UBS Makes Progress on Credit Suisse Integration

DBRS Morningstar has released a commentary on UBS Group AG (UBS or the Group).

Key highlights include:

• UBS announced changes to the legal entity structure including the legal merger between UBS AG and Credit Suisse AG planned for 2024, and the legal merger between the Swiss entities Credit Suisse (Schweiz) AG and UBS Switzerland AG, also planned for 2024.
• UBS disclosed the perimeter of non-strategic assets and businesses. Overall, UBS is retaining only USD 9 billion risk-weighted assets (excluding operational risk) from Credit Suisse’s Investment Banking (IB) in its core IB.
• Credit Suisse’s Wealth Management activities reported positive net new assets flows Quarter-to-Date (up to the 28th of August 2023), which is an important development.
• UBS’ operating profit before tax was USD 29,239 million in Q2 2023. However, excluding negative goodwill of USD 28,925 million, as well as integration-related expenses and acquisition costs of USD 830 million, UBS’ operating profit before tax was USD 1,144 million in Q2 2023.

“We consider net new assets/money inflows in the combined Group’s wealth management businesses demonstrate UBS’ capacity to restore confidence.” said Vitaline Yeterian, Senior Vice President, Global Financial Institutions at DBRS Morningstar. “UBS’ Q2 2023 results confirm that the Group has been able to maintain business momentum in a complex environment, while we also note the underlying profit before tax of the combined entity is expected to be around break-even in Q3 2023 and positive in H2 2023.”