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US tax reforms send UBS profits plunging
[ZURICH] Swiss banking giant UBS reported Monday that its profits plummeted 63 per cent last year due to US tax reforms that hit fourth-quarter earnings.
It said annual net profit dropped to 1.16 billion Swiss francs (S$1.59 billion) for the year.
During the last three months of 2017 the bank suffered a net loss of 2.2 billion Swiss francs as it took a charge of 2.87 billion Swiss francs due to changes in US tax laws.
Without the charge against earnings, the bank said it would have posted a net profit of 641 million Swiss francs for the fourth quarter, and annual profits would have climbed by 26 percent.
Changes in US tax law have forced banks that operate in the United States to book considerable one-time losses in the final quarter of last year, but are expected to be mostly favourable to them going forward.
While the US tax reform reduces the corporate tax rate from 35 to 21 per cent, UBS said it may find its tax bill in the United States rises by 60 million Swiss francs due to an alternate method to ensure firms pay a minimum amount of tax.
Despite the US-tax writedown "2017 was an excellent year for us. We delivered stronger financial results and met our net cost reduction target," chief executive Sergio Ermotti said in a statement.
"Greater regulatory clarity means we can open a new chapter for UBS, allowing us to sharpen our focus on growth across our businesses, make further investments in technology and deliver attractive returns to shareholders." UBS, the largest Swiss bank, said it meet its target to cut costs by 2.1 billion Swiss francs.
It said profit before taxes at its wealth management business rose by 15 percent to 2.7 billion Swiss francs. At the wealth management unit for the Americas, which is separate, pre-tax earnings fors by 12 per cent to $1.3 billion.
UBS shares dropped 2.9 per cent to 18.77 Swiss francs in morning trading on a Swiss market which was down 0.1 per cent overall.