Switzerland's largest bank, UBS, has reported a 29 per cent drop in net profit for 2002 to SFr3.535 billion ($2.58 billion).This content was published on February 18, 2003 - 16:21
The company blamed the slump on last year's decision to scrap the PaineWebber brand at a cost of SFr953 million.
The non-cash writedown was reflected in the bank's fourth-quarter loss of SFr101 million - down from a net profit of SFr1.106 billion a year ago.
This was worse than the SFr65 million loss predicted by analysts.
The full-year result - down from SFr4.973 billion in 2001 - is still significantly better than the SFr3.4 billion loss expected at its rival Credit Suisse, which is due to post its results later this month.
Commenting on Tuesday's figures, UBS boss Peter Wuffli said the bank had successfully weathered a difficult 12 months.
"In one of the most challenging years ever for the financial industry, our businesses were remarkably resilient and competitive, gaining market share by continuing to invest in growth."
Senior European analyst David Hussey at Barclays in London said the result did not quite come up to expectations.
"I think a lot of the market was expecting slightly better results than these, but in these conditions I think they are not bad... but they are also not sparkling," he told swissinfo.
Mark Branson, group communication officer for UBS, added that it was also important to consider the bank's results in relation to those of its competitors.
"We feel we've been able to return very consistent profitability," he told swissinfo. "You can probably say that, compared with other global financial organisations, it's really not turned out too badly."
Branson added that UBS was using the "pause" caused by the current economic slowdown to focus on gaining market share in its core businesses, wealth management and investment banking, particularly in the United States.
In November, UBS announced it would be scrapping the PaineWebber and Warburg names and realigning the bank under a single brand from June 2003.
UBS said it hoped the move would help raise the firm's profile. The Zurich-based banking group acquired US broker PaineWebber in 2000 for around $11 billion.
Also weighing heavily on the fourth-quarter results was the $80 million charge for settling claims in the United States that UBS, along with other Wall Street banks, had misled investors.
UBS also announced on Tuesday that it was consolidating its five private banks - Armand von Ernst, Banco di Lugano, Bank Ehinger, Cantrade and Ferrier Lullin - into a new holding company.
The new unit will be headed by Hans de Gier, a vice chairman of UBS, and have 1,750 staff and assets under management of SFr70 billion.
Observers say the consolidation is part of UBS's efforts to improve growth in private banking - the bank's most profitable business.
UBS said that with the new holding structure the five banks will be "encouraged to grow faster and deliver their full value potential".
The bank made no comment about whether job losses were likely at the five banks, but Switzerland's private banking sector has been squeezed by high costs and consolidation is already underway.
Looking ahead, UBS added that 2003 looked likely to be challenging, with the risk of war in Iraq affecting investor confidence and markets remaining weak.
"UBS does not expect to see an immediate pick up in its financial performance, as depressed asset levels, low investor activity and possible deterioration of the credit environment weigh on revenue," explained Wuffli.
Branson echoed the sense of uncertainty for the coming year.
"There's nothing in the environment at the moment that is supporting growth in revenues and earnings, so it's going to continue to be tough," he said.
He added that UBS' conservative strategy, which has earned it a reputation of being boring, has enabled the company to weather such difficult times in the past.
"We've managed to navigate a course very successfully, as we've turned from the boom time of the late 1990s and the year 2000 to the tough times now, so from that perspective I guess boring is good," he said.
swissinfo, Robert Brookes in Zurich
UBS net profit tumbled by 29 per cent in 2002 to SFr3.535 billion.
The group said this was largely due to a non-cash writedown of SFr953 million after tax related to the withdrawal of the PaineWebber brand.
It made a loss of SFr101 million in the fourth quarter of 2002.
UBS has told shareholders that its businesses were "remarkably resilient" and competitive in view of the environment they faced in 2002.
The group's wealth management business saw positive inflows of net new money in 2002, with wealthy clients investing SFr35.1 billion in new funds with UBS.
UBS was affected by more than SFr8 billion of net outflows to Italian clients, as they took advantages of Italy's tax amnesty.
The board of directors is recommending a dividend of SFr2 per share at the annual shareholders' meeting on April 16.
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