Profit before tax USD (255m) driven by integration-related expenses; underlying1 PBT of USD 844m in the first full quarter since acquisition with positive operating leverage at the Group level and underlying PBT growth in GWM, P&C and AM compared to estimated underlying 2Q232
Net new money of USD 22bn in Global Wealth Management (GWM) driven by asset win-back, new clients and share-of-wallet gains; positive NNM in Credit Suisse Wealth Management (CS WM) for the first time since 1Q22
Net new deposits of USD 33bn across GWM and Personal and Corporate Banking (P&C), with USD 22bn from Credit Suisse clients; positive deposit inflows in P&C in September, the month after announcing the decision to integrate Credit Suisse (Schweiz)
Released USD ~1bn of CET1 capital through accelerated wind-down of Non-core and Legacy (NCL) assets; reduced RWA by USD 6bn and LRD by USD 52bn sequentially, primarily from active unwinds
Maintained a balance sheet for all seasons with 14.4% CET1 capital ratio and USD 195bn of total loss-absorbing capacity; issued USD 7.5bn of combined TLAC and benchmark OpCo debt with pricing in line with pre-acquisition levels
Achieved USD 3bn in gross run-rate saves in 9M23 vs. FY22, further progress expected in 4Q23
1 Underlying results exclude items of profit or loss that management believes are not representative of the underlying performance. Underlying results are a non-GAAP financial measure and alternative performance measure (APM). Refer to “Group Performance” and “Appendix-Alternative Performance Measures” in the financial report for the third quarter of 2023 for a reconciliation of underlying to reported results and definitions of the APMs.
2“Estimated underlying” combined results for 2Q23 are intended to reflect estimated underlying performance of UBS Group as if Credit Suisse were part of UBS for the entire second quarter. The estimated results reflect adjusted results of Credit Suisse AG for the full 2Q23 converted on an estimated basis from US GAAP to IFRS and aligned to the UBS presentation combined with the underlying results of UBS Group for 2Q23. Estimated results are estimates only and are intended to provide information on comparing performance of the Group in 3Q23 to 2Q23. Estimated results are not financial statements or pro forma financial information and are non-GAAP financial measures and alternative performance measures. Refer to the appendix to this media release for a reconciliation of these measures to reported results.
Second quarter 2023
2Q23 net profit of USD 29bn
UBS Group CEO Sergio Ermotti comments on our results for the second quarter of 2023.
Solid underlying results and strong liquidity and capital amid uncertain market conditions: On a reported basis, and including an increase in provisions of USD 665m related to the US residential mortgage-backed securities (RMBS) litigation matter, 1Q23 PBT was USD 1,495m (-45% YoY). Net credit loss expenses were USD 38m, compared with net expenses of USD 18m in 1Q22. Total revenues decreased 7% YoY, while operating expenses increased 9%, driven by the aforementioned provision. The cost/income ratio was 82.5%. Net profit attributable to shareholders was USD 1,029m (-52% YoY), with diluted earnings per share of USD 0.32. The return on CET1 capital was 9.1%.
On an underlying basis, 1Q23 PBT was USD 2,354m, (-22% YoY). Underlying revenues decreased 8% YoY, while operating expenses decreased 2%, or 1% when excluding FX. The cost/income ratio was 72.8% and the return on CET1 capital was 16.5%.
In the quarter, we repurchased USD 1.3bn of shares under our share repurchase program. We have temporarily suspended share repurchases following the announcement of the anticipated acquisition of Credit Suisse, and we intend to resume them as soon as possible.
Our capital position remained strong. The quarter-end CET1 capital ratio was 13.9% and the CET1 leverage ratio was 4.40%, both in excess of our guidance of ~13% and >3.7%, respectively. We also maintained healthy liquidity buffers with an LCR of 162% and an NSFR of 118%.
Continued client momentum with inflows in all regions: In the first quarter, we maintained positive momentum across the firm and attracted USD 28bn of net new money in GWM, of which USD 7bn came in the last ten days of March, after the announcement of our acquisition of Credit Suisse. We also saw USD 20bn in net new fee-generating assets1 in GWM, USD 14bn of net new money in AM (of which USD 18bn in money market), and CHF 0.9bn of net new investment products for Personal Banking. Overall, we saw broadly stable loan balances2 as loan growth in Switzerland offset deleveraging in other regions. As clients repositioned their investments in response to interest rate increases, we captured demand for higher yield into money market funds and US-government securities.
We delivered these results during a quarter characterized by persistent concerns about interest rates and economic growth exacerbated by questions about the stability of the banking system, especially in the US. Against this backdrop, private and institutional investors' activity remained muted.
In Americas, GWM attracted net new fee-generating assets1 of USD 4bn, with continued positive momentum in our SMA3 offering, which contributed USD 4.5bn of net new money in AM. In the quarter we also saw USD 8bn net new money in GWM, and continued momentum in advisor recruiting.
In Switzerland, we saw USD 8bn net new fee-generating assets,1 USD 2bn net new loans in GWM and P&C combined and USD 0.9bn net new investment products for Personal Banking (16% annualized growth).
In EMEA, we generated USD 3bn of net new fee-generating assets1 and net interest income rose by nearly 60% as we started to benefit from higher euro rates. We were also named best equities bank in EMEA4 and Europe financial bond house for the year.5
In APAC, we attracted USD 5bn of net new fee-generating assets1 contributing to a 17% net new fee-generating asset growth over the past 12 months, and we were recently named the best equity house in Asia and ANZ6 and best M&A bank in APAC by Global Finance.
Enhancing client franchises through the announced acquisition of Credit Suisse: We expect the combination with Credit Suisse to strengthen our position as a leading and truly global wealth manager, with around USD 5trn in invested assets. We also expect to reinforce our position as a leading universal bank in Switzerland, and to enhance our complementary investment banking and asset management capabilities, while adding strategic scale in the most attractive growth markets.
We intend to actively reduce the risk and resource consumption of Credit Suisse’s investment banking business. We plan for the combined Investment Bank (excluding assets and liabilities that we define as non-core) to account for around 25% of Group RWAs and to remain focused and strategically aligned to the products and capabilities that are most relevant to our wealth management clients.
While acknowledging the magnitude of, and complexity associated with, the integration and restructuring of Credit Suisse, we believe that this combination presents a unique opportunity to bring significant, long-term value to all of our stakeholders.
1 In GWM; net new fee-generating assets exclude the effects on fee-generating assets of strategic decisions by UBS to exit markets or services.
2 Loans and advances to customers in GWM and P&C, as well as customer brokerage receivables, which are presented in a separate reporting line on the balance sheet.
3 Separately managed accounts.
4 Global Finance, 2023.
5 International Financing Review, February 2023.
6 Australia and New Zealand.
A definition of each alternative performance measure, the method used to calculate it and the information content are presented under “Alternative performance measures” in the appendix to our 1Q23 report.
In case of any differences between the digital and the .pdf version of our quarterly reports, the .pdf version shall prevail.