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Wednesday, November 30, 2022

UBS Boosts Buybacks, Growth Targets

UBS Group AG

UBS 1.30%

said profit growth from managing money for the rich is giving it firepower to return more money to shareholders and take on competitors in digital wealth advice.

The Swiss bank raised some financial targets Tuesday and said it is aiming to buy back up to $5 billion in shares this year, after spending $2.6 billion on buybacks in 2021. It made a $1.35 billion net profit in the fourth quarter, down 18% from a year earlier because of a $740 million legal charge.

Chief Executive

Ralph Hamers

on Tuesday said UBS wants customers to have more choice on how they interact with the bank, and that it plans to target more people globally with digital wealth products after agreeing to buy Wealthfront in the U.S. last week.

He raised a target return on the bank’s common equity Tier 1 capital to 15%-18% annually, from a 12%-15% range. The return was 17.5% in 2021. UBS is also aiming for 10%-15% annual pretax profit growth in its global wealth-management arm.

UBS is on a growth drive to win a bigger piece of the global wealth-management pot. It has said it will target rising wealth pools in the U.S. and Asia, and that it wants to reach a broader spectrum of clients with more digital advice. It is buying digital adviser Wealthfront for $1.4 billion cash, to access technology and almost half a million customers.

Pretax profit in global wealth management also fell in the fourth quarter because of the legal charge, but was up 19% for the full year. Without the legal charge, wealth pretax profit growth was in double-digit percentages in all its geographies in the fourth quarter, UBS said. Its investment bank reported a 35% rise in pretax profit in the fourth quarter, boosted by higher revenue in market trading.

Mr. Hamers has sought to strip out layers of bureaucracy at UBS since starting as CEO in November 2020. He has said he wants to bring a Silicon Valley vibe to UBS’s technology so it can take on startups and brokerage firms in easy-to-use banking and investment advice over people’s devices.

At the same time, UBS wants to keep its status as private banker to billionaires and rich families with humans delivering high-end services and exclusive access to deals.

UBS is one of Europe’s best-performing banks in terms of its financial health and stock price. It retreated from investment banking after heavy losses in the 2008 financial crisis and recast itself as a hub for wealth management with in-house investment banking and asset management. It still competes on Wall Street in lines such as mergers advice and stock trading.

In December, a French appeals court ordered UBS to pay around $2 billion for helping wealthy clients in France evade taxes. UBS appealed the verdict but said it would assess what is best for stakeholders. On Tuesday, it took the $740 million charge for the fourth quarter and said provisions for the case are now $1.25 billion.

Write to Margot Patrick at margot.patrick@wsj.com

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