Swiss banking giant UBS said on Thursday that its net profit in the fourth quarter was $770 million, higher than its estimate of $483 million but short of the mean forecast of $886.4 million in an LSEG poll of analysts. The bank also announced a share buyback plan of $3 billion, which did little to impress investors. UBS shares fell 6%.
Though earning figures were encouraging, analysts warned of issues facing divisions, with the Personal & Corporate Banking business being the area of concern – its Q4 8% rise was mitigated by falling net interest income. The group’s outlook was also gloomy for interest income, especially within Global Wealth Management and Personal & Corporate Banking.

Key Performance Indicators & Financials
Net Profit: $770m; vs $886.4m forecast; and $483m estimated by the company.
Revenue: $11.635 billion (vs. analyst expectations of $11.64 billion)
Return on Tangible Equity (RoTE): 3.9% (vs. 7.3% in Q3)
CET1 Capital Ratio: 14.3% (unchanged from Q3)
Investment Banking Growth: 37% year-over-year growth in revenue
Global Wealth Management Revenue Growth: 10% growth in Q4
Dividend Proposal: $0.90 per share (up 29% year-over-year)
Cost Savings: $700 million gross cost reduction in Q4; aims for another $2.5 billion in 2024
UBS’s Strategic Moves and Market Response
UBS unveiled a buyback program of as much as $3 billion but pegged its delivery to financial objectives and Switzerland’s regulatory environment. The market received the news half-heartedly as investors considered how long UBS’s cost cuts would be sustained and how the integration of Credit Suisse is going.
CEO Sergio Ermotti explained UBS’s strategy to be competitive in investment banking and build up wealth management. However, uncertainties around tariffs, the Swiss economic outlook, and global banking trends remain challenges.
Future Outlook and Industry Implications
Net Interest Income (NII): Expected decline in Q1 2025 (low-to-mid single digits in Global Wealth Management; 10% decline in Personal & Corporate Banking)
Cost Cut: Aim at achieving $13 billion in total cost cut, of which the company has reached $7.5 billion by 2023 end
Swiss Banking Industry: Concerns surrounding UBS’s size and the risk of an effective regulatory response
Macroeconomics: Weak Swiss inflation at 0.6% in December, strong Swiss franc, and trade war-related volatility

FAQs
Why did UBS’s shares decline despite showing higher than estimated profits?
The UBS shares declined by 6 percent on concerns about the bank’s plan to spend $3 billion to buy back its shares and about continued net interest income challenges. Besides, though results overall for the bank were good, analysts pointed out weaknesses in divisional performance, especially in Personal & Corporate Banking.
How does the UBS share buyback program work?
UBS intends to buy back $1 billion worth of shares in the first half of 2025 and $2 billion in the latter half of 2024. This is subject to the achievement of financial targets and no major regulatory changes in Switzerland.
What are the key drivers of UBS’s investment banking growth?
Investment banking revenue rose 37 per cent from the previous year as major drivers of the increase through performance in global banking, capital markets, and M&A activities. In addition, the bank shared market share gains in key areas, including equities and leverage finance.
What are the challenges facing UBS in 2024?
There are challenges that UBS faces in declining net interest income, integrating Credit Suisse, regulatory pressures because of its size, and uncertainties in the form of inflation, interest rates, and trade wars globally.
How does UBS maintain cost reduction and efficiency?
UBS has been undertaking cost-saving measures aimed at saving $13 billion. Through the end of 2023, it has managed to achieve $7.5 billion in cost cuts. For the current year 2024, the bank will seek to achieve $2.5 billion more through operational efficiencies and restructuring efforts.
While UBS delivered a solid financial performance in Q4 2023, concerns over net interest income declines, divisional performance, and regulatory uncertainties overshadowed the positive aspects of its earnings report. Investors remain cautious as the bank navigates cost-cutting initiatives and broader economic headwinds in 2024.

I am Aparna Sahu
Investment Specialist and Financial Writer
With 2 years of experience in the financial sector, Aparna brings a wealth of knowledge and insight to Investor Welcome. As an accomplished author and investment specialist, Aparna has a passion for demystifying complex financial concepts and empowering investors with actionable strategies. She has been featured in relevant publications, if any, and is dedicated to providing clear, evidence-based analysis that helps clients make informed investment decisions. Aparna holds a relevant degree or certification and is committed to staying ahead of market trends to deliver the most up-to-date advice.