UBS, the Swiss banking giant, has reported a larger-than-expected net loss of $785 million for the third quarter as it continues to work on integrating its fallen rival, Credit Suisse. Analysts had predicted a quarterly net loss of $444 million. The loss was primarily driven by $2 billion in expenses related to the integration. However, UBS recorded an underlying operating profit before tax of $844 million.
Despite the loss, UBS saw a 23% increase in total group revenues, which amounted to $11.7 billion in Q3. The CET1 capital ratio, a measure of bank liquidity, remained unchanged at 14.4% from the previous quarter.
In a positive development, Credit Suisse Wealth Management generated positive net new money inflows for the first time since Q1 2022, contributing to inflows of $22 billion for UBS Global Wealth Management.
UBS CEO Sergio Ermotti expressed optimism about the future, stating, “We are executing on the integration of Credit Suisse at pace and have delivered underlying profitability for the Group in the first full quarter since the acquisition.” Ermotti also highlighted strong inflows across wealth management and the Swiss franchise.
UBS completed the takeover of Credit Suisse in June, following an emergency rescue deal brokered by Swiss authorities. It also announced in August the termination of a 9 billion Swiss franc loss protection agreement and a 100 billion Swiss franc public liquidity backstop. The bank’s shares experienced a surge in August after reporting a net profit of $28.88 billion for the second quarter, mainly due to negative goodwill on the Credit Suisse acquisition.
Since the acquisition, UBS shares have remained up more than 27% for the year, although the stock price has slightly moderated. UBS is now focused on fully integrating Credit Suisse’s Swiss banking unit and is expected to make significant workforce reductions.
The bank reported net new deposits of $33 billion across its Global Wealth Management and Personal and Corporate Banking divisions, with $22 billion attributed to Credit Suisse clients. UBS also revealed its target of achieving gross cost savings of at least $10 billion by 2026, once the integration of all Credit Suisse Group’s businesses is complete.