Earnings Preview: Analysts expect UBS 4Q profit

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ZURICH -Swiss bank UBS AG reports results for its fourth quarter before the Zurich stock market opens Tuesday.

WHAT TO WATCH FOR: A return to profit after three loss-making quarters last year as a sign that CEO Oswald Gruebel is finally turning the bank around.

UBS has lagged behind rivals Deutsche Bank, JPMorgan Chase & Co. and Goldman Sachs Group Inc. in recovering from the financial crisis, partly due to a sharp drop in customer confidence following investment blunders and a high-profile tax evasion case in the United States.

Gruebel has restocked the board, overhauled the bank's divisions and slimmed down its workforce while insisting that winning back client confidence is key to its revival.

Most analysts expect UBS to post a profit but will look closely at net new asset flows and the impact that the departure of some 400 advisors from its Wealth Management & Swiss Bank division will have on deposits from ultra rich clients.

"They are likely to have pulled money out of UBS to their new employers in the final quarter, with the trend proably extending for most of 2010," Helvea analyst Peter Thorne said.

Manfred Hofer of LGT Capital Management said U.S.-led plans to impose tighter banking rules remain "an uncertainty factor for 2010."

WHY IT MATTERS: UBS was Switzerland's biggest bank by market capitalization until its dramatic fall from investors' grace in 2008-2009. The bank's woes have reflected negatively on the Swiss banking brand as a whole and a revival will be welcomed by markets and politicians alike.

WHAT'S EXPECTED: The analyst consensus is for UBS to report a 321 Swiss francs ($300 million) net profit. The investment bank division is still expected to lose over 600 million francs.

LAST YEAR'S QUARTER: UBS reported a net loss of 9.58 billion francs in the fourth quarter.

2010-02-08 05:57:26