6-K
UBS AG (AMUB)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 6-K
REPORT OF FOREIGN PRIVATE
ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
Date: October 30, 2024
UBS Group AG
(Registrant's
Name)
Bahnhofstrasse 45, 8001 Zurich, Switzerland
(Address of principal executive office)
Commission File Number: 1-36764
UBS AG
(Registrant's
Name)
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Aeschenvorstadt 1, 4051 Basel, Switzerland
(Address of principal executive offices)
Commission File Number: 1-15060
Indicate by check mark whether the registrants file or will file annual
reports under cover of Form 20-F or Form
40-
F.
Form 20-F
☒
Form 40-F
☐
This Form 6-K consists of the Third Quarter 2024 Report of UBS Group
AG, which appears immediately following
this page.
UBS
Group
Third quarter
2024 report
Corporate calendar UBS Group
Publication of the UBS Group fourth quarter 2024
report
Tuesday,
4 February 2025
Information about future publication dates is available
at
ubs.com/global/en/investor-relations/events/calendar.html
Publication of the UBS AG third quarter 2024 report
Friday, 8 November 2024
Contacts
Switchboards
For all general inquiries
ubs.com/contact
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8000
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UBS’s Investor Relations team manages
relationships with institutional investors,
research analysts and credit rating agencies.
ubs.com/investors
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relationships with global media and
journalists.
ubs.com/media
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ubs-media-relations@ubs.com
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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
PO 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
PO Box, CH-8098 Zurich, Switzerland
sh-shareholder-services@ubs.com
Zurich +41-44-235 6652
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For global registered share-related
inquiries in the US.
Computershare Trust Company NA
PO Box 43006
Providence, RI, 02940-3006, USA
Shareholder online inquiries:
www.computershare.com/us/
investor-inquiries
Shareholder website:
computershare.com/investor
Calls from the US
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Calls from outside the US
+1-781-575-2623
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+1-201-680-6610
Imprint
Publisher: UBS Group AG, Zurich, Switzerland | ubs.com
Language: English
© UBS 2024. The key symbol and UBS are among
the registered and unregistered
trademarks of UBS. All rights reserved.
1.
UBS
Group
4
Recent developments
6
Group performance
2.
UBS business divisions
and Group Items
18
Global Wealth Management
22
Personal & Corporate Banking
25
Asset Management
28
Investment Bank
31
Non-core and Legacy
33
Group Items
3.
Risk, capital, liquidity and funding,
and balance sheet
35
Risk management and control
40
Capital management
50
Liquidity and funding management
51
Balance sheet and off-balance sheet
54
Share information and earnings per share
4.
Consolidated
financial statements
56
UBS Group AG interim consolidated
financial statements (unaudited)
Appendix
97
Alternative performance measures
101
Abbreviations frequently used in
our financial reports
103
Information sources
104
Cautionary statement
UBS Group third quarter 2024 report
2
Terms used in this report, unless the context requires otherwise
“UBS”, “UBS Group”, “UBS Group
AG consolidated”, “Group”, “we”,
“us” and “our”
UBS Group AG and its consolidated subsidiaries
“UBS AG” and “UBS
AG consolidated”
UBS AG and its consolidated subsidiaries
“Credit Suisse AG” and “Credit
Suisse AG consolidated”
Credit Suisse AG and its consolidated subsidiaries
before the merger
with UBS AG
“Credit Suisse Group“ and “Credit Suisse Group
AG consolidated”
Pre-acquisition Credit Suisse Group
”Credit Suisse”
Credit Suisse AG and its consolidated subsidiaries
before the merger
with UBS AG, Credit Suisse Services
AG, and other small former
Credit Suisse Group entities now directly held by UBS Group
AG
“UBS Group AG” and “UBS
Group AG standalone”
UBS Group AG on a standalone basis
“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
“1m”
One million, i.e. 1,000,000
“1bn”
One billion, i.e. 1,000,000,000
“1trn”
One trillion, i.e. 1,000,000,000,000
In this report, unless the context requires otherwise,
references to any gender shall apply to all genders.
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 Group
Items. 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.
Our
underlying results are APMs and are non-GAAP
financial measures.
›
Refer to the “Group performance” section of this report and to “Alternative performance measures” in the
appendix to this report for additional information about underlying results
Comparability
Comparative information in this report is presented
as follows.
Profit and
loss information for
all quarters
covered by this
report and
for 2024
year-to-date information is
based
entirely
on
consolidated
data
following
the
acquisition
of
the
Credit
Suisse
Group.
Comparative
year-to-date
information for
2023 includes
four months
(June to
September 2023)
of post-acquisition
consolidated data
and
five months of UBS Group data only (January
to May 2023).
All balance sheet information presented in this
report includes only post-acquisition consolidated
information.
Significant regulated subsidiary and sub-group
information
Financial and regulatory key figures
for our significant regulated subsidiaries and sub-groups
will be published on
8 November 2024 and
will be
available under “Holding
company and
significant regulated subsidiaries
and sub-
groups” at
ubs.com/investors
.
UBS Group third quarter 2024 report
3
Our key figures
As of or for the quarter ended
As of or year-to-date
USD m, except where indicated
30.9.24
30.6.24
31.12.23
1
30.9.23
1
30.9.24
30.9.23
1
Group results
Total revenues
12,334
11,904
10,855
11,695
36,976
29,979
Negative goodwill
27,264
Credit loss expense / (release)
121
95
136
239
322
901
Operating expenses
10,283
10,340
11,470
11,640
30,880
27,336
Operating profit / (loss) before tax
1,929
1,469
(751)
(184)
5,773
29,006
Net profit / (loss) attributable to shareholders
1,425
1,136
(279)
(715)
4,315
27,645
Diluted earnings per share (USD)
2
0.43
0.34
(0.09)
(0.22)
1.29
8.46
Profitability and growth
3,4
Return on equity (%)
6.7
5.4
(1.3)
(3.4)
6.8
52.1
Return on tangible equity (%)
7.3
5.9
(1.4)
(3.7)
7.4
57.7
Underlying return on tangible equity (%)
5
9.0
8.4
4.8
1.5
9.1
3.8
Return on common equity tier 1 capital (%)
7.6
5.9
(1.4)
(3.7)
7.5
60.0
Underlying return on common equity tier 1 capital (%)
5
9.4
8.4
4.8
1.5
9.2
4.0
Return on leverage ratio denominator, gross (%)
3.1
3.0
2.6
2.8
3.1
3.0
Cost / income ratio (%)
6
83.4
86.9
105.7
99.5
83.5
91.2
Underlying cost / income ratio (%)
5,6
78.5
80.6
93.0
89.3
78.8
85.1
Effective tax rate (%)
26.0
20.0
n.m.
7
n.m.
7
24.4
4.6
Net profit growth (%)
n.m.
(95.8)
n.m.
n.m.
