6-K 1 edgar3q23ubsgroup.htm edgar3q23ubsgroup
 
 
 
 
 
 
 
 
 
 
 
 
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: November 7, 2023
UBS Group AG
(Registrant's
 
Name)
Bahnhofstrasse 45, 8001 Zurich, Switzerland
(Address of principal executive office)
Commission File Number: 1-36764
UBS AG
(Registrant's
 
Name)
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Aeschenvorstadt 1, 4051 Basel, Switzerland
 
(Address of principal executive offices)
Commission File Number: 1-15060
 
Credit Suisse AG
(Registrant's
 
Name)
Paradeplatz 8, 8001 Zurich, Switzerland
(Address of principal executive office)
Commission File Number: 1-33434
Indicate by check mark whether the registrants file or will file annual
 
reports under cover of Form 20-F or Form
40-
F.
Form 20-F
 
☒
 
Form 40-F
 
☐
 
 
This Form 6-K consists of the Third Quarter 2023 Report of UBS Group
 
AG, which appears immediately following
this page.
 
edgarq23ubsgroupagp3i0
 
 
 
UBS
 
Group
Third
quarter
2023
report
 
 
 
 
 
Corporate calendar UBS Group AG
Publication of the fourth quarter 2023
 
report:
 
Tuesday,
 
6 February 2024
Publication of the Annual Report 2023:
 
Thursday, 28 March 2024
Publication of the Sustainability Report 2023:
 
Thursday, 28 March 2024
Annual General Meeting 2024:
 
Wednesday, 24 April 2024
Publication of the first quarter 2024 report:
 
Tuesday,
 
7 May 2024
Publication dates of future quarterly and annual reports
 
and results are made available as
part of the corporate calendar of UBS Group AG at
ubs.com/investors
.
Contacts
Switchboards
For all general inquiries
 
ubs.com/contact
Zurich +41-44-234 1111
London +44-207-567
 
8000
New York +1-212-821 3000
Hong Kong +852-2971 8888
Singapore +65-6495 8000
Investor Relations
UBS’s Investor Relations team manages
relationships with institutional investors,
research analysts and credit rating agencies.
 
ubs.com/investors
Zurich +41-44-234 4100
New York +1-212-882 5734
Media Relations
UBS’s Media Relations team manages
relationships with global media and
journalists.
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 5858
 
mediarelations@ubs.com
Hong Kong +852-2971 8200
sh-mediarelations-ap@ubs.com
Office of the Group Company Secretary
The Group Company Secretary handles
 
inquiries directed to the Chairman or to
other members of the Board of Directors.
UBS Group AG, Office of the Group
Company Secretary
P.O.
 
Box, CH-8098 Zurich, Switzerland
sh-company-secretary@ubs.com
Zurich +41-44-235 6652
Shareholder Services
UBS’s Shareholder Services team, a unit
of the Group Company Secretary’s office,
manages relationships with shareholders
and the registration of UBS Group AG
registered shares.
 
UBS Group AG, Shareholder Services
P.O.
 
Box, CH-8098 Zurich, Switzerland
sh-shareholder-services@ubs.com
Zurich +41-44-235 6652
US Transfer Agent
For global registered share-related
inquiries in the US.
Computershare Trust Company NA
P.O.
 
Box 505000
Louisville, KY 40233-5000, USA
Shareholder online inquiries:
www-us.computershare.com/
investor/contact
Shareholder website:
computershare.com/investor
Calls from the US
 
+1-866-305-9566
Calls from outside the US
+1-781-575-2623
TDD for hearing impaired
+1-800-231-5469
TDD for foreign shareholders
+1-201-680-6610
Imprint
Publisher: UBS Group AG, Zurich, Switzerland | ubs.com
Language: English
 
© UBS 2023. The key symbol and UBS are among
 
the registered and unregistered
trademarks of UBS. All rights reserved.
1.
UBS
 
Group
4
7
2.
UBS business divisions
 
and Group Items
19
23
26
29
32
34
3.
Risk, capital, liquidity and funding,
and balance sheet
36
42
50
52
55
4.
Consolidated
financial statements
57
5.
Significant regulated subsidiary and
sub-group information
108
Appendix
111
115
117
118
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report
 
2
Terms used in this report, unless the context requires otherwise
“UBS,” “UBS Group,” “UBS Group
 
AG consolidated,” “Group,”
 
“the Group,” “we,” “us”
 
and “our”
UBS Group AG and its consolidated subsidiaries
“UBS AG” and “UBS
 
AG consolidated”
 
UBS AG and its consolidated subsidiaries
“Credit Suisse AG” and “Credit
 
Suisse AG consolidated”
Credit Suisse AG and its consolidated subsidiaries
“Credit Suisse Group“ and “Credit Suisse Group
 
AG consolidated”
Pre-acquisition Credit Suisse Group
”Credit Suisse”
Credit Suisse AG and its consolidated subsidiaries,
 
Credit Suisse
Services AG, and other small former Credit
 
Suisse Group entities
now directly held by UBS Group AG
“UBS Group AG” and “UBS
 
Group AG standalone”
 
UBS Group AG on a standalone basis
“Credit Suisse Group AG” and
 
“Credit Suisse Group AG standalone”
 
Credit Suisse Group AG on a standalone basis
“UBS AG standalone”
 
UBS AG on a standalone basis
“Credit Suisse AG standalone”
Credit Suisse AG on a standalone basis
“UBS Switzerland AG” and “UBS
 
Switzerland AG standalone”
UBS Switzerland AG on a standalone basis
“UBS Europe SE consolidated”
 
UBS Europe SE and its consolidated subsidiaries
“UBS Americas Holding LLC” and
 
“UBS Americas Holding LLC consolidated”
UBS Americas Holding LLC and its consolidated subsidiaries
“1m”
One million, i.e., 1,000,000
“1bn”
One billion, i.e., 1,000,000,000
“1trn”
One trillion, i.e., 1,000,000,000,000
In this report, unless the context requires otherwise,
 
references to any gender shall apply to all genders.
Alternative performance measures
An alternative performance measure (an APM) is a financial measure of historical or
 
future financial performance,
financial position
 
or cash
 
flows other
 
than a
 
financial measure
 
defined or
 
specified in
 
the applicable
 
recognized
accounting standards
 
or
 
in other
 
applicable regulations.
 
We
 
report
 
a
 
number of
 
APMs
 
in
 
the discussion
 
of
 
the
financial and
 
operating performance
 
of the
 
Group, our
 
business divisions
 
and Group
 
Items. We
 
use APMs
 
to provide
a
 
more
 
complete
 
picture of
 
our
 
operating performance
 
and
 
to
 
reflect
 
management’s view
 
of
 
the
 
fundamental
drivers
 
of
 
our
 
business
 
results. A
 
definition
 
of
 
each
 
APM,
 
the
 
method
 
used
 
to
 
calculate
 
it
 
and
 
the
 
information
content are presented
 
under “Alternative performance measures”
 
in the
 
appendix to this
 
report. Our APMs
 
may
qualify
 
as
 
non-GAAP
 
measures
 
as
 
defined
 
by
 
US
 
Securities
 
and
 
Exchange
 
Commission
 
(SEC)
 
regulations.
 
Our
underlying results are APMs and are non-GAAP
 
financial measures.
›
Refer to the ”Group performance” section of this report and to “Alternative performance measures” in the
appendix to this report for additional information about underlying results
Comparability
Comparative information in this report is presented
 
as follows:
 
Profit and
 
loss information
 
for the
 
third quarter
 
of 2023
 
is presented
 
on a
 
consolidated basis,
 
including Credit
 
Suisse
data for
 
three months.
 
The second
 
quarter of
 
2023 comparative
 
consolidated profit or
 
loss information includes
three months of data for
 
UBS and one month (June
 
2023) for Credit Suisse.
 
Information for the prior-year
 
quarters
includes legacy
 
UBS data
 
only. 2023
 
year-to-date
 
information includes
 
nine months
 
of data
 
for UBS
 
and four
 
months
for Credit Suisse. Comparative year-to-date
 
information for 2022 includes UBS only.
Balance sheet
 
information as
 
at 30 September
 
2023 and
 
30 June 2023
 
includes
 
UBS and
 
Credit Suisse
 
consolidated
information, prior balance sheet dates reflect
 
legacy UBS information only.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report
 
3
Our key figures
As of or for the quarter ended
As of or year-to-date
USD m, except where indicated
30.9.23
30.6.23
1
31.12.22
30.9.22
30.9.23
30.9.22
Group results
Total revenues
 
11,695
 
9,540
 
8,029
 
8,236
 
29,979
 
26,534
Negative goodwill
 
28,925
 
28,925
Credit loss expense / (release)
 
306
 
623
 
7
 
(3)
 
967
 
22
Operating expenses
 
11,644
 
8,486
 
6,085
 
5,916
 
27,340
 
18,845
Operating profit / (loss) before tax
 
(255)
 
29,356
 
1,937
 
2,323
 
30,597
 
7,667
Net profit / (loss) attributable to shareholders
 
(785)
 
28,992
 
1,653
 
1,733
 
29,235
 
5,977
Diluted earnings per share (USD)
2
 
(0.24)
 
9.02
 
0.50
 
0.52
 
8.95
 
1.74
Profitability and growth
3,4,5
Return on equity (%)
 
(3.7)
 
161.2
 
11.7
 
12.3
 
54.5
 
13.7
Return on tangible equity (%)
 
(4.0)
 
178.4
 
13.2
 
13.9
 
60.3
 
15.4
Underlying return on tangible equity (%)
 
1.1
 
2.7
 
12.7
 
12.1
 
3.6
 
12.8
Return on common equity tier 1 capital (%)
 
(4.0)
 
185.8
 
14.7
 
15.5
 
62.6
 
17.8
Underlying return on common equity tier 1 capital (%)
 
1.1
 
2.9
 
14.1
 
13.5
 
3.8
 
14.8
Return on leverage ratio denominator, gross (%)
 
2.8
 
2.8
 
3.2
 
3.3
 
3.0
 
3.4
Cost / income ratio (%)
6
 
99.6
 
88.9
 
75.8
 
71.8
 
91.2
 
71.0
Underlying cost / income ratio (%)
6
 
89.3
 
83.5
 
76.4
 
74.4
 
85.1
 
73.9
Effective tax rate (%)
n.m.
7
 
1.2
 
14.5
 
25.0
 
4.4
 
21.7
Net profit growth (%)
n.m.
n.m.
 
22.6
 
(24.0)
 
389.1
 
(2.2)
Resources
3
Total assets
 
1,644,522
 
1,678,856
 
1,104,364
 
1,111,753
 
1,644,522
 
1,111,753
Equity attributable to shareholders
 
84,856
 
87,116
 
56,876
 
55,756
 
84,856
 
55,756
Common equity tier 1 capital
8
 
78,587
 
80,258
 
45,457
 
44,664
 
78,587
 
44,664
Risk-weighted assets
8
 
546,491
 
556,603
 
319,585
 
310,615
 
546,491
 
310,615
Common equity tier 1 capital ratio (%)
8
 
14.4
 
14.4
 
14.2
 
14.4
 
14.4
 
14.4
Going concern capital ratio (%)
8
 
16.8
 
16.8
 
18.2
 
19.1
 
16.8
 
19.1
Total loss-absorbing capacity ratio (%)
8
 
35.7
 
35.2
 
33.0
 
33.7
 
35.7
 
33.7
Leverage ratio denominator
8
 
1,615,817
 
1,677,877
 
1,028,461
 
989,787
 
1,615,817
 
989,787
Common equity tier 1 leverage ratio (%)
8
 
4.9
 
4.8
 
4.4
 
4.5
 
4.9
 
4.5
Liquidity coverage ratio (%)
9
 
196.5
 
175.2
 
163.7
 
162.7
 
196.5
 
162.7
Net stable funding ratio (%)
 
120.7
 
117.6
 
119.8
 
120.4
 
120.7
 
120.4
Other
Invested assets (USD bn)
4,10,11
 
5,373
 
5,530
 
3,981
 
3,731
 
5,373
 
3,731
Personnel (full-time equivalents)
 
115,981
 
119,100
 
72,597
 
72,009
 
115,981
 
72,009
Market capitalization
2,12
 
85,768
 
69,932
 
65,608
 
51,694
 
85,768
 
51,694
Total book value per share (USD)
2
 
26.24
 
26.99
 
18.30
 
17.52
 
26.24
 
17.52
Tangible book value per share (USD)
2
 
23.94
 
24.64
 
16.28
 
15.57
 
23.94
 
15.57
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
 
2 Refer to the
 
“Share information
 
and earnings
 
per share”
 
section of
 
this report
 
for more
 
information.
 
3 Refer to
 
the “Targets,
 
aspirations and
 
capital guidance”
 
section of
 
the Annual
 
Report 2022
 
for more
information about our performance targets.
 
4 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method.
 
5 Profit or loss information for the third quarter
of 2023 includes three months of information for UBS and three months of information for Credit Suisse and, for the purpose of the calculation of return measures, has been annualized multiplying such by four. Profit
or loss information for the second quarter of 2023 includes three months of information for UBS and one month (June 2023) of information for Credit Suisse and, for the purpose of the calculation of return measures,
has been annualized multiplying such by four. Profit or loss information for the first nine months of
 
2023 includes nine months of information for UBS and four months (June–September 2023)
 
of information for Credit
Suisse and, for the purpose of the
 
calculation of return measures,
 
has been annualized by dividing such
 
by three and then multiplying by
 
four for the year-to-date
 
measure.
 
6 Negative goodwill is not used in
 
the
calculation as it is presented in a
 
separate reporting line and
 
is not part of total
 
revenues.
 
7 The effective tax rate
 
for the third quarter of
 
2023 is not a meaningful
 
measure, due to the
 
distortive effect of current
unbenefited tax losses
 
at the former
 
Credit Suisse entities.
 
8 Based on the
 
Swiss systemically relevant
 
bank framework as
 
of 1 January 2020.
 
Refer to the “Capital
 
management” section of
 
this report for
 
more
information.
 
9 The disclosed ratios represent quarterly averages for the quarters presented and are calculated based on an
 
average of 63 data points in the third quarter of 2023, 64 data points
 
in the second quarter
of 2023, 63 data points in the fourth quarter
 
of 2022 and 66 data points in the
 
third quarter of 2022. Refer to the “Liquidity
 
and funding management” section of this report
 
for more information.
 
10 Consists of
invested assets for Global Wealth Management, Asset Management and Personal
 
& Corporate Banking. Refer to “Note 31 Invested assets and net new money” in the “Consolidated financial
 
statements” section of
the Annual Report 2022 for more information.
 
11 Starting with the second quarter of 2023, invested assets include
 
invested assets from associates in the Asset Management
 
business division, to better reflect the
business strategy. Comparative figures
 
have been restated to reflect this change.
 
12 In the second quarter of 2023, the calculation of
 
market capitalization was amended to reflect total
 
shares issued multiplied by
the share price at the end of the period. The calculation was previously based on total shares outstanding multiplied by the share price at the end of the period. Market capitalization has been increased by USD 7.8bn
as of 31 December 2022 and by USD 5.0bn as of 30 September 2022 as a result.
 
 
UBS Group third quarter 2023 report |
UBS Group | Recent developments
 
4
UBS Group
Management report
Recent developments
Integration of Credit Suisse
We are executing on our integration plans at pace
 
and we made further progress regarding Non-core and Legacy
risk reduction and cost savings.
We
 
aim
 
to
 
substantially complete
 
the integration
 
for
 
the
 
Group
 
by
 
the
 
end
 
of
 
2026
 
and
 
to
 
achieve gross
 
cost
reductions of over
 
USD 10bn by that
 
time compared with
 
the pre-acquisition 2022
 
combined cost base
 
of UBS and
Credit Suisse.
 
We plan
 
to merge
 
UBS AG with
 
Credit Suisse
 
AG and
 
Credit Suisse
 
(Schweiz)
 
AG with
 
UBS Switzerland
AG in
 
2024 and
 
to transition
 
to a
 
single US
 
intermediate holding
 
company in
 
the first
 
half
 
of 2024.
 
The client
migration to a combined platform for
 
UBS Switzerland AG and Credit Suisse (Schweiz)
 
AG is targeted for 2025.
 
Starting with
 
the third
 
quarter
 
of 2023,
 
we report
 
five business
 
divisions in
 
line with
 
International
 
Financial Reporting
Standards (IFRS),
 
reflecting the
 
way we
 
are
 
managing our
 
businesses and
 
engaging with
 
clients: Global
 
Wealth
Management, Personal &
 
Corporate Banking, Asset
 
Management, the Investment
 
Bank, and Non-core and
 
Legacy.
We separately report Group Items.
 
The
 
Non-core and
 
Legacy business
 
division includes
 
positions and
 
businesses not
 
aligned with
 
our
 
strategy and
policies. Those consist of the assets and liabilities reported as part of the former Credit Suisse Capital Release Unit
in the second quarter
 
of 2023 and certain
 
assets and liabilities
 
of the former
 
Credit Suisse Investment
 
Bank, Wealth
Management
 
and
 
Asset
 
Management
 
divisions,
 
as
 
well
 
as
 
of
 
the
 
former
 
Credit
 
Suisse
 
Corporate
 
Center.
 
Also
included
 
are
 
the
 
remaining
 
assets
 
and
 
liabilities
 
of
 
UBS’s
 
Non-core
 
and
 
Legacy
 
Portfolio,
 
previously
 
reported
 
in
Group Functions,
 
and smaller
 
amounts of assets
 
and liabilities
 
of our UBS’s
 
business divisions
 
that we have
 
assessed
as not strategic in light of the acquisition
 
of the Credit Suisse Group.
Information for the business divisions
 
and Group Items for the second
 
quarter of 2023 has been restated
 
to reflect
the effect of
 
the integration of
 
the UBS and
 
Credit Suisse divisions
 
on an IFRS
 
basis from June
 
2023 onward, as
 
well
as the
 
establishment of
 
the Non-core
 
and Legacy
 
business division,
 
and a
 
related reclassification
 
of certain
 
Non-
Core and Legacy
 
positions to a
 
fair value accounting
 
basis. Prior-year quarter
 
information reflects
 
the results of
 
UBS
Group operations
 
prior to
 
the acquisition
 
of the
 
Credit Suisse
 
Group, presented
 
in line
 
with the
 
new business
 
division
structure. As we execute our integration plans, it is expected that allocation methodologies
 
for profit and loss and
balance sheet to the business divisions and
 
into Group Items will continue to be
 
reviewed and refined.
As
 
disclosed
 
in
 
the
 
UBS
 
Group
 
second
 
quarter
 
2023
 
report,
 
UBS
 
accounted
 
for
 
the
 
acquisition
 
as
 
a
 
business
combination
 
under
 
IFRS
 
3,
Business
 
Combinations
,
 
applying
 
the
 
acquisition
 
method
 
of
 
accounting.
 
After
establishing the initial purchase price allocation
 
(PPA) published
 
as in the UBS
 
Group second quarter 2023 report,
we are required
 
for the subsequent
 
12-month period to
 
monitor developments
 
that may suggest
 
that the fair
 
value
valuations established as of the acquisition
 
balance sheet date (31 May 2023) could be
 
different.
›
Refer to the “UBS business divisions and Group Items” section of this report for more information
›
Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial
statements” section of this report for more information
Underlying results
In the context of
 
the integration of Credit
 
Suisse,
 
we recognize the importance
 
of describing the performance
 
of
our
 
business
 
divisions excluding
 
items of
 
profit
 
or
 
loss that
 
management believes
 
are
 
not
 
representative
 
of
 
the
underlying performance.
 
Therefore, in
 
addition to
 
reporting our
 
results in
 
accordance with
 
IFRS, we
 
have added
underlying results to
 
our reporting. Underlying
 
results are non-GAAP
 
financial measures as
 
defined by US
 
Securities
and Exchange Commission (SEC) regulations and as alternative
 
performance measures in Switzerland and the
 
EU.
 
 
UBS Group third quarter 2023 report |
UBS Group | Recent developments
 
5
Items related to
 
the integration of
 
Credit Suisse that
 
management believes are
 
not representative of
 
our underlying
performance include accretion impacts
 
resulting from PPA
 
adjustments related to
 
financial instruments measured
at
 
amortized
 
cost,
 
including
 
off-balance
 
sheet
 
positions.
 
They
 
also
 
include
 
integration-related
 
expenses
 
and
acquisition-related costs.
 
›
Refer to “Selected financial information of our business divisions and Group Items” in the “Group performance”
section of this report for more information about underlying results
›
Refer to “Alternative performance measures” in the appendix to this report for more information
Update to the operational risk risk-weighted
 
asset allocation methodology
In the third
 
quarter of 2023, we
 
updated the methodology that we
 
use to allocate operational
 
risk risk-weighted
assets (RWA)
 
to business
 
divisions and
 
Group
 
Items. The
 
revised allocation
 
methodology takes
 
into account
 
the
integration of
 
Credit Suisse
 
into the
 
revised business
 
division structure
 
and the
 
establishment and
 
perimeter of
 
Non-
core and Legacy, as well as both
 
current operational risk
 
calculation methodologies
 
and anticipated changes to
 
the
methodology under
 
Basel III that
 
are expected to
 
become effective in
 
2025. As
 
some of
 
these drivers
 
remain subject
to uncertainty, the methodology and divisional operational
 
risk RWA allocation may undergo
 
further refinement in
subsequent financial reporting periods.
›
Refer to “Risk-weighted assets” in the “Capital management” section of this report for more information about
operational risk RWA
Material weaknesses in the Credit Suisse
 
Group’s internal control over financial reporting
 
as of 31 December
2022 and 31 December 2021
As registrants with the SEC, the UBS
 
Group,
 
UBS AG and Credit Suisse AG are
 
subject to requirements under the
Sarbanes–Oxley Act
 
of 2002
 
with respect
 
to financial
 
reporting. This
 
requires us
 
to perform
 
system and
 
process
evaluation and
 
testing of
 
internal controls
 
over financial
 
reporting to
 
enable management
 
to assess
 
the effectiveness
of our
 
internal controls.
 
A material
 
weakness is
 
a deficiency
 
or a
 
combination of
 
deficiencies in
 
internal controls
over financial
 
reporting such
 
that there
 
is
 
a
 
reasonable possibility
 
that a
 
material misstatement
 
of a
 
registrant’s
financial statements will not be prevented or detected on a timely basis.
 
Evaluation of the impacts of the material
weaknesses
 
identified
 
in
 
Credit
 
Suisse’s
 
internal
 
control
 
over
 
financial
 
reporting
 
will
 
form
 
part
 
of
 
our
 
annual
assessment, which will be disclosed as part
 
of our Annual Report 2023.
Regulatory and legal developments
Introduction of a public liquidity backstop in
 
Switzerland
In September
 
2023, the
 
Swiss Federal
 
Council adopted
 
a dispatch
 
and draft
 
legislation on
 
the introduction
 
of a
public liquidity
 
backstop (a
 
PLB) for
 
systemically important banks
 
(SIBs). The
 
proposed legislative
 
changes aim
 
to
establish the PLB as part
 
of ordinary law in order to
 
enable the Swiss government
 
and the Swiss National
 
Bank (the
SNB) to
 
support an
 
SIB domiciled
 
in Switzerland
 
with liquidity
 
in the
 
process of
 
resolution, in
 
line with
 
other financial
centers. The introduction of the PLB
 
is intended to increase the
 
confidence of market participants in the ability of
SIBs to be
 
successfully recapitalized and remain
 
solvent in a crisis.
 
Furthermore, the draft legislation provides
 
that
SIBs
 
will
 
pay
 
the
 
Swiss
 
Confederation
 
an
 
annual
 
fee
 
to
 
mitigate
 
a
 
potential
 
impact
 
on
 
competition
 
and
 
to
compensate the Swiss Confederation for its
 
guarantee to the SNB of the PLB,
 
if required.
 
In
 
addition
 
to
 
the
 
PLB,
 
the
 
proposed
 
legislative
 
changes
 
would
 
enact
 
into
 
ordinary
 
law
 
additional
 
provisions
contained in the emergency ordinance of March 2023, including mandated clawback of variable compensation in
the event that government
 
support is provided to an SIB.
In
 
a next
 
step, the
 
Swiss Parliament
 
will assess
 
the proposed
 
legislation, and
 
if adopted,
 
legislative changes
 
are
expected to come into force by January 2025,
 
at the earliest.
Findings of the group of experts on banking
 
stability
In September
 
2023, a group
 
of experts
 
on banking stability, mandated
 
by the Swiss
 
Federal Department
 
of Finance,
published a report considering the role of banks and the legal and regulatory framework related to the stability of
the Swiss financial center.
 
The report concludes
 
that the Swiss capital
 
regulation is working as
 
intended and that
there is
 
no need
 
for a
 
major revision.
 
However, the report
 
sees a
 
need for
 
reforms with
 
regard to
 
banking supervision
and
 
proposes
 
that
 
the
 
relevant
 
authorities
 
be
 
granted
 
broader
 
powers.
 
Furthermore,
 
the
 
report
 
suggests
improvements regarding liquidity regulations, including
 
a proposal to extend the
 
supply of liquidity in the
 
case of a
crisis. The report also suggests that Swiss
 
authorities should make improvements with regard
 
to crisis preparation
and management. The Swiss Federal
 
Council will consider the findings of
 
the group of experts in its too-big-to-fail
(TBTF) review report to be presented by April 2024.
 
 
UBS Group third quarter 2023 report |
UBS Group | Recent developments
 
6
Revisions to the Swiss Liquidity Ordinance
In the third quarter of 2023, the Swiss Financial Market
 
Supervisory Authority (FINMA) communicated the
 
liquidity
requirements arising
 
from the
 
revisions to
 
the Swiss
 
Liquidity Ordinance,
 
with the
 
aim of
 
strengthening the
 
resilience
of SIBs
 
in Switzerland.
 
The impacted
 
legal entities
 
of the
 
UBS Group
 
expect to
 
be compliant
 
with these
 
requirements
when they become effective on 1 January 2024.
Swiss Federal Council consultation to strengthen
 
the Swiss anti-money-laundering framework
In August 2023,
 
the Swiss Federal
 
Council launched a consultation
 
on a bill
 
to strengthen the
 
Swiss anti-money-
laundering framework, with the aim of
 
reinforcing the integrity and
 
competitiveness of Switzerland as a financial
and business location.
 
The measures
 
aim to comply
 
with the international
 
standards of the
 
Financial Action Task
Force
 
(the
 
FATF).
 
Among other
 
matters,
 
key
 
elements of
 
the
 
proposal
 
include the
 
introduction
 
of
 
a
 
non-public
register
 
managed
 
by
 
the
 
Federal
 
Department
 
of
 
Justice
 
and
 
Police
 
containing
 
information
 
about
 
the
 
beneficial
owners of
 
companies and
 
other legal
 
entities in
 
Switzerland, as
 
well as
 
due diligence
 
requirements for
 
activities
with an
 
increased risk
 
of money
 
laundering. The
 
consultation ends
 
in November
 
2023, and
 
we expect
 
to implement
operational controls if the bill is implemented as proposed.
US banking regulators’ changes to the resolution
 
framework and long-term debt requirements
In August
 
2023, the Federal
 
Reserve Board
 
and the Federal
 
Deposit Insurance Corporation
 
issued joint proposals
on long-term debt
 
requirements and
 
resolution planning guidance
 
for large banks.
 
The long-term
 
debt proposal
would
 
require
 
certain
 
large
 
bank-holding
 
companies, intermediate
 
holding
 
companies
 
and
 
insured
 
depositories
with USD 100bn or more
 
in total assets to
 
maintain a minimum amount of
 
long-term debt, intended to enhance
the resilience and
 
resolvability of such
 
organizations. Large banking organizations would
 
also be prohibited
 
from
certain
 
activities
 
that
 
could
 
complicate
 
the
 
resolution
 
or
 
would
 
lead
 
to
 
contagion
 
risks.
 
If
 
the
 
proposals
 
are
implemented, UBS Bank
 
USA would be subject
 
to the long-term debt
 
requirement, which would be
 
incremental to
the requirements
 
already imposed
 
upon its
 
parent organization,
 
UBS Americas
 
Holding LLC.
 
The resolution
 
planning
guidance proposed by
 
US banking regulators
 
would cover
 
our US-based entities
 
and calls for
 
certain enhancements
in the requirements of the submitted resolution plans.
Disclosures on cybersecurity incidents and
 
cybersecurity risk management, strategy and governance
In September
 
2023, the
 
new rules
 
from the
 
SEC to
 
enhance and
 
standardize disclosure
 
requirements related
 
to
cybersecurity
 
incidents
 
and
 
cybersecurity
 
risk
 
management,
 
strategy
 
and
 
governance became
 
effective.
 
Among
other changes, the
 
rules require foreign private issuers,
 
including UBS Group AG, UBS
 
AG and Credit Suisse
 
AG, to
annually report material
 
information regarding their
 
cybersecurity risk management,
 
strategy and governance on
Form 20-F. The Form 20-F disclosures will become applicable
 
with annual reports for
 
fiscal years ending on
 
or after
15 December 2023.
Other developments
Sale of UBS Hana Asset Management Co.,
 
Ltd. in the fourth quarter of 2023
In October
 
2023,
 
we completed
 
the sale
 
of our
 
51% stake
 
in UBS
 
Hana Asset
 
Management Co.,
 
Ltd.
 
to Hana
Securities.
 
We
 
expect
 
to
 
record
 
a
 
pre-tax
 
gain
 
on
 
sale
 
of
 
approximately
 
USD 20m
 
(net
 
of
 
a
 
foreign
 
currency
translation loss) in Asset Management in the
 
fourth quarter of 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
UBS Group | Group performance
 
7
Group performance
 
Income statement
For the quarter ended
% change from
Year-to-date
USD m
30.9.23
30.6.23
1
30.9.22
2Q23
3Q22
30.9.23
30.9.22
Net interest income
 
2,107
 
1,707
 
1,596
 
23
 
32
 
5,202
 
5,032
Other net income from financial instruments measured
 
at fair value through profit or loss
 
3,212
 
2,517
 
1,796
 
28
 
79
 
8,410
 
5,641
Net fee and commission income
 
6,071
 
5,128
 
4,481
 
18
 
35
 
15,804
 
14,608
Other income
 
305
 
188
 
363
 
62
 
(16)
 
563
 
1,254
Total revenues
 
11,695
 
9,540
 
8,236
 
23
 
42
 
29,979
 
26,534
Negative goodwill
 
28,925
 
28,925
Credit loss expense / (release)
 
306
 
623
 
(3)
 
(51)
 
967
 
22
Personnel expenses
 
7,571
 
5,651
 
4,216
 
34
 
80
 
17,842
 
13,559
General and administrative expenses
 
3,124
 
1,968
 
1,192
 
59
 
162
 
7,157
 
3,769
Depreciation, amortization and impairment of non-financial
 
assets
 
950
 
866
 
508
 
10
 
87
 
2,341
 
1,517
Operating expenses
 
11,644
 
8,486
 
5,916
 
37
 
97
 
27,340
 
18,845
Operating profit / (loss) before tax
 
(255)
 
29,356
 
2,323
 
30,597
 
7,667
Tax expense / (benefit)
 
 
526
 
361
 
580
 
46
 
(9)
 
1,346
 
1,662
Net profit / (loss)
 
(781)
 
28,995
 
1,742
 
29,251
 
6,005
Net profit / (loss) attributable to non-controlling interests
 
4
 
3
 
9
 
23
 
(57)
 
15
 
28
Net profit / (loss) attributable to shareholders
 
(785)
 
28,992
 
1,733
 
29,235
 
5,977
Comprehensive income
Total comprehensive income
 
(2,692)
 
28,128
 
(48)
 
27,269
 
960
Total comprehensive income attributable to non-controlling interests
 
(8)
 
(2)
 
(8)
 
382
 
(1)
 
4
 
1
Total comprehensive income attributable to shareholders
 
(2,684)
 
28,130
 
(40)
 
27,266
 
959
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more
 
information.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
UBS Group | Group performance
 
8
Selected financial information of our business divisions and Group Items
For the quarter ended 30.9.23
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
 
Management
Investment
Bank
Non-core and
Legacy
1
Group Items
1
Total
Total revenues as reported
 
5,810
 
2,871
 
755
 
2,151
 
350
 
(242)
 
11,695
of which: accretion of PPA adjustments on financial
instruments and other effects
 
318
 
446
 
251
 
(57)
 
958
Total revenues (underlying)
 
5,492
 
2,426
 
755
 
1,900
 
350
 
(186)
 
10,737
Credit loss expense / (release)
 
2
 
168
 
0
 
4
 
125
 
6
 
306
Operating expenses as reported
 
4,801
 
1,579
 
724
 
2,377
 
2,156
 
7
 
11,644
of which: integration-related expenses
 
431
 
166
 
125
 
365
 
918
 
(2)
 
2,003
of which: acquisition-related costs
 
26
 
26
of which: amortization from newly recognized intangibles
resulting from the acquisition of the Credit Suisse Group
 
28
 
28
Operating expenses (underlying)
 
4,370
 
1,385
 
599
 
2,012
 
1,238
 
(17)
 
9,587
Operating profit / (loss) before tax as reported
 
1,007
 
1,124
 
31
 
(230)
 
(1,932)
 
(255)
 
(255)
Operating profit / (loss) before tax (underlying)
 
1,119
 
872
 
156
 
(116)
 
(1,014)
 
(174)
 
844
For the quarter ended 30.6.23 restated
2
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
 
Management
Investment
Bank
Non-core and
Legacy
1
Group Items
1
Negative
goodwill
Total
Total revenues as reported
 
5,144
 
1,856
 
577
 
2,022
 
207
 
(265)
 
9,540
of which: accretion of PPA adjustments on financial
instruments and other effects
 
117
 
153
 
55
 
53
 
378
Total revenues (underlying)
 
5,026
 
1,704
 
577
 
1,967
 
207
 
(318)
 
9,162
Negative goodwill
 
28,925
 
28,925
Credit loss expense / (release)
 
136
 
234
 
1
 
132
 
119
 
2
 
623
Operating expenses as reported
 
4,022
 
985
 
498
 
2,013
 
566
 
401
 
8,486
of which: integration-related expenses
 
67
 
30
 
14
 
161
 
105
 
348
 
724
of which: acquisition-related costs
 
106
 
106
of which: amortization from newly recognized intangibles
resulting from the acquisition of the Credit Suisse Group
 
8
 
8
Operating expenses (underlying)
 
3,956
 
947
 
484
 
1,852
 
461
 
(52)
 
7,648
Operating profit / (loss) before tax as reported
 
986
 
637
 
77
 
(123)
 
(478)
 
(668)
 
28,925
 
29,356
Operating profit / (loss) before tax (underlying)
 
935
 
523
 
91
 
(16)
 
(373)
 
(268)
 
891
For the quarter ended 30.9.22
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
 
Management
Investment
Bank
Non-core and
Legacy
1
Group Items
1
Total
Total revenues as reported
 
4,786
 
1,028
 
516
 
2,032
 
77
 
(203)
 
8,236
of which: gains from sales of subsidiary and business
 
219
 
219
of which: litigation settlement
 
62
 
62
Total revenues (underlying)
 
4,567
 
1,028
 
516
 
2,032
 
15
 
(203)
 
7,955
Credit loss expense / (release)
 
7
 
(15)
 
0
 
4
 
0
 
0
 
(3)
Operating expenses as reported
 
3,326
 
602
 
376
 
1,581
 
25
 
7
 
5,916
Operating profit / (loss) before tax as reported
 
1,453
 
442
 
140
 
447
 
52
 
(210)
 
2,323
Operating profit / (loss) before tax (underlying)
 
1,234
 
442
 
140
 
447
 
(10)
 
(210)
 
2,042
1 Starting with
 
the third quarter
 
of 2023, Non-core
 
and Legacy (previously
 
reported within Group
 
Functions) represents a
 
separate reportable segment
 
and Group Functions
 
has been renamed
 
Group Items.
 
Prior
periods have been restated to reflect these changes.
 
2 Comparative-period information has been restated. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial
statements” section of this report for more information.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
UBS Group | Group performance
 
9
Selected financial information of our business divisions and Group Items
Year-to-date 30.9.23
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
 
Management
Investment
Bank
Non-core and
Legacy
1
Group Items
1
Negative
goodwill
Total
Total revenues as reported
 
15,746
 
6,005
 
1,834
 
6,522
 
579
 
(707)
 
29,979
of which: accretion of PPA adjustments on financial
instruments and other effects
 
436
 
598
 
306
 
(3)
 
1,336
Total revenues (underlying)
 
15,310
 
5,407
 
1,834
 
6,216
 
579
 
(704)
 
28,643
Negative goodwill
 
28,925
 
28,925
Credit loss expense / (release)
 
154
 
418
 
1
 
142
 
244
 
8
 
967
Operating expenses as reported
 
12,384
 
3,227
 
1,630
 
6,255
 
3,421
 
423
 
27,340
of which: integration-related expenses
 
498
 
195
 
139
 
526
 
1,023
 
346
 
2,727
of which: acquisition-related costs
 
202
 
202
of which: amortization from newly recognized intangibles
resulting from the acquisition of the Credit Suisse Group
 
36
 
36
Operating expenses (underlying)
 
11,886
 
2,996
 
1,491
 
5,729
 
2,398
 
(126)
 
24,375
Operating profit / (loss) before tax as reported
 
3,208
 
2,360
 
203
 
124
 
(3,085)
 
(1,138)
 
28,925
 
30,597
Operating profit / (loss) before tax (underlying)
 
3,270
 
1,994
 
342
 
345
 
(2,063)
 
(586)
 
3,301
Year-to-date 30.9.22
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
 
Management
Investment
Bank
Non-core and
Legacy
1
Group Items
1
Total
Total revenues as reported
 
14,367
 
3,172
 
2,466
 
7,034
 
184
 
(690)
 
26,534
of which: net gain from disposal of a joint venture
 
848
 
848
of which: gains from sales of subsidiary and business
 
219
 
219
of which: losses in the first quarter of 2022 from
transactions with Russian counterparties
 
(93)
 
(93)
of which: litigation settlement
 
62
 
62
Total revenues (underlying)
 
14,148
 
3,172
 
1,619
 
7,127
 
122
 
(690)
 
25,499
Credit loss expense / (release)
 
(3)
 
42
 
0
 
(20)
 
2
 
0
 
22
Operating expenses as reported
 
10,450
 
1,847
 
1,193
 
5,269
 
84
 
2
 
18,845
Operating profit / (loss) before tax as reported
 
3,919
 
1,283
 
1,273
 
1,785
 
98
 
(692)
 
7,667
Operating profit / (loss) before tax (underlying)
 
3,700
 
1,283
 
426
 
1,878
 
36
 
(692)
 
6,631
1 Starting with the third
 
quarter of 2023, Non-core and Legacy represents
 
a separate reportable segment and Group Functions
 
has been renamed Group Items. Prior periods have
 
been restated to reflect these changes.
Integration-related expenses by business division and Group Items
For the quarter ended
Year-to-date
USD m
30.9.23
30.6.23
30.9.23
Global Wealth Management
 
431
 
67
 
498
Personal & Corporate Banking
 
166
 
30
 
195
Asset Management
 
125
 
14
 
139
Investment Bank
 
365
 
161
 
526
Non-core and Legacy
1
 
918
 
105
 
1,023
Group Items
1
 
(2)
 
348
 
346
Total net integration-related expenses
 
2,003
 
724
 
2,727
of which: personnel expenses
 
1,039
 
360
 
1,399
of which: general and administrative expenses
 
860
 
119
 
979
of which: depreciation, amortization and impairment of non-financial
 
assets
 
104
 
244
 
349
1 Starting with
 
the third quarter
 
of 2023, Non-core
 
and Legacy (previously
 
reported within Group
 
Functions) represents a
 
separate reportable segment
 
and Group Functions
 
has been renamed
 
Group Items.
 
Prior
periods have been restated to reflect these changes.
 
 
UBS Group third quarter 2023 report |
UBS Group | Group performance
 
10
Introduction to underlying results
In addition to reporting
 
our results in accordance
 
with International Financial
 
Reporting Standards (IFRS),
 
we report
underlying results that exclude
 
items of profit or loss that are not representative
 
of the underlying performance.
These
 
items
 
include
 
accretion
 
impacts
 
resulting
 
from
 
purchase
 
price
 
allocation
 
(PPA)
 
adjustments
 
on
 
financial
instruments measured
 
at amortized
 
cost, including
 
off-balance sheet
 
positions, and
 
other related
 
effects, arising
from the
 
acquisition
 
of Credit
 
Suisse. Underlying
 
revenues
 
exclude these
 
aforementioned
 
impacts. Accretion
 
impacts
resulting from
 
PPA adjustments on
 
financial instruments include
 
accelerated accretion when
 
the related
 
financial
instrument is terminated before its contractual
 
maturity.
 
Integration-related expenses
 
are defined
 
as expenses
 
that are
 
temporary, incremental
 
and directly
 
related to
 
the
integration of
 
Credit Suisse
 
into UBS.
 
They generally
 
include costs
 
of internal
 
staff and
 
contractors substantially
dedicated to integration activities, retention awards, redundancy costs, incremental expenses from the shortening
of useful lives of property,
 
equipment and software, and
 
impairment charges relating to
 
these assets. Classification
as integration-related expenses does
 
not affect the
 
timing of recognition and
 
measurement of those expenses
 
or
the
 
presentation
 
thereof
 
in
 
the
 
income
 
statement.
 
Integration-related
 
expenses
 
incurred
 
by
 
Credit
 
Suisse
 
also
included expenses associated with restructuring
 
programs that existed prior to the acquisition.
Acquisition
 
costs
 
consist
 
of
 
costs
 
directly
 
attributable
 
to
 
the
 
acquisition
 
of
 
Credit
 
Suisse
 
and
 
mainly
 
include
consulting and legal fees.
Results: 3Q23 vs 3Q22
Operating loss before tax was USD 255m, compared
 
with an operating profit before tax of USD 2,323m,
 
primarily
reflecting higher operating expenses
 
and net credit losses of
 
USD 306m, compared with a
 
net credit loss release of
USD 3m in the third quarter of
 
2022, partly offset by an
 
increase in total revenues.
 
Operating expenses increased
by
 
USD 5,728m,
 
or
 
97%,
 
to
 
USD 11,644m,
 
largely
 
due
 
to
 
the
 
consolidation
 
of
 
Credit
 
Suisse
 
expenses
 
of
USD 4,861m.
 
The
 
third
 
quarter
 
of
 
2023
 
included
 
total
 
integration-related expenses
 
of
 
USD 2,003m.
 
Personnel
expenses
 
increased
 
by
 
USD 3,355m,
 
mainly
 
reflecting
 
higher
 
expenses
 
for
 
salaries
 
and
 
variable
 
compensation.
General and administrative
 
expenses increased by
 
USD 1,932m, across
 
most categories. Depreciation,
 
amortization
and impairment of non-financial assets increased by USD 442m, mainly driven by higher depreciation of internally
developed
 
software
 
and
 
leasehold
 
improvements.
 
Total
 
revenues
 
increased
 
by
 
USD 3,459m,
 
or
 
42%,
 
to
USD 11,695m, largely
 
due to the
 
consolidation of Credit
 
Suisse revenues of
 
USD 3,468m, which
 
included accretion
impacts resulting from PPA
 
adjustments on financial instruments and
 
other effects of USD 958m.
 
Total combined
net interest income and other net income
 
from financial instruments measured at fair value through profit or loss
increased by
 
USD 1,928m, mainly attributable
 
to the
 
consolidation of
 
the Credit Suisse
 
Group, which
 
accounted
for USD 1,861m
 
of the increase. Net fee
 
and commission income increased
 
by USD 1,590m, mainly attributable
 
to
a larger invested assets base, following
 
the acquisition of the Credit Suisse
 
Group, which contributed USD 1,416m
of this increase. This was partly offset by a USD
 
58m decrease in other income.
Underlying results 3Q23 vs 3Q22
For the
 
purpose of
 
determining underlying
 
results for
 
the third
 
quarter of
 
2023, we
 
excluded accretion
 
impacts
resulting from PPA adjustments on financial instruments and
 
other effects of USD 958m from total revenues, and
integration-related expenses of
 
USD 2,003m, amortization
 
from newly
 
recognized intangibles
 
resulting from
 
the
acquisition of Credit Suisse of USD 28m and
 
acquisition-related costs of USD 26m
 
from operating expenses.
 
On
 
an
 
underlying
 
basis,
 
profit
 
before
 
tax
 
decreased
 
by
 
USD 1,198m,
 
or
 
59%,
 
to
 
USD 844m,
 
reflecting
 
a
USD 3,672m increase in underlying
 
operating expenses and net
 
credit losses of
 
USD 306m, compared with a
 
net
credit loss
 
release of
 
USD 3m in
 
the third
 
quarter of
 
2022, partly
 
offset by
 
a USD 2,782m increase
 
in underlying
total revenues.
Total revenues: 3Q23 vs 3Q22
Net interest income and other net income
 
from financial instruments measured at
 
fair value through profit or loss
Total combined net
 
interest income
 
and other
 
net income
 
from financial
 
instruments
 
measured at
 
fair value
 
through
profit or
 
loss increased
 
by USD 1,928m
 
to USD 5,320m,
 
mainly driven
 
by the
 
consolidation
 
of USD 1,861m
 
of Credit
Suisse
 
revenues,
 
which
 
included
 
USD
 
655m
 
of
 
accretion
 
impacts
 
resulting
 
from
 
PPA
 
adjustments
 
on
 
financial
instruments
 
and other
 
effects. Excluding
 
Credit Suisse,
 
there were
 
higher revenues
 
in Personal
 
& Corporate
 
Banking,
partly offset by the Investment Bank.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
UBS Group | Group performance
 
11
Excluding
 
the
 
contribution
 
of
 
Credit
 
Suisse
 
entities,
 
Personal
 
&
 
Corporate
 
Banking
 
increased
 
by
 
USD 294m
 
to
USD 923m, largely
 
due to higher
 
net interest income,
 
mainly driven by
 
higher deposit
 
margins, which
 
resulted from
rising
 
interest
 
rates,
 
and
 
higher
 
loan
 
revenues,
 
partly
 
offset
 
by
 
lower
 
deposit
 
fees.
 
The
 
prior-year
 
quarter
 
also
included a benefit from the Swiss National Bank
 
(SNB) deposit exemption.
Excluding
 
the contribution of Credit Suisse entities,
 
the Investment Bank decreased by USD 217m
 
to USD 1,143m.
Derivatives & Solutions decreased by USD 301m, driven by Foreign Exchange, Rates and Equity Derivatives, due to
lower levels of both volatility and
 
client
 
activity. This was partly offset by
 
an USD 82m increase in Global Banking,
mainly reflecting an improvement in mark-to-market
 
and from higher revenues in Public Capital
 
Markets.
›
Refer to the relevant business division commentary in the “UBS business divisions and Group Items” section of this
report for more information about business-division-specific revenues
›
Refer to “Note 4 Net interest income” in the “Consolidated financial statements” section of this report for more
information about net interest income
Net interest income and other net income from financial instruments measured at fair value through profit or loss
For the quarter ended
% change from
Year-to-date
USD m
30.9.23
30.6.23
1
30.9.22
2Q23
3Q22
30.9.23
30.9.22
Net interest income from financial instruments measured
 
at amortized cost and fair value
through other comprehensive income
 
1,046
 
1,176
 
1,319
 
(11)
 
(21)
 
3,185
 
3,992
Net interest income from financial instruments measured
 
at fair value through profit or loss
and other
 
1,061
 
530
 
277
 
100
 
283
 
2,017
 
1,040
Other net income from financial instruments measured
 
at fair value through profit or loss
 
3,212
 
2,517
 
1,796
 
28
 
79
 
8,410
 
5,641
Total
 
5,320
 
4,224
 
3,392
 
26
 
57
 
13,612
 
10,673
Global Wealth Management
 
2,302
 
1,959
 
1,634
 
17
 
41
 
6,064
 
4,624
of which: net interest income
 
1,946
 
1,657
 
1,366
 
17
 
43
 
5,094
 
3,775
of which: transaction-based income from foreign exchange and other
 
intermediary
activity
2
 
356
 
303
 
268
 
18
 
33
 
970
 
850
Personal & Corporate Banking
 
 
1,957
 
1,294
 
629
 
51
 
211
 
4,085
 
1,934
of which: net interest income
 
 
1,742
 
1,135
 
502
 
53
 
247
 
3,582
 
1,559
of which: transaction-based income from foreign exchange and other
 
intermediary
activity
2
 
216
 
159
 
127
 
36
 
70
 
503
 
376
Asset Management
 
0
 
(7)
 
(3)
 
(98)
 
(94)
 
(13)
 
(14)
Investment Bank
 
1,109
 
1,272
 
1,360
 
(13)
 
(18)
 
4,041
 
4,734
Non-core and Legacy
3
 
269
 
96
 
5
 
181
 
383
 
105
Group Items
3
 
(318)
 
(389)
 
(234)
 
(18)
 
36
 
(947)
 
(711)
1 Comparative-period information has been revised. Refer
 
to “Note 2 Accounting for the acquisition of the
 
Credit Suisse Group” in the “Consolidated financial statements” section of
 
this report for more information.
 
2 Mainly includes spread-related income
 
in connection with client-driven transactions,
 
foreign currency translation effects and
 
income and expenses from precious
 
metals, which are included
 
in the income statement
line Other net income from
 
financial instruments measured at
 
fair value through profit
 
or loss. The
 
amounts reported on this
 
line are one component
 
of Transaction-based
 
income in the management
 
discussion and
analysis in the “Global Wealth Management” and
 
“Personal & Corporate Banking” sections
 
of this report.
 
3 Starting with the third quarter of
 
2023, Non-core and Legacy represents a
 
separate reportable segment
and Group Functions has been renamed Group Items. Prior periods have been restated to reflect these changes.
Net fee and commission income
Net fee and commission income increased by USD 1,590m
 
to USD 6,071m.
Fees for portfolio management
 
and related services
 
increased by USD 833m
 
to USD 3,011m, largely
 
attributable to
the
 
acquisition of
 
the Credit
 
Suisse Group,
 
which
 
contributed USD 689m
 
of
 
revenues and
 
drove
 
an
 
increase in
invested assets across the UBS Group, as well
 
as gains reflecting positive market performance.
 
Other fee
 
and commission
 
income increased
 
by USD
 
588m to
 
USD 1,088m,
 
largely due
 
to the
 
consolidation of
Credit Suisse,
 
mainly related
 
to accretion
 
impacts resulting
 
from PPA
 
adjustments on
 
financial instruments
 
and other
effects of USD 303m.
Net
 
brokerage
 
fees
 
increased
 
by
 
USD 192m
 
to
 
USD 925m,
 
mainly
 
related
 
to
 
the
 
consolidation
 
of
 
USD 187m
attributable to Credit Suisse revenues.
›
Refer to “Note 5 Net fee and commission income” in the “Consolidated financial statements” section of this report
for more information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
UBS Group | Group performance
 
12
Other income
Other income was USD 305m, compared
 
with USD 363m in the prior-year
 
quarter. The
 
decrease was largely due
to the prior-year quarter including gains in Global Wealth Management of USD 133m and USD 86m, respectively,
on the
 
sales of
 
our domestic wealth
 
management business in
 
Spain and our
 
wholly owned subsidiary
 
UBS Swiss
Financial Advisers AG, as well as a
 
USD 70m gain related to a legacy litigation
 
settlement. This was partly offset by
other income from Credit Suisse for the third quarter of
 
2023 of USD 191m, which included USD 99m relating to
income
 
earned from
 
mortgage-servicing rights.
 
The third
 
quarter of
 
2023
 
also included
 
a
 
USD 62m increase
 
in
income from associates
 
and joint ventures,
 
which included
 
a gain that
 
resulted from a
 
change to
 
the equity
 
method
measurement basis for a portion of our investment in SIX Group
 
.
 
UBS Group has a 36% economic equity interest
in SIX Group and accounts for its proportionate share of SIX Group’s
 
profit or loss.
›
Refer to the “Recent developments” section of the UBS Group
 
third quarter 2022 report for
 
more information about the
sale of our domestic wealth
 
management business in Spain and the sale
 
of UBS Swiss Financial Advisers AG
Credit loss expense / release: 3Q23 vs
 
3Q22
Total net credit loss expenses in the third quarter of 2023 were USD 306m, compared with net credit loss releases
of USD 3m in the prior-year quarter.
›
Refer to “Note 8 Expected credit loss measurement” in the “Consolidated financial statements” section of this
report for more information
Credit loss expense / (release)
Performing positions
Credit-impaired positions
USD m
Stages 1 and 2
Stage 3
Purchased
 
Total
For the quarter ended 30.9.23
Global Wealth Management
 
(18)
 
15
 
6
2
Personal & Corporate Banking
 
85
 
60
 
23
 
168
Asset Management
 
0
 
0
 
0
 
0
Investment Bank
 
(6)
 
10
 
0
 
4
Non-core and Legacy
 
71
 
20
 
34
 
125
Group Items
1
5
 
0
 
0
6
Total
 
137
 
105
 
63
 
306
For the quarter ended 30.6.23
2
Global Wealth Management
 
121
 
9
 
7
 
136
Personal & Corporate Banking
 
206
 
28
 
0
 
234
Asset Management
 
1
 
0
 
0
 
1
Investment Bank
 
134
 
(4)
 
1
 
132
Non-core and Legacy
 
74
 
44
 
0
 
119
Group Items
1
 
2
 
0
 
0
 
2
Total
 
537
 
77
 
8
 
623
For the quarter ended 30.9.22
Global Wealth Management
 
6
 
1
 
7
Personal & Corporate Banking
 
(6)
 
(9)
 
(15)
Asset Management
 
0
 
0
 
0
Investment Bank
 
4
 
1
 
4
Group Items
1
 
0
 
0
 
0
Total
 
4
 
(7)
 
(3)
1 Starting with the third quarter
 
of 2023, Non-core and Legacy represents a
 
separate reportable segment and Group Functions has been
 
renamed Group Items. Prior periods have been restated to reflect
 
these changes.
 
2 Certain prior-period
 
figures as of
 
or for the
 
quarter ended 30
 
June 2023 have
 
been restated due
 
to effects of
 
measurement period adjustments
 
in relation to
 
the acquisition of
 
the Credit Suisse
 
Group. Refer
 
to
“Note
2
Accounting for the acquisition of the Credit Suisse Group” for more information.
Operating expenses: 3Q23 vs 3Q22
Operating expenses
For the quarter ended
% change from
Year-to-date
USD m
30.9.23
30.6.23
30.9.22
2Q23
3Q22
30.9.23
30.9.22
Personnel expenses
 
 
7,571
 
5,651
 
4,216
 
34
 
80
 
17,842
 
13,559
of which: salaries and variable compensation
 
6,428
 
4,804
 
3,566
 
34
 
80
 
15,118
 
11,520
of which: variable compensation – financial advisors
1
 
1,150
 
1,110
 
1,093
 
4
 
5
 
3,372
 
3,436
General and administrative expenses
 
 
3,124
 
1,968
 
1,192
 
59
 
162
 
7,157
 
3,769
of which: net expenses for litigation, regulatory and similar
 
matters
 
12
 
69
 
21
 
(83)
 
(44)
 
802
 
298
of which: other general and administrative expenses
 
3,112
 
1,899
 
1,171
 
64
 
166
 
6,355
 
3,471
Depreciation, amortization and impairment of non-financial
 
assets
 
950
 
866
 
508
 
10
 
87
 
2,341
 
1,517
Total operating expenses
 
11,644
 
8,486
 
5,916
 
37
 
97
 
27,340
 
18,845
1 Consists of cash and deferred compensation awards and is based on
 
compensable revenues and firm tenure using a formulaic
 
approach. It also includes expenses related to compensation commitments
 
with financial
advisors entered into at the time of recruitment that are subject to vesting requirements.
 
 
UBS Group third quarter 2023 report |
UBS Group | Group performance
 
13
Personnel expenses
Personnel
 
expenses
 
increased
 
by
 
USD 3,355m
 
to
 
USD 7,571m,
 
mainly
 
reflecting
 
higher
 
salaries
 
and
 
variable
compensation, which
 
increased overall
 
by USD 2,862m.
 
This increase was
 
largely due
 
to the consolidation
 
of Credit
Suisse
 
expenses
 
of
 
USD 2,897m
 
and
 
included
 
integration-related
 
expenses
 
of
 
USD 1,039m
 
relating
 
to
 
awards
granted
 
to employees
 
to
 
support retention
 
and
 
operational stability,
 
severance expenses,
 
and
 
the
 
alignment of
Credit
 
Suisse
 
processes
 
to
 
the
 
UBS
 
variable
 
compensation
 
framework.
 
Excluding
 
the
 
aforementioned
 
effects,
salaries and variable
 
compensation increased due
 
to salary adjustments,
 
higher variable compensation,
 
and foreign
currency effects.
›
Refer to “Note 6 Personnel expenses” in the “Consolidated financial statements” section of this report for more
information
General and administrative expenses
General and administrative
 
expenses increased by USD
 
1,932m to USD 3,124m,
 
largely due to
 
the consolidation of
Credit
 
Suisse
 
expenses
 
of
 
USD 1,586m
 
and
 
higher
 
technology
 
costs.
 
The
 
third
 
quarter
 
of
 
2023
 
included
 
total
integration-related expenses of USD 860m, largely from
 
higher real estate costs and higher consulting fees.
We believe that the industry continues to operate in an environment in which
 
expenses associated with litigation,
regulatory and similar matters will remain elevated
 
for the foreseeable future, and we continue
 
to be exposed to a
number
 
of
 
significant
 
claims
 
and
 
regulatory
 
matters.
 
The
 
outcome
 
of
 
many
 
of
 
these
 
matters,
 
the
 
timing
 
of
 
a
resolution, and the
 
potential effects
 
of resolutions on
 
our future business,
 
financial results
 
or financial condition
 
are
extremely difficult to predict.
›
Refer to “Note 7 General and administrative expenses” in the “Consolidated financial statements” section of this
report for more information
›
Refer to “Note 15 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this
report for more information about litigation, regulatory and similar matters
›
Refer to “Regulatory and legal developments” in the Annual Report 2022 and “Risks relating to UBS”
 
filed on Form
6-K together with the UBS Group second quarter 2023 report for more information
Depreciation, amortization and impairment of
 
non-financial assets
Depreciation, amortization and impairment
 
of non-financial assets
 
increased by USD 442m
 
to USD 950m, largely
due to the consolidation of
 
Credit Suisse expenses of
 
USD 378m, and included total integration-related expenses
of USD 104m. Excluding Credit
 
Suisse, depreciation increased, due to
 
higher depreciation of internally developed
software, reflecting a higher
 
level of capitalized
 
costs, as well
 
as higher costs
 
in respect of
 
leasehold improvements.
Tax: 3Q23 vs 3Q22
Income tax expenses were
 
USD 526m for the third
 
quarter of 2023, compared with
 
USD 580m for the prior-year
quarter. Current
 
tax expenses
 
were USD 643m,
 
compared with
 
USD 368m, and
 
related to
 
the taxable
 
profits of
UBS Switzerland AG and
 
other
 
entities.
 
There
 
was
 
a
 
net
 
deferred
 
tax
 
benefit
 
of
 
USD 116m,
 
compared with
 
an
expense
 
of
 
USD 213m
 
in
 
the
 
prior-year
 
quarter.
 
This
 
included
 
a
 
benefit
 
of
 
USD 133m
 
that
 
resulted
 
from
 
the
recognition
 
of
 
deferred
 
tax
 
assets
 
(DTAs)
 
for
 
tax
 
credits
 
carried
 
forward
 
in
 
relation
 
to
 
US
 
corporate
 
alternative
minimum tax and a
 
benefit of USD 89m
 
in respect of
 
an increase in the
 
expected value of
 
future tax deductions
 
for
deferred compensation awards,
 
due to
 
an increase
 
in the
 
Group’s share
 
price during
 
the quarter.
 
These benefits
were partly offset
 
by expenses of
 
USD 106m that primarily
 
relate to the
 
amortization of DTAs
 
previously recognized
in relation to tax losses carried forward and deductible
 
temporary differences of UBS Americas Inc.
Although the
 
Group had a
 
net pre-tax loss
 
for the quarter,
 
it has a
 
tax expense because
 
that loss
 
included operating
losses of certain entities, reflecting
 
integration-related expenses and restructuring costs, that did
 
not result in any
tax benefits because
 
they cannot be offset
 
with profits of
 
other entities in the
 
Group,
 
and they did not
 
result in any
DTA recognition. The Group’s tax expense
 
for the fourth quarter of 2023 may
 
be similarly impacted if further
 
such
operating losses
 
are incurred,
 
and it
 
may also
 
be affected
 
by remeasurements
 
of DTAs
 
connected with
 
business
planning or that result from material changes
 
to jurisdictional statutory tax rates.
 
 
UBS Group third quarter 2023 report |
UBS Group | Group performance
 
14
Total comprehensive income attributable
 
to shareholders
In the third quarter of
 
2023, total comprehensive income attributable to shareholders was negative USD 2,684m,
reflecting a net loss of USD 785m and other comprehensive
 
income (OCI), net of tax, of negative USD 1,899m.
OCI related to own credit on financial
 
liabilities designated at fair value was negative USD 686m, primarily due
 
to
a tightening of our own credit spreads.
Foreign currency
 
translation OCI
 
was negative
 
USD 615m, mainly resulting
 
from a
 
weakening of
 
the Swiss
 
franc
and the euro against the US dollar.
OCI
 
related
 
to
 
cash
 
flow
 
hedges
 
was
 
negative
 
USD 526m,
 
mainly
 
reflecting
 
net
 
unrealized
 
losses
 
on
 
US
 
dollar
hedging derivatives resulting from increases
 
in the relevant US dollar long-term interest
 
rates.
›
Refer to “Statement of comprehensive income” in the “Consolidated financial statements” section of this report for
more information
›
Refer to “Reconciliation of IFRS equity to Swiss SRB common equity tier 1 capital” in the “Capital management”
section of this report for more information about the effects of OCI on common equity tier 1 capital
›
Refer to “Note 20 Fair value measurement” in the “Consolidated financial statements” section of the Annual Report
2022 for more information about own credit on financial liabilities designated at fair value
Sensitivity to interest rate movements
As of 30 September
 
2023, it is
 
estimated that a
 
parallel shift in
 
yield curves by
 
+100 basis points
 
could lead to
 
a
combined increase in
 
annual net interest
 
income from our
 
banking book of
 
approximately USD 1.6bn in
 
the first
year after
 
such a
 
shift. Of
 
this increase,
 
approximately USD 0.8bn, USD 0.4bn
 
and USD 0.1bn
 
would result
 
from
changes in Swiss franc, US dollar and
 
euro interest rates, respectively. A parallel shift in yield
 
curves by –100 basis
points could
 
lead to
 
a combined
 
decrease in
 
annual net
 
interest income
 
of approximately
 
USD 1.5bn in
 
the first
year after such a shift, showing similar currency
 
contributions as for the aforementioned increase
 
in rates.
These estimates
 
are based
 
on a
 
hypothetical scenario
 
of an
 
immediate change
 
in interest
 
rates, equal
 
across all
currencies
 
and
 
relative
 
to
 
implied
 
forward
 
rates
 
as
 
of
 
30 September
 
2023
 
applied
 
to
 
our
 
banking
 
book.
 
These
estimates further assume no change to balance sheet size and product mix, stable foreign exchange rates, and no
specific management action. These estimates do
 
not represent a forecast of net interest income
 
variability.
 
›
Refer to the “Risk management and control” section of this report for information about interest rate risk in the
banking book
Key figures and personnel
Below is
 
an overview
 
of selected
 
key figures
 
of the
 
Group. For
 
further information
 
about key
 
figures related
 
to
capital management, refer to the “Capital management”
 
section of this report.
 
Cost / income ratio: 3Q23 vs 3Q22
The cost
 
/ income
 
ratio was 99.6%,
 
compared with
 
71.8%, mainly reflecting
 
an increase
 
in operating expenses,
partly offset by an increase in
 
total revenues. The operating
 
loss incurred by Credit Suisse entities
 
is reflected in the
overall
 
increase
 
of
 
the
 
ratio
 
for
 
the
 
UBS
 
Group.
 
On
 
an
 
underlying
 
basis,
 
the
 
cost
 
/
 
income
 
ratio
 
was
 
89.3%,
compared with 74.4%, mainly reflecting an increase
 
in operating expenses on an underlying
 
basis, partly offset by
an increase in total revenues on an underlying basis.
Personnel: 3Q23 vs 2Q23
The number of personnel employed as of 30 September 2023 was 115,981 (full-time equivalents), a net decrease
of 3,119 compared with 30 June 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
UBS Group | Group performance
 
15
Equity, CET1 capital and returns
As of or for the quarter ended
Year-to-date
USD m, except where indicated
30.9.23
30.6.23
1
30.9.22
30.9.23
30.9.22
Net profit
Net profit / (loss) attributable to shareholders
 
(785)
 
28,992
 
1,733
 
29,235
 
5,977
Equity
 
Equity attributable to shareholders
 
84,856
 
87,116
 
55,756
 
84,856
 
55,756
Less: goodwill and intangible assets
 
7,462
 
7,569
 
6,210
 
7,462
 
6,210
Tangible equity attributable to shareholders
 
77,394
 
79,547
 
49,546
 
77,394
 
49,546
Less: other CET1 deductions
 
(1,193)
 
(710)
 
4,882
 
(1,193)
 
4,882
CET1 capital
 
78,587
 
80,258
 
44,664
 
78,587
 
44,664
Returns
Return on equity (%)
 
(3.7)
 
161.2
 
12.3
 
54.5
 
13.7
Return on tangible equity (%)
 
(4.0)
 
178.4
 
13.9
 
60.3
 
15.4
Underlying return on tangible equity (%)
 
1.1
 
2.7
 
12.1
 
3.6
 
12.8
Return on CET1 capital (%)
 
(4.0)
 
185.8
 
15.5
 
62.6
 
17.8
Underlying return on CET1 capital (%)
 
1.1
 
2.9
 
13.5
 
3.8
 
14.8
1 Comparative-period information has been restated. Refer to “Note 2 Accounting for
 
the acquisition of the Credit Suisse Group” in the “Consolidated
 
financial statements” section of this report for more information.
Common equity tier 1 capital: 3Q23 vs 2Q23
During the third
 
quarter of 2023,
 
our common equity
 
tier 1 (CET1)
 
capital decreased by
 
USD 1.7bn to USD 78.6bn,
mainly reflecting an
 
operating loss before
 
tax of USD 0.3bn, current
 
tax expenses of USD
 
0.6bn, negative effects
from foreign
 
currency translation
 
of USD 0.6bn,
 
dividend accruals of
 
USD 0.5bn and amortization
 
of transitional
CET1 PPA adjustments (interest rate and own credit) of USD 0.3bn (net of tax).
Return on CET1 capital: 3Q23 vs 3Q22
The
 
annualized
 
return
 
on
 
CET1
 
capital
 
was
 
negative
 
4.0%,
 
compared
 
with
 
positive
 
15.5%,
 
driven
 
by
 
a
 
loss
attributable to
 
shareholders compared
 
with a
 
profit
 
in the
 
prior-year
 
quarter and
 
the impacts
 
of
 
an
 
increase
 
in
average CET1 capital. On an underlying basis,
 
the return on CET1 capital was 1.1%.
Risk-weighted assets: 3Q23 vs 2Q23
Risk-weighted assets
 
(RWA) decreased by
 
USD 10.1bn to
 
USD 546.5bn, primarily
 
driven by decreases
 
of USD 5.5bn
due
 
to currency
 
effects
 
and
 
USD 5.3bn due
 
to asset
 
size
 
and
 
other movements,
 
partly
 
offset
 
by
 
an
 
increase
 
of
USD 0.6bn due to model updates
.
Common equity tier 1 capital ratio: 3Q23 vs 2Q23
Our CET1 capital ratio was broadly unchanged at 14.4%,
 
reflecting the aforementioned decrease in CET1 capital,
offset by the decrease in RWA.
Leverage ratio denominator: 3Q23 vs 2Q23
During
 
the
 
third
 
quarter
 
of
 
2023,
 
the
 
leverage
 
ratio
 
denominator
 
(the
 
LRD)
 
decreased
 
by
 
USD 62.1bn
 
to
USD 1,615.8bn, primarily driven by
 
decreases from asset
 
size and other
 
movements of USD 37.1bn and
 
currency
effects of USD 24.9bn.
Common equity tier 1 leverage ratio: 3Q23
 
vs 2Q23
Our CET1
 
leverage ratio
 
increased to
 
4.9% from
 
4.8%, due
 
to the
 
aforementioned decrease
 
in the
 
LRD, partly
offset by the decrease in CET1 capital.
Going concern leverage ratio: 3Q23 vs 2Q23
 
Our going
 
concern leverage
 
ratio increased
 
to 5.7%
 
from 5.6%,
 
reflecting the
 
aforementioned decrease
 
in the
LRD, partly offset by the decrease in CET1 capital.
Results 9M23 vs 9M22
Operating profit before tax increased by USD 22,930m
 
to USD 30,597m, primarily reflecting negative goodwill of
USD 28,925m,
 
partly
 
offset
 
by
 
an
 
operating
 
loss
 
incurred
 
by
 
Credit
 
Suisse
 
entities
 
of
 
USD 2,765m,
 
and
 
lower
operating profit earned excluding Credit Suisse.
Total revenues increased
 
by USD 3,445m, or
 
13%, to USD 29,979m,
 
including the consolidation
 
of Credit Suisse
revenues
 
of
 
USD 4,624m,
 
partly
 
offset
 
by
 
lower
 
year-on-year
 
revenues
 
in
 
non-Credit
 
Suisse
 
entities,
 
across
 
the
respective reporting lines
 
discussed below.
 
Total revenues include
 
accretion impacts
 
resulting from PPA
 
adjustments
on financial instruments and other effects
 
of USD 1,336m.
 
 
 
UBS Group third quarter 2023 report |
UBS Group | Group performance
 
16
Total combined
 
net interest
 
income and
 
other net
 
income from
 
financial instruments
 
measured at
 
fair value
 
through
profit or loss increased by USD 2,939m,
 
mainly due to the consolidation
 
of USD 2,410m of Credit Suisse
 
revenues.
Excluding Credit
 
Suisse,
 
there
 
were increases
 
of USD 764m
 
in
 
Personal &
 
Corporate Banking
 
and USD 493m
 
in
Global Wealth
 
Management,
 
partly offset
 
by a
 
USD 721m decrease
 
in the
 
Investment Bank.
 
