UBS AG's wealth management business in the Americas returned to profitability in the third quarter, despite losing financial advisers and client assets.
UBS saw client outflows of $9.6 billion in its Americas wealth management business during the three-month period ended Sept. 30, the company disclosed during its earnings call today. That compares with $5.3 billion of outflows during the second quarter.
At the same time, the UBS unit ended the quarter with 7,286 financial advisers, an 8% decrease from the second quarter. The firm shed nearly 370 advisers during the quarter following
Stifel Financial Corp.'s acquisition of 55 UBS branches in March.
Despite the decline in assets and advisers, UBS's wealth management business in the Americas — which last week tapped former Merrill Lynch & Co. Inc. brokerage head Bob McCann as its new CEO — still squeezed out a profit.
The unit generated a $107 million profit during the three-month period, compared with a loss of $214 million in the second quarter, mainly because of lower operating expenses, the company noted in a statement.
In April,
UBS announced that it would restructure its wealth management business and consolidate its branches in the United States — a restructuring that also involved the layoffs of roughly 500 financial advisers.
Companywide, UBS AG reported a third-quarter net loss of 564 million Swiss francs ($542 million) on Tuesday, blaming accounting charges of 2.15 billion francs for keeping it in the red.
The disappointing results — along with a warning that wealthy clients are still withdrawing more money from the bank than they are putting in — sent UBS shares down 5.8 percent to close at 16.35 francs ($15.86) on the Zurich exchange.
The Zurich-based bank had posted a net profit of 283 million francs during the same period last year.
Discounting the one-time charges, UBS would have made a third-quarter pretax profit of 1.56 billion francs, it said. Operating income rose 4 percent to 5.77 billion francs compared with the same period last year.
Analysts had predicted a third consecutive quarterly loss this year but differed widely in how to assess the expected writedowns, most of which resulted from tighter credit conditions.
UBS also took a hit from currency exchange in the sale of its Brazilian unit UBS Pactual, and from the conversion of mandatory convertible notes issued to the Swiss government as part of a bailout last year when the bank suffered a record 21-billion-franc annual loss.
The bank has reduced its risky investments and shed thousands of jobs in an attempt to return to profit over the past year. Staff numbers fell by almost 2,800 during the quarter and now stand at just over 69,000.
Chief Executive Oswald Gruebel tried to strike an upbeat note, stating that "business is steadily returning to normal."
"Management actions are delivering visible results, and we are continuing to emphasize risk reduction and capital strength," said Gruebel, who was brought in to turn the bank around in March.
The Associated Press contributed to this article.
