UBS Group Third-Quarter Profit

By Dave Graham
ZURICH (Reuters) – UBS Group posted a third-quarter profit nearly double expectations, significantly reducing costs and boosting revenues. They announced the completion of the first wave of client migrations from Credit Suisse after acquiring its rival last year.

Net profit attributable to shareholders at Switzerland's largest bank was $1.4 billion, exceeding analysts’ estimated $740 million.

Operating expenses totaled $10.3 billion, down from over $11.6 billion a year earlier. Total group revenue reached $12.3 billion, surpassing a consensus estimate of $11.5 billion.

UBS CEO Sergio Ermotti commented, "Against a market backdrop that, while constructive, still exhibited periods of high volatility and dislocation, our business delivered impressive revenue growth… particularly in the Americas and APAC."

He added, "We continue to significantly mitigate execution risk as we progress on the integration of Credit Suisse while remaining disciplined in driving our cost and efficiency targets."

UBS forecasts that market conditions will remain similar in the fourth quarter, supported by prospects of a soft landing in the U.S. economy; however, the global macroeconomic outlook remains uncertain.

Ermotti indicated that seasonality, ongoing geopolitical conflicts, and upcoming U.S. elections could influence investor behavior.

Since officially completing the merger with Credit Suisse in May, UBS has been actively integrating operations. Client migrations onto UBS platforms are expected to take around 18 months. They have successfully completed the first wave of account migrations in Luxembourg and Hong Kong in October, with Singapore and Japan anticipated by year-end, followed by Switzerland next year.

Investors have responded positively to the acquisition, with UBS shares rising over 60% since acquiring Credit Suisse in March 2023.

Despite this, uncertainty looms over UBS, as markets await potential implications from tougher new regulations proposed by Swiss authorities to ensure systemic banks hold more capital. The bank and the country's banking lobby warn that excessive burdens could harm competitiveness and business.

Additionally, the financial regulator FINMA has mandated that UBS improve its emergency and recovery plans in light of Credit Suisse's collapse, which has impacted confidence among some wealthy clients, according to a recent study.