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UBS Group AG (UBS - Free Report) reported fourth-quarter 2022 net profit attributable to shareholders of $1.65 billion, up 22.6% from the prior-year quarter.
The company’s quarterly performance was aided by a decline in expenses. However, lower revenues acted as a headwind.
The performances of the Global Wealth Management and the Personal & Corporate Banking divisions were impressive. However, the Asset Management arm and the Investment Bank did not perform well.
Total Revenues & Expenses Decline
UBS’s total revenues decreased 7.8% from the prior-year quarter to $8.03 billion.
Operating expenses decreased 13.1% year over year to $6.09 billion.
UBS reported total credit loss expenses of $7 million in the quarter against a release of $27 million witnessed in the year-ago quarter.
Business Divisions’ Performance
Global Wealth Management’s fourth-quarter operating profit before tax was $1.06 billion, up 87.9% year over year. The rise was driven by an increase in net interest income and other income.
Asset Management’s operating profit declined 62.9% year over year to $124 million. The fall was mainly due to a decline in total revenues.
Personal & Corporate Banking reported an operating profit before tax of $529 million, up 44.9% year over year. The rise was driven by an increase in revenues and lower expenses.
The Investment Bank unit’s operating profit before tax was $112 million, down 84.3% from the prior-year quarter. The fall was due to a decline in total revenues in global banking, as well as the global markets business arm.
Group Functions reported an operating profit before tax of $114 million in the reported quarter against a loss of $246 million in the year-ago quarter.
Capital Position Decent
Total assets decreased marginally from the end of the previous quarter to $1.10 trillion.
Common Equity Tier 1 (CET1) capital increased marginally year over year to $45.46 billion. As of Dec 31, 2022, UBS's invested assets were $3.96 trillion, down 13.9% year over year.
UBS’s return on CET1 capital was 14.7% as of Dec 31, 2022, compared with 11.9% as of Dec 31, 2021.
The risk-weighted assets increased 5.7% year over year to $319.6 billion.
Share Repurchase Update
In 2022, the company repurchased $5.6 billion of common stock under its 2022 share repurchase program. It expects to repurchase more than $5 billion in shares in 2023.
Our Take
UBS’s business divisions performed decently in the reported quarter. UBS continues to undertake initiatives to digitalize its operations and serve clients better in the long run.
Commerce Bancshares Inc.’s (CBSH - Free Report) fourth-quarter 2022 earnings per share of $1.04 surpassed the Zacks Consensus Estimate of $1.02. The bottom line increased 15.6% from the prior-year quarter.
Results primarily benefited from an improvement in net interest income, a slight rise in loan balance and higher rates. However, an increase in non-interest expenses and provisions, and a fall in non-interest income were the major headwinds for CBSH.
BankUnited, Inc.’s (BKU - Free Report) fourth-quarter 2022 earnings per share of 82 cents missed the Zacks Consensus Estimate of $1.11 by a considerable margin. The bottom line also declined 41.8% from the prior-year quarter. We had projected earnings per share of 96 cents.
BKU’s results were adversely impacted by subdued fee income performance and an increase in credit costs. However, higher net interest income, a decent rise in loan balance, increasing rates and a fall in expenses acted as tailwinds.
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UBS Q4 Earnings Improve Y/Y, Revenues & Expenses Decline
UBS Group AG (UBS - Free Report) reported fourth-quarter 2022 net profit attributable to shareholders of $1.65 billion, up 22.6% from the prior-year quarter.
The company’s quarterly performance was aided by a decline in expenses. However, lower revenues acted as a headwind.
The performances of the Global Wealth Management and the Personal & Corporate Banking divisions were impressive. However, the Asset Management arm and the Investment Bank did not perform well.
Total Revenues & Expenses Decline
UBS’s total revenues decreased 7.8% from the prior-year quarter to $8.03 billion.
Operating expenses decreased 13.1% year over year to $6.09 billion.
UBS reported total credit loss expenses of $7 million in the quarter against a release of $27 million witnessed in the year-ago quarter.
Business Divisions’ Performance
Global Wealth Management’s fourth-quarter operating profit before tax was $1.06 billion, up 87.9% year over year. The rise was driven by an increase in net interest income and other income.
Asset Management’s operating profit declined 62.9% year over year to $124 million. The fall was mainly due to a decline in total revenues.
Personal & Corporate Banking reported an operating profit before tax of $529 million, up 44.9% year over year. The rise was driven by an increase in revenues and lower expenses.
The Investment Bank unit’s operating profit before tax was $112 million, down 84.3% from the prior-year quarter. The fall was due to a decline in total revenues in global banking, as well as the global markets business arm.
Group Functions reported an operating profit before tax of $114 million in the reported quarter against a loss of $246 million in the year-ago quarter.
Capital Position Decent
Total assets decreased marginally from the end of the previous quarter to $1.10 trillion.
Common Equity Tier 1 (CET1) capital increased marginally year over year to $45.46 billion. As of Dec 31, 2022, UBS's invested assets were $3.96 trillion, down 13.9% year over year.
UBS’s return on CET1 capital was 14.7% as of Dec 31, 2022, compared with 11.9% as of Dec 31, 2021.
The risk-weighted assets increased 5.7% year over year to $319.6 billion.
Share Repurchase Update
In 2022, the company repurchased $5.6 billion of common stock under its 2022 share repurchase program. It expects to repurchase more than $5 billion in shares in 2023.
Our Take
UBS’s business divisions performed decently in the reported quarter. UBS continues to undertake initiatives to digitalize its operations and serve clients better in the long run.
Currently, UBS carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Commerce Bancshares Inc.’s (CBSH - Free Report) fourth-quarter 2022 earnings per share of $1.04 surpassed the Zacks Consensus Estimate of $1.02. The bottom line increased 15.6% from the prior-year quarter.
Results primarily benefited from an improvement in net interest income, a slight rise in loan balance and higher rates. However, an increase in non-interest expenses and provisions, and a fall in non-interest income were the major headwinds for CBSH.
BankUnited, Inc.’s (BKU - Free Report) fourth-quarter 2022 earnings per share of 82 cents missed the Zacks Consensus Estimate of $1.11 by a considerable margin. The bottom line also declined 41.8% from the prior-year quarter. We had projected earnings per share of 96 cents.
BKU’s results were adversely impacted by subdued fee income performance and an increase in credit costs. However, higher net interest income, a decent rise in loan balance, increasing rates and a fall in expenses acted as tailwinds.