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UBS Posts Profit, Plans $1 Bln Buy Back; Warns On Client Activity; Stock Dips

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Shares of UBS Group AG (UBS) were losing around 5 percent in the early morning trading after the Swiss banking giant warned on client activity in the first quarter, despite reporting a profit in its fourth quarter, compared to prior year's hefty loss.

For 2018, the Board of Directors intends to propose a dividend of CHF 0.706 per share, an 8% increase on the prior year. For 2019, UBS is targeting to repurchase up to $1 billion of shares.

Looking ahead, the company said the client activity in the first quarter of 2019 will be affected by lack of progress in resolving geopolitical tensions, rising protectionism and trade disputes along with increased volatility. These had hurt investor sentiment and confidence in the second half and particularly in the fourth quarter of 2018, the company noted.

Further, lower invested assets as a result of market declines in the fourth quarter of 2018 are expected to affect recurring revenues in Global Wealth Management and Asset Management.

"Further improvements in market levels, as well as improvements in investor sentiment and client activity would contribute to mitigating revenue and profit growth headwinds," the bank said.

While global economic activity continues to moderate, the overall outlook for economic growth remains positive, and asset prices have improved from the fourth quarter of 2018.

For the fourth quarter, net profit attributable to shareholders was $696 million or $0.18 per share, compared to net loss of $2.42 billion or $0.65 per share a year ago.

The prior year's results included $2.94 billion net write-down of deferred tax assets or DTAs following the enactment of the US Tax Cuts and Jobs Act in the fourth quarter of 2017.

Operating profit before tax was $862 million, higher than prior year's $845 million. Adjusted profit before tax was $860 million, compared to last year's $1.08 billion.

Operating income for the quarter declined to $6.97 billion from last year's $7.21 billion.

For the year 2018, UBS' attributable net profit was $4.90 billion, compared to prior year's profit of $969 million. Profit before tax went up 19% year over year to $6.37 billion on higher operating income and lower operating expenses. The company noted that Global Wealth Management recurring net fee income and net interest income both reached the highest level in a decade, while the Investment Bank delivered higher revenues with continued disciplined resource usage.

In Switzerland, UBS shares were trading at 12.80 francs, down 4.62%.

In pre-market activity on the NYSE, UBS shares were losing 2.3 percent to trade at $13.30.

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