(84.4)
362.5
Resources
3
Total assets
1,623,941
1,560,976
1,716,924
1,643,684
1,623,941
1,643,684
Equity attributable to shareholders
87,025
83,683
85,624
83,265
87,025
83,265
Common equity tier 1 capital
8
74,213
76,104
78,002
76,926
74,213
76,926
Risk-weighted assets
8
519,363
511,376
546,505
546,491
519,363
546,491
Common equity tier 1 capital ratio (%)
8
14.3
14.9
14.3
14.1
14.3
14.1
Going concern capital ratio (%)
8
17.5
18.0
16.8
16.4
17.5
16.4
Total loss-absorbing capacity ratio (%)
8
37.5
38.7
36.4
35.4
37.5
35.4
Leverage ratio denominator
8
1,608,341
1,564,201
1,695,403
1,615,817
1,608,341
1,615,817
Common equity tier 1 leverage ratio (%)
8
4.6
4.9
4.6
4.8
4.6
4.8
Liquidity coverage ratio (%)
9
199.2
212.0
215.7
196.5
199.2
196.5
Net stable funding ratio (%)
126.9
128.0
124.7
120.7
126.9
120.7
Other
Invested assets (USD bn)
4,10
6,199
5,873
5,714
5,373
6,199
5,373
Personnel (full-time equivalents)
109,396
109,991
112,842
115,981
109,396
115,981
Market capitalization
2,11
106,528
101,903
107,355
85,768
106,528
85,768
Total book value per share (USD)
2
27.32
26.13
26.68
25.75
27.32
25.75
Tangible book value per share (USD)
2
25.10
23.85
24.34
23.44
25.10
23.44
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
2 Refer to the
“Share information and
earnings per share”
section of this
report for more
information.
3 Refer to the
“Targets,
capital guidance and
ambitions” section of
the UBS Group
Annual Report 2023,
available under “Annual
reporting” at ubs.com/investors,
for more information about our
performance targets.
4 Refer to “Alternative
performance measures” in the appendix
to this report for the definition
and
calculation method.
5 Refer to the “Group
performance” section of this
report for more information
about underlying results.
6 Negative goodwill is
not used in the
calculation as it is
presented in a
separate
reporting line and is
not part of total
revenues.
7 The effective tax
rate for the fourth
and third quarters of
2023 is not a
meaningful measure, due
to the distortive effect
of current unbenefited tax
losses at the
former Credit Suisse entities.
8 Based on the Swiss
systemically relevant bank fram
ework as of 1 January
- Refer to the “Capital
management” section of this
report for more information.
9 The disclosed
ratios represent quarterly averages for the
quarters presented and are calculated based
on an average of 65 data
points in the third quarter of 2024,
61 data points in the second quarter of
2024, 63 data points in
the fourth quarter of 2023 and
63 data points in the third quarter
of 2023. Refer to the “Liquidity
and funding management” section of
this report for more information.
10 Consists of invested assets for
Global
Wealth Management,
Asset Management
(including invested
assets from
associates) and
Personal &
Corporate Banking.
Refer to
“Note 32
Invested assets
and net
new money”
in the
“Consolidated financial
statements” section of the UBS Group
Annual Report 2023, available
under “Annual
reporting” at ubs.com/investors,
for more information.
11 The calculation of market
capitalization reflects total shares
issued
multiplied by the share price at the end of the period.
UBS Group third quarter 2024 report |
UBS Group | Recent developments
4
UBS Group
Management report
Recent developments
Regulatory capital developments and capital
returns guidance
In
the
third
quarter
of
2024,
reflecting
our
strong
capital
position,
completion
of
legal
entity
mergers,
overall
progress
on
the
integration
and
the
winding
down
of
Non-core
and
Legacy,
we
voluntarily
accelerated
the
amortization of
the remaining
transitional purchase
price allocation
(PPA)
adjustments for
common equity
tier 1
(CET1) capital purposes. This resulted in a USD 3.4bn decrease in CET1 capital and a CET1 capital ratio of 14.3%.
Excluding this adjustment,
the CET1
capital ratio would
have been 14.9%.
In connection with
the acquisition of
the
Credit
Suisse
Group
in
2023,
the
Swiss
Financial
Market
Supervisory
Authority
(FINMA)
had
approved
neutralizing
a
CET1
capital
effect
of
USD 5.0bn
(net
of
tax)
of
interest-rate-
and
own-credit-driven
fair
value
adjustments for UBS
Group AG that are
expected to fully reverse
into income and
be accretive to CET1
capital over
time. The
transitional treatment was
subject to linear
amortization at the
rate of USD 0.3bn
per quarter through
30 June 2027. This
quarterly
amortization was eliminated
upon fully
amortizing the transitional
treatment in
the
third
quarter
of
2024.
As
these
transitional
adjustments only
applied
to
UBS
Group
AG,
the
regulatory
capital
position
of
UBS
AG
was
not
impacted
by
the
decision
to
fully
amortize
them.
On
a
standalone
basis
as
of
30 September 2024, UBS AG’s fully applied
CET1 capital ratio is expected to be
around 13.3%.
We expect
that the
adoption of
the final
Basel III standards
in January
2025 will
lead to
a low
single-digit percentage
increase in the UBS
Group’s RWA,
reducing the CET1 capital
ratio by around 30
basis points. This
estimate is based
on
our
current understanding
of
the
relevant
standards as
we
are
in
an
active
dialogue
with
FINMA
regarding
various aspects of the final rules. We continue to expect to operate with a CET1 capital ratio of around 14% after
the implementation of the final Basel III standards.
We expect to complete our planned USD 1bn of share repurchases
in the fourth quarter of 2024. Our ambition to
continue
share
repurchases
in
2025
and
for
our
capital
returns
in
2026
to
exceed
pre-acquisition
levels
is
unchanged.
Our
ambitions
beyond
2025
are
subject
to
our
assessment
of
any
proposed
requirements
from
Switzerland’s ongoing review of its capital regime.
›
Refer to “Amortization of transitional purchase price allocation adjustments for regulatory capital” in the “Capital
management”
section of this report for more information.
Integration of Credit Suisse
We continue to make progress related to the integration of Credit
Suisse, with the current focus on client account
and platform migrations.
Following the merger of UBS AG and Credit Suisse AG in May 2024 and the
transition to a single US intermediate
holding company in June
2024, the merger of
UBS Switzerland AG and Credit
Suisse (Schweiz) AG was
completed
on 1 July 2024 and was another critical step on
our integration roadmap.
In October 2024, we completed the migration of our Global
Wealth Management client accounts in Luxembourg
and Hong Kong to UBS
platforms and we plan to
migrate our Global Wealth
Management client accounts
booked
in
Singapore
and
Japan
before
the
end
of
2024.
In
Switzerland,
we
expect
the
next
phase
of
Global
Wealth
Management and Personal & Corporate Banking
client account migrations in the second quarter
of 2025.
In
the
third
quarter
of
2024,
we
realized
an
additional
USD 0.8bn
in
gross
cost
savings,
for
a
total
of
around
USD 6.8bn in annualized exit rate gross cost savings
compared with the 2022 combined cost base
of Credit Suisse
and UBS. We
expect to achieve
around USD 7.5bn of
gross cost savings
by the end
of 2024, or approximately
58%
of our ambition of around USD 13bn by the
end of 2026.
UBS Group third quarter 2024 report |
UBS Group | Recent developments
5
Our
Non-core
and
Legacy
business
division
continues
to
actively
exit
positions
and
reduce
its
exposures.
On
13 August
2024,
UBS
entered
into
an
agreement
to
sell
Select
Portfolio
Servicing,
the
US
mortgage-servicing
business of Credit Suisse managed in the Non-core and Legacy business division. Completion of the
transaction is
subject to regulatory approvals and other customary closing conditions. The transaction
is expected to close in the
first quarter
of 2025. UBS
does not
expect to
recognize a
material profit
or loss
upon completion
of the
transaction.
