UBS Beats Earnings Expectations and Plans $1 Billion Share Buyback

Zurich, Switzerland – UBS, the Swiss banking giant, reported that it narrowly beat fourth-quarter earnings expectations on Tuesday and revealed plans to 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. This figure was actually better than analysts had anticipated, as they had expected a wider net loss of $372 million.

In addition to the share buybacks, UBS plans to propose a dividend per share of $0.70, marking a 27% increase year-on-year. The company had previously posted a bigger-than-expected net loss of $785 million in the third quarter, which included $2 billion in expenses related to the integration of Credit Suisse. Despite this setback, the market has chosen to focus on the bank’s strong underlying operating profit before tax, which came in at $592 million for the fourth quarter.

Since completing the takeover of Credit Suisse in June 2023, UBS has reported a quicker than expected return of client inflows to Credit Suisse’s wealth management business. The company has also begun a process of cutting around 3,000 Credit Suisse jobs as part of the wider restructure, and on Tuesday, announced the completion of the first phase of the strategic integration.

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

Overall, UBS shares have made an indifferent start to 2024, closing Monday’s trade down 1.5% since the turn of the year. The company reported total group revenues of $10.86 billion, down from $11.7 billion in the third quarter, and a CET1 capital ratio of 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.

The latest developments at UBS demonstrate the challenges and opportunities that come with integrating fallen rivals and adjusting to changing market conditions, positioning the company for future growth and success.