ubsagstandalone6k

6-K 1 ar21ubsagstandalone.htm ubsagstandalone6k

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: March 7, 2022

UBS Group AG

Commission File Number: 1-36764

UBS AG

Commission File Number: 1-15060

(Registrants' Name)

Bahnhofstrasse 45, Zurich, Switzerland and
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 UBS AG audited standalone financial statements for the year ended 31 December 2021, as well as the consent of Ernst & Young Ltd. with respect thereto, which appear immediately following this page.

UBS AG

Standalone financial statements and regulatory information
for the year ended 31 December 2021

Table of contents

2		UBS AG standalone financial statements (audited)

43		UBS AG standalone regulatory information

UBS AG standalone financial statements (audited)

UBS AG standalone financial statements
(audited)

Income statement
		USD million		CHF million
		For the year ended		For the year ended
	Note	31.12.21	31.12.20	31.12.21	31.12.20
Interest and discount income¹		4,091	4,699	3,745	4,406
Interest and dividend income from trading portfolio¹		2,572	2,000	2,360	1,869
Interest and dividend income from financial investments		115	266	105	251
Interest expense²		(5,128)	(5,701)	(4,704)	(5,357)
Gross interest income		1,649	1,264	1,506	1,169
Credit loss (expense) / release	14	78	(548)	72	(498)
Net interest income		1,727	716	1,578	671
Fee and commission income from securities and investment business and other fee and commission income		3,703	3,580	3,390	3,343
Credit-related fees and commissions		109	223	100	209
Fee and commission expense		(810)	(644)	(741)	(599)
Net fee and commission income		3,002	3,160	2,749	2,953
Net trading income	3	3,623	4,323	3,301	4,060
Net income from disposal of financial investments		56	152	52	142
Dividend income from investments in subsidiaries and other participations	4	6,401	3,214	5,882	2,995
Income from real estate holdings		480	532	439	497
Sundry ordinary income	5	1,342	1,288	1,229	1,202
Sundry ordinary expenses	5	(338)	(434)	(308)	(404)
Other income from ordinary activities		7,940	4,752	7,295	4,432
Total operating income		16,293	12,951	14,923	12,116
Personnel expenses	6	3,221	3,545	2,943	3,323
General and administrative expenses	7	3,625	3,662	3,317	3,413
Subtotal operating expenses		6,846	7,207	6,260	6,736
Impairment of investments in subsidiaries and other participations	8	1,187	134	1,090	127
Depreciation, amortization and impairment of property, equipment, software, goodwill and intangible assets		816	917	747	850
Changes in provisions for litigation, regulatory and similar matters, and other provisions	9	862	112	787	101
Total operating expenses		9,712	8,370	8,885	7,814
Operating profit		6,581	4,581	6,037	4,302
Extraordinary income	10	282	435	262	403
Extraordinary expenses	10	1	0	1	0
Tax expense / (benefit)	11	315	476	286	440
Net profit / (loss)		6,548	4,539	6,013	4,265
1 Interest income includes negative interest income of approximately USD 0.5 billion (CHF 0.4 billion) for the year ended 31 December 2021 (approximately USD 0.4 billion (CHF 0.4 billion) for the year ended 31 December 2020). 2 Includes negative interest expense on financial liabilities of approximately USD 0.5 billion (CHF 0.4 billion) for the year ended 31 December 2021 (approximately USD 0.3 billion (CHF 0.3 billion) for the year ended 31 December 2020).

Balance sheet
		USD million		CHF million
	Note	31.12.21	31.12.20	31.12.21	31.12.20

Assets
Cash and balances at central banks	14	53,760	34,148	49,012	30,239
Due from banks	14, 25	33,330	38,357	30,386	33,966
Receivables from securities financing transactions	12, 14, 25	56,336	63,305	51,360	56,058
Due from customers	13, 14, 25	121,812	124,596	111,052	110,334
Funding provided to significant regulated subsidiaries eligible as total loss-absorbing capacity¹	13, 14, 25	27,530	26,354	25,098	23,337
Mortgage loans	13, 14	5,492	5,406	5,007	4,787
Trading portfolio assets	15	119,795	115,164	109,213	101,981
Derivative financial instruments	16	11,921	17,203	10,868	15,234
Financial investments	17	19,482	23,852	17,761	21,122
Accrued income and prepaid expenses	14	1,213	1,414	1,106	1,253
Investments in subsidiaries and other participations	18	50,671	50,444	46,195	44,670
Property, equipment and software		5,580	6,091	5,087	5,394
Other assets	13, 14, 19	2,927	2,690	2,667	2,381
Total assets		509,851	509,024	464,814	450,756
of which: subordinated assets		*18,751*	19,999	*17,095*	17,710
of which: subject to mandatory conversion and / or debt waiver		*17,813*	18,067	*16,239*	15,998

Liabilities
Due to banks	25	40,293	49,655	36,734	43,971
Payables from securities financing transactions	12, 25	23,046	24,407	21,010	21,613
Due to customers	25	141,119	132,747	128,654	117,553
Funding received from UBS Group AG eligible as total loss-absorbing capacity at UBS AG level measured at amortized cost¹	25	57,078	53,585	52,036	47,451
Trading portfolio liabilities	15	25,711	28,806	23,440	25,509
Derivative financial instruments	16	14,128	21,918	12,880	19,409
Financial liabilities designated at fair value	15, 22	73,081	58,737	66,625	52,014
of which: funding received from UBS Group AG eligible as total loss-absorbing capacity at UBS AG level¹	22, 25	*2,137*		*1,948*
Bonds issued		73,631	76,490	67,127	67,734
of which: eligible as total loss-absorbing capacity at UBS AG level¹		*5,048*	7,480	*4,602*	6,624
Accrued expenses and deferred income		2,919	3,282	2,661	2,906
Other liabilities	19	2,305	5,591	2,100	4,951
Provisions	14	2,136	1,411	1,947	1,250
Total liabilities		455,446	456,628	415,215	404,359

Equity
Share capital	23	393	393	386	386
General reserve		36,326	36,326	35,649	35,649
of which: statutory capital reserve		*36,326*	36,326	*35,649*	35,649
of which: capital contribution reserve²		*36,326*	36,326	*35,649*	35,649
Voluntary earnings reserve		11,138	11,138	7,552	6,098
Net profit / (loss) for the period		6,548	4,539	6,013	4,265
Total equity		54,405	52,396	49,599	46,397
Total liabilities and equity		509,851	509,024	464,814	450,756
of which: subordinated liabilities		*65,219*	62,053	*59,459*	54,950
of which: subject to mandatory conversion and / or debt waiver		*64,654*	61,486	*58,943*	54,448
1 Represents the Swiss GAAP carrying amount of instruments qualifying as total loss-absorbing capital. 2 The Swiss Federal Tax Administration’s current position is that, of the CHF 35.6 billion capital contribution reserve available as of 31 December 2021, an amount limited to CHF 20.5 billion is available from which dividends may be paid without a Swiss withholding tax deduction.

