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MD&A - Capital management
 12 Months Ended
Dec. 31, 2021
Entity [Table]  
Disclosure Of Objectives Policies And Processes For Managing Capital Explanatory
Audited |
 
An adequate level of
 
total loss-absorbing capacity (TLAC)
meeting both internal assessment and regulatory requirements
 
is
a prerequisite for conducting our business activities.
Audited
 
|
 
We
 
manage
 
our
 
balance
 
sheet,
 
RWA,
 
leverage
 
ratio
denominator (LRD) and TLAC ratio levels based on our regulatory
requirements
 
and
 
within
 
our
 
internal
 
limits
 
and
 
targets.
 
Our
strategic focus
 
is on
 
achieving an optimal
 
attribution and
 
use of
financial
 
resources
 
between
 
our
 
business
 
divisions
 
and
 
Group
Functions, as well
 
as between our legal
 
entities, while remaining
within
 
the
 
limits
 
defined
 
for
 
the
 
Group
 
and
 
allocated
 
to
 
the
business
 
divisions
 
by
 
the
 
Board
 
of
 
Directors
 
(the
 
BoD).
 
These
resource
 
allocations, in
 
turn, affect
 
business plans
 
and earnings
projections, which are reflected in our capital plans.
The
 
annual
 
strategic
 
planning
 
process
 
includes
 
a
 
capital
-
planning component that is
 
key in defining our
 
capital targets. It
is based on
 
an attribution of
 
Group RWA and
 
LRD internal limits
to the business divisions.
 
Limits and
 
targets are
 
established at
 
the Group
 
and business
division levels, and
 
are approved by
 
the BoD at
 
least annually. In
the target-setting process,
 
we take into
 
account the current
 
and
potential future TLAC
 
requirements, our aggregate
 
risk exposure
in
 
terms
 
of
 
capital-at-risk,
 
the
 
assessment
 
by
 
rating
 
agencies,
comparisons
 
with
 
peers
 
and
 
the
 
effect
 
of
 
expected
 
accounting
policy changes.
Regulatory capital and movement [text block]
Reconciliation of IFRS equity to Swiss SRB common equity tier 1 capital
USD million
31.12.21
31.12.20
Total IFRS equity
61,002
59,765
Equity attributable to non-controlling interests
(340)
(319)
Defined benefit plans, net of tax
(270)
(41)
Deferred tax assets recognized for tax loss carry-forwards
(4,565)
(5,617)
Deferred tax assets on temporary differences, excess over threshold
(49)
(5)
Goodwill, net of tax
1
(5,838)
(6,319)
Intangible assets, net of tax
(180)
(296)
Compensation-related components (not recognized in net
 
profit)
(1,700)
(1,349)
Expected losses on advanced internal ratings-based portfolio less provisions
(482)
(330)
Unrealized (gains) / losses from cash flow hedges, net of tax
(628)
(2,321)
Own credit related to gains / losses on financial liabilities
 
measured at fair value that existed at the balance sheet date
315
382
Own credit related to gains / losses on derivative financial instruments
 
that existed at the balance sheet date
(50)
(45)
Unrealized gains related to debt instruments at fair value through
 
OCI, net of tax
(68)
(152)
Prudential valuation adjustments
(167)
(150)
Accruals for dividends to shareholders
(1,700)
(1,314)
Capital reserve for potential share repurchases
(2,000)
Other
1
0
Total common equity tier 1 capital
45,281
39,890
1 Includes goodwill
 
related to significant
 
investments in financial
 
institutions of USD
22
 
million as of 31
 
December 2021 (31
 
December 2020: USD
413
 
million) presented on
 
the balance sheet
 
line Investments in
associates.
Audited |
 
Our
 
CET1
 
capital mainly
 
consists of:
 
share
 
capital; share
premium,
 
which
 
primarily
 
consists
 
of
 
additional
 
paid-in
 
capital
related
 
to
 
shares
issued;
 
and
 
retained
 
earnings.
 
A
 
detailed
reconciliation of
 
IFRS
 
equity
 
to
 
CET1
 
capital
 
is
 
provided
 
in
 
the
“Reconciliation of IFRS equity to Swiss
 
SRB common equity tier 1
capital” table.
 
