Money Matters, Simplified.
UBS reports net profit; outflow increases
by Ishita Sood - February 9, 2010 - comments
UBS is one of the most respected banks in the world. Tuesday’s news saw shares of UBS drop by 2.5 percent on the Swiss Exchange.
New York, February 9 -- Swiss bank UBS AG reported its first net profit in five quarters on Tuesday. The Zurich based bank reported a net profit of 1.21 billion Swiss francs in the quarter ended Dec. 31.
After Tuesday’s news, the Swiss bank announced its plans to pay out 34 percent more in bonuses for 2009. The bonus pool amounts to 2.9 billion Swiss francs, said Andreas Kern, a spokesman for the bank.
UBS chief executive Oswald Gruebel said he was confident that the bank's positive performance would continue.
“We entered 2009 at the height of the crisis. By the end of 2009 UBS has returned to profitability, delivering on its priorities. We expect that our return to profitability will increase clients' confidence in UBS and restore our reputation,” he said.
In 2008, UBS slashed its bonuses by 78 percent after reporting a net loss of 21.3 billion francs.
UBS’s performance
UBS reported an increase in outflow in the current quarter from 36.7 billion francs to 56.2 billion francs. In the wealth management and Swiss bank unit, the Swiss bank reported an outflow of 33.2 billion francs compared to its previous 16.7 billion francs.
“The money outflows will dominate the discussion today so the share will likely come under pressure,” said Kepler Capital Markets analyst Dirk Becker.
“The margin in private banking has dropped further. They beat expectations but it looks like it was only because of non-operational items. The one big (thing) they achieved was to get back into profit in the fourth quarter, but it was expected. Obviously it would have been worse if they had not managed to do this,” he added.
UBS-one of the hardest hit banks of credit crunch
UBS, which faced loss of assets from wealthy clients, was one of the hardest hit banks of the credit crunch. However, the company said, “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.”
UBS, an abbreviation from its predecessor Union Bank of Switzerland, is one of the most respected and renowned banks of the world. The bank, which is currently recovering from a battle with U.S. tax authorities, is the world's second largest manager of private wealth assets. It is also the second-largest bank in Europe.
After Tuesday’s news, shares of UBS dropped by 2.5 percent on the Swiss Exchange.