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September 14, 2022

UBS to raise dividend and buy back more shares

UBS Group is set to raise its ordinary dividend from $0.51 to $0.55 per share, which is 10% more than the previous year.

The board of the Swiss bank plans to put the proposal for shareholder approval at its annual general meeting to be held next year.

The Swiss wealth management giant also expects its share repurchases for this year to surpass the $5bn target.

Until 9 September this year, the bank has bought back $4.1bn of shares.    

UBS in a statement said: “We will provide guidance on next year’s capital return at our fourth quarter earnings presentation and expect to continue to have share repurchases and a progressive dividend.”

UBS witnessed a 1.2% surge in pre-market activity after it announced to boost its dividend, reported CNBC.

Michael Klien, an analyst from Zurich Cantonal Bank (ZKB), has termed the move a ‘surprise news’.

In a research note, Klien said: “We assume that this increase is related to the capital released due to the termination of the Wealthfront acquisition.”

According to ZKB, the increased payout has enabled UBS to have a 3.4% dividend at Monday’s closing price, which is a little lower than the average of its European counterparts but a little higher than the agreed $0.53 per share.

The latest move comes shortly after UBS cancelled the previously announced deal to buy American automated wealth management firm Wealthfront for $1.4bn.

The mutually scrapped deal was reached in January this year and it involved the purchase of Wealthfront by UBS Americas.

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