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5 Reasons to Add UBS Group (UBS) to Your Portfolio Right Now
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UBS Group AG (UBS - Free Report) is well-positioned for growth, driven by its strategic acquisition of Credit Suisse, strong capital position and digitalization efforts. Additionally, its business restructuring initiatives will support its financials in the long run.
The Zacks Consensus Estimate for UBS Group’s 2024 and 2025 earnings have been revised upward by 6.8% and 2.4%, respectively, over the past 60 days. This indicates that analysts are optimistic regarding its earnings growth potential. UBS currently carries a Zacks Rank #2 (Buy).
Over the past six months, the company’s shares on the NYSE have gained 17.9% compared with the industry’s growth of 15.1%.
Image Source: Zacks Investment Research
Now, let’s discuss some of the important factors that make the stock an attractive pick.
Acquisition of Credit Suisse: In June 2023, UBS Group completed the acquisition of Credit Suisse (a regulatory-assisted deal). This move is expected to enhance the company’s capabilities in wealth and asset management, as well as help grow its capital-light businesses. UBS is on track to complete the integration process by the end of 2026. The merger of UBS Group and Credit Suisse is expected to be completed on May 31, 2024, with the transition to a single U.S. intermediate holding company planned for the second quarter of 2024.
Earnings Growth: UBS’ earnings have witnessed a rise of 18.24% over the past three to five years, higher than the industry's growth of 10.43%. While the company’s earnings are projected to decline 58.5% in 2024, it will likely rebound and jump 170.5% in 2025.
Cost Reduction Initiatives: As part of its restructuring plans, the bank intends to phase out its Non-Core and Legacy portfolio, which will release more than $6 billion of capital by the end of 2026. Additionally, UBS plans to cut jobs in five separate waves, starting this June, in order to reduce costs. In total, 50-60% of the former Credit Suisse workforce is likely to be made redundant.
Through these efforts, UBS Group aims to achieve gross cost reductions of around $13 billion by the end of 2026 compared with 2022 levels. It has already achieved approximately $1 billion in gross cost savings in first-quarter 2024. The bank aims to achieve an additional $1.5 billion in gross cost savings by the end of 2024.
Digitalization Efforts: The company has established a leveling-up strategy based on five key pillars through Agile@UBS, quarterly business reviews and digital roadmaps, modern technology, automation and engineering excellence.
UBS is migrating toward a cloud-based application system and is accelerating digitalization and facilitating connection with the financial industry ecosystem to provide better and faster client services. It has also introduced an Artificial Intelligence, Data and Analytics center of expertise. These initiatives will help in delivering a client experience that is personalized, relevant, on-time and seamless, thereby providing the company a competitive edge.
Strong Capital Position: As of Mar 31, 2024, the common equity tier (CET) 1 capital ratio was 14.8% and the CET1 leverage ratio was 4.9%, both meeting management’s target of 14% and above 4%, respectively. Management forecasts to achieve an underlying return on CET1 capital ratio of 15% and 18% by the end of 2026 and 2028, respectively.
Other Stocks to Consider
Some other top-ranked foreign bank stocks are Bancolombia S.A. (CIB - Free Report) and The Bank of N.T. Butterfield & Son Limited (NTB - Free Report) .
Bancolombia S.A.’s current-year earnings have been revised upward marginally over the past 30 days. Shares of CIB have gained 24.9% over the past six months. The stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for The Bank of N.T. Butterfield & Son Limited’s current-year earnings have been revised 4% upward over the past 30 days. Over the past three months, shares of NTB have gained 26.4%. The stock currently flaunts a Zacks Rank #1.
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5 Reasons to Add UBS Group (UBS) to Your Portfolio Right Now
UBS Group AG (UBS - Free Report) is well-positioned for growth, driven by its strategic acquisition of Credit Suisse, strong capital position and digitalization efforts. Additionally, its business restructuring initiatives will support its financials in the long run.
The Zacks Consensus Estimate for UBS Group’s 2024 and 2025 earnings have been revised upward by 6.8% and 2.4%, respectively, over the past 60 days. This indicates that analysts are optimistic regarding its earnings growth potential. UBS currently carries a Zacks Rank #2 (Buy).
Over the past six months, the company’s shares on the NYSE have gained 17.9% compared with the industry’s growth of 15.1%.
Image Source: Zacks Investment Research
Now, let’s discuss some of the important factors that make the stock an attractive pick.
Acquisition of Credit Suisse: In June 2023, UBS Group completed the acquisition of Credit Suisse (a regulatory-assisted deal). This move is expected to enhance the company’s capabilities in wealth and asset management, as well as help grow its capital-light businesses. UBS is on track to complete the integration process by the end of 2026. The merger of UBS Group and Credit Suisse is expected to be completed on May 31, 2024, with the transition to a single U.S. intermediate holding company planned for the second quarter of 2024.
Earnings Growth: UBS’ earnings have witnessed a rise of 18.24% over the past three to five years, higher than the industry's growth of 10.43%. While the company’s earnings are projected to decline 58.5% in 2024, it will likely rebound and jump 170.5% in 2025.
Cost Reduction Initiatives: As part of its restructuring plans, the bank intends to phase out its Non-Core and Legacy portfolio, which will release more than $6 billion of capital by the end of 2026. Additionally, UBS plans to cut jobs in five separate waves, starting this June, in order to reduce costs. In total, 50-60% of the former Credit Suisse workforce is likely to be made redundant.
Through these efforts, UBS Group aims to achieve gross cost reductions of around $13 billion by the end of 2026 compared with 2022 levels. It has already achieved approximately $1 billion in gross cost savings in first-quarter 2024. The bank aims to achieve an additional $1.5 billion in gross cost savings by the end of 2024.
Digitalization Efforts: The company has established a leveling-up strategy based on five key pillars through Agile@UBS, quarterly business reviews and digital roadmaps, modern technology, automation and engineering excellence.
UBS is migrating toward a cloud-based application system and is accelerating digitalization and facilitating connection with the financial industry ecosystem to provide better and faster client services. It has also introduced an Artificial Intelligence, Data and Analytics center of expertise. These initiatives will help in delivering a client experience that is personalized, relevant, on-time and seamless, thereby providing the company a competitive edge.
Strong Capital Position: As of Mar 31, 2024, the common equity tier (CET) 1 capital ratio was 14.8% and the CET1 leverage ratio was 4.9%, both meeting management’s target of 14% and above 4%, respectively. Management forecasts to achieve an underlying return on CET1 capital ratio of 15% and 18% by the end of 2026 and 2028, respectively.
Other Stocks to Consider
Some other top-ranked foreign bank stocks are Bancolombia S.A. (CIB - Free Report) and The Bank of N.T. Butterfield & Son Limited (NTB - Free Report) .
Bancolombia S.A.’s current-year earnings have been revised upward marginally over the past 30 days. Shares of CIB have gained 24.9% over the past six months. The stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for The Bank of N.T. Butterfield & Son Limited’s current-year earnings have been revised 4% upward over the past 30 days. Over the past three months, shares of NTB have gained 26.4%. The stock currently flaunts a Zacks Rank #1.