UBS; Still Weak But Good Payout News For Equity Holders

UBS (UBSG SW) reported 4Q23 results which were operationally weak but included better capital return for equity holders. News on merger completion may give credit investors some comfort.

• Revenues in 4Q23 were 3% lower q/q with most businesses seeing some seasonal slowdown. Group net loss was roughly in line with consensus but with a miss from the key Wealth division (litigation, provisioning), so operating performance still not ideal. Net new money was a USD12.2bn outflow which is a large miss.
• In credit terms, gross non-performers rose 20% in the quarter (to USD6.4bn) though are still <1% of the loan book. CET1 was 14.5% (+10bp q/q), driven by balance sheet shrinkage and marginally ahead of expectations. Total capital is 17.0% (up 20bp q/q).
• The bank is restarting the share buyback, targeting USD1bn in 2H24, post-merger completion and the dividend of USD0.70 is ahead of 0.63 expected. The outlook statement is very muted, reflecting the lack of visibility into this fluid situation, in our view.

Conf call is 0800 London time , available at https://webcast.swisscom.ch/csr/#/webcast/659d48849cde8ff1ff1f5332/en