Swiss multinational bank UBS released its quarterly earnings report Tuesday. The bank reported a drop in its profits for the period, which still managed to beat Wall Street estimates.
For its fourth quarter, UBS posted a net profit attributable to shareholders of $1.35 billion. The figure was lower than the $1.64 billion reported by the company over the same period a year earlier. It was also a 28% drop from the $2.28 billion the company posted for its third quarter last year.
UBS's profits for the period beat average analyst estimates of $853 million. It also helped the company realize a full-year profit of $7.46 billion, slightly higher than the $6.98 billion expected by Wall Street.
For the quarter, UBS reported a CET 1 ratio of 15%, higher than the 14.9% it reported in the past quarter. Operating income for the period was at $8.73 billion, lower than the $9.1 billion reported in the previous quarter. Return of equity for the three months stood at 8.9%.
Profits for the quarter were severely hampered by the $740 million the bank had to spend on litigation over a French cross-border tax case. UBS had spent millions of dollars in December to appeal a money-laundering conviction by a Paris court with France's Supreme Court.
The bank said during its earnings call that its improved operating performance has led it to update its financial targets for the coming quarters. It added that its capital guidance still remains unchanged.
UBS said it would aim for $6 trillion in invested assets across its worldwide wealth management, asset management, and personal and corporate banking businesses. The updated targets are its first significant strategy update since CEO Ralph Hamers joined the helm in November 2020.
Meanwhile, the bank established a goal range of 15% to 18% for its return on CET1 capital and a 70% to 73% cost-to-income ratio. The bank will also aim for a profit before tax increase of 10% to 15% in its wealth management division.
Hamers said that the company plans to deploy new technologies and better serve its clients to achieve its higher goals and targets for the coming quarters. He added that they also hope to attract new clients with innovative products.
UBS plans to provide a 50 cents-per-share dividend to shareholders in 2021, up from 37 cents in 2020 and plans to buy back $5 billion in its own stock in 2022. Buybacks are a mechanism for companies to return cash to shareholders in addition to dividends, and they frequently coincide with a company's price rising as more shares become available.
