Market Commentary

UBS Reports Strong Q1 Earnings & Commitment to Share Buyback Plan

Jahanzeb Salam
7 May 2024 · 1 minute read

UBS Group (UBS:US) recently reported a first-quarter profit of $1.76 billion, surpassing analysts' expectations of $602 million. Despite proposed increases in capital requirements by the Swiss government, the bank remains committed to its three-year share buyback plan.

Shares of Switzerland's largest bank surged 8%, marking their largest single-day gain since March 2023, attributed to robust quarterly performance. This quarter's net income of $1.8 billion, nearly triple analyst forecasts, signals UBS' first profitable quarter since acquiring Credit Suisse, driven by cost-cutting measures and divesting 'non-core' business segments.

Investors awaited news on UBS' cash returns, considering buybacks and dividends have been key drivers behind the recent rally in European bank shares.

Pre-provision profits in UBS' core businesses exceeded expectations by 10%, although revenues in asset management and investment banking fell short. UBS' wealth management arm reported $27 billion in net new assets for the quarter, highlighting growth despite potential challenges from lower lending and deposit volumes and decreased interest rates in Switzerland.

UBS achieved an additional $1 billion in gross cost savings in the first quarter, totaling $5 billion since the merger with Credit Suisse (CS:US). The merger's legal completion is set for May 31, with the Swiss branches expected to merge in the third quarter.

This year is pivotal for UBS as it navigates integration challenges, including IT system consolidation, client migration, and workforce reduction.

In recent activity regarding congressional trading, California congressman Rep. Ro Khanna increased his holdings in the banking firm on January 12, 2024, and September 8, 2023, with both transactions falling within the range of $1,000 to $15,000. Subsequently, both of these trades have experienced increases, surpassing 8% and 18% respectively.