UPDATE 1-PREVIEW-UBS to swing to profit, C.Suisse doing better

* UBS seen achieving “psychologically important” profit

* Credit Suisse trading profits expected lower

* Net New money positive at CS, still negative at UBS

* UBS reports Feb. 9 at 0600 GMT

* Credit Suisse reports Feb. 11 at 0600 GMT

(Adds CEO background)

By Martin de Sa’Pinto and Lisa Jucca

ZURICH, Feb 4 (BestGrowthStock) – UBS (UBSN.VX: ) (UBS.N: ) is seen
reporting its first quarterly profit since Chief Executive
Oswald Gruebel took the helm and put its investment bank in
order, but client outflows could remain at worrying levels.

Credit Suisse (CSGN.VX: ), which has fared better during the
financial crisis, is likely to see a much healthier profit than
its domestic rival, although fourth quarter numbers should be
down on the third quarter as trading profits slow.

“Credit Suisse is in a better shape, they did not have all
these credit losses (that UBS had)… and their revenue
expectations are quite substantial going into 2010,” said
analyst Rainer Skierka at Swiss private bank Sarasin.

“It is clear that they were able to win market share in
several businesses, particularly in investment banking and
private banking where several peers were affected by the crisis
in a much more negative impact,” Skierka said.

The effects of the crisis were accentuated by an ongoing tax
row between Switzerland and the United States, with UBS in the
eye of the storm, and by growing hostility in Europe to Swiss
banking secrecy. [ID:nLDE60P26N] [ID:nLDE6120ET]

But while UBS has struggled to stem losses at its investment
bank and to staunch client outflows from its wealth management
business, Credit Suisse’s has gained ground in both areas.

In the latest quarter, UBS’s hopes of stemming outflows were
hit by an Italian tax amnesty that also affected its domestic
rival.

This has added to the challenges facing UBS Chief Executive
Gruebel, who was appointed in February 2009 as the bank sought
to end a run of crises sparked by heavy subprime losses in its
investment banking unit. [ID:nLQ256541]

Analysts expect overall UBS outflows to continue, but to
fall to 24 billion Swiss francs ($22.6 billion) from 37 billion
in the third quarter. At Credit Suisse flows are seen positive
at 10 billion francs, down slightly from the previous quarter.

Cheuvreux banking analyst Christian Stark said there could
be a negative impact of 5 billion francs at both banks, with UBS
suffering a further 1 billion in outflows from its Pactual sale.

UBS PROFITABLE AGAIN?

Among U.S. peers who have reported, JP Morgan (JPM.N: ) fourth
quarter profit (Read more your timing to make a profit.)s of $3.3 billion disappointed Wall Street, and
Goldman Sachs (GS.N: ) beat estimates by recording negative
compensation, with trading profits down at both banks.
[ID:nN15183524] [ID:nN21197777]

Analysts polled by Reuters expect UBS, Switzerland’s largest
wealth manager, to post a fourth quarter profit (Read more your timing to make a profit.) of 326 million
francs after four consecutive quarters of losses.
[ID:nLDE61225M]

While this is much lower than its rival, it could be an
important landmark for UBS.

“The main focus at UBS will be on overall profitability. A
positive bottom line is psychologically important in terms of
the bank being able to draw clients back,” said Stark.

Credit Suisse is seen posting a 1.3 billion franc profit,
even though investment banking profits are expected to come in
well below the third quarter number. [ID:nLDE6121I2]

“We have seen from U.S. players that the fourth quarter was
a soft trading quarter, so for Credit Suisse we also expect a
drop compared to the third quarter trading performance which was
very strong,” said ZKB analyst Andreas Venditti.

Even so, he said, the bank does have some room to manoeuvre
to preserve profitability. “Several U.S. players have reduced
compensation in the fourth quarter to balance weaker trading,
and Credit Suisse should also have room (to do so).”

For its part, UBS may be compelled to curb compensation,
according to reports that Swiss regulators have cut the bank’s
2009 bonus pool following a 2008 state rescue. [ID:nLDE60G08L]

Investment Analysis

(Editing by Sharon Lindores)
($1=1.060 Swiss Franc)

UPDATE 1-PREVIEW-UBS to swing to profit, C.Suisse doing better