UBS reported that it earned 9.8 billion Swiss francs ($8.64 billion) from continuing operations in 2005, 2.6 billion of that in the fourth quarter. This is up 28% from 2004.

Total 2005 profit was CHF14 billion, including a CHF3.7 billion net gain from the sale of its private banks and global asset management (GAM) divisions. “As in 2004, we have achieved another record level of profit. Although markets clearly helped us last year, we believe the result also reflects the sustainable earnings power of UBS, based on our client-centric strategy of business focus and growth,” said Peter Wuffli, UBS’ chief executive officer.

“All our businesses put in a stronger performance in 2005. We saw really constructive developments with revenues growing much faster than costs,” said Clive Standish, chief financial officer.

The wealth and asset management businesses had excellent years, UBS said. Strong client inflows, along with rising markets, drove total invested assets up 25% on the year and, in turn, strengthened asset-based fees.

Revenues from advising corporate and institutional clients also rose to a record high. This reflected strong capital market activity in 2005. Buoyant market opportunities, particularly in the second half of the year, pushed trading revenues up, it added.

Profits were also helped by another year of credit loss recoveries. “At the same time, we continued to invest in new business opportunities while keeping the costs of running the firm under control. Overall, expenses increased less than revenues,” it added.

The firm said that early indications for 2006 show that business has started on a positive note. Deal pipelines are promising, investors are upbeat and macroeconomic indicators are encouraging, it noted. The fundamentals driving the growth of the financial industry remain intact for the time being.

“We are therefore optimistic about the outlook for UBS — for 2006 and beyond. We now have a strong competitive position in the areas we chose to invest in – among them European wealth management, alternative investments, investment banking, prime brokerage and in Asia Pacific across business lines. These areas are becoming major revenue contributors, allowing us to invest in other opportunities that fit our strategy. This will help us sustain growth as well as our attractiveness to clients, employees and shareholders well into the future,” said Wuffli.