The increase
 
in Personal
& Corporate Banking primarily reflected the
 
impacts of rising interest rates, and higher
 
loan revenues, partly offset
by lower
 
deposit fees
 
and the
 
prior-year period
 
including benefits
 
from the
 
SNB deposit
 
exemption. In
 
addition,
revenues were higher
 
in Global
 
Wealth Management, reflecting
 
an increase in
 
deposit margins, driven
 
by higher
rates.
 
The
 
decrease
 
in
 
the
 
Investment
 
Bank
 
was
 
due
 
to
 
lower
 
levels
 
of
 
both
 
volatility
 
and
 
client
 
activity,
predominantly in
 
Derivatives &
 
Solutions. This
 
decrease was
 
partly
 
offset
 
by
 
an
 
increase in
 
Financing, reflecting
increases across all products.
Net fee
 
and commission
 
income increased
 
by USD 1,196m,
 
largely due
 
to higher
 
portfolio management
 
and related
services fees,
 
due to
 
the consolidation
 
of USD 1,955m
 
of Credit
 
Suisse revenues,
 
partly
 
offset by
 
the impact
 
of
negative market performance
 
on Global
 
Wealth Management and
 
Asset Management revenues,
 
which also
 
had
lower investment fund fees due to negative market
 
performance.
 
Other income decreased
 
by USD 691m
 
and included
 
higher gains
 
recognized on repurchases
 
of UBS’s
 
own debt
instruments and a higher
 
share of net profits
 
from associates
 
and joint ventures,
 
mainly due to our share
 
of the net
profit from
 
the equity
 
ownership of
 
SIX Group.
 
These increases
 
were more
 
than offset
 
by an
 
USD 848m gain
 
in
Asset
 
Management
 
from
 
the
 
sale
 
of
 
a
 
joint
 
venture
 
in
 
the
 
prior-year
 
period.
 
In
 
addition,
 
the
 
prior-year
 
period
included
 
gains
 
in
 
Global
 
Wealth
 
Management of
 
USD 133m
 
on
 
the
 
sale
 
of
 
our
 
domestic
 
wealth
 
management
business in Spain and USD 86m on the sale of
 
UBS Swiss Financial Advisers AG.
Expected credit
 
loss expenses
 
were USD 967m,
 
largely due to
 
the consolidation
 
of Credit
 
Suisse expected
 
credit loss
expenses of USD 888m, compared with expenses
 
of USD 22m in the prior-year period.
 
Operating expenses
 
increased by
 
USD 8,495m, or
 
45%, to
 
USD 27,340m, largely
 
due to
 
the consolidation
 
of Credit
Suisse expenses of USD
 
6,501m. Included in the
 
overall increase were integration-related
 
expenses of USD 2,727m
and acquisition-related costs of USD 202m.
 
Personnel
 
expenses
 
increased
 
by
 
USD 4,283m,
 
largely
 
due
 
to
 
the
 
consolidation
 
of
 
Credit
 
Suisse
 
expenses
 
of
USD 3,985m,
 
and
 
included
 
USD 1,399m
 
of
 
integration-related
 
expenses.
 
On
 
an
 
underlying
 
basis,
 
salaries
 
and
variable compensation increased due to salary
 
adjustments,
 
partly offset by lower variable compensation.
 
General and
 
administrative expenses increased
 
by USD 3,388m, largely
 
due to
 
the consolidation of
 
Credit Suisse
expenses of USD 2,037m,
 
and included USD 979m of integration-related expenses and
 
USD 202m in acquisition-
related costs. In addition,
 
expenses for litigation,
 
regulatory and similar
 
matters increased, driven
 
by the USD 665m
increase in
 
provisions recognized
 
in the
 
first quarter
 
of 2023
 
related to
 
the US
 
residential mortgage-backed
 
securities
litigation matter.
 
Depreciation, amortization and
 
impairment of
 
non-financial assets
 
increased by
 
USD 824m, primarily
 
due to
 
the
consolidation of
 
Credit Suisse
 
expenses of
 
USD 480m,
 
and included
 
USD 349m of
 
integration-related expenses,
mainly reflected in an impairment
 
of software projects in progress
 
of USD 206m resulting from a
 
reprioritization of
software development activity in the context
 
of the acquisition.
 
Underlying results 9M23
 
vs 9M22
Underlying
 
results
 
for
 
the
 
nine-month
 
period
 
ended
 
30 September
 
2023
 
excluded
 
negative
 
goodwill
 
of
USD 28,925m,
 
and accretion impacts resulting from
 
PPA adjustments on financial instruments
 
and other effects of
USD 1,336m
 
from
 
total
 
revenues.
 
Integration-related
 
expenses
 
of
 
USD 2,727m,
 
acquisition-related
 
costs
 
of
USD 202m and amortization
 
from newly recognized intangibles
 
resulting from the
 
acquisition of Credit
 
Suisse of
USD 36m were excluded from operating expenses.
On
 
an
 
underlying
 
basis,
 
profit
 
before
 
tax
 
decreased
 
by
 
USD 3,330m,
 
or
 
50%,
 
to
 
USD 3,301m,
 
reflecting
 
a
USD 5,530m increase in underlying
 
operating expenses and
 
net credit loss expenses
 
of USD 967m, compared with
USD 22m in the prior-year period, partly offset
 
by a USD 3,145m increase in underlying total
 
revenues.
 
›
Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial
statements” section of this report for more information about the negative goodwill recognized
 
 
UBS Group third quarter 2023 report |
UBS Group | Group performance
 
17
Outlook
Central banks
 
have paused
 
interest rate
 
increases, but
 
uncertainties remain
 
in terms
 
of
 
the appropriate
 
level
 
of
interest rates that
 
will allow
 
inflation to
 
converge to their
 
targets.
 
As a
 
result, the
 
outlook for economic
 
growth,
asset
 
valuations
 
and
 
market volatility
 
remains
 
difficult
 
to
 
predict.
 
In
 
addition,
 
the
 
ongoing
 
geopolitical tensions
including the conflicts in the Middle East and
 
Ukraine continue to cloud the macroeconomic
 
outlook.
This, in
 
addition to
 
normal seasonality,
 
may affect
 
wealth management
 
and institutional
 
clients’
 
transactional activity
in the fourth quarter of 2023. We also expect clients to continue
 
to shift cash holdings from deposits into higher-
yielding products, resulting in similar sequential net
 
interest income performance.
As we continue to execute on our strategy,
 
growth and integration plans, our focus
 
remains on offsetting some of
these ongoing
 
challenges by
 
helping clients
 
to manage the
 
inherent risks and
 
opportunities, gaining
 
share of wallet
and actively winding down our non-core assets
 
and costs.
 
 
UBS Group third quarter 2023 report |
UBS business divisions and Group Items |
 
Global Wealth Management
 
18
UBS business divisions and
Group Items
Management report
Starting with
 
the third
 
quarter
 
of 2023,
 
we report
 
five business
 
divisions in
 
line with
 
International
 
Financial Reporting
Standard (IFRS): Global Wealth Management, Personal &
 
Corporate Banking, Asset Management, the Investment
Bank, and Non-core and Legacy.
 
Group Functions has been renamed
 
Group Items and excludes
 
UBS’s former Non-
core and
 
Legacy Portfolio
 
and includes
 
certain of
 
the assets
 
and liabilities
 
of the
 
former Credit
 
Suisse Corporate
Center.
The
 
Non-core and
 
Legacy business
 
division includes
 
positions and
 
businesses not
 
aligned with
 
our
 
strategy and
policies. Those consist of the assets and liabilities reported as part of the former Credit Suisse Capital Release Unit
in the second quarter
 
of 2023 and certain
 
assets and liabilities
 
of the former
 
Credit Suisse Investment
 
Bank, Wealth
Management
 
and
 
Asset
 
Management
 
divisions,
 
as
 
well
 
as
 
of
 
the
 
former
 
Credit
 
Suisse
 
Corporate
 
Center.
 
Also
included
 
are
 
the
 
remaining
 
assets
 
and
 
liabilities
 
of
 
UBS’s
 
Non-core
 
and
 
Legacy
 
Portfolio,
 
previously
 
reported
 
in
Group Functions, and smaller amounts of
 
assets and liabilities of UBS’s business
 
divisions that we have assessed as
not strategic in light of the acquisition of the
 
Credit Suisse Group.
Information for the business divisions
 
and Group Items for the second
 
quarter of 2023 has been restated
 
to reflect
the effect of
 
the integration of
 
the UBS and
 
Credit Suisse divisions
 
on an IFRS
 
basis from June
 
2023 onward, as
 
well
as the establishment
 
of the Non-core
 
and Legacy business division.
 
The aforementioned transfer
 
of a small amount
of assets and
 
liabilities from legacy
 
UBS business divisions
 
into Non-core and
 
Legacy has been
 
applied prospectively,
starting with
 
the third
 
quarter of
 
2023. Information
 
for the
 
third quarter
 
of 2022
 
represents the
 
results of
 
UBS
Group operations prior
 
to the acquisition
 
of the Credit
 
Suisse Group, but is
 
presented in line with
 
the new business
division structure. As we execute our integration plans, it is expected
 
that allocation methodologies for profit and
loss and balance sheet to the business divisions
 
and into Group Items will continue
 
to be reviewed and refined.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
UBS business divisions and Group Items |
 
Global Wealth Management
 
19
Global Wealth Management
Global Wealth Management
As of or for the quarter ended
% change from
Year-to-date
USD m, except where indicated
30.9.23
30.6.23
1
30.9.22
2
2Q23
3Q22
30.9.23
30.9.22
2
Results
Net interest income
 
1,946
 
1,657
 
1,366
 
17
 
43
 
5,094
 
3,775
Recurring net fee income
3
 
2,886
 
2,635
 
2,464
 
10
 
17
 
7,975
 
7,883
Transaction-based income
3
 
959
 
841
 
732
 
14
 
31
 
2,642
 
2,479
Other income
 
19
 
12
 
224
 
67
 
(91)
 
34
 
229
Total revenues
 
5,810
 
5,144
 
4,786
 
13
 
21
 
15,746
 
14,367
Credit loss expense / (release)
 
2
 
136
 
7
 
(98)
 
(67)
 
154
 
(3)
Operating expenses
 
4,801
 
4,022
 
3,326
 
19
 
44
 
12,384
 
10,450
Business division operating profit / (loss) before tax
 
1,007
 
986
 
1,453
 
2
 
(31)
 
3,208
 
3,919
Underlying results
Total revenues as reported
 
5,810
 
5,144
 
4,786
 
13
 
21
 
15,746
 
14,367
of which: gains from sales of subsidiary and business
 
219
 
219
of which: accretion of PPA adjustments on financial instruments
 
318
 
117
 
171
 
436
Total revenues (underlying)
3
 
5,492
 
5,026
 
4,567
 
9
 
20
 
15,310
 
14,148
Credit loss expense / (release)
 
2
 
136
 
7
 
(98)
 
(67)
 
154
 
(3)
Operating expenses as reported
 
4,801
 
4,022
 
3,326
 
19
 
44
 
12,384
 
10,450
of which: integration-related expenses
3
 
431
 
67
 
548
 
498
Operating expenses (underlying)
3
 
4,370
 
3,956
 
3,326
 
10
 
31
 
11,886
 
10,450
of which: expenses for litigation, regulatory and similar matters
 
22
 
41
 
18
 
(47)
 
22
 
73
 
192
Business division operating profit / (loss) before tax as reported
 
1,007
 
986
 
1,453
 
2
 
(31)
 
3,208
 
3,919
Business division operating profit / (loss) before tax (underlying)
3
 
1,119
 
935
 
1,234
 
20
 
(9)
 
3,270
 
3,700
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
3
 
(30.7)
 
(14.8)
 
(4.2)
 
(18.2)
 
(7.1)
Cost / income ratio (%)
3
 
82.6
 
78.2
 
69.5
 
78.7
 
72.7
Average attributed equity (USD bn)
4
 
25.0
 
20.9
 
20.0
 
20
 
25
 
22.1
 
19.9
Return on attributed equity (%)
3,4
 
16.1
 
18.9
 
29.1
 
19.4
 
26.2
Financial advisor compensation
5
 
1,150
 
1,110
 
1,093
 
4
 
5
 
3,372
 
3,436
Net new money (USD bn)
3
 
21.5
 
13.6
 
12.8
 
62.8
 
31.2
Invested assets (USD bn)
3
 
3,617
 
3,717
 
2,655
 
(3)
 
36
 
3,617
 
2,655
Loans, gross (USD bn)
6
 
282.9
 
290.4
 
221.7
 
(3)
 
28
 
282.9
 
221.7
Customer deposits (USD bn)
6
 
439.9
 
419.5
 
336.0
 
5
 
31
 
439.9
 
336.0
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
3,7
 
0.5
 
0.4
 
0.2
 
0.5
 
0.2
Advisors (full-time equivalents)
 
10,278
 
10,538
 
9,230
 
(2)
 
11
 
10,278
 
9,230
Underlying performance measures
Pre-tax profit growth (year-on-year, %)
3
 
(9.2)
 
(19.2)
 
(12.9)
 
(11.6)
 
(10.2)
Cost / income ratio (%)
3
 
79.6
 
78.7
 
72.8
 
77.6
 
73.9
1 Information has
 
been restated
 
to reflect
 
the effects
 
of the
 
integration of
 
the Wealth
 
Management (Credit
 
Suisse) division
 
on an
 
IFRS basis.
 
In addition,
 
certain information
 
has been
 
revised. Refer
 
to “Note
 
2
Accounting for the acquisition of the Credit
 
Suisse Group” in the “Consolidated financial
 
statements” section of this report for
 
more information.
 
2 Information reflects Global Wealth
 
Management as reported in
the third quarter of 2022 and the first nine
 
months of 2022, respectively.
 
3 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method.
 
4 Refer to “Capital
management” in the “Capital, liquidity and funding, and balance sheet” section of the Annual Report 2022 for more information about the equity attribution framework.
 
5 Relates to licensed professionals with the
ability to provide investment advice to clients in the Americas. Consists of cash and deferred compensation
 
awards and is based on compensable revenues and firm tenure using a formulaic approach. It also includes
expenses related to compensation commitments with financial advisors entered into at the time of recruitment that are subject to vesting requirements. Recruitment loans to financial advisors were USD 1,764m as of
30 September 2023.
 
6 Loans and Customer deposits in this table include customer brokerage receivables and payables, respectively,
 
which are presented in a separate reporting line on the balance sheet.
 
7 Refer
to the “Risk management and control” section of this report for more information about (credit-)impaired exposures. Excludes
 
loans to financial advisors.
Results: 3Q23 vs 3Q22
Profit before
 
tax decreased
 
by USD 446m,
 
or 31%, to
 
USD 1,007m, mainly
 
driven by
 
higher operating
 
expenses
and due
 
to the
 
third quarter
 
of 2022
 
including a
 
USD 133m gain
 
from the
 
sale of
 
our domestic
 
wealth management
business in Spain and
 
an USD 86m gain from
 
the sale of UBS
 
Swiss Financial Advisers AG. The
 
decrease was also
due to
 
the acquisition of
 
the Credit
 
Suisse Group. Excluding
 
USD 318m of
 
accretion of purchase
 
price allocation
(PPA) adjustments
 
on financial
 
instruments and
 
integration-related expenses
 
of USD 431m,
 
underlying profit
 
before
tax was USD 1,119m.
Total revenues
Total revenues increased by
 
USD 1,024m, or
 
21%, to
 
USD 5,810m, mainly
 
due to
 
the consolidation
 
of Credit
 
Suisse
revenues, which included
 
USD 318m of accretion
 
of PPA
 
adjustments on financial instruments.
 
The increase was
partly offset by lower other income. Excluding accretion
 
effects, underlying total revenues were USD 5,492m.
 
 
UBS Group third quarter 2023 report |
UBS business divisions and Group Items |
 
Global Wealth Management
 
20
Net interest income increased by USD 580m, or 43%, to USD 1,946m, largely attributable to the
 
consolidation of
Credit
 
Suisse
 
net
 
interest
 
income,
 
which
 
included
 
USD 298m
 
of
 
accretion
 
of
 
PPA
 
adjustments
 
on
 
financial
instruments,
 
and the effects of higher deposit margins,
 
resulting from rising interest rates, partly offset
 
by shifts to
lower-margin
 
deposit
 
products
 
and
 
lower
 
loan
 
revenues,
 
reflecting
 
lower
 
average
 
loan
 
volumes
 
and
 
margins.
Excluding accretion effects, underlying net interest
 
income was USD 1,648m.
Recurring net
 
fee income
 
increased by
 
USD 422m, or
 
17%, to
 
USD 2,886m, attributable to
 
the consolidation of
Credit Suisse recurring net fee income,
 
as well as reflecting positive market performance.
Transaction-based income
 
increased by USD 227m,
 
or 31%, to
 
USD 959m, largely
 
attributable to the
 
consolidation
of Credit Suisse transaction-based income, which included USD 20m of
 
accretion of PPA adjustments on financial
instruments, as well as higher levels of
 
client activity, particularly in Asia Pacific, Switzerland and EMEA.
 
Excluding
accretion effects, underlying transaction-based
 
income was USD 939m.
Other income decreased
 
by USD 205m, or
 
91%,
 
to USD 19m, largely
 
due to the
 
third quarter of
 
2022 including
the aforementioned
 
gains from
 
the sales
 
of our
 
domestic wealth
 
management business
 
in Spain
 
and UBS
 
Swiss
Financial Advisers AG.
Credit loss expense / release
Net credit loss expenses were USD 2m, compared with net expenses
 
of USD 7m in the third quarter of 2022.
Operating expenses
Operating expenses increased by USD
 
1,475m, or 44%, to USD 4,801m,
 
largely due to the consolidation
 
of Credit
Suisse expenses,
 
integration-related expenses,
 
unfavorable foreign
 
currency effects,
 
higher financial
 
advisor variable
compensation
 
and
 
an
 
increase
 
in
 
technology
 
expenses.
 
Excluding
 
integration-related
 
expenses
 
of
 
USD 431m,
underlying operating expenses were USD 4,370m.
Invested assets: 3Q23 vs 2Q23
Invested assets decreased by USD 100bn, or 3%, to USD 3,617bn, mainly driven by negative market performance
of USD 53bn, a reclassification of
 
USD 30bn related to non-strategic relationships,
 
a transfer of USD 5bn
 
to Non-
core and Legacy, and unfavorable
 
foreign currency effects of
 
USD 30bn, partly offset by
 
net new money inflows of
USD 22bn.
Loans: 3Q23 vs 2Q23
Loans
 
decreased
 
by
 
USD 7.5bn
 
to
 
USD 282.9bn,
 
mainly
 
driven
 
by
 
negative
 
net
 
new
 
loans
 
of
 
USD 7.1bn
 
and
negative foreign currency effects.
Customer deposits: 3Q23 vs 2Q23
Customer deposits
 
increased by
 
USD 20.4bn to
 
USD 439.9bn, mainly
 
driven by
 
net inflows
 
into
 
fixed-term and
savings deposit products,
 
partly offset by continued
 
shifts into money market
 
funds and US-government securities,
as well as unfavorable foreign currency effects.
Results: 9M23 vs 9M22
Profit before tax decreased by USD 711m, or 18%, to USD 3,208m, mainly due to higher operating expenses and
the
 
first
 
nine
 
months
 
of
 
2022
 
including
 
a
 
USD 133m gain
 
from
 
the
 
sale
 
of
 
our
 
domestic
 
wealth
 
management
business in Spain and
 
an USD 86m gain from
 
the sale of UBS
 
Swiss Financial Advisers AG. The
 
decrease was also
due to
 
the acquisition
 
of the
 
Credit Suisse
 
Group. Excluding
 
USD 436m of
 
accretion of
 
PPA adjustments
 
on financial
instruments and integration-related expenses
 
of USD 498m, underlying profit before
 
tax was USD 3,270m.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
UBS business divisions and Group Items |
 
Global Wealth Management
 
21
Total revenues increased by USD 1,379m, or
 
10%, to USD 15,746m, largely driven
 
by the consolidation of
 
Credit
Suisse
 
revenues,
 
which
 
included
 
the
 
aforementioned
 
USD 436m
 
of
 
accretion
 
of
 
PPA
 
adjustments
 
on
 
financial
instruments, and
 
higher net
 
interest income. The
 
increase was
 
partly offset by
 
a decrease
 
in lower recurring
 
net fee,
other
 
and
 
transaction-based income.
 
Excluding
 
the
 
aforementioned accretion
 
effects, underlying
 
total
 
revenues
were USD 15,310m.
Net interest income
 
increased by USD 1,319m, or
 
35%, to USD 5,094m, largely
 
attributable to the
 
consolidation
of
 
Credit
 
Suisse
 
net
 
interest
 
income,
 
which
 
included
 
USD 412m
 
of
 
accretion
 
of
 
PPA
 
adjustments
 
on
 
financial
instruments, with
 
the remaining
 
increase mainly
 
driven by
 
higher deposit
 
margins, resulting
 
from rising
 
interest
rates, partly
 
offset by
 
the effects
 
of shifts
 
to lower-margin
 
deposit products,
 
lower average
 
deposit volumes and
lower loan
 
revenues, reflecting
 
lower average
 
volumes and
 
margins. Excluding
 
accretion effects,
 
underlying net
interest income was USD 4,682m.
Recurring net
 
fee income
 
increased by
 
USD 92m, or
 
1%, to
 
USD 7,975m, mainly
 
driven by
 
the consolidation
 
of
Credit Suisse recurring net fee income, partly
 
offset by negative market performance.
Transaction-based income increased by USD 163m, or 7%, to USD 2,642m, mainly
 
driven by the consolidation of
Credit
 
Suisse
 
transaction-based income,
 
which
 
included
 
USD 24m
 
of
 
accretion of
 
PPA
 
adjustments on
 
financial
instruments, partly offset
 
by lower
 
levels of
 
client activity,
 
particularly in the
 
Americas and Asia
 
Pacific. Excluding
accretion effects, underlying transaction-based
 
income was USD 2,618m.
Other income
 
decreased by
 
USD 195m, or
 
85%, to
 
USD 34m, largely
 
due to
 
the first
 
nine months
 
of 2022
 
including
the aforementioned gains from the sales of our domestic wealth management
 
business in Spain and of UBS Swiss
Financial Advisers AG.
Net
 
credit
 
loss
 
expenses
 
were
 
USD 154m,
 
mainly
 
driven
 
by
 
the
 
consolidation
 
of
 
Credit
 
Suisse
 
net
 
credit
 
loss
expenses, compared with net releases of USD
 
3m in the first nine months of 2022.
Operating expenses
 
increased by
 
USD 1,934m, or
 
19%, to
 
USD 12,384m, largely
 
due to
 
the consolidation
 
of Credit
Suisse
 
expenses,
 
higher
 
technology
 
expenses,
 
integration-related
 
expenses,
 
and
 
unfavorable
 
foreign
 
currency
effects. These were partly offset
 
by lower provisions for litigation, regulatory
 
and similar matters,
 
as well as lower
financial advisor
 
variable compensation.
 
Excluding
 
integration-related expenses
 
of USD 498m,
 
underlying operating
expenses were USD 11,886m.
Regional breakdown of performance measures
As of or for the quarter ended 30.9.23
USD bn, except where indicated
Americas
1
Switzerland
2
EMEA
2
Asia Pacific
2
Global
3
Global Wealth
Management
Total revenues (USD m)
 
2,607
 
873
 
1,166
 
833
 
332
 
5,810
Operating profit / (loss) before tax (USD m)
 
307
 
374
 
272
 
160
 
(106)
 
1,007
Operating profit / (loss) before tax (underlying) (USD m)
4
 
307
 
374
 
272
 
160
 
7
 
1,119
Cost / income ratio (%)
4
 
88.8
 
55.6
 
76.1
 
81.2
–
 
82.6
Cost / income ratio (underlying) (%)
4
 
88.8
 
55.6
 
76.1
 
81.2
–
 
79.6
Loans, gross
 
99.6
5
 
71.8
 
63.2
 
47.4
 
0.8
 
282.9
Net new loans
 
(1.7)
 
(1.0)
 
(1.8)
 
(2.6)
 
0.0
 
(7.1)
Net new money
4
 
0.3
 
0.9
 
7.9
 
13.1
 
(0.6)
 
21.5
Net new money growth rate (%)
4
 
0.1
 
0.7
 
4.1
 
8.2
–
 
2.3
Invested assets
4
 
1,764
 
614
 
623
 
611
 
5
 
3,617
Advisors (full-time equivalents)
 
6,142
 
1,002
 
1,811
 
1,232
 
91
 
10,278
1 Including the following business units: United
 
States and Canada; and Latin
 
America.
 
2 In the third quarter of
 
2023, the invested assets of
 
Global Financial Intermediaries were transferred
 
from EMEA and Asia
Pacific to the Switzerland region, to better align it to
 
the management structure. These changes were applied prospectively and had no impact on
 
previous quarters.
 
3 Includes minor functions, which are not included
in the
 
four regions
 
individually presented
 
in this
 
table, and
 
also includes
 
impacts from
 
accretion of
 
purchase price
 
allocation adjustments
 
on financial
 
instruments and
 
integration-related expenses.
 
4 Refer to
“Alternative performance measures” in the appendix to this report for the definition and calculation method.
 
5 Loans include customer brokerage receivables, which are presented in a separate reporting line on the
balance sheet.
 
 
UBS Group third quarter 2023 report |
UBS business divisions and Group Items |
 
Global Wealth Management
 
22
Regional comments 3Q23 vs 3Q22, except where
 
indicated
 
Americas
Profit
 
before
 
tax
 
decreased
 
by
 
USD 231m
 
to
 
USD 307m.
 
Total
 
revenues
 
decreased
 
by
 
USD 53m,
 
or
 
2%,
 
to
USD 2,607m, driven by lower net interest
 
and transaction-based income, partly offset by higher
 
recurring net fee
income
 
and
 
the
 
consolidation
 
of
 
Credit
 
Suisse
 
revenues
 
in
 
the
 
third
 
quarter
 
of
 
2023.
 
The
 
cost
 
/
 
income
 
ratio
increased to
 
88.8% from
 
79.8%. Loans
 
decreased 2%
 
compared with the
 
second quarter
 
of 2023,
 
to USD 99.6bn,
mainly reflecting USD 1.7bn of negative net new loans.
 
Net new money inflows were USD 0.3bn.
Switzerland
Profit
 
before
 
tax
 
increased
 
by
 
USD 195m
 
to
 
USD 374m.
 
Total
 
revenues
 
increased
 
by
 
USD 445m,
 
or
 
104%,
 
to
USD 873m, driven by the transfer
 
of the Global Financial Intermediaries
 
business to the Switzerland
 
region, as well
as the
 
consolidation of Credit
 
Suisse revenues in
 
the third
 
quarter of 2023.
 
The cost
 
/ income
 
ratio decreased to
55.6%
 
from
 
56.6%.
 
Loans
 
increased
 
10%
 
compared
 
with
 
the
 
second
 
quarter
 
of
 
2023,
 
to
 
USD 71.8bn,
 
as
USD 1.0bn of negative net new loans
 
were offset by the transfer of the Global
 
Financial Intermediaries business
 
to
the Switzerland region. Net new money inflows were
 
USD 0.9bn.
EMEA
Profit
 
before
 
tax
 
decreased
 
by
 
USD 226m
 
to
 
USD 272m.
 
Total
 
revenues
 
increased
 
by
 
USD 94m,
 
or
 
9%,
 
to
USD 1,166m, largely
 
driven by
 
the consolidation
 
of Credit
 
Suisse revenues,
 
partly offset
 
by
 
the aforementioned
gains from the sales in
 
the third quarter of
 
2022 and by the
 
transfer of the Global
 
Financial Intermediaries
 
business
to
 
the
 
Switzerland
 
region.
 
The
 
cost
 
/
 
income
 
ratio
 
increased
 
to
 
76.1%
 
from
 
53.2%.
 
Loans
 
decreased
 
13%
compared
 
with
 
the
 
second
 
quarter
 
of
 
2023,
 
to
 
USD 63.2bn,
 
driven
 
by
 
the
 
transfer
 
of
 
the
 
Global
 
Financial
Intermediaries business
 
to the Switzerland
 
region, as well
 
as USD 1.8bn of
 
negative net new
 
loans. Net new
 
money
inflows were USD 7.9bn.
Asia Pacific
Profit
 
before
 
tax
 
decreased
 
by
 
USD 77m
 
to
 
USD 160m.
 
Total
 
revenues
 
increased
 
by
 
USD 213m,
 
or
 
34%,
 
to
USD 833m, mainly
 
driven by
 
the consolidation
 
of Credit
 
Suisse revenues
 
and increases
 
in transaction-based
 
income.
The cost / income ratio increased to 81.2% from 62.0%. Loans decreased 7% compared with the second quarter
of 2023,
 
to USD 47.4bn,
 
mostly reflecting
 
USD 2.6bn of
 
negative net
 
new loans.
 
Net new
 
money inflows
 
were
USD 13.1bn.
Global
Operating loss
 
before tax was
 
USD 106m, mainly
 
including USD 431m
 
of integration-related
 
expenses, partly
 
offset
by USD 318m of accretion of PPA adjustments on financial instruments.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
UBS business divisions and Group Items |
 
Personal & Corporate Banking
 
23
Personal & Corporate Banking
 
Personal & Corporate Banking – in Swiss francs
As of or for the quarter ended
% change from
Year-to-date
CHF m, except where indicated
30.9.23
30.6.23
1
30.9.22
2
2Q23
3Q22
30.9.23
30.9.22
2
Results
Net interest income
 
1,550
 
1,020
 
489
 
52
 
217
 
3,222
 
1,484
Recurring net fee income
3
 
431
 
287
 
206
 
51
 
109
 
928
 
618
Transaction-based income
3
 
543
 
383
 
285
 
42
 
90
 
1,236
 
885
Other income
 
31
 
(21)
 
20
 
56
 
19
 
32
Total revenues
 
2,556
 
1,669
 
1,000
 
53
 
156
 
5,404
 
3,020
Credit loss expense / (release)
 
154
 
210
 
(15)
 
(27)
 
378
 
39
Operating expenses
 
1,405
 
886
 
585
 
59
 
140
 
2,903
 
1,758
Business division operating profit / (loss) before tax
 
997
 
573
 
430
 
74
 
132
 
2,123
 
1,222
Underlying results
Total revenues as reported
 
2,556
 
1,669
 
1,000
 
53
 
156
 
5,404
 
3,020
of which: accretion of PPA adjustments on financial instruments
 
397
 
137
 
191
 
534
Total revenues (underlying)
3
 
2,159
 
1,532
 
1,000
 
41
 
116
 
4,871
 
3,020
Credit loss expense / (release)
 
154
 
210
 
(15)
 
(27)
 
378
 
39
Operating expenses as reported
 
1,405
 
886
 
585
 
59
 
140
 
2,903
 
1,758
of which: integration-related expenses
3
 
148
 
27
 
458
 
174
of which: amortization from newly recognized intangibles
 
resulting from the acquisition of
the Credit Suisse Group
 
25
 
8
 
228
 
33
Operating expenses (underlying)
3
 
1,232
 
852
 
585
 
45
 
111
 
2,696
 
1,758
of which: expenses for litigation, regulatory and similar matters
 
(9)
 
0
 
0
 
(8)
 
0
Business division operating profit / (loss) before tax as reported
 
997
 
573
 
430
 
74
 
132
 
2,123
 
1,222
Business division operating profit / (loss) before tax (underlying)
3
 
773
 
471
 
430
 
64
 
80
 
1,797
 
1,222
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
3
 
132.0
 
44.2
 
(2.0)
 
73.7
 
(2.4)
Cost / income ratio (%)
3
 
55.0
 
53.1
 
58.5
 
53.7
 
58.2
Average attributed equity (CHF bn)
4
 
18.0
 
10.8
 
8.9
 
67
 
103
 
12.6
 
8.8
Return on attributed equity (%)
3,4
 
22.2
 
21.3
 
19.4
 
22.5
 
18.5
Loans, gross (CHF bn)
 
288.5
 
290.7
 
142.7
 
(1)
 
102
 
288.5
 
142.7
Customer deposits (CHF bn)
 
268.9
 
261.2
 
162.4
 
3
 
66
 
268.9
 
162.4
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
3,5
 
0.7
 
0.6
 
0.8
 
0.7
 
0.8
Underlying performance measures
Pre-tax profit growth (year-on-year, %)
3
 
79.8
 
18.4
 
(2.0)
 
47.0
 
0.2
Cost / income ratio (%)
3
 
57.1
 
55.6
 
58.5
 
55.4
 
58.2
1 Information has been restated to reflect the
 
effects of the integration of the
 
Swiss Bank (Credit Suisse) division
 
on an IFRS basis. In
 
addition, certain information has been revised.
 
Refer to “Note 2 Accounting for
the acquisition of the Credit Suisse Group” in the “Consolidated financial
 
statements” section of this report for more information.
 
2 Information reflects Personal & Corporate Banking as reported in the third quarter
of 2022 and the first nine months of 2022, respectively.
 
3 Refer to “Alternative performance measures” in the appendix to this report for the definition
 
and calculation method.
 
4 Refer to “Capital management”
in the “Capital, liquidity and funding, and balance sheet” section of the Annual Report 2022 for more information about the equity attribution framework.
 
5 Refer to the “Risk management and control” section of
this report for more information about (credit-)impaired exposures.
Results
:
3Q23 vs 3Q22
Profit before
 
tax increased
 
by CHF 567m,
 
or 132%,
 
to CHF 997m,
 
mainly due
 
to the
 
acquisition of
 
the Credit
 
Suisse
Group. Excluding CHF 397m of accretion
 
of purchase price allocation (PPA) adjustments
 
on financial instruments,
integration-related
 
expenses
 
of
 
CHF 148m
 
and
 
CHF 25m
 
of
 
amortization
 
from
 
newly
 
recognized
 
intangibles
resulting from the acquisition of the Credit
 
Suisse Group, underlying profit before
 
tax was CHF 773m.
Total revenues
Total
 
revenues increased
 
by
 
CHF 1,556m, or
 
156%, to
 
CHF 2,556m, mainly
 
due
 
to
 
the consolidation
 
of Credit
Suisse
 
revenues,
 
which
 
included
 
CHF 397m
 
of
 
accretion
 
of
 
PPA
 
adjustments on
 
financial
 
instruments, with
 
the
remaining
 
increase
 
largely
 
reflecting
 
increases
 
across
 
all
 
income
 
lines,
 
predominantly
 
in
 
net
 
interest
 
income.
Excluding the aforementioned accretion effects, underlying total revenues
 
were CHF 2,159m.
Net interest income increased by CHF 1,061m, or 217%, to CHF 1,550m, largely attributable to the consolidation
of
 
Credit
 
Suisse
 
net
 
interest
 
income,
 
which
 
included
 
CHF 361m
 
of
 
accretion
 
of
 
PPA
 
adjustments
 
on
 
financial
instruments,
 
with
 
the
 
remaining
 
increase
 
mainly
 
driven
 
by
 
higher
 
deposit
 
margins,
 
which
 
resulted
 
from
 
rising
interest rates, and higher loan
 
revenues, partly offset by lower
 
deposit fees. The third
 
quarter of 2022 included
 
a
benefit from
 
the Swiss
 
National Bank
 
deposit exemption.
 
Excluding accretion
 
effects, underlying
 
net interest
 
income
was CHF 1,189m.
 
 
 
UBS Group third quarter 2023 report |
UBS business divisions and Group Items |
 
Personal & Corporate Banking
 
24
Recurring net fee
 
income increased
 
by CHF 225m,
 
or 109%, to
 
CHF 431m, mainly
 
attributable to the
 
consolidation
of Credit Suisse recurring
 
net fee income, with
 
the remaining increase
 
mostly driven by the
 
higher revenues related
to custody assets and mandates, reflecting
 
higher average volumes of underlying
 
assets.
Transaction-based income
 
increased by CHF 258m,
 
or 90%, to CHF 543m,
 
largely attributable to
 
the consolidation
of Credit Suisse transaction-based income, which included CHF
 
36m of accretion of PPA
 
adjustments on financial
instruments, with the
 
remaining increase
 
mainly driven
 
by higher
 
income from
 
Corporate &
 
Institutional Clients.
Excluding accretion effects, underlying transaction-based
 
income was CHF 507m.
Other income increased by
 
CHF 11m, or 56%,
 
to CHF 31m, mostly
 
reflecting a one-time effect
 
of CHF 23m that
resulted from a
 
change to the
 
equity method
 
measurement basis
 
for our investment
 
in SIX Group.
 
The increase
 
was
partly offset by a decrease attributable to the
 
consolidation of Credit Suisse other
 
income.
Credit loss expense / release
Net
 
credit
 
loss
 
expenses were
 
CHF 154m,
 
primarily
 
related
 
to
 
stage 3
 
positions, compared
 
with
 
net
 
releases
 
of
CHF 15m in the third quarter of 2022.
Operating expenses
Operating expenses increased by CHF 820m, or 140%, to CHF 1,405m, largely due to the consolidation of Credit
Suisse expenses, with
 
the remaining increase mostly reflecting integration-related expenses.
 
Excluding integration-
related expenses of
 
CHF 148m and CHF 25m
 
of amortization from
 
newly recognized intangibles
 
resulting from the
acquisition of the Credit Suisse Group,
 
underlying operating expenses were CHF 1,232m.
Results: 9M23 vs 9M22
Profit
 
before tax
 
increased by
 
CHF 901m,
 
or 74%,
 
to CHF
 
2,123m, mainly
 
due to
 
the acquisition
 
of the
 
Credit
Suisse Group.
 
Excluding CHF 534m of
 
accretion of
 
PPA adjustments
 
on financial
 
instruments, integration-related
expenses
 
of
 
CHF 174m
 
and
 
CHF 33m
 
of
 
amortization
 
from
 
newly
 
recognized
 
intangibles
 
resulting
 
from
 
the
acquisition of the Credit Suisse Group, underlying
 
profit before tax was CHF 1,797m.
Total revenues increased
 
by CHF 2,384m,
 
or 79%, to
 
CHF 5,404m, mainly
 
due to the
 
consolidation of Credit
 
Suisse
revenues, which included CHF 534m of accretion
 
of PPA adjustments on financial instruments, with
 
the remaining
increase
 
reflecting
 
increases
 
across
 
all
 
income
 
lines,
 
predominantly
 
in
 
net
 
interest
 
income.
 
Excluding
 
the
aforementioned accretion effects, underlying
 
total revenues were CHF 4,871m.
Net interest income increased by CHF 1,738m, or 117%, to CHF 3,222m, largely attributable to the consolidation
of
 
Credit
 
Suisse
 
net
 
interest
 
income,
 
which
 
included
 
CHF 484m
 
of
 
accretion
 
of
 
PPA
 
adjustments
 
on
 
financial
instruments,
 
with
 
the
 
remaining
 
increase
 
mainly
 
driven
 
by
 
higher
 
deposit
 
margins,
 
which
 
resulted
 
from
 
rising
interest rates, and
 
higher loan revenues,
 
partly offset by
 
lower deposit fees.
 
The first nine months
 
of 2022 included
a
 
benefit
 
from
 
the
 
Swiss
 
National
 
Bank
 
deposit
 
exemption.
 
Excluding
 
accretion
 
effects,
 
underlying
 
net
 
interest
income was CHF 2,738m.
Recurring net fee income increased by CHF 310m,
 
or 50%, to CHF 928m, mainly attributable to the consolidation
of
 
Credit
 
Suisse
 
recurring
 
net
 
fee
 
income,
 
with
 
the
 
remaining
 
increase
 
mostly
 
driven
 
by
 
higher
 
revenues
 
from
account fees.
Transaction-based
 
income
 
increased
 
by
 
CHF 351m,
 
or
 
40%,
 
to
 
CHF 1,236m,
 
largely
 
attributable
 
to
 
the
consolidation of Credit
 
Suisse transaction-based income,
 
which included CHF 50m
 
of accretion of PPA
 
adjustments
on financial
 
instruments, with
 
the remaining
 
increase mainly
 
driven by
 
higher income
 
from Corporate
 
& Institutional
Clients. Excluding accretion effects, underlying
 
transaction-based income was CHF 1,186m.
 
Other
 
income
 
decreased
 
by
 
CHF 13m,
 
or
 
41%,
 
to
 
CHF 19m,
 
mainly
 
due
 
to
 
a
 
decrease
 
attributable
 
to
 
the
consolidation of
 
Credit Suisse
 
other income,
 
partly offset
 
by a
 
one-time effect
 
of CHF 23m
 
that resulted
 
from a
change to the equity method measurement
 
basis for our investment in SIX Group.
Net credit
 
loss expenses
 
were CHF 378m,
 
primarily related
 
to first-time
 
adoption of
 
IFRS 9
 
in Swiss
 
Bank (Credit
Suisse), compared with net expenses of CHF 39m
 
in the first nine months of 2022.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
UBS business divisions and Group Items |
 
Personal & Corporate Banking
 
25
Operating expenses increased by CHF 1,145m,
 
or 65%, to CHF 2,903m, largely due to the
 
consolidation of Credit
Suisse expenses, with
 
the remaining increase
 
mostly reflecting integration-related expenses, technology
 
expenses
and
 
accruals
 
for
 
variable
 
compensation. Excluding
 
integration-related
 
expenses
 
of
 
CHF 174m
 
and
 
CHF 33m
 
of
amortization
 
from
 
newly
 
recognized
 
intangibles
 
resulting
 
from
 
the
 
acquisition
 
of
 
the
 
Credit
 
Suisse
 
Group,
underlying operating expenses were CHF 2,696m.
Personal & Corporate Banking – in US dollars
As of or for the quarter ended
% change from
Year-to-date
USD m, except where indicated
30.9.23
30.6.23
1
30.9.22
2
2Q23
3Q22
30.9.23
30.9.22
2
Results
Net interest income
 
1,742
 
1,135
 
502
 
53
 
247
 
3,582
 
1,559
Recurring net fee income
3
 
485
 
319
 
212
 
52
 
129
 
1,030
 
649
Transaction-based income
3
 
611
 
426
 
294
 
43
 
108
 
1,373
 
931
Other income
 
34
 
(24)
 
20
 
66
 
20
 
33
Total revenues
 
2,871
 
1,856
 
1,028
 
55
 
179
 
6,005
 
3,172
Credit loss expense / (release)
 
168
 
234
 
(15)
 
(28)
 
418
 
42
Operating expenses
 
1,579
 
985
 
602
 
60
 
162
 
3,227
 
1,847
Business division operating profit / (loss) before tax
 
1,124
 
637
 
442
 
76
 
155
 
2,360
 
1,283
Underlying results
Total revenues as reported
 
2,871
 
1,856
 
1,028
 
55
 
179
 
6,005
 
3,172
of which: accretion of PPA adjustments on financial instruments
 
446
 
153
 
192
 
598
Total revenues (underlying)
3
 
2,426
 
1,704
 
1,028
 
42
 
136
 
5,407
 
3,172
Credit loss expense / (release)
 
168
 
234
 
(15)
 
(28)
 
418
 
42
Operating expenses as reported
 
1,579
 
985
 
602
 
60
 
162
 
3,227
 
1,847
of which: integration-related expenses
3
 
166
 
30
 
460
 
195
of which: amortization from newly recognized intangibles
 
resulting from the acquisition of
the Credit Suisse Group
 
28
 
8
 
229
 
36
Operating expenses (underlying)
3
 
1,385
 
947
 
602
 
46
 
130
 
2,996
 
1,847
of which: expenses for litigation, regulatory and similar matters
 
(9)
 
0
 
0
 
(9)
 
0
Business division operating profit / (loss) before tax as reported
 
1,124
 
637
 
442
 
76
 
155
 
2,360
 
1,283
Business division operating profit / (loss) before tax (underlying)
3
 
872
 
523
 
442
 
67
 
97
 
1,994
 
1,283
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
3
 
154.5
 
54.3
 
(7.6)
 
84.0
 
(6.1)
Cost / income ratio (%)
3
 
55.0
 
53.1
 
58.5
 
53.7
 
58.2
Average attributed equity (USD bn)
4
 
20.2
 
12.0
 
9.2
 
69
 
121
 
14.0
 
9.3
Return on attributed equity (%)
3,4
 
22.2
 
21.3
 
19.3
 
22.5
 
18.4
Loans, gross (USD bn)
 
315.0
 
324.5
 
144.6
 
(3)
 
118
 
315.0
 
144.6
Customer deposits (USD bn)
 
293.6
 
291.6
 
164.6
 
1
 
78
 
293.6
 
164.6
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
3,5
 
0.7
 
0.6
 
0.8
 
0.7
 
0.8
Underlying performance measures
Pre-tax profit growth (year-on-year, %)
3
 
97.5
 
26.5
 
(7.6)
 
55.4
 
(3.5)
Cost / income ratio (%)
3
 
57.1
 
55.6
 
58.5
 
55.4
 
58.2
1 Information has been restated to reflect the
 
effects of the integration of the
 
Swiss Bank (Credit Suisse) division on
 
an IFRS basis. In addition,
 
certain information has been revised. Refer
 
to “Note 2 Accounting for
the acquisition of the Credit Suisse Group” in the “Consolidated financial
 
statements” section of this report for more information.
 
2 Information reflects Personal & Corporate Banking as reported in the third quarter
of 2022 and the first nine months of 2022, respectively.
 
3 Refer to “Alternative performance measures” in the appendix to this report for the definition
 
and calculation method.
 
4 Refer to “Capital management”
in the “Capital, liquidity and funding, and balance sheet” section of the Annual Report 2022 for more information about the equity attribution framework.
 
5 Refer to the “Risk management and control” section of
this report for more information about (credit-)impaired exposures.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
UBS business divisions and Group Items |
 
Asset Management
 
26
Asset Management
Asset Management
As of or for the quarter ended
% change from
Year-to-date
USD m, except where indicated
30.9.23
30.6.23
1
30.9.22
2
2Q23
3Q22
30.9.23
30.9.22
2
Results
Net management fees
3
 
737
 
566
 
502
 
30
 
47
 
1,782
 
1,579
Performance fees
 
18
 
11
 
14
 
65
 
29
 
52
 
40
Net gain from disposal of a joint venture
 
848
Total revenues
 
755
 
577
 
516
 
31
 
46
 
1,834
 
2,466
Credit loss expense / (release)
 
0
 
1
 
0
 
1
 
0
Operating expenses
 
724
 
498
 
376
 
45
 
93
 
1,630
 
1,193
Business division operating profit / (loss) before tax
 
31
 
77
 
140
 
(60)
 
(78)
 
203
 
1,273
Underlying results
Total revenues as reported
 
755
 
577
 
516
 
31
 
46
 
1,834
 
2,466
of which: net gain from disposal of a joint venture
 
848
Total revenues (underlying)
4
 
755
 
577
 
516
 
31
 
46
 
1,834
 
1,619
Credit loss expense / (release)
 
0
 
1
 
0
 
1
 
0
Operating expenses as reported
 
724
 
498
 
376
 
45
 
93
 
1,630
 
1,193
of which: integration-related expenses
4
 
125
 
14
 
793
 
139
Operating expenses (underlying)
4
 
599
 
484
 
376
 
24
 
59
 
1,491
 
1,193
of which: expenses for litigation, regulatory and similar matters
 
1
 
1
 
2
 
0
Business division operating profit / (loss) before tax as reported
 
31
 
77
 
140
 
(60)
 
(78)
 
203
 
1,273
Business division operating profit / (loss) before tax (underlying)
4
 
156
 
91
 
140
 
71
 
11
 
342
 
426
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
4
 
(77.8)
 
(91.9)
 
(34.5)
 
(84.1)
 
82.9
Cost / income ratio (%)
4
 
95.9
 
86.4
 
72.8
 
88.9
 
48.4
Average attributed equity (USD bn)
5
 
2.3
 
1.8
 
1.7
 
27
 
37
 
2.0
 
1.7
Return on attributed equity (%)
4,5
 
5.4
 
17.0
 
33.2
 
13.9
 
98.1
Gross margin on invested assets (bps)
4,6
 
19
 
17
 
20
 
18
 
30
Underlying performance measures
Pre-tax profit growth (year-on-year, %)
4
 
11.2
 
(17.8)
 
(34.5)
 
(19.7)
 
(38.8)
Cost / income ratio (%)
4
 
79.3
 
84.0
 
72.8
 
81.3
 
73.7
Information by business line / asset
 
class
Net new money (USD bn)
4
Equities
 
(5.7)
 
12.1
 
(0.4)
 
2.4
 
(13.2)
Fixed Income
 
4.6
 
(0.3)
 
19.7
 
23.5
 
23.6
of which: money market
 
5.7
 
(2.8)
 
16.0
 
20.9
 
10.0
Multi-asset & Solutions
 
(0.5)
 
0.5
 
0.0
 
1.3
 
5.4
Hedge Fund Businesses
 
(1.7)
 
0.0
 
(1.4)
 
(2.6)
 
(1.4)
Real Estate & Private Markets
 
0.7
 
2.8
 
0.0
 
2.4
 
(0.4)
Total net new money excluding associates
 
(2.6)
 
15.1
 
17.9
 
26.9
 
14.0
of which: net new money excluding money market
 
(8.3)
 
18.0
 
2.0
 
6.0
 
4.0
Associates
7
 
1.2
 
0.1
 
5.7
 
1.0
 
9.1
Total net new money
6
 
(1.5)
 
15.2
 
23.6
 
27.9
 
23.1
Invested assets (USD bn)
4
Equities
 
588
 
620
 
411
 
(5)
 
43
 
588
 
411
Fixed Income
 
446
 
448
 
271
 
0
 
65
 
446
 
271
of which: money market
 
146
 
139
 
99
 
5
 
47
 
146
 
99
Multi-asset & Solutions
 
248
 
256
 
149
 
(3)
 
67
 
248
 
149
Hedge Fund Businesses
 
58
 
59
 
51
 
(1)
 
13
 
58
 
51
Real Estate & Private Markets
 
149
 
157
 
97
 
(5)
 
52
 
149
 
97
Total invested assets excluding associates
 
1,489
 
1,539
 
979
 
(3)
 
52
 
1,489
 
979
of which: passive strategies
 
642
 
672
 
408
 
(4)
 
57
 
642
 
408
Associates
7
 
70
 
70
 
25
 
1
 
185
 
70
 
25
Total invested assets
6,8
 
1,559
 
1,609
 
1,004
 
(3)
 
55
 
1,559
 
1,004
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
UBS business divisions and Group Items |
 
Asset Management
 
27
Asset Management (continued)
As of or for the quarter ended
% change from
Year-to-date
USD m, except where indicated
30.9.23
30.6.23
1
30.9.22
2
2Q23
3Q22
30.9.23
30.9.22
2
Information by region
Invested assets (USD bn)
4
Americas
 
387
 
382
 
271
 
1
 
43
 
387
 
271
Asia Pacific
6
 
225
 
230
 
166
 
(2)
 
35
 
225
 
166
Europe, Middle East and Africa (excluding Switzerland)
 
328
 
343
 
239
 
(4)
 
37
 
328
 
239
Switzerland
 
619
 
654
 
328
 
(5)
 
89
 
619
 
328
Total invested assets
6,8
 
1,559
 
1,609
 
1,004
 
(3)
 
55
 
1,559
 
1,004
Information by channel
Invested assets (USD bn)
4
Third-party institutional
 
899
 
928
 
563
 
(3)
 
60
 
899
 
563
Third-party wholesale
 
162
 
174
 
108
 
(7)
 
51
 
162
 
108
UBS’s wealth management businesses
 
427
 
437
 
309
 
(2)
 
38
 
427
 
309
Associates
7
 
70
 
70
 
25
 
1
 
185
 
70
 
25
Total invested assets
6,8
 
1,559
 
1,609
 
1,004
 
(3)
 
55
 
1,559
 
1,004
1 Information has been restated to reflect
 
the effects of the integration of the Asset
 
Management (Credit Suisse) division on an IFRS basis. In
 
addition, certain information has been revised. Refer
 
to “Note 2 Accounting
for the acquisition of the
 
Credit Suisse Group” in the
 
“Consolidated financial statements” section
 
of this report for
 
more information.
 
2 Information reflects Asset Management
 
as reported in the third
 
quarter of
2022 and the first nine months of
 
2022, respectively.
 
3 Net management fees include transaction fees,
 
fund administration revenues (including net
 
interest and trading income from lending
 
activities and foreign-
exchange hedging as part of the fund services offering), distribution fees, incremental fund-related
 
expenses, gains or losses from seed money and co-investments,
 
funding costs, the negative pass-through impact of
third-party performance fees,
 
and other items that
 
are not Asset Management’s
 
performance fees.
 
4 Refer to “Alternative
 
performance measures” in the
 
appendix to this report
 
for the definition and
 
calculation
method.
 
5 Refer to “Capital management” in the
 
“Capital, liquidity and funding, and balance sheet”
 
section of the Annual Report 2022 for
 
more information about the equity attribution fram
 
ework.
 
6 Starting
with the second quarter of
 
2023, net new money
 
and invested assets include net
 
new money and invested
 
assets from associates,
 
to better reflect the business
 
strategy. Comparative
 
figures have been restated
 
to
reflect this change.
 
7 The invested assets and
 
net new money amounts reported for
 
associates are prepared in accordance
 
with their local regulatory requirements
 
and practices.
 
8 Invested assets as of 30
 
June
2023 have not been restated for the cross-investments of Asset Management (Credit Suisse) and legacy UBS Asset Management.
Results: 3Q23 vs 3Q22
 
Profit before tax decreased by USD 109m,
 
or 78%, to USD 31m, mainly due to the
 
acquisition of the Credit Suisse
Group. Excluding integration-related expenses
 
of USD 125m, underlying profit before tax was
 
USD 156m.
Total revenues
Total
 
revenues
 
increased
 
by
 
USD 239m,
 
or
 
46%,
 
to
 
USD 755m,
 
reflecting
 
the
 
consolidation
 
of
 
Credit
 
Suisse
revenues.
Net management fees increased by USD 235m,
 
or 47%, to USD 737m, largely attributable to the consolidation
 
of
Credit Suisse
 
net management fees
 
and due
 
to positive market
 
performance and foreign
 
currency effects,
 
partly
offset by continued margin compression.
Performance fees increased
 
by USD 4m,
 
or 29%,
 
to USD 18m, mainly
 
attributable to the
 
consolidation of Credit
Suisse performance fees
 
and due to
 
an increase in
 
Hedge Fund Businesses,
 
partly offset by
 
a decrease in
 
Real Estate
& Private Markets.
Operating expenses
Operating expenses increased by USD 348m, or 93%, to USD 724m, mainly reflecting the
 
consolidation of Credit
Suisse expenses. The increase was
 
also due to integration-related
 
expenses, adverse foreign currency
 
effects, and
increases in technology and personnel expenses. Excluding integration-related expenses of USD 125m, underlying
operating expenses were USD 599m.
Invested assets: 3Q23 vs 2Q23
 
Invested assets decreased by USD 50bn
 
to USD 1,559bn, reflecting negative
 
foreign currency effects of USD
 
23bn,
negative market performance
 
of USD 21bn, negative
 
net new
 
money of
 
USD 1bn and
 
a net-new-money-neutral
reduction of
 
USD 4bn due
 
to the
 
elimination of
 
the cross-investments
 
of Asset
 
Management (Credit
 
Suisse)
 
and
legacy
 
UBS
 
Asset
 
Management,
 
as
 
UBS
 
policy
 
does
 
not
 
allow
 
for
 
double
 
counting
 
of
 
assets
 
within
 
the
 
same
reporting segment.
1
 
Excluding money market flows and associates,
 
net new money was negative USD 8bn.
 
 
 
 
UBS Group third quarter 2023 report |
UBS business divisions and Group Items |
 
Asset Management
 
28
Results: 9M23 vs 9M22
Profit before tax decreased by USD 1,070m, or
 
84%, to USD 203m, primarily
 
due to the first nine
 
months of 2022
including
 
a
 
gain
 
of
 
USD 848m
 
from
 
the
 
sale
 
of
 
our
 
shareholding
 
in
 
the
 
Mitsubishi
 
Corp.-UBS
 
Realty
 
Inc.
 
joint
venture.
 
Excluding
 
that
 
gain
 
and
 
integration-related
 
expenses
 
of
 
USD 139m,
 
underlying
 
profit
 
before
 
tax
 
was
USD 342m.
Total revenues decreased by
 
USD 632m, or 26%, to
 
USD 1,834m, primarily due to
 
the first nine
 
months of 2022
including the
 
aforementioned gain
 
of USD 848m.
 
The decrease
 
was partly
 
offset by
 
higher revenues
 
due to
 
the
consolidation of Credit Suisse revenues.
Net management fees increased by USD 203m, or 13%, to USD 1,782m, largely
 
attributable to the consolidation
of
 
Credit
 
Suisse
 
net
 
management
 
fees,
 
partly
 
offset
 
by
 
negative
 
market
 
performance
 
and
 
continued
 
margin
compression.
Performance fees increased by USD 12m, or 30%, to USD 52m, mainly attributable to the consolidation of Credit
Suisse performance
 
fees and
 
due to
 
an increase
 
in Real
 
Estate &
 
Private Markets,
 
partly offset
 
by decreases
 
in Hedge
Fund Businesses and Equities.
Operating expenses
 
increased by
 
USD 437m, or
 
37%, to
 
USD 1,630m, mainly
 
reflecting the
 
consolidation of
 
Credit
Suisse expenses.
 
The increase was
 
also due to
 
integration-related expenses, adverse foreign currency effects, and
increases in
 
technology expenses,
 
general and
 
administrative expenses,
 
and control
 
functions expenses,
 
partly offset
by lower personnel expenses.
 
Excluding integration-related
 
expenses of USD 139m,
 
underlying operating expenses
were USD 1,491m.
1
 
Invested assets as of 30 June 2023 have not been restated for the cross-investments of Asset Management (Credit Suisse) and legacy UBS Asset Management.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
UBS business divisions and Group Items |
 
Investment Bank
 
29
Investment Bank
Investment Bank
As of or for the quarter ended
% change from
Year-to-date
USD m, except where indicated
30.9.23
30.6.23
1
30.9.22
2
2Q23
3Q22
30.9.23
30.9.22
2
Results
Advisory
 
191
 
193
 
136
 
(1)
 
40
 
556
 
561
Capital Markets
 
507
 
285
 
193
 
78
 
163
 
1,002
 
695
Global Banking
 
698
 
478
 
329
 
46
 
112
 
1,558
 
1,256
Execution Services
 
379
 
363
 
376
 
4
 
1
 
1,165
 
1,271
Derivatives & Solutions
 
605
 
648
 
866
 
(7)
 
(30)
 
2,261
 
3,124
Financing
 
468
 
533
 
460
 
(12)
 
2
 
1,538
 
1,384
Global Markets
 
1,452
 
1,544
 
1,702
 
(6)
 
(15)
 
4,964
 
5,778
of which: Equities
 
1,080
 
1,153
 
1,108
 
(6)
 
(3)
 
3,541
 
4,087
of which: Foreign Exchange, Rates and Credit
 
373
 
391
 
595
 
(5)
 
(37)
 
1,423
 
1,692
Total revenues
 
2,151
 
2,022
 
2,032
 
6
 
6
 
6,522
 
7,034
Credit loss expense / (release)
 
4
 
132
 
4
 
(97)
 
(12)
 
142
 
(20)
Operating expenses
 
2,377
 
2,013
 
1,581
 
18
 
50
 
6,255
 
5,269
Business division operating profit / (loss) before tax
 
(230)
 
(123)
 
447
 
88
 
124
 
1,785
Underlying results
Total revenues as reported
 
2,151
 
2,022
 
2,032
 
6
 
6
 
6,522
 
7,034
of which: accretion of PPA adjustments on financial instruments
 
251
 
55
 
356
 
306
of which: losses in the first quarter of 2022 from transactions with
 
Russian counterparties
 
(93)
Total revenues (underlying)
3
 
1,900
 
1,967
 
2,032
 
(3)
 
(6)
 
6,216
 
7,127
Credit loss expense / (release)
 
4
 
132
 
4
 
(97)
 
(12)
 
142
 
(20)
Operating expenses as reported
 
2,377
 
2,013
 
1,581
 
18
 
50
 
6,255
 
5,269
of which: integration-related expenses
3
 
365
 
161
 
127
 
526
Operating expenses (underlying)
3
 
2,012
 
1,852
 
1,581
 
9
 
27
 
5,729
 
5,269
of which: expenses for litigation, regulatory and similar matters
 
0
 
20
 
3
 
(99)
 
(90)
 
65
 
101
Business division operating profit / (loss) before tax as reported
 
(230)
 
(123)
 
447
 
88
 
124
 
1,785
Business division operating profit / (loss) before tax (underlying)
3
 
(116)
 
(16)
 
447
 
602
 
345
 
1,878
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
3
 
(151.5)
 
(129.9)
 
(46.6)
 
(93.0)
 
(6.9)
Cost / income ratio (%)
3
 
110.5
 
99.6
 
77.8
 
95.9
 
74.9
Average attributed equity (USD bn)
4
 
14.7
 
13.2
 
12.8
 
12
 
15
 
13.6
 
13.1
Return on attributed equity (%)
3,4
 
(6.2)
 
(3.7)
 
14.0
 
1.2
 
18.2
Underlying performance measures
Pre-tax profit growth (year-on-year, %)
3
 
(125.9)
 
(104.0)
 
(46.6)
 
(81.7)
 
(32.4)
Cost / income ratio (%)
3
 
105.9
 
94.1
 
77.8
 
92.2
 
73.9
1 Information has been restated to reflect the effects of the integration of the Investment Bank (Credit
 
Suisse) division on an IFRS basis. In addition, certain information has been revised.
 
Refer to “Note 2 Accounting
for the acquisition of the Credit Suisse
 
Group” in the “Consolidated financial statements”
 
section of this report for more
 
information.
 
2 Information reflects the Investment Bank as
 
reported in the third quarter of
2022 and the first nine months of 2022, respectively.
 
3 Refer to “Alternative performance measures”
 
in the appendix to this report for the definition and calculation method.
 
4 Refer to “Capital management” in
the “Capital, liquidity and funding, and balance sheet” section of the Annual Report 2022 for more information about the equity attribution framework.
 
 
UBS Group third quarter 2023 report |
UBS business divisions and Group Items |
 
Investment Bank
 
30
Results: 3Q23 vs 3Q22
Loss before
 
tax was
 
USD 230m, compared
 
with profit
 
before tax
 
of USD 447m,
 
mainly due
 
to higher
 
operating
expenses associated with the acquisition of the Credit Suisse Group,
 
which included integration-related expenses,
and
 
due
 
to
 
lower
 
underlying
 
revenues.
 
Excluding
 
USD 251m
 
of
 
accretion
 
of
 
purchase
 
price
 
allocation
 
(PPA)
adjustments on
 
financial instruments
 
and integration-related
 
expenses of
 
USD 365m, underlying
 
loss before
 
tax
was USD 116m.
Total revenues
Total
 
revenues increased by USD 119m,
 
or 6%, to USD 2,151m,
 
mainly due to the
 
consolidation of Credit Suisse
revenues,
 
which included
 
USD 251m of
 
accretion of
 
PPA
 
adjustments on
 
financial instruments.
 
Underlying total
revenues
 
decreased,
 
largely
 
driven
 
by
 
lower
 
Global
 
Markets
 
revenues,
 
partly
 
offset
 
by
 
higher
 
Global
 
Banking
revenues. Excluding the aforementioned accretion effects, underlying
 
total revenues were USD 1,900m.
Global Banking
Global Banking
 
revenues increased by
 
USD 369m, or 112%,
 
to USD 698m,
 
largely attributable
 
to the consolidation
of Credit
 
Suisse revenues,
 
which included
 
USD 251m of
 
accretion
 
of PPA
 
adjustments on
 
financial instruments.
Excluding accretion
 
effects,
 
underlying Global
 
Banking revenues
 
increased by
 
USD 118m, or
 
36%. The
 
relevant
market fee pool
1,2
decreased 19%.
Advisory revenues
 
increased by
 
USD 55m, or
 
40%, to
 
USD 191m, mainly
 
due to
 
higher merger
 
and acquisition
transaction revenues, which increased by
 
USD 50m, or 41%. The relevant global fee pool
2
decreased 33%.
Capital Markets
 
revenues increased
 
by USD 314m,
 
or 163%,
 
to USD 507m,
 
largely attributable
 
to the
 
consolidation
of Credit
 
Suisse
 
revenues, which
 
included USD 251m
 
of accretion
 
of PPA
 
adjustments on
 
financial instruments.
Excluding accretion
 
effects,
 
underlying Capital
 
Markets revenues
 
increased by
 
USD 63m, or
 
33%, mainly
 
due to
higher Leveraged
 
Capital Markets
 
revenues, with
 
a USD 45m,
 
or 95%,
 
increase in
 
fees, and
 
prior-year mark-to-
market losses of USD 28m,
 
which did not recur. The Leveraged Capital Markets
 
global fee pool
2
 
increased 17%.
Global Markets
Global Markets revenues decreased by
 
USD 250m, or 15%, to USD 1,452m, primarily driven
 
by lower Derivatives
& Solutions revenues.
Execution Services revenues increased by USD
 
3m, or 1%, to USD 379m.
Derivatives
 
&
 
Solutions
 
revenues
 
decreased
 
by
 
USD 261m,
 
or
 
30%,
 
to
 
USD 605m,
 
mostly
 
driven
 
by
 
Foreign
Exchange, Rates and Equity Derivatives, due to
 
lower levels of both volatility and client activity.
Financing revenues increased by USD 8m, or 2%,
 
to USD 468m, supported by increased client
 
balances.
Equities
Global Markets Equities
 
revenues decreased
 
by USD 28m, or
 
3%, to USD 1,080m,
 
mainly driven by
 
lower Equity
Derivatives revenues.
Foreign Exchange, Rates and Credit
Global Markets
 
Foreign
 
Exchange, Rates
 
and
 
Credit
 
revenues
 
decreased by
 
USD 222m, or
 
37%, to
 
USD 373m,
primarily driven by lower Foreign Exchange and Rates
 
revenues.
Credit loss expense / release
Net credit loss expenses were largely unchanged.
Operating expenses
Operating expenses increased
 
by USD 796m, or
 
50%, to USD 2,377m,
 
largely due to
 
integration-related expenses,
the
 
consolidation
 
of
 
Credit
 
Suisse
 
expenses,
 
and
 
higher
 
technology
 
expenses.
 
Excluding
 
integration-related
expenses of USD 365m, underlying operating expenses
 
were USD 2,012m.
 
 
 
 
UBS Group third quarter 2023 report |
UBS business divisions and Group Items |
 
Investment Bank
 
31
Results: 9M23 vs 9M22
Profit
 
before
 
tax
 
decreased
 
by
 
USD 1,661m,
 
or
 
93%,
 
to
 
USD 124m,
 
mainly
 
due
 
to
 
higher
 
operating
 
expenses
associated with the
 
acquisition of the Credit
 
Suisse Group, which included
 
integration-related expenses, and due
to
 
lower
 
total
 
revenues.
 
Excluding
 
USD 306m
 
of
 
accretion
 
of
 
PPA
 
adjustments
 
on
 
financial
 
instruments
 
and
integration-related expenses
 
of USD 526m, underlying profit before tax was
 
USD 345m.
Total revenues
Total
 
revenues decreased
 
by USD 512m,
 
or 7%,
 
to USD 6,522m,
 
mainly due
 
to lower
 
Global Markets
 
revenues,
partly
 
offset
 
by
 
the
 
consolidation
 
of
 
Credit
 
Suisse
 
revenues,
 
which
 
included
 
USD 306m
 
of
 
accretion
 
of
 
PPA
adjustments on
 
financial instruments.
 
Excluding the
 
aforementioned accretion
 
effects, underlying
 
total revenues
were USD 6,216m.
Global Banking
Global Banking revenues
 
increased by
 
USD 302m, or 24%,
 
to USD 1,558m, largely
 
attributable to USD 306m
 
of
accretion of
 
PPA adjustments
 
on financial
 
instruments.
 
Excluding accretion
 
effects, underlying
 
revenues were
 
stable.
Advisory revenues decreased by USD 5m, or
 
1%, to USD 556m.
Capital Markets revenues increased by
 
USD 307m, or 44%, to
 
USD 1,002m, including USD 306m of accretion
 
of
PPA adjustments on financial instruments.
 
Underlying revenues were stable.
Global Markets
Global Markets revenues decreased by USD
 
814m, or 14%, to USD 4,964m, primarily driven
 
by lower Derivatives
& Solutions revenues.
Execution Services revenues decreased by USD
 
106m, or 8%, to USD 1,165m.
Derivatives
 
&
 
Solutions
 
revenues
 
decreased
 
by
 
USD 863m,
 
or
 
28%,
 
to
 
USD 2,261m,
 
mostly
 
driven
 
by
 
Equity
Derivatives, Foreign Exchange and Rates, due to
 
lower levels of both volatility and client activity.
Financing revenues increased by USD 154m, or
 
11%, to USD 1,538m, with increases
 
across all products.
Equities
Global Markets Equities
 
revenues decreased by USD 546m,
 
or 13%, to USD
 
3,541m, mainly driven
 
by lower Equity
Derivatives revenues.
Foreign Exchange, Rates and Credit
Global Markets Foreign
 
Exchange, Rates and Credit
 
revenues decreased by
 
USD 269m, or 16%, to
 
USD 1,423m,
primarily driven by lower Foreign Exchange and Rates
 
revenues.
Credit loss expense / release
Net credit loss
 
expenses
 
were USD 142m,
 
compared with
 
net releases
 
of USD 20m
 
in the
 
first nine
 
months of
 
2022.
Operating expenses
Operating expenses increased
 
by USD 986m, or
 
19%, to USD 6,255m,
 
largely due to
 
integration-related expenses,
the consolidation
 
of Credit
 
Suisse expenses
 
and higher
 
technology expenses.
 
