UBS shares remain subdued on wealth management outflows, despite BofA backing

UBS Group has received the backing of Bank of America, which has maintained its ‘buy’ rating for the world’s largest wealth manager, despite market concerns about attrition in the UBS wealth management business.

UBS shares remain around 10% lower than a month ago a day after it reported a sharp rise in fourth-quarter profit and announced plans for a $3 billion share buyback, underscoring the strength of its global franchise. The consensus ‘buy’ rating reflects the overall positive outlook for the Swiss-based banking group.

But beneath the headline numbers, continued outflows in its US wealth management business, tied to advisor departures, remain a key pressure point for the firm.

While Global Wealth Management generated $101 billion in net new assets for the full year, UBS acknowledged that outflows in the Americas were offset by strong inflows in Asia-Pacific, EMEA and Switzerland. Although the stat was not explicitly mentioned in the release, analysts have pointed to a $14.1 billion decline in new net asset outflows.

For the fourth quarter, Global Wealth Management reported $8.5 billion of net new assets globally, a modest figure relative to the size of the business and one that again masked sharp regional differences. UBS did not disclose U.S.-specific flow figures, but management has tied the Americas weakness to financial advisor attrition.

The advisor departures followed changes to compensation structures designed to improve profitability. Notably, UBS disclosed that underlying operating expenses in Global Wealth Management rose 4% year over year, driven largely by higher variable compensation for financial advisors, reflecting stronger compensable revenues among remaining advisors.

That dynamic — rising advisor pay alongside advisor losses — illustrates the delicate balance UBS is attempting to strike between cost discipline and retention in the competitive U.S. wealth market. The bank has framed the U.S. outflows as transitional rather than structural, but investors reacted cautiously, sending UBS shares lower after the earnings release despite the profit beat and capital return announcement.

UBS posted net profit of $1.2 billion for the fourth quarter of 2025, up 56% from a year earlier, and $7.8 billion for the full year, driven by higher fee income, solid client activity and disciplined cost execution, according to its fourth-quarter media release. The bank said group invested assets surpassed $7 trillion for the first time, reflecting market gains and net inflows across several regions.

The earnings beat allowed UBS to increase its dividend by 22% year over year and signal a $3 billion share repurchase in 2026, with potential upside depending on capital conditions.

“The strength of our global, diversified franchise powered our excellent full year performance as we helped clients navigate an unpredictable market environment,” said group CEO Sergio Ermotti. “We made great progress on one of the most complex integrations in banking history while facing ongoing regulatory uncertainty in Switzerland. We maintained a strong capital position and delivered on our capital return commitments in the year with an increased dividend complemented by share repurchases.”