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UBS AG reports third-quarter results before Tuesday trading in Zurich.
WHAT TO WATCH FOR: The Zurich bank has set the bar high by posting net profits of over 2 billion Swiss francs during the first two quarters. Weak economic recovery data in the United States and disappointing third-quarter results by its rivals indicate that UBS too will lose momentum.
Crosstown rival Credit Suisse set the tone by reporting significantly lower third-quarter net profits on weak trading and higher staff costs due to hiring at its investment bank. Analyst Teresa Nielsen at private bank Vontobel predicts a similar outcome for UBS.
In addition, Nielsen sees continued UBS customer withdrawals unlike Credit Suisse, which saw positive net new money flows during the quarter.
Investors will also be looking for further insight into how the bank plans to meet new regulatory requirements for increased capital reserves over the next decade.
WHY IT MATTERS: UBS appeared to have left behind the woes of years past: solid profits after disastrous subprime losses; the end of its tax evasion case in the United States. Now the bank, which recently launched a major marketing campaign to win back the trust of its Swiss clients, faces much the same problems as its rivals. All eyes are on CEO Oswald Gruebel to see whether he can master small crises as well as big ones.
WHAT'S EXPECTED: Consensus estimates predict net profits of just under 1.14 billion francs. Vontobel has UBS reporting a net profit of 790 million francs.
LAST YEAR'S QUARTER: UBS reported a net loss of 564 million francs (then $542 million) in the third quarter of 2009.