Market Analysis

UBS surprised analysts on Tuesday with its first quarterly profit since absorbing Credit Suisse, nearly tripling estimates for January-March. The wealth management division saw a substantial $27 billion increase in net new assets, a significant jump from the previous quarter.

Despite this success, UBS cautioned about potential challenges ahead due to lower lending and deposit volumes, along with decreased interest rates in Switzerland, which might impact the wealth management segment in the second quarter of 2024.

Net income attributable to shareholders stood at $1.8 billion, surpassing expectations and marking a considerable improvement from the same period last year. Analysts from Vontobel highlighted the strong performance driven by both core and non-core businesses inherited from Credit Suisse.

UBS reported achieving $1 billion in additional cost savings in the first quarter, bringing the total savings since the merger to $5 billion, with a target of $1.5 billion more by year-end. Despite initial losses after the merger, investors have been optimistic about UBS's future prospects, reflected in a 40% increase in its shares over the past year.

The merger, set to be legally finalized on May 31, is seen as a critical step for UBS, although challenges remain in integrating IT systems, migrating clients, and streamlining the workforce. With a balance sheet now exceeding $1.6 trillion, UBS faces scrutiny from regulators concerned about systemic risks. However, UBS expressed confidence in its financial position to meet its 2024 capital return targets, including plans to repurchase shares and increase dividends.

Paraphrasing text from "Reuters" all rights reserved by the original author.