UBS posts $29 billion second-quarter profit in first results since Credit Suisse takeover

UBS on Thursday posted a second-quarter profit of $28.88 billion in its first quarterly earnings since Switzerland’s largest bank completed its takeover of stricken rival Credit Suisse.

Analysts had projected a net profit of $12.8 billion for the three months to the end of June, according to a Reuters poll.

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.

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 ($3.4 billion) to acquire Credit Suisse in March.

“Two and a half months since closing the Credit Suisse acquisition, we are wasting no time in delivering value for all our stakeholders from one of the biggest and most complex bank mergers in history,” UBS CEO Sergio Ermotti said in a statement.

“We are winning back the trust of clients, reducing costs and taking the necessary actions to create economies of scale that will allow us to better focus our resources and target investments for future growth.”

Here are some other highlights:

• CET 1 capital ratio, a measure of bank liquidity, reached 14.4% versus 14.2% in the second quarter of 2022.
• Return on tangible equity (excluding negative goodwill, integration-related expenses, and acquisition costs) was 4.3%.
• CET1 leverage ratio was 4.8% versus 4.4% a year ago.

Credit Suisse’s Swiss bank to be fully absorbed

Credit Suisse’s stalwart domestic banking unit will be fully integrated into UBS, the group also announced on Thursday, with a merging of legal entities expected to close in 2024.

The fate of Credit Suisse’s flagship Swiss bank, a key profit center for the group and the only…