UBS posted a 22 percent drop in its quarterly profit, hit by spending for restructuring and the need to set aside funds for past scandals. Growth at its flagship private bank was hard to spot.

The Swiss bank said profit dropped to 738 million Swiss francs in the last three months of the year, compared to 949 in the previous year. The result was hit by provisions for lawsuits and regulatory snafus of 162 million francs, but also 372 million in restructuring expenses.

The bank's outlook lent hope that conditions are improving for private banks.

«We have begun to observe improved investor confidence, primarily in the U.S., which may benefit our wealth management businesses,» UBS said one week after Donald Trump took office. It is the first upbeat outlook statement UBS has given in years, after countless warnings that geopolitical instability is hampering the investment appetite of its wealthy clients.

Massive Outflows

If the outlook was upbeat, the quarter itself was dire.

All UBS' money-management arms – an American brokerage, its wider private bank, and asset management unit – lost client funds. The private bank, the world's largest when measured by assets, as client in emerging markets and Asia pulled more than 7 billion from the bank. New client money couldn't offset that shortfall, leading to outflows of 4.1 billion francs in total.

That unit's quarterly profit before tax rose 7 percent to 368 million, while UBS' investment bank recorded 306 million francs in pre-tax profit. Its business with Swiss retail and corporate clients was the standout: it posted a more than 5 percent rise in profit before tax to 374 million francs.

Spending Cuts

Zurich-based UBS also said central bank fees on major Swiss franc deposits as well as new, as yet unclear capital requirements will take another bite out of its spending. It has cut 1.6 billion francs in costs in 2016, of a 2.1 billion franc target by year-end.

The bank will propose a 0.60 franc-per-share dividend for last year, which is unchanged compared to 2015. Its return on equity was 5.5 percent.

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