25.10.2011
By Simon Miller
Swiss bank UBS managed a third-quarter pre-tax profit CHF1bn (£0.7bn)despite losing CHF1.8bn to rogue trading in September and continued volatility in the global financial markets.
In addition, the bank’s BIS tier 1 ratio grew to 18.4% and its BIS tier 1 capital grew to CHF38.1bn.
The pre-tax profit of CHF980m included the actions of UBS trader Kweku Adoboli who is accused of costing the bank CHF1.8bn by making unauthorised trades and falsifying records on exchange traded funds in September.
Adoboli has been in custody since his arrest on 15 September and is to enter a plea at a 22 November hearing.
As a result chief executive officer Oswald Gruebel and the co-heads of the Swiss bank lost their jobs with Sergio Ermotti appointed interim CEO charged to restore confidence in UBS.
Net profit attributable to UBS shareholders increased to CHF1bn; diluted earnings per share CHF 0.2 while the bank said its CHF2bn cost reduction program was still on track with total restructuring charges CHF387m in the third quarter and operating costs down 2%.
Global Asset Management achieved a pre-tax profit CHF79m with CHF1.5bn net new money inflows from third parties, excluding money market flows
The Investment Bank suffered a pre-tax loss of CHF650m which the bank said reflected market conditions and the CHF1.8 billion trading loss.
Looking ahead, UBS said that in the absence of US economic growth and continued problems in Europe, “current market conditions and trading activity are unlikely to improve materially, potentially creating headwinds for growth in revenues and net new money”.
It added: “Nevertheless, we will continue to leverage our unparalleled client franchise and competitive advantages in wealth management through closer alignment with a more focused Investment Bank. Implementation of the Investment Bank's client-centric strategy will make the business less complex and more capital efficient and ensure it provides more reliable returns to our shareholders.”
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