UBS AG, Europe's biggest bank, reported record first-quarter profits as increased fees for managing money for the rich outweighed a drop in earnings at the investment bank.

Net income rose 15 per cent to 2.63 billion Swiss francs (US$2.19 billion), or 2.48 francs a share, from 2.28 billion francs, or 2.05 francs, in the year-earlier period, the Zurich-based bank said yesterday. Profits surpassed the 2.41 billion-franc median estimate of 10 analysts surveyed by Bloomberg News.

Chief Executive Officer Peter Wuffli, 47, spent 1 billion francs last year buying private banks that added about 40 billion francs to funds and helped solidify UBS's position as the world's biggest wealth manager. The investment banking business lagged behind competitors such as Deutsche Bank AG, which profited from a surge in trading income. UBS said markets weakened in March and declined to give a forecast for 2005.

"There is an appreciable slowdown in the market, in terms of the level of turnover in the equity and debt markets," said Chief Financial Officer Clive Standish.

The shares of UBS declined 1.45 francs, or 1.5 per cent, to 94.85 francs at 9:31 am in Zurich, valuing the company at 106.6 billion francs.

The stock has declined 0.5 per cent this year, compared with the Bloomberg Europe Banks and Financial Services Index, which is little changed.

Earnings at UBS's private bank, which caters to clients with at least US$1 million to invest, rose 6 per cent to a record 915 million francs from 863 million francs a year earlier. Private banking clients added 15.4 billion francs more than they withdrew in the first quarter, the second-highest intake ever, according to UBS, behind last year's first quarter.

The private bank, headed by Marcel Rohner, 41, oversaw 820 billion francs of client assets at the end of March, up 5 per cent from December 31. UBS's total managed assets stood at 2.36 trillion francs at the end of March.

UBS's investment bank, run from New York and London and headed by John Costas, 48, reported a 19 per cent decline in pretax earnings from the year-earlier period to 1.3 billion francs.

Revenue from the fixed-income and foreign exchange business fell 14 per cent as the dollar declined against the franc and because of "the mixed impact of the current market conditions," UBS said.

(China Daily 05/04/2005 page3)