UBS has reported a credit loss expense of approximately 150 million Swiss francs ($170 million) for 2024, primarily due to sluggish growth in Europe.
The challenges faced by companies within the bank's lending portfolio, particularly those with exposure to the eurozone economies, have contributed to these losses. The sluggish performance of neighboring economies, especially Germany, has raised concerns about increased credit losses. Many Swiss corporates engaged in export-import activities are directly impacted by the economic conditions in these regions.
The credit loss expense is expected to be recorded in the fourth quarter, reflecting the ongoing economic pressures.
The integration of Credit Suisse, which UBS acquired following its collapse in March last year, has added complexity to UBS's financial outlook. The non-core legacy unit responsible for managing the assets of the failed bank is projected to incur a pre-tax loss of $700 million in the final quarter. UBS is navigating the integration process and client migrations are planned for Singapore, Japan, and Italy.
Despite the challenges posed by the Credit Suisse integration, UBS is optimistic about its performance in the Asia-Pacific region. The positive economic environment in this area has contributed to a favorable outlook for the bank's operations. UBS's investment banking division has also performed well during the same period, indicating resilience amid broader economic uncertainties.
UBS is currently facing regulatory uncertainty as discussions surrounding capital requirements for banks in Switzerland continue. Clarity on these matters is unlikely to emerge before early February. The potential for stricter capital requirements poses challenges for UBS as it seeks to navigate the evolving regulatory landscape. The bank's leadership is aware of the implications these changes could have on its operations and financial stability. UBS's ability to adapt to regulatory changes will be critical in maintaining investor confidence and ensuring long-term growth.