UBS reports pre-tax loss in 3Q but says benefits of Credit Suisse merger gather steam

UBS has reported a $255 million pre-tax loss, shed some 4,000 jobs globally, cut costs faster than expected, and reaped billions in asset inflows in the third quarter

Switzerland Earns UBS (' KEYSTONE / ENNIO LEANZA)

UBS reported Tuesday a $255 million pre-tax loss as the giant Swiss bank shed some 4,000 jobs globally, cut costs faster than expected, and reaped billions in asset inflows in the third quarter while moving forward with its government-orchestrated merger with rival Credit Suisse.

The Zurich-based bank said underlying profit before taxes came in at $884 million in the first full quarter since the merger was completed in June. Government authorities in Bern shepherded through the deal with bank chiefs to stave off a collapse of Credit Suisse and avert a financial crisis.

UBS, which is striving to rid of overlap between the two former rival banks, said underlying operating expenses of $1.2 billion in non-core, legacy operation stemmed from efforts to reduce headcount and outsourcing costs.

The bank said it was one quarter ahead of schedule in reaping savings from the restructuring operations, and the headcount was down more than 4,000 during the third quarter.

UBS tallied $33 billion in net new deposits in its wealth management and personal and corporate banking segments, two-thirds of that from Credit Suisse clients.

“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," UBS chief executive Sergio Ermotti said in a statement.

Shares of the bank rose more than 3% in Tuesday morning trading on the Six Swiss Exchange in Zurich, and have gained more than 32% so far this year.

Deutsche Bank analysts Benjamin Goy and Sharath Kumar, who affirmed their “buy” rating on UBS shares, said the pre-tax figures topped the consensus analysts' expectations and said: “UBS reported another good quarter in our view.”

UBS has said the two banks will operate separately until a planned legal merger next year, and the Credit Suisse brand — with its storied yet recently troubled legacy in Swiss finance — would remain “until we complete the migration of clients to our system, which we expect in 2025.”