6-K 1 d385027d6k.htm FORM 6-K Form 6-K
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

Date: July 31, 2012

Commission File Number: 1-15060

 

 

UBS AG

(Registrant’s Name)

 

 

Bahnhofstrasse 45, Zurich, Switzerland, and

Aeschenvorstadt 1, Basel, Switzerland

(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  x            Form 40-F  ¨

 

 

 


Table of Contents

This Form 6-K consists of the Second Quarter 2012 Report of UBS AG, which appears immediately following this page.


Table of Contents
LOGO  

 

 

 

 

 

Second Quarter 2012 Report

 

 

  

 

 

 

LOGO

 

Our financial results for

the second quarter of 2012.


Table of Contents


Table of Contents

Second Quarter 2012 Report

 

Dear shareholders,

 

 

For the second quarter of 2012, we report a net profit attributable to UBS shareholders of CHF 425 million and diluted earnings per share of CHF 0.11. Despite challenging market conditions, we achieved a Group pre-tax profit of CHF 951 million, net new money inflows in our wealth management businesses improved further to CHF 13.2 billion and we increased our already industry-leading capital ratios, with our quarter-end Basel 2.5 tier 1 ratio rising to 19.2%. We also made substantial progress in our Basel III capital ratio 1 development during the quarter and have already surpassed our 13% common equity tier 1 target based on the phase-in rules taking effect on 1 January 2013. We are already managing the firm on a Basel III basis, and by doing so and executing on our capital plan, we clearly distinguish ourselves from our peers. Having already surpassed our Basel III capital target for 2012, we are accelerating towards our 2013 target. We will work to extend our advantage both on a Basel III phase-in basis and on a fully applied basis to ensure the firm is best placed to succeed in a more volatile banking environment.

During the second quarter, markets continued to be affected by economic and political challenges in Europe, the slowdown in the global economy and election year concerns in the US. The resulting volatility prompted clients to act with even greater caution, with many clients intensifying their focus on wealth preservation by increasing their allocation to cash and cash-like products. This prompted a substantial reduction in activity levels that affected all our businesses and resulted in our revenues declining over the quarter to CHF 6.4 billion.

In this challenging economic and political climate, clients, regulators and shareholders are seeking greater reassurance regarding the financial strength and stability of the world’s financial institutions. More than ever, we believe our capital, liquidity and funding positions, as well as our transparency and consistency in communicating these strengths, clearly speak in favor of UBS. This strategic advantage provides comfort to our clients that UBS is strong, stable and financially sound in an otherwise adverse environment. At our Investor Day last year, we outlined our strategic objectives, highlighting our desire to build our capital ratios rapidly, primarily by reducing risk-weighted assets in our Investment Bank and Corporate Center legacy portfolio. In the second quarter, we continued to make good progress on this critical strategic objective, reducing Basel III risk-weighted assets by CHF 45 billion. We have also lowered our 2016 risk-weighted asset target for the Group by CHF 30 billion to approximately CHF 240 billion,

and for the Investment Bank by CHF 15 billion to approximately CHF 135 billion. This refinement of our targets reflects our success in reducing risk-weighted assets, as well as the revised treatment of our SNB StabFund option that became effective in the second quarter. More importantly, it reflects our assessment that, in the longer term, the Investment Bank can perform within the target performance ranges we set last year with risk-weighted assets of less than CHF 135 billion. We are confident that our shareholders will continue to value our non-dilutive capital accretion strategy.

Our tier 1 capital position remains the best in our peer group, and at the end of the quarter stood at 19.2% under Basel 2.5 and 13.1% under the phase-in Basel III rules. We remain fully committed to consistent and transparent reporting of our position to ensure our progress is well understood by our clients and the market. In addition, our funding and liquidity positions are strong and we believe we are already compliant with future FINMA and Basel III liquidity requirements, well in advance of the mandatory implementation of these standards. We are confident that our strategy, which builds on our industry-leading capital position, our strong funding and liquidity positions, and our enduring commitment to our clients, benefits all our stakeholders. Accelerated inflows of net new money in our wealth management businesses and continuing deposit inflows in our Retail & Corporate business serve to emphasize that our clients also recognize the merits of our approach.

In these challenging markets, we are maintaining our vigilance on costs while exploring measures to improve our overall efficiency. During the quarter, we reduced costs in line with our CHF 2 billion cost reduction program announced last summer and, despite the effects of the rising US dollar, our cost base is approximately CHF 1 billion lower than in the first half of 2011. We remain confident we will deliver our entire planned savings by the end of 2013. We are reducing the structural costs of running the firm by improving our operating model, streamlining our product offering and optimizing the use of technology. This will benefit our clients by enabling us to deliver faster and better advice and services to them as we refocus expertise and resources on client-facing advisory and execution businesses, while reducing operational risks and controlling costs.

In addition to a challenging operating environment, there were several other significant factors that affected our results in the second quarter. The widening of our credit spreads resulted in an own

 

 

1  The calculation of our pro-forma Basel III risk-weighted assets combines existing Basel 2.5 risk-weighted assets, a revised treatment for low-rated securitization exposures which are no longer deducted from capital but are risk-weighted with 1250%, and new capital charges based on models. Some of these new models still require regulatory approval and therefore our pro-forma calculations include estimates of the impact of these new capital charges which will be refined as models and the associated systems are enhanced.

 

3


Table of Contents

Second Quarter 2012 Report

 

 

credit gain of CHF 239 million recorded in our Corporate Center. In our Investment Bank’s Equities business, we incurred losses related to the Facebook initial public offering, as discussed below. Net profit attributable to non-controlling interests was CHF 273 million due to dividend payments on trust preferred securities and represents the vast majority of the net profit allocation to non-controlling interest equity holders we expect for the year.

Our clients’ continued trust in our Wealth Management business was evident from the increased net new money inflows recorded across all regions in the second quarter, with inflows improving by CHF 2.8 billion to CHF 9.5 billion, placing the business at the upper end of its target range for net new money growth. We attracted strong inflows from our strategic growth areas in Asia Pacific and the emerging markets, where we continued to attract experienced client advisors, as well as from our home market of Switzerland and globally from ultra high net worth clients. The business recorded a pre-tax profit of CHF 502 million for the quarter. Revenues were down due to a decline in non-recurring fees and trading income that reflected adverse market conditions and lower activity levels. Net interest income rose on higher treasury-related income and deposit and lending volumes, which benefited from net inflows and favorable currency effects. Looking at performance against the target ranges we announced at our Investor Day 2011, the business’s cost/income ratio was slightly above target due to the effects of lower operating income and slightly higher operating expenses. The gross margin for the quarter dropped to 89 basis points as a result of lower income and a higher invested asset base. We are pleased to report that UBS won the award for best global wealth manager in Euromoney magazine’s prestigious Awards for Excellence in 2012, illustrating the wide recognition of our standing as the world’s leading wealth manager.

Our Wealth Management Americas business continued to deliver for the firm with a record profit of USD 211 million in the second quarter, mostly due to increased managed account fees as invested assets rose and also on higher realized gains from the

available-for-sale portfolio. The business’s strategic banking and lending initiatives continued to bear fruit, with a 21% growth in average mortgage balances and an increase in securities-backed lending balances. Net new money inflows were USD 3.8 billion, as we continued to attract experienced financial advisors. The business remained broadly in line with its target range for net new money growth despite the effects of US tax-related outflows traditionally seen in the second quarter. In addition, advisor attrition rates remain low and illustrate the continued confidence that experienced industry professionals have in the business’s future. We are pleased to report the business remains within its stated cost/income ratio target range.

Our firm is the world’s leading wealth manager, with more than CHF 1.5 trillion in invested assets and the top global high net worth and ultra high net worth franchises, and we will build on this position by accelerating our growth in key markets. In the second quarter, we took significant steps to ensure all our wealth management clients globally receive the best possible investment advice. Our global wealth management Chief Investment Office aggregates our global coverage with local insight and expertise to provide a clearer picture of the issues affecting the world’s capital markets and the global economy. The appointment of five regional chief investment officers in the second quarter has augmented this capability, enabling us to deliver even better and faster investment advice to our globally diverse client base. We also brought together the research expertise of our Wealth Management Americas and Wealth Management businesses, significantly strengthening our ability to analyze the markets and deliver even better investment advice to our clients. We believe these significant improvements clearly differentiate UBS from its peers, adding great value for all our wealth management clients globally while ensuring more efficient and cost-effective delivery of these services.

Our Retail & Corporate business is crucial to the success of the Group as it delivers stable revenues and profitability, and provides growth opportunities for our other businesses. Pre-tax profit for

 

 

4   


Table of Contents

 

 

 

LOGO

Axel A. Weber Chairman of the Board of Directors    Sergio P. Ermotti Group Chief Executive Officer

 

5


Table of Contents

Second Quarter 2012 Report

 

 

the business for the second quarter was CHF 399 million, a notable achievement given the continued low interest rate environment that illustrates the success of our ongoing pricing initiatives and continued growth in new client assets. Revenues were down slightly, mainly as a result of increased, but still very modest, credit loss expenses. The business executed strongly against all its target ranges with its net interest margin up slightly to 161 basis points, comfortably within its target range. This increase reflected higher client deposits and slightly higher average loan volumes, and this moderate level of growth in loan volumes is in line with our strategy to grow our business in high-quality loans. The business remained within its cost/income target range, reflecting the progress we are making in implementing efficiency measures, and also remains on track to achieve its target for net new business volume growth, with significant client deposits recorded in both the retail and corporate businesses. Again, we are pleased to note that UBS was recognized in Euromoney’s Awards for Excellence, winning the award for best bank in Switzerland.

