By Ariane Luthi
ZURICH (Reuters) -UBS Group posted fourth-quarter profit that beat forecasts by a wide margin and said it would buy back up to $3 billion in shares this year if there were no major changes to bank capital rules in Switzerland in the near term.
The country’s largest lender, which has made progress in integrating former rival Credit Suisse, said it plans to repurchase $1 billion of shares in the first half of 2025 and up to $2 billion in the second half.
To prevent a repeat of scandal-hit Credit Suisse’s meltdown, Swiss authorities have pledged to draw up stricter banking regulations, at the centre of which are plans to make UBS hold more capital. But it is not yet clear how much that will be.
UBS says existing capital requirements are appropriate and has warned the Swiss government that excessive demands could make the country’s financial sector less competitive.
The fourth quarter saw UBS post net profit attributable to shareholders of $770 million, pushing its shares up by 3% at opening, and marking its fourth consecutive quarter of profit.
The figure was far more than an average estimate of $483 million in a company-provided poll, with UBS benefitting from lower-than-expected costs, robust revenues and a strong performance by its investment bank.
“We achieved all key integration milestones in 2024 and significantly reduced execution risk, while our capital position remained robust,” UBS CEO Sergio Ermotti said in a statement.
“We are confident in our ability to substantially complete the integration by the end of 2026, achieve our financial targets, and fulfill our growth initiatives as we position UBS for a successful future,” he added.
UBS said it was on track to achieve planned cost savings, though it raised its forecast for integration-related expenses to $14 billion by the end of 2026, up from $13 billion.
Total revenues climbed 7% to $11.6 billion year-on-year, narrowly beating the company-provided consensus forecast of $11.5 billion.
The bank also said it would maintain its target common equity tier 1 capital (CET1) ratio of around 14%.
Analysts at Bank Vontobel lauded UBS for “good cost management” though Citi analysts noted overall cost saving and cost-income guidance through end-2026 remained unchanged and gave a neutral rating.
“On balance a decent set of results, but perhaps not as good as at first glance,” the Citi analysts wrote.
Net new assets attracted in global wealth management during the quarter amounted to $18 billion, missing a forecast of $21 billion from Zuercher Kantonalbank analysts.
Investors have warmed to the 2023 Credit Suisse takeover, with UBS’s shares rising by more than 80% since then.
UBS Chief Executive Sergio Ermotti said last week the migrating of Credit Suisse clients to its IT system was going well, but that it would remain a major focal point for the next 12 months.
(Reporting by Ariane Luthi; Editing by Dave Graham and Edwina Gibbs)
