UBS expects return to profit in third quarter

"Despite recent extremely volatile market conditions, UBS currently expects to report a small profit for the third quarter, based on preliminary estimates," the bank said.

Switzerland's largest bank has been one of Europe's hardest hit by the U.S. property market meltdown, so the news was cheered by analysts and investors, who drove the bank's shares up 8.8 percent to 21.43 Swiss francs ($18.88) by the close of Zurich trading. In U.S. trading, shares were up 6 percent at $20.05 by midafternoon.

UBS also expects to report an overall net profit in the coming year, Chairman Peter Kurer said in a speech published ahead of Thursday's shareholders meeting in Basel.

The bank also said it has further reduced its exposure to the subprime-related investments that caused it to make massive writedowns, starting a year ago.

Shareholders at Thursday's meeting approved four new members for the board of directors: William G. Parrett, retired chief executive of Deloitte Touche Tohmatsu; Bruno Gehrig, chairman of Swiss Life Holding and vice chairman of Roche Holding AG; Rainer-Marc Frey, who has held senior positions in a number of investment management companies; and Sally Bott, group human resources director of BP PLC.

The new board will oversee a shift away from UBS's integrated business model, which has been criticized for a lack of risk management. Instead, the bank will separate its businesses into three divisions--wealth management for the rich, asset management and investment banking.

Shareholders also voted to abolish the powers of the chairman's office, which has been blamed for failing to oversee risky investment strategies.

Kurer said job cuts and cost reductions would be part of the adjustment process, but declined to provide any details. Chief executive Marcel Rohner declined to answer journalists' questions about job losses, saying the bank would make a statement "when we have something to say."

The bank, which has some 81,400 employees worldwide, has already reduced its global headcount by 2,400 since announcing in May that it would slash 5,500 posts by the end of next year.