UBS Celebrates Profit With $4.9Bln Payout

ZURICH, Switzerland -- UBS posted its best quarterly profit in over three years Tuesday and said it will pay a record dividend as improved markets and tight cost control helped it beat even the most optimistic market expectations.

The world's largest asset manager said it would hand back up to 6 billion Swiss francs ($4.9 billion) to shareholders via share buybacks and would step up the pace of acquisitions in its core business of managing money for the rich.

Chief executive Peter Wuffli said UBS had entered "calmer waters" after years of market turbulence, although he declined to give a detailed outlook for the current year.

"The year has started well," Wuffli told a conference call. "The markets are favorable."

Net profit in the fourth quarter rose to 1.86 billion francs, up 11 percent on the third quarter, bringing 2003 net profit to 6.39 billion francs -- its second-best yearly result ever, only bettered by the 7.8 billion francs it made in 2000.

Analyst Kinner Lakhani at ABN AMRO said, "If anybody is in a position to manage for growth, it is UBS, which has come out of a market slump not just intact but by building market share."

UBS said it had gained market share in all businesses, including investment banking where it said it now ranks No. 4 globally, and had advanced in the key U.S. market that is dominated by a handful of Wall Street firms.

The world's sixth-largest bank by market capitalization said it had 2.21 trillion francs ($1.8 trillion) in assets under management at the end of 2003, up 8 percent over the year, boosted by rising equity markets, but held back by the weakness of the dollar.

Clients invested a net 14.2 billion francs in new funds with its wealth management operations in the fourth quarter. UBS cut cost by 19 percent on the year to 6.3 billion francs, lowering staffing by 5 percent to 65,929 at year's end. UBS said it no plans for big waves of cost-cutting.

To reward shareholders for the surprisingly good performance, UBS said it would propose a record 2.60 franc dividend per share, up 30 percent from the 2002 dividend.

The cash-rich bank, which has ruled out large acquisitions, said it planned to buy back up to 6 billion francs worth of its shares, continuing a program under which it has already bought back 16.3 billion francs worth of shares since 2000.

The results set the bar high for Credit Suisse, due to report Thursday, which has traditionally been seen as a more aggressive recovery play, but lost some of its shine with a sharp fall in trading income in the third quarter.

UBS said it would buy British wealth manager Laing & Cruickshank Investment Management from Credit Lyonnais for some ?160 million ($298 million), continuing its strategy of buying up smaller asset managers. The acquisition adds ?5 billion in managed assets to UBS's portfolio.

UBS would continue with smaller takeovers. "You will see us continue to look at and seize these bolt-on acquisitions to accelerate our organic growth in Europe," Wuffli said.

Over the past year, UBS bought Merrill Lynch's private client business in Germany, the French wealth management operations of Lloyds TSB and the U.S. prime brokerage business from ABN AMRO.