ZURICH - UBS is expected to post solid first-quarter results, with all eyes on whether the bank is strong enough to carry through its forced alliance with stricken rival Credit Suisse.
Credit Suisse, long Switzerland's second largest bank, revealed Monday that nearly $70-billion had been withdrawn in the first three months of 2023 alone, publishing perhaps its final quarterly results ahead of the merger.
Most of the withdrawals were made in panic around the March 19 announcement that UBS had been strongarmed by Swiss authorities into a $3.25-billion shotgun marriage to ensure its smaller, but still "too-big-to-fail" rival, did not go belly up.
Investors were on the edge of their seats for the Credit Suisse results but are also eagerly awaiting Tuesday's UBS report to determine the magnitude of the challenges facing the banks in their mammoth merger.
Analysts polled by the Swiss financial newswire AWP expect first quarter UBS net profit to tick in at around $1.7-billion, down from $2.1-billion a year ago.
"We expect a weaker quarter for the investment bank," analysts with the Zurich Cantonal Bank said.
On the other hand, its retail bank in Switzerland was expected to benefit from rising interest rates, they said.
US banks have set the tone, with Citigroup, Wells Fargo and Bank of America having already posted better-than-expected results, as interest rates boosted their incomes.
UBS's investment banking business accounts for about a quarter of its revenue.
But investors will be particularly interested in any details about the Credit Suisse merger, especially after the smaller bank revealed Monday the desperate situation it found itself in when the deal was pushed through.
Credit Suisse hosted no press conference, so questions are "likely to be directed to UBS's management," Jefferies analyst Flora Bocahut said in a research note.
Credit Suisse's results spoke clearly to the challenges ahead for UBS.