A month has passed by because the final earnings report for UBS (UBS). Shares have misplaced about 3.9% in that timeframe, underperforming the S&P 500.
Will the latest unfavorable development proceed main as much as its subsequent earnings launch, or is UBS due for a breakout? Earlier than we dive into how buyers and analysts have reacted as of late, let’s take a fast take a look at the newest earnings report to be able to get a greater deal with on the necessary catalysts.
UBS Group Q2 Earnings Fall Y/Y on Increased Prices, Revenues Up
UBS Group AG reported a second-quarter 2024 web revenue attributable to shareholders of $1.13 billion, which declined from $27.3 billion within the prior-year quarter. The prior-year quarter’s determine included a unfavorable goodwill of $27.2 billion, ensuing from the acquisition of Credit score Suisse Group.
Outcomes had been affected because of a rise in working bills. Nonetheless, an increase in complete revenues, pushed by the acquisition of Credit score Suisse acted as a tailwind. The lower in credit score loss bills was one other optimistic.
The efficiency of the Asset Administration, Private & Company Banking, and Funding Financial institution divisions was spectacular. Nevertheless, the non-core & Legacy, World Wealth Administration and Group objects segments didn’t carry out effectively.
Revenues & Bills Rise
UBS’ complete revenues jumped 24.8% 12 months over 12 months to $11.9 billion.
Working bills elevated 21.8% 12 months over 12 months to $10.3 billion.
UBS Group reported complete credit score loss bills of $95 million, which decreased 84.8% from the year-ago quarter.
Enterprise Divisions’ Efficiency
World Wealth Administration’s second-quarter working revenue earlier than tax was $871 million, down 15.3% 12 months over 12 months. The autumn was primarily because of an increase in working bills, partly offset by the impression of the acquisition of the Credit score Suisse Group.
In June 2024, UBS introduced that it’s re-aligning its wealth administration enterprise to enhance its choices to ultra-rich shoppers. Beginning Jul 1, 2024, it should set up a brand new division often known as GWM Options to consolidate completely different merchandise for shoppers. This new unit can have different merchandise from each its wealth and asset administration companies, together with actual property and personal market investments.
Asset Administration’s working revenue earlier than tax surged 64.6% 12 months over 12 months to $130 million. The rise was primarily pushed by the consolidation of Credit score Suisse revenues and because of a web achieve from the preliminary portion of the sale of the Brazilian actual property fund administration enterprise.
Private & Company Banking reported working revenue earlier than tax of $703 million, up 19.2% 12 months over 12 months. The rise was pushed by a rise in revenues, primarily because of the consolidation of Credit score Suisse revenues.
The Funding Financial institution unit reported an working revenue earlier than tax of $477 million towards a lack of $121 million within the year-ago interval. The advance was a results of larger complete revenues, partially offset by larger working bills.
Non-core and Legacy reported working loss earlier than tax of $405 million within the reported quarter in contrast with a lack of $493 million within the year-ago quarter.
Group objects reported working loss earlier than tax of $377 million in contrast with a lack of $717 million within the year-ago quarter.
Capital Place: Blended bag
Complete property decreased 2.9% from the earlier quarter’s finish to $1.56 trillion.
UBS’ return on Frequent Fairness Tier 1 (CET1) capital was 5.9% as of Jun 30, 2024, towards unfavorable 1.4% as of Jun 30, 2023.
The danger-weighted property declined 8.1% 12 months over 12 months to $511.4 billion.
The CET1 capital declined 3.2% 12 months over 12 months to $76.1 billion. As of Jun 30, 2024, UBS’ invested property had been $5.87 trillion, up 6.2% 12 months over 12 months.
Outlook
2024
The corporate expects 2024 NII can be roughly flat versus 4Q ’23 annualized. This features a low to mid-single-digit sequential drop within the third quarter pushed by a lower in volumes, combine shifts in anticipation of falling charges, and the impression on replication portfolios.
Medium Time period
Administration expects the Underlying RoCET1 2026 exit fee to be 15%.
The underlying cost-to-income ratio 2026 exit fee is predicted to be lower than 70%.
How Have Estimates Been Shifting Since Then?
Analysts had been quiet over the past two month interval as none of them issued any earnings estimate revisions.
VGM Scores
At the moment, UBS has a median Development Rating of C, a grade with the identical rating on the momentum entrance. Nevertheless, the inventory was allotted a grade of A on the worth facet, placing it within the prime quintile for this funding technique.
Total, the inventory has an mixture VGM Rating of B. When you aren’t centered on one technique, this rating is the one you need to be all in favour of.
Outlook
UBS has a Zacks Rank #3 (Maintain). We count on an in-line return from the inventory within the subsequent few months.
Efficiency of an Trade Participant
UBS is a part of the Zacks Banks – International trade. Over the previous month, HSBC (HSBC), a inventory from the identical trade, has gained 1.2%. The corporate reported its outcomes for the quarter ended June 2024 greater than a month in the past.
HSBC reported revenues of $16.54 billion within the final reported quarter, representing a year-over-year change of -1%. EPS of $1.65 for a similar interval compares with $1.70 a 12 months in the past.
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