UBS is slowing its cost cutting, but bonuses may disappoint

If you've survived so far at UBS, well done. If you're expecting to get paid well at UBS for 2024, you may be disappointed.

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The Swiss bank released its fourth quarter results today. 4,200 jobs were cut last year and UBS revealed that it's more than halfway through the $13bn of cost savings it aspires to achieve by 2026. $7.5bn of savings were achieved across the bank in 2024; just $2.5bn and $3bn are targeted in 2025 and 2026.

The integration of Credit Suisse is therefore going well, but is not complete. In the tricky area of IT integration in particular, the bank is less than a third of the way through decommissioning apps and less than 20% of the way through Credit Suisse's quantity of data. 

In the investment bank, the year ended well and 2025 is looking promising. UBS's equities salespeople and traders achieved a 44% year-on-year revenue increase in the fourth quarter. Fixed income traders achieved a 45% increase, led by FX. Morgan Stanley's 51% equities increase excepted, this was a better performance than at rivals to have reported so far.

In banking, UBS's new US bankers from the likes of Credit Suisse and Barclays delivered: UBS's American bankers are credited with driving its advisory revenues 36% higher and the bank said underlying revenues in the Americas were up five percentage points year over year.

And yet, as we noted last week, there are signs of misfiring, too. While US banks benefited from increases of between 4% and 120% in their equity and debt capital markets revenues in the fourth quarter, UBS's capital markets revenues were down 6%. UBS attributed the decline to price adjustments on financial instruments.

This might be why - along with the ongoing cost-cutting - UBS appears to be being careful with bonuses. UBS is announcing its bonuses today, but is signalling caution. Personnel costs in the investment bank are "lower" as are "accruals for performance awards" across the organization. This could be unpopular: between 2021 and 2023, bonuses for senior UBS bankers and traders were cut 30%. "All that I know is that it will be highly differentiated," suggests one senior markets professional in London.

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