UBS forecasts third quarter profit

Banking giant UBS said today that it no longer expects to report a loss in the third quarter despite the $2.3bn (£1.5bn) hole left by alleged rogue trading.

The Swiss bank also said it is set to report revenues in its wealth management arm at similar levels to the second quarter in a sign that investors have not pulled cash out of UBS in the wake of the scandal.



The resilient trading update comes after UBS chief executive Oswald Gruebel took responsibility for the massive losses and resigned.



However, the Zurich-based bank said profit in the period was driven by "credit gains on financial liabilities" worth £1.1bn - an indication that investors' confidence in banks is actually falling.



Former UBS trader Kweku Adoboli, 31, was last month charged with committing false accounting and fraud during his time at the bank's London offices. He is yet to enter a plea against the charges.









UBS, which employs 6,000 UK staff, revealed the unauthorised trading incident on September 15, and said at the time it could have tipped them to a third quarter loss.



But the bank said net profit attributable to shareholders - earnings after costs including tax are deducted - in the three months to September would include the £1.5bn loss.



While net money inflows have not fallen in the quarter, the boost from credit gains on financial liabilities shows conditions in financial markets have become more stressed and the price of debt issued by banks has fallen. Banks make a larger profit when the price of debt falls.



However, UBS also warned its cash buffer - the so-called Tier 1 capital ratio in place to protect against future crises - would be dented by the unauthorised trading incident.



Elsewhere, the bank said it had also taken into account £400m of restructuring charges associated with UBS's cost-cutting plans which have included reducing its headcount by 3,500.



UBS said the majority of affected employees have been notified though reductions will continue into 2012.



Adoboli, from Clark Street, east London, was remanded in custody when he last appeared at City of London Magistrates' Court and will next appear on October 20.



The primary fraud offence allegedly took place between January 1 and September 14 this year, while the two accusations of false accounting date back to 2008.



UBS Europe chief Sergio Ermotti took over as interim chief executive after Mr Gruebel resigned.

PA

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee