UBS posts strong first-quarter on trading income surge

Reuters

UBS reported a better-than-expected first quarter profit on Tuesday as it saw a surge in trading income from its investment bank and more fees from wealthy clients.

Switzerland's biggest bank saw net profit slip 5 percent to 988 million Swiss francs ($1.05 billion), but still beat by far analyst forecasts, which averaged 601 million francs in a Reuters poll.

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UBS, which is cutting 10,000 jobs in a retreat from riskier fixed income activities, said economic worries could again prevent wealthy clients from trading and hit second-quarter revenue, margins, and fresh funds.

"Nevertheless, we remain confident that our asset-gathering businesses as a whole will continue to attract net new money," UBS said in a statement.

UBS's private bank, which forms the cornerstone of the bank's strategy and must deliver the bulk of the profits, snapped back from a poor fourth quarter with a 67 percent rise in pretax profit.

UBS, the second-largest private bank in the world after Bank of America , is trying to rid itself of a scandal-tainted image and focus far more strongly on private banking clients, or those with more than $1 million in assets to bank. In December, UBS paid $1.5 billion for taking part in a multi-year scheme to manipulate Libor and other benchmark interest rates.

With 15 billion francs in fresh funds won from clients, the private bank posted its best showing since 2007, before the subprime crisis hit and caused massive withdrawals.

On Monday, better-than-expected results at Deutsche Bank were overshadowed by a 2.8 billion euro ($3.67 billion) capital increase to beef up its balance sheet, as the German lender strives to narrow the gap with better-capitalized peers such as UBS and Credit Suisse .

By contrast, UBS said it had become the first bank to bring capital above the key 10 percent ratio demanded by new, stiffer Basel III regulations, posting a 10.1 percent common equity Tier 1 capital ratio in the quarter.

UBS cut nearly 2,461 jobs in the quarter, part of the overall 10,000 cuts announced last October.

($1 = 0.9368 Swiss francs)

(Reporting by Katharina Bart, editing by Emma Thomasson)