UBS Group AG (UBS.US) Q3 profit climbs as Credit Suisse integration nears completion and cost savings exceed expectations

UBS Group AG (UBS.US) released its Q3 2026 financial results on October 28. Net profit attributable to shareholders for the quarter was US$2.69 billion, up 8% year-on-year, slightly below the approximately US$2.71 billion consensus of analysts surveyed by the company; diluted earnings per share were US$0.85 (US$0.76 in the prior-year period). Pre-tax profit was US$3.587 billion, up 27% year-on-year; underlying pre-tax profit excluding special items was US$4.077 billion, up 14% year-on-year. Total revenue was US$13.350 billion, up 5% year-on-year. By business segment, Global Wealth Management underlying revenue rose 8% year-on-year to US$6.898 billion, with recurring net fee income up 9% and net interest income up 8%; net new assets for the quarter were US$55.1 billion, an annualized growth rate of 4.5%, with the strongest inflows from Asia Pacific and the Americas; group invested assets reached US$7.3 trillion. Investment Bank posted a record third-quarter underlying revenue, with Global Markets revenue up 17% to US$2.548 billion, including a 22% increase in equities. Americas pre-tax profit rose 28% year-on-year, with the pre-tax profit margin up more than 2 percentage points to 16%. Swiss Personal & Corporate Banking recorded net new loans of CHF3.3 billion and net new deposits of CHF1.8 billion. On capital and returns, the CET1 capital ratio was 14.7% (14.8% in the prior-year period and 14.4% in the previous quarter), and the CET1 leverage ratio was 4.6%; the cost-income ratio was 72.3%, or 68.7% on an underlying basis. The company repurchased US$1.8 billion of shares during the quarter and plans to complete its US$3 billion buyback program before reporting fourth-quarter results, rather than by mid-2027 as previously announced; it will continue to accrue dividends at an increase of "low-teens percentage points." Credit Suisse integration is nearing completion: cumulative gross cost savings reached US$13.2 billion (US$600 million added in the third quarter). The bank added that integration of former rival Credit Suisse is proceeding as planned and is expected to be completed by year-end, with cumulative cost savings projected at approximately US$13.7 billion by the end of 2026, above the previous expectation of approximately US$13.5 billion. About 90% of legacy IT applications in scope for decommissioning have been taken offline. The company said underlying RoCET1 for the nine months was 16.7% and the underlying cost-income ratio was 69.6%, and it is on track to exceed its 2026 exit-rate underlying RoCET1 target of approximately 15%. Looking ahead to the fourth quarter, UBS Group AG expects a "more typical seasonal slowdown" in trading volumes; Global Markets will face a tough year-on-year comparison due to the high base from the prior-year period that included disposal gains; Global Banking revenue is expected to grow quarter-on-quarter; and Wealth Management net interest income is expected to rise by a low single-digit percentage quarter-on-quarter. CEO Sergio Ermotti said that in an increasingly complex market environment, the results once again demonstrate the advantages of a diversified global business model and disciplined execution. As integration progressed, the company reduced its full-time headcount by nearly 1,500 during the quarter. UBS Group AG said its staff currently run more than 12,700 private AI agents, and the bank will continue to increase investment in this technology. The bank has tied the size and pace of its share buybacks to the outcome of Swiss banking rule reforms, which followed the collapse of Credit Suisse in 2023 and UBS Group AG's emergency state-orchestrated takeover. The new capital rules for UBS Group AG are currently being debated in a parliamentary committee and are expected to be submitted to the lower house in December. Switzerland's upper house proposed the rules last month, but UBS Group AG considers them unacceptable. UBS Group AG's chairman warned that if capital requirements are too stringent, the bank would need to seriously consider its future in Switzerland, and some shareholders have also called for UBS Group AG to withdraw from Switzerland. In its earnings report, UBS Group AG said it hopes parliament can find a solution that supports Swiss financial stability without imposing excessive costs on UBS Group AG's shareholders, clients and employees.