UBS said a state bailout was helping stem client money outflows, but it needed stable markets to revive its key wealth management business and could take a 6 billion Swiss franc ($5.13 billion) accounting hit this quarter.
The world's largest wealth manager had already reported most of its third-quarter figures, including a small profit, last month when it announced it was getting a 6 billion franc capital injection from the Swiss government and was also unloading $60 billion of risky assets into a Swiss National Bank (SNB) fund.
UBS, which has made more writedowns than any other bank in Europe, said on Tuesday it had seen "encouraging signs for net new money" since the Oct.
16 central bank deal.
It reported net outflows of 83.6 billion francs for its core wealth management and asset management divisions in the third quarter.
UBS Chief Financial Officer John Cryan told Reuters the pace of withdrawals had slowed down in the fourth quarter.
But he said the bank expected investors to continue to sell assets for several quarters and, although the worst was over, UBS would not be able to return to strong growth yet.
"Before we can see strong inflows we need to see more stability in the markets," Cryan told Reuters in an interview.
"We know we need to pull our socks up to motivate our client-facing people and re-establish UBS as the bank it used to be," he said, but added: "We are not miracle men and cannot change the way the market operate." UBS shares were down 1.06 percent to 18.75 Swiss francs at 1140 GMT, underperforming a 3.15 percent stronger Dow Jones index of European bank stocks.
UBS' stock is down nearly 60 percent since the start of the year against a 52 percent fall for the European index.
Switzerland's banking champion, whose reputation was tarnished in the subprime crisis and is under public pressure to return executive bonuses, said it expected market conditions to remain "challenging" and shrinking client assets to affect fees.
UBS, which has changed its top management this year and is undergoing a massive restructuring, will give an update on client flows at an extraordinary shareholder meeting on Nov. 27.
"Management claims the trends after the settlement with the SNB have been encouraging, but we have seen these statements before," said Dirk Becker, analyst at Kepler Capital Markets. "Our impression is that it might take a while before UBS gets back to meaningful inflows."