Zurich, Switzerland (GenevaLunch) – Swiss bank UBS has posted a second quarter loss of CHF1.4 billion, slightly less than the forecasts of 11 analysts consulted by Bloomberg and smaller than the Q1 loss of nearly CHF2b, but larger than a year earlier when the bank announced a loss of CHF395 million.

Net new money outflows continued, but CEO Oswald Gruebel notes in his  letter to shareholders that the Swiss domestic market is “quite stable. We believe that the US cross-border issue and our exit from the US cross-border business are having a major influence on these results.”

Gruebel was brought in, in February 2009, to get the bank back on its feet after its confrontation with the IRS tax authority in the US in 2008, followed by large outflows of money.

The bank says it is now “on track to achieve the targeted fixed cost base reduction of CHF 3.5-4.0 billion by 2010″ and that cost savings are “starting to flow through with full effect expected towards the end of the year.” Cost-cutting has involved job cuts of 4,400, to 71,806 at 30 June 2009. Another 4,300 jobs will go by the end of 2010.

Total operating income rose to CHF5.8 million from just under CHF5 million in Q1, but operating expenses also rose, by 9 percent to CHF7.1m (from CHF6.5m), fueled by restructuring charges and a goodwill impairment of nearly half a million francs from the sale of UBS Pactual in Brazil.

UBS shares continued their upward climb after results were posted. The bank’s shares rose Friday when the news was announced of an Agreement in Principle between the US and Switzerland in the pending UBS court case. They rose again Monday on widespread rumours, unconfirmed, that UBS will not be expected to pay a fine in the US.

Related: Financial Times, Wall Street Journal/Dow Jones and Le Temps (Fre)

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