UBS, Switzerland’s biggest bank, reported its fourth consecutive quarterly profit and the first net new money inflows in wealth management since 2008.
Net income amounted to 1.66 billion Swiss francs (€1.22bn) in the third quarter, compared with a loss of 564 million francs (€416m) a year earlier, the Zurich-based bank said in a statement today. That beat the 1.16 billion-franc (€855m) median estimate of 16 analysts surveyed by Bloomberg News, helped by a tax gain.
Chief Executive Officer Oswald Gruebel, 66, has described halting outflows this year as “imperative.” Wealthy customers, who withdrew a net 251.6 billion francs (€186bn) in 27 months through June, added 1.2 billion francs (€885m) in the third quarter.
“The worst is over for UBS,” Dirk Hoffmann-Becking, a London-based analyst at Sanford C. Bernstein, said in a note before the release. “It will benefit the most from the return of clients to the capital markets.”
UBS gained 9.9pc in Swiss trading so far this year, while Credit Suisse, the second-biggest Swiss bank, fell 21pc and Bloomberg’s European banking index declined 2.8pc.
Wealthy clients started defecting in 2008 as UBS piled up record losses in the financial crisis, got engulfed in a US investigation over tax evasion by some customers and lost client advisers.
UBS also gave up its top spot in the ranking of wealth managers to Bank of America, according to Scorpio Partnership’s survey.
Since then Gruebel, who joined UBS in February 2009 out of retirement, hired Robert J McCann, 52, a former Merrill Lynch & Co executive, to run wealth management in the Americas and brought in Lukas Gaehwiler, 45, from Credit Suisse as CEO for Switzerland and co-head of the wealth management and Swiss bank unit with Juerg Zeltner, 43.
In August, the bank hired Jakob Stott, 55, previously with JPMorgan Chase & Co, to run the wealth management business with European clients that hold their assets where they reside.
Christian Wiesendanger was hired from Credit Suisse to head wealth management in Switzerland and Paul Raphael, who has worked for Salomon Brothers, Merrill Lynch and Credit Suisse, was named to run the business in emerging markets. All three were hired to start at UBS on October 1.
UBS has also now put its dispute with the US over tax evasion by some of its clients in the past. The US Justice Department last week dismissed the case against the bank after the expiration of the 18-month deferred prosecution agreement UBS signed to avoid criminal charges.
The Swiss parliament in August approved the deal to pass on information on as many as 4,450 UBS accounts to the Internal Revenue Service.
“This year is the year of the turnaround,” said Christopher Wheeler, a London-based analyst at Mediobanca SpA. The consecutive quarters of profitability have helped UBS to bring clients back, he added.
UBS returned to profit at the end of last year after revamping its investment bank, which posted more than 57 billion francs (€42bn) in pretax losses from 2007 through 2009.
The unit reported a third-quarter pretax loss of 406 million francs (€300m), compared with a loss of 1.37 billion francs (€1.01bn) a year ago, on lower trading revenue and a 387 million-franc (€285m) charge on its own debt.