UBS AG standalone financial statements (audited)

Balance sheet (continued)
	USD million		CHF million
	31.12.21	31.12.20	31.12.21	31.12.20

Off-balance sheet items
Contingent liabilities, gross	19,046	14,617	17,364	12,944
Sub-participations	(1,093)	(1,287)	(997)	(1,140)
Contingent liabilities, net	17,953	13,330	16,367	11,804
of which: guarantees to third parties related to subsidiaries	*7,825*	6,110	*7,133*	5,411
Irrevocable loan commitments, gross	17,394	19,337	15,858	17,123
Sub-participations	0	0	0	0
Irrevocable loan commitments, net	17,394	19,337	15,858	17,123
Forward starting transactions¹	41,719	26,690	38,034	23,634
of which: reverse repurchase agreements	*24,559*	17,265	*22,390*	15,289
of which: repurchase agreements	*17,160*	9,424	*15,644*	8,345
Liabilities for calls on shares and other equity instruments	5	5	4	4
1 Cash to be paid in the future by either UBS AG or the counterparty.

Off-balance sheet items

Contingent liabilities include indemnities and guarantees issued by UBS AG for the benefit of subsidiaries and creditors of subsidiaries.

Where the indemnity amount issued by UBS AG is not specifically defined, the indemnity relates to the solvency or minimum capitalization of a subsidiary, and therefore no amount is included in the table above.

Joint and several liability – value-added tax (VAT)

UBS AG is jointly and severally liable for the combined VAT liability of UBS entities that belong to the VAT group of UBS in Switzerland. This contingent liability is not included in the table above.

Guarantees – UBS Europe SE

Following the combined UK business transfer and cross-border merger of UBS Limited into UBS Europe SE in March 2019, UBS AG issued a guarantee for the benefit of counterparties of UBS Europe SE’s Investment Bank, covering transactions subject to master netting agreements.

A similar guarantee that UBS AG issued in 2003 for the benefit of each counterparty of UBS Limited also continues to be effective. This guarantee covers transactions in accordance with and contemplated under any agreement entered into by UBS Limited prior to the merger into UBS Europe SE, to the extent that such an agreement has not been amended by UBS Europe SE thereafter.

Under both guarantees, UBS AG promises to pay to the beneficiary counterparties any unpaid liabilities covered under the terms of the guarantees on demand. These guarantees are included as contingent liabilities in the off-balance sheet items table above.

Indemnities – UBS Europe SE

In connection with the establishment of UBS Europe SE in 2016, UBS AG entered into agreements with UBS Europe SE under which UBS AG would provide UBS Europe SE with limited indemnification of payment obligations that may arise from certain litigation, regulatory and similar matters.

As of 31 December 2021, the amount of such potential payment obligations could not be reliably estimated and the likelihood of an outflow is not considered to be probable or the probability of an outflow was assessed to be remote; therefore, the table above does not include any amount related to this limited indemnification.

In addition, in accordance with the bylaws of the Deposit Protection Fund of the Association of German Banks, UBS AG issued an indemnity in favor of this fund on behalf of UBS Europe SE. The probability of an outflow was assessed to be remote, and as a result, the table above does not include any exposure arising under this indemnity.

Statement of changes in equity
USD million	Share capital	Statutory capital reserve	Voluntary earnings reserve and profit / (loss) carried forward	Net profit / (loss) for the period	Total equity

Balance as of 1 January 2021	393	36,326	11,138	4,539	52,396
Dividends and other distributions			(4,539)		(4,539)
Net profit / (loss) appropriation			4,539	(4,539)	0
Net profit / (loss) for the period				6,548	6,548
Balance as of 31 December 2021	393	36,326	11,138	6,548	54,405

CHF million	Share capital	Statutory capital reserve	Voluntary earnings reserve and profit / (loss) carried forward	Net profit / (loss) for the period	Total equity

Balance as of 1 January 2021	386	35,649	6,098	4,265	46,397
Dividends and other distributions			(4,149)		(4,149)
Net profit / (loss) appropriation			4,265	(4,265)	0
Net profit / (loss) for the period				6,013	6,013
Currency translation difference			1,338		1,338
Balance as of 31 December 2021	386	35,649	7,552	6,013	49,599

UBS AG standalone financial statements (audited)

Statement of proposed appropriation of total profit and dividend distribution

The Board of Directors proposes that the Annual General Meeting of Shareholders (the AGM) on 5 April 2022 approve the appropriation of total profit and an ordinary dividend distribution of USD 4,200 million out of the total profit as follows:

	USD million	CHF million
	For the year ended	For the year ended
	31.12.21	31.12.21
Net profit for the period	6,548	6,013
Profit / (loss) carried forward	0	0
Total profit available for appropriation	6,548	6,013

Appropriation of total profit
Appropriation to voluntary earnings reserve	(2,348)	(2,184)
Dividend distribution	(4,200)	(3,829)¹
Profit / (loss) carried forward	0	0
1 For illustrative purposes, converted at closing exchange rate as of 31 December 2021 (CHF / USD 1.10).

The ordinary dividend distribution is declared and paid in US dollars. The total amount of the dividend distribution is capped at CHF 8,400 million (the Cap). To the extent that the Swiss franc equivalent of the total dividend distribution of USD 4,200 million would exceed the Cap on the day of the AGM, based on the exchange rate determined by the Board of Directors in its reasonable opinion, the US dollar per share amount of the dividend will be reduced on a pro rata basis so that the total Swiss franc amount does not exceed the Cap. To the extent the Swiss franc equivalent of the total dividend distribution exceeds CHF 6,013 million but does not exceed the Cap, the total dividend distribution in US dollars remains as is and is booked against the total profit in US dollars, while the Swiss franc currency difference of maximum CHF 2,387 million is balanced through the Swiss franc translation of the voluntary earnings reserve account.

Note 1 Name, legal form and registered office

UBS AG is incorporated and domiciled in Switzerland. Its registered offices are at Bahnhofstrasse 45, CH-8001 Zurich and Aeschenvorstadt 1, CH-4051 Basel, Switzerland. UBS AG operates under Art. 620 et seq. of the Swiss Code of Obligations and Swiss banking law as an Aktiengesellschaft, a corporation limited by shares.

