The now-profitable UBS still faces at least a couple of challenges that date back to its involvement in the U.S. subprime mortgage space, but is seeing some funding diversification benefits from a new Swiss residential mortgage covered bond program.

The company as a whole, which previously had been struggling with a chain of quarterly losses, generated a profit of about 1.2 billion Swiss francs ($1.1 billion) in the fourth quarter. Remaining mortgage-related challenges for the firm include exposures to monoline insurers through credit-default swaps of ABS.

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