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

Fabrice Coffrini | Afp | Getty Images

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.

“I’m very pleased that, on an underlying basis, we saw actually good profitability, and we saw also good momentum with clients. We had $22 billion of inflows in net new assets and also saw very good inflows in deposits across both wealth management and the P&C (personal and corporate banking), we have managed down exposure in non-core and legacy,” UBS CEO Sergio Ermotti told CNBC on Tuesday.

“We also made further improvements in our targets to deliver cost savings by achieving a $4 billion exit rate in cost savings in 2023, so all that contributed to good results, and this gives us the confidence to now tackle the next phase of our restructuring and integration.”

UBS CEO: Delays are the only risk to Credit Suisse integration

UBS has so far 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.

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.

Ermotti told CNBC’s Silvia Amaro on Tuesday that delays are the biggest risk to the Credit Suisse integration, given the tight targets UBS has set for itself.

“2024 is a pivotal year in that sense, because we are merging in the first half of the year our two parent companies, we are…

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

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