In a challenging quarter for the asset management industry as a whole, our Global Asset Management business nevertheless delivered a pre-tax profit of CHF 118 million. The result was affected by significantly lower performance fees, which more than offset slightly higher net management fees. The gross margin for the business remains within its stated target range, although its cost/income ratio fell outside its range in the second quarter. Despite an improving performance, the business remained outside its net new money growth range. For the business to achieve this target, a sustained improvement in the current dynamic around money market funds and client confidence levels remains essential. Nevertheless, we are pleased to note that third-party net new money inflows excluding money market funds were CHF 3.4 billion compared with outflows through this channel last quarter. Total net new money flows, excluding money market funds, were positive in the second quarter at CHF 1.2 billion.

In the second quarter, despite challenging operating conditions, our Investment Bank continued its decisive and disciplined re-

duction of risk-weighted assets, with Basel III risk-weighted assets decreasing to CHF 170 billion. Operating income declined as the weak operating environment deteriorated, further impacting most areas of the business. The results also include a number of notable items that adversely affected the Investment Bank’s performance, including losses related to the Facebook initial public offering (IPO). In total, this led to a pre-tax loss of CHF 130 million. We are pleased to note that in the Euromoney Awards for Excellence, UBS won in several categories, including best investment bank in Asia and best equity house in China. Our clients also benefit from our well-established European research capability that provides in-depth and comprehensive regional analysis with global insight. In recognition of this, our clients voted UBS the leading Pan European Brokerage firm for Equity Linked Research for a record twelfth consecutive year, one of several high-profile awards for the firm in the Thomson Reuters Extel Survey. We believe our success in these awards illustrates our progress in implementing our strategy, and recognizes the fact that we continue to deliver the best possible advice, products and services to our clients.

Due to the gross mishandling of Facebook’s market debut by NASDAQ, we recorded a loss of CHF 349 million in our US Equities business as a result of our efforts to provide best execution for our clients. As a market maker in one of the largest IPOs in US history, we received significant orders from clients, including clients of our wealth management businesses. Due to multiple operational failures by NASDAQ, UBS’s pre-market orders were not confirmed for several hours after the stock had commenced trading. As a result of system protocols that we had designed to ensure our clients’ orders were filled consistent with regulatory guidelines and our own standards, orders were entered multiple times before the necessary confirmations from NASDAQ were received and our systems were able to process them. NASDAQ ultimately filled all of these orders, exposing UBS to far more shares than our clients had ordered. UBS’s loss resulted from NASDAQ’s multiple failures to carry out its obligations, including both opening the Facebook stock for trading and not halting trading in the stock during the day. We will take appropriate legal action against

 

 

6   


Table of Contents

 

 

NASDAQ to address its gross mishandling of the offering and its substantial failures to perform its duties. Although as in all such matters there can be no assurance as to the amount of any recovery we may obtain, we intend to pursue compensation for the full extent of our losses.

During the quarter, the firm also underwent some important senior management changes. At our Annual General Meeting of Shareholders in May, shareholders elected Axel A. Weber to the Board, along with Isabelle Romy and Beatrice Weder di Mauro. Following the meeting, the Board of Directors appointed Axel A. Weber as the new Chairman of UBS, marking the end of Kaspar Villiger’s successful tenure as Chairman of the Board of Directors. Kaspar led the firm through some testing times and we would like to take this opportunity to offer our sincere thanks to him for his great commitment and dedication over the past three years, and wish him well for the future. At the meeting, shareholders also approved the proposed distribution of a nominal dividend of CHF 0.10 per share for the financial year 2011, the first step in our stated plans to implement a progressive capital returns program.

In keeping with the firm’s long-standing support of the contemporary arts, and as part of our 150th anniversary celebrations, in April we announced a long-term commitment with the Solomon R. Guggenheim Foundation to support art, artists, and curators from some of the most vibrant regions of the world – South and Southeast Asia, Latin America, the Middle East and Africa. This global initiative, which includes the creation of the Guggenheim UBS MAP, will chart the diverse contemporary art currents in these regions and encompass acquisitions, touring exhibitions, education programs, and long-term curatorial residencies at the Guggenheim Museum in New York. We look forward to a collaboration that will help bring contemporary art to a wider audience and open important new perspectives both locally and internationally.

Outlook: As in recent quarters, the degree of progress towards achieving sustained and material improvements to eurozone sovereign debt and European banking system issues, as well as the

extent of uncertainty surrounding geopolitical tensions, the global economic outlook and the US fiscal “cliff”, will continue to exert a strong influence on client confidence and, thus, activity levels in the third quarter of 2012. Failure to make progress on these key issues, accentuated by the reduction in market activity levels typically seen in the third quarter, would make further improvements in prevailing market conditions unlikely and would thus generate headwinds for revenue growth, net interest margins and net new money. Despite these challenges, we remain confident that our asset-gathering businesses as a whole will continue to attract net new money, reflecting our clients’ steadfast trust in the firm and their recognition of our continuing efforts to strengthen UBS. We will strive to deliver on our strategy, which focuses on prudent liquidity management, reducing risk and complexity, and improving our position as one of the best-capitalized banks in the world. We have the utmost confidence in our ability to deliver on our strategy by adapting our execution in a changing environment.

 

Yours sincerely,   

LOGO

 

  

LOGO

 

Axel A. Weber    Sergio P. Ermotti

Chairman of the

Board of Directors

   Group Chief Executive Officer
 

 

7


Table of Contents

Second Quarter 2012 Report

 

 

UBS key figures

 

 

          For the quarter ended                     Year-to-date   
CHF million, except where indicated           30.6.12                    31.3.12                     30.6.11                         30.6.12                    30.6.11   

Group results

                                                   

Operating income

          6,408        6,525         7,171             12,934        15,515   

Operating expenses

          5,457        5,221         5,516             10,678        11,626   

Operating profit before tax

          951        1,304         1,654             2,256        3,889   

Net profit attributable to UBS shareholders

          425        827         1,015             1,252        2,822   

Diluted earnings per share (CHF)1

          0.11        0.22         0.26             0.33        0.73   

Key performance indicators, balance sheet and capital management2

  

                                     

Performance

                                                   

Return on equity (RoE) (%)

                                        4.7        12.0   

Return on risk-weighted assets, gross (%)3

                                        11.8        15.3   

Return on assets, gross (%)

                                        1.9        2.4   

Growth

                                                   

Net profit growth (%)

          (48.6     159.2         (43.8          (55.6     (32.9

Net new money growth (%)4

          1.8        0.6         1.7             1.2        2.9   

Efficiency

                                                   

Cost/income ratio (%)

          85.1        80.5         77.1             82.8        75.0   
              As of                      
CHF million, except where indicated           30.6.12        31.3.12         31.12.11                        

Capital strength

                                                   

BIS tier 1 capital ratio (%)5

          19.2        18.7         15.9                        

FINMA leverage ratio (%)5

          5.6        5.6         5.4                        

Balance sheet and capital management

                                                   

Total assets

          1,412,043        1,365,837         1,419,162                        

Equity attributable to UBS shareholders

          54,716        53,226         53,447                        

Total book value per share (CHF)6

          14.60        14.10         14.26                        

Tangible book value per share (CHF)6

          12.00        11.62         11.68                        

BIS core tier 1 capital ratio (%)5

          17.2        16.7         14.1                        

BIS total capital ratio (%)5

          21.8        21.1         17.2                        

BIS risk-weighted assets5

          214,676        211,092         240,962                        

BIS tier 1 capital5

          41,210        39,570         38,370                        

Additional information

                                                   

Invested assets (CHF billion)7

          2,163        2,115         2,088                        

Personnel (full-time equivalents)

          63,520        64,243         64,820                        

Market capitalization8

          42,356        48,488         42,843                        

1  Refer to “Note 8 Earnings per share (EPS) and shares outstanding” in the “Financial information” section of this report for more information.    2  For the definitions of our key performance indicators, refer to the “Measurement of performance” section of our Annual Report 2011.    3  Based on Basel 2.5 risk-weighted assets for 2012. Based on Basel II risk-weighted assets for 2011.    4  Group net new money includes net new money for Retail & Corporate and excludes interest and dividend income.    5  Capital management data is disclosed in accordance with the Basel 2.5 framework. Refer to the “Capital management” section of this report for more information.    6  Refer to the “Capital management” section of this report for more information.    7  In the first quarter of 2012, we have refined our definition of invested assets. Refer to the “Recent developments and financial reporting structure changes” section of our first quarter 2012 report for more information. Group invested assets includes invested assets for Retail & Corporate.    8  Refer to the appendix “UBS shares” of this report for more information.

 

8   


Table of Contents

Corporate calendar

 

Publication of the third quarter 2012 report

Tuesday, 30 October 2012

 

Publication of the fourth quarter 2012 report

Tuesday, 5 February 2013

 

Publication of the first quarter 2013 report

Tuesday, 30 April 2013

 

Annual General Meeting

Thursday, 2 May 2013

Contacts

 

 

Switchboards

For all general queries.

Zurich +41-44-234 1111

London +44-20-7568 0000

New York +1-212-821 3000

Hong Kong +852-2971 8888

www.ubs.com/contact

 

Investor Relations

UBS’s Investor Relations team supports institutional, professional and retail investors from our offices in Zurich and New York.

