Swiss bank UBS returns to profit, still struggles

ZURICH (AFP) – Troubled Swiss bank UBS said Tuesday it had jumped back into quarterly profit for the first time in more than a year even though it was still grappling with a damaging loss of client confidence.

The bank, severely hit by the financial crisis as well as international pressure on tax evasion and Swiss banking secrecy, posted a 1.20-billion-franc profit (1.12 billion dollars, 821 million euros) in the fourth quarter of 2009.

It was the first time that Switzerland's banking flagship had reported a profit since the third quarter of 2008, helping to cut its 2009 net loss to 2.73 billion francs from 21.29 billion francs in 2008.

The earnings figures outstripped analyst expectations but investors were unimpressed as unsettled clients continued to withdraw their funds.

The drop in UBS shares accelerated during the day and they were down 5.7 percent in afternoon trading in Zurich.

Chief executive Oswald Gruebel said the reputational damage caused by the fallout from the global credit crisis and legal pressures over tax issues, especially in the United States, 'should not be underestimated.'

On Tuesday, UBS reported that net money outflows from its international wealth management unit more than doubled from the previous quarter.

Net new money outflows totalled 56.2 billion Swiss francs in the fourth quarter, despite an increase in assets from Asia. The outflows from its global wealth management unit rose to 27.3 billion francs from 12.9 billion francs.