Excluding integration-related
 
expenses
of USD 526m, underlying operating expenses
 
were USD 5,729m.
1
 
UBS fee-pool-comparable revenues consist of revenues
 
from: merger-and-acquisition-related transactions; Equity Capital
 
Markets, excluding derivatives;
 
Leveraged Capital Markets,
 
excluding the impact of mark-to-
market movements on loan portfolios; and Debt Capital Markets,
 
excluding revenues related to debt underwriting of UBS instruments.
2
 
Source: Dealogic, as of 29 September 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
UBS business divisions and Group Items |
 
Non-core and Legacy
 
32
Non-core and Legacy
Non-core and Legacy
1
As of or for the quarter ended
% change from
Year-to-date
USD m
30.9.23
30.6.23
2
30.9.22
3
2Q23
3Q22
30.9.23
30.9.22
3
Results
Total revenues
 
350
 
207
 
77
 
69
 
357
 
579
 
184
Credit loss expense / (release)
 
125
 
119
 
0
 
244
 
2
Operating expenses
 
2,156
 
566
 
25
 
281
 
3,421
 
84
Operating profit / (loss) before tax
 
(1,932)
 
(478)
 
52
 
304
 
(3,085)
 
98
Underlying results
Total revenues as reported
 
350
 
207
 
77
 
69
 
357
 
579
 
184
of which: litigation settlement
 
62
 
62
Total revenues (underlying)
4
 
350
 
207
 
15
 
69
 
579
 
122
Credit loss expense / (release)
 
125
 
119
 
0
 
244
 
2
Operating expenses as reported
 
2,156
 
566
 
25
 
281
 
3,421
 
84
of which: integration-related expenses
4
 
918
 
105
 
1,023
Operating expenses (underlying)
4
 
1,238
 
461
 
25
 
169
 
2,398
 
84
of which: litigation expenses
 
(2)
 
7
 
670
 
(1)
Operating profit / (loss) before tax as reported
 
(1,932)
 
(478)
 
52
 
304
 
(3,085)
 
98
Operating profit / (loss) before tax (underlying)
4
 
(1,014)
 
(373)
 
(10)
 
172
 
(2,063)
 
36
Performance measures and other information
Average attributed equity
5
 
9.0
 
2.6
 
1.1
 
243
 
749
 
4.2
 
1.1
Risk-weighted assets (USD bn)
 
77.5
 
83.8
 
13.1
 
(8)
 
490
 
77.5
 
13.1
Leverage ratio denominator (USD bn)
 
156.4
 
208.7
 
7.0
 
(25)
 
156.4
 
7.0
1 Starting with
 
the third
 
quarter of
 
2023, Non-core
 
and Legacy
 
represents a
 
separate reportable
 
segment and
 
includes positions
 
and businesses
 
not aligned
 
with our
 
strategy and
 
policies. Refer
 
to the
 
“Recent
developments” section of this report for more information about the composition of
 
the Non-core and Legacy division.
 
2 Information has been restated to reflect the establishing of the
 
Non-core and Legacy business
division. In addition,
 
certain information
 
has been
 
revised. Refer to
 
“Note 2 Accounting
 
for the acquisition
 
of the Credit
 
Suisse Group”
 
in the “Consolidated
 
financial statements” section
 
of this
 
report for
 
more
information.
 
3 Information reflects Non-core and Legacy Portfolio as reported in Group Functions
 
in the third quarter of 2022 and the first nine months of 2022, respectively.
 
4
 
Refer to “Alternative performance
measures” in the appendix to this report for the
 
definition and calculation method.
 
5 Refer to “Capital management” in the
 
“Capital, liquidity and funding, and balance sheet”
 
section of the Annual Report 2022
for more information about the equity attribution framework.
 
Composition of Non-core and Legacy
USD bn
RWA
Total assets
LRD
30.9.23
30.6.23
30.9.23
30.6.23
30.9.23
30.6.23
Exposure category
Equities
 
4.1
 
6.0
 
28.9
 
32.6
 
17.9
 
22.4
Macro
 
7.9
 
9.8
 
64.6
 
67.8
 
29.8
 
36.4
Loans
 
14.5
 
16.7
 
14.0
 
15.9
 
17.2
 
30.0
Securitized products
 
14.3
 
14.6
 
28.2
 
35.0
 
29.2
 
38.1
Credit
 
3.4
 
5.4
 
2.8
 
5.5
 
3.9
 
8.0
High-quality liquid assets
 
55.3
 
71.8
 
53.2
 
70.8
Operational risk
 
30.0
 
30.0
Other
 
3.3
 
1.4
 
3.2
 
4.7
 
5.2
 
3.0
Total
 
77.5
 
83.8
 
196.9
 
233.3
 
156.4
 
208.7
Results: 3Q23 vs 3Q22
Loss
 
before
 
tax
 
was
 
USD 1,932m,
 
compared
 
with
 
profit
 
before
 
tax
 
of
 
USD 52m.
 
Excluding
 
integration-related
expenses of USD 918m, underlying loss before
 
tax was USD 1,014m.
Total revenues
Total
 
revenues increased by USD 273m to USD 350m, mainly due to the transfer of assets and liabilities into Non-
core
 
and
 
Legacy
 
following
 
the
 
acquisition
 
of
 
the
 
Credit
 
Suisse
 
Group,
 
and
 
included
 
USD 242m
 
releases
 
of
markdowns
 
on
 
exited
 
commitments
 
and
 
loans,
 
and
 
mark-to-market
 
gains.
 
In
 
addition,
 
positive
 
carry
 
in
 
our
securitized products and credit portfolios was reduced by higher funding
 
costs.
 
 
UBS Group third quarter 2023 report |
UBS business divisions and Group Items |
 
Non-core and Legacy
 
33
Credit loss expense / release
Net credit loss expenses were USD 125m, mainly related to incremental provisions that reflected a deterioration in
credit risk
 
across the lending
 
book of Non-core
 
and Legacy,
 
compared with net
 
expenses of USD 0m
 
in the third
quarter of 2022.
Operating expenses
Operating expenses
 
were USD 2,156m,
 
compared with
 
USD 25m, mainly
 
due to
 
the acquisition
 
of the
 
Credit Suisse
Group, and included integration-related expenses of USD 918m, of which a one-time fee of USD 289m related to
an onerous
 
contract
 
provision, and
 
also included
 
real estate
 
impairments and
 
personnel costs.
 
Excluding integration-
related expenses, underlying operating expenses were
 
USD 1,238m.
Risk-weighted assets and leverage ratio denominator:
 
3Q23 vs 2Q23
Risk-weighted
 
assets
 
decreased
 
by
 
USD 6.4bn,
 
or
 
8%,
 
to
 
USD 77.5bn,
 
mainly
 
driven
 
by
 
an
 
accelerated
 
roll-off
caused
 
by
 
our
 
actions
 
to
 
actively
 
unwind
 
the
 
portfolio,
 
in
 
addition
 
to
 
the
 
natural
 
roll-off.
 
The
 
leverage
 
ratio
denominator decreased
 
by USD 52.2bn,
 
or 25%,
 
to USD 156.4bn,
 
driven by
 
business reductions
 
across all
 
asset
classes,
 
lower
 
high-quality
 
liquid
 
assets
 
and
 
USD 12bn
 
of
 
reductions
 
due
 
to
 
an
 
accounting
 
update
 
that
 
was
implemented prospectively for the leverage
 
ratio denominator.
Results: 9M23 vs 9M22
Loss
 
before
 
tax
 
was
 
USD 3,085m,
 
compared
 
with
 
profit
 
before
 
tax
 
of
 
USD 98m.
 
Excluding
 
integration-related
expenses of USD 1,023m, underlying loss
 
before tax was USD 2,063m.
Total revenues
Total
 
revenues increased by USD 395m to USD 579m, mainly due to the transfer of assets and liabilities into Non-
core
 
and
 
Legacy
 
following
 
the
 
acquisition
 
of
 
the
 
Credit
 
Suisse
 
Group,
 
and
 
included
 
USD 248m
 
releases
 
of
markdowns
 
on
 
exited
 
commitments
 
and
 
loans,
 
and
 
mark-to-market
 
gains.
 
In
 
addition,
 
positive
 
carry
 
in
 
our
securitized products and credit portfolios was reduced by higher funding
 
costs.
Credit loss expense / release
Net credit
 
loss expenses
 
were USD 244m,
 
mainly related
 
to incremental
 
provisions that
 
reflect a
 
deterioration in
credit risk
 
across the
 
lending book
 
of Non-core
 
and Legacy,
 
compared with
 
net expenses
 
of USD 2m
 
in the
 
first
nine months of 2022.
Operating expenses
Operating expenses
 
were
 
USD 3,421m, compared
 
with USD 84m,
 
and
 
included integration-related
 
expenses of
USD 1,023m, of which
 
a one-time fee
 
of USD 289m related
 
to an
 
onerous contract provision
 
,
 
and also
 
included
real estate
 
impairments and
 
personnel costs.
 
Excluding integration-related
 
expenses, underlying
 
operating expenses
were USD 2,398m.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
UBS business divisions and Group Items |
 
Group Items
 
34
Group Items
Group Items
1
As of or for the quarter ended
% change from
Year-to-date
USD m
30.9.23
30.6.23
2
30.9.22
3
2Q23
3Q22
30.9.23
30.9.22
3
Results
Total revenues
 
(242)
 
(265)
 
(203)
 
(9)
 
19
 
(707)
 
(690)
Credit loss expense / (release)
 
6
 
2
 
0
 
8
 
0
Operating expenses
 
7
 
401
 
7
 
(98)
 
4
 
423
 
2
Operating profit / (loss) before tax
 
(255)
 
(668)
 
(210)
 
(62)
 
21
 
(1,138)
 
(692)
Underlying results
Total revenues as reported
 
(242)
 
(265)
 
(203)
 
(9)
 
19
 
(707)
 
(690)
of which: accretion of PPA adjustments on financial instruments
 
(57)
 
53
 
(3)
Total revenues (underlying)
4
 
(186)
 
(318)
 
(203)
 
(42)
 
(9)
 
(704)
 
(690)
Credit loss expense / (release)
 
6
 
2
 
0
 
8
 
0
Operating expenses as reported
 
7
 
401
 
7
 
(98)
 
4
 
423
 
2
of which: integration-related expenses
4
 
(2)
 
348
 
346
of which: acquisition-related costs
 
26
 
106
 
202
Operating expenses (underlying)
4
 
(17)
 
(52)
 
7
 
(68)
 
(126)
 
2
of which: expenses for litigation, regulatory and similar matters
 
0
 
0
 
0
 
1
 
5
Operating profit / (loss) before tax as reported
 
(255)
 
(668)
 
(210)
 
(62)
 
21
 
(1,138)
 
(692)
Operating profit / (loss) before tax (underlying)
4
 
(174)
 
(268)
 
(210)
 
(35)
 
(17)
 
(586)
 
(692)
1 Starting with the third quarter
 
of 2023, Group Items reflects the
 
integration of Group Functions and
 
the Corporate Center (Credit Suisse),
 
and excludes UBS’s Non-core
 
and Legacy Portfolio,
 
which was previously
reported within Group Functions.
 
2 Information has been restated
 
to reflect the effects of the
 
integration of the Corporate
 
Center (Credit Suisse) on an IFRS
 
basis and the exclusion of
 
UBS’s Non-core and
 
Legacy
Portfolio. In
 
addition, certain information
 
has been revised.
 
Refer to “Note
 
2 Accounting
 
for the acquisition
 
of the Credit
 
Suisse Group” in
 
the “Consolidated financial
 
statements” section of
 
this report for
 
more
information.
 
3 Information reflects
 
Group Functions as
 
reported in the
 
third quarter of
 
2022 and the
 
first nine months
 
of 2022, respectively,
 
excluding Non-core and
 
Legacy Portfolio.
 
4 Refer to
 
“Alternative
performance measures” in the appendix to this report for the definition and calculation method.
 
Results: 3Q23 vs 3Q22
Loss before
 
tax was USD
 
255m, compared with
 
a loss
 
of USD 210m,
 
mainly due to
 
the acquisition
 
of the
 
Credit
Suisse
 
Group.
 
Excluding
 
USD 57m
 
of
 
accretion
 
of
 
purchase
 
price
 
allocation
 
(PPA)
 
adjustments
 
on
 
financial
instruments and acquisition-related costs of USD
 
26m, underlying loss before tax was USD 174m.
Income from
 
accounting asymmetries,
 
including hedge
 
accounting ineffectiveness,
 
was net
 
positive
 
USD 132m,
resulting from the acquisition of the
 
Credit Suisse Group,
 
compared with net negative income of USD 153m.
 
The
impacts in the prior-year quarter
 
were driven by mark-to-market
 
effects on portfolio-level economic
 
hedges due to
rising interest rates and cross-currency-basis widening.
 
Income related to
 
centralized Group Treasury risk
 
management was negative USD 107m, compared
 
with positive
USD 29m,
 
driven
 
by
 
a
 
combination of
 
increased
 
funding
 
costs
 
of
 
negative
 
USD 82m
 
and
 
a
 
negative
 
impact
 
of
USD 53m from the acquisition of the Credit Suisse
 
Group.
 
In addition, the third quarter of 2023 included a
 
USD 61m increase in funding costs related to deferred tax assets
(DTAs).
Results: 9M23 vs 9M22
Loss before tax was USD 1,138m, compared with a loss of USD 692m, mainly due to the acquisition of the Credit
Suisse
 
Group.
 
Excluding
 
USD 3m
 
of
 
accretion
 
of
 
PPA
 
adjustments
 
on
 
financial
 
instruments,
 
integration-related
expenses of USD 346m and acquisition-related
 
costs of USD 202m, underlying loss
 
before tax was USD 586m.
This
 
included income
 
from accounting
 
asymmetries, including
 
hedge accounting
 
ineffectiveness, of
 
net
 
positive
USD 65m, compared with net negative income of USD 504m. The impacts in the prior-year period were driven by
mark-to-market
 
effects
 
on
 
portfolio-level
 
economic
 
hedges
 
due
 
to
 
rising
 
interest
 
rates
 
and
 
cross-currency-basis
widening.
 
Income related to
 
centralized Group
 
Treasury risk management
 
was negative USD
 
204m, compared
 
with
negative USD 7m in the first nine months
 
of 2022.
Furthermore,
 
the first nine
 
months of 2023
 
also included a
 
USD 240m increase in
 
funding costs related
 
to DTAs,
partly offset by remeasurement losses in
 
the first nine months of 2022 of USD 46m
 
on properties held for sale.
 
 
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
36
Risk management and control
This
 
section
 
provides
 
information
 
about
 
key
 
developments
 
during
 
the
 
reporting
 
period
 
and
 
should
 
be
 
read
 
in
conjunction
 
with
 
the
 
“Risk
 
management
 
and
 
control”
 
section
 
of
 
the
 
Annual
 
Report
 
2022
 
and
 
the
 
“Recent
developments” section of this report for
 
more information about the integration
 
of Credit Suisse.
Credit risk
 
Overall banking products exposure
Overall banking products exposure decreased by
 
USD 25bn to USD 1,107bn
 
as of 30 September 2023,
 
driven by a
USD 21bn decrease in loans and advances to customers.
Total net
 
credit loss
 
expenses in
 
the third
 
quarter of
 
2023 were
 
USD 306m, reflecting
 
USD 137m net
 
credit loss
expenses related to performing positions and USD
 
168m
 
related to credit-impaired positions.
›
Refer to the “Balance sheet and off-balance sheet” section of this report for more information about balance sheet
movements
›
Refer to the “Group performance” section and “Note 8 Expected credit loss measurement” in the “Consolidated
financial statements” section of this report for more information about credit loss expense / release
Loan underwriting
In the Investment Bank, mandated loan underwriting
 
commitments on a notional basis increased by USD 0.9bn
 
to
USD 2.8bn
 
as
 
of
 
30 September
 
2023,
 
driven
 
by
 
new
 
deals.
 
In
 
Non-core
 
and
 
Legacy,
 
exposure
 
decreased
 
by
USD 2.5bn to USD
 
1.4bn, mainly due
 
to de-risking via
 
commitment reductions and
 
syndication of remaining
 
legacy
positions. As of 30 September 2023, USD 0.1bn and USD 0.9bn
 
of commitments had not yet been
 
distributed as
originally planned in the Investment Bank and
 
in Non-core and Legacy,
 
respectively.
 
Loan underwriting exposures are classified as
 
held for trading, with fair
 
values reflecting the market conditions at
the end of the quarter. Credit hedges are
 
in place to help protect against fair value movements
 
in the portfolio.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
37
Banking and traded products exposure in our business divisions and Group Items
30.9.23
USD m
Global
Wealth
Management
Personal &
Corporate
Banking
Asset
 
Management
Investment
 
Bank
Non-core
 
and Legacy
1
Group
 
Items
1
Total
Banking products
2,3
Gross exposure
 
386,936
 
427,406
 
1,929
 
93,024
 
30,363
 
167,405
 
1,107,062
of which: loans and advances to customers (on-balance sheet)
 
277,710
 
314,973
 
(1)
 
16,244
 
16,792
 
676
 
626,394
of which: guarantees and loan commitments (off-balance sheet)
 
20,382
 
56,321
 
57
 
37,914
 
6,491
 
11,792
 
132,956
Traded products
4,5,6
Gross exposure
 
13,364
 
5,749
 
0
 
52,529
 
71,642
of which: over-the-counter derivatives
 
9,653
 
5,185
 
0
 
15,631
 
30,469
of which: securities financing transactions
 
370
 
17
 
0
 
24,469
 
24,856
of which: exchange-traded derivatives
 
3,341
 
549
 
0
 
12,429
 
16,319
Other credit lines, gross
7
 
69,094
 
85,140
 
0
 
4,634
 
5
 
111
 
158,986
Total credit-impaired exposure, gross
 
1,550
 
2,288
 
0
 
357
 
1,270
 
118
 
5,582
of which: stage 3
 
914
 
1,848
 
0
 
348
 
278
 
1
 
3,387
of which: PCI
 
636
 
440
 
0
 
9
 
992
 
117
 
2,194
Total allowances and provisions for expected credit losses
 
409
 
1,090
 
1
 
305
 
221
 
18
 
2,043
of which: stage 1
 
167
 
362
 
1
 
151
 
94
 
15
 
790
of which: stage 2
 
97
 
241
 
0
 
73
 
16
 
0
 
427
of which: stage 3
 
101
 
476
 
0
 
76
 
71
 
0
 
723
of which: PCI
 
44
 
11
 
0
 
5
 
40
 
3
 
102
30.6.23
8
USD m
Global
Wealth
Management
Personal &
Corporate
Banking
Asset
 
Management
Investment
 
Bank
Non-core
 
and Legacy
1
Group
Items
1
Total
Banking products
3
Gross exposure
 
404,697
 
440,618
 
1,901
 
91,534
 
36,261
 
156,915
 
1,131,927
of which: loans and advances to customers (on-balance sheet)
 
284,898
 
324,537
 
(1)
 
17,306
 
19,912
 
425
 
647,077
of which: guarantees and loan commitments (off-balance sheet)
 
23,785
 
57,650
 
212
 
36,555
 
6,698
 
10,069
 
134,969
Traded products
4,5,6
Gross exposure
 
12,231
 
4,995
 
0
 
49,062
 
66,287
of which: over-the-counter derivatives
 
8,749
 
4,427
 
0
 
12,981
 
26,157
of which: securities financing transactions
 
361
 
22
 
0
 
25,416
 
25,799
of which: exchange-traded derivatives
 
3,120
 
546
 
0
 
10,665
 
14,331
Other credit lines, gross
7
 
74,863
 
88,219
 
0
 
5,357
 
2
 
115
 
168,556
Total credit-impaired exposure, gross
 
1,334
 
2,088
 
0
 
326
 
1,798
 
84
 
5,631
of which: stage 3
 
785
 
1,629
 
0
 
324
 
77
 
1
 
2,817
of which: PCI
 
549
 
459
 
0
 
2
 
1,721
 
83
 
2,814
Total allowances and provisions for expected credit losses
 
363
 
954
 
1
 
303
 
123
 
6
 
1,750
of which: stage 1
 
211
 
379
 
1
 
184
 
67
 
6
 
848
of which: stage 2
 
51
 
145
 
0
 
48
 
0
 
0
 
244
of which: stage 3
 
87
 
433
 
0
 
69
 
48
 
0
 
637
of which: PCI
 
14
 
(3)
 
0
 
2
 
8
 
0
 
21
1 Starting with the third quarter of 2023, Non-core and Legacy
 
represents a separate reportable segment and Group Functions has been renamed Group Items. Prior periods
 
have been revised to reflect these changes.
 
2 In the third quarter of 2023,
 
a small amount of exposure of
 
pre-integration UBS business divisions was
 
included in Non-core and Legacy,
 
as it was assessed as not
 
strategic in light of the acquisition
 
of the Credit
Suisse Group.
 
3 IFRS 9 gross exposure including other financial
 
assets at amortized cost, but excluding cash, receivables
 
from securities financing transactions, cash
 
collateral receivables on derivative
 
instruments,
financial assets at fair value through other comprehensive income,
 
irrevocable committed prolongation of existing loans and unconditionally
 
revocable committed credit lines, and forward starting
 
reverse repurchase
and securities borrowing agreements.
 
4 Internal management view of credit risk, which differs in certain respects from IFRS.
 
5 As counterparty risk for traded products is managed at counterparty level, no further
split between exposures in
 
the Investment Bank, Non
 
-core and Legacy and
 
Group Items is provided.
 
6 Credit Suisse traded
 
products are presented before
 
reflection of the impact
 
of the purchase price
 
allocation
performed under IFRS 3, Business
 
Combinations, following the
 
acquisition of the Credit Suisse
 
Group by UBS. The
 
acquisition date adjustment is
 
less than USD 1bn and,
 
if applied, would lead to
 
a reduction in our
reported traded products exposure.
 
7 Unconditionally revocable committed credit
 
lines.
 
8 Comparative-period information has
 
been revised. Refer to
 
“Note 2 Accounting for the
 
acquisition of the Credit Suisse
Group” in the “Consolidated financial statements” section of this report for more information.
Collateralization of Loans and advances to customers
1
Global Wealth Management
Personal & Corporate Banking
USD m, except where indicated
30.9.23
30.6.23
2
30.9.23
30.6.23
2
Secured by collateral
 
269,969
 
276,765
 
274,016
 
281,446
Residential real estate
 
75,722
 
75,848
 
217,921
 
223,972
Commercial / industrial real estate
 
8,302
 
8,319
 
41,847
 
43,228
Cash
 
35,252
 
36,612
 
4,136
 
4,359
Equity and debt instruments
 
122,711
 
129,285
 
4,759
 
4,883
Other collateral
 
27,982
 
26,700
 
5,353
 
5,003
Subject to guarantees
 
2,211
 
2,183
 
7,250
 
7,594
Uncollateralized and not subject to guarantees
 
5,531
 
5,950
 
33,708
 
35,497
Total loans and advances to customers, gross
 
277,710
 
284,898
 
314,973
 
324,538
Allowances
 
(226)
 
(284)
 
(864)
 
(719)
Total loans and advances to customers, net of allowances
 
277,485
 
284,613
 
314,109
 
323,819
Collateralized loans and advances to customers in % of total loans
 
and advances to customers, gross (%)
 
97.2
 
97.1
 
87.0
 
86.7
1 Collateral arrangements generally
 
incorporate a range of
 
collateral, including cash, securities,
 
real estate and other collateral.
 
UBS applies a risk-based approach that
 
generally prioritizes collateral according
 
to its
liquidity profile. In the case of loan facilities with funded and unfunded elements,
 
the collateral is first allocated to the funded element. Credit Suisse applies
 
a risk-based approach that generally prioritizes real estate
collateral and prioritizes other collateral according to its liquidity profile. In the case of loan facilities with funded and unfunded elements, the collateral is proportionately allocated.
 
2 Comparative-period information
has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section
 
of this report for more information.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
38
Market risk
The UBS
 
Group excluding
 
Credit Suisse
 
continued to
 
maintain generally
 
low levels
 
of management
 
value-at-risk
(VaR). Average management VaR
 
(1-day, 95%
 
confidence level) increased from USD 13m to USD 17m at the end
of the
 
third quarter
 
of 2023,
 
mainly driven
 
by Global
 
Markets in
 
the Investment
 
Bank. There
 
were no
 
new VaR
negative backtesting
 
exceptions in
 
the third quarter
 
of 2023.
 
The number
 
of negative
 
backtesting exceptions
 
within
the most recent 250-business-day window decreased from one to zero.
 
Credit Suisse’s average management VaR (1-day, 98% confidence level) decreased from USD 32m to USD 27m at
the end of the
 
third quarter of 2023
 
due to continued de-risking
 
and an improved equity risk
 
profile. In the third
quarter of 2023, Credit Suisse had one backtesting exception,
 
driven by fair value adjustments to certain positions
in the trading inventory as
 
a result of the
 
acquisition by UBS, reflecting purchase price
 
allocation, which does not
count against the total exceptions relevant
 
for the capital multiplier.
The FINMA VaR multiplier
 
derived from backtesting
 
exceptions for market
 
risk risk-weighted assets
 
was unchanged
compared with the prior quarter, at 3.0,
 
for both the UBS Group excluding Credit
 
Suisse and Credit Suisse.
Management value-at-risk (1-day, 95% confidence, 5 years of historical data) of UBS Group business divisions and
Group Items excluding Credit Suisse components by general market risk type
1
Average by risk type
USD m
Min.
Max.
Period end
Average
Equity
Interest
rates
Credit
spreads
Foreign
exchange
Commodities
Global Wealth Management
 
1
 
2
 
1
 
1
 
0
 
1
 
2
 
0
 
0
Personal & Corporate Banking
 
0
 
0
 
0
 
0
 
0
 
0
 
0
 
0
 
0
Asset Management
 
0
 
0
 
0
 
0
 
0
 
0
 
0
 
0
 
0
Investment Bank
 
8
 
23
 
14
 
16
 
12
 
10
 
5
 
2
 
3
Non-core and Legacy
 
1
 
2
 
1
 
1
 
0
 
1
 
1
 
0
 
0
Group Items
 
4
 
6
 
4
 
5
 
1
 
3
 
4
 
1
 
0
Diversification effect
2,3
 
(5)
 
(5)
 
(1)
 
(4)
 
(4)
 
(1)
 
0
Total as of 30.9.23
 
10
 
25
 
15
 
17
 
12
 
11
 
7
 
2
 
3
Total as of 30.6.23
 
7
 
20
 
18
 
13
 
8
 
11
 
6
 
2
 
3
Management value-at-risk (1-day, 98% confidence, 2 years of historical data) of the Credit Suisse components of the
UBS Group business divisions and Group Items by general market risk type
1,4
Average by risk type
USD m
Min.
Max.
Period end
Average
Equity
Interest
rates
Credit
spreads
Foreign
exchange
Commodities
Global Wealth Management
 
6
 
12
 
6
 
11
 
1
 
0
 
11
 
0
 
0
Personal & Corporate Banking
 
0
 
0
 
0
 
0
 
0
 
0
 
0
 
0
 
0
Asset Management
 
0
 
0
 
0
 
0
 
0
 
0
 
0
 
0
 
0
Investment Bank
 
0
 
0
 
0
 
0
 
0
 
0
 
0
 
0
 
0
Non-core and Legacy
5
 
18
 
22
 
20
 
20
 
13
 
10
 
14
 
2
 
1
Group Items
 
0
 
3
 
0
 
2
 
0
 
2
 
2
 
0
 
0
Diversification effect
2,3
 
(4)
 
(7)
 
(1)
 
2
 
(9)
 
0
 
0
Total as of 30.9.23
 
23
 
29
 
23
 
27
 
14
 
14
 
18
 
2
 
1
Total as of 30.6.23
 
28
 
37
 
29
 
32
 
14
 
20
 
21
 
2
 
2
1 Statistics at individual levels may not be summed
 
to deduce the corresponding aggregate figures. The
 
minima and maxima for each level may occur
 
on different days, and, likewise,
 
the value-at-risk (VaR) for each
business line or risk type, being driven
 
by the extreme loss tail of the corresponding
 
distribution of simulated profits and losses
 
for that business line or risk type,
 
may well be driven by different days
 
in the historical
time series, rendering invalid the simple summation of figures to arrive at the aggregate total.
 
2 The difference between the sum of the standalone VaR for the business divisions and Group Items and the total VaR.
 
3 As the minima and maxima for different business divisions and Group Items occur on different days, it is not meaningful to calculate a portfolio diversification effect.
 
4 In the second quarter of 2023, Credit Suisse
AG consolidated introduced an enhanced approach to measure management value-at-risk for individual risk types.
 
The enhanced approach is applied to each risk type using a collection of risk factors included within
the respective risk type only,
 
ignoring the cross-risk effects. This
 
change in the measurement approach
 
for individual risk types particularly affected standalone
 
management VaR for equity risk
 
and foreign exchange
risk, with no impact on the total management VaR.
 
5 Non-core and Legacy management VaR consists of exposures of the previously reported
 
Capital Release Unit (Credit Suisse) and Investment Bank (Credit Suisse).
Economic value of equity and net interest income
 
sensitivity
The economic value of equity
 
(EVE) sensitivity in the UBS Group
 
banking book to a parallel shift
 
in yield curves of
+1 basis
 
point
 
was
 
negative
 
USD 27.8m
 
as
 
of
 
30 September
 
2023,
 
compared
 
with
 
negative
 
USD 28.7m
 
as
 
of
30 June 2023.
 
This excludes
 
the sensitivity
 
of USD 2.5m
 
from
 
additional tier 1
 
(AT1)
 
capital instruments
 
(as per
specific FINMA requirements)
 
in contrast to general
 
Basel Committee on
 
Banking Supervision
 
(BCBS) guidance.
 
The
exposure in the banking
 
book of the UBS
 
Group decreased during the
 
third quarter of 2023,
 
due to lower
 
demand
for long-term loans and mortgages, partially
 
offset by a longer modeled duration assigned
 
to own equity.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
39
The majority of
 
our interest rate
 
risk in
 
the banking
 
book is
 
a reflection of
 
the net asset
 
duration that
 
we run
 
to
offset our
 
modeled sensitivity
 
of net
 
USD 23.4m (30 June
 
2023: USD 23m)
 
assigned to
 
our equity,
 
goodwill and
real estate,
 
with the
 
aim of
 
generating a
 
stable net
 
interest income
 
contribution. Of
 
this, USD 17.5m
 
and USD 4.9m
are
 
attributable
 
to
 
the
 
US
 
dollar
 
and
 
the
 
Swiss
 
franc
 
portfolios,
 
respectively,
 
(30 June
 
2023:
 
USD 17m
 
and
USD 5.1m, respectively).
 
In
 
addition
 
to
 
the
 
sensitivity mentioned
 
above,
 
we
 
calculate
 
the
 
six
 
interest
 
rate
 
shock
 
scenarios
 
prescribed
 
by
FINMA. The “Parallel up”
 
scenario, assuming all positions
 
were fair valued,
 
was the most
 
severe and would have
resulted
 
in
 
a
 
change
 
in
 
EVE
 
of
 
negative
 
USD 5.2bn,
 
or
 
5.6%,
 
of
 
our
 
tier 1
 
capital
 
(30 June
 
2023:
 
negative
USD 5.4bn, or
 
5.8%), which
 
is well below
 
the 15%
 
threshold as
 
per the
 
BCBS supervisory
 
outlier test for
 
high levels
of interest rate risk in the banking book.
 
The immediate effect on our
 
tier 1 capital in the “Parallel up”
 
scenario as of 30 September
 
2023 would have been
a decrease of approximately USD 0.9bn, or 0.9%
 
(30 June 2023: USD 0.6bn,
 
or 0.7%), reflecting the fact that the
vast majority of our banking book is accrual accounted
 
or subject to hedge accounting. The “Parallel up”
 
scenario
would subsequently have a positive effect on
 
net interest income, assuming a constant
 
balance sheet.
 
›
Refer to “Interest rate risk in the banking book” in the “Risk management and control”
 
section of the Annual
Report 2022 for more information about the management of interest rate risk in the banking book
›
Refer to “Sensitivity to interest rate movements” in the “Group performance” section of this report for more
information about the effects of increases in interest rates on the net interest income of our banking book
 
Interest rate risk – banking book
30.9.23
USD m
Effect on EVE
1
 
– FINMA
Effect on EVE
1
 
– BCBS
Scenarios
CHF
EUR
GBP
USD
Other
Total
Additional tier 1 (AT1) capital
instruments
Total
+1 bp
 
(3.1)
 
(0.6)
 
0.1
 
(24.4)
 
0.2
 
(27.8)
 
2.5
 
(25.2)
Parallel up
2
 
(458.9)
 
(113.1)
 
12.6
 
(4,685.4)
 
18.5
 
(5,226.3)
 
475.6
 
(4,750.7)
Parallel down
2
 
463.5
 
131.4
 
(19.6)
 
4,989.0
 
(16.9)
 
5,547.5
 
(525.0)
 
5,022.4
Steepener
3
 
(221.0)
 
(31.3)
 
(10.1)
 
(959.0)
 
(33.6)
 
(1,254.9)
 
(55.4)
 
(1,310.3)
Flattener
4
 
126.5
 
14.1
 
12.1
 
(108.5)
 
34.9
 
79.1
 
161.4
 
240.5
Short-term up
5
 
(51.1)
 
(21.3)
 
15.4
 
(2,047.8)
 
34.6
 
(2,070.1)
 
342.8
 
(1,727.3)
Short-term down
6
 
45.3
 
23.7
 
(16.3)
 
2,172.8
 
(36.2)
 
2,189.2
 
(357.7)
 
1,831.6
30.6.23
USD m
Effect on EVE
1
 
– FINMA
Effect on EVE
1
 
– BCBS
Scenarios
CHF
EUR
GBP
USD
Other
Total
Additional tier 1 (AT1) capital
instruments
Total
+1 bp
 
(4.3)
 
(0.9)
 
(0.1)
 
(23.5)
 
0.1
 
(28.7)
 
2.8
 
(25.9)
Parallel up
2
 
(639.8)
 
(165.0)
 
(32.5)
 
(4,549.6)
 
2.5
 
(5,384.4)
 
535.1
 
(4,849.2)
Parallel down
2
 
646.6
 
204.1
 
24.7
 
4,687.9
 
(1.1)
 
5,562.2
 
(574.6)
 
4,987.6
Steepener
3
 
(125.4)
 
(24.7)
 
15.8
 
(905.9)
 
(31.7)
 
(1,071.9)
 
(55.5)
 
(1,127.3)
Flattener
4
 
3.8
 
(2.2)
 
(22.0)
 
(148.9)
 
30.2
 
(139.0)
 
173.3
 
34.3
Short-term up
5
 
(213.7)
 
(54.4)
 
(30.1)
 
(2,006.1)
 
25.8
 
(2,278.6)
 
376.5
 
(1,902.1)
Short-term down
6
 
209.8
 
57.5
 
29.2
 
2,139.0
 
(24.8)
 
2,410.9
 
(390.4)
 
2,020.5
1 Economic value of equity.
 
2 Rates across all tenors move by ±150 bps for Swiss franc, ±200 bps
 
for euro and US dollar, and ±250 bps for pound sterling.
 
3 Short-term rates decrease and long-term rates increase.
 
4 Short-term rates increase and long-term rates decrease.
 
5 Short-term rates increase more than long-term rates.
 
6 Short-term rates decrease more than long-term rates.
Country risk
We remain
 
watchful of
 
a range
 
of geopolitical
 
developments and
 
political changes
 
in a
 
number of
 
countries, as
well as
 
international tensions arising
 
from the
 
Russia–Ukraine war, the
 
escalating conflict in
 
the Middle
 
East and
US–China
 
trade
 
relations.
 
Our
 
direct
 
exposure
 
to
 
Israel
 
is
 
less
 
than
 
USD 0.5bn
 
and
 
our
 
direct
 
exposure
 
to
 
Gulf
Cooperation Council
 
countries is
 
less than
 
USD 5bn. We
 
have limited
 
direct exposure
 
to Egypt,
 
Jordan and
 
Lebanon,
and
 
we
 
have
 
no
 
direct
 
exposure
 
to
 
Iran,
 
Iraq
 
or
 
Syria.
 
Our
 
direct
 
exposure
 
to
 
Russia,
 
Belarus
 
and
 
Ukraine
 
is
immaterial,
 
and potential second-order impacts, such as European energy security, continue
 
to be monitored. We
have significant country risk exposure to major
 
European economies, including France,
 
Germany and the UK.
Inflation has abated to some extent in major Western economies, though there are still concerns regarding future
developments, and central banks’
 
monetary policy is in the
 
spotlight. The potential for
 
“higher-for-longer” interest
rates raises the prospect
 
of a global recession,
 
particularly as the growth
 
of China’s economy has
 
been muted. This
combination
 
of
 
factors
 
translates
 
into
 
a
 
more
 
uncertain
 
and
 
volatile
 
environment,
 
which
 
increases
 
the
 
risk
 
of
financial market disruptions.
 
 
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
40
We continue to monitor
 
potential trade policy
 
disputes, as well as
 
economic and political
 
developments in addition
to those
 
mentioned above.
 
In 2023,
 
several emerging
 
markets have
 
faced economic,
 
political and
 
market pressures,
particularly in light
 
of interest rate
 
hikes and
 
a stronger
 
US dollar.
 
Our exposure to
 
emerging market countries
 
is
less than 10%
 
of our total country exposure,
 
mainly in Asia.
›
Refer to the “Risk management and control” section of the Annual Report 2022 for more information
Non-financial risk
UBS is actively
 
managing the
 
non-financial risks
 
emerging from
 
the acquisition
 
of the
 
Credit Suisse
 
Group, including
the current operation of dual corporate structures, and the scale, pace and
 
complexity of the required integration
activities. These activities continue to be managed by
 
our program run by the Group
 
Integration Office. We place
an
 
increased
 
focus
 
on
 
maintaining
 
and
 
enhancing
 
our
 
control
 
environment
 
and
 
continue
 
to
 
cooperate
 
with
regulators
 
to
 
submit
 
and
 
execute
 
implementation
 
plans
 
to
 
meet
 
regulatory
 
requirements,
 
including
 
regulatory
remediation requirements applicable to Credit Suisse AG. In
 
addition, the Group is closely
 
monitoring operational
risk indicators, including attrition, to detect any
 
potential for adverse impacts on the
 
control environment.
 
There is an
 
increased risk
 
of cyber-related
 
operational disruption
 
to business activities
 
at our locations
 
and / or
 
those
of third
 
parties due
 
to operating
 
an enlarged
 
group of
 
entities. This
 
is
 
combined with
 
the increasingly
 
dynamic
threat environment,
 
which is
 
intensified by current
 
geopolitical factors
 
and evidenced
 
by the increased
 
volumes and
sophistication of cyberattacks against financial
 
institutions globally.
 
UBS
 
was not
 
affected by
 
significant cyber
 
events in
 
the third
 
quarter of
 
2023
 
but, due
 
to the
 
high threat
 
level
observed,
 
remains
 
on
 
heightened
 
alert
 
to
 
respond
 
to
 
and
 
mitigate
 
new
 
threats.
 
Given
 
this
 
backdrop,
 
we
 
are
continuing
 
to
 
invest
 
in
 
improving
 
our
 
technology
 
infrastructure
 
to
 
enhance
 
our
 
information
 
security
 
and
 
data
protection and improve
 
our defense, detection
 
and response capabilities
 
against cyberattacks,
 
including addressing
regulatory expectations and
 
advancing overall organizational
 
development. In addition,
 
the Group
 
faces multiple
related
 
regulatory
 
deadlines
 
to
 
enhance
 
operational
 
resilience
 
between
 
2023
 
and
 
2026.
 
To
 
that
 
end,
 
a
 
global
framework
 
designed
 
to
 
drive
 
enhancements
 
in
 
operational
 
resilience
 
continues
 
to
 
be
 
implemented
 
across
 
all
business divisions
 
and jurisdictions,
 
as well as
 
being provided to
 
third parties, including
 
third-party vendors,
 
that are
of critical importance to us.
Following a post-incident review of the
 
ION XTP ransomware attack, we are
 
proceeding with improvements to our
frameworks for managing third parties that support
 
our important business services and continue with
 
actions to
enhance our cyber-risk assessments and controls
 
over third-party vendors.
The increasing interest
 
in data-driven
 
advisory processes,
 
and use of
 
artificial intelligence
 
(AI) and machine
 
learning,
is opening up new questions
 
related to the fairness of
 
AI algorithms, data life cycle
 
management, data ethics,
 
data
privacy and
 
security, and
 
records management.
 
We seek
 
to enhance
 
our frameworks
 
to implement
 
controls for
these risks
 
and to
 
meet regulatory expectations.
 
In addition,
 
new risks
 
continue to emerge,
 
such as
 
those which
result
 
from
 
the
 
demand
 
from
 
our
 
clients
 
for
 
distributed
 
ledger
 
technology,
 
blockchain-based
 
assets
 
and
cryptocurrencies; although we currently
 
have limited exposure
 
to such risks,
 
and relevant control
 
frameworks for
them are implemented and reviewed on a regular
 
basis as they evolve.
Competition to
 
find new
 
business opportunities
 
across the
 
financial services
 
sector, both
 
for firms
 
and for
 
customers,
is increasing,
 
particularly during periods of
 
market volatility and rising
 
interest rates. Thus, suitability
 
risk, product
selection, cross-divisional
 
service offerings,
 
quality of advice
 
and price
 
transparency also
 
remain areas
 
of heightened
focus for UBS and for the industry as a whole.
Sustainable investing,
 
and major
 
legislation, such
 
as the
 
Consumer Duty
 
Regulation in
 
the United
 
Kingdom, the
Swiss Financial Services Act (FIDLEG) in Switzerland, Regulation Best Interest (Reg BI) in the US and the Markets in
Financial
 
Instruments
 
Directive
 
II
 
(MiFID II)
 
in
 
the
 
EU,
 
all
 
significantly
 
affect
 
the
 
industry
 
and
 
have
 
required
adjustments to control processes.
Cross-border
 
risk
 
remains
 
an
 
area
 
of
 
regulatory
 
attention
 
for
 
global
 
financial
 
institutions,
 
including
 
a
 
focus
 
on
market access, such as third-country market access
 
into the European Economic Area, and taxation
 
of US persons.
Unintended permanent establishment remains an area of ongoing attention and
 
the risk that tax authorities may,
on
 
the
 
basis
 
of
 
new
 
interpretations
 
of
 
existing
 
law,
 
seek
 
to
 
impose
 
taxation.
 
We
 
maintain
 
a
 
series
 
of
 
controls
designed to address these risks, and we are increasing
 
the number of controls that are automated.
 
 
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
41
Financial crime, including
 
money laundering, terrorist
 
financing, sanctions violations,
 
fraud, bribery and corruption,
continues
 
to
 
present
 
a
 
major
 
risk,
 
as
 
technological
 
innovation
 
and
 
geopolitical
 
developments
 
increase
 
the
complexity of
 
doing business
 
and heightened
 
regulatory attention
 
continues. An
 
effective financial
 
crime prevention
program
 
therefore
 
remains
 
essential
 
for
 
UBS.
 
Money
 
laundering
 
and
 
financial
 
fraud
 
techniques
 
are
 
becoming
increasingly
 
sophisticated, and
 
geopolitical
 
volatility
 
makes
 
the
 
sanctions
 
landscape
 
more
 
complex,
 
such
 
as
 
the
extensive and
 
continuously evolving
 
sanctions arising
 
from the
 
Russia–Ukraine war,
 
which also
 
requires constant
attention to prevent circumvention risks.
In the US, the
 
Office of the Comptroller of
 
the Currency (the OCC) issued
 
a Cease and Desist Order
 
against us in
May
 
2018
 
relating
 
to
 
our
 
US
 
branch
 
anti-money-laundering
 
(AML)
 
and
 
know-your-client
 
(KYC)
 
programs.
 
In
response, we
 
initiated an
 
extensive program
 
for the
 
purpose of
 
ensuring sustainable
 
remediation of
 
US-relevant
Bank Secrecy Act / AML issues across all our
 
US legal entities. We have introduced significant
 
improvements to the
framework and continue to evolve it in
 
response to new and emerging risks.
We continue to focus on strategic enhancements
 
to our global AML, KYC and sanctions programs.
In
 
September
 
2022,
 
the
 
Securities
 
and
 
Exchange
 
Commission
 
(the
 
SEC)
 
and
 
the
 
Commodity
 
Futures
 
Trading
Commission (the CFTC)
 
issued settlement
 
orders relating to
 
communications recordkeeping
 
requirements in
 
our US
broker-dealers
 
and
 
our
 
registered swap
 
dealers.
 
In
 
response, we
 
continue
 
to
 
focus
 
on
 
a
 
program
 
to
 
remediate
identified shortcomings.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and
 
balance sheet | Capital management
 
42
Capital management
The
 
disclosures
 
in
 
this
 
section
 
are
 
provided
 
for
 
UBS Group AG
 
on
 
a
 
consolidated
 
basis
 
and
 
focus
 
on
 
key
developments during
 
the reporting
 
period and
 
information in
 
accordance with
 
the Basel III
 
framework, as
 
applicable
to Swiss systemically relevant banks (SRBs).
 
They should be read in conjunction
 
with “Capital management” in the
“Capital,
 
liquidity
 
and
 
funding,
 
and
 
balance
 
sheet”
 
section
 
of
 
the
 
Annual
 
Report
 
2022,
 
which
 
provides
 
more
information about our capital management objectives, planning and activities, as
 
well as the Swiss SRB
 
total loss-
absorbing capacity (TLAC) framework.
UBS Group AG is a
 
holding company and
 
conducts substantially all
 
of its
 
operations through UBS AG
 
and Credit
Suisse AG, and subsidiaries
 
thereof. UBS Group AG, UBS AG
 
and Credit Suisse AG
 
have contributed a
 
significant
portion
 
of
 
their
 
respective
 
capital
 
to,
 
and
 
provide
 
substantial
 
liquidity
 
to,
 
such
 
subsidiaries.
 
Many
 
of
 
these
subsidiaries
 
are
 
subject
 
to
 
regulations
 
requiring
 
compliance
 
with
 
minimum
 
capital,
 
liquidity
 
and
 
similar
requirements.
›
Refer to the 30 September 2023 Pillar 3 Report, available under “Pillar 3 disclosures” at
ubs.com/investors
, for more
information relating to additional regulatory disclosures for UBS Group AG on a consolidated basis, as well as our
significant regulated subsidiaries and sub-groups
›
Refer to the
 
UBS AG third
 
quarter 2023
 
report, available
 
under “Quarterly
 
reporting” at
ubs.com/investors
, for more
information
 
about capital
 
and other
 
regulatory
 
information
 
for UBS AG
 
consolidated,
 
in accordance
 
with the Basel
 
III
framework,
 
as applicable
 
to Swiss SRBs
Swiss SRB going and gone concern requirements and information
As of 30.9.23
RWA
LRD
USD m, except where indicated
in %
in %
Required going concern capital
Total going concern capital
 
14.90
1
 
81,427
 
5.05
1
 
81,591
Common equity tier 1 capital
 
10.60
 
57,928
 
3.55
2
 
57,354
of which: minimum capital
 
4.50
 
24,592
 
1.50
 
24,237
of which: buffer capital
 
5.50
 
30,057
 
2.00
 
32,316
of which: countercyclical buffer
 
0.45
 
2,479
Maximum additional tier 1 capital
 
4.30
 
23,499
 
1.50
 
24,237
of which: additional tier 1 capital
 
3.50
 
19,127
 
1.50
 
24,237
of which: additional tier 1 buffer capital
 
0.80
 
4,372
Eligible going concern capital
Total going concern capital
 
16.75
 
91,546
 
5.67
 
91,546
Common equity tier 1 capital
 
14.38
 
78,587
 
4.86
 
78,587
Total loss-absorbing additional tier 1 capital
3
 
2.37
 
12,960
 
0.80
 
12,960
of which: high-trigger loss-absorbing additional tier 1 capital
 
2.15
 
11,764
 
0.73
 
11,764
of which: low-trigger loss-absorbing additional tier 1 capital
 
0.22
 
1,195
 
0.07
 
1,195
Required gone concern capital
Total gone concern loss-absorbing capacity
4,5,6
 
10.73
 
58,611
 
3.75
 
60,593
of which: base requirement including add-ons for market share and LRD
 
10.73
7
 
58,611
 
3.75
7
 
60,593
Eligible gone concern capital
Total gone concern loss-absorbing capacity
 
18.91
 
103,353
 
6.40
 
103,353
Total tier 2 capital
 
0.10
 
536
 
0.03
 
536
of which: non-Basel III-compliant tier 2 capital
 
0.10
 
536
 
0.03
 
536
TLAC-eligible senior unsecured debt
 
18.81
 
102,817
 
6.36
 
102,817
Total loss-absorbing capacity
Required total loss-absorbing capacity
 
25.63
 
140,038
 
8.80
 
142,184
Eligible total loss-absorbing capacity
 
35.66
 
194,899
 
12.06
 
194,899
Risk-weighted assets / leverage ratio denominator
Risk-weighted assets
 
546,491
Leverage ratio denominator
 
1,615,817
1 Includes applicable add-ons of 1.59% for risk-weighted assets (RWA) and 0.55% for leverage ratio denominator (LRD), of which 15 basis points for RWA and 5 basis points for LRD reflect the FINMA Pillar 2 capital
add-on of USD 800m related to the supply
 
chain finance funds matter at Credit
 
Suisse.
 
2 Our minimum CET1 leverage ratio
 
requirement of 3.55% consists of a
 
1.5% base requirement, a 1.5% base buffer
 
capital
requirement, a 0.25% LRD add-on requirement, a 0.25% market share add-on requirement
 
based on our Swiss credit business and a 0.05% Pillar 2 capital add-on related
 
to the supply chain finance funds matter at
Credit Suisse.
 
3 Includes outstanding low-trigger loss-absorbing additional tier 1
 
capital instruments, which are available under the Swiss
 
systemically relevant bank framework to meet the going concern
 
requirements
until their first call date. As
 
of their first call date, these
 
instruments are eligible to meet the
 
gone concern requirements.
 
4 A maximum of 25% of the gone
 
concern requirements can be met with
 
instruments that
have a remaining maturity of between one and
 
two years. Once at least 75%
 
of the minimum gone concern requirement has
 
been met with instruments that have
 
a remaining maturity of greater than two
 
years, all
instruments that have a remaining
 
maturity of between one
 
and two years remain
 
eligible to be included
 
in the total gone concern
 
capital.
 
5 From 1 January
 
2023, the resolvability discount
 
on the gone concern
capital requirements for systemically important
 
banks (SIBs) has been replaced with
 
reduced base gone concern capital requirements
 
equivalent to 75% of the total
 
going concern requirements (excluding countercyclical
buffer requirements and the Pillar 2 add-on).
 
6 As of July 2024, the Swiss Financial Market Supervisory Authority (FINMA) will
 
have the authority to impose a surcharge of up to 25%
 
of the total going concern capital
requirements should obstacles to an SIB’s resolvability be identified in future resolvability
 
assessments.
 
7 Includes applicable add-ons of 1.08% for RWA and 0.38% for LRD.
 
 
 
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and
 
balance sheet | Capital management
 
43
We are subject to
 
the going and gone
 
concern requirements of
 
the Swiss Capital Adequacy
 
Ordinance that include
the
 
too-big-to-fail
 
(TBTF)
 
provisions
 
applicable
 
to
 
Swiss
 
SRBs.
 
The
 
table
 
above
 
provides
 
the
 
risk-weighted asset
(RWA)- and leverage ratio denominator (LRD)-based
 
requirements and information as of
 
30 September 2023.
In November
 
2022, the
 
Swiss Federal
 
Council adopted
 
amendments to
 
the Banking
 
Act and
 
the Banking
 
Ordinance,
which entered into
 
force as of
 
1 January 2023. The
 
amendments replaced the resolvability
 
discount on the
 
gone
concern
 
capital
 
requirements
 
for
 
systemically
 
important
 
banks
 
(SIBs),
 
including
 
UBS,
 
with
 
reduced
 
base
 
gone
concern capital requirements
 
equivalent to 75%
 
of the total
 
going concern
 
requirements (excluding countercyclical
buffer requirements and
 
the Pillar 2 add-on).
 
In addition, as
 
of July
 
2024, the Swiss
 
Financial Market Supervisory
Authority
 
(FINMA)
 
will
 
have
 
the
 
authority
 
to
 
impose
 
a
 
surcharge
 
of
 
up
 
to
 
25%
 
of
 
the
 
total
 
going
 
concern
requirements based
 
on
 
obstacles to
 
an
 
SIB’s
 
resolvability identified
 
in
 
future
 
resolvability assessments.
 
Our
 
total
gone
 
concern requirements
 
remained substantially
 
unchanged in
 
the
 
third quarter
 
of
 
2023
 
as
 
a
 
result
 
of these
changes.
 
Transitional purchase price allocation
 
adjustments for regulatory capital
As
 
part
 
of
 
the
 
acquisition
 
of
 
the
 
Credit
 
Suisse
 
Group,
 
the
 
assets
 
acquired
 
and
 
liabilities
 
assumed,
 
including
contingent liabilities, were
 
recognized at fair
 
value as
 
of the
 
acquisition date in
 
accordance with IFRS 3,
Business
Combinations
. The purchase
 
price allocation (PPA) fair
 
value adjustments required under
 
IFRS 3 are recognized as
part of
 
negative goodwill
 
and
 
include effects
 
on
 
financial instruments
 
measured at
 
amortized cost,
 
such as
 
fair
value impacts
 
from interest
 
rates and
 
own credit,
 
that are
 
expected to
 
accrete back
 
to par
 
through the
 
income
statement as the instruments are held to maturity. Similar own-credit-related effects have also been recognized as
part of
 
the PPA
 
adjustments on
 
financial liabilities
 
measured at
 
fair value.
 
As
 
agreed with
 
FINMA, a
 
transitional
common equity tier 1 (CET1) capital treatment has
 
been applied for certain of these
 
fair value adjustments, given
the
 
substantially
 
temporary
 
nature
 
of
 
the
 
IFRS-3-accounting-driven
 
effects.
 
As
 
such,
 
IFRS
 
equity
 
reductions
 
of
USD 5.9bn (before
 
tax) and
 
USD 5.0bn (net
 
of tax) as
 
of the acquisition
 
date have
 
been neutralized
 
for CET1 capital
calculation
 
purposes,
 
of
 
which
 
USD 1.0bn
 
(net
 
of
 
tax)
 
relates
 
to
 
own-credit-related fair
 
value
 
adjustments. The
transitional treatment is subject to linear amortization and
 
will reduce to nil by 30 June
 
2027. In the third quarter
of 2023, the amortization of transitional CET1 PPA adjustments (interest rate and own credit) was USD 0.3bn (net
of tax).
 
IFRS 3 measurement period adjustments
 
in the third quarter of 2023 for the
 
acquisition of the Credit
Suisse Group
UBS has reclassified certain
 
loans and off-balance sheet
 
loan commitments held
 
by the newly established
 
Non-core
and Legacy business
 
division to “measured
 
at fair value
 
through profit
 
or loss”. Refer
 
to “Note 2
 
Accounting for
the acquisition
 
of the
 
Credit Suisse
 
Group” in
 
the “Consolidated
 
financial statements” section
 
of this
 
report for
details
 
on
 
the
 
accounting
 
treatment,
 
and
 
respective
 
adjustments
 
to
 
the
 
comparative
 
second
 
quarter
 
2023
information. We have
 
applied the amended
 
classification and measurement
 
for LRD and
 
RWA calculation purposes
prospectively from the third quarter of 2023.
Updates to the segment reporting for RWA
 
and LRD
Starting with
 
the third
 
quarter of
 
2023, we
 
report five
 
business divisions
 
in line
 
with International
 
Financial Reporting
Standards
 
(IFRS), reflecting
 
the way
 
we are
 
managing our
 
businesses and
 
engaging with
 
clients: Global
 
Wealth
Management, Personal
 
& Corporate Banking,
 
Asset Management,
 
the Investment
 
Bank, and Non-core
 
and Legacy.
We
 
separately
 
report
 
Group
 
Items.
 
As
 
UBS
 
executes
 
its
 
integration
 
plans,
 
it
 
is
 
expected
 
that
 
allocation
methodologies for RWA and LRD to the business divisions and into
 
Group Items will continue to be reviewed and
refined.
›
Refer to the “Management report” sections of this report, including the disclosures under “Integration of Credit
Suisse” in the “Recent developments” section
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and
 
balance sheet | Capital management
 
44
Total loss-absorbing capacity
The table below provides Swiss SRB going and gone concern information based on the Swiss SRB
 
framework and
requirements that are discussed under “Capital management” in the “Capital, liquidity and funding, and
 
balance
sheet”
 
section
 
of
 
the
 
Annual
 
Report
 
2022.
 
Changes
 
to
 
the
 
Swiss
 
SRB
 
framework
 
and
 
requirements
 
after
 
the
publication of the Annual Report 2022 are described above.
Swiss SRB going and gone concern information
USD m, except where indicated
30.9.23
30.6.23
31.12.22
Eligible going concern capital
Total going concern capital
 
91,546
 
93,287
 
58,321
Total tier 1 capital
 
91,546
 
93,287
 
58,321
Common equity tier 1 capital
 
78,587
 
80,258
 
45,457
Total loss-absorbing additional tier 1 capital
 
12,960
 
13,030
 
12,864
of which: high-trigger loss-absorbing additional tier 1 capital
 
11,764
 
11,839
 
11,675
of which: low-trigger loss-absorbing additional tier 1 capital
 
1,195
 
1,190
 
1,189
Eligible gone concern capital
Total gone concern loss-absorbing capacity
 
103,353
 
102,753
 
46,991
Total tier 2 capital
 
536
 
539
 
2,958
of which: low-trigger loss-absorbing tier 2 capital
 
0
 
0
 
2,422
of which: non-Basel III-compliant tier 2 capital
 
536
 
539
 
536
TLAC-eligible senior unsecured debt
 
102,817
 
102,214
 
44,033
Total loss-absorbing capacity
Total loss-absorbing capacity
 
194,899
 
196,040
 
105,312
Risk-weighted assets / leverage ratio denominator
Risk-weighted assets
 
546,491
 
556,603
 
319,585
Leverage ratio denominator
 
1,615,817
 
1,677,877
 
1,028,461
Capital and loss-absorbing capacity ratios (%)
Going concern capital ratio
 
16.8
 
16.8
 
18.2
of which: common equity tier 1 capital ratio
 
14.4
 
14.4
 
14.2
Gone concern loss-absorbing capacity ratio
 
18.9
 
18.5
 
14.7
Total loss-absorbing capacity ratio
 
35.7
 
35.2
 
33.0
Leverage ratios (%)
Going concern leverage ratio
 
5.7
 
5.6
 
5.7
of which: common equity tier 1 leverage ratio
 
4.9
 
4.8
 
4.4
Gone concern leverage ratio
 
6.4
 
6.1
 
4.6
Total loss-absorbing capacity leverage ratio
 
12.1
 
11.7
 
10.2
Total loss-absorbing capacity and movement
 
Our total loss-absorbing capacity (TLAC) decreased
 
by USD 1.1bn to USD 194.9bn in the third quarter
 
of 2023.
Going concern capital and movement
Our going concern capital decreased
 
by USD 1.7bn to USD 91.5bn. Our
 
CET1 capital decreased by USD
 
1.7bn to
USD 78.6bn,
 
mainly
 
reflecting
 
an
 
operating
 
loss
 
before
 
tax
 
of
 
USD 0.3bn,
 
current
 
tax
 
expenses
 
of
 
USD 0.6bn,
negative effects from foreign currency translation of USD 0.6bn, dividend accruals
 
of USD 0.5bn and amortization
of transitional CET1 PPA
 
adjustments (interest rate and
 
own credit) of USD
 
0.3bn (net of tax). These
 
effects were
partly offset by a
 
USD 0.2bn decrease in
 
the shortfall in
 
expected credit loss allowances
 
and provisions over
 
Basel III
expected losses and a USD 0.1bn increase in eligible deferred
 
tax assets on temporary differences.
Our
 
additional
 
tier 1
 
(AT1)
 
capital
 
decreased
 
by
 
USD 0.1bn
 
to
 
USD 13.0bn,
 
reflecting
 
interest
 
rate
 
risk
 
hedge,
foreign currency translation
 
and other effects. On
 
20 October 2023, we announced
 
that we would redeem
 
an AT1
capital instrument on 28 November 2023 (ISIN CH0447353704 with a
 
nominal amount of SGD 700bn, issued on
28 November 2018). This instrument remained
 
eligible as AT1 capital as of 30 September 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and
 
balance sheet | Capital management
 
45
Gone concern loss-absorbing capacity and movement
Our total gone concern
 
loss-absorbing capacity increased by
 
USD 0.6bn to USD 103.4bn, mainly
 
due to three new
issuances of TLAC-eligible senior unsecured debt
 
denominated in US dollars of USD 4.5bn,
 
largely offset by a call
of one
 
TLAC-eligible
 
unsecured debt
 
instrument denominated
 
in US
 
dollars of
 
USD 1.3bn, and
 
interest
 
rate risk
hedge, foreign currency translation
 
and other effects. On
 
18 October 2023, we announced
 
that we would redeem
TLAC-eligible
 
senior
 
unsecured
 
debt
 
on
 
8 November
 
2023
 
(ISIN
 
CH0445624981
 
with
 
a
 
nominal
 
amount
 
of
JPY 130bn,
 
issued
 
on
 
9 November
 
2018).
 
This
 
instrument
 
remained
 
eligible
 
as
 
gone
 
concern
 
capital
 
as
 
of
30 September 2023.
›
Refer to “Bondholder information” at
 
ubs.com/investors
for more information about the eligibility of capital and
senior unsecured debt instruments and about key features and terms and conditions of capital instruments
Loss-absorbing capacity and leverage ratios
Our CET1 capital
 
ratio was
 
broadly unchanged at
 
14.4%, reflecting a
 
decrease in CET1
 
capital of
 
USD 1.7bn, offset
by a USD 10.1bn decrease in RWA.
 
Our CET1 leverage ratio increased to 4.9% from 4.8%, reflecting a USD 62.1bn decrease in the LRD, partly offset
by a decrease in CET1 capital of USD 1.7bn.
Our
 
gone
 
concern
 
loss-absorbing
 
capacity
 
ratio
 
increased
 
to
 
18.9%
 
from
 
18.5%,
 
due
 
to
 
the
 
aforementioned
decrease in RWA and an increase in gone concern
 
loss-absorbing capacity of USD 0.6bn.
 
Our gone
 
concern leverage ratio
 
increased to 6.4%
 
from 6.1%, due
 
to the
 
aforementioned decrease in
 
the LRD
and an increase in gone concern loss-absorbing
 
capacity of USD 0.6bn.
Swiss SRB total loss-absorbing capacity movement
USD m
Going concern capital
Swiss SRB
Common equity tier 1 capital as of 30.6.23
 
80,258
Operating profit before tax
 
(255)
Current tax (expense) / benefit
 
(643)
Foreign currency translation effects, before tax
 
(618)
Amortization of transitional CET1 purchase price allocation adjustments, net of
 
tax
 
(297)
Other
1
 
142
Common equity tier 1 capital as of 30.9.23
 
78,587
Loss-absorbing additional tier 1 capital as of 30.6.23
 
13,030
Interest rate risk hedge, foreign currency translation and other effects
 
(70)
Loss-absorbing additional tier 1 capital as of 30.9.23
 
12,960
Total going concern capital as of 30.6.23
 
93,287
Total going concern capital as of 30.9.23
 
91,546
Gone concern loss-absorbing capacity
Tier 2 capital as of 30.6.23
 
539
Interest rate risk hedge, foreign currency translation and other effects
 
(4)
Tier 2 capital as of 30.9.23
 
536
TLAC-eligible senior unsecured debt as of 30.6.23
 
102,214
Issuance of TLAC-eligible senior unsecured debt
 
4,500
Call of TLAC-eligible senior unsecured debt
 
(1,300)
Interest rate risk hedge, foreign currency translation and other effects
 
(2,596)
TLAC-eligible senior unsecured debt as of 30.9.23
 
102,817
Total gone concern loss-absorbing capacity as of 30.6.23
 
102,753
Total gone concern loss-absorbing capacity as of 30.9.23
 
103,353
Total loss-absorbing capacity
Total loss-absorbing capacity as of 30.6.23
 
196,040
Total loss-absorbing capacity as of 30.9.23
 
194,899
1 Includes dividend accruals for the current year (negative USD 0.5bn) and movements related to other items.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and
 
balance sheet | Capital management
 
46
Reconciliation of IFRS equity to Swiss SRB common equity tier 1 capital
USD m
30.9.23
30.6.23
1
31.12.22
Total IFRS equity
 
85,398
 
87,752
 
57,218
Equity attributable to non-controlling interests
 
(542)
 
(636)
 
(342)
Defined benefit plans, net of tax
 
(929)
 
(987)
 
(311)
Deferred tax assets recognized for tax loss carry-forwards
 
(3,760)
 
(3,917)
 
(4,077)
Deferred tax assets for unused tax credits
 
(245)
 
(117)
Deferred tax assets on temporary differences, excess over threshold
 
(64)
Goodwill, net of tax
2
 
(5,736)
 
(5,761)
 
(5,754)
Intangible assets, net of tax
 
(844)
 
(894)
 
(150)
Compensation-related components (not recognized in net profit)
 
(2,296)
 
(2,013)
 
(2,287)
Expected losses on advanced internal ratings-based portfolio less provisions
 
(553)
 
(749)
 
(471)
Unrealized (gains) / losses from cash flow hedges, net of tax
 
4,947
 
4,451
 
4,234
Own credit related to (gains) / losses on financial liabilities
 
measured at fair value that existed at the balance sheet date, net of tax
 
571
 
(130)
 
(523)
Own credit related to (gains) / losses on derivative financial instruments
 
that existed at the balance sheet date
 
(123)
 
(142)
 
(105)
Prudential valuation adjustments
 
(407)
 
(488)
 
(201)
Accruals for dividends to shareholders for 2022
 
(1,683)
Transitional CET1 purchase price allocation adjustments
 
4,600
 
4,897
Other
3
 
(1,495)
 
(1,008)
 
(29)
Total common equity tier 1 capital
 
78,587
 
80,258
 
45,457
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
 
2 Includes goodwill related to significant investments in financial institutions of USD 19m as of 30 September 2023 (USD 19m as of 30 June 2023; USD 20m as of 31 December 2022) presented on the balance sheet
line Investments in associates.
 
3 Includes dividend accruals for the current year and other items.
 
Additional information
Sensitivity to currency movements
 
Risk-weighted assets
We estimate that a 10% depreciation of the US dollar against other currencies would have increased our RWA by
USD 23bn and our
 
CET1 capital
 
by USD 2.6bn as
 
of 30 September
 
2023 (30 June
 
2023: USD 23bn and
 
USD 3.0bn,
respectively) and decreased our CET1 capital
 
ratio by 11 basis points (30 June 2023: 6 basis points). Conversely,
 
a
10% appreciation of the US dollar against other currencies would have decreased our
 
RWA by USD 21bn and our
CET1 capital by USD 2.4bn
 
(30 June 2023: USD 21bn and USD
 
2.7bn, respectively) and increased our CET1
 
capital
ratio by 11 basis points (30 June 2023: 6 basis
 
points).
Leverage ratio denominator
We estimate that a
 
10% depreciation of the
 
US dollar against other
 
currencies would have increased
 
our LRD by
USD 103bn
 
as
 
of
 
30
 
September
 
2023
 
(30
 
June
 
2023:
 
USD 109bn)
 
and
 
decreased
 
our
 
CET1
 
leverage
 
ratio
 
by
14 basis points
 
(30 June
 
2023: 12 basis
 
points). Conversely,
 
a
 
10%
 
appreciation of
 
the US
 
dollar against
 
other
currencies would
 
have decreased
 
our LRD
 
by USD 94bn
 
(30 June
 
2023: USD 99bn)
 
and increased
 
our CET1
 
leverage
ratio by 14 basis points (30 June 2023: 13 basis
 
points).
The aforementioned
 
sensitivities do
 
not consider
 
foreign currency
 
translation effects
 
related to
 
defined benefit
 
plans
other than those related to the currency
 
translation of the net equity of foreign operations.
›
Refer to “Active management of sensitivity to currency movements” under “Capital management” in the “Capital,
liquidity and funding, and balance sheet” section of the Annual Report 2022 for more information
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and
 
balance sheet | Capital management
 
47
Estimated effect on capital from litigation,
 
regulatory and similar matters subject to
 
provisions and contingent
liabilities
We have estimated the
 
loss in capital that
 
we could incur
 
as a result of
 
the risks associated
 
with the matters
 
related
to
 
UBS AG
 
and
 
subsidiaries
 
described
 
in
 
“Note 15
 
Provisions
 
and
 
contingent
 
liabilities”
 
in
 
the
 
“Consolidated
financial
 
statements”
 
section
 
of
 
this
 
report.
 
We
 
have
 
employed
 
for
 
this
 
purpose
 
the
 
advanced
 
measurement
approach (AMA) methodology
 
that we use
 
when determining
 
the capital requirements
 
associated with
 
operational
risks, based on a
 
99.9% confidence level
 
over a 12-month horizon.
 
The methodology takes
 
into consideration UBS
and industry experience for the AMA
 
operational risk categories to which
 
those matters correspond, as well
 
as the
external environment affecting risks of these types, in
 
isolation from other areas. On this basis, with respect to the
litigation,
 
regulatory
 
and
 
similar
 
matters
 
related
 
to
 
UBS AG and
 
subsidiaries,
 
we estimate
 
the
 
maximum loss
 
in
capital that we
 
could incur over
 
a 12-month period
 
as a result
 
of our risks
 
associated with these
 
operational risk
categories at USD 4.0bn as of 30 September 2023. This estimate is not
 
related to and does not take into
 
account
any provisions recognized
 
for any of
 
these matters and does
 
not constitute a subjective
 
assessment of our actual
exposure in any of these matters.
›
Refer to “Non-financial risk” in the “Risk management and control” section of the Annual Report 2022 for more
information
›
Refer to “Note 15 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this
report for more information
 
Risk-weighted assets
 
During the third quarter
 
of 2023, RWA decreased
 
by USD 10.1bn to
 
USD 546.5bn, primarily driven
 
by decreases of
USD 5.5bn
 
due
 
to
 
currency effects
 
and
 
USD 5.3bn due
 
to
 
asset
 
size
 
and
 
other movements,
 
partly
 
offset by
 
an
increase of USD 0.6bn due to model updates.
Movement in risk-weighted assets by key driver
USD bn
RWA as of
30.6.23
Currency
effects
Methodology
and policy
changes
Model
updates /
changes
Regulatory
add-ons
Asset size
and other
1
RWA as of
30.9.23
Credit and counterparty credit risk
2
 
356.4
 
(5.2)
 
0.6
 
(5.5)
 
346.3
Non-counterparty-related risk
3
 
31.1
 
(0.3)
 
(0.1)
 
30.7
Market risk
 
23.6
 
0.1
 
0.3
 
24.1
Operational risk
 
145.4
 
145.4
Total
 
556.6
 
(5.5)
 
0.6
 
(5.3)
 
546.5
1 Includes the Pillar
 
3 categories “Asset
 
size,” “Credit
 
quality of counterparties,”
 
“Acquisitions and
 
disposals” and “Other.”
 
