UBS‘ fourth-quarter revenue beat market expectations, however the Swiss banking large reported a fall in revenues on the again of weaker shopper exercise and warned of an “unsure” 12 months forward.

The financial institution reported $1.7 billion of internet earnings for the fourth quarter of final 12 months, bringing its full-year revenue to $7.6 billion in 2022. Analysts had anticipated UBS to publish internet earnings of $1.3 billion within the fourth quarter and of $7.3 billion for the 12 months, in keeping with Refinitiv information.

The financial institution’s International Wealth Administration unit posted a fourth-quarter enhance in internet curiosity earnings of 35% on the 12 months, given increased deposit margins off the again of upper rates of interest. Its Private and Company Banking division additionally recorded a 21% year-on-year hike in internet curiosity earnings over the identical interval, because of increased rates of interest and mortgage revenues.

However market uncertainty hit the funding banking and asset administration arms of the enterprise. The previous noticed a 24% yearly drop in revenues, whereas asset administration revenues fell by 31% year-on-year as a result of “damaging market efficiency and international foreign money results.”

“The speed surroundings helps the enterprise on one facet, and that offsets a few of the decrease exercise that we see on the funding facet,” CEO Ralph Hamers instructed CNBC’s Geoff Cutmore on Tuesday.

He added that there had been a shift within the markets that put strain on the funding facet of the financial institution.

“We noticed a transfer from what we might name micro focus, which is equity-focused, to macro focus, which is charges targeted,” he stated, noting that the Swiss financial institution was not in a position to profit from that transition as a lot as a few of its friends, given its smaller presence within the U.S.

Listed here are another highlights from the outcomes:

• CET 1 capital ratio, a measure of financial institution solvency, stood at 14.2%, down from 14.4% within the earlier quarter;
• Complete revenues dropped to $8 billion from $8.7 billion a 12 months in the past;
• Return on tangible fairness, a measure of banks’ efficiency, rose to 13.2% on the finish of the quarter, up from 10% a 12 months in the past.

Wanting forward, the Swiss lender stated that revenues for the primary quarter of 2023 had been set to be “positively influenced” by increased shopper exercise and rates of interest, in addition to by the easing of Covid-19 restrictions in Asia.

Nonetheless, it was cautious concerning the financial outlook extra broadly, citing central financial institution exercise as a possible catalyst for market volatility.

“Whereas inflation might have peaked within the second half of 2022, and an power disaster in Europe appears more likely to be averted, the outlook for financial development, asset valuations and market volatility stays extremely unsure, and central financial institution tightening might have an effect on market liquidity,” the financial institution stated its earnings launch.

UBS stated will probably be buying extra of its personal shares this 12 months.

“We stay dedicated to a progressive dividend and anticipate to repurchase greater than $5 billion of shares in 2023,” Hamers stated in a press release accompanying the outcomes.

Shares within the financial institution fell greater than 2% in early European commerce.

“UBS posted what we expect are combined fourth quarter outcomes,” analysts at Jefferies stated in a Tuesday be aware.

“Going by means of the small print, our sturdy first impression will get tempered as the upper earnings are literally pushed by some one-offs in revenues in addition to a low tax charge. Underlying tendencies are extra combined,” they stated.