UBS reinstates dividend and plans share buyback despite second consecutive quarterly loss

UBS has announced that it will resume share buybacks in the second half of this year and plans to award shareholders up to $1bn (£797m) as it integrates fallen rival Credit Suisse.

The Switzerland-based banking giant posted a $279m net loss in the final quarter of 2023, slightly worse than analysts’ estimates, due to the costly integration process.

However, it reported an annual profit of $30bn (£23.9bn) due almost entirely to an accounting gain it booked on the takeover.

UBS acquired domestic rival Credit Suisse in a state-brokered deal finalised last June, which came after years of scandal at the latter firm, resulting in mass client outflows and a share slump.

It is battling high costs as it winds down Credit Suisse’s unprofitable businesses while fully integrating its key Swiss banking unit, including combining the two firms’ IT systems and legal entities, by the end of 2026.

UBS has also stripped out thousands of jobs as it seeks to avoid duplicating roles.

The bank revealed on Tuesday that it was planning $13bn in cost savings by the end of 2026, with half expected by the end of 2024.

Opponents argue the integration could reduce competition in Switzerland, and hundreds of Credit Suisse shareholders mounted legal action last summer over losses incurred from the rushed acquisition.

UBS’ key wealth management unit – the biggest in the world – posted a pretax profit of $381m, undershooting analysts’ expectations of $1.07bn.

It set a new financial target for the wealth management business to amass $5tn of invested assets by 2028.

The group saw higher underlying revenues in the fourth quarter, driven by its global banking arm, while its investment bank saw a pretax loss of $169m.

UBS said it expected the investment bank to return to profitability as market activity improves, its pipeline grows and the integration progresses.

“Clients entrusted us with $77bn in net new assets since the acquisition,” said chief executive Sergio Ermotti. “We will focus on restructuring and optimizing the combined businesses.”

He added: “With enhanced scale and capabilities across our leading client franchises and improved resource discipline, we will drive sustainable long-term growth and higher returns.”

Cevian Capital, Europe’s largest activist investor, took a €1.2bn (£1bn) stake in UBS in December, betting that the bank would double its share price after taking over Credit Suisse.

UBS also announced today that it planning a dividend of $0.70 per share for last year.