10/29/2013 03:12 EDT | Updated 01/23/2014 06:58 EST

UBS posts 3Q profit turnaround but regulatory challenges loom

GENEVA - Swiss banking giant UBS AG is reporting a third-quarter net profit of 577 million Swiss francs ($644 million), reversing its $2.1 billion francs loss in the comparable period a year ago.

But Switzerland's largest bank says it may not be able to reach its profit goals for 2015 because of Swiss regulatory demands that it hold more capital for risks from litigation.

UBS said in a statement Tuesday it had third-quarter charges of 586 million francs for litigation, regulatory and other related matters, and sees more regulatory challenges ahead.

The Zurich-based bank said "the operating environment in the third quarter remained challenging," but its declining operating income was partly offset by lower operating expenses and staff cuts, reducing the number of employees to 60,635, down from 62,628 a year earlier.