 

UBS AG, Investor Relations

P.O. Box, CH-8098 Zurich, Switzerland

 

sh-investorrelations@ubs.com

www.ubs.com/investors

 

Hotline +41-44-234 4100

New York +1-212-882 5734

Fax (Zurich) +41-44-234 3415

 

Media Relations

UBS’s Media Relations team supports global media and journalists from offices in Zurich, London, New York and Hong Kong.

 

www.ubs.com/media

 

Zurich +41-44-234 8500

mediarelations@ubs.com

 

London +44-20-7567 4714

ubs-media-relations@ubs.com

 

New York +1-212-882 5857

mediarelations-ny@ubs.com

 

Hong Kong +852-2971 8200

sh-mediarelations-ap@ubs.com

   

 

 

Office of the Company Secretary

The Company Secretary receives queries on compensation and related issues addressed to members of the Board of Directors.

 

UBS AG, Office of the Company Secretary

P.O. Box, CH-8098 Zurich, Switzerland

 

sh-company-secretary@ubs.com

 

Hotline +41-44-234 3628

Fax +41-44-234 6603

 

Shareholder Services

UBS’s Shareholder Services team, a unit of the Company Secretary office, is responsible for the registration of the global registered shares.

 

UBS AG, Shareholder Services

P.O. Box, CH-8098 Zurich, Switzerland

 

sh-shareholder-services@ubs.com

   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   

 

Hotline +41-44-235 6202

Fax +41-44-235 3154

 

US Transfer Agent

For all global registered share-related queries in the US.

 

Computershare

480 Washington Boulevard

Jersey City, NJ 07310-1900, USA

 

sh-relations@melloninvestor.com

www.bnymellon.com/shareowner/

equityaccess

 

Calls from the US +1 866-541 9689

Calls outside the US +1-201-680 6578

Fax +1-201-680 4675

Imprint

 

 

Publisher: UBS AG, Zurich and Basel, Switzerland | www.ubs.com

Language: English | SAP-No. 80834E-1203

 

© UBS 2012. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved.

 

Printed in Switzerland on chlorine-free paper with mineral oil-reduced inks. Paper production from socially responsible and ecologically sound forestry practices.

 

LOGO

 

 

 

 

 

 

  1.

 

 

  

 

 

 

UBS
Group

 

 

 

12

 

  

 

 

Group results

 

 

 

2.

 

  

 

 

UBS business divisions and
Corporate Center

 

 

 

22

 

  

 

 

Wealth Management

  25      Wealth Management Americas
  30      Investment Bank
  34      Global Asset Management
  39      Retail & Corporate
  42      Corporate Center

 

 

 

3.

 

  

 

 

Risk and treasury
management

 

 

 

50

 

  

 

 

Risk management and control

  60      Balance sheet
  62      Liquidity and funding
  65      Capital management

 

 

 

4.

 

  

 

 

Financial information
(unaudited)

 

 

 

73

 

  

 

 

Interim consolidated financial statements

  81      Notes to the interim consolidated financial statements
  105      Supplemental information for UBS AG
(Parent Bank) and UBS Limited
 

 

 

Appendix

 

 

 

 

112

 

  

 

 

UBS shares

  113      Information sources
 


Table of Contents

Second Quarter 2012 Report

 

 

UBS and its businesses

 

We draw on our 150-year heritage to serve private, institutional and corporate clients worldwide, as well as retail clients in Switzerland. Our business strategy is centered on our pre-eminent global wealth management businesses and our universal bank in Switzerland. Together with a client-focused Investment Bank and a strong, well-diversified Global Asset Management business, we will expand our premier wealth management franchise and drive further growth across the Group. Headquartered in Zurich and Basel, Switzerland, we have offices in more than 50 countries, including all major financial centers, and employ approximately 64,000 people. UBS AG is the parent company of the UBS Group (Group). Under Swiss company law, UBS AG is organized as an Aktiengesellschaft, a corporation that has issued shares of common stock to investors. The operational structure of the Group comprises the Corporate Center and five business divisions: Wealth Management, Wealth Management Americas, the Investment Bank, Global Asset Management and Retail & Corporate.

 

Wealth Management delivers comprehensive financial services to wealthy private clients around the world – except those served by Wealth Management Americas. Its clients benefit from the entire spectrum of UBS resources, ranging from investment management to estate planning and corporate finance advice, in addition to specific wealth management products and services. An open product platform provides clients with access to a wide array of products from third-party providers that complement our own product lines.

Wealth Management Americas provides advice-based solutions through financial advisors who deliver a fully integrated set of products and services specifically designed to address the needs of ultra high net worth and high net worth individuals and families. It includes the domestic US business, the domestic Canadian business and international business booked in the US.

The Investment Bank provides a broad range of products and services in equities, fixed income, foreign exchange and commodities to corporate and institutional clients, sovereign and government bodies, financial intermediaries, alternative asset managers and UBS’s wealth management clients. The Investment Bank is an active participant in capital markets flow activities, including sales, trading and market-making across a broad range of securities. It provides financial solutions to a wide range of clients, and offers advisory and analytics services in all major capital markets.

Global Asset Management is a large-scale asset manager with businesses diversified across regions, capabilities and distribution channels. It offers investment capabilities and styles across all ma-

jor traditional and alternative asset classes including equities, fixed income, currencies, hedge fund, real estate, infrastructure and private equity that can also be combined into multi-asset strategies. The fund services unit provides professional services, including fund set-up, accounting and reporting for traditional investment funds and alternative funds.

Retail & Corporate delivers comprehensive financial products and services to our retail, corporate and institutional clients in Switzerland. It is an integral part of the universal bank model in Switzerland and delivers growth to our other businesses. It supports them by cross-selling products and services provided by our asset-gathering and investment banking businesses, by referring clients to them and transferring clients to Wealth Management due to increased client wealth.

The Corporate Center provides treasury services, and manages support and control functions for the business divisions and the Group in such areas as risk control, finance, legal and compliance, funding, capital and balance sheet management, management of non-trading risk, communications and branding, human resources, information technology, real estate, procurement, corporate development and service centers. It allocates most of the treasury income, operating expenses and personnel associated with these activities, which we refer to collectively as Corporate Center – Core Functions, to the businesses based on capital and service consumption levels. The Corporate Center also encompasses the Legacy Portfolio, consisting of the centrally managed legacy portfolio formerly in the Investment Bank and the option to acquire the equity of the SNB StabFund.

 

 

10   


Table of Contents

  UBS Group

 

       Management report

 

 

 

 

 

 

 

 

 


Table of Contents

Group results

 

Group results

 

Net profit attributable to UBS shareholders was CHF 425 million in the second quarter of 2012 compared with CHF 827 million in the first quarter. Pre-tax profit declined to CHF 951 million from CHF 1,304 million, primarily reflecting lower trading revenues, excluding own credit, as well as a decline in net fee and commission income and higher operating expenses. These declines were partly offset by an own credit gain of CHF 239 million compared with a loss of CHF 1,164 million in the prior quarter. Tax expense was CHF 253 million compared with CHF 476 million in the prior quarter. In addition, CHF 273 million of the second quarter net profit was attributable to non-controlling interests, mostly reflecting dividends on trust preferred securities, compared with CHF 1 million in the prior quarter.

Income statement

 

            For the quarter ended            % change from            Year-to-date   
CHF million           30.6.12            31.3.12            30.6.11                1Q12            2Q11                30.6.12            30.6.11   

Interest income

          4,397        4,130        4,880            6        (10         8,527        9,457   

Interest expense

          (3,004     (2,539     (3,440         18        (13         (5,542     (6,236

Net interest income

          1,393        1,591        1,440            (12     (3         2,984        3,221   

Credit loss (expense)/recovery

          (1     37        16                                35        19   

Net interest income after credit loss expense

          1,392        1,628        1,456            (14     (4         3,020        3,240   

Net fee and commission income

          3,649        3,843        3,879            (5     (6         7,492        8,119   

Net trading income

          1,369        961        1,724            42        (21         2,330        3,928   

Other income

          (1     93        112                                92        228   

Total operating income

          6,408        6,525        7,171            (2     (11         12,934        15,515   

Personnel expenses

          3,601        3,643        3,925            (1     (8         7,244        8,332   

General and administrative expenses

          1,652        1,398        1,408            18        17            3,050        2,896   

Depreciation of property and equipment

          179        158        161            13        11            337        352   

Amortization of intangible assets

          26        23        22            13        18            48        46   

Total operating expenses

          5,457        5,221        5,516            5        (1         10,678        11,626   

Operating profit before tax

          951        1,304        1,654            (27     (43         2,256        3,889   

Tax expense/(benefit)

          253        476        377            (47     (33         729        803   

Net profit

          698        828        1,278            (16     (45         1,526        3,087   

Net profit attributable to non-controlling interests

          273        1        263                    4            274        265   

Net profit attributable to UBS shareholders

          425        827        1,015            (49     (58         1,252        2,822   

Comprehensive income

                                                                     

Total comprehensive income

          2,445        (170     1,065                    130            2,275        2,036   

Total comprehensive income attributable to non-controlling interests

          337        (75     380                    (11         263        486   

Total comprehensive income attributable to UBS shareholders

          2,107        (95     685                    208            2,012        1,551   

 

12   


Table of Contents
     UBS Group
    

 

 

Performance: 2Q12 vs 1Q12

Operating profit before tax was CHF 951 million in the second quarter of 2012 compared with CHF 1,304 million in the prior quarter. The second quarter included an own credit gain on financial liabilities designated at fair value of CHF 239 million, compared with a loss of CHF 1,164 million in the prior quarter. The second quarter also included a credit to personnel expenses of CHF 84 million related to changes to our retiree medical and life insurance benefit plan in the US and net restructuring charges of CHF 9 million. The first quarter included a credit to personnel expenses of CHF 485 million related to changes to our Swiss pension plan and net restructuring charges of CHF 126 million.

