Credit Suisse Consolidation Weighs On UBS, Stock Tanks On Q4 Performance

UBS Group AG UBS reported fourth-quarter 2023 sales of $10.9 billion, up 35% Y/Y, beating the consensus of $10.28 billion.

The group posted a net loss attributable to shareholders of $(279) million for the quarter, compared to $(715) million in the third quarter of 2023 and $1.6 billion a year ago. Underlying operating profit reached $592 million, down from $1.87 billion a year ago.

CET1 capital ratio, a measure of bank liquidity, was 14.5%, compared to 14.4% the previous quarter and 14.2% a year ago.

For the fourth quarter, Global Wealth Management’s net new assets were $21.8 billion, with revenues increased 18% to $5.4 billion, mainly due to the consolidation of Credit Suisse revenues.

“2023 was a defining year in UBS’s history with the acquisition of Credit Suisse…we stabilized the franchise and have made tremendous progress in the integration. In addition, clients entrusted us with USD 77 billion of net new assets since the acquisition and relied on our advice in a challenging geopolitical and macroeconomic environment,” said CEO Sergio Ermotti.

Buyback: In 2023, UBS bought back $1.3 billion, which was announced before the Credit Suisse acquisition. 

In 2024, the bank expects to repurchase up to $1 billion, commencing after the completion of the merger of UBS AG and Credit Suisse AG.

For 2023, the Board of Directors plans to propose a dividend of $0.70 per share. Subject to approval at the Annual General Meeting, scheduled for 24 April 2024, the dividend will be paid on 3 May 2024 to shareholders of record on 2 May 2024.

Outlook: UBS expects 2024 revenues to be positively influenced by seasonal factors, such as higher client activity levels compared with the fourth quarter of 2023. 

The company also expects the Investment Bank to return to profitability due to improving market activity, a growing banking pipeline, and advanced progress on the integration.

NII for Personal & Corporate Banking and Global Wealth Management combined is expected to be roughly flat sequentially in the first quarter of 2024, with higher rates broadly offsetting the residual effects of deposit mix shifts and the initial impact of financial resource optimization.

Price Action: UBS shares are down 4.73% at $28.38 on the last check Tuesday.

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