UBS expects pretax profit of 2.5 bln francs in Q1

[April 20, 2010]  GENEVA (AP) -- Swiss bank UBS AG said Monday it expects to announce a pretax profit of at least 2.5 billion Swiss francs (US$2.36 billion) when it releases its first-quarter results next month.

The result would be the second quarterly profit in a row for the Swiss bank, which has been struggling to win back the confidence of wealthy customers and investors after a series of losses and a long-running tax evasion spat with the United States.

UBS recorded fourth-quarter net earnings of 1.205 billion francs (US$1.12 billion) following three consecutive losses in 2009. Its year-ago first-quarter loss amounted to 1.98 billion francs (US$1.73 billion).

The announcement comes ahead of Wednesday's annual shareholder meeting, at which the bank is expected to face strong criticism from investors for wanting to discharge former executives of their responsibility for the record losses it suffered over the past two years. UBS has also drawn fire recently for lavishing almost 70 million francs in bonuses on senior executives, even as the road to recovery appears uncertain.

The Zurich-based bank said customer withdrawals slowed to 18 billion francs in the first quarter compared with the previous three months when outflows amounted to 56.2 billion francs. The flow of so-called net new money is an important indicator of future business in the banking industry and cross-town rival Credit Suisse has seen more deposits than withdrawals in recent months.

Uncertainty remains over the outcome of the UBS tax evasion saga in the U.S. and Swiss courts.

An agreement between the U.S. and Swiss governments last year was blocked by a Swiss court, which ruled parts of the deal incompatible with the Alpine republic's strict banking secrecy laws.

UBS and the Swiss government have appealed to lawmakers to sign off on the deal, which would see UBS divulge the names of 4,450 American customers suspected of large-scale tax crimes. In a separate deal, UBS paid a US$780 million penalty as part of a deferred prosecution agreement that included disclosure of an additional 150 names.

[Associated Press]

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