UBS Group, the Swiss banking giant, reported a larger-than-expected net loss in Q3, attributed to the financial strain of integrating Credit Suisse (SIX:CSGN). Despite this setback, the combined wealth management business of UBS and Credit Suisse had a strong quarter, with net new money of $22 billion. This success reflects the bank's ability to regain client assets and attract new clients, leading to positive net new money results for Credit Suisse's wealth management business for the first time since Q1 2022.
The consolidation efforts boosted revenues by 21% to $5.8 billion and led to a substantial $29 billion net profit in Q2. However, restructuring costs resulted in a net shareholder loss of $785 million. The personal and corporate banking sector saw double revenue growth, surging by 156%, while asset management income rose by 46%. Investment banking only saw a modest increase of 6%.
In the wake of the unprecedented 'shotgun marriage' with Credit Suisse, UBS CEO Sergio Ermotti reported swift integration and profitability in the first quarter post-merger. The bank garnered $18 billion in net new money for wealth management, outstripping Goldman Sachs (NYSE:GS)' estimate, inclusive of $3 billion from Credit Suisse.
Now managing $5 trillion in assets, UBS is addressing the client fund exodus from Credit Suisse by offering above-market deposit rates and retaining clients who had funds in both global banking giants. As part of their cost-saving measures, UBS has cut down its headcount from 119,100 to 115,981 post-merger and plans further job cuts, including 3,000 in Switzerland alone. This strategy is key to stabilizing the merged entity after the groundbreaking merger between two of the world's systemically important banks.
Despite the financial burden of the merger, UBS CEO Sergio Ermotti remains optimistic about the future, as the bank focuses on building a stronger and safer bank through an accelerated build-down of non-core assets and risk-weighted assets.
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