6-K 1 6kubsgroupag3q19.htm 6kubsgroupag3q19

 



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: October 22, 2019

 

UBS Group AG

Commission File Number: 1-36764

 

UBS AG

Commission File Number: 1-15060

 

 

(Registrants' Name)

 

Bahnhofstrasse 45, Zurich, Switzerland

Aeschenvorstadt 1, Basel, Switzerland

(Address of principal executive offices)

 

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 2019 Report of UBS Group AG, which appears immediately following this page.

 

 


 

  

Our financial results

 

Third quarter 2019 report

 

 


 

 


 

Corporate calendar UBS Group AG

 

1.

UBS
Group

4

Recent developments

6

Group performance

   

2.

UBS business divisions and
Corporate Center

20

Global Wealth Management

24

Personal & Corporate Banking

29

Asset Management

32

Investment Bank

36

Corporate Center

   

3.

Risk, treasury and capital
management

41

Risk management and control

45

Balance sheet, liquidity and funding management

49

Capital management

   

4.

Consolidated
financial statements

63

UBS Group AG interim consolidated financial statements (unaudited)

107

UBS AG interim consolidated financial information (unaudited)

   

5.

Significant regulated subsidiary and sub-group information

112

Financial and regulatory key figures for our significant regulated subsidiaries and sub-groups

 

 

 

Appendix

 

 

114

Abbreviations frequently used in
our financial reports

117

Information sources

118

Cautionary statement

 

 

   
Publication of the fourth quarter 2019 report:                      Tuesday, 21 January 2020
Publication of the Annual Report 2019:                               Friday, 28 February 2020
Publication of the first quarter 2020 report:                          Tuesday, 28 April 2020
Annual General Meeting 2020:                                           Wednesday, 29 April 2020

Corporate calendar UBS AG*

Publication of the third quarter 2019 report:                         Friday, 25 October 2019

*Publication dates of future quarterly and annual reports and results are made available as part of the corporate calendar of UBS AG at www.ubs.com/investors

Contacts

Switchboards

For all general inquiries
www.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 supports
institutional, professional and retail
investors from our offices in Zurich,
London, New York and Krakow.

UBS Group AG, Investor Relations
P.O. Box, CH-8098 Zurich, Switzerland

www.ubs.com/investors

Zurich +41-44-234 4100
New York +1-212-882 5734

Media Relations

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

www.ubs.com/media

Zurich +41-44-234 8500
mediarelations@ubs.com

London +44-20-7567 4714
ubs-media-relations@ubs.com

New York +1-212-882 5858
mediarelations-ny@ubs.com

Hong Kong +852-2971 8200
sh-mediarelations-ap@ubs.com


Office of the Group Company Secretary

The Group Company Secretary receives
inquiries on compensation and related
issues addressed to 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

+41-44-235 6652

Shareholder Services

UBS’s Shareholder Services team, a unit
of the Group Company Secretary office,
is responsible for 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

+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:
www.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 | www.ubs.com
Language: English

© UBS 2019. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved.

 

 

  

 


Third quarter 2019 report 

Our key figures

 

 

As of or for the quarter ended

 

As of or year-to-date

USD million, except where indicated

 

30.9.19

30.6.19

31.12.18

30.9.18

 

30.9.19

30.9.18

Group results

 

 

 

 

 

 

 

 

Operating income

 

 7,088 

 7,532 

 6,972 

 7,428 

 

 21,838 

 23,240 

Operating expenses

 

 5,743 

 5,773 

 6,492 

 5,724 

 

 17,188 

 17,730 

Operating profit / (loss) before tax

 

 1,345 

 1,759 

 481 

 1,704 

 

 4,650 

 5,510 

Net profit / (loss) attributable to shareholders

 

 1,049 

 1,392 

 315 

 1,253 

 

 3,582 

 4,201 

Diluted earnings per share (USD)1

 

 0.28 

 0.37 

 0.08 

 0.33 

 

 0.95 

 1.09 

Profitability and growth2

 

 

 

 

 

 

 

 

Return on equity (%)3

 

 7.7 

 10.4 

 2.4 

 9.7 

 

 8.9 

 10.7 

Return on tangible equity (%)4

 

 8.7 

 11.9 

 2.7 

 11.1 

 

 10.1 

 12.2 

Return on common equity tier 1 capital (%)5

 

 12.1 

 16.0 

 3.7 

 14.5 

 

 13.8 

 16.3 

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

 

 10.8 

 11.4 

 10.8 

 11.6 

 

 11.0 

 12.1 

Return on leverage ratio denominator, gross (%)6

 

 3.1 

 3.3 

 3.1 

 3.3 

 

 3.2 

 3.4 

Cost / income ratio (%)7

 

 80.6 

 76.5 

 92.4 

 77.0 

 

 78.5 

 76.1 

Adjusted cost / income ratio (%)8

 

 79.1 

 76.1 

 92.2 

 75.9 

 

 77.7 

 75.7 

Effective tax rate (%)

 

 21.9 

 20.8 

 34.4 

 26.3 

 

 23.0 

 23.6 

Net profit growth (%)9

 

 (16.2) 

 0.7 

 

 27.6 

 

 (14.7) 

 24.1 

Resources

 

 

 

 

 

 

 

 

Total assets

 

 973,118 

 968,728 

 958,489 

 950,192 

 

 973,118 

 950,192 

Equity attributable to shareholders

 

 56,187 

 53,180 

 52,928 

 52,094 

 

 56,187 

 52,094 

Common equity tier 1 capital10

 

 34,673 

 34,948 

 34,119 

 34,816 

 

 34,673 

 34,816 

Risk-weighted assets10

 

 264,626 

 262,135 

 263,747 

 257,041 

 

 264,626 

 257,041 

Common equity tier 1 capital ratio (%)10

 

 13.1 

 13.3 

 12.9 

 13.5 

 

 13.1 

 13.5 

Going concern capital ratio (%)10

 

 19.2 

 19.1 

 17.5 

 17.9 

 

 19.2 

 17.9 

Total loss-absorbing capacity ratio (%)10

 

 33.3 

 33.3 

 31.7 

 31.8 

 

 33.3 

 31.8 

Leverage ratio denominator10

 

 901,914 

 911,379 

 904,598 

 915,066 

 

 901,914 

 915,066 

Common equity tier 1 leverage ratio (%)10

 

 3.84 

 3.83 

 3.77 

 3.80 

 

 3.84 

 3.80 

Going concern leverage ratio (%)10

 

 5.6 

 5.5 

 5.1 

 5.0 

 

 5.6 

 5.0 

Total loss-absorbing capacity leverage ratio (%)10

 

 9.8 

 9.6 

 9.3 

 8.9 

 

 9.8 

 8.9 

Liquidity coverage ratio (%)11

 

 138 

 145 

 136 

 135 

 

 138 

 135 

Other

 

 

 

 

 

 

 

 

Invested assets (USD billion)12

 

 3,422 

 3,381 

 3,101 

 3,330 

 

 3,422 

 3,330 

Personnel (full-time equivalents)

 

 67,634 

 66,922 

 66,888 

 65,556 

 

 67,634 

 65,556 

Market capitalization13,14

 

 41,210 

 43,491 

 45,907 

 58,856 

 

 41,210 

 58,856 

Total book value per share (USD)13

 

 15.47 

 14.53 

 14.35 

 13.98 

 

 15.47 

 13.98 

Total book value per share (CHF)13,15

 

 15.45 

 14.18 

 14.11 

 13.72 

 

 15.45 

 13.72 

Tangible book value per share (USD)13

 

 13.67 

 12.72 

 12.55 

 12.25 

 

 13.67 

 12.25 

Tangible book value per share (CHF)13,15

 

 13.64 

 12.42 

 12.33 

 12.02 

 

 13.64 

 12.02 

1 Refer to “Note 9 Earnings per share (EPS) and shares outstanding” in the “Consolidated financial statements” section of this report for more information.    2 Refer to the “Performance targets and measurement” section of our Annual Report 2018 for more information about our performance targets.    3 Calculated as net profit attributable to shareholders (annualized as applicable) divided by average equity attributable to shareholders.    4 Calculated as net profit attributable to shareholders (annualized as applicable) divided by average equity attributable to shareholders less average goodwill and intangible assets. Effective 1 January 2019, the definition of the numerator for return on tangible equity has been revised to align with numerators for return on equity and return on common equity tier 1 capital; i.e., we no longer adjust for amortization and impairment of goodwill and intangible assets. Prior periods have been restated.    5 Calculated as net profit attributable to shareholders (annualized as applicable) divided by average common equity tier 1 capital.    6 Calculated as operating income before credit loss expense or recovery (annualized as applicable) divided by average risk-weighted assets and average leverage ratio denominator, respectively.    7 Calculated as operating expenses divided by operating income before credit loss expense or recovery.    8 Calculated as adjusted operating expenses divided by adjusted operating income before credit loss expense or recovery.    9 Calculated as 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 comparison period.    10 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.    11 Refer to the “Balance sheet, liquidity and funding management” section of this report for more information.    12 Includes invested assets for Global Wealth Management, Asset Management and Personal & Corporate Banking.    13 Refer to “UBS shares” in the “Capital management” section of this report for more information.    14 Beginning with our Annual Report 2018, the calculation of market capitalization has been amended to reflect total shares outstanding multiplied by the share price at the end of the period. The calculation was previously based on total shares issued multiplied by the share price at the end of the period. Market capitalization has been reduced by USD 2.1 billion as of 31 December 2018 and by USD 2.0 billion as of 30 September 2018 as a result.    15 Total book value per share and tangible book value per share in Swiss francs are calculated based on a translation of equity under our US dollar presentation currency. As a consequence of the restatement to a US dollar presentation currency, amounts may differ from those originally published in our quarterly and annual reports.

