The result compared with a loss of 2.7 billion francs a year earlier as Switzerland's flagship banking group symbolically shrugged off three successive years of deep losses with at least five consecutive quarters of positive results.

"While we made substantial progress in 2010, we are fully aware that we have to continue to improve our results," chief executive Oswald Gruebel said in a statement.

During the fourth quarter, profit before tax increased to 1.16 billion francs, compared to 818 million francs in the previous quarter.

The results were largely in line with analysts' expectations.

UBS last posted an annual net profit, of 12.6 billion francs, in 2006 before it was swept into the US subrpime crisis.