UBS sails beyond profit expectations

It's all looking shipshape at UBS Keystone

Switzerland’s largest bank, UBS, has reported its second most profitable year ever.

Net profit at the world’s largest asset manager soared to SFr6.385 billion ($5.18 billion) in 2003, up by 81 per cent on the previous year.

Fourth-quarter net profit came in at SFr1.86 billion, beating even the most optimistic expectations.

“2003 turned out to be a surprisingly good year for financial markets and a terrific year for UBS,” commented CEO Peter Wuffli in a statement.

For the 2003 financial year, the UBS board of directors is recommending a dividend of SFr2.60 per share, an increase of 30 per cent on the 2002 figure.

“Our businesses have made substantial competitive gains across the globe,” Wuffli added.

“Put that together with tight cost control and disciplined capital management and we’ve delivered rapid earnings per share growth, combined with a high return on equity, so that now we can reward our shareholders with a record dividend.”

Record dividend

Senior European banks analyst David Hussey at Barclays Stockbrokers commented that the figures were well above consensus expectations, which had clearly pleased the market.

“They are very good figures. The revenue line is a little bit flat pretty much across most of the divisions, but broadly people thought the numbers would be worse than they actually are, so that’s good news,” he told swissinfo.

“2003 was an exceptionally strong year for UBS because the asset quality was fantastic and they cut an awful lot of costs out of the business, which more than compensated for the revenue declines,” he added.

UBS, which employs 66,000 staff worldwide, shed around 3,700 jobs last year.

Calmer waters

UBS said all group businesses continued to build market share as financial markets recovered.

Net new money inflows in the wealth management business totalled SFr50.8 billion in 2003.

The cash-rich bank said it had SFr2.21 trillion in assets under management at the end of 2003, a rise of eight per cent over the year, boosted by rising equity markets but hindered by the weakness of the dollar.

Although the group gave no detailed outlook for this year, Wuffli said that UBS had now entered “calmer waters” in terms of growth.

“Our businesses are all performing extremely well and are positioned for growth. Now, conditions appear to be improving and investors are increasingly optimistic,” he added.

However, individual items that UBS termed “significant financial events” influenced the results in both 2002 and 2003. Excluding these effects, and before goodwill amortisation, net profit in 2003 increased by 33 per cent from 2002.

Shares buyback

UBS, which has ruled out large acquisitions, also announced on Tuesday that it planned to buy the British wealth manager Laing and Cruickshank Investment Manager for £160 million (SFr367 million) from Crédit Lyonnais.

And it said it wanted to buy back up to SFr6 billion of shares, continuing a programme under which it has already bought back SFr16.3 billion worth of shares since 2000.

Shares in UBS jumped to a two-year high on Monday, as the market anticipated a strong result, ending up 2.6 per cent at the close of trading at SFr92.90.

Switzerland’s number two bank, Credit Suisse, is due to announce its 2003 results on Thursday.

swissinfo with agencies

Key facts

UBS is Europe’s largest bank by assets.
It is the world’s largest money manager for the rich.
UBS was formed in 1998 by the merger of the Union Bank of Switzerland and the Swiss Bank Corporation.
UBS, which employs 66,000 staff worldwide, shed around 3,700 jobs last year.

In brief

UBS posted a net profit of SFr6.385 billion in 2003, up by 81% over the previous year.

All group businesses reported a stronger set of results in 2003 than in 2002.

The board of directors is proposing a record dividend of SFr2.60 per share.

Chairman of the board of directors Marcel Ospel received remuneration (pay, blocked shares and options) in 2003 of SFr17.2 million, up by SFr5.9 million over the previous year.

The 13 members of the management and board received total remuneration in 2003 of SFr158.4 million.