UBS said first-quarter profit more than halved, dragged down by a 1.16 billion Swiss franc hit to profit due to charges on its own debt.
The Swiss bank struck a cautious note for the second quarter, saying economic worries rattling wealthy clients such as the euro zone debt crisis, concern over Europe's banks and the US deficit are likely to take a toll.
"Failure to make progress on these key issues would make further improvements in prevailing market conditions unlikely and would have the potential to continue the headwinds for revenue growth, net interest margins and net new money," UBS said in a statement.
The bank voiced confidence its flagship private banking arm would still attract fresh assets, a key bellwether for future revenue.
UBS, which announced in November it would scale back its investment bank business to focus on private banking, said it is on track to achieve its target of CHF 2 billion of cost savings by the end of 2013.
The bank cut risk-weighted assets by roughly 30 billion Swiss francs in the quarter, putting it ahead of its reduction target for this year.
Net profit fell to 827 million Swiss francs from 1.807 billion a year earlier. Analysts called for net profit of 1.11 billion Swiss francs in a Reuters poll.
Last week, Credit Suisse eked out a meagre profit for the quarter amid a better-than-expected showing from its fixed income division.