UBS expects Q1 revenues to be ‘positively influenced’ by seasonal factors

“Central banks are widely expected to lower short-term interest rates in 2024. The timing and magnitude of such cuts are still highly uncertain, given the ongoing debate around the pace of inflation converging with central bank targets. In addition, ongoing geopolitical tensions, including the conflicts in the Middle East and Eastern Europe, may impact supply chains and inflation, with consequences for the macroeconomic outlook and market volatility. Notwithstanding the challenges mentioned above, we continue to execute on our strategy and integration plans at pace, and we will actively reduce non-core assets and costs. In the first quarter of 2024, we expect revenues to be positively influenced by seasonal factors, such as higher client activity levels compared with the fourth quarter of 2023. We also expect the Investment Bank to return to profitability, due to improving market activity, a growing banking pipeline and advanced progress on the integration. We expect NII for Personal & Corporate Banking and Global Wealth Management combined, and in US dollar terms, to be roughly flat sequentially in the first quarter, with higher rates broadly offsetting the residual effects of deposit mix shifts and the initial impact of financial resource optimization. These factors are expected to result in substantial sequential improvement in reported net profit in the first quarter, including around USD 1bn of integration-related expenses and around USD 0.7bn of pull to par and other purchase price allocation accretion effects. Our focus remains on helping clients navigate challenging market environments to manage the inherent risks and opportunities while continuing to grow our invested assets and delivering on our financial targets.