Switzerland's largest bank, UBS, said it had suffered a loss of 830 million Swiss francs (€495m) in the third quarter after its results were hit by the crisis in the US home loans market.
The loss compared with a net profit of 2.20 billion Swiss francs during the same time last year. The results were in line with the Swiss bank's warning on October 1 that it was expecting a pre-tax operating loss of 600 million to 800 million Swiss francs.
UBS said in a statement today that the deterioration in the US subprime mortgage market, especially in August, was 'so severe and sudden that markets turned illiquid.'
Trading income swung to a 3.55 billion Swiss franc loss, compared to 2.4 billion Swiss francs in revenues during the third quarter of 2006, as the bank's investment banking division was sapped by writedowns related to US mortgage trading.
UBS's fixed income and commodities trading plunged to a negative outflow of 4.2 billion Swiss francs.
'Our third quarter result was unquestionably disappointing,' said UBS's new chief executive Marcel Rohner. Rohner underlined recent management and structural changes made by the bank.
'We are also taking steps to strengthen our market risk management and control framework,' he added.
UBS said it was expecting a return to profitability in the fourth quarter despite 'market uncertainties'.
It cautioned that fixed income trading in the US remained exposed to any further deterioration in the US housing and mortgage markets, as well as ratings downgrades for mortgage-related securities.
