US tax reform pushes UBS fourth quarter to loss

6 years ago - Published in Finance, Fundamental Analysis

The Swiss bank UBS reported a net profit of 1.165 billion Swiss francs ($1.25 billion) for the whole of 2017, weighed down by a writedown in the fourth quarter that related to the new U.S. tax overhaul.

The consensus from a Reuters poll was for a figure of 1.257 billion Swiss francs, below the 2016 number of 3.3 billion Swiss francs and below the 2015 figure of 6.2 billion Swiss francs.

“2017 was an excellent year for us. We delivered stronger financial results and met our net cost reduction target,” Sergio Ermotti, the group’s chief executive officer, said in a statement.

The bank posted a 2.2 billion Swiss franc (1.66 billion pounds) net loss for the fourth quarter of 2017 as the U.S. tax reforms saddled it with a 2.9 billion franc writedown. Pretax earnings rose 34 percent.

The bank also lowered capital targets through 2020 and decoupled its shareholder payout policy from a previous capital ratio floor, ahead of an anticipated drag on its finances from new international rules known as Basel III.

UBS also said on Monday that it would increase its dividend for investors to 0.65 Swiss francs per share — an 8 percent jump from last year. The bank also introduced a three-year share buyback program of up to 2 billion Swiss francs.

UBS also achieved its net cost reduction target of 2.1 billion Swiss francs but highlighted that low market volatility could affect client activity in its wealth management business. 

UBS said its American wealth management business would be merged with its international wealth management division with effect from February 1. The combined unit would have two co-presidents – Martin Blessing, the head of the current wealth management unit, and Tom Naratil, president of UBS Americas.

Mr Ermotti said: “Two years ago, we began to more closely align the divisions, and today’s announcement reflects our continued evolution. It will mean improved efficiency, more sharing of best practices, greater returns on our investments and enhanced client service.”