UBS posts dramatic turnaround for 2013
AFP/The Local · 4 Feb 2014, 09:48
Published: 04 Feb 2014 09:48 GMT+01:00
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The bank said that last year it made a net profit of 3.2 billion francs ($3.38 billion), up from a loss of 2.4 billion francs in 2012.
It took huge losses from the financial crisis and, in common with Swiss banks in general, is having to adjust to a new Swiss banking climate on many fronts, notably owing to an opening up of Swiss banking secrecy.
In 2012, results were set back by a fine from regulatory authorities over an international scandal concerning the rigging of the Libor interbank interest rate.
But UBS in 2013 began to benefit from a massive reorganization of its businesses, announced in October 2012.
"A year ago, we said we would further adapt our business to better serve clients, reduce risk, deliver more sustainable performance and enhance shareholder returns," Sergio Ermotti, chief executive of UBS, said in a statement.
"I am pleased to report that in 2013 we accomplished all those goals," he said.
"We finished the year ahead of the majority of our performance targets and will continue to execute our strategy in a disciplined manner in order to ensure the firm's long-term success."
The UBS wealth management arm posted a 17-percent increase in pre-tax profit against the outcome in 2012, reaching 2.4 billion francs.
Its Americas wealth management activities, which are accounted for separately, notched up pre-tax profit of $991 million.
Net new money in the group's wealth management businesses increased to 54 billion francs.
And the UBS investment bank division, at the core of the restructuring programme, posted pre-tax profit of 2.5 billion francs.
UBS said its performance accelerated in the fourth quarter, with net profit reaching 917 million francs, a full 59 percent higher than the 577 million recorded in the previous three months.
While the first quarter tends to see activity speed up further in the banking sector, UBS was downbeat about the current market outlook.
"At the start of the first quarter of 2014, many of the underlying challenges and geopolitical issues that we have previously highlighted remain," the bank said.
"The continued absence of sustained and credible improvements to unresolved issues in Europe, continuing US fiscal and monetary policy issues, emerging markets fragility and the mixed outlook for global growth would make improvements in prevailing market conditions unlikely."
But despite the overall environment, UBS underlined that it expected its wealth management business to continue attracting new money.
The board of directors is proposing a 67 percent increase in its dividend to 0.25 francs a share for 2013.
"We still believe that UBS is on track to successfully implement its strategy," said Vontobel analyst Andrea Venditti, though he said the wealth management arm's performance had been less than impressive in the fourth quarter due to rising costs.
Helvea analyst Tim Dawson said the UBS refocus on core operations had provided a valuable lesson.
"In the financial sector, simplicity is a virtue," Dawson said.
"Many of the sector's recent troubles arose because of excessive complexity," he said.