UBS costs up

UBS has reported that costs incurred during expansion of its investment banking business have eliminated profits generated in the fourth quarter of 2006.

The Swiss banking group insisted that, despite soaring expansion costs, 2007 had started in a "positive" way and it raised shareholder dividends.

UBS witnessed a 47 per cent slump in net income during the fourth quarter, though underlying profit and revenue were exceeded expectations, fuelled by strong growth in its investment banking and wealth management businesses. Last year's results were affected by income from the sale of three private banks and a hedge fund unit.

Fourth quarter net profit for the fourth quarter of last year was up by 19 per cent year-on-year to 3.15 billion francs, with financial business rising 18 per cent to just over three billion francs.

The bank has unveiled a new three-year share buyback programme and is predicting continuing growth in emerging markets.

Investors are becoming increasingly concerned about rising costs at UBS and shares in the company dipped by 1.1 per cent in early trading, despite a 22 per cent rise in operating income over the quarter to 5.6 billion francs.

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