10 Best Diversified Bank Stocks to Buy Now

6. UBS Group AG (NYSE:UBS)

Number of Hedge Fund Holders In Q2 2024: 33

UBS Group AG (NYSE:UBS) is a Swiss mega bank headquartered in Zurich, Switzerland. It is one of the most crucial banking stories in the industry right now as the sector recovers from the stress that big banks faced in 2023. This saw Swiss giant Credit Suisse fail, and UBS Group AG (NYSE:UBS), somewhat unwillingly, bought it. Credit Suisse was UBS Group AG (NYSE:UBS)’s biggest local competitor and it was sold for an 80% discount, for quite a sweet deal. It has appeared to have paid off too, as after two consecutive quarters of losses, UBS Group AG (NYSE:UBS) posted a bonanza of $1.8 billion in profit in Q1 which decimated analyst estimates of $598 million. The deal has also allowed the bank to benefit from economies of scale through lower costs and allowed wealth management assets to grow by 3% to $54 billion in H1 2024. Should further cost catalysts emerge from the deal, UBS Group AG (NYSE:UBS) could see tailwinds in the future. However, in an ironic twist, the bank might have to beef up capital requirements because of its growth.

UBS Group AG (NYSE:UBS)’s management had the following to say about the Basel III regulations during the Q2 2024 earnings call:

“So on Basel III final as mentioned, we still expect $25 billion impact is 5% of risk-weighted assets, so in that range. As you mentioned, we guided in the fourth quarter in our investor update that $15 billion is in the core, $10 billion is in non-core. I think for now, that split remains pretty robust in terms of how we’re thinking — how we’re seeing it, and actually we’ll continue to work down the NCL portfolio to make that impact lessened over time. In terms of the NII guidance for P&C, just to — you asked for clarity on — it is in Swiss francs, so we’re guiding in Swiss francs. We’ll offer both in the future to sort of help. As I mentioned, in 3Q, we see a low single-digit down in Swissy, but flat sequentially in USD.

And as I mentioned, I think that’s a good outcome that we’ve had a number of headwinds that we’ve been working through sort of reaffirm the guidance for the full-year is also a function of some management actions that have been taken, including some loan repricing actions that have helped. So those are the drivers of the NII guidance for P&C.”