PROFITS at troubled Swiss bank UBS tumbled in the third quarter but came in above analysts’ worst fears.
UBS said net profit fell 39 per cent to SwFr1.018bn (£723m) after one-off items, including a SwFr1.765bn gain on its own debt. In the investment banking division, however, where trader Kweku Adoboli is accused of carrying out a SwFr1.85bn fraud, pre-tax losses hit SwFr2.4bn, excluding the accounting gain.
The ratio of pay costs to revenue in the investment banking division hit 94 per cent, up from 59 per cent in the second quarter, despite the desire to cut costs. Insiders said the shift reflected a sharp fall in revenue.
Once the impact of the “rogue” trade and one-off gains and charges were set aside, the division recorded a pre-tax loss of SwFr566m, compared to a SwFr19m loss last year, as tough market conditions and a strong Swiss Franc took their toll.
Sergio Ermotti, who was named interim group chief executive when Oswald Gruebel quit, said it had been a “very challenging” period and warned that quarter four had begun with “increased evidence of strain to the financial system”. He will present his restructuring plan for the investment bank on 17 November.
UBS said SwFr4bn of net inflows in its US wealth management arm was a “vote of confidence” but the full impact on its reputation from the rogue trading scandal will only be seen in the coming months.