Full year loss in 2008 reached 19.69 billion Swiss francs (13 billion euros), including 8.1 billion francs worth of losses incurred during the last three months of the year, UBS said in a statement.
The bank, which is one of the worst-hit globally by the United States subprime home-loan crisis and the ensuing market fallout, said 2,000 more jobs would go this year at its investment bank unit, which was responsible for most of the damage.
Despite the figures, the bank said that it would still pay employees bonuses totalling 2.15 billion francs.
Just under half of the sum are bonuses that the company is obliged to pay contractually, while the remaining 1.161 billion francs make up variable bonuses determined by management, said the bank. The board would not receive bonuses for 2008, it added.
Public indignation has grown in Switzerland over the issue of bonuses for executives, after UBS was forced to tap into public funds late last year.
The Swiss financial markets surveillance authority confirmed in late January that it allowed the bank to go ahead with the 2008 bonus payments -- albeit severely trimmed -- a decision that was criticised by some politicians.
Looking ahead for this year, chief executive Marcel Rohner confirmed an earlier prediction of a return to profitability in 2009 after two years of losses.
He said the bank had made an encouraging start to this year.
"We have had positive net new money in January and an encouraging start into the year. That also refers to trading in (our) investment bank," chief executive officer Marcel Rohner told journalists during a conference call.
The news gave a temporary bounce to the stock, which gained sharply in opening trade before falling back.
At 0812 GMT, it was trading 6.74 percent higher at 13.77 francs, outperforming the overall Swiss Market Index which was up 0.53 percent. By 1100 GMT, however, the stock was up 2.02 percent at 13.16 francs, while the SMI was trading flat.
Analysts appeared unimpressed by the fourth-quarter figures.
"However, the developments in January are encouraging. But this trend must be confirmed in the first quarter before we can sound a definitive all-clear," Bank Wegelin said.
Stemming a haemorrhage of assets has been a key concern at UBS, and clients withdrew a net 85.8 billion worth in the last three months of the year, according to the latest data
In all, 226 billion francs in assets flowed out of the bank in 2008, compared to a net inflow of 140.6 billion in 2007.
"Overall net new money outflows were particularly heavy in October, but slowed down progressively in November and December," said the bank.
However, UBS warned that it remained "cautious" and that it would continue to cut costs and risks.
It announced another 2,000 job cuts in its investment banking unit on Tuesday, bringing total job losses since October 2007 to 11,000.
"Financial market conditions remain fragile as company and household cash flows continue to deteriorate. On the other hand, governments are taking very substantial measures to ease fiscal and monetary conditions," the bank noted.
"Our near-term outlook remains cautious, and UBS will continue its programme to strengthen its financial position through reductions in risk positions, risk weighted assets, total assets and operating costs," it added.
An icon of Swiss banking, UBS has experienced two very turbulent years, with billions in asset writedowns and losses that forced it to take on an emergency state aid package worth almost 60 billion dollars late last year.