UBS AG is a regulated bank in Switzerland and is 100% owned by UBS Group AG, the ultimate parent of the UBS Group. UBS AG holds investments in and provides funding to subsidiaries, including the other banking subsidiaries of the UBS Group. In addition, UBS AG operates globally, including business activities from all four UBS business divisions and Group Functions. In the ordinary course of business, main contributors to the net profit / (loss) of UBS AG are the Investment Bank, Global Wealth Management, Group Treasury and Group Services. The balance sheet is mainly composed of financial assets and liabilities from the Investment Bank, Group Treasury and Global Wealth Management business booked outside of Switzerland as well as investments in subsidiaries and other participations in Group Treasury and fixed assets of Group Services.

UBS AG employed 10,169 personnel on a full-time equivalent basis as of 31 December 2021 compared with 10,364 personnel as of 31 December 2020.

Note 2 Accounting policies

a) Significant accounting policies

UBS AG standalone financial statements are prepared in accordance with Swiss GAAP (the FINMA Accounting Ordinance, FINMA Circular 2020/1 “Accounting – banks” and the Banking Ordinance) and represent “reliable assessment statutory single-entity financial statements.” The accounting policies are principally the same as those outlined in Note 1 to the consolidated financial statements of UBS AG included in the UBS Group AG and UBS AG Annual Report 2021. Major differences between the Swiss GAAP requirements and International Financial Reporting Standards are described in Note 34 to the consolidated financial statements of UBS AG. The significant accounting policies applied for the standalone financial statements of UBS AG are discussed below.

› Refer to the UBS Group AG and UBS AG Annual Report 2021 for more information

Risk management

UBS AG is fully integrated into the Group-wide risk management process described in the audited part of the “Risk management and control” section of the UBS Group AG and UBS AG Annual Report 2021.

Further information on the use of derivative instruments and hedge accounting is provided on the following pages and in Notes 1, 10 and 26 to the consolidated financial statements of UBS AG.

› Refer to the UBS Group AG and UBS AG Annual Report 2021 for more information

Compensation policy

The compensation structure and processes of UBS AG conform to the compensation principles and framework of UBS Group AG. For detailed information, refer to the Compensation Report of UBS Group AG.

Deferred compensation

Expenses for deferred compensation awards granted by UBS Group AG to employees of UBS AG in the form of UBS shares, notional investment funds and notional additional tier 1 (AT1) capital instruments are charged by UBS Group AG to UBS AG.

› Refer to Note 28 to the UBS AG consolidated financial statements in the UBS Group AG and UBS AG Annual Report 2021 for more information

Foreign currency translation

Non-US dollar-denominated transactions are translated into US dollars at the spot exchange rate on the date of the transaction. At the balance sheet date, all non-US dollar-denominated monetary assets and liabilities, as well as non-US dollar-denominated equity instruments recorded in Trading portfolio assets and Financial investments, are translated into US dollars using the closing exchange rate. Non-monetary items measured at historic cost are translated at the spot exchange rate on the date of the transaction. Assets and liabilities of branches with functional currencies other than the US dollar are translated into US dollars at the closing exchange rate. Income and expense items of such branches are translated at weighted average exchange rates for the period. All currency translation effects are recognized in the income statement.

The main currency translation rates used by UBS AG are provided in Note 33 of the consolidated financial statements of UBS AG.

› Refer to the UBS Group AG and UBS AG Annual Report 2021 for more information

UBS AG standalone financial statements (audited)

Note 2 Accounting policies (continued)

Presentation currencies

As the primary presentation currency of the financial statements of UBS AG is the US dollar, amounts in Swiss francs are additionally presented for each component of the financial statements. UBS AG applies the modified closing rate method for translating the US dollar presentation currency amounts into Swiss francs: assets and liabilities are translated at the closing rate, equity positions at historic rates, and income and expense items at the weighted average rate for the period. The resulting currency translation effects are recognized separately in the Voluntary earnings reserve, amounting to a negative currency translation effect of CHF 3,619 million as of 31 December 2021 (negative CHF 4,957 million as of 31 December 2020).

Structured debt instruments

Structured debt instruments comprise debt instruments issued and transacted over the counter and include a host contract and one or more embedded derivatives that do not relate to UBS AG’s own equity. By applying the fair value option, the vast majority of structured debt instruments are measured at fair value as a whole and recognized in Financial liabilities designated at fair value. The fair value option for structured debt instruments can be applied only if the following criteria are cumulatively met:

– the structured debt instrument is measured on a fair value basis and is subject to risk management that is equivalent to risk management for trading activities;

– the application of the fair value option eliminates or significantly reduces an accounting mismatch that would otherwise arise; and

– changes in fair value attributable to changes in unrealized own credit are not recognized.

Fair value changes related to Financial liabilities designated at fair value, excluding changes in unrealized own credit, are recognized in Net trading income. Interest expense on Financial liabilities designated at fair value is recognized in Interest expense.

Where the designation criteria for the fair value option are not met, the embedded derivatives are assessed for bifurcation for measurement purposes. Bifurcated embedded derivatives are measured at fair value through profit or loss and presented in the same balance sheet line as the host contract.

› Refer to Note 22 for more information

Group-internal funding

UBS AG obtains funding from UBS Group AG in the form of loans that either qualify as going concern additional tier 1 capital or as gone concern loss-absorbing capacity at the UBS AG consolidated and standalone levels. A portion of Group-internal funding obtained is further on-lent by UBS AG to certain subsidiaries in the form of loans.

Where such Group-internal funding is eligible to meet the requirements for total loss-absorbing capacity (TLAC) at the level of UBS AG consolidated or standalone, or at the levels of significant regulated subsidiaries as defined for Pillar 3 disclosure purposes, the aggregate amounts of the respective obligations and claims are separately disclosed on the balance sheet. For those TLAC instruments that are eligible to meet the going concern capital requirements (i.e., are subordinated and subject to mandatory conversion and / or debt waiver, as explained below), the aggregate corresponding amounts are disclosed on the balance sheet.

UBS AG obligations arising from Group-internal funding it has received are presented as Funding received from UBS Group AG eligible as total loss-absorbing capacity at UBS AG level measured at amortized cost and Funding received from UBS Group AG eligible as total loss-absorbing capacity at UBS AG level within Financial liabilities designated at fair value. UBS AG claims arising from Group-internal funding it has provided are presented as Funding provided to significant regulated subsidiaries eligible as total loss-absorbing capacity and measured at amortized cost less any allowance for expected credit losses.

