UBS Stock Dips On Lower Q4 Net Profit; Maintains Dividend

(RTTNews) - Shares of UBS Group AG (UBS) were losing around 3 percent in Friday's trading after the Swiss banking giant reported sharply lower profit in its fourth quarter on the absence of prior year's tax benefit.

Looking ahead, the company noted that although macroeconomic uncertainty, geopolitical tensions and divisive politics continue to affect client sentiment and transaction volumes, it has begun to observe improved investor confidence, primarily in the US that may benefit wealth management businesses.

"Lower than expected and negative interest rates, particularly in Switzerland and the eurozone, continue to present headwinds to net interest margins, which may be offset by the effect of higher US dollar interest rates," the company said in its statement.

For the fourth quarter, net profit attributable to shareholders declined to 738 million Swiss francs or 0.19 franc per share from last year's 949 million francs or 0.25 franc per share. The prior year results were benefited by a substantial tax benefit.

On a pre-tax basis, UBS's profit was 848 million francs, higher than 234 million francs a year ago. Adjusted profit before tax was 1.11 billion francs.

Operating income increased 4% to 7.06 billion francs from 6.78 billion francs a year ago. Net interest income was 1.762 billion francs, same as last year's 1.759 billion francs.

Net interest income after credit loss expense grew 2 percent to 1.74 billion francs. Net fee and commissioning income dropped 1 percent, while net trading income grew 5 percent.

The company noted that Wealth Management Americas delivered significant operating profit, and Swiss Personal and Corporate business achieved its best full-year results since 2008.

Further, UBS said its Board of Directors intends to propose a dividend of 0.60 franc per share to shareholders, unchanged from 2015.

The company added that implementing Switzerland's new bank capital standards and the proposed further changes to the international regulatory framework for banks will result in increasing capital requirements and costs.

UBS said it will continue to execute its strategy with discipline, positioning it to mitigate these challenges and to benefit from any further improvement in market conditions.

In Zurich, UBS shares were trading at 16.46 francs, down 3.29 percent.