UBS Group is set to release its results for the fourth quarter of 2023 on Tuesday. Here are the key details:
According to consensus estimates compiled by the Swiss bank, UBS is expected to report total revenue of $10.38 billion for the fourth quarter. In the same period last year, UBS recorded total revenue of $8.03 billion.
Net Profit Forecast
The Zurich-based lender is projected to post a net loss of $285 million for the quarter, as indicated by the bank’s consensus. This figure continues to be significantly impacted by the forced takeover of its troubled domestic rival, Credit Suisse. In comparison, UBS reported a net profit of $1.65 billion for the same period in the previous year.
At 1002 GMT on Monday, UBS shares showed a 17% increase over the past three months, outperforming the 8.6% gain in the Stoxx Europe 600 Banks index during the same period.
What to Watch
UBS will provide an update to investors regarding its profitability target, aiming for a approximately 15% return on common equity Tier 1 capital by 2026. However, Barclays analysts express doubt about achieving this target and suggest that UBS may extend it until the end of 2027. The analysts project a 10% Return on Common Equity Tier 1 for the entire year of 2027 due to the bank’s cyclical business nature, which adds complexity to predicting this rate, as outlined by Barclays.
Furthermore, it is anticipated that UBS will outline a more detailed integration strategy for Credit Suisse as part of its three-year growth plan. Citi highlights that “The CS integration is progressing well and UBS has already achieved its $3 billion target in gross cost savings.” Additionally, Credit Suisse’s legal entity mergers in 2024 are expected to result in further cost savings, according to a note from Barclays.
The consensus suggests $903 million in buybacks in 2024. However, Citi analysts expect the bank to restart buybacks at $2 billion with a total yield of 4% in 2024, given the strong capital position of the bank. Citi forecasts $4 billion in buybacks for 2025 and $6 billion for 2026, while Barclays notes that the slow capital build limits the potential buyback size, expecting distributions only in 2027.