ubsgroupag6k4q21

6-K 1 EDGARq21ubsgroupagsel.htm ubsgroupag6k4q21

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: February 1, 2022

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 x Form 40-F o

This Form 6-K consists of the Fourth Quarter 2021 Report of UBS Group AG, which appears immediately following this page.

Our financial results

Fourth quarter 2021 report

Corporate calendar UBS Group AG Publication of the Annual Report 2021: Monday, 7 March 2022 Publication of the Sustainability Report 2021: Friday, 11 March 2022 Annual General Meeting 2022 (webcast): Wednesday, 6 April 2022 Publication of the first quarter 2022 report: Tuesday, 26 April 2022 Publication of the second quarter 2022 report: Tuesday, 26 July 2022 Corporate calendar UBS AG Publication of the Annual Report 2021: Monday, 7 March 2022 Publication dates of future quarterly and annual reports and results are made available as part of the corporate calendar of UBS AG at ubs.com/investors.
		1.	UBS Group
		4	Recent developments
		7	Group performance

		2.	UBS business divisions and Group Functions
		14	Global Wealth Management
		17	Personal & Corporate Banking
		20	Asset Management
		22	Investment Bank
		24	Group Functions
		25	Selected financial information of our business divisions and Group Functions

		3.	Risk, capital, liquidity and funding, and balance sheet
		29	Risk management and control
		35	Capital management
		47	Liquidity and funding management
		48	Balance sheet and off-balance sheet
		51	Share information and earnings per share

		4.	Consolidated financial information
		54	UBS Group AG interim consolidated financial information (unaudited)
		63	UBS AG interim consolidated financial information (unaudited)

			Appendix

		68	Alternative performance measures
		71	Abbreviations frequently used in our financial reports
		73	Information sources
		74	Cautionary statement

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 2022. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved.

Fourth quarter 2021 report

Our key figures

	As of or for the quarter ended			As of or for the year ended
USD million, except where indicated	31.12.21	30.9.21	31.12.20	31.12.21	31.12.20
Group results
Operating income	8,732	9,128	8,117	35,542	32,390
Operating expenses	7,003	6,264	6,132	26,058	24,235
Operating profit / (loss) before tax	1,729	2,865	1,985	9,484	8,155
Net profit / (loss) attributable to shareholders	1,348	2,279	1,636	7,457	6,557
Diluted earnings per share (USD)¹	0.38	0.63	0.44	2.06	1.77
Profitability and growth²
Return on equity (%)	8.9	15.3	11.0	12.6	11.3
Return on tangible equity (%)	10.0	17.2	12.4	14.1	12.8
Return on common equity tier 1 capital (%)	11.9	20.8	16.8	17.5	17.4
Return on risk-weighted assets, gross (%)	11.5	12.2	11.4	12.0	11.7
Return on leverage ratio denominator, gross (%)³	3.3	3.5	3.2	3.4	3.4
Cost / income ratio (%)	80.5	68.7	74.9	73.6	73.3
Effective tax rate (%)	21.4	20.1	17.2	21.1	19.4
Net profit growth (%)	(17.6)	8.9	126.7	13.7	52.3
Resources²
Total assets	1,117,182	1,088,773	1,125,765	1,117,182	1,125,765
Equity attributable to shareholders	60,662	60,219	59,445	60,662	59,445
Common equity tier 1 capital⁴	45,281	45,022	39,890	45,281	39,890
Risk-weighted assets⁴	302,209	302,426	289,101	302,209	289,101
Common equity tier 1 capital ratio (%)⁴	15.0	14.9	13.8	15.0	13.8
Going concern capital ratio (%)⁴	20.0	20.0	19.4	20.0	19.4
Total loss-absorbing capacity ratio (%)⁴	34.7	34.0	35.2	34.7	35.2
Leverage ratio denominator^3,4	1,068,862	1,044,916	1,037,150	1,068,862	1,037,150
Common equity tier 1 leverage ratio (%)^3,4	4.24	4.31	3.85	4.24	3.85
Going concern leverage ratio (%)^3,4	5.7	5.8	5.4	5.7	5.4
Total loss-absorbing capacity leverage ratio (%)⁴	9.8	9.8	9.8	9.8	9.8
Liquidity coverage ratio (%)⁵	155	157	152	155	152
Net stable funding ratio (%)⁵	119	118	119	119	119
Other
Invested assets (USD billion)⁶	4,596	4,432	4,187	4,596	4,187
Personnel (full-time equivalents)	71,385	71,427	71,551	71,385	71,551
Market capitalization¹	61,230	55,423	50,013	61,230	50,013
Total book value per share (USD)¹	17.84	17.48	16.74	17.84	16.74
Total book value per share (CHF)¹	16.27	16.30	14.82	16.27	14.82
Tangible book value per share (USD)¹	15.97	15.62	14.91	15.97	14.91
Tangible book value per share (CHF)¹	14.56	14.57	13.21	14.56	13.21
1 Refer to the “Share information and earnings per share” section of this report for more information. 2 Refer to the “Performance targets and capital guidance” section of our Annual Report 2020 for more information about our performance targets. 3 Leverage ratio denominators and leverage ratios for the respective periods in 2020 do not reflect the effects of the temporary exemption that applied from 25 March 2020 until 1 January 2021 and was granted by FINMA in connection with COVID-19. Refer to the “Regulatory and legal developments” section of our Annual Report 2020 for more information. 4 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. 5 Prior to 30 September 2021 “Net stable funding ratio” is based on estimated pro forma reporting. Refer to the “Liquidity and funding management” section of this report for more information. 6 Consists of invested assets for Global Wealth Management, Asset Management and Personal & Corporate Banking. Refer to “Note 32 Invested assets and net new money” in the “Consolidated financial statements” section of our Annual Report 2020 for more information.

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 our Group Functions. 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.

UBS Group

Management report

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 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 consolidated”	UBS Americas Holding LLC and its consolidated subsidiaries

Recent developments

Strategy update

Updated targets and aspirations

Reflecting our improved operating performance over the last two years, we have updated our financial targets. We aim to deliver:

– 15–18% return on common equity tier 1 (CET1) capital

– 70–73% cost / income ratio, and

– 10–15% profit before tax growth in Global Wealth Management over the cycle.

Our capital guidance remains unchanged. We intend to operate with a CET1 capital ratio of around 13% and a CET1 leverage ratio of greater than 3.7%. The Investment Bank is expected to represent up to one-third of Group risk-weighted assets (RWA) and liquidity ratio denominator (LRD).

We have also outlined selected commercial and environmental, social and governance (ESG) aspirations that support those targets. These aspirations include business growth as measured by net new fee-generating assets, our net-zero ambitions, and increasing the volume of sustainability-focus and impact invested assets.

Acquisition of Wealthfront

On 26 January 2022, UBS entered into an agreement to acquire Wealthfront, an industry-leading, digital wealth management provider, for a cash consideration of USD 1.4 billion. This acquisition is aligned with our growth strategy in the Americas, will broaden our reach among affluent investors and add a new digital-first offering increasing our distribution capabilities. The transaction is subject to customary closing conditions, including regulatory approvals, and is expected to close in the second half of 2022. Upon closing of the transaction, UBS Group’s CET1 capital ratio is expected to decrease approximately 0.4 percentage points, mainly due to the deduction of newly recognized goodwill and intangible assets from CET1 capital.

