Priya Patel
TLDR:
– UBS, the Swiss banking giant, reported a pretax loss of over $750 million in the fourth quarter of 2023.
– The loss was attributed to integration and consolidation expenses related to the merger with Credit Suisse.
UBS reported a pretax loss of more than $750 million in the fourth quarter of 2023 as the bank continued to integrate its rival Credit Suisse after a government-orchestrated merger. The loss included more than a half-billion dollars linked to an investment in SIX Group, Switzerland’s main stock market operator. The net loss for the quarter was $278 million. UBS expects to complete the merger of Credit Suisse by the end of the second quarter of 2024, and the merger of the two banks’ Swiss operations by the end of the third quarter. The bank plans to increase its dividend for the 2023 financial year by 27 percent and resume share buybacks in the second half of the year.
In terms of new assets, UBS reported net new assets of $22 billion in the fourth quarter, which was slower than the injection of new assets immediately after the merger was completed. For the full year, the bank took in $77 billion in new assets across its wealth-management and personal and corporate banking segments.
Operating expenses for UBS increased by 43% to more than $5 billion in the fourth quarter. This increase was due to consolidation and integration expenses related to the Credit Suisse merger, as well as higher compensation for financial advisors. Additionally, UBS faced a $60 million charge from the U.S. Federal Deposit Insurance Corp. in connection with the failures of Silicon Valley Bank and Signature Bank in the United States.
Despite the loss, UBS saw a 35% increase in revenue in the fourth quarter, reaching nearly $10.9 billion. However, underlying pretax profit decreased by over one-third compared to the third quarter, which the bank attributed to lower client activity and billable invested assets, as well as bank-levy expenses and the cost of the FDIC assessment.
Overall, UBS remains focused on restructuring and optimizing its combined businesses with Credit Suisse, as the two banks continue their merger process. The bank believes that while progress may not be linear over the next three years, its strategy is clear.