 

Performance measures: reasons for use

Return on equity                                               This measure provides information about the profitability of the business in relation to equity.

Return on tangible equity                                 This measure provides information about the profitability of the business in relation to tangible equity.

Return on 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 risk-weighted assets, gross              This measure provides information about the revenues of the business in relation to risk-weighted assets.

Return on leverage ratio denominator, gross           This measure provides information about the revenues of the business in relation to leverage ratio denominator.

Cost / income ratio                                           This measure provides information about the efficiency of the business by comparing operating expenses with gross income.

Adjusted cost / income ratio                             This measure provides information about the efficiency of the business by comparing operating expenses with gross income,              while  excluding items that management believes are not representative of the underlying performance of the businesses.

Net profit growth                                             This measure provides information about profit growth in comparison with the prior-year period.

 

2 


 

UBS Group

Management report

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Changes to our presentation currency

Effective from 1 October 2018, the presentation currency of UBS Group AG’s consolidated financial statements has changed from Swiss francs to US dollars. Comparative information in this report for periods prior to the fourth quarter of 2018 has been restated. Assets, liabilities and total equity were translated to US dollars at closing exchange rates prevailing on the respective balance sheet dates, and income and expenses were translated at the respective average rates prevailing for the relevant periods.

 

 

 

 

Terms used in this report, unless the context requires otherwise

“UBS,” “UBS Group,” “UBS Group AG consolidated,”                                  UBS Group AG and its consolidated subsidiaries
“Group,” “the Group,” “we,” “us” and “our”                                              

“UBS AG consolidated”                                                                                       UBS AG and its consolidated subsidiaries

“UBS Group AG” and “UBS Group AG standalone”                                       UBS Group AG on a standalone basis

“UBS AG” and “UBS AG standalone”                                                               UBS 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 and its
“UBS Americas Holding LLC consolidated”                                                       consolidated subsidiaries  

 


Recent developments 

Recent developments

Regulatory and legal developments

Tightened self-regulation for income-producing real estate

In August 2019, FINMA approved the Swiss Bankers Association’s revised self-regulation on mortgage lending for income-producing real estate. The revisions increase the minimum equity required for new and increased mortgages on these properties, from 10% to 25% of the market value at origination, and require mortgages to amortize to two-thirds of the market value at origination within 10 years (previously 15 years). UBS Switzerland AG will be subject to the revised self-regulation that will come into effect on 1 January 2020. We expect the overall effect on UBS to be limited.

Volcker Rule revisions

US regulators have adopted amendments (2019 Final Rule) to their regulations implementing the Volcker Rule prohibitions on proprietary trading and limitations on covered fund activities. The amendments will become effective on 1 January 2020, with compliance voluntary from that date and mandatory from 1 January 2021.

Among other changes, the 2019 Final Rule tailors compliance program obligations for trading activities in tiers based on the level of US trading assets and liabilities and relaxes certain conditions for exemptions to the Volcker Rule restrictions to apply to activities engaged in by foreign banking entities outside the United States.

We expect UBS will fall within the “Significant” category, which will require UBS to maintain its compliance program but should eliminate certain reporting requirements. US regulators also signaled the intention to propose further amendments to the covered funds provisions of their Volcker Rule regulations.

Tailoring of regulation for foreign banks in the US

On 10 October 2019, the Board of Governors of the Federal Reserve System adopted two proposals that tailor how certain capital and liquidity requirements and enhanced prudential standards apply to foreign banking organizations (FBOs) with significant US operations. Under the final rules, FBOs and their
US intermediate holding companies (IHCs) will be assigned to categories based on their size measured in total assets as well as on scores relating to four other risk-based indicators: non-bank assets, a weighted measure of short-term wholesale funding, off-balance sheet exposure and cross-jurisdictional activity.

Each of UBS Americas Holdings LLC (our IHC) and our combined US operations, which include our IHC and US branches of UBS AG, are expected to be a “Category III” firm under the final rule. In this category, among other things, UBS Americas Holding LLC will continue to be: (i) required to submit its capital plan annually; (ii) subject to limitations on distributions through the Comprehensive Capital Analysis and Review (CCAR) process; (iii) subject to annual supervisory stress testing and (iv) subject to the supplementary leverage ratio. It will also become subject to the newly applicable liquidity coverage ratio requirements and the proposed net stable funding ratio requirements. “Category III firms” will be required to conduct company-run stress tests once every two years, rather than annually, and to submit US resolution plans once every three years.

China further opening up its financial sector

In July 2019, China’s Office of Financial Stability and Development Committee and the State Administration of Foreign Exchange announced measures designed to accelerate the opening up of the financial sector to foreign financial institutions and investors. Measures include: the removal of foreign ownership limits on securities, fund management and futures companies one year earlier, in 2020; encouraging overseas financial institutions to establish and invest in asset and wealth management entities and currency brokers and participate in the bond market; and eliminating requirements and quotas for qualified foreign investors to invest in China. More detailed implementation guidance is expected over the coming months.

The accelerated removal of the ownership caps for securities companies means that UBS AG is expected to be permitted to increase its stake in UBS Securities China from the current level of 51% to 100% by 2020. The exact effective date remains to be clarified.

 

4 


 

The Swiss National Bank to adjust the zero interest rate exemption threshold

In September 2019, the Swiss National Bank (SNB) announced that it would keep the SNB policy rate and interest on sight deposits at the SNB at negative 0.75% and reconfirmed its willingness to intervene in the foreign exchange market as necessary. The SNB also announced adjustments to the calculation of the amount of sight deposits at the SNB that are exempt from negative interest rates. The exemption threshold will be increased from 20 to 25 times each bank’s minimum requirement. In addition, the threshold will be updated on a monthly basis. These changes will come into effect on 1 November 2019. The SNB communicated that this decision was taken based on the assumption that the low interest rate environment around the world will persist for some time. UBS maintains significant sight deposits at the SNB. The adjustments to the exemption threshold calculation are expected to benefit our net interest income.

Swiss emergency plan credibility determination

UBS has developed and annually submits to FINMA an emergency plan demonstrating how it will maintain functions that are systemically important for the Swiss economy in the event of a crisis. UBS has developed a comprehensive emergency plan and has completed substantial measures designed to ensure the maintenance of systemically important functions, including the transfer of systemically important functions to UBS Switzerland AG and the establishment of a separate service company to provide services to Group companies. FINMA is expected to make a formal determination of whether the emergency plans of Swiss systemically relevant banks are “credible” in early 2020. As a result of this review, FINMA may require us to amend the plan or put other measures in place.

Developments related to the transition away from IBORs

Liquidity and activity in Alternative Reference Rates (ARRs) continue to develop in markets around the world, with work progressing to resolve certain issues associated with transitioning away from interbank offered rates (IBORs). Regulatory authorities continue to focus on transitioning to ARRs by the end of 2021. The Alternative Reference Rates Committee is considering potential legislative solutions that would mitigate legal risks related to legacy contracts in the event of IBOR discontinuation. In addition, in October 2019 the US Treasury Department and Internal Revenue Service published proposed regulations providing tax relief related to issues that may arise as a result of the modification of debt, derivative, and other financial contracts from IBOR-based language to ARRs. The European Central Bank published the euro short-term rate (€STR), the risk-free rate for EUR markets, for the first time on 2 October 2019, reflecting trading activity on 1 October 2019. The Bank of England Working Group on Sterling Risk-Free Reference Rates continues to be supportive of the development of a term reference rate (Sterling Overnight Index Average, or SONIA).  

We have a substantial number of contracts linked to IBORs. The new, risk-free ARRs do not currently provide a term structure, which will require a change in the contractual terms of products currently indexed on terms other than overnight. We have established a cross-divisional, cross-regional governance structure and change program to address the scale and complexity of the transition.

Strategic initiatives

Strategic partnership with Banco do Brasil

In September 2019, we announced our intention to enter into a strategic investment banking partnership with Banco do Brasil. By building on the complementary strengths of both firms, UBS and Banco do Brasil believe that the formation of a strategic, long-term partnership will create a leading investment bank platform in South America with global coverage. It is envisaged that UBS will hold the majority (50.01%) of the shares in the partnership, which would be established by a contribution of assets by both parties. Closing of the transaction is subject to the execution of transaction documents as well as obtaining all required internal and external approvals.

