The Swiss bank UBS remains bogged down by unsettled regulatory investigations, even as it reported healthier third-quarter profit on Tuesday.
The company said its profit for the quarter that ended Sept. 30 increased 32 percent, to 762 million Swiss francs ($804 million), up from 577 million francs in the period a year earlier. The strong results came even as the bank took a nearly $2 billion charge for legal costs.
Still, the firm faces myriad legal issues. The bank said it did not expect the regulatory environment to improve soon and expected legal charges to remain at “elevated levels” through 2014, adding to analysts’ concerns that banks would be confronted by such issues for some time.
UBS recently said that certain authorities had started settlement talks in a foreign exchange investigation that could lead to “material” fines.
The bank also said that as part of the discussions, the Justice Department and UBS had agreed in principle to extend a so-called nonprosecution agreement that was struck after the bank admitted in 2012 that it manipulated interest rates. The agreement, which requires the bank to refrain from committing crimes and to cooperate with any investigations, was set to end Dec. 18, but will be extended one year.
The Financial Conduct Authority of Britain, the Justice Department and regulators from Switzerland and Hong Kong are all looking into the manipulation of foreign currency markets. UBS is one of a handful of banks expected to take part in a global settlement with the Financial Conduct Authority in the coming weeks related to the issue.
UBS said that the 1.8 billion francs it set aside for future litigation and regulatory costs brought its total legal provisions since 2012 to about 3.5 billion francs. But the bank in the third quarter also recorded a net tax benefit of 1.3 billion francs related to the revaluation of deferred tax assets.
Its quarterly net profit beat the 737 million francs that analysts surveyed by Reuters had forecast. That news helped send the stock up nearly 6 percent in trading in Switzerland.
Sergio P. Ermotti, the bank’s chief executive, said that he was pleased with the performance and that the bank was facing its regulatory issues head on. UBS has been focused on cutting costs in its investment bank and building its wealth management business.
“Three years since introducing our strategy, the business is far stronger, its earnings power is much greater, and our absolute and relative capital position speaks for itself,” Mr. Ermotti said in a statement. “That gives us every confidence in our ability to deliver on our capital returns policy.”
The firm said that operating income rose to 6.9 billion francs, from 6.3 billion francs in the third quarter of 2013, while operating expenses increased to 7.4 billion francs, from 5.9 billion francs.
The investment bank, which the company has sought to shrink, posted a loss of 1.3 billion francs, reflecting provisions for litigation. That compares with a profit of 251 million francs in the period a year earlier.
UBS projected restructuring costs of 700 million francs for 2014 and 1.4 billion francs for 2015.
The bank’s common equity Tier 1 capital, a measure of its ability to absorb losses, rose to 13.7 percent at the end of the third quarter from 11.9 percent at the end of the third quarter of 2013.
That measure is used to determine the size of a bank’s capital buffer. European banks are required to have a minimum common equity Tier 1 capital of 4 percent under the so-called Basel III regulations. Larger banks, however, are required to maintain a much higher minimum capital level.
UBS continues to face pressures from other regulators. In a settlement announcement last week, the European Commission said UBS, Royal Bank of Scotland, JPMorgan Chase and Credit Suisse had operated a cartel related to Swiss franc interest-rate derivatives. The commission imposed fines totaling 32.4 million euros, or about $41.1 million. UBS was ordered to pay the largest fine in that case, at €12.7 million.
An earlier version of this article misstated when the bank’s common equity Tier 1 capital reached 13.7 percent. It was at the end of the third quarter, not the second quarter.