Capital returns

For 2021, the Board of Directors intends to propose a dividend to UBS Group AG shareholders of USD 0.50 per share. Subject to approval at the Annual General Meeting (the AGM), scheduled to be held by webcast on 6 April 2022, the dividend will be paid on 14 April 2022 to shareholders of record on 13 April 2022. The ex-dividend date will be 12 April 2022.

In 2021, we bought back USD 2.6 billion of our shares. The USD 112 million of shares repurchased under the 2018–2021 repurchase program have already been canceled, as approved by shareholders at the 2021 AGM. The USD 2.5 billion of shares repurchased under the 2021–2024 repurchase program are also intended to be canceled by means of a capital reduction, pending approval by shareholders at the 2022 AGM. Looking ahead, we intend to commence a new 2022–2024 repurchase program of up to USD 6 billion and expect to execute up to USD 5 billion of repurchases under both the existing 2021–2024 repurchase program and the new program by the end of 2022.

Regulatory and legal developments

Climate-related legal developments

In November 2021, the Swiss Federal Council published several recommendations to increase transparency regarding climate-related information and reporting in the Swiss financial center, including that: i) financial market participants use comparable and meaningful climate compatibility indicators to create transparency for all financial products and client portfolios; and ii) the financial sector joins international net-zero alliances. UBS has joined the Glasgow Financial Alliance for Net Zero (GFANZ) and is participating in an industry-wide working group led by the Swiss Federal Department of Finance (the FDF) to develop climate compatibility indicators. The Swiss Federal Council has also instructed the FDF to work with the Department of the Environment, Transport, Energy and Communications (DETEC) and the Swiss Financial Market Supervisory Authority (FINMA) to jointly assess, by the end of 2022, whether any changes to financial market rules may help avoid greenwashing, and, if necessary, to propose binding guidelines.

In November 2021, FINMA issued guidance on preventing and combating greenwashing in the context of sustainability-related collective investment schemes. The guidance sets out FINMA’s expectations regarding: the advertised sustainability characteristics in fund documents of respective Swiss collective investment schemes; the appropriate organizational structures of institutions that manage sustainability-related Swiss or foreign collective investment schemes; and the integration of ESG considerations into the process of advising clients.

In November 2021, the Swiss Environmental Commission of the Council of States agreed to start work on an indirect counterproposal to the “Glacier Initiative.” Both the original initiative and the counterproposal aim to embed in national law a net-zero target to be achieved by 2050. The Environmental Commission of the National Council will formulate a draft in early 2022, but the public vote will not take place before 2023.

In December 2021, the Swiss Federal Council opened the consultation on the revised CO₂ Act following its rejection in a public vote earlier in 2021. The new proposal contains measures to reduce carbon emissions for the period from 2025 to 2030 and mandates FINMA and the Swiss National Bank (the SNB) to report on climate-related financial risks.

Revision of the Swiss Liquidity Ordinance

In September 2021, the FDF had launched a consultation on proposed revisions to the Swiss Liquidity Ordinance, with the aim of strengthening the resilience of systemically important banks in Switzerland. As proposed, the revisions would increase the regulatory minimum liquidity requirements for systemically important banks, including UBS. The final rule is expected to be published later this year.

Reactivation of the Swiss countercyclical buffer

In January 2022, the Swiss Federal Council decided, at the request of the SNB, to reactivate the countercyclical capital buffer, at a maximum level of 2.5% on risk-weighted positions that are directly or indirectly backed by residential properties in Switzerland. This is expected to increase our CET1 capital requirement by approximately 30 basis points. The reactivated countercyclical capital buffer will become effective on 30 September 2022.

Revision of the Swiss Banking Act

In December 2021, the Swiss Parliament adopted a revision of the Banking Act. The legislative amendment aims to strengthen depositor protection and promote system stability by reducing the time needed to pay out protected deposits through the depositor protection scheme in the event a bank enters bankruptcy. It will also require banks to deposit 50% of the contribution obligations to the scheme in securities or Swiss francs, among other measures. The FDF, FINMA and the SNB consider the current revision to meet the relevant Basel Committee on Banking Supervision (BCBS) standards. The revised Banking Act will enter into force at the beginning of 2023. We expect moderate additional costs for all Switzerland-based Group entities that are within the scope of the revision.

Revision of Swiss withholding tax

In December 2021, the Swiss Parliament adopted legislation that will abolish the withholding tax on bond interest payments (for bonds issued from the beginning of 2023 onward) and will eliminate the securities transfer stamp tax on domestic bonds. However, the withholding tax on interest paid on bank deposits of natural persons with tax domicile in Switzerland is maintained. The reform intends to strengthen the debt capital market in Switzerland, and is expected to take effect in 2023, subject to an optional referendum.

Protection of the Swiss stock exchange infrastructure

In November 2021, the Swiss Federal Council decided to extend the existing measure protecting the Swiss stock exchange infrastructure (which was due to expire on 31 December 2021) until 31 December 2025 and to open a consultation on incorporating this measure into the Financial Market Infrastructure Act. In the absence of mutual recognition of equivalence by both Swiss and EU authorities, the measure requires EU investment firms to trade Swiss equities on Swiss stock exchanges. UBS had previously adjusted its internal processes to reflect this measure.

OECD corporate tax reform

In October 2021, the G20 endorsed the final political agreement on the two-pillar solution reached by the OECD / G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS). The two-pillar solution consists of Pillar 1, which provides taxing rights to the market jurisdiction from where the profits are derived, and Pillar 2, which introduces a minimum corporate tax rate of 15%. The G20 called for all the rules to come into effect at a global level by 2024, with some to be implemented in 2023. At the time of publication in October 2021, 137 of the 141 members of the Framework had agreed to the reform and planned to incorporate the new rules into their respective national legislation, including Switzerland. As financial services are expected to be out of scope of Pillar 1, UBS will primarily be affected by Pillar 2. The impact of the reform on UBS will depend on implementation by the countries that agreed to the reform.

In January 2022, the Swiss Federal Council presented the key aspects of the implementation in Switzerland. The relevant changes will require a constitutional amendment, which triggers a mandatory referendum. The government aims to implement the minimum tax rate as of 1 January 2024.

EU banking legislative package

In October 2021, the European Commission published a legislative proposal to amend the EU’s prudential framework for banks to implement the remaining elements of Basel III and revised rules on resolution. UBS Europe SE will be subject to the revised requirements.

In addition, the proposal, which may be adjusted in the political process and is expected to be finalized by the end of 2023, includes a requirement that certain banking and investment services be provided through a branch in the EU. UBS Group entities currently provide such services in the EU on a cross-border basis. UBS will assess the final requirements to determine whether changes are required ahead of the new framework entering into force, which is anticipated to be by 2025.

Developments related to the transition away from LIBOR

In December 2021, the Financial Conduct Authority (the FCA) confirmed that for all legacy London Interbank Offered Rate (LIBOR) contracts, other than cleared derivatives, it will allow the temporary use of synthetic pound sterling and Japanese yen LIBOR rates, if such contracts were not changed on, or prior to, 31 December 2021 in a manner that allowed the rate to transition to an alternative reference rate. Such synthetic rates will not be available for use in any new contracts. As a result of this limited continued use, the FCA requires the publication of one-, three- and six-month LIBOR rates for pound sterling and Japanese yen on a synthetic basis until the end of 2022, to allow more time to complete transition and avoid market disruption. In accordance with regulatory guidance, UBS has limited any new LIBOR activity from 1 January 2022.

