UBS, the Swiss banking giant, announced a fourth-quarter net profit of $770 million, defying expectations set by analysts. This figure is notably higher than the company’s consensus estimate of $483 million but falls short of the $886.4 million forecasted in a poll conducted by LSEG analysts. The bank has also confirmed its intention to initiate a $1 billion share buyback in the first half of 2025, with plans to repurchase an additional $2 billion in the latter half of the year.
Despite a reduction in return on tangible equity to 3.9%, down from 7.3% in the third quarter, UBS maintained a steady CET 1 capital ratio of 14.3%. This ratio serves as a critical measure of the bank's solvency, remaining unchanged from the previous quarter. Group revenue reached $11.635 billion, slightly below analyst expectations of $11.64 billion.
The Swiss economy remains fragile, grappling with an annual inflation rate of only 0.6% as of December. Additionally, the Swiss franc has strengthened amidst global economic uncertainties driven by U.S. tariffs. These factors have intensified concerns about UBS's sheer size and influence within Switzerland, especially as its balance sheet exceeded $1.7 trillion in 2023.
The bank faces heightened scrutiny domestically, with critics suggesting that its size has surpassed the Swiss government's comfort level. There are fears that UBS's potential failure could lead to costly nationalization efforts, with few peers able to absorb such a large entity. In response to these challenges, UBS has been actively pursuing cost savings, aiming for $7.5 billion out of a total target of $13 billion by the end of last year.