UBS reports a $770 million profit in Q4 2024, exceeding forecasts, driven by robust investment banking performance.
In a remarkable display of financial prowess, UBS has reported a bottom-line profit of $770 million (CHF 701 million) for the fourth quarter of 2024, significantly outpacing analysts’ forecasts, buoyed by a robust performance from its investment banking division. This announcement, made on Tuesday, comes on the heels of a tumultuous previous year, during which the bank recorded a loss of $279 million attributed to the integration of Credit Suisse.
Before taxes, UBS’s earnings reached an impressive $1.05 billion, a striking recovery from the $751 million deficit experienced in the fourth quarter of 2023. When adjusted for integration costs, UBS anticipates a pre-tax profit of approximately $1.77 billion for the period spanning October to December 2024. The bank has successfully trimmed costs by $7.5 billion by year-end compared to 2022, with $700 million of that reduction occurring in the final quarter of 2024. Looking ahead, UBS projects that by the conclusion of 2026, coinciding with the anticipated completion of the Credit Suisse integration, cumulative cost reductions could reach around $13 billion, albeit with integration expenses expected to total $14 billion.
In terms of overall performance, UBS reported a full-year profit of $5.09 billion for 2024, a stark contrast to the $27 billion reported in 2023, which was heavily influenced by the acquisition of Credit Suisse. This acquisition resulted in substantial negative goodwill, as the purchase price was markedly lower than the book value of Switzerland’s second-largest bank at the time. In a show of confidence, UBS has announced a 29% increase in dividends for shareholders, now set at $0.90 per share for 2024, with management projecting an additional increase of at least 10% for the upcoming financial year.
Moreover, UBS has outlined plans for share buybacks, targeting up to $3 billion in 2025, with an initial $1 billion earmarked for repurchases in the first half of the year, followed by an additional $2 billion in the latter half of 2024. However, these plans hinge on the stability of capital requirements in Switzerland, as UBS cautioned against any direct and significant changes.
On the asset front, UBS attracted $18 billion in net new assets within its core global wealth management business during the fourth quarter. Consequently, the bank’s total group-wide assets stood at $6,087 billion at the end of December, a decline from $6,199 billion at the end of September.
“Investor sentiment remained buoyant in the fourth quarter of 2024,” the bank stated in its announcement. “Both institutional and private clients exhibited heightened activity in a market characterized by an increased risk appetite following the US presidential election.” This optimistic market sentiment appears to have persisted into the first quarter of 2025, fueled by growing optimism regarding economic prospects in the United States.
Nevertheless, UBS remains vigilant, as the broader economic landscape outside the US presents challenges, including rising uncertainty surrounding global trade, inflationary pressures, central bank policies, and geopolitical developments, notably the forthcoming elections in Germany, all of which could potentially temper investor enthusiasm.
