UBS gains fresh client money despite profit drop

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Swiss banking giant UBS said on Tuesday that it had weathered an 18 percent decline in first quarter net profit by attracting substantial new money from clients.

Rising personnel costs and a tax charge helped keep net profit down to 1.8 billion Swiss francs (1.4 billion euros, $2.0 billion), the bank said in a statement.

But the result was slightly better than the average 1.7 billion francs forecast by analysts polled by Swiss business news agency AWP.

"I am satisfied with our result considering market activity during the first quarter, and I am particularly pleased by the increase in net new money, confirming the return of client trust and confidence," chief executive Oswald Gruebel said.

The group said it recorded net new money of 22.3 billion francs in the first quarter, marking a recovery from a year ago when a net outflow reached 18 billion francs.

UBS's wealth management division attracted nearly half of those fresh inflows largely thanks to rising business with very wealthy clients in the Asia-Pacific region and a doubling of Swiss inflows, according to the bank.

Wealth management in the Americas, where UBS had notably suffered from bruising litigation over tax evasion charges in the United States in the past three years, rebounded, with a pre-tax result of 111 million francs during the first quarter compared to a loss of 32 million three months earlier.

The group's investment banking division also multiplied its pre-tax profit eightfold to 835 million francs during the first quarter.

UBS said it expected improvement in parts of its investment banking business over the coming quarter as equity markets maintained their trading volumes despite volatile conditions.

But it cautioned that competition for talent and salary increases would put pressure on its expenses.

Rising personnel costs and a one-off tax charge wiped 426 million francs off the Swiss bank's result over the first three months of the year.

UBS's share price rose sharply in early trading, increasing by 5.0 percent to 17.42 francs.

Analysts at Zuercher Kantonalbank (ZKB) said markets would welcome the "significant" rise in net new money inflows and improving margins in wealth management.

© 2011 AFP

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