UBS plans recovery after string of quarterly losses

Outlining its strategy, the bank said that it aims not only to “strengthen its position as the number one bank” for its clients but also to remain the "number one bank in Switzerland".

UBS mired in recession
This is not going to be easy for UBS as it has witnessed some tough quarters lately.

The Swiss bank has posted a third quarter loss of 564 million Swiss francs ($542 million). This has largely been due to accounting charges levied, which amounted to 2.15 billion francs.

Discounting the charges, the bank would have made a pre-tax profit of 1.56 billion francs.

Further, the bank has witnessed an increase in net outflows. The improvement has largely been due to strong performance by its assets management business but its wealthy private banking customers are withdrawing cash at a faster rate.

UBS’ banking operation has taken a hit as customers have lost confidence in the bank after $50 billion of write-downs during the economic downturn.

UBS confident to restore profitability
But despite this dismal picture, the Swiss bank is confident to return to profitability.

UBS is targeting around 15 billion Swiss francs ($14.85 billion) in annual pretax profit over the medium-term, defined as three to five years.

It is expecting cost-income ratio of 65 to70 percent annually and 15 to 20 percent as return-on-equity. Currently, UBS’ return-on-equity is negative and its cost-income ratio is 109.4 percent.

The bank aims to attract about 5 percent of total invested assets as net new funds annually at the main wealth management unit in the medium term, and reach pretax profit of 4.6 billion francs.

It is also aiming to reach pretax annual earnings of about 1.3 billion francs at its asset management division in the medium term.

Though the bank has voiced confidence, it has also warned that the whole process will take long.

"The transformation we are undertaking is a fundamental one and it will not happen quickly. I am determined, however, that we build a firm for sustainable profit and not one to focus only on short-term expectations,” stated UBS Chief Executive Oswald Gruebel.