Structural changes in the Investment Bank

We are realigning our Investment Bank to meet the evolving needs of its clients, further focus its resources on opportunities for profitable growth and allow it to invest in our digital transformation. Corporate Client Solutions (CCS) and Investor Client Services (ICS) will be renamed Global Banking and Global Markets, respectively. Global Banking will adopt a global coverage model and will deploy its deep global industry expertise to meet the needs of its most important clients. Global Markets will combine Equities and Foreign Exchange, Rates and Credit, and will introduce three product verticals (Execution & Platform, Derivatives & Solutions, and Financing). Research and Evidence Lab Innovations will continue to be a critical part of the Investment Bank’s advisory and content offering. Associated with these changes, which will be effective 1 January 2020, we expect the Investment Bank to incur restructuring expenses of around USD 100 million in the fourth quarter of 2019.

 

Separately, we are continuing to execute on various strategic initiatives across the Group and are considering opportunities that would leverage our technology capabilities, build on our strengths and focus resources on growth areas. These opportunities may include strategic partnerships, additional collaboration across business divisions, evolution of our business models and optimization of our legal entities.

 

  

5 


Group performance  

Group performance

Income statement

 

 

 

 

 

 

 

 

 

 

 

 

For the quarter ended

 

% change from

 

Year-to-date

USD million

 

30.9.19

30.6.19

30.9.18

 

2Q19

3Q18

 

30.9.19

30.9.18

Net interest income

 

 1,090 

 1,026 

 1,182 

 

 6 

 (8) 

 

 3,239 

 3,822 

Other net income from financial instruments measured at fair value through profit or loss

 

 1,587 

 1,939 

 1,689 

 

 (18) 

 (6) 

 

 5,461 

 5,663 

Credit loss (expense) / recovery

 

 (38) 

 (12) 

 (10) 

 

 208 

 289 

 

 (70) 

 (64) 

Fee and commission income

 

 4,805 

 4,907 

 4,875 

 

 (2) 

 (1) 

 

 14,253 

 14,897 

Fee and commission expense

 

 (396) 

 (434) 

 (409) 

 

 (9) 

 (3) 

 

 (1,238) 

 (1,264) 

Net fee and commission income

 

 4,409 

 4,474 

 4,466 

 

 (1) 

 (1) 

 

 13,015 

 13,633 

Other income

 

 39 

 105 

 101 

 

 (63) 

 (61) 

 

 193 

 187 

Total operating income

 

 7,088 

 7,532 

 7,428 

 

 (6) 

 (5) 

 

 21,838 

 23,240 

Personnel expenses

 

 3,987 

 4,153 

 3,936 

 

 (4) 

 1 

 

 12,182 

 12,293 

General and administrative expenses

 

 1,308 

 1,175 

 1,462 

 

 11 

 (10) 

 

 3,670 

 4,504 

Depreciation and impairment of property, equipment and software

 

 432 

 427 

 310 

 

 1 

 39 

 

 1,285 

 885 

Amortization and impairment of intangible assets

 

 16 

 18 

 15 

 

 (7) 

 7 

 

 50 

 48 

Total operating expenses

 

 5,743 

 5,773 

 5,724 

 

 (1) 

 0 

 

 17,188 

 17,730 

Operating profit / (loss) before tax

 

 1,345 

 1,759 

 1,704 

 

 (24) 

 (21) 

 

 4,650 

 5,510 

Tax expense / (benefit)

 

 294 

 366 

 448 

 

 (20) 

 (34) 

 

 1,067 

 1,303 

Net profit / (loss)

 

 1,051 

 1,393 

 1,256 

 

 (25) 

 (16) 

 

 3,582 

 4,207 

Net profit / (loss) attributable to non-controlling interests

 

 1 

 1 

 3 

 

 34 

 (60) 

 

 0 

 6 

Net profit / (loss) attributable to shareholders

 

 1,049 

 1,392 

 1,253 

 

 (25) 

 (16) 

 

 3,582 

 4,201 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

Total comprehensive income

 

 3,146 

 2,473 

 809 

 

 27 

 289 

 

 6,658 

 3,022 

Total comprehensive income attributable to non-controlling interests

 

 (5) 

 (5) 

 4 

 

 1 

 

 

 (8) 

 4 

Total comprehensive income attributable to shareholders

 

 3,151 

 2,478 

 805 

 

 27 

 291 

 

 6,666 

 3,018 

 

6 


 

Performance of our business divisions and Corporate Center – reported and adjusted1,2

 

 

For the quarter ended 30.9.19

USD million

 

Global Wealth Management

Personal &

Corporate

Banking

Asset

Manage-

ment

Investment Bank

Corporate Center3

UBS

Operating income as reported

 

 4,142 

 919 

 465 

 1,752 

 (191) 

 7,088 

of which: net foreign currency translations losses4

 

 

 

 

 

 (46) 

 (46) 

Operating income (adjusted)

 

 4,142 

 919 

 465 

 1,752 

 (145) 

 7,133 

 

 

 

 

 

 

 

 

Operating expenses as reported

 

 3,248 

 565 

 341 

 1,580 

 9 

 5,743 

of which: personnel-related restructuring expenses5

 

 0 

 0 

 1 

 1 

 44 

 46 

of which: non-personnel-related restructuring expenses5

 

 0 

 0 

 2 

 1 

 20 

 23 

of which: restructuring expenses allocated from Corporate Center5,6

 

 25 

 8 

 8 

 28 

 (70) 

 0 

Operating expenses (adjusted)

 

 3,223 

 557 

 331 

 1,549 

 15 

 5,674 

of which: net expenses for litigation, regulatory and similar matters7

 

 69 

 0 

 0 

 0 

 (4) 

 65 

 

 

 

 

 

 

 

 

Operating profit / (loss) before tax as reported

 

 894 

 354 

 124 

 172 

 (200) 

 1,345 

Operating profit / (loss) before tax (adjusted)

 

 919 

 362 

 135 

 203 

 (160) 

 1,459 

 

 

 

 

 

 

 

 

 

 

For the quarter ended 30.6.19

USD million

 

Global Wealth Management

Personal &

Corporate

Banking

Asset

Manage-

ment

Investment Bank

Corporate Center3

UBS

Operating income as reported

 

 4,057 

 958 

 475 

 2,071 

 (30) 

 7,532 

of which: net foreign currency translations gains4

 

 

 

 

 

 10 

 10 

Operating income (adjusted)

 

 4,057 

 958 

 475 

 2,071 

 (40) 

 7,522 

 

 

 

 

 

 

 

 

Operating expenses as reported

 

 3,183 

 568 

 351 

 1,644 

 26 

 5,773 

of which: personnel-related restructuring expenses5

 

 0 

 0 

 3 

 1 

 22 

 25 

of which: non-personnel-related restructuring expenses5

 

 0 

 0 

 2 

 2 

 10 

 13 

of which: restructuring expenses allocated from Corporate Center5,6

 

 12 

 2 

 5 

 10 

 (30) 

 0 

Operating expenses (adjusted)

 

 3,171 

 566 

 340 

 1,631 

 25 

 5,735 

of which: net expenses for litigation, regulatory and similar matters7

 

 19 

 0 

 0 

 (1) 

 (14) 

 4 

 

 

 

 

 

 

 

 

Operating profit / (loss) before tax as reported

 

 874 

 390 

 124 

 427 

 (56) 

 1,759 

Operating profit / (loss) before tax (adjusted)

 

 886 

 392 

 135 

 440 

 (65) 

 1,787 

 

7 


Group performance  

Performance of our business divisions and Corporate Center – reported and adjusted (continued)1,2

 

 

For the quarter ended 30.9.18

USD million

 

Global Wealth Management

Personal &

Corporate

Banking

Asset

Manage-

ment

Investment Bank

Corporate Center3

UBS

Operating income as reported

 

 4,084 

 972 

 457 

 1,944 

 (29) 

 7,428 

of which: gains on sale of real estate

 

 

 

 

 

 31 

 31 

of which: gains on sale of subsidiaries and businesses

 

 

 

 

 

 25 

 25 

Operating income (adjusted)

 

 4,084 

 972 

 457 

 1,944 

 (85) 

 7,371 

 

 

 

 

 

 

 

 

Operating expenses as reported

 

 3,220 

 574 

 339 

 1,490 

 100 

 5,724 

of which: personnel-related restructuring expenses5

 

 11 

 1 

 2 

 1 

 44 

 60 

of which: non-personnel-related restructuring expenses5

 

 0 

 0 

 1 

 3 

 59 

 63 

of which: restructuring expenses allocated from Corporate Center5,6

 

 61 

 8 

 6 

 32 

 (106) 

 0 

Operating expenses (adjusted)

 

 3,148 

 565 

 330 

 1,455 

 103 

 5,601 

of which: net expenses for litigation, regulatory and similar matters7

 

 28 

 0 

 0 

 (59) 

 34 

 2 

 

 

 

 

 

 

 

 

Operating profit / (loss) before tax as reported

 

 864 

 398 

 118 

 453 

 (128) 

 1,704 

Operating profit / (loss) before tax (adjusted)

 

 936 

 407 

 127 

 489 

 (188) 

 1,770 

1 Adjusted results are non-GAAP financial measures as defined by SEC regulations.    2 Prior-year comparative figures in this table have been restated for the changes in Corporate Center cost and resource allocation to the business divisions and the changes in the equity attribution framework. Refer to “Note 2 Segment reporting” in the “Consolidated financial statements” section of this report for more information. Comparatives may additionally differ as a result of adjustments following organizational changes, restatements due to the retrospective adoption of new accounting standards or changes in accounting policies, and events after the reporting period.    3 Corporate Center operating expenses presented in this table are after service allocations to business divisions.    4 Related to the disposal or closure of foreign operations.    5 Reflects restructuring expenses related to legacy cost programs as well as expenses for new restructuring initiatives.    6 Prior periods may include allocations (to) / from other business divisions.    7 Reflects the net increase in / (release of) provisions for litigation, regulatory and similar matters recognized in the income statement. Refer to ”Note 16 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this report for more information. Also includes recoveries from third parties (third quarter of 2019: USD 2 million; second quarter of 2019: USD 1 million; third quarter of 2018: USD 0 million).

