Swiss bank UBS issued a dismal outlook for 2012, noting that the tough conditions experienced in 2011 would prevail and continue to impact the traditional improvements usually seen in first quarter activity levels and trading volumes.

Most notably, the challenging market conditions are expected to weigh heavily on its first quarter results in investment banking.

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The bank’s fourth quarter profit slumped to 393 million Swiss francs ($426m), reflecting the severe pressures on earnings seen at some U.S. rivals and at Deutsche Bank in Europe. Fourth-quarter earnings in investment banking turned negative as well, with a 256 million Swiss francs pre-tax loss, compared with a profit before tax of 100 million Swiss francs the previous year.

The bank warned that the possibility for further “tactical” cost cutting was limited, and that future efforts will focus on “strategic changes in the firm’s organization design and structures.”

“We continue to strengthen our capital, putting us ahead as the industry as a whole builds towards new capital requirements,” said Sergio Ermotti, CEO of the bank.

     Read more about UBS’ 2011 results.

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