07/31/2012 02:00 EDT | Updated 09/29/2012 05:12 EDT

Switzerland's largest bank UBS posts 58 per cent second-quarter net profit drop

GENEVA - Swiss banking giant UBS AG posted second-quarter net profits of 425 million francs ($434.16 million) Tuesday, a sharp plunge from the 1.02 billion Swiss francs ($1.2 billion) it posted in the comparable period a year ago.

Hit by lower trading revenue and fewer commissions and client fees, Switzerland's largest bank said the 58 per cent net profit drop reflects "challenging conditions marked by increased volatility and greater client caution."

The Zurich-based bank emphasized as it has in previous quarters the effect of the eurozone debt crisis and the poor economic outlook globally.

Chief Executive Sergio P. Ermotti told investors in a statement that going forward UBS will continue to focus on "prudent liquidity management, further reducing risk-weighted assets and delivering the best possible service to our clients."

But the bank said it had surpassed requirements to increase its capital cushion and prudently cut costs that should lead to better results by the end of 2013.

UBS is cutting about 3,500 jobs, and had 63,520 staff at the end of June.

Its outlook remained cautious, however, even as it expressed confidence that it would continue to attract net new assets. Its report warned it could face "headwinds for revenue growth, net interest margins and net new money" if it fails to make progress on key issues and third-quarter market activity levels fall as they usually do.