UBS AG posted a net profit of 296 million Swiss francs (US$252 million) for the third quarter yesterday, its first after four consecutive quarterly losses, and predicted customers would continue withdrawing funds in the last three months of the year.
The bank benefited from a SF913 million tax credit and a revaluation of its credit positions that led to a SF2.21 billion gain on its books.
Switzerland’s largest bank said its investment business recorded writedowns and losses of US$4.4 billion during the quarter. Net new money remained negative during the three months to September, with customers withdrawing SF84 billion during the period.
The results came as little surprise after UBS told investors what to expect last month when it agreed on a US$60 billion bailout deal with the Swiss government.
About SF6 billion will be used to bolster the bank’s reserves, resulting in the government holding a 9.3 percent stake in UBS.
But most of the bailout money will be used to transfer subprime-related assets and other high-risk securities from UBS to a so-called “bad bank,” whose sole purpose is to sell the risky investments. Any profits will be split between UBS and the Swiss National Bank.
UBS said the move would leave it with “nearly zero” exposure to a market that has cost it over SF45 billion in losses and writedowns over the past year. UBS said its fourth quarter results would reflect the disposal of those assets.
With third quarter figures already known, analysts said last week they would focus on whether customers continued to withdraw more money than they deposited last month.
UBS did not provide precise figures for last month, but indicated that investors should prepare for further large-scale withdrawals.
John Cryan, the bank’s chief financial officer, said customers wanted to spread their investments among several banks to minimize risk, a trend he expects to continue for some time.
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