UBS Group (UBSG) Q4 2023 earnings summary

Executive summary

• Completed the first integration phase, stabilized the acquired franchise, attracted $77bn in GWM net new assets and deposits across GWM and P&C, and delivered ~ $4bn in 2023 gross cost saves.

• 4Q23 underlying PBT was $592m versus reported PBT of $(751)m; FY23 underlying PBT was $3.963bn, excluding the $28.925bn negative goodwill gain.

• Targeting ~15% underlying RoCET1 by 2026 exit rate and ~18% reported RoCET1 by 2028, supported by cost reductions, balance-sheet optimization and franchise growth.

Financial highlights

• FY23 reported revenue was $40.834bn, PBT $29.916bn, net profit $29.027bn and diluted EPS $8.81; underlying PBT was $3.963bn, excluding negative goodwill and other specified items.

• 4Q23 reported revenue was $10.855bn and PBT $(751)m; net profit was $(279)m. Underlying revenue was $10.419bn, down 3% QoQ, and underlying PBT was $592m.

• 4Q23 underlying operating expenses were $9.690bn, up 1% QoQ; reported expenses were $11.470bn, including $1.779bn of integration-related expenses.

• 4Q23 underlying RoCET1 was 4.7%; FY23 underlying RoCET1 was 4.1% and underlying cost/income ratio 87.2%.

Outlook and guidance

• 2024 revenue is expected to decline mid-single digits versus 4Q23 annualized, with 1Q24 broadly flat QoQ; NII is expected to recover in the second half of the planning period.

• Targets: ~15% underlying RoCET1 and <70% underlying cost/income ratio by 2026 exit rate; ~18% reported RoCET1 by 2028.

• Gross cost saves target is ~ $13bn by year-end 2026; cumulative delivery milestones are ~30% in 2023, ~45% in 2024 and ~75% in 2025.

• GWM targets ~ $100bn annual NNA through 2025, building to ~ $200bn by 2028 and invested assets above $5tn by 2028.

• RWA is expected to decline by ~ $35bn to $510bn by year-end 2026; NCL unwind is expected to be substantially complete by then.