UBS Beats Earnings Expectations, Announces $1B Share Buyback

UBS, the Swiss banking giant, surpassed expectations in its fourth-quarter earnings report released on Tuesday. It disclosed plans to reintroduce share buybacks totaling $1 billion in the latter half of the year.

Despite facing challenges from integrating the troubled rival Credit Suisse, the group reported a net loss attributable to shareholders for the quarter.

This marked its second consecutive quarterly loss, with the figure standing at $279 million. However, it was notably narrower than the expected net loss of $372 million, as per analysts surveyed by LSEG.

Alongside the share buyback program, UBS outlined its proposal to distribute a dividend per share of $0.70. This represents a significant 27% increase compared to the previous year.

In the third quarter, a larger-than-expected net loss attributable to shareholders was recorded, amounting to $785 million. This was primarily due to $2 billion in expenses associated with the integration of Credit Suisse.

UBS 2024 shares
Swiss banking giant UBS exceeded Q4 expectations and plans $1B share buybacks. (Credits: Google Finance)

Despite this setback, the market focused on the bank’s strong underlying operating profit before tax, which exceeded expectations.

However, in the fourth quarter, the operating profit was $592 million, falling short of the company-compiled consensus of $762 million.

During a CNBC interview on Tuesday, UBS CEO Sergio Ermotti expressed satisfaction with the underlying profitability and positive client momentum.

He highlighted $22 billion in net new assets and significant inflows in deposits across both wealth management and personal and corporate banking.

Ermotti emphasized the strategic reduction of exposure in non-core and legacy areas and underscored further advancements in cost-saving targets, aiming for a $4 billion exit rate in 2023.

According to Ermotti, these positive outcomes provide the confidence needed to embark on the next phase of restructuring and integration.

Ermotti also underscored the importance of net new money growth in the wealth management division, especially in the Credit Suisse legacy segment.

This metric is a critical indicator of the combined entity’s capability to retain and possibly regain clients lost by Credit Suisse amid concerns about its financial health.

Notably, the Credit Suisse segment of the wealth management business has been operating near breakeven, if not slightly at a loss.

CEO of UBS- Sergio Ermotti.

Therefore, the infusion of new assets under management becomes crucial for the division’s financial performance, intending to boost fee income and restore profitability.

UBS successfully navigated through a challenging quarter, exceeding projections and signaling a positive trajectory with strategic initiatives like share buybacks and increased dividends.

The bank’s emphasis on underlying profitability and client growth, notably in the crucial Credit Suisse legacy segment, lays the groundwork for the next phase of restructuring and integration.

Sajda Parveen
Sajda Parveen
Sajda Praveen is a market expert. She has over 6 years of experience in the field and she shares her expertise with readers. You can reach out to her at [email protected]
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