The big bank earned over seven billion francs in 2022.
Christian KolbeEditor Economics
It’s hard to believe: the largest Swiss bank – UBS – is making billions in profits, earning over seven billion francs, the highest it has been since 2006. She spoils the shareholders with a dividend increase of ten percent and buys back her own shares for more than five billion francs. Shareholders should also be happy about this, because it will increase the bank’s valuation – and thus the share price in the medium term. And the share buyback program continues.
Only savers look into the tube at UBS, although UBS boss Ralph Hamers (57) mentioned at the question and answer session on the annual result that the bank had just increased interest on savings. That’s right, from nothing to 0.1 percent, effective February 1.
For comparison: Mortgage rates in Switzerland are currently between two and almost three percent on average – depending on the type and term of the mortgage.
Quickly up with the mortgage interest
Even if it is obvious that interest rates on savings do not skyrocket the first time interest rates are raised, it takes a very long time for the savings to start earning interest again. Mind you, with an inflation rate of well over two percent. This means that the money in the account is worth less in real terms at the end of the year.
“When interest rates rise, banks quickly raise mortgage rates. Only in a second phase of the interest rate cycle will interest on savings rise, »says Andreas Venditti (50), equity analyst at Bank Vontobel.
So how long can it be before interest rates on savings actually rise sharply in Switzerland? Difficult to say, according to Venditti, that depends very much on further rate hikes by the SNB, customer behavior and the competitive environment. In other words, as long as the other banks in Switzerland don’t move any more, UBS will also keep interest on savings low.
Swiss business benefits
This makes the bank particularly strong in the home market. “Swiss business in particular has benefited greatly from this interest rate difference,” explains Venditti. UBS CEO Hamers knows exactly what he has in this strong pillar of his bank. “In Switzerland we defended our undisputed leading position on the market,” he said proudly at the presentation of the annual results.
Some shareholders, however, seem to have had enough of UBS shares for now – and sell after the annual results are announced. The title loses over two percent. No surprise for UBS boss Hamers: “The share started the new year very well.” “Corrections” are normal. Venditti also understands this profit-taking by shareholders.
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