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By Swissquote Analysts
Published on 01.02.2022
Morning news

UBS: 2021 net profit of USD 7.5bn, 17.5% return on CET1 capital

Topic of the day

The major Swiss bank UBS earned less in the fourth quarter of 2021 due to higher expenses. As UBS AG announced, pre-tax profit fell by 13 per cent to 1.73 billion dollars compared to the same period last year. This includes credit loss recoveries of $27 million net. Due to higher provisions of 740 million dollars, operating expenses increased by 14 per cent. Without the provision, operating expenses would have increased only 2 per cent, UBS said, and pre-tax profit would have been 24 per cent higher than a year earlier. Net profit attributable to shareholders was $1.35 billion, down 18 per cent from the same period in 2020, with a return on common equity tier 1 (CET1) of 11.9 per cent and a common equity tier 1 ratio of 15.0 per cent at the end of 2021. "The fourth quarter was a strong finish to a year of consistent growth," said Group CEO Ralph Hamers. "Our success allows us to propose a dividend of $0.50 for 2021."

Swiss stocks

The SMI gained 1.0 per cent to 12,227 points. Among the 20 SMI stocks, there were 16 price gainers and three price losers, and one share closed unchanged. 41.37 (previously: 40.8) million shares were exchanged. Particularly price increases among banks and the index heavyweights pulled the SMI upwards. The shares of UBS and CS Group gained 1.0 and 2.3 per cent, respectively. UBS publishes its results for the fourth quarter on Tuesday. Novartis, Roche and ABB, among others, will follow with their quarterly figures in the course of the week. The shares of Novartis, Roche and Nestle rose between 0.4 and 1.0 per cent. ABB shares rose by 1.9 per cent. The company increased its majority stake in Chinese electric car charging provider Chargedot to 80 per cent from 67 per cent previously. The group pointed to positive developments at Chargedot in 2019 to 2021 and stated the investment will help ABB E-Mobility implement its growth strategy and strengthen its position in the fast-growing Chinese electric mobility market.

International markets


European stock indices traded higher Monday as investors analysed a series of economic indicators ahead of the European Central Bank (ECB) meeting Thursday. The Stoxx Europe 600 index rose 0.7 percent to 468.9 points. In Paris, the CAC 40 and SBF 120 rose 0.5% each. In Frankfurt, the DAX 40 gained 1% while London's FTSE 100 remained stable. Harmonised consumer prices in Germany rose by 5.1% year-on-year and 0.9% month-on-month in January. Despite inflationary pressures, the ECB is not expected to tighten its monetary policy at its meeting on Thursday. Casino (-13.8%) lowered its gross operating profit (Ebitda) estimate for its French retail chains in 2021 and now expects a decline in this indicator, after a more difficult fourth quarter than expected. Its competitor Carrefour lost 5.3%. Orpea (-7.4%) has dismissed its CEO, Yves Le Masne. The company has appointed Philippe Charrier as CEO with immediate effect. In the wake of Orpea, Korian lost 6.6% on Monday. Faurecia's shares, which were suspended on Monday, will resume trading on Tuesday. The group announced late Monday afternoon that it had completed the acquisition of its German counterpart Hella. Faurecia said it had acquired 79.5% of Hella, representing an investment of 5.3 billion euros. The new entity is the world's seventh largest automotive supplier. Low-cost carrier Ryanair’s (-1.1% in Dublin) 3Q saw an improvement in pricing despite December's Omicron-related restrictions as its EUR25 average fare was only around 24% below 2019's 3Q, an improvement from the 31% difference in the 2Q comparison, Citi said. Pearson's acquisition of digital-credentialing firm Credly for a total firm value of $200 million is a sensible move and should be well received, according to Citi.

United States

The S&P 500 rose Monday but closed out its worst month since March 2020 as expectations for higher interest rates erode enthusiasm for stocks. The central bank last week signaled that it would begin steadily raising rates in mid-March. Adding to investors’ anxieties in recent weeks: the possibility of a Russian invasion of Ukraine and the surge of the Omicron variant of Covid-19. On the final trading day of January, the S&P 500 advanced 83.70 points, or 1.9% to 4515.55. The Dow Jones Industrial Average gained 406.39 points, or 1.2%, to 35131.86. The tech-heavy Nasdaq Composite advanced 469.31 points, or 3.4%, to 14239.88, chipping away at its monthly losses. Technology stocks have slumped this month as investors consider how rising interest rates could weigh on the group’s pricey valuations, which are based in part on expectations for growth far into the future. Microsoft shares dropped 7.5% in January, while Nvidia’s slumped 17%. Among individual stocks on Monday, shares of Netflix jumped $42.78, or 11%, to $427.14 on Monday after a ratings upgrade from Citigroup and share purchases by Co-Chief Executive Reed Hastings. Still, the stock ended January down 29%, its worst month since April 2012. U.S.-listed shares of Sony rose $4.82, or 4.5%, to $111.66 after Sony Interactive Entertainment LLC said it is buying videogame developer Bungie. Earlier in January Microsoft said it would buy videogame giant Activision Blizzard. Citrix Systems shares fell $3.61, or 3.4%, to $101.94 as the cloud-computing company said it would be taken private in an all-cash acquisition valued at $16.5 billion. Shares of L3Harris Technologies dropped $9.38, or 4.3%, to $209.29 after the aerospace and defense company gave a downbeat revenue outlook.


The Tokyo stock exchange showed positive signs on Tuesday. Many other Asian stock exchanges, including those in Hong Kong, China, Singapore, Seoul and Kuala Lumpur, are closed for Lunar New Year celebrations. The Nikkei 225 index initially gives up more significant gains and is still up 0.2 per cent. Strong business figures and convincing outlooks support shares in the electronics sector in Tokyo. NEC, for example, rises by 10.6 per cent after the company raises its profit forecast for the current financial year. TDK also (+12%) raised its sales and profit targets. Encouraging data from a study on a Covid 19 drug help Shionogi gain 8.7 per cent. Sony is trending little changed after announcing the purchase of video game maker Bungie for $3.6 billion on Monday.


Treasury yields saw modest moves Monday, giving up a small early rise, as investors awaited a busy week of jobs data, including Friday’s January employment report. Investors continued to assess the path higher for interest rates after the Federal Reserve signaled last week that it would move aggressively to rein in inflation. The yield on the 10-year Treasury note was at 1.778% at 3 p.m. Eastern, compared with 1.779% at the same time on Monday. The 10-year rate traded above 1.8% in early action.


Citi raises Bayer to Buy (Neutral) - Target EUR 70
JP Morgan lowers Henkel target to EUR 74 (85) - Neutral
Berenberg lowers target SMA Solar to EUR 36 (46) - Hold

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