UPDATE 5-UBS targets end to client withdrawals by year end

* UBS posts 2.2 bln Sfr Q1 net profit, beats f’cast 2 bln

* CEO says hopes to turn around client outflows by year end

* Confirms Q1 WM & AM outflows, says margins improved

* 2.8 bln Sfr pre-tax profit vs 2.5 bln Sfr pre-announcement

* UBS shares down 5 percent, in line with index

(Adds quotes from CEO, analyst, fund manager, updates shares)

By Lisa Jucca

ZURICH, May 4 (BestGrowthStock) – Swiss bank UBS’ (UBSN.VX: )(UBS.N: )
top managers reported a “sea change” in client confidence that
should stem outflows of client cash by the end of this year.

In the most upbeat progress report to date of his recovery
plan for the world’s no. 2 wealth manager, Chief Executive
Oswald Gruebel told investors that asset withdrawals would stay
at a “relatively moderate level” in the near term.

Gruebel told Swiss television that a turnaround in client
flows, the bank’s biggest headache, could happen “by the end of
this year”.

Chief Financial Officer John Cryan went further.

“There is… a bit of a sea change in the perception of
UBS,” he said. “Now that we are back at reporting some profit,
clients tend to have more confidence in us, and there are
definitely signs that this is the case.”

The outlook came as the bank posted forecast-beating
quarterly results which analysts said could boost customer
confidence and reverse a flight by its own demoralised wealth

“I think this (stemming of outflows) is plausible given the
clear quarterly improvement and as UBS becomes more solidly
profitable,” said KWB analyst Matthew Clark.

Gruebel, hired in February 2009 to restore the bank to its
former glory, had previously said the bleeding of rich client
money would last for “quarters.”

Strong fixed-income revenues and higher wealth management
margins helped Switzerland’s No. 1 bank post a first-quarter net
profit of 2.2 billion Swiss francs ($2 billion), beating a
forecast of 2 billion francs.

UBS had pre-announced pre-tax profit and client withdrawals
in April, pointing to a drop in outflows to 18 billion francs,
one third the total in the previous quarter. [ID:nLDE63S2GN]

UBS, badly hit in the subprime crisis, outpaced for the
second quarter in a row Credit Suisse (CSGN.VX: ) (CS.N: ), which
posted net profit of 2 billion francs and disappointed investors
for not matching U.S. peers’ results. [ID:nLDE63K1ZH]

UBS shares, which rallied after the pre-announced results in
April, rose 1 percent at the open but gradually lost ground with
the sector. UBS was down 5.00 percent in late trade, in line
with a falling Europe’s Stoxx 600 banking index (.SX7P: ).


Graphic on UBS asset trends click on:


Reuters Breakingviews column on [ID:nLDE63S2G7]


Gruebel said UBS was on track to meet its medium-term goals
of annual pre-tax profit of 15 billion francs and said
improvement in wealth and asset management would be gradual.

UBS had to ask for government cash to survive the crisis and
was also embroiled in a bitter U.S. tax fraud probe, prompting
rich clients to pull out billions of francs.

Persistent pressure by large neighbours like Germany and
Italy on Switzerland’s weakened bank secrecy laws is also
straining UBS’s massive offshore wealth management business.

Cryan said UBS was winning client assets in high-growth Asia
among the super-rich and in some important domestic European
markets. But its offshore business was still struggling.

Wealth Management Americas, a unit which Gruebel hopes to
revive thanks to the appointment last year of ex-Merril Lynch
veteran Bob McCann, showed pre-tax profit retreating to near
flat after an encouraging improvement in the fourth quarter.

“The outlook on client flows is more upbeat than what they
have been saying before,” said analyst Dirk Hoffmann-Becking at
Sanford C. Bernstein. “But the continued decline in relationship
managers does not reassure me.”

Hundreds of client advisors have been leaving UBS in the
past two years, taking clients with them. CFO Cryan said he
hoped this trend could be reversed towards the end of 2010.

“Winning back trust takes time. One needs to be patient,”
said Sascha Kever, a fund manager at Banca del Sempione.

UBS had already indicated that the investment banking
performance was driven by a strong rebound at its fixed income,
currency and commodities. The credit business, which Cryan said
had been virtually non-existent, was especially strong, he said.

The unit’s revenues of 2.2 billion francs were four times
the previous quarter as UBS won market share.[ID:nLDE62T0IF]

The CFO said market conditions for the investment banking
were continuing into the second quarter. He also said UBS had
virtually no exposure to Greece and Portugal’s sovereign debt
and only a small exposure to that of Spain.

Stock Market Today

(Editing by David Cowell and Andrew Callus)
($1=1.081 Swiss francs)

UPDATE 5-UBS targets end to client withdrawals by year end