Credit Suisse integration pushes UBS into the red

UBS Group posted a quarterly loss on Tuesday, after the cost of integrating Credit Suisse pushed it into the red.

The Swiss bank reported total revenues of $11.7bn in the three months to 30 September, up from $8.2bn a year previously.

The operating loss was $255m, however, compared to a $2.2bn profit in the third quarter of 2022, while the net loss came in at $785m. A year previously UBS posted a net profit of $1.7bn.

UBS attributed the loss to integration-related expenses of more than $2bn. Once they were stripped out, the lender posted an underlying profit of $844m.

Crisis-hit Credit Suisse was taken over by UBS in March this year in a complex rescue deal orchestrated by the Swiss National Bank.

Shortly afterwards, the board rehired former chief executive Sergio Ermotti to oversee the mammoth integration. Ermotti left UBS in 2020 after nearly a decade at the helm and was instrumental in turning the business around following a string of losses.

UBS said it expected to “substantially complete” the integration by the end of 2026, and to achieve gross cost reductions of more than $10bn by then. It has already cut around 13,000 jobs so far this year, giving it a global headcount of 116,000.

Ermotti said: “We are executing on the integration of Credit Suisse at pace, and have delivered underlying profitability for the group in the first full quarter

“Our clients have continued to place their trust and confidence in us, contributing to strong inflows across wealth management and our Swiss franchise.

“We are optimistic about our future as we build an even stronger and safer version of UBS that was called upon to stabilise the financial system in March.”

Looking to the rest of the year, UBS noted that while central banks had paused interest rate hikes, “uncertainties remain in terms of the appropriate level of interest rates that will allow inflation to converge to their targets.

“As a result, the outlook for economic growth, asset valuations and market volatility remains difficult to predict.”