UBS Group AG plans to raise the dividend for this year by 10 percent and would probably exceed a target for share buybacks, as it returns excess capital to investors following the cancelation of its Wealthfront Inc acquisition.
The Zurich, Switzerland-based lender would propose a dividend of US$0.55 a share for approval at its annual meeting next year, up from US$0.50 a year earlier, it said in a statement yesterday.
UBS also expects share repurchases to exceed a target of US$5 billion for this year. The lender has already bought back US$4.1 billion of shares as of Friday.
Photo: Reuters
The move comes after the Swiss firm this month called off the US$1.4 billion acquisition of US robo-adviser Wealthfront following a collapse in valuations of tech stocks.
In returning more cash, UBS is underscoring how fears of a global recession are not stopping European lenders from rewarding investors who have stuck with them through years of negative interest rates and sub-par profitability.
Shares of UBS have declined 1.9 percent this year, as rising interest rates and the prospect of higher income from lending shielded banks from steeper declines in the broad stock market.
The Wealthfront deal would have been chief executive officer Ralph Hamers’ biggest transaction since becoming CEO less than two years ago, and was the centerpiece of his focus on broadening UBS’ wealth-management offering beyond the traditional customer base through the use of digital platforms.
Founded in 2008, Wealthfront was an early robo-advisor, using algorithms to help users manage money. The acquisition would have added more than US$27 billion in assets under management and more than 470,000 clients in the US for UBS.
Hamers has said the bank must embrace a broader base of customers, even it if means pushing lower-margin, automated products that are not the hallmark of UBS’ personalized offerings.
Hamers in May said that UBS was “as much of a US player as we are a Swiss player” and the bank could “absolutely” compete with Wall Street titans on advising the rich.
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