Based on
balances as
of 30 September
2024, the
completion of
the transaction
would reduce
the Group’s
risk-
weighted
assets
(RWA)
by
around
USD 1.4bn
and
the
Group’s
leverage
ratio
denominator
(LRD)
by
around
USD 1.7bn.
In
October
2024, UBS
entered into
an
agreement to
sell
to American
Express Swiss
Holdings GmbH
(American
Express) its 50% interest in
Swisscard AECS GmbH (Swisscard),
a joint venture between UBS
and American Express
in Switzerland. In addition,
UBS and Swisscard entered into
an agreement to transition the
Credit Suisse-branded
card portfolios to UBS. Both
transactions are subject to certain
closing conditions and are not
expected to have a
material impact for UBS.
Regulatory and legal developments
Withholding tax exemption period for too-big-to-fail
instruments
In August
2024, the
Swiss Federal
Council launched
a consultation
related to
the existing
withholding
tax exemption
that
applies
to
too-big-to-fail instruments
issued
by
no
later
than
31 December 2026.
The
Federal Council
had
recommended an
unlimited extension
of the
exemption as
part of
a broader reform
package in
its April
2024 report
on banking stability. As these reforms are not expected to enter into force before the expiry of the existing special
rules,
the
Swiss
Federal
Council
proposes
to
extend
the
current
exemption,
from
31 December
2026
to
31 December 2031, to ensure that banks can continue
to issue capital instruments on competitive terms.
Swiss legislators postpone the review of a
public liquidity backstop
In
August
2024,
the Swiss
Economic Affairs
and
Taxation
Committee of
the Council
of
States deferred
further
deliberations
on the
introduction of
a public
liquidity backstop
until the
Swiss parliamentary
investigation
committee
publishes its report on the failure
of the Credit Suisse Group,
which is expected to
be released by the end of
2024.
FINMA suspends annual approval of UBS’s recovery
and emergency plans
In
October
2024,
FINMA
published
its
2024
resolution
reporting
for
UBS.
FINMA
noted
that
if
the
preferred
resolution
strategy
was
applied,
UBS
would
be
resolvable
by
means
of
a
single
point
of
entry
recapitalization.
Considering the ongoing integration activities and the additional requirements for alternative resolution strategies
following
the
Credit
Suisse
crisis,
including
the
need
for
legislative
changes,
FINMA
announced
that
it
had
suspended the annual
approval of UBS’s
recovery and emergency
plans. UBS has
started working on
the new plans
in close dialogue with FINMA.
Switzerland implements the Income Inclusion Rule
In September 2024, the Swiss
Federal Council introduced the Income
Inclusion Rule (the IIR), a measure developed
by the Organisation
for Economic Co-operation and
Development (the OECD) as
part of the
minimum corporate
taxation rules applicable to corporate groups
with a worldwide turnover of at
least EUR 750m. Under the IIR,
the
profits of foreign subsidiaries and branches of Swiss corporate groups will be taxed at a minimum rate of 15% on
the OECD global minimum
tax base with
respect to each jurisdiction
in which the corporate
groups operate.
The
IIR complements
the Swiss
supplementary
tax that
was introduced
in January
- The
IIR will
apply from
1 January
2025, and UBS expects the overall tax impact from
the IIR will be limited,
given that UBS is subject to a corporate
tax burden of more than 15% in the vast majority of countries
in which it operates.
Mutual recognition agreement with the UK submitted
to the Swiss Parliament
In
September
2024,
the
Swiss
Federal
Council
submitted
for
parliamentary
approval
a
mutual
recognition
agreement
(an
MRA)
with
the
UK
regarding
financial
services.
The
agreement
facilitates
cross-border
financial
activities based
on a
new model
for regulatory
cooperation and
an outcomes-based
mutual recognition
of domestic
rules.
The
MRA
is
supplemented
by
an
enhanced
and
closer
supervisory
process
and
additional
supervisory
arrangements where new market access
is granted. It is expected
that the Parliaments in Switzerland and
the UK
will grant approval for the MRA in 2025.
Developments related to the final Basel III implementation
In Switzerland,
the amendments
to the
Capital Adequacy
Ordinance that
will incorporate
the final
Basel III standards
into Swiss law are still scheduled to enter into force on 1 January 2025, as confirmed
by the Swiss Federal Council
in June 2024.
UBS Group third quarter 2024 report |
UBS Group | Recent developments
6
We expect that the adoption
of the final Basel III standards
in January 2025 will
lead to low single-digit percentage
increases in
the UBS
Group’s RWA
and LRD,
reducing the
CET1 capital
ratio by
around 30
basis points
and the
CET1
leverage
ratio
by
around
10 basis
points.
This
estimate
is
based
on
our
current
understanding
of
the
relevant
standards,
as we are in an
active dialogue with FINMA
regarding various aspects
of the final rules.
Our estimate for
the RWA and CET1 capital ratio does not
take into account the impact of the output floor,
which is to be phased
in over time.
In
September
2024,
the
UK
Prudential
Regulatory
Authority
(the
PRA)
published
its
final
rules
covering
the
implementation of
the final Basel III
standards. As
part of the
package, the PRA
announced the
pushing back
of the
implementation date,
from 1 July
2025 to
1 January 2026,
with full
phase-in of
the output
floor by
1 January 2030.
The overall impact on UBS is expected to be
limited.
In the US,
the banking agencies, including the
Federal Reserve Board, have been
discussing amendments to their
original proposals
regarding the
implementation
of the
final Basel III
standards.
The banking
agencies have
indicated
that they plan to issue a revised proposal before
issuing the final rules.
The Federal Reserve Board stress capital buffer
requirements
In August 2024, the Federal Reserve Board
assigned UBS Americas Holding LLC a stress capital
buffer (an SCB) of
9.3% as of 1
October 2024 (previously 9.1%)
under the Federal Reserve
Board’s SCB rule, resulting in
a total CET1
capital requirement of 13.8%.
The SCB for our
US-based intermediate holding
company is based
on the previously
released
results
of the
Federal Reserve
Board’s 2024
Dodd–Frank Act
Stress
Test
(DFAST),
where
UBS Americas
Holding LLC exceeded the minimum capital
requirements under the severely adverse scenario.
