UBS shares fell on Tuesday after the Swiss banking giant reported fourth-quarter earnings that fell short of market expectations, despite announcing plans for a $3 billion share buyback.
The bank posted a net profit of $770 million for the quarter, exceeding a company-provided consensus estimate of $483 million but falling below the $886.4 million forecast in a poll by LSEG analysts. Group revenue reached $11.635 billion, aligning with analyst expectations.
UBS unveiled a two-phase buyback program, planning to repurchase $1 billion in shares in the first half of 2025 and up to $2 billion in the second half of this year. However, the bank noted that these targets depend on meeting financial goals and the stability of Switzerland’s capital regulations. Additionally, UBS proposed a dividend of $0.90 per share for 2024, a 29% increase from the previous year.
Despite initially opening higher, UBS shares dropped 5.57% by mid-morning in London. Analysts from Deutsche Bank acknowledged the “solid” earnings report but noted that the performance of the Personal & Corporate Banking division was weaker than expected. Citi analysts described the results as “decent” but raised concerns over continued pressure on net interest income (NII) into the first quarter.
Key Financial Metrics
- Return on Tangible Equity: 3.9%, down from 7.3% in Q3.
- CET1 Capital Ratio: 14.3%, unchanged from the previous quarter.
Investment banking was a bright spot for UBS, with revenues soaring 37% year-on-year, driven by strong performance in global banking and markets. The wealth management division also posted a 10% revenue increase, benefiting from higher recurring net fee income and transaction-based earnings.
CEO Sergio Ermotti told CNBC that UBS remains focused on improving its investment banking business to match industry leaders. He highlighted revenue growth in equities, capital markets, and mergers & acquisitions, as well as increased returns in wealth management.
Looking ahead, UBS warned of a low-to-mid single-digit percentage decline in NII for its Global Wealth Management division in the first quarter, alongside a steeper 10% drop in the Personal & Corporate Banking segment.
