Swiss financial major UBS (NYSE:UBS) posted its first quarterly profit since its takeover of Credit Suisse. It expects the Credit Suisse deal to be completed on May 31.
In Q1, UBS’ revenue jumped by 45.8% year-over-year to $12.74 billion. The figure exceeded expectations by $840 million. Furthermore, its EPS of $0.52 came in significantly higher than the year-ago $0.32 mark.
UBS’ Stellar Q1 Performance
The quarter was marked by continued franchise strength and client momentum for UBS. It added nearly $27 billion in net new assets in its Global Wealth Management (GWM) unit. Importantly, revenues in its GWM and Personal and Corporate Banking (P&C) units rose by 28% and 81% respectively, largely due to a boost from the Credit Suisse consolidation. Concurrently, revenues in its Asset Management (AM) and Investment Bank (IB) units shot up by 54% and 16%, respectively.
Furthermore, a focus on streamlining its operations helped the company achieve additional gross cost savings of nearly $1 billion in Q1. This takes UBS’ annualized exit rate gross cost savings to around $5 billion. Notably, it aims to reach about $13 billion in cumulative cost savings by the end of 2026.
UBS’ Forward Guidance
With its merger with Credit Suisse anticipated to be completed on May 31, the company plans to transition to a single U.S. intermediate holding entity in Q2. In Q1, UBS’ CET1 capital ratio stood at 14.8% and its CET1 leverage ratio stood at 4.9%. For the upcoming quarter, UBS anticipates a low-to-mid single-digit decline in net interest income in its Global Wealth Management unit. Similarly, it foresees a mid-to-high single-digit decline in net interest income in its Personal and Corporate Banking unit owing to lower interest rates.
What Is the Price Target for UBS Stock?
Today’s price gains further add to the nearly 40% rally in UBS’ share price over the past year. Overall, the Street has a Moderate Buy consensus rating on the stock, alongside an average UBS price target of $31.98. However, analysts’ views on UBS could see a revision following today’s earnings report.
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