UBS reports a strong third-quarter profit that nearly doubles projections

UBS Group reported third-quarter profits nearly twice the expected level, driven by cost-cutting measures and revenue growth, while successfully completing its initial client transitions from Credit Suisse after last year’s acquisition.

Switzerland’s largest bank recorded a net profit of $1.4 billion, significantly above the $740 million forecasted by analysts in a company survey. Operating costs for the quarter were $10.3 billion, a reduction from over $11.6 billion during the same period last year. Total group revenue reached $12.3 billion, surpassing the $11.5 billion consensus estimate.

UBS CEO Sergio Ermotti commented on the performance, noting the bank’s “impressive revenue growth” despite a “constructive yet volatile market backdrop,” with strong client activity particularly in the Americas and APAC regions. Ermotti emphasized UBS’s focus on cost-efficiency goals and risk management in its ongoing integration of Credit Suisse.

UBS anticipates similar market conditions in the fourth quarter, with optimism for a “soft landing” in the U.S. economy. However, it highlighted continued global economic uncertainty due to seasonal factors, geopolitical tensions, and the upcoming U.S. elections, which could influence investor actions.

Following its formal merger with Credit Suisse in May, UBS has advanced in absorbing its former rival, with Ermotti previously reporting that integration efforts and cost reductions are ahead of schedule. Client migration from Credit Suisse has started, with the initial phase of account transfers completed in Luxembourg and Hong Kong in October, and additional transfers in Singapore and Japan expected by year-end. Transfers within Switzerland are scheduled for the following year.

Investors have responded positively to the acquisition, with UBS’s share price increasing by more than 60% since the Credit Suisse purchase in March 2023.

Despite this, UBS faces lingering uncertainties, as market observers await final decisions on new regulations proposed by Swiss authorities that would require systemically important banks, including UBS, to hold higher capital reserves to prevent a repeat of the Credit Suisse collapse. UBS, along with the Swiss banking association, has cautioned that overly strict requirements may impact sector competitiveness.

Additionally, Swiss regulator FINMA has directed UBS to enhance its contingency and recovery strategies, aiming to restore confidence in the Swiss banking system following Credit Suisse's high-profile failure.

Paraphrasing text from "Reuters" all rights reserved by the original author.