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UBS Fourth-Quarter 2020 Results Materially Ahead of Consensus

Johann Scholtz, CFA Equity Analyst

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.

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Company Profile

Business Description

UBS is the world’s largest wealth manager and is the product of multiple mergers over the years. Apart from wealth and asset management, it operates a universal bank in Switzerland and a global investment bank.

Bahnhofstrasse 45
Zurich, CH-8001, Switzerland
T +41 442341111
Sector Financial Services
Industry Banks - Diversified
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2020
Stock Type
Employees 71,551