UBS Group AG (UBS) Q4 Earnings Impress, Tax Expense Recorded

UBS Group AG (UBS - Free Report) reported fourth-quarter 2017 net profit attributable to shareholders of CHF 955 million ($967.7 million) on an adjusted basis, up around 25.2% from the prior-year quarter. Results exclude deferred tax expense.

Including deferred tax expense, net loss attributable to shareholders came in at CHF 2.2 billion ($2.23 billion) compared with net income of $636 million recorded in the prior-year quarter.

Results displayed rise in net fee and commission income (up 3% year over year) and higher trading income (up 4% year over year), partially offset by decrease in net interest income (down 5% year over year). Notably, the quarter benefited from the company’s continued focus on expense management.

For 2017, net profit attributable to shareholders was CHF 5.3 billion on an adjusted basis, up 23.3% from the prior year. Including one-time adjustments, net income came in at CHF 1.2 billion, down 62.5% from the prior year.

The company recorded improved profitability in Global wealth management, Wealth Management Americas, Personal & Corporate banking and Wealth Management units. However, performances in Investment Bank and Asset Management units were disappointing.

Constant Cost Control Reflected, Operating Income Stable

Excluding the significant items, UBS Group AG’s adjusted operating income remained almost stable compared with the prior-year quarter at CHF 6.9 billion ($6.99 billion).

Adjusted operating expenses were down 3.4% year over year to CHF 5.7 billion ($5.8 billion). Expenses included provisions for litigation, regulatory and similar matters of CHF 39 million ($39.5 million), a whopping 85.2% year over year.

Business Division Performance

The global wealth management division’s adjusted operating profit before tax came in at CHF 1.03 billion ($1.04 billion), up 18% year over year. U.S. dollar interest rate rises and elevated invested assets, along with loan growth, mainly aided revenues. Net new money came in at CHF 13.8 billion in the quarter.

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