UBS Records Bumper Q2 Profit Of $29B Thanks To Goodwill, Aims Cost Savings Of $10B Starting With Axing 3K Swiss Jobs

UBS Group's UBS Q2 EPS reached $8.99 against $0.61 a year ago and $0.32 in Q1 FY23, its first quarterly result since it completed its takeover of stricken rival Credit Suisse.

The company's adjusted EPS stood at $(0.01), which excludes goodwill of $28.925 billion or $9.00/share.

Sales increased 7% Y/Y to $9.54 billion, beating the consensus of $8.57 billion. 

UBS said the result primarily reflected $28.93 billion in negative goodwill on the Credit Suisse acquisition. 

Underlying profit before tax, which excludes negative goodwill, integration-related expenses, and acquisition costs, came in at $1.1 billion.

CET 1 capital ratio, a measure of bank liquidity, reached 14.4% versus 14.2% a year ago. CET1 leverage ratio was 4.8% versus 4.4% a year ago.

Credit Suisse's (Schweiz) domestic banking unit will be fully integrated into UBS. It also announced that a merging of legal entities is expected to close in 2024.

"Our analysis clearly shows that a full integration is the best outcome for UBS, our stakeholders and the Swiss economy," Chief Executive Sergio Ermotti said.

"The two Swiss entities will operate separately until their planned legal integration for 2024, with the gradual migration of clients onto UBS systems expected to be completed in 2025," he added.

The bank also announced that it is targeting gross cost savings of at least $10 billion by 2026.

Credit Suisse reported net asset outflows of CHF 39.2 billion in Q2, underscoring that the rescue has failed to stem the loss of confidence in its franchise.

But UBS said the outflows took place slower than in previous quarters and turned positive in June.

UBS's global wealth management reported net new money of $16 billion, its highest for the second quarter in over a decade.

UBS said its merger with Credit Suisse and full absorption of its Swiss unit would cause 3,000 job cuts.

"Around 1,000 redundancies will result from the integration of Credit Suisse Schweiz," UBS chief executive Sergio Ermotti said in a conference call with analysts.

He added that the restructuring was "expected to lead to about 2,000 additional redundancies in Switzerland over the next couple of years".

UBS said it has created a Non-core and Legacy (NCL) business division, including Credit Suisse positions and businesses not aligned with the company's strategy and policies.

UBS intends to actively reduce the assets of the NCL unit to reduce operating costs and financial resource consumption and to enable us to simplify infrastructure.

Price Action: UBS shares are up 5.10% at $26.58 during the premarket session on the last check Thursday.