UBS has posted a 137% year-on-year growth in Q4 2020 profit, driven by wealth and asset management businesses.
The Swiss wealth manager also doubled the size of an earlier share buyback programme, with plans to repurchase up to $4.5bn of shares over the coming three-year period.
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It intends to buy back $1.1bn of this in Q1 2021.
The firm also plans to propose a 2020 dividend of $0.37 per share.
Key group metrics in Q4 2020
The group’s attributable net profit in the quarter to December 2020 stood at $1.71bn, versus $722m in the corresponding quarter of 2019.
Operating income increased to $8.12bn from $7.05bn. Operating expenses dropped 1% to $6.06bn from $6.12bn over the period.
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By GlobalDataThe common equity tier 1 capital ratio (CET1), a key measure of strength, was 13.8% at the end of 2020. The year-ago ratio was 13.5%.
The cost/income ratio was 73% at year-end, which is said to be the lowest since 2006 and exceeded the target of 75–78%.
Quarterly performance across segments
Global Wealth Management
The unit’s pre-tax profit was $936m in Q4 2020, 22% higher than the previous year.
Net interest income increased 2%, as higher revenues from lending offset the pressure from lower USD interest rates on deposits.
Invested assets grew to an all-time high of $3.01bn, while inflows in all regions contributed to net new money of $21.1bn.
Investment Bank
The unit’s profit before tax was $529m in Q4 2020, versus a loss of 22m in the prior year.
Higher client activity levels, mainly across equity derivatives, cash equities as well as credit product lines led to a 21% growth in Global Markets revenue increased by. Significant growth was also recorded in Equity Capital Markets and Advisory.
Asset Management
Pre-tax profit at the division jumped 123% to $401m. Higher performance fees due to increases in its hedge fund businesses led to a 40% growth in operating income.
Invested assets breached the $1trn mark for the first time, soaring 21% year-on-year to $1.09bn. Net new money was $22.2bn, and $38bn when stripping off money market flows.
Commenting on the performance, UBS group CEO Ralph Hamers said: “We met or exceeded every single one of our growth and returns targets.
“As significant to me, though, is that every single business division and region played a role in this success. Global Wealth Management and Asset Management recorded double-digit profit before tax growth, while the Investment Bank achieved a 20% return on attributed equity. Regionally, profit before tax in the Americas and Asia Pacific increased by over 1 billion each.”
