The financial and euro crisis is still in the bones of many investors. UBS shareholders can tell you a thing or two about the fact that the past ten years have been very lousy for many bank stocks. UBS shares (WKN: A12DFH) have risen since the 5. March 2012 barely off the mark. The appreciation averages just 1.4% per year. This is far too little for investors who do not want to park their money, but rather increase it.
But now some market participants fear rising interest rates. Fed and ECB threaten multi-stage interest rate hikes. On the one hand, this weighs on growth stocks, as their future cash flow looks less attractive compared to the secure interest rate of the bonds. On the other hand, mainly bank stocks are in a better light.
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Does this mean that UBS is an interesting stock again??
UBS cleans up the balance sheet
After the financial crisis, the bank downsized its volatile investment bank and focused more on money management for the super-rich. And this focus is worth it. Asset management is now the flagship discipline of switzerland's largest bank. At the end of 2021, it had assets under management totaling 4.6 billion US dollars.
In the future, the trend should continue upwards. More loans should lead to more earnings. UBS is now relying less on risky corporate loans for its private clients. On the other hand, the main increase in the fourth quarter of 2021 was in mortgages.
The corona year 2020 was an important growth driver
The wealthy clientele in no way remained passively on the sidelines. No, the financial markets were very active, and UBS achieved its best result in ten years in the process. In 2021, EBT grew by another 16 % to 9.48 billion. US dollar.
I am curious about ralph hamers
The new CEO has been in office since november 2020, but the foundation for today's success was laid by his predecessor, sergio ermotti. In his nine years at the helm, he led UBS into relatively calm waters.
Do you still remember? In 2011, the bank was on the verge of collapse. In october 2008, following losses of billions of euros in the US real estate crisis, the management of UBS at the time accepted a government bailout package worth 60 billion euros. US dollar to.
Ermotti and chairman axel weber strategically realigned UBS. They downsized the investment bank and ramped up business with the super-rich. In addition, they got rid of some of their old legal burdens. This, too, was important for the operating business to pick up speed.
UBS can be an exciting investment
If hamers now succeeds in making the bank even more agile, I see decent growth potential. Compared to some other banks, the 12.3% return on equity is at the lower end of the scale. The return on assets of 0.7 % is also expandable. UBS's asset/equity ratio of 18.3 is in order.
But more importantly, when we look at banks, we look at credit quality. And that looks relatively good at UBS. 51 % of loans are considered low-risk. 76% of deposits are currently back in circulation at UBS. This ratio also looks healthy.
Beware the stumbling blocks!
Valuing bank shares is a difficult task. We fools always pay attention to how interest rates develop. The currently volatile stock markets also play an important role for future earnings.
UBS seems to me to be particularly dependent on the asset management and risk appetite of its clients. In addition, there are still one or two legal risks from the past. But at the moment I can't blame anyone who is already building up a position. After all, the current price/earnings ratio of 7 looks pretty damn favorable, even for a bank stock. However, I will first take a closer look at this share.
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