Switzerland's largest bank posted a better-than-expected profit in the fourth quarter. The bank will increase its dividend this year and buy back more shares.

UBS's business model, trimmed for solidity, proved its worth in 2022: Net profit attributable to shareholders in what bankers commonly refer to as a «horror year» rose 2 percent from 2021 to $7.63 billion at the Swiss market leader, the institution reported Tuesday.

The UBS board of directors, which is particularly concerned about a higher valuation of UBS shares, now confirmed the previously announced dividend increase of 10 percent to 55 cents per share.

After the bank bought back its own shares worth the equivalent of $5.6 billion in 2022, buybacks of more than $5 billion have been announced for this year. This puts the bank in line with market expectations.

Fourth Quarter Figures

UBS posted a net profit attributable to shareholders in the fourth quarter of $1.65 billion, and $7.63 billion for the year 2022 as a whole, according to figures released Tuesday. The fourth quarter result is better than expected, and the annual result improves on the $7.457 billion net profit the bank made in 2021.

Total revenues in the fourth quarter were $8.09 billion while operating expenses fell to $6.09 billion, down 13 percent from a year ago. UBS said that the fourth quarter of last year included $740 million in litigation provisions for a cross-border legal case with France.

Excluding the provisions, operating expenses would have decreased by 3 percent and pre-tax profit would have declined 22 percent, according to UBS.

Marginally Better Than Expected

The Global Wealth Management (GWM) unit booked a pre-tax profit of $1.1 billion in the fourth quarter, which was marginally better than expected. Compared to the year-ago result of $563 million, it marked an 88 percent increase. For 2022, the net profit for the unit fell to $4.6 billion, a decline of five percent. 

GWM attracted $23.3 billion in new fee-generating assets for the quarter, bringing the total new money for the year to $60.1 billion, according to UBS.

Difficult Conditions

CEO Ralph Hamers said, «we could achieve this in a year marked by difficult macroeconomic conditions, persistent inflation, rapid monetary tightening, the war between Russia and Ukraine, the impact of the Corona pandemic in China, and other geopolitical tensions.» He also said that UBS is starting 2023 from a position of strength despite uncertain macroeconomic conditions. 

The Asset Management division reported a pre-tax profit of $124 million for the fourth quarter a decline of 63 percent.

More Buybacks

After buying back $5.6 billion of shares last year, Hamers said UBS plans to buy back more than $5 billion this year as well.

Furthermore, the bank will continue to pursue a progressive dividend payment policy.

Expanding in the US

UBS will continue to pursue growth opportunities in the US, Hamers said. In the Americas region, the GWM unit attracted $17 billion in fee-generating money and closed the quarter with strong advisor recruiting efforts.  

 More to follow.