(21 January 2020)DAILY MARKET BRIEF 2:UBS Cuts Mid-Term Guidance After Missing 2019 Targets

UBS Group AG has cut its mid-term guidance after missing its key targets for 2019. The results come as the Swiss bank, one of the world's largest wealth managers for rich clients, is revamping its investment bank and wealth management arms, shedding jobs and reorganizing businesses. The bank now targets a return on Common Equity Tier 1 capital of between 12% and 15% and a cost-income ratio of 75%-78% through 2022. This compares with a previous guidance of a 2021 return on CET1 capital of around 17% and a cost-income ratio of 72%. The bank missed its key targets for last year. It had targeted a return on CET1 capital of around 15% and an adjusted cost-income ratio of about 77%. Instead, return on CET1 capital was 12.4% for 2019, while the adjusted cost-income ratio stood at 78.9%. UBS closed the year with a better-than-expected quarterly performance. Net profit for the period rose to $722 million from $315 million a year earlier, it said Tuesday, topping analysts' expectations of net profit of $632 million, according to a consensus provided by the bank. Operating income grew 1% to $7.05 billion. "We finished a solid year with our best fourth-quarter adjusted [pretax profit] since 2010," Chief Executive Sergio Ermotti said.

By Ipek Ozkardeskaya