LONDON – UBS, the world’s largest asset manager, reported net income of $ 1.71 billion for the fourth quarter of 2020, up 137% from the previous year.
According to Refinitiv, analysts had expected revenues to be $ 967 million for the three-month period. It comes after the Swiss bank reported net profit of $ 2.1 billion for the third quarter of last year.
Double digit earnings growth in the asset management and asset management divisions of UBS contributed to the quarterly results.
The bank also announced that it would start buying back its shares again. It announced a new three-year program in which it plans to buy up to 4 billion Swiss francs ($ 4.5 billion) in shares, of which $ 1 billion will be bought in the first quarter of 2021. Buyback offers companies a way to money back. to shareholders – along with dividends – and usually coincides with a company’s stock rising as stocks become scarcer.
At a time when banks were discouraged from paying dividends, UBS also announced that it will propose a 2020 dividend of $ 0.37 per share.
The results are the first under the leadership of Ralph Hamers, who took over the position of new CEO on November 1.
In a conversation with CNBC on Tuesday, Hamers highlighted “a record number of invested assets of more than $ 1 trillion in the asset manager and more than $ 3 trillion in the asset manager.”
“And basically shows you the success of UBS, which is (a) very strong asset manager, very strong asset manager, (and) as the markets reposition, you see Investment Banking doing very well,” he told CNBC’s Joumanna Bercetche . .
Economic uncertainty due to Covid-19
Despite exceeding analyst 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 the vaccination programs,” said Hamers.
But he added, “On the other hand, we are in severe lockdowns, especially here in Europe, 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 beginning of 2021 was clouded by tighter social restrictions, especially in Europe, where governments were also criticized for slow introduction of Covid-19 vaccines. There are also concerns about new variants of coronavirus that are more transmissible and lead to higher infection levels.
“Recent developments, including economic and political situations in some major economies and geopolitical tensions, have again raised questions about the shape and pace of the recovery,” the bank said in its statement of results.
Here are some other important statistics from the results:
- Income from operations was $ 8.1 billion, versus $ 8.9 billion at the end of the third quarter.
- Common equity tier 1 capital ratio (CET1) – a measure of bank solvency – was 13.8% versus 13.5% in the previous quarter.
- Return on tangible equity – a measure of profitability – was 12.9%, compared to 16.2% in the previous quarter.
The UBS share is up about 3% since the beginning of the year.