UBS is sending clear signals to shareholders, politicians and the economy as well as the supervisory authorities. It emphasizes the importance of the domestic market and underlines the strength of its balance sheet.
UBS presented its second quarter financial statements on Wednesday morning. Some of the numbers are still heavily influenced by the takeover of Credit Suisse (CS) and the comparable period in 2023 only includes the results of one month after the takeover.
With the half-year results, the bank shows that it is fulfilling all of its obligations towards our stakeholders, stated CEO Sergio Ermotti in a press release. The financial statements also contain messages for the stakeholders.
Share Buybacks: Much Powder Used
UBS began buying back shares in June. Now it has announced that it has already repurchased $467 million by 9 August 2024 with a target of up to $1 billion for the overall year.
UBS' share price has developed positively since the CS rescue was announced in March 2023 but it has come under pressure in the last few weeks. On Wednesday morning, the shares were traded on the Swiss stock exchange at 25.60 francs. The fact that the share buybacks are continuing is fundamentally supportive of the share price. However, UBS has already used up almost half of its powder for the rest of the year in just over two months.
«Best Bank in Switzerland»
The major bank also points out that it was named the best bank in the world at the prestigious «Euromoney Awards for Excellence 2024» in July. UBS was able to accept this award largely because of its contribution to the CS rescue and thus to the stabilization of the financial system.
What is even more important to the bank is that it was also able to win the award as the best bank in Switzerland on this occasion (for the tenth time since 2012). It uses this opportunity to calculate that since the CS takeover it has accepted net new deposits of around 30 billion francs from customers in Switzerland and has granted or extended loans worth 85 billion francs during this period. This means that the total amount of loans granted to Swiss customers currently amounts to a total of 350 billion francs.
Core Business in Home Market
In doing so, UBS is signaling to politicians, businesspeople and the public in Switzerland that it intends to continue to play a central role in its core business in this country. In recent months, fears have been repeatedly expressed that UBS could exercise too much restraint in the mortgage business or corporate customer loans, reducing competition and leading to more expensive conditions for bank customers, which would be damaging to the economy.
The Swiss bank is sending another message to regulators. The Federal Council, the Financial Market Supervisory Authority and the Swiss National Bank have been insisting for months that the bank should hold more equity capital in the future, though they have not provided specific figures. UBS emphasizes that it remains strongly capitalized and has a solid and resilient balance sheet in any environment. It proves this with key figures including its core capital ratio, leverage ratio and liquidity ratio.
First Major Bank Merger in 25 Years
UBS also repeatedly emphasizes the progress that has been made in integrating CS and eliminating legacy issues. The risk-weighted assets in the non-core and legacy areas have been reduced by 42 percent since the second quarter of 2023. Compared to the previous quarter, they fell by $8 billion, largely thanks to active settlement. The merger of the companies is progressing on the legal level as well, as is the transfer to the UBS customer platform on the operational level.
In doing so, UBS wants to demonstrate to the outside world that it has full control of the demanding process of merging two major banks. The last such exercise in this country with the Swiss Bank Corporation and the Swiss Bank Association was a full quarter of a century ago.
