UBS profits rise after Credit Suisse client defections

UBS enjoyed a 23 per cent rise in pre-tax profits in the final quarter as it benefited from clients switching from rival Credit Suisse.

The Swiss bank on Tuesday reported $1.7bn of net profit in the final three months of 2022, comfortably ahead of analyst estimates of $1.3bn, bringing the group’s profit for the year to $7.6bn.

The bank was one of the main recipients of clients pulling billions of dollars from their wealth management accounts at Credit Suisse late last year, following social media rumours about its financial health.

Net new fee-generating assets — a metric UBS uses for new money managed — rose by $23bn in the final quarter, bringing the total for the year to $60bn.

“Clients turned to us for advice and stability,” said chief executive Ralph Hamers.

The bank also benefited from rising interest rates, with net interest income in its wealth management business increasing 35 per cent, although revenues at its investment bank dropped 24 per cent.

Analysts tipped UBS’s investment bank to be one of the strongest performers in Europe, even though it faced the same challenging market conditions as Wall Street lenders last year.

In their full-year results this month, US banks reported a 16 per cent fall in investment banking revenues, with fixed income fees down 30 per cent and equity fees dropping 8 per cent.

Revenues in UBS’s global markets division dropped 11 per cent while its global banking unit suffered a 52 per cent fall in income, mainly driven by lower capital markets revenues.

UBS repurchased $5.6bn of shares in 2022 and said it planned to distribute a further $5bn to shareholders in buybacks in 2023, ahead of the $4.7bn forecast by analysts.

The bank returned a total $7.3bn to shareholders in 2022 and said it would increase its dividend by 10 per cent to $0.55 per share.

UBS shares have risen 25 per cent over the past three months to SFr19.80 ($21.40) as banks have benefited from rising interest rates.

While the bank’s shares trade at a 24 per cent premium to its book value — making it the most valuable large bank in Europe — it still trails US competitors on the same measure, such as Morgan Stanley at a 75 per cent premium and JPMorgan at 55 per cent.

Chair Colm Kelleher, who joined last year, has prioritised attracting large US active fund managers to boost the group’s share price and narrow its valuation gap with Wall Street peers.