Group performance
Income statement
For the quarter ended
% change from
Year-to-date
USD m
30.9.24
30.6.24
30.9.23
1
2Q24
3Q23
30.9.24
30.9.23
1
Net interest income
1,794
1,535
2,107
17
(15)
5,270
5,202
Other net income from financial instruments measured
at fair value through profit or loss
3,681
3,684
3,226
0
14
11,547
8,425
Net fee and commission income
6,517
6,531
6,056
0
8
19,540
15,790
Other income
341
154
305
122
12
619
563
Total revenues
12,334
11,904
11,695
4
5
36,976
29,979
Negative goodwill
27,264
Credit loss expense / (release)
121
95
239
28
(49)
322
901
Personnel expenses
6,889
7,119
7,567
(3)
(9)
20,957
17,838
General and administrative expenses
2,389
2,318
3,124
3
(24)
7,120
7,157
Depreciation, amortization and impairment of non-financial
assets
1,006
903
950
11
6
2,804
2,341
Operating expenses
10,283
10,340
11,640
(1)
(12)
30,880
27,336
Operating profit / (loss) before tax
1,929
1,469
(184)
31
5,773
29,006
Tax expense / (benefit)
502
293
526
71
(5)
1,407
1,346
Net profit / (loss)
1,428
1,175
(711)
21
4,366
27,660
Net profit / (loss) attributable to non-controlling interests
3
40
4
(92)
(22)
51
15
Net profit / (loss) attributable to shareholders
1,425
1,136
(715)
25
4,315
27,645
Comprehensive income
Total comprehensive income
3,910
1,614
(2,622)
142
5,279
25,679
Total comprehensive income attributable to non-controlling interests
27
18
(8)
47
40
4
Total comprehensive income attributable to shareholders
3,883
1,596
(2,614)
143
5,239
25,675
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
UBS Group third quarter 2024 report |
UBS Group | Group performance
7
Selected financial information of the business divisions and Group Items
For the quarter ended 30.9.24
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group Items
Total
Total revenues as reported
6,199
2,394
873
2,645
262
(39)
12,334
of which: PPA effects and other integration items
1
224
278
185
(25)
662
Total revenues (underlying)
5,975
2,116
873
2,461
262
(14)
11,672
Credit loss expense / (release)
2
83
0
9
28
0
121
Operating expenses as reported
5,112
1,465
722
2,231
837
(84)
10,283
of which: integration-related expenses and PPA effects
2
419
198
86
156
270
(11)
1,119
Operating expenses (underlying)
4,693
1,267
636
2,076
567
(74)
9,165
Operating profit / (loss) before tax as reported
1,085
846
151
405
(603)
45
1,929
Operating profit / (loss) before tax (underlying)
1,280
766
237
377
(333)
60
2,386
For the quarter ended 30.6.24
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group Items
Total
Total revenues as reported
6,053
2,272
768
2,803
401
(392)
11,904
of which: PPA effects and other integration items
1
233
246
310
(8)
780
Total revenues (underlying)
5,820
2,026
768
2,493
401
(384)
11,124
Credit loss expense / (release)
(1)
103
0
(6)
(1)
0
95
Operating expenses as reported
5,183
1,396
638
2,332
807
(15)
10,340
of which: integration-related expenses and PPA effects
2
523
182
98
245
325
(2)
1,372
Operating expenses (underlying)
4,660
1,213
540
2,087
481
(13)
8,969
Operating profit / (loss) before tax as reported
871
773
130
477
(405)
(377)
1,469
Operating profit / (loss) before tax (underlying)
1,161
710
228
412
(80)
(371)
2,060
For the quarter ended 30.9.23
3
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group Items
Total
Total revenues as reported
5,953
2,517
775
2,162
366
(78)
11,695
of which: PPA effects and other integration items
1
388
333
251
(14)
958
Total revenues (underlying)
5,565
2,184
775
1,911
366
(64)
10,737
Credit loss expense / (release)
10
160
0
4
59
5
239
Operating expenses as reported
5,017
1,400
738
2,412
2,068
6
11,640
of which: integration-related expenses and PPA effects
2
448
174
126
368
920
(5)
2,031
of which: acquisition-related costs
26
26
Operating expenses (underlying)
4,569
1,226
612
2,043
1,149
(15)
9,583
Operating profit / (loss) before tax as reported
926
957
37
(254)
(1,762)
(89)
(184)
Operating profit / (loss) before tax (underlying)
986
798
163
(136)
(842)
(55)
914
1 Includes accretion of PPA
adjustments on financial instruments and other
PPA effects, as well
as temporary and incremental items directly
related to the integration.
2 Includes temporary, incremental
operating
expenses directly related to the integration, as well as amortization of newly recognized intangibles resulting from the acquisition of the Credit Suisse Group.
3 Comparative-period information has been restated for
changes in business division perimeters, Group Treasury
allocations and Non-core and Legacy cost allocations. Refer to “Note 3 Segment reporting” in the “Consolidated financial statements”
section of this report.
UBS Group third quarter 2024 report |
UBS Group | Group performance
8
Selected financial information of the business divisions and Group Items (continued)
Year-to-date 30.9.24
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group Items
Total
Total revenues as reported
18,395
7,089
2,416
8,199
1,664
(786)
36,976
of which: PPA effects and other integration items
1
691
780
787
(37)
2,221
Total revenues (underlying)
17,705
6,308
2,416
7,412
1,664
(749)
34,755
Credit loss expense / (release)
(2)
229
0
34
63
(2)
322
Operating expenses as reported
15,340
4,265
2,025
6,728
2,655
(132)
30,880
of which: integration-related expenses and PPA effects
2
1,347
540
255
543
837
(12)
3,511
Operating expenses (underlying)
13,993
3,725
1,770
6,185
1,817
(120)
27,370
Operating profit / (loss) before tax as reported
3,057
2,594
392
1,437
(1,054)
(652)
5,773
Operating profit / (loss) before tax (underlying)
3,713
2,354
647
1,193
(216)
(627)
7,063
Year-to-date 30.9.23
3,4
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group Items
Negative
goodwill
Total
Total revenues as reported
16,002
5,604
1,861
6,562
551
(602)
29,979
of which: PPA effects and other integration items
1
574
477
306
(20)
1,336
Total revenues (underlying)
15,428
5,128
1,861
6,257
551
(582)
28,643
Negative goodwill
27,264
27,264
Credit loss expense / (release)
174
398
1
142
178
7
901
Operating expenses as reported
12,663
2,996
1,649
6,302
3,304
422
27,336
of which: integration-related expenses and PPA effects
2
516
211
140
529
1,024
342
2,763
of which: acquisition-related costs
202
202
Operating expenses (underlying)
12,147
2,785
1,509
5,773
2,279
(122)
24,371
Operating profit / (loss) before tax as reported
3,165
2,210
211
118
(2,930)
(1,031)
27,264
29,006
Operating profit / (loss) before tax (underlying)
3,107
1,945
351
341
(1,906)
(467)
3,371
1 Includes accretion of PPA
adjustments on financial instruments and other
PPA effects, as well
as temporary and incremental items directly
related to the integration.
2 Includes temporary, incremental
operating
expenses directly related to the integration, as well as amortization of newly recognized intangibles resulting from the acquisition of the Credit Suisse Group.
3 Comparative-period information has been restated for
changes in business division perimeters, Group Treasury
allocations and Non-core and Legacy cost allocations.
Refer to “Note 3 Segment reporting” in the “Consolidated
financial statements” section of this report.
4 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated
financial statements” section of this report for more information.
Integration-related expenses, by business division and Group Items
For the quarter ended
Year-to-date
USD m
30.9.24
30.6.24
30.9.23
1
30.9.24
30.9.23
1
Global Wealth Management
420
536
446
1,388
513
Personal & Corporate Banking
172
159
148
470
177
Asset Management
86
98
126
255
140
Investment Bank
156
245
368
543
529
Non-core and Legacy
270
325
920
837
1,024
Group Items
21
8
(5)
30
342
Total integration-related expenses
1,124
1,370
2,003
3,523
2,727
of which: total revenues
35
26
0
97
0
of which: operating expenses
1,090
1,344
2,003
3,426
2,727
of which: personnel expenses
561
825
1,039
1,942
1,399
of which: general and administrative expenses
415
426
860
1,197
979
of which: depreciation, amortization and impairment of non-financial
assets
113
93
104
287
349
1 Comparative-period information has been restated for changes in business division perimeters, Group
Treasury allocations and Non-core and Legacy cost allocations.
Refer to “Note 3 Segment reporting” in the
“Consolidated financial statements” section of this report.
