For more than a year, former rival Credit Suisse has been part of Swiss banking giant UBS. In a rescue operation in March 2023, UBS acquired its former competitor after Credit Suisse fell into an existential crisis due to numerous scandals and financial setbacks. This acquisition not only led to massive job cuts but also was a significant step towards stabilizing the Swiss banking system during a period of global economic uncertainty.
Despite the challenges of integrating Credit Suisse, UBS has managed to present impressive financial results for the second quarter of 2024. The net profit stood at $1.1 billion, which is lower than the $1.76 billion profit in the first quarter but significantly exceeds the analysts' expectations of $528 million. This positive development was supported by improvements in investment banking, wealth management, and the "Non Core and Legacy" division.
A major success for UBS was the net new money inflow of $27 billion in its Global Wealth Management division, the bank’s core business focused on wealthy clients. UBS also sees itself on track with integration efforts and targeted cost savings. CEO Sergio Ermotti expressed confidence that the bank would achieve its financial goals and return to profitability levels seen before the Credit Suisse acquisition.
However, comparing with the same quarter last year is not particularly meaningful due to the exceptional record profit of $29 billion in Q2 2023. This extraordinary profit resulted from the low purchase price of Credit Suisse, which was significantly below its book value. At that time, UBS paid only 3 billion Swiss francs for the troubled bank.
For Q3 2024, UBS expects integration-related costs of around $1.1 billion. Additionally, the bank anticipates a slight slowdown in the pace of gross cost savings compared to the previous quarter. Between April and June, UBS achieved additional savings of $0.9 billion. By the end of 2026, the bank aims to reduce annual costs by a total of approximately $13 billion compared to 2022.
The acquisition of Credit Suisse became necessary after the bank faced a severe crisis due to numerous scandals and loss of customer trust since the fall of 2022. To avoid a larger banking crisis following the collapse of Silicon Valley Bank in the US, the Swiss government intervened in March 2023 and initiated the acquisition by UBS. The formal acquisition was completed on June 12, 2023, the day on which CS shares were last traded on the Swiss stock exchange.
