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UBS Tempers Trading Revenue News Report

A media report saying that UBS's Fixed Income, Currencies and Commodities unit (FICC) would generate around $2.3 billion in the first quarter is higher than the unit's forecast, UBS said in a statement Tuesday.

UBS
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News agency Bloomberg said late Monday, citing people with knowledge of the stuation, that the Swiss banks' rebuilt fixed-income division will post about $2.3 billion in revenue.

"The reported figure is slightly higher than FICC's current first quarter forecast revenues," UBS said in a statement. "Because the quarter has not ended and results to date are subject to possible fair value adjustments, including those relating to own credit, this forecast may not be reliable."

The bank will issue first-quarter results on May 4.

The fixed income division made a loss of 547 million Swiss francs ($515.5 million) in 2009, following a loss of 31.9 billion francs in 2008, which brought the bank to the brink of collapse and forced the Swiss government to bail it out.

Shares in UBS were up 3 percent at the closed Tuesday, making it by far the strongest performer in an overall firmer Stoxx Europe 600 banking index. Trading volumes were more than 90 percent of the 90-day daily average in the first 96 minutes of trade, according to Reuters data.

"While the fact is not particularly new news in that the bank had made directionally similar comments earlier in March, the size of the figure is significant in that it exceeds the 2 billion francs quarterly revenue target set in the recent investor day for the three to five-year plan," Nomura analyst Jon Peace said in a note.

"We welcome the momentum, but conclude it is premature for the market to price in a strong turnaround," he said.

UBS may have generated revenue of almost $1 billion from credit alone, the Bloomberg report said.

A spokeswoman for UBS confirmed that the bank has hired about 350 people at its fixed income unit, which includes emerging markets and foreign exchange, in the past 12 months.

The bank's fixed income division was responsible for most of the over $50 billion in writedowns and the bank's record losses during the credit crisis.

The fixed income division reported a profit of nearly 500 million francs in the fourth quarter 2009.

UBS returned to profit in the final quarter of 2009 but wealth management clients continued to withdraw money, raising concern that chief executive Oswald Gruebel may be struggling to steady the ship.

Peace said a reversal of fortunes in the private bank business still remained key for the bank.

"While we expect Q1 outflows to be better than Q4, the lagged effect of advisor attrition from 2009 combined with renewed uncertainty about U.S. tax litigation is likely in our view to lead to further outflows through much of 2010," he said.

In January a Swiss court ruled in favor of a UBS client seeking to prevent her account data from being given to the U.S. tax authority, threatening a deal struck by the U.S. and Switzerland which would allow UBS to hand over data on clients which the U.S. suspects of dodging taxes.