For more information,
 
refer to our 30
 
September 2023 Pillar
 
3 report, available
 
under
“Pillar 3 disclosures” at ubs.com/investors.
 
2 Includes settlement risk, credit valuation adjustments, equity and investments in funds exposures in the banking book, and securitization
 
exposures in the banking book.
 
3 Non-counterparty-related risk includes deferred tax assets recognized for temporary differences,
 
property, equipment, software and other items.
Credit and counterparty credit risk
Credit and counterparty
 
credit risk
 
RWA were
 
USD 346.3bn as
 
of 30 September
 
2023. The decrease
 
of USD
 
10.1bn
included currency effects of USD 5.2bn.
Asset size and other movements resulted in
 
a USD 5.5bn decrease in RWA.
 
–
Non-core and Legacy decreased by USD 6.0bn,
 
mainly due to lower RWA from loans as a result of strategic de-
risking.
–
Personal & Corporate Banking RWA decreased
 
by USD 0.3bn, primarily driven by lower
 
RWA from loans.
 
–
Investment Bank
 
RWA decreased
 
by USD 0.2bn,
 
mainly due
 
to lower RWA
 
from securities
 
financing transactions.
–
Global
 
Wealth
 
Management RWA
 
decreased
 
by
 
USD 0.1bn,
 
with
 
lower
 
RWA
 
from
 
derivatives,
 
securitization
exposures, and equity positions almost entirely
 
offset by higher RWA from loans.
 
–
Group Items RWA increased by USD 1.0bn, mainly
 
driven by higher RWA from nostro accounts.
–
Asset Management RWA increased by USD 0.1bn.
 
 
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and
 
balance sheet | Capital management
 
48
Model updates resulted in an RWA increase of USD 0.6bn.
 
RWA increases of USD 1.0bn related to the phase-in of
model
 
updates for
 
hedge funds,
 
USD 0.5bn related
 
to
 
updates
 
to
 
the Lombard
 
model,
 
USD 0.3bn related
 
to
 
a
model update for
 
income-producing real estate and
 
USD 0.3bn related to the
 
Swiss corporate model
 
were partly
offset
 
by
 
an
 
RWA
 
decrease
 
of
 
USD 1.5bn
 
related
 
to
 
the
 
recalibration
 
of
 
certain
 
multipliers
 
as
 
a
 
result
 
of
improvements to models.
›
Refer to the “Recent developments” section of this report for more information about the realignment of business
divisions
›
Refer to the 30 September 2023 Pillar 3 report, available under “Pillar 3 disclosures” at
ubs.com/investors
, for more
information
 
›
Refer to “Credit risk models” in the “Risk management and control” section of the Annual Report 2022 for more
information
 
Outlook
 
We expect
 
that regulatory-driven
 
updates to
 
credit and
 
counterparty credit
 
risk models
 
will result
 
in an
 
RWA increase
of
 
around USD
 
2bn in
 
the fourth
 
quarter
 
of
 
2023.
 
The
 
extent
 
and
 
timing of
 
RWA
 
changes
 
may vary
 
as model
updates
 
are
 
completed and
 
receive regulatory
 
approval, along
 
with changes
 
in the
 
composition of
 
the relevant
portfolios. Furthermore, we
 
expect exposures in Non-core and Legacy
 
to reduce as a result of
 
maturities and active
unwinding of positions.
›
Refer to the “Recent developments” section of this report for more information about the integration of Credit
Suisse
Market risk
Market risk
 
RWA increased
 
by USD
 
0.5bn to
 
USD 24.1bn in
 
the third
 
quarter of
 
2023, primarily
 
driven by
 
an increase
of USD 0.3bn from
 
asset size and
 
other movements and an
 
increase of USD 0.1bn related
 
to ongoing parameter
updates of the value-at-risk
 
(VaR) models. UBS
 
is in discussions
 
with FINMA regarding
 
the integration of
 
time decay
into the regulatory VaR, which would replace the
 
current add-on
.
›
Refer to the 30 September 2023 Pillar 3 report, available under “Pillar 3 disclosures” at
 
ubs.com/investors,
 
for more
information
 
›
Refer to ”Market risk” in the “Risk management and control” section of the Annual Report 2022 for more
information
Operational risk
Operational risk
 
RWA were
 
unchanged at
 
USD 145.4bn. In
 
the third
 
quarter of
 
2023, we
 
updated our
 
methodology
that we use to allocate
 
operational risk RWA
 
to the business divisions
 
and Group Items. The
 
updated methodology
was retrospectively applied for the second quarter
 
of 2023.
›
Refer to the “Recent developments” section and “Note 15 Provisions and contingent liabilities” in the “Consolidated
financial statements” section of this report for more information
›
Refer to “Non-financial risk” in the “Risk management and control” section of the Annual Report 2022 for
information about the advanced measurement approach model
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and
 
balance sheet | Capital management
 
49
Risk-weighted assets by business division and Group Items
USD bn
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Manage-
ment
Investment
Bank
Non-core and
Legacy
1
Group
 
Items
1
Total
RWA
30.9.23
Credit and counterparty credit risk
2
 
92.8
 
132.0
 
7.6
 
64.4
 
38.8
 
10.7
 
346.3
Non-counterparty-related risk
3
 
6.8
 
3.5
 
0.8
 
3.7
 
2.7
 
13.2
 
30.7
Market risk
 
1.6
 
0.1
 
0.0
 
13.9
 
5.9
 
2.4
 
24.1
Operational risk
 
57.5
 
19.5
 
7.2
 
25.0
 
30.0
 
6.2
 
145.4
Total
 
158.8
 
155.1
 
15.6
 
107.0
 
77.5
 
32.5
 
546.5
30.6.23
Credit and counterparty credit risk
2
 
93.1
 
134.6
 
7.5
 
66.0
 
45.2
 
9.9
 
356.4
Non-counterparty-related risk
3
 
7.1
 
3.8
 
0.8
 
3.8
 
2.6
 
13.0
 
31.1
Market risk
 
1.9
 
0.2
 
0.0
 
12.5
 
6.0
 
3.1
 
23.6
Operational risk
 
57.5
 
19.5
 
7.2
 
25.0
 
30.0
 
6.2
 
145.4
Total
 
159.6
 
158.0
 
15.6
 
107.3
 
83.8
 
32.2
 
556.6
30.9.23 vs 30.6.23
Credit and counterparty credit risk
2
 
(0.3)
 
(2.6)
 
0.1
 
(1.6)
 
(6.4)
 
0.8
 
(10.1)
Non-counterparty-related risk
3
 
(0.3)
 
(0.3)
 
0.0
 
(0.1)
 
0.1
 
0.1
 
(0.4)
Market risk
 
(0.3)
 
0.0
 
0.0
 
1.5
 
(0.1)
 
(0.7)
 
0.4
Operational risk
Total
 
(0.9)
 
(3.0)
 
0.0
 
(0.2)
 
(6.4)
 
0.3
 
(10.1)
1 Starting with the third quarter of 2023, Non-core and Legacy
 
represents a separate reportable segment and Group Functions has been renamed Group Items. Prior periods
 
have been revised to reflect these changes.
 
2 Includes settlement risk, credit valuation
 
adjustments, equity and investments
 
in funds exposures in the banking
 
book and securitization exposures in the
 
banking book.
 
3 Non-counterparty-related risk includes
deferred tax assets recognized for temporary differences (30 September 2023:
 
USD 12.6bn; 30 June 2023: USD 12.4bn), as well as property,
 
equipment, software and other items (30 September 2023: USD
 
18.1bn;
30 June 2023: USD 18.7bn).
 
Leverage ratio denominator
During
 
the
 
third
 
quarter
 
of
 
2023,
 
the
 
LRD
 
decreased
 
by
 
USD 62.1bn
 
to
 
USD 1,615.8bn,
 
primarily
 
driven
 
by
decreases from asset size and other movements
 
of USD 37.1bn and currency effects of
 
USD 24.9bn.
 
Movement in leverage ratio denominator by key driver
USD bn
LRD as of
 
30.6.23
Currency
 
effects
Asset size and
 
other
LRD as of
 
30.9.23
On-balance sheet exposures (excluding derivatives and securities
 
financing transactions)
 
1,283.1
 
(19.9)
 
(20.9)
 
1,242.4
Derivatives
 
141.4
 
(2.2)
 
4.2
 
143.5
Securities financing transactions
 
161.8
 
(1.6)
 
(3.1)
 
157.1
Off-balance sheet items
 
98.9
 
(1.3)
 
(17.2)
 
80.4
Deduction items
 
(7.4)
 
0.0
 
(0.2)
 
(7.6)
Total
 
1,677.9
 
(24.9)
 
(37.1)
 
1,615.8
The LRD movements described below exclude
 
currency effects.
 
On-balance sheet exposures
 
(excluding derivatives and
 
securities financing transactions)
 
decreased by USD 20.9bn,
mainly reflecting lower lending balances and
 
trading assets.
Derivative
 
exposures
 
increased
 
by
 
USD 4.2bn,
 
mainly
 
due
 
to
 
market-driven
 
movements
 
on
 
foreign
 
currency
contracts and higher trading volumes in equity
 
contracts in the Investment Bank.
Securities financing transactions
 
decreased by USD 3.1bn, mainly
 
due to reduced volumes in Non-core
 
and Legacy,
partly offset by client-driven increases in brokerage
 
receivables in the Investment Bank.
Off-balance sheet items
 
decreased by USD 17.2bn,
 
mainly due to a
 
decrease in loan
 
commitments in Non-core
 
and
Legacy,
 
following
 
the
 
accounting reclassification
 
of
 
loan
 
commitments from
 
accrual
 
to
 
fair
 
value,
 
implemented
prospectively in the LRD framework during
 
the third quarter of 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and
 
balance sheet | Capital management
 
50
The application
 
of measurement
 
period adjustments
 
to the
 
accounting for
 
the acquisition
 
of the
 
Credit Suisse
 
Group
included the reclassification of loan commitments not measured at fair value in Non-core and Legacy to derivative
loan commitments measured at fair value
 
through profit or loss. This resulted in a USD 14bn decrease
 
in LRD from
off-balance sheet items and a USD 2bn increase
 
in LRD from derivative exposures
 
in the third quarter of 2023.
›
Refer to the “Balance sheet and off-balance sheet” section of this report for more information about balance sheet
movements
Leverage ratio denominator by business division and Group Items
USD bn
Global Wealth
Management
 
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
1
Group Items
1
Total
 
30.9.23
On-balance sheet exposures
 
427.3
 
424.0
 
5.9
 
199.9
 
115.9
 
69.4
 
1,242.4
Derivatives
 
8.0
 
4.8
 
0.0
 
96.2
 
32.3
 
2.1
 
143.5
Securities financing transactions
 
23.1
 
12.5
 
0.1
 
41.3
 
5.0
 
75.1
 
157.1
Off-balance sheet items
 
18.2
 
37.6
 
0.2
 
19.2
 
3.8
 
1.5
 
80.4
Items deducted from Swiss SRB tier 1 capital
 
(4.6)
 
4.7
 
(1.2)
 
(0.4)
 
(0.6)
 
(5.4)
 
(7.6)
Total
 
472.0
 
483.7
 
5.0
 
356.0
 
156.4
 
142.7
 
1,615.8
30.6.23
On-balance sheet exposures
 
439.8
 
436.3
 
5.6
 
200.8
 
144.9
 
55.7
 
1,283.1
Derivatives
 
8.3
 
2.5
 
0.0
 
91.7
 
34.4
 
4.4
 
141.4
Securities financing transactions
 
25.4
 
13.4
 
0.1
 
42.6
 
11.0
 
69.4
 
161.8
Off-balance sheet items
 
21.1
 
38.9
 
0.2
 
19.1
 
18.7
 
1.0
 
98.9
Items deducted from Swiss SRB tier 1 capital
 
(4.6)
 
5.1
 
(1.2)
 
(0.8)
 
(0.3)
 
(5.6)
 
(7.4)
Total
 
490.0
 
496.2
 
4.7
 
353.4
 
208.7
 
124.9
 
1,677.9
30.9.23 vs 30.6.23
On-balance sheet exposures
 
(12.5)
 
(12.2)
 
0.3
 
(0.9)
 
(29.0)
 
13.7
 
(40.7)
Derivatives
 
(0.3)
 
2.3
 
0.0
 
4.5
 
(2.1)
 
(2.3)
 
2.0
Securities financing transactions
 
(2.3)
 
(0.9)
 
0.0
 
(1.4)
 
(5.9)
 
5.7
 
(4.7)
Off-balance sheet items
 
(2.9)
 
(1.4)
 
0.0
 
0.1
 
(14.9)
 
0.6
 
(18.5)
Items deducted from Swiss SRB tier 1 capital
 
0.0
 
(0.4)
 
0.0
 
0.4
 
(0.3)
 
0.1
 
(0.2)
Total
 
(18.1)
 
(12.6)
 
0.3
 
2.7
 
(52.2)
 
17.8
 
(62.1)
1 Starting with the third quarter of 2023, Non-core and Legacy represents
 
a separate reportable segment and Group Functions has been renamed Group
 
Items. Prior periods have been revised to reflect these changes.
Liquidity and funding management
Strategy, objectives and governance
 
This
 
section
 
provides
 
liquidity
 
and
 
funding
 
management
 
information
 
and
 
should
 
be
 
read
 
in
 
conjunction
 
with
“Liquidity and
 
funding management”
 
in
 
the “Capital,
 
liquidity and
 
funding, and
 
balance sheet”
 
section of
 
the
Annual Report 2022, which
 
provides more information about
 
the Group’s strategy, objectives
 
and governance in
connection with liquidity and funding management.
Liquidity coverage ratio
The
 
quarterly
 
average
 
liquidity
 
coverage
 
ratio
 
(the
 
LCR)
 
of
 
the
 
UBS
 
Group
 
increased
 
21.3 percentage
 
points
 
to
196.5%, remaining
 
above the
 
prudential requirement
 
communicated by
 
the Swiss
 
Financial Market
 
Supervisory
Authority (FINMA).
The movement
 
in the
 
average LCR
 
was primarily
 
driven by
 
an increase
 
in high-quality
 
liquidity assets
 
(HQLA) of
USD 110.4bn to
 
USD 367.5bn. This
 
increase was
 
substantially attributable to
 
the effect
 
of the
 
acquisition of
 
the
Credit Suisse Group on 12 June 2023, with only 15 days
 
of post-acquisition effect included in the average LCR for
the
 
second
 
quarter
 
of
 
2023.
 
Comparing
 
the
 
average
 
for
 
the
 
15
 
business
 
days
 
in
 
the
 
second
 
quarter
 
of
 
2023
following the acquisition of
 
the Credit Suisse
 
Group with the
 
average for the
 
full third quarter,
 
the HQLA for
 
the
UBS Group
 
decreased from
 
USD 372.1bn to
 
USD 367.5bn.
 
The effect
 
of higher
 
customer deposit
 
balances was
offset by the repayment of an Emergency Liquidity
 
Assistance Plus loan drawn by Credit Suisse.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and
 
balance sheet | Liquidity and funding management
 
51
The increase
 
in HQLA
 
was partly
 
offset by
 
a USD 42.3bn
 
increase in
 
net cash
 
outflows to
 
USD 187.3bn, substantially
attributable to the effect of
 
the acquisition of the
 
Credit Suisse Group on 12 June 2023,
 
as only 15 days
 
of post-
acquisition effect were
 
included in the
 
average LCR for
 
the second quarter
 
of 2023. Comparing
 
the average for
 
the
15 business days in
 
the second quarter
 
of 2023 with the
 
average for the full
 
third quarter, net cash
 
outflows of the
UBS Group were largely unchanged, at USD
 
187.3bn.
›
Refer to “Liquidity coverage ratio” in the “Liquidity and funding management” section of our second quarter 2023
report, available under “Quarterly reporting” at
ubs.com/investors
, for more information about the basis of
calculation for the average LCR for the second quarter of 2023
›
Refer to the
30 September 2023 Pillar 3 report, available under “Pillar 3 disclosures” at
ubs.com/investors
, for more
information about the LCR
Liquidity coverage ratio
USD bn, except where indicated
Average 3Q23
1
Average 2Q23
1
High-quality liquid assets
 
367.5
 
257.1
Net cash outflows
2
 
187.3
 
145.0
Liquidity coverage ratio (%)
3
 
196.5
 
175.2
1 Calculated based on an average of 63 data points in the third quarter of 2023 and 64 data points in
 
the second quarter of 2023.
 
2 Represents the net cash outflows expected over a stress period of 30 calendar
days.
 
3 Calculated after the application of haircuts and inflow and outflow rates, as well as,
 
where applicable, caps on Level 2 assets and cash inflows.
Net stable funding ratio
 
As of
 
30 September 2023,
 
the net
 
stable funding
 
ratio (the
 
NSFR) of
 
the UBS
 
Group increased
 
3.1 percentage
 
points
to 120.7%, remaining above the prudential
 
requirement communicated by FINMA.
 
Available
 
stable
 
funding decreased
 
slightly
 
by
 
USD 0.4bn
 
to
 
USD 872.7bn, reflecting
 
higher
 
customer
 
deposits,
substantially offset by a
 
decrease in debt issued,
 
lower payables from securities
 
financing transactions, and lower
capital.
 
Required stable
 
funding decreased
 
by USD 19.2bn
 
to USD 722.9bn,
 
predominantly reflecting
 
lower lending
assets and, to a lesser extent, lower trading
 
assets, partly offset by higher derivative balances.
›
Refer to the 30 September 2023 Pillar 3 report, available under “Pillar 3 disclosures” at
ubs.com/investors
, for more
information about the NSFR
Net stable funding ratio
USD bn, except where indicated
30.9.23
30.6.23
Available stable funding
 
872.7
 
873.1
Required stable funding
 
722.9
 
742.1
Net stable funding ratio (%)
 
120.7
 
117.6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and
 
balance sheet | Balance sheet and off-balance
 
sheet
 
52
Balance sheet and off-balance sheet
This
 
section
 
provides
 
balance
 
sheet
 
and
 
off-balance sheet
 
information
 
and
 
should
 
be
 
read
 
in
 
conjunction
 
with
“Balance sheet
 
and off-balance
 
sheet” in
 
the “Capital,
 
liquidity and
 
funding, and
 
balance sheet”
 
section of
 
the
Annual Report 2022,
 
which provides more
 
information about the
 
balance sheet and
 
off-balance sheet positions.
For more
 
information about
 
the balance
 
sheet effects
 
of the
 
acquisition of
 
the Credit
 
Suisse Group,
 
refer to
 
“Note 2
Accounting for the acquisition of the Credit
 
Suisse Group”
 
in the “Consolidated financial statements” section.
Balances disclosed in this
 
report represent quarter-end
 
positions, unless indicated
 
otherwise. Intra-quarter balances
fluctuate in the ordinary course of business
 
and may differ from quarter-end positions.
Balance sheet assets
 
(30 September 2023 vs 30 June 2023)
Total assets were USD 1,644.5bn as
 
of 30 September 2023. The decrease
 
of USD 34.4bn included currency
 
effects
of approximately USD 21.1bn.
Lending
 
assets
 
decreased
 
by
 
USD 24.0bn,
 
mainly
 
reflecting
 
negative
 
net
 
new
 
loans,
 
mainly
 
in
 
Global
 
Wealth
Management,
 
and
 
negative
 
currency
 
effects
 
of
 
approximately
 
USD 10.9bn.
 
Trading
 
assets
 
decreased
 
by
USD 14.3bn,
 
mainly driven by a decrease in positions held in the Investment Bank to hedge client positions.
 
Other
financial assets measured at fair value decreased by USD 6.3bn,
 
mainly reflecting a decrease in securities financing
transactions measured at fair value in the
 
Investment Bank.
These
 
decreases
 
were
 
partly
 
offset
 
by
 
an
 
increase
 
in
 
Derivatives
 
and
 
cash
 
collateral
 
receivables
 
on
 
derivative
instruments of USD 10.0bn, mainly in
 
Derivatives & Solutions in the
 
Investment Bank,
 
primarily reflecting market-
driven movements on foreign-currency contracts
 
amid volatility in exchange rates.
Assets
As of
% change from
USD bn
30.9.23
30.6.23
1
30.6.23
Cash and balances at central banks
 
262.4
 
261.6
 
0
Lending
2
 
646.2
 
670.2
 
(4)
Securities financing transactions at amortized cost
 
84.9
 
86.5
 
(2)
Trading assets
 
142.9
 
157.2
 
(9)
Derivatives and cash collateral receivables on derivative instruments
 
250.3
 
240.3
 
4
Brokerage receivables
 
24.6
 
21.5
 
14
Other financial assets measured at amortized cost
 
64.2
 
64.9
 
(1)
Other financial assets measured at fair value
3
 
114.5
 
120.8
 
(5)
Non-financial assets
 
54.7
 
55.8
 
(2)
Total assets
 
1,644.5
 
1,678.9
 
(2)
of which: Credit Suisse
4
 
559.4
 
598.4
 
(7)
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
 
2 Consists of Loans and advances to customers and Amounts due from banks.
 
3 Consists of Financial assets at fair value not held for trading and Financial assets measured at
 
fair value through other comprehensive
income.
 
4 Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this
 
report for more information.
Balance sheet liabilities (30 September
 
2023 vs 30 June 2023)
Total
 
liabilities
 
were
 
USD 1,559.0bn
 
as
 
of
 
30 September
 
2023.
 
The
 
decrease
 
of
 
USD 32.1bn
 
included
 
currency
effects of USD 18.6bn.
Short-term
 
borrowings
 
decreased
 
by
 
USD 33.2bn,
 
mainly
 
related
 
to
 
the
 
reduction
 
of
 
funding
 
from
 
the
 
Swiss
National
 
Bank.
 
Securities
 
financing
 
transactions
 
at
 
amortized
 
cost
 
decreased
 
by
 
USD 7.3bn,
 
predominantly
reflecting roll-offs.
 
Trading liabilities
 
decreased by
 
USD 5.4bn, mainly
 
due to
 
a
 
decrease in
 
positions held
 
in
 
the
Investment Bank to hedge client positions.
These decreases were
 
partly offset by
 
an increase in
 
Customer deposits of
 
USD 20.6bn, including negative
 
currency
effects of
 
USD 10.4bn,
 
mainly in
 
Global Wealth
 
Management and
 
primarily driven
 
by net
 
inflows into
 
time deposits,
partly offset by continued shifts into money market
 
funds and US-government securities.
The “Liabilities
 
by product
 
and currency”
 
table
 
in this
 
section provides
 
more information
 
about our
 
funding sources.
›
Refer to “Bondholder information” at
 
ubs.com/investors
for more information about capital and senior debt
instruments
 
›
Refer to the “Consolidated financial statements” section of this report for more information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and
 
balance sheet | Balance sheet and off-balance
 
sheet
 
53
Liabilities and equity
As of
 
% change from
USD bn
30.9.23
30.6.23
1
30.6.23
Short-term borrowings
2,3
 
106.5
 
139.7
 
(24)
Securities financing transactions at amortized cost
 
15.0
 
22.3
 
(33)
Customer deposits
 
733.1
 
712.5
 
3
Debt issued designated at fair value and long-term debt issued measured
 
at amortized cost
3
 
312.1
 
315.4
 
(1)
Trading liabilities
 
35.0
 
40.4
 
(13)
Derivatives and cash collateral payables on derivative instruments
 
239.6
 
236.6
 
1
Brokerage payables
 
41.3
 
43.9
 
(6)
Other financial liabilities measured at amortized cost
 
19.2
 
19.4
 
(1)
Other financial liabilities designated at fair value
 
33.3
 
36.1
 
(8)
Non-financial liabilities
 
24.1
 
24.8
 
(3)
Total liabilities
 
1,559.1
 
1,591.1
 
(2)
of which: Credit Suisse
4
 
462.5
 
502.7
 
(8)
Share capital
 
0.3
 
0.3
 
0
Share premium
 
12.9
 
12.5
 
3
Treasury shares
 
(4.1)
 
(4.2)
 
(2)
Retained earnings
 
76.7
 
78.3
 
(2)
Other comprehensive income
5
 
(1.0)
 
0.2
Total equity attributable to shareholders
 
84.9
 
87.1
 
(3)
Equity attributable to non-controlling interests
 
0.5
 
0.6
 
(15)
Total equity
 
85.4
 
87.8
 
(3)
Total liabilities and equity
 
1,644.5
 
1,678.9
 
(2)
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
 
2 Consists of short-term debt issued measured at amortized cost and amounts due to banks, which includes amounts due to central banks.
 
3 The classification of debt issued measured at amortized cost into short-
term and long-term is based
 
on original contractual
 
maturity and therefore long-term
 
debt also includes debt
 
with a remaining time
 
to maturity of less
 
than one year.
 
This classification does
 
not consider any
 
early
redemption features.
 
4 Excludes USD 55.7bn
 
(30 June 2023:
 
USD 52.9bn) of debt
 
instruments previously issued
 
by Credit Suisse
 
Group AG and
 
transferred to UBS
 
Group AG as
 
part of the acquisition.
 
Refer to
“Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
 
5 Excludes other comprehensive income related to defined
benefit plans and own credit, which is recorded directly in Retained earnings.
Equity (30 September 2023 vs 30 June 2023)
Equity attributable to shareholders decreased
 
by USD 2,260m to USD 84,856m as of
 
30 September 2023.
The
 
decrease
 
of
 
USD 2,260m
 
was
 
mainly
 
driven
 
by
 
negative
 
total
 
comprehensive
 
income
 
attributable
 
to
shareholders of USD 2,684m, reflecting
 
a net loss
 
of USD 785m and
 
negative other comprehensive income (OCI)
of USD 1,899m,
 
partly offset by deferred share-based compensation awards expensed
 
in the income statement of
USD 346m. OCI mainly included negative OCI
 
related to own credit on
 
financial liabilities designated at fair value
of USD 686m,
 
negative OCI
 
related to foreign
 
currency translation
 
of USD 615m
 
and negative
 
cash flow
 
hedge OCI
of USD 526m.
 
›
Refer to the “Group performance” and “Consolidated financial statements” sections of this report for more
information
›
Refer to “Reconciliation of IFRS equity to Swiss SRB common equity tier 1 capital” in the “Capital management”
section of this report for more information about the effects of OCI on common equity tier 1 capital
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and
 
balance sheet | Balance sheet and off-balance
 
sheet
 
54
Liabilities by product and currency
USD equivalent
All currencies
of which: USD
of which: CHF
of which: EUR
USD bn
30.9.23
30.6.23
1
30.9.23
30.6.23
1
30.9.23
30.6.23
30.9.23
30.6.23
Short-term borrowings
106.5
139.7
49.6
49.7
39.2
69.6
7.8
9.3
of which: amounts due to banks
68.5
99.2
20.7
20.3
39.0
69.5
3.2
3.8
of which: short-term debt issued
2,3
38.0
40.5
28.9
29.4
0.1
0.1
4.6
5.5
Securities financing transactions at amortized cost
15.0
22.3
8.2
15.4
2.2
2.2
3.0
2.8
Customer deposits
733.1
712.5
299.7
280.9
293.0
296.0
73.2
72.3
of which: demand deposits
233.8
250.1
61.9
66.2
103.6
109.2
38.2
42.7
of which: retail savings / deposits
180.1
189.0
31.2
31.0
144.4
153.0
4.4
4.9
of which: sweep deposits
40.2
45.5
40.2
45.5
0.0
0.0
0.0
0.0
of which: time deposits
279.0
227.9
166.3
138.2
45.0
33.8
30.6
24.7
Debt issued designated at fair value and long-term debt issued measured
 
at
amortized cost
3
312.1
315.4
177.1
176.3
40.1
40.1
67.1
70.1
Trading liabilities
35.0
40.4
12.0
13.3
1.3
1.6
9.3
13.0
Derivatives and cash collateral payables on derivative instruments
239.6
236.6
189.9
184.1
6.8
5.5
26.3
27.8
Brokerage payables
41.3
43.9
30.9
32.7
0.6
0.7
2.2
2.6
Other financial liabilities measured at amortized cost
 
19.2
19.4
9.4
7.7
5.6
4.9
0.8
2.3
Other financial liabilities designated at fair value
33.3
36.1
9.3
9.5
0.0
0.1
4.3
4.8
Non-financial liabilities
24.1
24.8
13.3
14.5
3.2
3.0
3.1
3.3
Total liabilities
1,559.1
1,591.1
799.5
784.0
391.9
423.8
197.2
208.2
of which: Credit Suisse
4
462.5
502.7
190.8
197.8
163.3
189.8
61.4
67.3
1 Comparative-period information has been revised.
 
Refer to “Note 2 Accounting for the acquisition of
 
the Credit Suisse Group” in the “Consolidated financial
 
statements” section of this report for more information.
 
2 Short-term debt issued consists of certificates
 
of deposit, commercial paper,
 
acceptances and promissory notes,
 
and other money market
 
paper.
 
3 The classification of debt
 
issued measured at amortized cost into
short-term and long-term is based on original contractual maturity and therefore long-term debt also includes debt with a remaining time to maturity of less than one year. This
 
classification does not consider any early
redemption features.
 
4 Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of
 
this report for more information.
Off-balance sheet (30 September 2023
 
vs 30 June 2023)
Committed unconditionally revocable credit lines decreased by USD 9.6bn, mainly driven by a decrease in facilities
provided
 
to
 
corporate
 
and
 
institutional
 
clients.
 
Forward
 
starting
 
reverse
 
repurchase
 
agreements
 
increased
 
by
USD 5.4bn, mainly
 
in Group
 
Treasury,
 
reflecting fluctuations
 
in levels
 
of business
 
division activity
 
in short-dated
securities financing transactions.
Off-balance sheet
As of
% change from
USD bn
30.9.23
30.6.23
1
30.6.23
Guarantees
2,3
 
35.1
 
36.5
 
(4)
Loan commitments
2
 
91.5
 
92.8
 
(1)
Committed unconditionally revocable credit lines
 
159.0
 
168.6
 
(6)
Forward starting reverse repurchase agreements
 
10.4
 
5.0
 
110
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more
 
information.
 
2 Guarantees and loan commitments are shown net of sub-participations.
 
3 Includes guarantees measured at fair value through profit or loss.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and
 
balance sheet | Share information and earnings
 
per share
 
55
Share information and earnings per share
UBS Group AG
 
shares
 
are
 
listed
 
on
 
the
 
SIX
 
Swiss
 
Exchange
 
(SIX).
 
They
 
are
 
also
 
listed
 
on
 
the
 
New
 
York
 
Stock
Exchange (the NYSE) as global registered
 
shares. Each share has a
 
nominal value of USD 0.10 following a change
of the share
 
capital currency
 
of UBS Group AG
 
from the Swiss
 
franc to the
 
US dollar in
 
the second quarter
 
of 2023.
Shares issued were unchanged in the third quarter
 
of 2023 compared with the second quarter
 
of 2023.
We held 229m shares as of 30 September
 
2023, of which 121m shares had been
 
acquired under our 2022 share
repurchase program for cancellation
 
purposes. The remaining 108m
 
shares are primarily
 
held to hedge
 
our share
delivery obligations related to employee share-based
 
compensation and participation plans.
Treasury
 
shares
 
held
 
decreased by
 
5m
 
shares
 
in
 
the
 
third
 
quarter
 
of
 
2023.
 
This
 
mainly
 
reflected
 
the
 
delivery of
treasury shares under our share-based compensation
 
plans.
Shares acquired
 
under our
 
2022 program
 
totaled 121m
 
as of
 
30 September 2023
 
for a
 
total acquisition
 
cost of
USD 2,277m
 
(CHF 2,138m).
 
A
 
new,
 
two-year
 
share
 
repurchase
 
program
 
of
 
up
 
to
 
USD 6bn
 
was
 
approved
 
by
shareholders at the 2023 AGM.
 
However, we have temporarily
 
suspended repurchases under
 
the share repurchase
programs due to the acquisition of the Credit
 
Suisse Group.
›
Refer to the “Recent developments” section of this report for more information about the integration of Credit
Suisse
›
Refer to the “Equity, CET1 capital and returns” table in the “Group performance” section of this report
 
for more
information about equity attributable to shareholders and tangible equity attributable to shareholders
As of or for the quarter ended
As of or year-to-date
30.9.23
30.6.23
1
30.9.22
30.9.23
30.9.22
Basic and diluted earnings (USD m)
Net profit / (loss) attributable to shareholders for basic
 
EPS
 
(785)
 
28,992
 
1,733
 
29,235
 
5,977
Less: (profit) / loss on own equity derivative contracts
 
(1)
 
(4)
 
(1)
 
(2)
 
(4)
Net profit / (loss) attributable to shareholders for diluted
 
EPS
 
(786)
 
28,987
 
1,732
 
29,233
 
5,973
Weighted average shares outstanding
Weighted average shares outstanding for basic EPS
2
 
3,229,878,446
 
3,082,139,901
 
3,217,212,461
 
3,128,272,554
 
3,300,688,319
Effect of dilutive potential shares resulting from notional
 
employee shares, in-the-money
options and warrants outstanding
3
 
380,852
4
 
130,190,947
 
132,630,871
 
139,759,974
 
136,632,556
Weighted average shares outstanding for diluted EPS
 
3,230,259,298
 
3,212,330,848
 
3,349,843,332
 
3,268,032,528
 
3,437,320,875
Earnings per share (USD)
Basic
 
(0.24)
 
9.41
 
0.54
 
9.35
 
1.81
Diluted
 
(0.24)
 
9.02
 
0.52
 
8.95
 
1.74
Shares outstanding and potentially dilutive instruments
Shares issued
 
3,462,087,722
 
3,462,087,722
 
3,524,635,722
 
3,462,087,722
 
3,524,635,722
Treasury shares
5
 
228,822,625
 
234,314,998
 
342,282,123
 
228,822,625
 
342,282,123
of which: related to the 2021 share repurchase program
 
62,548,000
 
62,548,000
of which: related to the 2022 share repurchase program
 
120,506,008
 
120,506,008
 
157,608,950
 
120,506,008
 
157,608,950
Shares outstanding
 
3,233,265,097
 
3,227,772,724
 
3,182,353,599
 
3,233,265,097
 
3,182,353,599
Potentially dilutive instruments
6
 
160,925,793
4
 
7,790,755
 
7,284,942
 
8,518,394
 
6,281,940
Other key figures
Total book value per share (USD)
 
26.24
 
26.99
 
17.52
 
26.24
 
17.52
Tangible book value per share (USD)
 
23.94
 
24.64
 
15.57
 
23.94
 
15.57
Share price (USD)
7
 
24.77
 
20.20
 
14.67
 
24.77
 
14.67
Market capitalization (USD m)
8
 
85,768
 
69,932
 
51,694
 
85,768
 
51,694
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more
 
information.
 
2 The weighted average shares outstanding
 
for basic earnings per share (EPS) are calculated by taking the number of shares at the beginning of the period, adjusted by the number of
 
shares acquired or issued during
the period, multiplied by a time-weighted factor for the period outstanding. As a
 
result, balances are affected by the timing of acquisitions and issuances during the period.
 
3 The weighted average number of shares
for notional
 
employee awards
 
with performance
 
conditions reflects
 
all potentially
 
dilutive shares
 
that are
 
expected to
 
vest under
 
the terms
 
of the
 
awards.
 
4 Due
 
to the
 
net loss
 
in the
 
third quarter
 
of 2023,
148,423,317 weighted average potential
 
shares from unvested notional
 
share awards were not
 
included in the calculation
 
of diluted EPS as
 
they were not dilutive
 
for the quarter ended
 
30 September 2023.
 
Such
shares are only taken into account for
 
the diluted EPS calculation when their conversion
 
to ordinary shares would decrease earnings
 
per share or increase the loss per
 
share, in accordance with IAS 33,
 
Earnings per
Share.
 
5 Based on a settlement date view.
 
6 Reflects potential shares that could dilute basic EPS in the future, but were not dilutive for any of the periods presented. It mainly includes equity-based awards subject
to absolute and relative
 
performance conditions and
 
equity derivative contracts.
 
For the quarter
 
ended 30 September 2023
 
it also includes 148,423,317
 
weighted average potential
 
shares from unvested notional
share awards that were not included in the calculation of diluted EPS as they were not dilutive.
 
7 Represents the share price as listed on the SIX Swiss Exchange, translated to US dollars using the closing exchange
rate as of the
 
respective date.
 
8 The calculation of
 
market capitalization has been
 
amended in the second quarter
 
of 2023 to reflect
 
total shares issued multiplied by
 
the share price at the
 
end of the period. The
calculation was previously based on total shares outstanding multiplied by the share price at the end of the period. Market
 
capitalization has been increased by USD 5.0bn as of 30 September 2022 as a result.
Ticker symbols UBS Group AG
Security identification codes
Trading exchange
SIX / NYSE
Bloomberg
Reuters
ISIN
CH0244767585
SIX Swiss Exchange
UBSG
UBSG SW
UBSG.S
Valoren
24 476 758
New York Stock Exchange
UBS
UBS UN
UBS.N
CUSIP
CINS H42097 10 7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | UBS
 
Group AG interim consolidated financial
 
statements (unaudited)
 
57
UBS Group AG interim consolidated financial
statements (unaudited)
Income statement
For the quarter ended
Year-to-date
USD m
Note
30.9.23
30.6.23
1
30.9.22
30.9.23
30.9.22
Interest income from financial instruments measured at
 
amortized cost and fair value through
other comprehensive income
4
 
10,128
 
7,057
 
3,078
 
21,962
 
7,602
Interest expense from financial instruments measured at
 
amortized cost
4
 
(9,082)
 
(5,880)
 
(1,758)
 
(18,777)
 
(3,610)
Net interest income from financial instruments measured
 
at fair value through profit or loss
and other
4
 
1,061
 
530
 
277
 
2,017
 
1,040
Net interest income
4
 
2,107
 
1,707
 
1,596
 
5,202
 
5,032
Other net income from financial instruments measured
 
at fair value through profit or loss
 
3,212
 
2,517
 
1,796
 
8,410
 
5,641
Fee and commission income
5
 
6,683
 
5,635
 
4,957
 
17,371
 
16,018
Fee and commission expense
5
 
(613)
 
(507)
 
(476)
 
(1,566)
 
(1,410)
Net fee and commission income
5
 
6,071
 
5,128
 
4,481
 
15,804
 
14,608
Other income
 
305
 
188
 
363
 
563
 
1,254
Total revenues
 
11,695
 
9,540
 
8,236
 
29,979
 
26,534
Negative goodwill
2
 
28,925
 
0
 
28,925
 
0
Credit loss expense / (release)
8
 
306
 
623
 
(3)
 
967
 
22
Personnel expenses
6
 
7,571
 
5,651
 
4,216
 
17,842
 
13,559
General and administrative expenses
7
 
3,124
 
1,968
 
1,192
 
7,157
 
3,769
Depreciation, amortization and impairment of non-financial
 
assets
 
950
 
866
 
508
 
2,341
 
1,517
Operating expenses
 
11,644
 
8,486
 
5,916
 
27,340
 
18,845
Operating profit / (loss) before tax
 
(255)
 
29,356
 
2,323
 
30,597
 
7,667
Tax expense / (benefit)
 
526
 
361
 
580
 
1,346
 
1,662
Net profit / (loss)
 
(781)
 
28,995
 
1,742
 
29,251
 
6,005
Net profit / (loss) attributable to non-controlling interests
 
4
 
3
 
9
 
15
 
28
Net profit / (loss) attributable to shareholders
 
(785)
 
28,992
 
1,733
 
29,235
 
5,977
Earnings per share (USD)
Basic
 
(0.24)
 
9.41
 
0.54
 
9.35
 
1.81
Diluted
 
(0.24)
 
9.02
 
0.52
 
8.95
 
1.74
1 Comparative-period information has been revised. Refer to Note 2 for more information.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | UBS
 
Group AG interim consolidated financial
 
statements (unaudited)
 
58
 
Statement of comprehensive income
For the quarter ended
Year-to-date
USD m
30.9.23
30.6.23
1
30.9.22
30.9.23
30.9.22
Comprehensive income attributable to shareholders
2
Net profit / (loss)
 
(785)
 
28,992
 
1,733
 
29,235
 
5,977
Other comprehensive income that may be reclassified to the income
 
statement
Foreign currency translation
Foreign currency translation movements related to net assets of foreign operations, before tax
 
(1,425)
 
754
 
(1,135)
 
(435)
 
(2,647)
Effective portion of changes in fair value of hedging instruments
 
designated as net investment hedges, before tax
 
806
 
(379)
 
475
 
300
 
1,135
Foreign currency translation differences on foreign operations reclassified to the
 
income statement
 
2
 
(3)
 
24
 
(1)
 
32
Effective portion of changes in fair value of hedging instruments
 
designated as net investment hedges reclassified
 
to
the income statement
 
0
 
(1)
 
(3)
 
(3)
 
(7)
Income tax relating to foreign currency translations, including the effect of
 
net investment hedges
 
4
 
(4)
 
6
 
(2)
 
14
Subtotal foreign currency translation, net of tax
 
(615)
 
368
 
(633)
 
(141)
 
(1,473)
Financial assets measured at fair value through other comprehensive income
Net unrealized gains / (losses), before tax
 
(2)
 
0
 
(3)
 
0
 
(445)
Net realized (gains) / losses reclassified to the income statement
 
from equity
 
0
 
0
 
0
 
1
 
0
Reclassification of financial assets to Other financial assets measured
 
at amortized cost
3
 
449
Income tax relating to net unrealized gains / (losses)
 
0
 
0
 
0
 
0
 
(3)
Subtotal financial assets measured at fair value through other comprehensive
 
income, net of tax
 
(2)
 
0
 
(3)
 
0
 
0
Cash flow hedges of interest rate risk
Effective portion of changes in fair value of derivative instruments designated
 
as cash flow hedges, before tax
 
(1,198)
 
(1,314)
 
(2,053)
 
(2,126)
 
(5,816)
Net (gains) / losses reclassified to the income statement from
 
equity
 
580
 
410
 
16
 
1,339
 
(370)
Income tax relating to cash flow hedges
 
92
 
130
 
373
 
91
 
1,168
Subtotal cash flow hedges, net of tax
 
(526)
 
(775)
 
(1,664)
 
(695)
 
(5,018)
Cost of hedging
Cost of hedging, before tax
 
(1)
 
11
 
17
 
5
 
114
Income tax relating to cost of hedging
 
0
 
0
 
(3)
 
0
 
(3)
Subtotal cost of hedging, net of tax
 
(1)
 
11
 
14
 
5
 
111
Total other comprehensive income that may be reclassified to the income statement, net
 
of tax
 
(1,144)
 
(397)
 
(2,286)
 
(832)
 
(6,380)
Other comprehensive income that will not be reclassified to the income
 
statement
Defined benefit plans
Gains / (losses) on defined benefit plans, before tax
 
(62)
 
(17)
 
136
 
(54)
 
299
Income tax relating to defined benefit plans
 
(7)
 
(35)
 
42
 
(36)
 
33
Subtotal defined benefit plans, net of tax
 
(69)
 
(53)
 
177
 
(91)
 
332
Own credit on financial liabilities designated at fair value
Gains / (losses) from own credit on financial liabilities designated
 
at fair value, before tax
 
(715)
 
(473)
 
452
 
(1,119)
 
1,171
Income tax relating to own credit on financial liabilities designated
 
at fair value
 
29
 
60
 
(116)
 
72
 
(142)
Subtotal own credit on financial liabilities designated at
 
fair value, net of tax
 
(686)
 
(413)
 
335
 
(1,047)
 
1,029
Total other comprehensive income that will not be reclassified to the income statement,
 
net of tax
 
(755)
 
(466)
 
513
 
(1,138)
 
1,361
Total other comprehensive income
 
(1,899)
 
(862)
 
(1,773)
 
(1,970)
 
(5,018)
Total comprehensive income attributable to shareholders
 
(2,684)
 
28,130
 
(40)
 
27,266
 
959
Comprehensive income attributable to non-controlling
 
interests
Net profit / (loss)
 
4
 
3
 
9
 
15
 
28
Total other comprehensive income that will not be reclassified to the income statement,
 
net of tax
 
(12)
 
(5)
 
(17)
 
(12)
 
(27)
Total comprehensive income attributable to non-controlling interests
 
(8)
 
(2)
 
(8)
 
4
 
1
Total comprehensive income
Net profit / (loss)
 
(781)
 
28,995
 
1,742
 
29,251
 
6,005
Other comprehensive income
 
(1,911)
 
(867)
 
(1,791)
 
(1,981)
 
(5,045)
of which: other comprehensive income that may be reclassified
 
to the income statement
 
(1,144)
 
(397)
 
(2,286)
 
(832)
 
(6,380)
of which: other comprehensive income that will not be reclassified
 
to the income statement
 
(767)
 
(470)
 
496
 
(1,150)
 
1,334
Total comprehensive income
 
(2,692)
 
28,128
 
(48)
 
27,269
 
960
1 Comparative-period information has been revised.
 
Refer to Note 2 for more information.
 
2 Refer to the “Group performance” section
 
of this report for more information.
 
3 Effective 1 April 2022, a portfolio
of assets previously classified as Financial assets measured at fair value through other comprehensive income was reclassified to Other financial assets measured at
 
amortized cost. As a result, the related cumulative
fair value
 
losses of
 
USD 449m
 
before tax
 
and USD
 
333m after
 
tax, previously
 
recognized in
 
Other comprehensive
 
income, have
 
been removed
 
from equity
 
and adjusted
 
against the
 
value of
 
the assets
 
at the
reclassification date.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | UBS
 
Group AG interim consolidated financial
 
statements (unaudited)
 
59
 
Balance sheet
USD m
Note
30.9.23
30.6.23
1
31.12.22
Assets
Cash and balances at central banks
 
262,383
 
261,587
 
169,445
Amounts due from banks
 
21,334
 
24,392
 
14,792
Receivables from securities financing transactions measured at amortized
 
cost
 
84,872
 
86,538
 
67,814
Cash collateral receivables on derivative instruments
 
10
 
55,606
 
54,314
 
35,032
Loans and advances to customers
 
8
 
624,885
 
645,785
 
387,220
Other financial assets measured at amortized cost
 
11
 
64,158
 
64,916
 
53,264
Total financial assets measured at amortized cost
 
1,113,238
 
1,137,531
 
727,568
Financial assets at fair value held for trading
 
9
 
142,888
 
157,171
 
107,866
of which: assets pledged as collateral that may be sold or repledged
 
by counterparties
 
48,770
 
54,165
 
36,742
Derivative financial instruments
9, 10
 
194,661
 
185,949
 
150,108
Brokerage receivables
 
9
 
24,611
 
21,537
 
17,576
Financial assets at fair value not held for trading
 
9
 
112,256
 
118,605
 
59,796
Total financial assets measured at fair value through profit or loss
 
474,415
 
483,261
 
335,347
Financial assets measured at fair value through other comprehensive income
 
9
 
2,213
 
2,217
 
2,239
Investments in associates
 
2,715
 
2,691
 
1,101
Property, equipment and software
 
17,919
 
18,325
 
12,288
Goodwill and intangible assets
 
7,462
 
7,569
 
6,267
Deferred tax assets
 
10,469
 
10,342
 
9,389
Other non-financial assets
 
11
 
16,091
 
16,919
 
10,166
Total assets
 
1,644,522
 
1,678,856
 
1,104,364
of which: Credit Suisse
2
 
559,424
 
598,379
Liabilities
Amounts due to banks
 
68,461
 
99,167
 
11,596
Payables from securities financing transactions measured at amortized cost
 
14,954
 
22,297
 
4,202
Cash collateral payables on derivative instruments
 
10
 
41,546
 
41,416
 
36,436
Customer deposits
 
733,071
 
712,546
 
525,051
Debt issued measured at amortized cost
 
13
 
224,025
 
230,857
 
114,621
Other financial liabilities measured at amortized cost
 
11
 
19,211
 
19,403
 
9,575
Total financial liabilities measured at amortized cost
 
1,101,268
 
1,125,687
 
701,481
Financial liabilities at fair value held for trading
 
9
 
34,989
 
40,364
 
29,515
Derivative financial instruments
9, 10
 
198,019
 
195,182
 
154,906
Brokerage payables designated at fair value
 
9
 
41,313
 
43,852
 
45,085
Debt issued designated at fair value
9, 12
 
126,135
 
125,050
 
73,638
Other financial liabilities designated at fair value
9, 11
 
33,284
 
36,122
 
30,237
Total financial liabilities measured at fair value through profit or loss
 
433,739
 
440,569
 
333,381
Provisions and contingent liabilities
 
15
 
11,515
 
12,951
 
3,243
Other non-financial liabilities
 
11
 
12,603
 
11,896
 
9,040
Total liabilities
 
1,559,125
 
1,591,104
 
1,047,146
of which: Credit Suisse
2
2
 
462,491
 
502,702
Equity
Share capital
 
346
 
346
 
304
Share premium
 
12,858
 
12,521
 
13,546
Treasury shares
 
(4,122)
 
(4,208)
 
(6,874)
Retained earnings
 
76,726
 
78,297
 
50,004
Other comprehensive income recognized directly in equity, net of tax
 
(953)
 
161
 
(103)
Equity attributable to shareholders
 
84,856
 
87,116
 
56,876
Equity attributable to non-controlling interests
 
542
 
636
 
342
Total equity
 
85,398
 
87,752
 
57,218
Total liabilities and equity
 
1,644,522
 
1,678,856
 
1,104,364
1 Comparative-period information has been revised. Refer to Note 2 for more information.
 
2 Excludes USD 55.7bn (30 June 2023: USD 52.9bn) of debt instruments previously issued by Credit Suisse Group AG
 
and
transferred to UBS Group AG as part of the acquisition of the Credit Suisse Group.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | UBS
 
Group AG interim consolidated financial
 
statements (unaudited)
 
60
 
Statement of changes in equity
USD m
Share
capital and
share
premium
Treasury
shares
Retained
earnings
OCI
recognized
directly in
equity,
net of tax
1
of which:
foreign
currency
translation
of which:
cash flow
hedges
Total equity
attributable to
shareholders
Balance as of 1 January 2023
2
 
13,850
 
(6,874)
 
50,004
 
(103)
 
4,128
 
(4,234)
 
56,876
Purchase price consideration, before consideration of share-based compensation
 
awards
3
 
619
 
2,928
 
3,547
Impact of share-based compensation awards
3
 
162
 
162
Impact of the settlement of pre-existing relationships
3
 
(61)
 
(61)
Acquisition of treasury shares
 
(2,353)
4
 
(2,353)
Delivery of treasury shares under share-based compensation
 
plans
 
(856)
 
946
 
91
Other disposal of treasury shares
 
6
 
177
4
 
182
Cancellation of treasury shares related to the 2021
 
share repurchase program
5
 
(561)
 
1,115
 
(554)
 
0
Share-based compensation expensed in the income statement
 
791
 
791
Tax (expense) / benefit
 
7
 
7
Dividends
 
(839)
6
 
(839)
6
 
(1,679)
Equity classified as obligation to purchase own shares
 
21
 
21
Translation effects recognized directly in retained earnings
 
18
 
(18)
 
(18)
 
0
Share of changes in retained earnings of associates and
 
joint ventures
 
(1)
 
(1)
New consolidations / (deconsolidations) and other increases
 
/ (decreases)
 
2
 
1
 
3
Total comprehensive income for the period
 
28,097
 
(832)
 
(141)
 
(695)
 
27,266
of which: net profit / (loss)
 
29,235
 
29,235
of which: OCI, net of tax
 
(1,138)
 
(832)
 
(141)
 
(695)
 
(1,970)
Balance as of 30 September 2023
2
 
13,204
 
(4,122)
 
76,726
 
(953)
 
3,987
 
(4,947)
 
84,856
Non-controlling interests as of 30 September 2023
 
542
7
Total equity as of 30 September 2023
 
85,398
Balance as of 1 January 2022
2
 
16,250
 
(4,675)
 
43,851
 
5,236
 
4,653
 
628
 
60,662
Acquisition of treasury shares
 
(4,944)
4
 
(4,944)
Delivery of treasury shares under share-based compensation
 
plans
 
(761)
 
857
 
96
Other disposal of treasury shares
 
(2)
 
124
4
 
123
Cancellation of treasury shares related to the 2021
 
share repurchase program
 
(1,520)
 
3,022
 
(1,502)
 
0
Share-based compensation expensed in the income statement
 
544
 
544
Tax (expense) / benefit
 
12
 
12
Dividends
 
(834)
6
 
(834)
6
 
(1,668)
Equity classified as obligation to purchase own shares
 
(31)
 
(31)
Translation effects recognized directly in retained earnings
 
(44)
 
44
 
44
 
0
Share of changes in retained earnings of associates and
 
joint ventures
 
0
 
0
New consolidations / (deconsolidations) and other increases
 
/ (decreases)
 
4
 
3
 
(3)
 
4
Total comprehensive income for the period
 
7,338
 
(6,380)
 
(1,473)
 
(5,018)
 
959
of which: net profit / (loss)
 
5,977
 
5,977
of which: OCI, net of tax
 
1,361
 
(6,380)
 
(1,473)
 
(5,018)
 
(5,018)
Balance as of 30 September 2022
2
 
13,663
 
(5,617)
 
48,813
 
(1,103)
 
3,180
 
(4,346)
 
55,756
Non-controlling interests as of 30 September 2022
 
330
Total equity as of 30 September 2022
 
56,087
1 Excludes other comprehensive income related to defined benefit plans and own credit that is recorded directly in Retained earnings.
 
2 Excludes non-controlling interests.
 
3 Refer to Note 2 for more information.
 
4 Includes treasury shares acquired and disposed of by
 
the Investment Bank in its capacity as
 
a market maker with regard to UBS shares and related derivatives, and to
 
hedge certain issued structured debt instruments.
These acquisitions and disposals are reported based on the sum of the net monthly movements.
 
5 Reflects the cancellation of 62,548,000 shares purchased under UBS’s 2021 share repurchase program as approved
by shareholders at the 2023 Annual General Meeting. Swiss tax law requires
 
Switzerland-domiciled companies with shares listed on a Swiss stock exchange
 
to reduce capital contribution reserves by at least 50% of
the total capital reduction amount
 
exceeding the nominal value
 
upon cancellation of the shares.
 
6 Reflects the payment of an
 
ordinary cash dividend of USD 0.55
 
per dividend-bearing share in April
 
2023 (2022:
USD 0.50 per dividend-bearing share
 
paid in April 2022).
 
Swiss tax law requires
 
Switzerland-domiciled companies with shares
 
listed on a Swiss
 
stock exchange to pay
 
no more than 50%
 
of dividends from capital
contribution reserves, with the remainder required to be paid from retained earnings.
 
7 Includes an increase of USD 285m in the second quarter of 2023 due to the acquisition of the Credit Suisse Group.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | UBS
 
Group AG interim consolidated financial
 
statements (unaudited)
 
61
 
Statement of cash flows
Year-to-date
USD m
30.9.23
30.9.22
Cash flow from / (used in) operating activities
Net profit / (loss)
 
29,251
 
6,005
Non-cash items included in net profit and other adjustments:
Depreciation, amortization and impairment of non-financial
 
assets
 
2,341
 
1,517
Credit loss expense / (release)
 
967
 
22
Share of net (profit) / loss of associates and joint ventures
 
and impairment related to associates
 
(118)
 
(31)
Deferred tax expense / (benefit)
 
(152)
 
563
Net loss / (gain) from investing activities
 
26
 
(889)
Net loss / (gain) from financing activities
 
(1,921)
 
(22,611)
Negative goodwill
1
 
(28,925)
Other net adjustments
 
3,496
 
14,766
Net change in operating assets and liabilities:
2
Amounts due from banks and amounts due to banks
 
4,813
 
1,808
Securities financing transactions measured at amortized cost
 
6,307
 
5,347
Cash collateral on derivative instruments
 
(5,826)
 
(5,313)
Loans and advances to customers and customer deposits
 
43,632
 
(15,899)
Financial assets and liabilities at fair value held for trading and derivative financial
 
instruments
 
(8,521)
 
22,996
Brokerage receivables and payables
 
(10,517)
 
3,243
Financial assets at fair value not held for trading and other financial assets
 
and liabilities
 
13,185
 
4,448
Provisions and other non-financial assets and liabilities
 
1,637
 
313
Income taxes paid, net of refunds
 
(1,544)
 
(1,284)
Net cash flow from / (used in) operating activities
 
48,131
 
15,000
Cash flow from / (used in) investing activities
Cash and cash equivalents acquired on acquisition of Credit Suisse
1
 
108,510
Purchase of subsidiaries, associates and intangible assets
 
(1)
 
0
Disposal of subsidiaries, associates and intangible assets
 
47
 
1,682
Purchase of property, equipment and software
 
(1,227)
 
(1,181)
Disposal of property, equipment and software
 
63
 
9
Net (purchase) / redemption of financial assets measured
 
at fair value through other comprehensive income
 
25
 
(724)
Purchase of debt securities measured at amortized cost
 
(11,632)
 
(16,881)
Disposal and redemption of debt securities measured at amortized
 
cost
 
7,227
 
8,653
Net cash flow from / (used in) investing activities
 
103,013
 
(8,443)
Cash flow from / (used in) financing activities
Repayment of Swiss National Bank funding
 
(56,516)
Net issuance (repayment) of short-term debt measured at amortized
 
cost
 
3,084
 
(16,249)
Net movements in treasury shares and own equity derivative
 
activity
 
(2,100)
 
(4,745)
Distributions paid on UBS shares
 
(1,679)
 
(1,668)
Issuance of debt designated at fair value and long-term debt measured
 
at amortized cost
 
88,028
 
68,389
Repayment of debt designated at fair value and long-term debt measured
 
at amortized cost
 
(82,904)
 
(54,184)
Net cash flows from other financing activities
 
(481)
 
(481)
Net cash flow from / (used in) financing activities
 
(52,568)
 
(8,939)
Total cash flow
Cash and cash equivalents at the beginning of the period
 
195,321
 
207,875
Net cash flow from / (used in) operating, investing and financing
 
activities
 
98,576
 
(2,382)
Effects of exchange rate differences on cash and cash equivalents
 
(1,497)
 
(15,788)
Cash and cash equivalents at the end of the period
3
 
292,400
 
189,707
of which: cash and balances at central banks
4
 
262,304
 
166,306
of which: amounts due from banks
4
 
18,961
 
13,469
of which: money market paper
4,5
 
11,135
 
9,932
Additional information
Net cash flow from / (used in) operating activities includes:
Interest received in cash
 
30,680
 
10,189
Interest paid in cash
 
23,541
 
5,028
Dividends on equity investments, investment funds and associates
 
received in cash
6
 
1,867
 
1,556
1 Refer to Note 2 for more information about
 
the acquisition of the Credit Suisse Group.
 
2 Movements in this section exclude foreign
 
currency translation and foreign exchange effects,
 
which are presented within
the Other net
 
adjustments line.
 
3 USD 6,194m
 
and USD 3,855m
 
of cash and
 
cash equivalents (mainly
 
reflected in Amounts
 
due from banks)
 
were restricted as
 
of 30 September 2023
 
and 30 September
 
2022,
respectively. Refer to
 
“Note 22 Restricted and
 
transferred financial assets” in
 
the “Consolidated financial
 
statements” section of the
 
Annual Report 2022
 
for more information. Cash
 
and cash equivalents
 
as of 30
September 2023 includes USD 109,098m related to Credit Suisse.
 
4 Includes only balances with an original maturity of three months
 
or less.
 
5 Money market paper is included on the balance sheet under Financial
assets at fair value
 
not held for trading
 
(30 September 2023: USD
 
10,158m; 30 September 2022:
 
USD 3,898m), Other financial
 
assets measured at amortized
 
cost (30 September 2023:
 
USD 393m; 30 September
2022: USD 5,943m), and Financial assets at fair value held for trading (30 September 2023: USD 583m; 30 September 2022: USD 91m).
 
6 Includes dividends received from associates reported within Net cash flow
from / (used in) investing activities.
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
62
Notes to the UBS Group AG interim consolidated
financial statements (unaudited)
Note 1
 
Basis of accounting
Basis of preparation
The consolidated
 
financial statements
 
(the financial
 
statements) of
 
UBS Group AG and
 
its subsidiaries
 
(together,
UBS or the Group) are prepared in accordance with International
 
Financial Reporting Standards (IFRS), as issued by
the International Accounting Standards
 
Board (the IASB),
 
and are presented
 
in US dollars.
 
These interim financial
statements are prepared in accordance with
 
IAS 34,
Interim Financial Reporting
.
In preparing
 
these interim financial
 
statements, the same
 
accounting policies and
 
methods of
 
computation have
been applied as in the
 
UBS Group AG consolidated annual
 
financial statements for
 
the period ended 31 December
2022, except for the changes described in this
 
Note and Note 2, which set out
 
the accounting for the acquisition
of the
 
Credit Suisse
 
Group. These
 
interim financial
 
statements are
 
unaudited and
 
should be
 
read in
 
conjunction
with UBS Group AG’s
 
audited consolidated
 
financial statements
 
in the Annual
 
Report 2022 and
 
the “Management
report”
 
sections of
 
this
 
report, including
 
the disclosures
 
in
 
under
 
“Integration of
 
Credit
 
Suisse”
 
in
 
the
 
“Recent
developments” section of
 
this report. In
 
the opinion of
 
management, all necessary adjustments
 
have been made
for a fair presentation of the Group’s financial
 
position, results of operations and
 
cash flows.
Preparation of
 
these interim financial
 
statements requires management
 
to make
 
estimates and
 
assumptions that
affect
 
the
 
reported
 
amounts
 
of
 
assets,
 
liabilities,
 
income,
 
expenses
 
and
 
disclosures
 
of
 
contingent
 
assets
 
and
liabilities. These estimates
 
and assumptions are
 
based on the
 
best available information.
 
Actual results in
 
the future
could differ
 
from such
 
estimates and
 
differences may
 
be material
 
to the
 
financial statements.
 
Revisions to
 
estimates,
based on regular
 
reviews, are recognized
 
in the period
 
in which they
 
occur. For more
 
information about areas of
estimation uncertainty that are considered
 
to require critical judgment, refer to this
 
Note and Note 2 in this report,
as well as “Note
 
1a Material accounting
 
policies” in the
 
“Consolidated financial
 
statements” section of
 
the Annual
Report 2022.
IFRS 17,
Insurance Contracts
Effective
 
from
 
1 January
 
2023,
 
UBS
 
has
 
adopted
 
IFRS
 
17,
Insurance
 
Contracts
,
 
which
 
sets
 
out
 
the
 
accounting
requirements
 
for
 
contractual
 
rights
 
and
 
obligations
 
that
 
arise
 
from
 
insurance
 
contracts
 
issued
 
and
 
reinsurance
contracts held. The adoption has had no material
 
effect on the Group’s financial statements.
Amendments to IAS 12
, Income Taxes
In May
 
2023, the
 
IASB issued
 
amendments to
 
IAS 12,
Income Taxes
, whereby,
 
under an
 
exception, deferred
 
tax
assets (DTAs)
 
and deferred
 
tax liabilities
 
(DTLs) will
 
not be
 
recognized in
 
respect of
 
top-up tax
 
on income
 
under
Global Anti-Base Erosion
 
Rules that is
 
imposed under tax
 
law that is enacted
 
or substantively enacted
 
to implement
the
 
Pillar Two
 
model
 
rules
 
published
 
by
 
the
 
Organisation
 
for
 
Economic
 
Co-operation
 
and
 
Development.
 
This
exception applies
 
immediately upon
 
the issuance
 
of the
 
amendments and
 
it is,
 
therefore, potentially
 
relevant to
these financial statements and subsequent financial statements. Although countries are starting to implement the
rules, the Group did
 
not have any DTAs
 
or DTLs on 30 September
 
2023 that had not
 
been recognized as a
 
result
of the application of this exception. The exception is expected to be removed by the IASB in due course, although
the timing of
 
that has not
 
been specified. The
 
amendments also
 
introduced new
 
disclosure requirements
 
in relation
to top-up tax, which will first apply to the
 
Group’s financial statements for the year ended
 
31 December 2023.
Other amendments to IFRS
Effective
 
from
 
1 January
 
2023,
 
UBS
 
has
 
adopted
 
a
 
number
 
of
 
minor
 
amendments to
 
IFRS,
 
which
 
have
 
had
 
no
significant effect on the Group.
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
63
Note 1
 
Basis of accounting (continued)
Incremental accounting policies related to
 
the transactions and activities associated
 
with the
acquisition of the Credit Suisse Group
Business combinations
UBS has determined that
 
the acquisition of the
 
Credit Suisse Group constitutes
 
a business combination
 
under IFRS.
As per
 
“Note 1a
 
Material accounting policies,
 
item 1
 
Consolidation” in
 
the “Consolidated financial
 
statements”
section of the Annual Report 2022, business
 
combinations are accounted for using the acquisition method.
 
Under
this method, any excess of the acquisition-date amounts of the identifiable
 
net assets acquired over the fair value
of the consideration
 
transferred results in
 
a negative goodwill
 
that is recognized
 
in the income
 
statement on the
date of the acquisition, with
 
transaction costs expensed as
 
incurred.
 
As required by IFRS 3,
Business Combinations
,
provisional amounts of
 
identifiable assets acquired,
 
liabilities assumed and
 
purchase consideration determined as
of the
 
acquisition date
 
may be
 
subject to
 
adjustments within
 
a maximum
 
of one
 
year from
 
the acquisition
 
date
(referred to in this report as measurement period adjustments).
 
Allowances and provisions for expected credit
 
losses
The Group’s material accounting policies in respect of allowances and provisions for expected credit losses are set
out in “Note 1a Material accounting policies, item 2g Allowances
 
and provisions for expected credit losses” in the
“Consolidated financial statements” section of the Annual Report
 
2022. Financial instruments acquired through a
business combination
 
that are
 
not classified
 
by the
 
Group
 
at fair
 
value through
 
profit
 
or loss
 
are
 
subject to
 
the
IFRS 9 expected credit loss (ECL)
 
requirements. At the date of acquisition,
 
financial instruments within
 
the scope of
the ECL requirements that are determined to be credit impaired are treated as purchased credit-impaired financial
instruments,
 
with all
 
other financial
 
instruments that
 
are not
 
credit impaired
 
treated as
 
stage 1 financial
 
instruments
on
 
the basis
 
that there
 
has not
 
been
 
a
 
significant increase
 
in credit
 
risk
 
(an SICR)
 
since their
 
initial recognition.
Consistent with the requirements
 
of IFRS 3 and IFRS 9,
 
immediately after the application
 
of the acquisition method
to the
 
business combination,
 
financial instruments that
 
are not
 
credit impaired
 
are classified
 
as stage 1
 
financial
instruments and a maximum 12-month ECL
 
is recognized, resulting in
 
a carrying amount below their
 
acquisition-
date fair value.
 
Significant increase in credit risk
For the purpose
 
of the 30-days-past-due
 
backstop applied for
 
the determination of
 
an SICR for loans
 
that were not
30 days
 
past due
 
on the
 
date of
 
acquisition, days
 
past due
 
are determined
 
by counting
 
the number
 
of days
 
for
which the contractual payments have not
 
been received since the acquisition date.
 
Financial instruments with
 
counterparties on a
 
watch list as
 
of the
 
date of a
 
business combination are
 
treated as
stage 1, on the
 
basis that there
 
has not been
 
an SICR since
 
their initial recognition.
 
However, remaining on
 
a watch
list for more than
 
90 days since the
 
first reporting period
 
following the date
 
of a business combination
 
is treated as
an indication of a prolonged deterioration
 
of credit quality and therefore considered
 
to be an SICR trigger.
Default and credit impairment
For the purpose of the 90-days-past-due backstop applied for the determination
 
of whether default has occurred,
days past
 
due are
 
determined by
 
counting the
 
number of
 
days since
 
the earliest
 
elapsed due
 
date in
 
respect of
which material payments
 
of interest,
 
principal or
 
fees have not
 
been received,
 
even if
 
that date
 
was prior
 
to the
acquisition date.
Goodwill and other separately identifiable
 
intangible assets
 
The Group’s material accounting policies in respect of the
 
accounting of goodwill are set out in “Note 1a Material
accounting policies,
 
item
 
8
 
Goodwill” in
 
the “Consolidated
 
financial statements”
 
section
 
of the
 
Annual Report
2022.
 
Separately from
 
goodwill, UBS
 
recognizes identifiable
 
intangible assets
 
acquired in
 
a
 
business
 
combination that
were not previously recognized in the financial statements
 
of the acquiree. Amortization of these intangible assets
is recognized on a straight-line basis over their estimated useful life. These assets are tested for impairment at the
appropriate cash-generating unit level.
Negative
 
goodwill,
 
generally
 
determined
 
based
 
on
 
the
 
difference
 
between
 
the
 
provisional
 
fair
 
values
 
for
 
the
identifiable
 
assets
 
acquired
 
and
 
liabilities
 
assumed
 
and
 
consideration
 
transferred,
 
is
 
recognized
 
in
 
the
 
income
statement on the acquisition date.
›
Refer to Note 2 for more information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
64
Note 1
 
Basis of accounting (continued)
Contingent liabilities recognized in a business
 
combination
Contingent liabilities recognized in a
 
business combination are initially measured at
 
fair value. Subsequently,
 
they
are measured at
 
the amount that would be
 
recognized in accordance
 
with the requirements for
 
provisions as set
out in IAS 37,
Provisions, Contingent Liabilities and Contingent Assets
, floored at the
 
amount attributed on initial
recognition, until the contingency is resolved.
Currency translation rates
The
 
table
 
below
 
shows
 
the
 
rates
 
of
 
the
 
main
 
currencies
 
used
 
to
 
translate
 
the
 
financial
 
information
 
of
 
UBS’s
operations with a functional currency other
 
than the US dollar into US dollars.
 