UBS Group third quarter 2024 report |
UBS Group | Group performance
9
Underlying results
In addition to
reporting our
results in accordance
with IFRS
Accounting Standards,
we report underlying
results that
exclude items of profit or loss that management believes
are not representative of the underlying performance.
In
the
third
quarter
of
2024,
underlying
revenues
exclude
purchase
price
allocation
(PPA)
effects
and
other
integration items. PPA
effects mainly consist
of PPA
adjustments on financial
instruments measured at
amortized
cost, including
off-balance sheet
positions, arising
from the
acquisition of
the Credit
Suisse Group.
Accretion of
PPA
adjustments on financial
instruments is accelerated
when the related
financial instrument is
derecognized before
its contractual maturity. No adjustment is made for accretion of PPA on financial instruments within Non-core and
Legacy, due to the nature of its business model.
Underlying expenses exclude
integration-related expenses that
are temporary, incremental
and directly
related to
the integration of
Credit Suisse into UBS,
including costs of
internal staff and contractors
substantially dedicated to
integration activities, retention
awards, redundancy costs,
incremental expenses from
the shortening of useful
lives
of property,
equipment and
software, and
impairment charges
relating to these
assets. Classification
as integration-
related expenses does
not affect the
timing of recognition
and measurement
of those expenses
or the presentation
thereof in the income statement.
Results: 3Q24 vs 3Q23
Reported operating profit before tax was USD
1,929m, compared with an operating loss
before tax of USD 184m,
reflecting lower
operating expenses,
an increase
in total
revenues and
lower net
credit loss
expenses. Total
revenues
increased by
USD 639m, or
5%,
to
USD 12,334m, and
included
a
decrease
of USD
296m
in
accretion
impacts
resulting from PPA adjustments on financial instruments and other PPA effects. The increase in total revenues was
driven by a
USD 461m increase
in net fee
and commission
income, a USD
142m increase
in net interest
income and
other net income from financial
instruments measured at
fair value through profit or
loss, and a USD 36m increase
in
other
income.
Operating
expenses
decreased
by
USD 1,357m,
or
12%,
to
USD 10,283m
and
included
a
USD 913m decrease
in integration-related expenses.
The decrease
in operating
expenses was
mainly driven
by a
USD 735m decrease
in general
and administrative
expenses and
a USD 678m
decrease in
personnel expenses,
partly
offset by a USD 56m increase in depreciation, amortization and impairment of non-financial assets.
Net credit loss
expenses were USD 121m, compared with USD
239m in the third quarter of 2023.
Underlying results 3Q24 vs 3Q23
Underlying results
for the
third quarter
of 2024
excluded PPA
effects and
other integration
items of
USD 662m
from total revenues
and also excluded
integration-related expenses
and PPA effects
of USD 1,119m from
operating
expenses.
On an underlying
basis, profit
before tax
increased by
USD 1,472m to
USD 2,386m,
reflecting a
USD 935m
increase
in underlying total revenues,
a USD 418m decrease in underlying
operating expenses and a
USD 118m decrease in
net credit loss expenses.
Total revenues: 3Q24 vs 3Q23
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 142m to USD 5,476m and included
a decrease of USD 156m in
accretion impacts
resulting from PPA adjustments on financial instruments and other PPA effects.
Global Wealth Management decreased by
USD 136m to USD 2,232m,
which included USD 221m of accretion
of
PPA adjustments on financial instruments and other PPA effects, compared with USD 371m in the third quarter of
2023.
Excluding
the
aforementioned
effects,
net
interest
income
decreased,
reflecting
lower
deposit
margins,
including the effects
of shifts to
lower-margin deposit
products and the
effects of liquidity
and funding costs,
partly
offset
by
higher
deposit
volumes. The
decrease
was
also
due
to
lower
loan
revenues,
reflecting
lower
average
volumes.
These decreases were
partly offset by
an increase
in transaction-based income,
mainly driven by
higher
levels of client activity.
Personal & Corporate Banking
decreased
by USD 106m to USD 1,638m,
which included USD 255m of
accretion of
PPA adjustments on financial instruments and other PPA effects, compared with USD 290m in the third quarter of
- The
remaining
decrease
was mainly
due to
higher liquidity
and funding
costs,
as well
as lower
deposit margins
resulting from both lower reinvestment rates and
shifts to lower-margin deposit products.
UBS Group third quarter 2024 report |
UBS Group | Group performance
10
The
Investment
Bank
increased
by
USD 401m
to
USD 1,518m,
mainly
due
to
higher
revenues
in
Derivatives
&
Solutions, reflecting
increases mostly
in
Equity
Derivatives,
Foreign
Exchange and
Rates
revenues,
as
well
as
an
increase in Global Banking,
mainly from higher revenues
across Public Capital Markets.
These increases were partly
offset by lower revenues in Financing, particularly
in the Capital Markets Financing business.
Non-core and Legacy decreased by
USD 174m
to USD 98m, mainly as a
result of portfolio reductions.
Group Items
was negative USD 32m
compared with negative
USD 166m, mainly as
a result
of positive effects
in
Group hedging and own debt, including hedge accounting ineffectiveness, within Group Treasury. Higher gains in
Group hedging and
own debt
during the third
quarter of
2024 were driven
by mark-to-market
effects on portfolio-
level economic hedges, mainly due to the
impact of decreasing interest rates.
›
Refer to the relevant business division commentary in the “UBS business divisions and Group Items” section of this
report for more information about business-division-specific revenues
›
Refer to “Note 4 Net interest income” in the “Consolidated financial statements” section of this report for more
information about net interest income
Net interest income and other net income from financial instruments measured at fair value through profit or loss
For the quarter ended
% change from
Year-to-date
USD m
30.9.24
30.6.24
30.9.23
1,2
2Q24
3Q23
30.9.24
30.9.23
1,2
Net interest income from financial instruments measured
at amortized cost and fair
value through other comprehensive income
(256)
2
850
101
2,930
Net interest income from financial instruments measured
at fair value through profit or
loss and other
2,050
1,533
1,257
34
63
5,168
2,272
Other net income from financial instruments measured
at fair value through profit or
loss
3,681
3,684
3,226
0
14
11,547
8,425
Total
5,476
5,218
5,334
5
3
16,817
13,626
Global Wealth Management
2,232
2,232
2,368
0
(6)
6,814
6,216
of which: net interest income
1,811
1,825
1,991
(1)
(9)
5,509
5,211
of which: transaction-based income from foreign exchange and other
intermediary
activity
2
421
407
377
3
12
1,306
1,005
Personal & Corporate Banking
1,638
1,564
1,744
5
(6)
4,907
3,834
of which: net interest income
1,429
1,350
1,559
6
(8)
4,288
3,367
of which: transaction-based income from foreign exchange and other
intermediary
activity
2
210
214
186
(2)
13
619
467
Asset Management
21
1
(2)
21
(15)
Investment Bank
1,518
1,528
1,117
(1)
36
4,608
4,072
Non-core and Legacy
3
98
310
272
(68)
(64)
1,316
347
Group Items
3
(32)
(417)
(166)
(92)
(80)
(851)
(828)
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
2 Comparative-period information
has been restated
for changes in
business division perimeters,
Group Treasury
allocations and Non-core
and Legacy cost
allocations. Refer to
“Note 3 Segment
reporting” in the
“Consolidated financial statements” section of this report.
