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Goodwill and intangible assets
 12 Months Ended
Dec. 31, 2023
Disclosure Goodwill And Intangible Assets [Line Items]  
Disclosure Of Intangible Assets And Goodwill Explanatory
 
Note 13
 
Goodwill and intangible assets
Introduction
UBS performs an impairment test on its goodwill assets
 
on an annual basis or when indicators of impairment exist.
 
UBS considers Asset Management,
 
as reported in Note 3a,
 
as a separate cash-generating unit (a CGU),
 
as that is the level
at which the performance of investment (and the
 
related goodwill) is reviewed and assessed by management. Given that
a significant amount of goodwill in Global Wealth Management relates to the acquisition of PaineWebber Group, Inc. in
2000, which
 
mainly affected
 
the Americas
 
portion of
 
the business,
 
this goodwill
 
remains separately
 
monitored by
 
the
Americas,
 
despite
 
the
 
formation
 
of
 
Global
 
Wealth
 
Management
 
in
 
2018.
 
Therefore,
 
goodwill
 
for
 
Global
 
Wealth
Management
 
is
 
separately
 
considered
 
for
 
impairment
 
at
 
the
 
level
 
of
 
two
 
CGUs:
 
Americas;
 
and
 
Switzerland
 
and
International (consisting of EMEA, Asia Pacific and Global).
The impairment
 
test is
 
performed for
 
each CGU
 
to which
 
goodwill is
 
allocated by
 
comparing the
 
recoverable amount
with the carrying amount of the respective CGU. UBS determines
 
the recoverable amount of the respective CGUs
 
based
on their value in use. An impairment charge is recognized
 
if the carrying amount exceeds the recoverable amount.
The acquisition
 
of the
 
Credit Suisse
 
Group in
 
2023 resulted
 
in negative
 
goodwill,
 
which was
 
recognized in
 
the income
statement on
 
the date of
 
the acquisition. No
 
goodwill related to
 
the acquisition of
 
the Credit
 
Suisse Group
 
was recognized
on the balance sheet.
›
Refer to Note 2 for more information about the acquisition
 
of the Credit Suisse Group
As
 
of
 
31 December
 
2023,
 
total
 
goodwill
 
recognized
 
on
 
the
 
balance
 
sheet
 
was
 
USD
6.0
bn,
 
of
 
which
 
USD
3.7
bn
 
was
carried by
 
the Global
 
Wealth Management
 
Americas CGU,
 
USD
1.2
bn was
 
carried by
 
the Global
 
Wealth Management
Switzerland and International CGU, and USD
1.1
bn was carried by Asset Management. Based on the impairment testing
methodology described
 
below, UBS
 
concluded that
 
the goodwill
 
balances as
 
of 31 December
 
2023 allocated
 
to these
CGUs were not impaired. For each
 
of the CGUs, the recoverable amount
 
substantially exceeded the carrying value
 
as of
31 December
 
2023
 
and
 
there
 
was
 
no
 
indication
 
of
 
a
 
significant
 
risk
 
of
 
goodwill
 
impairment
 
based
 
on
 
the
 
testing
performed as of 31 December 2023.
Methodology for goodwill impairment testing
The recoverable
 
amounts are
 
determined using
 
a discounted
 
cash flow
 
model, which
 
has been
 
adapted to
 
use inputs
that consider features of
 
the banking business and its
 
regulatory environment.
 
The recoverable amount of
 
a CGU is the
sum of
 
the discounted
 
earnings attributable
 
to shareholders
 
from the
 
first three
 
forecast years
 
and the
 
terminal value,
adjusted for the effect of the capital
 
assumed to be needed over the next
 
three years and to support growth beyond that
period. The
 
terminal value,
 
which covers
 
all periods
 
beyond the
 
third year,
 
is calculated
 
on the
 
basis of
 
the forecast
 
of
the third-year
 
profit, the
 
discount rate
 
and the
 
long-term growth
 
rate, as well
 
as the
 
implied perpetual
 
capital growth.
For
 
the
 
Global
 
Wealth
 
Management
 
Americas
 
CGU,
 
the
 
methodology
 
is
 
consistently
 
applied,
 
however,
 
the
 
forecast
period was extended from three to five years (with a
 
terminal value thereafter) in 2023 to provide for the CGU’s specific
planning
 
assumptions,
 
namely
 
the
 
ongoing
 
investments
 
in
 
the
 
core
 
banking
 
infrastructure
 
in
 
the
 
US
 
to
 
enhance
 
the
product capabilities and offerings in this market
 
in the mid-term. The extension of the forecast
 
period from three to five
years did not trigger,
 
defer or avoid an impairment of goodwill as of 31
 
December 2023.
The carrying amount for each
 
CGU is determined by reference
 
to the Group’s equity attribution
 
framework. Within this
framework,
 
UBS
 
attributes
 
equity
 
to
 
the
 
businesses
 
on
 
the
 
basis
 
of
 
their
 
risk-weighted
 
assets
 
and
 
leverage
 
ratio
denominator (both
 
metrics include
 
resource allocations
 
from Group
 
Items to the
 
business divisions),
 
their goodwill
 
and
their
 
intangible
 
assets,
 
as
 
well
 
as
 
attributed
 
equity
 
related
 
to
 
certain
 
common
 
equity
 
tier 1
 
deduction
 
items.
 
