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UBS posts 1b franc profit despite rogue trade losses

ZURICH, Oct 25 – Swiss banking giant UBS said on Tuesday that its third quarter net profit reached 1.018 billion francs (831 million euros, $1.16 billion) even though it had to take a 1.849 billion franc charge due to a rogue trading scandal.

When the bank first announced the discovery in mid-September of massive fraud perpetrated by 31-year-old trader Kweku Adoboli, it warned that it might have to report a loss for the third quarter. It later said it would report a “modest net profit.”

On Tuesday, the bank said an own credit gain as well as returns from the sale of treasury-related investments helped it to offset the losses. It also recorded an income tax benefit of 40 million francs.

In addition, it managed to bring in 4.9 billion francs worth of net new money.

UBS acknowledged that current economic conditions would likely continue to create “headwinds for growth in revenues and net new money” but noted that its funding positions were solid.

“We have every reason to remain confident about our future,” it added.

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