The leading banking giant UBS Group AG (NYSE:UBS) today posted a record performance in its first set of quarterly earnings after the much-hyped acquisition and integration of Credit Suisse. UBS published its second-quarter earnings for 2023 with a net profit of $28.8 billion, incorporating only a single month of Credit Suisse earnings as the acquisition was completed in June. Investors and analysts were awaiting these results to gain insights into the effects of the deal and the internal dynamics of the newly formed bank.
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For Q2 2023 results, the company reported $28.93 billion in negative goodwill related to the Credit Suisse acquisition. The underlying profit before tax, which excludes negative goodwill, integration-related expenses, and acquisition costs, stood at $1.1 billion. The bank showcased a robust capital position, featuring a CET1 capital ratio of 14.4% and a CET1 leverage ratio of 4.8%.
Based in Switzerland, UBS Group is the leading banking institution in the world, providing banking, wealth management, and other financial services. In March 2023, UBS agreed to acquire Credit Suisse in a deal backed by Swiss authorities to avert a banking crisis.
The Integration
UBS announced plans to fully integrate Credit Suisse’s domestic bank in Switzerland, which will result in 3,000 job cuts. The bank projects more than $10 billion in cost savings by the end of 2026, as compared to a previous estimate of $8 billion by 2027. The majority of these savings are expected to result from workforce reduction measures. The two entities will remain separate until 2024, with a transition of customers into UBS expected to be completed by 2025.
Analysts highlighted the cost-effectiveness of this acquisition for UBS. The bank paid only $3.3 billion for the acquisition and gained a substantial asset base, strong client relationships, and a skilled workforce. However, they are cautious about the risks involved in executing this deal.
What is the Price Target for UBS?
Following a setback in March 2023, the UBS stock has demonstrated a recovery, particularly over the last three months, achieving a trading gain of 33.7%. Looking ahead, analysts are cautious about predicting substantial share price gains due to the already elevated trading levels.
Overall, the stock has received a Moderate Buy rating on TipRanks based on a total of nine recommendations from analysts. It includes five Buy, three Hold, and one sell ratings. The UBS share price prediction is $26.0, which is 2.8% higher than the current price.
