UBS Restarts Buybacks, Pledges $1 Billion

• UBS completed the initial phase of integrating Credit Suisse, signaling net fresh asset flows and announcing plans to resume share buybacks with a $1 billion target set for 2024.
• The Swiss bank revealed a plan to increase the dividend by 27% to $0.70 per share in 2023 despite reporting a net loss of $279 million for the fourth quarter, attributed to the cost of acquiring Credit Suisse.
• UBS aims to achieve significant financial goals, including reaching $5 trillion in invested assets under its wealth management division by 2028 and attracting $200 billion in net new assets annually by the same year. Despite progress, analysts caution that challenges remain in fully integrating the two banks, particularly concerning client and staff retention.

On Tuesday, UBS said that it had finished the first stage of integrating its fallen rival Credit Suisse, that it was seeing net fresh asset flows, and that it intended to resume buybacks of shares in the second half of the year, with a $1 billion target set for 2024.

Additionally, the Swiss bank announced that it was planning to raise the dividend by 27% to $0.70 per share in 2023.

The largest wealth manager in the world reported a net loss of $279 million for the fourth quarter, just less than the $285 million consensus forecast that the business prepared due to the expense of acquiring Credit Suisse.

The largest wealth manager in the world confirmed important financial goals and established new ones, one of which is to have $5 trillion in invested assets under its wealth management division by 2028.

Additionally, UBS stated that by 2028, it wanted to see $200 billion in net new assets come into the bank annually.

Following the merger, customers have entrusted the bank with $77 billion in net additional assets, according to CEO Sergio Ermotti.

UBS also disclosed that it expects to save $13 billion in costs by the end of 2026, of which half are anticipated to be incurred by the end of this year.

Since the announcement of the shotgun buyout in March of last year, which was the first-ever combination of two globally significant banks, UBS has experienced a 50% increase in share price and has avoided any significant disruptions.

Nevertheless, there are still several challenging steps to be completed in order to fully integrate the two banks, such merging their distinct IT infrastructures and legal organizations.

Additionally, the bank will start moving Credit Suisse customers; the first customers to be relocated are those in Singapore, Hong Kong, and Luxembourg.

Analysts Warn of Ongoing Hurdles

In 2023, while most analysts were pleased with the outcome, they cautioned that the bank was not yet out of the woods.

According to Vontobel analyst Andreas Venditti, "UBS has made clear progress since the close of the deal - but it continues to face a huge task, including client & key staff retention."

Wealth management fell short of expectations, according to KBW analysts, who described the findings as "underwhelming" "when we dig a little deeper" while appearing decent at first look.

UBS is at the outset in what might turn out to be a drawn-term merger of a bank that had gotten embroiled in legal disputes and controversy.

The study of "weaknesses" and "deficiencies" in Credit Suisse's 2021 and 2022 financial reporting was forewarned, and the company stated that the findings will be included in its own annual report.

The bank said that it was still impossible to forecast market volatility, asset values, and economic development.