UBS has demonstrated in recent months that it can stand firm despite the turmoil surrounding the takeover of Credit Suisse and the associated integration challenges. With a net profit of $5.1 billion in 2024, the large bank not only exceeded market expectations but also showed that it can navigate a increasingly difficult global environment. Of course, there is still a lot to be done – whether it’s the integration of Credit Suisse, regulatory uncertainties, or the geopolitical tensions.
The takeover of Credit Suisse was undoubtedly one of the biggest steps in UBS’s recent history and a central building block in 2024. While the integration is on track, it remains a delicate matter, particularly with regard to the migration of customer data and the upgrading of IT systems.
By the end of 2024, UBS managed a total of $6.087 billion in assets, which was a reduction of over 100 billion from just three months earlier. UBS attributes this decline primarily to currency effects. However, it is clear that the bank is operating in a challenging environment. The US elections and geopolitical tensions have had a significant impact on investor behavior in recent months.
For UBS, it is crucial that the integration of Credit Suisse goes smoothly and quickly. By the end of 2026, the integration is expected to be largely complete, which should also bring about significant cost savings. By the end of the year, UBS plans to have already moved most of Credit Suisse’s customer accounts and portfolios in the asset management area to its own platform. In the long term, UBS aims to achieve cost savings of a total of $13 billion through this integration.
Despite the challenges in asset management and the losses due to currency effects, which have affected the bank’s total assets, UBS’s investment bank has surprisingly performed well. With a pre-tax profit of $479 million in the fourth quarter, the division has exceeded analyst expectations, which had only expected $119 million. This shows once again that UBS is flexible and can still perform well in difficult market phases with its broad business scope.
Especially the investment bank’s revenues profited from a stable demand from institutional and private clients. The positive market conditions, which were characterized by a growing risk appetite of investors following the US elections, also benefited the investment bank. It was able to take advantage of the increased demand for financial services and thus make a significant contribution to UBS’s overall result.
The area that is traditionally considered the heart of UBS – asset management – could only book $18 billion in new inflows in the fourth quarter, which was behind the optimistic expectations of analysts, who had expected $24 billion. UBS also fell short of its expectations for the full year, with new inflows of $93 billion, instead of the predicted $103 billion.
The development of the assets under management clearly shows the pressure the bank is under in the asset management area. By the end of December 2024, the assets under management stood at $6.087 billion, a decline of over 100 billion from September. This decline is not only due to negative currency effects but also the challenging market environment and the volatile mood of investors.
Despite the short-term setbacks, UBS remains the world’s largest asset manager and is optimistic for the long term. The bank has invested in its business model in recent years and has expanded its presence in important markets, such as the US. In this respect, UBS remains on a growth course, despite the short-term challenges.
Another aspect of significance in the context of the integration and the associated restructuring is the reduced headcount. In the fourth quarter of 2024, UBS reduced its full-time workforce by around 600 to a total of 108,648. This is in line with the announced cost savings and the bank’s restructuring efforts. UBS is still pursuing its goal of reducing its operating costs, particularly in the context of the integration of Credit Suisse and the associated synergy effects.
The bank has already achieved cost savings of $7.5 billion by the end of 2024 and aims to increase these savings to a total of $13 billion by the end of 2026. This should further ease the pressure on the bank’s earnings and put it in a stronger position to respond to future challenges.
Despite the challenges in some areas, UBS remains generous to its shareholders. The bank announced a dividend of $0.90 per share for 2024, a 29% increase, which is a clear signal that UBS has achieved its financial goals despite the recent setbacks and remains in a solid financial position.
Moreover, UBS plans to repurchase up to $3 billion in shares in 2025. In the first half of the year, repurchases of $1 billion are planned, while in the second half, another $2 billion will be repurchased. However, these repurchases are dependent on the development of the regulatory framework in Switzerland, particularly with regard to possible changes in the capital requirements.
For 2025 and beyond, UBS remains optimistic, despite the geopolitical uncertainties and regulatory challenges. The bank relies on its strong core competencies in asset management and investment banking, as well as the planned cost savings in the context of the integration of Credit Suisse.
A big focus will be on the regulatory changes. Specifically, the Swiss capital requirements could become a significant issue for UBS, as it is feared that the bank may be subject to additional capital requirements due to its size, which could impair its ability to return capital to its shareholders. The coming months will show how the regulatory framework in Switzerland changes and how UBS reacts to it.
Not least, the bank will also continue to pursue its strategy in the US, where it aims to build its market position and achieve annual asset inflows of around $200 billion by 2028. This market remains of central importance for UBS, especially in times when the domestic markets in Switzerland and Europe are growing less strongly.
UBS has shown a solid performance in 2024 and has exceeded market expectations. The integration of Credit Suisse, however, remains a major challenge and there are setbacks in the asset management area. Nevertheless, UBS remains one of the world’s leading banks and has created a stable financial basis through cost savings, the announced dividend and share repurchases.
Overall, the bank can look optimistically to the future – but the coming years will show whether it can achieve its goals in the face of regulatory uncertainties, geopolitical tensions and changing market conditions. UBS remains on an interesting, but also risk-prone, course.