Swiss bank UBS restores money inflow in third quarter profit
Swiss bank UBS on Tuesday posted a third quarter net profit of 1.66 billion Swiss francs, exceeding analysts' forecasts as it restored client cashflow for the first time since the financial crisis.
The net profit attributable to shareholders, equivalent to 1.71 billion dollars or 1.22 billion euros, compared with a 564 million franc loss during the same period last year.
Net new money reached 1.2 billion Swiss francs in the third quarter of 2010, marking a turnaround from a trend of withdrawals by fearful clients, with strong business in the Asia-Pacific region.
Nonetheless, UBS said in a statement that its investment banking business suffered from reduced flows in equities while wealth management revenues also decreased.
"The third quarter was unusual in that there were very low levels of client activity as well as a strengthening of the Swiss franc against most major currencies," said chief executive Oswald Gruebel.
"However, we are optimistic that an uptick in the fourth quarter will benefit all of our business divisions. We remain confident about our future and believe that we are on track to achieve our medium-term goals," he added".
The bank, which was one of the hardest hit in the financial crisis, is counting on its profits to shore up its capital foundations and meet tougher international banking regulations over the coming decade.
Analysts polled by Swiss business news agency AWP had forecast an average third quarter net profit of around 1.1 billion francs.
UBS also beat analysts' expectations during the previous quarter with net profit of 2.0 billion Swiss francs.
Third quarter net new money inflows in wealth management alone reached 1.0 billion francs, compared with outflows of 5.2 billion francs in the second quarter, especially thanks to business in the Asia-Pacific region.
Although the market pattern of low volumes and "subdued" activity in securities trading dampened investment banking, UBS said revenues from emerging markets increased to 117 million francs from 73 million, especially thanks to gains in the Asia Pacific region and east Europe.
It offset the revenue decline by slashing 731 million francs in costs, as reduced staffing and better currency management started to bite.
The bank said it expected an improvement "to some degree" of investment returns and year-end corporate transactions to bolster business in the fourth quarter.
Rival Credit Suisse, which emerged from the financial and economic downturn in a healthier position than UBS, saw its third quarter net profits melt by 74 percent with the subdued investment markets.
© 2010 AFP