Toby Melville/ReutersKweku M. Adoboli, appearing in a London court last month, is accused of costing UBS $2.3 billion.
Interactive Timeline: Struggles at Swiss Banking Giant
The embattled Swiss bank UBS said on Tuesday that it would post a third-quarter profit despite a $2.3 billion loss from unauthorized trades discovered last month.
In addition to a “modest” profit, UBS said it continued to attract net new money to its wealth management operation in the quarter, which ended Sept. 30. The company is set to report detailed third-quarter earnings on Oct. 25.
“UBS expects to report a modest net profit for the group and positive net new money in its wealth management business,” the bank said in a statement before European markets opened.
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The profit was the result of gains on the valuation of the bank’s own credit, the sale of Treasury-related investments in the Swiss wealth management unit and low tax charges, the statement said.
The announcement comes after a turbulent third quarter for the bank, based in Zurich. Oswald J. Grübel resigned as chief executive in September over a trading scandal that landed a midlevel employee in police custody, charged with fraud and false accounting.
It also reflects broader weakness at European banks, which have been dealing with the fallout from the sovereign debt crisis. On Tuesday, Deutsche Bank warned that it would miss its profit target for the year. The same day, France and Belgium agreed to back Dexia, as a result of fears that its exposure to Greek debt could lead to the bank’s collapse.
Some analysts called the news at UBS positive, given that the bank had said just three weeks ago that the rogue trades might lead to a loss for the quarter. Dirk Becker, a Frankfurt-based analyst at Kepler Capital Markets, called the results disappointing, however.
“The news of third-quarter profit is not as positive as it may appear at first glance because the gains UBS booked have nothing to do with normal business,” he told Bloomberg News.
Investors responded poorly, too. Shares in UBS fell 1.3 percent at the open of trading.
The interim chief executive, Sergio P. Ermotti, head of Europe, the Middle East and Africa at UBS, pledged to continue with Mr. Grübel’s plan to shrink the investment banking operation and focus on wealth management.
The third-quarter results also include about 400 million Swiss francs ($435 million) of costs related to a restructuring that includes the elimination of thousands of jobs, UBS said.
The cost-cutting program was “on track,” the bank said, adding that the majority of employees whose jobs would be affected by the cuts have been informed. The bank plans to continue to invest in Asia, Latin America and its global wealth management operation.
Article source: http://feeds.nytimes.com/click.phdo?i=6e1a4b0270736ea38f4d2ce7745b33f8
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