US swap-dealer registration

In October 2021, FINMA and the US Securities and Exchange Commission (the SEC) finalized a memorandum of understanding relating to cooperation in oversight of Swiss entities registered under the SEC’s security-based swaps regulations. The SEC also published a substituted compliance order modifying the application of certain of its regulations for Swiss security-based swap dealers. Under SEC regulations, UBS AG has been registered as a security-based swap dealer since 1 November 2021.

Recent developments

Other developments

French investigations regarding cross-border wealth management businesses

On 13 December 2021, the Court of Appeal found UBS AG guilty of unlawful solicitation and aggravated laundering of the proceeds of tax fraud relating to the bank’s cross-border business activities in France between 2004 and 2012. The court also found UBS (France) SA guilty of the aiding and abetting of unlawful solicitation, but acquitted it of charges of aggravated laundering of the proceeds of tax fraud. The court ordered UBS AG to pay a fine of EUR 3.75 million, a confiscation of EUR 1 billion, and awarded civil damages to the French state of EUR 800 million. UBS AG has filed an appeal with the French Supreme Court to preserve its rights. Our balance sheet as of 31 December 2021 reflected provisions with respect to this matter in an amount of EUR 1.1 billion (USD 1.252 billion as of 31 December 2021). We expect to reflect additional operational risk RWA in the first quarter of 2022 with a potential single-digit billion RWA impact.

› Refer to “Provisions and contingent liabilities” in the “Consolidated financial information” section of this report for more information

Changes to the Board of Directors

On 20 November 2021, the Board of Directors of UBS Group AG announced that it intends to nominate Colm Kelleher as the new Chairman and Lukas Gähwiler as the new Vice Chairman for election to the Board at the AGM on 6 April 2022. If elected, Colm Kelleher will succeed Axel A. Weber, who will have reached the maximum term limit after ten years in office and will thus not stand for re-election.

Change of Group Chief Financial Officer

As announced on 1 December 2021, Sarah Youngwood will join UBS’s Group Executive Board at the beginning of March 2022. She will succeed Kirt Gardner, who is retiring from the firm, and will take over as Group Chief Financial Officer in May 2022.

Sale of UBS Swiss Financial Advisers AG

In December 2021, we signed an agreement to sell our wholly owned subsidiary UBS Swiss Financial Advisers AG (SFA) to Vontobel. SFA is a Switzerland-based SEC-registered investment advisor and FINMA-licensed securities firm that offers US clients tailored investment solutions. The transaction is subject to customary closing conditions and regulatory approvals and is expected to close in the third quarter of 2022.

We do not expect a material effect on UBS’s profit or loss upon the closing of the transaction.

Group performance

Income statement
	For the quarter ended			% change from		For the year ended
USD million	31.12.21	30.9.21	31.12.20	3Q21	4Q20	31.12.21	31.12.20
Net interest income	1,770	1,693	1,622	5	9	6,705	5,862
Other net income from financial instruments measured at fair value through profit or loss	1,365	1,697	1,453	(20)	(6)	5,850	6,960
Credit loss (expense) / release	27	14	(66)	100		148	(694)
Fee and commission income	6,042	6,119	5,543	(1)	9	24,372	20,961
Fee and commission expense	(513)	(510)	(459)	1	12	(1,985)	(1,775)
Net fee and commission income	5,529	5,610	5,084	(1)	9	22,387	19,186
Other income	40	115	24	(65)	64	452	1,076
Total operating income	8,732	9,128	8,117	(4)	8	35,542	32,390
Personnel expenses	4,216	4,598	3,989	(8)	6	18,387	17,224
General and administrative expenses	2,212	1,148	1,515	93	46	5,553	4,885
Depreciation, amortization and impairment of non-financial assets	574	518	627	11	(8)	2,118	2,126
Total operating expenses	7,003	6,264	6,132	12	14	26,058	24,235
Operating profit / (loss) before tax	1,729	2,865	1,985	(40)	(13)	9,484	8,155
Tax expense / (benefit)	370	576	341	(36)	9	1,998	1,583
Net profit / (loss)	1,359	2,289	1,645	(41)	(17)	7,486	6,572
Net profit / (loss) attributable to non-controlling interests	11	9	9	18	26	29	15
Net profit / (loss) attributable to shareholders	1,348	2,279	1,636	(41)	(18)	7,457	6,557

Comprehensive income
Total comprehensive income	1,178	1,678	1,728	(30)	(32)	5,119	8,312
Total comprehensive income attributable to non-controlling interests	7	(5)	27		(73)	13	36
Total comprehensive income attributable to shareholders	1,171	1,683	1,701	(30)	(31)	5,106	8,276

Group performance

Results: 4Q21 vs 4Q20

Profit before tax decreased by USD 256 million, or 13%, to USD 1,729 million, reflecting higher operating expenses, partly offset by higher operating income. Operating expenses increased by USD 871 million, or 14%, to USD 7,003 million, mainly reflecting a USD 697 million increase in general and administrative expenses, largely driven by an increase in litigation provisions for the French cross-border matter, and USD 227 million higher personnel expenses. Operating income increased by USD 615 million, or 8%, to USD 8,732 million, mainly reflecting USD 445 million higher net fee and commission income. Net credit loss releases were USD 27 million, compared with net credit loss expenses of USD 66 million in the prior-year quarter.

Operating income: 4Q21 vs 4Q20

Total operating income increased by USD 615 million, or 8%, to USD 8,732 million.

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 61 million to USD 3,136 million .

Global Wealth Management increased by USD 131 million to USD 1,357 million, mainly driven by higher net interest income from loans and deposits, reflecting increases in volumes.

The Investment Bank increased by USD 86 million to USD 1,253 million, mainly reflecting USD 67 million higher net income in Financing, largely driven by capital market financing products, reflecting increased swap activity, and USD 30 million higher net income in Global Banking, mainly due to the Capital Markets business.

Personal & Corporate Banking increased by USD 56 million to USD 656 million, largely reflecting higher net interest income, driven by proactive deposit management.

Group Functions decreased by USD 212 million, from positive income of USD 83 million to negative income of USD 129 million. This was mainly due to the Group Treasury result of negative USD 114 million, compared with positive USD 4 million in the prior-year quarter, mainly due to the net effects related to accounting asymmetries, including hedge accounting ineffectiveness, and USD 122 million lower valuation gains on auction rate securities in Non-core and Legacy Portfolio.

Net fee and commission income

Net fee and commission income increased by USD 445 million to USD 5,529 million.

Fees for portfolio management and related services increased by USD 390 million to USD 2,535 million, predominantly driven by Global Wealth Management, reflecting higher average fee-generating assets, due to positive market performance and net new fee-generating assets.

Investment fund fees increased by USD 47 million to USD 1,520 million, mainly driven by Global Wealth Management, largely due to higher average fee-generating assets, partly offset by Asset Management, reflecting lower performance fees compared with the particularly high levels in the prior-year quarter, partly offset by higher management fees on a higher average invested asset base, reflecting net new money generation and a constructive market backdrop.

Credit loss expense / release

Total net credit loss releases were USD 27 million, compared with net credit loss expenses of USD 66 million in the prior-year quarter, reflecting net expenses of USD 1 million related to stage 1 and 2 positions and net releases of USD 28 million related to credit-impaired (stage 3) positions.

