UBS Q4 and full year 2022 results

UBS beat market expectations with its latest results amid weaker spending and higher interest rates. But the lender’s revenue declined due to lower customer activity.

The bank reported net profit of $1.7 billion in the fourth quarter of last year, taking its total annual profit to $7.6 billion in 2022. Analysts had expected UBS to make a net profit of $1.3 billion in the fourth quarter and $7.3 billion for the year. , according to data from Refinitiv.

Looking ahead, the Swiss lender said first-quarter 2023 revenue should “be positively impacted” by higher customer activity and interest rates, as well as the easing of Covid-related restrictions. -19 in Asia.

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

Here are some highlights of the latest version:

• The CET 1 capital ratio, a measure of bank solvency, stood at 14.2%, compared to 14.4% in the previous quarter;
• Revenue fell to $8.029 billion from $8.705 billion a year ago;
• Return on tangible equity, a measure of the bank’s performance, reached 13.2% at the end of the quarter, compared with 10% a year ago.

Among the bank’s units, Global Wealth Management reported a net interest income increase in the fourth quarter of 35% year-on-year, given higher deposit margins thanks to higher interest rates. Personal and Corporate Banking also saw a 21% year-on-year rise in net interest income over the same period, driven by higher interest rates and lending income.

But market uncertainty has hit the investment banking and asset management arms of the firm. The former saw a 24% annual decline in revenue, while asset management revenue fell 31% year-on-year due to “negative market performance and the effects of exchange”.

“The rate environment is helping the business on one side, and that’s offsetting some of the lower activity we’re seeing on the investment side,” Hamers told CNBC’s Geoff Cutmore on Tuesday.

He added that after the first half of last year there was a shift in the markets which put pressure on the investment side of the bank.

“We’ve seen a shift from what we would call the micro focus, which is equity driven, to the macro focus, which is rate driven,” he said, noting that the Swiss bank n hasn’t been able to benefit from this transition as much as some of its peers, given its lesser presence in the United States

UBS said it will buy more shares this year.

“We remain committed to a progressive dividend and expect to buy back more than $5 billion of stock in 2023,” Hamers said in a statement.

However, the Swiss bank is cautious about the economic outlook, citing central bank activity as a potential catalyst for market volatility.

“While inflation may have peaked in the second half of 2022 and an energy crisis in Europe looks avertable, the outlook for economic growth, asset valuations and market volatility remains highly uncertain, and the tightening of central banks could have an impact on the liquidity market,” the bank said in its latest results.

UBS shares are up around 15% over the past 12 months.