UBS returns to profit

UBS said it expects to win back more money from clients in 2011 and has laid the foundations for a rebound in its investment bank as chief Oswald Gruebel turns around a bank almost felled by the crisis.

UBS said it had seen improvement across all its businesses in the fourth quarter – with total net new money of 7.1bn Swiss francs – although inflows were "very small" at its core wealth management unit after 1 billion in the third quarter.

"We are optimistic that overall positive net new money inflows will continue in the first quarter. For the full year, we believe that net new money will strengthen noticeably," UBS said in a statement.

Clients rattled by massive writedowns on toxic assets and a tax dispute with the United States had pulled nearly 400bn francs from Switzerland's biggest bank in recent years.

"The results are a relief after the poor results of U.S. brokers and those from Deutsche Bank and even Julius Baer," said Helvea analyst Peter Thorne. "It is a relief to hear their optimism for 2011."

UBS shares were up 2 percent at 17.86 francs at 0828 GMT, against a slightly weaker European STOXX banks index.

Gruebel's overhaul of the investment bank started to pay off in the fourth quarter as equities and fixed income, commodities and currencies revenues improved, though bigger losses on the bank's own credit, as well as losses on student loans, kept net profit to just 75m Swiss francs (£48.53m) after a surprise loss for the previous three months.

UBS described the investment bank results as "unsatisfactory in relation to our ambitions" but expects some improvement in the business's trading results in the first quarter, though this depended largely on market conditions.

UBS was forced to cut risky but potentially very profitable proprietary trading in favour of client flow business after it took huge losses in the financial crisis pushing it to take a bailout from the Swiss government in 2008.

"While we made substantial progress in 2010, we are fully aware that we have to continue to improve our results," Gruebel said in a statement.