LONDON — UBS, the on cloud nine’s largest wealth manager, has reported net income of $1.71 billion for the fourth quarter of 2020, a 137% jump on the year formerly.
Analysts had expected income to come in at $967 million for the three-month period, according to Refinitiv. It comes after the Swiss bank put out net income of $2.1 billion for the third quarter of last year.
Double-digit profit growth in UBS’ wealth management and asset directing divisions contributed to the quarterly performance.
The bank also revealed that it would restart buying back its rations. It announced a new three-year program in which it plans to purchase up to 4 billion Swiss francs ($4.5 billion) of shares, $1 billion of which desire be purchased during the first quarter of 2021. Buybacks offer a way for firms to return cash to shareholders — along with dividends — and mainly coincide with a company’s stock pushing higher as shares get scarcer.
At a time when banks have been prevented from paying dividends, UBS also announced it will propose a 2020 dividend of $0.37 per share.
The results are the basic under the leadership of Ralph Hamers, who took over as the new chief executive officer on Nov. 1.
Speaking to CNBC on Tuesday, Hamers highlighted a “notation number in invested assets of more than 1 trillion (dollars) in the asset manager and more than 3 trillion (dollars) in the riches manager.”
“And basically that shows you the success of UBS, which is (a) very strong asset manager, very strong wherewithal manager, (and) if the markets are repositioning, you see that Investment Banking does really well,” he told CNBC’s Joumanna Bercetche.
Financial uncertainty on the back of Covid-19
Despite beating analyst expectations with its results, UBS was cautious on the economic outlook.
“On the one side obviously there is some light at the end of the tunnel with the vaccination programs,” Hamers said.
But he added: “On the other side we are in laden lockdowns, certainly also here in Europe, 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 start of 2021 has been clouded by tighter social restrictions, mainly in Europe, where superintendences have also been criticized for a slow roll out of Covid-19 vaccines. There are also concerns over new variables of coronavirus which are more transmissible and leading to higher infections levels.
“Recent developments, including economic and bureaucratic situations in some large economies and geopolitical tensions, have again raised questions around the shape and rate of speed of the recovery,” the bank said in its result statement.
Here are some other key metrics from the results:
- Operating takings came in at $8.1 billion, versus $8.9 billion at the end of the third quarter.
- Common equity tier 1 capital correlation (CET1) — a metric of bank solvency — was 13.8% versus 13.5% in the previous quarter.
- Return on tangible equity — a metric of profitability — hit 12.9%, approached with 16.2% in the previous quarter.
UBS shares are up around 3% since the start of the year.