UBS AG, Switzerland's biggest bank, reported the highest quarterly profit in almost three years after a rebound at the debt trading unit.

UBS said pretax profit was at least 2.5 billion Swiss francs ($2.35 billion) in the first quarter, the highest level since the second quarter of 2007. The Zurich company will release full results on May 4.

Chief Executive Oswald Gruebel, who joined UBS in February 2009, is relying on a recovery in fixed-income trading to help the bank reach an annual pretax profit of 15 billion francs in the next three to five years.

"Gruebel's first point of action was to rebuild the debt business, and that's paying off," said Florian Esterer, who helps manage about $47 billion, including UBS shares, at Swisscanto Asset Management in Zurich. "The investment bank is making good progress, while the issue of rebuilding the private-banking franchise still remains."

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