UBS Pulled In Fewer Clients Than Credit Suisse Lost

UBS Pulled In Fewer Clients Than Credit Suisse Lost
Paul Allison, CFA

7 months ago1 min

What’s going on here?

UBS reported results on Tuesday for the first time since its rushed takeover of Credit Suisse.

What does this mean?

UBS’s stock price has been sitting pretty ever since the firm bought Credit Suisse, in what was either a forced buyout or the deal of the century. So it was a shock when the mammoth investment bank revealed that its first-quarter profit was down 52% from the same time last year, even if that was partly down to the $665 million it put aside to cover a drawn-out legal battle. On the plus side, clients popped $28 billion into UBS’s wealth management division. Mind you, Credit Suisse reported on Monday that it lost $69 billion during its embattled first quarter – and when you add those together, the future Swiss megabank is still bleeding cash.

UBS profit

Why should I care?

For markets: Not-so-low-hanging fruit.

Squishing two supersized firms together is hard in any industry, but UBS has an extra tricky task on its hands with Credit Suisse. Just do the math: banks hire a lot of workers, and mergers mean job losses. Those layoffs can really crush morale among the remaining number crunchers, and loyal cash-rich clients often follow their departing bankers or take their business elsewhere out of principle.

UBS fee margin

Zooming out: Timing’s everything.

The old adage of “time in the market’s better than timing the market” is sound advice most of the time – but the saying doesn’t always ring true for bank stocks. Take UBS: today’s share price is the same as it was in 2018, 2015, 2013, and 2008, but the stock bounced between 10 and 20 Swiss Francs a number of times in between. So without a knack for timing, bank stocks could leave you feeling pretty flat.



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