By Ariane Luthi
ZURICH (Reuters) -Fourth-quarter profit at UBS Group well exceeded forecasts on Tuesday but the lender’s shares fell as its buyback plans, contingent on no changes to Swiss capital rules, failed to impress investors.
After an initial surge, UBS shares were down 5.5% at 0938 GMT even as other bank stock prices rose.
Analysts noted that UBS’s results were mixed, with net new assets missing forecasts, and that a lot of expectation was built into the price with shares up more than 80% since the bank bought its rival Credit Suisse in a 2023 emergency takeover.
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, if there were no major changes to Swiss bank capital rules.
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 financial sector less competitive.
The fourth quarter saw UBS post net profit attributable to shareholders of $770 million, its fourth consecutive quarter of profit.
That far exceeded an average estimate of $483 million in a company-provided poll, with UBS benefitting from lower-than-expected costs, robust revenue 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,” and achieve financial targets and growth initiatives, 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.
During a call to discuss the results with analysts, Ermotti urged Switzerland not to saddle UBS with capital requirements that could hurt returns to shareholders.
“Offsetting the consequences of higher requirements would make us uncompetitive domestically and abroad, hamper our ability to help clients grow, and importantly, make banking services more expensive for Swiss families and enterprises in the long run,” he said.
“It will also damage the nation’s standing as an attractive global financial center, and ultimately hurt our position as the third-largest private employer in Switzerland.”
INTEGRATION
Total revenues at the bank climbed 7% to $11.6 billion year-on-year, narrowly beating the company-provided consensus forecast of $11.5 billion.
The bank 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.
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, Edwina Gibbs and Bernadette Baum)
