UBS reported fourth quarter and full year earnings.
Fabrice Coffrini | Photo Afp | Getty Images
UBSMoreFourth-quarter profit beat market expectations, but the Swiss banking giant reported lower earnings on the back of weaker client activity and warned of an “uncertain” year ahead.
The bank reported a net profit of $1.7 billion in the fourth quarter of last year, bringing it to $7.6 billion for the full year of 2022. Analysts had expected UBS to post a net profit of $1.3 billion in the fourth quarter and $7.3 billion for the full year. , according to Refinitiv data.
The bank’s Global Wealth Management division posted a 35% year-over-year increase in net interest income in the fourth quarter, driven by higher deposit margins on the back of higher interest rates. Personal and Corporate Banking also recorded a 21% year-over-year increase in net interest income over the same period as a result of higher interest rates and loan income.
However, market uncertainty has hit the investment banking and wealth management divisions of the business. The former’s revenues declined 24% on an annualized basis, while wealth management revenues declined 31% year-on-year due to “negative market performance and foreign exchange impacts.”
“The interest rate environment is one-sidedly helping business, which will offset the low activity we are seeing on the investment side,” Chief Executive Ralph Hammers told CNBC’s Jeff Cutmore on Tuesday. rice field.
He added that there have been market changes that put pressure on the investment side of the bank.
“We saw a shift from a micro focus focused on equities to a macro focus focused on rates.”
Other highlights of the results are:
- The CET 1 capital adequacy ratio, a measure of bank solvency, was 14.2%, down from 14.4% in the previous quarter.
- Total revenue fell to $8.0 billion from $8.7 billion a year ago.
- Return on tangible equity, a measure of bank performance, rose to 13.2% at the end of the quarter, up from 10% a year ago.
Looking ahead, the Swiss lender says its first quarter 2023 earnings are set to be “positively impacted” by higher client activity and interest rates, as well as the easing of Covid-19 restrictions in Asia. I said that there is.
But they were more broadly cautious on the economic outlook, as central bank activity could spur market volatility.
“Inflation may have peaked in the second half of 2022 and a European energy crisis seems likely to be averted, but the outlook for economic growth, asset valuations and market volatility remains highly uncertain. and central bank tightening could affect market liquidity,” the bank said in its earnings release.
UBS said it plans to buy more of its shares this year.
“We remain committed to a progressive dividend and expect to repurchase more than $5 billion of our stock in 2023,” Hamers said in a statement accompanying the earnings call.
Bank stocks are up about 15% in the last 12 months.