UBS’s Triumph: Unveiling the Secrets Behind the Largest Quarterly Bank Profit in History

UBS has reported a $29 billion profit for the second quarter, the biggest quarterly profit by a bank in history. This profit comes from “badwill,” an accounting phenomenon where a company buys an asset for less than it’s worth, leading to a noncash gain that essentially recognizes the actual value of the asset. UBS reported its underlying profit for the quarter was just $1.1 billion. A wave of bank rescue deals this year has led to pumped-up profits for acquirers, with JPMorgan Chase’s second-quarter profits jumping 67% due to its takeover of First Republic and First Citizens enjoying a 3,500 percent gain in first-quarter profit after buying Silicon Valley Bank at a steep discount.

UBS has more work to do, with the Credit Suisse acquisition expected to be largely completed by 2026. One of its biggest tasks is consolidating its former rival’s domestic bank with its own, despite concerns that the move will undercut competition in Swiss retail banking. Uniting the two will lead to around 3,000 job losses in the country, fulfilling fears among politicians and voters.

Credit Suisse’s own results, including a pretax loss of 4.3 billion Swiss Francs ($4.9 billion) in the quarter, suggest that UBS still has big hurdles to overcome in absorbing the business. UBS shareholders appear happy, especially with the badwill gain showing how much the bank benefited from rescuing its rival. Shares in the bank were up over 5% today, at 23.42 Swiss francs ($26.57), and now trade at their highest level since the summer of 2008.

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