The stage 3 net credit loss releases of USD 28 million included USD 14 million net releases in the Investment Bank and USD 14 million net releases in Personal & Corporate Banking, across various corporate lending positions.

During the fourth quarter of 2021, the scenarios applied were not subject to significant revisions and scenario weights were kept constant, given the continued levels of heightened uncertainty and the absence of a material change in macroeconomic factors. Expected credit loss allowances and provisions, and the stage 1 and 2 coverage ratios, were substantially unchanged from those at the end of the third quarter. The post-model adjustment for stages 1 and 2 allowances and provisions increased slightly to USD 224 million from USD 219 million.

Credit loss (expense) / release
USD million	Global Wealth Management	Personal & Corporate Banking	Asset Management	Investment Bank	Group Functions	Total
For the quarter ended 31.12.21
Stages 1 and 2	2	(4)	0	2	0	(1)
Stage 3	1	14	(1)	14	0	28
Total credit loss (expense) / release	2	10	(1)	16	0	27

For the quarter ended 30.9.21
Stages 1 and 2	9	(1)	0	2	0	11
Stage 3	2	8	0	(7)	0	3
Total credit loss (expense) / release	11	7	0	(5)	0	14

For the quarter ended 31.12.20
Stages 1 and 2	8	7	0	18	0	33
Stage 3	(1)	15	0	(108)	(4)	(99)
Total credit loss (expense) / release	7	22	0	(91)	(5)	(66)

Credit loss (expense) / release
USD million	Global Wealth Management	Personal & Corporate Banking	Asset Management	Investment Bank	Group Functions	Total
For the year ended 31.12.21
Stages 1 and 2	28	62	0	34	0	123
Stage 3	1	24	(1)	0	0	25
Total credit loss (expense) / release	29	86	(1)	34	0	148

For the year ended 31.12.20
Stages 1 and 2	(48)	(129)	0	(88)	0	(266)
Stage 3	(40)	(128)	(2)	(217)	(42)	(429)
Total credit loss (expense) / release	(88)	(257)	(2)	(305)	(42)	(694)

Group performance

Operating expenses: 4Q21 vs 4Q20

Operating expenses increased by USD 871 million, or 14%, to USD 7,003 million.

Personnel expenses

Personnel expenses increased by USD 227 million to USD 4,216 million, mainly reflecting USD 192 million higher financial advisor compensation, due to an increase in compensable revenues, and restructuring expenses of USD 57 million, compared with zero in the prior-year quarter, as a result of continued actions to achieve cost efficiencies.

General and administrative expenses

General and administrative expenses increased by USD 697 million to USD 2,212 million, mainly driven by a USD 740 million (EUR 650 million) increase in litigation provisions for the French cross-border matter.

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 “Provisions and contingent liabilities” in the “Consolidated financial information” section of this report and to the “Regulatory and legal developments” and “Risk factors” sections of our Annual Report 2020 for more information about litigation, regulatory and similar matters

Depreciation, amortization and impairment

Depreciation, amortization and impairment of non-financial assets decreased by USD 53 million to USD 574 million, mainly resulting from lower impairment expenses on internally generated software.

Operating expenses
	For the quarter ended			% change from		For the year ended
USD million	31.12.21	30.9.21	31.12.20	3Q21	4Q20	31.12.21	31.12.20
Personnel expenses	4,216	4,598	3,989	(8)	6	18,387	17,224
of which: salaries and variable compensation	*2,283*	2,659	2,247	(14)	2	10,758	10,452
of which: financial advisor compensation¹	*1,269*	1,239	1,077	2	18	4,860	4,091
of which: other personnel expenses²	*665*	700	665	(5)	0	2,768	2,680
General and administrative expenses	2,212	1,148	1,515	93	46	5,553	4,885
of which: net expenses for litigation, regulatory and similar matters	*826*	12	148		458	911	197
of which: other general and administrative expenses	*1,386*	1,136	1,367	22	1	4,642	4,688
Depreciation, amortization and impairment of non-financial assets	574	518	627	11	(8)	2,118	2,126
Total operating expenses	7,003	6,264	6,132	12	14	26,058	24,235
1 Financial advisor compensation consists of grid-based compensation based directly on compensable revenues generated by financial advisors and supplemental compensation calculated on the basis of financial advisor productivity, firm tenure, 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. 2 Consists of expenses related to contractors, social security, and post-employment benefit plans, as well as other personnel expenses.

Tax: 4Q21 vs 4Q20

We recognized income tax expenses of USD 370 million for the fourth quarter of 2021, resulting in an effective tax rate of 21.4%, compared with USD 341 million for the fourth quarter of 2020 and an effective tax rate of 17.2%. Current tax expenses were USD 365 million, compared with USD 317 million, and related to taxable profits of UBS Switzerland AG and other entities. Deferred tax expenses were USD 5 million, compared with USD 24 million. These included expenses of USD 215 million that primarily related to the amortization of deferred tax assets (DTAs) that were previously recognized in relation to tax losses carried forward and deductible temporary differences of UBS Americas Inc. However, these expenses were mostly offset by benefits of USD 210 million in respect of DTA remeasurements. Those included a benefit of USD 146 million in respect of the revaluation of DTAs for certain entities in connection with our business planning process. They also included a benefit of USD 36 million 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 in this quarter. In addition, they included the remaining benefit of USD 28 million that primarily relates to the contribution of real estate assets by UBS AG to UBS Americas Inc. and UBS Financial Services Inc. in the third quarter of 2021 and was recognized in the fourth quarter in accordance with the requirements of IAS 34, Interim Financial Reporting.

The pre-tax expense that was recognized in respect of the increase in litigation provisions for the French cross-border matter did not result in any tax benefit.

Excluding any potential effects from the remeasurement of DTAs in connection with next year’s business planning process and any potential US corporate tax rate changes or other material jurisdictional statutory tax rate changes that could be enacted during the year, we expect a tax rate for 2022 of around 24%.

Total comprehensive income attributable to shareholders

In the fourth quarter of 2021, total comprehensive income attributable to shareholders was positive USD 1,171 million, reflecting net profit of USD 1,348 million and other comprehensive income (OCI), net of tax, of negative USD 177 million.

OCI related to cash flow hedges was negative USD 421 million, mainly reflecting net gains on hedging instruments that were reclassified from OCI to the income statement as the hedged forecast cash flows affected profit or loss.

OCI associated with financial assets measured at fair value through OCI was negative USD 37 million, mainly reflecting net unrealized losses of USD 49 million following increases in the relevant US dollar long-term interest rates.

Defined benefit plan OCI was positive USD 124 million, mainly related to our non-Swiss pension plans, which recorded positive net pre-tax OCI of USD 163 million.

Our Swiss pension plan recorded negative net pre-tax OCI of USD 14 million, primarily driven by a pension plan curtailment of USD 14 million that reduced the defined benefit obligation against profit or loss but led to an offsetting OCI loss, as no net pension asset could be recognized on the balance sheet as of 31 December 2021 due to the asset ceiling.

Foreign currency translation OCI was positive USD 111 million, mainly resulting from the strengthening of the Swiss franc (2%) against the US dollar, partly offset by the weakening of the euro (2%) against the US dollar.

OCI related to own credit on financial liabilities designated at fair value was positive USD 55 million, primarily due to a widening of our own credit spreads.

