UBS raises dividends after return to profit
Zurich, February 5, 2014
UBS raised its dividend and increased bonuses for bankers by nearly a third yesterday after the Swiss bank returned to a fourth-quarter profit, reaping benefits of a revamp of its investment banking business.
The turnaround follows a transformational year in which UBS successfully hived off loans, abandoned risky bond trading activities and centred the group around its traditional private banking roots. Its shares rose six per cent.
The results represent a vindication of sorts for UBS's decision to shrink its investment bank and largely withdraw from riskier activities such as bond trading, where a slowdown has stung rivals such as Goldman Sachs, Citigroup and Deutsche Bank.
UBS, Switzerland's biggest bank, reported fourth-quarter net profit of 917 million Swiss francs ($1.02 billion) after it booked a 470 million franc gain from deferring taxes.
The result was nearly three times the 354 million francs average estimate of 16 analysts polled by Reuters and a turnaround from last year's 1.89 billion francs loss when it was fined for trying to rig global interest rates.
UBS increased its bonus pool by 28 per cent to 3.2 billion francs from 2012, when awards were cut after it had to pay out $1.5 billion to settle the interest rate allegations.
Chief executive Sergio Ermotti said compensation at the bank was now "normalised." But the increases drew criticism in Switzerland, where taxpayers are still sore at having to bail UBS out during the financial crisis.
The bank kept a conservative outlook, in particular for its private bank, and said an emerging market rout may unnerve its wealthy clients, which could in turn hit fund inflows, revenue and interest margins.-Reuters