UBS Q4 2021 Profit Spurs Bank’s Agenda to Increase Financial Targets

Prominent Swiss bank UBS Group AG recently posted its earnings for the fourth quarter (Q4) 2021, which showed a decline in profit. However, the latest results beat analysts’ expectations and engendered new ambitious profitability targets by the banking powerhouse. This also includes a planned increase in its share buyback program.

Net profit attributable to shareholders posted by UBS for the fourth quarter stood at $1.35 billion. This figure marked a noticeable drawdown from the $1.64 billion recorded a year earlier, and was lower than the $2.28 billion reported from the previous quarter. However, UBS Q4 report trumped a forecast of $863 million in net income attributable to shareholders. With the latest quarterly profit, UBS’ full-year profit is now $7.46 billion, 14% higher than the preceding year. In addition, it also now sits above a company-compiled consensus of $6.98 billion.

According to UBS chief executive officer Ralph Hamers, the banking giant’s Q4 outing represented a great way to conclude a profitable year. As he put it:

“The fourth quarter was a very good ending to a record year, the best year in 15 years, both from a pre-tax and a post-tax perspective. The markets business held up really well with an operating income of 11% increase year-on-year, we saw net new money in the asset manager at $16 billion and we saw $27 billion of fee-generating assets coming in in the wealth manager.”

UBS Looks to Build on Q4 Profit with An Increment to Its Planned Share Buyback Program

UBS now has its sights on loftier targets following the better-than-anticipated results from the preceding year(s). The bank issued an accompanying statement with its latest results, which read:

“We are aiming to create sustainable value through the cycle. Reflecting our improved operating performance over the last two years, we have updated our financial targets, while our capital guidance remains unchanged.”

One of UBS’ financial targets is to buy back $5 billion worth of shares this year, approximately doubling its total buyback initiative. The bank also set the target range for its return on CET1 capital at 15-18% and cost-to-income ratio at 70-73%. UBS will also eye a 10-15% growth in profit before tax at its wealth management business. Furthermore, the Swiss bank also revealed that it will aim for $6 trillion in invested assets across several of its operational divisions. These include global wealth management, asset management, and personal and corporate banking.

This is also CEO Hamers’ second year at the helm of the Swiss banking giant. Now, the former ING Group CEO is providing more shareholder insight into his plans for the bank. Hamers expressed that the occurring developements put UBS in a better position to further serve clients.

UBS is in the middle of a French tax and money laundering case which recently cost the bank as much as $740 million. According to Hamers, the bank is carefully weighing its options in that regard.

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