Subordinated assets and liabilities

Subordinated assets are comprised of claims that, based on an irrevocable written declaration, in the event of liquidation, bankruptcy or composition concerning the debtor, rank after the claims of all other creditors and may not be offset against amounts payable to the debtor nor be secured by its assets. Subordinated liabilities are comprised of corresponding obligations.

Subordinated assets and liabilities that contain a point-of-non-viability clause in accordance with Swiss capital requirements pursuant to Art. 29 and 30 of the Capital Adequacy Ordinance are disclosed as being Subject to mandatory conversion and / or debt waiver and provide for the claim or the obligation to be written off or converted into equity in the event that the issuing bank reaches a point of non-viability.

Note 2 Accounting policies (continued)

Investments in subsidiaries and other participations

Investments in subsidiaries and other participations are equity interests that are held to carry on the business of UBS AG or for other strategic purposes. They include all subsidiaries directly held by UBS AG through which UBS AG conducts its business on a global basis. The investments are measured individually and carried at cost less impairment. The carrying amount is tested for impairment annually and when indicators of a potential decrease in value exist, which include significant operating losses incurred or a severe depreciation of the currency in which the investment is denominated. If an investment in a subsidiary is impaired, its value is generally written down to the net asset value. Subsequent recoveries in value are recognized up to the original cost value based on either the increased net asset value or a value above the net asset value if, in the opinion of management, forecasts of future profitability provide sufficient evidence that a carrying amount above net asset value is supported. Management may exercise its discretion as to what extent and in which period a recovery in value is recognized.

Impairments of investments are presented as Impairment of investments in subsidiaries and other participations and reversals of impairments are presented as Extraordinary income in the income statement. Impairments and partial or full reversals of impairments for a subsidiary during the same annual period are determined on a net basis.

› Refer to Note 18 for more information

Hedge accounting for Investments in subsidiaries and other participations

UBS AG applies hedge accounting for certain investments in subsidiaries and other participations denominated in currencies other than the US dollar, which are designated as hedged items. For this purpose, foreign exchange (FX) derivatives, mainly FX forwards and FX swaps, are used and designated as hedging instruments.

The hedged risk is determined as the change in the carrying amount of the hedged item arising solely from changes in spot FX rates. Consequently, UBS AG only designates the spot element of the FX derivatives as hedging instruments. Changes in the fair value of the hedging instruments attributable to changes in forward points are not part of a hedge accounting designation. These amounts, therefore, do not form part of the effectiveness assessment and are recognized in Net trading income.

The effective portion of gains and losses of these FX derivatives is deferred on the balance sheet as Other assets or Other liabilities to the extent no change is recognized in the carrying amount of the hedged item arising from changes in spot FX rates. Otherwise the effective portion of gains and losses of these FX derivatives is matched with the corresponding valuation adjustments of the hedged item recorded in the income statement and recorded either as a reduction of Impairment of investments in subsidiaries and other participations or as Extraordinary income.

Revenue and expense transfers with other Group entities

UBS AG pays to and receives amounts from other Group entities in connection with revenue sharing arrangements, primarily related to the Investment Bank. Revenues transferred to and received from Group entities are settled in cash as hard revenue transfers paid or received. When the nature of the underlying transaction between UBS AG and the Group entity contains a single, clearly identifiable service element, related income and expenses are presented in the respective income statement line item, e.g., Fee and commission income from securities and investment business and other fee and commission income, Fee and commission expense or Net trading income. To the extent the nature of the underlying transaction contains various service elements and is not clearly attributable to a particular income statement line item, related income and expenses are presented in Sundry ordinary expenses.

UBS AG receives services from UBS Business Solutions AG, the main Group service company, mainly relating to Group Technology and Group Corporate Services, as well as certain other services from other Group entities. UBS AG also provides services to Group entities, mainly relating to real estate and selected other Group Services functions. Services received from and provided to Group entities are settled in cash as hard cost transfers paid or received. Hard cost transfers paid are presented within General and administrative expenses and hard cost transfers received are presented within Sundry ordinary income or Income from real estate holdings.

› Refer to Notes 5 and 7 for more information

Post-employment benefit plans

Swiss GAAP permits the use of IFRS or Swiss accounting standards for post-employment benefit plans, with the election made on a plan-by-plan basis.

UBS AG has elected to apply Swiss GAAP (FER 16) for the Swiss pension plan in its standalone financial statements. The requirements of Swiss GAAP are better aligned with the specific nature of Swiss pension plans, which are hybrid in that they combine elements of defined contribution and defined benefit plans but are treated as defined benefit plans under IFRS. Swiss GAAP requires that the employer contributions to the pension fund are recognized as Personnel expenses in the income statement. The employer contributions to the Swiss pension fund are determined as a percentage of contributory compensation. Furthermore, Swiss GAAP requires an assessment as to whether, based on the financial statements of the pension fund prepared in accordance with Swiss accounting standards (FER 26), an economic benefit to, or obligation of, UBS AG arises from the pension fund that is recognized in the balance sheet when conditions are met. Conditions for recording a pension asset or liability would be met if, for example, an employer contribution reserve is available or UBS AG is required to contribute to the reduction of a pension deficit (on an FER 26 basis).

UBS AG standalone financial statements (audited)

Note 2 Accounting policies (continued)

Key differences between Swiss GAAP and IFRS include the treatment of dynamic elements, such as future salary increases and future interest credits on retirement savings, which are not considered under the static method used in accordance with Swiss GAAP. Also, the discount rate used to determine the defined benefit obligation in accordance with IFRS is based on the yield of high-quality corporate bonds of the market in the respective pension plan country. The discount rate used in accordance with Swiss GAAP, i.e., the technical interest rate, is determined by the Pension Foundation Board, based on the expected returns of the Board’s investment strategy.

› Refer to Note 24 for more information

UBS AG has elected to apply IFRS (IAS 19) for its non-Swiss defined benefit plans. However, remeasurements of the defined benefit obligation and the plan assets are recognized in the income statement rather than directly in equity. For corresponding disclosures in accordance with IAS 19 requirements, refer to Note 27 to the consolidated financial statements of UBS AG.

› Refer to the UBS Group AG and UBS AG Annual Report 2021 for more information

Deferred taxes

Deferred tax assets are not recognized in UBS AG’s standalone financial statements. However, deferred tax liabilities may be recognized for taxable temporary differences. Changes in the deferred tax liability balance are recognized in the income statement.

Allowances and provisions for expected credit losses

UBS AG is required to apply an expected credit loss (ECL) approach for non-impaired financial instruments in its standalone financial statements in addition to the approach for impaired financial instruments.

