UBS Q4 Net Profit Rises; Sets Dividends

(RTTNews) - Swiss financial services giant UBS AG (UBS) reported Tuesday higher profit in its fourth quarter, benefited mainly by a tax benefit. Meanwhile, operating profit declined amid very low levels of client activity and pronounced risk aversion. The company further announced ordinary and special dividends for the year.

Looking ahead, the company said in its statement, "Negative market performance and substantial market volatility since the start of 2016, low interest rates, and the relative strength of the Swiss franc, particularly against the euro, continue to present headwinds. In addition, the proposed changes to the Swiss too big to fail framework will cause substantial ongoing interest costs."

For the fourth quarter, net profit attributable to shareholders was 949 million Swiss francs or 0.25 franc per share, compared to last year's profit of 858 million francs or 0.23 franc per share.

The latest quarter results included a net tax benefit of 715 million francs, mainly relating to a net upward revaluation of deferred tax assets, and provisions for litigation, regulatory and similar matters totaling 365 million francs. As previously announced, the quarter also included a charge of 257 million francs for a debt buyback.

Operating profit before tax declined to 234 million francs from 404 million francs a year ago.

Wealth Management segment's profit was hurt by very low levels of client activity while net interest income grew 3 percent.

Wealth Management Americas' profit plunged on charges, while net interest income climbed 16 percent.

Investment Bank's profit was hurt mainly by revenue declines in Equities and Corporate Client Solutions.

Personal & Corporate Banking posted higher adjusted profit, its best fourth quarter since 2011, despite continued negative interest rates.

UBS' total operating income increased to 6.775 billion francs from 6.746 billion francs a year ago.

The cost/income ratio was 95.7 percent compared with 88.7 percent.

Further, UBS Board proposed an ordinary dividend of 0.60 franc per share on strong annual profit and a special dividend of 0.25 franc per share on a significant net upward revaluation of deferred tax assets. The total dividend of 0.85 franc will be paid out of capital contribution reserves, and will be payable on May 17 to shareholders of record on May 13.

Looking ahead, the company expects to record net foreign currency translation losses of around 250 million francs in the first half of 2016, although some of these losses could be recognized in a later period.

The company also expects to recognize in the income statement gains of approximately 100 million francs, deferred in OCI, during the first half of 2016.

UBS shares closed Monday's trading at 16.68 francs, down 0.89 percent.