Swiss banking major UBS has posted a first quarter loss of 2 billion Swiss francs (about $1.77 billion) and has warned of economic turmoil negatively impacting its credit-related provisioning in the coming months.
For the three months ended March 31, 2009, the company has losses to the tune of 2 billion Swiss francs whereas in the year-ago period, the same stood at 11.62 billion Swiss francs, the entity said in a statement today.
"Losses driven primarily by risk positions in businesses now exited or in the process of being exited by the Investment Bank," it said.
Even though there has been an improvement in market sentiment during the first quarter, the Swiss bank said the credit markets improved only partly and trading in complex financial products remains illiquid.
"...The real economy has continued to deteriorate, and this is expected to have negative implications for credit-related provisioning in coming quarters," the bank said.
The firm has been one of the worst hit in the ongoing global financial turmoil and had even announced significant job cuts to bring down costs. Further, the entity is fighting a legal battle in the US related to charges of helping Americans in tax evasion.
UBS has restated its 2008 financial statements to correct accounting errors.
"The total net impact of all restated items on the 2008 results was a reduction of net profit and net profit attributable to UBS shareholders of 405 million Swiss francs, and a reduction of equity and equity attributable to UBS shareholders of 269 million Swiss francs," the statement said.
According to the bank, the restated results also reflect the reorganisation of its wealth management business.
In the first quarter, the bank's Wealth Management & Swiss Bank recorded an increase in pre-tax profit to 1,077 million Swiss francs from 535 million Swiss francs.
"This increase was largely due to the impact of provisions made in connection with the US cross-border case in fourth quarter 2008. Without the effect of these provisions, pre-tax profit would have fallen 26 per cent as less income was earned on a reduced asset base and operating expenses were higher," it added.
Meanwhile, UBS expects to bring down operating expenses by 3.5 to 4.5 billion Swiss francs by the end of 2010.
