UBS in client fund surge

UBS reported a big rise in client inflows in the first quarter, attracting the most money for its wealth management arm since the financial crisis began.

Switzerland's biggest bank saw inflows of 11.1 billion Swiss francs (£7.4bn) at its core wealth management unit in the quarter after they were flat the previous three months and following continued big outflows in the first half of 2010.

"I am particularly pleased by the increase in net new money, confirming the return of client trust and confidence," Chief Executive Oswald Gruebel said in a statement.

Clients pulled nearly 400 billion francs from the world's second-largest wealth manager in recent years after UBS was bailed out following huge writedowns on toxic assets and was hit by U.S. charges that it helped wealthy Americans dodge tax.

"The key figures look good at first sight, particularly wealth management," said Cheuvreux analyst Christian Stark. "Investment bank results were broadly in line with expectations."

UBS reported a pretax profit of 835 million francs at its investment bank, up from 100 million the previous quarter, driven by equities and strong credit trading revenues fixed income, currencies and commodities (FICC) business.

Gruebel's plans to turn around the investment bank – which made the massive losses that almost felled UBS – is under scrutiny after an exodus of top bankers and an admission he underestimated the challenge of reviving fixed income.

UBS said it expected to see some improvement in a number of business lines in the investment bank, despite constraints imposed on some of the FICC businesses by a focus on controlling risk. It also noted the competition for talent and recent base salary increases will put some pressure on the cost base.