LONDON – UBS, the world’s largest wealth manager, reported a net income of $ 1.71 billion for the fourth quarter of 2020, a jump of 137% over the previous year.
According to Refinitiv, analysts expected revenue for the three-month period to be $ 967 million. This comes after the Swiss bank reported a net income of $ 2.1 billion for the third quarter of last year.
Double-digit profit growth in UBS’s Wealth Management and Asset Management divisions contributed to the quarterly performance.
The bank also revealed that it would buy back its shares. It announced a new three-year program in which it plans to buy up to 4 billion Swiss francs ($ 4.5 billion) in shares, of which $ 1 billion will be purchased during the first quarter of 2021. Repurchase provides a way for companies to give back cash. to shareholders – along with dividends – and usually coincides with a company’s share rising higher as shares become more scarce.
At a time when banks were discouraged from paying dividends, UBS also announced that it would propose a $ 0.37 per share dividend in 2020.
The results are the first led by Ralph Hamers, who took over as the new CEO on November 1st.
In an interview with CNBC on Tuesday, Hamers highlighted a “record number in investment assets of more than $ 1 trillion in the asset manager and more than $ 3 trillion in the wealth manager.”
“And basically it shows you the success of UBS, which is (a) very strong asset manager, a very strong wealth manager, (and) if the markets reposition, you see that Investment Banking is doing really well,” he told CNMA’s Joumanna Bercetche said. .
Economic uncertainty at the back of Covid-19
Despite the expectations of analysts with its results, UBS was cautious with the economic outlook.
“On the one hand, there is clear light at the end of the tunnel with the vaccination programs,” Hamers said.
But he added: “On the other hand, we find ourselves very heavy, certainly here in Europe as well, so you do not know what the real impact is on the economy and how the economy will actually emerge from this pandemic.”
The beginning of 2021 has been clouded by stricter social restrictions, especially in Europe, where governments have also been criticized for the slow deployment of Covid-19 vaccines. There are also concerns about new variants of coronavirus that are more transmissible and that lead to higher infection levels.
“Recent developments, including economic and political situations in some major economies and geopolitical tensions, have again raised questions about the form and pace of recovery,” the bank said in a statement.
Here are some other important statistics from the results:
- Operating income was $ 8.1 billion, compared to $ 8.9 billion at the end of the third quarter.
- Common Equity Tier 1 capital ratio (CET1) – a benchmark for bank solvency – was 13.8% compared to 13.5% in the previous quarter.
- The return on tangible equity – a measure of profitability – was 12.9%, compared to 16.2% in the previous quarter.
UBS shares have risen about 3% since the beginning of the year.