Analyst Note
| Johann Scholtz, CFA |UBS Group reported net attributable profit of $1.7 billion for fourth-quarter 2020, more than double the $722 million it reported a year earlier and blowing the $1 billion expected by the consensus of analysts polled by UBS itself completely out of the water. The earnings beat was largely driven by revenue for the quarter of $8.1 billion, coming in 9% ahead of expectations. UBS asset management business exceeded its revenue expectations by 37% and the investment bank beat its expectations by 12%. UBS maintained a conservative provision methodology for loan losses; its models suggested it could book greater releases from its provisions built up in previous periods, but it believed it would be premature to do so and used management discretion to override the release of provisions. Given the current uncertain economic environment this is the correct decision. We maintain our narrow moat rating and CHF 14/share fair value estimate for the time being, but we will update our model soon, which may see a change in our fair value estimate.