Swiss UBS continues in the red as costs weigh

Author: By Nick Clark

The European bank yesterday announced a Sfr1.4bn pre-tax loss for the quarter to the end of June, more than triple the Sfr395m loss for the corresponding period of last year.

It blamed much of the hit on a debt charge, as well as restructuring costs and costs related to the sale of its Pactual banking business in Brazil.

This comes despite its keen domestic rival Credit Suisse last month posting a Sfr1.5bn profit for the quarter, while in France BNP Paribas yesterday posted a 6.6 per cent rise in profits on the back of strong investment banking activity.

A spokesman for UBS said stripping out the exceptionals saw profits hit Sfr971m, an indication of the performance of the underlying business.

Yet clients continued to pull money out of its wealth management arm with Sfr16.5bn in net outflows, and Sfr17.1bn from its global asset management arm.

The group said in its results statement: “The overall economic environment in most of the regions in which we operate remains recessionary. Sustainable recovery is not yet visible.”

This came despite it admitting that market conditions had improved steadily, “with asset prices rising as investor confidence began to return in many credit and equity markets”.

UBS has attempted to stabilise in recent months, significantly reducing its risk positions and losses. It said it was on course to slash costs by up to Sfr4bn by next year. During the quarter, staff were cut by 4,400 to 71,806, and will be further reduced, to 67,500. Even so, staff costs rose as UBS increased basic salaries and incentives.

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