 

8 


 

Performance of our business divisions and Corporate Center – reported and adjusted1,2

 

 

Year-to-date 30.9.19

USD million

 

Global Wealth Management

Personal &

Corporate

Banking

Asset

Manage-

ment

Investment Bank

Corporate Center3

UBS

Operating income as reported

 

 12,202 

 2,834 

 1,386 

 5,588 

 (174) 

 21,838 

of which: net foreign currency translations losses4

 

 

 

 

 

 (35) 

 (35) 

Operating income (adjusted)

 

 12,202 

 2,834 

 1,386 

 5,588 

 (139) 

 21,873 

 

 

 

 

 

 

 

 

Operating expenses as reported

 

 9,571 

 1,703 

 1,035 

 4,782 

 97 

 17,188 

of which: personnel-related restructuring expenses5

 

 0 

 0 

 6 

 3 

 80 

 89 

of which: non-personnel-related restructuring expenses5

 

 0 

 0 

 6 

 5 

 40 

 50 

of which: restructuring expenses allocated from Corporate Center5,6

 

 48 

 14 

 15 

 49 

 (126) 

 0 

Operating expenses (adjusted)

 

 9,524 

 1,690 

 1,008 

 4,725 

 103 

 17,049 

of which: net expenses for litigation, regulatory and similar matters7

 

 88 

 0 

 0 

 (1) 

 (26) 

 61 

 

 

 

 

 

 

 

 

Operating profit / (loss) before tax as reported

 

 2,631 

 1,131 

 352 

 806 

 (271) 

 4,650 

Operating profit / (loss) before tax (adjusted)

 

 2,678 

 1,145 

 378 

 864 

 (242) 

 4,823 

 

 

 

 

 

 

 

 

 

 

Year-to-date 30.9.18

USD million

 

Global Wealth Management

Personal &

Corporate

Banking

Asset

Manage-

ment

Investment Bank

Corporate Center3

UBS

Operating income as reported

 

 12,656 

 2,883 

 1,384 

 6,520 

 (203) 

 23,240 

of which: gains on sale of real estate

 

 

 

 

 

 31 

 31 

of which: gains on sale of subsidiaries and businesses

 

 

 

 

 

 25 

 25 

Operating income (adjusted)

 

 12,656 

 2,883 

 1,384 

 6,520 

 (259) 

 23,184 

 

 

 

 

 

 

 

 

Operating expenses as reported

 

 9,729 

 1,731 

 1,064 

 4,956 

 251 

 17,730 

of which: personnel-related restructuring expenses5

 

 17 

 3 

 18 

 15 

 138 

 191 

of which: non-personnel-related restructuring expenses5

 

 15 

 0 

 7 

 8 

 152 

 182 

of which: restructuring expenses allocated from Corporate Center5,6

 

 149 

 26 

 21 

 97 

 (293) 

 0 

of which: gain related to changes to the Swiss pension plan8

 

 (66) 

 (38) 

 (10) 

 (5) 

 (122) 

 (241) 

Operating expenses (adjusted)

 

 9,612 

 1,739 

 1,028 

 4,841 

 377 

 17,599 

of which: net expenses for litigation, regulatory and similar matters7

 

 113 

 (1) 

 0 

 (59) 

 70 

 123 

 

 

 

 

 

 

 

 

Operating profit / (loss) before tax as reported

 

 2,927 

 1,152 

 320 

 1,564 

 (454) 

 5,510 

Operating profit / (loss) before tax (adjusted)

 

 3,044 

 1,144 

 356 

 1,679 

 (637) 

 5,585 

1 Adjusted results are non-GAAP financial measures as defined by SEC regulations.    2 Prior-year comparative figures in this table have been restated for the changes in Corporate Center cost and resource allocation to the business divisions and the changes in the equity attribution framework. Refer to “Note 2 Segment reporting” in the “Consolidated financial statements” section of this report for more information. Comparatives may additionally differ as a result of adjustments following organizational changes, restatements due to the retrospective adoption of new accounting standards or changes in accounting policies, and events after the reporting period.    3 Corporate Center operating expenses presented in this table are after service allocations to business divisions.    4 Related to the disposal or closure of foreign operations.    5 Reflects restructuring expenses related to legacy cost programs as well as expenses for new restructuring initiatives.    6 Prior periods may include allocations (to) / from other business divisions.    7 Reflects the net increase in / (release of) provisions for litigation, regulatory and similar matters recognized in the income statement. Refer to ”Note 16 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this report for more information. Also includes recoveries from third parties of USD 10 million and USD 28 million for the first nine months of 2019 and 2018, respectively.    8 Changes to the pension fund of UBS in Switzerland in the first quarter of 2018 resulted in a reduction in the pension obligation recognized by UBS. As a consequence, a pre-tax gain of USD 241 million was recognized in the income statement in the first quarter of 2018, with no overall effect on total equity. Refer to “Note 29 Pension and other post-employment benefit plans” in the “Consolidated financial statements” section of our Annual Report 2018 for more information.

 

9 


Group performance  

Results: 3Q19 vs 3Q18

Profit before tax decreased by USD 359 million, or 21%, to USD 1,345 million, predominantly reflecting a decrease in operating income. Operating income decreased by USD 340 million, or 5%, to USD 7,088 million, mainly reflecting USD 194 million lower net interest income and other net income from financial instruments measured at fair value through profit or loss, as well as a USD 62 million decrease in other income and a USD 57 million decrease in net fee and commission income. Operating expenses were broadly stable at USD 5,743 million, with a USD 154 million decrease in general and administrative expenses, mostly offset by a USD 122 million increase in depreciation, amortization and impairment of property, equipment and software, both effects mainly resulting from the adoption of IFRS 16, Leases, in the first quarter of 2019. Personnel expenses increased by USD 51 million.

In addition to reporting our results in accordance with International Financial Reporting Standards (IFRS), we report adjusted results that exclude items which management believes are not representative of the underlying performance of our businesses. Such adjusted results are non-GAAP financial measures as defined by US Securities and Exchange Commission (SEC) regulations. These adjustments include restructuring expenses related to our CHF 2.1 billion cost reduction program completed at the end of 2017 (referred to as our “legacy cost programs” in this report), as well as expenses relating to new restructuring initiatives. For the full year 2019, we expect
restructuring expenses associated with our legacy cost programs to be approximately USD 200 million, and nil beyond 2019. In addition, we expect to incur around USD 100 million of restructuring expenses in the fourth quarter of 2019 in connection with the planned structural changes in the Investment Bank.  

For the purpose of determining adjusted results for the third quarter of 2019, we excluded net foreign currency translation losses related to the closure of subsidiaries of USD 46 million and net restructuring expenses of USD 69 million. For the third quarter of 2018, we excluded USD 56 million gains related to the sale of Widder Hotel and net restructuring expenses of USD 122 million.

On this adjusted basis, profit before tax for the third quarter of 2019 decreased by USD 311 million, or 18%, to USD 1,459 million, driven by a decrease in operating income of USD 238 million, or 3%, and an increase in operating expenses of USD 73 million, or 1%.

®   Refer to the “Recent developments” section of this report for more information about planned structural changes in the Investment Bank

Operating income: 3Q19 vs 3Q18

Total operating income decreased by USD 340 million, or 5%, to USD 7,088 million. Adjusted operating income decreased by USD 238 million, or 3%, to USD 7,133 million. This excludes net foreign currency translation losses of USD 46 million related to the closure of subsidiaries in the third quarter of 2019, compared with gains of USD 56 million related to the sale of Widder Hotel in the prior year.

