UBS remained strong last year, benefiting from higher volumes and buoyant financial markets. The momentum eased somewhat in the 4th quarter.
The number one Swiss bank has generally exceeded expectations despite new provisions in France. Shareholders will be pampered. The annual profit amounted to 7.46 billion dollars (6.90 billion francs), up 13.7% according to indications provided on Tuesday by the Zurich banking giant.
This surge in profits will benefit shareholders. The board of directors will propose a significantly increased dividend (+35%) to 0.50 dollar per share, once morest 0.37 dollar for 2020. In addition to this, UBS plans share buybacks capped at 5 billion this year, following 2.6 billion in 2021.
The annual performance was started by a perceived slowdown in the last partial. In the fourth quarter, net profit fell 18% to $1.35 billion. Pre-tax income was 1.73 billion, which represents a decline of 13%.
Profitability suffered from a new provision of 740 million dollars in connection with the dispute over cross-border wealth management activities in France, which caused a 14% increase in expenses to 7.00 billion. In mid-December, the large bank was found guilty at second instance of illicit transactions and complicity in money laundering.
Revenue jumped 7.6% to $8.37 billion, although the pace slowed from the previous quarter. “The fourth quarter capped a year of sustained growth,” Chief Executive Ralph Hamers said in the statement.
A fifth of the savings
Strategic activity, the wealth management division saw its profit before tax melt by nearly 44% to 563 billion dollars, weighed down by the provision in France. Asset management also posted a lower result in annual comparison, unlike investment banking (+32% to 713 million).
Quarterly figures released by UBS show a mixed picture. Net profit, pre-tax profit, the performance of the investment banking and asset management division as well as the dividend per share deflated the expectations of analysts polled by AWP. Expenses and especially the result of the wealth management unit were disappointing.
In 2021, the wealth management division’s fee-earning assets grew 16% to $1.481 billion, on net cash inflows of $106.9 billion. For 2021, UBS claims annualized net inflow growth of 8%.
UBA believes its cost reduction target of $1 billion by 2023 is on track. A fifth of the savings has already been achieved last year. Cuts of up to 0.4 billion are planned for each financial year, in 2022 and 2023.
In terms of financial objectives, management is now counting on a core capital ratio of between 15 and 18% (15.0% at the end of December), a ratio between expenses and income in the range of 70-73% (73 .6% in 2021) and pre-tax profit growth of 10-15% in the wealth management division.
/ ATS
