Zurich (AFP) – Swiss banking giant UBS said Tuesday that it remained on track to substantially wrap up its mega-merger with Credit Suisse by the end of 2026, after once again posting better-than-expected quarterly results. Switzerland’s biggest bank reported a net profit of $770 million for the fourth quarter of 2024, compared with a $279 million loss in the period a year earlier as it wrestled with the weight of absorbing its closest domestic rival.
In March 2023, Swiss authorities strong-armed UBS into a $3.25 billion takeover to prevent Credit Suisse from going under, with what could have been catastrophic consequences for the global financial system. The Zurich-based bank posted a year-on-year seven percent increase in fourth-quarter revenue to $11.6 billion, fueled by rising stock markets that supported transactions in both wealth management and investment banking.
Analysts surveyed by the Swiss financial newswire AWP had, on average, expected a net profit of $536 million on $11.4 billion in revenue. For the full year, the bank posted a net profit of $5 billion. Andreas Venditti, an analyst with Swiss investment managers Vontobel, said UBS beat the forecasts thanks to “good cost management.” The bank had already outperformed analysts’ predictions for the third quarter.
Deutsche Bank Research said that while the results were “solid” and significantly ahead of expectations, the divisional mix was not ideal, with global wealth management only in line with expectations, and personal and corporate banking missing them. But UBS shares slumped on the Swiss stock exchange, ending 7.1 percent lower at 29.55 Swiss francs.
The biggest challenge facing UBS in 2025 remains the question of the rules in Switzerland concerning the capital the bank will have to set aside to withstand future possible shocks. At a conference with financial analysts, chief executive Sergio Ermotti said he expected the debate to continue following a parliamentary inquiry in December that also called for tougher rules given UBS’s size following the takeover. While the bank is willing to accept some adjustments, Ermotti said a disproportionate tightening of the rules would risk undermining the bank’s competitiveness.
Even before the merger, UBS and Credit Suisse were both among 30 international banks deemed too big to fail due to their importance in the global banking architecture. Without the emergency takeover, the Swiss government feared a Credit Suisse default that would have triggered a widespread financial crisis and shredded Switzerland’s valuable reputation for sound banking.
UBS said it completed all its key Credit Suisse integration milestones for 2024, including the legal merger, which opened the door for the bank to start transferring over Credit Suisse clients. It said that with the successful migration of wealth management client accounts across booking centers in Hong Kong, Singapore, Japan, and Luxembourg, it had transferred more than 90 percent of client accounts outside of Switzerland onto UBS platforms.
“Throughout 2024, we maintained robust momentum,” Ermotti said in a statement. “We achieved all key integration milestones in 2024 and significantly reduced execution risk, while our capital position remained robust. We are confident in our ability to substantially complete the integration by the end of 2026.” The bank said it had achieved 58 percent of its target of achieving $13 billion in cost savings by the end of next year as part of the merger.
UBS said investor sentiment remained positive in the fourth quarter, with the market backdrop reflecting an “increase in investors’ risk appetite” following the re-election of Donald Trump to the US presidency. “Constructive market conditions have continued into the first quarter of 2025 sustained by the greater optimism regarding growth prospects in the US,” UBS said.
For 2024, UBS will increase the dividend paid to shareholders by 29 percent to $0.90 per share and plans to increase it by another 10 percent in 2025. The bank also resumed its share buyback program last year, purchasing $1 billion worth of stock, and plans to buy back an additional $3 billion in 2025, including $1 billion in the first half.
© 2024 AFP