3 Mainly includes spread-related income in connection with client-driven
transactions, foreign currency translation
effects and income and expenses from
precious metals, which are
included in the income statement
line Other net income from
financial instruments measured at fair
value through profit or
loss. The amounts
reported on this line are
one component of
Transaction-based income in the management discussion and analysis in the
“Global Wealth Management” and “Personal & Corporate Banking” sections
of this report.
Net fee and commission income
Net fee and commission income
increased by USD 461m
to USD 6,517m and included a
decrease of USD 118m
in
accretion of PPA adjustments on financial instruments and other PPA effects, which was reflected in other fee and
commission income, predominantly in the Investment
Bank.
Investment fund
fees increased
by USD 291m
to USD 1,530m,
and there was
a USD 106m
increase to
USD 3,117m
in
fees
from
portfolio
management
and
related
services,
predominantly
in
Global
Wealth
Management.
These
increases were largely attributable to positive market
performance.
Net brokerage
fees increased
by USD 117m
to USD 1,042m,
reflecting an
increase across
all regions
in Cash
Equities
in Execution Services
in the Investment Bank,
as well as an
increase in Global Wealth
Management that was
due to
higher levels of client activity,
particularly in the Americas,
Asia Pacific and Switzerland regions.
Underwriting
fee
income
increased
by
USD 54m
to
USD 153m,
largely
driven
by
a
USD 40m
increase
in
debt
underwriting revenues, mainly due to higher deal
volumes
in the Global Banking business in the Investment
Bank.
›
Refer to “Note 5 Net fee and commission income” in the “Consolidated financial statements” section of this report
for more information
UBS Group third quarter 2024 report |
UBS Group | Group performance
11
Other income
Other
income
was
USD 341m,
compared
with
USD 305m
in
the
third
quarter
of
2023.
Revenues
included
a
USD 135m gain related to the
sale of our investment
in an associate, with
half of the gain being
recognized within
the
Investment
Bank
and
the
other
half
in
Non-core
and
Legacy,
as
well
as
a
USD 72m
net
gain
in
Asset
Management
from
both
the
closing
of
the
remaining
portion
of
the
sale
of
our
Brazilian
real
estate
fund
management business
and the
sale of
our shareholding
in Credit
Suisse Insurance
Linked Strategies
Ltd (CSILS).
These
gains
were
partly
offset
by
a
USD 35m
decrease
in
gains
recognized
on
repurchases
of
UBS’s
own
debt
instruments.
›
Refer to “Note 6 Other income” in the “Consolidated financial statements” section of this report for more
information
›
Refer to “Asset Management”, “Investment Bank” and “Non-core and Legacy”
in the “UBS business divisions and
Group Items” section of this report for more information about the sale of businesses
Credit loss expense / release: 3Q24 vs
3Q23
Total
net
credit loss
expenses in
the
third quarter
of 2024
were USD 121m,
reflecting net
releases of
USD 15m
related to performing positions and net expenses
of USD 136m on credit-impaired positions. Credit loss
expenses
were USD 239m in the prior-year quarter.
›
Refer to “Note 9 Expected credit loss measurement” in the “Consolidated financial statements” section of this
report for more information
Credit loss expense / (release)
Performing positions
Credit-impaired positions
USD m
Stages 1 and 2
Stage 3
Purchased
Total
For the quarter ended 30.9.24
Global Wealth Management
(11)
12
1
2
Personal & Corporate Banking
(10)
94
0
83
Asset Management
0
0
0
0
Investment Bank
9
0
0
9
Non-core and Legacy
(2)
0
30
28
Group Items
0
0
0
0
Total
(15)
106
30
121
For the quarter ended 30.6.24
Global Wealth Management
(13)
12
0
(1)
Personal & Corporate Banking
(15)
132
(14)
103
Asset Management
0
0
0
0
Investment Bank
7
(14)
1
(6)
Non-core and Legacy
(1)
3
(2)
(1)
Group Items
0
0
0
0
Total
(22)
132
(15)
95
For the quarter ended 30.9.23
1
Global Wealth Management
(10)
15
6
10
Personal & Corporate Banking
77
60
23
160
Asset Management
0
0
0
0
Investment Bank
(6)
10
0
4
Non-core and Legacy
4
20
34
59
Group Items
5
0
0
5
Total
71
105
63
239
1 Comparative-period information
has been restated
for changes in business
division perimeters. Refer
to “Changes to segment
reporting in 2024”
in the “UBS business
divisions and Group
Items” section of
the
UBS Group first quarter 2024 report,
available under
“Quarterly reporting” at ubs.com/investors, and “Note 3 Segment reporting”
in the “Consolidated financial statements” section of
this report for more information.
UBS Group third quarter 2024 report |
UBS Group | Group performance
12
Operating expenses: 3Q24 vs 3Q23
Operating expenses
For the quarter ended
% change from
Year-to-date
USD m
30.9.24
30.6.24
30.9.23
1
2Q24
3Q23
30.9.24
30.9.23
1
Personnel expenses
6,889
7,119
7,567
(3)
(9)
20,957
17,838
of which: salaries and variable compensation
5,805
6,058
6,424
(4)
(10)
17,726
15,114
of which: variable compensation – financial advisors
2
1,335
1,291
1,150
3
16
3,893
3,372
General and administrative expenses
2,389
2,318
3,124
3
(24)
7,120
7,157
of which: net expenses for litigation, regulatory and similar
matters
(69)
(153)
12
(55)
(227)
802
Depreciation, amortization and impairment of non-financial
assets
1,006
903
950
11
6
2,804
2,341
Total operating expenses
10,283
10,340
11,640
(1)
(12)
30,880
27,336
1 Comparative-period information has been revised. Refer to
“Note 2 Accounting for the acquisition of
the Credit Suisse Group” in the
“Consolidated financial statements” section of this report for
more information.
2 Consists of cash and deferred compensation
awards and is based on compensable revenues
and firm tenure using a formulaic
approach. Also includes expenses related to compensation commitments
with financial
advisors entered into at the time of recruitment that are subject to vesting requirements.
Personnel expenses
Personnel expenses decreased
by USD 678m
to USD 6,889m, which
included a USD 478m
decrease in integration-
related
expenses, which
was mainly
due
to awards
granted to
employees to
support retention
and
operational
stability in 2023. Salaries and
variable compensation decreased by USD 619m, mainly
due to the aforementioned
effects and
decreases
in salaries
as a
result of
a smaller workforce.
These decreases
were partly
offset by
annual
salary increases,
unfavorable foreign
currency exchange impacts
and higher
accruals for
performance awards on
an underlying basis.
In addition, there
was a USD 185m
increase in financial advisor
compensation,
which reflected
higher compensable revenues.
›
Refer to “Note 7 Personnel expenses” in the “Consolidated financial statements” section of this report for more
information
General and administrative expenses
General and
administrative expenses
decreased by
USD 735m to
USD 2,389m, largely
due to
a USD 445m
decrease
in integration-related
expenses, which
was mainly
attributable to
lower real
estate and
consulting costs.
In addition,
there was a release of USD 84m
of IFRS 3 acquisition-related contingent
liabilities following settlements
reached in
the third
quarter of
- In
the third
quarter of
2023,
integration-related expenses
included a
one-time fee
of
USD 289m related to a provision for an onerous contract.
