Switzerland’s biggest bank UBS AG yesterday reported a first-quarter net profit of US$1 billion, lifted by strong showings from its investment bank and management for wealthy clients.
The results posted by the bank, based in Zurich, were down 4.5 percent from the comparable period a year ago. Still, it was a major turnaround from the US$2 billion loss the bank posted in the final quarter last year in the wake of a series of lawsuits, scandals and a wave of restructuring.
“While it is too early to declare victory, we have shown our business model works in practice,” UBS chief executive Sergio Ermotti said. “Although markets improved, we still saw challenges, so I am very pleased with our performance.”
Ermotti said the bank’s capital cushion as demanded by global and Swiss regulations rose to 10 percent “and our leading capital cushion continues to be a competitive advantage for the bank.”
In the first quarter, the investment bank saw a profit of 977 million Swiss francs (US$1 billion) before taxes and the wealth management arm posted a profit of SF664 million before taxes.
UBS offered a cautionary outlook on the rest of the year, due mainly to Europe’s continuing problems.
“While market participants showed renewed interest early in the first quarter, events in Europe served as a reminder that many of the underlying challenges related to structural issues remain unsolved,” the bank said.
“European banking system issues, ongoing geopolitical risks, and the outlook for growth in the global economy together with an increasing focus on unresolved US fiscal issues would continue to exert a strong influence on client confidence, and thus activity levels, in the second quarter of 2013,” it said.
Meanwhile, Switzerland’s central bank posted a profit of SF11.2 billion in the first quarter on gains in its foreign currency holdings, a major turnaround from the previous year.
The Swiss National Bank said foreign currency positions profited from exchange rate gains of SF5.2 billion and valuation gains on shares of SF4.9 billion. By comparison, the bank posted a SF1.7 billion loss in the first quarter last year due to exchange rate losses against the yen, US dollar and euro.
The bank said it suffered “a slight valuation loss” of SF100 million this year on its 1,040 tonnes of gold reserves stashed in Switzerland, Britain and Canada.