Relief for UBS investors as it stays in profit despite rogue-trading losses

  • @MrNickClark

After a troubled few months, UBS finally had some good news for its investors yesterday as it revealed that the losses incurred from alleged rogue trading had not sent it tumbling into the red as had been feared.

The Swiss bank had expected to dip into the red in the third quarter after "an unauthorised trading incident" caused losses of SFr1.8bn (£1.3bn). Instead, it made a net profit of just over Sfr1m.

The numbers were boosted by a Sfr1.7bn accounting gain on changes to the value of its own debt as well as lower restructuring costs than had been expected. It also sold Sfr722m of treasury-related investments. A strong performance at its wealth management business strengthened the results. The interim UBS chief executive, Sergio Ermotti, said it had been a "very challenging" quarter for the bank and the industry as a whole. He replaced Oswald Grübel, who resigned in the wake of the unauthorised trading loss.

UBS said its performance in the three months to 20 September reflected increased market volatility because of the concerns around a potential sovereign debt crisis in the eurozone. Sharp declines in world markets hit its investments, and currency exchange volatility also affected profitability. It made a pre-tax loss of Sfr650m as its business came under pressure.

The bank is preparing to overhaul the investment banking division before an investors' day next month. The London-based UBS trader Kweku Adoboli is facing charges related to the losses exposed last month. UBS said yesterday that management had determined certain controls "were not effective".

Deutsche Bank also beat expectations yesterday, posting profits of €942m (£819m). The German firm also took a hit at its investment banking operation, but was salvaged by its retail banking and asset management divisions. The chief executive, Josef Ackerman, said the economic outlook was "deteriorating" and warned that more job cuts could follow.