Bank UBS has announced its results for the past financial year. The crux lies in the fine print, although the financial institution shines above all.
In absolute terms, the big bank UBS has delivered a respectable annual result, if it weren’t for just one little word “but”. Exactly thereby the 9.6 billion dollars in pre-tax profit for the past financial year shine first with considerable gloss.
In the fourth quarter of 2022 alone, there was an operating profit of almost two billion dollars, as the Swiss flagship credit institution announced today, Tuesday.
Less becomes more
To be sure, total revenues fell nearly a billion from a year earlier to 34.6 billion dollars. Net income, however, rose by about 150 million to 7.7 billion dollars compared to 2021.
With so much light, however, there is also a lot of shadow, and that is evident in the corporate goals that the top dog in the Swiss financial industry recently imposed upon itself alongside struggling Credit Suisse.
Fine-tuning cost base
UBS Group CEO Ralph Hamers, for example, wanted to keep the cost-income-ratio within the target range of 70 to 73 percent. He succeeded quite well, with 72.1 percent for the full year 2022.
However, the figure deteriorated to 75.8 percent in the fourth quarter, sticking well outside the target range. UBS must therefore continue to fine-tune its cost base and/or generate more revenues in order to be on track for this target.
Outside target range
The second company target is the return on CET1 capital, where UBS aims for a range between 15 and 18 percent. Here, too, this was achieved for the full year at 17 percent. In the fourth quarter of 2022, however, the ratio was 14.7 percent and thus outside the target range.
The share buyback program is also interesting in this context. UBS planned to spend 5.5 billion dollars on this in the past fiscal quarter.
In the fourth quarter, the bank spent 1.3 billion dollars and had to really step on the gas to reach its target for the year.
Finally, UBS landed on 5.6 billion dollars in share buybacks.
Profit growth difficult
Last, but not least, Hamer gave himself his ambitious growth target in Global Wealth Management. There, pre-tax profit growth is expected to be 10 to 15 percent over the strategy cycle.
In 2022, however, the big bank only achieved growth of 4 percent, which shows how difficult profitable expansion in the financial sector is overall at the moment. In the third quarter, UBS came to -4 percent and over the first three quarters to -7 percent, as also reported by muula.ch.
However, individual quarters may well be subject to fluctuations – growth in the segment was a high 88 percent in the fourth quarter.
U.S.A. in focus
One thing is clear from UBS’s annual financial statements, however. The situation is far from bad, but profitable growth is not easy to achieve. The major Swiss bank definitely wants to grow in the U. S., as muula.ch recently published.
But on customers, like the Russian oligarch Roman Abramovich, which belonged to the customer master of the large bank at least and as also muula.ch reported, the credit institute could, probably, nevertheless confidently do without in view of its pre-tax profit of ten billion dollars in only one year.