UBS' underlying profit before tax for the first quarter of 2026 came in 17% ahead of the company-compiled consensus. Its investment bank benefited from volatile markets and was the main driver of the beat, but the wealth management business also performed ahead of expectations.

European banks have declined around 10% from their highs as rising oil and gas prices and the prospect of higher-for-longer interest rates fuel fears that loan defaults will rise.

UBS has made significant progress with its integration of Credit Suisse, and completion remains on track. The merger has delivered the expected cost savings, and UBS is on course to restore its premerger operating margins. Concerns about market share losses have not materialized, and markdowns of the value of Credit Suisse assets have been limited.

UBS has made significant progress with its integration of Credit Suisse and remains on track to complete it by the end of 2026. The merger has delivered the expected cost savings, and UBS is on course to restore its premerger operating margins. Concerns about market share losses have not materialized, and markdowns of the value of Credit Suisse assets have been limited.

UBS beat the company-compiled consensus' underlying profit before tax estimate for the second quarter by 12%. UBS hinted at softer second-half revenue as trading activity from wealth and investment banking clients normalizes. There was no update to its capital strategy.

UBS has missed out on Europe’s banking rally, its shares flat over the past year even as the Morningstar Developed Markets Europe Banks Index has soared 40%. Investors remain wary ahead of a June 6, 2025 Swiss government proposal that could sharply raise the bank’s capital requirements.

UBS' first-quarter 2025 underlying pretax profit held steady year on year but beat company-compiled consensus by 13%. Its investment bank booked record profits amid market volatility. Wealth management net inflows accelerated. Swiss domestic banking faced revenue declines as interest rates fell.

Narrow-moat UBS reported underlying pretax profits of $1.8 billion for fourth-quarter 2024, surpassing the $1.4 billion company-compiled consensus estimate. Strong performance in its investment banking operations primarily drove this earnings beat. However, lower-than-expected net new money inflows into the wealth management business and high loan-loss provisions in the Swiss personal and corporate bank will likely disappoint investors. UBS plans to buy back $3 billion of its shares in 2025, slightly exceeding the $2.9 billion consensus expectation.

Narrow-moat UBS reported underlying pretax profits of $2.4 billion for the third quarter of 2024, 41% ahead of the $1.7 billion company-compiled consensus estimate. Revenue came in 7% higher than expected and was the main driver of the earnings beat, with operating expenses in line with consensus. All divisions outperformed expectations. We were surprised by the market's sharply negative reaction. UBS' share price declined by 4.5% on Oct. 30, the weakest of the European banks we cover. We think the decline in UBS' common equity Tier 1 ratio concerned investors. However, we see it as merely a technical decline that will reverse in the coming years.

Narrow-moat UBS reported underlying pretax profits of $2.1 billion for the second quarter of 2024, 26% ahead of the $1.6 billion company-compiled consensus estimate. Revenue for the quarter was slightly ahead of expectations, mainly due to a good quarter for the investment banking business.

The Credit Suisse integration is UBS' main focus for the foreseeable future. After the 2008 global financial crisis, UBS was in a similar position to Credit Suisse before its collapse. UBS' capital allocation was utterly lopsided, with 70% of its capital allocated to volatile, unprofitable investment banking activities. Over the next 15 years, UBS reduced the capital allocated to investment banking to 30% and shut down investment banking operations that did not support its core wealth management business. UBS halved its asset base and lopped 30% of its cost base while growing revenue. The consequent capital adequacy and profitability improvement allowed it to buy back 20% of its shares over the past five years. Now UBS will have to do this all over again.

Narrow-moat UBS reported much better-than-expected results for the first quarter of 2024, yet we felt its management team struck a somewhat cautious tone during the earnings call. Potentially higher regulatory capital requirements will continue to weigh on the share price as UBS could not provide an update on the Swiss regulator's position. Net new money inflows in wealth management continue, which suggests limited client attrition. We will incorporate the results in our model and update our current fair value estimate of CHF 27.50/share shortly.

UBS reported net underlying profits in line with our expectations. The underlying results exclude the impact of the Credit Suisse integration, but UBS’ operating expenses remain inflated by Credit Suisse’s cost base. The rightsizing of the acquired Credit Suisse cost base will run until 2026. UBS confirmed its profitability target of a 15% return on common equity Tier 1, or CET1, capital by 2026. It, however, introduced a fresh ambition to achieve a return on CET1 of 18% by 2028.

UBS has managed to stem client outflows earlier than we anticipated. A significant positive development was the $22 billion of net new client inflows the consolidated wealth management business booked for the quarter—$3 billion of these inflows came from the legacy Credit Suisse wealth management business, and this comes after Credit Suisse lost $183 billion of its client assets over the previous four quarters.

The Credit Suisse takeover will be UBS' main focus for the foreseeable future. After the 2008 global financial crisis, UBS was in a similar position to Credit Suisse before its collapse. UBS' capital allocation was utterly lopsided, with 70% of its capital allocated to volatile, unprofitable investment banking activities. Over the next 15 years, UBS reduced the capital allocated to investment banking to 30% and shut down investment banking operations that did not support its core wealth management business. UBS halved its asset base and lopped 30% of its cost base while growing revenue. The consequent capital adequacy and profitability improvement allowed it to buy back 20% of its shares over the past five years. Now UBS will have to do this all over again.

UBS had delayed its results in June to allow more time to formulate a strategy around the integration of Credit Suisse. Accounting noise distorted the second-quarter 2023 results. UBS booked a massive $29 billion profit before tax, but excluding the negative goodwill from the bargain purchase of Credit Suisse, pretax profit was a more modest $314 million. The legacy UBS-only business performed well, although its investment banking business saw a sharp slowdown in revenue. Credit Suisse's business, even on a normalized basis, remained loss-making. Revenue for Credit Suisse declined by 38% compared with the first quarter of 2023 and its investment banking revenue collapsed completely. Credit Suisse's wealth management revenue held up reasonably well and we view the net client inflows recorded in the quarter as confirmation that UBS has managed to stabilize the situation, a major positive. The Swiss domestic business of Credit Suisse remained profitable with stable revenue. After much speculation, UBS announced it would retain Credit Suisse's domestic Swiss business rather than pursue a separate listing. The merged operations in Switzerland could deliver meaningful synergies over time, making this a positive development.

The 22% increase in our fair value estimate for UBS to CHF 27.50 is primarily due to the takeover of Credit Suisse, implying that we place a value of around CHF 19 billion on the acquired Credit Suisse operations. To contextualize our valuation, in February 2023, before the final collapse of Credit Suisse, the market still valued it at CHF 13 billion. As recently as March 2021, Credit Suisse had a market value of CHF 32 billion. We acknowledge that it will be hard, if not impossible, for UBS to reverse Credit Suisse's recent revenue losses. UBS is, however, much better placed than Credit Suisse to drastically reduce the loss-making, volatile, and capital-hungry investment banking operations and restore the profitability of Credit Suisse's wealth management operations.