Bloomberg News

ZURICH - UBS AG, Europe's fourth-biggest banking company, said its first-quarter profit slumped 29% as fees from trading and stock underwriting declined and the company took a loss on private-equity investments.

Net income fell to $900 million in the quarter, or $1.90 a share, from $1.25 billion, or $2.91 a share, the year earlier. UBS said it expects full-year profit to lag last year's.

The decline was steeper than at rival companies like Citigroup Inc., BNP Paribas SA, or ABN Amro Holding NV. UBS said pretax profit at its UBS Warburg securities unit fell 47%, including a $227 million charge for the purchase of New York-based PaineWebber Inc.

Investment banking is "an area of concern going forward,'' said Susan Smith, a fund manager at Prudential PLC's M&G Group, which owns UBS shares. "With trading performance quite quiet, fees will obviously take a hit. Overall, though, the result was pretty good for a poor quarter.''

Zurich-based UBS, which is headed by Luqman Arnold, said clients invested more than $12 billion with the company in the first quarter. About half the inflows went into the company's retail and private banking units.

The losses in private equity were tied to investments in the United States and Europe, Mr. Arnold said in an interview. He was not more specific.

"We expect UBS Capital to be profitable for the next nine months,'' he said of the private-equity unit.

Not all analysts were gloomy on the outlook for UBS.

UBS's profit is "below forecast, but the quality is good,'' excluding the charge and the private-equity losses, said Christian Stark, an analyst at Credit Agricole Indosuez Chevreuxin Zurich. He reiterated an "outperform'' rating for UBS.

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