UBS reported strong earnings for the fourth quarter, boosted by strong growth in its Wealth Management division and Wealth Management Americas division, which posted a record quarterly profit.

The wealth management divisions delivered their best pre-tax profit since the financial crisis, CEO Sergio Ermotti told investors on a conference call. “2013 was a year of strong execution and noteworthy achievements,” Ermotti said.

WEALTH MANAGEMENT AMERICAS

UBS Wealth Management Americas contributed a fourth quarter profit of $254 million USD before taxes to the company’s bottom line, an increase of 64% over the $157 million posted for the same period a year ago. For the year the division had record pre-tax profits of $927 million, up from $638 million, a 45% increase.

The division’s operating expenses grew in the fourth quarter by $65 million to $1.596 billion, largely due to restructuring costs and higher advisor compensation, according to the firm. Client assets for the division also grew, rising to $1.025 trillion from $885 billion, a 15% increase quarter-over-quarter. 

“There are a lot of key indicators that have moved in the right direction,” says Alois Pirker, research director at Aite Group.

Revenue per financial advisor at UBS Wealth Management Ameicas also reached a record of $1.04 million for the fourth quarter, up 8% from $967,000 for the year-ago period.  And the division’s cost to income ratio fell from 89.8% to 85.9%.

While the number of advisors in the Americas division grew to 7,137 from 7,059, the total number of UBS employees declined to 60,205 from 62,628 a year ago. The overall decline comes as the bank has tried to cut costs this past year.

OVERALL PROFIT

The Zurich-based company reported that its overall profit for the quarter was 917 million Swiss francs, a big improvement from the 1.9 billion loss UBS reported for the fourth quarter of 2012.  The bank also posted 0.24 francs diluted earnings-per-share, a significant increase over the -0.5 francs UBS posted a year ago.

The firm’s total operating expenses dropped to 5.858 billion francs for the quarter, down from 8.044 billion francs for the same period last year when UBS had an additional 2 billion francs in litigation and regulatory expenses.

'PUNCHED ABOVE ITS WEIGHT'

According to UBS, its wealth management division, which does not include the United States or Canada, saw a profit of 471 million francs before taxes during the fourth quarter, growing 18% from the 398 million Swiss francs for the year-ago period.

The company’s investment bank also reported strong growth, posting a profit of 297 million Swiss francs, a significant improvement over the loss of 243 million francs over the period a year ago.

“UBS has punched above its weight.  They’ve put up phenomenal numbers in recent times,” Pirker says.

UBS says its board of directors will propose a 67% increase in UBS’ dividend, causing it to potentially rise to 0.25 francs per share for 2013.

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