UBS AG said on Tuesday that it returned to a profit in the October-December quarter of 2009 on the back of a recovery in its investment banking business and a lower charge on the company’s debt.
UBS reported a net profit of 1.21 billion Swiss francs (US$1.12bn) after losing 9.56 billion francs in the same period of the previous year, the Zurich-based bank said in a statement today.
Lowest costs and a 480 million franc tax credit helped UBS turn to profitability. This was the first quarterly profit for UBS in more than a year. It had the dubious distinction of having suffered the biggest losses from the credit crisis in Europe.
Analysts had anticipated a 426 million franc profit.
But the Swiss giant saw outflows of 56.2 billion francs during the three months ended December 2009, which was not as steep as the 85.8 billion francs in the year-ago period but worse than the 36.7 billion francs in the third quarter.
Redemptions increased to 45.2 billion francs in the fourth quarter from 26.6 billion francs in the previous three months and compare with 58.2 billion francs in the year-ago period. Analysts had forecast 17.5 billion francs in outflows.
UBS is confident that the measures it is taking to address the causes of client asset outflows will be effective, but in the immediate future still expects to report outflows, with some pressure on margins.
Client activity in investment banking was high in January and it sees a better performance as residual risk will have a smaller impact.