The logo of the Swiss banking giant UBS, engraved on the wall, can be seen on May 8, 2019 at the headquarters in Zurich.
Fabrice Coffrini | AFP | Getty Images
LONDON – UBS, the world’s largest asset manager, reported net income of $ 1.71 billion for the fourth quarter of 2020, up 137% year over year.
According to Refinitiv, analysts had expected income of 967 million US dollars for the three-month period. It did so after the Swiss bank reported net income of $ 2.1 billion in the third quarter of last year.
Double-digit earnings growth in UBS’s wealth management and asset management businesses contributed to quarterly performance.
The bank also announced that it would resume buying back its shares. It announced a new three-year program that will buy up to 4 billion Swiss francs ($ 4.5 billion) of shares, of which $ 1 billion will be bought in the first quarter of 2021. Buybacks provide companies with an opportunity to return cash to shareholders – along with dividends – and usually coincide with a surge in a company’s stock as stocks become scarcer.
At a time when banks were being discouraged from paying dividends, UBS also announced that it would propose a 2020 dividend of $ 0.37 per share.
The result is the first under the leadership of Ralph Hamers, who took over as the new Chief Executive Officer on November 1st.
Speaking to CNBC on Tuesday, Hamers highlighted “a record number of assets invested of more than $ 1 trillion ($ 1 trillion) in the money manager and more than 3 trillion (dollars) in the money manager”.
“And basically this shows the success of UBS, which is (a) a very strong asset manager, a very strong asset manager and (and) when the markets reposition themselves you see that investment banking is doing really well,” he said Joumanna Bercetche from CNBC.
Economic uncertainty on the back of Covid-19
Although UBS exceeded analysts’ expectations with its results, it was cautious about the economic outlook.
“On the one hand, there is a clear light at the end of the tunnel with the vaccination programs,” said Hamers.
But he added: “On the other hand, we are in severe lockdowns, certainly here in Europe too. So you don’t know what the real impact on the economy is and how the economy will actually get out of this pandemic.”
The start of 2021 has been marred by stricter social restrictions, particularly in Europe, where governments have also been criticized for the slow adoption of Covid-19 vaccines. There are also concerns about new variants of the coronavirus that are more transmissible and lead to higher infection rates.
“Recent developments, including the economic and political situation in some major economies and geopolitical tensions, have raised questions about the shape and pace of the recovery,” the bank said in its statement of results.
Here are some other important metrics from the results:
- Operating income was $ 8.1 billion compared to $ 8.9 billion at the end of the third quarter.
- The core capital ratio (CET1) – a key figure for the solvency of banks – was 13.8% compared to 13.5% in the previous quarter.
- The return on equity – a measure of profitability – was 12.9% compared to 16.2% in the previous quarter.
The UBS share has risen by around 3% since the beginning of the year.