UBS Global Wealth Management and Business Banking pre-tax profits fell 12 per cent to SFr1,837 million in third quarter 2006, from SFr2,094 ...

UBS Global Wealth Management and Business Banking pre-tax profits fell 12 per cent to SFr1,837 million in third quarter 2006, from SFr2,094 million in second quarter of the year, the Swiss bank has announced. Pre-tax profit for Wealth Management International & Switzerland, at SF1,226 million, was down 4 per cent from the record second quarter result. Total operating income fell 4 per cent, as non-recurring income declined on significantly lower client activity levels. Recurring income rose, benefiting from the higher asset base. Operating expenses were down 4 per cent from second quarter 2006. Personnel expenses fell, mainly reflecting lower performance-related compensation, which declined with revenues. General and administrative expenses were up from second quarter on higher marketing and public relations expenses. Income in the European wealth management business fell 1 per cent to SFr250 million in third quarter 2006. The business was profitable, though, for the third consecutive quarter. The net new money inflow in the first three quarters of 2006 totaled SFr16.4 billion, reflecting an annualised net new money growth rate of 19 per cent of the underlying asset base at year-end 2005, with positive contributions from all target markets. In the third quarter, Wealth Management US reported pre-tax profit of SFr43 million, down 76 per cent compared with second quarter 2006. The decline mainly reflected the New Jersey office lease provision and Piper Jaffray integration costs. Total operating income in third quarter 2006 was up 3 per cent from second quarter 2006. In US dollar terms, operating income rose 2 per cent from the second quarter. A record recurring income result offset the decline in commissions, reflecting lower client trading activity. The wealth management units recorded asset inflows of SFr26.8 billion this quarter, down from SFr31.1 billion in third quarter 2005. Inflows in the international and Swiss wealth management business rose to SFr 23.4 billion, driven by inflows from Asia and the Americas. Within this, net new money in European Wealth Management was SFr2.7 billion in third quarter 2006, down from SFr 5.6 billion in third quarter 2005, as asset gathering slowed in July and August. Strong inflows in Italy and the UK were partly offset by small outflows in other European markets. Inflows into the domestic wealth management business in the US were SFr3.4 billion in third quarter, down sharply from the record of SFr9.9 billion a year earlier. Global Asset Management inflows fell to SFr15.5 billion, down from SFr19.9 billion a year earlier. Of the total, SFr 8.8 billion was into money market funds, which tend to experience larger quarterly swings than other asset classes. Additionally, inflows were seen in alternative and quantitative investments, fixed income, real estate, and multi-asset mandates. The overall inflow of UBS net new money in the first nine months of 2006 totaled SFr126.2 billion, equivalent to 5 per cent of the underlying asset base at year-end 2005. Invested assets totaled SFr2,879 billion at the end of September, up 8 per cent from 30 June 2006, benefiting from rising financial markets, the inclusion of the Piper Jaffray branch network and the rise in the US dollar against the Swiss franc.