UBS, the Swiss banking giant, has exceeded expectations for its fourth-quarter earnings and announced plans to buy back shares worth up to $1 billion later this year. Despite posting a net loss of $279 million for the quarter, which was attributed to the costs of integrating fallen rival Credit Suisse, UBS managed to beat analysts’ predictions of a wider loss. The bank also plans to propose a dividend per share of $0.70, marking a 27% increase from the previous year.
In the third quarter, UBS reported a net loss of $785 million due to expenses related to the integration of Credit Suisse. However, the market focused on the bank’s strong underlying operating profit before tax, which exceeded expectations. For the fourth quarter, UBS reported an operating profit before tax of $592 million.
Since completing the takeover of Credit Suisse’s wealth management business in June 2023, UBS has experienced a quicker-than-expected return of client inflows. The integration process is ongoing, with UBS planning to cut around 3,000 Credit Suisse jobs as part of a wider restructuring effort. The first phase of the strategic integration has been completed, and the full merger is expected to be finalized by the end of the second quarter.
UBS CEO Sergio Ermotti expressed his gratitude for the efforts of UBS colleagues in stabilizing the franchise and making significant progress in the integration process. He also highlighted that clients have entrusted UBS with $77 billion of net new assets since the acquisition, demonstrating their confidence in the bank’s advice despite challenging geopolitical and macroeconomic conditions.
Despite these positive developments, UBS shares have had a lackluster start to 2024, closing Monday’s trade down 1.5% since the beginning of the year.
Other highlights from UBS’s fourth-quarter report include total group revenues of $10.86 billion, a decrease from $11.7 billion in the previous quarter. The bank’s CET1 capital ratio, which measures liquidity, stood at 14.5%, slightly higher than the previous quarter’s ratio of 14.4%. In terms of net new assets, UBS saw $77 billion in its flagship Global Wealth Management division and across the personal and corporate banking division since the completion of the Credit Suisse acquisition. For the fourth quarter alone, Global Wealth Management recorded net new assets of $21.8 billion.
While this news is still developing, it showcases UBS’s ability to navigate challenges and deliver positive results. Investors will be closely monitoring the bank’s progress as it continues to integrate Credit Suisse and implement its restructuring plans.