Swiss bank UBS AG posted a fourth-quarter net profit of 1.29 billion Swiss francs (US$1.35 billion) yesterday, a result that missed analysts’ expectations, but helped make for its first annual profit in four years.
The largest Swiss bank said that for the first time since the global financial crisis, it had a net annual profit, of SF7.2 billion. That made last year the first profitable year for UBS since 2006, when the bank had an annual net profit of SF12.6 billion.
UBS said it benefited from income gains at its securities unit and its private bank, and that it had turned around the outflows it had suffered from wealthy client deposits.
The Zurich-based bank suggested it was regaining trust from those clients, saying inflows at its private bank rose to SF2.7 billion, up from SF900 million.
In 2009, the bank had a net loss of SF2.74 billion.
However, the latest fourth quarter results were only a modest improvement on last year, when the bank reported a net profit of SF1.205 billion for the fourth quarter and missed analysts’ forecasts who had expected net profits of up to SF1.45 billion in the fourth quarter.
“While we made substantial progress in 2010, we are fully aware that we have to continue to improve our results,” UBS chief executive Oswald Gruebel said in a statement.
The bank’s fourth-quarter -results benefited from a one-off tax credit of SF149 million.
However, that was significantly less than the one-off tax credit of SF825 million that helped UBS beat expectations in the third quarter, when it reported a net profit of SF1.664 billion.
The bank said it would continue this year to retain earnings to meet capital requirements and was confident that activity among its wealthy clients would pick up this quarter.
UBS said that it would not pay a dividend to its shareholders this year and will instead store up the profit to meet stricter Swiss banking rules and new international banking standards that require higher reserves of capital.
It said it had cut its bonus pool by 10 percent, down to SF4.3 billion, which is SF500 million less than in 2009.
Those figures reflect the bank’s attempt to appease the Swiss government — which kept the bank going two years ago — but retain talented staff.
The head of the bank’s compensation committee, UBS board member Sally Bott, stepped down on Monday.
UBS said its fourth-quarter profits before taxes rose to SF1.161 billion, up from SF818 million in the third quarter, which it said reflected more client activity across all businesses and included some credit losses and higher general and administrative expenses.