Investors have piled into UBS since its revamp, enticed by its policy of returning at least half its profit to shareholders. While Ermotti reaffirmed the practice and said UBS aims to increase its dividend, he noted that the bank is also building capital to comply with new Swiss rules and support growth.

“No bank is aggressively distributing capital at the moment,” said Joost de Graaf, who helps manage about 3 billion euros ($3.4 billion), including UBS shares, at Kempen Capital Management in Amsterdam. “Eighteen months or a year ago, everybody was much more optimistic.”

When Ermotti took over in late 2011, UBS was reeling from $2.3 billion in losses by rogue trader Kweku Adoboli - this after a 2008 bailout during the subprime mortgage meltdown. In late 2012, the CEO announced an overhaul that culminated in a decision to eliminate 10,000 jobs and dismantle parts of the investment bank that the Swiss lender had spent more than a decade building.

“No profit is worth more than the bank’s reputation,” he said at the time. Since then, assets under management worldwide have swelled to 2.2 trillion francs from 1.76 trillion francs at the end of the 2012, making UBS the world’s largest wealth manager.

Credit Suisse, Deutsche Bank

As investors applauded, other banks took note. Credit Suisse and Deutsche Bank last year stepped up efforts to pare back their investment banking arms. Besides stable earnings, they are seeking relief from post-crisis regulations requiring more capital to backstop debt-trading and other riskier activities.

Even after markets settle down, record-low interest rates will continue to squeeze profit. UBS forfeited about 10 billion Swiss francs in client assets last year in a year-old drive to discourage cash deposits.

A crackdown on tax evasion has also prompted outflows as customers in countries including France and Italy come clean on undeclared Swiss funds. The analysts surveyed by UBS estimated its wealth management division will take in a net 3.8 billion Swiss francs in the first quarter, a third of inflows a year ago.

“Net new money has also been under pressure from tax regularization and margins from low interest rates,” said Jon Peace, a London-based analyst at Nomura who has a neutral rating on UBS. “Focus on costs is important in this environment especially given a strong Swiss franc.”

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