Ubs Remains In The Red In Third Quarter

The net loss of SFr564 million ($542 million) reported on Tuesday followed higher-than-expected accounting charges of SFr2.15 billion.

It is the second quarterly loss under new chief executive Oswald Grübel.

The bank said the accounting charges resulted from currency exchange loss from the sale of its Brazilian unit UBS Pactual, and the conversion of mandatory convertible notes issued to the Swiss government as part of a bailout.

"In the last two quarters we have been addressing the bank's most critical problems. Business is steadily returning to normal. We see this in a clear improvement in our financial performance," Grübel said commenting on the results.

"Having stabilised the bank's financial condition and resized the business, I expect to see further progress in future quarters, particularly in 2010."

However, he noted that the progress would depend on the market and other factors.

Rebuilding confidence

Grübel added that the settlement of legal action with the United States' tax authorities and the decision of the Swiss government to exit its investment in UBS were having a profound impact on efforts to rebuild confidence in the bank and on staff morale.

Operating income rose four per cent to SFr5.77 billion compared with the same period last year – and the bank said discounting the one-time accounting charges it would have made a pre-tax profit of SFr1.56 billion.

The result is narrower than the SFr1.4 billion net loss in the second quarter of 2009 but larger than average analyst forecasts.

Analysts had been looking for signs of recovery at UBS's wealth management division, which has been struggling to resurface from the subprime crisis. Analysts expected on average a third-quarter net loss of SFr207 million. But forecasts had ranged from a loss of SFr1.4 billion to a profit of SFr800 million.

The results contrast with profits at Switzerland's biggest bank Credit Suisse.

swissinfo.ch and agencies