Shares of UBS Group (UBS) fell 3.5% in premarket trading Tuesday after the bank unveiled its FQ4 2023 results and announced it would reinitiate share buybacks of up to $1 billion.
Most notably, the Swiss lender reported a net loss attributable to shareholders of $279 million for the quarter, marking its second consecutive quarterly loss caused by costs of integrating collapsed rival Credit Suisse.
Still, the loss was notably lower than the $372 million expected by analysts. UBS reported operating profit before tax of $592 million, below the consensus of $762 million.
The lender posted a pre-tax loss of $751 million for the fourth quarter of 2023, which includes a $508 million loss from its investment in SIX Group.
The firm has upheld a strong capital position, showcasing a Common Equity Tier 1 (CET1) ratio of 14.5% and a CET1 leverage ratio of 4.7%, both of which are well above the guidance.
Going forward, UBS reaffirmed its target of achieving approximately a 15% underlying return on Common Equity Tier 1 (RoCET1) and maintaining an underlying cost-to-income ratio of below 70% by the end of 2026. By 2028, the bank expects RoCET1 to hit around 18%.
Further, UBS has set a goal to achieve roughly $13 billion in gross cost savings by the end of 2026, expecting to realize about 50% of these cost reductions by the end of 2024.
The goal is to exceed $5 trillion in invested assets within Global Wealth Management (GWM) by 2028, aiming for approximately $100 billion in net new assets (NNA) annually through 2025, and increasing to about $200 billion annually by 2028.
The group also forecasts up to $1 billion in funding cost savings by 2026 compared to 2023, thanks to reduced funding requirements, a diversified and more stable funding base, and disciplined management of deposit pricing
“2023 was a defining year in UBS’s history with the acquisition of Credit Suisse. Thanks to the exceptional efforts of all of our colleagues, we stabilized the franchise and have made tremendous progress in the integration,” said Sergio P. Ermotti, CEO of UBS.
“In addition, clients entrusted us with USD 77 billion of net new assets since the acquisition and relied on our advice in a challenging geopolitical and macroeconomic environment.”
Simultaneously, the Swiss lender announced it would recommence share repurchases worth up to $1 billion in the second half of the year.
Moreover, the bank also plans to propose a dividend per share of $0.70, marking a 27% year-over-year increase.
Citi Research analysts said UBS’s Q4 2023 results were “messy,” but “the stock is already being valued off outer-year earnings” so the broker does not see this as a major issue.
“Meanwhile the capital return is the key positive today: dividends for 2023 (and guided for 2024) are much higher than consensus and UBS has confirmed it will recommence buybacks in 2024. We reiterate our Buy rating,” analysts wrote.