LONDON – UBS, the world’s largest wealth manager, reported net income of $ 1.71 billion for the fourth quarter of 2020, up 137% from a year earlier.
Analysts expected revenues to reach $ 967 million over the three-month period, according to Refinitiv. This comes after the Swiss bank reported net income of $ 2.1 billion for the third quarter of last year.
Double-digit profit growth in the UBS wealth management and asset management divisions contributed to quarterly performance.
The bank also revealed that it will resume buying shares. It has announced a new three-year program in which it intends to acquire shares of up to 4 billion Swiss francs ($ 4.5 billion), of which $ 1 billion will be purchased in the first quarter of 2021. Shareholders – along with dividends – and usually coincide with the shares of a company that grow more as shares become rarer.
At a time when banks have been discouraged from paying dividends, UBS has also announced that it will propose a $ 0.37 per share dividend in 2020.
The results are the first under the leadership of Ralph Hamers, who took over as executive director on November 1.
Speaking to CNBC on Tuesday, Hamers highlighted a “record number of assets invested of more than 1 trillion (dollars) in the asset manager and more than 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 that Investment Banking is doing very well,” he told Joumanna CNBC cradle.
Economic uncertainty behind Covid-19
Despite exceeding analysts’ expectations with its results, UBS has been cautious about the economic outlook.
“On the one hand, there is clearly a light at the end of the tunnel with vaccination programs,” Hamers said.
He added: “On the other hand, we are in heavy bottlenecks, certainly here in Europe, so you do not know what the real impact on the economy is and how the economy will actually emerge from this pandemic.”
The beginning of 2021 was marred by stricter social restrictions, especially in Europe, where governments have also been criticized for the slow release of Covid-19 vaccines. There are also concerns about new variants of coronavirus, which are more communicable and lead to higher levels of infections.
“Recent developments, including the economic and political situation in some large economies and geopolitical tensions, have again raised questions about the form and pace of recovery,” the bank said in a statement.
Here are some other key values from the results:
- Operating income was $ 8.1 billion, compared to $ 8.9 billion at the end of the third quarter.
- The Tier 1 equity ratio (CET1) – a value of bank solvency – was 13.8% compared to 13.5% in the previous quarter.
- The return on tangible capital – a value of profitability – reached 12.9%, compared to 16.2% in the previous quarter.
UBS shares have risen about 3% since the beginning of the year.