UBS Results: Q4 2020

LONDON – UBS, the world’s largest wealth manager, reported net income of $ 1.71 billion for the fourth quarter of 2020, a 137% jump from the previous year.

Analysts expected revenue to hit $ 967 million for the three-month period, according to Refinitiv. It comes after the Swiss bank reported a net profit 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 start repurchasing its shares again. It has announced a new three-year program in which it plans to buy up to 4 billion Swiss francs ($ 4.5 billion) of shares, of which $ 1 billion will be purchased in the first quarter of 2021. Buyouts allow companies to repay cash. to shareholders – as well as dividends – and usually coincide with the rise in a company’s shares as stocks become scarce.

At a time when banks have been discouraged from paying dividends, UBS also announced that it will offer a 2020 dividend of $ 0.37 per share.

The results are the first under the leadership of Ralph Hamers, who took over as the new CEO on November 1.

Speaking to CNBC on Tuesday, Hamers pointed to a “record number of invested assets of over 1 trillion (dollars) in the asset manager and over 3 trillion (dollars) in the wealth manager.”

“And basically that shows you the success of UBS, which is (a) a very strong asset manager, a very strong wealth manager, (and) if the markets reposition themselves, you see the bank of investment is doing very well, ”he told Joumanna Bercetche of CNBC. .

Although its results exceeded analysts’ expectations, UBS has been cautious about the economic outlook.

“On the one hand, there is clearly light at the end of the tunnel with vaccination programs,” Hamers said.

But he added: “On the other side, we’re in heavy lockdowns, certainly here in Europe as well, so you don’t know what the real impact is on the economy and how the economy is actually going to come out of this. pandemic.”

The start of 2021 was clouded by tighter social restrictions, mainly in Europe, where governments have also been criticized for the slow rollout of Covid-19 vaccines. There are also concerns about newer variants of coronavirus which are more transmissible and lead to higher levels of infections.

“Recent developments, including economic and political situations in some major economies and geopolitical tensions, have once again raised questions about the shape and pace of the recovery,” the bank said in its statement.

Here are some other key performance indicators:

• Operating profit was $ 8.1 billion, up from $ 8.9 billion at the end of the third quarter.
• The Common Equity Tier 1 (CET1) capital ratio – a measure of bank solvency – was 13.8% compared to 13.5% in the previous quarter.
• Return on tangible equity – a measure of profitability – reached 12.9%, up from 16.2% in the previous quarter.

UBS shares are up around 3% year-to-date.