UBS profits rise after Credit Suisse client defections

UBS 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. © Keystone / Gaetan Bally

UBS enjoyed a 23% 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 $1.7 billion (CHF1.58 billion) of net profit in the final three months of 2022, comfortably ahead of analyst estimates of $1.3 billion, bringing the group’s profit for the year to $7.6 billion.

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 $23 billion in the final quarter, bringing the total for the year to $60 billion.

“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%, although revenues at its investment bank dropped 24%.

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% fall in investment banking revenues, with fixed income fees down 30% and equity fees dropping 8%.

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

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

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

UBS shares have risen 25% over the past three months to CHF19.80 ($21.40) as banks have benefited from rising interest rates.

While the bank’s shares trade at a 24% 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% premium and JPMorgan at 55%.

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.

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