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

› Refer to “Note 26 Post-employment benefit plans” in the “Consolidated financial statements” section of our Annual Report 2020 for more information about OCI related to defined benefit plans

Sensitivity to interest rate movements

As of 31 December 2021, 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 1.8 billion in Global Wealth Management and Personal & Corporate Banking in the first year after such a shift. Of this increase, approximately USD 1.2 billion and USD 0.2 billion would result from changes in US dollar and Swiss franc 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 0.8 billion in Global Wealth Management and Personal & Corporate Banking in the first year after such a shift, predominantly driven by positions denominated in US dollars.

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 31 December 2021 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 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: 4Q21 vs 4Q20

The cost / income ratio was 80.5%, compared with 74.9%, mainly driven by an increase in expenses, partly offset by an increase in income. Excluding the effect of the increase in litigation provisions for the French cross-border matter, the cost / income ratio would have been 72.0%. The cost / income ratio is measured based on income before credit loss expenses or releases.

Common equity tier 1 capital: 4Q21 vs 3Q21

Our common equity tier 1 (CET1) capital increased by USD 0.3 billion to USD 45.3 billion, mainly reflecting operating profit before tax of USD 1.7 billion, partly offset by dividend accruals of USD 0.7 billion and share repurchases of USD 0.6 billion.

Return on CET1 capital: 4Q21 vs 4Q20

The annualized return on CET1 capital (RoCET1) was 11.9%, compared with 16.8%, driven by a decrease in net profit attributable to shareholders and higher average CET1 capital. Excluding the effect of the increase in litigation provisions for the French cross-border matter, the annualized RoCET1 would have been 18.3%.

Risk-weighted assets: 4Q21 vs 3Q21

Risk-weighted assets (RWA) decreased slightly, by USD 0.2 billion, to USD 302.2 billion, as decreases from asset size and other movements of USD 2.7 billion and regulatory add-ons of USD 1.2 billion were almost entirely offset by increases from model updates of USD 2.7 billion and currency effects of USD 1.0 billion.

Group performance

Common equity tier 1 capital ratio: 4Q21 vs 3Q21

Our CET1 capital ratio increased 0.1 percentage points to 15.0%, mainly reflecting a USD 0.3 billion increase in CET1 capital.

Leverage ratio denominator: 4Q21 vs 3Q21

The leverage ratio denominator (LRD) increased by USD 24 billion to USD 1,069 billion, driven by asset size and other movements of USD 19 billion and currency effects of USD 5 billion.

Common equity tier 1 leverage ratio: 4Q21 vs 3Q21

Our CET1 leverage ratio decreased from 4.31% to 4.24%, reflecting a USD 24 billion increase in LRD that was partly offset by a USD 0.3 billion increase in CET1 capital.

Going concern leverage ratio: 4Q21 vs 3Q21

Our going concern leverage ratio decreased from 5.8% to 5.7% in the fourth quarter of 2021, mainly driven by a USD 24 billion increase in LRD.

Personnel: 4Q21 vs 3Q21

The number of personnel employed as of 31 December 2021 was broadly stable at 71,385 (full-time equivalents), a net decrease of 42 compared with 30 September 2021.

Return on equity and CET1 capital
	As of or for the quarter ended			As of or for the year ended
USD million, except where indicated	31.12.21	30.9.21	31.12.20	31.12.21	31.12.20

Net profit
Net profit attributable to shareholders	1,348	2,279	1,636	7,457	6,557

Equity
Equity attributable to shareholders	60,662	60,219	59,445	60,662	59,445
Less: goodwill and intangible assets	6,378	6,401	6,480	6,378	6,480
Tangible equity attributable to shareholders	54,283	53,819	52,965	54,283	52,965
Less: other CET1 deductions	9,003	8,797	13,075	9,003	13,075
CET1 capital	45,281	45,022	39,890	45,281	39,890

Return on equity
Return on equity (%)	8.9	15.3	11.0	12.6	11.3
Return on tangible equity (%)	10.0	17.2	12.4	14.1	12.8
Return on common equity tier 1 capital (%)	11.9	20.8	16.8	17.5	17.4

Outlook

Investor sentiment remained positive in the fourth quarter of 2021, helped by the continued rebound in economic activity and greater optimism regarding further recovery. Fiscal stimulus, along with continued accommodative monetary policy and strong economic data, contributed to generally positive views on the timing and extent of a sustainable economic recovery.

However, economic, social and geopolitical tensions remain, raising questions around the sustainability and shape of the recovery. All-time high numbers of COVID-19 infections and associated disruption, along with uneven vaccination rates, add to these existing concerns. The severity and duration of the effects of the pandemic on certain economic sectors, supply chains and the workforce also remain uncertain. A potential resurgence in global inflation and tight labor markets in many countries could lead to more restrictive monetary policy, and this has become an additional concern for the market.

Our clients value strength and expert guidance, particularly in these uncertain times, and we remain focused on supporting them with advice and solutions. We expect our revenues in the first quarter of 2022 to be influenced by seasonal factors, such as higher client activity levels compared with the fourth quarter of 2021. Asset prices remain high, supporting recurring fee income in our asset-gathering businesses. However, the continued uncertainty about the environment, including renewed geopolitical concerns, and economic recovery could affect both asset prices and client activity levels.

UBS business
divisions
and Group Functions

Management report

Global Wealth Management

Global Wealth Management¹
	As of or for the quarter ended			% change from		As of or for the year ended
USD million, except where indicated	31.12.21	30.9.21	31.12.20	3Q21	4Q20	31.12.21	31.12.20

Results
Net interest income	1,114	1,107	1,011	1	10	4,244	4,027
Recurring net fee income²	2,896	2,872	2,468	1	17	11,170	9,372
Transaction-based income²	807	894	776	(10)	4	3,836	3,576
Other income	5	119	15	(96)	(68)	168	159
Income	4,822	4,992	4,269	(3)	13	19,419	17,134
Credit loss (expense) / release	2	11	7	(78)	(67)	29	(88)
Total operating income	4,824	5,002	4,277	(4)	13	19,449	17,045
Total operating expenses	4,261	3,486	3,412	22	25	14,665	13,026
Business division operating profit / (loss) before tax	563	1,516	864	(63)	(35)	4,783	4,019

