EyeOfPaul/iStock Editorial via Getty Images UBS Group (NYSE:UBS) stock rises 7.2% in Zurich trading and 6.5% in premarket trading in the U.S. after the Swiss bank's operating and net income beats consensus estimates and boosts its stock buyback program. The company updates financial targets to: return on CET1 capital target to 15%-18%, up from its previous target of 12%-15%; cost/income ratio to 70%-73% vs. its earlier target of 75%-78%; and Global Wealth Management profit before tax growth of 10%-15% target remains unchanged. The new return on CET1 capital target has already been exceeded, with 2021 return on CET1 capital at 17.5%. The company repurchased $2.6B of shares in 2021 and plans to buy up to $5B more during 2022. Capital guidance remains unchanged. UBS (UBS) expects FY2022 costs, excluding variable and FA compensation, litigation, and foreign exchange, to increase ~2% Y/Y. It also expects $200M in 2022 restructuring costs and ~$100M Group Functions average quarterly loss. For Q4 2021 cost/income ratio is 80.5%; for the year it's 73.6% exceeding its previous guidance of 75%-78%. CET1 capital ratio of 15.0% for Q4 and the year exceeds previous guidance of ~13%; CET1 leverage ratio of 4.24% at Q4 end compares with its guidance of over 3.7%. Q4 performance by business:
- Global Wealth Management profit before tax of $0.6B, including $563M of litigation provisions for the French cross-border matter, fell 35% Y/Y; recurring net fee income increased by 17%, primarily driven by higher average fee-generating assets, reflecting positive market performance and net new fee-generating assets.
- Personal & Corporate Banking profit before tax of CHF 335M rose 5% Y/Y; operating income rose by 11% with increases across net interest, transaction-based and recurring net fee income.
- Asset Management profit before tax of $334M fell 17% Y/Y; operating income fell by 7% as an increase in net management fees was more than offset by a decrease in performance fees to a more normalized level from particularly high levels in Q4 2020.
- Investment Bank profit before tax of $713M rose 35% Y/Y; operating income increased by 11%; Global Markets revenue increased by 6%, primarily on higher revenue in foreign exchange, capital market financing, prime brokerage, and cash equities products; Global Banking revenue inceased by 4% driven by Capital Markets, notably in Leveraged Capital Markets and Advisory revenue.
- Group Function loss before taxes was $246M vs. loss of $161M in Q4 2020.
Earlier, UBS Q4 operating and net income beat estimates