UBS Reports Strong Q4 Profit Growth, Warns Of Interest Income Decline

UBS Group AG UBS shares are trading lower after it reported fourth-quarter 2024 sales of $11.6 billion. That’s up 7% year-over-year, beating the consensus of $11.2 billion.

Underlying revenues upped 6% year-over-year to $11 billion, led by the performance of core businesses.

Underlying operating profit before tax reached $1.8 billion, a significant increase of 198% Y/Y in the quarter.

Global Wealth Management’s net new assets for the quarter were $18 billion, with revenues rising 10% Y/Y to $6.1 billion.

The group posted a net profit attributable to shareholders of $770 million for the quarter. A year ago, the firm reported a loss of $279 million. EPS of 23 cents beat the consensus of 22 cents.

CET1 capital ratio, a measure of bank liquidity, was 14.3%, same as in year ago quarter.

UBS CEO Sergio P. Ermotti said the firm “captured growth in Global Wealth and Asset Management” and gained market share in investment banking.

“With over 70 billion Swiss francs of loans granted or renewed, we continued to be a reliable partner for the Swiss economy,” he added.

The company achieved additional gross cost savings of $700 million in exit rate gross cost saves in the quarter, for a total of about $3.4 billion in FY24. 

Outlook: In the first quarter, UBS anticipates a low-to-mid single-digit sequential decline in Global Wealth Management’s net interest income (NII) and a ~10% drop in Personal & Corporate Banking’s NII (CHF).

The bank projects integration-related expenses of around ~$1.1 billion, while PPA accretion should contribute ~$0.5 billion to total revenues.

UBS says it is on track to reach ~$13 billion in gross cost savings by 2026 compared to FY22.

The Swiss bank now expects integration-related expenses of total ~$14 billion by 2026.

Investors can gain exposure to the stock via Avantis International Equity ETF AVDE and Avantis International Large Cap Value ETF AVIV.

Price Action: UBS shares are down 6.45% at $32.69 at the last check Tuesday.

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