UBS Reports Strong Q4, Upto $3B Buyback: But Potential Drag Due To Swiss Banking Reforms Dampens Wall Street Mood

The Swiss lender said it plans to repurchase $1 billion of shares in the first half of 2025 and aims to repurchase up to an additional $2 billion in the second half.

NYSE-listed shares of Swiss giant UBS Group AG declined nearly 5% pre-market Tuesday after the lender reported strong fourth-quarter earnings.

This surprised many investors as the bank also announced up to $3 billion of share repurchases in 2025.

UBS said it plans to repurchase $1 billion of shares in the first half of 2025 and aims to repurchase up to an additional $2 billion in the second half.

However, the dampener turned out to be a warning from the lender that the repurchase plans could be impacted by the banking reforms in the country.

“Our share repurchase levels will be subject to maintaining our CET1 capital ratio target of ~14%, achieving our financial targets, and the absence of material and immediate changes to the current capital regime in Switzerland,” UBS said.

According to a Financial Times report, UBS CEO Sergio Ermotti said that the bank’s competitiveness could be hurt by an overreaction by the Swiss government.

“It doesn’t look like the right time to do experiments on increasing requirements, at a time in which the economy seems to need the banking system to be a source of stability and strength,” Ermotti said, according to the report.

Meanwhile, the bank reported fourth-quarter (Q4) group revenue at $11.635 billion compared to an estimated $11.64 billion. Net profit attributable to shareholders stood at $770 million, compared with an estimate of $483 million, according to the FT report.

Net interest income, the difference between interest earned and expended, declined 12% year-over-year (YoY) to $1.84 billion during the quarter.

On Stocktwits, retail investors mirrored Wall Street’s sentiment, with the sentiment meter dipping into the ‘neutral’ territory (46/100) from ‘extremely bullish’ a day ago.

The stock has been gaining increasing retail interest on Stocktwits as is evident from a 100% rise in message count over the past year.

UBS said investor sentiment remained positive in the fourth quarter of 2024. This drove strong institutional and private client activity supported by a constructive market backdrop that reflected an increase in investors’ risk appetite following the results of the US presidential election.

The lender noted that although constructive market conditions have continued in the first quarter of 2025, investor behavior may be affected by the clouded macroeconomic outlook outside the US, increased uncertainties around global trade, inflation, and central bank policies, as well as geopolitics, including the upcoming elections in Germany.

For the first quarter, UBS expects a low-to-mid single-digit percentage sequential decline in NII in Global Wealth Management and around a 10% sequential decline in Personal & Corporate Banking’s NII, measured in Swiss francs.

UBS shares have gained over 15% year-to-date, while the stock is up over 17% in the past year.

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