UBS Profit Beats Forecast As Credit Suisse Merger Nears End

Swiss banking giant UBS said it remained on track to substantially wrap up its mega-merger with Credit Suisse by the end of 2026, after once again posting better-than-expected quarterly results on Tuesday.

Switzerland's biggest bank reported a net profit of $770 million for the fourth quarter of 2024, compared with a $279 million loss in the same period a year earlier as it wrestled with the weight of absorbing its closest domestic rival.

In March 2023, Swiss authorities strongarmed UBS into a $3.25-billion takeover to prevent Credit Suisse from going under, with what could have been catastrophic consequences for the global financial system.

The Zurich-based bank posted Tuesday a year-on-year seven percent increase in fourth-quarter revenue to $11.6 billion, fuelled by rising stock markets which supported transactions in both wealth management and investment banking.

Analysts surveyed by the Swiss financial newswire AWP had, on average, expected a net profit of $536 million on $11.4 billion in revenue.

For the full year 2024, the bank posted a net profit of $5 billion.

Andreas Venditti, an analyst with Swiss investment managers Vontobel, said UBS beat the forecasts thanks to "good cost management".

The bank had already outperformed analysts' predictions for the third quarter.

Deutsche Bank Research said that while the results were significantly ahead of expectations, the divisional mix was not ideal, with global wealth management only in line with expectations, and personal and corporate banking missing them.

Calling the results "solid", it said: "UBS continues to deliver post Credit Suisse takeover but the valuation already factors in a lot of profitability improvement to come."

Even before the merger, UBS and Credit Suisse were both among 30 international banks deemed too big to fail due to their importance in the global banking architecture.

Without the emergency takeover, the Swiss government feared a Credit Suisse default that would have triggered a global banking crisis and shredded Switzerland's valuable reputation for sound banking.

UBS said it completed all its key Credit Suisse integration milestones for 2024, including the legal merger, which opened the door for the bank to start transferring over Credit Suisse clients.

It said that with the successful migration of wealth management client accounts across booking centres in Hong Kong, Singapore, Japan and Luxembourg, it had transferred more than 90 percent of client accounts outside of Switzerland onto UBS platforms.

"Throughout 2024, we maintained robust momentum as we captured growth in global wealth and asset management and gained market share in the investment bank in the areas where we have made strategic investments," chief executive Sergio Ermotti said in a statement.

"We achieved all key integration milestones in 2024 and significantly reduced execution risk, while our capital position remained robust.

"We are confident in our ability to substantially complete the integration by the end of 2026."

The bank said it had achieved 58 percent of its target of achieving $13 billion in cost savings by the end of next year as part of the merger.

UBS said investor sentiment remained positive in the fourth quarter, with the market backdrop reflecting an "increase in investors' risk appetite" following the re-election of Donald Trump to the US presidency.

"Constructive market conditions have continued into the first quarter of 2025 sustained by the greater optimism regarding growth prospects in the US," UBS said.

But it cautioned that investor behaviour might be affected by the "clouded macroeconomic outlook" outside the United States, plus increased uncertainties around global trade, inflation and central bank policies, as well as geopolitics, including upcoming elections in Germany.

For 2024, UBS will increase the dividend paid to shareholders by 29 percent to $0.90 per share, and plans to increase it by another 10 percent in 2025.

The bank also resumed its share purchases in 2024, buying back $1 billion worth of shares last year, and plans to buy back another $3 billion in 2025, including $1 billion in the first half of the year.