UBS reported a big rise in client inflows in the first quarter on Tuesday, attracting the most money for its wealth management arm since the financial crisis began.

Switzerland's biggest bank saw inflows of 11.1 billion Swiss francs ($11.55 billion) at its core wealth management unit in the quarter after they were flat the previous three months and following continued big outflows in the first half of 2010.

I am particularly pleased by the increase in net new money, confirming the return of client trust and confidence, Chief Executive Oswald Gruebel said in a statement.

Clients pulled nearly 400 billion francs from the world's second-largest wealth manager in recent years after UBS was bailed out following huge writedowns on toxic assets and was hit by U.S. charges that it helped wealthy Americans dodge tax.

The key figures look good at first sight, particularly wealth management, said Cheuvreux analyst Christian Stark. Investment bank results were broadly in line with expectations.

UBS reported a pretax profit of 835 million francs at its investment bank, up from 100 million the previous quarter, driven by equities and strong credit trading revenues fixed income, currencies and commodities (FICC) business.

Gruebel's plans to turn around the investment bank -- which made the massive losses that almost felled UBS -- is under scrutiny after an exodus of top bankers and an admission he underestimated the challenge of reviving fixed income.

UBS said it expected to see some improvement in a number of business lines in the investment bank, despite constraints imposed on some of the FICC businesses by a focus on controlling risk. It also noted the competition for talent and recent base salary increases will put some pressure on the cost base.

At U.S. rival Morgan Stanley investment banking was the biggest reason for a steep earnings decline in the first quarter, with fixed-income trading the main source of that drop.

UBS said the disaster in Japan, unrest in North Africa and the Middle East and the ongoing euro zone debt crisis had dampened usually strong first-quarter client activity.

Taking into account the state of the market, our result for the first quarter was satisfactory. Nevertheless, it falls short of our overall ambitions for the firm, Gruebel and Chairman Kaspar Villiger said in a letter to shareholders.

Some analysts have said Gruebel will have to revise his target for a pretax profit of 15 billion Swiss francs from 2012, but he said last month he would only review the figures once there was more clarity on new capital rules.

Gruebel has said stiff Swiss standards -- which the government sent to parliament last week and could be approved this year -- could force UBS to move units abroad.

We remain concerned that the international regulatory environment increasingly lacks consistency, Villiger and Gruebel said, adding they would monitor the effect of rules on the corporate structure and take appropriate action when needed.

UBS is not paying a dividend for 2010 or for some time to come as it retains earnings to meet the tough new requirements.

($1=.9607 Swiss Franc)

(Additional reporting by Martin de Sa'Pinto)

Japan Morgan Stanley