UBS hit by warning on Swiss franc and negative rates

Tue Feb 10, 2015 8:11am EST
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By Joshua Franklin and Katharina Bart

ZURICH (Reuters) - UBS Group AG UBSG.VX has warned about the impact on profit of the surging Swiss franc and negative interest rates, while also disclosing another tax investigation in the United States involving wealthy clients.

Shares in UBS slid more than four percent to 15.42 francs by 1225 GMT (07:25 a.m. EST), despite the bank trebling its dividend from the previous year and saying it had made a solid start to 2015.

Switzerland's biggest bank said a sudden move by the Swiss central bank to abandon a cap on the franc, which sent the currency surging and is set to make life difficult for Swiss financial firms and exporters, will take a toll.

"The increased value of the Swiss franc relative to other currencies, especially the U.S. dollar and the euro, and negative interest rates in the euro zone and Switzerland will put pressure on our profitability and, if they persist, on some of our targeted performance levels," it said.

The bank said net profit for the fourth quarter of 2014 was 963 million Swiss francs ($1.04 billion), exceeding the 937 million francs analysts had forecast.

The profits led to what several analysts identified as a rare bright spot -- a 0.75 franc per share dividend in two separate payouts, three times more than the 2013 payout of 0.25 francs a share.


The logo of Swiss bank UBS is seen on a building in Zurich November 12, 2014.   REUTERS/Arnd Wiegmann