UBS profit rises 11% on tax gain; bank raises dividend

[LONDON] UBS Group AG said net income rose 11 per cent in the fourth quarter boosted by a tax gain that offset a decline in wealth-management and investment-banking profit.

Net income in the fourth quarter was 949 million Swiss francs (S$1.33 billion), UBS said in a statement Tuesday. That beat the 911 million-franc average estimate of seven analysts surveyed by Bloomberg. UBS proposed a dividend for 2015 of 85 centimes per share, up from 75 centimes for 2014.

Chief Executive Officer Sergio Ermotti has reshaped the bank to focus on wealth management, shrinking the investment bank, a model that's being tested as market swings and a slumping oil price reduce client trading. Low interest rates and increasing regulatory demands for capital are hampering the bank's ability to boost profit, raising investor concern that dividends may not increase as quickly as expected.

The fourth quarter was characterised by very low levels of client activity and pronounced risk aversion, UBS said in the statement.

The bank has pledged to pay out at least half its earnings to shareholders as long as its common equity Tier 1 ratio, a measure of financial strength, remains above 13 per cent. The ratio stood at 14.5 per cent at the end of December. The 2015 dividend includes a special payout of 25 centimes, as did the 2014 dividend.

The bank's pretax profit in wealth management declined 47 per cent to 344 million francs from a year ago, while the investment bank saw a decline of 63 per cent to 80 million francs.

Wealth management had net money outflows of 3.4 billion francs in the quarter.

BLOOMBERG