Return to profit helps UBS in fight to save reputation

Swiss bank UBS made a profit of SwFr1.205 billion (£717 million) after taxes in the final quarter of last year, beating analysts' expectations.

The result is a significant improvement on last year, when the bank reported a net loss of SwFr9.58 billion in the fourth quarter. It was helped partly by a tax credit worth SwFr480 million.

UBS is one of the City's biggest employers, with 6,200 staff, although this is down from 7,000 a year ago.

The bank made three consecutive quarterly losses last year and struggled to salvage its reputation among customers after being hit by bad investments and American tax authorities.

"We have taken decisive action to transform UBS, and it is now a focused, efficient and resilient firm," said Oswald Gruebel, chief executive. "We expect that our return to profitability will increase clients' confidence in UBS and restore our reputation."

Analysts predicted that UBS would report a net profit of SwFr321 million in the final quarter.

Net new money - an important indicator of future business - was negative during the fourth quarter. Outflows amounted to SwFr56.2 billion, with more than half going from its Wealth Management and domestic Swiss Bank division.

UBS said it was confident that measures taken to address the causes of client asset outflows would be effective, but still expected to report outflows in the immediate future.

The Zurich bank's investment unit returned a profit of SwFr297 million during the quarter, after being responsible for most of UBS's massive losses during the credit crisis, leading to some in Switzerland calling for it to be spun off or sold.

UBS said it expected the investment bank's performance to further improve this year.