 

10 


 

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 million

 

30.9.19

30.6.19

30.9.18

 

2Q19

3Q18

 

30.9.19

30.9.18

Net interest income from financial instruments measured at amortized cost and fair value through other comprehensive income

 

 923 

 794 

 890 

 

 16 

 4 

 

 2,502 

 2,808 

Net interest income from financial instruments measured at fair value through profit or loss1

 

 167 

 232 

 292 

 

 (28) 

 (43) 

 

 737 

 1,014 

Other net income from financial instruments measured at fair value through profit or loss1

 

 1,587 

 1,939 

 1,689 

 

 (18) 

 (6) 

 

 5,461 

 5,663 

Total

 

 2,677 

 2,965 

 2,871 

 

 (10) 

 (7) 

 

 8,701 

 9,484 

Global Wealth Management2

 

 1,219 

 1,206 

 1,207 

 

 1 

 1 

 

 3,686 

 3,803 

of which: net interest income

 

 979 

 966 

 1,011 

 

 1 

 (3) 

 

 2,953 

 3,073 

of which: transaction-based income from foreign exchange and other intermediary activity3

 

 240 

 240 

 197 

 

 0 

 22 

 

 733 

 730 

Personal & Corporate Banking2

 

 602 

 610 

 615 

 

 (1) 

 (2) 

 

 1,821 

 1,836 

of which: net interest income

 

 497 

 501 

 515 

 

 (1) 

 (3) 

 

 1,491 

 1,532 

of which: transaction-based income from foreign exchange and other intermediary activity3

 

 105 

 110 

 100 

 

 (4) 

 5 

 

 330 

 304 

Asset Management2

 

 (4) 

 1 

 (8) 

 

 

 (52) 

 

 (2) 

 (20) 

Investment Bank2,4

 

 962 

 1,185 

 1,083 

 

 (19) 

 (11) 

 

 3,240 

 3,963 

Corporate Client Solutions

 

 133 

 241 

 207 

 

 (45) 

 (36) 

 

 538 

 879 

Investor Client Services

 

 828 

 943 

 876 

 

 (12) 

 (5) 

 

 2,702 

 3,084 

Corporate Center2

 

 (101) 

 (37) 

 (26) 

 

 176 

 296 

 

 (44) 

 (98) 

1 Effective as of 1 January 2019, UBS refined the presentation of dividend income and expense by reclassifying dividends from Net interest income from financial instruments measured at fair value through profit or loss to Other net income from financial instruments measured at fair value through profit or loss. Prior-period information was restated accordingly and the total effect to the Group was as follows: for the quarter ended 30 September 2018 and the first nine months of 2018, respectively, USD 524 million and USD 726 million of net dividend income was reclassified. Refer to “Note 1 Basis of accounting” in the “Consolidated financial statements” section of this report for more information.    2 Prior-year comparative figures have been restated for changes in Corporate Center cost allocations to the business divisions. Refer to “Note 2 Segment reporting” in the “Consolidated financial statements” section of this report for more information.    3 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 of Global Wealth Management and Personal & Corporate Banking in the “Global Wealth Management” and “Personal & Corporate Banking” sections of this report.    4 Investment Bank information is provided at the business line level rather than by financial statement reporting line in order to reflect the underlying business activities, which is consistent with the structure of the management discussion and analysis in the “Investment Bank” section of this report.

 

 

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 decreased by USD 194 million to USD 2,677 million. This was mainly driven by our Corporate Client Solutions and Equities businesses in the Investment Bank, as well as by Corporate Center.

Global Wealth Management

In Global Wealth Management, net interest income decreased by USD 32 million to USD 979 million, mainly reflecting lower deposit and loan margins, partly offset by higher investment-of-equity income.

Transaction-based income from foreign exchange and other intermediary activity increased by USD 43 million to USD 240 million, driven by higher levels of client activity.


Personal & Corporate Banking

In Personal & Corporate Banking, net interest income decreased by USD 18 million to USD 497 million, mainly as a result of the persistent low interest rate environment leading to lower deposit margin.  

Investment Bank

In the Investment Bank, net interest income and other net income from financial instruments measured at fair value through profit or loss decreased by USD 121 million to USD 962 million amid challenging market conditions in the third quarter of 2019. This was driven by USD 74 million lower income in our Corporate Client Solutions business, mainly reflecting a decrease in leveraged finance revenues, and USD 38 million lower income in our Equities business, reflecting reduced client activity levels and lower client balances.

 

11 


Group performance  

Corporate Center

In Corporate Center, net interest income and other net income from financial instruments measured at fair value through profit or loss decreased by USD 75 million to negative USD 101 million. This mainly reflects lower other Corporate Center income of USD 59 million, largely as a result of USD 30 million of additional interest expense related to lease liabilities recognized as a result of the adoption of IFRS 16, Leases, effective from 1 January 2019, and higher funding expenses for Group Technology assets, as well as lower net income of USD 53 million in Non-core and Legacy Portfolio, mainly as the third quarter of 2018 included valuation gains on auction rate securities. These effects were partly offset by an increase in net treasury income of USD 36 million, mainly reflecting higher net interest income.

®   Refer to “Note 1 Basis of accounting” in the “Consolidated financial statements” section of this report for more information about the adoption of IFRS 16

®   Refer to “Note 3 Net interest income” in the “Consolidated financial statements” section of this report for more information about net interest income

Net fee and commission income

Net fee and commission income was USD 4,409 million, compared with USD 4,466 million.

M&A and corporate finance fees decreased by USD 57 million to USD 204 million, primarily reflecting lower revenues from merger and acquisition transactions.

Underwriting fees decreased by USD 41 million to USD 169 million, largely driven by lower equity underwriting revenues from public offerings.

Investment fund fees decreased by USD 21 million to USD 1,200 million, mainly in Personal & Corporate Banking and Global Wealth Management, partly offset by an increase in Asset Management.


Other fee and commission income increased by USD 28 million to USD 475 million, reflecting increases in Global Wealth Management and Personal & Corporate Banking, largely as a result of higher levels of client activity and increased revenues from credit card transactions, respectively.

In the fourth quarter of 2019, we plan to realign our client coverage between Global Wealth Management and Personal & Corporate Banking as a result of a detailed client segmentation review. We expect that this will result in a reduction of approximately USD 5 billion in invested assets in Global Wealth Management and the shifting of approximately USD 1 billion in loans from Global Wealth Management to Personal & Corporate Banking. In line with the remuneration framework for net client shifts and referrals, we expect Global Wealth Management to receive a fee of approximately USD 70 million from Personal & Corporate Banking related to this shift in the fourth quarter of 2019. This will increase transaction-based income in Global Wealth Management, with an offsetting decrease in transaction-based income in Personal & Corporate Banking in the fourth quarter of 2019. The shift of invested assets and loans will not affect net new money or net new business volume reported by Global Wealth Management and Personal & Corporate Banking, respectively.

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

Other income

Other income was USD 39 million, compared with USD 101 million. The third quarter of 2019 included net foreign currency translation losses of USD 46 million related to the closure of subsidiaries. In comparison, the third quarter of 2018 included gains of USD 31 million on sale of real estate and gains of USD 25 million on sale of subsidiaries and businesses, both related to the sale of Widder Hotel. Excluding these items, adjusted other income increased by USD 41 million, reflecting gains from the disposal of financial assets measured at fair value through OCI and a gain related to legacy securities positions in Global Wealth Management.

®   Refer to “Note 5 Other income” in the “Consolidated financial statements” section of this report for more information

 

 

12 


 

Credit loss (expense) / recovery

 

 

 

 

 

 

 

 

 

 

 

 

For the quarter ended

 

% change from

 

Year-to-date

USD million

 

30.9.19

30.6.19

30.9.18

 

2Q19

3Q18

 

30.9.19

30.9.18

Global Wealth Management

 

 (7) 

 (5) 

 (6) 

 

 47 

 8 

 

 (11) 

 (4) 

Personal & Corporate Banking

 

 (30) 

 (1) 

 (3) 

 

 

 774 

 

 (29) 

 (39) 

Investment Bank

 

 0 

 (1) 

 1 

 

 

 (96) 

 

 (24) 

 (20) 

Corporate Center

 

 (1) 

 (6) 

 (1) 

 

 (74) 

 14 

 

 (7) 

 (2) 

Total

 

 (38) 

 (12) 

 (10) 

 

 208 

 289 

 

 (70) 

 (64) 

 

Credit loss expense / recovery

Total net credit loss expenses in the third quarter of 2019 were USD 38 million, reflecting net expenses of USD 43 million related to credit impaired (stage 3) positions and recoveries of USD 5 million related to stage 1 and stage 2 positions. The net stage 3 expenses of USD 43 million were recognized across a number of defaulted positions: USD 29 million in Personal & Corporate Banking, mainly related to a single exposure; USD 8 million in the Investment Bank; and USD 6 million in Global Wealth Management.

