UBS Earnings Q4 and FY 2022

UBS Beating market expectations with its recent results on the back of lower costs and higher interest rates.

The bank reported net income of $1.7 billion in the fourth quarter of last year, bringing its total annual profit to $7.6 billion by 2022.

Analysts had expected UBS to post net income of $1.3 billion in the fourth quarter and $7.3 billion for the year, according to Refinitiv data.

The Swiss lender said earnings in the first quarter of 2023 were set to be “positively impacted” by higher customer activity, higher interest rates and easing of Covid-19 regulations in Asia.

“We delivered good full-year and strong fourth-quarter results in a challenging macroeconomic and geopolitical environment,” CEO Ralph Hammer said in a statement.

Here are some highlights from the latest release:

• CET 1 capital ratio, a measure of bank solvency, stood at 14.2%, down from 14.4% in the previous quarter;
• Revenue fell to $8.029 billion from $8.705 billion a year ago.
• Return on equity, a measure of bank performance, rose to 13.2 percent at the end of the quarter, up from 10 percent a year ago.

Among the bank’s divisions, Global Wealth Management reported a 35 percent increase in net interest income in the fourth quarter as it enjoyed higher deposit margins on the back of higher interest rates. Personal and Corporate Banking recorded 21% year-on-year growth in net interest income during the same period, a result of higher interest rates and loan income.

But market volatility has affected the business’s investment banking and asset management tools. The former reported a 24 percent year-over-year decline in revenues, while asset management revenues fell 31 percent year-over-year due to “negative market performance and foreign exchange effects.”

UBS also said it will buy back more shares in 2023.

“We are committed to a growing dividend and expect to buy back more than $5 billion in shares by 2023,” Hammer said.

UBS shares are up about 15 percent over the past 12 months.