›
Refer to “Note 8 General and administrative expenses” in the “Consolidated financial statements” section of this
report for more information
›
Refer to “Note 15 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this
report for more information about litigation, regulatory and similar matters
›
Refer to the “Regulatory and legal developments” and “Risk factors” sections of the UBS Group Annual Report
2023, available under “Annual reporting” at
ubs.com/investors
, for more information about litigation, regulatory
and similar matters
Depreciation, amortization and impairment of
non-financial assets
Depreciation, amortization
and impairment
of non-financial
assets increased
by USD 56m
to USD 1,006m,
including
a USD 9m
increase in
integration-related expenses.
The increase
was mainly
attributable to
depreciation of
internally
generated capitalized
software, reflecting
a higher
level of
capitalized cost
and accelerated
depreciation of
own
used buildings, partly offset by a decrease in depreciation of leasehold
improvements.
Tax: 3Q24 vs 3Q23
The Group had a net income tax expense of USD 502m
in the third quarter of 2024, compared with USD
526m in
the prior-year quarter.
The net current
tax expense
was USD 378m, compared
with USD 643m, and
primarily related to
the taxable profits
of UBS Switzerland AG and other entities.
There was a
net deferred tax expense
of USD 124m, compared with
a net benefit
of USD 116m in
the prior-year
quarter. This included a net expense of USD 222m that primarily related to the amortization of deferred tax assets
(DTAs) previously
recognized in
relation to
tax losses
carried forward
and deductible
temporary differences.
This
was partly offset by benefits
of USD 98m from increases
in recognized DTAs, of which
USD 41m reflected updated
expectations of future profits available to utilize tax losses carried forward,
and USD 57m in respect of an increase
in tax credits carried forward in relation to US
corporate alternative minimum tax.
UBS Group third quarter 2024 report |
UBS Group | Group performance
13
The
Group’s
effective
tax
rate
for
the
quarter
was
26.0%,
although
it
would
have
been
28.1%
without
the
aforementioned deferred tax benefit from
updated expectations of future
profits. This is higher
than the Group’s
structural rate of 23%, mainly because its
net profit includes operating losses of certain entities,
mostly reflecting
integration-related expenses and restructuring
costs, that did not result in
any tax benefits because they cannot
be
offset with profits of other entities
in the Group, and did not
result in any DTA recognition. The Group’s effective
tax rate
for the
fourth quarter
of 2024
may be
higher than
the Group’s
structural rate
if further
such operating
losses are incurred
in these entities,
and the amount
of that impact
will depend on
the amount of those
losses. The
Group’s effective tax rate is expected to decrease
toward the structural rate in subsequent
years.
Total comprehensive income attributable
to shareholders
In the third quarter of 2024, total comprehensive income
attributable to shareholders was USD 3,883m,
reflecting
a net profit of USD 1,425m and other comprehensive income
(OCI), net of tax, of USD 2,459m.
OCI related
to cash
flow hedges
was USD 1,593m,
mainly reflecting
net unrealized
gains on
US dollar
hedging
derivatives resulting from decreases in the relevant
US dollar long-term interest rates.
Foreign
currency
translation
OCI
was
USD 1,333m,
mainly
resulting
from
the
Swiss
franc
and
the
euro
both
strengthening against the US dollar.
OCI related to own credit on financial
liabilities designated at fair value was negative USD 323m, primarily due
to
a tightening of our own credit spreads.
Defined benefit plan OCI was
negative USD 128m, primarily reflecting
negative pre-tax OCI in our
non-Swiss plans
of
USD 107m,
mainly
driven
by
the
Credit
Suisse
UK
plan
following
a
buy-in
insurance
transaction to
mitigate
inherent risks.
›
Refer to “Statement of comprehensive income” in the “Consolidated financial statements” section of this report for
more information
›
Refer to “Reconciliation of equity under IFRS Accounting Standards to Swiss SRB common equity tier 1 capital” in
the “Capital management” section of this report for more information about the effects of OCI on common equity
tier 1 capital
›
Refer to “Note 21 Fair value measurement” in the “Consolidated financial statements” section of the UBS Group
Annual Report 2023, available under “Annual reporting” at
ubs.com/investors
, for more information about own
credit on financial liabilities designated at fair value
›
Refer to “Note 27 Post-employment benefit plans” in the “Consolidated financial statements” section of the UBS
Group Annual Report 2023, available under “Annual reporting” at
ubs.com/investors
, for more information about
OCI related to defined benefit plans
Sensitivity to interest rate movements
As of 30 September
2024, it is
estimated that a
parallel shift in
yield curves by
+100 basis points
could lead to
a
combined increase in
annual net interest
income from our
banking book of
approximately USD 1.7bn in
the first
year after
such a
shift. Of
this increase,
approximately USD 1.0bn, USD 0.4bn
and USD 0.1bn
would result
from
changes in Swiss franc, US dollar and euro
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 0.3bn. Of
this decrease,
approximately USD 0.4bn
and USD 0.1bn
would result
from changes
in US dollar and euro
interest rates, respectively. Swiss franc interest rates
would provide an offsetting increase of
approximately USD 0.3bn, driven by both contractual
and assumed flooring benefits under negative
interest rates.
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
30 September
2024
applied
to
our
banking
book.
These
estimates further assume no change to balance sheet size and product mix, stable foreign exchange rates, and no
specific management action. These estimates do
not represent a forecast of net interest income
variability.
›
Refer to the “Risk management and control” section of this report for information about interest rate risk in the
banking book
UBS Group third quarter 2024 report |
UBS Group | Group performance
14
Key figures and personnel
Below is
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: 3Q24 vs 3Q23
The cost / income ratio
was 83.4%, compared with
99.5%, and on an
underlying basis the
cost / income ratio was
78.5%, compared with 89.3%.
These decreases were a
result of higher total
revenues and a decrease in
operating
expenses.
Personnel: 3Q24 vs 2Q24
The number
of internal
and external
personnel employed
was 131,677
(workforce count)
as of
30 September 2024,
a
net
decrease
of
1,361
compared
with
30 June
2024.
The
number
of
internal
personnel
employed
as
of
30 September 2024 was 109,396 (full-time equivalents),
a net decrease of 595 compared with 30 June 2024. The
number of external staff
was approximately 22,281 (workforce
count) as of 30 September
2024, a net decrease of
approximately 766 compared with 30 June 2024.
Equity, CET1 capital and returns
As of or for the quarter ended
Year-to-date
USD m, except where indicated
30.9.24
30.6.24
30.9.23
1
30.9.24
30.9.23
1
Net profit
Net profit / (loss) attributable to shareholders
1,425
1,136
(715)
4,315
27,645
Equity
Equity attributable to shareholders
87,025
83,683
83,265
87,025
83,265
less: goodwill and intangible assets
7,048
7,313
7,462
7,048
7,462
Tangible equity attributable to shareholders
79,976
76,370
75,804
79,976
75,804
less: other CET1 adjustments
5,763
267
(1,122)
5,763
(1,122)
CET1 capital
74,213
76,104
76,926
74,213
76,926
Returns
Return on equity (%)
6.7
5.4
(3.4)
6.8
52.1
Return on tangible equity (%)
7.3
5.9
(3.7)
7.4
57.7
Underlying return on tangible equity (%)
9.0
8.4
1.5
9.1
3.8
Return on CET1 capital (%)
7.6
5.9
(3.7)
7.5
60.0
Underlying return on CET1 capital (%)
9.4
8.4
1.5
9.2
4.0
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
Common equity tier 1 capital: 3Q24 vs 2Q24
During the third
quarter of 2024,
our common
equity tier 1 (CET1)
capital decreased by
USD 1.9bn to USD 74.2bn,
mainly as operating
profit before tax of
USD 1.9bn and foreign
currency translation gains
of USD 1.3bn were
more
than offset
by the
effect of our
voluntary acceleration
of the
amortization of
the remaining transitional
CET1 capital
PPA
adjustments of USD 3.4bn (net
of tax) and
the regular amortization of
these adjustments during the
quarter
of USD 0.3bn
(net of
tax), as
well as
dividend accruals of
USD 0.6bn,
current tax
expenses of
USD 0.4bn, and
a
negative effect from
compensation-
and own-share-related capital components of
USD 0.3bn.
