| |
| |
![]() |
| |
|
| |
|
| |
|
ZURICH: Swiss banking giant UBS, which had been hit hard by the sub-prime crisis, on Friday said it would break even or report a slight loss for its second quarter thanks to a substantial tax credit.
In a statement, the bank said its second quarter results "are likely to be at or slightly below break-even", marking a sharp contrast from its massive first quarter loss of 11.54 billion Swiss francs (11.25 billion US dollars).
A tax credit of approximately three billion Swiss francs would help boost its accounts for the quarter ending June 30.
Meanwhile "positive contributions" from its wealth management and asset management divisions also offset a loss in the investment bank division, it added.
The news beat analyst forecasts of a four billion Swiss franc loss, which had sent UBS shares stock diving to an all-time low point earlier this week.
But Friday's news lifted the shares significantly, with the stock opening up 7.52 per cent at 22.54 Swiss francs. At late morning, it was trading up 3.52 per cent at 21.76 Swiss francs, still outperforming an overall market which was flat.
In an announcement ahead of its scheduled earnings report on August 12, the bank said its investment bank division continued to post losses and asset writedowns due to "further market deterioration".
However, its wealth management and asset management divisions had offset the impact.
The bank also revealed that money outflow was "most pronounced" in April, but that there was an improvement in May and June.
It added that it expected its Tier 1 capital ratio -- a measure of capital adequacy -- to reach approximately 11.5 per cent at the end of the quarter, and that it did not need to raise new equity.
For Zuercher Kantonalbank's analyst Andreas Venditti, it was the announcement that the bank would not need fresh capital that helped the stock.
"As investors are currently intensely focused on this ratio, we can count on an increase in the UBS stock price today," said Venditti.
Another analyst at Credit Suisse, Olivier Mueller, viewed the announcement as "mixed".
"We see the capital development as positive so far, but note that the break-even result was mostly due to the 3 billion Swiss francs tax credit which somewhat offset write-downs at UBS' risk positions," he said.
Analysts for Swiss Bank Wegelin, meanwhile, noted that in particular, the results would dampen "any further negative speculation and rumours".
UBS has written down over 37 billion US dollars in assets since the sub-prime crisis emerged last year.
It had to seek fresh capital twice, once from Singapore sovereign wealth fund GIC and an unnamed Middle Eastern investor, and the second time from its shareholders.
-AFP/jk
|
