Outlook
Although monetary easing is expected in the Eurozone, the US and Switzerland, the timing and magnitude of rate cuts by central banks are unclear, as inflation remains above their target range. In addition, the ongoing geopolitical tensions, combined with consequential elections in several major economies, continue to create uncertainty regarding the macroeconomic and geopolitical outlooks.
In the second quarter of 2024, we expect a low-to-mid single-digit decline in net interest income in Global Wealth Management, due to moderately lower lending and deposit volumes and lower interest rates in Switzerland, partly offset by additional revenues, primarily from higher US dollar rates, combined with our repricing efforts. We expect a mid-to-high single-digit decrease in net interest income in Personal & Corporate Banking in US dollar terms, as the Swiss central bank’s interest rate cut in March 2024 takes effect for a full quarter. In line with our strategy to actively reduce assets and costs in Non-core and Legacy, we continue to expect revenues in the closing out of any positions to approximately reflect their current book value. We also expect our reported revenues to include around USD 0.6bn of pull-to-par and other PPA accretion effects, while we incur around USD 1.3bn of integration-related expenses. The tax rate for the second quarter is expected to return to more elevated levels, with our effective tax rate still expected to be around 40% by the end of 2024.
