Profits reached 1.015 billion francs ($1.266 billion) for the three months ending June compared to 2.005 billion francs a year ago, and the bank warned that it would probably miss its mid-term target.
The Zurich-based bank added that it would slash 1.5 to 2.0 billion francs in costs over the next two to three years, a move which would force it to book "significant restructuring charges later this year."
"Banks returns have declined overall in the last 12 months, reflecting deleveraging and the actions being taken in advance of increased capital requirements," said Oswald Gruebel, UBS chief executive.
"We are responding to this changed environment and the weakening economic outlook by adapting our business and increasing efficiency.
"While our target for pre-tax profit set in 2009 is unlikely to be achieved in the original timeframe, our strong competitive positioning and our capital strength give us confidence for the future," added Gruebel.
UBS had previously set a target to book pre-tax profits of 15 billion francs in the mid-term.
Net new money for the second quarter was positive, reaching 8.7 billion francs, but just a fraction of the 22.3 billion francs recorded in the first quarter, said the bank.
Its wealth management division recorded inflows for the Asia Pacific region and the European onshore business, but the European cross-border business posted outflows amid tighter scrutiny from tax authorities.
The investment bank division meanwhile posted sharp falls in pre-tax profit to 376 million francs from 1.314 billion a year ago, as revenues slumped across the board.
A levy imposed by Britain on bank liabilities that takes effect at the end of the second quarter is expected to shave about 100 million francs off the investment bank unit's pre-tax earnings in the coming quarters.
"Current economic uncertainty shows little sign of abating," said the bank.
"We therefore do not envisage material improvements in market conditions in the third quarter of 2011, particularly given the seasonal decline in activity levels traditionally associated with the summer holiday season, and expect these conditions to continue to constrain our results," it warned.