UBS has announced a record year, reporting on Tuesday a net profit of SFr12.26 billion ($9.79 billion) for its operations in 2006.This content was published on February 13, 2007 - 08:04
Switzerland's largest bank said financial businesses improved for the fourth consecutive year and attributed the result largely to the flood of new money into its wealth management businesses.
UBS said that total 2006 attributable profit was SFr11.25 billion, up 19 per cent from the same period a year ago.
"We are pleased to report that 2006 was another record year for UBS. The performance of our financial businesses improved for the fourth consecutive year," commented UBS chief executive Peter Wuffli.
"Even more importantly, we took a number of strategic steps to expand and develop our business in line with our growth ambitions."
UBS also reported a higher net profit of SFr3.145 billion in the fourth quarter of 2006, well above analysts' expectations as new money flooded into its wealth management business.
Total new money for 2006 at the bank, which is the world's largest wealth manager, totalled a record-breaking SFr151.7 billion, compared with SFr148 billion the previous year.
Over SFr113.3 billion was contributed by the wealth management businesses particularly in Asia and Europe.
Clive Standish, chief financial officer, told journalists that the strong performance had continued into the new year "with a very strong pipeline in business opportunities in capital markets and investment banking".
The bank proposed a dividend payout of SFr2.20 per share, up from SFr1.60 a year earlier and announced a new three-year share buyback programme worth SFr16 billion at the current share price level.
"Overall it's a very good result," said Andreas Venditti, an analyst at the Zurich Cantonal Bank.
"If you look at pre-tax results, it's across the board. Investment banking is good, especially on equity revenues, fixed income is not that great but advisory income from investment banking is very good," said Venditti.
Investors are focusing on UBS's growing cost base as it expands with a string of acquisitions, which last year included Brazilian wealth manager Banco Pactual, the brokerage business of Piper Jaffray and McDonald Investments in the United States. UBS said these will close important competitive gaps and help accelerate growth.
The bank said its strategic expansion, both by acquisition and through organic development, required more people, infrastructure and investment, and although income rose 19 per cent, costs were also up 18 per cent.
Wuffli indicated that the unusually high level of acquisitions was unlikely to be repeated in 2007, but added that the bank would continue to look for growth opportunities.
"The challenge is to maintain our discipline. This is not so easy because there is an incredible party going on in the financial services industry at the moment," Wuffli said.
"We are acutely aware of the importance of concentrating extra resources in areas that generate or support increased revenues, and making sure that we do not allow any part of our business to develop inefficient habits," added Standish.
UBS's rival Credit Suisse is set to announce its 2006 figures on Thursday.
swissinfo with agencies
The present UBS took shape in the 1990s through a series of mergers and acquisitions that transformed a mainly Swiss business into a global institution.
In December 1997 the Union Bank of Switzerland and the Swiss Bank Corporation announced their merger, which was completed in June 1998.
Later that year UBS had to declare a SFr793 million pre-tax loss after the collapse of the Long Term Capital Management (LTCM) hedge fund in which Union Bank of Switzerland had invested.
The firm's first major acquisition in 2000 was PaineWebber, the fourth-largest securities broker in the United States. This filled a strategic and regional gap in UBS's wealth management business.
In June 2003, the bank adopted the single UBS brand for all its major businesses.
Financial figures 2006
Net profit: SFr12.26 billion
Total attributable profit: SFr11.25 billion
Total net new money: SFr151.7 billion
Proposed dividend payout: SFr2.20
Staff at the end of 2006: 78,140 (+8,571)
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