UBS reports 4Q/FY23 results and confirms financial targets

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UBS plans to propose USD 0.70 dividend per share, +27% YoY, and to reinstate share repurchases in 2H24.

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06/02/2024 |
  • FreeVector-UBS

4Q23 and FY23 highlights

  • 4Q23 PBT of USD (751m), including losses of USD 508m related to the investment in SIX Group, in addition to integration-related expenses and pull-to-par and other PPA-related benefits; underlying1 PBT of USD 592m
  • FY23 PBT of USD 29,916m, including USD 28,925m negative goodwill
  • Completed first phase of strategic integration, stabilized the franchise, achieved underlying profitability and initiated restructuring
  • USD 77bn of net new assets2 in GWM and USD 77bn of net new deposits across GWM and P&C since the closing of the acquisition in 2023; USD 22bn of NNA and USD 16bn of NND in GWM, and CHF 7bn of NND in P&C in 4Q23, driven by strong momentum with our clients
  • Achieved USD ~4bn in exit rate gross cost savings in FY23 vs FY22 combined
  • Strong progress in NCL wind-down with RWA down USD 5.5bn of which three quarters from active unwinds, LRD down USD 19bn and underlying operating expenses down 9% QoQ
  • Maintained capital strength with CET1 ratio of 14.5% and CET1 leverage ratio of 4.7% comfortably above guidance
  • Increase of 27% YoY in FY23 ordinary dividend, to USD 0.70 per share, subject to shareholder approval at the Annual General Meeting

Investor update highlights

  • Re-iterating ~15% underlying RoCET1 and <70% underlying cost/income ratio exit rate targets by end-2026; well positioned to deliver long-term growth and higher returns with ~18% reported RoCET1 in 2028
  • Targeting USD ~13bn gross cost reductions by end-2026; ~50% of cumulative exit rate gross cost reductions expected by end-2024
  • Cost savings to provide necessary capacity for reinvestment to reinforce the resilience of our combined infrastructure as we absorb Credit Suisse and to drive sustainable growth
  • Ambition to surpass USD 5trn of invested assets in GWM by 2028, with USD ~100bn of NNA per annum through 2025, building to USD ~200bn per annum by 2028
  • NCL actively run down; underlying operating expenses expected to be USD <1bn and underlying loss before tax expected to be USD ~1bn by end-2026; RWA expected to be around 5% of Group RWA
  • Optimizing financial resources to enable sustainable growth and higher returns; USD ~510bn of RWA expected by end-2026; expecting USD ~45bn of RWA reductions in NCL and USD ~15bn of business-led RWA reductions in core divisions from actions to improve capital efficiency; Basel 3 finalization and migrating Credit Suisse’s portfolios to UBS risk models are expected to increase RWAs in the core divisions by USD 25bn
  • Expecting up to USD 1bn of funding cost saves by 2026 relative to 2023 levels as a result of lower funding needs, diversified and more stable funding sources, and disciplined deposit pricing
  • Merger of UBS AG and Credit Suisse AG planned to be completed by the end of 2Q24 and merger of UBS Switzerland AG and Credit Suisse (Schweiz) AG entities planned before the end of 3Q24, which is a critical step in enabling us to unlock the next phase of the cost, capital and funding synergies we expect to realize in 2025 and 2026
  • Delivering attractive capital returns; planning to reinstate share repurchases after completion of UBS AG and Credit Suisse AG merger, with up to USD 1bn in 2024, committed to progressive dividends and accruing for a mid-teen percentage increase in the dividend per share for 2024; ambition for FY26 share repurchases to exceed FY22 levels.

Full press release attached.

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