UBS Q4 and FY2022 Earnings

UBS beat market expectations with its latest results amid lower costs and higher interest rates.

The bank reported $1.7 billion in net income for the fourth quarter last year, bringing its total annual profit to $7.6 billion in 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 data from Refinitiv.

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

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

Here are some highlights from the latest release:

• The CET 1 capital ratio, a measure of a bank’s 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 tangible capital, a measure of the bank’s performance, rose to 13.2 percent at the end of the quarter from 10 percent a year ago.

Among the bank’s units, Global Wealth Management reported a 35% year-over-year increase in fourth-quarter net interest income, given higher deposit margins amid higher interest rates. Personal and corporate banking also saw a 21% year-over-year increase in net interest income over the same period, driven by higher interest rates and loan income.

But market uncertainty has hit investment banking and asset management businesses. The former reported a 24% year-on-year drop in revenue, while asset management revenue was down 31% year-on-year due to “negative market performance and foreign currency effects”.

UBS also said it would buy more shares in 2023.

“We remain committed to a progressive dividend and expect to buy back more than $5 billion of shares in 2023,” Hammers said.

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