UBS beats earnings expectations, announces up to $1 billion share buyback

Swiss banking giant UBS on Tuesday narrowly beat fourth-quarter earnings expectations and announced that it would recommence share buybacks worth up to $1 billion in the second half of the year.

The group posted a net loss attributable to shareholders of $279 million for the quarter, its second consecutive loss due to the costs of integrating fallen rival Credit Suisse. However, analysts polled by LSEG had expected a wider net loss of $372 million.

Along with the share buybacks, UBS plans to propose a dividend per share of $0.70, up 27% year-on-year.

In the third quarter, UBS had posted a bigger-than-expected net loss attributable to shareholders of $785 million — which factored in $2 billion in expenses related to the integration of fallen rival Credit Suisse.

After that third quarter report, the market chose to focus on the bank’s strong underlying operating profit before tax, which was well ahead of expectations. For the fourth quarter, that came in at $592 million.

UBS has also reported a quicker than expected return of client inflows to Credit Suisse’s wealth management business since the takeover, which it completed in June 2023.

The integration of its stricken rival continues, with UBS embarking on a process of cutting around 3,000 Credit Suisse jobs as part of the wider restructure.

UBS announced on Tuesday that it had completed the first phase of the strategic integration, and that the full merger is expected to be completed by the end of the second quarter.

“Thanks to the exceptional efforts of all of our colleagues, we stabilized the franchise and have made tremendous progress in the integration,” UBS CEO Sergio Ermotti said in a statement.

“In addition, clients entrusted us with USD 77 billion of net new assets since the acquisition and relied on our advice in a challenging geopolitical and macroeconomic environment.”

UBS shares have made an indifferent start to 2024, closing Monday’s trade down 1.5% since the turn of the year.

Here are some other highlights:

• Total group revenues were $10.86 billion, down from $11.7 billion in the third quarter.
• CET1 capital ratio, a measure of bank liquidity, was 14.5%, compared to 14.4% the previous quarter.
• Net new assets in the flagship Global Wealth Management were $77 billion, while net new deposits across GWM and the personal and corporate banking division also totaled $77 billion, since closing the Credit Suisse acquisition in 2023.
• For the fourth quarter, GWM net new assets were $21.8 billion.

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