On Aug 25, we issued an updated research report on UBS Group AG (UBS - Free Report) . With the help of a strong capital position, the company is well positioned to undertake initiatives that are likely to boost its performance.
The company is on track to achieve the financial targets it had laid out in order to improve efficiency and free resources that can be used to invest in growth areas.
UBS Group plans to have CHF 2.1 billion in net cost reductions by the end of 2017. It has successfully reduced expenses in the first six months of 2017. Such initiatives should support the company’s bottom-line growth.
As of the quarter ended June 2017, UBS Group had already achieved its target of having Basel III fully applied CET1 ratio at 13% and 10% post-stress. It plans to maintain this level in the upcoming years.
Further, the company’s strong capital position enables it to be involved in inorganic growth activities. In May 2017, UBS Group entered into an agreement to acquire majority stake in Brazilian multi-family office, CONSENSO, with a view to expand its wealth management business in Brazil.
However, UBS Group’s net interest income remains under pressure owing to the negative interest rates in the domestic economy. Also, the appreciation of the Swiss franc against other currencies is likely to impact the company’s earnings, as a significant part of its operating income is denominated in non-Swiss franc currencies.
The company’s initiatives to improve performance have been successful in gaining analysts’ confidence, as reflected by 1.4% upward revision in Zacks Consensus Estimate for current-year earnings over the past 60 days.
Shares of UBS Group have gained 7.2% year to date, underperforming the 15.5% rally of the industry.
Currently, the stock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some other foreign banks worth considering are Deutsche Bank AG (DB - Free Report) , HDFC Bank Limited (HDB - Free Report) and HSBC Holdings plc (HSBC - Free Report) . All these stocks carry a Zacks Rank #2.
Deutsche Bank’s Zacks Consensus Estimate for current-year earnings have been revised 9.8% upward in the past 60 days. The company’s share price has increased almost 18% in the past year.
HDFC Bank’s Zacks Consensus Estimate for the current-year earnings has been revised 2.9% upward, over the past 60 days. Also, its shares have gained 35.2% in a year’s time.
HSBC’s Zacks Consensus Estimate for the current year has moved up 3.6%, over the past 60 days. Its share price has increased 32.2% in the past 12 months.
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