Profits down, but UBS beats expectations and is optimistic for 2017

William Turvill
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UBS said earlier this month that it would be moving jobs from London as a result of Brexit (Source: Getty)

UBS has beaten expectations with its fourth-quarter results and said improved investor confidence should benefit its wealth management business.

The figures

The Swiss bank this morning reported a 47 per cent fall in full-year net profits to 3.3bnSFr (£2.6bn), down from 6.2bnSFr in 2015.

In its fourth quarter, net profit came in at 738mSFr, while diluted earnings per share were 0.19SFr.

Read more: UBS will have to move bankers out of London because of Brexit

Net profit for the quarter came in well ahead of expectations, with a Reuters poll of analysts finding a median estimate of 339mSFr.

The bank’s proposed dividend for the year was 0.60SFr, flat on 2015.

Why it’s interesting

UBS’ wealth management division reported a pre-tax profit of 2.4bnSFr, down 15 per cent on 2015.

But the firm appears optimistic for 2017:

Although macroeconomic uncertainty, geopolitical tensions and divisive politics continue to affect client sentiment and transaction volumes, we have begun to observe improved investor confidence, primarily in the US, which may benefit our wealth management businesses. Lower than expected and negative interest rates, particularly in Switzerland and the Eurozone, continue to present headwinds to net interest margins, which may be offset by the effect of higher US dollar interest rates.

Earlier this month, UBS followed other banks in declaring that it is planning to move staff out of London because of Brexit. No further details were contained in today’s results.

Read more: RBS no closer to privatisation despite £3.1bn US fine provision

What the company said

Group chief executive Sergio Ermotti:

Despite a very challenging market environment in 2016, we achieved solid results, thanks to our balanced business and geographic mix, as well as our strong focus on executing our strategy. Wealth Management Americas delivered a record performance, and our Swiss Personal and Corporate business achieved its best full-year results since 2008. While we saw persistent client risk aversion and substantial cross-border outflows, we generated over 40bn SFr of net new money in our wealth management businesses.

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