UBS just warned profits are going to be killed

Swiss banking giant UBS delivered a double round of news this morning - it just appointed a new Chief Financial Officer and profits are going to be probably terrible for the next few years.

UBS confirmed in its third quarter results statement that it didn't actually too badly in over the last three months but the future was more troubling.

Its third quarter profits were almost three times higher than what they were a year earlier at Swiss franc 1.068 billion (£702 million, $1.083 billion). Pre-tax profits came in a little higher than analysts expected at Swiss franc 749 million (£492 million, $760 million).

However, this was mainly aided by a huge Swiss franc 1.295 billion (£851 million, $1.31 billion) tax gain and offset on the other side of the balance sheet by Swiss franc 592 million (£389 million, $600 million) worth of net charges for provisions for litigation, regulatory and similar matters. It also paid Swiss franc 298 million (£196 million, $302 million) in net restructuring charges.

But the most troubling thing about UBS' statement this morning is the fact it thinks profitability will be strangled over the next few years due to challenging economic conditions and tighter regulations (emphasis ours):

Many of the underlying macroeconomic challenges and geopolitical issues that we have highlighted in previous quarters remain and are unlikely to be resolved in the foreseeable future.

In addition, recently proposed changes to the too big to fail regulatory framework in Switzerland will cause substantial ongoing interest costs for the firm.

We also continue to see headwinds from interest rates which have not increased in line with market expectations, negative market performance in certain asset classes and the weak performance of the euro versus the Swiss franc during the year. We are executing the measures already announced to mitigate these effects as we progress towards our targeted return on tangible equity in the short to medium term.

Our strategy has proven successful in a variety of market conditions. We remain committed to our strategy and its disciplined execution in order to ensure the firm's long-term success and deliver sustainable returns for our shareholders.

Meanwhile, UBS said Kirt Gardner will step into the role of CFO as of January 1, 2016. Gardner was the CFO of the wealth management division. Gardner joined UBS in 2013 after 10 years at Citi. He takes over from Tom Naratil who will now become president of the UBS' Americas unit.