UBS Surprises with Q4 Profit Surge but Investor Concerns Persist Over Buyback Plan

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UBS has reported a remarkable fourth-quarter profit of $770 million for 2024, significantly surpassing analysts’ expectations and marking a substantial recovery from the previous year’s loss of $279 million.

The Swiss banking giant’s strong performance was primarily driven by its investment banking division, which showcased resilience in a challenging market environment.

This impressive financial turnaround reflects UBS’s successful integration of Credit Suisse and strategic cost management efforts.

In a statement released on February 4, 2025, UBS revealed that its pre-tax profit reached $1.05 billion, a stark contrast to the $751 million loss recorded in the same quarter of 2023.

When adjusted for integration costs, the bank anticipates a pre-tax profit of approximately $1.77 billion for the period from October to December 2024.

UBS CEO Sergio Ermotti expressed satisfaction with the results, stating that the bank had achieved all key milestones in 2024 while significantly reducing integration risks and maintaining a solid capital position.

Despite this positive news, investor sentiment remained cautious. UBS shares experienced a retreat following the earnings announcement, as some investors found the results underwhelming compared to their expectations.

Analysts had forecasted a net profit of around $886 million, leaving UBS’s actual results falling short of these projections.

Furthermore, the bank’s decision to initiate a $3 billion share buyback plan did not sufficiently reassure shareholders.

For the full year of 2024, UBS reported a net profit of $5.1 billion, bolstered by strong client inflows and robust performance across its wealth management and asset management divisions.

The bank recorded net new assets of $97 billion in Global Wealth Management for the year and demonstrated significant cost savings amounting to $3.4 billion.

Looking ahead, UBS confirmed its commitment to long-term growth and plans to continue investing in strategic initiatives while maintaining a focus on cost reduction.

The bank aims to achieve an underlying return on CET1 capital of approximately 15% by the end of 2026, alongside an underlying cost-to-income ratio below 70%.

As UBS navigates through the complexities of integrating Credit Suisse and adapting to evolving market conditions, its ability to maintain investor confidence will be crucial for sustaining its growth trajectory in the coming years.

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