UBS reported a 52% annual drop in net profit on Tuesday amid a legacy litigation matter, but maintained it is a “source of stability” for its clients during periods of high uncertainty.
These are the bank’s first results since announcing its takeover of rival Credit Suisse.
UBS said net profit came in at $1.03 billion for the first quarter, coming in well below analyst expectations of a net profit near $1.75 billion for the period, according to Refinitiv.
The hit in net income came from increased provisions of $665 million following a U.S. residential mortgage-backed securities litigation matter.
Speaking to CNBC’s Geoff Cutmore, UBS CEO Sergio Ermotti — who resumed his post on April 5 — said, “We are in advanced discussions. Hopefully we can close this 15-year old chapter very soon.”
Ermotti also described the latest results as “very solid.”
“We saw some inflows coming from Credit Suisse, but, most importantly, we continue to see even after the transaction, we saw inflows, so the demonstration that our clients believe we are a source of stability.” he told CNBC.
“We are part of the solution and not part of the problem,” he added.
Here are other highlights of the quarter:
- Revenues reached $8.75 billion vs 9.38 billion a year ago
- Operating expenses were $7.2 billion from $6.6 billion a year ago
- CET 1 capital ratio, a measure of bank solvency, came in at 13.9% vs 14.1% a year ago
The lender also said that it attracted $28 billion in net new money in its global wealth management unit, of which $7 billion were registered in the last 10 days of March — after the announcement of its acquisition of Credit Suisse.
Credit Suisse Deal
UBS shares have jumped more than 10% since the news that it was buying its embattled Swiss competitor last month. At the time, UBS said that the deal, brokered by Swiss regulators, would create a “leading global wealth manager” with more than $5 billion in total invested assets.
However, analysts at Barclays said that the market is “significantly underestimating” the complexity of integrating Credit Suisse within UBS, Reuters reported. Ermotti told CNBC on Tuesday that the merger should be completed within the second quarter.
“In the next couple of weeks I will redefine our target operating model for the future, (I) also come out with some organizational announcements and clarity,” he said, adding that the merger with Credit Suisse is not a “risky” transaction and will deliver for shareholders.
This article was originally published by CNBC.