Top Swiss bank UBS crushes expectations with 54% rise in 4th-quarter net profit as income from wealthy clients swells

Top Swiss bank UBS crushes expectations with 54% rise in 4th-quarter net profit as income from wealthy clients swells
FABRICE COFFRINI/AFP via Getty Images
  • Swiss bank UBS posted a 54% jump in fourth-quarter net profit to $6.6 billion on Tuesday.
  • Although the bank smashed analyst expectations, UBS cautioned on the economic outlook for 2021.
  • UBS' fourth-quarter earnings are the first results under new CEO Ralph Hamers' leadership.

Swiss lender UBS posted a 54% rise in fourth-quarter net profit on Tuesday, beating analyst expectations, driven by an increase in income for the bank's super-rich clients.

Full-year net profit jumped to $6.6 billion, well above analyst expectations of $5.9 billion.

The world's largest wealth manager doubled the size of a previous share repurchase program, saying it expects to buyback about $4.5 billion of shares over the next three years. Of that, $1.1 billion is expected to be repurchased in the first quarter this year.
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Here are the key figures for the quarter:
  • Net income: $1.7 billion versus $1.01 billion estimated
  • Global wealth management profit before tax: $936 million versus $903.8 million estimated
  • Investment bank profit before tax: $529 million versus $232.2 million

UBS' results unveil a strong start to the tenure of new chief executive Ralph Hamers, who took over from Sergio Ermotti on November 1. Furthermore, the bank said it met, or exceeded, all financial targets for 2020. A key measure of financial strength, known as the Common Equity Tier 1 capital ratio, stood at 17.6% compared to a targeted range of between 12 to 15%.

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"We stood for stability, maintained connectivity, and provided the advice and solutions our clients needed," Hamers said in a statement. "And, in turn, they entrusted us with their business - with over a hundred billion dollars in net new money."

Invested assets across the bank's asset and wealth management divisions rose to a record $4.1 trillion, from $3.6 trillion a year ago, and group revenue rose 12%. Revenue from the wealth management business, which caters to the bank's wealthiest clients, rose 3% in the quarter compared to the same period a year ago. UBS warned outlook for this year remains uncertain due to developments in geopolitical tensions and concerns over the effective distribution of COVID-19 vaccines. Still, the bank expects a positive first-quarter, driven by even higher client activity compared to its fourth-quarter.
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UBS rose 3% in early European trading. Before the latest earnings announcement, shares in the company gained 4.2% over the last year, ranking it among the best performers among the large European banks.

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