UBS Capital Debate, Big Oil’s Buybacks: EMEA Earnings Week Ahead

The recent selloff in UBS Group AG shares underscores the Swiss bank’s challenge to demonstrate its Credit Suisse Group AG acquisition is on solid ground.

UBS Capital Debate, Big Oil’s Buybacks: EMEA Earnings Week Ahead

Results this week will be overshadowed by concerns about a government proposal to increase the amount of capital held by systemically important lenders, a reform that — if adopted — could limit UBS’s profitability and scope for shareholder returns, Bloomberg Intelligence’s Alison Williams said.

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Investor returns are sure to feature in Saudi Aramco and BP Plc’s updates, too. OPEC output cuts probably curbed Aramco’s profit, while BP likely had a “resilient” first quarter, according to BI. Aramco has raised the price of its flagship crude to Asia for a third consecutive month as it tries to tighten the oil market to prevent a global surplus, a price list seen by Bloomberg shows.

Chipmaker Infineon Technologies AG may show the effects of a slowdown in electric vehicle demand in its report, after industry peer STMicroelectronics NV cut guidance more severely than feared in April. Brewing giant Anheuser-Busch InBev SA and carmaker BMW AG are also due.

Highlights to look out for:

Monday: No major earnings of note

Tuesday: Capital fears aside, UBS is expected to report a 16% increase in net interest income at the core wealth management business. A strong showing by US peers in equity derivatives trading also bodes well, BI said. The outlook for its investment bank will be scrutinized as UBS looks to expand the business after buying Credit Suisse, according to RBC analyst Anke Reingen. Its leeway for share buybacks may be compromised by a Swiss proposal for higher capital requirements. Talent retention and cost cuts are also in focus. Credit Suisse Chief Executive Officer Ulrich Koerner is set to leave UBS in the coming weeks after the completion of the merger, the Financial Times reported on Monday.

Wednesday: The first three months of 2024 should mark the last full quarter of fallout from AB InBev’s Bud Light marketing debacle. Still, an increase in marketing spend and higher wage costs for US brewery staff may leave organic Ebitda growth short of the full-year 4% to 8% target range, BI’s Duncan Fox said. The US aside, the company is performing well in the Middle and South America regions, although comparatives are more challenging in Asia Pacific, Barclays said. A new buyback is probably not in the cards, given the Altria stock overhang, Citi said.

Thursday: Safaricom should benefit from strong growth in M-Pesa income in Kenya and mobile data revenue by the Ethiopian unit, which is reporting its first full year of operations, according to Kestrel Capital. The East African telecommunications giant boosted its full-year outlook for Ebit by about 15% in November on an expected increase in M-Pesa revenue following the reinstatement of fees on transfers from banks. With the Ethiopian business yet to turn a profit, consensus is for earnings per share to remain flat.

Friday: IAG will be leaning on premium leisure demand to bolster revenue and offset a slower rebound on the corporate side. Pay negotiations at Vueling and Aer Lingus could add to cost inflation, while a tight labor market and geopolitical developments could pose disruption risk for the British Airways owner, said BI’s Conroy Gaynor. At the same time, with traffic, operations and the balance sheet on the mend, a resumption of the dividend shouldn’t be ruled out. A blot on the landscape is IAG’s €400 million takeover of Air Europa, which risks being derailed for a second time unless they can appease antitrust regulators.

With assistance from Charlotte Hughes-Morgan, Laura Alviž, Omar Tamo, Leonard Kehnscherper, Alexey Anishchuk and Helen Nyambura.

This article was generated from an automated news agency feed without modifications to text.