What led to the stock fall: UBS Group AG (NYSE: UBS) stock fell over 4.6% on January 22nd, 2019 (as of 11:08 am GMT-5; Source: Google finance). The adjusted pretax profit for the fourth quarter fell at UBS’s investment bank and at its key wealth-management business, with the latter reporting a 22% decline on year in adjusted pretax profit. In recent years UBS has shifted toward managing money for wealthy clients while streamlining its investment bank operations. Moreover, on an adjusted basis, total operating income decreased by USD 243 million or 3% to USD 6,782 million, mainly due to a USD 172 million decrease in net interest income and other net income from fair value changes on financial instruments and USD 94 million lower net fee and commission income. Total combined net interest income and other net income from fair value changes on financial instruments declined by USD 172 million to USD 2,524 million, mainly due to a decrease in the Investment Bank, primarily due to lower client activity in Equities and lower revenues in Corporate Client Solutions.
Overall Performance: The company in the fourth quarter of FY 18 has reported the net profit of $696 million for the quarter compared with a loss of $2.42 billion a year earlier, when it took hit from the U.S. tax overhaul of almost $3 billion. The analysts had expected the bank to report a $729 million profit for the period, according to a consensus forecast provided by UBS.
In December 2018, the company has increased the shareholding in UBS Securities Co. Limited (UBSS) from 24.99% to 51% by completing a share purchase from existing shareholders. As a result, the company have consolidated UBSS in our financial statements under International Financial Reporting Standards (IFRS) and for regulatory capital purposes.
The company continue to prepare for the UK withdrawal from the EU in the expectation that the UK will leave the EU at the end of March 2019. The company’s plans are intended to ensure that UBS can continue to serve the clients (including in the event the UK leaves the EU without a binding withdrawal agreement). As the expected effective date of the UK’s exit approaches, it appears increasingly likely that any transition arrangements may be significantly limited in scope and may only be agreed upon close to the exit date, if at all.
The bank will propose a dividend of 0.70 Swiss francs ($0.70) per share for 2018, an 8% increase compared with the previous year, targeting a share buyback of up to $1 billion in 2019.