UBS AG, one of Europe's banks hardest-hit by the financial crisis, said accounting effects would weigh on fourth-quarter results but it had seen some encouraging signs of client money flows in October.
UBS, the world's biggest wealth manager, confirmed today it had made a net profit of 296 million Swiss francs ($256.3 million) helped by its own credit and tax gains as rival European banks saw their profits evaporate and scrambled for emergency funds.
UBS also confirmed outflows from its core wealth management unit totalled a record 49.3 billion francs in the quarter, while its asset management business saw net outflows of 34.4 billion.
UBS had already reported most of its third-quarter figures last month when it announced it was getting a 6 billion franc capital injection from the Swiss government and was also unloading $60 billion of risky assets into a central bank fund.
"Fourth-quarter results will be impacted by a possible reversal of own credit gains and a loss on the equity in the fund to be controlled by the SNB," it said in a statement.
"UBS expects that the conditions seen at the beginning of the fourth quarter will continue to affect clients' assets, and therefore UBS's fee-earning businesses," it added.
However it said it saw some improvement in client flows since the central bank deal: "Whilst the situation was very difficult at the start of October, there have been encouraging signs for net new money flows following the announcement."
UBS said by the end of the third quarter its total number of employees was 79,565, down by 1,887 from the previous quarter, but added that the full effects of job cuts was still to come.
For the fourth quarter, UBS said the transaction with the Swiss National Bank to unload risky assets would lead to a loss on the equity transferred to the fund.
UBS also said it expected some or most of the 4.8 billion franc own credit gain to reverse in the fourth quarter as credit spreads on its debt had narrowed since the central bank deal.
UBS was hit earlier than most of its rivals in the financial crisis by its investment bank's foray into the US subprime market. It has made more writedowns than any other European bank, adding a further $4.4 billion of writedowns in the quarter to bring its total in the crisis to almost $49 billion.
UBS shares have fallen nearly 60 per cent since the start of the year, slightly underperforming the Dow Jones index of European bank stocks, which is down 52 per cent this year.
Credit Suisse, Switzerland's other main bank, reported a whopping 1.3 billion franc net loss in the third quarter after large trading losses, but its shares have shed only 36 per cent so far this year and the bank has declined state help.
Reuters