UBS Group on Tuesday (Feb 4) posted fourth-quarter profit that beat forecasts by a wide margin and said it would buy back up to US$3 billion in shares this year if there were no major changes to bank capital rules in Switzerland in the near term.
The country’s largest lender, which has made progress in integrating former rival Credit Suisse, said it plans to repurchase US$1 billion of shares in the first half of 2025 and up to US$2 billion in the second half.
To prevent a repeat of scandal-hit Credit Suisse’s meltdown, Swiss authorities have pledged to draw up stricter banking regulations, at the centre of which are plans to make UBS hold more capital. But it is not yet clear how much that will be.
UBS says existing capital requirements are appropriate, and has warned the Swiss government that excessive demands could make the country’s financial sector less competitive.
The fourth quarter saw UBS posted net profit attributable to shareholders of US$770 million, marking its fourth consecutive quarter of profit.
That was far more than an average estimate of US$483 million in a company-provided poll, with UBS benefitting from lower-than-expected costs, robust revenues and a strong performance by its investment bank.
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“We achieved all key integration milestones in 2024 and significantly reduced execution risk, while our capital position remained robust,” UBS CEO Sergio Ermotti said in a statement.
“We are confident in our ability to substantially complete the integration by the end of 2026, achieve our financial targets, and fulfill our growth initiatives as we position UBS for a successful future,” he added.
UBS said it was on track to achieve planned cost savings, though it raised its forecast for integration-related expenses to US$14 billion by the end of 2026, up from US$13 billion.
Total revenues climbed 7 per cent to US$11.6 billion year-on-year, narrowly beating the company-provided consensus forecast of US$11.5 billion.
The bank also said it would maintain its target common equity tier one capital (CET1) ratio of around 14 per cent.
Net new assets attracted in global wealth management during the quarter amounted to US$18 billion, missing a forecast of US$21 billion from Zuercher Kantonalbank analysts.
Investors have warmed to the 2023 Credit Suisse takeover, with UBS’s shares rising by more than 80 per cent since then.
UBS chief executive Sergio Ermotti said last week the migrating of Credit Suisse clients to its IT system was going well, but that it would remain a major focal point for the next 12 months. REUTERS