®   Refer to “Note 10 Expected credit loss measurement” in the “Consolidated financial statements” section of this report for more information about credit loss expense / recovery

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

For the quarter ended

 

% change from

 

Year-to-date

USD million

 

30.9.19

30.6.19

30.9.18

 

2Q19

3Q18

 

30.9.19

30.9.18

 

 

 

 

 

 

 

 

 

 

 

Operating expenses as reported

 

 

 

 

 

 

 

 

 

 

Personnel expenses

 

 3,987 

 4,153 

 3,936 

 

 (4) 

 1 

 

 12,182 

 12,293 

General and administrative expenses

 

 1,308 

 1,175 

 1,462 

 

 11 

 (10) 

 

 3,670 

 4,504 

Depreciation and impairment of property, equipment and software

 

 432 

 427 

 310 

 

 1 

 39 

 

 1,285 

 885 

Amortization and impairment of intangible assets

 

 16 

 18 

 15 

 

 (7) 

 7 

 

 50 

 48 

Total operating expenses as reported

 

 5,743 

 5,773 

 5,724 

 

 (1) 

 0 

 

 17,188 

 17,730 

 

 

 

 

 

 

 

 

 

 

 

Adjusting items

 

 

 

 

 

 

 

 

 

 

Personnel expenses

 

 46 

 25 

 60 

 

 

 

 

 89 

 (50) 

of which: restructuring expenses1

 

 46 

 25 

 60 

 

 

 

 

 89 

 191 

of which: gain related to changes to the Swiss pension plan2

 

 

 

 

 

 

 

 

 

 (241) 

General and administrative expenses1

 

 21 

 11 

 35 

 

 

 

 

 43 

 152 

Depreciation and impairment of property, equipment and software1

 

 1 

 2 

 27 

 

 

 

 

 7 

 30 

Total adjusting items

 

 69 

 39 

 122 

 

 

 

 

 139 

 132 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses (adjusted)3

 

 

 

 

 

 

 

 

 

 

Personnel expenses

 

 3,941 

 4,127 

 3,876 

 

 (5) 

 2 

 

 12,094 

 12,343 

of which: salaries and variable compensation

 

 2,313 

 2,506 

 2,252 

 

 (8) 

 3 

 

 7,229 

 7,340 

of which: financial advisor compensation4

 

 1,029 

 1,005 

 1,016 

 

 2 

 1 

 

 2,994 

 3,055 

of which: other personnel expenses5

 

 599 

 616 

 609 

 

 (3) 

 (2) 

 

 1,871 

 1,948 

General and administrative expenses

 

 1,287 

 1,164 

 1,426 

 

 11 

 (10) 

 

 3,628 

 4,352 

of which: net expenses for litigation, regulatory and similar matters

 

 65 

 4 

 2 

 

 

 

 

 61 

 123 

of which: other general and administrative expenses

 

 1,221 

 1,160 

 1,424 

 

 5 

 (14) 

 

 3,567 

 4,228 

Depreciation and impairment of property, equipment and software

 

 431 

 425 

 283 

 

 1 

 52 

 

 1,278 

 856 

Amortization and impairment of intangible assets

 

 16 

 18 

 15 

 

 (7) 

 7 

 

 50 

 48 

Total operating expenses (adjusted)

 

 5,674 

 5,735 

 5,601 

 

 (1) 

 1 

 

 17,049 

 17,599 

1 Reflects restructuring expenses related to legacy cost programs as well as expenses for new restructuring initiatives.    2 Changes to the pension fund of UBS in Switzerland in the first quarter of 2018 resulted in a reduction in the pension obligation recognized by UBS. As a consequence, a pre-tax gain of USD 241 million was recognized in the income statement in the first quarter of 2018, with no overall effect on total equity. Refer to “Note 29 Pension and other post-employment benefit plans” in the “Consolidated financial statements” section of our Annual Report 2018 for more information.    3 Adjusted results are non-GAAP financial measures as defined by SEC regulations.    4 Financial advisor compensation consists of formulaic compensation based directly on compensable revenues generated by financial advisors and supplemental compensation calculated on the basis of financial advisor productivity, firm tenure, new assets and other variables. It also includes expenses related to compensation commitments with financial advisors entered into at the time of recruitment that are subject to vesting requirements.    5 Consists of expenses related to contractors, social security, pension and other post-employment benefit plans, and other personnel expenses. Refer to “Note 6 Personnel expenses” in the “Consolidated financial statements” section of this report for more information.

 

13 


Group performance  

Operating expenses: 3Q19 vs 3Q18

Total operating expenses were broadly stable, with an increase of USD 19 million to USD 5,743 million. Adjusted total operating expenses increased by USD 73 million, or 1%, to USD 5,674 million. These exclude net restructuring expenses related to legacy cost programs and new restructuring initiatives of USD 69 million, compared with USD 122 million in the prior year.

Personnel expenses

Personnel expenses increased by USD 51 million to USD 3,987 million on a reported basis, and by USD 65 million to USD 3,941 million on an adjusted basis, primarily reflecting higher salaries and variable compensation, including the effect from the insourcing of certain activities from third-party vendors, as well as expenses related to pension and other post-employment benefit plans. This was partly offset by lower expenses related to contractors in Corporate Center, mainly reflecting our insourcing initiatives.

®   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 decreased by USD 154 million to USD 1,308 million, mainly driven by lower rent expenses. The decrease in rent expenses included a USD 133 million decrease as a result of the adoption of IFRS 16, Leases, in the first quarter of 2019. This decrease was more than offset by an increase of USD 117 million in depreciation expense and an increase of USD 30 million in interest expense relating to lease liabilities, also as a direct result of the adoption of IFRS 16.

On an adjusted basis, general and administrative expenses decreased by USD 139 million to USD 1,287 million, largely due to the aforementioned decrease in rent expenses.

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 1 Basis of accounting” in the “Consolidated financial statements” section of this report for more information about the adoption of IFRS 16

®   Refer to “Note 7 General and administrative expenses” in the “Consolidated financial statements” section of this report for more information

®   Refer to “Note 16 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this report and to the “Regulatory and legal developments” and “Risk factors” sections of our Annual Report 2018 for more information about litigation, regulatory and similar matters


Depreciation, amortization and impairment

Depreciation, amortization and impairment of property, equipment and software increased by USD 122 million to USD 448 million on a reported basis, and by USD 149 million to USD 447 million on an adjusted basis, mainly driven by USD 117 million higher depreciation expenses as a result of the adoption of IFRS 16 in the first quarter of 2019.

®   Refer to “Note 1 Basis of accounting” in the “Consolidated financial statements” section of this report for more information about the adoption of IFRS 16

Tax: 3Q19 vs 3Q18

We recognized income tax expenses of USD 294 million for the third quarter of 2019, representing an effective tax rate of 21.9%, compared with USD 448 million for the third quarter of 2018.

Current tax expenses were USD 229 million, compared with USD 235 million, and related to taxable profits of UBS Switzerland AG and other entities.

Deferred tax expenses were USD 65 million, compared with USD 213 million. Deferred tax expenses in the third quarter of 2019 include expenses of USD 130 million that primarily reflect the amortization of deferred tax assets (DTAs) previously recognized in relation to tax losses carried forward and deductible temporary differences to reflect their offset against profits for the quarter, including the amortization of US tax loss DTAs at the level of UBS Americas Inc. Deferred tax expenses were decreased by a benefit of USD 65 million in respect of additional DTA recognition that resulted from the contribution of real estate assets by UBS AG to UBS Americas Inc. during the second quarter of 2019 in accordance with the requirements of IAS 34, Interim Financial Reporting, as described in our second quarter 2019 report. A further benefit of USD 65 million will be recognized in the fourth quarter of 2019.

We expect a tax rate for the fourth quarter of 2019 that is similar to the 23.0% tax rate for the first nine months of this year, subject to any potential DTA-related adjustments made in the quarter as part of our annual business planning process. Our tax rate over the longer term is expected to be around 25%, excluding any potential effects from the reassessment of deferred tax assets.

®   Refer to “Note 8 Income taxes” in the “Consolidated financial statements” section of this report for more information

 

14 


 

Total comprehensive income attributable to shareholders: 3Q19 vs 3Q18

Total comprehensive income attributable to shareholders was USD 3,151 million, compared with USD 805 million. Net profit attributable to shareholders was USD 1,049 million, compared with USD 1,253 million, and other comprehensive income (OCI) attributable to shareholders, net of tax, was positive USD 2,101 million, compared with negative USD 448 million.

Defined benefit plan OCI was positive USD 2,000 million, compared with negative USD 52 million. We recorded net pre-tax OCI gains of USD 2,624 million related to our Swiss pension plan, reflecting the recognition of the plan’s surplus of USD 2,631 million as of 30 September 2019. The plan’s surplus was recognized in accordance with IFRS requirements, which stipulate when a pension asset is recognized by considering whether the service benefits in the plan exceed the contributions that UBS is required to make. This was primarily due to a 36-basis-point decrease in the applicable discount rate, which increased the value of the service benefits. There was no significant effect on regulatory capital as the Swiss pension plan surplus is reversed as a CET1 capital deduction.

Net pre-tax OCI losses related to the non-Swiss pension plans amounted to USD 146 million, primarily driven by the UK defined benefit plans.

The total net pre-tax OCI gains on defined benefit plans of USD 2,478 million were partly offset by a net tax expense of USD 478 million, mainly related to the aforementioned pre-tax OCI gains in the Swiss pension plan.

