UBS on Tuesday reported a bigger-than-expected third-quarter net loss of $785 million as it works to integrate fallen rival Credit Suisse.
Analysts polled by the company had expected the Swiss banking giant to post a quarterly net loss of $444 million.
The loss was driven by $2 billion in costs related to the Credit Suisse integration, with the bank posting an underlying pre-tax operating profit of $844 million.
Here are some other highlights:
Total Group revenues were $11.7 billion, up 23% from $9.54 billion in the second quarter.
The CET1 capital ratio, a measure of the bank’s liquidity, was 14.4%, unchanged from the previous quarter.
Credit Suisse Wealth Management generated positive net new money for the first time since first quarter 2002, contributing $22 billion to UBS Global Wealth Management’s inflows.
“We are making good progress with the integration of Credit Suisse, delivering underlying profitability for the Group in the first full quarter since the acquisition. Our clients have continued to place their trust in us, contributing to strong inflows across our wealth management businesses and in our Swiss franchise,” said CEO Sergio Ermotti in a statement.
“We are optimistic about our future as we build an even stronger and safer version of the UBS that was called upon to help stabilise the financial system in March, and of which all our key stakeholders can be proud.”
UBS completed its takeover of its troubled domestic rival in June and announced in August that it had ended a CHF 9 billion loss protection agreement and a CHF 100 billion public liquidity backstop that were put in place when the emergency bailout was agreed in March.
The bank’s shares rose to their highest level since late 2008 in August after its second-quarter results showed a net profit of $28.88 billion as a result of negative goodwill from the Credit Suisse acquisition.
Negative goodwill represents the fair value of assets acquired in a merger over and above the purchase price. UBS paid a discounted 3 billion Swiss francs ($3.33 billion) to acquire Credit Suisse in March, in a deal brokered by Swiss authorities to prevent the collapse of the storied but scandal-plagued lender.
The share price has eased slightly since then, but is still up more than 27% on the year.
UBS is also in the process of fully integrating Credit Suisse’s Swiss banking unit – a key profit centre – and is expected to cut a significant proportion of the legacy bank’s workforce.
In September, the month after UBS announced the decision to integrate the Swiss bank, UBS reported net new deposits of USD 33 billion in its Global Wealth Management and Personal and Corporate Banking (P&C) divisions, of which USD 22 billion came from Credit Suisse clients, and positive inflows in P&C.
The bank also announced earlier this year that it is targeting gross cost savings of at least $10 billion by 2026, when it hopes to have completed the integration of all of Credit Suisse Group’s businesses.
