General and administrative expenses decreased to 104 million francs in first quarter 2008 due to lower litigation expenses, lower professional fees and lower travel and entertainment expenses.

Investment Bank

The Investment Bank’s pre-tax profit fell from 1.53 billion francs in the first quarter 2007 to a loss of 18.2 billion, while total operating income also slumped to a loss of 14.81 billion francs from a total operating income gain of 6.23 billion in first quarter 2007.

Investment banking revenues slipped 58% to 557 million francs in first quarter 2008 from a year ago on contraction in global fee volume.

Advisory revenues fell by 14% in tandem with the industry trend of a decline in mandated deals. However capital markets revenues fell 72% as market volumes fell in all regions.

Equity capital markets revenues from the FICC area fell by 80% and capital market revenues slumped by 61%.

Other fee income and risk management decreased to a negative 98 million francs.

Sales and trading revenue in first quarter 2008 was recorded a loss of 17.16 million francs on falling revenue in FICC.

Also the equities business revenues fell 32% from a year earlier to 1.9 billion francs in the first three months of 2008, on volatile trading conditions and limited market liquidity.

Conversely cash equities realised increased revenues with record commissions.

In the segment prime brokerage revenues grew markedly in the quarter as client-financing revenues increased. Exchange-traded derivatives revenues also jumped to record levels.

Proprietary trading revenues declined considerably across all regions, while equity-linked revenues continued to suffer from reduced liquidity levels.

Fixed income, currencies and commodities revenues recorded a loss of 19.11 billion francs in first quarter 2008 from a gain of 2.05 billion francs a year ago.

UBS marked down its holdings in US student loan asset-backed securities and certain leveraged finance commitments. Further credit valuation adjustments were made on protection bought from monoline insurers.

The financial institution also reduced its holding of European asset-backed positions and, as a result, experienced losses from disposals and the negotiated termination of deals.

Total operating expenses in first quarter 2008 fell 27% to 3.41 billion francs from the comparable period a year ago.

Outlook

UBS forecasts that difficult conditions will persist in the industry on the health of the global economy, deleveraging by institutional and private investors, slower wealth creation and lower trading and capital market activity.

The lender expects to employ around 19,000 people at the end of 2008 and this will require a reduction of up to 2,600, of which the large majority will be redundancies.

It is estimated that assuming no changes take place in the market conditions, “UBS will have about 5,500 fewer employees than today”.