ZURICH, Feb 8, 2011 – Swiss bank UBS on Tuesday posted a largely expected annual profit in 2010 for the first time since the financial crisis, with full year net income of 7.2 billion Swiss francs (5.5 billion euros).
The result compared with a loss of 2.7 billion francs a year earlier as Switzerland\’s flagship banking group symbolically shrugged off three successive years of deep losses with five consecutive quarters of positive results.
"While we made substantial progress in 2010, we are fully aware that we have to continue to improve our results," the architect of the banks\’ recovery, chief executive Oswald Gruebel, said in a statement.
During the fourth quarter, attributable profit reached 1.1 billion francs, compared to 818 million francs in the previous quarter.
The results were largely in line with analysts\’ expectations.
UBS last posted an annual net profit, of 12.6 billion francs, in 2006 before it was swept into the US subprime crisis, prompting a state rescue plan to shore it up as it suffered a record loss in 2008 of more than 21 billion francs.
On Tuesday, the bank said it had further bolstered its Bank for International Settlements core tier one capital ratio — a measure of its financial underpinnings — to 15.3 percent.
UBS also marked a recovery in customer confidence after unsettled clients deserted the bank during the crisis years, reporting "stabilised" flows of net new money in the fourth quarter of 7.1 billion francs.
The bank reported inflows in global wealth management from "the Asia Pacific region, in emerging markets and globally from ultra high net worth clients" and a turnaround in the Americas.
"We are optimistic that overall positive net new money inflows will continue in the first quarter. For the full year, we believe that net new money will strengthen noticeably," the bank said in its outlook.
However, the banking giant cautioned that it did not expected its investment banking business to perform as well as the "seasonally strong" end of 2010 over the coming quarter, as uncertain financial markets dampened confidence.
"We do expect the investments we have been making in certain of our securities trading operations to bear fruit during 2011," it added.
UBS\’s share price rose in early trading (0836 GMT), increasing by 2.23 percent.
Analysts at bank Wegelin nonetheless felt the fourth quarter result was "very disappointing at first sight", especially the dampened investment banking performance.
"The cheer for investors is in the improved tier one ratio and the sustained net new money inflows, even if the turnaround in Europe is still not quite completed," they added in a note to investors.