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UBS Group AG missed its key targets for 2019 despite reporting a sharp increase in fourth-quarter net profit.
The results come as the Swiss bank UBS, -0.45% UBSG, +0.55% , one of the world’s largest wealth managers for rich clients, is revamping its investment bank and wealth management arms, shedding jobs and reorganizing businesses.
Net profit for the period rose to $722 million from $315 million a year earlier, it said Tuesday, topping analysts’ expectations of net profit of $632 million, according to a consensus provided by the bank.
Operating income grew 1% to $7.05 billion.
For the full year, UBS reported net profit of $4.30 billion on operating income of $28.89 billion.
The bank missed its key targets for the year. It had targeted a return on Common Equity Tier 1 capital of around 15% and an adjusted cost-income ratio of about 77%. Instead, return on CET1 capital was 12.4% for 2019, while the adjusted cost-income ratio stood at 78.9%.
The bank updated its targets for the 2020-22 period. It now targets a return on CET1 capital of between 12% and 15% and cost-income ratio of 75%-78%.
“UBS intends to increase its dividend per share by $0.01 per year and return incremental capital through share repurchases,” it said.
Quarterly results were boosted by the performance of the investment bank, which swung to an adjusted pretax profit of $198 million from a loss of $5 million, while the wealth management division’s adjusted pretax profit soared to $787 million from $302 million.
UBS has proposed a dividend of $0.73 a share for 2019, and will buy back around $450 million of shares in the first half of the year.
“Any further buybacks will be assessed in the second half of 2020, considering business conditions and any idiosyncratic developments,” it said.
In recent years, UBS, like its rival Credit Suisse Group AG (CS), has shifted its business toward managing money for rich clients while streamlining its investment banks. Earlier in January, The Wall Street Journal reported that the bank would cut hundreds of jobs in wealth management, while in October UBS said it would take a $100 million restructuring charge in the fourth quarter related to organizational changes to its investment bank.
“While the macroeconomic and geopolitical situation remains uncertain, for the first quarter we expect more typical seasonality, supporting earnings,” it said.