The
framework
 
is
 
primarily
 
used
 
for
 
the
 
purpose
 
of
 
measuring
 
the
 
performance
 
of
 
the
 
businesses
 
and
 
includes
 
certain
management assumptions. Attributed equity
 
is equal to
 
the capital a
 
CGU requires to
 
conduct its business
 
and is currently
considered a reasonable
 
approximation of the
 
carrying amount of
 
the CGUs. The
 
attributed equity methodology
 
is also
applied in the
 
business planning process,
 
the inputs from
 
which are used
 
in calculating the
 
recoverable amounts
 
of the
respective CGU.
Assumptions
Valuation parameters
 
used within the Group’s
 
impairment test model
 
are linked to
 
external market information, where
applicable. The
 
model used
 
to determine
 
the recoverable
 
amount is
 
most sensitive
 
to changes
 
in the
 
forecast earnings
available to shareholders in years one to three, to changes in the discount rates and to changes in the long-term growth
rate. The applied
 
long-term growth
 
rate is based
 
on long-term economic
 
growth rates for
 
different regions
 
worldwide.
Earnings available
 
to
 
shareholders
 
are
 
estimated
 
on
 
the
 
basis of
 
forecast
 
results,
 
which
 
are
 
part
 
of the
 
business
 
plan
approved by the Board of Directors.
The
 
discount
 
rates
 
are
 
determined
 
by
 
applying
 
a
 
capital
 
asset
 
pricing
 
model-based
 
approach,
 
as
 
well
 
as
 
considering
quantitative and qualitative inputs from both internal and external analysts and the view of management. They also take
into account
 
regional differences
 
in risk-free
 
rates at
 
the level of
 
the individual
 
CGUs. In line
 
with discount
 
rates, long-
term growth rates are determined at the regional level based
 
on nominal GDP growth rate forecasts.
Key
 
assumptions
 
used
 
to
 
determine
 
the
 
recoverable
 
amounts
 
of
 
each
 
CGU
 
are
 
tested
 
for
 
sensitivity
 
by
 
applying
 
a
reasonably possible change to
 
those assumptions. Forecast earnings available
 
to shareholders were changed by
20
%, the
discount rates
 
were changed by
1.5
 
percentage points, and
 
the long-term
 
growth rates
 
were changed
 
by
0.75
 
percentage
points. Under all scenarios,
 
reasonably possible changes
 
in key assumptions did
 
not result in an
 
impairment of goodwill
or
 
intangible
 
assets
 
reported
 
by
 
Global
 
Wealth
 
Management
 
Americas,
 
Global
 
Wealth
 
Management
 
Switzerland
 
and
International, and Asset Management.
 
If the estimated earnings
 
and other assumptions in future periods
 
deviate from the current outlook,
 
the value of goodwill
attributable to
 
Global Wealth
 
Management Americas,
 
Global Wealth
 
Management
 
Switzerland and
 
International, and
Asset Management may become impaired in the
 
future, giving rise to losses
 
in the income statement. Recognition of any
impairment of
 
goodwill would
 
reduce IFRS
 
Accounting Standards
 
equity and
 
net profit.
 
It would
 
not affect
 
cash flows
and,
 
as
 
goodwill
 
is
 
required
 
to
 
be
 
deducted
 
from
 
capital
 
under
 
the
 
Basel III
 
capital
 
framework,
 
no
 
effect
 
would
 
be
expected on the Group’s capital ratios.
 
 
 
 
 
 
 
Discount and growth rates
Discount rates
Growth rates
In %
31.12.23
31.12.22
31.12.23
31.12.22
Global Wealth Management Americas
9.5
10.5
3.8
3.8
Global Wealth Management Switzerland and International
9.5
9.4
3.4
3.6
Asset Management
9.0
9.5
3.3
3.4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
USD m
Goodwill
Intangible
assets
1
2023
2022
Historical cost
Balance at the beginning of the year
6,043
1,598
7,641
7,739
Acquisition of the Credit Suisse Group
2
0
1,287
1,287
0
Additions
0
6
6
0
Disposals
3
(10)
(30)
(40)
(22)
Foreign currency translation
10
102
112
(76)
Balance at the end of the year
6,043
2,964
9,006
7,641
Accumulated amortization and impairment
Balance at the beginning of the year
0
1,374
1,374
1,360
Amortization
134
134
26
Impairment / (reversal of impairment)
0
0
0
(1)
Disposals
3
0
(30)
(30)
0
Foreign currency translation
0
13
13
(11)
Balance at the end of the year
0
1,491
1,491
1,374
Net book value at the end of the year
6,043
1,473
7,515
6,267
of which: Global Wealth Management Americas
3,712
36
3,748
3,740
of which: Global Wealth Management Switzerland and International
1,182
55
1,236
1,225
of which: Personal & Corporate Banking
0
908
908
0
of which: Asset Management
1,149
0
1,149
1,167
of which: Investment Bank
0
135
135
135
of which: Non-core and Legacy
0
339
339
0
1 Intangible assets
 
mainly include customer
 
relationships, core
 
deposits, contractual
 
rights and the
 
fully amortized branch
 
network intangible asset
 
recognized in connection
 
with the acquisition
 
of PaineWebber
Group, Inc. in 2000.
 
2 Refer to Note 2 for more information about the acquisition of the Credit Suisse Group.
 
3 Reflects the derecognition of goodwill allocated to business and intangible assets held by entities
that have been disposed of. Refer to Note 30 for more information.
The table below presents estimated aggregated
 
amortization expenses for intangible assets.
 
 
 
 
 
 
 
 
 
USD m
Intangible assets
Estimated aggregated amortization expenses for:
2024
211
2025
194
2026
181
2027
173
2028
161
Thereafter
551
Not amortized due to indefinite useful life
3
Total
1,473