UBS Re-Emerges From 9 Quarters Of FICC Losses - WSJ.com

The fixed-income, currencies and commodities group at UBS (UBS), which bore the brunt of the Swiss bank's losses in the credit crisis, reported its first positive three-month period in more than two years, helping to edge the investment bank back into the black.

UBS Investment Bank reported an adjusted pretax profit of CHF66 million, excluding a CHF1.436m charge on its own debt as a result of credit spread tightening in the third quarter. This was the first positive three-month period in nine consecutive quarters.

The result was driven by CHF985 million in revenue from the FICC business. UBS reported a CHF4.518 billion loss in the same period of last year.
On a call this morning John Cryan, chief financial officer of UBS, said the FICC result was down to improved revenues in credit trading following several key hires, stable revenues in macro and the rates business picked up a little slack from the foreign exchange trading business, which experienced narrower spreads, lower volatilities and seasonally lower trading volumes.

UBS said it expects the investment bank's performance to continue to improve into 2010, but fourth quarter results will likely reflect the early stage of its recovery. It also expects another own credit charge in the fourth quarter, as a result of further tightening of its credit spreads.

Group-wide UBS reported a third-quarter loss of CHF564m, more than double the consensus forecast which was for a CHF228 million loss, according to Citigroup research. The result was impacted by accounting charges of CHF2.15 billion. Excluding these accounting charges, the underlying pretax profit was CHF1.557 billion.

Oswald Gruebel, group chief executive of UBS, and Kaspar Villiger, chairman of the board of directors, told shareholders in a letter today: "We have successfully stabilised the firm and our focus is now on growing the business...We intend to focus on building our capital strength and on de-risking our balance sheet for several quarters to come."