UBS expects to post pretax profit of $2.4B in 1Q

UBS, which is headquartered in Basel and Zürich, Switzerland, has adversely been affected due to the withdrawal of capital by clients.

As the withdrawal of its wealthy clients has slowed, the bank expects to post at least 2.5 billion Swiss francs or $2.4 billion as pretax profit for the first quarter. Company’s quarterly results will be announced on May 4.

The announcement comes before UBS’ annual shareholder meeting on Wednesday.

UBS’ second quarterly profit in a row
After string of quarterly losses, the Swiss banking giant returned to profitability in the last quarter of 2009, when it reported profit of 1,205 million Swiss francs.

The first quarter result will be bank’s second quarterly profit in a row.

UBS has been trying since long to win back the confidence of its wealthy customers, and the announcement by the company that it will again post profit has been welcomed by the analysts.

The analysts have welcomed UBS’ announcement but they have raised questioned like how extensive is the profit development, and when will the net outflows end.

In the third quarter, the bank has posted loss of 564 million Swiss francs, after being hit by accounting charges of 2.15 billion francs.

These losses were also due to increase in net outflows, which were recorded as 36.6 billion francs in the third quarter.

Though the bank returned to profitability in the fourth quarter, its net outflow increased. They amounted to 56.2 billion francs in the same quarter ending December 31.

Net outflows expected to fall
As UBS is expecting to report profit again, it is also anticipating its net outflows to fall.

The bank has estimated that outflows in its core wealth-management and Swiss bank unit will be around 8 billion in the first quarter, which is far less than 33.2 billion francs net flows recorded in the fourth quarter.

Overall the net outflows are expected to fall to 18 billion francs in the first quarter this year.

Though the net outflows have fallen over the past few months, they are still high, according to analysts.

The analysts have welcomed UBS’ announcement but they have raised questioned like how extensive is the profit development, and when will the net outflows end.