Investing.com — UBS Group AG (SIX:)’s second quarter 2024 performance was mixed. While the Investment Banking division delivered record results, fueled by strong equity and fixed income trading, other segments presented challenges.
The non-core unit exceeded expectations with significant reductions in risk-weighted assets and costs, demonstrating progress in the bank’s restructuring efforts.
However, the global asset management division faced headwinds from higher advisor compensation costs, resulting in lower profits. In addition, the Swiss banking unit’s net interest income fell short of expectations due to slower deposit rate adjustments.
Despite these challenges, UBS’s overall cost-cutting initiatives and asset management performance were well received by analysts at Jefferies and RBC Capital Markets, who expressed optimism about the bank’s trajectory for the remainder of the year. The bank’s CET1 ratio remained strong, but tangible net asset value per share was slightly below estimates.
“UBS is delivering faster results on the factors it can control – cost savings and NCL phasing out – which should provide a cushion against regulatory headwinds and a potentially more challenging operating environment,” RBC analysts said.
Looking ahead, UBS maintains its cautious outlook, citing potential headwinds from net interest income and ongoing restructuring costs.
While the bank has increased its cost savings target for this year, it also faces risks related to the integration of Credit Suisse and potential economic uncertainties.
Ultimately, UBS’s valuation is a complex interplay of Investment Banking’s strong performance, ongoing challenges in other divisions and the successful execution of its strategic initiatives.
