Substantial drop in UBS profit ‘not due to Credit Suisse takeover’

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The net profit of the Swiss bank UBS has halved to 1.03 billion euros in the past quarter. The bank recently acquired Swiss competitor Credit Suisse. However, according to stock market analyst CornĂ© van Zeijl of Actiam Asset Management, the disappointing profit of UBS is not due to this. “The new CEO of UBS has taken the broom through its own figures.”

The drop in profit is not due to the acquisition of Credit Suisse, but to an old lawsuit that was still pending at UBS, says Van Zeijl. ‘That lawsuit was about loans backed by mortgages as a guarantee. They took care of that right away. I think that the new CEO has quickly swept through his own figures and hopes that it will all turn out better than expected,’ explains the stock analyst.

New CEO

According to Van Zeijl, this provision mainly says something about the fact that there is a new CEO at the helm at UBS. The former CEO of the bank, Ralph Hamers, had to give up his place to the Swiss Sergio Ermotti after the takeover of Credit Suisse. He was also previously the CEO of the Swiss banking giant.

Nevertheless, the problems at Credit Suisse are reflected in UBS’s ultimately turned profit, says Van Zeijl. ‘Things went pretty fast at that bank and they had a fairly good inflow, an interest rate of seven billion euros and a lot of wealthy customers. Many of those customers subsequently fled to UBS because they were a fairly stable bank during the turbulent times. In the end – because of the acquisition of Credit Suisse – it all didn’t matter, but they didn’t know that at the time’, explains the stock market analyst.

Stock prices

One of the consequences of the takeover is that the blunt ax will go into the Credit Suisse workforce. Because although UBS made more than a billion euros in profit, Credit Suisse suffered a loss of one and a half billion euros. ‘A lot of jobs will disappear, that was announced some time ago,’ says Van Zeijl.

‘Predicting prices in the short term is the dumbest thing you can do’

Corné van Zeijl, stock market analyst at Actiam Asset Management

In addition, the stock market analyst expects UBS to follow the path of Credit Suisse by focusing more on the truly high-net-worth customers and less on interest income. ‘It will then become more of a bank for asset management, and then you will not be dependent on what you see on savings accounts.’ Van Zeijl suspects that stock prices will not react very strongly to the bank’s disappointing profit. “But predicting prices in the short term is the stupidest thing you can do,” he adds.

The former CEO of the bank, Ralph Hamers, had to give up his place to the Swiss Sergio Ermotti after the takeover of Credit Suisse. He was also previously the CEO of the Swiss banking giant. (ANP/EPA)

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