UBS Group AG (SIX:UBSG) is managing a rapidly changing bond market landscape following its acquisition of Credit Suisse (SIX:CSGN), which has significantly impacted investors and the bank's risk profile. The acquisition deal, which was seen as a bargain, resulted in $17 billion in worthless notes for investors and propelled UBS's risk premium to an unprecedented 450 basis points.
The banking giant is witnessing a recovery in confidence as highlighted by Joost Beaumont at ABN Amro Bank NV. The yield gap against non-Swiss lenders, which had widened due to the increased risk, has now narrowed to 25 basis points.
In response to these market shifts, UBS CEO Sergio Ermotti is considering issuing new Additional Tier 1 (AT1) capital while simultaneously managing the integration of Credit Suisse. This comes amidst a record profit boost for the bank due to the acquisition.
According to InvestingPro data, UBS has a market capitalization of 77,726.29M USD and a P/E ratio of 2.25, indicating it is trading at a low earnings multiple. The company's revenue for LTM2023.Q2 is reported at 33.65B USD, but there has been a revenue decline of 7.07%. The company's gross profit for LTM2023.Q2 stands at 33.65B USD, and the operating income, adjusted for the same period, is 6609M USD.
InvestingPro Tips reveal that the management of UBS has been aggressively buying back shares, which is often a positive indication of the company's belief in its own value. Additionally, UBS has maintained dividend payments for 12 consecutive years, providing consistent returns for its shareholders. This is supported by the InvestingPro data showing a dividend yield of 2.22% for Y2023.D276.
Sebastien Barthelemi has emphasized the need for interest rate stabilization in light of these developments. The integration of Credit Suisse into UBS and its effects on the bond market will continue to be closely monitored by investors and analysts alike.
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