For the substantial majority of non-impaired exposures in scope of the Swiss GAAP ECL requirements, UBS AG has chosen to apply the IFRS ECL approach that is also applied in its consolidated financial statements. These exposures include all financial assets measured at amortized cost under both Swiss GAAP and IFRS, fee and lease receivables, claims arising from Group-internal funding presented as Funding provided to significant regulated subsidiaries eligible as total loss-absorbing capacity, guarantees, irrevocable loan commitments, revolving revocable credit lines and forward starting reverse repurchase and securities borrowing agreements. Further information on the ECL approach under IFRS is provided in Note 1 to the consolidated financial statements of UBS AG.

› Refer to the UBS Group AG and UBS AG Annual Report 2021 for more information

In addition, for a small population of exposures in scope of the Swiss GAAP ECL requirements, which are not subject to ECL under IFRS due to classification and measurement differences, an alternative approach is applied. Where the Pillar 1 internal ratings-based (IRB) models are applied for measurement of credit risk, ECL for such exposures is calculated as the regulatory expected loss (EL), with an add-on for scaling up to the residual maturity of exposures maturing beyond the next 12 months. This approach is mainly applied for brokerage receivables presented within Due from customers, which generally mature within 12 months, and therefore are not subject to any add-on. For detailed information on regulatory EL, refer to the “Risk management and control” section in the UBS Group AG and UBS AG Annual Report 2021. For exposures for which the Pillar 1 standardized approach (SA) is applied for the measurement of credit risk, ECL is determined using a portfolio approach that derives conservative probability of default (PD) and loss given default (LGD) for the entire portfolio. This approach is mainly applied for a small number of loans to large corporate clients presented within Due from customers.

UBS applies a single definition of default for credit risk management purposes, regulatory reporting and ECL, with a counterparty classified as defaulted based on quantitative and qualitative criteria.

› Refer to “Credit policies for distressed assets” in the “Risk management and control” section of the UBS Group AG Annual Report 2021 for more information

An allowance for credit losses is reported as a decrease in the carrying amount of a financial asset. For an off-balance sheet item, such as a commitment, a provision for credit losses is reported in Provisions. Changes to allowances and provisions for credit losses are recognized in Credit loss (expense) / release.

› Refer to Note 14 for more information

Note 2 Accounting policies (continued)

Dispensations in the standalone financial statements

As UBS AG prepares consolidated financial statements in accordance with IFRS, UBS AG is exempt from various disclosures in the standalone financial statements. The dispensations include the management report, the statement of cash flows and various note disclosures, as well as the publication of full interim financial statements. As a Swiss issuer of debt, in order to validly issue debt throughout the year, UBS AG discloses interim mid-year financial information as per the requirements of Art. 1156 of the Swiss Code of Obligations in conjunction with Art. 652a thereof, including an income statement, a balance sheet and a note on the basis of accounting.

b) Changes in accounting policies

There were no significant changes in accounting policies during 2021.

Note 3a Net trading income by business

	USD million		CHF million
	For the year ended		For the year ended
	31.12.21	31.12.20	31.12.21	31.12.20
Investment Bank	3,588	4,235	3,263	3,981
of which: Global Markets	*3,632*	4,208	*3,303*	3,954
of which: Global Banking	*(44)*	27	*(40)*	27
Other business divisions and Group Functions	35	88	38	79
Total net trading income	3,623	4,323	3,301	4,060

2021 included a loss of USD 861 million (CHF 811 million) incurred in the first half of 2021 in the Investment Bank on a default by a US-based client of UBS AG’s prime brokerage business.

Note 3b Net trading income by underlying risk category

	USD million		CHF million
	For the year ended		For the year ended
	31.12.21	31.12.20	31.12.21	31.12.20
Equity instruments (including funds)	2,283	2,014	2,069	1,885
Foreign exchange instruments	978	1,305	896	1,231
Interest rate and credit instruments (including funds)	310	965	290	908
Other	51	40	47	37
Total net trading income	3,623	4,323	3,301	4,060
of which: net gains / (losses) from financial liabilities designated at fair value¹	*(4,318)*	1,661	*(3,929)*	1,950
1 Excludes fair value changes of hedges related to financial liabilities designated at fair value and foreign currency effects arising from translating foreign currency transactions into the respective functional currency, both of which are reported within Net trading income.

Note 4 Dividend income from investments in subsidiaries and other participations

The increase in Dividend income from investments in subsidiaries and other participations of USD 3,187 million (CHF 2,887 million) was mainly attributable to UBS Americas Holding LLC and UBS Europe SE, as in 2021 dividends of USD 3,788 million (CHF 3,490 million) and USD 1,363 million (CHF 1,249 million), respectively, were received, compared with dividends of USD 945 million (CHF 881 million) and USD 14 million (CHF 13 million), respectively, received in 2020. This was partly offset by lower dividends received from UBS Switzerland AG of USD 377 million (CHF 344 million) in 2021, compared with USD 1,382 million (CHF 1,298 million) in 2020.

UBS AG standalone financial statements (audited)

Note 5 Sundry ordinary income and expenses

	USD million		CHF million
	For the year ended		For the year ended
	31.12.21	31.12.20	31.12.21	31.12.20
Income from services provided to UBS Group AG or its subsidiaries¹	1,312	1,272	1,201	1,187
Other	30	16	28	15
Total sundry ordinary income	1,342	1,288	1,229	1,202
Expenses from revenue transfers to UBS Group AG or its subsidiaries	(289)	(418)	(262)	(389)
Other	(49)	(16)	(45)	(15)
Total sundry ordinary expenses	(338)	(434)	(308)	(404)
1 Services provided by UBS AG primarily related to Group Functions.

Note 6 Personnel expenses

	USD million		CHF million
	For the year ended		For the year ended
	31.12.21	31.12.20	31.12.21	31.12.20
Salaries	1,710	1,671	1,566	1,560
Variable compensation – performance awards	1,158	1,264	1,060	1,184
Variable compensation – other	53	51	48	48
Contractors	51	49	47	45
Social security	216	215	198	201
Post-employment benefit plans	(74)	195	(73)	190
of which: value adjustments for economic benefits or obligations from non-Swiss pension funds¹	*(208)*	61	*(195)*	64
Other personnel expenses	106	102	97	95
Total personnel expenses	3,221	3,545	2,943	3,323
1 Reflects the remeasurement of the defined benefit obligation and return on plan assets excluding amounts included in interest income for the non-Swiss defined benefit plans, for which IAS 19 is applied.

