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UBS Group AG (UBS - Free Report) reported a first-quarter 2024 net profit attributable to shareholders of $1.75 billion, which surged 70.6% from the year-ago quarter.
Results benefited from a rise in total revenues, driven in part by the acquisition of Credit Suisse. However, an increase in operating expenses, along with a significant rise in credit loss expenses, is a near-term concern.
The performance of the Asset Management, Personal & Corporate Banking and Investment Bank divisions was impressive. However, Global Wealth Management, Non-core and Legacy and Group items segments did not perform well.
Revenues & Expenses Rise
UBS’ total revenues jumped 45.7% year over year to $12.74 billion.
Operating expenses increased 42.3% year over year to $10.26 billion.
UBS Group reported total credit loss expenses of $106 million, which increased significantly from $38 million in the year-ago quarter.
Business Divisions’ Performance
Global Wealth Management’s first-quarter operating profit before tax was $1.1 billion, down 9.1% year over year. The fall was mainly due to a rise in operating expenses, largely from the consolidation of Credit Suisse expenses.
Asset Management’s operating profit before tax increased 16.8% year over year to $111 million. The rise was mainly driven by the consolidation of Credit Suisse revenues.
Personal & Corporate Banking reported operating profit before tax of $859 million, up 43.6% year over year. The rise was driven by an increase in revenues, mainly due to the consolidation of Credit Suisse revenues.
The Investment Bank unit’s operating profit before tax was $555 million, up 12.8% year over year. The improvement was a result of higher Global Banking revenues, partially offset by lower Global Markets revenues.
Non-core and Legacy reported operating loss before tax of $46 million in the reported quarter compared with a loss of $676 million in the year-ago quarter.
Group items reported operating loss before tax of $320 million compared with a loss of $225 million in the year-ago quarter.
Capital Position Improves
Total assets increased 52.6% from the previous quarter’s end to $1.61 trillion. The increase was mainly driven by the consolidation of Credit Suisse assets.
UBS’ return on Common Equity Tier 1 (CET1) capital was 9% as of Mar 31, 2024, down from 9.1% as of Mar 31, 2023.
The risk-weighted assets surged 63.7% year over year to $526.4 billion.
The CET1 capital rallied 75.3% year over year to $78.1 billion. As of Mar 31, 2024, UBS' invested assets were $5.85 trillion, up 39.8% year over year.
Our Take
UBS’ acquisition of Credit Suisse has helped enhance its capabilities in wealth and asset management and augment the company’s strategy of growing capital-light businesses. The company’s strong capital position, expansion strategies and business restructuring initiatives support its financials.
Deutsche Bank (DB - Free Report) reported a first-quarter 2024 profit attributable to its shareholders of €1.3 billion ($1.41 billion), up 10.1% year over year. The Germany-based lender reported a profit before tax of €2 billion ($2.17 billion), up 10% year over year.
DB’s results were positively impacted by higher net revenues and lower expenses. This led investors to turn bullish on the stock, resulting in a gain of 8.7%. However, higher provision for credit losses was an offsetting factor.
Barclays (BCS - Free Report) reported first-quarter 2024 net income attributable to ordinary equity holders of £1.55 billion ($1.97 billion), down 13% year over year.
BCS recorded lower revenues in the quarter, which was a negative. However, a decline in operating expenses, along with lower credit impairment charges, aided the results to some extent.
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UBS Group (UBS) Q1 Earnings & Revenues Jump Y/Y, Expenses Rise
UBS Group AG (UBS - Free Report) reported a first-quarter 2024 net profit attributable to shareholders of $1.75 billion, which surged 70.6% from the year-ago quarter.
Results benefited from a rise in total revenues, driven in part by the acquisition of Credit Suisse. However, an increase in operating expenses, along with a significant rise in credit loss expenses, is a near-term concern.
The performance of the Asset Management, Personal & Corporate Banking and Investment Bank divisions was impressive. However, Global Wealth Management, Non-core and Legacy and Group items segments did not perform well.
Revenues & Expenses Rise
UBS’ total revenues jumped 45.7% year over year to $12.74 billion.
Operating expenses increased 42.3% year over year to $10.26 billion.
UBS Group reported total credit loss expenses of $106 million, which increased significantly from $38 million in the year-ago quarter.
Business Divisions’ Performance
Global Wealth Management’s first-quarter operating profit before tax was $1.1 billion, down 9.1% year over year. The fall was mainly due to a rise in operating expenses, largely from the consolidation of Credit Suisse expenses.
Asset Management’s operating profit before tax increased 16.8% year over year to $111 million. The rise was mainly driven by the consolidation of Credit Suisse revenues.
Personal & Corporate Banking reported operating profit before tax of $859 million, up 43.6% year over year. The rise was driven by an increase in revenues, mainly due to the consolidation of Credit Suisse revenues.
The Investment Bank unit’s operating profit before tax was $555 million, up 12.8% year over year. The improvement was a result of higher Global Banking revenues, partially offset by lower Global Markets revenues.
Non-core and Legacy reported operating loss before tax of $46 million in the reported quarter compared with a loss of $676 million in the year-ago quarter.
Group items reported operating loss before tax of $320 million compared with a loss of $225 million in the year-ago quarter.
Capital Position Improves
Total assets increased 52.6% from the previous quarter’s end to $1.61 trillion. The increase was mainly driven by the consolidation of Credit Suisse assets.
UBS’ return on Common Equity Tier 1 (CET1) capital was 9% as of Mar 31, 2024, down from 9.1% as of Mar 31, 2023.
The risk-weighted assets surged 63.7% year over year to $526.4 billion.
The CET1 capital rallied 75.3% year over year to $78.1 billion. As of Mar 31, 2024, UBS' invested assets were $5.85 trillion, up 39.8% year over year.
Our Take
UBS’ acquisition of Credit Suisse has helped enhance its capabilities in wealth and asset management and augment the company’s strategy of growing capital-light businesses. The company’s strong capital position, expansion strategies and business restructuring initiatives support its financials.
UBS Group AG Price, Consensus and EPS Surprise
UBS Group AG price-consensus-eps-surprise-chart | UBS Group AG Quote
Currently, UBS Group sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Performance of Other Foreign Banks
Deutsche Bank (DB - Free Report) reported a first-quarter 2024 profit attributable to its shareholders of €1.3 billion ($1.41 billion), up 10.1% year over year. The Germany-based lender reported a profit before tax of €2 billion ($2.17 billion), up 10% year over year.
DB’s results were positively impacted by higher net revenues and lower expenses. This led investors to turn bullish on the stock, resulting in a gain of 8.7%. However, higher provision for credit losses was an offsetting factor.
Barclays (BCS - Free Report) reported first-quarter 2024 net income attributable to ordinary equity holders of £1.55 billion ($1.97 billion), down 13% year over year.
BCS recorded lower revenues in the quarter, which was a negative. However, a decline in operating expenses, along with lower credit impairment charges, aided the results to some extent.