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UBS posts 32% rise in Q3 profit despite legal changes

Published: 14:40 28 Oct 2014 EDT

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UBS (NYSE:UBS) advanced to the highest in three weeks after the Swiss bank reported its third-quarter profit increased 32 percent even as it took a charge of nearly $2 billion for legal costs.

Shares were up 6.4 percent at $17.26 at 2:25 p.m. in New York, after touching $17.33, the highest intraday price since Oct. 1.

Net income rose to 762 million Swiss francs, or $802 million, in the July-to-September quarter, from 577 million francs in the period a year earlier, the Zurich-based company said in a statement today.

UBS has been wrestling with legal probes that range from the rigging of foreign-exchange rates to allegations it helped clients evade taxes -- investigations that could lead to sanctions that hurt profitability.

The bank’s chief executive officer, Sergio P. Ermotti, said he was pleased with the performance and that the bank was facing its regulatory issues head on.

UBS has been focused on cutting costs in its investment bank and building its wealth management business.

“Three years since introducing our strategy, the business is far stronger, its earnings power is much greater, and our absolute and relative capital position speaks for itself,” Ermotti said in a statement. 

“That gives us every confidence in our ability to deliver on our capital returns policy.”

Wealth management pretax profit rose 27 percent to 707 million francs, beating analysts’ estimate of 641 million francs. Earnings at wealth management Americas rose 17 percent to 236 million francs. The units added 9.8 billion francs and 4.6 billion francs in net new money, respectively. 

Earnings in asset management rose 31 percent to 154 million francs, while the retail and corporate banking unit posted a 6 percent increase in income to 426 million francs.

The investment bank posted a pretax loss of 1.28 billion francs compared with a profit of 251 million francs a year earlier after the 1.69 billion-franc litigation provision.

Revenue in the corporate client solutions unit, which includes advisory, underwriting and financing businesses, jumped 46 percent to 738 million francs in the quarter. 

Equities trading posted a 2.3 percent increase in revenue to 884 million francs, while the foreign-exchange, rates and credit unit saw a 6.8 percent revenue decline to 315 million francs.

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