Performance measures and other information
Financial advisor variable compensation^3,4	1,151	1,119	955	3	21	4,382	3,589
Compensation commitments with recruited financial advisors^3,5	118	120	122	(2)	(3)	479	502
Pre-tax profit growth (year-on-year, %)²	(34.8)	43.5	12.8			19.0	18.3
Cost / income ratio (%)²	88.4	69.8	79.9			75.5	76.0
Average attributed equity (USD billion)⁶	19.3	19.0	17.7	2	9	18.8	17.1
Return on attributed equity (%)^2,6	11.6	31.9	19.5			25.4	23.6
Risk-weighted assets (USD billion)⁶	99.8	95.7	87.2	4	15	99.8	87.2
Leverage ratio denominator (USD billion)^6,7	399.6	391.3	371.2	2	8	399.6	371.2
Goodwill and intangible assets (USD billion)	5.0	5.0	5.1	0	(1)	5.0	5.1
Net new fee-generating assets (USD billion)²	26.9	18.8	18.0			106.9	40.8
Fee-generating assets (USD billion)²	1,482	1,412	1,277	5	16	1,482	1,277
Fee-generating asset margin (bps)²	80.5	81.9	82.4			82.6	86.2
Invested assets (USD billion)²	3,303	3,198	3,016	3	10	3,303	3,016
Loans, gross (USD billion)⁸	234.1	230.7	213.1	1	10	234.1	213.1
Customer deposits (USD billion)⁸	369.8	351.8	348.0	5	6	369.8	348.0
Recruitment loans to financial advisors³	1,830	1,876	1,872	(2)	(2)	1,830	1,872
Other loans to financial advisors³	623	623	697	0	(11)	623	697
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)^2,9	0.2	0.2	0.4			0.2	0.4
Advisors (full-time equivalents)	9,329	9,399	9,575	(1)	(3)	9,329	9,575
1 Comparatives may 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. 2 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method. 3 Relates to licensed professionals with the ability to provide investment advice to clients in the Americas. 4 Financial advisor variable 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. 5 Compensation commitments with recruited financial advisors represent expenses related to compensation commitments granted to financial advisors at the time of recruitment that are subject to vesting requirements. 6 Refer to the “Capital management” section of this report for more information. 7 The leverage ratio denominator calculated as of the respective date in 2020 does not reflect the effects of the temporary exemption that applied from 25 March 2020 until 1 January 2021 and was granted by FINMA in connection with COVID-19. Refer to the “Regulatory and legal developments” section of our Annual Report 2020 for more information. 8 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. 9 Refer to the “Risk management and control” section of this report for more information about (credit-)impaired exposures. Excludes loans to financial advisors.

Results: 4Q21 vs 4Q20

Profit before tax decreased by USD 301 million, or 35%, to USD 563 million, predominantly driven by higher operating expenses, mainly reflecting a USD 657 million increase in litigation provisions for the French cross-border matter, partly offset by higher operating income.

Operating income

Total operating income increased by USD 547 million, or 13%, to USD 4,824 million, mainly driven by higher recurring net fee, net interest income and transaction-based income.

Net interest income increased by USD 103 million to USD 1,114 million, as a result of higher loan and deposit revenues, reflecting increases in volumes.

Recurring net fee income increased by USD 428 million, or 17%, to USD 2,896 million, primarily driven by higher average fee-generating assets, reflecting positive market performance and net new fee-generating assets.

Transaction-based income increased by USD 31 million, or 4%, to USD 807 million, mainly driven by high levels of client activity in the Americas, EMEA and Switzerland.

Net credit loss releases were USD 2 million, primarily related to stage 1 and 2 positions, compared with net releases of USD 7 million.

Operating expenses

Total operating expenses increased by USD 849 million, or 25%, to USD 4,261 million. This increase was driven by the aforementioned USD 657 million increase in litigation provisions for the French cross-border matter, and by an increase in financial advisor variable compensation reflecting higher compensable revenues.

Fee-generating assets: 4Q21 vs 3Q21

Fee-generating assets increased by USD 70.0 billion, or 5%, to USD 1,482 billion, mainly driven by net positive market performance and foreign currency effects of USD 43.1 billion, as well as net new fee-generating asset inflows of USD 26.9 billion, with inflows across all regions.

Loans: 4Q21 vs 3Q21

Loans increased by USD 3.4 billion, or 1%, to USD 234.1 billion, mainly driven by net new loans of USD 3.9 billion and positive foreign currency effects of USD 0.6 billion, partly offset by a reclassification of USD 1.1 billion of loans to disposal groups held for sale in connection with the upcoming sales of our domestic wealth management business in Spain and UBS Swiss Financial Advisers AG. Net new loans were largely driven by an increase in Lombard loans and mortgages. Loan penetration decreased to 7.1% from 7.2% in the third quarter of 2021.

Global Wealth Management

Regional breakdown of performance measures
As of or for the quarter ended 31.12.21 USD billion, except where indicated	Americas¹	Switzerland	EMEA²	Asia Pacific	Global Wealth Management³
Total operating income (USD million)	2,769	481	960	606	4,824
Total operating expenses (USD million)	2,299	349	1,190	413	4,261
Operating profit / (loss) before tax (USD million)	471	133	(230)	193	563
Cost / income ratio (%)⁴	83.1	72.1	124.1	68.2	88.4
Loans, gross⁵	92.0	43.2	49.6	48.6	234.1
Net new loans	4.5	0.2	1.2	(1.8)	3.9
Loan penetration (%)^4,6	5.0	15.3	7.6	9.3	7.1
Fee-generating assets⁴	900	130	334	116	1,482
Net new fee-generating assets⁴	21.9	1.5	1.1	2.8	26.9
Invested assets⁴	1,842	283	654	521	3,303
Advisors (full-time equivalents)	6,218	685	1,494	852	9,329
1 Including the following business units: United States and Canada; and Latin America. 2 Including the following business units: Europe; Central & Eastern Europe, Greece and Israel; and Middle East and Africa. 3 Including minor functions, which are not included in the four regions individually presented in this table, with USD 7 million of total operating income, USD 10 million of total operating expenses, USD 3 million of operating loss before tax, USD 0.6 billion of loans, USD 0.1 billion of net new loan outflows, USD 1 billion of fee-generating assets, USD 0.3 billion of net new fee-generating asset outflows, USD 3 billion of invested assets and 80 advisors in the fourth quarter of 2021. 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. 6 Loans, gross as a percentage of invested assets.

Regional comments 4Q21 vs 4Q20, except where indicated

Americas

Profit before tax increased by USD 90 million to USD 471 million. Operating income increased by USD 387 million, or 16%, to USD 2,769 million, mainly driven by higher recurring net fee, net interest and transaction-based income. The cost / income ratio decreased to 83.1% from 84.3%. Loans increased 5% compared with the third quarter of 2021, to USD 92 billion, reflecting USD 4.5 billion of net new loans, which were mostly Lombard loans and mortgages. Fee-generating assets increased 6% sequentially to USD 900 billion, mainly driven by positive market performance and net new fee-generating assets of USD 21.9 billion.

Switzerland

Profit before tax decreased by USD 9 million to USD 133 million, driven by higher operating expenses, mainly reflecting an USD 85 million increase in litigation provisions for the French cross-border matter. Operating income increased by USD 56 million, or 13%, to USD 481 million, mainly driven by higher recurring net fee and transaction-based income. The cost / income ratio increased to 72.1% from 66.8%. Loans increased 2% sequentially to USD 43 billion, largely reflecting positive foreign currency effects and USD 0.2 billion of net new loans. Fee-generating assets increased 5% sequentially to USD 130 billion, mainly driven by net positive market performance and foreign currency effects, and net new fee-generating asset inflows of USD 1.5 billion.

EMEA

Loss before tax was USD 230 million, compared with profit before tax of USD 174 million. This was driven by higher operating expenses, mainly reflecting a USD 572 million increase in litigation provisions for the French cross-border matter. Operating income increased by USD 72 million, or 8%, to USD 960 million, mainly driven by higher recurring net fee and transaction-based income. The cost / income ratio increased to 124.1% from 80.4%. Loans increased 1% sequentially to USD 50 billion, reflecting net new loans of USD 1.2 billion, partly offset by the aforementioned reclassification of USD 0.7 billion of loans to disposal groups held for sale. Fee-generating assets increased 2% sequentially to USD 334 billion, mainly driven by net positive market performance and foreign currency effects and net new fee-generating assets of USD 1.1 billion.

