UBS was dragged into the red by the Credit Suisse takeover, but inflows cheer. The Swiss bank’s acquisition of Credit Suisse cost UBS Group (UBSG.S.) $785 million in the third quarter, although the company also indicated that its core wealth business is stabilizing. Although consumer inflows exceeded analysts’ forecasts, the loss was more than the $444 million loss ascribed to shareholders they had predicted in a UBS survey.

“We are executing on the integration of Credit Suisse at pace and have delivered underlying profitability for the group in the first full quarter since the acquisition,” stated Sergio Ermotti, chief executive officer.

In early morning Zurich trade, UBS shares—which have gained around 30% this year—rose 4.1% due to the headline loss having a bright spot. Gaining new clients helped the group’s wealth management division bring in $22 billion in net new money. Additionally, Credit Suisse saw cash flow into the company for the first time since early 2022. With the Swiss bank having already revealed $8 billion for July and August, Goldman Sachs analysts had projected $14 billion for the group.

When the effects of the acquisition are removed, UBS generated a $844 million underlying profit. Since the June completion of the shotgun marriage, the first merger of two globally significant banks, UBS has struggled to stabilize the firm.

UBS currently manages more than $5 trillion in assets due to the acquisition. With above-market deposit rates from Credit Suisse, it has been trying to recoup the customer’s money withdrawal. Additionally, it’s attempting to hold on to customers who could have looked to spread risk and would have had money in two banks.

MASSIVE TASK

Though they cautioned that the bank was not yet out of the woods, analysts praised the findings. “UBS continues to face a huge task, including client & key staff retention,” said Vontobel analyst Andreas Venditti. “UBS has made clear progress since the close of the deal.”

UBS, a bank embroiled in controversy and legal disputes, will likely undergo a drawn-out merger process. It stated that the examination findings into “weaknesses” and “deficiencies” in Credit Suisse’s financial reporting for the years 2021 and 2022 will be detailed in its annual report.

The bank added that forecasting the future of asset values, market volatility, and economic development remained challenging. A significant portion of the expenditures associated with integration, totaling over 2 billion Swiss francs ($2.22 billion), were attributable to UBS’s ongoing workforce reductions.

UBS said that as of the end of September, 115,981 workers were employed by the merged bank, a decrease from 119,100 full-time equivalents at the end of June. It has stated that to save money after the merger, it would eliminate a lot of positions, including 3,000 in Switzerland alone.

For Zurich, Switzerland’s financial hub, where banks rule the landscape, the cuts will be excruciating. A firm whose assets surpass the nation’s GDP, whose authorities had already struggled to supervise giant lenders, was established by the largest bank merger since the global financial crisis, which was arranged by the Swiss state to prevent Credit Suisse’s collapse.

Rejecting claims that it needs more capital, the bank has stood its ground. Its chairman, Colm Kelleher, stated on Tuesday that certain authorities’ discussions about stepping up capital monitoring are “misguided.”

Switzerland’s government had little influence over the organization since UBS withdrew official assistance when the country’s guarantees and central bank funds for the bailout were exhausted.