Note 7 General and administrative expenses¹

	USD million		CHF million
	For the year ended		For the year ended
	31.12.21	31.12.20	31.12.21	31.12.20
Real estate	461	511	422	477
Market data services	108	106	99	99
IT expenses	90	73	83	68
Outsourcing costs	83	86	76	81
Marketing & communication	29	31	27	28
Travel and entertainment	18	22	16	21
Fees to audit firms	13	14	12	13
of which: financial and regulatory audits	11	12	10	11
of which: audit-related services	2	2	2	2
of which: tax and other services	0	0	0	0
Other professional fees	108	127	99	118
Other G&A	2,715	2,693	*2,484*	2,510
of which: shared services costs charged by UBS Group AG or its subsidiaries	*2,524*	2,492	*2,310*	2,324
Total general and administrative expenses	3,625	3,662	3,317	3,413
1 In 2021, UBS AG changed the presentation of the line items within general and administrative expenses. Prior-period information reflects the new presentation structure, with no effect on Total general and administrative expenses.

Note 8 Impairment of investments in subsidiaries and other participations

UBS AG recognized an Impairment of investments in subsidiaries and other participations of USD 1,187 million (CHF 1,090 million) in 2021 compared with USD 134 million (CHF 127 million) in 2020. The increase mainly related to UBS Europe SE, as in 2021 an impairment of USD 1,063 million (CHF 973 million) was recorded, following a dividend received of USD 1,363 million (CHF 1,249 million).

Note 9 Changes in provisions for litigation, regulatory and similar matters, and other provisions

2021 included a USD 755 million (CHF 688 million) increase in litigation provisions for the French cross-border matter.

› Refer to Note 18 to the UBS AG consolidated financial statements in the UBS Group AG and UBS AG Annual Report 2021 for more information

Note 10 Extraordinary income and expenses

	USD million		CHF million
	For the year ended		For the year ended
	31.12.21	31.12.20	31.12.21	31.12.20
Reversal of impairments of and provisions for subsidiaries and other participations¹	161	258	151	240
Net gains from disposals of properties	114	168	104	155
Gains from disposals of subsidiaries and other participations	2	1	2	1
Other extraordinary income	5	8	5	8
Total extraordinary income	282	435	262	403
Total extraordinary expenses	1	0	1	0
1 Refer to Note 18 for more information.

Net gains from disposals of properties of USD 114 million (CHF 104 million) in 2021 mainly reflected gains on the sale of properties in Basel. Net gains from disposals of properties of USD 168 million (CHF 155 million) in 2020 mainly reflected a gain on the sale of a property in Geneva.

Note 11 Taxes

	USD million		CHF million
	For the year ended		For the year ended
	31.12.21	31.12.20	31.12.21	31.12.20
Income tax expense / (benefit)	307	455	279	421
of which: current	*282*	459	*256*	424
of which: deferred	25	(4)	23	(3)
Capital tax	8	21	7	20
Total tax expense / (benefit)	315	476	286	440

There was an income tax expense of USD 307 million (CHF 279 million) for 2021, as compared to an income tax expense of USD 455 million (CHF 421 million) for 2020. The income tax expense for 2021 was reduced by a benefit of USD 163 million (CHF 149 million) in respect of the utilization of tax losses carried forward, primarily in the US. The income tax expense for 2021 relates to UBS AG’s taxable profits that were earned in other locations.

The income tax expense for 2020 was reduced by a benefit of USD 164 million (CHF 153 million) in respect of the utilization of tax losses carried forward, primarily in the US. The income tax expense for 2020 relates to UBS AG’s taxable profits that were earned in other locations.

For 2021, the average tax rate, defined as income tax expense divided by the sum of operating profit and extraordinary income minus extraordinary expenses and capital tax, was 4.5% (2020: 9.1%).

UBS AG standalone financial statements (audited)

Note 12 Securities financing transactions

	USD billion		CHF billion
	31.12.21	31.12.20	31.12.21	31.12.20

On-balance sheet
Receivables from securities financing transactions, gross	139.9	125.4	127.6	111.1
Netting of securities financing transactions	(83.6)	(62.1)	(76.2)	(55.0)
Receivables from securities financing transactions, net	56.3	63.3	51.4	56.1

Payables from securities financing transactions, gross	106.6	86.5	97.2	76.6
Netting of securities financing transactions	(83.6)	(62.1)	(76.2)	(55.0)
Payables from securities financing transactions, net	23.0	24.4	21.0	21.6

Assets pledged as collateral in connection with securities financing transactions	58.8	64.4	53.6	57.0
of which: trading portfolio assets	*57.0*	61.5	*52.0*	54.5
of which: assets that may be sold or repledged by counterparties	*47.3*	54.0	*43.1*	47.8
of which: financial investments	*1.8*	2.9	*1.6*	2.6
of which: assets that may be sold or repledged by counterparties	*1.8*	2.9	*1.6*	2.6

Off-balance sheet
Fair value of assets received as collateral in connection with securities financing transactions	343.5	332.2	313.2	294.2
of which: repledged	*248.0*	222.1	*226.1*	196.7
of which: sold in connection with short sale transactions	*25.7*	28.8	*23.4*	25.5

Note 13a Collateral for loans and off-balance sheet transactions

31.12.21

31.12.20

Secured

Unsecured

Total

Secured

Unsecured

Total

Secured by collateral

Secured by

other credit

enhancements²

Secured by collateral

Secured by

other credit

enhancements²

USD million

Real estate

Other

collateral¹

Real estate

Other

collateral¹

On-balance sheet

Due from customers, gross³

85,928

192

35,901⁴

122,025

93,800

355

30,813⁴

124,970

Mortgage loans, gross

5,496

5,417

of which: residential mortgages

4,233

4,538

of which: office and business premises mortgages

671

715

of which: industrial premises mortgages

454

of which: other mortgages

138

111

Funding provided to significant regulated subsidiaries eligible as total loss-absorbing capacity

27,561

26,406

Total on-balance sheet, gross

5,500

85,928

192

63,463

155,083

5,419

93,800

355

57,218

156,793

Allowances

(4)

(78)

(167)

(249)

(12)

(9)

(0)

(417)

(437)

Total on-balance sheet, net

5,496

85,850

192

63,296

154,834

5,407

93,791

355

56,802

156,356

Off-balance sheet

Contingent liabilities, gross

8,190

1,093

9,762

19,046

5,813

1,287

7,517

14,617

Irrevocable commitments, gross

253

8,192

226

8,723

17,394

239

7,526

212

11,359

19,337

Forward starting reverse repurchase and securities borrowing transactions

24,559

17,265

Liabilities for calls on shares and other equities

Total off-balance sheet

253

40,941

1,320

18,490

61,005

240

30,604

1,499

18,881

51,224

1 Mainly comprised of cash and securities. 2 Includes guarantees. 3 Includes prime brokerage margin lending receivables and prime brokerage receivables relating to securities financing transactions. 4 Primarily comprised of amounts due from subsidiaries and other Group entities.

