UBS delivered its highest pretax profit since the credit crisis began, just ahead of a likely tense shareholder meeting, and said withdrawals had slowed substantially as the bank rebuilds client trust. In an unscheduled announcement, the world's second-largest wealth manager said first-quarter pretax profit was "at least" 2.5 billion Swiss francs ($2.3 billion), nearly three times higher than the previous quarter.
Profit was likely driven by strong fixed-income revenue, particularly in forex trading, where UBS has a 15 percent market share. The Swiss bank added that money withdrawals by rich clients, disappointed with its losses during the financial crisis and with its US tax woes, had shrunk to a third of what they were in the previous quarter. That surprised some analysts and helped push shares 4 percent higher. "Net new money outflows in all businesses were substantially lower than in fourth quarter 2009," UBS said.
Chief Executive Oswald Gruebel on Wednesday will face some disgruntled shareholders who are ready to reject a UBS bonus system and plans to clear management of responsibilities for the crisis, but the surprise profit statement could take the edge off some of the tension.
UBS is due to report full first-quarter figures on May 4. While UBS' investment bank is on the mend, persistent bleeding of client money has been Gruebel's toughest challenge. Since the middle of 2008, 225 billion Swiss francs have left the bank, or about 11 percent of total assets. "What is of surprise is the net new money which we believe is a sentiment change for investors that UBS is going in the right direction now," said Vontobel analyst Teresa Nielsen. UBS' pretax profit would be above a mean estimate of five analysts of 2.375 billion Swiss francs, ThomsonOne data show. UBS said on March 30 first-quarter fixed-income division revenues would be nearly $2.3 billion.
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