Tag: UBS Group AG

UBS is in talks to take over all or part of Credit Suisse, sources tell the Financial Times

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UBS is in talks to take over all or part of Credit Suisse, the Financial Times reported, citing multiple people familiar involved in the discussions.

According to the report, the Swiss National Bank and Finma, its regulator, are behind the negotiations, which are aimed at boosting confidence in the Swiss banking sector.

Earlier this week, the embattled Credit Suisse said it would borrow as much as 50 billion Swiss francs (or nearly $54 billion) from the Swiss National Bank. But even with that move, Credit Suisse shares have continued to fall. Credit Suisse shares closed lower by nearly 7% on Friday, but are down 24% for the week.

Swiss regulators have told U.S. and U.K. regulators that a merger of the two banks was their “plan A,” the people told the Financial Times. But there continue to be other options that may be considered, they said.

The paper said UBS declined to comment. Credit Suisse also declined to comment.

UBS reported fourth quarter and full-year earnings.

Fabrice Coffrini | Afp | Getty Images

The global banking sector has been under increasing pressure in the wake of Silicon Valley Bank’s failure last week. Since that event, crypto-focused Signature Bank was also closed by regulators and regional bank shares have lost millions in market cap. Among the stocks suffering the biggest losses is First Republic Bank, which tanked nearly 33% on Friday.

First Republic’s losses were particularly unnerving as they came after 11 other banks pledged to deposit $30 billion at the bank for at least 120 days. That rescue was an attempt by the largest U.S. banks to shore up confidence in the financial sector.

Credit Suisse began to tumble earlier this week when it was revealed that its biggest backer, Saudi National Bank, would not be able to provide additional financial support.

On Wednesday, Swiss National Bank said it would provide Credit Suisse with additional liquidity and the Swiss Financial Market Supervisory Authority issued a statement saying the bank met “capital and liquidity requirements.” However, the unease in the banking sector is continuing.

The pressure to combine UBS and Credit Suisse recalls the 2008 financial crisis when Bear Stearns was sold to JPMorgan in a fire-sale deal. Despite the seemingly low price of that transaction, JPMorgan’s Jamie Dimon has said he regretted the decision. That lesson is likely being weighed by UBS executives and its board as part of the reported negotiations.

Read the full story here.

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March 17, 2023
UBS posts better-than-expected profit, as wealth-management unit brings in $23.3 billion in new client money

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UBS Group AG on Tuesday reported a surprise rise in fourth-quarter profit as its wealth-management arm attracted billions in new client money, offsetting a slump at its investment bank amid macroeconomic headwinds.

The Swiss bank
UBS,
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reported a net profit of $1.65 billion in the three months to the end of December, up from $1.35 billion for the same period a year earlier.

Revenue was $8.03 billion compared with $8.71 billion in the fourth quarter of 2021.

It meant the Zurich-based bank beat 4Q estimates of net profit of $1.28 billion and revenue at $7.98 billion, according to analysts’ consensus provided by the company.

UBS said it took on $23.3 billion in net new fee-generating assets at its key wealth-management business in the quarter, at a time when its local rival Credit Suisse Group AG had struggled with client withdrawals.

Profit before tax at wealth management jumped 88% to $1.06 billion, it added.

It also attracted $25 billion in net new money at its asset-management business, UBS said.

But at its investment bank, profit before tax tumbled to around $100 million, down 84%, as dealmaking slumped.

The bank cited persistent inflation, rapid central bank tightening, the Ukraine war, and geopolitical tensions that affected asset-pricing levels and investor sentiment in the year.

“While the macroeconomic outlook remains uncertain, our operational resilience, capital strength and capital generation put us in a great position to serve our clients, fund growth and deliver strong capital returns to shareholders,” Chief Executive Ralph Hamers said.

Its common equity tier 1 ratio, a measure of financial strength, at the end of December was 14.2%, down from 14.4% at the third quarter.

The company said it would propose a dividend of $0.55 for 2022, a 10% year-on-year increase.

The lender added that it would remain committed to a progressive dividend and expects to repurchase more than $5 billion of shares in 2023, after $5.6 billion in 2022.

Write to Ed Frankl at edward.frankl@dowjones.com

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January 30, 2023
UBS gets a boost from higher rates, but lower client activity brings down revenues
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UBS reported fourth quarter and full-year earnings.

