UBS beats profit forecasts

The financial industry has seen massive job losses

Second-quarter profts at UBS, Switzerland's largest bank, fell sharply, but still easily beat expectations.

The bank said net profit in the second quarter fell 26% to 1.385bn Swiss francs (£576m; $819m), compared with an expected drop of 40% year on year.

Although it warned that market conditions remained "difficult", UBS reported record levels of fees from underwriting, portfolio management and investment fund activity, at a time when the bank's costs are growing more slowly than European inflation.

The news came as a rare note of cheer in a financial industry that has been hit by profit warnings and redundancies.

On Monday, the Financial Times reported that investment banks had cut 25,000 staff this year - followed by reports on Tuesday that finance powerhouse Citigroup was planning to cut 3,500 jobs.

Shares in UBS rose by almost 4% in early trading on Tuesday.

Spending wisely

UBS said that, unlike many other investment banks, it had managed to rein in costs ahead of the economic slowdown.

This, the bank said, gave it room for "selective investments in strategic initiatives".

And despite fears of a slowdown in private banking business for Swiss banks, whose traditional secretive practices are under attack from international authorities, UBS recorded a surge in new business among private clients.

The group's private banking operations recorded net new inflows of 24bn francs in the second quarter.

The overall fall in profits was caused largely by a loss of 351m francs by its private equity business, UBS Capital.