Note 13a Collateral for loans and off-balance sheet transactions (continued)

31.12.21

31.12.20

Secured

Unsecured

Total

Secured

Unsecured

Total

Secured by collateral

Secured by

other credit

enhancements²

Secured by collateral

Secured by

other credit

enhancements²

CHF million

Real estate

Other

collateral¹

Real estate

Other

collateral¹

On-balance sheet

Due from customers, gross³

78,338

175

32,730⁴

111,247

83,063

315

27,286⁴

110,665

Mortgage loans, gross

5,011

4,797

of which: residential mortgages

3,859

4,019

of which: office and business premises mortgages

612

633

of which: industrial premises mortgages

414

of which: other mortgages

126

Funding provided to significant regulated subsidiaries eligible as total loss-absorbing capacity

25,127

23,383

Total on-balance sheet, gross

5,014

78,338

175

57,857

141,384

4,799

83,063

315

50,669

138,845

Allowances

(3)

(71)

(152)

(227)

(10)

(7)

(0)

(370)

(387)

Total on-balance sheet, net

5,011

78,267

175

57,705

141,157

4,788

83,056

315

50,299

138,458

Off-balance sheet

Contingent liabilities, gross

7,467

997

8,900

17,364

5,147

1,140

6,657

12,944

Irrevocable commitments, gross

231

7,468

206

7,953

15,858

212

6,665

188

10,059

17,123

Forward starting reverse repurchase and securities borrowing transactions

22,390

15,289

Liabilities for calls on shares and other equities

Total off-balance sheet

231

37,325

1,203

16,857

55,616

212

27,101

1,328

16,720

45,361

Note 13b Impaired financial instruments

	31.12.21				31.12.20
USD million	Gross impaired financial instruments	Allowances and provisions	Estimated liquidation proceeds of collateral	Net impaired financial instruments	Gross impaired financial instruments	Allowances and provisions	Estimated liquidation proceeds of collateral	Net impaired financial instruments
Amounts due from customers	395	147	184	63	566	277	220	68
Mortgage loans	118	4	114	0	180	11	167	1
Other assets	1	1	0	0	2	2	0	0
Guarantees and loan commitments	14	0	14	0	43	7	24	11
Total impaired financial instruments¹	528	153	312	63	790	298	412	80
1 Impaired financial instruments are financial assets and off-balance sheet positions subject to incurred credit losses, also referred to as stage 3 positions.

	31.12.21				31.12.20
CHF million	Gross impaired financial instruments	Allowances and provisions	Estimated liquidation proceeds of collateral	Net impaired financial instruments	Gross impaired financial instruments	Allowances and provisions	Estimated liquidation proceeds of collateral	Net impaired financial instruments
Amounts due from customers	360	134	168	58	501	246	195	60
Mortgage loans	108	4	104	0	159	10	148	1
Other assets	1	1	0	0	2	1	0	0
Guarantees and loan commitments	13	0	13	0	38	6	22	10
Total impaired financial instruments¹	481	139	285	58	699	264	364	71
1 Impaired financial instruments are financial assets and off-balance sheet positions subject to incurred credit losses, also referred to as stage 3 positions.

UBS AG standalone financial statements (audited)

Note 14 Allowances and provisions

Total allowances and provisions of USD 2,395 million (CHF 2,184 million) as of 31 December 2021 included allowances and provisions for credit losses of USD 336 million (CHF 307 million). Total allowances and provisions of USD 1,859 million (CHF 1,647 million) as of 31 December 2020 included allowances and provisions for credit losses of USD 556 million (CHF 492 million).

The 2021 decrease in allowances and provisions for credit losses of USD 219 million (CHF 185 million) includes total credit loss releases of USD 78 million (CHF 72 million), as well as USD 141 million (CHF 113 million) for write-offs and other movements that did not impact the income statement. Total credit loss releases in 2021 also included a net release of USD 6 million (CHF 5 million) on positions subject to incurred credit losses (also referred to as stage 3 losses), primarily related to Global Wealth Management.

Note 14a Allowances for credit losses

USD million	Balance as of 31.12.20	Increase recognized in the income statement	Release recognized in the income statement	Write-offs	Recoveries and past due interest	Reclassifications / other	Foreign currency translation	Balance as of 31.12.21
Default risk relating to on-balance sheet exposures	448	1	(49)	(135)	1	0	(8)	259
of which: incurred credit losses	291	1	0	(135)	1	0	(6)	*153*
of which: expected credit losses¹	157	0	(49)	0	0	0	(2)	*106*
Total allowances for credit losses	448	1	(49)	(135)	1	0	(8)	259
1 Includes ECL allowances where an approach other than IFRS ECL is applied of USD 4 million as of 31 December 2021 (USD 4 million as of 31 December 2020). Refer to Note 2 for more information.

CHF million	Balance as of 31.12.20	Increase recognized in the income statement	Release recognized in the income statement	Write-offs	Recoveries and past due interest	Reclassifications / other	Foreign currency translation	Balance as of 31.12.21
Default risk relating to on-balance sheet exposures	397	1	(45)	(123)	3	0	6	237
of which: incurred credit losses	258	1	0	(123)	3	0	1	*139*
of which: expected credit losses¹	139	0	(45)	0	0	0	5	98
Total allowances for credit losses	397	1	(45)	(123)	3	0	6	237
1 Includes ECL allowances where an approach other than IFRS ECL is applied of CHF 4 million as of 31 December 2021 (CHF 4 million as of 31 December 2020). Refer to Note 2 for more information.

