– 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

“We are executing on the integration of Credit Suisse at pace and have delivered underlying profitability for the Group in the first full quarter since the acquisition. Our clients have continued to place their trust and confidence in us, contributing to strong inflows across wealth management and our Swiss franchise. We are optimistic about our future as we build an even stronger and safer version of the UBS that was called upon to stabilize the financial system in March and one that all of our key stakeholders can be proud of.” Sergio P. Ermotti, Group CEO

Delivered underlying profitability in the first full quarter since the acquisition

For the third quarter of 2023 we reported an underlying profit before tax of USD 0.8bn, compared to an estimated underlying loss for the second quarter of 2023 for the combined firm2. The improvement was driven by positive operating leverage at the Group level. GWM, P&C and AM delivered underlying PBT growth sequentially.

Net new money of USD 22bn in GWM and net new deposits of USD 33bn across GWM and P&C

Our consistent dedication to clients continues to be rewarded by their confidence and trust in UBS. This was reflected in another quarter of strong flows. We have now stabilized Credit Suisse and continued to grow our franchise through new client acquisition and share of wallet gains, as well as the continued success of our client retention and win-back strategy.

CS WM’s quarterly net new money has now turned positive for the first time in a year and a half, with USD 3bn in the third quarter. UBS wealth management’s USD 18bn in net new money is the second highest third quarter result in over a decade. Net new money was positive across all regions, with particular strength in APAC. Net new fee generating assets at UBS were also strong at USD 21bn, representing a 6% annualized growth rate.

Our efforts to win back assets resulted in USD 22bn of our USD 33bn of net new deposits across GWM and P&C coming from Credit Suisse clients. Following our decision to integrate Credit Suisse (Schweiz), we undertook extensive outreach to re-assure our clients that we remain committed to serving with the best capabilities of both institutions. We reiterated that their credit limits across both banks will remain in place. To date, client reactions have been broadly constructive and net new deposits in P&C were positive in both our personal and corporate banking client segments in September.

Accelerated NCL wind-down and initiated significant operating expense reductions

We accelerated the wind-down of non-core assets, releasing USD ~1bn of CET1 capital. We reduced RWA by USD 6.4bn and LRD by USD 52.2bn during the quarter. 80% of the credit and market risk RWA reduction was due to accelerated active unwinds which were executed above marks. Non-operational risk RWA has been reduced by nearly one third since 1Q23 and the natural RWA run-off profile through 2026 has improved by USD 3bn. The finalized perimeter of NCL contains USD 30bn in operational risk RWA, which we expect to reduce by at least 50% by the end of 2026 as a function of the natural decay across the portfolio.

Underlying operating expenses of USD 1.2bn in NCL reflect the benefits from early actions to reduce headcount and outsourcing costs. We expect the underlying cost base in NCL to decrease further in the fourth quarter of 2023.

Delivered approximately USD 3bn in gross run-rate saves in 2023 to date

Underlying Group operating expenses of USD 9.6bn were down around 5% compared to estimated underlying operating expenses for the combined Group for the second quarter of 2023 as we continued to execute our plans to reduce costs in NCL, restructure Credit Suisse’s investment bank and remove duplication across our operations. Annualized gross run-rate saves at the end of the third quarter of 2023 were around USD 3bn, achieving our year-end target one quarter earlier than initially communicated. We expect further progress in the fourth quarter of 2023.

Managed headcount for the combined group is down over 4,000 in the quarter and around 13,000 compared to an overall pro-forma combined basis as of 2022 year end.

Maintained a balance sheet for all seasons

We are positioning UBS to be an even stronger and safer global financial institution that provides greater value to clients and shareholders, supported by a balance sheet for all seasons. In the third quarter of 2023, we maintained strong capital and liquidity positions, well above regulatory requirements. The quarter-end CET1 capital ratio was 14.4% and the CET1 leverage ratio was 4.9%, both in excess of our current guidance of ~14% and >4.0%, respectively. Total loss-absorbing capacity was USD 195bn. We issued USD 4.5bn of TLAC and USD 3bn of benchmark OpCo debt in the quarter, which were priced at similar levels to where UBS debt was priced before the rescue of Credit Suisse.

Outlook

Central banks have paused interest rate increases, but uncertainties remain in terms of the appropriate level of interest rates that will allow inflation to converge to their targets. As a result, the outlook for economic growth, asset valuations and market volatility remains difficult to predict. In addition, the ongoing geopolitical tensions including the conflicts in the Middle East and Ukraine continue to cloud the macroeconomic outlook. This, in addition to normal seasonality, may affect wealth management and institutional clients’ transactional activity in the fourth quarter of 2023. We also expect clients to continue to shift cash holdings from deposits into higher-yielding products, resulting in similar sequential net interest income performance. As we continue to execute on our strategy, growth and integration plans, our focus remains on offsetting some of these ongoing challenges by helping clients to manage the inherent risks and opportunities, gaining share of wallet and actively winding down our non-core assets and costs.

Asset Management (AM) PBT USD 31m, underlying PBT USD 156m

Total revenues increased 46% to USD 755m, reflecting the consolidation of Credit Suisse revenues. Operating expenses increased 93% to USD 724m, mainly reflecting the consolidation of Credit Suisse expenses. The increase was also due to integration-related expenses, adverse foreign currency effects, and increases in technology and personnel expenses. Excluding integration-related expenses of USD 125m, underlying operating expenses were USD 599m. The cost/income ratio was 95.9% and the underlying cost/income ratio was 79.3%. Invested assets decreased 3% sequentially to USD 1,559bn. Net new money was USD (1.5bn), and USD (8.3bn), excluding money market flows and associates.

Investment Bank (IB) PBT USD (230m), underlying PBT USD (116m)

Total revenues increased 6% to USD 2,151m, mainly due to the consolidation of Credit Suisse revenues, which included USD 251m of accretion of PPA adjustments on financial instruments. Underlying total revenues decreased, largely driven by lower Global Markets revenues, partly offset by higher Global Banking revenues. Excluding the aforementioned accretion effects, underlying total revenues were USD 1,900m. Net credit loss expenses were largely unchanged. Operating expenses increased 50% to USD 2,377m, largely due to integration-related expenses, the consolidation of Credit Suisse expenses, and higher technology expenses. Excluding integration-related expenses of USD 365m, underlying operating expenses were USD 2,012m. The cost/income ratio was 110.5% and the underlying cost/income ratio was 105.9%.

The full results can be read here 

Source: UBS