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UBS and ABN warn of difficult days ahead

Chris Hughes Financial Editor
Thursday 14 February 2002 20:00 EST
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UBS, Switzerland's largest bank, and ABN Amro, its Dutch counterpart, yesterday warned that their performance this year could be as poor as in 2001, despite posting annual results slightly better than expected.

UBS, the owner of the London-based investment bank UBS Warburg, suffered a 24 per cent year-on-year fall in net profits in the fourth quarter, to 1.11bn Swiss francs (£452m).

UBS Warburg grew earnings 4 per cent on the third quarter, mainly by slashing bonus payments to staff. The investment bank's salary bill fell 21 per cent on the previous quarter, to its lowest in almost three years.

UBS said there was only limited potential to increase its profits this year, as economic recovery appeared unlikely until later this year. Provisions against bad debts were only Sfr155m, down from the third quarter's Sfr171m. Peter Wuffli, the company's president, said UBS had not been hit by recent corporate failures such as Enron and Global Crossing.

ABN Amro said its performance would weaken during the first half of this year, after net income fell 21 per cent to €533m (£325m) in the fourth quarter after a fivefold increase in bad debt provisions.

The Dutch bank, which was among institutions hit by the bankruptcy of Swissair as well as Enron, said bad debt provisions would rise while revenues would hold flat during 2002.

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