UBS’ Kelleher sees potential upside to 2026 profitability goal
UBS Group chairman Colm Kelleher indicated there’s a fair chance the Swiss lender will exceed the profitability goal it has set itself.
“We have given a 15 per cent target,” Kelleher said Wednesday (Jan 17) at an event at Bloomberg House in Davos. “Obviously there may be upside on that.”
UBS has been making quick progress on integrating Credit Suisse since it agreed to buy the smaller rival in an emergency takeover ten months ago in what was the biggest banking sector tie-up since the financial crisis. Still, the acquisition comes with a raft of potential difficulties from closing out positions to managing the legal liabilities inherited from Credit Suisse.
Chief executive officer Sergio Ermotti is set to update on his strategy beyond the integration when he reports full-year earnings on Feb 6. UBS currently has a profitability target of a return on its common equity tier 1 capital of about 15 per cent at the end of 2026, and it’s seeking to cut more than US$10 billion in costs by that time as well.
UBS is coming under pressure from investors to capitalise on the Credit Suisse deal. Cevian Capital, which has built up a stake of about 1.3 per cent, said in December that it thinks the bank can achieve a return of more than 20 per cent on tangible equity once the integration is complete.
The fusion of Credit Suisse “is going very well,” Kelleher said in the interview, but he also said that what has been down so far was “the relatively easy bit.” In contrast, 2024 will be “a very hard year of heavy lifting,” he said.
UBS plans to dissolve Credit Suisse’s legal entity into UBS by the middle of the year. “We can really start attacking those allocated and stuck costs” once that’s completed, Kelleher said. BLOOMBERG
Share with us your feedback on BT's products and services
