ubs positively surprised the market with i results for the second quarter of 2024, significantly exceeding analysts' forecasts. The Zurich bank has registered a net profit of 1,14 billion of dollars, the double the estimates. This result was supported by strong client inflows and a robust contribution from the investment bank, while the wealth management division saw net inflows of $27 billion. In total in the first six months of the year the financial institution raised 54 billion dollars, in line with the goal of reaching 100 by 2025.
“The results of the first half reflect the significant progress made after the closing of the acquisition and the respect of the commitments made with the stakeholders – said the CEO Sergio Ermotti –. We are well positioned to achieve our financial objectives and return to previous levels of profitability. We now enter the next phase of integration, which is crucial to achieving further benefits in terms of costs, capital, financing and taxes. We will continue to invest to deliver sustainable growth and improve outcomes for our customers and the communities in which we operate."
Il title celebrates on the stock market with an increase of over 2%.
Financial results and prospects
In first semester For 2024, UBS achieved net income of $2,9 billion, with net asset management inflows reaching $54 billion, in line with its annual target of approximately $100 billion. Wealth management revenues were more than $1 billion, with strong growth in Asia and the Americas. In global markets, the bank reported its best results since 2013, with an 18% increase in revenue and a notable 55% increase in global banking revenue.
As regards the second quarter, the Swiss group reported a net profit of 1,14 billion dollars and revenues of 11,9 billion dollars. Although turnover decreased by 7% compared to the same period last year, the bank achieved positive results in its key areas. Revenue at the investment bank rose 38%, with pre-tax profit of $477 million. Advisory revenues rose 23%, and capital markets results rose 82%, excluding adjustments for the Credit Suisse merger. The reduction in turnover was mainly due to lower interest income, but UBS balanced this decline with solid performance in investment banking and effective management of client portfolios.
Looking to the future, UBS expects “positive investor sentiment”. The bank aims to achieve an additional $7 billion in savings by the end of 2024, equivalent to 55% of its overall target of $13 billion set for the end of the year.
However, the elections in the United States and geopolitical tensions could increase the volatility of the market in the second half of the year. Additionally, lower interest rates and changes in customer portfolios could impact interest income.
Merger with Credit Suisse
One year after the conclusion of theacquisition of Credit Suisse, which collapsed after a series of bankruptcies and financial scandals, UBS has made notable progress in rationalizing its inherited assets. The bank has reduced Credit Suisse assets earmarked for liquidation by 42% since the second quarter of last year and liquidated $8 billion in the latest quarter alone. These efforts generated $900 million in savings, although the pace of cost savings slowed compared to the first quarter.
The Swiss bank recently reorganized its wealth management division, centralizing all offerings in a new unit and restructured leadership. Robert Karofsky was named head of the US division and co-head of wealth management with Iqbal Khan, promoted to president of the Asia-Pacific region.
Perspectives and challenges
UBS plans to buy back shares for approximately 1 billion dollars by the end of the year, whose plan was launched in June and has already led to 467 million dollars of shares repurchased as of August 9th, and aims to reach pre-merger profitability levels. However, the new ones regulations svizzere in the planning stages could involve additional capital demands of up to $25 billion, raising concerns among analysts about the need to contain payouts to shareholders. CEO Ermotti told Bloomberg Television: “I don't think this will happen. We will find out probably by the end of the year or early 2025 what the direction will be. Then we can make an evaluation."
In the third quarter, the Swiss banking giant expects to incur about $1,1 billion in integration-related expenses, while the pace of cost savings is expected to slow slightly. Additionally, the bank recently offered Credit Suisse investors funds tied to the collapse of Greensill Capital a agreement to receive 90% of the value of the funds before closing. 92% of investors accepted the offer, helping to solve another problem inherited from the acquisition.