Note 14b Provisions

USD million	Balance as of 31.12.20	Increase recognized in the income statement	Release recognized in the income statement	Provisions used in conformity with designated purpose	Recoveries	Reclassifications	Foreign currency translation / other²	Balance as of 31.12.21
Default risk related to off-balance sheet items and credit lines	108	0	(30)	0	0	0	(1)	77
of which: incurred credit losses	7	0	(7)	0	0	0	0	0
of which: expected credit losses	101	0	(23)	0	0	0	(1)	77
Litigation, regulatory and similar matters	971	867	(7)	(69)	0	0	(52)	1,711
Restructuring	100	54	(21)	(66)	0	0	4	70
Real estate¹	117	34	(4)	(32)	0	0	15	130
Employee benefits	29	5	(7)	0	0	0	(1)	25
Deferred taxes	46	25	0	0	0	0	0	71
Other	40	24	(10)	(2)	0	0	0	52
Total provisions	1,411	1,009	(79)	(169)	0	0	(36)	2,136
1 Includes provisions for onerous contracts of USD 67 million as of 31 December 2021 (31 December 2020: USD 53 million) and reinstatement cost provisions for leasehold improvements of USD 63 million as of 31 December 2021 (31 December 2020: USD 64 million). 2 Other mainly includes changes related to capitalized reinstatement costs and unwind of discounting.

CHF million	Balance as of 31.12.20	Increase recognized in the income statement	Release recognized in the income statement	Provisions used in conformity with designated purpose	Recoveries	Reclassifications	Foreign currency translation / other²	Balance as of 31.12.21
Default risk related to off-balance sheet items and credit lines	95	0	(28)	0	0	0	2	70
of which: incurred credit losses	6	0	(6)	0	0	0	0	0
of which: expected credit losses	89	0	(21)	0	0	0	2	70
Litigation, regulatory and similar matters	860	791	(6)	(63)	0	0	(22)	1,560
Restructuring	88	49	(19)	(61)	0	0	7	64
Real estate¹	104	32	(3)	(29)	0	0	16	119
Employee benefits	25	4	(6)	0	0	0	0	23
Deferred taxes	41	23	0	0	0	0	1	65
Other	36	22	(9)	(2)	0	0	1	47
Total provisions	1,250	921	(73)	(155)	0	0	4	1,947
1 Includes provisions for onerous contracts of CHF 61 million as of 31 December 2021 (31 December 2020: CHF 47 million) and reinstatement cost provisions for leasehold improvements of CHF 58 million as of 31 December 2021 (31 December 2020: CHF 57 million). 2 Other mainly includes changes related to capitalized reinstatement costs and unwind of discounting.

UBS AG standalone financial statements (audited)

Note 14c Development of ECL allowances and provisions

USD million	Total	Stage 1	Stage 2	Stage 3
Balance as of 31 December 2020	(556)	(193)	(65)	(298)
Net movement from new and derecognized transactions¹	15	6	9	0
of which: Large corporate clients	1	(8)	9	0
of which: Financial intermediaries and hedge funds	14	14	0	0
Remeasurements with stage transfers²	(2)	1	7	(10)
of which: Large corporate clients	(1)	1	7	(8)
of which: SME clients	1	0	0	0
of which: Financial intermediaries and hedge funds	(2)	0	0	(2)
Remeasurements without stage transfers³	33	14	4	15
of which: Private clients with mortgages	(1)	0	0	(1)
of which: Real estate financing	(1)	(1)	0	0
of which: Large corporate clients	9	(5)	3	10
of which: SME clients	4	(1)	0	5
of which: Financial intermediaries and hedge funds	22	20	0	1
Model changes⁴	32	23	9	0
Total ECL allowance movements with profit or loss impact	78	44	29	6
Movements without profit or loss impact (write-off, FX and other)⁵	142	1	0	140
Balance as of 31 December 2021	(336)	(148)	(35)	(153)
1 Represents the increase and decrease in allowances and provisions resulting from financial instruments (including guarantees and facilities) that were newly originated, purchased or renewed and from the final derecognition of loans or facilities on their maturity date or earlier. 2 Represents the remeasurement between 12-month and lifetime ECL due to stage transfers. 3 Represents the change in allowances and provisions related to changes in model inputs or assumptions, including changes in forward-looking macroeconomic conditions, changes in the exposure profile, PD and LGD changes, and unwinding of the time value. 4 Represents the change in the allowances and provisions related to changes in models and methodologies. 5 Represents the decrease in allowances and provisions resulting from write-offs of the ECL allowance against the gross carrying amount when all or part of a financial asset is deemed uncollectible or forgiven and movements in foreign exchange rates.

CHF million	Total	Stage 1	Stage 2	Stage 3
Balance as of 31 December 2020	(492)	(172)	(57)	(264)
Net movement from new and derecognized transactions¹	14	5	8	0
of which: Large corporate clients	0	(8)	8	0
of which: Financial intermediaries and hedge funds	13	13	0	0
Remeasurements with stage transfers²	(2)	1	7	(9)
of which: Large corporate clients	(1)	1	7	(8)
of which: SME clients	1	0	0	0
of which: Financial intermediaries and hedge funds	(2)	0	0	(2)
Remeasurements without stage transfers³	31	13	3	14
of which: Private clients with mortgages	(1)	0	0	(1)
of which: Real estate financing	0	0	0	0
of which: Large corporate clients	8	(4)	3	10
of which: SME clients	4	(1)	0	4
of which: Financial intermediaries and hedge funds	20	19	0	1
Model changes⁴	29	21	9	0
Total ECL allowance movements with profit or loss impact	72	41	27	5
Movements without profit or loss impact (write-off, FX and other)⁵	113	(6)	(2)	120
Balance as of 31 December 2021	(307)	(136)	(32)	(139)
1 Represents the increase and decrease in allowances and provisions resulting from financial instruments (including guarantees and facilities) that were newly originated, purchased or renewed and from the final derecognition of loans or facilities on their maturity date or earlier. 2 Represents the remeasurement between 12-month and lifetime ECL due to stage transfers. 3 Represents the change in allowances and provisions related to changes in model inputs or assumptions, including changes in forward-looking macroeconomic conditions, changes in the exposure profile, PD and LGD changes, and unwinding of the time value. 4 Represents the change in the allowances and provisions related to changes in models and methodologies. 5 Represents the decrease in allowances and provisions resulting from write-offs of the ECL allowance against the gross carrying amount when all or part of a financial asset is deemed uncollectible or forgiven and movements in foreign exchange rates.

Note 14d Balance sheet and off-balance sheet positions subject to ECL

The tables below provide ECL exposure and ECL allowance and provision information about financial instruments and certain non-financial instruments that are subject to ECL.

USD million	31.12.21
	Carrying amount¹				ECL allowances
Financial instruments measured at amortized cost	Total	Stage 1	Stage 2	Stage 3	Total	Stage 1	Stage 2	Stage 3
Cash and balances at central banks	53,760	53,760	0	0	0	0	0	0
Due from banks	33,330	33,330	0	0	(5)	(5)	(0)	0
Receivables from securities financing transactions	56,336	56,336	0	0