Asia Pacific

Profit before tax increased by USD 24 million to USD 193 million. Operating income increased by USD 29 million to USD 606 million, mainly driven by higher recurring net fee and net interest income. The cost / income ratio decreased to 68.2% from 70.5%. Loans decreased 4% sequentially to USD 49 billion, driven by net new loan outflows of USD 1.8 billion, mostly in Lombard loans. Fee-generating assets increased 3% sequentially to USD 116 billion, mainly driven by net new fee-generating assets of USD 2.8 billion.

Personal & Corporate Banking

Personal & Corporate Banking – in Swiss francs¹
	As of or for the quarter ended			% change from		As of or for the year ended
CHF million, except where indicated	31.12.21	30.9.21	31.12.20	3Q21	4Q20	31.12.21	31.12.20

Results
Net interest income	497	494	455	1	9	1,941	1,916
Recurring net fee income²	205	201	177	2	16	774	676
Transaction-based income²	271	281	230	(3)	18	1,079	985
Other income	12	19	14	(36)	(14)	110	74
Income	985	995	876	(1)	13	3,904	3,650
Credit loss (expense) / release	9	6	20	42	(55)	79	(243)
Total operating income	995	1,002	896	(1)	11	3,984	3,407
Total operating expenses	660	563	578	17	14	2,397	2,233
Business division operating profit / (loss) before tax	335	439	318	(24)	5	1,587	1,175

Performance measures and other information
Average attributed equity (CHF billion)³	8.5	8.4	8.2	1	3	8.4	8.3
Return on attributed equity (%)^2,3	15.8	20.9	15.5			19.0	14.1
Pre-tax profit growth (year-on-year, %)²	5.1	43.7	4.1			35.1	(18.0)
Cost / income ratio (%)²	67.0	56.6	66.0			61.4	61.2
Net interest margin (bps)²	143	142	133			140	142
Risk-weighted assets (CHF billion)³	66.7	66.5	63.8	0	4	66.7	63.8
Leverage ratio denominator (CHF billion)^3,4	221.7	219.7	219.9	1	1	221.7	219.9
Business volume for Personal Banking (CHF billion)²	184	184	179	0	3	184	179
Net new business volume for Personal Banking (CHF billion)²	0.3	1.2	2.1			5.3	11.6
Net new business volume growth for Personal Banking (%)²	0.6	2.5	4.8			3.0	6.9
Active Digital Banking clients in Personal Banking (%)^2,5	71.7	70.2	68.1			70.3	66.1
Active Digital Banking clients in Corporate & Institutional Clients (%)²	79.7	78.9	78.8			79.3	77.9
Mobile Banking log-in share in Personal Banking (%)²	75.9	75.1	70.3			73.5	68.0
Client assets (CHF billion)²	751	738	702	2	7	751	702
Loans, gross (CHF billion)	139.3	138.9	136.4	0	2	139.3	136.4
Customer deposits (CHF billion)	162.1	159.8	161.1	1	1	162.1	161.1
Secured loan portfolio as a percentage of total loan portfolio, gross (%)²	92.7	93.0	92.9			92.7	92.9
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)^2,6	0.9	1.0	1.1			0.9	1.1
1 Comparatives may 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. 2 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method. 3 Refer to the “Capital management” section of this report for more information. 4 The leverage ratio denominator calculated as of the respective date in 2020 does not reflect the effects of the temporary exemption that applied from 25 March 2020 until 1 January 2021 and was granted by FINMA in connection with COVID-19. Refer to the “Regulatory and legal developments” section of our Annual Report 2020 for more information. 5 In the fourth quarter of 2021, 85.5% of clients of Personal Banking were “activated users” of Digital Banking (i.e., clients who had logged into Digital Banking at least once in the course of their relationship with UBS). 6 Refer to the “Risk management and control” section of this report for more information about (credit-)impaired exposures.

Personal & Corporate Banking

Results: 4Q21 vs 4Q20

Profit before tax increased by CHF 17 million, or 5%, to CHF 335 million, reflecting higher operating income, almost entirely offset by higher operating expenses, mainly driven by a CHF 76 million (USD 83 million) increase in litigation provisions for the French cross-border matter.

Operating income

Total operating income increased by CHF 99 million, or 11%, to CHF 995 million, mainly reflecting increases in net interest, transaction-based and recurring net fee income, partly offset by lower net credit loss releases.

Net interest income increased by CHF 42 million to CHF 497 million, mainly driven by proactive deposit management.

Recurring net fee income increased by CHF 28 million to CHF 205 million, primarily driven by higher investment fund, custody and mandate fees, mainly resulting from an increase in average custody assets, reflecting net new investment product inflows and positive market performance.

Transaction-based income increased by CHF 41 million to CHF 271 million, mainly driven by higher revenues from credit card and foreign exchange transactions, reflecting a continued increase in spending on travel and leisure by clients following the easing of COVID-19-related restrictions in certain countries relative to the fourth quarter of 2020.

Net credit loss releases were CHF 9 million, compared with net releases of CHF 20 million for the fourth quarter of 2020.

Operating expenses

Total operating expenses increased by CHF 82 million, or 14%, to CHF 660 million, mainly reflecting the aforementioned CHF 76 million increase in litigation provisions for the French cross-border matter.

Personal & Corporate Banking – in US dollars¹
	As of or for the quarter ended			% change from		As of or for the year ended
USD million, except where indicated	31.12.21	30.9.21	31.12.20	3Q21	4Q20	31.12.21	31.12.20

Results
Net interest income	543	538	503	1	8	2,120	2,049
Recurring net fee income²	224	219	196	2	14	846	725
Transaction-based income²	296	306	255	(3)	16	1,178	1,054
Other income	13	21	16	(36)	(15)	119	79
Income	1,077	1,084	970	(1)	11	4,263	3,908
Credit loss (expense) / release	10	7	22	40	(56)	86	(257)
Total operating income	1,086	1,091	992	0	9	4,349	3,651
Total operating expenses	721	613	640	18	13	2,618	2,392
Business division operating profit / (loss) before tax	365	478	353	(24)	4	1,731	1,259

Performance measures and other information
Average attributed equity (USD billion)³	9.2	9.2	9.0	0	2	9.2	8.9
Return on attributed equity (%)^2,3	15.9	20.8	15.6			18.9	14.2
Pre-tax profit growth (year-on-year, %)²	3.5	42.8	13.6			37.5	(12.6)
Cost / income ratio (%)²	67.0	56.6	66.0			61.4	61.2
Net interest margin (bps)²	144	144	133			142	143
Risk-weighted assets (USD billion)³	73.2	71.4	72.1	3	1	73.2	72.1
Leverage ratio denominator (USD billion)^3,4	243.2	235.6	248.3	3	(2)	243.2	248.3
Business volume for Personal Banking (USD billion)²	202	197	202	2	0	202	202
Net new business volume for Personal Banking (USD billion)²	0.3	1.2	2.3			5.8	12.3
Net new business volume growth for Personal Banking (%)²	0.6	2.5	4.8			2.9	7.1
Active Digital Banking clients in Personal Banking (%)^2,5	71.7	70.2	68.1			70.3	66.1
Active Digital Banking clients in Corporate & Institutional Clients (%)²	79.7	78.9	78.8			79.3	77.9
Mobile Banking log-in share in Personal Banking (%)²	75.9	75.1	70.3			73.5	68.0
Client assets (USD billion)²	824	792	793	4	4	824	793
Loans, gross (USD billion)	152.8	148.9	154.0	3	(1)	152.8	154.0
Customer deposits (USD billion)	177.8	171.4	181.9	4	(2)	177.8	181.9
Secured loan portfolio as a percentage of total loan portfolio, gross (%)²	92.7	93.0	92.9			92.7	92.9
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)^2,6	0.9	1.0	1.1			0.9	1.1
1 Comparatives may 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. 2 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method. 3 Refer to the “Capital management” section of this report for more information. 4 The leverage ratio denominator calculated as of the respective date in 2020 does not reflect the effects of the temporary exemption that applied from 25 March 2020 until 1 January 2021 and was granted by FINMA in connection with COVID-19. Refer to the “Regulatory and legal developments” section of our Annual Report 2020 for more information. 5 In the fourth quarter of 2021, 85.5% of clients of Personal Banking were “activated users” of Digital Banking (i.e., clients who had logged into Digital Banking at least once in the course of their relationship with UBS). 6 Refer to the “Risk management and control” section of this report for more information about (credit-)impaired exposures.

