ZURICH (Reuters) - UBS clients withdrew money at twice the expected rate in the fourth quarter, eclipsing the bank's first net profit since Oswald Gruebel took the helm a year ago and raising concern he will struggle to steady the ship.

Gruebel, the banking veteran who had nursed rival Credit Suisse back to health, delivered a 1.2 billion Swiss franc ($1.1 billion) profit a year after he was hired to rebuild UBS. He said further positive quarters were needed for the scandal-tainted Swiss bank to restore client trust.

Clients withdrew a hefty 56 billion francs, up from 37 billion in the third quarter and confounding expectations that outflows would slow after UBS settled a bitter US probe into help it offered rich Americans to dodge taxes.

UBS, left damaged by the tax row and the credit crisis, has struggled to attract clients and investors, with doubts about the US settlement and concerted attacks on Swiss banking secrecy further complicating Gruebel's task.

"(He) is certainly the right man for the job, but it will be a long journey," said Manfred Hofer, head of equity research at LGT Capital Management.

Cost cuts and resilience in the investment bank's advisory and underwriting business did not compensate for the torrent of client money outflows, said Helvea analyst Peter Thorne.

"These factors are overshadowed by the awful outflows from the wealth management unit and the prospect of more to come," he said. Pressure from an aggressive Italian tax amnesty in the final quarter of 2009 added to persistent brand damage that has hampered UBS's performance in the last two years.

"In the immediate future we still expect to report outflows," Gruebel and Chairman Kaspar Villiger — a former Swiss minister hired to help clinch the US tax deal — said.

Shares in UBS traded 1.4 percent lower at 1322 GMT, lagging a two percent rise in the DJ Stoxx European banks index Shares in Credit Suisse and Julius Baer, which have gained client money from UBS, both rose more than three percent. UBS' fourth quarter net profit came in at 1.205 billion Swiss francs, its first positive quarter after four negative ones and helped by one-off gains. The figure beat expectations of 326 million francs in a Reuters poll.

"While returning to profit is a milestone, the higher-than-expected outflows are worrying as there seems no end in sight for the negative margin trend in Wealth Management and Swiss Banking," said Kepler analyst Mathias Bueeler, who reiterated his "reduce" rating.

UBS' investment bank, which had shown improvements in the previous two quarters, turned positive at pretax level with a gain of nearly 300 million francs after the bank cut its balance sheet by a further 11 percent and slashed personnel costs.