UBS wary despite return to profit

UBS has been hard hit by sub-prime losses

Switzerland's largest bank UBS has reported a profit for the third quarter but has warned of challenges ahead.

UBS made a profit of 296m Swiss francs ($256.3m; £163.3m) for the three months to 30 September, helped by write-ups and a tax credit.

It was UBS's first profit after four quarterly losses in a row.

Last month UBS said it was raising 6bn Swiss francs from the government and would move $60bn of toxic assets to a fund backed by the Swiss central bank.

Money flows

UBS's investment banking arm reported write-downs and losses of $4.4bn during the quarter, bringing the total of such write-downs since the sub-prime crisis started to nearly $49bn.

The bank also said its wealth management business had seen outflows of 49.3bn Swiss francs in the quarter, while is asset management business saw net outflows of 34.4bn Swiss francs.

UBS added that conditions at the start of the fourth quarter would "continue to affect client's assets, and therefore UBS's fee-earning business".

However, it added that there had been signs of improvement regarding flows of customers' money since it struck the rescue deal with the Swiss government.

"Whilst the situation was very difficult at the start of October, there have been encouraging signs for net new money flows following the announcement," UBS said.

But Dirk Becker, analyst at Kepler Capital Markets, said: "Our impression is that it might take a while before UBS gets back to meaningful inflows".

UBS, which is currently undergoing a huge restructuring, said its total number of employees had been reduced by almost 1,900 in the third quarter to 79,565.