UBS Sees Uptick in Q4 Profit, But Falls Below Expectations

This shortfall was largely thanks to its wealth management division and weaker investment bank earnings.

UBS has revealed an ever-so-slight yearly increase in its pre-tax profit for the fourth quarter of 2018 today. However, even though the multinational firm still managed to report a jump in profits, it still fell short of analyst estimates.

This shortfall was largely thanks to its wealth management division, which noted $8 billion in outflows during the fourth quarter. The company’s investment bank, which managed to buoy UBS during the second and third quarter, also saw weaker earnings during the period.

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Sergio P. Ermotti, CEO of UBS AG
Sergio P. Ermotti
Source: UBS

Commenting on the fourth quarter results, Group Chief Executive Officer Sergio Ermotti said: “The strength of our strategic choices and diversified franchise once again came through in the fourth quarter, as we delivered a resilient performance despite historically tough market conditions.”

Specifically, during Q4 of 2018, UBS reported a profit before tax of $862 million, which represents a two percent increase when measured against the prior year period. Adjusted profit before tax for the fourth quarter was $860 million.

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Taking a look at UBS’ investment bank, adjusted profit before tax was $26 million in Q4, an 84 percent increase year-on-year. From the unit, foreign exchange (forex), rates and credit increased by 14 percent on a yearly basis. According to the statement, forex results offset more subdued credit revenues.

UBS full-year results paint a brighter picture

For the full year of 2018, the results look a lot more optimistic. Profit before tax was $6.4 billion on an adjusted basis in 2018, which also represents an increase of two percent year-on-year.

Group profit before tax was also up by 19 percent for 2018 when measured against the prior year. This was driven by higher operating income and lower operating expenses. More notably, net profit for the whole of 2018 was $4.9 billion. This is an increase of 25 percent when compared with 2017.

For the full year, the investment bank unit achieved an adjusted profit before tax of $1.8 billion. This translates to a growth of 20 percent year-on-year.

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