Closing exchange rate
Average rate
1
As of
For the quarter ended
Year-to-date
30.9.23
30.6.23
31.12.22
30.9.22
30.9.23
30.6.23
30.9.22
30.9.23
30.9.22
1 CHF
 
1.09
 
1.12
 
1.08
 
1.01
 
1.12
 
1.11
 
1.03
 
1.11
 
1.05
1 EUR
 
1.06
 
1.09
 
1.07
 
0.98
 
1.08
 
1.09
 
0.99
 
1.08
 
1.05
1 GBP
 
1.22
 
1.27
 
1.21
 
1.12
 
1.26
 
1.27
 
1.16
 
1.25
 
1.24
100 JPY
 
0.67
 
0.69
 
0.76
 
0.69
 
0.69
 
0.71
 
0.72
 
0.71
 
0.78
1 Monthly income statement items of operations with a functional currency other than
 
the US dollar are translated into US dollars using month-end rates.
 
Disclosed average rates for a quarter represent an average of
three month-end rates, weighted according to the income and expense volumes of all operations of the Group with the same functional currency for each month. Accordingly, the weighted average rates for the second
and third quarter of 2023 and first nine
 
months of 2023 consider income and expenses
 
from Credit Suisse’s operations
 
generated since its acquisition by UBS.
 
Weighted average rates for individual
 
business divisions
may deviate from the weighted average rates for the Group.
Note 2
 
Accounting for the acquisition of the Credit
 
Suisse Group
The transaction
On 12 June
 
2023, UBS Group AG
 
acquired Credit
 
Suisse Group AG,
 
succeeding by
 
operation of
 
Swiss law
 
to all
assets and liabilities of Credit Suisse Group AG, and became the
 
direct or indirect shareholder of all of the
 
former
direct and indirect subsidiaries of Credit Suisse
 
Group AG (the Transaction).
The acquisition followed a
 
request from the Swiss
 
Federal Department of Finance,
 
the Swiss National Bank
 
and the
Swiss Financial
 
Market Supervisory
 
Authority (FINMA)
 
to both
 
firms to
 
duly consider
 
the Transaction
 
in order
 
to
restore necessary
 
confidence
 
in the
 
stability of
 
the Swiss
 
economy and
 
banking system
 
and to
 
serve the
 
best interests
of
 
the
 
shareholders
 
and
 
stakeholders
 
of
 
UBS
 
and
 
Credit
 
Suisse.
 
The
 
firms
 
subsequently
 
entered
 
into
 
a
 
merger
agreement on 19 March 2023.
Upon the completion of the Transaction, each outstanding, registered Credit Suisse Group AG share
 
converted to
the right
 
to receive,
 
subject to
 
the payment
 
of certain
 
fees to
 
the Credit
 
Suisse Depositary
 
in the
 
case of
 
Credit
Suisse American depositary
 
shares (ADS),
 
a merger
 
consideration consisting of
 
1/22.48 UBS Group AG shares.
 
In
aggregate, Credit Suisse
 
Group AG shareholders received 5.1%
 
of the
 
outstanding UBS Group AG shares on
 
the
acquisition date, with a purchase price of USD
 
3.7bn.
For further
 
information about
 
the acquisition
 
of the
 
Credit Suisse
 
Group, refer
 
to the
 
“Management report”
 
sections
of
 
this
 
report,
 
including
 
the
 
disclosures
 
in
 
under
 
“Integration
 
of
 
Credit
 
Suisse”
 
in
 
the
 
“Recent
 
developments”
section.
The accounting principles – conversion from
 
US GAAP to IFRS of Credit Suisse Group
 
and IFRS 3
purchase price allocation
 
As set out
 
in Note 1,
 
the acquisition of the
 
Credit Suisse Group
 
constitutes a business combination under
 
IFRS 3,
Business Combinations
, and is required to be accounted for
 
by applying the acquisition method of accounting.
As part
 
of the
 
acquisition method
 
of accounting,
 
the assets
 
and liabilities
 
of the
 
Credit Suisse
 
Group have
 
been
converted from US generally accepted accounting principles (GAAP)
 
to IFRS. The most material conversion impact
arose from the
 
different derivative
 
netting rules,
 
resulting in
 
an increase
 
in
Total assets
 
of USD 70bn,
 
with no
 
impact
on
Equity
. Other
 
conversion adjustments
 
arose from
 
the removal
 
of the
 
Swiss pension
 
surplus and
 
the different
methods used to calculate expected credit losses.
›
Refer to Note 8 for more information about the expected credit losses recognized as an additional measurement
adjustment following the acquisition date
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
65
Note 2
 
Accounting for the acquisition of the Credit
 
Suisse Group (continued)
Remeasurement of assets, liabilities and off-balance
 
sheet arrangements at acquisition
 
date as part of
the IFRS 3 purchase price allocation
Financial instruments
In addition, the financial assets and liabilities of
 
the Credit Suisse Group
 
have been remeasured to fair value
 
as of
the acquisition date, resulting
 
in the provisional fair values
 
disclosed below, with negative fair
 
value adjustments of
USD 14.7bn, including USD
 
4.3bn (USD 2.3bn provisionally reported
 
in the second quarter
 
of 2023) recognized on
financial instruments
 
that are classified
 
at fair value
 
through profit or
 
loss and fair
 
value adjustments
 
of USD 10.4bn
(USD 12.4bn provisionally
 
reported in
 
the second
 
quarter of
 
2023) recognized
 
on financial
 
instruments at
 
amortized
cost and off-balance sheet commitments and guarantees.
 
In particular, material fair value adjustments have been made regarding the Credit Suisse Group lending portfolio,
including mortgages and
 
corporate lending, to
 
bring the
 
financial instruments from
 
amortized cost to
 
fair value.
Fair value
 
adjustments
 
applied to
 
amortized-cost
 
financial
 
instruments
 
and lending
 
arrangements
 
that are
 
fair valued
through profit or loss will generally accrete to par over their
 
expected lives through
Interest income from financial
instruments measured at amortized
 
cost and fair value through other
 
comprehensive income
,
Fee and commission
income
 
and
Other net
 
income from
 
financial instruments
 
measured at
 
fair value
 
through profit
 
or loss
 
in the
 
income
statement if the instruments continue to be
 
held.
 
›
Refer to Note 9 for more information
Adjustments have also been made to other asset and liability categories, with new intangible assets of USD 0.9bn
and
 
additional
 
litigation
 
provisions
 
and
 
contingent
 
liabilities
 
of
 
USD 4.5bn
 
recognized
 
as
 
detailed
 
below.
Furthermore, Credit Suisse Group goodwill has been derecognized, the fair value of internally generated software
has been marked down considering
 
how other market participants would value
 
acquired software, and real estate
held and leased has been revalued.
 
With the acquisition
 
date of
 
12 June 2023,
 
for convenience
 
the Credit
 
Suisse Group
 
was consolidated
 
from 31 May
2023,
 
as
 
the
 
impact
 
of
 
transactions
 
and
 
activities
 
in
 
the
 
period
 
from
 
31 May
 
2023
 
to
 
12 June
 
2023
 
on
 
the
consolidated financial statements was
 
not material.
Intangible assets
Included in
Intangible assets
 
is a
 
fair value of
 
USD 0.9bn for core
 
deposits and customer
 
relationship intangibles,
which
 
were
 
recognized
 
as part
 
of
 
the
 
acquisition of
 
the
 
Credit
 
Suisse
 
Group.
 
These
 
assets
 
were
 
not
 
previously
recognized in
 
the financial
 
statements of
 
the Credit
 
Suisse Group.
 
The fair
 
value of
 
the core
 
deposits intangible
asset was determined using the
 
after-tax cost savings
 
method under the income approach.
 
After-tax cost
 
savings
were estimated by comparing the cost of
 
the existing deposits (including the
 
cost of maintaining them) to the
 
cost
of obtaining alternative funds from a
 
mix of diversified funding sources available to
 
market participants. The core
deposits intangible asset represents the present value
 
of the after-tax cost savings expected to be realized over
 
the
remaining useful life
 
of the deposits.
 
The fair value
 
of the customer
 
relationship intangible asset
 
was determined
using the
 
multi-period excess
 
earnings method
 
(an income-based
 
valuation methodology),
 
by discounting
 
estimated
after-tax
 
excess
 
earnings
 
attributable
 
to
 
existing
 
customer
 
relationships
 
over
 
their
 
remaining
 
useful
 
lives.
 
Both
intangible asset
 
valuations include
 
assumptions consistent
 
with how
 
a market
 
participant
 
would estimate
 
fair values,
such as
 
growth and
 
attrition rates
 
and projected
 
fee and
 
interest income,
 
as well
 
as related
 
costs to
 
service the
relationships and deposits, and discount rates.
 
Also included in
Intangible assets
 
are mortgage-servicing rights (MSRs) of USD 0.4bn, which represent the right
 
to
perform specified
 
mortgage-servicing activities
 
on behalf
 
of third
 
parties, generating
 
income through
 
servicing fees.
The MSRs were valued using a discounted cash
 
flow model.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
66
Note 2
 
Accounting for the acquisition of the Credit
 
Suisse Group (continued)
Additional provisions and contingent liabilities
Included
 
in
Provisions
 
and
 
contingent
 
liabilities
 
is
 
USD 4.5bn
 
for
 
additional
 
litigation
 
provisions
 
and
 
contingent
liabilities,
 
which
 
includes
 
USD 1.5bn
 
for
 
litigation
 
provisions,
 
in
 
addition
 
to
 
the
 
existing
 
USD 1.3bn
 
provision
previously recorded by the
 
Credit Suisse Group, and
 
USD 3bn contingent liabilities
 
for certain obligations
 
in respect
of litigation,
 
regulatory and
 
similar matters
 
identified in
 
the purchase
 
price allocation.
 
The timing
 
and actual
 
amount
of outflows
 
associated with
 
litigation matters
 
are
 
uncertain. UBS
 
continues to
 
assess the
 
development of
 
these
obligations and the amount and timing of potential outflows. In addition, UBS has also recognized USD 4.5bn for
fair value adjustments on acquired loan commitments and guarantees recognized under IFRS as a consequence
 
of
the acquisition, of which USD 2.3bn (USD 4.3bn provisionally
 
reported in the second quarter
 
of 2023) is included
in
Provisions and contingent liabilities
 
and USD 2.2bn (USD 0.2bn
 
provisionally reported in
 
the second quarter
 
of
2023) is included as fair value loan commitments
 
within
Derivative financial instruments
 
liabilities.
›
Refer to “IFRS 3 measurement period adjustments for the acquisition of the Credit Suisse Group” in this Note
›
Refer to Note 15 for more information
 
Determination of the purchase price consideration
Measure
Credit Suisse Group ordinary shares outstanding, 12
 
June 2023
Number of shares (m)
 
3,949
Exchange ratio (1 to 22.48)
Ratio
0.04
UBS ordinary shares
Number of shares (m)
 
176
UBS ordinary share price
CHF
18.35
Purchase price consideration, before consideration of share-based compensation
 
awards
CHF m
 
3,223
Purchase price consideration, before consideration of share-based compensation awards
 
using exchange rate of 1.10
1
USD m
 
3,547
Impact of share-based compensation awards
2
USD m
 
162
Purchase price consideration, after consideration of share-based compensation awards
USD m
 
3,710
Settlement of pre-existing relationships
USD m
 
135
Provisional purchase price consideration, after consideration of pre-existing relationships
USD m
 
3,845
Net cash and cash equivalents acquired with the Credit Suisse
 
Group (included in cash flows from investing activities)
USD m
 
108,510
of which: cash and balances at central banks
USD m
 
93,012
of which: amounts due from banks
USD m
 
12,601
of which: money market paper
USD m
 
2,897
1 The purchase
 
price consideration is
 
reflected as a
 
reduction to treasury
 
shares of the
 
Group at their
 
weighted average cost,
 
with the difference
 
between the fair
 
value of UBS
 
shares on the
 
closing date and the
weighted average cost
 
of treasury shares
 
in the UBS
 
Group balance
 
sheet on closing
 
date taken
 
as an adjustment
 
to share premium.
 
As of 12
 
June 2023,
 
this resulted in
 
a total purchase
 
price of
 
approximately
USD 3.7bn, based on the UBS
 
Group AG share price
 
on 12 June 2023
 
and before considering the
 
effect of pre-existing relationships.
 
2 Represents the value
 
of share-based compensation awards
 
outstanding to
Credit Suisse employees attributable to the service period completed on the date of acquisition.
Determination of negative goodwill
The
 
acquisition
 
of
 
the
 
Credit
 
Suisse
 
Group
 
on
 
12 June
 
2023
 
resulted
 
in
 
provisional
 
negative
 
goodwill
 
of
USD 28.9bn. The
 
negative goodwill
 
represents
 
the difference
 
between the
 
fair values
 
for the
 
identifiable assets
acquired
 
and liabilities
 
assumed, except
 
for amounts
 
related
 
to leases
 
and employee
 
benefits, which
 
have been
determined by
 
applying the
 
requirements in
 
IFRS 16 and
 
IAS 19, respectively,
 
and consideration
 
transferred. The
negative
 
goodwill
 
has
 
been
 
recognized
 
as
 
of
 
the
 
acquisition
 
date
 
in
 
the
 
income
 
statement
 
on
 
a
 
separate
 
line,
Negative goodwill,
 
following the
 
requirements in
 
IFRS 3. The
 
pre-tax gain
 
arising from
 
negative goodwill
 
on the
acquisition of the Credit Suisse Group did not result in any tax
 
expense.
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
67
Note 2
 
Accounting for the acquisition of the Credit
 
Suisse Group (continued)
IFRS 3
 
measurement period
 
adjustments in
 
the third
 
quarter of
 
2023 for
 
the acquisition
 
of the
 
Credit
Suisse Group
The
 
acquisition
 
of
 
Credit
 
Suisse AG
 
was
 
made
 
without
 
the
 
ordinary
 
due
 
diligence
 
procedures
 
and
 
outside
 
the
conventional time
 
frame for
 
an acquisition
 
of this
 
scale and
 
nature. As
 
such, complete
 
information about
 
all relevant
facts and circumstances
 
of the
 
acquisition date
 
were not
 
practically available to
 
UBS at
 
the time
 
when the
 
initial
acquisition accounting
 
was applied
 
for the
 
purpose of
 
the UBS
 
Group second
 
quarter 2023
 
report, with
 
the amounts
that
 
form
 
part
 
of
 
the
 
business
 
combination
 
accounting
 
therefore
 
considered
 
provisional
 
and
 
subject
 
to
 
further
measurement period
 
adjustments if
 
new information
 
about facts
 
and circumstances
 
existing on
 
the date
 
of the
acquisition is obtained within one year from
 
the acquisition date.
IFRS 9 reclassification of
 
certain loans and off-balance
 
sheet loan commitments
 
held by the newly
 
established Non-
core and Legacy business division to measured
 
at fair value through profit or loss
 
In the
 
third quarter
 
of 2023,
 
the management
 
of UBS
 
determined that
 
it intended
 
to sell
 
certain loans
 
and off-
balance sheet
 
loan commitments
 
held by the
 
newly created
 
Non-core and Legacy
 
business division.
 
Decisions about
whether to
 
hold loans
 
to collect
 
contractual cash
 
flows or
 
to sell
 
them affect
 
the business
 
model for
 
managing
certain financial assets
 
and, consequently,
 
their classification and
 
measurement in accordance
 
with IFRS 9. These
measurement
 
period
 
adjustments
 
reflect
 
facts
 
and
 
circumstances
 
as
 
of
 
the
 
acquisition
 
date
 
that
 
have
 
been
determined
 
subsequently,
 
considering
 
the
 
time
 
needed
 
to
 
assess
 
the
 
risks,
 
valuations
 
and
 
ability
 
to
 
sell
 
certain
financial assets.
 
As a
 
consequence, the
 
classification and
 
measurement adjustments
 
are accounted
 
for under
 
IFRS 3,
with previously reported financial information revised as of
 
the acquisition date.
The application
 
of measurement
 
period adjustments
 
to the
 
accounting for
 
the acquisition
 
of the
 
Credit Suisse
 
Group
resulted in
 
USD 6bn of
 
loans and
 
advances to
 
customers previously
 
reported in
 
the UBS
 
Group second
 
quarter 2023
report as accounted for on an amortized-cost
 
basis to be reclassified to financial
 
assets measured at fair value held
for trading,
 
and loan
 
commitments with
 
a notional
 
value of
 
USD 27.5bn and
 
a corresponding
 
fair value
 
of USD 2bn,
not measured at fair value, to be reclassified to derivative loan
 
commitments measured at fair value through profit
or loss. As a consequence of the classification and
 
measurement adjustments, USD 117m stage 1 and 2 expected
credit losses have
 
been reversed from
 
the income statement
 
and, accordingly, a
 
USD 117m increase in
 
net profit
has been recognized
 
in the second
 
quarter of 2023.
 
The measurement
 
period adjustments
 
had no further
 
effect on
the net assets as of the acquisition date and
 
no impact on provisional negative
 
goodwill.
Effect of measurement
 
period adjustments on
 
the acquisition date
 
balance sheet made
 
in the third
 
quarter of 2023
The table below sets out the identifiable net assets attributable to the acquisition of the Credit Suisse Group as of
the acquisition date and includes the
 
effects of measurement period adjustments on
 
the acquisition date balance
sheet, made in the third quarter 2023, detailed above.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
68
Note 2
 
Accounting for the acquisition of the Credit
 
Suisse Group (continued)
USD m
Purchase price consideration, after consideration of share-based compensation awards
 
3,710
Credit Suisse Group net identifiable assets on the acquisition
 
date
Assets
As previously
reported
Measurement period
adjustment
Revised
Cash and balances at central banks
 
93,012
 
93,012
Amounts due from banks
 
13,590
 
13,590
Receivables from securities financing transactions measured at amortized
 
cost
 
26,194
 
26,194
Cash collateral receivables on derivative instruments
 
20,878
 
20,878
Loans and advances to customers
 
261,839
 
(6,292)
 
255,547
Other financial assets measured at amortized cost
 
13,440
 
(12)
 
13,428
Total financial assets measured at amortized cost
1
 
428,954
 
(6,304)
 
422,650
Financial assets at fair value held for trading
 
35,046
 
6,304
 
41,350
Derivative financial instruments
 
62,162
 
62,162
Brokerage receivables
 
366
 
366
Financial assets at fair value not held for trading
 
61,305
 
61,305
Total financial assets measured at fair value through profit or loss
 
158,879
 
6,304
 
165,183
Financial assets measured at fair value through other comprehensive income
1
 
0
 
0
Investments in associates
 
1,657
 
1,657
Property, equipment and software
 
6,055
 
6,055
Intangible assets
 
1,287
 
1,287
Deferred tax assets
 
942
 
942
Other non-financial assets
 
6,892
 
6,892
Total assets
 
604,667
 
604,667
Liabilities
Amounts due to banks
 
107,617
 
107,617
Payables from securities financing transactions measured at amortized cost
 
11,911
 
11,911
Cash collateral payables on derivative instruments
 
10,939
 
10,939
Customer deposits
 
183,119
 
183,119
Debt issued measured at amortized cost
 
110,491
 
110,491
Other financial liabilities measured at amortized cost
 
7,992
 
7,992
Total financial liabilities measured at amortized cost
 
432,070
 
432,070
Financial liabilities at fair value held for trading
 
5,711
 
5,711
Derivative financial instruments
 
66,091
 
2,038
 
68,129
Brokerage payables designated at fair value
 
316
 
316
Debt issued designated at fair value
 
44,909
 
44,909
Other financial liabilities designated at fair value
 
7,574
 
7,574
Total financial liabilities measured at fair value through profit or loss
 
124,601
 
2,038
 
126,639
Provisions and contingent liabilities
 
11,052
 
(1,982)
 
9,070
Other non-financial liabilities
 
3,888
 
(56)
 
3,832
Total liabilities
 
571,611
 
571,611
Non-controlling interests
 
(285)
 
(285)
Fair value of net assets acquired
 
32,771
 
32,771
Settlement of pre-existing relationships
 
135
 
135
Provisional negative goodwill resulting from the acquisition
 
28,925
 
28,925
1 Refer to Note 8 for information about credit quality of financial assets, including purchased credit-impaired
 
positions.
The tables below set out the consequential impact of the measurement period adjustments detailed above on the
previously reported income statement for the quarter ended 30 June 2023, the balance sheet as
 
of 30 June 2023
and the statement
 
of cash flows for
 
the six months ended
 
30 June 2023, as
 
well as the off-balance
 
sheet effects
 
as
of 30 June 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
69
Note 2
 
Accounting for the acquisition of the Credit
 
Suisse Group (continued)
Effect of the measurement period adjustments on the income statement for the quarter ended 30 June 2023
For the quarter ended 30 June 2023
USD m
As previously
reported
Measurement
period adjustment
Revised
Net interest income
 
1,713
 
(7)
 
1,707
Other net income from financial instruments measured
 
at fair value through profit or loss
 
2,463
 
55
 
2,517
Net fee and commission income
 
5,175
 
(48)
 
5,128
Other income
 
188
 
188
Total revenues
 
9,540
 
9,540
Negative goodwill
 
28,925
 
28,925
Credit loss expense / (release)
 
740
 
(117)
 
623
Operating expenses
 
8,486
 
8,486
Operating profit / (loss) before tax
 
29,239
 
117
 
29,356
Tax expense / (benefit)
 
361
 
361
Net profit / (loss)
 
28,878
 
117
 
28,995
Net profit / (loss) attributable to non-controlling interests
 
3
 
3
Net profit / (loss) attributable to shareholders
 
28,875
 
117
 
28,992
Effect of the measurement period adjustments on the balance sheet as of 30 June 2023
USD m
As of 30 June 2023
Assets
As previously
reported
Measurement
period adjustment
Revised
Total financial assets measured at amortized cost
 
1,143,528
 
(5,997)
 
1,137,531
of which: Loans and advances to customers
 
651,770
 
(5,985)
 
645,785
of which: Other financial assets measured at amortized cost
 
64,928
 
(12)
 
64,916
Total financial assets measured at fair value through profit or loss
 
477,188
 
6,073
 
483,261
of which: Financial assets at fair value held for trading
 
151,098
 
6,073
 
157,171
Financial assets measured at fair value through other comprehensive income
 
2,217
 
2,217
Non-financial assets
 
55,846
 
55,846
Total assets
 
1,678,780
 
76
 
1,678,856
Liabilities
Total financial liabilities measured at amortized cost
 
1,125,687
 
1,125,687
Total financial liabilities measured at fair value through profit or loss
 
438,534
 
2,035
 
440,569
of which: Derivative financial instruments
 
193,147
 
2,035
1
 
195,182
Provisions and contingent liabilities
 
14,929
 
(1,978)
 
12,951
Other non-financial liabilities
 
11,994
 
(98)
 
11,896
Total liabilities
 
1,591,145
 
(41)
 
1,591,104
Equity
Equity attributable to shareholders
 
86,999
 
117
 
87,116
of which: Retained earnings
 
78,180
 
117
 
78,297
Total equity
 
87,635
 
117
 
87,752
Total liabilities and equity
 
1,678,780
 
76
 
1,678,856
1 Represents the fair value of loan commitments with a notional amount of USD 27.5bn reclassified from loan commitments not measured at
 
fair value to derivative loan commitments.
Off-balance sheet effect of the measurement period adjustments as of 30 June 2023
As of 30 June 2023
USD bn
As previously
reported
Measurement
period adjustment
Revised
Guarantees
 
36.7
 
(0.2)
 
36.5
Loan commitments
 
120.3
 
(27.5)
1
 
92.8
Committed unconditionally revocable credit lines
 
168.6
 
168.6
Forward starting reverse repurchase agreements
 
5.0
 
5.0
1 Represents the notional amount of loan commitments reclassified from loan commitments not measured at fair value to derivative loan commitments,
 
with a fair value as of 30 June 2023 of USD 2.0bn.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
70
Note 2
 
Accounting for the acquisition of the Credit
 
Suisse Group (continued)
Effect of the measurement period adjustments on the statement of cash flows for the six months ended 30 June 2023
For the six months ended 30 June 2023
USD m
As previously
reported
Measurement
period adjustment
Revised
Cash flow from / (used in) operating activities
Net profit / (loss)
 
29,915
 
117
 
30,032
Non-cash items included in net profit and other adjustments:
of which: Credit loss expense / (release)
778
 
(117)
661
Net cash flow from / (used in) operating activities
 
17,665
 
17,665
of which: Loans and advances to customers and customer deposits
 
1,772
(230)
 
1,542
of which: Financial assets and liabilities at fair value held for trading
 
and derivative
financial instruments
 
(7,278)
228
 
(7,050)
of which: Provisions and other non-financial assets and
 
liabilities
 
898
3
 
901
Net cash flow from / (used in) investing activities
 
104,869
 
104,869
Net cash flow from / (used in) financing activities
 
(25,056)
 
(25,056)
Total cash flow
Cash and cash equivalents at the beginning of the period
 
195,321
 
195,321
Net cash flow from / (used in) operating, investing and financing
 
activities
 
97,478
 
97,478
Effects of exchange rate differences on cash and cash equivalents
 
2,960
 
2,960
Cash and cash equivalents at the end of the period
 
295,759
 
295,759
Acquisition-related costs to effect the acquisition
 
UBS incurred certain acquisition-related costs to
 
effect the acquisition. These consisted primarily of
 
advisory,
 
legal
and consulting fees. These
 
costs were expensed as incurred. In
 
the first nine months
 
of 2023, a total of USD
 
0.2bn
(first
 
six
 
months of
 
2023: USD 0.2bn)
 
has
 
been included
 
in
General and
 
administrative expenses
 
in
 
the income
statement.
 
Early termination of loans and loan commitments
During the third quarter
 
of 2023, the Group
 
recognized gains on
 
early termination of
 
loans and loan
 
commitments
of
 
USD
 
0.1bn
 
and
 
USD
 
0.3bn,
 
respectively,
 
mainly
 
driven
 
by
 
natural
 
roll-off,
 
accelerated
 
by
 
actions
 
to
 
actively
unwind the portfolio in the Non-core and Legacy business
 
division.
Pro forma financial information
From
 
the
 
date
 
of
 
acquisition
 
until
 
30 September
 
2023,
 
the
 
Credit
 
Suisse
 
Group
 
contributed
 
USD 4.6bn
 
(until
30 June 2023: USD 1.2bn) of net revenues and an overall net loss of USD 2.9bn (until 30 June 2023: USD 1.1bn
1
)
to the net profit of the UBS
 
Group. For illustration purposes, the pro forma net revenues and net
 
loss for the UBS
Group in
 
the first
 
nine months
 
of 2023
 
if the
 
business combination
 
had taken
 
place on
 
1 January 2023
 
are estimated
as USD 35.7bn and
 
USD 1.6bn, respectively; for
 
the comparative six
 
months ended 30 June
 
2023, the respective
amounts were estimated at USD 24.0bn and USD 0.8bn.
2
 
This pro
 
forma information
 
is based
 
on the
 
actual nine-month
 
and six-month
 
results of
 
the consolidated
 
UBS Group,
as reported
 
(including the
 
Credit Suisse
 
US GAAP
 
results for
 
the first
 
five months
 
of 2023,
 
adjusted for
 
the estimated
effect
 
of
 
conversion
 
to
 
IFRS
 
and
 
effects
 
from
 
purchase
 
price
 
allocation
 
adjustments
 
under
 
IFRS
 
3,
Business
Combinations
, plus the Credit Suisse IFRS results for the
 
four months and one month since the acquisition).
 
The pro
 
forma net
 
revenues and
 
net loss
 
exclude the
 
impact from
 
negative goodwill
 
recognized from
 
the acquisition
of the Credit Suisse Group of USD 28.9bn, and
 
certain items recognized by the Credit Suisse Group in 2023 prior
to the
 
acquisition date,
 
including a
 
gain from
 
the write-down
 
of additional
 
tier 1 (AT1)
 
capital notes
 
of USD 16.4bn,
a goodwill
 
impairment charge,
 
mostly related
 
to Wealth
 
Management (Credit
 
Suisse), of
 
USD 1.4bn and
 
a gain
from
 
the
 
reversal
 
of
 
contingent
 
compensation
 
award
 
accruals
 
of
 
USD 0.4bn.
 
These
 
items
 
are
 
considered
 
non-
recurring and therefore not representative
 
of the normal course of business.
 
The pro forma
 
net revenues and
 
net loss do
 
not purport to
 
represent what UBS’s
 
actual results of
 
operations would
have been had the transaction occurred on
 
the date indicated, nor are they necessarily
 
indicative of future results
of operations.
 
The pro
 
forma net
 
revenues and
 
net loss
 
also do
 
not consider
 
any potential
 
impacts of
 
current market
conditions on revenues, assets or
 
liabilities. Nor do they
 
reflect expense efficiencies, asset dispositions or
 
business
reorganizations that
 
are
 
or
 
may
 
be
 
contemplated, or
 
any
 
cost
 
or
 
revenue
 
synergies, including
 
further
 
potential
restructuring actions, associated with the acquisition
 
of the Credit Suisse Group.
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
71
Note 2
 
Accounting for the acquisition of the Credit
 
Suisse Group (continued)
Segment reporting – Integration of UBS’s
 
and Credit Suisse’s businesses in the third
 
quarter of 2023
and establishment of Non-core and Legacy
 
Prior to
 
the third
 
quarter of
 
2023, UBS’s
 
businesses were
 
organized globally
 
into four
 
business divisions
 
(Global
Wealth Management,
 
Personal &
 
Corporate Banking,
 
Asset Management
 
and the
 
Investment Bank),
 
each qualifying
as
 
a
 
reportable
 
segment,
 
and
 
Group
 
Functions.
 
Credit
 
Suisse’s
 
businesses
 
were
 
organized
 
globally
 
into
 
five
reportable segments (Wealth Management
 
(Credit Suisse), Swiss
 
Bank (Credit Suisse), Asset Management
 
(Credit
Suisse), the Investment
 
Bank (Credit Suisse)
 
and the Capital Release
 
Unit (Credit Suisse)),
 
and the Corporate Center
(Credit Suisse).
 
As the integration
 
of the UBS
 
and Credit Suisse
 
businesses continues,
 
beginning with the
 
third quarter of
 
2023, the
Group reports
 
five business
 
divisions, which
 
each qualify
 
as a
 
reportable segment:
 
Global Wealth
 
Management,
Personal & Corporate Banking, Asset Management,
 
the Investment Bank, and Non-core and Legacy.
 
The
 
Non-core and
 
Legacy business
 
division includes
 
positions and
 
businesses not
 
aligned with
 
our
 
strategy and
policies. Those consist of
 
the assets and liabilities
 
reported as part of
 
the former Capital
 
Release Unit (Credit
 
Suisse)
and certain assets
 
and liabilities of
 
the former Investment
 
Bank (Credit Suisse),
 
Wealth Management
 
(Credit Suisse),
and Asset
 
Management (Credit
 
Suisse) divisions,
 
as well
 
as of
 
the former
 
Corporate Center
 
(Credit Suisse).
 
Also
included
 
are
 
the
 
remaining
 
assets
 
and
 
liabilities
 
of
 
UBS’s
 
Non-core
 
and
 
Legacy
 
Portfolio,
 
previously
 
reported
 
in
Group Functions, and smaller amounts of assets and liabilities of UBS’s business divisions that have been assessed
as not strategic in light of the acquisition
 
of the Credit Suisse Group.
Group Functions
 
has been
 
renamed Group
 
Items and
 
excludes UBS’s
 
former Non-core
 
and Legacy
 
Portfolio and
includes certain of the assets and liabilities
 
of the former Corporate Center (Credit
 
Suisse).
The above reflects
 
how financial information is
 
presented effective from the
 
third quarter of 2023
 
in the internal
management
 
reports
 
to
 
the
 
Group
 
Executive
 
Board,
 
which
 
is
 
considered
 
the
 
“chief
 
operating
 
decision-maker”
pursuant to IFRS 8,
Operating Segments
.
 
Information for
 
the second
 
quarter of
 
2023 for
 
the reportable
 
segments and
 
Group Items
 
has been
 
restated to
reflect the effect of the integration of the UBS and Credit Suisse business divisions on an IFRS basis, as well as the
establishment of the
 
Non-core and Legacy
 
reportable segment. Third
 
quarter 2022 information
 
has been
 
revised
and presents the Non-core and Legacy business
 
division separately from Group Items.
As UBS executes its integration
 
plans, it is expected that allocation
 
methodologies for profit and loss and balance
sheet to the business divisions and into Group
 
Items will continue to be reviewed and refined.
›
Refer to Note 3 for more information
 
›
Refer to the “Management report” sections of this report, including the disclosures in the “Integration of Credit
Suisse” section, for more information about the Non-core and Legacy business division and other changes in the
composition of reportable segments in the third quarter of 2023
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
72
Note 2
 
Accounting for the acquisition of the Credit
 
Suisse Group (continued)
Pre-existing relationships
 
As of 12 June 2023, UBS had the following pre-existing
 
relationships with the Credit Suisse Group.
 
USD m
Cash collateral receivables on derivative instruments
 
7
Derivative financial instruments
 
1,476
Debt instruments issued by the Credit Suisse Group and held
 
by UBS
 
98
Total assets
 
1,581
Cash collateral payables on derivative instruments
 
572
Derivative financial instruments
 
813
Total liabilities
 
1,385
Treasury shares
 
(61)
Total equity
 
(61)
Total net pre-existing relationships
 
135
Such balances are eliminated in the consolidated
 
financial statements.
Retention awards of
 
approximately USD 0.5bn
 
were offered to
 
selected employees
 
of the Credit Suisse
 
Group prior
to
 
the
 
acquisition
 
date
 
to
 
support
 
the
 
completion of
 
the
 
transaction
 
and
 
the
 
early
 
phase
 
of
 
integration. These
awards were
 
contingent on
 
the completion
 
of the
 
acquisition and
 
are delivered
 
50% in
 
cash (in
 
general vesting
60 days from the
 
completion of the acquisition)
 
and 50% in
 
shares (in general vesting
 
on the first
 
anniversary of
the completion of
 
the acquisition). Vesting
 
periods are longer
 
for certain regulated
 
employees. Expenses associated
with
 
these
 
awards
 
are
 
recognized
 
between
 
the
 
date
 
of
 
acquisition
 
and
 
the
 
applicable
 
vesting
 
dates
 
and
 
were
USD 219m in the third quarter of 2023 (second
 
quarter of 2023: USD 84m).
 
1
 
USD 1.2bn as provisionally reported in the second quarter of 2023.
2
 
USD 0.9bn as provisionally reported in the second quarter of 2023.
 
Note 3
 
Segment reporting
Beginning
 
with
 
the
 
third
 
quarter
 
of
 
2023,
 
the
 
Group
 
reports
 
five
 
business
 
divisions,
 
which
 
each
 
qualify
 
as
 
a
reportable
 
segment:
 
Global
 
Wealth
 
Management,
 
Personal
 
&
 
Corporate
 
Banking,
 
Asset
 
Management,
 
the
Investment Bank, and Non-core and Legacy.
 
Group Items is presented separately.
Profit
 
and
 
loss
 
information
 
for
 
the
 
business
 
divisions
 
and
 
Group
 
Items
 
for
 
the
 
nine-month
 
period
 
ended
 
30
September 2023 reflects the effect of the integration of the UBS and Credit Suisse divisions on an
 
IFRS basis from
June
 
2023
 
onward,
 
as
 
well
 
as
 
the
 
establishment of
 
the
 
Non-core
 
and
 
Legacy
 
business
 
division.
 
Profit
 
and
 
loss
information for
 
the nine-month
 
period ended
 
30 September
 
2022 reflects
 
the results
 
of UBS
 
Group operations
 
prior
to the
 
acquisition of the
 
Credit Suisse Group,
 
presented in line
 
with the new
 
business division structure.
 
Balance
sheet information as of 30 September 2023 includes UBS and Credit Suisse consolidated information and balance
sheet information
 
as of 31
 
December 2022
 
reflects UBS
 
Group positions
 
prior to the
 
acquisition of
 
the Credit
 
Suisse
Group.
As UBS executes its integration
 
plans, it is expected that allocation
 
methodologies for profit and loss and balance
sheet to the business divisions and into Group
 
Items will continue to be reviewed and refined.
›
Refer to the “Management report” sections of this report, including the disclosures under “Integration of Credit
Suisse” in the “Recent developments” section, and the “Consolidated financial statements” section of the Annual
Report 2022 for more information about the Group’s
 
business divisions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
73
Note 3
 
Segment reporting (continued)
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
 
Manage-
ment
Investment
Bank
Non-core and
Legacy
1
Group Items
1
Negative
goodwill
2
UBS
For the nine months ended 30 September 2023
3
Total revenues
 
15,746
 
6,005
 
1,834
 
6,522
 
579
 
(707)
 
29,979
Negative goodwill
 
28,925
 
28,925
Credit loss expense / (release)
 
154
 
418
 
1
 
142
 
244
 
8
 
967
Operating expenses
 
12,384
 
3,227
 
1,630
 
6,255
 
3,421
 
423
 
27,340
Operating profit / (loss) before tax
 
3,208
 
2,360
 
203
 
124
 
(3,085)
 
(1,138)
 
28,925
 
30,597
Tax expense / (benefit)
 
1,346
Net profit / (loss)
 
29,251
As of 30 September 2023
3
Total assets
 
454,293
 
437,296
 
20,091
 
393,549
 
196,917
 
142,376
 
1,644,522
1 Starting with
 
the third quarter
 
of 2023, Non-core
 
and Legacy (previously
 
reported within Group
 
Functions) represents a
 
separate reportable segment
 
and Group Functions
 
has been renamed
 
Group Items.
 
Prior
periods have been revised to reflect these changes.
 
2 Negative goodwill arising from the acquisition of the Credit Suisse
 
Group is not allocated to the business divisions, as it relates to the
 
Group. For further details,
refer to Note 2.
 
3 Refer to Note 2 for more information about the Group’s reporting segments.
 
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
 
Management
Investment
Bank
Non-core and
Legacy
1
Group
Items
1
UBS
For the nine months ended 30 September 2022
2
Total revenues
 
14,367
 
3,172
 
2,466
 
7,034
 
184
 
(690)
 
26,534
Credit loss expense / (release)
 
(3)
 
42
 
0
 
(20)
 
2
 
0
 
22
Operating expenses
 
10,450
 
1,847
 
1,193
 
5,269
 
84
 
2
 
18,845
Operating profit / (loss) before tax
 
3,919
 
1,283
 
1,273
 
1,785
 
98
 
(692)
 
7,667
Tax expense / (benefit)
 
1,662
Net profit / (loss)
 
6,005
As of 31 December 2022
2
Total assets
 
388,530
 
235,226
 
17,348
 
391,320
 
13,367
 
58,574
 
1,104,364
1 Starting with the
 
third quarter of 2023,
 
Non-core and Legacy (previously
 
reported within Group
 
Functions) represents a
 
separate reportable segment
 
and Group Functions has
 
been renamed Group
 
Items. Prior
periods have been restated to reflect these changes.
 
2 Refer to Note 2 for more information about the Group’s reporting segments.
 
Note 4
 
Net interest income
For the quarter ended
Year-to-date
USD m
30.9.23
30.6.23
1
30.9.22
30.9.23
30.9.22
Interest income from loans and deposits
2
 
9,314
 
6,202
 
2,520
 
19,622
 
6,066
Interest income from securities financing transactions measured
 
at amortized cost
3
 
1,094
 
1,004
 
415
 
2,863
 
742
Interest income from other financial instruments measured
 
at amortized cost
 
307
 
282
 
148
 
847
 
338
Interest income from debt instruments measured at fair
 
value through other comprehensive income
 
27
 
26
 
12
 
75
 
60
Interest income from derivative instruments designated as cash
 
flow hedges
 
 
(613)
 
(457)
 
(17)
 
(1,446)
 
396
Total interest income from financial instruments measured at amortized cost and fair
 
value through other comprehensive
income
 
10,128
 
7,057
 
3,078
 
21,962
 
7,602
Interest expense on loans and deposits
4
 
4,780
 
3,024
 
698
 
9,798
 
1,099
Interest expense on securities financing transactions measured
 
at amortized cost
5
 
575
 
616
 
282
 
1,555
 
794
Interest expense on debt issued
 
3,676
 
2,205
 
756
 
7,311
 
1,649
Interest expense on lease liabilities
 
52
 
35
 
22
 
113
 
67
Total interest expense from financial instruments measured at amortized cost
 
9,082
 
5,880
 
1,758
 
18,777
 
3,610
Total net interest income from financial instruments measured at amortized cost and fair
 
value through other comprehensive
income
 
1,046
 
1,176
 
1,319
 
3,185
 
3,992
Net interest income from financial instruments measured at fair value through profit
 
or loss and other
 
1,061
 
530
 
277
 
2,017
 
1,040
Total net interest income
 
2,107
 
1,707
 
1,596
 
5,202
 
5,032
1 Comparative-period information has been revised.
 
Refer to Note 2 for more information.
 
2 Consists of interest income from cash and balances
 
at central banks, loans and advances
 
to banks and customers, and
cash collateral receivables on derivative instruments,
 
as well as negative interest on amounts due to banks,
 
customer deposits, and cash collateral payables
 
on derivative instruments.
 
3 Includes interest income on
receivables from securities financing
 
transactions and negative
 
interest, including fees,
 
on payables from securities
 
financing transactions.
 
4 Consists of interest
 
expense on amounts due to
 
banks, cash collateral
payables on derivative instruments, and customer deposits,
 
as well as negative interest on cash and balances at central banks,
 
loans and advances to banks, and cash collateral receivables
 
on derivative instruments.
 
5 Includes interest expense on payables from securities financing transactions and negative interest, including fees,
 
on receivables from securities financing transactions.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
74
Note 5
 
Net fee and commission income
For the quarter ended
Year-to-date
USD m
30.9.23
30.6.23
1
30.9.22
30.9.23
30.9.22
Underwriting fees
 
99
 
153
 
175
 
379
 
458
M&A and corporate finance fees
 
239
 
199
 
152
 
616
 
608
Brokerage fees
 
1,008
 
930
 
779
 
2,817
 
2,726
Investment fund fees
 
1,239
 
1,196
 
1,173
 
3,613
 
3,794
Portfolio management and related services
 
3,011
 
2,485
 
2,178
 
7,707
 
6,938
Other
 
1,088
 
672
 
500
 
2,239
 
1,494
Total fee and commission income
2
 
6,683
 
5,635
 
4,957
 
17,371
 
16,018
of which: recurring
 
4,391
 
3,759
 
3,453
 
11,593
 
10,905
of which: transaction-based
 
2,275
 
1,869
 
1,490
 
5,727
 
5,069
of which: performance-based
 
17
 
7
 
14
 
51
 
43
Fee and commission expense
 
613
 
507
 
476
 
1,566
 
1,410
Net fee and commission income
 
6,071
 
5,128
 
4,481
 
15,804
 
14,608
1 Comparative-period
 
information has
 
been revised.
 
Refer to
 
Note 2
 
for more
 
information.
 
2 Includes
 
third-party fee
 
and commission
 
income for
 
the third
 
quarter of
 
2023 of
 
USD 3,669m for
 
Global Wealth
Management (second
 
quarter of 2023:
 
USD 3,322m; third
 
quarter of 2022:
 
USD 3,106m), USD 931m
 
for Personal
 
& Corporate
 
Banking (second
 
quarter of
 
2023: USD 615m;
 
third quarter
 
of 2022:
 
USD 398m),
USD 943m for Asset Management
 
(second quarter of 2023:
 
USD 756m; third quarter of
 
2022: USD 682m), USD 1,135m for the
 
Investment Bank (second quarter of
 
2023: USD 796m; third quarter of
 
2022: USD 769m),
negative USD 22m for Group Items (second quarter of 2023: USD 45m; third quarter of 2022: USD 2m) and USD 27m for Non-core and Legacy (second
 
quarter of 2023: USD 101m; third quarter of 2022: USD 0m).
 
Note 6
 
Personnel expenses
For the quarter ended
Year-to-date
USD m
30.9.23
30.6.23
30.9.22
30.9.23
30.9.22
Salaries and variable compensation
1
 
6,428
 
4,804
 
3,566
 
15,118
 
11,520
of which: variable compensation – financial advisors
2
 
1,150
 
1,110
 
1,093
 
3,372
 
3,436
Contractors
 
96
 
77
 
80
 
243
 
243
Social security
 
470
 
294
 
230
 
1,042
 
734
Post-employment benefit plans
 
320
 
261
 
177
 
817
 
625
Other personnel expenses
 
256
 
215
 
163
 
622
 
437
Total personnel expenses
 
7,571
 
5,651
 
4,216
 
17,842
 
13,559
1 Includes role-based
 
allowances.
 
2 Consists of
 
cash and
 
deferred compensation awards
 
and is based
 
on compensable revenues
 
and firm tenure
 
using a formulaic
 
approach. Also includes
 
expenses related
 
to
compensation commitments with financial advisors entered into at the time of recruitment that are subject to vesting requirements.
 
Note 7
 
General and administrative expenses
For the quarter ended
Year-to-date
USD m
30.9.23
30.6.23
30.9.22
30.9.23
30.9.22
Outsourcing costs
 
455
 
311
 
217
 
1,014
 
671
Technology costs
 
552
 
414
 
277
 
1,287
 
853
Consulting, legal and audit fees
 
521
 
351
 
141
 
1,053
 
413
Real estate and logistics costs
 
593
 
207
 
141
 
942
 
439
Market data services
 
208
 
151
 
104
 
472
 
311
Marketing and communication
 
108
 
89
 
64
 
249
 
165
Travel and entertainment
 
61
 
73
 
44
 
188
 
110
Litigation, regulatory and similar matters
1
 
12
 
69
 
21
 
802
 
298
Other
 
614
 
304
 
185
 
1,151
 
510
Total general and administrative expenses
 
3,124
 
1,968
 
1,192
 
7,157
 
3,769
1 Reflects the net increase in provisions for litigation, regulatory and similar matters recognized in the income statement. Refer to Note 15b for more information.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
75
Note 8
 
Expected credit loss measurement
a) Credit loss expense / release
 
Total
 
net
 
credit loss
 
expenses in
 
the
 
third
 
quarter of
 
2023
 
were
 
USD 306m, reflecting
 
USD 137m net
 
expenses
related to performing positions and USD 168m
 
on credit-impaired positions.
 
Personal & Corporate
 
Banking credit loss expenses
 
of USD 168m included USD 85m
 
net expenses on
 
performing
loans with USD 69m from performing Credit
 
Suisse loans following a number of corporate
 
loan credit reviews and
transfers
 
to stage 2.
 
In addition,
 
USD 83m of
 
provisions were
 
recognized in
 
the third
 
quarter of
 
2023 for
 
credit-
impaired loans, mainly for a number of Credit Suisse corporate loans, including newly defaulted positions, and, to
a lesser extent, previously defaulted positions.
 
Non-core and
 
Legacy credit
 
loss expenses
 
for the
 
third quarter
 
of 2023
 
were USD 125m,
 
including expenses
 
of
USD 71m on performing loans, mainly for
 
securitizations and for stage 2 transfers
 
following credit reviews, as well
as net
 
expenses for
 
credit-impaired positions
 
of USD 54m,
 
including stage 3
 
net expenses
 
of USD 20m
 
and net
expenses on purchased credit-impaired positions
 
of USD 34m.
 
›
Refer to Note 2 for more information about accounting under IFRS 3,
Business Combinations
›
Refer to Note 2 for more information about the acquisition of the Credit Suisse Group and measurement period
adjustments
 
Credit loss expense / (release)
Performing positions
Credit-impaired positions
USD m
Stages 1 and 2
Stage 3
Purchased
 
Total
For the quarter ended 30.9.23
Global Wealth Management
 
(18)
 
15
 
6
2
Personal & Corporate Banking
 
85
 
60
 
23
 
168
Asset Management
 
0
 
0
 
0
 
0
Investment Bank
 
(6)
 
10
 
0
 
4
Non-core and Legacy
 
71
 
20
 
34
 
125
Group Items
1
5
 
0
 
0
6
Total
 
137
 
105
 
63
 
306
For the quarter ended 30.6.23
2
Global Wealth Management
 
121
 
9
 
7
 
136
Personal & Corporate Banking
 
206
 
28
 
0
 
234
Asset Management
 
1
 
0
 
0
 
1
Investment Bank
 
134
 
(4)
 
1
 
132
Non-core and Legacy
 
74
 
44
 
0
 
119
Group Items
1
 
2
 
0
 
0
 
2
Total
 
537
 
77
 
8
 
623
For the quarter ended 30.9.22
Global Wealth Management
 
6
 
1
 
7
Personal & Corporate Banking
 
(6)
 
(9)
 
(15)
Asset Management
 
0
 
0
 
0
Investment Bank
 
4
 
1
 
4
Group Items
1
 
0
 
0
 
0
Total
 
4
 
(7)
 
(3)
1 Starting with the third quarter
 
of 2023, Non-core and Legacy represents a
 
separate reportable segment and Group Functions has been
 
renamed Group Items. Prior periods have been restated to reflect
 
these changes.
 
2 Certain prior-period
 
figures as of
 
or for the
 
quarter ended 30
 
June 2023 have
 
been restated due
 
to effects of
 
measurement period adjustments
 
in relation to
 
the acquisition of
 
the Credit Suisse
 
Group. Refer
 
to
“Note
2
Accounting for the acquisition of the Credit Suisse Group” for more information.
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
76
Note 8
 
Expected credit loss measurement (continued)
b) Changes to ECL models, scenarios, scenario
 
weights and post-model adjustments
Scenarios and scenario weights
The expected
 
credit loss
 
(ECL) scenarios,
 
along with
 
their related
 
macroeconomic factors and
 
market data,
 
were
reviewed in light of
 
the economic and political conditions prevailing
 
in the third quarter
 
of 2023 through a
 
series
of governance meetings, with input and feedback
 
from UBS Risk and Finance experts across the business divisions
and regions. ECLs
 
for Credit Suisse AG
 
positions were
 
calculated based
 
on Credit Suisse AG’s
 
models, including
 
the
same scenarios
 
and scenario weight inputs as for
 
UBS’s existing business activity.
The
 
baseline
 
scenario
 
was
 
updated
 
with
 
the
 
latest
 
macroeconomic
 
forecasts
 
as
 
of
 
30 September
 
2023.
 
The
assumptions on a calendar-year basis are
 
included in the table below
 
and imply a more optimistic outlook for
 
the
US for the remainder of 2023 and 2024, while
 
projections have become slightly more pessimistic
 
for the Eurozone
and Switzerland.
 
The mild
 
debt crisis
 
scenario, the
 
stagflationary geopolitical
 
crisis scenario
 
and the
 
asset price
 
inflation scenario
 
were
updated based on the
 
latest market data, but
 
the assumptions remain
 
broadly unchanged. UBS kept
 
scenarios and
scenario weights in line with those applied
 
in the second quarter of 2023. Refer to the
 
table below.
 
At the beginning of the second quarter
 
of 2023, UBS replaced the global crisis scenario applied
 
at year-end 2022
and at the end of the first quarter of 2023
 
with the mild debt crisis scenario.
 
Post-model adjustments
Total
 
stage 1 and
 
2
 
allowances and
 
provisions
 
were
 
USD 1,216m as
 
of 30 September
 
2023 and
 
included post-
model adjustments
 
of USD 439m (30
 
June 2023: USD
 
233m). Overlays
 
are to cover
 
for uncertainty levels,
 
including
the geopolitical situation, for
 
Credit Suisse models
 
which may not
 
comprehensively reflect market
 
events, and to
align model outputs for Credit Suisse with those
 
of UBS for dedicated segments.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
77
Note 8
 
Expected credit loss measurement (continued)
Comparison of shock factors
Baseline
Key parameters
2022
2023
2024
Real GDP growth (annual percentage change)
US
 
 
1.9
 
2.1
 
0.5
Eurozone
 
3.4
 
0.5
 
0.7
Switzerland
 
2.7
 
0.7
 
0.9
Unemployment rate (%, annual average)
US
 
 
3.6
 
3.6
 
4.9
Eurozone
 
6.7
 
6.6
 
6.9
Switzerland
 
2.2
 
2.0
 
2.3
Fixed income: 10-year government bonds (%, Q4)
USD
 
3.9
 
4.6
 
4.5
EUR
 
2.6
 
2.8
 
2.8
CHF
 
1.6
 
1.1
 
1.1
Real estate (annual percentage change, Q4)
 
US
 
 
7.5
 
1.2
 
0.5
Eurozone
 
2.9
 
(3.2)
 
1.7
Switzerland
 
3.9
 
0.5
 
(1.0)
Economic scenarios and weights applied
Assigned weights in %
ECL scenario
30.9.23
30.6.23
30.9.22
Asset price inflation
 
0.0
 
0.0
 
0.0
Baseline
 
60.0
 
60.0
 
55.0
Severe Russia–Ukraine conflict scenario
–
–
 
25.0
Mild debt crisis
 
 
15.0
 
15.0
–
Stagflationary geopolitical crisis
 
25.0
 
25.0
–
Global crisis
 
–
–
 
20.0
 
c) ECL-relevant balance sheet and off-balance
 
sheet positions including ECL allowances
 
and provisions
The following tables
 
provide information
 
about financial
 
instruments and
 
certain non-financial
 
instruments that
 
are
subject
 
to
 
ECL
 
requirements.
 
For
 
amortized-cost
 
instruments,
 
the
 
carrying
 
amount
 
represents
 
the
 
maximum
exposure to credit risk, taking
 
into account the allowance for
 
credit losses. Financial assets measured at
 
fair value
through other comprehensive
 
income (FVOCI) are
 
also subject to ECL;
 
however, unlike amortized-cost
 
instruments,
the allowance
 
for credit
 
losses for
 
FVOCI instruments
 
does not
 
reduce the
 
carrying amount
 
of these financial
 
assets.
Instead, the
 
carrying amount
 
of financial
 
assets measured
 
at FVOCI
 
represents the
 
maximum exposure
 
to credit
 
risk.
In addition to recognized financial assets, certain off-balance sheet financial instruments and other credit lines are
also subject to ECL.
 
The maximum exposure to
 
credit risk for off-balance
 
sheet financial instruments is calculated
based on the maximum contractual amounts.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
78
Note 8
 
Expected credit loss measurement (continued)
USD m
30.9.23
Carrying amount
1
ECL allowances
Financial instruments measured at amortized cost
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Cash and balances at central banks
 
262,383
 
262,285
 
17
 
0
 
81
 
(57)
 
0
 
(24)
 
0
 
(33)
Loans and advances to banks
 
21,334
 
21,238
 
63
 
0
 
32
 
(9)
 
(7)
 
0
 
0
 
(1)
Receivables from securities financing transactions measured at
amortized cost
 
84,872
 
84,872
 
0
 
0
 
0
 
(1)
 
(1)
 
0
 
0
 
0
Cash collateral receivables on derivative instruments
 
55,606
 
55,606
 
0
 
0
 
0
 
0
 
0
 
0
 
0
 
0
Loans and advances to customers
 
624,885
 
597,443
 
23,292
 
2,340
 
1,810
 
(1,508)
 
(511)
 
(304)
 
(631)
 
(62)
of which: Private clients with mortgages
 
248,847
 
237,880
 
9,893
 
836
 
238
 
(177)
 
(58)
 
(95)
 
(24)
 
(1)
of which: Real estate financing
 
90,771
 
86,119
 
4,528
 
23
 
100
 
(83)
 
(41)
 
(27)
 
(2)
 
(12)
of which: Large corporate clients
 
21,645
 
17,918
 
2,311
 
702
 
714
 
(377)
 
(102)
 
(59)
 
(189)
 
(26)
of which: SME clients
 
34,240
 
30,315
 
3,159
 
561
 
205
 
(389)
 
(91)
 
(67)
 
(222)
 
0
of which: Lombard
 
159,496
 
158,788
 
590
 
40
 
79
 
(41)
 
(12)
 
(11)
 
(16)
 
(2)
of which: Credit cards
 
1,905
 
1,462
 
408
 
35
 
0
 
(38)
 
(6)
 
(10)
 
(21)
 
0
of which: Commodity trade finance
 
5,938
 
5,832
 
57
 
30
 
18
 
(120)
 
(16)
 
(1)
 
(103)
 
0
of which: Ship / aircraft financing
 
9,497
 
9,174
 
267
 
5
 
51
 
(55)
 
(52)
 
(3)
 
0
 
0
of which: Consumer financing
 
2,878
 
2,735
 
58
 
13
 
72
 
(51)
 
(24)
 
(12)
 
(15)
 
0
Other financial assets measured at amortized cost
 
64,158
 
63,293
 
656
 
151
 
59
 
(130)
 
(39)
 
(15)
 
(69)
 
(6)
of which: Loans to financial advisors
 
2,582
 
2,332
 
134
 
116
 
0
 
(54)
 
(4)
 
(2)
 
(48)
 
0
Total financial assets measured at amortized cost
 
1,113,238
 
1,084,737
 
24,028
 
2,491
 
1,982
 
(1,706)
 
(559)
 
(343)
 
(700)
 
(103)
Financial assets measured at fair value through other comprehensive
income
 
2,213
 
2,213
 
0
 
0
 
0
 
0
 
0
 
0
 
0
 
0
Total on-balance sheet financial assets in scope of ECL requirements
 
1,115,451
 
1,086,950
 
24,028
 
2,491
 
1,982
 
(1,706)
 
(559)
 
(343)
 
(700)
 
(103)
of which: Credit Suisse
2
 
405,774
 
397,376
 
5,894
 
522
 
1,982
 
(741)
 
(366)
 
(132)
 
(140)
 
(103)
Total exposure
ECL provisions
Off-balance sheet (in scope of ECL)
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Guarantees
 
37,298
 
35,703
 
1,412
 
126
 
58
 
(73)
 
(33)
 
(18)
 
(21)
 
(1)
of which: Large corporate clients
 
4,667
 
3,902
 
660
 
91
 
15
 
(10)
 
(8)
 
(2)
 
0
 
0
of which: SME clients
 
6,302
 
5,592
 
643
 
33
 
35
 
(36)
 
(12)
 
(12)
 
(12)
 
(1)
of which: Financial intermediaries and hedge funds
 
 
14,916
 
14,868
 
48
 
0
 
0
 
(11)
 
(8)
 
(3)
 
0
 
0
of which: Lombard
 
3,462
 
3,462
 
0
 
0
 
0
 
(1)
 
0
 
0
 
(1)
 
0
of which: Commodity trade finance
 
1,868
 
1,860
 
8
 
0
 
0
 
(1)
 
(1)
 
0
 
0
 
0
Irrevocable loan commitments
 
95,658
 
92,785
 
2,751
 
71
 
51
 
(186)
 
(133)
 
(53)
 
(2)
 
1
of which: Large corporate clients
 
47,287
 
45,061
 
2,132
 
47
 
47
 
(131)
 
(89)
 
(41)
 
(2)
 
0
Forward starting reverse repurchase and securities borrowing
agreements
 
10,431
 
10,431
 
0
 
0
 
0
 
0
 
0
 
0
 
0
 
0
Unconditionally revocable loan commitments
 
158,986
 
156,709
 
2,225
 
51
 
0
 
(75)
 
(63)
 
(13)
 
0
 
0
of which: Real estate financing
 
15,891
 
15,278
 
613
 
0
 
0
 
(13)
 
(12)
 
(1)
 
0
 
0
of which: Large corporate clients
 
4,681
 
4,489
 
185
 
7
 
0
 
(5)
 
(3)
 
(2)
 
0
 
0
of which: SME clients
 
22,941
 
22,447
 
466
 
28
 
0
 
(42)
 
(35)
 
(7)
 
0
 
0
of which: Lombard
 
76,136
 
76,135
 
0
 
1
 
0
 
0
 
0
 
0
 
0
 
0
of which: Credit cards
 
9,654
 
9,183
 
467
 
4
 
0
 
(6)
 
(4)
 
(2)
 
0
 
0
Irrevocable committed prolongation of existing loans
 
3,769
 
3,749
 
17
 
3
 
0
 
(3)
 
(3)
 
0
 
0
 
0
Total off-balance sheet financial instruments and other credit lines
 
306,142
 
299,377
 
6,405
 
251
 
109
 
(337)
 
(231)
 
(84)
 
(23)
 
0
Total allowances and provisions
 
(2,043)
 
(790)
 
(427)
 
(723)
 
(102)
of which: Credit Suisse
2
 
184,784
 
182,814
 
1,859
 
3
 
109
 
(902)
 
(494)
 
(163)
 
(142)
 
(102)
1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective ECL
 
allowances.
 
2 Refer to Note 2 for more information about the acquisition of the
Credit Suisse Group.
Loans and advances to customers of USD 624,885m
 
included USD 241,773m from Credit Suisse AG.
Breakout: Loans and advances to customers of Credit Suisse AG
USD m
30.9.23
Carrying amount
1
ECL allowances
Loans and advances to customers
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Loans and advances to customers
 
241,773
 
233,845
 
5,607
 
511
 
1,810
 
(660)
 
(340)
 
(123)
 
(135)
 
(62)
of which: Private clients with mortgages
 
86,802
 
86,044
 
468
 
53
 
238
 
(22)
 
(16)
 
(5)
 
0
 
(1)
of which: Real estate financing
 
40,468
 
39,779
 
581
 
7
 
100
 
(38)
 
(20)
 
(4)
 
(2)
 
(12)
of which: Large corporate clients
 
8,526
 
6,728
 
893
 
191
 
714
 
(186)
 
(70)
 
(29)
 
(61)
 
(26)
of which: SME clients
 
22,152
 
20,152
 
1,628
 
166
 
205
 
(159)
 
(58)
 
(44)
 
(47)
 
(9)
of which: Lombard
 
40,837
 
40,167
 
590
 
1
 
79
 
(19)
 
(6)
 
(11)
 
0
 
(2)
of which: Commodity trade finance
 
3,076
 
2,994
 
46
 
18
 
18
 
(11)
 
(10)
 
(1)
 
0
 
0
of which: Ship / aircraft financing
 
8,019
 
7,834
 
134
 
0
 
51
 
(50)
 
(48)
 
(1)
 
0
 
0
of which: Consumer financing
 
2,878
 
2,735
 
58
 
13
 
72
 
(51)
 
(24)
 
(12)
 
(15)
 
0
1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective
 
ECL allowances.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
79
Note 8
 
Expected credit loss measurement (continued)
Credit
 
Suisse AG
 
had
 
allowances and
 
provisions
 
for
 
defaulted
 
positions
 
of
 
USD 1.1bn
 
immediately
 
prior
 
to
 
the
acquisition date. UBS recognized
 
these purchased credit-impaired
 
(PCI) positions on its
 
balance sheet at
 
their fair
value as at
 
the acquisition
 
date, and,
 
as required by
 
IFRS, no
 
additional expected
 
credit loss allowances
 
or provisions
were recognized for them on that date.
›
Refer to Note 2 for more information about accounting under IFRS 3,
Business Combinations
,
and
measurement
period adjustments
USD m
30.6.23
1
Carrying amount
2
ECL allowances
Financial instruments measured at amortized cost
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Cash and balances at central banks
 
261,587
 
261,475
 
32
 
0
 
79
 
(10)
 
0
 
(10)
 
0
 
0
Loans and advances to banks
 
24,392
 
24,208
 
157
 
0
 
27
 
(11)
 
(10)
 
(1)
 
0
 
0
Receivables from securities financing transactions measured at
amortized cost
 
86,538
 
86,538
 
0
 
0
 
0
 
(1)
 
(1)
 
0
 
0
 
0
Cash collateral receivables on derivative instruments
 
54,314
 
54,314
 
0
 
0
 
0
 
0
 
0
 
0
 
0
 
0
Loans and advances to customers
 
645,785
 
624,323
 
17,204
 
1,850
 
2,408
 
(1,293)
 
(548)
 
(173)
 
(556)
 
(17)
of which: Private clients with mortgages
 
255,322
 
244,894
 
9,358
 
783
 
287
 
(173)
 
(61)
 
(87)
 
(23)
 
(2)
of which: Real estate financing
 
92,890
 
88,669
 
4,088
 
10
 
122
 
(63)
 
(41)
 
(23)
 
0
 
0
of which: Large corporate clients
 
29,125
 
25,987
 
1,292
 
387
 
1,460
 
(353)
 
(150)
 
(29)
 
(157)
 
(17)
of which: SME clients
 
29,595
 
27,649
 
1,293
 
436
 
218
 
(314)
 
(91)
 
(21)
 
(203)
 
0
of which: Lombard
 
168,713
 
168,596
 
0
 
42
 
75
 
(32)
 
(15)
 
0
 
(17)
 
0
of which: Credit cards
 
1,939
 
1,502
 
403
 
34
 
0
 
(39)
 
(8)
 
(11)
 
(21)
 
0
of which: Commodity trade finance
 
4,950
 
4,917
 
0
 
15
 
19
 
(124)
 
(20)
 
0
 
(104)
 
0
of which: Ship / aircraft financing
 
9,478
 
9,234
 
166
 
22
 
56
 
(69)
 
(67)
 
(2)
 
0
 
0
of which: Consumer financing
 
3,140
 
3,056
 
0
 
0
 
84
 
(30)
 
(30)
 
0
 
0
 
0
Other financial assets measured at amortized cost
 
64,916
 
64,351
 
377
 
153
 
35
 
(108)
 
(36)
 
(7)
 
(62)
 
(3)
of which: Loans to financial advisors
 
2,588
 
2,287
 
174
 
126
 
0
 
(55)
 
(6)
 
(2)
 
(47)
 
0
Total financial assets measured at amortized cost
 
1,137,531
 
1,115,210
 
17,770
 
2,003
 
2,548
 
(1,424)
 
(596)
 
(190)
 
(618)
 
(20)
Financial assets measured at fair value through other comprehensive
income
 
2,217
 
2,217
 
0
 
0
 
0
 
0
 
0
 
0
 
0
 
0
Total on-balance sheet financial assets in scope of ECL requirements
 
1,139,748
 
1,117,427
 
17,770
 
2,003
 
2,548
 
(1,424)
 
(596)
 
(190)
 
(618)
 
(20)
of which: Credit Suisse
3
 
425,561
 
422,908
 
0
 
104
 
2,548
 
(391)
 
0
 
(52)
 
(20)
Total exposure
ECL provisions
Off-balance sheet (in scope of ECL)
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Guarantees
 
38,247
 
37,131
 
921
 
118
 
77
 
(63)
 
(37)
 
(7)
 
(19)
 
(1)
of which: Large corporate clients
 
8,153
 
7,348
 
690
 
79
 
36
 
(16)
 
(13)
 
(2)
 
0
 
0
of which: SME clients
 
4,170
 
3,928
 
167
 
38
 
37
 
(20)
 
(11)
 
(1)
 
(12)
 
2
of which: Financial intermediaries and hedge funds
 
 
12,874
 
12,859
 
15
 
0
 
0
 
(11)
 
(8)
 
(3)
 
0
 
0
of which: Lombard
 
4,752
 
4,752
 
0
 
1
 
0
 
(1)
 
0
 
0
 
(1)
 
0
of which: Commodity trade finance
 
2,200
 
2,200
 
0
 
0
 
0
 
(1)
 
(1)
 
0
 
0
 
0
Irrevocable loan commitments
 
96,754
 
94,432
 
2,076
 
78
 
168
 
(188)
 
(147)
 
(37)
 
(1)
 
0
of which: Large corporate clients
 
58,076
 
56,130
 
1,731
 
52
 
163
 
(163)
 
(129)
 
(33)
 
(1)
 
0
Forward starting reverse repurchase and securities borrowing
agreements
 
4,972
 
4,972
 
0
 
0
 
0
 
0
 
0
 
0
 
0
 
0
Unconditionally revocable loan commitments
 
168,556
 
166,754
 
1,739
 
63
 
0
 
(74)
 
(66)
 
(9)
 
0
 
0
of which: Real estate financing
 
17,107
 
16,850
 
258
 
0
 
0
 
(12)
 
(12)
 
0
 
0
 
0
of which: Large corporate clients
 
4,790
 
4,624
 
158
 
7
 
0
 
(6)
 
(3)
 
(2)
 
0
 
0
of which: SME clients
 
24,601
 
24,381
 
179
 
40
 
0
 
(42)
 
(39)
 
(3)
 
0
 
0
of which: Lombard
 
82,491
 
82,491
 
0
 
1
 
0
 
0
 
0
 
0
 
0
 
0
of which: Credit cards
 
9,762
 
9,274
 
484
 
4
 
0
 
(7)
 
(4)
 
(2)
 
0
 
0
Irrevocable committed prolongation of existing loans
 
4,362
 
4,353
 
7
 
2
 
0
 
(3)
 
(3)
 
0
 
0
 
0
Total off-balance sheet financial instruments and other credit lines
 
312,891
 
307,642
 
4,743
 
261
 
245
 
(327)
 
(253)
 
(53)
 
(21)
 
(1)
Total allowances and provisions
 
(1,751)
 
(849)
 
(244)
 
(638)
 
(21)
of which: Credit Suisse
3
 
197,278
 
197,033
 
0
 
0
 
245
 
(614)
 
(542)
 
0
 
(52)
 
(21)
1 Certain prior-period figures as of
 
30 June 2023 have been revised due to
 
effects of measurement period adjustments in relation to
 
the acquisition of the Credit Suisse Group.
 
Refer to Note 2 for more information.
 
2 The carrying amount of financial assets
 
measured at amortized cost represents the total gross
 
exposure net of the respective ECL allowances.
 
