ZURICH, Switzerland (AFP) – Troubled Swiss bank UBS said Tuesday that it had returned a 1.20 billion Swiss franc profit (1.12 billion dollars, 821 million euros) in the final quarter of 2009, shrugging off more than a year of quarterly losses.

The turnaround in the final three months of the year helped the bank to cut its annual net loss to 2.73 billion francs last year, compared with 21.29 billion francs at the height of the financial crisis in 2008, UBS said in a statement.

However, the Swiss banking flagship, which also faced bruising litigation over client tax fraud in the United States, indicated that it was still losing money from unsettled clients and that it expected outflows to continue "in the immediate future".

Net new money outflows totalled 56.2 billion Swiss francs from wealth and asset management divisions in the fourth quarter, despite an increase in assets from Asia.

In a letter to shareholders, UBS's fresh management team termed that trend "disappointing," despite the sharp improvement in the bank's overall profitability.

"We entered 2009 at the height of the crisis. By the end of 2009 UBS has returned to profitability, delivering on its priorities," chief executive Oswald Gruebel said.

"We expect that our return to profitability will increase clients' confidence in UBS and restore our reputation," he added.

UBS said that addressing the causes of net new money outflows "remains a main priority."

The fourth quarter result outstripped a poll of analysts' expectations by Swiss financial news agency AWP, which had expected a net profit of 374 million Swiss francs.

The bank, which was one of the hardest hit in the global financial crisis but has struggled to recover compared to some of its US and British rivals, said it had bolstered its capital reserves through 2009.

Its Tier 1 capital ratio, a measure of the solidity of reserves which were sorely tested in the crisis, reached 15.4 percent by the end of 2009, compared with 11.0 percent a year earlier.

UBS said it expected to see further effects of its rebuilding over the coming quarters, with an improvement in its crisis-hit investment bank performance as a whole in 2010.

"The investment bank's results always depend heavily on market vitality and client activity levels have been high in January," the statement said.

"UBS is confident that the measures it is taking to address the causes of client outflows will be effective, but in the immediate future still expects to report outflows with some pressure on margins."

Source: Swiss bank UBS ...