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February 1, 2022updated 02 Feb 2022 6:44am

UBS sets ambitious targets after record annual performance

UBS has set new profitability goals after posting its highest annual profit since 2006, though its quarterly profit dipped.

The Swiss bank’s profit decreased to $1.35bn in Q4 2021 from $1.64bn in the prior year and $2.28bn in the previous quarter.

Key metrics

The bank’s profit before tax stood at $9.48bn for the year ended 31 December 2021, a 16% rise from the prior year.

This includes net credit loss releases of $148m, versus net credit loss expenses of $694m in 2020.

Operating income rose by 10% while YoY, with operating expenses up by 8%.

The results included a rise in litigation provisions of $740m for the French tax evasion case. If stripping off this provision, operating expenses would be up by 4% and pre-tax profit would have grown by 25%.

Attributable net profit for the full year increased 14% to $7.46m.

UBS Group CEO Ralph Hamers said: “UBS is in better shape than ever. For the second year in a row, we achieved our targets, remained disciplined in our costs and saw strong contributions from all regions and divisions. This is just the start of what we’re capable of.

“To make the most of the momentum we’ve built, our updated targets focus on where we see the biggest opportunities.”

Global Wealth Management (GWM)

The unit saw profit before tax slumping 35% year-on-year to $563m.

Operating income rose by 13%, while net interest income increased by 10%.

high levels of client activity in the Americas, EMEA and Switzerland led to 4% rise in transaction-based income.

Invested assets rose by 3% sequentially to $3.3trn, while fee generating assets rose 5% sequentially to $1.48trn.

Inflows in all regions resulted in net new fee-generating assets of $26.9bn.

Asset Management (AM)

Profit before tax dropped 17% to $334m, while operating income dropped 7%.  

Invested assets grew by 5% sequentially to $1.21trn and net new money was $15.1bn.

Investment Bank (IB)

In this unit, pre-tax profit surged 35% year-on-year to $713m. Operating income rose by 11%.

Higher revenues in cash equities, foreign exchange, prime brokerage and capital market financing led to 6% growth in Global Markets revenues.

Targets

The bank has now revised its earlier target of 75%-78% cost-income ratio, and now aims for a ratio of 70%-73%.

Besides, it now targets a CET1 ratio of 15%-18%, up from its earlier target of 12%-15%.

Furthermore, it plans to expedite its strategic tech investments, and looks to expand into new client segments.     

It also aims to buy back $5bn of its shares this year. At the same time, UBS has proposed a dividend of 50 cents a share for 2021, up from 37 cents in 2020.

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