3
 
Refer to Note 2 for more information about the
 
acquisition of the
Credit Suisse Group.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
80
Note 8
 
Expected credit loss measurement (continued)
USD m
31.12.22
Carrying amount
1
ECL allowances
Financial instruments measured at amortized cost
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Cash and balances at central banks
 
169,445
 
169,402
 
44
 
0
 
(12)
 
0
 
(12)
 
0
Loans and advances to banks
 
14,792
 
14,792
 
1
 
0
 
(6)
 
(5)
 
(1)
 
0
Receivables from securities financing transactions
 
67,814
 
67,814
 
0
 
0
 
(2)
 
(2)
 
0
 
0
Cash collateral receivables on derivative instruments
 
35,032
 
35,032
 
0
 
0
 
0
 
0
 
0
 
0
Loans and advances to customers
 
387,220
 
370,095
 
15,587
 
1,538
 
(783)
 
(129)
 
(180)
 
(474)
of which: Private clients with mortgages
 
156,930
 
147,651
 
8,579
 
699
 
(161)
 
(27)
 
(107)
 
(28)
of which: Real estate financing
 
46,470
 
43,112
 
3,349
 
9
 
(41)
 
(17)
 
(23)
 
0
of which: Large corporate clients
 
12,226
 
10,733
 
1,189
 
303
 
(130)
 
(24)
 
(14)
 
(92)
of which: SME clients
 
13,903
 
12,211
 
1,342
 
351
 
(251)
 
(26)
 
(22)
 
(203)
of which: Lombard
 
132,287
 
132,196
 
0
 
91
 
(26)
 
(9)
 
0
 
(17)
of which: Credit cards
 
1,834
 
1,420
 
382
 
31
 
(36)
 
(7)
 
(10)
 
(19)
of which: Commodity trade finance
 
3,272
 
3,261
 
0
 
11
 
(96)
 
(6)
 
0
 
(90)
Other financial assets measured at amortized cost
 
53,264
 
52,704
 
413
 
147
 
(86)
 
(17)
 
(6)
 
(63)
of which: Loans to financial advisors
 
2,611
 
2,357
 
128
 
126
 
(59)
 
(7)
 
(2)
 
(51)
Total financial assets measured at amortized cost
 
727,568
 
709,839
 
16,044
 
1,685
 
(889)
 
(154)
 
(199)
 
(537)
Financial assets measured at fair value through other comprehensive income
 
2,239
 
2,239
 
0
 
0
 
0
 
0
 
0
 
0
Total on-balance sheet financial assets in scope of ECL requirements
 
729,807
 
712,078
 
16,044
 
1,685
 
(889)
 
(154)
 
(199)
 
(537)
Total exposure
ECL provisions
Off-balance sheet (in scope of ECL)
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Guarantees
 
22,167
 
19,805
 
2,254
 
108
 
(48)
 
(13)
 
(9)
 
(26)
of which: Large corporate clients
 
3,663
 
2,883
 
721
 
58
 
(26)
 
(2)
 
(3)
 
(21)
of which: SME clients
 
1,337
 
1,124
 
164
 
49
 
(5)
 
(1)
 
(1)
 
(3)
of which: Financial intermediaries and hedge funds
 
 
11,833
 
10,513
 
1,320
 
0
 
(12)
 
(8)
 
(4)
 
0
of which: Lombard
 
2,376
 
2,376
 
0
 
1
 
(1)
 
0
 
0
 
(1)
of which: Commodity trade finance
 
2,121
 
2,121
 
0
 
0
 
(1)
 
(1)
 
0
 
0
Irrevocable loan commitments
 
39,996
 
37,531
 
2,341
 
124
 
(111)
 
(59)
 
(52)
 
0
of which: Large corporate clients
 
23,611
 
21,488
 
2,024
 
99
 
(93)
 
(49)
 
(45)
 
0
Forward starting reverse repurchase and securities borrowing agreements
 
3,801
 
3,801
 
0
 
0
 
0
 
0
 
0
 
0
Unconditionally revocable loan commitments
 
41,390
 
39,521
 
1,833
 
36
 
(40)
 
(32)
 
(8)
 
0
of which: Real estate financing
 
8,711
 
8,528
 
183
 
0
 
(6)
 
(6)
 
0
 
0
of which: Large corporate clients
 
4,578
 
4,304
 
268
 
5
 
(4)
 
(1)
 
(2)
 
0
of which: SME clients
 
4,723
 
4,442
 
256
 
26
 
(19)
 
(16)
 
(3)
 
0
of which: Lombard
 
7,855
 
7,854
 
0
 
1
 
0
 
0
 
0
 
0
of which: Credit cards
 
9,390
 
8,900
 
487
 
3
 
(7)
 
(5)
 
(2)
 
0
of which: Commodity trade finance
 
327
 
327
 
0
 
0
 
0
 
0
 
0
 
0
Irrevocable committed prolongation of existing loans
 
4,696
 
4,600
 
94
 
2
 
(2)
 
(2)
 
0
 
0
Total off-balance sheet financial instruments and other credit lines
 
112,050
 
105,258
 
6,522
 
270
 
(201)
 
(106)
 
(69)
 
(26)
Total allowances and provisions
 
(1,091)
 
(259)
 
(267)
 
(564)
1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective
 
ECL allowances.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
81
Note 8
 
Expected credit loss measurement (continued)
The table
 
below provides information
 
about the gross
 
carrying amount of
 
exposures subject to
 
ECL and
 
the ECL
coverage ratio for
 
UBS’s core loan portfolios
 
(i.e.,
Loans and advances
 
to customers
and
 
Loans to financial
 
advisors
)
and
 
relevant
 
off-balance
 
sheet
 
exposures.
Cash
 
and
 
balances
 
at
 
central
 
banks
,
Loans
 
and
 
advances
 
to
 
banks
,
Receivables from
 
securities
 
financing transactions
,
Cash collateral
 
receivables
 
on derivative
 
instruments
 
and
Financial
assets measured
 
at fair
 
value through
 
other comprehensive
 
income
 
are not included
 
in the
 
table below, due
 
to their
lower sensitivity to ECL.
ECL coverage ratios are calculated by dividing ECL
 
allowances and provisions by the gross carrying amount of the
related exposures.
Coverage ratios for core loan portfolio
30.9.23
Gross carrying amount (USD m)
ECL coverage (bps)
On-balance sheet
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
PCI
Private clients with mortgages
 
249,024
 
237,938
 
9,988
 
859
 
239
 
7
 
2
 
95
 
6
 
277
 
236
Real estate financing
 
90,854
 
86,160
 
4,556
 
26
 
112
 
9
 
5
 
60
 
8
 
875
 
1,059
Total real estate lending
 
339,878
 
324,098
 
14,543
 
885
 
351
 
8
 
3
 
84
 
7
 
294
 
360
Large corporate clients
 
22,022
 
18,020
 
2,370
 
891
 
741
 
171
 
57
 
248
 
79
 
2,125
 
358
SME clients
 
34,629
 
30,406
 
3,226
 
783
 
215
 
112
 
30
 
209
 
47
 
2,838
 
429
Total corporate lending
 
56,651
 
48,426
 
5,596
 
1,674
 
955
 
135
 
40
 
225
 
59
 
2,459
 
374
Lombard
 
159,538
 
158,799
 
601
 
56
 
81
 
3
 
1
 
187
 
1
 
2,910
 
281
Credit cards
 
1,942
 
1,468
 
418
 
56
 
0
 
195
 
41
 
251
 
87
 
3,808
 
0
Commodity trade finance
 
6,058
 
5,848
 
58
 
133
 
18
 
199
 
28
 
237
 
30
 
7,723
 
0
Ship / aircraft financing
 
8,069
 
7,882
 
136
 
0
 
52
 
61
 
61
 
90
 
61
 
0
 
77
Consumer financing
 
2,929
 
2,759
 
69
 
28
 
73
 
175
 
88
 
1,667
 
127
 
5,337
 
41
Other loans and advances to customers
 
51,329
 
48,674
 
2,174
 
137
 
343
 
35
 
23
 
96
 
26
 
2,703
 
319
Loans to financial advisors
 
2,636
 
2,336
 
136
 
164
 
0
 
206
 
19
 
142
 
25
 
2,925
 
0
Total other lending
 
232,501
 
227,767
 
3,592
 
576
 
566
 
23
 
10
 
163
 
12
 
4,187
 
241
Total
1
 
629,030
 
600,291
 
23,731
 
3,135
 
1,872
 
25
 
9
 
129
 
13
 
2,165
 
331
Gross exposure (USD m)
ECL coverage (bps)
Off-balance sheet
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
PCI
Private clients with mortgages
 
8,583
 
8,289
 
280
 
14
 
0
 
7
 
5
 
38
 
6
 
26
 
0
Real estate financing
 
17,786
 
17,147
 
634
 
0
 
6
 
8
 
9
 
0
 
8
 
0
 
0
Total real estate lending
 
26,369
 
25,436
 
913
 
14
 
6
 
8
 
8
 
12
 
8
 
26
 
0
Large corporate clients
 
56,713
 
53,529
 
2,978
 
145
 
62
 
26
 
19
 
153
 
26
 
120
 
0
SME clients
 
36,528
 
35,035
 
1,379
 
75
 
39
 
29
 
18
 
212
 
26
 
1,571
 
139
Total corporate lending
 
93,242
 
88,564
 
4,356
 
220
 
101
 
27
 
18
 
172
 
26
 
617
 
122
Lombard
 
83,433
 
83,433
 
0
 
1
 
0
 
0
 
0
 
0
 
0
 
14,136
 
0
Credit cards
 
9,654
 
9,183
 
467
 
4
 
0
 
6
 
5
 
36
 
6
 
0
 
0
Commodity trade finance
 
5,187
 
5,174
 
13
 
0
 
0
 
7
 
7
 
81
 
7
 
0
 
0
Ship / aircraft financing
 
901
 
901
 
0
 
0
 
0
 
42
 
42
 
0
 
42
 
0
 
0
Consumer financing
 
262
 
262
 
0
 
0
 
0
 
0
 
0
 
0
 
0
 
0
 
0
Financial intermediaries and hedge funds
 
37,723
 
37,491
 
232
 
0
 
0
 
5
 
4
 
148
 
5
 
0
 
0
Other off-balance sheet commitments
 
38,910
 
38,472
 
424
 
12
 
2
 
8
 
5
 
66
 
6
 
6,714
 
0
Total other lending
 
176,070
 
174,915
 
1,135
 
17
 
2
 
4
 
3
 
71
 
3
 
5,446
 
0
Total
2
 
295,681
 
288,916
 
6,405
 
251
 
109
 
11
 
8
 
131
 
11
 
915
 
(1)
Total on- and off-balance sheet
3
 
924,711
 
889,206
 
30,136
 
3,387
 
1,981
 
21
 
8
 
130
 
12
 
2,072
 
313
1 Includes Loans and advances
 
to customers and Loans
 
to financial advisors,
 
which are presented on
 
the balance sheet line Other
 
financial assets measured
 
at amortized cost.
 
2 Excludes Forward
 
starting reverse
repurchase and securities borrowing agreements.
 
3 Includes on-balance-sheet exposure, gross and off-balance-sheet exposure (notional) and the related
 
ECL coverage ratio (bps).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
82
Note 8
 
Expected credit loss measurement (continued)
Coverage ratios for core loan portfolio
30.6.23
1
Gross carrying amount (USD m)
ECL coverage (bps)
On-balance sheet
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
PCI
Private clients with mortgages
 
255,495
 
244,955
 
9,445
 
806
 
289
 
7
 
2
 
92
 
6
 
291
 
53
Real estate financing
 
92,953
 
88,710
 
4,111
 
11
 
122
 
7
 
5
 
55
 
7
 
71
 
0
Total real estate lending
 
348,448
 
333,665
 
13,556
 
817
 
410
 
7
 
3
 
80
 
6
 
288
 
36
Large corporate clients
 
29,478
 
26,137
 
1,320
 
544
 
1,477
 
120
 
57
 
217
 
65
 
2,894
 
115
SME clients
 
29,909
 
27,740
 
1,313
 
639
 
217
 
105
 
33
 
157
 
38
 
3,180
 
0
Total corporate lending
 
59,387
 
53,877
 
2,634
 
1,183
 
1,693
 
112
 
45
 
187
 
51
 
3,049
 
96
Lombard
 
168,745
 
168,611
 
0
 
59
 
75
 
2
 
1
 
0
 
1
 
2,872
 
24
Credit cards
 
1,978
 
1,510
 
413
 
55
 
0
 
199
 
53
 
255
 
97
 
3,821
 
0
Commodity trade finance
 
5,074
 
4,937
 
0
 
118
 
19
 
244
 
41
 
351
 
41
 
8,769
 
5
Ship / aircraft financing
 
8,097
 
8,041
 
0
 
0
 
56
 
78
 
79
 
0
 
81
 
0
 
1
Consumer financing
 
3,170
 
3,086
 
0
 
0
 
84
 
96
 
98
 
0
 
98
 
222
 
32
Other loans and advances to customers
 
52,179
 
51,144
 
773
 
174
 
88
 
19
 
13
 
47
 
14
 
1,740
 
0
Loans to financial advisors
 
2,643
 
2,293
 
177
 
173
 
0
 
208
 
24
 
140
 
33
 
2,707
 
0
Total other lending
 
241,886
 
239,622
 
1,363
 
579
 
321
 
18
 
9
 
136
 
10
 
3,777
 
0
Total
2
 
649,721
 
627,164
 
17,553
 
2,579
 
2,425
 
21
 
9
 
100
 
11
 
2,338
 
70
Gross exposure (USD m)
ECL coverage (bps)
Off-balance sheet
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
PCI
Private clients with mortgages
 
9,284
 
8,950
 
324
 
11
 
0
 
4
 
3
 
22
 
4
 
60
 
0
Real estate financing
 
18,031
 
17,751
 
280
 
0
 
0
 
7
 
7
 
0
 
7
 
0
 
0
Total real estate lending
 
27,315
 
26,701
 
603
 
11
 
0
 
6
 
6
 
0
 
6
 
60
 
0
Large corporate clients
 
71,104
 
68,188
 
2,580
 
138
 
199
 
26
 
21
 
141
 
26
 
132
 
10
SME clients
 
32,494
 
31,955
 
400
 
95
 
43
 
23
 
18
 
257
 
21
 
994
 
0
Total corporate lending
 
103,598
 
100,143
 
2,980
 
233
 
242
 
25
 
20
 
156
 
24
 
482
 
(3)
Lombard
 
91,235
 
91,234
 
0
 
1
 
0
 
0
 
0
 
0
 
0
 
6,718
 
0
Credit cards
 
9,763
 
9,274
 
484
 
4
 
0
 
7
 
6
 
37
 
8
 
0
 
0
Commodity trade finance
 
5,833
 
5,833
 
0
 
0
 
0
 
6
 
6
 
0
 
6
 
0
 
0
Ship / aircraft financing
 
1,731
 
1,731
 
0
 
0
 
0
 
4
 
3
 
0
 
4
 
0
 
0
Consumer financing
 
301
 
301
 
0
 
0
 
0
 
34
 
34
 
0
 
34
 
0
 
0
Financial intermediaries and hedge funds
 
43,077
 
42,697
 
380
 
0
 
0
 
3
 
2
 
90
 
3
 
0
 
0
Other off-balance sheet commitments
 
25,110
 
24,799
 
296
 
11
 
4
 
10
 
5
 
95
 
6
 
6,404
 
7,980
Total other lending
 
177,049
 
175,868
 
1,160
 
17
 
4
 
3
 
2
 
71
 
2
 
4,772
 
7,913
Total
3
 
307,962
 
302,712
 
4,743
 
261
 
245
 
11
 
8
 
114
 
10
 
737
 
37
Total on- and off-balance sheet
4
 
957,683
 
929,876
 
22,296
 
2,840
 
2,670
 
17
 
9
 
104
 
11
 
2,191
 
67
1 Certain prior period figures
 
as of 30 June 2023
 
have been revised due to
 
effects of measurement period adjustments
 
in relation to the
 
acquisition of the Credit Suisse
 
Group. Refer to Note
 
2 for more information.
 
2 Includes Loans and advances
 
to customers
 
and Loans to financial
 
advisors, which are
 
presented on the balance
 
sheet line Other financial
 
assets measured at amortized
 
cost.
 
3 Excludes Forward starting
 
reverse
repurchase and securities borrowing agreements.
 
4 Includes on-balance-sheet exposure, gross and off-balance-sheet exposure (notional) and the related
 
ECL coverage ratio (bps).
Coverage ratios for core loan portfolio
31.12.22
Gross carrying amount (USD m)
ECL coverage (bps)
On-balance sheet
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
Private clients with mortgages
 
157,091
 
147,678
 
8,686
 
727
 
10
 
2
 
123
 
9
 
381
Real estate financing
 
46,511
 
43,129
 
3,372
 
9
 
9
 
4
 
70
 
9
 
232
Total real estate lending
 
203,602
 
190,807
 
12,059
 
736
 
10
 
2
 
108
 
9
 
379
Large corporate clients
 
12,356
 
10,757
 
1,204
 
395
 
105
 
22
 
120
 
32
 
2,325
SME clients
 
14,154
 
12,237
 
1,364
 
553
 
177
 
22
 
161
 
36
 
3,664
Total corporate lending
 
26,510
 
22,994
 
2,567
 
949
 
144
 
22
 
142
 
34
 
3,106
Lombard
 
132,313
 
132,205
 
0
 
108
 
2
 
1
 
0
 
1
 
1,580
Credit cards
 
1,869
 
1,427
 
393
 
50
 
190
 
46
 
256
 
91
 
3,779
Commodity trade finance
 
3,367
 
3,266
 
0
 
101
 
285
 
18
 
0
 
18
 
8,901
Other loans and advances to customers
 
20,342
 
19,525
 
748
 
68
 
21
 
7
 
38
 
8
 
3,769
Loans to financial advisors
 
2,670
 
2,364
 
130
 
176
 
221
 
28
 
124
 
33
 
2,870
Total other lending
 
160,561
 
158,787
 
1,270
 
503
 
16
 
3
 
114
 
4
 
4,016
Total
1
 
390,672
 
372,588
 
15,896
 
2,188
 
22
 
4
 
114
 
8
 
2,398
Gross exposure (USD m)
ECL coverage (bps)
Off-balance sheet
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
Private clients with mortgages
 
6,535
 
6,296
 
236
 
3
 
5
 
4
 
18
 
4
 
1,183
Real estate financing
 
10,054
 
9,779
 
275
 
0
 
6
 
7
 
0
 
6
 
0
Total real estate lending
 
16,589
 
16,075
 
511
 
3
 
6
 
6
 
2
 
6
 
1,288
Large corporate clients
 
32,126
 
28,950
 
3,013
 
163
 
38
 
18
 
165
 
32
 
1,263
SME clients
 
7,122
 
6,525
 
499
 
98
 
47
 
30
 
214
 
43
 
304
Total corporate lending
 
39,247
 
35,475
 
3,513
 
260
 
40
 
20
 
172
 
34
 
903
Lombard
 
12,919
 
12,918
 
0
 
1
 
2
 
1
 
0
 
1
 
0
Credit cards
 
9,390
 
8,900
 
487
 
3
 
7
 
5
 
36
 
7
 
0
Commodity trade finance
 
2,459
 
2,459
 
0
 
0
 
3
 
3
 
0
 
3
 
0
Financial intermediaries and hedge funds
 
15,841
 
14,177
 
1,664
 
0
 
9
 
7
 
25
 
9
 
0
Other off-balance sheet commitments
 
11,803
 
11,454
 
346
 
3
 
11
 
8
 
68
 
9
 
0
Total other lending
 
52,412
 
49,907
 
2,498
 
7
 
7
 
5
 
33
 
6
 
0
Total
2
 
108,249
 
101,457
 
6,522
 
270
 
19
 
10
 
106
 
16
 
980
Total on- and off-balance sheet
3
 
498,921
 
474,045
 
22,418
 
2,458
 
21
 
5
 
112
 
10
 
2,242
1 Includes Loans and
 
advances to customers and
 
Loans to financial advisors,
 
which are presented on the
 
balance sheet line Other financial
 
assets measured at amortized
 
cost.
 
2 Excludes Forward starting
 
reverse
repurchase and securities borrowing agreements.
 
3 Includes on-balance-sheet exposure, gross and off-balance-sheet exposure (notional) and the related
 
ECL coverage ratio (bps).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
83
Note 9
 
Fair value measurement
a) Fair value hierarchy
The fair
 
value hierarchy
 
classification of
 
financial and
 
non-financial assets
 
and liabilities
 
measured at
 
fair value
 
is
summarized in the table below.
During
 
the
 
first
 
nine
 
months
 
of
 
2023,
 
and
 
for
 
Credit
 
Suisse
 
for
 
the
 
period
 
between
 
the
 
acquisition
 
date
 
and
30 September 2023 on a revised basis,
 
assets and liabilities that were transferred from
 
Level 2 to Level 1, or from
Level 1 to Level 2, and were held for the entire
 
reporting period were not material.
Determination of fair values from quoted market
 
prices or valuation techniques
1
30.9.23
30.6.23
2
31.12.22
USD m
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial assets measured at fair value on a recurring basis
Financial assets at fair value held for trading
106,872
27,578
8,437
142,888
117,863
30,710
8,598
157,171
96,241
10,138
1,488
107,866
of which: Equity instruments
 
90,129
 
777
 
343
 
91,250
 
96,546
 
1,330
 
454
 
98,329
 
83,074
 
789
 
126
 
83,988
of which: Government bills / bonds
 
9,474
 
11,511
 
66
 
21,051
 
13,586
 
11,865
 
67
 
25,518
 
5,496
 
950
 
18
 
6,464
of which: Investment fund units
 
6,242
 
847
 
146
 
7,236
 
6,123
 
773
 
146
 
7,043
 
6,673
 
596
 
61
 
7,330
of which: Corporate and municipal bonds
 
1,023
 
11,057
 
1,157
 
13,237
 
1,592
 
11,310
 
995
 
13,897
 
976
 
6,363
 
541
 
7,880
of which: Loans
 
0
 
3,279
 
6,519
 
9,797
 
0
 
3,442
 
6,530
 
9,972
 
0
 
1,179
 
628
 
1,807
of which: Asset-backed securities
 
4
 
101
 
205
 
310
 
15
 
1,970
 
406
 
2,391
 
22
 
261
 
114
 
397
Derivative financial instruments
1,140
190,457
3,064
194,661
1,072
181,900
2,978
185,949
769
147,875
1,464
150,108
of which: Foreign exchange
 
727
 
84,134
 
282
 
85,143
 
576
 
73,686
 
425
 
74,686
 
575
 
84,881
 
2
 
85,458
of which: Interest rate
 
13
 
64,690
 
802
 
65,506
 
0
 
62,950
 
761
 
63,711
 
0
 
39,345
 
460
 
39,805
of which: Equity / index
 
1
 
36,158
 
1,265
 
37,425
 
1
 
38,544
 
1,108
 
39,652
 
1
 
21,542
 
653
 
22,195
of which: Credit
 
0
 
3,348
 
617
 
3,965
 
0
 
4,802
 
580
 
5,382
 
0
 
719
 
318
 
1,038
of which: Commodities
 
3
 
1,854
 
23
 
1,880
 
7
 
1,686
 
28
 
1,720
 
0
 
1,334
 
30
 
1,365
Brokerage receivables
 
0
 
24,611
 
0
 
24,611
 
0
 
21,537
 
0
 
21,537
 
0
 
17,576
 
0
 
17,576
Financial assets at fair value not held for trading
 
31,514
 
65,287
 
15,455
 
112,256
 
31,358
 
71,889
 
15,358
 
118,605
 
26,572
 
29,498
 
3,725
 
59,796
of which: Financial assets for unit-linked
investment contracts
 
14,027
 
7
 
0
 
14,034
 
14,802
 
171
 
0
 
14,973
 
13,071
 
1
 
0
 
13,072
of which: Corporate and municipal bonds
 
60
 
13,002
 
222
 
13,284
 
61
 
12,673
 
359
 
13,093
 
35
 
14,101
 
230
 
14,366
of which: Government bills / bonds
 
17,082
 
3,324
 
0
 
20,406
 
16,144
 
3,976
 
0
 
20,120
 
13,103
 
3,638
 
0
 
16,741
of which: Loans
 
0
 
8,089
 
8,178
 
16,267
 
0
 
10,395
 
7,861
 
18,256
 
0
 
3,602
 
736
 
4,337
of which: Securities financing transactions
 
0
 
38,690
 
108
 
38,798
 
0
 
43,798
 
109
 
43,907
 
0
 
7,590
 
114
 
7,704
of which: Auction rate securities
 
0
 
0
 
1,212
 
1,212
 
0
 
0
 
1,321
 
1,321
 
0
 
0
 
1,326
 
1,326
of which: Investment fund units
 
320
 
541
 
674
 
1,535
 
321
 
516
 
683
 
1,519
 
307
 
566
 
190
 
1,063
of which: Equity instruments
 
25
 
26
 
3,043
 
3,094
 
29
 
227
 
3,092
 
3,348
 
57
 
0
 
792
 
849
Financial assets measured at fair value through other comprehensive income on
 
a recurring basis
Financial assets measured at fair value through
other comprehensive income
 
64
 
2,149
 
0
 
2,213
 
65
 
2,152
 
0
 
2,217
 
57
 
2,182
 
0
 
2,239
of which: Commercial paper and certificates
of deposit
 
0
 
1,927
 
0
 
1,927
 
0
 
1,926
 
0
 
1,926
 
0
 
1,878
 
0
 
1,878
of which: Corporate and municipal bonds
 
64
 
193
 
0
 
257
 
65
 
217
 
0
 
282
 
57
 
278
 
0
 
335
Non-financial assets measured at fair value on a recurring basis
Precious metals and other physical commodities
 
5,759
 
0
 
0
 
5,759
 
5,794
 
0
 
0
 
5,794
 
4,471
 
0
 
0
 
4,471
Non-financial assets measured at fair value on a non-recurring basis
Other non-financial assets
3
 
0
 
0
 
14
 
14
 
0
 
1
 
89
 
90
 
0
 
0
 
110
 
110
Total assets measured at fair value
145,350
310,082
26,971
482,402
156,152
308,188
27,023
491,364
128,110
207,269
6,788
342,166
of which: Credit Suisse
4
9,280
110,130
19,543
138,953
15,168
121,951
20,254
157,374
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
84
Note 9
 
Fair value measurement (continued)
Determination of fair values from quoted market
 
prices or valuation techniques (continued)
1
30.9.23
30.6.23
2
31.12.22
USD m
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial liabilities measured at fair value on a recurring basis
Financial liabilities at fair value held for trading
 
28,819
 
6,047
 
123
 
34,989
 
33,231
 
6,983
 
150
 
40,364
 
23,578
 
5,823
 
114
 
29,515
of which: Equity instruments
 
19,491
 
256
 
94
 
19,841
 
22,984
 
311
 
83
 
23,378
 
16,521
 
352
 
78
 
16,951
of which: Corporate and municipal bonds
 
37
 
4,906
 
24
 
4,966
 
32
 
5,639
 
61
 
5,731
 
36
 
4,643
 
27
 
4,707
of which: Government bills / bonds
 
8,124
 
767
 
0
 
8,891
 
9,159
 
957
 
0
 
10,115
 
5,880
 
706
 
1
 
6,587
of which: Investment fund units
 
1,168
 
73
 
3
 
1,244
 
1,057
 
46
 
3
 
1,106
 
1,141
 
84
 
3
 
1,229
Derivative financial instruments
1,249
191,182
5,589
198,019
1,007
187,375
6,800
195,182
640
152,582
1,684
154,906
of which: Foreign exchange
 
825
 
82,002
 
22
 
82,849
 
591
 
75,856
 
132
 
76,580
 
587
 
87,897
 
24
 
88,508
of which: Interest rate
 
1
 
63,744
 
252
 
63,997
 
0
 
61,690
 
355
 
62,045
 
0
 
37,429
 
116
 
37,545
of which: Equity / index
 
0
 
39,065
 
2,901
 
41,966
 
0
 
41,569
 
3,714
 
45,284
 
0
 
24,963
 
1,184
 
26,148
of which: Credit
 
31
 
3,997
 
618
 
4,646
 
2
 
5,629
 
605
 
6,235
 
0
 
920
 
279
 
1,199
of which: Commodities
 
7
 
1,670
 
21
 
1,697
 
6
 
1,685
 
37
 
1,728
 
0
 
1,309
 
52
 
1,361
of which: Loan commitments measured at
FVTPL
 
0
 
499
 
1,220
 
1,718
 
0
 
595
 
1,468
 
2,063
 
0
 
19
 
24
 
43
Financial liabilities designated at fair value on a recurring basis
Brokerage payables designated at fair value
 
0
 
41,313
 
0
 
41,313
 
0
 
43,852
 
0
 
43,852
 
0
 
45,085
 
0
 
45,085
Debt issued designated at fair value
 
0
 
108,621
 
17,514
 
126,135
 
0
 
105,951
 
19,099
 
125,050
 
0
 
63,111
 
10,527
 
73,638
Other financial liabilities designated at fair value
 
0
 
30,479
 
2,805
 
33,284
 
0
 
33,097
 
3,025
 
36,122
 
0
 
29,547
 
691
 
30,237
of which: Financial liabilities related to unit-
linked investment contracts
 
0
 
14,177
 
0
 
14,177
 
0
 
15,124
 
0
 
15,124
 
0
 
13,221
 
0
 
13,221
of which: Securities financing transactions
 
0
 
12,258
 
1
 
12,259
 
0
 
13,295
 
0
 
13,295
 
0
 
15,333
 
0
 
15,333
of which: Over-the-counter debt instruments
and others
 
0
 
4,044
 
2,804
 
6,848
 
0
 
4,678
 
3,025
 
7,703
 
0
 
993
 
691
 
1,684
Total liabilities measured at fair value
30,068
377,642
26,030
433,739
34,238
377,258
29,073
440,569
24,219
296,148
13,015
333,381
of which: Credit Suisse
4
2,912
98,797
12,280
113,989
4,442
104,499
14,741
123,681
1 Bifurcated embedded derivatives are presented on the same balance sheet lines
 
as their host contracts and are not included in this table. The fair value of these derivatives was not
 
material for the periods presented.
 
2 Comparative-period information has been revised. Refer to Note 2 for more information.
 
3 Other non-financial assets primarily consist of properties and other non-current assets held for sale, which are measured
at the lower of their net carrying amount or fair value less costs to sell.
 
4 Refer to Note 2 for more information about the acquisition of the Credit Suisse Group.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
85
Note 9
 
Fair value measurement (continued)
b) Valuation adjustments
The table below summarizes the changes
 
in deferred day-1 profit or loss reserves during the
 
relevant period.
 
Deferred day-1 profit or loss is generally released into
Other net income from financial instruments measured
 
at fair
value
 
through
 
profit
 
or
 
loss
when
 
the
 
pricing
 
of
 
equivalent
 
products
 
or
 
the
 
underlying
 
parameters
 
become
observable or
 
when the
 
transaction is
 
closed out.
 
In accordance
 
with IFRS,
 
no day-1
 
profit or
 
loss reserves
 
were
recognized on
 
positions acquired with
 
the Credit
 
Suisse Group
 
and no
 
significant new positions
 
were originated
between the acquisition date and 30 September
 
2023.
Deferred day-1 profit or loss reserves
For the quarter ended
Year-to-date
USD m
30.9.23
30.6.23
30.9.22
30.9.23
30.9.22
Reserve balance at the beginning of the period
 
402
 
399
 
451
 
422
 
418
Profit / (loss) deferred on new transactions
 
37
 
78
 
84
 
196
 
245
(Profit) / loss recognized in the income statement
 
(42)
 
(75)
 
(108)
 
(228)
 
(235)
Foreign currency translation
 
(1)
 
(1)
 
(1)
 
(1)
 
(2)
Reserve balance at the end of the period
 
396
 
402
 
426
 
389
 
426
The table below summarizes other valuation
 
adjustment reserves recognized on the
 
balance sheet.
Other valuation adjustment reserves on the
 
balance sheet
As of
USD m
30.9.23
30.6.23
31.12.22
Own credit adjustments on financial liabilities designated at fair value
1
 
(565)
 
142
 
556
of which: debt issued designated at fair value
 
(616)
 
46
 
453
of which: other financial liabilities designated at fair value
 
51
 
96
 
103
Credit valuation adjustments
2
 
(134)
 
(151)
 
(33)
Funding and debit valuation adjustments
 
(118)
 
(172)
 
(46)
Other valuation adjustments
 
(2,792)
 
(2,911)
 
(839)
of which: liquidity
 
(1,824)
 
(1,905)
 
(311)
of which: model uncertainty
 
(969)
 
(1,005)
 
(529)
1 Own credit adjustments on financial liabilities designated at fair value includes amounts for TLAC notes.
 
2 Amount does not include reserves against defaulted counterparties.
Own
 
credit
 
adjustments on
 
financial
 
liabilities designated
 
at
 
fair
 
value
 
includes a
 
life-to-date loss
 
of USD 658m
attributable to Credit
 
Suisse.
Credit valuation adjustments
 
includes USD 104m from
 
the Credit
 
Suisse Group and
Funding
 
and debit
 
valuation adjustments
 
includes USD 44m
 
from
 
the Credit
 
Suisse Group.
 
Liquidity and
 
model
uncertainty adjustments in Credit Suisse amount to
 
USD 1,549m and USD 527m, respectively.
c) Level 3 instruments: valuation techniques
 
and inputs
The
 
table
 
below
 
presents material
 
Level 3
 
assets
 
and
 
liabilities,
 
together
 
with
 
the
 
valuation
 
techniques
 
used
 
to
measure fair value,
 
as well as
 
the inputs used
 
in a given
 
valuation technique that are
 
considered significant as of
30 September 2023
 
and unobservable, and a range of values
 
for those unobservable inputs.
The range of values
 
represents the highest- and
 
lowest-level inputs used in the valuation
 
techniques. Therefore, the
range does not reflect the level of uncertainty regarding a particular input or an assessment of the reasonableness of
the Group’s estimates and assumptions, but rather the different underlying characteristics of the relevant
 
assets and
liabilities held by the Group.
 
The significant unobservable
 
inputs disclosed in
 
the table below
 
are consistent with
 
those included in
 
“Note 20 Fair
value measurement” in the “Consolidated financial
 
statements” section of the Annual
 
Report 2022.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
86
Note 9
 
Fair value measurement (continued)
Valuation techniques and inputs
 
used in the fair value measurement of Level
 
3 assets and liabilities
Fair value
Significant unobservable
input(s)
1
Range of inputs
Assets
Liabilities
Valuation technique(s)
30.9.23
31.12.22
USD bn
30.9.23
31.12.22
30.9.23
31.12.22
low
high
weighted
average
2
low
high
weighted
average
2
unit
1
Financial assets and liabilities at fair value held for
 
trading and Financial assets at fair value not held for
 
trading
Corporate and municipal
bonds
 
1.4
 
0.8
 
0.0
 
0.0
Relative value to
market comparable
Bond price equivalent
 
4
 
126
 
96
 
14
 
112
 
85
points
Discounted expected
cash flows
Discount margin
 
215
 
374
 
368
 
412
 
412
basis
points
Traded loans,
 
loans
measured at fair value,
loan commitments and
guarantees
 
14.9
 
1.7
 
0.0
 
0.0
Relative value to
market comparable
Loan price equivalent
 
1
 
140
 
91
 
30
 
100
 
97
points
Discounted expected
cash flows
Credit spread
 
20
 
1,197
 
317
 
200
 
200
 
200
basis
points
Market comparable
and securitization
model
Credit spread
 
152
 
1,763
 
326
 
145
 
1,350
 
322
basis
points
Option model
Gap risk
5
 
0
 
4
 
0
%
Auction rate securities
 
1.2
 
1.3
Discounted expected
cash flows
Credit spread
 
135
 
208
 
150
 
115
 
196
 
144
basis
points
Investment fund units
3
 
0.8
 
0.3
 
0.0
 
0.0
Relative value to
market comparable
Net asset value
Equity instruments
3
 
3.4
 
0.9
 
0.1
 
0.1
Relative value to
market comparable
Price
Debt issued designated at
fair value
4
 
17.5
 
10.5
Other financial liabilities
designated at fair value
 
2.8
 
0.7
Discounted expected
cash flows
Funding spread
 
25
 
175
 
23
 
175
basis
points
Derivative financial instruments
Interest rate
 
0.8
 
0.5
 
0.3
 
0.1
Option model
Volatility of interest rates
 
63
 
154
 
75
 
143
basis
points
Volatility of inflation
 
0
 
6
%
IR-to-IR correlation
 
0
 
100
%
Credit
 
0.6
 
0.3
 
0.6
 
0.3
Discounted expected
cash flows
Credit spreads
 
 
3
 
2,738
 
9
 
565
basis
points
Bond price equivalent
 
3
 
223
 
3
 
277
points
Recovery rates
6
 
0
 
100
%
Option model
Credit spreads
 
 
27
 
1,218
basis
points
Equity / index
 
1.3
 
0.7
 
2.9
 
1.2
Option model
Equity dividend yields
 
0
 
16
 
0
 
20
%
Volatility of equity stocks,
equity and other indices
 
4
 
194
 
4
 
120
%
Equity-to-FX correlation
 
(40)
 
77
 
(29)
 
84
%
Equity-to-equity correlation
 
(50)
 
100
 
(25)
 
100
%
Loan commitments
measured at FVTPL
 
1.2
Relative value to
market comparable
Loan price equivalent
 
31
 
100
points
1 The ranges of significant unobservable inputs are represented in points, percentages and basis points.
 
Points are a percentage of par (e.g., 100 points would be 100% of par).
 
2 Weighted averages are provided for
most non-derivative financial instruments and were calculated
 
by weighting inputs based on the
 
fair values of the respective instruments. Weighted averages are
 
not provided for inputs related
 
to Other financial liabilities
designated at fair value
 
and Derivative financial instruments,
 
as this would not
 
be meaningful.
 
3 The range
 
of inputs is not
 
disclosed, as there is
 
a dispersion of values
 
given the diverse nature
 
of the investments.
 
4 Debt issued designated at fair value primarily consists of UBS structured notes, which include variable maturity notes with various equity and foreign exchange
 
underlying risks, as well as rates-linked and credit-linked
notes, all of
 
which have embedded
 
derivative parameters
 
that are considered
 
to be unobservable.
 
The equivalent
 
derivative instrument parameters
 
for debt issued
 
or embedded derivatives
 
for over-the-counter
 
debt
instruments are presented in
 
the respective derivative
 
financial instruments lines in
 
this table.
 
5 Gap risk is
 
risk of unexpected large
 
declines in the underlying
 
values occurring between
 
collateral settlement dates.
 
6 Recovery rates reflect the estimated recovery that will be realized given expected defaults, they may vary
 
significantly depending upon the specific assets and terms of each transaction.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
87
Note 9
 
Fair value measurement (continued)
d) Level 3 instruments: sensitivity to changes
 
in unobservable input assumptions
 
The table below summarizes those financial assets and liabilities classified as Level 3 for
 
which a change in one or
more of
 
the unobservable
 
inputs to
 
reflect reasonably
 
possible alternative
 
assumptions would
 
change fair
 
value
significantly, and the estimated effect thereof.
 
The
 
sensitivity data
 
shown below
 
presents an
 
estimation of
 
valuation uncertainty
 
based
 
on
 
reasonably possible
alternative values for Level 3
 
inputs at the balance sheet
 
date and does not represent
 
the estimated effect of stress
scenarios. Typically,
 
these financial
 
assets and
 
liabilities are
 
sensitive to
 
a combination
 
of inputs
 
from Levels 1–3.
Although well-defined interdependencies may exist
 
between Level 1 / 2 parameters and
 
Level 3 parameters (e.g.,
between interest rates,
 
which are generally
 
Level 1 or Level 2,
 
and prepayments,
 
which are generally
 
Level 3), these
have not been incorporated
 
in the table. Furthermore,
 
direct interrelationships between
 
the Level 3 parameters are
not a significant element of the valuation uncertainty.
Sensitivity of fair value measurements to changes
 
in unobservable input assumptions
1
30.9.23
30.6.23
2
31.12.22
USD m
Favorable
 
changes
Unfavorable
 
changes
Favorable
 
changes
Unfavorable
 
changes
Favorable
 
changes
Unfavorable
 
changes
Traded loans, loans measured at fair value and guarantees
 
426
 
(350)
 
468
 
(393)
 
19
 
(12)
Securities financing transactions
 
32
 
(35)
 
37
 
(37)
 
33
 
(37)
Auction rate securities
 
66
 
(22)
 
44
 
(44)
 
46
 
(46)
Asset-backed securities
 
56
 
(55)
 
48
 
(47)
 
27
 
(27)
Equity instruments
 
469
 
(413)
 
483
 
(397)
 
183
 
(161)
Investment fund units
 
134
 
(136)
 
127
 
(129)
 
19
 
(21)
Loan commitments measured at FVTPL
 
418
 
(399)
 
436
 
(393)
 
0
 
0
Interest rate derivatives, net
 
234
 
(109)
 
221
 
(111)
 
18
 
(12)
Credit derivatives, net
 
61
 
(57)
 
75
 
(67)
 
3
 
(4)
Foreign exchange derivatives, net
 
5
 
(4)
 
6
 
(6)
 
10
 
(5)
Equity / index derivatives, net
 
503
 
(453)
 
646
 
(614)
 
361
 
(330)
Other
 
302
 
(295)
 
296
 
(292)
 
20
 
(41)
Total
 
2,706
 
(2,327)
 
2,887
 
(2,530)
 
738
 
(696)
of which: Credit Suisse
3
 
2,036
 
(1,760)
 
2,157
 
(1,864)
1 Sensitivity of issued and over-the-counter debt instruments is reported with the equivalent derivative or Other.
 
2 Comparative-period information has been revised. Refer to Note 2 for more information.
 
3 Refer
to Note 2 for more information about the acquisition of the Credit Suisse Group.
e) Level 3 instruments: movements during
 
the period
The table below presents additional information about material Level 3 assets and liabilities measured at fair value
on a recurring basis. Level 3 assets and liabilities
 
may be hedged with instruments
 
classified as Level 1 or Level 2 in
the fair
 
value hierarchy
 
and, as
 
a
 
result,
 
realized and
 
unrealized gains
 
and losses
 
included in
 
the table
 
may not
include the effect of related hedging
 
activity. Furthermore, the realized and unrealized gains and
 
losses presented
in the table are not
 
limited solely to those
 
arising from Level 3 inputs,
 
as valuations are generally
 
derived from both
observable and unobservable parameters.
Assets
 
and
 
liabilities
 
transferred
 
into
 
or
 
out
 
of
 
Level 3
 
are
 
presented
 
as
 
if
 
those
 
assets
 
or
 
liabilities
 
had
 
been
transferred at the beginning of the year.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
88
Note 9
 
Fair value measurement (continued)
Movements of Level 3 instruments
USD bn
Balance
at the
 
beginning
of the
period
Credit
Suisse
Level 3
assets and
liabilities
acquired
1
Net gains /
losses
included in
compre-
hensive
income
2
of which:
related to
instruments
held at the
end of the
period
Purchases
Sales
Issuances
Settlements
Transfers
 
into
 
Level 3
Transfers
 
out of
 
Level 3
Foreign
 
currency
 
translation
Balance
at the
end
of the
period
For the nine months ended 30 September 2023
3
Financial assets at fair value held for
trading
 
1.5
 
7.9
 
(0.6)
 
(0.3)
 
0.8
 
(3.3)
 
2.2
 
(0.0)
 
0.3
 
(0.4)
 
(0.0)
 
8.4
of which: Investment fund units
 
0.1
 
0.1
 
0.0
 
0.0
 
0.0
 
(0.0)
0.0
 
(0.0)
 
0.0
 
(0.0)
 
0.0
 
0.1
of which: Corporate and municipal
bonds
 
0.5
 
1.1
 
(0.3)
 
(0.0)
 
0.6
 
(0.8)
0.0
0.0
 
0.1
 
(0.1)
 
(0.0)
 
1.2
of which: Loans
 
0.6
 
5.9
 
(0.2)
 
(0.2)
 
0.0
 
(2.0)
 
2.2
 
(0.0)
 
0.1
 
(0.2)
 
(0.0)
 
6.5
Derivative financial instruments –
assets
 
1.5
 
1.4
 
0.3
 
0.2
 
0.0
 
(0.0)
 
0.7
 
(0.4)
 
0.2
 
(0.5)
 
0.0
 
3.1
of which: Interest rate
 
0.5
 
0.2
 
0.2
 
0.2
 
0.0
0.0
 
0.1
 
(0.1)
 
0.0
 
(0.1)
 
(0.0)
 
0.8
of which: Equity / index
 
0.7
 
0.5
 
0.1
 
0.1
 
0.0
 
(0.0)
 
0.4
 
(0.2)
 
0.1
 
(0.3)
 
(0.0)
 
1.3
of which: Credit
 
0.3
 
0.2
 
(0.0)
 
(0.1)
 
0.0
 
(0.0)
 
0.1
 
(0.0)
 
0.1
 
(0.0)
 
0.0
 
0.6
Financial assets at fair value not held
for trading
 
3.7
 
11.6
 
(0.0)
 
(0.0)
 
2.1
 
(2.8)
 
0.0
 
(0.1)
 
1.3
 
(0.3)
 
0.0
 
15.5
of which: Loans
 
0.7
 
7.1
 
0.1
 
0.1
 
1.2
 
(1.8)
 
(0.0)
 
(0.0)
 
1.1
 
(0.3)
 
(0.0)
 
8.2
of which: Auction rate securities
 
1.3
0.0
 
0.0
 
0.0
0.0
 
(0.1)
0.0
0.0
0.0
0.0
0.0
 
1.2
of which: Equity instruments
 
0.8
 
2.1
 
(0.0)
 
(0.0)
 
0.5
 
(0.3)
 
0.0
 
(0.1)
 
0.1
0.0
 
(0.0)
 
3.0
Derivative financial instruments –
liabilities
 
1.7
 
4.3
 
(0.2)
 
0.0
 
(0.0)
 
(0.0)
 
1.3
 
(1.0)
 
0.2
 
(0.8)
 
(0.0)
 
5.6
of which: Interest rate
 
0.1
 
0.2
 
(0.0)
 
0.0
 
0.0
0.0
 
0.1
 
(0.1)
 
0.0
 
(0.1)
 
(0.0)
 
0.3
of which: Equity / index
 
1.2
 
1.7
 
(0.2)
 
(0.0)
 
0.0
 
(0.0)
 
0.8
 
(0.4)
 
0.1
 
(0.2)
 
(0.0)
 
2.9
of which: Credit
 
0.3
 
0.3
 
0.0
 
0.1
 
0.0
 
(0.0)
 
0.4
 
(0.1)
 
0.0
 
(0.4)
 
(0.0)
 
0.6
of which: Loan commitments
measured at FVTPL
 
0.0
 
1.5
0.0
0.0
0.0
0.0
0.0
 
(0.3)
0.0
0.0
0.0
 
1.2
Debt issued designated at fair value
 
10.5
 
8.5
 
0.0
 
(0.1)
0.0
0.0
 
4.7
 
(4.0)
 
1.0
 
(3.1)
 
(0.1)
 
17.5
Other financial liabilities designated at
fair value
 
0.7
 
2.1
 
0.1
 
0.1
 
0.0
 
(0.0)
 
0.1
 
(0.1)
 
0.0
 
(0.1)
 
(0.0)
 
2.8
For the nine months ended 30 September 2022
Financial assets at fair value held for
trading
 
2.3
 
(0.2)
 
(0.2)
 
0.3
 
(1.4)
 
0.3
0.0
 
0.3
 
(0.3)
 
(0.0)
 
1.3
of which: Investment fund units
 
0.0
 
0.0
 
0.0
 
0.0
 
(0.0)
0.0
0.0
 
0.1
 
(0.0)
 
(0.0)
 
0.1
of which: Corporate and municipal
bonds
 
0.6
 
(0.0)
 
(0.0)
 
0.2
 
(0.2)
0.0
0.0
 
0.0
 
(0.0)
 
(0.0)
 
0.5
of which: Loans
 
1.4
 
(0.1)
 
(0.1)
 
0.0
 
(1.1)
 
0.3
0.0
0.0
 
(0.2)
 
(0.0)
 
0.5
Derivative financial instruments –
assets
 
1.1
 
0.8
 
0.5
0.0
0.0
 
0.6
 
(0.7)
 
0.1
 
(0.1)
 
(0.1)
 
1.7
of which: Interest rate
 
0.5
 
0.2
 
0.2
0.0
0.0
 
0.0
 
(0.1)
 
0.1
 
(0.1)
 
(0.1)
 
0.5
of which: Equity / index
 
0.4
 
0.4
 
0.3
0.0
0.0
 
0.2
 
(0.3)
 
0.0
 
(0.0)
 
(0.0)
 
0.7
of which: Credit
 
0.2
 
0.1
 
(0.1)
0.0
0.0
 
0.2
 
(0.2)
 
0.0
 
0.0
 
0.0
 
0.4
Financial assets at fair value not held
for trading
 
4.2
 
0.1
 
0.1
 
0.6
 
(0.8)
 
0.1
 
(0.0)
 
0.1
 
(0.3)
 
(0.1)
 
3.9
of which: Loans
 
0.9
 
(0.0)
 
(0.1)
 
0.4
 
(0.4)
 
0.1
0.0
 
0.0
 
(0.3)
 
(0.0)
 
0.7
of which: Auction rate securities
 
1.6
 
0.1
 
0.1
 
0.0
0.0
0.0
0.0
0.0
0.0
0.0
 
1.7
of which: Equity instruments
 
0.7
 
0.0
 
0.0
 
0.1
 
(0.1)
0.0
0.0
 
0.1
0.0
 
(0.0)
 
0.8
Derivative financial instruments –
liabilities
 
2.2
 
(0.8)
 
(0.6)
0.0
0.0
 
1.3
 
(0.8)
 
0.1
 
(0.2)
 
(0.2)
 
1.7
of which: Interest rate
 
0.3
 
(0.2)
 
(0.1)
0.0
0.0
 
0.1
 
(0.0)
 
0.0
 
0.0
 
(0.1)
 
0.1
of which: Equity / index
 
1.5
 
(0.5)
 
(0.5)
0.0
0.0
 
1.0
 
(0.7)
 
0.0
 
(0.2)
 
(0.1)
 
1.2
of which: Credit
 
0.3
 
(0.1)
 
(0.1)
0.0
0.0
 
0.1
 
(0.0)
 
0.1
 
(0.0)
 
(0.0)
 
0.3
Debt issued designated at fair value
 
14.2
 
(2.7)
 
(2.3)
0.0
0.0
 
4.4
 
(3.0)
 
0.5
 
(3.0)
 
(0.5)
 
9.9
Other financial liabilities designated at
fair value
 
0.8
 
0.0
 
0.0
0.0
0.0
 
0.2
 
(0.3)
 
0.0
 
(0.0)
 
(0.1)
 
0.7
1 Information has been revised. Refer to Note 2 for more information.
 
2 Net gains / losses included in comprehensive income are recognized in Net interest
 
income and Other net income from financial instruments
measured at fair value through profit or loss in the Income statement, and also in Gains / (losses) from own credit on financial liabilities designated at fair value, before tax in the Statement of comprehensive
 
income.
 
3 Total Level 3 assets as of 30 September 2023 were USD 27.0bn (31 December 2022: USD 6.8bn). Total
 
Level 3 liabilities as of 30 September 2023 were USD 26.0bn (31 December 2022: USD 13.0bn).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
89
Note 9
 
Fair value measurement (continued)
f) Financial instruments not measured
 
at fair value
The table
 
below reflects
 
the estimated
 
fair values
 
of financial
 
instruments not
 
measured at
 
fair value.
 
Valuation
principles applied
 
when determining fair
 
value estimates for
 
financial instruments not
 
measured at
 
fair value
 
are
consistent with those described in “Note 20
 
Fair value measurement” in the “Consolidated financial statements”
section of the Annual Report 2022.
Financial instruments not measured at fair value
30.9.23
30.6.23
1
31.12.22
USD bn
Carrying
amount
Fair value
Carrying
amount
Fair value
Carrying
amount
Fair value
Assets
Cash and balances at central banks
 
262.4
 
262.4
 
261.6
 
261.6
 
169.4
 
169.4
Amounts due from banks
 
21.3
 
21.2
 
24.4
 
24.3
 
14.8
 
14.8
Receivables from securities financing transactions measured at amortized
 
cost
 
84.9
 
84.9
 
86.5
 
86.6
 
67.8
 
67.8
Cash collateral receivables on derivative instruments
 
55.6
 
55.6
 
54.3
 
54.3
 
35.0
 
35.0
Loans and advances to customers
 
624.9
 
613.4
 
645.8
 
633.5
 
387.2
 
374.9
Other financial assets measured at amortized cost
 
64.2
 
61.2
 
64.9
 
62.5
 
53.3
 
50.8
Liabilities
Amounts due to banks
 
68.5
 
68.5
 
99.2
 
99.2
 
11.6
 
11.6
Payables from securities financing transactions measured at amortized cost
 
15.0
 
14.9
 
22.3
 
22.3
 
4.2
 
4.2
Cash collateral payables on derivative instruments
 
41.5
 
41.5
 
41.4
 
41.4
 
36.4
 
36.4
Customer deposits
 
733.1
 
734.5
 
712.5
 
712.3
 
525.1
 
524.8
Debt issued measured at amortized cost
 
224.0
 
224.3
 
230.9
 
229.9
 
114.6
 
113.5
Other financial liabilities measured at amortized cost
2
 
13.7
 
13.7
 
13.6
 
13.7
 
6.2
 
6.2
1 Comparative-period information has been revised. Refer to Note 2 for more information.
 
2 Excludes lease liabilities.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
90
Note 10
 
Derivative instruments
a) Derivative instruments
As of 30.9.23, USD bn
Derivative
financial
assets
Derivative
financial
liabilities
Notional values
related to derivative
financial assets and
liabilities
1
Other
notional
values
2
Derivative financial instruments
Interest rate
 
65.5
 
64.0
 
3,808
3
 
21,893
Credit derivatives
 
4.0
 
4.6
 
329
Foreign exchange
 
85.1
 
82.8
 
7,092
 
108
Equity / index
 
37.4
 
42.0
 
1,219
 
429
Commodities
 
1.9
 
1.7
 
154
 
21
Other
4
 
0.7
 
2.9
 
154
Total derivative financial instruments, based on IFRS netting
5
 
194.7
 
198.0
 
12,756
 
22,451
of which: Credit Suisse
6
 
61.5
 
66.1
 
2,586
 
7,930
Further netting potential not recognized on the balance
 
sheet
7
 
(175.6)
 
(180.7)
of which: netting of recognized financial liabilities / assets
 
(144.2)
 
(144.2)
of which: netting with collateral received / pledged
 
(31.4)
 
(36.5)
Total derivative financial instruments, after consideration of further netting potential
 
19.1
 
17.3
As of 30.6.23, USD bn
8
Derivative financial instruments
Interest rate
 
63.7
 
62.0
 
3,788
 
3
 
25,438
Credit derivatives
 
5.4
 
6.2
 
379
Foreign exchange
 
74.7
 
76.6
 
7,350
 
82
Equity / index
 
39.7
 
45.3
 
1,192
 
497
Commodities
 
1.7
 
1.7
 
159
 
23
Other
4
 
0.8
 
3.3
 
168
Total derivative financial instruments, based on IFRS netting
5
 
185.9
 
195.2
 
13,037
 
26,040
of which: Credit Suisse
6
 
63.2
 
68.7
 
2,832
 
10,689
Further netting potential not recognized on the balance
 
sheet
7
 
(170.0)
 
(174.9)
of which: netting of recognized financial liabilities / assets
 
(140.0)
 
(140.0)
of which: netting with collateral received / pledged
 
(30.0)
 
(34.9)
Total derivative financial instruments, after consideration of further netting potential
 
15.9
 
20.2
As of 31.12.22, USD bn
Derivative financial instruments
Interest rate
 
39.8
 
37.5
 
2,080
 
11,255
Credit derivatives
 
1.0
 
1.2
 
74
Foreign exchange
 
85.5
 
88.5
 
6,080
 
40
Equity / index
 
22.2
 
26.1
 
886
 
63
Commodities
 
1.4
 
1.4
 
132
 
18
Other
4
 
0.2
 
0.1
 
50
Total derivative financial instruments, based on IFRS netting
5
 
150.1
 
154.9
 
9,302
 
11,376
Further netting potential not recognized on the balance
 
sheet
7
 
(139.4)
 
(137.1)
of which: netting of recognized financial liabilities / assets
 
(110.9)
 
(110.9)
of which: netting with collateral received / pledged
 
(28.5)
 
(26.2)
Total derivative financial instruments, after consideration of further netting potential
 
10.7
 
17.8
1 In cases where derivative
 
financial instruments are presented
 
on a net basis
 
on the balance sheet,
 
the respective notional
 
values of the netted
 
derivative financial instruments
 
are still presented on
 
a gross basis.
Notional amounts of client-cleared ETD and OTC transactions
 
through central clearing counterparties are not disclosed, as they
 
have a significantly different risk profile.
 
2 Other notional values relate to derivatives
that are cleared through either
 
a central counterparty or an
 
exchange and settled on a
 
daily basis (except for
 
OTC derivatives
 
settled through collateralized-to-market arrangements, which are presented under
 
Derivative
financial assets and Derivative financial liabilities). The fair value of these derivatives is presented on the balance sheet net of the corresponding cash margin under Cash collateral receivables on derivative instruments
and Cash collateral payables on
 
derivative instruments and was not
 
material for all periods presented.
 
3 Includes USD 246bn (30 June 2023:
 
USD 225bn) related to OTC
 
derivatives settled through collateralized-
to-market arrangements.
 
4 Includes mainly Loan commitments measured at FVTPL, as
 
well as unsettled purchases and sales of non-derivative
 
financial instruments for which the changes in the
 
fair value between
trade date and settlement date are recognized as
 
derivative financial instruments.
 
5 Financial assets and liabilities are presented net on the
 
balance sheet if UBS has the unconditional and legally
 
enforceable right
to offset the recognized amounts, both
 
in the normal course of business
 
and in the event of default, bankruptcy
 
or insolvency of UBS or its
 
counterparties, and intends either to
 
settle on a net basis or to
 
realize the
asset and settle the liability simultaneously.
 
6 Refer to Note 2 for more information about the acquisition of the Credit Suisse Group.
 
7 Reflects the netting potential in accordance with enforceable master netting
and similar
 
arrangements where
 
not all
 
criteria for
 
a net
 
presentation on
 
the balance
 
sheet have
 
been met.
 
Refer to
 
“Note 21
 
Offsetting financial
 
assets and
 
financial liabilities”
 
in the
 
“Consolidated financial
statements” section of the Annual Report 2022 for more information.
 
8 Comparative-period information has been revised. Refer to Note 2 for more information.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
91
Note 10
 
Derivative instruments (continued)
b) Cash collateral on derivative instruments
USD bn
Receivables
30.9.23
Payables
30.9.23
Receivables
30.6.23
Payables
30.6.23
Receivables
31.12.22
Payables
31.12.22
Cash collateral on derivative instruments, based on IFRS netting
1
 
55.6
 
41.5
 
54.3
 
41.4
 
35.0
 
36.4
of which: Credit Suisse
2
 
19.6
 
9.8
 
19.3
 
10.0
Further netting potential not recognized on the balance
 
sheet
3
 
(35.0)
 
(27.2)
 
(34.1)
 
(26.7)
 
(22.9)
 
(21.9)
of which: netting of recognized financial liabilities / assets
 
(31.6)
 
(23.8)
 
(30.4)
 
(22.9)
 
(20.9)
 
(20.0)
of which: netting with collateral received / pledged
 
(3.4)
 
(3.4)
 
(3.8)
 
(3.8)
 
(1.9)
 
(1.9)
Cash collateral on derivative instruments, after consideration of further netting potential
 
20.6
 
14.4
 
20.2
 
14.7
 
12.1
 
14.5
1 Financial assets and liabilities are presented
 
net on the balance sheet if UBS
 
has the unconditional and legally enforceable
 
right to offset the recognized amounts,
 
both in the normal course of business
 
and in the
event of default, bankruptcy or insolvency of UBS or its counterparties, and intends either to settle on a net basis or to realize the asset
 
and settle the liability simultaneously.
 
2 Refer to Note 2 for more information
about the acquisition of the Credit Suisse Group.
 
3 Reflects the netting potential in accordance with enforceable master netting and similar arrangements where not all criteria for
 
a net presentation on the balance
sheet have been met. Refer to “Note 21 Offsetting financial assets and financial liabilities” in the “Consolidated financial statements” section of
 
the Annual Report 2022 for more information.
 
Note
11
 
Other assets and liabilities
 
a) Other financial assets measured at
 
amortized cost
USD m
30.9.23
30.6.23
1
31.12.22
Debt securities
 
44,391
 
43,664
 
44,594
Loans to financial advisors
 
2,582
 
2,588
 
2,611
Fee- and commission-related receivables
 
2,509
 
2,762
 
1,812
Finance lease receivables
 
5,829
 
5,868
 
1,315
Settlement and clearing accounts
 
 
410
 
811
 
1,175
Accrued interest income
 
2,846
 
2,746
 
1,259
Other
 
5,592
 
6,477
 
499
Total other financial assets measured at amortized cost
 
64,158
 
64,916
 
53,264
 
of which: Credit Suisse
2
 
11,460
 
12,829
1 Comparative-period information has been revised. Refer to Note 2 for more information.
 
2 Refer to Note 2 for more information about the acquisition of the Credit Suisse Group.
b) Other non-financial assets
USD m
30.9.23
30.6.23
31.12.22
Precious metals and other physical commodities
 
 
5,759
 
5,794
 
4,471
Deposits and collateral provided in connection with litigation,
 
regulatory and similar matters
1
 
2,938
 
3,006
 
2,205
Prepaid expenses
 
2,735
 
3,138
 
1,076
Current tax assets
 
 
1,262
 
1,331
 
182
VAT,
 
withholding tax and other tax receivables
 
1,262
 
1,279
 
1,286
Properties and other non-current assets held for sale
 
146
 
485
 
369
Other
 
1,988
 
1,885
 
578
Total other non-financial assets
 
16,091
 
16,919
 
10,166
of which: Credit Suisse
2
 
6,553
 
6,971
1 Refer to Note 15 for more information.
 
2 Refer to Note 2 for more information about the acquisition of the Credit Suisse Group.
c) Other financial liabilities measured at
 
amortized cost
USD m
30.9.23
30.6.23
31.12.22
Other accrued expenses
 
3,221
 
3,653
 
1,760
Accrued interest expenses
 
5,098
 
4,639
 
1,949
Settlement and clearing accounts
 
1,639
 
1,931
 
1,075
Lease liabilities
 
5,543
 
5,810
 
3,334
Other
 
 
3,710
 
3,370
 
1,457
Total other financial liabilities measured at amortized cost
 
19,211
 
19,403
 
9,575
of which: Credit Suisse
1
 
8,061
 
7,415
1 Refer to Note 2 for more information about the acquisition of the Credit Suisse Group.
d) Other financial liabilities designated at
 
fair value
 
USD m
30.9.23
30.6.23
31.12.22
Financial liabilities related to unit-linked investment contracts
 
14,177
 
15,124
 
13,221
Securities financing transactions
 
12,259
 
13,295
 
15,333
Over-the-counter debt instruments and other
 
6,848
 
7,703
 
1,684
Total other financial liabilities designated at fair value
 
33,284
 
36,122
 
30,237
of which: Credit Suisse
1
 
5,563
 
6,996
1 Refer to Note 2 for more information about the acquisition of the Credit Suisse Group.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
92
Note 11
 
Other assets and liabilities (continued)
e) Other non-financial liabilities
USD m
30.9.23
30.6.23
1
31.12.22
Compensation-related liabilities
 
8,399
 
7,310
 
6,822
of which: net defined benefit liability
 
748
 
777
 
469
Current tax liabilities
 
1,562
 
1,630
 
1,071
Deferred tax liabilities
 
353
 
434
 
236
VAT,
 
withholding tax and other tax payables
 
804
 
822
 
592
Deferred income
 
652
 
730
 
235
Other
 
832
 
970
 
84
Total other non-financial liabilities
 
12,603
 
11,896
 
9,040
of which: Credit Suisse
2
 
4,416
 
4,285
1 Comparative-period information has been revised. Refer to Note 2 for more information.
 
2 Refer to Note 2 for more information about the acquisition of the Credit Suisse Group.
 
Note
12
 
Debt issued designated at fair value
USD m
30.9.23
30.6.23
31.12.22
Issued debt instruments
Equity-linked
1
 
61,483
 
64,446
 
41,901
Rates-linked and fixed-rate
 
47,229
 
42,676
 
22,814
Credit-linked
 
7,766
 
7,655
 
2,170
Commodity-linked
 
4,141
 
4,234
 
4,294
Other
 
5,515
 
6,039
 
2,459
of which: debt that contributes to total loss-absorbing capacity
 
3,766
 
4,287
 
1,959
Total debt issued designated at fair value
 
126,135
 
125,050
 
73,638
of which: Credit Suisse
2
 
38,864
 
42,396
1 Includes investment fund unit-linked instruments issued.
 
2 Refer to Note 2 for more information about the acquisition of the Credit Suisse Group.
 
Note
13
 
Debt issued measured at amortized cost
USD m
30.9.23
30.6.23
31.12.22
Short-term debt
1
 
38,043
 
40,522
 
29,676
of which: Credit Suisse
 
1,691
 
4,932
Senior unsecured debt that contributes to total loss-absorbing
 
capacity (TLAC)
 
99,052
 
97,927
 
42,073
Senior unsecured debt other than TLAC
 
42,689
 
43,508
 
17,892
Covered bonds
 
3,813
 
3,934
Subordinated debt
 
14,248
 
16,832
 
16,017
of which: eligible as high-trigger loss-absorbing additional
 
tier 1 capital instruments
 
9,871
 
9,928
 
9,882
of which: eligible as low-trigger loss-absorbing additional
 
tier 1 capital instruments
 
1,195
 
1,190
 
1,189
of which: eligible as low-trigger loss-absorbing tier 2 capital
 
instruments
 
0
 
0
 
2,422
of which: eligible as non-Basel III-compliant tier 2 capital
 
instruments
 
536
 
539
 
536
Debt issued through the Swiss central mortgage institutions
 
24,807
 
24,862
 
8,962
Other long-term debt
 
1,372
 
3,273
Long-term debt
2
 
185,982
 
190,336
 
84,945
of which: Credit Suisse
3
 
41,147
 
52,406
Total debt issued measured at amortized cost
4
 
224,025
 
230,857
 
114,621
1 Debt with an original contractual maturity
 
of less than one year,
 
includes mainly certificates of deposit and
 
commercial paper.
 
2 Debt with an original contractual
 
maturity greater than or equal to one
 
year. The
classification of debt
 
issued into short-term
 
and long-term does
 
not consider any
 
early redemption features.
 
3 Refer to Note
 
2 for more
 
information about the
 
acquisition of the
 
Credit Suisse Group.
 
4 Net of
bifurcated embedded derivatives, the fair value of which was not material for
 
the periods presented.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
93
Note 14
 
Interest rate benchmark reform
During 2023, the Group
 
has largely completed the
 
transition of the remaining
 
USD London Interbank
 
Offered Rate
(LIBOR) contracts,
 
with corporate
 
loans of
 
approximately USD 1bn
 
(predominantly attributable
 
to positions
 
acquired
through the acquisition of the Credit Suisse
 
Group) as of 30 September 2023 relying on synthetic
 
LIBOR rates.
The Group
 
has approximately
 
USD 6bn equivalent
 
of yen-,
 
pounds sterling-
 
and US
 
dollar-denominated publicly
issued benchmark bonds (including approximately USD 3bn
 
of benchmark notes assumed
 
by UBS Group AG as a
result
 
of
 
the
 
acquisition
 
of
 
the
 
Credit
 
Suisse
 
Group)
 
that,
 
per
 
current
 
contractual
 
terms,
 
if
 
not
 
called
 
on
 
their
respective call dates, would reset based directly on JPY LIBOR, GBP LIBOR and USD
 
LIBOR, respectively. In October
2023, it was announced that
 
approximately USD 1bn of these
 
instruments would be redeemed
 
in November 2023
(on their first
 
call date). In
 
addition, certain
 
benchmark bonds
 
publicly issued
 
by the Group
 
reference rates
 
indirectly
derived from IBORs, if they are not
 
called on their respective call dates. These
 
bonds have robust fallback language
and the confirmation of interest rate calculation
 
mechanics will be communicated in advance
 
of any rate resets.
 
 
Note 15
 
Provisions and contingent liabilities
a) Provisions and contingent liabilities
The table below presents an overview of total provisions
 
and contingent liabilities.
USD m
30.9.23
30.6.23
1
31.12.22
Provisions related to expected credit losses (IFRS 9,
Financial Instruments
)
2
 
337
 
327
 
201
Provisions related to Credit Suisse loan commitments (IFRS
 
3,
Business Combinations
)
3
 
2,246
 
2,462
Provisions related to litigation, regulatory and similar matters
 
(IAS 37,
Provisions, Contingent Liabilities and Contingent Assets
)
 
4,017
 
6,126
 
2,586
Acquisition-related contingent liabilities (IFRS 3,
Business Combinations
)
3
 
2,973
 
2,992
Other provisions
 
1,942
 
1,044
 
456
Total provisions and contingent liabilities
 
11,515
 
12,951
 
3,243
of which: Credit Suisse
3
 
9,164
 
9,092
1 Comparative-period information has been revised. Refer to Note 2 for more information.
 
2 Refer to Note 8c for more information.
 
3 Refer to Note 2 for more information about the acquisition
 
of the Credit Suisse
Group.
The table below presents
 
additional information for provisions related
 
to litigation, regulatory and similar matters
and other provisions.
USD m
Litigation,
regulatory and
similar matters
1
Other
2
Total
Balance as of 31 December 2022
 
2,586
 
456
 
3,042
Balance as of 30 June 2023
 
6,126
 
1,044
 
7,170
Increase in provisions recognized in the income statement
 
26
 
999
 
1,024
Release of provisions recognized in the income statement
 
(14)
 
(9)
 
(23)
Provisions used in conformity with designated purpose
 
(2,108)
 
(84)
 
(2,192)
Foreign currency translation and other movements
 
(12)
 
(8)
 
(20)
Balance as of 30 September 2023
 
4,017
 
1,942
 
5,959
of which: Credit Suisse
3
 
2,283
 
1,501
 
3,784
1 Consists of provisions for losses resulting
 
from legal, liability and compliance risks.
 
2 Mainly includes provisions in connection
 
with the ongoing integration activities and
 
related to onerous contracts,
 
real estate
and employee benefits.
 
3 Refer to Note 2 for more information about the acquisition of the
 
Credit Suisse Group.
Information about provisions and
 
contingent liabilities in respect of
 
litigation, regulatory and similar matters,
 
as a
class,
 
is
 
included
 
in
 
Note
 
15b.
 
