UBS Group AG (NYSE:UBS) has reported its fourth-quarter and full-year results for 2023, confirming financial targets and announcing plans for a 27% year-on-year increase in its dividend to US$0.70 per share.
The bank also intends to reinstate share repurchases in the second half of 2024.
Reported pre-tax losses in the fourth quarter came to US$751 million due to operating expenses related to the integration of Credit Suisse.
Revenues were also impacted by UBS’s US$500 million investment in SIX Group.
For the full year, UBS achieved a profit before tax of US$29.9 billion, significantly boosted by negative goodwill.
In fact, negative goodwill arising from UBS’s bargain-bin acquisition of Credit Suisse accounted for over 96% of UBS’s pre-tax profits.
UBS subsumed former domestic rival Credit Suisse via a Swiss government-brokered takeover in March 2023, after which UBS confirmed sweeping job cuts and cost-cutting exercises.
The bank has since made notable progress in integrating Credit Suisse, adding US$77 billion of net new assets in Global Wealth Management (GWM) coupled with significant cost savings.
“2023 was a defining year in UBS’s history with the acquisition of Credit Suisse,” said UBS chief executive Sergio P. Ermotti.
“Thanks to the exceptional efforts of all of our colleagues, we stabilised the franchise and have made tremendous progress in the integration. In addition, clients entrusted us with $77 billion of net new assets since the acquisition and relied on our advice in a challenging geopolitical and macroeconomic environment.
“As we move to the next phase of our journey, we will focus on restructuring and optimising the combined businesses.”
Going forward, UBS will have to navigate lower short-term interest rates in 2024, which may result in lower margins for the bank.
“The timing and magnitude of such cuts are still highly uncertain, given the ongoing debate around the pace of inflation converging with central bank targets. In addition, ongoing geopolitical tensions, including the conflicts in the Middle East and Eastern Europe, may impact supply chains and inflation, with consequences for the macroeconomic outlook and market volatility,” said UBS.
UBS expects net interest income for personal and corporate banking and Global Wealth Management combined to be roughly flat sequentially in the first quarter.
The Credit Suisse merger is planned to be completed by the end of the second quarter and other related entities by the third quarter.