UBS CEO talks Credit Suisse integration after a strong second quarter

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Written on Aug 31, 2023

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UBS Group AG reports a massive boost to profit in its second quarter.
CEO Ermotti discussed earnings and Credit Suisse acquisition on CNBC.
UBS shares climbed more than 6.0% to an all-time high on Thursday.

UBS Group AG (NYSE: UBS) just reported strong results for the second quarter – the first one after its $3.2 billion acquisition of Credit Suisse.

CEO Ermotti on Credit Suisse takeover

On Thursday, the investment bank also revealed plans of integrating the Swiss operations of Credit Suisse and not spinning them off as it had considered earlier. According to CEO Sergio Ermotti:

It’s clear that we’re making very good progress in our integration plans. Clients are staying loyal. They understand the rationale of the combination and they’re entrusting us with very good inflows.

UBS reported net new inflows of $16 billion in the second quarter. Its shares jumped more than 6.0% to an all-time high this morning.

UBS revealed plans of cutting jobs

UBS said the merger will result in a loss of 1,000 jobs. Another 2,000 will be cut from other Credit Suisse businesses as well. On CNBC’s “Squawk Box Europe”, the Chief Executive added:

We are migrating people and positions on the UBS platform. It’s important because one way to achieve our financial targets is to take down cost but shutting down infrastructure, emerging legal entities.

The multinational now expects to trim costs by a whopping $10 billion by the end of 2026 and go above and beyond from there on.

Last month, UBS voluntarily terminated the agreement it had with the Swiss government that aimed at covering potential losses related to its merger with Credit Suisse as Invezz reported here.

UBS reports a massive jump in profit

UBS saw $28.9 billion in quarterly profit much of which was attributed to negative goodwill related to its acquisition of Credit Suisse. Profit in the previous quarter was $2.11 billion only. CEO Ermotti also said today:

The negative goodwill is the equity necessary to sustain 240 billions of risk-weighted assets and the financial resources to go through a deep restructuring that is necessary at Credit Suisse.

But $1.14 billion it had in underlying pre-tax profit still missed Street estimates by some $400 million, as per the earnings press release.

The Swiss bank brought in $9.54 billion in overall revenue – $497 of which came from Credit Suisse. Wall Street currently has a consensus “overweight” rating on UBS.