Geneva - Swiss Bank UBS AG reported a drop of 18 per cent smaller than expected in the first quarter net profit Tuesday that the strength of the Swiss franc ate into profits overseas and said money client influx has improved.
Net profit dropped to 1.81 billion francs ($2.05 billion) of 2.2 billion francs a year earlier, while operating profit fell by 7% to 8,34 billion francs.
UBS, which is a large part of its activities outside the Switzerland, said that the U.S. dollar worth about 15 percent less during the first three months of the year over the same period in 2010.
"We will continue to see this effect for some time," John Cryan, Chief Financial Officer of the Bank, told journalists. The difference of the year on year in April was about 20 percent, he added.
The results beat expectations analyst for even lower earnings for the first quarter, as the years profits - it there were consolidated by exceptional factors.
Nine - an important indicator of future business - money turnover increased 22.3 billion francs. UBS Chief Executive Oswald Gruebel saw the figures "confirm the return of customer confidence."
UBS reported a net exodus of 18 billion francs in the first quarter of 2010.
Analyst at Zuercher Kantonalbank commended the u-turn, but noted that unexpected improvement in net new money everywhere except in Europe was largely due to lower withdrawals.
UBS also improved margins in the business of UBS wealth beyond expectations management, they said.
The Zurich-based Bank played up to its benefit of 7 per cent improved from the last quarter of 2010, citing higher income from its investment banking unit commercial. But UBS also benefited to some 150 million francs to release reserves it had set aside for the prosecution and the regulatory changes.
UBS said that he expects volatile exchange rates due to Europe's sovereign debt crisis and the economic crisis in the Middle East and the Japan to offer attractive investment opportunities in the second quarter.
Costs will increase, too, as the Bank struggles to stop high staff from defecting to competition. Cryan said base salaries increased by 5% to 10%.
Observers have questioned target midway through the Bank of the annual net profit of 15 billion francs in greater regulatory requirements in Switzerland.
Cryan says UBS stands by this figure.
"We do not exclude our targets today," he said.
Shares in UBS closed 3.9% higher at 17.23 ($ 19.65) on the Zurich Exchange.
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