There
 
are
 
no
 
material
 
contingent
 
liabilities
 
associated
 
with
 
the
 
other
 
classes
 
of
provisions.
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
94
Note 15
 
Provisions and contingent liabilities
 
(continued)
b) Litigation, regulatory and similar matters
The Group operates in
 
a legal and regulatory
 
environment that exposes it to
 
significant litigation and similar risks
arising from
 
disputes and regulatory
 
proceedings. As a
 
result, UBS (which
 
for purposes of
 
this Note
 
may refer to
UBS
 
Group
 
AG
 
and/or
 
one
 
or
 
more
 
of
 
its
 
subsidiaries,
 
as
 
applicable)
 
is
 
involved
 
in
 
various
 
disputes
 
and
 
legal
proceedings, including litigation, arbitration,
 
and regulatory and criminal investigations.
Such matters are subject
 
to many uncertainties,
 
and the outcome and the
 
timing of resolution are
 
often difficult to
predict,
 
particularly in
 
the
 
earlier
 
stages
 
of
 
a
 
case.
 
There
 
are
 
also
 
situations
 
where
 
the
 
Group
 
may
 
enter into
 
a
settlement
 
agreement.
 
This
 
may
 
occur
 
in
 
order
 
to
 
avoid
 
the
 
expense,
 
management
 
distraction
 
or
 
reputational
implications of
 
continuing to
 
contest liability,
 
even
 
for those
 
matters for
 
which
 
the Group
 
believes it
 
should be
exonerated. The uncertainties inherent in all such matters affect the amount and timing of any potential outflows
for both matters
 
with respect to
 
which provisions have
 
been established and
 
other contingent liabilities.
 
The Group
makes
 
provisions
 
for
 
such
 
matters
 
brought
 
against
 
it
 
when,
 
in
 
the
 
opinion
 
of
 
management
 
after
 
seeking legal
advice, it
 
is more
 
likely than
 
not that
 
the Group
 
has a
 
present legal
 
or constructive obligation
 
as a
 
result of
 
past
events, it
 
is probable
 
that an
 
outflow of
 
resources will
 
be required,
 
and the
 
amount can
 
be reliably
 
estimated. Where
these factors
 
are
 
otherwise satisfied,
 
a
 
provision may
 
be
 
established for
 
claims that
 
have
 
not
 
yet been
 
asserted
against the
 
Group, but
 
are nevertheless
 
expected to
 
be, based
 
on
 
the Group’s
 
experience with
 
similar asserted
claims.
 
If
 
any
 
of
 
those
 
conditions
 
is
 
not
 
met,
 
such
 
matters
 
result
 
in
 
contingent
 
liabilities.
 
If
 
the
 
amount
 
of
 
an
obligation cannot
 
be reliably
 
estimated, a
 
liability exists
 
that is
 
not recognized
 
even if
 
an outflow
 
of resources
 
is
probable. Accordingly, no
 
provision is
 
established even if
 
the potential
 
outflow of resources
 
with respect
 
to such
matters could be significant. Developments relating to a matter that occur after the relevant reporting period, but
prior
 
to
 
the
 
issuance
 
of
 
financial
 
statements, which
 
affect
 
management’s assessment
 
of
 
the
 
provision
 
for
 
such
matter
 
(because,
 
for
 
example,
 
the
 
developments provide
 
evidence of
 
conditions that
 
existed
 
at
 
the
 
end
 
of
 
the
reporting
 
period),
 
are
 
adjusting
 
events
 
after
 
the
 
reporting period
 
under
 
IAS
 
10
 
and
 
must
 
be
 
recognized in
 
the
financial statements for the reporting period.
Specific litigation, regulatory and other matters are
 
described below, including all such matters that
 
management
considers to be material and others that management believes to be of significance to the Group due to potential
financial,
 
reputational
 
and
 
other
 
effects.
 
The
 
amount
 
of
 
damages
 
claimed,
 
the
 
size
 
of
 
a
 
transaction
 
or
 
other
information is
 
provided where
 
available and
 
appropriate in order
 
to assist
 
users in
 
considering the
 
magnitude of
potential exposures.
In the case of certain matters below, we state that we have established a provision, and for the other matters, we
make no such statement. When we
 
make this statement and we expect
 
disclosure of the amount of a provision
 
to
prejudice seriously our
 
position with other
 
parties in the
 
matter because it
 
would reveal what
 
UBS believes to
 
be
the
 
probable
 
and
 
reliably estimable
 
outflow, we
 
do
 
not
 
disclose
 
that amount.
 
In
 
some
 
cases we
 
are
 
subject to
confidentiality obligations
 
that preclude
 
such disclosure.
 
With respect
 
to the
 
matters for
 
which we
 
do not
 
state
whether we have
 
established a provision,
 
either: (a) we
 
have not established
 
a provision; or
 
(b) we have
 
established
a provision
 
but expect
 
disclosure of
 
that fact
 
to prejudice
 
seriously our
 
position with
 
other parties
 
in the
 
matter
because it would reveal the fact that
 
UBS believes an outflow of resources to be probable
 
and reliably estimable.
With respect to certain litigation, regulatory
 
and similar matters for which we
 
have established provisions, we are
able to
 
estimate the expected
 
timing of outflows.
 
However, the aggregate
 
amount of the
 
expected outflows for
those matters for which we
 
are able to estimate expected
 
timing is immaterial relative to
 
our current and expected
levels of liquidity over the relevant time periods.
The
 
aggregate
 
amount
 
provisioned
 
for
 
litigation,
 
regulatory
 
and
 
similar
 
matters
 
as
 
a
 
class
 
is
 
disclosed
 
in
 
the
“Provisions”
 
table
 
in
 
Note
 
15a
 
above. It
 
is
 
not
 
practicable
 
to
 
provide
 
an
 
aggregate
 
estimate
 
of
 
liability
 
for
 
our
litigation, regulatory
 
and similar
 
matters as
 
a class
 
of contingent
 
liabilities beyond
 
what has
 
been identified
 
as a
consequence of
 
the acquisition
 
of Credit
 
Suisse as
 
set out
 
below. Doing
 
so would
 
require UBS
 
to provide
 
speculative
legal assessments as to claims and proceedings that involve unique fact patterns or novel legal theories, that have
not yet
 
been initiated
 
or are
 
at early
 
stages of
 
adjudication,
 
or as
 
to which
 
alleged damages
 
have not
 
been quantified
by the claimants. Although
 
UBS therefore cannot provide a
 
numerical estimate of the
 
future losses that could arise
from litigation,
 
regulatory and
 
similar matters,
 
UBS believes
 
that the
 
aggregate amount
 
of possible
 
future losses
from this class that are more than remote
 
substantially exceeds the level of current
 
provisions.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
95
Note 15
 
Provisions and contingent liabilities
 
(continued)
Litigation, regulatory
 
and similar
 
matters may
 
also result
 
in non-monetary
 
penalties and
 
consequences. A
 
guilty plea
to, or conviction of, a crime could have material consequences for UBS. Resolution of regulatory proceedings may
require UBS to obtain waivers of regulatory disqualifications to maintain certain operations, may entitle regulatory
authorities to limit, suspend or terminate
 
licenses and regulatory authorizations, and may
 
permit financial market
utilities to
 
limit, suspend
 
or terminate
 
UBS’s participation
 
in such
 
utilities. Failure
 
to obtain
 
such waivers,
 
or any
limitation, suspension
 
or termination
 
of licenses,
 
authorizations or
 
participations, could
 
have material
 
consequences
for UBS.
The
 
risk
 
of
 
loss
 
associated with
 
litigation, regulatory
 
and
 
similar matters
 
is
 
a
 
component of
 
operational risk
 
for
purposes of determining
 
capital requirements.
 
Information concerning
 
our capital requirements
 
and the calculation
of operational risk for this purpose is included
 
in the “Capital management” section of
 
this report.
Matters related
 
to Credit
 
Suisse entities
 
are separately
 
described herein.
 
The amounts
 
shown in
 
the table
 
below
reflect the provisions
 
recorded under IFRS
 
accounting principles.
 
In connection with
 
the acquisition of
 
Credit Suisse,
UBS Group AG additionally has reflected
 
in its purchase accounting under IFRS
 
3 a further valuation adjustment of
USD 3bn reflecting an
 
estimate of outflows relating
 
to contingent liabilities for
 
all present obligations included in
the scope of the acquisition at fair value upon closing, even
 
if it is not probable that they will
 
result in an outflow
of resources, significantly
 
increasing the recognition
 
threshold for litigation
 
liabilities beyond those
 
that generally
apply under IFRS and US GAAP.
Provisions for litigation, regulatory and similar matters
 
by business division and in Group Items
1
USD m
Global Wealth
Management
Personal &
Corporate
Banking
 
Asset
Management
Investment
Bank
Non-core
and Legacy
2
Group Items
2
Total
Balance as of 31 December 2022
 
1,182
 
159
 
8
 
308
 
770
 
158
 
2,586
Balance as of 30 June 2023
 
1,289
 
163
 
8
 
329
 
4,174
 
163
 
6,126
Increase in provisions recognized in the income statement
 
24
 
0
 
1
 
0
 
0
 
0
 
26
Release of provisions recognized in the income statement
 
(2)
 
(9)
 
0
 
0
 
(2)
 
0
 
(14)
Provisions used in conformity with designated purpose
 
(123)
 
0
 
0
 
(57)
 
(1,928)
 
0
 
(2,108)
Foreign currency translation and other movements
 
(27)
 
(5)
 
0
 
0
 
21
 
0
 
(12)
Balance as of 30 September 2023
 
1,160
 
149
 
9
 
272
 
2,264
 
163
 
4,017
of which: Credit Suisse
3
 
11
 
0
 
0
 
7
 
2,260
 
3
 
2,283
1 Provisions, if any,
 
for the matters described in items
 
A3, B8 and B10 of this Note
 
are recorded in Global Wealth Management
 
;
 
provisions, if any,
 
for the matters described in items
 
A2, B1, B2, B3, B4, B5,
 
B6, B7,
B9, B11 and
 
B12 of this
 
Note are recorded
 
in Non-core and
 
Legacy; provisions,
 
if any,
 
for the matters
 
described in items
 
B13 and B14
 
of this Note
 
are recorded in
 
Group Items.
 
Provisions, if
 
any, for
 
the matters
described in items A1 and A5 of this Note are allocated between Global Wealth Management and Personal & Corporate Banking; and provisions, if any, for the matters described in item A4 are allocated between the
Investment Bank and Group Items.
 
2 Starting with the third quarter of 2023, Non-core and Legacy represents a separate reportable segment and Group Functions has been renamed Group Items. Prior periods have
been revised to reflect these changes.
 
3 Refer to Note 2 for more information about the acquisition of the Credit Suisse Group.
A. Litigation, regulatory and similar matters
 
involving UBS AG and subsidiaries
1. Inquiries regarding cross-border wealth management
 
businesses
 
Tax
 
and regulatory
 
authorities in
 
a number
 
of countries
 
have made
 
inquiries, served
 
requests for
 
information or
examined
 
employees
 
located
 
in
 
their
 
respective
 
jurisdictions
 
relating
 
to
 
the
 
cross-border
 
wealth
 
management
services provided by UBS and other financial institutions.
Since 2013, UBS
 
(France) S.A., UBS AG
 
and certain former employees
 
have been under investigation in
 
France in
relation to UBS’s cross-border business with French
 
clients. In connection with this investigation, the
 
investigating
judges ordered UBS AG to provide bail (“
caution
”) of EUR 1.1bn.
In 2019,
 
the court of
 
first instance
 
returned a verdict
 
finding UBS AG
 
guilty of
 
unlawful solicitation of
 
clients on
French territory and aggravated
 
laundering of the proceeds
 
of tax fraud, and UBS
 
(France) S.A. guilty of aiding
 
and
abetting unlawful
 
solicitation and of
 
laundering the
 
proceeds of
 
tax fraud.
 
The court
 
imposed fines
 
aggregating
EUR 3.7bn on UBS AG and UBS (France) S.A. and awarded EUR 800m of
 
civil damages to the French state. A trial
in the French Court of Appeal took
 
place in March 2021. In December 2021, the Court
 
of Appeal found UBS AG
guilty of unlawful solicitation and aggravated laundering of the proceeds of tax fraud. The court ordered a fine of
EUR
 
3.75m,
 
the
 
confiscation
 
of
 
EUR
 
1bn,
 
and
 
awarded
 
civil
 
damages
 
to
 
the
 
French
 
state
 
of
 
EUR
 
800m.
 
UBS
appealed the decision
 
to the French
 
Supreme Court. On
 
27 September 2023,
 
the Supreme Court
 
held a hearing
on
 
UBS’s appeal.
 
At
 
the conclusion
 
of the
 
hearing the
 
court stated
 
that it
 
will communicate
 
its
 
decision on
 
15
November 2023. The fine and confiscation imposed
 
by the Court of Appeal are suspended during the
 
appeal. The
civil damages award has been paid to the French
 
state (EUR 99m of which was deducted from the bail),
 
subject to
the result of UBS’s appeal.
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
96
Note 15
 
Provisions and contingent liabilities
 
(continued)
Our
 
balance sheet
 
at 30
 
September 2023
 
reflected provisions
 
with respect
 
to this
 
matter in
 
an
 
amount of
 
EUR
1.1bn (USD 1.2bn).
 
The wide range
 
of possible outcomes
 
in this
 
case contributes to
 
a high
 
degree of estimation
uncertainty and the provision
 
reflects our best estimate
 
of possible financial implications,
 
although actual penalties
and civil damages could exceed (or may be less
 
than) the provision amount.
2. Claims related to sales of residential mortgage-backed
 
securities and mortgages
From 2002
 
through 2007,
 
prior to
 
the crisis
 
in the
 
US residential
 
loan market,
 
UBS was
 
a substantial
 
issuer and
underwriter of US residential mortgage-backed securities (RMBS) and was a
 
purchaser and seller of US residential
mortgages.
 
In 2018,
 
the DOJ
 
filed a
 
civil complaint
 
in the
 
District Court
 
for the
 
Eastern District
 
of New
 
York. The
 
complaint
seeks unspecified civil monetary
 
penalties under the
 
Financial Institutions Reform, Recovery and
 
Enforcement Act
of 1989 related to UBS’s issuance, underwriting and sale of 40 RMBS transactions in 2006
 
and 2007. UBS moved
to dismiss the
 
civil complaint in 2019.
 
Later in 2019, the
 
district court denied UBS’s
 
motion to dismiss. In
 
August
2023, UBS reached a settlement
 
with the DOJ, under
 
which UBS paid USD 1.435bn
 
to resolve all civil claims
 
by the
DOJ.
3. Madoff
In relation to
 
the Bernard
 
L. Madoff Investment
 
Securities LLC (BMIS)
 
investment fraud,
 
UBS AG, UBS
 
(Luxembourg)
S.A. (now UBS
 
Europe SE, Luxembourg
 
branch) and certain
 
other UBS subsidiaries have
 
been subject to
 
inquiries
by a
 
number of
 
regulators, including
 
the Swiss
 
Financial Market
 
Supervisory Authority
 
(FINMA) and
 
the Luxembourg
Commission
 
de
 
Surveillance
 
du
 
Secteur
 
Financier.
 
Those
 
inquiries
 
concerned
 
two
 
third-party
 
funds
 
established
under Luxembourg
 
law,
 
substantially all
 
assets of
 
which were
 
with BMIS,
 
as well
 
as certain
 
funds established
 
in
offshore
 
jurisdictions
 
with
 
either
 
direct
 
or
 
indirect
 
exposure
 
to
 
BMIS.
 
These
 
funds
 
faced
 
severe
 
losses,
 
and
 
the
Luxembourg funds are in liquidation. The documentation establishing both funds identifies UBS entities in various
roles,
 
including custodian,
 
administrator,
 
manager,
 
distributor and
 
promoter,
 
and indicates
 
that UBS
 
employees
serve as board members.
In 2009 and 2010, the liquidators
 
of the two Luxembourg funds
 
filed claims against UBS entities,
 
non-UBS entities
and certain individuals, including
 
current and former UBS employees,
 
seeking amounts totaling approximately
 
EUR
2.1bn, which
 
includes amounts
 
that the
 
funds may
 
be held
 
liable to
 
pay the
 
trustee for
 
the liquidation
 
of BMIS
(BMIS Trustee).
A large number of alleged beneficiaries have filed claims
 
against UBS entities (and non-UBS entities) for purported
losses relating to
 
the Madoff fraud.
 
The majority of
 
these cases have
 
been filed in
 
Luxembourg, where decisions
that the claims in eight test cases were inadmissible have been affirmed by the Luxembourg Court of Appeal, and
the Luxembourg Supreme Court has dismissed
 
a further appeal in one of the test
 
cases.
In the
 
US, the
 
BMIS Trustee
 
filed claims
 
against UBS
 
entities, among
 
others, in
 
relation to
 
the two
 
Luxembourg
funds and one of
 
the offshore funds. The
 
total amount claimed against
 
all defendants in
 
these actions was
 
not less
than USD
 
2bn. In
 
2014, the
 
US Supreme
 
Court rejected
 
the BMIS
 
Trustee’s motion for
 
leave to
 
appeal decisions
dismissing all
 
claims except
 
those for
 
the recovery
 
of approximately
 
USD 125m
 
of payments
 
alleged to
 
be fraudulent
conveyances
 
and
 
preference
 
payments.
 
In
 
2016,
 
the
 
bankruptcy
 
court
 
dismissed
 
these
 
claims
 
against
 
the
 
UBS
entities. In 2019,
 
the Court of Appeals
 
reversed the dismissal of
 
the BMIS Trustee’s remaining
 
claims, and the US
Supreme Court
 
subsequently denied
 
a petition seeking
 
review of the
 
Court of Appeals’
 
decision. The case
 
has been
remanded to the Bankruptcy Court for further
 
proceedings.
4. Foreign exchange, LIBOR and benchmark rates,
 
and other trading practices
Foreign exchange-related regulatory matters:
 
Beginning in 2013, numerous authorities commenced investigations
concerning possible
 
manipulation of
 
foreign
 
exchange markets
 
and
 
precious
 
metals prices.
 
As
 
a
 
result
 
of these
investigations,
 
UBS
 
entered
 
into
 
resolutions
 
with
 
Swiss,
 
US
 
and
 
United
 
Kingdom
 
regulators
 
and
 
the
 
European
Commission. UBS
 
was granted
 
conditional immunity
 
by the Antitrust
 
Division of
 
the DOJ
 
and by
 
authorities in
 
other
jurisdictions
 
in
 
connection
 
with
 
potential
 
competition
 
law
 
violations
 
relating
 
to
 
foreign
 
exchange
 
and
 
precious
metals businesses.
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
97
Note 15
 
Provisions and contingent liabilities
 
(continued)
Foreign exchange-related civil litigation:
 
Putative class actions have been filed since 2013 in US federal
 
courts and
in other jurisdictions against
 
UBS and other banks on
 
behalf of putative classes of
 
persons who engaged in foreign
currency transactions with any of the defendant banks. UBS has resolved US federal court class actions relating to
foreign currency transactions with
 
the defendant banks
 
and persons who
 
transacted in foreign
 
exchange futures
contracts and options on such futures
 
under a settlement agreement that
 
provides for UBS to pay an
 
aggregate of
USD 141m and
 
provide cooperation
 
to the
 
settlement classes.
 
Certain class
 
members have
 
excluded themselves
from that
 
settlement
 
and have
 
filed individual
 
actions in
 
US and
 
English courts
 
against
 
UBS and
 
other banks,
 
alleging
violations of
 
US and
 
European competition laws
 
and unjust
 
enrichment. UBS
 
and the
 
other banks
 
have resolved
those individual matters.
In
 
2015, a
 
putative
 
class action
 
was filed
 
in
 
federal court
 
against UBS
 
and numerous
 
other banks
 
on
 
behalf of
persons and
 
businesses in
 
the US
 
who directly
 
purchased foreign
 
currency from
 
the defendants
 
and alleged
 
co-
conspirators for
 
their own
 
end use.
 
In 2022,
 
the court
 
denied plaintiffs’
 
motion for
 
class certification.
 
In March
2023, the court granted defendants’ summary
 
judgment motion, dismissing the case. Plaintiffs
 
have appealed.
LIBOR and other benchmark-related regulatory
 
matters:
 
Numerous government agencies conducted investigations
regarding potential improper attempts by UBS, among others, to manipulate LIBOR and other benchmark rates at
certain times. UBS reached settlements or otherwise concluded investigations relating to benchmark interest rates
with the investigating authorities. UBS
 
was granted conditional leniency or
 
conditional immunity from authorities
in certain jurisdictions,
 
including the Antitrust
 
Division of the DOJ
 
and the Swiss Competition
 
Commission (WEKO),
in connection with potential antitrust or competition law violations related to certain rates. However, UBS has not
reached a final settlement with WEKO, as the
 
Secretariat of WEKO has asserted that UBS does
 
not qualify for full
immunity.
LIBOR and
 
other benchmark-related
 
civil litigation:
 
A number
 
of putative
 
class actions
 
and other
 
actions are
 
pending
in the federal
 
courts in New
 
York against UBS
 
and numerous other banks
 
on behalf of
 
parties who transacted in
certain interest rate benchmark-based derivatives. Also
 
pending in the US
 
and in other jurisdictions are
 
a number
of other
 
actions asserting losses
 
related to
 
various products whose
 
interest rates were
 
linked to
 
LIBOR and other
benchmarks, including
 
adjustable rate
 
mortgages, preferred
 
and debt securities,
 
bonds pledged
 
as collateral, loans,
depository
 
accounts,
 
investments
 
and
 
other
 
interest-bearing
 
instruments.
 
The
 
complaints
 
allege
 
manipulation,
through
 
various
 
means,
 
of
 
certain
 
benchmark
 
interest
 
rates,
 
including
 
USD LIBOR,
 
Euroyen
 
TIBOR,
 
Yen
 
LIBOR,
EURIBOR,
 
CHF LIBOR,
 
GBP
 
LIBOR
 
and
 
seek
 
unspecified
 
compensatory
 
and
 
other
 
damages
 
under
 
varying
 
legal
theories.
USD LIBOR class
 
and individual
 
actions in
 
the US:
In 2013
 
and 2015,
 
the district
 
court in
 
the USD LIBOR
 
actions
dismissed, in whole or in
 
part, certain plaintiffs’ antitrust
 
claims, federal racketeering claims,
 
Commodity Exchange
Act claims, and state common law
 
claims, and again dismissed the
 
antitrust claims in 2016 following
 
an appeal. In
2021, the
 
Second Circuit affirmed
 
the district court’s
 
dismissal in
 
part and
 
reversed in part
 
and remanded to
 
the
district
 
court
 
for
 
further
 
proceedings.
 
The
 
Second
 
Circuit,
 
among
 
other
 
things,
 
held
 
that
 
there
 
was
 
personal
jurisdiction over
 
UBS and
 
other foreign
 
defendants.
 
Separately, in
 
2018, the
 
Second Circuit
 
reversed in
 
part the
district court’s
 
2015 decision
 
dismissing certain
 
individual plaintiffs’
 
claims and
 
certain of
 
these actions
 
are now
proceeding. In 2018, the district court
 
denied plaintiffs’ motions for class certification in
 
the USD class actions for
claims pending
 
against UBS,
 
and plaintiffs
 
sought permission
 
to appeal
 
that ruling
 
to the
 
Second Circuit.
 
The Second
Circuit denied the petition
 
to appeal. In
 
2020, an individual action
 
was filed in
 
the Northern District of
 
California
against UBS and numerous other banks alleging that the
 
defendants conspired to fix the interest rate used as
 
the
basis for
 
loans to
 
consumers by jointly
 
setting the USD LIBOR
 
rate and
 
monopolized the market
 
for LIBOR-based
consumer
 
loans
 
and
 
credit
 
cards.
 
In
 
September
 
2022,
 
the
 
court
 
granted
 
defendants’
 
motion
 
to
 
dismiss
 
the
complaint in its
 
entirety, while allowing plaintiffs
 
the opportunity to file
 
an amended complaint. Plaintiffs filed
 
an
amended complaint in October 2022, and defendants have moved to dismiss the amended complaint. In October
2023, the court dismissed the amended complaint
 
with prejudice.
Other benchmark class actions in the US:
 
Yen
 
LIBOR / Euroyen TIBOR
– In 2017, the court dismissed one Yen LIBOR / Euroyen TIBOR action in its entirety on
standing grounds. In
 
2020, the appeals
 
court reversed the
 
dismissal and, subsequently, plaintiffs
 
in that action
 
filed
an amended complaint
 
focused on Yen
 
LIBOR. In 2022,
 
the court granted
 
UBS’s motion for
 
reconsideration and
dismissed the case against UBS. The dismissal of the case against UBS could be appealed following
 
the disposition
of the case against the remaining defendant in the
 
district court.
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
98
Note 15
 
Provisions and contingent liabilities
 
(continued)
CHF LIBOR
 
– In 2017, the court
 
dismissed the CHF LIBOR action on standing
 
grounds and failure to state a
 
claim.
Plaintiffs
 
filed
 
an
 
amended
 
complaint,
 
and
 
the
 
court
 
granted
 
a
 
renewed
 
motion
 
to
 
dismiss
 
in
 
2019.
 
Plaintiffs
appealed. In
 
2021, the
 
Second Circuit
 
granted the
 
parties’ joint
 
motion to
 
vacate the dismissal
 
and remand
 
the case
for further
 
proceedings. Plaintiffs
 
filed a
 
third amended
 
complaint in
 
November 2022
 
and defendants
 
moved to
dismiss the amended complaint in January
 
2023.
EURIBOR
 
–
 
In
 
2017,
 
the
 
court
 
in
 
the
 
EURIBOR
 
lawsuit
 
dismissed
 
the
 
case
 
as
 
to
 
UBS
 
and
 
certain
 
other
 
foreign
defendants for lack of personal jurisdiction.
 
Plaintiffs have appealed.
 
GBP LIBOR
 
– The court dismissed the GBP LIBOR action
 
in 2019. Plaintiffs have appealed.
 
Government bonds:
 
Putative class actions
 
have been filed
 
since 2015 in
 
US federal courts
 
against UBS and
 
other
banks
 
on
 
behalf
 
of
 
persons
 
who
 
participated
 
in
 
markets
 
for
 
US
 
Treasury
 
securities
 
since
 
2007.
 
A
 
consolidated
complaint was filed in 2017 in the US District Court
 
for the Southern District of New York alleging that the banks
colluded with
 
respect to,
 
and manipulated
 
prices of,
 
US Treasury
 
securities sold
 
at auction
 
and in
 
the secondary
market and
 
asserting claims under
 
the antitrust
 
laws and
 
for unjust
 
enrichment. Defendants’ motions
 
to dismiss
the consolidated complaint
 
were granted in 2021.
 
Plaintiffs filed an amended
 
complaint, which defendants
 
moved
to dismiss later in 2021. In March 2022, the court granted
 
defendants’ motion to dismiss that complaint.
 
Plaintiffs
have
 
appealed the
 
dismissal. Similar
 
class
 
actions have
 
been
 
filed concerning
 
European government
 
bonds and
other government bonds.
In
 
2021,
 
the
 
European Commission
 
issued
 
a
 
decision finding
 
that
 
UBS
 
and
 
six
 
other
 
banks
 
breached European
Union antitrust rules in 2007–2011
 
relating to European government
 
bonds. The European Commission
 
fined UBS
EUR 172m. UBS is appealing the amount of the
 
fine.
With respect
 
to additional
 
matters and
 
jurisdictions not
 
encompassed by
 
the settlements
 
and orders
 
referred to
above,
 
our
 
balance
 
sheet
 
at
 
30
 
September
 
2023
 
reflected
 
a
 
provision
 
in
 
an
 
amount
 
that
 
UBS
 
believes
 
to
 
be
appropriate under
 
the applicable
 
accounting standard.
 
As in
 
the case
 
of other
 
matters for
 
which we
 
have established
provisions, the future outflow
 
of resources in respect
 
of such matters
 
cannot be determined with
 
certainty based
on currently available information and
 
accordingly may ultimately prove to
 
be substantially greater (or may be less)
than the provision that we have recognized.
5. Swiss retrocessions
The Federal Supreme Court of Switzerland ruled in 2012, in
 
a test case against UBS, that distribution fees paid
 
to
a firm for distributing third-party
 
and intra-group investment funds
 
and structured products must be disclosed
 
and
surrendered
 
to
 
clients
 
who have
 
entered
 
into
 
a
 
discretionary
 
mandate agreement
 
with
 
the
 
firm,
 
absent a
 
valid
waiver. FINMA issued a
 
supervisory note
 
to all Swiss
 
banks in response
 
to the Supreme
 
Court decision.
 
UBS has
 
met
the FINMA requirements and has notified all potentially
 
affected clients.
The Supreme
 
Court decision
 
has resulted, and
 
continues to
 
result, in a
 
number of
 
client requests
 
for UBS to
 
disclose
and potentially surrender
 
retrocessions. Client requests are assessed on a case-by-case basis. Considerations taken
into account
 
when assessing
 
these cases
 
include, among
 
other things,
 
the existence
 
of a discretionary
 
mandate and
whether or not the client documentation contained
 
a valid waiver with respect to distribution
 
fees.
Our balance sheet at
 
30 September 2023 reflected a
 
provision with respect to
 
matters described in this item
 
5 in
an amount that UBS
 
believes to be
 
appropriate under the applicable accounting standard.
 
The ultimate exposure
will depend on client requests and the resolution thereof, factors that are difficult to predict and assess. Hence, as
in the case of other
 
matters for which we have
 
established provisions, the
 
future outflow of resources
 
in respect of
such matters
 
cannot be
 
determined with certainty
 
based on
 
currently available information
 
and accordingly may
ultimately prove to be substantially greater (or
 
may be less) than the provision that we
 
have recognized.
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
99
Note 15
 
Provisions and contingent liabilities
 
(continued)
B. Litigation regulatory and similar matters
 
involving Credit Suisse entities
1. Mortgage-related matters
Government and
 
regulatory
 
related matters
:
DOJ RMBS
 
settlement
 
– In January
 
2017, Credit Suisse
 
Securities (USA)
LLC
 
(CSS
 
LLC)
 
and
 
its
 
current
 
and
 
former
 
US
 
subsidiaries
 
and
 
US
 
affiliates
 
reached
 
a
 
settlement
 
with
 
the
 
US
Department of
 
Justice (DOJ)
 
related to
 
its legacy
 
Residential
 
Mortgage-Backed
 
Securities (RMBS)
 
business, a
 
business
conducted through
 
2007. The
 
settlement resolved
 
potential civil
 
claims by
 
the DOJ
 
related to certain
 
of those
 
Credit
Suisse entities’
 
packaging, marketing,
 
structuring, arrangement,
 
underwriting, issuance
 
and sale
 
of RMBS.
 
Pursuant
to the terms of
 
the settlement a civil monetary penalty was
 
paid to the DOJ in
 
January 2017. The settlement also
required
 
the
 
Credit
 
Suisse
 
entities
 
to
 
provide
 
certain
 
levels
 
of
 
consumer
 
relief
 
measures,
 
including
 
affordable
housing
 
payments
 
and
 
loan
 
forgiveness,
 
and
 
the
 
DOJ
 
and
 
Credit
 
Suisse
 
agreed
 
to
 
the
 
appointment
 
of
 
an
independent
 
monitor
 
to
 
oversee
 
the
 
completion
 
of
 
the
 
consumer
 
relief
 
requirements
 
of
 
the
 
settlement.
 
Credit
Suisse continues
 
to evaluate
 
its approach
 
toward satisfying
 
its remaining
 
consumer relief
 
obligations, and Credit
Suisse currently
 
anticipates that
 
it will
 
take much
 
longer than
 
the five-year
 
period provided
 
in the
 
settlement to
satisfy
 
in
 
full
 
its
 
obligations
 
in
 
respect
 
of
 
these
 
consumer
 
relief
 
measures,
 
subject
 
to
 
risk
 
appetite
 
and
 
market
conditions. Credit Suisse expects to incur costs
 
in relation to satisfying those obligations.
 
The amount of consumer
relief Credit Suisse must provide also
 
increases after 2021 pursuant
 
to the original settlement
 
by 5% per annum
 
of
the outstanding amount
 
due until these
 
obligations are settled.
 
The monitor publishes
 
reports periodically on
 
these
consumer relief matters.
Civil litigation: Repurchase litigations
 
– CSS LLC and/or certain of its affiliates
 
have also been named as defendants
in various
 
civil litigation
 
matters related to
 
their roles
 
as issuer,
 
sponsor, depositor, underwriter
 
and/or servicer
 
of
RMBS
 
transactions.
 
These
 
cases
 
currently
 
include
 
repurchase
 
actions
 
by
 
RMBS
 
trusts
 
and/or
 
trustees,
 
in
 
which
plaintiffs
 
generally
 
allege
 
breached
 
representations
 
and
 
warranties
 
in
 
respect
 
of
 
mortgage
 
loans
 
and
 
failure
 
to
repurchase such
 
mortgage loans
 
as required
 
under the
 
applicable agreements. The
 
amounts disclosed
 
below do
not reflect actual realized plaintiff losses to date or anticipated future litigation exposure. Unless otherwise stated,
these amounts reflect the original
 
unpaid principal balance amounts
 
as alleged in these actions
 
and do not include
any reduction in principal amounts since issuance.
DLJ Mortgage Capital, Inc. (DLJ) is a defendant in New York state court in: (i)
 
one action brought by Asset Backed
Securities Corporation
 
Home Equity
 
Loan Trust,
 
Series 2006-HE7,
 
in which plaintiff
 
alleges damages
 
of not
 
less than
USD 374m in an amended complaint filed in August 2019; in January 2020, DLJ filed a motion to
 
dismiss; (ii) one
action brought by Home Equity Asset Trust,
 
Series 2006-8, in which plaintiff alleges damages of
 
not less than USD
436m; (iii) one
 
action brought by
 
Home Equity Asset
 
Trust 2007-1, in
 
which plaintiff alleges
 
damages of not
 
less
than USD
 
420m; in December
 
2018, the
 
court denied DLJ’s
 
motion for partial
 
summary judgment in
 
this action,
which was
 
affirmed on
 
appeal; in
 
March 2022,
 
the New
 
York State
 
Court of
 
Appeals reversed
 
the decision
 
and
ordered that
 
DLJ’s motion
 
for partial
 
summary judgment
 
be granted;
 
a non-jury
 
trial in
 
the action
 
was held
 
between
January and February 2023, and
 
a decision is pending; (iv)
 
one action brought by Home
 
Equity Asset Trust 2007-2,
in which plaintiff alleges damages of not less than USD 495m; and (v) one action brought by CSMC Asset-Backed
Trust 2007-NC1, in which no damages amount
 
is alleged. These actions are at various procedural
 
stages.
 
DLJ is also a defendant in one
 
action brought by Home Equity Asset Trust Series 2007-3, in
 
which plaintiff alleges
damages of not
 
less than USD
 
206m. In March
 
2022, DLJ and
 
the plaintiffs executed an
 
agreement to settle this
action. The
 
settlement remains
 
subject to
 
approval through
 
a trust
 
instruction proceeding
 
brought in
 
Minnesota
state court by the trustee of the plaintiff
 
trust.
 
DLJ and its affiliate, Select Portfolio Servicing, Inc. (SPS), were defendants
 
in two consolidated actions in New York
state court: one action brought
 
by Home Equity Mortgage
 
Trust Series 2006-1, Home
 
Equity Mortgage Trust
 
Series
2006-3 and Home
 
Equity Mortgage Trust
 
Series 2006-4, in
 
which plaintiffs allege
 
damages of not
 
less than USD
730m; and one action brought
 
by Home Equity Mortgage Trust
 
Series 2006-5, in which plaintiff alleges
 
damages
of not less than USD 500m.
 
In April 2021, DLJ, SPS and
 
the plaintiffs executed an
 
agreement to settle both actions
for the aggregate amount of
 
USD 500m, for which Credit
 
Suisse was fully reserved. In
 
May 2023, the Minnesota
state court approved the settlement
 
through a trust instruction proceeding brought by
 
the trustee of the
 
plaintiff
trusts. The New York state court dismissed
 
the underlying actions with prejudice in
 
July 2023.
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
100
Note 15
 
Provisions and contingent liabilities
 
(continued)
2. Tax and securities law matters
In
 
May 2014,
 
Credit
 
Suisse AG
 
entered
 
into settlement
 
agreements with
 
several US
 
regulators regarding
 
its
 
US
cross-border matters. As part of the agreements, Credit Suisse AG, among other things, engaged an independent
corporate monitor
 
that reports
 
to the
 
New York State
 
Department of
 
Financial Services.
 
As of
 
July 2018,
 
the monitor
concluded both
 
his review
 
and his
 
assignment. Credit
 
Suisse AG
 
continues to
 
report
 
to and
 
cooperate with
 
US
authorities in
 
accordance with
 
Credit
 
Suisse AG’s
 
obligations under
 
the agreements,
 
including by
 
conducting a
review
 
of
 
cross-border
 
services
 
provided
 
by
 
Credit
 
Suisse’s
 
Switzerland-based Israel
 
Desk.
 
Most
 
recently,
 
Credit
Suisse AG has provided information to US authorities regarding potentially undeclared US assets held by clients at
Credit Suisse AG since the May 2014 plea. Credit Suisse AG continues
 
to cooperate with the authorities. In March
2023,
 
the
 
US
 
Senate Finance
 
Committee issued
 
a
 
report
 
criticizing
 
Credit
 
Suisse AG’s
 
history
 
regarding
 
US
 
tax
compliance. The report called on the DOJ to investigate
 
Credit Suisse AG’s compliance with the 2014 plea.
In February 2021,
 
a qui tam
 
complaint was filed
 
in the Eastern
 
District of Virginia, alleging
 
that Credit Suisse AG
had violated the
 
False Claims Act
 
by failing to
 
disclose all US
 
accounts at the
 
time of the
 
2014 plea, which
 
allegedly
allowed Credit Suisse AG to pay a criminal fine in 2014 that was purportedly lower than it should have been. The
DOJ moved to
 
dismiss the case, and
 
the Court summarily dismissed
 
the suit. The case
 
is now on
 
appeal with the
US Federal Court of Appeals for the Fourth
 
Circuit.
3. Rates-related matters
Regulatory matters
: Regulatory authorities in a number of jurisdictions, including the US, UK, EU and Switzerland,
have for an extended period of time been conducting investigations into the setting of LIBOR and other reference
rates with
 
respect to
 
a number
 
of currencies,
 
as well
 
as the
 
pricing of
 
certain related
 
derivatives. These
 
ongoing
investigations have included
 
information requests from regulators
 
regarding LIBOR-setting practices
 
and reviews of
the activities
 
of various
 
financial institutions,
 
including Credit
 
Suisse Group
 
AG, which
 
was a
 
member of
 
three LIBOR
rate-setting panels
 
(US Dollar
 
LIBOR, Swiss
 
Franc LIBOR
 
and Euro
 
LIBOR). Credit
 
Suisse is
 
cooperating fully
 
with
these investigations.
Regulatory authorities in a number of jurisdictions, including WEKO,
 
the European Commission (Commission), the
South
 
African
 
Competition
 
Commission
 
and
 
the
 
Brazilian
 
Competition
 
Authority
 
have
 
been
 
conducting
investigations into
 
the
 
trading activities,
 
information sharing
 
and
 
the
 
setting of
 
benchmark
 
rates in
 
the
 
foreign
exchange (including electronic trading) markets.
 
Credit Suisse continues to cooperate
 
with ongoing investigations.
Credit Suisse
 
Group AG,
 
Credit Suisse
 
AG and
 
Credit Suisse
 
Securities (Europe)
 
Limited (CSSEL)
 
received a
 
Statement
of Objections and
 
a Supplemental Statement
 
of Objections
 
from the
 
Commission in
 
July 2018
 
and March 2021,
respectively, alleging
 
that Credit
 
Suisse entities
 
engaged in
 
anticompetitive practices
 
in connection
 
with their
 
foreign
exchange trading business.
 
In December
 
2021, the
 
Commission issued a
 
formal decision imposing
 
a fine
 
of EUR
83.3m. In February 2022, Credit Suisse appealed
 
this decision to the EU General Court.
The
 
reference
 
rates
 
investigations
 
have
 
also
 
included
 
information
 
requests
 
from
 
regulators
 
concerning
supranational, sub-sovereign
 
and agency
 
(SSA) bonds
 
and commodities
 
markets. Credit
 
Suisse Group
 
AG and
 
CSSEL
received a
 
Statement of
 
Objections from
 
the Commission
 
in December
 
2018, alleging
 
that Credit
 
Suisse entities
engaged
 
in
 
anticompetitive
 
practices
 
in
 
connection
 
with
 
their
 
SSA
 
bonds
 
trading
 
business.
 
In
 
April
 
2021,
 
the
Commission
 
issued
 
a
 
formal
 
decision
 
imposing
 
a
 
fine
 
of
 
EUR
 
11.9m.
 
In
 
July
 
2021,
 
Credit
 
Suisse
 
appealed
 
this
decision to the EU General Court.
Civil litigation:
USD LIBOR litigation
 
–
Beginning in 2011, certain
 
Credit Suisse entities
 
were named in
 
various putative class and
individual lawsuits
 
filed in
 
the US,
 
alleging banks
 
on the
 
US
 
dollar LIBOR
 
panel manipulated
 
US dollar
 
LIBOR to
benefit their reputation
 
and increase
 
profits. All
 
remaining matters have
 
been consolidated for
 
pre-trial purposes
into a multi-district litigation in the US
 
District Court for the Southern District
 
of New York (SDNY).
In a series of rulings between 2013 and 2019 on motions
 
to dismiss, the SDNY (i) narrowed the claims against
 
the
Credit
 
Suisse
 
entities
 
and
 
the
 
other
 
defendants
 
(dismissing
 
antitrust,
 
Racketeer
 
Influenced
 
and
 
Corrupt
Organizations Act (RICO), Commodity Exchange Act, and
 
state law claims), (ii) narrowed
 
the set of plaintiffs who
may bring claims, and
 
(iii) narrowed the set
 
of defendants in the
 
LIBOR actions (including the dismissal
 
of several
Credit Suisse entities from
 
various cases on personal jurisdiction
 
and statute of limitation grounds).
 
After a number
of putative class and individual plaintiffs appealed the dismissal of their antitrust
 
claims to the United States Court
of Appeals
 
for the
 
Second Circuit
 
(Second Circuit),
 
in
 
December 2021,
 
the
 
Second
 
Circuit affirmed
 
in
 
part and
reversed in part the district court’s decision
 
and remanded the case to the SDNY.
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
101
Note 15
 
Provisions and contingent liabilities
 
(continued)
Separately, in May
 
2017, the
 
plaintiffs in three
 
putative class
 
actions moved for
 
class certification.
 
In February 2018,
the SDNY
 
denied certification
 
in
 
two of
 
the actions
 
and
 
granted certification
 
over a
 
single antitrust
 
claim in
 
an
action brought by over-the-counter purchasers
 
of LIBOR-linked derivatives.
USD ICE LIBOR litigation
 
– In August 2020,
 
members of the
 
ICE LIBOR panel,
 
including Credit Suisse
 
Group AG and
certain of its affiliates, were named
 
in a civil action in the
 
US District Court for the Northern
 
District of California,
alleging that
 
panel banks
 
manipulated ICE
 
LIBOR to
 
profit from
 
variable interest
 
loans and
 
credit cards.
 
In December
2021, the
 
court denied
 
plaintiffs’ motion
 
for preliminary
 
and permanent
 
injunctions to
 
enjoin panel
 
banks from
continuing to set
 
LIBOR or
 
automatically setting
 
the benchmark
 
to zero each
 
day, and
 
in September
 
2022, the
 
court
granted
 
defendants’ motions
 
to
 
dismiss.
 
In
 
October
 
2022,
 
plaintiffs
 
filed
 
an
 
amended
 
complaint.
 
In
 
November
2022,
 
defendants filed
 
a
 
motion
 
to
 
dismiss
 
the
 
amended
 
complaint. In
 
October
 
2023,
 
the
 
court
 
dismissed
 
the
amended complaint with prejudice.
CHF LIBOR litigation
 
– In February 2015,
 
various banks that
 
served on the Swiss
 
franc LIBOR panel,
 
including Credit
Suisse Group
 
AG, were
 
named in
 
a civil
 
putative class
 
action lawsuit
 
filed in
 
the SDNY,
 
alleging manipulation of
Swiss franc LIBOR to benefit defendants’ trading positions. After defendants’ motion to dismiss for lack of subject
matter
 
jurisdiction
 
was granted
 
and
 
plaintiffs
 
successfully appealed,
 
in
 
July
 
2022, Credit
 
Suisse
 
entered into
 
an
agreement
 
to
 
settle all
 
claims. In
 
February and September 2023,
 
respectively, the
 
court
 
entered orders
 
granting
preliminary and final approval to the agreement
 
to settle all claims.
Foreign exchange litigation –
 
Credit Suisse Group AG and affiliates
 
as well as other financial institutions
 
have been
named in civil lawsuits relating
 
to the alleged manipulation of foreign
 
exchange rates.
Credit Suisse AG,
 
together with other
 
financial institutions, was
 
named in
 
a consolidated putative
 
class action in
Israel, which made allegations similar to the consolidated class action. In April 2022, Credit Suisse entered into an
agreement to settle all claims. The settlement
 
remains subject to court approval.
Treasury markets
 
litigation
 
– CSS
 
LLC, along
 
with over
 
20 other
 
primary dealers
 
of US
 
treasury securities,
 
was named
in a number of
 
putative civil class
 
action complaints
 
in the US relating
 
to the US
 
treasury markets. These
 
complaints
generally alleged
 
that the
 
defendants colluded
 
to manipulate
 
US treasury
 
auctions, as
 
well as
 
the pricing
 
of US
treasury securities in the
 
when-issued market, with impacts upon
 
related futures and options, and
 
that certain of
the defendants
 
participated in
 
a group
 
boycott to
 
prevent the
 
emergence of
 
anonymous all-to-all
 
trading in
 
the
secondary market
 
for treasury
 
securities. In
 
March 2022,
 
the SDNY
 
granted defendants’
 
motion to
 
dismiss and
dismissed with prejudice all claims against
 
the defendants. Plaintiffs have appealed.
SSA bonds litigation
 
– Credit Suisse
 
Group AG and
 
certain of its affiliates,
 
together with other
 
financial institutions,
were named in
 
two Canadian
 
putative class actions,
 
which allege that
 
defendants conspired
 
to fix the
 
prices of SSA
bonds
 
sold
 
to
 
and
 
purchased from
 
investors
 
in
 
the
 
secondary
 
market. One
 
putative
 
class
 
action
 
was
 
dismissed
against
 
Credit
 
Suisse
 
in
 
February
 
2020.
 
In
 
October
 
2022,
 
in
 
the
 
second
 
action,
 
Credit
 
Suisse
 
entered
 
into
 
an
agreement to settle all claims. The settlement
 
remains subject to court approval.
Credit default swap
 
auction litigation –
In June 2021,
 
Credit Suisse Group
 
AG and affiliates,
 
along with other
 
banks
and entities, were named in a
 
putative class action complaint filed in the
 
US District Court for the District
 
of New
Mexico alleging
 
manipulation of credit
 
default swap
 
(CDS) final
 
auction prices.
 
In April
 
2022, defendants
 
filed a
motion to dismiss. In June 2023, the court
 
granted in part and denied in part defendants’
 
motion to dismiss.
4. OTC trading cases
Interest rate
 
swaps litigation:
 
Credit
 
Suisse Group
 
AG and
 
affiliates, along
 
with other
 
financial institutions,
 
have
been
 
named
 
in
 
a
 
consolidated
 
putative
 
civil
 
class
 
action
 
complaint
 
and
 
complaints
 
filed
 
by
 
individual
 
plaintiffs
relating
 
to interest
 
rate swaps,
 
alleging that
 
dealer defendants
 
conspired
 
with trading
 
platforms to
 
prevent
 
the
development of interest rate swap exchanges. The individual lawsuits were brought by TeraExchange
 
LLC, a swap
execution facility, and affiliates; Javelin Capital Markets LLC, a swap execution facility,
 
and an affiliate; and trueEX
LLC, a
 
swap execution
 
facility, which claim
 
to have
 
suffered lost
 
profits as
 
a result
 
of defendants’
 
alleged conspiracy.
All interest rate swap actions have been consolidated
 
in a multi-district litigation in the SDNY.
Defendants moved to dismiss the
 
putative class and individual actions,
 
and the SDNY granted
 
in part and denied
in part these motions.
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
102
Note 15
 
Provisions and contingent liabilities
 
(continued)
In February 2019, class plaintiffs in the consolidated multi-district litigation filed a motion
 
for class certification. In
March 2019,
 
class plaintiffs
 
filed a
 
fourth amended
 
consolidated
 
class action
 
complaint. In
 
January 2022,
 
Credit
Suisse entered into an
 
agreement to settle all
 
class action claims. The
 
settlement remains subject
 
to court approval.
The individual lawsuits are stayed pending
 
a decision on plaintiffs’ motion for class
 
certification.
Credit
 
default
 
swaps
 
litigation
:
 
In
 
June
 
2017,
 
Credit
 
Suisse
 
Group
 
AG
 
and
 
affiliates,
 
along
 
with
 
other
 
financial
institutions, were named in a
 
civil action filed in
 
the SDNY by Tera
 
Group, Inc. and related
 
entities (Tera), alleging
violations of antitrust
 
law in
 
connection with the
 
allegation that CDS
 
dealers conspired to
 
block Tera’s electronic
CDS trading platform from successfully entering the market.
 
In July 2019, the SDNY granted in part and denied in
part
 
defendants’
 
motion
 
to
 
dismiss.
 
In
 
January
 
2020,
 
plaintiffs
 
filed
 
an
 
amended
 
complaint.
 
In
 
April
 
2020,
defendants filed
 
a
 
motion to
 
dismiss.
 
In August
 
2023, the
 
court granted
 
the motion,
 
dismissing all
 
claims with
prejudice.
Stock loan litigation
: Credit Suisse
 
Group AG and certain
 
of its affiliates,
 
as well as
 
other financial institutions,
 
were
originally named in
 
a number of
 
civil lawsuits in
 
the SDNY, certain
 
of which are
 
brought by
 
class action plaintiffs
alleging that the
 
defendants conspired to
 
keep stock-loan
 
trading in
 
an over-the-counter market
 
and collectively
boycotted certain trading platforms that sought to enter the market, and certain of
 
which are brought by trading
platforms
 
that sought
 
to
 
enter the
 
market alleging
 
that the
 
defendants collectively
 
boycotted the
 
platforms. In
January 2022, Credit Suisse entered into an agreement
 
to settle all class action claims. In February 2022, the
 
court
entered an
 
order granting preliminary
 
approval to
 
the agreement
 
to settle
 
all class
 
action claims.
 
The settlement
remains subject to final court approval.
 
In October 2021,
 
in a consolidated
 
civil litigation brought
 
in the SDNY
 
by entities that
 
developed a trading
 
platform
for stock loans that
 
sought to enter the
 
market, alleging that the
 
defendants collectively boycotted the platform,
the court
 
granted defendants’
 
motion to
 
dismiss. In
 
October 2021,
 
plaintiffs filed
 
a notice
 
of appeal.
 
In March
 
2023,
the Second Circuit affirmed the decision granting
 
defendants’ motion to dismiss.
Odd-lot corporate bond litigation:
In April 2020, CSS LLC and
 
other financial institutions were
 
named in a putative
class action complaint
 
filed in the SDNY,
 
alleging a conspiracy
 
among the financial
 
institutions to boycott
 
electronic
trading platforms and fix prices in the secondary market for odd-lot corporate bonds. In October 2021, the
 
SDNY
granted defendants’ motion to dismiss. Plaintiffs
 
have appealed.
5. ATA litigation
Since November 2014, a series of lawsuits have been filed
 
against a number of banks, including Credit Suisse AG
and, in two instances, Credit Suisse AG, New York
 
Branch, in the US District Court for the Eastern District of New
York (EDNY) and the
 
SDNY alleging
 
claims under
 
the United
 
States Anti-Terrorism Act (ATA) and the
 
Justice Against
Sponsors of Terrorism Act. The plaintiffs in each of these
 
lawsuits are, or are relatives of, victims
 
of various terrorist
attacks in Iraq
 
and allege a
 
conspiracy and/or aiding
 
and abetting based
 
on allegations that
 
various international
financial institutions, including
 
the defendants, agreed
 
to alter, falsify or omit information from
 
payment messages
that
 
involved
 
Iranian
 
parties
 
for
 
the
 
express
 
purpose
 
of
 
concealing
 
the
 
Iranian
 
parties’
 
financial
 
activities
 
and
transactions from detection by US
 
authorities. The lawsuits allege
 
that this conduct has made
 
it possible for Iran to
transfer funds
 
to Hezbollah
 
and other terrorist
 
organizations actively
 
engaged in
 
harming US
 
military personnel
 
and
civilians. In January
 
2023, the United
 
States Court of
 
Appeals for the
 
Second Circuit
 
affirmed a
 
September 2019
ruling by
 
the EDNY
 
granting defendants’
 
motion to
 
dismiss the
 
first filed
 
lawsuit. In
 
October 2023,
 
the United
 
States
Supreme Court
 
denied plaintiffs’
 
petition for
 
a writ
 
of certiorari. Of
 
the other
 
seven cases,
 
four are stayed,
 
including
one that was dismissed
 
as to Credit Suisse and
 
most of the bank
 
defendants prior to entry
 
of the stay, and in three
the court has
 
set a schedule for
 
plaintiffs to file
 
amended complaints, including two that
 
were dismissed prior
 
to
the court setting a schedule for plaintiffs to replead.
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
103
Note 15
 
Provisions and contingent liabilities
 
(continued)
6. Customer account matters
Several
 
clients
 
have
 
claimed
 
that
 
a
 
former
 
relationship
 
manager
 
in
 
Switzerland
 
had
 
exceeded
 
his
 
investment
authority
 
in
 
the
 
management of
 
their
 
portfolios, resulting
 
in
 
excessive concentrations
 
of
 
certain
 
exposures
 
and
investment losses.
 
Credit
 
Suisse AG
 
is investigating
 
the claims,
 
as well
 
as transactions
 
among the
 
clients. Credit
Suisse AG filed a criminal complaint against the former relationship manager with the Geneva Prosecutor’s Office
upon which the
 
prosecutor initiated
 
a criminal investigation.
 
Several clients of
 
the former relationship
 
manager also
filed criminal complaints with the
 
Geneva Prosecutor’s Office. In
 
February 2018, the former relationship manager
was sentenced to five years
 
in prison by the Geneva criminal
 
court for fraud, forgery
 
and criminal mismanagement
and ordered
 
to pay damages of
 
approximately USD 130m. Several
 
parties appealed the
 
judgment. In June 2019,
the
 
Criminal
 
Court
 
of
 
Appeals
 
of
 
Geneva
 
ruled
 
in
 
the
 
appeal
 
of
 
the
 
judgment
 
against
 
the
 
former
 
relationship
manager,
 
upholding the main findings of
 
the Geneva criminal court.
 
Several parties appealed the
 
decision to the
Swiss Federal
 
Supreme Court.
 
In February
 
2020, the Swiss
 
Federal Supreme
 
Court rendered
 
its judgment on
 
the
appeals, substantially confirming the findings
 
of the Criminal Court of Appeals of
 
Geneva.
Civil lawsuits have been initiated against
 
Credit Suisse AG and/or certain
 
affiliates in various jurisdictions, based
 
on
the findings established in the criminal proceedings
 
against the former relationship manager.
In
 
Singapore,
 
in
 
the
 
civil
 
lawsuit
 
brought
 
against
 
Credit
 
Suisse
 
Trust
 
Limited,
 
a
 
Credit
 
Suisse
 
AG
 
affiliate,
 
in
May 2023, the Singapore International
 
Commercial Court issued a
 
first instance judgment finding
 
for the plaintiffs
and
 
directing
 
the
 
parties’
 
experts
 
to
 
agree
 
on
 
the
 
amount
 
of
 
the
 
damages
 
award
 
according
 
to
 
the
 
calculation
method and parameters adopted by the court. As the parties’ experts were unable to agree on the amount
 
of the
damages, following
 
court directions,
 
the parties
 
filed their
 
proposed draft
 
orders with
 
supporting documents
 
in
August 2023.
 
In
 
September 2023,
 
the
 
court
 
ruled
 
that
 
the
 
damages
 
under
 
its
 
May 2023
 
judgment
 
are
USD 742.73m, excluding post-judgment interest. This figure does not exclude
 
potential overlap with the Bermuda
proceedings against Credit Suisse
 
Life (Bermuda) Ltd., which
 
are currently being appealed.
 
The court ordered the
parties to
 
ensure that
 
there shall
 
be no
 
double recovery
 
in relation
 
to this
 
award and
 
any sum
 
recovered in
 
the
Bermuda proceedings.
 
Credit Suisse
 
Trust Limited
 
has appealed
 
the judgment
 
and has
 
applied for
 
a stay
 
of execution
pending
 
that
 
appeal.
 
On
 
2
 
November
 
2023,
 
the
 
court
 
granted
 
a
 
stay
 
of
 
execution
 
of
 
its
 
May
 
2023
 
judgment
pending appeal on the condition that damages
 
awarded are paid into court deposit within
 
21 days.
In Bermuda, in the civil lawsuit brought against
 
Credit Suisse Life (Bermuda) Ltd., a Credit Suisse
 
AG affiliate, trial
took place in the Supreme Court
 
of Bermuda in November and December 2021. The
 
Supreme Court of Bermuda
issued
 
a
 
first
 
instance
 
judgment
 
in
 
March
 
2022,
 
finding
 
for
 
the
 
plaintiff.
 
In
 
May
 
2022,
 
the
 
Supreme
 
Court
 
of
Bermuda
 
issued
 
an
 
order
 
awarding
 
damages
 
of
 
USD
 
607.35m
 
to
 
the
 
plaintiff.
 
In
 
May
 
2022,
 
Credit
 
Suisse
 
Life
(Bermuda) Ltd.
 
appealed the
 
decision to
 
the Bermuda
 
Court of
 
Appeal. In
 
July 2022,
 
the Supreme
 
Court of
 
Bermuda
granted a stay
 
of execution
 
of its judgment
 
pending appeal
 
on the condition
 
that damages awarded
 
were paid into
an
 
escrow account
 
within 42
 
days, which
 
condition was
 
satisfied.
 
In June
 
2023, the
 
Bermuda Court
 
of Appeal
issued its judgment
 
confirming the award
 
issued by the
 
Supreme Court of
 
Bermuda and upholding
 
the Supreme
Court of Bermuda’s
 
finding that Credit
 
Suisse Life (Bermuda)
 
Ltd. had breached
 
its contractual and
 
fiduciary duties,
but overturning
 
the Supreme
 
Court of
 
Bermuda’s
 
finding that
 
Credit Suisse
 
Life (Bermuda)
 
Ltd. had
 
made fraudulent
misrepresentations. In July 2023, Credit Suisse Life (Bermuda) Ltd.
 
filed its notice of motion for leave
 
to appeal to
the Judicial
 
Committee of
 
the Privy
 
Council. In
 
July 2023
 
Credit Suisse
 
Life (Bermuda)
 
Ltd. applied
 
for a
 
stay of
execution
 
of
 
the
 
Bermuda
 
Court
 
of
 
Appeal’s
 
judgment
 
pending
 
the
 
outcome
 
of
 
the
 
appeal
 
to
 
the
 
Judicial
Committee of the
 
Privy Council on
 
the condition that
 
the damages awarded
 
remain within the
 
escrow account
 
and
that interest be added to the escrow account
 
calculated at the Bermuda statutory rate
 
of 3.5%.
In Switzerland, civil
 
lawsuits have commenced
 
against Credit Suisse
 
AG in
 
the Court of
 
First Instance
 
of Geneva,
with statements of claim served in March 2023.
7. Mozambique matter
Credit Suisse has
 
been subject
 
to investigations by
 
regulatory and enforcement
 
authorities, as
 
well as civil
 
litigation,
regarding certain Credit
 
Suisse entities’
 
arrangement of
 
loan financing
 
to Mozambique
 
state enterprises,
 
Proindicus
S.A. and Empresa Mocambiacana de Atum S.A.
 
(EMATUM), a distribution to private investors of loan participation
notes (LPN) related
 
to the EMATUM
 
financing in September
 
2013, and certain
 
Credit Suisse
 
entities’ subsequent
role in arranging the exchange
 
of those LPNs for
 
Eurobonds issued by the
 
Republic of Mozambique.
 
In 2019, three
former Credit Suisse employees pleaded guilty in the EDNY to accepting improper personal benefits in connection
with financing transactions carried out with
 
two Mozambique state enterprises.
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
104
Note 15
 
Provisions and contingent liabilities
 
(continued)
In October 2021,
 
Credit Suisse reached settlements with
 
the DOJ, the
 
US Securities Exchange Commission (SEC),
the UK
 
Financial Conduct Authority (FCA)
 
and FINMA to
 
resolve inquiries by
 
these agencies. Credit
 
Suisse Group
AG entered into a three-year Deferred Prosecution Agreement (DPA) with the DOJ in connection with the criminal
information charging Credit Suisse Group AG
 
with conspiracy to commit wire fraud and consented to
 
the entry of
a
 
Cease
 
and
 
Desist
 
Order
 
by
 
the
 
SEC.
 
Under
 
the
 
terms
 
of
 
the
 
DPA,
 
Credit
 
Suisse
 
Group
 
AG
 
will
 
continue
 
its
compliance enhancement
 
and remediation
 
efforts, report
 
to the DOJ
 
on those
 
efforts for
 
three years and
 
undertake
additional measures as
 
outlined in the
 
DPA. If Credit
 
Suisse Group AG
 
adheres to the
 
DPA’s conditions, the
 
charges
will be dismissed
 
at the end
 
of the DPA’s
 
three-year term. In
 
addition, CSSEL entered
 
into a Plea
 
Agreement and
pleaded guilty to one count of conspiracy
 
to violate the US federal wire fraud
 
statute. CSSEL is bound by the
 
same
compliance, remediation and reporting obligations as Credit Suisse Group AG under the DPA.
 
Under the terms of
the
 
SEC
 
Cease
 
and
 
Desist
 
Order,
 
Credit
 
Suisse
 
paid
 
a
 
civil
 
penalty,
 
disgorgement and
 
pre-judgment
 
interest
 
in
connection with violations of
 
antifraud and other provisions of
 
the US Securities Exchange Act
 
of 1934 and the US
Securities Act of 1933. The total monetary sanctions paid to the DOJ
 
and SEC, taking into account various credits
and
 
offsets,
 
was
 
approximately USD
 
275m. Under
 
the terms
 
of
 
the
 
resolution with
 
the
 
DOJ,
 
Credit
 
Suisse
 
was
required to pay restitution to any eligible investors in the 2016 Eurobonds issued by the Republic of Mozambique.
At a July
 
2022 hearing,
 
the EDNY approved
 
the joint restitution
 
proposal of
 
the DOJ and
 
Credit Suisse,
 
under which
Credit Suisse paid USD 22.6m in restitution to
 
eligible investors.
In the
 
resolution with
 
the FCA,
 
CSSEL, Credit
 
Suisse International
 
(CSI) and
 
Credit Suisse
 
AG, London
 
Branch agreed
that, in respect of these transactions
 
with Mozambique, its UK operations
 
had failed to conduct business with
 
due
skill, care and
 
diligence and to take
 
reasonable care to organize
 
and control its affairs
 
responsibly and effectively,
with adequate
 
risk management systems.
 
Credit Suisse paid
 
a penalty
 
of approximately
 
USD 200m
 
and has
 
also
agreed with the FCA to forgive USD 200m of
 
debt owed to Credit Suisse by Mozambique.
FINMA also entered a decree announcing the conclusion of its enforcement proceeding, finding that Credit Suisse
AG and Credit Suisse
 
(Schweiz) AG violated the
 
duty to file a
 
suspicious activity report in
 
Switzerland, and Credit
Suisse
 
Group
 
AG
 
did
 
not
 
adequately manage
 
and
 
address
 
the
 
risks arising
 
from specific
 
sovereign lending
 
and
related securities
 
transactions, and ordering
 
the bank
 
to remediate
 
certain deficiencies. FINMA
 
also arranged
 
for
certain existing
 
transactions to
 
be reviewed
 
by the same
 
independent third
 
party on
 
the basis
 
of specific risk
 
criteria,
and
 
required
 
enhanced
 
disclosure
 
of
 
certain
 
sovereign
 
transactions
 
until
 
all
 
remedial
 
measures
 
have
 
been
satisfactorily implemented.
 
Credit Suisse
 
has completed
 
implementation of
 
the measures
 
required under
 
the FINMA
decree. An
 
independent third
 
party appointed
 
by FINMA
 
is reviewing
 
the implementation
 
and effectiveness
 
of these
measures.
In February 2019, certain Credit Suisse entities, three former employees, and several other unrelated entities were
sued in
 
the English
 
High Court
 
by the
 
Republic of
 
Mozambique. In
 
January 2020,
 
the Credit
 
Suisse entities filed
their
 
defense
 
and
 
subsequently
 
filed
 
cross
 
claims
 
against
 
several
 
entities
 
controlled
 
by
 
Privinvest
 
Holding
 
SAL
(Privinvest) that
 
acted as
 
the project
 
contractor, Iskander
 
Safa, the
 
owner of
 
Privinvest, and
 
several Mozambique
officials. The
 
Republic of
 
Mozambique seeks
 
(i) a
 
declaration that
 
the sovereign
 
guarantee issued
 
in connection
with
 
the
 
ProIndicus loan
 
syndication arranged
 
and
 
funded, in
 
part, by
 
a
 
Credit Suisse
 
subsidiary is
 
void
 
and
 
(ii)
damages
 
alleged
 
to
 
have
 
arisen
 
in
 
connection
 
with
 
the
 
transactions
 
involving
 
ProIndicus
 
and
 
EMATUM,
 
and
 
a
transaction in which Credit Suisse had no involvement
 
with Mozambique Asset Management S.A.
In
 
addition, several
 
of
 
the banks
 
that participated
 
in the
 
ProIndicus loan
 
syndicate have
 
brought
 
claims against
Credit Suisse
 
entities seeking
 
a declaration
 
that Credit
 
Suisse is
 
liable to
 
compensate them
 
for alleged
 
losses suffered
as a result of any invalidity
 
of the sovereign guarantee or damages
 
stemming from the alleged loss
 
suffered due to
their reliance on representations made by
 
Credit Suisse to the syndicate lenders.
In January 2021, Privinvest entities filed a cross claim against the Credit Suisse entities (as well as the three former
Credit Suisse employees and various Mozambican officials) seeking
 
an indemnity and/or contribution in the event
that the contractor is found liable to the
 
Republic of Mozambique.
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
105
Note 15
 
Provisions and contingent liabilities
 
(continued)
In February 2022, Privinvest and Iskandar Safa brought a defamation claim in a Lebanese court against CSSEL and
Credit Suisse Group AG.
 
The lawsuit alleges
 
damage to the claimants’
 
professional reputation in Lebanon due
 
to
statements that were allegedly made by
 
Credit Suisse in documents relating to the
 
October 2021 settlements with
global regulators.
 
In November
 
2022, a
 
Privinvest employee who
 
was the lead
 
negotiator on
 
behalf of Privinvest
entities in relation to
 
the Mozambique transactions, also brought a
 
defamation claim in a
 
Lebanese court against
Credit Suisse Group AG and CSSEL.
In
 
September
 
2023,
 
Credit
 
Suisse,
 
the
 
Republic
 
of
 
Mozambique,
 
and
 
certain
 
of
 
the
 
lenders
 
in
 
the
 
ProIndicus
syndicate
 
entered
 
into
 
a
 
settlement
 
agreement.
 
In
 
November
 
2023,
 
Credit
 
Suisse,
 
Privinvest
 
and
 
Iskander
 
Safa
entered into an agreement to settle all claims
 
among them in the English High Court
 
and in Lebanon.
8. Cross-border private banking matters
Credit
 
Suisse
 
offices
 
in
 
various
 
locations,
 
including
 
the
 
UK,
 
the
 
Netherlands,
 
France
 
and
 
Belgium,
 
have
 
been
contacted
 
by
 
regulatory
 
and
 
law
 
enforcement
 
authorities
 
that
 
are
 
seeking
 
records
 
and
 
information
 
concerning
investigations into Credit Suisse’s historical private banking services
 
on a cross-border basis and in part through its
local branches
 
and banks.
 
Credit Suisse has
 
conducted a
 
review of these
 
issues, the
 
UK and
 
French aspects
 
of which
have been closed, and is continuing to cooperate
 
with the authorities.
9. ETN-related litigation
XIV litigation:
Since March 2018, three class action complaints
 
were filed in the SDNY on behalf
 
of a putative class
of purchasers
 
of VelocityShares
 
Daily Inverse
 
VIX Short
 
Term
 
Exchange Traded
 
Notes linked
 
to the
 
S&P 500
 
VIX
Short-Term Futures Index
 
due December
 
4, 2030
 
(XIV ETNs).
 
In August
 
2018, plaintiffs
 
filed a
 
consolidated amended
class action complaint, naming Credit
 
Suisse Group AG and
 
certain affiliates and executives, which
 
asserts claims
for violations of Sections
 
9(a)(4), 9(f), 10(b)
 
and 20(a) of the
 
Exchange Act and Rule
 
10b-5 thereunder and
 
Sections
11 and 15 of the US Securities Act of
 
1933 and alleges that the defendants are responsible for losses to
 
investors
following a
 
decline in
 
the value
 
of XIV
 
ETNs in
 
February 2018.
 
Defendants moved
 
to dismiss
 
the amended
 
complaint
in
 
November
 
2018.
 
In
 
September
 
2019,
 
the
 
SDNY
 
granted
 
defendants’
 
motion
 
to
 
dismiss
 
and
 
dismissed
 
with
prejudice all claims against the
 
defendants. In October 2019, plaintiffs
 
filed a notice of
 
appeal. In April 2021, the
Second Circuit issued
 
an order affirming in
 
part and vacating
 
in part the
 
SDNY’s September 2019
 
decision granting
defendants’ motion to dismiss with prejudice.
 
In July 2022, plaintiffs filed a motion for class
 
certification. In March
2023, the court denied plaintiffs’
 
motion to certify two of
 
their three alleged classes and
 
granted plaintiffs’ motion
to certify their
 
third alleged class.
 
On 30 March
 
2023, defendants moved
 
for reconsideration and
 
filed a petition
for permission to appeal the court’s class certification decision
 
to the Second Circuit. In April
 
2023, plaintiffs filed
a
 
motion
 
seeking
 
leave
 
to
 
amend
 
their
 
complaint.
 
