European banks' expenses rose in the fourth quarter of 2023, with Swiss bank UBS Group AG's cost-to-income ratio topping 100% as it continued to absorb expenses related to its acquisition of Credit Suisse Group AG.

UBS' ratio of 105.89% — 6.36 percentage points higher than three months earlier — was higher than any other large European bank, S&P Global Market Intelligence data shows.

UBS reported a fourth-quarter net loss attributable to shareholders of $279 million, driven by a $508 million loss from its investment in exchange operator SIX Group Ltd on top of integration-related expenses from the Credit Suisse takeover. The latter deal was orchestrated by the Swiss government in March 2023 in order to avert a wider banking crisis stemming from Credit Suisse's collapse.

Among a sample of banks with more than €100 billion in assets, all but three saw their ratios deteriorate in the quarter compared with the previous three-month period. The UK's Barclays PLC overtook Germany-based Deutsche Bank AG and had the second-highest ratio of 88.14%. Barclays also recorded the second-highest quarter-over-quarter increase with a ratio of 25.13 percentage points. Italy's BPER Banca SpA registered the highest quarterly increase.

Barclays booked a fourth-quarter attributable profit of £1.04 billion, compared to a year-ago loss of £111 million. The bank implemented £927 million of structural cost actions during the quarter to help drive future returns.

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Deutsche Bank was the third-least-efficient bank in the period, with a cost-to-income ratio of 78.70%. The lender reported a fourth-quarter net profit of €1.4 billion, down 28% year over year, impacted by goodwill impairment charges related to its acquisition of UK investment bank Numis Corp. PLC.

French banks Société Générale SA and Groupe BPCE completed the top five least-efficient banks with ratios of 78.33% and 75.60%, respectively.

Denmark's Danske Bank A/S and Jyske Bank A/S, and Spanish lender CaixaBank SA improved their ratios quarter over quarter.

On a countrywide basis, banks headquartered in the UK, France, Germany, Austria, Poland and Turkey recorded higher average cost-to-income ratios in the period than a year previously.