UBS posts strong profits amid drive to refocus

Leading Swiss bank UBS reported strong results for the second quarter on Tuesday in its drive to re-focus activities and turn the page on the financial crisis, but was cautious about the third quarter. The bank, which is slimming down after turmoil during the crisis, reported pre-tax operating profit of 775 million Swiss francs (628 million euros, $833.6 million). This was 21.0 percent less than the outcome in the first quarter, but it showed a big switch from a loss of 130 million francs for the second quarter of last year. Last week, the bank had already signalled its results, reporting a net profit for the second quarter of 690 million francs, marking an increase of 62.5 percent from the figure in the same period of last year. Those figures were announced when the bank said it was settling a dispute in the United States over subprime instruments by paying a fine of $885 million. On Tuesday, it said that operating profit in the second quarter rose by 15.0 percent on a 12-month comparison to 7.3 billion francs (5.9 billion euros). The activities of managing private wealth turned in a pre-tax operating profit of 557 million Swiss francs from a profit of 502 million francs last time, and from 664 million francs in the first quarter of this year. It explained that the figure had fallen between the first and second quarters because it had had to pay 104 million francs under a tax agreement between Switzerland and Britain. Excluding this charge, the pre-tax outcome had risen, it said. Wealth management activities in the Americas, presented separately, raised pre-tax operating profit by 4.0 percent from the first-quarter figure to 243 million francs. Managing director Sergio Ermotti said in a statement that he was highly satisfied with the results for the quarter. Ermotti took over in 2011 after a scandal over losses by rogue trader Kweku Adoboli. He has overseen a big redirection of the bank to build on its strengths in wealth management. In October it announced it was cutting down the size of its investment arm, tarnished by various scandals, with the loss of 10,000 jobs across the world. UBS, which is turning the page on its recent dark period, also said that in the fourth quarter it might exercise its option to buy the shareholder funds of the so-called stabilisation fund run by the Banque Nationale Suisse. This fund was created during the financial crisis as a rescue measure to prevent problems at UBS from destabilising the Swiss economy. The price of shares in UBS showed a gain of 2.71 percent to 18.22 Swiss francs in morning trading. The SMI index of leading Swiss shares was up 0.14 percent. Analysts described the results as "solid". But UBS was cautious abut the outlook for the third quarter, saying that the shadows of outstanding problems in the sovereign debt crisis, the banking system in Europe and the US federal budget, and uncertain prospects for the global economy, were weighing on clients' confidence.