UBS profits down, claims to be 'one of the world's best capitalized banks'
Swiss bank UBS AG (UBS) earned a profit in the third quarter, despite a trading income loss of $2 billion resulting from unauthorized trading in September. The $1.18 billion in 3Q profit comes largely from the bank's wealth management operations, which recorded combined net new money broadly in line with the prior quarter. UBS profits fell in the third quarter by 39%. Quarterly earnings per share are around 30 cents, down from $1.14 in the year-ago quarter. However, the bank, which has significant operations in the U.S., said it improved its Tier 1 ratio to 18.4%, a measure of capital deemed by the Basel accords to indicate financial strength. This makes the financial institution, in its own words "one of the world's best capitalized banks." Kweku Adoboli, a trader working on UBS's exchange-traded-fund desk in London, is believed to have made the unauthorized trades, leading to $2 billion in losses. Despite this, UBS said it would absorb the losses internally and would make money in the third quarter anyway. "UBS clients and shareholders can rest assured that our financial, capital and funding positions remain unquestionably solid," said CEO Sergio Ermotti. "We are finalizing the plans essential to implementing the investment bank's client-centric strategy, which will strengthen our wealth management offering, reduce the firm's risks and improve returns to shareholders." Write to Jacob Gaffney.