Asset Management

Asset Management¹
	As of or for the quarter ended			% change from		As of or for the year ended
USD million, except where indicated	31.12.21	30.9.21	31.12.20	3Q21	4Q20	31.12.21	31.12.20

Results
Net management fees²	627	560	518	12	21	2,320	1,950
Performance fees	94	33	255	181	(63)	260	455
Net gain from disposal of an associate / a subsidiary						37	571
Credit loss (expense) / release	(1)	0	0			(1)	(2)
Total operating income	721	593	774	22	(7)	2,616	2,974
Total operating expenses	387	379	372	2	4	1,586	1,519
Business division operating profit / (loss) before tax	334	214	401	56	(17)	1,030	1,455

Performance measures and other information
Average attributed equity (USD billion)³	1.8	1.9	2.1	(3)	(16)	2.0	2.0
Return on attributed equity (%)^3,4	74.6	46.3	74.9			51.8	74.2
Pre-tax profit growth (year-on-year, %)⁴	(16.7)	(71.0)	123.1			(29.2)	173.6
Cost / income ratio (%)⁴	53.6	63.9	48.1			60.6	51.0
Risk-weighted assets (USD billion)³	6.9	7.6	6.9	(9)	(1)	6.9	6.9
Leverage ratio denominator (USD billion)^3,5	2.9	2.8	5.8	1	(51)	2.9	5.8
Goodwill and intangible assets (USD billion)	1.2	1.2	1.2	(1)	(2)	1.2	1.2
Net margin on invested assets (bps)⁴	11	7	15			9	16
Gross margin on invested assets (bps)⁴	24	20	30			23	32

Information by business line / asset class
Net new money (USD billion)⁴
Equities	5.8	0.5	25.1			10.3	65.1
Fixed Income	7.5	3.0	(12.0)			22.7	7.3
of which: money market	*(1.1)*	0.4	(15.8)			(3.1)	(7.4)
Multi-asset & Solutions	1.1	(1.8)	7.7			6.8	6.6
Hedge Fund Businesses	1.3	0.8	0.7			5.7	(1.1)
Real Estate & Private Markets	(0.7)	(1.0)	0.6			(0.6)	2.3
Total net new money	15.1	1.5	22.2			44.9	80.1
of which: net new money excluding money market	*16.2*	1.1	38.0			48.0	87.5

Invested assets (USD billion)⁴
Equities	580	543	506	7	15	580	506
Fixed Income	285	279	274	2	4	285	274
of which: money market	92	94	97	(1)	(5)	92	97
Multi-asset & Solutions	193	183	172	5	12	193	172
Hedge Fund Businesses	55	53	48	2	15	55	48
Real Estate & Private Markets	98	95	93	3	5	98	93
Total invested assets	1,211	1,154	1,092	5	11	1,211	1,092
of which: passive strategies	*540*	497	457	9	18	540	457

Information by region
Invested assets (USD billion)⁴
Americas	287	273	254	5	13	287	254
Asia Pacific	190	181	181	5	5	190	181
Europe, Middle East and Africa (excluding Switzerland)	334	316	294	6	14	334	294
Switzerland	399	383	363	4	10	399	363
Total invested assets	1,211	1,154	1,092	5	11	1,211	1,092

Information by channel
Invested assets (USD billion)⁴
Third-party institutional	707	671	648	5	9	707	648
Third-party wholesale	145	139	128	4	13	145	128
UBS’s wealth management businesses	359	344	316	4	13	359	316
Total invested assets	1,211	1,154	1,092	5	11	1,211	1,092
1 Comparatives may 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. 2 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. 3 Refer to the “Capital management” section of this report for more information. 4 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method. 5 The leverage ratio denominator calculated as of the respective date in 2020 does not reflect the effects of the temporary exemption that applied from 25 March 2020 until 1 January 2021 and was granted by FINMA in connection with COVID-19. Refer to the “Regulatory and legal developments” section of our Annual Report 2020 for more information.

Results: 4Q21 vs 4Q20

Profit before tax decreased by USD 67 million, or 17%, to USD 334 million, mainly reflecting a decrease in performance fees, partly offset by higher net management fees.

Operating income

Total operating income decreased by USD 53 million, or 7%, to USD 721 million.

Net management fees increased by USD 109 million, or 21%, to USD 627 million, on a higher average invested asset base, reflecting a combination of continued net new money generation over the last twelve months and a constructive market backdrop. This increase included a one-time effect of USD 35 million that resulted from a change in the fee accrual methodology for Swiss investment fund fees.

Performance fees decreased by USD 161 million to USD 94 million, mainly in our Hedge Fund Businesses and our Equities business, compared with the particularly high levels of performance fees in the fourth quarter of 2020.

Operating expenses

Total operating expenses increased by USD 15 million, or 4%, to USD 387 million, mainly driven by personnel expenses.

Invested assets: 4Q21 vs 3Q21

Invested assets increased by USD 57 billion to USD 1,211 billion, reflecting positive market performance of USD 39 billion, net new money inflows of USD 15 billion, and favorable foreign currency effects of USD 2 billion.

Excluding money market flows, net new money inflows were USD 16 billion.

Investment Bank

Investment Bank¹
	As of or for the quarter ended			% change from		As of or for the year ended
USD million, except where indicated	31.12.21	30.9.21	31.12.20	3Q21	4Q20	31.12.21	31.12.20

Results
Advisory	196	270	190	(28)	3	988	634
Capital Markets	501	522	478	(4)	5	2,170	1,744
Global Banking	696	792	669	(12)	4	3,158	2,378
Execution Services²	452	444	428	2	6	1,894	1,857
Derivatives & Solutions	622	780	660	(20)	(6)	3,422	3,609
Financing	448	498	346	(10)	30	979	1,674
Global Markets	1,523	1,723	1,433	(12)	6	6,296	7,141
of which: Equities	*1,107*	1,360	1,065	(19)	4	4,581	4,502
of which: Foreign Exchange, Rates and Credit	*415*	363	368	14	13	1,715	2,638
Income	2,219	2,514	2,102	(12)	6	9,454	9,519
Credit loss (expense) / release	16	(5)	(91)			34	(305)
Total operating income	2,235	2,510	2,011	(11)	11	9,488	9,214
Total operating expenses	1,522	1,673	1,482	(9)	3	6,858	6,732
Business division operating profit / (loss) before tax	713	837	529	(15)	35	2,630	2,482

Performance measures and other information
Pre-tax profit growth (year-on-year, %)³