UBS Reports Quarterly Loss After Integration Costs

UBS Group, the Swiss bank that recently acquired Credit Suisse, has posted a net loss of $785 million in the third quarter. The bank attributed the loss to costs and expenses associated with integrating Credit Suisse into its operations. This figure is a significant drop from the $1.73 billion in net profit reported in the previous year.

Integration Expenses Impact Earnings

The integration of Credit Suisse has resulted in a substantial increase in operating expenses, which rose by 97% to reach $11.64 billion. This surge in expenses includes integration costs, Credit Suisse's expenses, and unfavorable foreign-currency effects in certain regions. Although analysts had predicted operating expenses of $11.7 billion, UBS incurred slightly less.

Revenue Exceeds Expectations

Despite reporting a net loss, UBS also achieved better-than-expected revenue figures. Revenue increased by 42% to $11.695 billion, surpassing the consensus estimate of $11.32 billion.

Strong Performance in Key Areas

UBS saw a notable increase in net fee and commission income, a primary driver of its profits, which rose by 35% to $6.07 billion. The bank attributes this growth to winning back assets from clients and attracting new clients.

Furthermore, UBS's wealth-management business witnessed a positive trend, with $22 billion in net new money generated during the period. This success can be attributed to both the bank's own unit and the addition of Credit Suisse's wealth management clients. Notably, this is the first time since Q1 of last year that Credit Suisse's wealth management division has experienced positive net new money.

Additionally, UBS's global wealth management and personal and corporate banking businesses received $33 billion in new deposits, with $22 billion of that coming from Credit Suisse clients.

Mixed Results for UBS's Business Divisions

While UBS's global wealth-management business recorded a revenue growth of 21%, operating expenses also rose by 44% during the quarter.

The personal and corporate banking business, on the other hand, reported an impressive doubling of revenue; however, this was accompanied by a significant increase in operating expenses due to the consolidation of Credit Suisse and integration-related costs.

The asset-management business saw revenue growth, but operating expenses soared by 93%.

UBS's investment bank experienced an increase in revenues as well.

Overall, despite incurring losses and facing integration challenges, UBS remains confident in its ability to reassure clients and maintain constructive relationships.