UBS Group Q3 Earnings & Revenues Increase Y/Y, Expenses Decline

Core Insights - UBS Group AG reported a significant turnaround in its financial performance for Q3 2024, achieving a net profit of $1.42 billion compared to a net loss of $715 million in the same quarter last year [1] UBS's Revenues & Expenses - Total revenues increased by 5% year over year to $12.3 billion [2] - Operating expenses decreased by 12% year over year to $10.3 billion [2] - Credit loss expenses rose by 27.4% year over year to $121 million [2] UBS Business Divisions' Performance - Global Wealth Management (GWM) reported an operating profit before tax of $1.1 billion, up 17.2% year over year, driven by higher recurring net fees and transaction-based income [4] - Asset Management's operating profit before tax surged to $151 million from $37 million in the prior year, primarily due to net gains from the sale of Brazilian real estate fund management and Credit Suisse Insurance Linked Strategies Ltd [5] - Personal & Corporate Banking reported an operating profit before tax of $846 million, down 11.6% year over year due to lower revenues [5] - The Investment Bank unit improved to an operating profit before tax of $405 million from a loss of $254 million in the previous year, attributed to higher revenues and lower operating expenses [6] - Non-Core & Legacy reported an operating loss before tax of $603 million, an improvement from a loss of $1.17 billion in the year-ago quarter [6] - Group Items reported an operating profit before tax of $45 million compared to a loss of $89 million in the prior year [7] UBS's Capital Position - Total assets increased by 4% from the previous quarter to $1.62 trillion [8] - Return on Common Equity Tier 1 (CET1) capital improved to 7.6% as of September 30, 2024, from negative 3.7% a year earlier [8] - Risk-weighted assets declined by 4.9% year over year to $519.4 billion [8] - CET1 capital decreased by 3.5% year over year to $74.2 billion [8] - Invested assets rose by 15% year over year to $6.2 trillion [8] UBS Ahead of Credit Suisse Integration Plan - UBS is executing its integration plans with a focus on de-risking the balance sheet and achieving cost reductions, delivering an additional $0.8 billion in gross cost savings during the quarter [9] - The company aims to achieve $7.5 billion in gross cost savings by the end of 2024 [9] - Significant progress has been made in migrating wealth management client accounts and data to UBS platforms, with milestones achieved in October 2024 [10] - UBS is on track to complete ongoing account transitions in Singapore and Japan by the end of 2024, with plans to begin transfers in Switzerland in Q2 2025 [10] - The company is positioned to enhance client experience and unlock further cost reductions towards the end of 2025 and into 2026, targeting $13 billion in gross cost savings by the end of 2026 [11] Overall Assessment - UBS's inorganic growth efforts and restructuring of its wealth management segment are expected to support financial performance, alongside a declining expense base [12]