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UBS Posts Highest Quarterly Profit in Almost 3 Years


April 12 (Bloomberg) — UBS AG, Switzerland’s biggest bank, reported the highest quarterly earnings in almost three years after a rebound at the debt trading unit.

First-quarter pretax profit was at least 2.5 billion Swiss francs ($2.4 billion), the Zurich-based bank said in a statement today, before its annual shareholders’ meeting on April 14. That is the highest pretax result since the second quarter of 2007.

Chief Executive Officer Oswald Gruebel, who joined the bank in February 2009, is relying on a recovery in fixed-income trading to help the bank reach an annual pretax profit of 15 billion francs in the next three to five years. The debt unit reaped about $2.3 billion of revenue in the quarter, people familiar with the matter said on March 29.

“The news will have a positive impact on the sentiment for UBS,” said Teresa Nielsen, an analyst at Vontobel Holding AG, who has a “buy” rating on the bank’s shares. “The consensus for UBS first-quarter earnings has probably been much lower.”

UBS rose as much as 2.9 percent, and was 50 centimes higher at 18.18 francs by 9:21 a.m. in Swiss trading, valuing the bank at 69.6 billion francs. The stock has climbed 13 percent this year, beating a 4.1 percent increase in the 52-company Bloomberg Europe Banks and Financial Services Index and a 7.3 percent gain at Credit Suisse Group AG over the same period.

Outflows Slow

UBS said last month that the $2.3 billion revenue figure for the debt unit was “slightly higher” than its current estimate for the period. The bank, which didn’t comment on the fixed-income division today, will publish detailed first-quarter results on May 4.

The company said in November it would aim for quarterly revenue of more than 2 billion francs at the fixed-income division in three to five years.

The bank also said today that net client withdrawals from its wealth management units amounted to about 15 billion francs, down from 45.2 billion francs in the fourth quarter. Asset management had net outflows of about 3 billion francs in the first quarter, UBS said. The bank has seen 373.3 billion francs of net redemption’s in the two years through the end of 2009.

“First-quarter outflows are a positive surprise,” said Nielsen, who had forecast redemption’s of 39 billion francs for the period.

At the shareholders meeting this week, UBS will seek approval for management’s actions in the years 2007 through 2009, when it reported a cumulative 29.3 billion francs in net losses. The bank had postponed the vote during the previous two years while trying to clarify the causes of its losses in the credit crisis, the second-biggest among European banks after Royal Bank of Scotland Group Plc.

‘Enormous Losses’

Ethos Foundation, a Swiss activist shareholder group, last month recommended investors refuse approval for the actions of UBS’s management and board of directors, “who are responsible for the bank’s enormous losses over the past few years.”

UBS last year decided not to file any charges against its former executives and board members, including former Chairman Marcel Ospel, after about 10 internal and external investigations into the bank’s losses over the past two years.

“The bank is not attempting to shun its past,” UBS said in a statement on its Web site last month. “We are confronting the question of civil liability and give our shareholders the right to decide.”