UBS earnings Q4 and FY 2022

UBS beat market expectations with its latest results on the back of lower expenses and higher interest rates.

The bank reported $1.7 billion of net income for the fourth quarter of last year, bringing its total annual profit to $7.6 billion in 2022.

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Analysts expected UBS would achieve a net income of $1.3 billion in the fourth quarter and of $7.3 billion for the year, according to Refinitiv data.

The Swiss lender said that revenues for the first quarter of 2023 are set “to be positively influenced” by higher client activity, higher interest rates and the easing of Covid-19 rules in Asia.

“We delivered good full-year and solid fourth-quarter results in a difficult macroeconomic and geopolitical environment,” CEO Ralph Hamers said in a statement.

Here are a couple of highlights from the latest release:

• CET 1 capital ratio, a measure of bank solvency, stood at 14.2%, down from 14.4% in the previous quarter;
• Revenues dropped to $8.029 billion from $8.705 billion a year ago;
• Return on tangible equity, a measure of bank’s performance, rose to 13.2% at the end of the quarter, up from 10% a year ago.

Among the bank’s units, Global Wealth Management posted a fourth-quarter net interest income increase of 35% on the year, given higher deposit margins off the back of higher interest rates. Personal and Corporate Banking also recorded a 21% year-on-year hike in net interest income over the same period, as a result of higher interest rates and loan revenues.

But market uncertainty hit the investment banking and asset management arms of the business. The former saw a 24% yearly drop in revenues, whereas asset management revenues fell by 31% year-on-year due to the “negative market performance and foreign currency effects.”

UBS also said it will be purchasing more shares in 2023.

“We remain committed to a progressive dividend and expect to repurchase more than $5 billion of shares in 2023,” Hamers said.

UBS shares are up by about 15% over the last 12 months.