In
 
May
 
2023,
 
plaintiffs
 
filed
 
a
 
renewed
 
motion
 
for
 
class
certification.
DGAZ litigation:
In January
 
2022, Credit
 
Suisse AG
 
was named
 
in a
 
class action
 
complaint filed
 
in the
 
SDNY brought
on behalf of a putative class
 
of short sellers of VelocityShares
 
3x Inverse Natural Gas Exchange
 
Traded Notes linked
to the
 
S&P GSCI
 
Natural Gas
 
Index ER
 
due February
 
9, 2032
 
(DGAZ ETNs).
 
The complaint
 
asserts claims
 
for violations
of Section 10(b)
 
of the Exchange
 
Act and Rule
 
10b-5 thereunder and alleges
 
that Credit Suisse
 
is responsible for
losses suffered by short sellers following
 
a June 2020 announcement that Credit Suisse
 
would delist and suspend
further issuances of the DGAZ
 
ETNs. In July 2022, Credit
 
Suisse AG filed a motion
 
to dismiss. In March
 
2023, the
court granted Credit Suisse
 
AG’s motion to
 
dismiss. In May 2023,
 
the court entered an
 
order dismissing the case
with prejudice. In June 2023, plaintiff filed a
 
notice of appeal.
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
106
Note 15
 
Provisions and contingent liabilities
 
(continued)
10. Bulgarian former clients matter
Credit
 
Suisse
 
AG
 
has
 
been responding
 
to an
 
investigation by
 
the
 
Swiss Office
 
of
 
the
 
Attorney General
 
(SOAG)
concerning the
 
diligence and
 
controls
 
applied
 
to a
 
historical relationship
 
with Bulgarian
 
former clients
 
who are
alleged to
 
have laundered
 
funds through
 
Credit Suisse
 
AG accounts.
 
In December
 
2020, the
 
SOAG brought
 
charges
against
 
Credit
 
Suisse
 
AG
 
and
 
other
 
parties.
 
Credit
 
Suisse
 
AG
 
believes
 
its
 
diligence
 
and
 
controls
 
complied with
applicable legal requirements and intends to defend
 
itself vigorously.
 
The trial in the Swiss Federal Criminal Court
took place in the first quarter of 2022. In June 2022,
 
Credit Suisse AG was convicted in the Swiss Federal Criminal
Court of certain historical organizational inadequacies
 
in its anti-money laundering framework and ordered to pay
a fine of CHF 2m. In addition, the court
 
seized certain client assets in the amount of approximately CHF 12m and
ordered Credit
 
Suisse AG
 
to pay
 
a compensatory
 
claim in
 
the amount
 
of approximately
 
CHF 19m.
 
In July
 
2022,
Credit Suisse AG appealed the decision to the
 
Swiss Federal Court of Appeals.
11. SCFF
Credit
 
Suisse
 
has
 
received
 
requests
 
for
 
documents and
 
information in
 
connection with
 
inquiries, investigations,
enforcement and
 
other actions
 
relating to
 
the supply chain
 
finance funds
 
(SCFF) matter by
 
FINMA, the
 
FCA and
other regulatory and governmental agencies. The Luxembourg Commission
 
de Surveillance du Secteur Financier is
reviewing the matter through a third party. Credit Suisse is cooperating with these authorities.
In
 
February
 
2023,
 
FINMA
 
announced
 
the
 
conclusion
 
of
 
its
 
enforcement
 
proceedings
 
against
 
Credit
 
Suisse
 
in
connection with the SCFF matter. In its order, FINMA reported
 
that Credit Suisse had seriously breached applicable
Swiss supervisory
 
laws in
 
this context
 
with regard
 
to risk
 
management and
 
appropriate operational
 
structures. While
FINMA
 
recognized
 
that
 
Credit
 
Suisse
 
has
 
already
 
taken
 
extensive
 
organizational
 
measures
 
based
 
on
 
its
 
own
investigation into the
 
SCFF matter, particularly
 
to strengthen its
 
governance and control
 
processes, and FINMA
 
is
supportive
 
of
 
these
 
measures,
 
the
 
regulator
 
has
 
ordered
 
certain
 
additional
 
remedial
 
measures.
 
These
 
include
 
a
requirement that the most
 
important (approximately 500)
 
business relationships must be
 
reviewed periodically and
holistically at
 
the Executive
 
Board level,
 
in particular
 
for counterparty
 
risks, and
 
that Credit
 
Suisse must
 
set up
 
a
document defining the responsibilities of
 
approximately 600 of its highest-ranking
 
managers. FINMA will appoint
an audit officer to assess compliance with these
 
supervisory measures. Separate from the
 
enforcement proceeding
regarding
 
Credit
 
Suisse,
 
FINMA
 
has
 
opened
 
four
 
enforcement
 
proceedings
 
against
 
former
 
managers
 
of
 
Credit
Suisse.
In May 2023,
 
FINMA opened
 
an enforcement
 
proceeding against
 
Credit Suisse in
 
order to confirm
 
compliance with
supervisory requirements in response to inquiries
 
from FINMA’s enforcement division in the SCFF
 
matter.
The Attorney
 
General of
 
the Canton
 
of Zürich
 
has initiated
 
a criminal
 
procedure in
 
connection with
 
the SCFF
 
matter.
In such
 
procedure, while certain
 
former and active
 
Credit Suisse employees,
 
among others, have
 
been named as
accused persons, Credit Suisse itself is not a party
 
to the procedure.
Certain civil actions have
 
been filed by fund investors
 
and other parties against
 
Credit Suisse and/or certain
 
officers
and directors in various
 
jurisdictions, which make allegations including mis-selling and
 
breaches of duties of care,
diligence and other fiduciary duties. Certain investors and other private
 
parties have also filed criminal complaints
against Credit Suisse and other parties in connection
 
with this matter.
12. Archegos
Credit
 
Suisse
 
has
 
received
 
requests
 
for
 
documents
 
and
 
information
 
in
 
connection
 
with
 
inquiries,
 
investigations
and/or actions
 
relating
 
to Credit
 
Suisse’s relationship
 
with Archegos
 
Capital Management
 
(Archegos),
 
including
from
 
FINMA (assisted
 
by
 
a third
 
party appointed
 
by
 
FINMA), the
 
DOJ,
 
the SEC,
 
the US
 
Federal Reserve,
 
the US
Commodity
 
Futures
 
Trading
 
Commission (CFTC),
 
the US
 
Senate
 
Banking Committee,
 
the
 
Prudential
 
Regulation
Authority
 
(PRA),
 
the
 
FCA,
 
COMCO,
 
the
 
Hong
 
Kong
 
Competition
 
Commission
 
and
 
other
 
regulatory
 
and
governmental agencies. Credit Suisse is cooperating
 
with the authorities in these matters.
 
In July 2023,
 
the US Federal
 
Reserve and the
 
PRA announced resolutions of
 
their investigations of Credit
 
Suisse’s
relationship with Archegos.
UBS Group
 
AG, Credit
 
Suisse AG,
 
Credit Suisse
 
Holdings (USA)
 
Inc., and
 
Credit Suisse
 
AG, New
 
York Branch
 
entered
into an Order to Cease and Desist with the Board of Governors of the Federal Reserve System. Under the terms
 
of
the order,
 
Credit Suisse
 
paid a
 
civil money
 
penalty of
 
USD 269m
 
and agreed
 
to undertake
 
certain remedial
 
measures
relating to counterparty
 
credit risk management,
 
liquidity risk management
 
and non-financial risk
 
management, as
well as enhancements to board oversight and
 
governance.
 
 
 
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim
 
consolidated financial statements (unaudited)
 
107
Note 15
 
Provisions and contingent liabilities
 
(continued)
CSI
 
and
 
CSSEL
 
entered
 
into
 
a
 
settlement
 
agreement
 
with
 
the
 
PRA
 
providing
 
for
 
the
 
resolution
 
of
 
the
 
PRA’s
investigation, following which
 
the PRA
 
published a
 
Final Notice
 
imposing a
 
financial penalty of
 
GBP 87m
 
on CSI
and CSSEL for breaches of various of the PRA’s
 
Fundamental Rules.
FINMA also entered
 
a decree
 
dated 14 July
 
2023 announcing
 
the conclusion
 
of its enforcement
 
proceeding, finding
that
 
Credit
 
Suisse
 
had
 
seriously
 
violated
 
financial
 
market
 
law
 
in
 
connection
 
with
 
its
 
business
 
relationship
 
with
Archegos and ordering remedial measures directed at Credit Suisse AG and UBS Group AG, as the legal successor
to
 
Credit
 
Suisse
 
Group
 
AG.
 
These
 
include
 
a
 
requirement
 
that
 
UBS
 
Group
 
AG
 
apply
 
its
 
restrictions
 
on
 
its
 
own
positions relating to individual clients throughout the financial group, as well as adjustments to the compensation
system of
 
the entire
 
financial group
 
to provide
 
for bonus
 
allocation criteria
 
that take
 
into account
 
risk appetite.
FINMA
 
also
 
announced
 
it
 
has
 
opened
 
enforcement
 
proceedings
 
against
 
a
 
former
 
Credit
 
Suisse
 
manager
 
in
connection with this matter.
In April
 
2021, Credit Suisse
 
Group AG and
 
certain current and
 
former executives were
 
named in a
 
putative class
action complaint filed in the SDNY by a holder of
 
Credit Suisse American Depositary Receipts, asserting claims for
violations of
 
Sections 10(b)
 
and 20(a)
 
of the
 
Exchange Act
 
and Rule
 
10b-5 thereunder,
 
alleging that
 
defendants
violated
 
US
 
securities
 
laws
 
by
 
making
 
material
 
misrepresentations
 
and
 
omissions
 
regarding
 
Credit
 
Suisse’s
 
risk
management practices, including with respect to the Archegos matter. In September
 
2022, the parties reached an
agreement to settle all claims. In December 2022 and May 2023, respectively, the court entered
 
an order granting
preliminary and final approval to the parties’
 
agreement to settle all claims.
Additional civil actions relating
 
to Credit Suisse’s relationship with
 
Archegos have been filed
 
against Credit Suisse
and/or certain officers and directors, including
 
claims for breaches of fiduciary duties.
13. Credit Suisse financial disclosures
Three putative
 
securities class action
 
complaints were
 
filed in
 
the US
 
District Court for
 
the District
 
of New
 
Jersey
(DNJ) against Credit Suisse Group AG and current
 
and former directors, officers, and executives. In July 2023, the
DNJ transferred the cases to the SDNY,
 
and a consolidated amended complaint was filed in September 2023. The
amended complaint alleges that
 
defendants made misleading statements regarding:
 
(i) customer outflows in
 
late
2022; (ii) the adequacy of
 
Credit Suisse’s financial reporting
 
controls; and (iii) the
 
adequacy of Credit Suisse’s risk
management processes, and
 
includes allegations relating
 
to Credit Suisse Group
 
AG’s merger with
 
UBS Group AG.
In October 2023, an additional securities class action complaint was filed in the SDNY against
 
Credit Suisse Group
AG and
 
certain individuals
 
who served
 
as Credit
 
Suisse Group directors,
 
officers, and
 
executives, making
 
similar
allegations, on
 
behalf of
 
United States
 
purchasers of
 
Credit Suisse
 
additional tier
 
1 bonds
 
between 18
 
February
2021 and 20 March 2023.
Credit Suisse has received requests for documents and information from regulatory and governmental agencies in
connection with inquiries,
 
investigations and/or actions
 
relating to
 
these matters, as
 
well as
 
for other statements
regarding
 
Credit
 
Suisse’s
 
financial
 
condition,
 
including
 
from
 
the
 
SEC,
 
the
 
DOJ
 
and
 
FINMA.
 
Credit
 
Suisse
 
is
cooperating with the authorities in these matters.
14. Merger-related litigation
In May
 
and June
 
2023, certain
 
Credit
 
Suisse AG
 
affiliates, as
 
well as
 
current and
 
former directors,
 
officers, and
executives were named in two
 
putative class action complaints in the
 
SDNY alleging that a series of
 
scandals and
misconduct led to
 
a loss of
 
shareholder value and,
 
eventually,
 
Credit Suisse Group
 
AG’s merger with
 
UBS Group
AG.
 
KPMG
 
and
 
KPMG
 
employees
 
are
 
also
 
named
 
as
 
defendants.
 
The
 
cases
 
have
 
been
 
consolidated,
 
and
 
an
amended complaint
 
was filed
 
in September
 
2023. The
 
complaints allege
 
breaches of
 
fiduciary duty
 
under Swiss
law, and civil RICO claims under United States federal law.
In June 2023,
 
a putative class
 
action complaint was
 
filed in the
 
EDNY against various
 
former Credit Suisse
 
directors,
officers, and
 
executives on
 
behalf of
 
a purported
 
class of
 
those who
 
held Credit
 
Suisse additional
 
tier 1
 
capital notes
between 12
 
January 2023
 
and 19
 
March 2023.
 
In August
 
2023, the
 
case was
 
transferred to
 
the SDNY,
 
and an
amended complaint was filed later in the
 
month. The complaint asserts direct claims
 
under Swiss law.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Significant regulated subsidiary and
 
sub-group information
 
108
Significant regulated subsidiary
and sub-group information
Unaudited
 
Financial and regulatory key figures for our significant regulated
subsidiaries and sub-groups
UBS AG
(consolidated)
UBS AG
(standalone)
UBS Switzerland AG
(standalone)
UBS Europe SE
(consolidated)
UBS Americas Holding
LLC
(consolidated)
All values in million, except where indicated
USD
USD
CHF
EUR
USD
Financial and regulatory requirements
IFRS
Swiss SRB rules
Swiss GAAP
Swiss SRB rules
(phase-in)
Swiss GAAP
Swiss SRB rules
IFRS
EU regulatory rules
US GAAP
US Basel III rules
As of or for the quarter ended
30.9.23
30.6.23
30.9.23
30.6.23
30.9.23
30.6.23
30.9.23
30.6.23
30.9.23
30.6.23
Financial information
1
Income statement
Total operating income
2
8,322
8,453
1,898
7,118
2,419
2,524
323
264
3,298
3,136
Total operating expenses
7,047
6,997
2,299
5,664
1,481
1,434
217
189
3,138
3,287
Operating profit / (loss) before tax
1,275
1,456
(400)
1,454
938
1,090
106
75
160
(151)
Net profit / (loss)
936
1,124
(500)
1,270
763
891
77
58
50
(174)
Balance sheet
Total assets
1,097,536
1,096,318
534,100
530,893
316,715
313,565
49,893
49,389
196,497
195,827
Total liabilities
 
1,044,355
1,043,044
481,243
477,536
301,375
298,987
45,844
45,892
172,158
171,539
Total equity
53,181
53,274
52,857
53,357
15,340
14,578
4,049
3,497
24,339
24,288
Capital
3
Common equity tier 1 capital
 
43,378
 
43,300
 
53,107
 
53,904
 
12,449
 
12,354
2,651
2,438
10,348
10,275
Additional tier 1 capital
 
11,660
 
11,718
 
11,660
 
11,718
 
5,389
 
5,381
600
600
5,085
5,085
Total going concern capital / Tier 1 capital
 
55,037
 
55,017
 
64,767
 
65,622
 
17,838
 
17,735
3,251
3,038
15,433
15,361
Tier 2 capital
 
536
 
539
 
530
 
533
214
220
Total capital
3,251
3,038
15,647
15,581
Total gone concern loss-absorbing capacity
 
53,349
 
51,572
 
53,343
 
51,566
 
11,257
 
11,235
 
2,534
4
2,525
4
7,400
5
7,400
5
Total loss-absorbing capacity
 
108,387
 
106,589
 
118,110
 
117,187
 
29,095
 
28,971
5,785
5,563
22,833
5
22,761
5
Risk-weighted assets and leverage
ratio denominator
3
Risk-weighted assets
 
321,134
 
323,406
 
347,514
 
343,374
 
108,009
 
107,203
12,374
11,118
72,002
70,135
Leverage ratio denominator
 
1,042,106
 
1,048,313
 
608,933
 
606,158
 
332,850
 
330,318
47,330
49,351
185,049
186,340
Supplementary leverage ratio denominator
206,753
207,357
Capital and leverage ratios (%)
3
Common equity tier 1 capital ratio
 
13.5
 
13.4
 
15.3
 
15.7
 
11.5
 
11.5
 
21.4
 
21.9
 
14.4
 
14.7
Going concern capital ratio / Tier 1 capital ratio
 
17.1
 
17.0
 
18.6
 
19.1
 
16.5
 
16.5
 
26.3
 
27.3
 
21.4
 
21.9
Total capital ratio
 
26.3
 
27.3
 
21.7
 
22.2
Total loss-absorbing capacity ratio
 
33.8
 
33.0
 
26.9
 
27.0
 
46.8
 
50.0
 
31.7
 
32.5
Tier 1 leverage ratio
 
6.9
 
6.2
 
8.3
 
8.2
Supplementary tier 1 leverage ratio
 
7.5
 
7.4
Going concern leverage ratio
 
5.3
 
5.2
 
10.6
 
10.8
 
5.4
 
5.4
Total loss-absorbing capacity leverage ratio
 
10.4
 
10.2
 
8.7
 
8.8
 
12.2
 
11.3
 
12.3
 
12.2
Gone concern capital coverage ratio
 
115.6
 
111.7
Liquidity coverage ratio
3
High-quality liquid assets (bn)
230.9
224.8
109.2
97.7
75.1
77.6
19.4
20.0
28.8
29.2
Net cash outflows (bn)
131.0
131.5
48.8
47.1
52.8
54.5
13.1
13.2
18.5
19.5
Liquidity coverage ratio (%)
176.6
170.9
225.9
6
208.0
142.2
7
142.4
148.1
152.4
155.8
150.0
Net stable funding ratio
3
Total available stable funding (bn)
568.5
564.5
263.7
253.9
221.9
219.7
14.4
13.1
101.8
100.7
Total required stable funding (bn)
467.1
477.6
279.2
283.9
165.5
163.0
10.9
9.1
78.8
79.6
Net stable funding ratio (%)
121.7
118.2
94.5
8
89.4
134.0
8
134.8
132.3
144.9
129.1
126.5
Other
Joint and several liability between UBS AG and
UBS Switzerland AG (bn)
9
3
3
1 The financial information disclosed does not represent
 
financial statements under the respective GAAP / IFRS.
 
2 The total operating income includes
 
credit loss expense or release.
 
3 Refer to the 30 September
2023 Pillar 3 Report, available under “Pillar 3
 
disclosures” at ubs.com/investors, for more information.
 
4 Consists of positions that meet the
 
conditions laid down in Art. 72a–b of
 
the Capital Requirements Regulation
(CRR) II with regard to contractual, structural or legal subordination.
 
5 Consists of eligible long-term debt that meets the conditions specified in 12 CFR 252.162 of the final TLAC rules. Total loss-absorbing capacity
is the sum of tier 1 capital and eligible long-term debt.
 
6 In the third quarter of 2023, the liquidity coverage ratio (the
 
LCR) of UBS AG was 225.9%, remaining above the prudential requirements
 
communicated by
FINMA.
 
7 In the third
 
quarter of 2023,
 
the LCR of
 
UBS Switzerland AG, which
 
is a Swiss
 
SRB, was
 
142.2%, remaining above
 
the prudential requirement
 
communicated by FINMA
 
in connection with
 
the Swiss
Emergency Plan.
 
8 In accordance with Art. 17h para. 3 and 4 of the Liquidity Ordinance,
 
UBS AG standalone is required to maintain a minimum NSFR of at least 80% without taking into
 
account excess funding of
UBS Switzerland AG and 100% after taking
 
into account such excess funding.
 
9 Refer to the “Capital, liquidity and funding, and
 
balance sheet” section of our Annual Report 2022
 
for more information about the
joint and several liability.
 
Under certain circumstances, the
 
Swiss Banking Act and FINMA’s
 
Banking Insolvency Ordinance authorize FINMA
 
to modify, extinguish
 
or convert to common
 
equity liabilities of a bank
 
in
connection with a resolution or insolvency of such bank.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Significant regulated subsidiary and
 
sub-group information
 
109
Credit Suisse AG
 
(consolidated)
Credit Suisse AG
 
(standalone)
Credit Suisse
(Schweiz) AG
(consolidated)
Credit Suisse
(Schweiz) AG
(standalone)
Credit Suisse
International
(standalone)
Credit Suisse
Holdings (USA), Inc.
(consolidated)
All values in million, except where
indicated
CHF
CHF
CHF
CHF
USD
USD
Financial and regulatory requirements
US GAAP
 
Swiss SRB rules
Swiss GAAP
 
Swiss SRB rules
(phase-in)
1
US GAAP
 
Swiss SRB rules
Swiss GAAP
 
Swiss SRB rules
1
IFRS
 
UK regulatory rules
US GAAP
 
US Basel III rules
As of or for the quarter ended
30.9.23
30.6.23
30.9.23
30.6.23
30.9.23
30.6.23
30.9.23
30.6.23
30.9.23
30.6.23
30.9.23
30.6.23
2
Financial information
3
Income statement
Total operating income
4
708
(663)
538
88
Total operating expenses
4,171
8,211
1,418
1,459
Operating profit / (loss) before tax
(3,463)
(8,874)
3,019
(3,833)
Net profit / (loss)
5
(3,539)
(9,329)
2,717
(3,948)
Balance sheet
Total assets
460,623
483,735
279,791
315,509
Total liabilities
 
417,948
437,602
255,752
294,186
Total equity
42,674
46,133
24,040
21,322
Capital
6
Common equity tier 1 capital
42,793
45,542
30,935
28,394
13,015
12,958
11,918
11,884
13,244
14,589
9,756
10,758
Additional tier 1 capital
469
463
469
463
3,100
3,100
3,100
3,100
1,200
1,200
523
523
Total going concern capital / Tier 1 capital
43,263
46,004
31,405
28,856
16,115
16,058
15,018
14,984
14,444
15,789
10,279
11,281
Tier 2 capital
3
3
67
67
Total capital
43,263
46,004
31,405
28,856
16,115
16,058
15,018
14,984
14,447
15,792
10,346
11,348
Total gone concern loss-absorbing
capacity
39,230
39,375
39,177
39,325
9,025
9,300
9,025
9,300
4,586
4,586
3,000
3,000
Total loss-absorbing capacity
82,492
85,379
70,581
68,182
25,140
25,358
24,043
24,284
19,033
20,378
13,279
14,281
Risk-weighted assets and
leverage ratio denominator
6
Risk-weighted assets
205,052
217,102
198,944
199,504
87,838
88,130
86,893
87,414
42,012
48,633
16,841
20,480
Leverage ratio denominator
555,398
585,681
317,772
362,074
257,419
256,015
255,147
253,987
89,344
98,366
33,906
42,802
Supplementary leverage ratio denominator
40,848
51,433
Capital and leverage ratios (%)
6
Common equity tier 1 capital ratio
20.9
21.0
15.6
14.2
14.8
14.7
13.7
13.6
31.5
30.0
57.9
52.5
Going concern capital ratio / Tier 1 capital
ratio
21.1
21.2
15.8
14.5
18.3
18.2
17.3
17.1
34.4
32.5
61.0
55.1
Total capital ratio
21.1
21.2
15.8
14.5
18.3
18.2
17.3
17.1
34.4
32.5
61.4
55.4
Total loss-absorbing capacity ratio
40.2
39.3
28.6
28.8
27.7
27.8
45.3
41.9
78.8
69.7
Tier 1 leverage ratio
7.7
7.8
9.7
7.8
5.1
5.1
4.7
4.7
16.2
16.1
30.3
26.4
Supplementary tier 1 leverage ratio
16.2
16.1
25.2
21.9
Going concern leverage ratio
7.8
7.9
9.9
8.0
6.3
6.3
5.9
5.9
16.2
16.1
Total loss-absorbing capacity leverage
ratio
14.9
14.6
9.8
9.9
9.4
9.6
21.3
20.7
39.0
33.4
Gone concern capital coverage ratio
187.8
178.1
141.7
134.5
122.0
125.3
123.4
126.4
566.3
523.8
Liquidity coverage ratio
6
High-quality liquid assets (bn)
122.3
131.7
50.7
63.2
49.9
42.9
49.9
42.9
15.4
20.1
16.4
17.0
Net cash outflows (bn)
53.8
51.3
14.4
16.2
35.8
30.6
36.2
31.0
8.1
11.5
5.0
6.3
Liquidity coverage ratio (%)
227.2
7
256.7
352.5
8
390.9
139.2
9
140.2
137.6
10
138.2
221.0
197.0
331.3
293.0
Net stable funding ratio
6
Total available stable funding (bn)
292.5
295.7
171.1
168.3
133.3
135.1
131.4
133.5
34.6
39.8
20.8
25.0
Total required stable funding (bn)
235.7
246.2
154.5
168.1
122.3
123.9
120.1
121.7
27.4
31.1
9.0
11.4
Net stable funding ratio (%)
124.1
120.1
110.8
11
100.1
11
109.0
109.0
109.4
11
109.7
11
126.1
128.1
232.2
219.6
Other
Joint and several liability between Credit
Suisse AG standalone and Credit Suisse
(Schweiz) AG standalone (bn)
0.6
0.6
1 Swiss GAAP statutory accounting rules
 
for banks allow the use of certain
 
US GAAP accounting rules,
 
such as current expected credit loss
 
(the CECL) requirements.
 
2 Comparative information has been
 
aligned
with Credit Suisse Holdings
 
(USA), Inc. standalone’s
 
final second quarter of
 
2023 financial statements.
 
3 The financial
 
information disclosed does
 
not represent financial statements
 
under the respective
 
GAAP /
IFRS.
 
4 The total operating income includes credit loss expense or release.
 
5 The net profit / (loss) excludes net income / (loss) attributable to non-controlling interests.
 
6 Refer to the 30 September 2023 Pillar 3
Report, available under “Pillar 3 disclosures”
 
at ubs.com/investors, for more information.
 
7 In the third quarter of
 
2023, the liquidity coverage ratio (the LCR) of
 
Credit Suisse AG consolidated was 227.2%, remaining
above the prudential requirements communicated by FINMA.
 
8 In the third quarter of 2023, the
 
LCR of Credit Suisse AG standalone was
 
352.5%, remaining above the prudential requirements
 
communicated by
FINMA.
 
9 In the third quarter of 2023, the LCR of
 
Credit Suisse (Schweiz) AG consolidated was 139.2%,
 
remaining above the prudential requirements communicated by
 
FINMA.
 
10 In the third quarter of 2023,
the LCR of Credit Suisse (Schweiz) AG standalone was 137.6%, remaining above the prudential requirements communicated by FINMA.
 
11 Based on the Liquidity Ordinance, Credit Suisse AG standalone is allowed
to fulfill the minimum NSFR
 
of 100% by taking
 
into consideration any excess funding
 
of Credit Suisse (Schweiz) AG
 
standalone, and Credit
 
Suisse AG standalone has
 
an NSFR requirement of at
 
least 80% without
taking into consideration
 
any such excess funding. Credit Suisse (Schweiz) AG must always fulfill the NSFR of at least 100% on a standalone basis.
 
 
 
UBS Group third quarter 2023 report |
Significant regulated subsidiary and
 
sub-group information
 
110
UBS Group AG is
 
a holding company
 
and conducts substantially
 
all of its operations
 
through UBS AG, Credit
 
Suisse
AG and subsidiaries thereof. UBS Group AG, UBS AG and Credit
 
Suisse AG have contributed a significant portion
of their respective capital to,
 
and provide substantial liquidity to,
 
such subsidiaries. Many of these
 
subsidiaries are
subject to regulations requiring compliance with minimum capital,
 
liquidity and similar requirements. The tables in
this section summarize
 
the regulatory capital
 
components and
 
capital ratios of
 
our significant
 
regulated subsidiaries
and sub-groups determined
 
under the regulatory framework
 
of each subsidiary’s or
 
sub-group’s home jurisdiction.
 
Supervisory authorities generally have discretion to impose higher requirements or
 
to otherwise limit the activities
of subsidiaries. Supervisory
 
authorities also may
 
require entities to
 
measure capital
 
and leverage ratios
 
on a stressed
basis and may limit
 
the ability of
 
an entity to engage
 
in new activities or
 
take capital actions based
 
on the results of
those tests.
In June 2023, the Federal Reserve Board released
 
the results of its 2023 Dodd–Frank Act
 
Stress Test (DFAST). UBS’s
US
 
intermediate holding
 
company, UBS
 
Americas Holding
 
LLC, and
 
Credit
 
Suisse’s intermediate
 
holding, Credit
Suisse
 
Holdings
 
(USA),
 
Inc.,
 
exceeded
 
the
 
minimum
 
capital
 
requirements
 
under
 
the
 
severely
 
adverse
 
scenario.
Following the completion of the
 
annual DFAST and the Comprehensive Capital
 
Analysis and Review (CCAR), UBS
Americas Holding LLC was assigned a stress capital buffer (an SCB) of 9.1% (previously 4.8%) under the SCB rule
as of 1 October 2023, resulting
 
in a total common equity
 
tier 1 (CET1) capital requirement
 
of 13.6%. Credit Suisse
Holdings (USA), Inc. was assigned an SCB of 7.2% (previously 9.0%),
 
resulting in a total CET1 capital requirement
of 11.7%.
 
Additional information
 
on the
 
above entities
 
is provided
 
in the 30 September
 
2023
 
Pillar 3 report,
 
which is available
under “Pillar 3 disclosures” at
ubs.com/investors
.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Appendix
 
111
Appendix
Alternative performance measures
Alternative performance measures
An alternative performance measure (an APM) is a financial measure of historical or
 
future financial performance,
financial position
 
or cash
 
flows other
 
than a
 
financial measure
 
defined or
 
specified in
 
the applicable
 
recognized
accounting standards or in
 
other applicable regulations. A
 
number of APMs
 
are reported in
 
the discussion of
 
the
financial and operating performance of
 
the external reports (annual, quarterly
 
and other reports). APMs
 
are used
to provide
 
a more
 
complete
 
picture of
 
operating
 
performance
 
and to
 
reflect management’s
 
view of
 
the fundamental
drivers
 
of
 
the
 
business
 
results. A
 
definition
 
of
 
each
 
APM,
 
the
 
method
 
used
 
to
 
calculate
 
it
 
and
 
the
 
information
content are presented in alphabetical order
 
in the table below. These APMs may
 
qualify as non-GAAP measures as
defined by US Securities and Exchange Commission
 
(SEC) regulations.
APM label
Calculation
 
Information content
Active Digital Banking clients in
Corporate & Institutional Clients (%)
– Personal & Corporate Banking
Calculated as the average number of active
 
clients for
each month in the relevant period divided by the
average number of total clients. “Clients” refers
 
to
the number of unique business relationships or legal
entities operated by Corporate & Institutional
 
Clients,
excluding clients that do not have an account,
 
mono-
product clients and clients that have defaulted on
loans or credit facilities. At the end of each month,
any client that has logged on at least once in
 
that
month is determined to be “active” (a log-in
 
time
stamp is allocated to all business relationship numbers
or per legal entity in a digital banking contract).
This measure provides information about the
proportion of active Digital Banking clients in the total
number of UBS clients (within the aforementioned
meaning) which are serviced by Corporate &
Institutional Clients.
Active Digital Banking clients in
Personal Banking (%)
– Personal & Corporate Banking
Calculated as the average number of active
 
clients for
each month in the relevant period divided by the
average number of total clients. “Clients” refers
 
to
the number of unique business relationships operated
by Personal Banking, excluding persons
 
under the age
of 15, clients who do not have a private account,
clients domiciled outside Switzerland and clients
 
who
have defaulted on loans or credit facilities. At the
 
end
of each month, any client that has logged on
 
at least
once in that month is determined to be “active”
 
(a
log-in time stamp is allocated to all business
relationship numbers in a digital banking contract).
This measure provides information about the
proportion of active Digital Banking clients in the total
number of UBS clients (within the aforementioned
meaning) who are serviced by Personal Banking.
Active Mobile Banking clients in
Personal Banking (%)
– Personal & Corporate Banking
Calculated as the average number of active
 
clients for
each month in the relevant period divided by the
average number of total clients. “Clients” refers
 
to
the number of unique business relationships operated
by Personal Banking, excluding persons
 
under the age
of 15, clients who do not have a private account,
clients domiciled outside Switzerland and clients
 
who
have defaulted on loans or credit facilities. At the
 
end
of each month, any client that has logged on
 
via the
mobile app at least once in that month is determined
to be “active” (a log-in time stamp is allocated
 
to all
business relationship numbers in a digital banking
contract).
This measure provides information about the
proportion of active Mobile Banking clients in the
total number of UBS clients (within the
aforementioned meaning) who are serviced by
Personal Banking.
Cost / income ratio (%)
Calculated as operating expenses divided by
 
total
revenues.
This measure provides information about the
efficiency of the business by comparing operating
expenses with gross income.
Fee and trading income for Corporate
 
&
Institutional Clients (USD and CHF)
– Personal & Corporate Banking
Calculated as the total of recurring net fee and
transaction-based income for Corporate &
Institutional Clients.
This measure provides information about the amount
of fee and trading income for Corporate
 
&
Institutional Clients.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Appendix
 
112
APM label
Calculation
 
Information content
Fee-pool-comparable revenues (USD)
– the Investment Bank
Calculated as the total of revenues from: merger-and-
acquisition-related transactions; Equity Capital
Markets,
 
excluding derivatives; Leveraged Capital
Markets, excluding the impact of mark-to-market
movements on loan portfolios; and Debt
 
Capital
Markets, excluding revenues related to debt
underwriting of UBS instruments.
This measure provides information about the amount
of revenues in the Investment Bank that are
comparable with the relevant global fee pools.
Gross margin on invested assets (bps)
– Asset Management
Calculated as total revenues (annualized as applicable)
divided by average invested assets.
This measure provides information about the total
revenues of the business in relation to invested assets.
Impaired loan portfolio as a percentage
of total loan portfolio, gross (%)
– Global Wealth Management,
Personal & Corporate Banking
Calculated as impaired loan portfolio divided by
 
total
gross loan portfolio.
This measure provides information about the
proportion of impaired loan portfolio in the total gross
loan portfolio.
Integration-related expenses (USD)
Generally include costs of internal staff
 
and
contractors substantially dedicated to integration
activities, retention awards, redundancy costs,
incremental expenses from the shortening of useful
lives of property, equipment and software, and
impairment charges relating to these assets.
Classification as integration-related expenses does
 
not
affect the timing of recognition and measurement of
those expenses or the presentation thereof in the
income statement. Integration-related expenses
incurred by Credit Suisse also included expenses
associated with restructuring programs that existed
prior to the acquisition.
This measure provides information about expenses
that are temporary, incremental and directly related to
the integration of Credit Suisse into UBS.
Invested assets (USD and CHF)
– Global Wealth Management,
Personal & Corporate Banking,
Asset Management
Calculated as the sum of managed fund
 
assets,
managed institutional assets, discretionary and
advisory wealth management portfolios, fiduciary
deposits, time deposits, savings accounts,
 
and wealth
management securities or brokerage accounts.
This measure provides information about the volume
of client assets managed by or deposited with
 
UBS for
investment purposes.
Investment products for Personal
Banking (USD and CHF)
– Personal & Corporate Banking
Calculated as the sum of investment funds
 
(including
UBS Vitainvest third-pillar pension funds, as
 
well as
money market funds), mandates and third-party life
insurance operated in Personal Banking.
This measure provides information about the volume
of investment funds (including UBS Vitainvest
 
third-
pillar pension funds, as well as money
 
market funds),
mandates and third-party life insurance operated in
Personal Banking.
Net interest margin (bps)
– Personal & Corporate Banking
Calculated as net interest income (annualized
 
as
applicable) divided by average loans.
This measure provides information about the
profitability of the business by calculating the
difference between the price charged for lending and
the cost of funding, relative to loan value.
Net new investment products for
Personal Banking (USD and CHF)
– Personal & Corporate Banking
Calculated as the net amount of inflows and
 
outflows
of investment products during a specific period.
This measure provides information about the
development of investment products during a specific
period as a result of net new investment product
flows.
Net new money (USD)
– Global Wealth Management,
Asset Management
Calculated as the net amount of inflows and
 
outflows
of invested assets (as defined in UBS policy) recorded
during a specific period. Excluded from the calculation
are movements due to market performance, foreign
exchange translation, dividends, interest and fees,
 
as
well as the effects on invested assets of strategic
decisions by UBS to exit markets
 
or services. Net new
money is not measured for Personal & Corporate
Banking.
This measure provides information about the
development of invested assets during a
 
specific
period as a result of net new money flows.
Net new money growth rate (%)
– Global Wealth Management
Calculated as the net amount of inflows and
 
outflows
of invested assets (as defined in UBS policy) recorded
during a specific period (annualized as applicable)
divided by total invested assets at the beginning
 
of
the period.
 
This measure provides information about the growth
of invested assets during a specific period as
 
a result
of net new money flows.
Net profit growth (%)
Calculated as the change in net profit attributable
 
to
shareholders from continuing operations between
current and comparison periods divided by net profit
attributable to shareholders from continuing
operations of the comparison period.
This measure provides information about profit
growth since the comparison period.
Operating expenses (underlying)
(USD)
Calculated by adjusting operating expenses
 
as
reported in accordance with International Financial
Reporting Standards (IFRS) for items that
management believes are not representative of the
underlying performance of the businesses.
›
Refer to the “Group performance” section of this
report for more information
This measure provides information about the amount
of operating expenses, while excluding items
 
that
management believes are not representative of the
underlying performance of the businesses.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Appendix
 
113
APM label
Calculation
 
Information content
Operating profit / (loss) before tax
(underlying) (USD)
Calculated by adjusting operating profit / (loss) before
tax as reported in accordance with International
Financial Reporting Standards (IFRS) for items that
management believes are not representative of the
underlying performance of the businesses.
›
Refer to the “Group performance” section of this
report for more information
This measure provides information about the amount
of operating profit / (loss) before tax, while excluding
items that management believes are not
representative of the underlying performance of the
businesses.
Pre-tax profit growth (%)
– Global Wealth Management,
Personal & Corporate Banking,
Asset Management,
the Investment Bank
Calculated as the change in net profit before tax
attributable to shareholders from continuing
operations between current and comparison periods
divided by net profit before tax attributable to
shareholders from continuing operations of the
comparison period.
This measure provides information about pre-tax
profit growth since the comparison period.
Pre-tax profit growth (underlying)(%)
– Global Wealth Management,
Personal & Corporate Banking,
Asset Management,
the Investment Bank
Calculated as the change in net profit before tax
attributable to shareholders from continuing
operations between current and comparison periods
divided by net profit before tax attributable to
shareholders from continuing operations of the
comparison period. Net profit before tax attributable
to shareholders from continuing operations excludes
items that management believes are not
representative of the underlying performance of the
businesses and also excludes related tax impact.
This measure provides information about pre-tax
profit growth since the comparison period, while
excluding items that management believes
 
are not
representative of the underlying performance of the
businesses.
Recurring net fee income
(USD and CHF)
– Global Wealth Management,
Personal & Corporate Banking
Calculated as the total of fees for services provided
 
on
an ongoing basis, such as portfolio management
 
fees,
asset-based investment fund fees and custody
 
fees,
which are generated on client assets, and
administrative fees for accounts.
This measure provides information about the amount
of recurring net fee income.
Return on attributed equity
1
 
(%)
Calculated as annualized business division
 
operating
profit before tax divided by average attributed equity.
This measure provides information about the
profitability of the business divisions in relation to
attributed equity.
Return on common equity tier 1
capital
1
 
(%)
Calculated as annualized net profit attributable to
shareholders divided by average common equity
 
tier 1
capital.
This measure provides information about the
profitability of the business in relation to common
equity tier 1 capital.
Return on equity
1
 
(%)
Calculated as annualized net profit attributable to
shareholders divided by average equity attributable
 
to
shareholders.
This measure provides information about the
profitability of the business in relation to equity.
Return on leverage ratio denominator,
gross
1
 
(%)
Calculated as annualized total revenues divided by
average leverage ratio denominator.
This measure provides information about the revenues
of the business in relation to the leverage ratio
denominator.
Return on tangible equity
1
 
(%)
Calculated as annualized net profit attributable to
shareholders divided by average equity attributable
 
to
shareholders less average goodwill and intangible
assets.
This measure provides information about the
profitability of the business in relation to tangible
equity.
Tangible book value per share
(USD)
Calculated as equity attributable to shareholders less
goodwill and intangible assets divided by the
 
number
of shares outstanding.
This measure provides information about tangible net
assets on a per-share basis.
Total book value per share
(USD)
Calculated as equity attributable to shareholders
divided by the number of shares outstanding.
This measure provides information about net assets
on a per-share basis.
Total revenues (underlying)
(USD)
Calculated by adjusting total revenues as reported in
accordance with International Financial Reporting
Standards (IFRS) for items that management believes
are not representative of the underlying performance
of the businesses.
›
Refer to the “Group performance” section of this
report for more information
This measure provides information about the amount
of total revenues, while excluding items that
management believes are not representative of the
underlying performance of the businesses.
Transaction-based income
(USD and CHF)
– Global Wealth Management,
Personal & Corporate Banking
Calculated as the total of the non-recurring portion
 
of
net fee and commission income, mainly composed
 
of
brokerage and transaction-based investment fund
fees, and credit card fees, as well as fees for payment
and foreign-exchange transactions, together with
other net income from financial instruments
measured at fair value through profit or loss.
This measure provides information about the amount
of the non-recurring portion of net fee and
commission income, together with other net
 
income
from financial instruments measured at fair value
through profit or loss.
Underlying cost / income ratio (%)
Calculated as underlying operating expenses
 
(as
defined above) divided by underlying total
 
revenues
(as defined above).
 
This measure provides information about the
efficiency of the business by comparing operating
expenses with total revenues, while excluding items
that management believes are not representative of
the underlying performance of the businesses.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UBS Group third quarter 2023 report |
Appendix
 
114
APM label
Calculation
 
Information content
Underlying net profit growth (%)
Calculated as the change in net profit attributable
 
to
shareholders from continuing operations between
current and comparison periods divided by net profit
attributable to shareholders from continuing
operations of the comparison period.
 
Net profit
attributable to shareholders from continuing
operations excludes items that management
 
believes
are not representative of the underlying performance
of the businesses and also excludes related tax
impact.
This measure provides information about profit
growth since the comparison period,
 
while excluding
items that management believes are not
representative of the underlying performance of the
businesses.
Underlying return on common equity
tier 1 capital
1
 
(%)
Calculated as annualized net profit attributable to
shareholders divided by average common equity
 
tier 1
capital. Net profit attributable to shareholders
excludes items that management believes
 
are not
representative of the underlying performance of the
businesses and also excludes related tax impact.
This measure provides information about the
profitability of the business in relation to common
equity tier 1 capital,
 
while excluding items that
management believes are not representative of the
underlying performance of the businesses.
Underlying return on tangible equity
1
(%)
Calculated as annualized net profit attributable to
shareholders divided by average equity attributable
 
to
shareholders less average goodwill and intangible
assets.
 
Net profit attributable to shareholders excludes
items that management believes are not
representative of the underlying performance of the
businesses and also excludes related tax impact.
This measure provides information about the
profitability of the business in relation to tangible
equity, while excluding items that management
believes are not representative of the underlying
performance of the businesses.
1
Profit or loss information for the third quarter of
 
2023 includes three months of information for UBS and
 
three months of information for Credit Suisse and,
 
for the purpose of the calculation of return measures,
 
has
been annualized multiplying such by four. Profit or loss information for the second quarter of 2023 includes three months of information for UBS and one month (June 2023) of information for Credit Suisse and, for the
purpose of the calculation of return
 
measures, has been annualized
 
multiplying such by four.
 
Profit or loss information for
 
the first nine months of 2023
 
includes nine months of information
 
for UBS and four months
(June–September 2023) of
 
information for Credit
 
Suisse and, for
 
the purpose of
 
the calculation of
 
return measures,
 
has been annualized
 
by dividing such
 
by three and
 
then multiplying by
 
four for the
 
year-to-date
measure.
This is a general list of the APMs used in our
 
financial reporting. Not all of the APMs
 
listed above may appear in
this particular report.
 
Information related to underlying return on common equity tier 1 (CET1) capital and underlying return on tangible
equity (%)
As of or for the quarter ended
As of or year-to-date
USD m
30.9.23
30.6.23
31.12.22
30.9.22
30.9.23
30.9.22
Underlying operating profit / (loss) before tax
844
891
1,869
2,042
3,301
6,631
Underlying tax expense / (benefit)
623
441
280
524
1,523
1,629
NCI
4
3
4
9
15
28
Underlying net profit / (loss)
216
447
1,585
1,508
1,762
4,974
Underlying net profit / (loss), annualized
866
1,786
6,339
6,033
2,349
6,633
Tangible equity
77,394
79,547
50,609
49,546
77,394
49,546
Average tangible equity
78,471
65,014
50,078
50,040
64,677
51,640
CET1 capital
78,587
80,258
45,457
44,664
78,587
44,664
Average CET1 capital
79,422
62,424
45,061
44,731
62,290
44,788
Underlying return on tangible equity (%)
1.1
2.7
12.7
12.1
3.6
12.8
Underlying return on common equity tier 1 capital
1.1
2.9
14.1
13.5
3.8
14.8
 
 
 
 
UBS Group third quarter 2023 report |
Appendix
 
115
Abbreviations frequently used in our financial reports
A
ABS
 
asset-backed securities
AG
 
Aktiengesellschaft
AGM
 
Annual General Meeting of
shareholders
A-IRB
 
advanced internal ratings-
based
AIV
 
alternative investment
vehicle
ALCO
 
Asset and Liability
Committee
AMA
 
advanced measurement
approach
AML
 
anti-money laundering
AoA
 
Articles of Association
APM
 
alternative performance
measure
ARR
 
alternative reference rate
ARS
 
auction rate securities
ASF
 
available stable funding
AT1
 
additional tier 1
AuM
 
assets under management
B
BCBS
 
Basel Committee on
Banking Supervision
BIS
 
Bank for International
Settlements
BoD
 
Board of Directors
C
CAO
 
Capital Adequacy
Ordinance
CCAR
 
Comprehensive Capital
Analysis and Review
CCF
 
credit conversion factor
CCP
 
central counterparty
CCR
 
counterparty credit risk
CCRC
 
Corporate Culture and
Responsibility Committee
CDS
 
credit default swap
CEA
 
Commodity Exchange Act
CEO
 
Chief Executive Officer
CET1
 
common equity tier 1
CFO
 
Chief Financial Officer
CGU
 
cash-generating unit
CHF
 
Swiss franc
CIO
 
Chief Investment Office
C&ORC
 
Compliance & Operational
Risk Control
CRM
 
credit risk mitigation (credit
risk) or comprehensive risk
measure (market risk)
CST
 
combined stress test
CUSIP
 
Committee on Uniform
Security Identification
Procedures
CVA
 
credit valuation adjustment
D
DBO
 
defined benefit obligation
DCCP
 
Deferred Contingent
Capital Plan
 
DE&I
 
diversity, equity and
inclusion
DFAST
 
Dodd–Frank Act Stress Test
DM
 
discount margin
DOJ
 
US Department of Justice
DTA
 
deferred tax asset
DVA
 
debit valuation adjustment
E
EAD
 
exposure at default
EB
 
Executive Board
EC
 
European Commission
ECB
 
European Central Bank
ECL
 
expected credit loss
EGM
 
Extraordinary General
Meeting of shareholders
EIR
 
effective interest rate
EL
 
expected loss
EMEA
 
Europe, Middle East and
Africa
EOP
 
Equity Ownership Plan
EPS
 
earnings per share
ESG
 
environmental, social and
governance
ESR
 
environmental and social
risk
ETD
 
exchange-traded derivatives
ETF
 
exchange-traded fund
EU
 
European Union
EUR
 
euro
EURIBOR
 
Euro Interbank Offered Rate
EVE
 
economic value of equity
EY
 
Ernst & Young Ltd
F
FA
 
financial advisor
FCA
 
UK Financial Conduct
Authority
FDIC
 
Federal Deposit Insurance
Corporation
FINMA
 
Swiss Financial Market
Supervisory Authority
FMIA
 
Swiss Financial Market
Infrastructure Act
FSB
 
Financial Stability Board
FTA
 
Swiss Federal Tax
Administration
FVA
 
funding valuation
adjustment
FVOCI
 
fair value through other
comprehensive income
FVTPL
 
fair value through profit or
loss
FX
 
foreign exchange
G
GAAP
 
generally accepted
accounting principles
GBP
 
pound sterling
GCRG
 
Group Compliance,
Regulatory & Governance
GDP
 
gross domestic product
GEB
 
Group Executive Board
GHG
 
greenhouse gas
GIA
 
Group Internal Audit
GRI
 
Global Reporting Initiative
G-SIB
 
global systemically
important bank
H
HQLA
high-quality liquid assets
I
IAS
 
International Accounting
Standards
IASB
 
International Accounting
Standards Board
IBOR
 
interbank offered rate
IFRIC
 
International Financial
Reporting Interpretations
Committee
IFRS
 
International Financial
Reporting Standards
IRB
 
internal ratings-based
IRRBB
 
interest rate risk in the
banking book
ISDA
 
International Swaps and
Derivatives Association
ISIN
 
International Securities
Identification Number
 
 
 
UBS Group third quarter 2023 report |
Appendix
 
116
Abbreviations frequently used in our financial reports (continued)
K
KRT
 
Key Risk Taker
L
LAS
 
liquidity-adjusted stress
LCR
 
liquidity coverage ratio
LGD
 
loss given default
LIBOR
 
London Interbank Offered
Rate
LLC
 
limited liability company
LoD
 
lines of defense
LRD
 
leverage ratio denominator
LTIP
 
Long-Term
 
Incentive Plan
LTV
 
loan-to-value
M
M&A
 
mergers and acquisitions
MRT
 
Material Risk Taker
N
NII
 
net interest income
NSFR
 
net stable funding ratio
NYSE
 
New York Stock Exchange
O
OCA
 
own credit adjustment
OCI
 
other comprehensive
income
OECD
 
Organisation for Economic
Co-operation and
Development
OTC
 
over-the-counter
P
PCI
 
purchased credit impaired
PD
 
probability of default
PIT
 
point in time
PPA
 
purchase price allocation
P&L
 
profit or loss
Q
QCCP
 
Qualifying central
counterparty
R
RBC
 
risk-based capital
RbM
 
risk-based monitoring
REIT
 
real estate investment trust
RMBS
 
residential mortgage-
backed securities
RniV
 
risks not in VaR
RoCET1
 
return on CET1 capital
RoU
 
right-of-use
rTSR
 
relative total shareholder
return
RWA
 
risk-weighted assets
S
SA
 
standardized approach or
société anonyme
SA-CCR
 
standardized approach for
counterparty credit risk
SAR
 
Special Administrative
Region of the People’s
Republic of China
SDG
 
Sustainable Development
Goal
SEC
 
US Securities and Exchange
Commission
SFT
 
securities financing
transaction
SI
 
sustainable investing or
sustainable investment
SIBOR
 
Singapore Interbank
Offered Rate
SICR
 
significant increase in credit
risk
SIX
 
SIX Swiss Exchange
SME
 
small and medium-sized
entities
SMF
 
Senior Management
Function
SNB
 
Swiss National Bank
SOR
 
Singapore Swap Offer Rate
SPPI
 
solely payments of principal
and interest
SRB
 
systemically relevant bank
SRM
 
specific risk measure
SVaR
 
stressed value-at-risk
T
TBTF
 
too big to fail
TCFD
 
Task
 
Force on Climate-
related Financial Disclosures
TIBOR
 
Tokyo
 
Interbank Offered
Rate
TLAC
 
total loss-absorbing capacity
TTC
 
through the cycle
U
USD
 
US dollar
V
VaR
 
value-at-risk
VAT
value added tax
This is a
 
general list
 
of the
 
abbreviations frequently
 
used in
 
our financial
 
reporting. Not
 
all of the
 
listed abbreviations
may appear in this particular report.
 
 
 
UBS Group third quarter 2023 report |
Appendix
 
117
Information sources
 
Reporting publications
Annual publications
Annual
 
Report
:
 
Published
 
in
 
English,
 
this
 
single-volume report
 
provides descriptions
 
of:
 
the
 
Group
 
strategy and
performance; the
 
strategy and
 
performance of
 
the business
 
divisions and
 
Group Items;
 
risk, treasury
 
and capital
management;
 
corporate
 
governance,
 
corporate
 
responsibility
 
and
 
the
 
compensation
 
framework,
 
including
information about compensation
 
for the Board
 
of Directors and
 
the Group Executive
 
Board members; and
 
financial
information, including the financial statements.
 
“Auszug aus
 
dem Geschäftsbericht
”: This
 
publication provides
 
a German
 
translation of
 
selected sections
 
of
 
the
Annual Report.
 
Compensation
 
Report
:
 
This
 
report
 
discusses
 
the
 
compensation
 
framework
 
and
 
provides
 
information
 
about
compensation for
 
the Board
 
of Directors
 
and the
 
Group Executive
 
Board members.
 
It is
 
available in
 
English and
German (
“Vergütungsbericht
”) and represents a component of the Annual
 
Report.
Sustainability Report
: Published
 
in English,
 
the Sustainability Report
 
provides disclosures on
 
environmental, social
and governance topics related to the UBS Group.
Diversity, Equity and Inclusion
 
Report
: This report details
 
UBS’s diversity, equity
 
and inclusion priority areas
 
of focus,
strategic goals and approach to achieving them.
Quarterly publications
 
Quarterly financial report
: This report provides an
 
update on performance and strategy (where
 
applicable) for the
respective quarter. It is available in English.
The annual
 
and quarterly
 
publications
 
are available
 
in .pdf
 
and online
 
formats
 
at
ubs.com/investors
, under
 
“Financial
information.” Starting
 
with the
 
Annual Report
 
2022, printed
 
copies, in
 
any language,
 
of the
 
aforementioned
 
annual
publications are no longer provided.
 
Other information
Website
The “Investor
 
Relations” website
 
at
ubs.com/investors
 
provides the
 
following information
 
about UBS:
 
results-related
news
 
releases;
 
financial
 
information,
 
including
 
results-related
 
filings
 
with
 
the
 
US
 
Securities
 
and
 
Exchange
Commission (the SEC);
 
information for shareholders,
 
including UBS share price
 
charts, as well as
 
data and dividend
information, and
 
for bondholders;
 
the corporate
 
calendar; and
 
presentations by
 
management for
 
investors and
financial analysts. Information is available
 
online in English, with some information
 
also available in German.
Results presentations
Quarterly
 
results
 
presentations
 
are
 
webcast
 
live.
 
Recordings
 
of
 
most
 
presentations
 
can
 
be
 
downloaded
 
from
ubs.com/presentations
.
Messaging service
Email
 
alerts
 
to
 
news
 
about
 
UBS
 
can
 
be
 
subscribed
 
for
 
under
 
“UBS
 
News
 
Alert”
 
at
ubs.com/global/en/investor-
relations/contact/investor-services.html
. Messages are sent in English, German, French or Italian, with an option to
select theme preferences for such alerts.
Form 20-F and other submissions to the US
 
Securities and Exchange Commission
UBS files periodic
 
reports with
 
and submits
 
other information
 
to the
 
SEC. Principal
 
among these
 
filings is the
 
annual
report on Form 20-F,
 
filed pursuant to
 
the US Securities
 
Exchange Act of 1934.
 
The filing of
 
Form 20-F is structured
as a
 
wraparound document.
 
Most sections
 
of the
 
filing can
 
be satisfied
 
by referring
 
to the
 
combined UBS Group
 
AG
and UBS AG Annual
 
Report. However, there is
 
a small amount
 
of additional information
 
in Form 20-F
 
that is not
presented
 
elsewhere
 
and
 
is
 
particularly
 
targeted
 
at
 
readers
 
in
 
the
 
US.
 
Readers
 
are
 
encouraged
 
to
 
refer
 
to
 
this
additional disclosure.
 
Any document
 
that filed
 
with the
 
SEC is
 
available on
 
the SEC’s
 
website:
sec.gov
. Refer
 
to
ubs.com/investors
 
for more information.
 
 
 
 
UBS Group third quarter 2023 report |
Appendix
 
118
Cautionary Statement Regarding Forward-Looking Statements |
 
This report contains statements that constitute “forward-looking statements,” including
but not limited to management’s outlook for
 
UBS’s financial performance, statements relating to the anticipated effect
 
of transactions and strategic initiatives
on UBS’s
 
business and future
 
development and goals
 
or intentions to
 
achieve climate, sustainability
 
and other social
 
objectives. While these
 
forward-looking
statements represent
 
UBS’s judgments,
 
expectations and
 
objectives concerning the
 
matters described,
 
a number
 
of risks,
 
uncertainties and
 
other important
factors could
 
cause actual
 
developments and
 
results to
 
differ materially
 
from UBS’s
 
expectations. In
 
particular,
 
recent terrorist
 
activity and
 
escalating armed
conflict in the
 
middle east, as
 
well as the
 
continuing Russia–Ukraine
 
war, may have significant
 
impacts on global
 
markets, exacerbate
 
global inflationary
 
pressures,
and slow global
 
growth. In addition,
 
the ongoing
 
conflicts may
 
continue to cause
 
significant population
 
displacement, and
 
lead
 
to shortages of
 
vital commodities,
including
 
energy shortages
 
and
 
food
 
insecurity outside
 
the areas
 
immediately involved
 
in
 
armed
 
conflict. Governmental
 
responses
 
to
 
the
 
armed conflicts,
including, with
 
respect to
 
the Russia–Ukraine
 
war,
 
coordinated successive
 
sets of
 
sanctions on
 
Russia and
 
Belarus, and
 
Russian and
 
Belarusian entities
 
and
nationals, and the uncertainty as to whether the ongoing conflicts will widen and intensify, may continue to have significant adverse effects on the market and
macroeconomic conditions, including in
 
ways that cannot
 
be anticipated. UBS’s
 
acquisition of Credit
 
Suisse has materially
 
changed our outlook and
 
strategic
direction and introduced new operational challenges. The integration of the Credit Suisse entities into the UBS structure is expected to take between three
 
and
five years and presents significant
 
risks, including the risks that
 
UBS Group AG may be
 
unable to achieve the cost
 
reductions and other benefits contemplated
 
by
the transaction. This
 
creates significantly greater
 
uncertainty about forward-looking statements.
 
Other factors that
 
may affect our
 
performance and ability
 
to
achieve our plans,
 
outlook and other
 
objectives also include,
 
but are not limited
 
to: (i) the degree to
 
which UBS is
 
successful in the
 
execution of its
 
strategic plans,
including its
 
cost reduction
 
and efficiency
 
initiatives and
 
its ability
 
to manage
 
its levels
 
of risk-weighted assets
 
(RWA) and
 
leverage ratio
 
denominator (LRD),
liquidity coverage ratio
 
and other financial
 
resources, including changes
 
in RWA
 
assets and
 
liabilities arising from
 
higher market volatility
 
and the
 
size of the
combined bank; (ii) the degree to which UBS is successful
 
in implementing changes to its businesses to
 
meet changing market, regulatory and other conditions,
including as a
 
result of the
 
acquisition of Credit
 
Suisse; (iii) increased
 
inflation and
 
interest rate volatility
 
in major
 
markets; (iv) developments
 
in the
 
macroeconomic
climate and in
 
the markets
 
in which UBS
 
operates or to
 
which it is
 
exposed, including
 
movements in
 
securities prices or
 
liquidity, credit spreads, currency
 
exchange
rates, deterioration
 
or slow
 
recovery in
 
residential and
 
commercial real
 
estate markets,
 
the effects
 
of economic
 
conditions, including
 
increasing inflationary
pressures, market developments, increasing geopolitical tensions,
 
and changes to national trade
 
policies on the financial position or
 
creditworthiness of UBS’s
clients and counterparties, as well as on client sentiment and levels of activity,
 
including the COVID-19 pandemic and the measures taken to manage it, which
have had and may also continue to have a significant adverse effect on global and regional economic activity, including disruptions to global supply chains and
labor market displacements;
 
(v) changes in the
 
availability of capital
 
and funding, including
 
any adverse changes
 
in UBS’s credit
 
spreads and credit ratings
 
of UBS,
Credit Suisse, sovereign issuers, structured credit products or credit-related exposures, as
 
well as availability and cost of funding to meet requirements for debt
eligible for total loss-absorbing
 
capacity (TLAC), in
 
particular in light
 
of the acquisition
 
of Credit Suisse;
 
(vi) changes in central
 
bank policies or
 
the implementation
of financial legislation and regulation in Switzerland, the US, the UK, the European Union and other financial centers that have imposed, or resulted in, or may
do so
 
in the
 
future, more
 
stringent or
 
entity-specific capital,
 
TLAC, leverage
 
ratio, net
 
stable funding
 
ratio, liquidity
 
and funding
 
requirements, heightened
operational resilience requirements, incremental tax requirements, additional levies, limitations on permitted activities, constraints on remuneration, constraints
on transfers
 
of capital
 
and liquidity
 
and sharing
 
of operational
 
costs across
 
the Group
 
or other
 
measures, and
 
the effect
 
these will
 
or would
 
have on
 
UBS’s
business activities; (vii) UBS’s ability to successfully implement resolvability and related regulatory requirements and the potential need to make further changes
to the legal structure or booking model
 
of UBS in response to legal and regulatory
 
requirements and any additional requirements due to its
 
acquisition of Credit
Suisse, or other developments; (viii) UBS’s ability to maintain and improve its systems and controls for complying with sanctions in a timely manner and
 
for the
detection and prevention of money laundering to
 
meet evolving regulatory requirements and expectations, in
 
particular in current geopolitical turmoil; (ix) the
uncertainty arising from
 
domestic stresses in
 
certain major economies;
 
(x) changes in
 
UBS’s competitive position,
 
including whether differences
 
in regulatory
capital and
 
other requirements
 
among the
 
major financial
 
centers adversely
 
affect UBS’s
 
ability to
 
compete in
 
certain lines
 
of business;
 
(xi) changes in
 
the standards
of conduct applicable to our businesses
 
that may result from new regulations or new
 
enforcement of existing standards, including
 
measures to impose new and
enhanced duties when interacting with customers and in the execution and handling of
 
customer transactions; (xii) the liability to which UBS may be exposed,
or possible constraints or sanctions
 
that regulatory authorities might
 
impose on UBS, due to
 
litigation, contractual claims
 
and regulatory investigations, including
the potential for disqualification
 
from certain businesses, potentially
 
large fines or monetary
 
penalties, or the loss
 
of licenses or privileges
 
as a result of regulatory
or other governmental
 
sanctions, as
 
well as the
 
effect that litigation,
 
regulatory and
 
similar matters
 
have on the
 
operational risk
 
component of
 
our RWA, including
as a result of its acquisition of Credit
 
Suisse, as well as the amount of
 
capital available for return to shareholders;
 
(xiii) the effects on UBS’s business, in particular
cross-border banking, of sanctions,
 
tax or regulatory developments
 
and of possible changes
 
in UBS’s policies and
 
practices; (xiv) UBS’s ability
 
to retain and attract
the employees necessary to
 
generate revenues and to manage,
 
support and control its businesses,
 
which may be affected by competitive
 
factors; (xv) changes in
accounting or tax standards or
 
policies, and determinations or
 
interpretations affecting the recognition of
 
gain or loss, the valuation
 
of goodwill, the recognition
of deferred tax
 
assets and other matters;
 
(xvi) UBS’s ability to implement new
 
technologies and business methods, including digital
 
services and technologies,
and ability
 
to successfully
 
compete with
 
both existing
 
and new
 
financial service
 
providers, some
 
of which
 
may not
 
be regulated
 
to the
 
same extent;
 
(xvii) limitations
on the
 
effectiveness of
 
UBS’s internal processes
 
for risk
 
management, risk control,
 
measurement and
 
modeling, and
 
of financial
 
models generally;
 
(xviii) the
occurrence of operational failures, such as fraud, misconduct, unauthorized trading, financial crime, cyberattacks, data leakage and systems failures, the risk of
which is increased with cyberattack threats from both nation states and non-nation-state actors targeting financial institutions;
 
(xix) restrictions on the ability of
UBS Group AG
 
to make payments
 
or distributions, including
 
due to restrictions
 
on the ability
 
of its subsidiaries
 
to make loans
 
or distributions,
 
directly or indirectly,
or, in
 
the case of financial difficulties, due to
 
the exercise by FINMA or the regulators of
 
UBS’s operations in other countries of their broad statutory powers in
relation to
 
protective measures, restructuring
 
and liquidation proceedings;
 
(xx) the degree to
 
which changes in
 
regulation, capital or
 
legal structure, financial
results or other factors may affect UBS’s ability to maintain its stated capital return objective;
 
(xxi) uncertainty over the scope of actions that may be required by
UBS, governments and others
 
for UBS to achieve goals
 
relating to climate, environmental
 
and social matters, as well
 
as the evolving nature of underlying
 
science
and industry and the possibility of conflict between different governmental standards and regulatory regimes; (xxii) the ability of UBS to access capital markets;
(xxiii) the ability of UBS to successfully recover from a disaster or other business continuity problem due
 
to a hurricane, flood, earthquake, terrorist attack, war,
conflict (e.g.,
 
the Russia–Ukraine war),
 
pandemic, security breach,
 
cyberattack, power
 
loss, telecommunications failure
 
or other
 
natural or
 
man-made event,
including the ability to function
 
remotely during long-term disruptions
 
such as the COVID-19 (coronavirus)
 
pandemic; (xxiv) the level
 
of success in the absorption
of Credit Suisse, in the integration
 
of the two groups
 
and their businesses, and
 
in the execution of the
 
planned strategy regarding cost
 
reduction and divestment
of any non-core
 
assets, the existing assets and
 
liabilities currently existing in
 
the Credit Suisse Group,
 
the level of
 
resulting impairments and write-downs, the
effect of
 
the consummation
 
of the
 
integration on
 
the operational
 
results, share
 
price and
 
credit rating
 
of UBS
 
– delays,
 
difficulties, or
 
failure in
 
closing the
transaction may cause market disruption and challenges for UBS to maintain business, contractual and operational relationships; and (xxv) the effect that these
or other factors or unanticipated events, including media reports and speculations, may have on our reputation and the additional consequences that this may
have on our business and
 
performance. The sequence in which
 
the factors above are presented is
 
not indicative of their likelihood
 
of occurrence or the potential
magnitude of their consequences.
 
Our business and financial
 
performance could be affected
 
by other factors identified
 
in our past and future
 
filings and reports,
including those
 
filed with
 
the US
 
Securities and
 
Exchange Commission
 
(the SEC).
 
More detailed
 
information about
 
those factors
 
is set
 
forth in
 
documents
furnished by UBS and
 
filings made by UBS with the
 
SEC, including the Annual Report
 
on Form 20-F for the year
 
ended 31 December 2022. UBS
 
is not under any
obligation to (and expressly disclaims
 
any obligation to) update or
 
alter its forward-looking statements,
 
whether as a result of new
 
information, future events, or
otherwise.
Rounding |
 
Numbers presented throughout this report may not add up
 
precisely to the totals provided in the tables and text.
 
Percentages and percent changes
disclosed in text and tables are
 
calculated on the basis of unrounded
 
figures. Absolute changes between reporting periods disclosed in
 
the text, which can be
derived from numbers presented in related tables, are calculated on
 
a rounded basis.
Tables |
 
Within tables, blank fields generally indicate non-applicability or that presentation of any content would not be meaningful, or that information is not
available as of the relevant date or for the relevant period. Zero values generally indicate that the respective figure is zero on an actual or rounded basis.
 
Values
that are zero on a rounded basis can be either negative or
 
positive on an actual basis.
edgarq23ubsgroupagp122i0
UBS Group AG
P.O. Box
CH-8098 Zurich
ubs.com
This
 
Form
 
6-K
 
is
 
hereby
 
incorporated
 
by
 
reference
 
into
 
(1)
 
each
 
of
 
the
 
registration
 
statements
 
on
 
Form
 
F-3
(Registration Numbers
 
333-263376, 333-272539
 
and 333-272452),
 
and on
 
Form S-8
 
(Registration Numbers
 
333-
200634; 333-200635;
 
333-200641; 333-200665; 333-215254;
 
333-215255; 333-228653; 333-230312;
 
333-249143
and 333-272975), and
 
into each
 
prospectus outstanding under
 
any of the
 
foregoing registration statements, (2)
 
any
outstanding
 
offering
 
circular
 
or
 
similar
 
document
 
issued
 
or
 
authorized
 
by
 
UBS
 
AG
 
and
 
Credit
 
Suisse
 
AG
 
that
incorporates by reference any Forms 6-K of UBS AG
 
and Credit Suisse AG (respectively) that are incorporated
 
into
its registration
 
statements filed
 
with the
 
SEC, and
 
(3) the
 
base prospectus
 
of Corporate
 
Asset Backed
 
Corporation
(“CABCO”) dated June 23,
 
2004 (Registration Number 333-111572), the Form 8-K
 
of CABCO filed and dated
 
June
23, 2004 (SEC
 
File Number 001-13444), and
 
the Prospectus Supplements relating to
 
the CABCO Series 2004-101
Trust dated May 10, 2004 and May 17, 2004 (Registration Number 033-91744 and 033-91744-05).
 
 
 
 
 
 
 
 
 
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
 
registrants have duly caused this
report to be signed on their behalf by the undersigned, thereunto duly
 
authorized.
UBS Group AG
By:
 
/s/
 
Sergio Ermotti
 
___
Name:
 
Sergio Ermotti
Title:
 
Group Chief Executive Officer
 
By:
 
/s/ Todd Tuckner
 
_
Name:
 
Todd Tuckner
Title:
 
Group Chief Financial Officer
By:
 
/s/ Steffen Henrich
 
____________
Name:
 
Steffen Henrich
Title:
 
Group Controller
 
UBS AG
By:
 
/s/
 
Sergio Ermotti
 
_
Name:
 
Sergio Ermotti
Title:
 
President of the Executive Board
By:
 
/s/ Todd Tuckner
 
_
Name:
 
Todd Tuckner
Title:
 
Chief Financial Officer
By:
 
/s/ Steffen Henrich
 
_____________
Name:
 
Steffen Henrich
Title:
 
Controller
 
Credit Suisse AG
By:
 
/s/
 
Ulrich Körner
 
______________
Name:
 
Ulrich Körner
Title:
 
Chief Executive Officer
By:
 
/s/
 
Simon Grimwood
 
_
Name:
 
Simon Grimwood
Title:
 
Chief Financial Officer
Date:
 
November 7, 2023