Greater rates of interest assist drive UBS to This autumn web revenue beat

By Scott Kanowsky — UBS Group AG (SIX:UBSG) has reported higher than anticipated web revenue within the fourth quarter, as elevated rates of interest helped offset a drawdown in buying and selling volumes, though a muted response from analysts weighed on the inventory in early buying and selling on Tuesday.

The Swiss lender posted web revenue attributable to shareholders of $1.65 billion for the three months ended on December 31, up 23% in comparison with the identical interval in 2021 and above Bloomberg consensus forecasts of $1.29B. Its revenue for the 12 months elevated to $7.6B.

The financial institution’s key world wealth administration enterprise undergirded the rise. The unit’s pre-tax revenue surged by 88% year-on-year due partially to a leap in web curiosity revenue as rising borrowing prices led to increased deposit margins. Nevertheless, this uptick was dampened by a lower in common deposit volumes, reflecting funding warning from non-public shoppers attributable to geopolitical uncertainties and a broader market downturn.

Working bills on the division additionally dropped by 17%, though this was a good comparability to the ultimate quarter of 2021, when UBS was hit by $657 million in litigation provisions linked to a tax evasion case in France.

Elsewhere, the spike in charges helped increase pre-tax earnings at UBS’ private and company banking unit by 51%. However the identical determine at its asset administration division slipped by 63% to $124M, as destructive market tendencies and international foreign money results led to a steep decline in charges. Funding banking income decreased to $1.68B, lacking analysts’ estimates, following a dip in equities gross sales.

Group chief govt Ralph Hamers known as the quarterly returns “strong” regardless of “a difficult macroeconomic surroundings, persistent inflation, speedy central financial institution tightening, the Russia–Ukraine struggle, the affect of COVID in China, and different geopolitical tensions.”

Analysts had a blended response to the results, sending shares decrease. Analysts at Jefferies famous that the better-than-expected web revenue was helped by one-off income advantages and a decrease tax charge, including that the “bar is excessive” for UBS given its shares are buying and selling close to 52-week highs.

Trying forward, UBS expects first-quarter top-line outcomes to be positively influenced by increased shopper exercise ranges as fairness markets present indicators of restoration from a pointy downturn final 12 months.

The group proposed a dividend per share of 55 cents for the 2022 fiscal 12 months, according to estimates. It additionally purchased again $5.6B of shares in 2022, and plans to repurchase over $5B extra in 2023.

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