What's going on?

UBS announced fourth-quarter results that were better than expected on Tuesday, and its investors certainly got what was coming to them: uh, more money.

What does this mean?

As the world’s biggest wealth manager, UBS makes most of its money by looking after and charging fees on rich people�s piles of cash � piles that tend to get even bigger when stock markets surge. The bank boasts a pretty significant trading business too, which does especially well when there�s a lot of uncertainty in the markets � like, say, when there�s a pandemic or a once-in-a-generation election. In other words, last quarter was practically tailor-made for UBS�s two biggest businesses, which might be why the company�s profit grew by 137% compared to the same time the year before. Throw in an announcement that UBS will be buying back $4.5 billion of its own shares, and it might come as no surprise investors pushed the bank�s stock up (tweet this).

Why should I care?

For markets: European banks are getting jealous.

UBS is rewarding its shareholders with more than just share buybacks: it�s also one of the few banks in Europe that paid out its full dividend last year. That might irk its European rivals, which were banned from paying dividends altogether by the European Central Bank (ECB) when the pandemic broke out � even as Swiss regulators were more lenient. That ban�s been lifted now, but the ECB�s still urging its banks not to throwing round too much cash � clearly a worry UBS doesn�t have.

Zooming in: The art of the buyback.�

There are a few reasons a company might want to buy back its own stock, but in UBS�s case, it�s a good way to give back to its investors. See, when a company buys its shares, it slashes the number of them available on the stock market. That means each remaining share represents a greater portion of ownership, which should then boost the company�s overall share price.