May 30, 2024

UBS Group stock jumped 9% in pre-market trading Tuesday after the bank reported that it has returned to profitability after being in the red for several consecutive quarters.

The Zurich-based lender reported a first-quarter net profit of $1.8 billion, breezing past Wall Street’s estimates and giving investors a positive signal.

“A little over a year ago, we were asked to play a critical role in stabilizing the Swiss and global financial systems through the acquisition of Credit Suisse and we are delivering on our commitments,” UBS CEO Sergio Ermotti said in a statement . “This quarter marks the return to reported net profits and further capital accretion — a testament to the strength of our business and client franchises and our ability to deliver significant progress on our integration plans while actively optimizing our financial resources.”

Shares of UBS traded at $27.60 on Tuesday before the bell. The stock pop erased some of the losses the lender saw in April.

UBS is still in the process of integrating its competitor, Credit Suisse, which it acquired last June for $3.25 billion — the largest banking takeover since the 2008 financial crisis, orchestrated by Switzerland’s government over concerns that Credit Suisse’s failure could have ripple effects on the international financial system.

In the first quarter following the rescue, UBS posted a record $29 billion quarterly profit thanks to an accounting gain from the deal — the biggest quarterly profit ever reported by a bank.

UBS’ absorption of Credit Suisse could take between three to five years. Ermotti told Bloomberg on Tuesday that the bank is hoping to complete the legal merger with Credit Suisse by May 31.

In its annual report released February, the bank announced plans to buy back $1 billion worth of shares in 2024 alone, with the hope of having share repurchases exceed pre-acquisition levels by 2026. Within that same timeframe, the bank hopes to reduce costs by about $13 billion.

Last month, the lender said it intends to buy back $2 billion worth of its shares over the next two years.

The bank completed a similar buyback in March, bringing in 5.01 billion Swiss francs ($5.52 billion), or 8.62 % of the share capital of UBS, over the course of two years. More than half of the shares that were bought back were used to complete its acquisition of Credit Suisse last July. The rest of those shares are expected to be canceled at next year’s annual shareholder meeting, the bank said.

Also in April, UBS offloaded $8 billion in assets to Apollo Global Management related to Atlas, the investment management agreement first established between Apollo and Credit Suisse in February 2023, as part of its cost-cutting efforts.

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