UBS reported net income for the January–March 2024 quarter that exceeded estimates and marked its first profit since acquiring rival Credit Suisse.
Additionally, the wealth management division of the company revealed that net new assets for the first quarter of the year were USD 27 billion, up from USD 22 billion for the three months previous.
However, UBS warned that the bank’s wealth management division may be impacted by decreased lending and deposit volumes as well as decreased interest rates in Switzerland.
“In the second quarter of 2024, we expect a low-to-mid single-digit decline in net interest income in Global Wealth Management,” the bank said in a statement, as reported by the Reuters.
UBS’s CEO also said the majority of job cuts in its home market, Switzerland, will start from around the end of 2024 and continue into 2025 and 2026.
In a call with journalists, Sergio Ermotti said the cuts are not something the bank sees as “imminent” and that in the next months it will need “more resources to really manage the very complex integration process.”
In August 2023, UBS said it would axe 3,000 jobs in Switzerland alone after swallowing up its stricken rival Credit Suisse, a move expected to help the bank make significant cost savings.
Additionally, UBS reported that it had saved USD 1 billion in gross cost savings in the first quarter, bringing its total savings since the merger to USD 5 billion. It hopes to have saved an additional USD 1.05 billion, by the end of the year.
Switzerland’s biggest bank reported net income attributable to shareholders of USD 1.8 billion, above a consensus estimate of USD 602 million provided by the company and a USD 1 billion profit in the same period last year.
The first merger of two globally significant banks was completed in June of last year. The merger was arranged by Swiss authorities who were concerned that scandal-plagued Credit Suisse was about to fail. UBS reported losses for two straight quarters, as a result of the costs associated with acquiring its competitor.
Investors are optimistic about UBS’s prospects despite the shotgun nature of the takeover, considering the low acquisition costs and significant asset increase. The bank’s shares have increased by about 40%, over the previous year.
It is anticipated that this year will be crucial for UBS as it takes on some of the more challenging phases of integration, like merging disparate IT systems and legal entities and transferring clients from Credit Suisse to UBS.
Regulators are concerned because, in the event that the bank encounters difficulties, UBS’s balance sheet has grown to almost USD 1.6 trillion, almost twice the size of Switzerland’s GDP, as a result of the merger.