Swiss bank UBS has recorded a loss of almost SFr2 billion ($1.77 billion) for the first quarter, in line with its forecast given in mid-April.
Switzerland's largest bank said the change was due to lower risk positions from businesses now divested or in the process of being divested by the ailing investment bank.
First-quarter performance was negatively affected by a goodwill impairment of SFr631 million from the sale of its Brazilian unit Pactual and costs of SFr184 million.
The net loss compares with a net loss of SFr9.56 billion in the fourth quarter of 2008.
In a statement on Tuesday, the bank said that there had been an improvement in market sentiment during the first quarter with a strong rebound in global stock market indices since early March.
However, it warned that credit markets had improved only partly and trading in complex financial products remained "illiquid".
The markets continue to be unsettled and we remain cautious on the immediate outlook for UBS, the statement said.
UBS, which has been going through a torrid time, reported that net new money outflows totalled SFr23.4 billion for its Wealth Management and Swiss Bank units.
Wealth Management Americas reported net new money inflows of SFr16.2 billion; net new money outflows slowed to SFr7.7 billion in Global Asset Management.
The bank's chief executive, Oswald Grübel, the former Credit Suisse chief who came out of retirement to try to bring UBS back to profit, had warned of the first-quarter loss on April 15.
At the same time, Grübel said the bank was still facing an uncertain future and announced a further 8,700 job cuts including 2,500 in Switzerland. The move was made to speed up restructuring and cut costs.
The loss contrasts with the first-quarter net profit of SFr2 billion made by rival Credit Suisse.
Investment bank woes
UBS has been forced to make more than $50 billion in writedowns as a result of business at its investment bank involving risky and complex United States financial products.
It said it had reduced risks on its balance sheet further in the first quarter, bringing total risk-weighted assets to SFr277.7 billion.
UBS, which turned to the Swiss government for help in October, is also embroiled in a US investigation into possible tax fraud, which is attracting negative headlines there.
In October Bern gave UBS a cash injection of SFr6 billion and the Swiss National Bank agreed to absorb in a special fund some of UBS's toxic assets, which now amount to about SFr40 billion.
The bank's share price fell by 1.5 per cent on Monday, finishing at SFr15.71 at the end of trading in Zurich.
swissinfo with agencies
UBS Q1 figures:
The group made a net loss of SFr1.975 billion.
The red figure stemmed mainly from trading losses made by the group's investment bank.
The result also included a goodwill impairment charge of SFr0.6 billion related to the sale of UBS Pactual in Brazil.
UBS reported net new outflows of SFr23.4 billion in Wealth Management and Swiss Bank.
It added that costs are expected to decrease by SFr3.5 to 4 billion by the end of 2010.
Shareholders' letter – selected points
Our most important task is to rebuild the trust placed in us by you as shareholders, the trust of our clients and the trust of political institutions.
We are continuing to reduce costs because our cost base remains too high for current conditions.
We are reviewing all our areas of business to determine their long-term viability as part of UBS.
Our decision to streamline certain business areas reflects near-term pressure on revenues as well as expected permanent changes to industry profitability.
UBS and the US
On May 14, 2008, former UBS employee Bradley Birkenfeld and a Liechtenstein businessman were charged by the US authorities with helping an American billionaire avoid paying taxes on $200 million of assets deposited in Swiss and Liechtenstein bank accounts.
Birkenfeld turned whistleblower, giving details of UBS private banking practices to US prosecutors.
In July, a Miami court authorised the Internal Revenue Service to issue a summons on UBS demanding the release of confidential information on clients the agency suspected of tax evasion.
In the same month, UBS told a congressional hearing that it would stop offshore banking activities for US clients.
UBS agreed to pay $780 million and name some United States clients to resolve criminal fraud charges against it.
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