UBS posts second-quarter profit of $29 billion in first results since Credit Suisse takeover

A general view of the UBS building in Manhattan on June 5, 2023 in New York City.

Eduardo Munoz Alvarez | View Press | Corbis News | Good pictures

UBS on Thursday posted a second-quarter profit of $28.88 billion on its first-quarter revenue since its takeover of Credit Suisse, Switzerland’s biggest bank.

Analysts had forecast a net profit of $12.8 billion for the three months to the end of June, according to a Reuters poll.

UBS said the result primarily reflected $28.93 billion in negative goodwill from the Credit Suisse acquisition. Pretax profit, excluding negative goodwill, integration-related costs and acquisition costs, came in at $1.1 billion.

Negative goodwill refers to the fair value of assets acquired in a merger over and above the purchase price. UBS paid a discounted 3 billion Swiss francs ($3.4 billion) to acquire Credit Suisse in March.

“Two and a half months after the completion of the Credit Suisse acquisition, we have wasted no time in delivering value to all our shareholders from one of the largest and most complex banking mergers in history,” UBS CEO Sergio Ermotti said in a statement.

“We are regaining customer confidence and taking the necessary steps to reduce costs and create economies of scale that allow us to better focus our resources and target investments for future growth.”

Credit Suisse’s firm domestic banking unit will be fully integrated with UBS, the group announced on Thursday, with the merger of the legal entities expected to close in 2024. Ermotti said the bank’s analysis determined that this was “the best decision for UBS. Shareholders and the Swiss economy.”

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Credit Suisse was taken over as part of an emergency rescue deal brokered by Swiss authorities over a weekend in March. Earlier this month, UBS announced it had ended a 9 billion Swiss franc ($10.24 billion) loss protection agreement and a 100 billion Swiss franc general liquidity freeze that were put in place by the Swiss government when it agreed to take over Credit Suisse in March. .

“Clients will continue to receive the premium level of service they have come to expect, benefit from enhanced offerings, expertise and global reach,” Ermotti said of the integration of Credit Suisse’s Swiss banking division.

“Our strong capital base will help us keep consolidated credit exposures unchanged while maintaining our risk controls.”

UBS delayed announcing its second-quarter results – initially scheduled for July 25 – until it completes its acquisition of Credit Suisse on June 12.

In the previous quarter, UBS suffered a 52% annual drop in net profit due to legacy litigation related to US mortgage-backed securities.

UBS shares closed Wednesday trading up nearly 30% since the start of the year, according to Eikon.

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