Hey there! UBS just revealed its first quarterly results since taking over Credit Suisse, and guess what? They made a whopping $29 billion profit in the second quarter alone. How amazing is that!
UBS announced its second-quarter earnings on Thursday, revealing a remarkable profit of $28.88 billion. This marks its first financial report since the successful acquisition of its troubled counterpart, Credit Suisse, solidifying its position as Switzerland's largest bank.
Analysts' estimates fell short in anticipation of a net profit of $12.8 billion for the three-month period ending in June, as indicated by a Reuters poll.
The impressive figure reported by UBS was largely attributed to the recognition of $28.93 billion in negative goodwill related to the Credit Suisse merger. Excluding this negative goodwill, integration-related costs, and acquisition expenses, the underlying pre-tax profit stood at $1.1 billion.
Negative goodwill signifies the assessed value of acquired assets surpassing the purchase price in a merger. UBS obtained Credit Suisse at a discounted rate of 3 billion Swiss francs ($3.4 billion) in March.
In a statement, UBS CEO Sergio Ermotti expressed his satisfaction with the swift progress after the completion of the Credit Suisse acquisition, emphasizing the focus on generating value for stakeholders. He stated, "We are regaining the confidence of our clients, streamlining costs, and implementing strategic measures to harness economies of scale. This approach will enable us to optimize resource allocation and facilitate targeted investments for future expansion."
As part of the ongoing integration process, UBS disclosed that Credit Suisse's robust domestic banking division will be seamlessly incorporated into its operations. The consolidation of legal entities is projected to finalize in 2024. Ermotti emphasized the outcome of extensive analysis, asserting that this strategy presents the optimal solution for UBS, its stakeholders, and the Swiss economy.
The acquisition of Credit Suisse emerged from an urgent rescue arrangement brokered by Swiss authorities over a weekend in March. Recently, UBS terminated a 9 billion Swiss franc ($10.24 billion) loss protection agreement and a 100 billion Swiss franc public liquidity backstop, both initiated by the Swiss government during the takeover of Credit Suisse.
Ermotti assured that the integration of Credit Suisse's Swiss banking division will uphold the premium level of service expected by clients, enriched by enhanced offerings, specialized capabilities, and global outreach. He highlighted the strengthened capital base, enabling UBS to maintain unchanged combined lending exposures while adhering to rigorous risk management practices.
UBS postponed its second-quarter financial disclosure, originally slated for July 25, to accommodate the finalization of the Credit Suisse acquisition on June 12.
The preceding quarter had witnessed an unexpected 52% annual decline in UBS's net profit, attributed to a historical litigation matter linked to U.S. mortgage-backed securities.
UBS shares exhibited robust growth, closing Wednesday's trading session with a nearly 30% increase since the beginning of the year, according to data from Eikon.