Excluding these items, adjusted pre-tax profit declined in the quarter by CHF 1,472 million to CHF 637 million from CHF 2,109 million. From the second quarter onwards, adjusted pre-tax profit no longer excludes debit valuation adjustments for the current and comparative period. The decrease in adjusted pre-tax profit resulted mainly from a decline in net interest and trading revenues that reflected challenging market conditions, a loss of CHF 349 million related to the Facebook initial public offering, and declines in net fee and commission income, which was affected by reduced client activity. On an adjusted basis, operating expenses decreased slightly from the prior quarter.

  è  

Refer to “Note 12b Fair value of financial instruments” in the “Financial information” section of this report for more information on own credit

Operating income: 2Q12 vs 1Q12

Total operating income was CHF 6,408 million compared with CHF 6,525 million. Excluding the impact of own credit, operating income decreased by CHF 1,520 million to CHF 6,169 million.

Net interest and trading income

Net interest and trading income increased by CHF 209 million to CHF 2,762 million. The second quarter included an own credit gain on financial liabilities designated at fair value of CHF 239 million, compared with an own credit loss of CHF 1,164 million in the prior quarter. The second quarter own credit gain included an improvement in the own credit calculation methodology and the

correction of various own credit items relating to prior periods as explained in the “Own credit” sidebar on the next page.

Excluding the impact of own credit, net interest and trading income declined by CHF 1,194 million, primarily in our equities and fixed income, currencies and commodities (FICC) trading businesses.

Equities net interest and trading revenues decreased by CHF 638 million, mainly due to the abovementioned loss related to the Facebook initial public offering. Derivatives revenues declined. Client revenues were stable, but market conditions deteriorated across all regions leading to trading losses in the second quarter. In addition, the second quarter included the impact of an improvement in the own credit calculation methodology and the correction of various own credit items relating to prior periods as explained in the “Own credit” sidebar on the next page.

Net interest and trading income in FICC declined by CHF 303 million. This was mainly due to a decline in credit revenues, which decreased as client activity declined and spreads widened as euro-zone instability impacted global markets. Macro net interest and trading revenues were relatively stable and included a gain resulting from the correction of an own credit item relating to prior periods as explained in the “Own credit” sidebar on the next page. Emerging markets revenues decreased due to lower client activity and increased market volatility across asset classes and regions. The second quarter included a debit valuation adjustment gain of CHF 35 million compared with a loss of CHF 53 million in the first quarter.

Net interest and trading revenues from the Legacy Portfolio decreased by CHF 79 million. The revaluation of our option to acquire the SNB StabFund’s equity resulted in a gain of CHF 45 million in the second quarter compared with a gain of CHF 127 million in the prior quarter.

Net interest and trading income was stable in Wealth Management, Wealth Management Americas and Retail & Corporate.

  è  

Refer to the “Non-trading portfolios – valuation and sensitivity information by instrument category” section in the “Risk management and control” section of this report for more information on changes in the value of our option to acquire the SNB StabFund’s equity

  è  

Refer to “Note 3 Net interest and trading income” in the “Financial information” section of this report for more information

 

 

Net interest and trading income

 

           For the quarter ended                         %  change from                         Year-to-date   
CHF million             30.6.12               31.3.12               30.6.11               1Q12                2Q11                   30.6.12               30.6.11   

Net interest and trading income

                                                                          

Net interest income

     1,393         1,591         1,440     

(12)

  

     (3          2,984         3,221   

Net trading income

         1,369         961         1,724             42          (21          2,330         3,928   

Total net interest and trading income

         2,762         2,553         3,164                     (13          5,315         7,149   

 

13


Table of Contents

Group results

 

 

Own credit: effect of improvement in methodology and correction of prior period items

 

      Effect on second quarter 2012 net trading
income related to prior periods
 
CHF million         

Investment Bank

     (23

of which: equities

     (65

of which: fixed income, currencies and commodities

     42   

Corporate Center – Core Functions

     90   

of which: own credit on financial liabilities designated at fair value

     90   

Corporate Center – Legacy Portfolio

     (4

Total effect on Group net trading income

     63   

 

 

 

Own credit

 

Beginning in the second quarter of 2012, the measurement of the performance of the business divisions excludes own credit gains and losses on financial liabilities designated at fair value. This reflects the fact that these gains and losses are not managed at a business division level (nor are they managed at a Group level) and are not necessarily indicative of any business division’s performance. In line with these internal reporting changes, own credit gains and losses are now reported as part of Corporate Center – Core Functions. Prior periods have been restated to conform to this presentation. This change does not have an effect on Group performance.

Debit valuation adjustments, which reflect the own credit risk in the negative replacement value of uncollaterized derivatives, will continue to be

reported within the business divisions, consistent with the way in which these positions are risk-managed.

Separately, as part of our ongoing enhancements to the own credit calculation methodology for financial liabilities designated at fair value, further improvements were made in the second quarter and various own credit items relating to prior periods were corrected. In the aggregate this resulted in the following effects which were recorded in the second quarter but relate to prior periods: a decrease of CHF 65 million in equities derivatives trading revenues and an increase of CHF 42 million in FICC macro trading revenues, both reported within the Investment Bank; a loss of CHF 4 million in trading revenues reported in the Corporate Center – Legacy Portfolio; and an own credit gain of

CHF 90 million reported in Corporate Center – Core Functions. After taking into account offsetting effects between own credit and other trading revenues, the net effect on the Group’s performance before tax was a gain of CHF 63 million.

The adoption of the improvement to the own credit methodology by equities had the effect of reducing trading revenues in the equities derivatives business in the Investment Bank by a further CHF 86 million in the second quarter, with a corresponding increase in the own credit gain in Corporate Center – Core Functions, when compared with the results that would have been reported under the previous methodology. This information has been provided for comparison purposes only and will not be provided in future periods.

 

 

 

 

14   


Table of Contents
     UBS Group
    

 

 

Credit loss (expense)/recovery

 

                  For the quarter  ended                    % change from                    Year-to-date   
CHF million             30.6.12                31.3.12                30.6.11                    1Q12             2Q11                30.6.12                30.6.11   

Wealth Management

        1        (1     2                    (50         0        11   

Wealth Management Americas

        (1     0        (1                             (1     0   

Investment Bank

        19        14        0            36                    33        3   

Retail & Corporate

        (12     18        0                                6        (7

Corporate Center

    (8     6        15                    (2)        12   

of which: related to Legacy Portfolio

        (8     6        15                                (2     13   

Total

        (1     37        16                                35        19   

 

 

Credit loss expense/recovery

We recorded a net credit loss expense of CHF 1 million in the second quarter, compared with a recovery of CHF 37 million in the prior quarter. This change mainly occurred in Retail & Corporate, where credit loss expenses of CHF 12 million were recorded compared with credit loss recoveries of CHF 18 million in the prior quarter. In the first quarter, credit portfolio developments led to an CHF 8 million decrease in event-based collective loan loss allowances. There were no releases from event-based collective loan loss allowances in the second quarter, whereas higher credit loss expenses were recorded due to allowance increases related to a small number of workout portfolio cases.

Net fee and commission income

Net fee and commission income decreased by CHF 194 million to CHF 3,649 million.

Net brokerage fees declined by CHF 99 million to CHF 712 million, due to lower client activity. Both, equity and debt underwriting fees decreased, by CHF 53 million and CHF 46 million to CHF 163 million and CHF 137 million, respectively, mainly reflecting a decrease in the global fee pool. Merger and acquisition and corporate finance fees decreased by CHF 37 million to CHF 136 million. These declines were partly offset by an increase in portfolio management and advisory fees, which were up CHF 45 million to CHF 1,449 million, mainly reflecting increased managed account fees in Wealth Management Americas.

  è  

Refer to “Note 4 Net fee and commission income” in the “Financial information” section of this report for more information

Other income

Other income was negative CHF 1 million in the second quarter, compared with positive CHF 93 million in the first quarter. The second quarter included a loss related to the sale of a portfolio underlying the previously disclosed settlement with MBIA, largely offset by income from financial investments available-for-sale and the share of net profits of associates.

  è  

Refer to “Note 5 Other income” in the “Financial information” section of this report for more information

Operating expenses: 2Q12 vs 1Q12

Operating expenses increased by CHF 236 million to CHF 5,457 million. The second quarter included a credit to personnel expenses of CHF 84 million related to changes to a retiree benefit plan in the US, while the prior quarter included a credit to personnel expenses of CHF 485 million related to changes to our Swiss pension plan. In addition, the second quarter included net restructuring charges of CHF 9 million compared with net restructuring charges of CHF 126 million in the prior quarter. Excluding these items, operating expenses decreased by CHF 48 million to CHF 5,532 million.

Personnel expenses

Personnel expenses decreased by CHF 42 million to CHF 3,601 million. The second quarter included a release of CHF 21 million in personnel-related restructuring charges compared with charges of CHF 139 million in the first quarter. Excluding restructuring charges as well as the effects of changes to our Swiss pension plan in the first quarter and to a retiree benefit plan in the US in the second quarter, personnel expenses declined by CHF 283 million. Expenses for total variable compensation, which includes discretionary bonus as well as other variable compensation, were CHF 609 million in the second quarter compared with CHF 1,060 million in the prior quarter, reflecting reduced profitability, particularly in the Investment Bank. Expenses for variable compensation included a charge of CHF 307 million for the amortization of deferred compensation awards from prior years compared with CHF 370 million in the prior quarter. This decline in the amortization charge mainly reflected the accelerated amortization of prior year awards in the first quarter in relation to restructuring.

