UBS bounced back from a year-ago loss on U.S. tax changes with a $696 million net profit, but the Swiss giant's investment banking arm disappointed with a loss and its private bank suffered outflows.
Zurich-based UBS said its net profit swung back to a $696 million for the fourth quarter, from a 2.22 billion Swiss franc ($2.22 billion) net loss last year after U.S. reforms did away with tax credits that many firms had been taking advantage of until now.
The profit masks a dismal performance from UBS' investment bank, led by Andrea Orcel until September: the unit swung to a loss – as Credit Suisse also flagged for its trading business for the quarter. Every business except for foreign exchange trading posted lower revenue on the year, with UBS' traditionally strong equities franchise as well as its advisory services especially hard-hit.
Muted Client Activity
The reading is an unseemly slip for the world's largest wealth manager, which said it «delivered a resilient performance despite historically tough market conditions.» It bled $7.9 billion at its flagship private bank during the fourth quarter. UBS cited muted client activity, especially in the Americas – down 19 percent – and Asia-Pacific, where it slid 23 percent.
Its flagship private banking division hiked profit before tax only marginally to $793 million for the quarter. UBS offered bright spots including a higher penetration of lucrative mandates among its clients to now 33.6 percent and a rise in lending of 1 percent.
French Probe
The private bank, merged one year ago, spent more due to IT investments, regulatory matters, and stowing for undisclosed legal cases. The bank is mired in a French tax and money-laundering probe, where it expects an initial ruling next month.
The bank, which last year launched a 2 billion franc share buyback program alongside its regular dividend, said it would pay shareholders 0.70 francs per share, a 0.05 hike from last year.
