The tanker is finally facing the right way

WHEN Oswald Grübel came out of retirement in February 2009 to take the helm at UBS, he quickly set himself gruelling targets. The bank would be booking at least SwFr15bn (£9.7bn) in annual profits, he said, at some point between 2012 and 2014. After yesterday’s results, which saw the bank return to the black with a SwFr7.2bn annual profit, such a goal no longer seems laughable, although Grübel still faces a long slog.

The fourth quarter was one of slow but sure improvement. Although the bank missed expectations at the bottom line, this was largely due to a raft of one-offs, including SwFr230m of legal fees and a SwFr509m charge related to its own credit.

Net new money inflows across its wealth management division improved markedly, standing at SwFr7.1bn in the fourth quarter, compared to an outflow of SwFr56.2bn a year earlier (when fears over the US tax clampdown hit fever pitch).

And the investment banking department saw revenues more than double to SwFr910m against SwFr422m in the third quarter, thanks to higher market activity and improved market share. In the fixed income, currencies and commodities business, revenues grew by six per cent to SwFr920m. Although headline investment banking profit looked meagre at SwFr75m, this was the division that took the SwFr509m own credit hit.

Taken together, these numbers suggest that a nascent recovery has begun. Think of UBS as a huge army tanker, which was hurtling at high speed in the totally wrong direction when Grübel took the controls. First he had to bring it to a halt, by stopping the firm hemorrhaging client cash in the face of the US tax assault and preceding financial crisis; then he had to turn it around (yesterday’s numbers suggest he has); now he has to rev it up again.

That could prove the hardest of all three.