On Tuesday, UBS Group AG reported profits would take a 52% hit in the first quarter due to increases in provisions for a legacy litigation matter.

The result comes at a bad time, as the bank is amid a wave of uncertainty regarding the state of its takeover of troubled lending giant Credit Suisse.

A UBS conducted poll of 15 analysts had predicted net profits attributable to shareholders would come in at $1.71 billion, however it ultimately ended up at $1.03 billion.

UBS noted that it had increased provisions which were assigned to US residential mortgage-backed securities by an additional $65 million.

Chief Executive Sergio Ermotti, who rejoined the bank recently to assist with the takeover, said in a statement, “We are in advanced discussions with the US Department of Justice, and I am pleased that we are making progress toward resolving the legacy matter which dates back 15 years.”

The largest wealth manager in the world, UBS reported inflows of $42 billion for the first quarter of 2023. The flagship wealth management division of the firm took in $28 billion in net new money, with $7 billion of that coming in over the final ten days of March.

In the background of course, UBS is also contending with the rigors associated with absorbing troubled lending giant Credit Suisse. Plagued by scandals and regulatory failures, Credit Suisse was confronted with record levels of outflows which brought the bank to its knees, until the Swiss government stepped in and brokered a deal whereby UBS would acquire the bank, in return for additional government support and guarantees. In return, UBS agreed to acquire Credit Suisse for $3 billion Swiss francs, and assume as much as 5 billion francs in losses.

Highlighting the challenges UBS will face going forward, on Monday, Credit Suisse said it had seen 61 billion francs ($68 billion) in assets leave the bank over the first quarter, and that the outflows were continuing into the second quarter.