UBS Group AG said net income rose 11 percent in the fourth quarter, boosted by a tax gain that offset a decline in wealth-management and investment-banking profit.
Net income in the fourth quarter was 949 million Swiss francs (US$932 million), UBS said in a statement yesterday. That beat the SF911 million average estimate of seven analysts polled by Bloomberg.
UBS proposed a dividend for last year of SF0.85 per share, up from SF0.75 centimes for 2014.
Chief executive officer Sergio Ermotti has reshaped the bank to focus on wealth management, shrinking the investment bank, a model that is being tested as market swings and a slumping oil price reduce client trading.
Low interest rates and increasing regulatory demands for capital are hampering the bank’s ability to boost profit and have raised investor concern that the company may not increase dividends quickly.
The fourth quarter was characterized by very low levels of client activity and pronounced risk aversion, UBS said in the statement.
Negative market performance and substantial market volatility since the start of the year, low interest rates and the relative strength of the Swiss franc continue to present headwinds, the bank said.
Wealth management had net money outflows of SF3.4 billion in the quarter, the biggest drop since the second quarter of 2010, when the bank had an outflow of SF5.2 billion.
Inflows in Switzerland and Asia partly offset outflows in Europe and emerging markets, UBS said.
“The results are weak and given the start of the year, expectations are probably going to have to come down,” said Tomasz Grzelak, an analyst at Mainfirst Bank AG in Zurich.
“Their capital position is supportive though and that’s positive because it allows them to pay a more attractive dividend than expected,” he said.
The bank has pledged to pay out at least half its earnings to shareholders as long as its common equity Tier 1 ratio, a measure of financial strength, remains above 13 percent. The ratio stood at 14.5 percent at the end of December. The dividend for last year includes a special payout of SF0.25, as did the 2014 dividend.
The payout of SF0.85 is above the expectations of some analysts, including Andrew Coombs at Citigroup Inc, who estimated SF0.75 for last year.
Some of the analysts polled by UBS for a consensus compiled by the company expected as much as SF1.
UBS’ pretax profit in wealth management slid 47 percent to SF344 million from a year ago, while the investment bank saw a decline of 63 percent to SF80 million. Revenue from trading equities declined 19 percent to SF733 million, compared with an estimate of SF847 million, and sales from advising on transactions and underwriting also dropped.
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