(MENAFN- AFP) Swiss banking giant UBS reported Tuesday a slight drop in its first quarter net profit, but nonetheless easily beat market expectations due to an influx of fresh cash.During the first three months of the year, the bank saw its net profit slide 4.5 percent compared to a year ago to 988 million Swiss francs (804 million euros, $1.052 billion).The result was meanwhile far higher than the expectations of analysts polled by Swiss agency AWP, who had predicted on average a net profit of 510 million Swiss francs for the quarter.The result was also a clear improvement on the previous quarter, when Switzerland's largest bank posted a net loss of 1.9 billion Swiss francs.UBS said its better-than-expected performance largely rested on its wealth management business, which posted a 664-million Swiss franc profit before tax, as well as an influx of fresh capital.During the first three months of the year, UBS saw net new money inflows of 15 billion Swiss francs, representing "the highest quarterly net inflows since 2007," the bank said in its earnings statement, and three billion more than investors had anticipated."While it is too early to declare victory, we have shown our business model works in practice," UBS chief executive Sergio Ermotti said in the statement."Although markets improved, we still saw challenges, so I am very pleased with our performance," he added.UBS's investment bank, which is in the midst of a massive restructuring after being the source of numerous scandals that burdened the bank with catastrophic losses during the 2008 subprime crisis, managed to rake in 977 million Swiss francs before tax.In the fourth quarter of 2012, that unit suffered a 243-million-franc loss.UBS also said it had brought down its expenses in the investment bank division by two percent during the first quarter.Last week, UBS's main competitor Credit Suisse, also surprised analysts with upbeat first quarter results and an announcement that it had cut costs by 13 percent during the first quarter.UBS was meanwhile cautious with its outlook."While market participants showed renewed interest early in the first quarter, events in Europe served as a reminder that many of the underlying challenges related to structural issues remain unsolved," it warned.The bank pointed to "the absence of further sustained and credible improvements to the eurozone sovereign debt situation."This along with problems in the European banking system and the uncertain outlook for growth in the global economy, as well as "unresolved US fiscal issues" was expected to continue to impact client confidence in the second quarter, it said.Following the news, UBS saw its stock price shoot up 5.0 percent to 16.50 Swiss francs a share in mid-morning trading, as Switzerland's main trading index was up just 0.07 percent.
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