By Adria Calatayud

UBS Group aims to buy back up to $3 billion in its own stock this year as it reported a better-than-expected net profit for the fourth quarter thanks to its investment bank and cost controls.

The Zurich-based group resumed share repurchases last year after a pause due to its takeover of Credit Suisse in 2023. The bank is seeking to bolster its returns to shareholders so that its buybacks next year exceed the levels of 2022, before the rescue deal for its former cross-town rival.

UBS reiterated that ambition on Tuesday, with the caveat that its plans remain subject to maintaining a capital ratio above its target, achieving financial goals and the absence of immediate changes to current capital rules in Switzerland.

The prospect of tougher regulations that are expected to increase the bank's capital demands in its home country has cast a cloud on its plans to return more money to shareholders. Analysts have said the new requirements could make UBS alter its plans.

UBS said it plans to repurchase $1 billion of its own stock in the first half and aims to buy back up to an additional $2 billion in the second half. It also hiked its dividend by 29% to $0.90 a share.

The dividend increase should give the market confidence that UBS can resolve its capital issues organically while maintaining buybacks, analysts at JPMorgan wrote in a note to clients.

The update sent UBS's shares up as much as 3% in early morning trade in Europe, but the stock fell later.

UBS's fourth-quarter results once again reflected its efforts to integrate Credit Suisse after the takeover engineered by Swiss authorities. Lower integration-expense bills and stronger-than-expected results at its investment bank lifted earnings.

The Swiss banking group said net profit for the quarter was $770 million compared with a loss of $279 million in the year-earlier period, when its results were hit by costs related to the integration of Credit Suisse.

Analysts had expected a net profit of $483 million, according to consensus estimates compiled by the bank.

Revenue for the quarter came in at $11.635 billion, up from $10.855 billion a year before. Analysts had expected $11.51 billion, according to the same consensus.

UBS's core global wealth management arm brought in $18 billion in net new assets last quarter, a slowdown from $25 billion in the prior quarter.

"We are confident in our ability to substantially complete the integration by the end of 2026, achieve our financial targets, and fulfill our growth initiatives as we position UBS for a successful future," Chief Executive Sergio Ermotti said.

UBS said it expects gross cost savings from the integration of around $2.5 billion in 2025 and that it is on track to deliver about $13 billion in savings by the end of next year. However, the bank now anticipates cumulative expenses of around $14 billion, higher than previously assumed.

The bank said constructive market conditions have continued into the first quarter of 2025 after investors ended 2024 on a positive note, but cautioned that increased uncertainties around global trade, inflation and central bank policies might trigger volatility.

Write to Adria Calatayud at adria.calatayud@wsj.com

(END) Dow Jones Newswires

February 04, 2025 04:11 ET (09:11 GMT)

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