ZURICH (Reuters) -UBS Group AG on Tuesday reported a 52% slide in profit for the first quarter due to an increase in provisions for a legacy litigation matter.
The result comes at a tumultuous time for the Swiss bank after it was forced into taking over former rival Credit Suisse.
Net profit attributable to shareholders came in at $1.03 billion versus the $1.71 billion average of 15 analyst estimates in a UBS-conducted poll.
UBS said it increased provisions relating to U.S. residential mortgage-backed securities litigation by $665 million.
“We are in advanced discussions with the US Department of Justice, and I am pleased that we are making progress toward resolving the legacy matter which dates back 15 years,” Chief Executive Sergio Ermotti, who has newly rejoined the bank to steer the takeover, said in a statement.
The world’s largest wealth manager reported inflows of $42 billion in the first three months of the year. Its flagship wealth management division received $28 billion in net new money, $7 billion of which came in the last ten days of March.
Scandal-plagued Credit Suisse had been brought to its knees after clients left in droves amid global banking sector turmoil. Under the deal hastily engineered by Swiss authorities, UBS agreed to take it over for 3 billion Swiss francs and to assume up to 5 billion francs in losses.
Credit Suisse said on Monday that 61 billion francs ($68 billion) in assets had left the bank in the first quarter and that outflows were continuing, underscoring the challenge faced by UBS.
(Reporting by Noele Illien; Editing by Edwina Gibbs)
