Switzerland's largest banking group, UBS, has announced record profits for 2000 of SFr7.792 billion ($4.61 billion), exceeding the forecasts of financial analysts.
In a statement, UBS said the strong performance reflected the group's increasingly distinct positioning and the quality of its earnings across varied market conditions.
Adjusted for significant financial events, net profit was SFr8.132 billion, representing a year-on-year growth of 74 per cent.
In a difficult year for the equity markets, UBS's share price rose 23 per cent over the 12 months. Earnings per share increased 76 per cent from SFr12.37 to SFr21.83.
UBS said that group assets under management increased by SFr725 billion to SFr2,469 billion, boosted by its acquisition of New York investment bank PaineWebber, which more than offset the effect of the falling US dollar and weaker equity markets in the latter part of the year.
Commenting on the fourth quarter results, UBS said that net profit was SFr1.149 billion, or SFr1.634 billion once adjusted for significant financial events. This is 54 per cent higher than in the fourth quarter 1999 but 21 per cent below the previous quarter's level.
Excluding the estimated impact of the merger with PaineWebber, underlying net profit fell eight per cent quarter on quarter, a performance described as "excellent" considering the less favourable market conditions and the seasonal slowdown.
UBS said that its strategy would now be focused on putting to use PaineWebber's skills across all its businesses, particularly in the growing European wealth management business.
It said services would be designed mainly for those with more than €500,000 (SFr765,000) of investible assets. It added that it would not directly target the "mass affluent" segment in Europe.
Given its strong capital generation, UBS said it intended to establish a further share buyback programme on March 5, intended for capital reduction purposes. The board of directors has set the maximum value of shares that can be repurchased under the programme at SFr5 billion.
Shareholders are also to be asked to approve a three-for-one share split, subject to new regulations currently passing through the Swiss legislative process which are expected to come into force on May 1.
In its outlook for 2001, UBS was cautious, saying that prospects for markets and for the international credit environment were "particularly difficult" to predict.
However, it said that the recent economic upswing in Switzerland gave some protection.
It added that the biggest opportunity for UBS this year was integrating PaineWebber to build the best wealth management firm in the world.