UBS Group (UBSG) Q2 2024 earnings summary

Executive summary

• Achieved net profit of $1.1bn (CHF 1.1bn) in 2Q24, with strong underlying profitability and continued cost reduction progress post-Credit Suisse acquisition.

• Integration of Credit Suisse progressing, with nearly half of targeted gross cost savings captured and significant de-risking of legacy assets; mergers of parent and Swiss banks completed.

• Maintained robust capital and liquidity positions, with CET1 capital ratio at 14.9% and total loss-absorbing capacity at $198bn.

• Net new assets of $127bn in Global Wealth Management since acquisition, with invested assets totaling $5.9trn.

• Recognized by Euromoney as Switzerland’s and World’s Best Bank in 2024.

Financial highlights

• Q2 2024 net profit was $1.1bn; diluted EPS $0.34; underlying RoCET1 8.4%; cost/income ratio 80.6% underlying.

• Total Q2 revenues $11.9bn, up 25% year-over-year; net fee and commission income up $1.4bn to $6.5bn.

• Underlying operating expenses $10.3bn, including $1.3bn integration-related expenses; OpEx up 22% YoY.

• Credit loss expense $95m, mainly from Swiss corporate loan book.

• LCR at 212%, TLAC at $198bn.

Outlook and guidance

• On track to achieve 2026 financial targets, with further cost, capital, and tax synergies expected; targeting underlying RoCET1 of ~15% by 2026 exit rate.

• Full-year 2024 NII in GWM expected to be roughly flat vs. 4Q 2023 annualized, with a low- to mid-single-digit % sequential drop in Q3.

• Basel III Final implementation in January 2025 expected to increase RWA by ~5%.

• Effective tax rate expected to be around 35% in H2 2024, normalizing to ~23% by 2026.

• Non-core and Legacy expected to record an underlying pre-tax loss of ~$1bn in 2H24.