Earnings Preview: UBS to post $257M profit in 3Q

ZURICH, Switzerland - UBS AG reports earnings for the third quarter on Tuesday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: UBS has been hard-hit by the financial crisis and a series of bad investments and legal battles. Switzerland's largest bank suffered losses and writedowns of over 45 billion Swiss francs ($40 billion) over the past year, and recently agreed on a $60 billion bailout deal with the government. The money will be used to bolster the bank's reserve and allow UBS to dispose of many of the toxic assets it is still sitting on.

BY THE NUMBERS: UBS told investors last month that it will report a 296 million francs ($257 million) profit for the third quarter thanks to a 912 million francs ($793 million) tax credit. Its investment banking business recorded writedowns and losses of $4.4 billion during the quarter.

Net new money, a key indicator of future business, remained negative during the three months to September, with customers withdrawing 84 billion francs ($74 billion) during the period.

ANALYST TAKE: Bank Vontobel analyst Panagiotis Spiliopoulos said that with division results already out, investors would focus on capital outflow figures for October and possible announcements on further job cuts.

Spiliopoulos said any indication that the bank is stemming the hemorrhage of customer money would be a welcome sign that confidence in UBS is returning.

WHAT'S AHEAD: Investors will be watching to see how UBS's capital position develops now that the problem of toxic assets has been dealt with. The bank also has to settle its dispute with U.S. authorities over allegations it helped rich Americans evade taxes. Domestically, the bank is under pressure to reform its management pay structure after accepting government assistance following bad decisions by former top officials.

STOCK PERFORMANCE: Shares fell 15.1 percent in the quarter to 18.00 Swiss francs ($15.50).

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