UBS Third-Quarter Results: What to Expect

Revenue Expectations

Analysts predict that UBS, the Swiss bank, will report a revenue of $11.32 billion for the third quarter. This figure is based on a bank-provided consensus and represents a significant increase from $8.24 billion in the same period last year.

Projected Net Loss

According to the same bank-provided consensus, UBS is expected to post a net loss of $444 million for the quarter. This is in contrast to the $1.73 billion net profit reported in the third quarter of the previous year.

Rising Operating Expenses

Analysts anticipate an increase in operating expenses compared to the prior year. The consensus indicates that expenses will rise to $11.7 billion, a substantial surge from $5.92 billion in the third quarter of 2022. In the second quarter of this year, operating expenses amounted to $8.49 billion.

Key Factors to Monitor

Business Integration, Momentum

UBS recently announced its decision to retain Credit Suisse's Swiss business and integrate it within their organization. The boards of both banks will undergo restructuring and harmonization, effective from November 1. The final phase of this integration process will be the legal merger, scheduled for 2024, after which all Credit Suisse clients will be fully migrated onto UBS systems by 2025.

During the second quarter, Credit Suisse showed signs of stabilization, with $18 billion in wealth management and Swiss bank net deposit inflows. Meanwhile, UBS reported $16 billion in net new money at its global wealth management business, demonstrating a positive trajectory that is expected to continue into the third quarter of 2023.

Morgan Stanley, a prominent financial institution, emphasized the significance of UBS's deposit and asset growth in its research note. It will closely monitor the pace at which deposits and assets are returning to UBS as an important indicator of the bank's overall performance.

Non-Core Businesses

The bank recently announced its plans to address its non-core and legacy division. This division is responsible for managing Credit Suisse positions and businesses that do not align with the group's current strategy and policies.

As of June 30, the non-core division held risk-weighted assets totaling $55 billion. The bank's goal is to let half of these assets mature without replacement by the end of 2026.

In the second quarter, Credit Suisse expressed its intention to reduce the assets within this unit in order to lower operating costs. Additionally, the bank aims to achieve gross cost reductions exceeding $10 billion by 2026.

This strategic decision emphasizes the bank's commitment to streamlining its operations and aligning its core businesses with its long-term goals. Through careful asset management and cost reduction efforts, Credit Suisse is poised to enhance its overall performance.