  è  

Refer to “Note 6 Personnel expenses” in the “Financial information” section of this report for more information

General and administrative expenses

General and administrative expenses increased by CHF 254 million to CHF 1,652 million in the second quarter.

Net charges for litigation provisions increased by CHF 133 million. Costs for marketing and public relations increased by CHF 70

 

 

15


Table of Contents

Group results

 

 

million, mainly arising from costs in relation to our 150th anniversary, including the education initiative we launched to mark this anniversary. In addition, the second quarter included restructuring charges of CHF 16 million compared with a release of CHF 13 million in the first quarter.

  è  

Refer to “Note 7 General and administrative expenses” in the “Financial information” section of this report for more information

Depreciation and amortization

Depreciation of property and equipment was CHF 179 million, an increase of CHF 21 million from the prior quarter, mainly due to restructuring charges of CHF 14 million reflecting the impairment of leasehold improvements, compared with zero in the prior quarter.

Amortization of intangible assets was CHF 26 million compared with CHF 23 million.

Tax: 2Q12 vs 1Q12

We recognized a net income tax expense of CHF 253 million for the second quarter of 2012. This includes a deferred tax expense of CHF 241 million with respect to the amortization of deferred tax assets, previously recognized in relation to tax losses carried forward, to offset taxable profits for the quarter in Switzerland and the US. It also includes other net tax expenses of CHF 113 million in respect of Group entities with net taxable profits. These expenses were partly offset by tax benefits of CHF 101 million arising from the release of provisions in respect of tax positions that had previously been uncertain.

For the first quarter of 2012, we recognized a net income tax expense of CHF 476 million, which mainly related to deferred tax expenses with respect to the amortization of Swiss deferred tax assets.

For the first half of 2012, the Group’s effective tax rate of approximately 32% was higher than expected principally owing to significant book tax adjustments affecting Swiss taxable profits, such as own credit losses, which are accounted for differently under Swiss federal banking law, the basis for Swiss taxable profits, than under International Financial Reporting Standards (IFRS). However, the full year 2012 effective tax rate for the Group may differ significantly from the effective tax rate in the first half of 2012 depending on the extent of further book tax adjustments affecting Swiss deferred tax expense in the second half of 2012,

whether we adjust the IFRS carrying values of our deferred tax assets in the US and in Switzerland following the preparation of the new business plan later this year, and whether we adjust the carrying values of our deferred tax assets for other expected tax benefits that are less sensitive to changes in the new business plan (such as expected claims in certain cantons of Switzerland for prior years’ foreign branch tax losses).

Net profit attributable to non-controlling interests:

2Q12 vs 1Q12

Net profit attributable to non-controlling interests was CHF 273 million compared with CHF 1 million in the prior quarter. In the second quarter, dividends of CHF 187 million were paid for trust preferred securities, for which no accrual was required to be established in a prior period. Additionally, an accrual of CHF 84 million was made for future dividend payments for trust preferred securities, triggered by the dividend payment to UBS shareholders in May 2012. In the first quarter, no event occurred triggering dividend obligations for trust preferred securities and no trust preferred securities dividends not previously accrued were paid.

Total comprehensive income attributable to

UBS shareholders: 2Q12 vs 1Q12

Total comprehensive income attributable to UBS shareholders was CHF 2,107 million, reflecting net profit attributable to UBS shareholders of CHF 425 million and other comprehensive income (OCI) attributable to UBS shareholders of CHF 1,682 million (net of tax). Second-quarter OCI included foreign currency translation gains of CHF 989 million predominantly related to the 6% strengthening of the US dollar against the Swiss franc. In addition, OCI included cash flow hedge gains of CHF 652 million, largely reflecting a decline in long-term interest rates.

In the first quarter of 2012, total comprehensive income attributable to UBS shareholders was a loss of CHF 95 million, reflecting negative OCI attributable to UBS shareholders of CHF 922 million (net of tax), largely offset by net profit attributable to UBS shareholders of CHF 827 million. First-quarter OCI included foreign currency translation losses of CHF 722 million and cash flow hedge losses of CHF 209 million.

  è  

Refer to the “Statement of comprehensive income” in the “Financial information” section of this report for more information

 

 

16   


Table of Contents
     UBS Group
    

 

 

Operating profit before tax by business divisions and Corporate Center

 

          For the quarter ended            % change from        Year-to-date   
CHF million             30.6.12                31.3.12                30.6.11                    1Q12                2Q11                30.6.12                30.6.11   

Wealth Management

        502        803        672            (37     (25     1,305        1,318   

Wealth Management Americas

        200        190        140            5        43        390        252   

Investment Bank

        (130     730        383                            600        1,348   

Global Asset Management

        118        156        108            (24     9        274        231   

Retail & Corporate

        399        575        421            (31     (5     975        824   

Corporate Center

        (138     (1,150     (70         88        (97     (1,288     (84

Total operating profit before tax

        951        1,304        1,654            (27     (43     2,256        3,889   

 

Performance by reporting segment: 2Q12 vs 1Q12

The management discussion and analysis by reporting segment is provided in the “UBS business divisions and Corporate Center” section of this report.

Key figures and personnel: 2Q12 vs 1Q12

Cost/income ratio

The cost/income ratio was 85.1% in the second quarter of 2012 compared with 80.5% in the prior quarter. Excluding own credit, net restructuring charges and the credits to personnel expenses related to changes to a retiree benefit plan in the US in the second quarter and to our Swiss pension plan in the first quarter, the cost/income ratio increased to 89.6% from 72.9%, against a target range of 65% to 75%.

BIS risk-weighted assets

Risk-weighted assets measured on a Basel 2.5 basis increased by CHF 3.6 billion to CHF 214.7 billion at the end of the second quarter from CHF 211.1 billion at the end of the first quarter, due to increases in credit risk RWA of CHF 1.7 billion and market risk RWA of CHF 2.2 billion, affected by the appreciation of the US dollar.

Our pro-forma Basel III1 risk-weighted assets on a fully applied basis were estimated to be CHF 305 billion at the end of the second quarter, a CHF 45 billion decline from the prior quarter. This decrease was mainly due to a revised treatment of our option to acquire the SNB StabFund’s equity, lower securitization uplift due to Legacy Portfolio asset sales and the reduction in credit valuation adjustment VaR RWA, partially offset by the revised treatment in deferred tax assets. The option to acquire the SNB StabFund’s equity will no longer be risk-weighted at 1250%, like low-rated securitization exposures, but will instead be deducted from common equity tier 1.

Having already surpassed our Basel III risk-weighted assets target for 2012, we have adjusted our target for 2013 from CHF 290 billion to CHF 270 billion and for 2016 from CHF 270 billion to

CHF 240 billion to take into account the change in treatment of UBS’s option to buy the SNB StabFund’s equity, a change in the classification of deferred tax assets under Basel III, the allocation of risk-weighted assets for the Basel III credit valuation adjustment value-at-risk charge from the Investment Bank to the Legacy Portfolio and the final composition of the Legacy Portfolio.

  è  

Refer to the “Investment Bank”, “Legacy Portfolio” and “Capital management” sections of this report for more information

Net new money

Wealth Management net new money increased to CHF 9.5 billion from CHF 6.7 billion due to strong inflows in Asia Pacific, emerging markets and Wealth Management Switzerland, as well as on a global basis from ultra high net worth clients. Each region reported improved net new money compared with the first quarter.

In Wealth Management Americas, net new money totaled CHF 3.7 billion or USD 3.8 billion compared with CHF 4.2 billion or USD 4.6 billion. This reduction primarily resulted from client withdrawals associated with annual income tax payments.

Net new money excluding money market flows in Global Asset Management was an inflow of CHF 1.2 billion compared with outflows of CHF 2.6 billion, mainly reflecting net inflows from third parties compared with outflows in the prior quarter, partly offset by net outflows from clients of UBS’s wealth management businesses, compared with inflows in the prior quarter.

  è  

Refer to the various discussions of net new money flows in the “UBS business divisions and Corporate Center” section of this report for more information

Invested assets

Invested assets in Wealth Management rose by CHF 11 billion to CHF 783 billion during the quarter, primarily due to favorable currency developments, particularly the appreciation of the US dollar against the Swiss franc, and strong net new money inflows, partly offset by negative market performance.

    In Wealth Management Americas, invested assets increased by CHF 29 billion to CHF 757 billion. In US dollar terms, invested assets declined by USD 10 billion to USD 797 billion during the

 

 

1  The calculation of our pro-forma Basel III risk-weighted assets combines existing Basel 2.5 risk-weighted assets, a revised treatment for low-rated securitization exposures which are no longer deducted from capital but are risk-weighted with 1250%, and new capital charges based on models. Some of these new models still require regulatory approval and therefore our pro-forma calculations include estimates of the impact of these new capital charges which will be refined as models and the associated systems are enhanced.

