Multinational banking giant UBS Group AG (UBS) outperformed expectations from its second quarter results, thanks to its integration with former rival Credit Suisse. The merger between the two companies was finalized in May. UBS reported a net profit of $1.14 billion, comfortably surpassing the bank-complied analysts’ forecasts of $528 million. Profits were also driven by the bank’s effective cost management and solid performance of the Global Wealth Management and Investment Bank units.
As of writing, UBS shares gained around 4% on its local stock exchange in Switzerland. The U.S.-listed shares rose by more than 3% in pre-market trading.
UBS Group is a major global banking institution that provides a wide range of financial services. In March 2023, UBS agreed to acquire Credit Suisse, with support from Swiss authorities, to dodge a potential banking crisis.
UBS Q2 Highlights: What You Need to Know
UBS reported quarterly revenue of $11.9 billion, marking a growth of 25% from the same period last year. Among its segments, revenue from the Global Wealth Management unit rose by 15% to $6.05 billion, primarily attributed to the consolidation of Credit Suisse.
Meanwhile, the Investment Bank division’s revenue surged 38% year-on-year to $2.8 billion, driven by the strength in the Global Banking and Global Markets businesses. Global Markets delivered its best-ever second-quarter revenues. Meanwhile, underlying Global Banking revenues increased 55% year-over-year.
Further, UBS achieved an additional $0.9 billion in gross cost savings, bringing the total to approximately 45% of its cumulative annualized gross cost-savings target.
Analysts React to UBS’ Q2 Earnings
Analysts praised UBS’ solid results, but noted that the growth was driven by the bank’s non-core businesses. They also highlighted that the bank’s Wealth Management and Personal and Corporate banking divisions fell short of expectations.
Citigroup analyst Andrew Coombs mentioned that UBS delivered a strong performance, largely fueled by non-core operations. However, he thinks that the momentum is unlikely to continue in 2025 and beyond.
Are UBS Shares a Buy?
According to TipRanks consensus, UBS stock has received a Moderate Buy rating based on seven Buys, seven Holds, and one sell rating. The UBS share price prediction is $31.76, which is 8.6% higher than the current price.