Our
 
CET1
 
capital
 
increased
 
by
 
USD
5.4
 
billion
 
to
 
USD
45.3
billion as
 
of 31 December
 
2021, mainly
 
as a
 
result of
 
operating
profit before
 
tax of
 
USD
9.5
 
billion, a
 
USD
0.5
 
billion increase
 
in
eligible deferred
 
tax assets
 
on temporary
 
differences, a
 
USD
0.4
billion decrease
 
in deduction
 
of goodwill
 
resulting from
 
the sale
of
 
our
 
remaining
 
minority
 
investment
 
in
 
Clearstream
 
Fund
Centre AG (previously Fondcenter
 
AG) and
 
an increase of
 
USD
0.2
billion related
 
to the
 
launch of
 
our new
 
operational partnership
entity
 
with
 
Sumitomo
 
Mitsui
 
Trust
 
Holdings,
 
Inc.
 
These
 
effects
were partly offset by dividend accruals of USD
1.7
 
billion, current
tax expenses
 
of USD
1.6
 
billion, share
 
repurchases under
 
our share
repurchase program of USD
0.6
 
billion, negative foreign currency
effects of
 
USD
0.6
 
billion, compensation- and
 
own share-related
capital components of USD
0.4
 
billion, and negative effects from
defined benefit plans of USD
0.2
 
billion.
Our
 
share
 
repurchases
 
in
 
2021
 
decreased
 
CET1
 
capital
 
by
USD
0.6
 
billion,
 
reflecting
 
shares
 
repurchased
 
under
 
our
 
share
repurchase programs
 
of USD
2.6
 
billion, partly
 
offset by
 
the use
of the
 
capital reserve
 
for potential share
 
repurchases of
 
USD
2.0
billion.
 
The
 
capital
 
reserve
 
for
 
potential
 
share
 
repurchases
 
was
fully utilized during 2021.
Our loss-absorbing additional tier 1 (AT1) capital decreased by
USD
1.1
 
billion
 
to
 
USD
15.2
 
billion,
 
mainly
 
due
 
to
 
two
 
calls
 
of
USD
2.6
 
billion
 
of
 
AT1
 
capital
 
instruments
 
denominated
 
in
 
US
dollars
 
and
 
foreign
 
currency
 
translation
 
and
 
interest
 
rate
 
risk
hedge effects,
 
partly offset
 
by two issuances
 
of USD
2.25
 
billion
of AT1 capital instruments denominated in US dollars.
Audited |
 
Our total gone
 
concern loss-absorbing capacity decreased
by USD 1.3
 
billion to
 
USD
44.3
 
billion as
 
of 31 December
 
2021 and
included
 
USD
41.1
 
billion
 
of
 
TLAC-eligible
 
senior
 
unsecured
debt.
UBS AG  
Entity [Table]  
Regulatory capital and movement [text block]
Reconciliation of IFRS equity to Swiss SRB common equity tier 1 capital (UBS Group AG vs UBS AG consolidated)
As of 31.12.21
USD million
UBS Group AG
(consolidated)
UBS AG
(consolidated)
Difference
Total IFRS equity
61,002
58,442
2,559
Equity attributable to non-controlling interests
(340)
(340)
Defined benefit plans, net of tax
(270)
(270)
Deferred tax assets recognized for tax loss carry-forwards
(4,565)
(4,565)
Deferred tax assets on temporary differences, excess over threshold
(49)
(350)
302
Goodwill, net of tax
(5,838)
(5,838)
Intangible assets, net of tax
(180)
(180)
Compensation-related components (not recognized in net
 
profit)
(1,700)
(1,700)
Expected losses on advanced internal ratings-based portfolio less provisions
(482)
(482)
Unrealized (gains) / losses from cash flow hedges, net of tax
(628)
(628)
Own credit related to gains / losses on financial liabilities
 
measured at fair value that existed at the balance sheet date
315
315
Own credit related to gains / losses on derivative financial instruments
 
that existed at the balance sheet date
(50)
(50)
Unrealized gains related to debt instruments at fair value through
 
OCI, net of tax
(68)
(68)
Prudential valuation adjustments
(167)
(167)
Accruals for dividends to shareholders
(1,700)
(4,200)
2,500
Other
1
(24)
25
Total common equity tier 1 capital
45,281
41,594
3,687