 

17


Table of Contents

Group results

 

 

Net new money1

 

          For the quarter ended            Year-to-date               
CHF billion                     30.6.12                    31.3.12                    30.6.11                        30.6.12                    30.6.11   

Wealth Management

        9.5        6.7        5.6            16.2        16.7   

Wealth Management Americas

        3.7        4.2        2.6            7.9        6.2   

Global Asset Management

    (3.5     (8.2     1.1      (11.7)        6.7   

of which: non-money market flows

    1.2        (2.6     3.5      (1.4)        10.7   

of which: money market flows

        (4.7     (5.6     (2.4         (10.3     (4.0

1  Net new money excludes interest and dividend income.

 

Invested assets

 

  

  

          As of                      % change from               
CHF billion         30.6.12        31.3.12        30.6.11            31.3.12        30.6.11   

Wealth Management

        783        772        748            1        5   

Wealth Management Americas

        757        728        650            4        16   

Global Asset Management

        569        559        536            2        6   

 

quarter, mainly due to negative market performance, partly offset by net new money inflows.

Global Asset Management invested assets increased by CHF 10 billion to CHF 569 billion, largely due to positive currency effects and CHF 4 billion related to an asset movement associated with our acquisition of the ING Investment Management business in Australia, partly offset by negative market movements and net new money outflows.

  è  

Refer to the various discussions of invested assets in the “UBS business divisions and Corporate Center” section of this report for more information

Personnel

We employed 63,520 personnel as of 30 June 2012 compared with 64,243 personnel as of 31 March 2012.

The decrease of 723 during the second quarter mainly related to our continued focus on cost reduction across most business divisions. Decreases were reported in the Investment Bank, with 312, in Wealth Management Americas, with 164, in Retail & Corporate, with 149, and in Wealth Management, with 107.

Performance: 6M12 vs 6M11

Net profit attributable to UBS shareholders was CHF 1,252 million in the first six months of 2012 compared with CHF 2,822 million in the same period of 2011.

    Operating profit before tax was CHF 2,256 million in the first half of 2012 compared with CHF 3,889 million in the same period last year. The first six months of 2012 included an own credit loss on financial liabilities designated at fair value of CHF 925 million, compared with a loss of CHF 158 million. The first half of 2012 also included credits to personnel expenses of CHF 485 million and CHF 84 million related to changes to our Swiss pension plan and a retiree benefit plan in the US, respectively. Restructuring charges were CHF 135 million in the first half of 2012 compared

with a net release of CHF 18 million. Excluding these items, adjusted pre-tax profit declined by CHF 1,282 million to CHF 2,747 million from CHF 4,029 million. The decrease in adjusted pre-tax profit resulted mainly from declines in net interest and trading revenues as well as lower net fee and commission income, partly offset by lower operating expenses.

Operating income decreased by CHF 2,581 million to CHF 12,934 million. This was partly due to an own credit loss on financial liabilities designated at fair value of CHF 925 million compared with a loss of CHF 158 million in the first half of 2011. Net interest and trading income excluding own credit declined by CHF 1,067 million, mainly reflecting a decline of CHF 889 million in our equities net interest and trading revenues in the Investment Bank due to challenging trading conditions, mostly in cash and derivatives. In addition, results were adversely affected by the loss of CHF 349 million related to the Facebook initial public offering. Net interest and trading income in FICC declined by CHF 128 million, largely due to a decline in credit revenues from a strong first half of 2011. Emerging markets revenues decreased, while macro revenues increased, mostly due to improved performance in the long-end linear rates business.

In addition, net fee and commission income decreased by CHF 627 million, mainly due to lower net brokerage fees, which were down CHF 259 million as a result of reduced client activity, as well as a decrease of CHF 206 million in merger and acquisition and corporate finance fees and CHF 128 million lower investment fund fees.

    Operating expenses decreased by CHF 948 million to CHF 10,678 million, mainly due to a decrease in personnel expenses of CHF 1,088 million to CHF 7,244 million. The first half of 2012 included credits to personnel expenses of CHF 485 million and CHF 84 million related to changes to our Swiss pension plan and a retiree benefit plan in the US, respectively. In addition, expenses for total variable compensation, which includes discretionary bonus as well as other variable compensation, decreased to CHF

 

 

18   


Table of Contents
     UBS Group
    

 

 

 

1,669 million in the first half of 2012 from CHF 2,280 million in the first half of 2011, reflecting reduced profitability. Expenses for variable compensation included a charge of CHF 677 million for the amortization of deferred compensation awards from prior years compared with CHF 893 million in the same period last year.

General and administrative expenses increased by CHF 154 million to CHF 3,050 million mainly due to increased expenses for marketing and public relations, higher costs for outsourcing of IT and other services as well as higher net charges for litigation provisions.

Assessment of carrying values

As explained in our Annual Report 2011, we periodically, and at least annually, evaluate the extent to which we should adjust the

carrying values of certain assets, including deferred tax assets as well as goodwill and intangible assets with indefinite useful lives. Because the estimates of recoverability of these assets can be sensitive to changes in our forecast earnings, our practice is to conduct evaluations following the preparation of our new business plan each year. Our next business plan, taking into account changes in market conditions and the global economic outlook, is expected to be completed by the end of the third quarter. The subsequent evaluations could lead to changes in the carrying values of certain of these assets which would be reflected in our income statement. As of 30 June 2012, our deferred tax assets as well as goodwill and intangible assets with indefinite useful lives were CHF 7.7 billion and CHF 9.2 billion, respectively. More information on these assets is included in the “Critical accounting policies” and “Financial information” sections of our Annual Report 2011.

 

 

Personnel by business divisions and Corporate Center

 

                  As of                      % change from   
Full-time equivalents         30.6.12        31.3.12        30.6.11            31.3.12        30.6.11   

Wealth Management

        15,444        15,551        16,110            (1     (4

Wealth Management Americas

        16,132        16,296        16,240            (1     (1

Investment Bank

        16,432        16,744        17,520            (2     (6

Global Asset Management

        3,719        3,716        3,789            0        (2

Retail & Corporate

        11,268        11,417        11,586            (1     (3

Corporate Center

        526        519        462            1        14   

Total

        63,520        64,243        65,707            (1     (3

of which: Corporate Center personnel (before allocations)1

        18,836        19,001        19,735            (1     (5

1  Please note that some of the comparative figures in this table may differ from those originally published in quarterly and annual reports (for example due to adjustments following organizational changes).

   

 

Personnel by region

 

             
                  As of                      % change from   
Full-time equivalents                     30.6.12                        31.3.12                        30.6.11                        31.3.12                    30.6.11   

Switzerland

        22,517        22,819        23,551            (1     (4

UK

        6,544        6,616        6,819            (1     (4

Rest of Europe

        4,117        4,140        4,228            (1     (3

Middle East and Africa

        172        169        154            2        12   

USA

        21,386        21,685        22,078            (1     (3

Rest of Americas

        1,196        1,195        1,192            0        0   

Asia Pacific

        7,588        7,617        7,684            0        (1

Total

        63,520        64,243        65,707            (1     (3

 

19


Table of Contents


Table of Contents
 

 

    UBS business

    divisions and

    Corporate Center

 

            Management report

 

 

 

 

 

 

 


Table of Contents

Wealth Management

 

Wealth Management

 

Pre-tax profit was CHF 502 million in the second quarter of 2012 compared with CHF 803 million in the previous quarter, primarily as the first quarter included a credit to personnel expenses of CHF 237 million related to changes to our Swiss pension plan. Adjusted for this item and restructuring charges, pre-tax profit decreased by CHF 75 million to CHF 503 million. The gross margin on invested assets decreased by 4 basis points to 89 basis points, mainly reflecting lower client activity levels. Net new money improved to CHF 9.5 billion from CHF 6.7 billion in the previous quarter. Invested assets increased to CHF 783 billion.

Business division reporting

 

          As of or for the quarter ended            % change from            Year-to-date   
CHF million, except where indicated                 30.6.12                31.3.12                30.6.11                    1Q12                 2Q11                    30.6.12                30.6.11   

Net interest income

    497        478        485             2      975        978   

Net fee and commission income

    1,041        1,079        1,175      (4)        (11   2,120        2,419   

Net trading income

    186        209        209      (11)        (11   395        390   

Other income

    10        3        (4         233                     13        (3

Income

    1,733        1,770        1,865      (2)        (7   3,503        3,784   

Credit loss (expense)/recovery

        1        (1     2                    (50         0        11   

Total operating income

        1,734        1,769        1,867            (2)        (7         3,503        3,795   

Personnel expenses

    747        559        800      34         (7   1,306        1,663   

General and administrative expenses

    343        276        281      24         22      619        580   

Services (to)/from other business divisions

    100        93        75             33      193        153   

Depreciation of property and equipment

    40        36        37      11         8      76        77   

Amortization of intangible assets

        2        2        2                   0            4        3   

Total operating expenses1, 2

        1,232        966        1,194            28         3            2,198        2,477   

Business division performance before tax

        502        803        672            (37)        (25         1,305        1,318   

Key performance indicators3

                                                                   

Pre-tax profit growth (%)

    (37.5     70.5        4.2                    (1.0)        (2.7

Cost/income ratio (%)

    71.1        54.6        64.0                    62.7        65.5   

Net new money growth (%)4

    4.9        3.6        2.8                    4.3        4.3   

Gross margin on invested assets (bps)

        89        93        97            (4)        (8         91        98   

Additional information

                                                                   

Average attributed equity (CHF billion)5

    3.8        4.0        5.0      (5)        (24              

Return on attributed equity (RoaE) (%)

                                        66.9        52.7   

BIS risk-weighted assets (CHF billion)6

    16.5        16.3        16.4             N/A                 

Return on risk-weighted assets, gross (%)7

                                              42.7        45.1   

Goodwill and intangible assets (CHF billion)

        1.4        1.3        1.3             8                       

Net new money (CHF billion)4

    9.5        6.7        5.6                    16.2        16.7   

Invested assets (CHF billion)

    783        772        748             5                 

Client assets (CHF billion)

        913        901        891                   2                       

Loans, gross (CHF billion)

    81.7        75.9        71.2             15                 

Due to customers (CHF billion)

    177.3        168.2        155.6                   14                       

Personnel (full-time equivalents)

    15,444        15,551        16,110      (1)        (4              

Client advisors (full-time equivalents)

        4,102        4,175        4,203            (2)        (2                    

1  Operating expenses include a credit to personnel expenses of CHF 237 million related to changes to our Swiss pension plan in the first quarter of 2012.    2  Operating expenses include restructuring charges of CHF 1 million in the second quarter of 2012 and restructuring charges of CHF 12 million in the first quarter of 2012.    3  For the definitions of our key performance indicators (KPI), refer to the “Measurement of performance” section of our Annual Report 2011.    4  Net new money excludes interest and dividend income.    5  Refer to the “Capital management” section of this report for more information about the equity attribution framework.    6  Data reported as of 30 June 2012 and 31 March 2012 is disclosed in accordance with the Basel 2.5 framework. Data as of 30 June 2011 is disclosed in accordance with the Basel II framework. Refer to the “Capital management” section of this report for more information.    7  Based on Basel 2.5 risk-weighted assets for 2012. Based on Basel II risk-weighted assets for 2011.

