ZURICH: Swiss banking giant UBS said Friday its net profit plunged 46 per cent in 2016 under the weight of restructuring costs and a downturn for its investment bank in difficult market conditions.

Switzerland’s largest bank reported its net profits for the year were 3.3 billion Swiss francs (3.09 billion euros, $3.3 billion).

The results included 693 million Swiss francs in provisions for potential legal costs and 1.4 billion in restructuring charges.

“Despite a very challenging market environment in 2016, we achieved solid results..,” chief executive Sergio Ermotti said in a statement.

“While we saw persistent client risk aversion and substantial cross-border outflows, we generated over CHF 40 billion of net new money in our wealth management businesses,” he added.

The bank said it had been able to reduce costs by 1.6 billion Swiss francs, nearly 50 per cent more than in the previous year, and was on track to achieve its target of 2.1 billion by the end of this year.

Ultra-low and negative interest rates in many nations have been hitting the ability of banks to earn money from traditional lending activities, while regulatory measures to improve their ability to absorb losses mean they have been forced to put more money aside.

Swiss banks have also been grappling with the impact of tighter regulation and the end of banking secrecy in Switzerland.

Despite continued macroeconomic uncertainty, geopolitical tensions and divisive politics, UBS said it had “begun to observe improved investor confidence, primarily in the US” and which could lead to better performance in its wealth management unit.

US stocks have rallied since the November election of Donald Trump as US president on hopes he will implement campaign promises to step up infrastructure spending, with Wall Street’s blue-chip Dow index closing above 20,000 points for the first time on Wednesday.

It added that low and negative interest rates in Europe “may be offset by the effect of higher US dollar interest rates”.

The Federal Reserve has now raised interest rates twice since taking them to practically zero to overcome the effects of the global financial and economic crisis, and expect to raise rates three times this year.