UBS Q4 earnings 2021

LONDON — UBS on Tuesday reported a decline in quarterly revenue, however beat analysts’ expectations. The Swiss financial institution additionally set formidable new profitability targets as a part of a strategic replace.

UBS posted web revenue attributable to shareholders of $1.35 billion for the fourth quarter, down from $1.64 billion a yr earlier and likewise decrease than the $2.28 billion reported within the earlier quarter.

Analysts had forecast UBS to publish web revenue attributable to shareholders of $863 million, based on the consensus printed by the financial institution.

“The fourth quarter was an excellent ending to a file yr, the very best yr in 15 years, each from a pre-tax and a post-tax perspective,” CEO Ralph Hamers informed CNBC on Tuesday.

“The markets enterprise held up very well with an working revenue of 11% enhance year-on-year, we noticed web new cash within the asset supervisor at $16 billion and we noticed $27 billion of fee-generating belongings coming in within the wealth supervisor,” he mentioned.

The quarterly figures take the financial institution’s full-year revenue to $7.46 billion, above a company-compiled consensus of $6.98 billion and 14% larger than the earlier yr.

Nonetheless, UBS’ backside line was hit by a rise of $740 million in litigation provisions for a French cross-border tax case. In late December, the financial institution filed an attraction with France’s Supreme Court docket in opposition to a call by a Paris appeals courtroom to uphold a cash laundering conviction, though with a diminished penalty.

Hamers mentioned the financial institution was nonetheless assessing how finest to method the continuing attraction in opposition to the ruling.

“Given the truth that you will have one other verdict right here, we additionally seemed on the general case, whether or not we wanted to alter the availability that we already had,” he informed CNBC.

“Our greatest estimate at this second in time, when it comes to what may very well be payable at a sure second in time, is 1.1 billion euro [$1.24 billion], and due to this fact we needed to enhance our provisioning by one other 650 million euros, which is $740 million.”

Listed below are different highlights for the third quarter:

• CET 1 ratio, a measure of financial institution solvency, reached 15.0% versus 14.9% within the earlier three months.
• Working revenue got here in at $8.73 billion versus $9.1 billion within the earlier quarter.
• Return on fairness, a measure of monetary efficiency, stood at 8.9% from 15.3% within the third quarter of 2021.

“We’re aiming to create sustainable worth by the cycle. Reflecting our improved working efficiency during the last two years, now we have up to date our monetary targets, whereas our capital steerage stays unchanged,” the financial institution mentioned in an announcement accompanying the outcomes.

In its first main strategic replace since Hamers took the reins in Nov. 2020, UBS mentioned it should intention for $6 trillion in invested belongings throughout its international wealth administration, asset administration and private and company banking divisions.

In the meantime, the financial institution set the goal vary for its return on CET1 capital at 15-18% and cost-to-income ratio at 70-73%. The financial institution may also intention for 10-15% progress in revenue earlier than tax at its wealth administration enterprise.

“Our new aspirations, targets and objectives will place us to reside as much as our goal, higher serve purchasers, deploy expertise in differentiated and impactful methods, and open our ecosystem for brand spanking new and current purchasers,” CEO Ralph Hamers added in an announcement.

UBS proposed a dividend to shareholders of fifty cents per share for 2021, rising from 37 cents in 2020, and goals to purchase again $5 billion price of its personal shares in 2022. Buybacks provide a means for companies to return money to shareholders — together with dividends — and often coincide with an organization’s inventory pushing larger as shares get scarcer.