 

22


Table of Contents
     UBS business divisions and Corporate Center
    

 

 

Regional breakdown of key figures1

 

As of or for the quarter ended 30.6.12     Europe     

Asia

Pacific

  Switzerland  

Emerging

markets

   
 
of which: ultra
    high net worth
  
  
 

    of which: Global

Family Office2

Net new money (CHF billion)3

    (0.1   5.3   2.2   2.2     5.9      1.7 

Net new money growth (%)3, 4

    (0.2   12.3   6.3   7.6     7.2      17.9 

Invested assets (CHF billion)

    336      180   139   119     336      41 

Gross margin on invested assets (bps)

    90      72   100   100     53      335

Client advisors (full-time equivalents)

    1,650      948   791   648     802 6    7

1  Based on the Wealth Management business area structure, and excluding minor functions with 65 client advisors, and CHF 8 billion of invested assets which are mainly attributable to the employee share and option plan service provided to corporate clients and their employees.    2  Joint venture between Wealth Management and the Investment Bank. Since June 2012, Global Family Office is reported as a sub-segment of ultra high net worth and is included in the ultra high net worth figures.    3  Net new money excludes interest and dividend income.    4  Net new money growth (%) is computed from 31 March 2012 figures, which are restated as if the Global Family Office were a sub-segment of ultra high net worth.    5  Gross margin includes income booked in the Investment Bank. Gross margin only based on income booked in Wealth Management is 18 basis points.    6  Dedicated ultra high net worth units: 578 client advisors. Non-dedicated ultra high net worth units: 224 client advisors.    7  Not meaningful.

 

Results: 2Q12 vs 1Q12

Operating income

Total operating income decreased by CHF 35 million to CHF 1,734 million from CHF 1,769 million, due to a decline in non-recurring fees and trading income, reflecting lower client activity levels.

Net interest income increased to CHF 497 million from CHF 478 million in the previous quarter, as deposits and lending volumes benefited from net inflows as well as favorable currency effects. In addition, net interest income increased due to higher treasury-related interest income.

Net fee and commission income decreased by CHF 38 million to CHF 1,041 million, mainly reflecting lower transaction-based revenues due to lower client activity. An increase in the average invested asset base benefited recurring fee income. However, lower margin markets and segments grew faster than higher margin markets and segments resulting in a dilution of the gross margin on invested assets. There was some pressure on product margins.

Net trading income decreased by CHF 23 million to CHF 186 million, mainly reflecting lower client activity within foreign exchange and precious metals-related products as well as lower treasury-related trading income.

Other income was CHF 10 million, up from CHF 3 million in the first quarter.

Operating expenses

Operating expenses increased to CHF 1,232 million from CHF 966 million, mainly as the previous quarter included a credit to personnel expenses of CHF 237 million related to changes to our Swiss pension plan. Adjusted for the effect of these changes and restructuring charges, operating expenses increased by CHF 40 million, mainly due to higher general and administrative expenses.

  è  

Refer to “Note 6 Personnel expenses” in the “Financial information” section of our first quarter 2012 report for more information on changes related to our Swiss pension plan

Excluding the effect of changes to the Swiss pension plan in the prior quarter and restructuring charges, personnel expenses decreased to CHF 746 million from CHF 782 million in the prior quarter. This decrease mainly reflected reduced accruals for variable compensation to front office staff due to reduced profitability. This was partially offset by higher personnel expenses mainly arising from technology-related service costs and control functions. General and administrative expenses increased by CHF 67 million to CHF 343 million, mainly due to higher charges for litigation provisions related to the 2007 to 2009 financial crisis.

Charges for services from other business divisions were CHF 100 million, up slightly from CHF 93 million in the previous quarter.

Cost/Income ratio

The cost/income ratio was 71.1%. Adjusted for the abovementioned changes to our Swiss pension plan as well as restructuring charges, the cost/income ratio increased by 3.7 percentage points to 71.0% from 67.3%, as a result of lower income and higher operating expenses. At this level, the ratio was slightly above our target range of 60% to 70%.

Net new money growth

The annualized net new money growth rate was 4.9% compared with 3.6% in the previous quarter, and was at the upper end of our target range of 3% to 5%.

Net new money increased to CHF 9.5 billion from CHF 6.7 billion due to strong inflows in Asia Pacific, emerging markets and Wealth Management Switzerland, as well as on a global basis from ultra high net worth clients. Each region reported improved net new money compared with the first quarter.

Invested assets

Invested assets rose by CHF 11 billion to CHF 783 billion during the quarter, primarily due to favorable currency developments, particularly the appreciation of the US dollar against the Swiss franc, and strong net new money inflows, partly offset by negative market performance.

 

 

23


Table of Contents

Wealth Management

 

 

 

Gross margin on invested assets

The gross margin for the quarter was 89 basis points compared with 93 basis points in the prior quarter and was below our target range of 95 to 105 basis points. The decrease was mainly a result of lower transaction-based net fee and commission income as well as net trading income due to lower client activity levels.

Personnel: 2Q12 vs 1Q12

Wealth Management employed 15,444 personnel on 30 June 2012 compared with 15,551 on 31 March 2012. This mainly reflected staff reductions related to our cost reduction program.

The number of client advisors decreased by 73 to 4,102, mainly due to a technical reclassification of 60 personnel in the financial intermediaries business in Europe from client advisor roles to non-client advisor roles. In addition, we continued to manage out lower-producing client advisors. These reductions were partly offset by continued hiring in the key strategic growth areas of Asia Pacific and emerging markets.

Results: 6M12 vs 6M11

Pre-tax profit decreased by CHF 13 million to CHF 1,305 million from CHF 1,318 million in the first half of 2011, and included a credit to personnel expenses of CHF 237 million related to changes to our Swiss pension plan. Adjusted for these changes and restructuring charges of CHF 13 million in the first half of 2012, pre-tax profit decreased by CHF 237 million.

Total operating income decreased by CHF 292 million to CHF 3,503 million from CHF 3,795 million.

Net interest income slightly decreased by CHF 3 million to CHF 975 million. Treasury-related income was significantly reduced, as the first half of 2011 included revenues of CHF 70 million related to the strategic investment portfolio, which was sold in the third quarter of 2011. Moreover, the first half of 2012 was negatively affected by increased charges related to the multi-currency portfolio of unencumbered, high-quality, short-term assets managed

centrally by Group Treasury and corresponding costs, partly offset by a substantial increase in client deposits and lending volumes that reflected net inflows and favorable currency effects.

Net fee and commission income decreased by CHF 299 million to CHF 2,120 million. Lower margin markets and segments grew, while higher margin markets and segments saw some attrition resulting in a dilution of the gross margin on invested assets. There was some pressure on product margins.

Non-recurring fees reflected reduced client activity compared with the first half of last year. In addition, net fee and commission income in the first half of 2011 included CHF 40 million of fee and commission revenues related to our Investment Products & Services unit that are now reflected in net trading income.

Trading income increased slightly to CHF 395 million from CHF 390 million in the first half of 2011. The increase from the above-mentioned reallocation of CHF 40 million from fee income was almost entirely offset by a decrease in treasury-related income.

Other income in the first half of 2012 was CHF 13 million compared with negative CHF 3 million in the first half of 2011. The credit loss expense in the first half of 2012 was zero compared with a credit loss recovery of CHF 11 million in the first half of 2011.

Operating expenses were down by CHF 279 million to CHF 2,198 million, mainly due to a credit to personnel expenses of CHF 237 million related to changes to our Swiss pension plan. Adjusted for these changes and restructuring charges, operating expenses decreased by CHF 55 million. Personnel expenses, excluding the abovementioned items, decreased by CHF 135 million to CHF 1,528 million, mainly reflecting reduced accruals for variable compensation due to lower profitability as well as a shift of middle and back office functions to Retail & Corporate from Wealth Management. This was partly offset by higher accruals for untaken annual leave. Non-personnel expenses were CHF 892 million compared with CHF 814 million in the first half of 2011, reflecting higher charges for litigation provisions as well as for services from other business divisions due to the abovementioned shift of middle and back office functions.

