UBS goes from strength to strength

Business is booming for UBS swissinfo.ch

UBS has announced another record year, reporting on Tuesday a net profit of SFr9.844 billion ($7.53 billion) from its operations in 2005.

Switzerland’s largest bank said that total 2005 attributable profit was SFr14.029 billion, which included a net gain of SFr3.704 billion from the sale of three private banks and asset manager GAM to Bank Julius Bär.

“As in 2004, we have achieved another record level of profit,” commented UBS chief executive Peter Wuffli.

“Although markets clearly helped us last year, we believe the result also reflects the sustainable earnings power of UBS, based on our client-centric strategy of business focus and growth.”

The group’s financial officer, Clive Standish, was also upbeat about the year’s performance.

“All our businesses put in a stronger performance in 2005. We saw really constructive developments with revenues growing much faster than costs,” he said.

Above expectations

UBS also reported a higher net profit of SFr2.629 billion in the fourth quarter of 2005, above the forecasts of market analysts.

Total new money for 2005 at the bank, which is the world’s largest wealth manager, totalled SFr148 billion, up 80 per cent compared with the previous year.

A UBS statement described the wealth and asset management businesses as having had “excellent” years.

Strong client inflows, along with rising markets, drove total invested assets (excluding the divestitures) up by 25 per cent on the year, and, in turn, strengthened asset-based fees.

Revenues from advising corporate and institutional clients also rose to a record high.

UBS said this reflected strong capital market activity in 2005 – with its investment bank continuing to establish itself as a preferred partner for many major corporations and institutional investors.

The board is to recommend a payout of SFr3.60 per share at the annual shareholders’ meeting in April, comprising a regular dividend of SFr3.20 (plus seven per cent over 2004), plus a one-time repayment of SFr0.60 per share.

Shareholders’ gain

The bank said this repayment would allow shareholders to benefit from the gain realised from the sale of private banks and GAM.

Analyst Beat Pfiffner from the Zurich cantonal bank was satisfied with the UBS performance.

“The figures are certainly good, everything is very solid, above expectations,” he commented.

“The shares have already gained a lot so nobody would be surprised if there were some profit taking. They have a good outlook and a good result… The payout with the par value repayment is higher than expected.”

UBS said that early indications for 2006 showed that business had started on a positive note.

Deal pipelines were promising, investors are upbeat and macroeconomic indicators were encouraging, the statement said.

Chief executive Wuffli said he was therefore optimistic for 2006 and beyond.

“We now have a strong competitive position in the areas we chose to invest in – among them European wealth management, alternative investments, investment banking, prime brokerage and in Asia Pacific across business lines.”

“These areas are becoming major revenue contributors, allowing us to invest in other opportunities that fit our strategy,” he added.

Rival Credit Suisse is due to announce its 2005 financial figures on Wednesday.

swissinfo with agencies

Key facts

Financial figures 2005

Net profit: SFr9.844 billion (+28%)
Total attributable profit: SFr14.029 billion (+75%)
Total net new money: SFr148 billion (+80%)
Proposed dividend payout: SFr3.80
Staff at the end of 2005: 69,569 (26,028 in Switzerland)

In brief

The present UBS took shape in the 1990s through a series of mergers and acquisitions that transformed a mainly Swiss business into a global institution.

In December 1997 the Union Bank of Switzerland and the Swiss Bank Corporation announced their merger, which was completed in June 1998.

Later that year UBS had to declare a SFr793 million pre-tax loss after the collapse of the Long Term Capital Management (LTCM) hedge fund in which Union Bank of Switzerland had invested.

The firm’s first major acquisition in 2000 was PaineWebber, the fourth-largest securities broker in the United States. This filled a strategic and regional gap in UBS’s wealth management business.

In June 2003, the bank adopted the single UBS brand for all its major businesses.