UBS warns of tough times ahead

INVESTMENT banking giant UBS delivered a stark message to the City today, saying that overall trading conditions would be subdued for the rest of the year despite delivering forecast busting second-quarter figures.

The bleak warning from the world's sixth largest bank with a massive investment banking hub in London will dampen hopes of any big pick-up in City financial recruitment after an exceptionally strong first quarter.

Chief executive Peter Wuffli said: 'While investor sentiment has recovered from the very low levels of last year, it still remains subdued. Combined with directionless markets and the expectation of rising interest rates, this may continue to dampen levels of market activity.'

Overall net profits of Swfr1.97bn (£854m) were up 24% on last year after goodwill and stripping out one off sales gains, ahead of consensus analysts' forecasts of Swfr

1.89bn. It was the bank's second-best quarter in four years. However, group profits between April and June fell 19% against the first quarter.

Net income from core trading activities including fixed income, equities and foreign exchange, was down 22% quarter on quarter to Swfr2.997bn.

Wuffli said: 'Such favourable conditions can't last - opportunities have to be captured as they arise. However, UBS's diversified revenue mix helps us to perform strongly across varying market conditions.'