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UBS reports a 137% jump in profit, but has concerns over economic recovery

UBS reports a 137% jump in profit, but has concerns over economic recovery

LONDON — UBS, the sphere’s largest wealth manager, has reported glean income of $1.71 billion for the fourth quarter of 2020, a 137% jump on the year previous to.

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Analysts had anticipated income to come in at $967 million for the three-month duration, according to Refinitiv. It comes after the Swiss bank reported glean income of $2.1 billion for the third quarter of last year.

Double-digit profit growth in UBS’ wealth management and asset management divisions contributed to the quarterly performance.

The bank also revealed that it may probably restart buying back its shares. It announced a fresh three-year program in which it plans to purchase as a lot as 4 billion Swiss francs ($4.5 billion) of shares, $1 billion of which can be purchased during the first quarter of 2021. Buybacks offer a way for corporations to return cash to shareholders — along with dividends — and usually coincide with a company’s stock pushing increased as shares gather scarcer.

At a time when banks have been discouraged from paying dividends, UBS also announced this can imply a 2020 dividend of $0.37 per share.

The consequences are the first underneath the leadership of Ralph Hamers, who took over as the fresh chief govt officer on Nov. 1.

Speaking to CNBC on Tuesday, Hamers highlighted a “file quantity in invested assets of more than 1 trillion (dollars) in the asset manager and more than 3 trillion (dollars) in the wealth manager.”

“And basically that reveals you the success of UBS, which is (a) very solid asset manager, very solid wealth manager, (and) if the markets are repositioning, you gape that Investment Banking does really nicely,” he advised CNBC’s Joumanna Bercetche.

Economic uncertainty on the back of Covid-19

Regardless of beating analyst expectations with its outcomes, UBS was cautious on the economic outlook.

“On the one aspect clearly there may be some gentle at the finish of the tunnel with the vaccination programs,” Hamers said.

But he added: “On the various aspect we are in heavy lockdowns, certainly also right here in Europe, so that you gain now not know what the real impact on the economic system is and how the economic system will actually gather out of this pandemic.”

The start of 2021 has been clouded by tighter social restrictions, mainly in Europe, where governments have also been criticized for a gradual roll out of Covid-19 vaccines. There are also concerns over fresh variants of coronavirus which are more transmissible and leading to increased infections ranges.

“Recent developments, including economic and political situations in some large economies and geopolitical tensions, have again raised questions around the shape and pace of the recovery,” the bank said in its result statement.

Here are some various key metrics from the implications:

  • Operating income came in at $8.1 billion, versus $8.9 billion at the finish of the third quarter.
  • Basic fairness tier 1 capital ratio (CET1) — a metric of bank solvency — was 13.8% versus 13.5% in the previous quarter.
  • Return on tangible fairness — a metric of profitability — hit 12.9%, compared with 16.2% in the previous quarter.

UBS shares are up around 3% since the start of the year.

UBS reports a 137% jump in profit, but has concerns over economic recovery