 

 

24   


Table of Contents
     UBS business divisions and Corporate Center
    

 

 

Wealth Management Americas

 

Pre-tax profit in the second quarter of 2012 was USD 211 million, a slight increase from the prior quarter’s record profit of USD 209 million, as a 1% rise in operating income was partially offset by an increase in operating expenses. The second quarter’s result included USD 63 million of realized gains in the investment portfolio, an increase over the prior quarter, and an increase in net fee and commission income that offset the combined effect of reduced net interest and trading income and higher operating expenses.

Business division reporting – in US dollars

 

                  As of or  for the quarter ended                                 % change from                    Year-to-date       
USD million, except where indicated         30.6.12        31.3.12        30.6.11            1Q12        2Q11            30.6.12        30.6.11   

Net interest income

        206        218        197            (6     5            424        374   

Net fee and commission income

        1,193        1,153        1,158            3        3            2,346        2,287   

Net trading income

        124        136        119            (9     4            260        245   

Other income

        65        60        34            8        91            125        49   

Income

        1,587        1,568        1,507            1        5            3,155        2,955   

Credit loss (expense)/recovery

        (1     0        (1                 0            (1     0   

Total operating income

        1,587        1,568        1,506            1        5            3,154        2,956   

Personnel expenses

        1,124        1,123        1,087            0        3            2,247        2,169   

Financial advisor compensation1

        587        579        554            1        6            1,167        1,099   

Compensation commitments and advances related to recruited financial advisors2

        169        168        154            1        10            337        298   

Salaries and other personnel costs

        367        376        379            (2     (3         744        772   

General and administrative expenses

        215        198        221            9        (3         413        429   

Services (to)/from other business divisions

        (4     (3     (5         (33     20            (7     (5

Depreciation of property and equipment

        27        26        24            4        13            53        51   

Amortization of intangible assets

        14        14        14            0        0            27        27   

Total operating expenses3, 4

        1,375        1,359        1,341            1        3            2,734        2,671   

Business division performance before tax

        211        209        165            1        28            420        285   

Key performance indicators5

                                                                   

Pre-tax profit growth (%)6

        1.0        34.0        38.7                                47.4        N/A   

Cost/income ratio (%)

        86.6        86.7        89.0                                86.7        90.4   

Share of recurring revenues (%)

        66.0        62.5        64.7                                64.3        63.6   

Net new money growth (%)7

        1.9        2.4        1.6                                2.2        1.9   

Gross margin on invested assets (bps)

        79        80        78            (1     1            80        78   

1  Financial advisor compensation consists of grid-based compensation based directly on compensable revenues generated by financial advisors and supplemental compensation calculated based on financial advisor productivity, firm tenure, assets and other variables.    2  Compensation commitments and advances related to recruited financial advisors represents costs related to compensation commitments and advances granted to financial advisors at the time of recruitment which are subject to vesting requirements.    3  Operating expenses include restructuring provision releases of USD 3 million in the second quarter of 2012 and USD 2 million in the first quarter of 2012.    4  Operating expenses include a credit to personnel expenses of USD 1 million related to changes to a retiree benefit plan in the US in the second quarter of 2012.    5  For the definitions of our key performance indicators (KPI), refer to the “Measurement of performance” section of our Annual Report 2011.    6  Not meaningful and not included if either the reporting period or the comparison period is a loss period.    7  Net new money excludes interest and dividend income.

 

25


Table of Contents

Wealth Management Americas

 

 

Business division reporting – in US dollars (continued)

 

                   As of or for the  quarter ended                                 % change  from                             Year-to-date            
USD million, except where indicated      30.6.12         31.3.12         30.6.11             1Q12        2Q11             30.6.12         30.6.11   

Additional information

                                                                     

Recurring income

     1,047         980         975             7        7             2,027         1,881   

Average attributed equity (USD billion)1

     6.3         7.7         9.4             (18     (33                      

Return on attributed equity (RoaE) (%)

                                                         12.0         6.3   

BIS risk-weighted assets (USD billion)2

     25.0         26.3         27.5             (5     N/A                         

Return on risk-weighted assets, gross (%)3

                                                         23.9         22.7   

Goodwill and intangible assets (USD billion)

     3.9         3.9         3.9             0        0                         

Net new money (USD billion)4

     3.8         4.6         3.0                                  8.5         7.0   
Net new money including interest and dividend income (USD billion)5      9.0         9.3         7.9                                  18.3         16.3   

Invested assets (USD billion)

     797         807         774             (1     3                         

Client assets (USD billion)

     838         851         825             (2     2                         

Loans, gross (USD billion)

     31.2         29.8         27.6             5        13                         

Due to customers (USD billion)

     46.8         43.7         38.1             7        23                         

of which: deposit accounts (USD billion)

     35.4         30.7         27.6             15        28                         

Personnel (full-time equivalents)

     16,132         16,296         16,240             (1     (1                      

Financial advisors (full-time equivalents)

     7,021         7,015         6,862             0        2                         

Business division reporting excluding PaineWebber acquisition costs6

  

                                          

Business division performance before tax

     240         235         189             2        27             474         332   

Cost/income ratio (%)

     85.1         85.2         87.6                                  85.1         88.9   

Average attributed equity (USD billion)1

     3.1         4.4         6.0             (30     (48                      

1  Refer to the “Capital management” section of this report for more information about the equity attribution framework.    2  Data reported as of 30 June 2012 and 31 March 2012 is disclosed in accordance with the Basel 2.5 framework. Data as of 30 June 2011 is disclosed in accordance with the Basel II framework. Refer to the “Capital management” section of this report for more information.    3  Based on Basel 2.5 risk-weighted assets for 2012. Based on Basel II risk-weighted assets for 2011.    4  Net new money excludes interest and dividend income.    5  For purposes of comparison with a US peer.     6  Acquisition costs represent goodwill and intangible assets funding costs and intangible asset amortization costs primarily related to UBS’s 2000 acquisition of the PaineWebber retail brokerage business.

Business division reporting – in Swiss francs

 

                   As of or for the  quarter ended                                 % change  from                             Year-to-date            
CHF million, except where indicated      30.6.12        31.3.12        30.6.11             1Q12        2Q11             30.6.12        30.6.11   

Net interest income

     194        199        168             (3     15             393        333   

Net fee and commission income

     1,125        1,048        988             7        14             2,173        2,037   

Net trading income

     116        124        101             (6     15             241        219   

Other income

     62        54        28             15        121             116        43   

Income

     1,498        1,425        1,285             5        17             2,922        2,631   

Credit loss (expense)/recovery

     (1     0        (1                  0             (1     0   

Total operating income

     1,497        1,425        1,284             5        17             2,922        2,631   

Personnel expenses

     1,060        1,021        928             4        14             2,081        1,933   

Financial advisor compensation1

     554        527        473             5        17             1,080        979   

Compensation commitments and advances related to recruited financial advisors2

     160        153        131             5        22             312        265   

Salaries and other personnel costs

     346        342        323             1        7             688        688   

General and administrative expenses

     202        180        188             12        7             382        382   

Services (to)/from other business divisions

     (4     (2     (4          (100     0             (6     (4

Depreciation of property and equipment

     26        24        20             8        30             49        45   

Amortization of intangible assets

     13        12        12             8        8             25        24   

Total operating expenses3, 4

     1,297        1,235        1,144             5        13             2,531        2,380   

Business division performance before tax

     200        190        140             5        43             390        252   

1  Financial advisor compensation consists of grid-based compensation based directly on compensable revenues generated by financial advisors and supplemental compensation calculated based on financial advisor productivity, firm tenure, assets and other variables.    2  Compensation commitments and advances related to recruited financial advisors represents costs related to compensation commitments and advances granted to financial advisors at the time of recruitment which are subject to vesting requirements.    3  Operating expenses include restructuring provision releases of CHF 3 million in the second quarter of 2012 and CHF 2 million in the first quarter of 2012.    4  Operating expenses include a credit to personnel expenses of CHF 1 million related to changes to a retiree benefit plan in the US in the second quarter of 2012.

 

26


Table of Contents
     UBS business divisions and Corporate Center
    

 

 

 

Business division reporting – in Swiss francs (continued)

 

                    As of or for the  quarter ended                              % change from                               Year-to-date            
CHF million, except where indicated      30.6.12         31.3.12         30.6.11              1Q12          2Q11               30.6.12         30.6.11   

Key performance indicators1

                                                          

Pre-tax profit growth (%)2

     5.3         31.9         26.1                       54.8         N/A   

Cost/income ratio (%)

     86.6         86.7         89.0                       86.6         90.5   

Share of recurring revenues (%)

     65.9         62.5         64.8                       64.3         63.6   

Net new money growth (%)3

     2.0         2.4         1.5                       2.2         1.8   

Gross margin on invested assets (bps)

     81         79         76                     80         77   

Additional information

                                                          

Recurring income

     987         891         832       11          19        1,878         1,673   

Average attributed equity (CHF billion)4

     5.9         7.0         8.0       (16)         (26)                   

Return on attributed equity (RoaE) (%)

                                              12.1         6.3   

BIS risk-weighted assets (CHF billion)5

     23.7         23.7         23.2               N/A                    

Return on risk-weighted assets, gross (%)6

                                              24.0         22.4   

Goodwill and intangible assets (CHF billion)

     3.7         3.5         3.3               12                    

Net new money (CHF billion)3

     3.7         4.2         2.6                       7.9         6.2   
Net new money including interest and dividend income (CHF billion)7      8.5         8.4         6.7                       16.9         14.5   

Invested assets (CHF billion)

     757         72