UBS to Pay 2019 Dividend in Two Parts Amid Coronavirus Crisis

On a request from the Swiss Financial Market Supervisory Authority (“FINMA”), amid the continued coronavirus spread in Switzerland, UBS Group AG UBS has agreed to pay the dividend of 73 cents for financial-year 2019 in two installments. The bank has planned to present a revised dividend proposal at its Annual General Meeting to be held on Apr 29 for shareholders’ approval.

The bank has proposed to make a payment of 36.5 cents per share on May 7 and keep a reserve of 36.5 cents as a special dividend. Notably, the board of directors’ proposal is subject to shareholders’ approval at the extraordinary general meeting to be conducted on Nov 19, post the company’s third-quarter results.

Swiss bank UBS Group AG remains confident of its capital position and is strategically well-positioned to deal with the crucial conditions, at present. The bank’s liquidity and funding profile are prudent for supporting clients and the economy with the payment of its full dividend.

Despite this, the bank changed its decision of dividend payment in compliance with FINMA’s request. It has suggested firms to be more prudent with their distribution policies, especially related to share-buyback programs.

UBS Group AG’s first-quarter 2020 net profit is expected to be $1.5 billion, with all business divisions reporting strong operating performance post credit loss expenses and own credit valuation adjustments. Despite the increase in credit and market risk RWAs on the current market conditions, management also anticipates CET1 capital and CET1 leverage ratios to be in line with its targets and well above regulatory requirements.

Per Sergio P. Ermotti, group chief executive officer, "The first quarter of 2020 once again showed our business model's ability to perform well under a variety of market conditions. We have been supporting our clients with lending and advice, helping them to navigate in this very difficult environment."

The bank is providing full support to the economy with its lending facilities, in an effort to help combat the crippling impact of the coronavirus crisis. It is continually providing loans to its clients in Switzerland and globally. Moreover, liquidity to SMEs and advisory services to corporate, institutional and wealth management clients are being inculcated by the bank globally.

Its peer, Credit Suisse CS, is also planning to propose paying half of its 2019 dividend worth 0.1388 Swiss francs per share in April and remaining part later this year, following the FINMA’s request. However, the bank has suspended its CHF 1.5-billion share-buyback plan for 2020 as the pandemic continues to hamper economic conditions.
Among others, in a coordinated move, Barclays BCS, Royal Bank of Scotland (RBS), HSBC Holdings HSBC, Standard Chartered and Lloyds Banking Group (LYG) have announced the suspension of their outstanding 2019 dividend payments.

UBS Group has lost 11% over the past six months on the NYSE compared with the 33% decline of the industry it belongs to.

Currently, UBS Group AG carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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