UBS officially posted its first-quarter earnings today and blamed bad loans on its books for the poor result. Loan quality could deteriorate further, the company said, if the global economy continues to worsen. In a bright spot, UBS recruited FAs and gathered retail assets.

The losses were “driven by risk positions in businesses now exited or in the process of being exited by the investment bank,” says the UBS earnings release. The firm’s mid-April “pre-announcement” warned as much.

In total, Wealth Management and the Swiss Bank businesses continued to suffer large net client asset outflows CHF 23.4 billion; but Wealth Management Americas (formerly Wealth Management U.S.) beat the trend, raking in CHF 16.2 billion in net new client assets during the quarter. UBS said that outflows in the quarter from its Swiss clients (CHF 10.2 billion) and international clients (CHF 13.2 billion) largely came following the firm’s announcements describing U.S. authorities’ investigation into UBS’ role helping American clients dodge the IRS. (The firm continues to fight U.S. requests for more than 50,000 American client names). Despite healthy client asset inflows, Wealth Management Americas recorded a pre-tax loss of CHF 35 million in the quarter, an 80 percent drop from the same period last year.

According to recruiters, UBS’ aggressive recruiting campaign paid incentive packages well above 200 percent of trailing 12-month production for top FAs—therein explains the positive client asset flows in the quarter. Recruiters also note that UBS has significantly slowed that campaign, as have other firms.

“The business has certainly slowed some compared to several months prior,” said Danny Sarch of Leitner Sarch Consultants in White Plains.

There were no new details regarding the firm’s plans to cut 2,500 jobs from the investment bank and U.S. wealth management operations—many of which will be lower-end producers. To view the UBS press release, click here.