Financial services firm UBS plans $4.5 bn buyback as profits increase

UBS Group AG, the leading investment banking and financial services firm, has reportedly made plans to buy back up to $4.5 billion (4 billion francs) in shares by 2024, boosting shareholder returns after revenue from managing client assets as well as investment banking spurred gains at the globe’s largest wealth manager.

The lender is doubling up the size of a prior program and stated that it anticipates to buyback nearly $1.1 billion of shares in Q1. The bank concluded the year very strongly, with 2020 Q4 net income of around $1.7 billion, which outperformed analyst estimates and saw the Zurich-based firm meeting or overcoming its targets in 2020.

The leading investment banking firm’s shares rose as high as 4.5% and traded nearly 1.4% at noon in Zurich. Earlier, the stock had gained around 4.2% over the last 12 months, known to be the amongst the top best performers of the big European banks.

The focus on affluent clients, who largely benefited from rising stock markets and moderately conservative lending, has permitted UBS to sail easily through the COVID-19 pandemic.

Alison Williams, banking analyst, stated that investment banking firm’s strong momentum entering 2021 is indicated by wealth flows worth $21 billion, with large strength led by Asia, equities in trading as well as fees keeping competitive edge, and target-breaking cost controls.

The banking firm had earlier indicated that it planned to increase buy backs, while decreasing a dividend that was much higher than most of its rivals. The bank aimed at nearly $3.7 billion for shareholders in 2020, including about $2 billion kept aside for buybacks.

The top five investment banks of the U.S. which combined for a record of approximately $30 billion in profit in the quarter, together saw their fixed-income trading revenue increase by nearly 10%, whereas the equities business increased 35%.

UBS has a comparatively small trading desk after shifting from investment banking to wealth management during the wake of the financial crisis.

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