In the third quarter of 2019, OCI related to cash flow hedges was positive USD 417 million, mainly reflecting an increase in unrealized gains on US dollar hedging derivatives resulting from decreases in the relevant US dollar long-term interest rates. In the third quarter of 2018, OCI related to cash flow hedges was negative USD 237 million.

OCI related to own credit on financial liabilities designated at fair value was positive USD 1 million, compared with negative USD 288 million, mainly as the credit spreads were broadly unchanged in the third quarter of 2019.

OCI associated with financial assets measured at fair value through OCI was negligible, compared with negative USD 18 million, and reflected net unrealized gains of USD 30 million following decreases in the relevant US dollar long-term interest rates in the third quarter of 2019, offset by the reclassification of USD 26 million net gains from OCI to the income statement upon sale of the respective instruments and a net tax expense of USD 4 million.


Foreign currency translation OCI was negative USD 316 million in the third quarter of 2019, mainly resulting from the weakening of the Swiss franc and the euro against the US dollar, partly offset by the reclassification of net losses totaling USD 46 million to the income statement. OCI related to foreign currency translation in the same quarter of last year was positive USD 148 million.

®   Refer to “Statement of comprehensive income” in the “Consolidated financial statements” section of this report for more information

®   Refer to “Note 29 Pension and other post-employment benefit plans” in the “Consolidated financial statements” section of our Annual Report 2018 for more information about other comprehensive income related to defined benefit plans

Sensitivity to interest rate movements

As of 30 September 2019, we estimate that a parallel shift in yield curves by +100 basis points could lead to a combined increase in annual net interest income of approximately USD 0.4 billion in Global Wealth Management and Personal & Corporate Banking. US dollar and euro interest rates contribute approximately USD 0.2 billion and USD 0.1 billion, respectively, to this increase.

These estimates are based on a hypothetical scenario of an immediate increase in interest rates, equal across all currencies and relative to implied forward rates applied to our banking book. These estimates further assume no change to balance sheet size and structure, constant foreign exchange rates and no specific management action.

®   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 we provide an overview of select key figures of the Group. For further information about key figures related to capital management, refer to the “Capital management” section of this report.

Adjusted cost / income ratio: 3Q19 vs 3Q18

The adjusted cost / income ratio was 79.1%, compared with 75.9%, driven mainly by a decrease in adjusted income.

Common equity tier 1 capital: 3Q19 vs 2Q19

During the third quarter of 2019, our common equity tier 1 (CET1) capital decreased by USD 0.3 billion to USD 34.7 billion.

Return on CET1 capital: 3Q19 vs 3Q18

The annualized return on CET1 capital (RoCET1) was 12.1%, compared with 14.5%, driven by a USD 0.8 billion decrease in annualized quarterly net profit attributable to shareholders and a USD 0.3 billion increase in the average CET1 capital.

 

15 


Group performance  

Risk-weighted assets: 3Q19 vs 2Q19

Risk-weighted assets (RWA) increased by USD 2.5 billion to USD 264.6 billion, reflecting increases from asset size and other movements of USD 5.7 billion, partly offset by currency effects of USD 2.5 billion, as well as decreases in regulatory add-ons of USD 0.5 billion and model updates of USD 0.1 billion.

Common equity tier 1 capital ratio: 3Q19 vs 2Q19

During the third quarter of 2019, our CET1 capital ratio decreased 0.2 percentage points to 13.1%, reflecting a USD 2.5 billion increase in RWA and a USD 0.3 billion decrease in CET1 capital.

Leverage ratio denominator: 3Q19 vs 2Q19

During the third quarter of 2019, the leverage ratio denominator (LRD) decreased by USD 9 billion to USD 902 billion. This decrease was driven by currency effects of USD 13 billion, partly offset by an increase in asset size and other movements of USD 4 billion.


Common equity tier 1 leverage ratio: 3Q19 vs 2Q19

Our CET1 leverage ratio increased from 3.83% to 3.84% in the third quarter of 2019, as the aforementioned USD 9 billion decrease in LRD was partly offset by the aforementioned decrease in CET1 capital.

Going concern leverage ratio: 3Q19 vs 2Q19

Our going concern leverage ratio increased from 5.5% to 5.6%, reflecting a USD 0.7 billion increase in going concern capital.

Personnel: 3Q19 vs 2Q19

We employed 67,634 personnel (full-time equivalents) as of 30 September 2019, a net increase of 712 compared with 30 June 2019, driven by regulatory requirements and strategic initiatives.

 

 

Return on equity

 

 

 

 

 

 

 

 

 

As of or for the quarter ended

 

Year-to-date

USD million, except where indicated

 

30.9.19

30.6.19

30.9.18

 

30.9.19

30.9.18

 

 

 

 

 

 

 

 

Net profit

 

 

 

 

 

 

 

Net profit / (loss) attributable to shareholders

 

 1,049 

 1,392 

 1,253 

 

 3,582 

 4,201 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

Equity attributable to shareholders

 

 56,187 

 53,180 

 52,094 

 

 56,187 

 52,094 

Less: goodwill and intangible assets

 

 6,560 

 6,624 

 6,436 

 

 6,560 

 6,436 

Tangible equity attributable to shareholders

 

 49,627 

 46,555 

 45,657 

 

 49,627 

 45,657 

Less: other CET1 deductions

 

 14,954 

 11,607 

 10,841 

 

 14,954 

 10,841 

Common equity tier 1 capital

 

 34,673 

 34,948 

 34,816 

 

 34,673 

 34,816 

 

 

 

 

 

 

 

 

Return on equity

 

 

 

 

 

 

 

Return on equity (%)1

 

 7.7 

 10.4 

 9.7 

 

 8.9 

 10.7 

Return on tangible equity (%)2

 

 8.7 

 11.9 

 11.1 

 

 10.1 

 12.2 

Return on common equity tier 1 capital (%)3

 

 12.1 

 16.0 

 14.5 

 

 13.8 

 16.3 

1 Calculated as net profit attributable to shareholders (annualized as applicable) divided by average equity attributable to shareholders.    2 Calculated as net profit attributable to shareholders (annualized as applicable) divided by average equity attributable to shareholders less average goodwill and intangible assets. Effective 1 January 2019, the definition of the numerator for return on tangible equity has been revised to align with numerators for return on equity and return on CET1 capital; i.e., we no longer adjust for amortization and impairment of goodwill and intangible assets. Prior periods have been restated.    3 Calculated as net profit attributable to shareholders (annualized as applicable) divided by average common equity tier 1 capital.

 

16 


 

Net new money and invested assets

Management’s discussion and analysis of net new money and invested assets is provided in the “UBS business divisions and Corporate Center” section of this report.

 

Net new money1

 

 

 

 

 

 

 

 

 

For the quarter ended

 

Year-to-date

USD billion

 

30.9.19

30.6.19

30.9.18

 

30.9.19

30.9.18

Global Wealth Management

 

 15.7 

 (1.7) 

 13.8 

 

 36.3 

 32.6 

Asset Management2

 

 33.1 

 (15.0) 

 3.2 

 

 18.2 

 34.4 

of which: excluding money market flows

 

 24.1 

 (13.9) 

 0.6 

 

 8.0 

 29.6 

of which: money market flows

 

 8.9 

 (1.1) 

 2.6 

 

 10.2 

 4.7 

1 Net new money excludes interest and dividend income.    2 Effective 1 January 2019, certain assets have been reclassified between asset classes to better reflect their underlying nature, with prior-period information restated. The adjustments have no effect on total net new money.

 

Invested assets

 

 

 

 

 

 

 

 

 

As of

 

% change from

USD billion

 

30.9.19

30.6.19

30.9.18

 

30.6.19

30.9.18

Global Wealth Management

 

 2,502 

 2,486 

 2,438 

 

 1 

 3 

Asset Management1

 

 858 

 831 

 830 

 

 3 

 3 

of which: excluding money market funds

 

 752 

 734 

 738 

 

 3 

 2 

of which: money market funds

 

 106 

 97 

 92 

 

 9 

 14 

1 Effective 1 January 2019, certain assets have been reclassified between asset classes to better reflect their underlying nature, with prior-period information restated. The adjustments have no effect on total invested assets.

 

 

Results: 9M19 vs 9M18

Profit before tax decreased by USD 860 million, or 16%, to USD 4,650 million.

Operating income decreased by USD 1,402 million, or 6%, mainly reflecting USD 783 million lower net interest income and other net income from financial instruments measured at fair value through profit or loss, mainly in the Investment Bank. In addition, net fee and commission income decreased by USD 618 million, mainly due to USD 298 million lower investment fund fees and fees for portfolio management and related services, mainly in Global Wealth Management and Personal & Corporate Banking, as well as a USD 252 million decrease in net brokerage fees across both Global Wealth Management and the Investment Bank.

Operating expenses decreased by USD 542 million, or 3%, mainly reflecting USD 834 million lower general and administrative expenses. This was largely driven by decreases in outsourcing costs, professional fees and expenses related to litigation, regulatory and similar matters. Additionally, following the adoption of IFRS 16, Leases, rent expenses decreased by USD 406 million, which was offset by a USD 402 million increase in expenses from depreciation, amortization and impairment of property, equipment and software, also as a result of the adoption of IFRS 16. Personnel expenses decreased by USD 111 million, primarily due to lower variable compensation, costs for contractors and financial advisor compensation, partly offset by higher pension costs, as the first quarter of 2018 included a gain of USD 241 million related to changes to our Swiss pension plan.

