UBS profit beats forecasts, sees more litigation charges
Gianluca Colla | Bloomberg | Getty Images
UBS third quarter profit slightly beat expectations on Tuesday but growing provisions for litigation signal the Swiss banking giant still faces regulatory issues.
UBS reported third quarter net profit of 577 million Swiss francs ($644.2 million) on Tuesday, above expectations of 537 million Swiss francs.
The bank's Wealth Management division delivered an adjusted profit before tax of 617 million Swiss francs and net new money inflows of 5 billion Swiss francs, with positive inflows from all regions, the bank said in a statement.
The results include charges for provisions of 586 million Swiss francs for litigation, regulatory and similar matters, the bank said. In addition, the bank said the Swiss regulator wants it to hold more capital. It imposed a temporary 50% add-on to the capital the bank does hold against risk-weighted assets to cope with potential litigation and other risks.
The latest earnings come after a turbulent year for the bank as it tackled restructuring, redundancies, the Libor-rate scandal and the arrest last week of the former head of its global wealth management business.
Last October, UBS announced massive restructuring plans including the axing of up to 10,000 jobs. It has also focused on shifting away from risky trading in its investment banking division toward its wealth management operations.
( Read more: We're half way through job cuts: UBS CEO)
Then, in December, it announced it had been hit with a $1.5 billion bill from U.S., UK and Swiss regulators and admitted to one count of wire fraud in order to settle charges of manipulating global benchmark interest rates.
Documents related to the case revealed a macho trading culture at the bank and the U.K.'s financial authorities stating that at least 45 UBS employees in total knew of, or were involved in, the rigging of the rate.
( Read more: UBS traders' 'humongous' Libor-fixing boasts)
In a further twist, the Swiss bourse announced last week that it was launching an investigation into whether UBS had violated rules when it announced the restructuring and settlement of Libor-related claims though UBS denied any wrongdoing.
( Read more: Why this UBS investigation looks misguided)
Also last week, Raoul Weil, the former head of UBS's global wealth management business, was arrested in the northern Italian city of Bologna on charges brought in the U.S. that he helped thousands of Americans hide assets worth $20 billion in Swiss bank accounts.
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