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UBS: Solid earnings report with a cautious outlook

February 4, 2014

UBS (Attractive*) reported Q4 profit of CHF 917m (USD 1.02bn), exceeding the CHF 442m Bloomberg consensus, boosted by higher earnings at its wealth management units. A year earlier, Switzerland’s biggest bank posted a loss of CHF 1.9bn after paying fines for trying to rig global interest rates. In the now focused wealth management unit, pre-tax profit rose 18% to CHF 471m. In the investment banking, UBS showed a Q4-profit of CHF 297m.

For the full year 2013, the bank achieved a net income of CHF 3.2bn compared to a CHF 2.5bn loss in the previous year. The bank set aside CHF 1.7bn for legal risks in 2013, compared with CHF 1.62bn already provisioned in the first nine months of the year. Net new money inflow in the wealth management business (on a group level) increased 14% to CHF 54bn. The wealth management private customer segment reported a pre-tax profit of CHF 2.4bn and a net-new money inflow of CHF 35.9bn, particularly from the Asia-Pacific region. In the investment banking, UBS said full-year pre-tax income was CHF 2.5bn. The core capital rate (CET1) rose 300 basis points to 12.8% in 2013. Shareholders will receive a 67% higher dividend of CHF 0.25 per share. In its outlook, the bank remained cautious, expecting headwinds in regard of margins and earnings growth. In view of this all-over-all solid report, we confirm our rating.

 

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