World Economy

UBS Profits Nearly Double

UBS Profits Nearly DoubleUBS Profits Nearly Double

UBS AG said Tuesday that first-quarter profit nearly doubled from the same period last year on gains at its core wealth management business and a strong bump from its pared-down investment bank.

The Swiss bank also said it is nearing the settlement of a US Justice Department probe into its foreign-exchange business, Yahoo News reported.

Zurich-based UBS said net profit for the first quarter rose to 1.98 billion Swiss francs ($2.14 billion), from 1.05 billion francs in the same period last year. Analysts had expected 1.22 billion francs. Operating income rose to 8.8 billion francs from 7.3 billion francs, UBS said. Shares of UBS rose more than 6%.

Chief Executive Officer Sergio Ermotti, who reorganized the bank to shrink the securities unit and focus on wealth management, is improving returns by cutting costs while litigation expenses persist. The bank attracted 14.4 billion francs in new funds at the main money management unit, topping estimates after a weak fourth quarter.

UBS’s return on tangible equity -- a measure of profitability -- amounted to about 14 percent in the quarter, above its target of 10 percent for the year.

“The bank had a good quarter all around,” said Alevizos Alevizakos, an analyst at Keefe Bruyette & Woods Inc. in London. “Revenues were strong and UBS exercised good cost control.”

UBS rose as much as 7.2 percent, the biggest gain in two years, and traded 6.4 percent higher at 20.27 francs as of 11:25 a.m. in Zurich, valuing the bank at about 78 billion francs.

  Currency Probes

UBS said in its quarterly report Tuesday that discussions with the US Justice Department about a settlement for attempting to rig currency markets are at an “advanced stage.” No agreement on the form of the resolution has been reached, the bank said.

UBS is among a group of banks that may have to pay about $1 billion to settle with the Justice Department for attempting to rig currency markets, people familiar with the talks said in March. The bank in November was ordered to pay about $800 million by regulators in the U.S., Britain and Switzerland in related separate probes.

Other investigating authorities may seek to conclude similar resolutions in the near future, UBS said. It said its provisions are “adequate” to meet the anticipated cost of resolutions.