UBS eyes US market after record profit

UBS, Europe’s largest bank by assets, has reported record fourth-quarter profit, after a gain from the sale of four money-management units, and said it may make acquisitions to win more wealthy clients in the US.

Net income more than tripled to 6.49 billion Swiss francs (CHF) or €4.17bn, UBS said yesterday. Earnings included a CHF3.7bn (€2.3bn) gain from the sale of three private banks and an asset management unit to Julius Baer Holding.

Profit from continuing operations rose 36% to CHF2.79bn (€1.79bn).

UBS, which said rising stock markets contributed to an increase in earnings in its main wealth management and securities units, will drive growth by investing in areas where it trails competitors, such as US wealth management and fixed income trading, chief executive Peter Wuffli said.

“The earnings have advanced at substantial growth rates in the last three to four years,” said Jacques-Antoine Demaurex, head of asset management at Banque Bonhote & Cie. in Neuchatel, Switzerland, which oversees about CHF1.2bn (€770 million), including UBS.

UBS said it will boost the dividend to CHF3.80 from CHF3 in 2004 and proposed a two-for-one stock split in July. The bank plans to start its eighth straight buy-back program in March and may repurchase as much as CHF5bn (€3.2bn) of stock.

The planned buyback is CHF1bn (€640m) lower than an estimate by Javier Lodeiro, an analyst at Bank Sarasin in Basel.

Total revenue in the fourth quarter rose 21% to CHF13.87bn (€8.8bn), with a 26% increase coming from the bank’s main wealth management division in Switzerland.

UBS, the world’s biggest money manager, said profit from investing money for wealthy clients in Switzerland, Europe and Asia rose 37% to CHF1.12bn (€718m) in the quarter. Earnings from the US division almost doubled to CHF83m (€53m).

Rising stock markets encouraged trading in the quarter and boosted the value of assets under management, increasing fees. The 228-share Swiss Performance Index advanced 8.9% in the period, while the Dow Jones Stoxx 600 Index rose 4.3%.

UBS’s biggest domestic rival, Credit Suisse, may reveal that profit rose 29% to CHF1.24bn (€795m), helped by money management fees and securities trading, according to the median estimate of eight analysts surveyed by Bloomberg.