In 3Q 08, UBS reported a y-o-y decrease in its Net Interest Income (NII), reflecting lower interest and dividend income on the trading portfolio and higher interest on financial liabilities. Coupled with lower net fees and commissions and trading losses, the group’s top-line fell y-o-y. However, due to a fall in operating expenses, the bank reported positive net income for the quarter (compared to net losses reported in 3Q 07 and 2Q 08). We anticipate a net loss overall for FY 2008, however, following further writedowns against the bank’s subprime exposure. Furthermore, as a deep global recession seems imminent in 2009, we anticipate deterioration in asset quality, which should drive up credit losses. Considering these factors, as well as a likely fall in demand for credit over the next 2 years, we maintain a cautious fundamental outlook.

Read the full report free of charge with free to view access to institutional-quality research on 400 companies and over 700 stocks at www.researchoracle.com

Disclaimer Independent International Investment Research PLC supplies this research via Pronet Analytics.com Ltd. (‘Pronet’). Pronet is Regulated and Authorized by the Financial Services Authority (FSA) and registered with the Securities Exchange Commission (SEC). You are reminded that investment advice provided by Pronet is for your general information and use and is not intended to address your particular requirements. Any advice or recommendations contained in this report may not be suitable for you and are not intended to be relied upon by you in the making (or refraining from making) any specific investment or other decision. Such decisions should only be made on the basis of independent advice from an appropriately qualified adviser. Pronet Analytics.com Ltd. and Independent Financial Markets Research Ltd. are subsidiaries of Independent International Investment Research PLC (the ‘Group’). Research analysts working for the Group are subject to stringent confidentiality and security policies and are located in secure-access premises which may be in the proximity of professionals conducting similar work for other firms. The Group is not nor has been nor will be engaged in investment banking and does not make markets in any of the securities covered in this report or have any investment banking relationship with the firm whose security is covered in this report. No employee or contractor of the Group is permitted to personally buy or sell stock in the company covered in this report, and neither the analysts responsible for this report nor any related household members are officers, directors, or advisory board members of any covered company. No one at a covered company is on the Board of Directors of the Group or any of its affiliates. This report is not a solicitation to buy or sell any security and past performance is no guarantee of future results. Copyright © 2008 Independent International Investment Research PLC. All rights reserved.