On an adjusted basis, profit before tax decreased by USD 762 million, or 14%, reflecting lower operating income, partly offset by a decrease in operating expenses.


Adjusted operating income decreased by USD 1,311 million, or 6%, reflecting the aforementioned decreases in net interest income and other net income from financial instruments measured at fair value through profit or loss and net fee and commission income.

Adjusted operating expenses decreased by USD 550 million, or 3%, mainly reflecting a USD 249 million decrease in personnel expenses, as well as the aforementioned decreases in outsourcing costs, professional fees, and expenses for litigation, regulatory and similar matters.

Outlook

Stimulus measures and easing of monetary policy by central banks may help to mitigate slowing global economic growth over the medium term. Geopolitical tensions and trade disputes continue to impact investor confidence. Positive momentum toward resolving these issues would likely improve confidence and the economic outlook.

Low and persistent negative interest rates and expectations of further monetary easing will adversely affect net interest income compared with last year. Our regional and business diversification, along with actions that we are taking, will help to mitigate these headwinds. Recurring revenues should also benefit from higher invested assets.

As we execute on our strategy, we are balancing investments for growth while managing for efficiency. We remain committed to delivering on our capital return objectives and creating sustainable long-term value for our shareholders.

  

17 


 

 


 

UBS business
divisions
and Corporate
Center

 Management report

  

 


Global Wealth Management 

Global Wealth Management

Global Wealth Management1

 

 

 

 

 

 

 

 

 

 

As of or for the quarter ended

 

% change from

 

Year-to-date

USD million, except where indicated

 

30.9.19

30.6.19

30.9.18

 

2Q19

3Q18

 

30.9.19

30.9.18

 

 

 

 

 

 

 

 

 

 

 

Results

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 979 

 966 

 1,011 

 

 1 

 (3) 

 

 2,953 

 3,073 

Recurring net fee income2

 

 2,371 

 2,315 

 2,411 

 

 2 

 (2) 

 

 6,904 

 7,203 

Transaction-based income3

 

 741 

 764 

 650 

 

 (3) 

 14 

 

 2,270 

 2,344 

Other income

 

 58 

 17 

 19 

 

 244 

 207 

 

 86 

 39 

Income

 

 4,149 

 4,062 

 4,090 

 

 2 

 1 

 

 12,213 

 12,660 

Credit loss (expense) / recovery

 

 (7) 

 (5) 

 (6) 

 

 47 

 8 

 

 (11) 

 (4) 

Total operating income

 

 4,142 

 4,057 

 4,084 

 

 2 

 1 

 

 12,202 

 12,656 

Personnel expenses

 

 1,903 

 1,905 

 1,903 

 

 0 

 0 

 

 5,708 

 5,801 

Salaries and other personnel costs

 

 874 

 900 

 887 

 

 (3) 

 (1) 

 

 2,715 

 2,746 

Financial advisor variable compensation4,5

 

 894 

 879 

 874 

 

 2 

 2 

 

 2,588 

 2,613 

Compensation commitments with recruited financial advisors4,6

 

 135 

 127 

 142 

 

 6 

 (5) 

 

 406 

 442 

General and administrative expenses

 

 344 

 271 

 298 

 

 27 

 15 

 

 864 

 908 

Services (to) / from Corporate Center and other business divisions

 

 985 

 992 

 1,008 

 

 (1) 

 (2) 

 

 2,952 

 2,982 

of which: services from Corporate Center

 

 948 

 948 

 976 

 

 0 

 (3) 

 

 2,834 

 2,886 

Depreciation and impairment of property, equipment and software

 

 2 

 1 

 1 

 

 6 

 43 

 

 4 

 3 

Amortization and impairment of intangible assets

 

 14 

 14 

 9 

 

 0 

 53 

 

 42 

 36 

Total operating expenses

 

 3,248 

 3,183 

 3,220 

 

 2 

 1 

 

 9,571 

 9,729 

Business division operating profit / (loss) before tax

 

 894 

 874 

 864 

 

 2 

 3 

 

 2,631 

 2,927 

 

 

 

 

 

 

 

 

 

 

 

Adjusted results7

 

 

 

 

 

 

 

 

 

 

Total operating income as reported

 

 4,142 

 4,057 

 4,084 

 

 2 

 1 

 

 12,202 

 12,656 

Total operating income (adjusted)

 

 4,142 

 4,057 

 4,084 

 

 2 

 1 

 

 12,202 

 12,656 

Total operating expenses as reported

 

 3,248 

 3,183 

 3,220 

 

 2 

 1 

 

 9,571 

 9,729 

of which: personnel-related restructuring expenses8

 

 0 

 0 

 11 

 

 

 

 

 0 

 17 

of which: non-personnel-related restructuring expenses8

 

 0 

 0 

 0 

 

 

 

 

 0 

 15 

of which: restructuring expenses allocated from Corporate Center8,9

 

 25 

 12 

 61 

 

 

 

 

 48 

 149 

of which: gain related to changes to the Swiss pension plan

 

 

 

 

 

 

 

 

 

 (66) 

Total operating expenses (adjusted)

 

 3,223 

 3,171 

 3,148 

 

 2 

 2 

 

 9,524 

 9,612 

Business division operating profit / (loss) before tax as reported

 

 894 

 874 

 864 

 

 2 

 3 

 

 2,631 

 2,927 

Business division operating profit / (loss) before tax (adjusted)

 

 919 

 886 

 936 

 

 4 

 (2) 

 

 2,678 

 3,044 

 

 

 

 

 

 

 

 

 

 

 

Performance measures10

 

 

 

 

 

 

 

 

 

 

Pre-tax profit growth (%)

 

 3.5 

 (9.1) 

 1.1 

 

 

 

 

 (10.1) 

 16.0 

Cost / income ratio (%)

 

 78.3 

 78.4 

 78.7 

 

 

 

 

 78.4 

 76.8 

Net new money growth (%)

 

 2.5 

 (0.3) 

 2.3 

 

 

 

 

 2.1 

 1.8 

 

 

 

 

 

 

 

 

 

 

 

Adjusted performance measures7,10

 

 

 

 

 

 

 

 

 

 

Pre-tax profit growth (%)

 

 (1.8) 

 (12.2) 

 (6.2) 

 

 

 

 

 (12.0) 

 4.4 

Cost / income ratio (%)

 

 77.7 

 78.1 

 77.0 

 

 

 

 

 78.0 

 75.9 

 

20 


 

Global Wealth Management (continued)¹

 

 

 

 

 

 

 

As of or for the quarter ended

 

% change from

 

Year-to-date

USD million, except where indicated

 

30.9.19

30.6.19

30.9.18

 

2Q19

3Q18

 

30.9.19

30.9.18

 

 

 

 

 

 

 

 

 

 

 

Additional information

 

 

 

 

 

 

 

 

 

 

Recurring income11

 

 3,350 

 3,280 

 3,421 

 

 2 

 (2) 

 

 9,857 

 10,276 

Recurring income as a percentage of income (%)

 

 80.7 

 80.8 

 83.6 

 

 

 

 

 80.7 

 81.2 

Average attributed equity (USD billion)12

 

 16.7 

 16.6 

 16.3 

 

 0 

 3 

 

 16.6 

 16.3 

Return on attributed equity (%)12

 

 21.4 

 21.0 

 21.2 

 

 

 

 

 21.1 

 24.0 

Risk-weighted assets (USD billion)12

 

 78.7 

 77.3 

 75.1 

 

 2 

 5 

 

 78.7 

 75.1 

Leverage ratio denominator (USD billion)12

 

 313.6 

 323.2 

 310.8 

 

 (3) 

 1 

 

 313.6 

 310.8 

Goodwill and intangible assets (USD billion)

 

 5.1 

 5.1 

 5.0 

 

 (1) 

 2 

 

 5.1 

 5.0 

Net new money (USD billion)

 

 15.7 

 (1.7) 

 13.8 

 

 

 

 

 36.3 

 32.6 

Invested assets (USD billion)

 

 2,502 

 2,486 

 2,438 

 

 1 

 3 

 

 2,502 

 2,438 

Net margin on invested assets (bps)13

 

 14 

 14 

 14 

 

 1 

 0 

 

 14 

 16 

Gross margin on invested assets (bps)

 

 67 

 66 

 68 

 

 1 

 (2) 

 

 67 

 70 

Client assets (USD billion)

 

 2,770 

 2,768 

 2,687 

 

 0 

 3 

 

 2,770 

 2,687 

Loans, gross (USD billion)14

 

 176.1 

 176.4 

 177.9 

 

 0 

 (1) 

 

 176.1 

 177.9 

Customer deposits (USD billion)14

 

 284.2 

 288.7 

 268.4 

 

 (2) 

 6