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UBS Boosts Shareholder Returns with $3 Billion Share Buyback After Strong First-half Performance

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UBS Boosts Shareholder Returns with $3 Billion Share Buyback After Strong First-half Performance

UBS Group (UBSG.SW) shares climbed 3% by midday Wednesday as the Swiss bank announced plans for a new $3 billion share repurchase program on the back of robust first-half earnings.

The banking group expects to deploy at least $1 billion of the entire allocation over the next three months, aiming to complete the full program by the end of the second quarter of 2027.

"Strong results in the second quarter and healthy capital generation have further fortified our balance sheet for all seasons and allow us to continue deploying financial resources towards profitable growth opportunities to support clients and deliver on our capital return ambitions," UBS Group Chief Executive Officer Sergio P. Ermotti said. "We are well positioned to outperform our 2026 exit-rate return target and achieve our exit-rate cost/income ratio target."

UBS' total revenue for the six months ended June 30 was $27.94 billion, above the previous year's $24.67 billion, while the group's second-quarter revenue rose to $13.70 billion from $12.11 billion. The group's first-half attributable net profit climbed to $5.84 billion from $4.09 billion a year ago, with second-quarter net profit edging higher to $2.80 billion from $2.40 billion, which RBC Capital Markets noted was 17% higher than market expectations.

Growth was driven by broad-based client momentum, with global wealth management delivering $36 billion in net new assets for the quarter, representing a 3% annualized growth rate. Investment bank revenue also rose by 26% for the three months to $3.73 billion, driven by higher revenue in global markets and global banking.

The Swiss lender noted that the Credit Suisse integration remains on schedule for year-end 2026 completion, supported by the decommissioning of 70% of legacy applications. UBS also delivered an additional $1.1 billion in second-quarter gross cost savings, bringing cumulative savings to $12.6 billion and keeping the bank on course to reach its $13.5 billion target.

"UBS reported a strong set of results, not unexpected post peer results. The top line benefited from supportive markets, and operating leverage meant a large part went through to profits. The [share buyback] announcement points to a slower run rate than in consensus, but the timeline leaves room to at least deliver in line with expectations. Even if low, the small positive [net new assets] in the Americas is encouraging. There is no update on [too big to fail] at this stage (as expected), but the parent bank ratio further increased," RBC wrote in a quick-take note.

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