Consolidated financials for 2Q23 and 1H23 include results for the former Credit Suisse business from 1 June 2023
2Q23 net profit of USD 29bn including USD 29bn of negative goodwill from CS acquisition to sustain USD 238bn assumed RWA; underlying1 PBT of USD 1.1bn, of which USD 2.0bn from the UBS sub-group
Strong capital position maintained with CET1 capital ratio of 14.4% and CET1 leverage ratio of 4.8%
Credit Suisse (Schweiz) AG to be fully integrated following a thorough evaluation focused on creating lasting value for all stakeholders; closing of legal entity merger expected in 2024
Credit Suisse AG reports a 2Q23 US GAAP pre-tax loss of CHF 8.9bn; CHF 4.3bn excluding acquisition-related effects; adjusted pre-tax loss of CHF 2.1bn2
Credit Suisse franchise broadly stabilized with net deposit inflows of USD 18bn in 2Q23, momentum continuing into 3Q23
UBS Global Wealth Management recorded highest second-quarter net new money in over a decade at USD 16bn, momentum continuing into 3Q23
Non-core and Legacy perimeter defined with clear plans to substantially reduce capital consumption by year-end 2026 with USD 9bn in RWAs exited in 2Q23
Plans to achieve greater than USD 10bn gross cost reductions, C/I ratio of <70%, and RoCET1 of around 15% exit-rate 2026
1 Excluding negative goodwill, integration-related expenses and acquisition costs
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.
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