UBS AG (UBS) has reported a fourth quarter net profit of CHF 1.21 billion ($1.1 billion) compared to a loss of CHF 564 million in the prior quarter and a loss of CHF 9.56 billion in the year-ago quarter. This is the first positive quarter since the third quarter of 2008. Results were aided by lower costs and a tax credit. However, the company experienced an increase in client money outflows.
UBS reported a 21% year-over-year decline in expenses to CHF 5.18 billion, primarily reflecting the cost cut initiatives and the headcount reduction. The reported quarter’s results include a CHF 480 million tax credit is mainly attributable to the revaluation of deferred tax assets, principally in the U.S.
However, outflows of client money continued in the quarter. The company reported outflows of CHF 56.2 billion during the quarter, which picked up from CHF 36.7 billion incurred in the prior quarter but decreased from CHF 85.8 billion in the year-ago quarter.
Invested assets of CHF 2,233 billion on Dec 31, 2009, were down 1% sequentially but up 3% year-over-year. In the reported quarter, net new money outflows were CHF 33.2 billion for Wealth Management & Swiss Bank, CHF 12.0 billion for Wealth Management Americas and CHF 11.0 billion for Global Asset Management.
UBS AG’s tier-1 capital ratio increased to 15.4% from 15.0% at the end of the prior quarter and 11.0% at the end of 2008. Total risk-weighted assets were down 32% year-on-year to CHF 207 billion on Dec 31, 2009.
The global economic turmoil severely hurt the Swiss banking major’s balance sheet when the subprime crisis led to record losses. Additionally, the issues emanating from the dilution of Swiss banking secrecy significantly challenges the company’s sustainable recovery.
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