UBS earnings: fourth quarter of 2020

LONDON – UBS, the world’s largest wealth manager, posted a net profit of $ 1.71 billion in the fourth quarter of 2020, a 137% jump from the previous year.

Analysts had expected revenue to reach $ 967 million over the three-month period, according to Refinitiv. This is after the Swiss bank reported net income of $ 2.1 billion in the third quarter of last year.

Double-digit profit growth in the wealth management and asset management divisions of UBS contributed to the quarterly performance.

The bank also revealed that it would restart the buyback of its shares. It announced a new three-year program in which it plans to buy up to 4 billion Swiss francs ($ 4.5 billion) in shares, $ 1 billion of which will be acquired during the first quarter of 2021. Repurchases offer a way to companies return money to shareholders – along with dividends – and it generally coincides with a company’s shares rising as shares become scarcer.

At a time when banks were discouraged from paying dividends, UBS also announced that it will propose a dividend of $ 0.37 per share for 2020.

The results are the first under the leadership of Ralph Hamers, who took over as the new CEO on November 1.

Speaking to CNBC on Tuesday, Hamers highlighted a “record number of assets invested in excess of 1 trillion (dollars) in the asset manager and more than 3 trillion (dollars) in the wealth manager”.

“And basically this shows the success of UBS, which is (a) a very strong asset manager, a very strong wealth manager (e) if the markets are repositioning, you see that the Investment Bank is doing very well”, he told CNBC’s Joumanna Bercetche.

Despite exceeding analysts’ expectations with its results, UBS was cautious about the economic outlook.

“On the one hand, there is clearly some light at the end of the tunnel with vaccination programs,” said Hamers.

But he added: “On the other hand, we are in strong blocks, certainly here in Europe, too, so you don’t know what the real impact on the economy is and how the economy will really get out of this pandemic.”

The beginning of 2021 was overshadowed by stricter social restrictions, mainly in Europe, where governments were also criticized for the slow implementation of Covid-19 vaccines. There are also concerns about new variants of the coronavirus, which are more transmissible and lead to higher levels of infections.

“Recent developments, including economic and political situations in some large economies and geopolitical tensions, have again raised questions about the form and pace of the recovery,” said the bank in its earnings release.

Here are some other important result metrics:

• Operating revenue was $ 8.1 billion, against $ 8.9 billion at the end of the third quarter.
• The Common Equity Tier 1 capital ratio (CET1) – a bank solvency metric – was 13.8% against 13.5% in the previous quarter.
• The return on tangible equity – profitability metric – reached 12.9%, compared to 16.2% in the previous quarter.

UBS shares have risen about 3% since the beginning of the year.