UBS reported a larger-than-expected third-quarter pretax loss of 726 million Swiss francs ($624.8 million) today but said it expected to post a group profit in the last quarter.
The Swiss bank, which had to take charges of 4.2 billion francs on subprime-related losses in the third quarter, said its investment bank was unlikely to break even in the final quarter of 2007. UBS also repeated warnings of further write-downs.
"The fourth quarter has started with good results from all businesses, including the investment bank," UBS said. "However the FICC (fixed income, currencies and commodities) business remains exposed to further deterioration in the US housing and mortgage markets," it added.
Ratings downgrades by credit ratings agencies for mortgage-related securities could lead to further write-downs on the bank's securities portfolio, it said.
UBS is the latest high-profile bank to take a big write-down on exposures to investments linked to US mortgage loans to people with patchy credit histories.