Fabrice Coffrini | Afp | Getty Images

UBS beat market expectations with its latest results on the back of lower expenses and higher interest rates. But the lender’s revenues declined because of weaker client activity.

The bank reported $1.7 billion of net income for the fourth quarter of last year, bringing its total annual profit to $7.6 billion in 2022. Analysts had expected UBS would achieve a net income of $1.3 billion in the fourth quarter and of $7.3 billion for the year, according to Refinitiv data.

Looking ahead, the Swiss lender said that revenues for the first quarter of 2023 are set “to be positively influenced” by higher client activity and interest rates, as well as by the easing of Covid-19 restrictions in Asia.

“We delivered good full-year and solid fourth-quarter results in a difficult macroeconomic and geopolitical environment,” CEO Ralph Hamers said in a statement.

Here are a couple of highlights from the latest release:

CET 1 capital ratio, a measure of bank solvency, stood at 14.2%, down from 14.4% in the previous quarter;

Revenues dropped to $8.029 billion from $8.705 billion a year ago;

Return on tangible equity, a measure of bank’s performance, rose to 13.2% at the end of the quarter, up from 10% a year ago.

Among the bank’s units, Global Wealth Management posted a fourth-quarter net interest income increase of 35% on the year, given higher deposit margins off the back of higher interest rates. Personal and Corporate Banking also recorded a 21% year-on-year hike in net interest income over the same period, as a result of higher interest rates and loan revenues.

But market uncertainty hit the investment banking and asset management arms of the business. The former saw a 24% yearly drop in revenues, whereas asset management revenues fell by 31% year-on-year due to the “negative market performance and foreign currency effects.”

“The rate environment is helping the business on one side, and that offsets some of the lower activity that we see on the investment side,” Hamers told CNBC’s Geoff Cutmore on Tuesday.

He added that, following the first half of last year, there was a shift in the markets that put pressure on the investment side of the bank.

“We saw a move from what we would call micro focus, which is equity focused, to macro focus, which is rates focused,” he said, noting that the Swiss bank was not able to benefit from that transition as much as some of its peers, given its smaller presence in the U.S.

‘Uncertain’ Outlook

UBS said it will be purchasing more shares this year.

“We remain committed to a progressive dividend and expect to repurchase more than $5 billion of shares in 2023,” Hamers said in a statement.

However, the Swiss bank is cautious about the economic outlook, citing central bank activity as a potential catalyst for market volatility.

“While inflation may have peaked in the second half of 2022, and an energy crisis in Europe seems likely to be averted, the outlook for economic growth, asset valuations and market volatility remains highly uncertain, and central bank tightening may have an impact on market liquidity,” the bank said in its latest results.

UBS shares are up by about 15% over the last 12 months.
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January 30, 2023
Swiss bank UBS posts 24% profit slide but beats analyst expectations
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UBS reports its latest earnings

FABRICE COFFRINI | AFP | Getty Images

UBS on Tuesday reported a net income of $1.7 billion for the third quarter of this year, slightly above analyst expectations, with the Swiss bank citing a challenging environment.

Analysts had expected a net profit of $1.64 billion, according to Refinitiv data. UBS reported a net income of $2.3 billion a year ago.

The Swiss lender had missed expectations in the last quarter when it posted a net profit of $2.108 billion. The bank said at the time the second quarter had been “one of the most challenging periods for investors in the last 10 years” due to high inflation, the war in Ukraine and strict Covid-19 policies in Asia.

UBS said Tuesday these factors continued to be in investors’ minds in the third quarter.

“The macroeconomic and geopolitical environment has become increasingly complex. Clients remain concerned about persistently high inflation, elevated energy prices, the war in Ukraine and residual effects of the pandemic,” Ralph Hamers, CEO of UBS, said in a statement.

Other highlights for the quarter include:

Revenues hit $8.3 billion, down from $9.1 billion a year ago.

Operating expenses dropped to $5.9 billion, from $6.2 billion a year ago.

CET 1 capital ratio, a measure of bank solvency, reached 14.4% versus 14.9% a year ago.

Its investment banking division saw revenues down by 19% with the lower performance in equity derivatives, cash equities, and financing revenue being offset by revenues in foreign exchange. The Global Wealth Management division also reported lower revenues, down by 4% year-on-year.

However, Personal and Corporate Banking revenues rose over the same period on more beneficial rates from the Swiss National Bank.

Shares of UBS are down about 8% so far this year.
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October 24, 2022