ZURICH, May 7 (Reuters) - UBS booked net income

for January-March that was more than double estimates as it

logged its first quarterly profit since taking over fallen rival

Credit Suisse.

The group's wealth management arm also reported on Tuesday

$27 billion in net new assets for the first quarter of the year,

compared to $22 billion for the three months prior.

UBS, however, flagged that lower lending and deposit volumes

as well as lower interest rates in Switzerland could impact the

bank's wealth management division.

"In the second quarter of 2024, we expect a low-to-mid

single-digit decline in net interest income in Global Wealth

Management," the bank said in a statement.

UBS also said that it had achieved an additional $1 billion

in gross cost savings in the first quarter, taking total savings

since the merger to $5 billion. It is aiming to achieve another

$1.5 billion in savings by the end of the year.

Net income attributable to shareholders for Switzerland's

largest bank came in at $1.8 billion, better than a

company-provided consensus estimate of $602 million and a profit

of $1 billion in the same period a year earlier.

The first merger of two global systemically important banks

- orchestrated by Swiss authorities who feared that

scandal-ridden Credit Suisse was on the brink of collapse - was

completed last June after which UBS posted two consecutive

quarters of losses due to the costs of absorbing its rival.

Despite the shotgun nature of the takeover, investors have

been upbeat about UBS's prospects given the low acquisition

costs and its huge increase in assets. Shares in the bank have

climbed some 40% over the past year.

This year is expected to be a pivotal year for UBS as it

tackles some of the trickier stages of integration such as

combining separate IT systems and legal entities, as well as

migrating clients from Credit Suisse to UBS.

With the merger, UBS's balance sheet has expanded to more

than $1.6 trillion, nearly twice the size of Switzerland's

economy and worrying regulators who fear huge consequences

should the bank run into trouble.

Switzerland's government recently laid out plans for how to

police banks deemed "too big to fail" and tougher capital rules

are expected sometime in the next few years.

UBS said its current financials will allow it to execute on

its 2024 capital return targets.

This includes a plan to repurchase up to $1 billion in

shares this year as well as increase last year's dividend of

$0.70 per share by a mid-teen percentage in 2024.