Share repurchases
of USD 0.5bn carried
out in the
third quarter of 2024
under our 2024
share repurchase program did not
affect our
CET1 capital position, as there was an equal reduction
in the capital reserve for potential share repurchases.
Return on common equity tier 1 capital: 3Q24
vs 3Q23
The annualized return on CET1 capital was 7.6%, compared with negative 3.7%, driven by net profit attributable
to shareholders compared with
a loss attributable
to shareholders in the
prior-year quarter, as well as a decrease in
average CET1 capital. On an underlying basis
the return on CET1 capital was 9.4%, compared with
1.5%.
Risk-weighted assets: 3Q24 vs 2Q24
During the third
quarter of
2024, RWA increased
by USD 8.0bn
to USD 519.4bn,
driven by an
USD 11.2bn increase
in currency effects, partly offset by
decreases of USD 1.7bn resulting from asset
size and other movements,
as well
as USD 1.6bn resulting from model updates and methodology
changes.
Common equity tier 1 capital ratio: 3Q24 vs 2Q24
Our CET1 capital ratio decreased to 14.3% from 14.9%,
reflecting a USD 1.9bn decrease in CET1 capital and the
aforementioned increase in RWA.
UBS Group third quarter 2024 report |
UBS Group | Group performance
15
Leverage ratio denominator: 3Q24 vs 2Q24
The leverage ratio denominator (the
LRD) increased by USD 44.1bn
to USD 1,608.3bn, driven by
currency effects
of USD 53.6bn,
partly offset by asset size and other movements of
USD 9.5bn.
Common equity tier 1 leverage ratio: 3Q24
vs 2Q24
Our CET1 leverage ratio
decreased to 4.6% from
4.9%, reflecting the aforementioned
increase in the
LRD and a
USD 1.9bn decrease in CET1 capital.
Results 9M24 vs 9M23
Operating profit before
tax decreased by
USD 23,233m, or 80%,
to USD 5,773m, as
the prior-year period included
negative goodwill of USD 27,264m
relating to the acquisition of
the Credit Suisse Group.
Total revenues increased
by USD 6,997m
and included
an increase
of USD 886m
in accretion
impacts resulting
from PPA
adjustments on
financial instruments and other PPA effects. This increase was partly offset by a USD 3,544m increase in operating
expenses,
including a
USD 699m increase
in integration-related
expenses. Net
credit loss
expenses were
USD 322m,
compared with USD 901m in the first nine months
of 2023.
Total combined
net interest
income and
other net
income from
financial instruments
measured at
fair value
through
profit or
loss increased
by USD 3,191m
to USD 16,817m
and included
an increase
of USD 514m
in accretion
impacts
resulting
from
PPA
adjustments
on
financial
instruments
and
other
PPA
effects.
Global
Wealth
Management
revenues
increased
by
USD 598m,
largely
as
a
result
of
the
consolidation of
Credit
Suisse
revenues
for
the
full
period, and included
USD 717m of accretion
of PPA
adjustments on financial
instruments and other
PPA effects,
compared with
USD 552m in
the first
nine months
of 2023.
The remaining variance
was largely
driven by lower
deposit revenues, mainly
as a
result of
lower margins and
including the
effects of
shifts to
lower-margin deposit
products. The
remaining variance
was also due
to higher
liquidity and
funding costs,
as well as
lower loan
revenues,
reflecting lower average volumes. Personal &
Corporate Banking increased by USD 1,073m, mainly due
to higher
net interest income,
largely attributable to
the consolidation of
Credit Suisse net
interest income for
the full period,
which
included
USD 717m
of
accretion
of
PPA
adjustments
on
financial
instruments
and
other
PPA
effects,
compared with USD 418m in the first nine months of 2023. Non-core
and Legacy increased by USD 969m, mainly
due to the consolidation of Credit Suisse revenues for the full period. Non-core and Legacy revenues reflected net
gains from position exits, along with net interest income from
securitized products and credit products, as well as
a net
gain of
USD 272m, after
the accounting
for the
PPA adjustments
at the
closing of
the acquisition
of the
Credit
Suisse
Group,
from
the
sale
of
assets
from
the
former
Credit
Suisse
securitized
products
group
to
Apollo
Management Holdings and certain other entities
(collectively, Apollo).
›
Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial
statements” section of this report for information about the conclusion of an investment management agreement
with Apollo and the transfer of senior secured asset-based financing
Net fee and commission income increased by
USD 3,750m to USD 19,540m and included a USD
394m increase in
accretion of PPA adjustments on financial instruments and other PPA effects, which was reflected in other fee and
commission income, mainly
in the
Investment Bank. Portfolio
management and related
service fees
increased by
USD 1,531m, and
investment fund
fees increased
by USD 575m,
predominantly in
Global Wealth
Management
and Asset
Management, respectively, due
to positive market
performance and
the consolidation of
Credit Suisse
revenues for
the full
period. Net
brokerage fees
increased by
USD 531m, reflecting
an increase
in Execution
Services
in the
Investment Bank,
mainly driven
by increases
in Cash
Equities across
all regions,
as well
as an
increase in
Global
Wealth Management,
mainly due
to higher
levels of
client activity
and also
due to
the consolidation
of Credit
Suisse.
Underwriting fee
income
increased by
USD 200m, largely
driven
by
a
USD 152m increase
in
debt
underwriting
revenues, mainly due to increased deal volumes in the Global Banking business in the Investment Bank. M&A and
corporate finance
fees increased
by USD 156m,
predominantly reflecting
an increase
in advisory
revenues in
our
Global Banking business within the Investment
Bank.
UBS Group third quarter 2024 report |
UBS Group | Group performance
16
Other income was USD 619m,
compared with USD 563m in the
first nine months of 2023.
This was mainly due to
a USD 135m gain
related to the
sale of our
investment in an
associate,
as well as
a USD 100m net
gain in Asset
Management
from
both
the
sale
of
our
Brazilian
real
estate
fund
management
business
and
the
sale
of
our
shareholding in CSILS. In addition, the share of net profits of associates and joint ventures increased by USD 59m,
mainly as a result of
the consolidation of Credit Suisse revenues for
the full period. These gains were partly offset
by a USD 93m
decrease in gains
recognized on repurchases
of UBS’s own
debt instruments compared
with the first
nine months of 2023.
Personnel expenses increased
by USD 3,119m
to USD 20,957m, largely
due to
the consolidation of
Credit Suisse
expenses for the
full period, and
included an increase
of USD 543m
of integration-related expenses,
which were
largely related to
salaries, severance and variable
compensation.
Salaries and variable
compensation increased by
USD 2,612m,
due
to
the
aforementioned
effects,
and
included
a
USD 521m
increase
in
financial
advisor
compensation due to higher compensable
revenues.
General
and
administrative
expenses
decreased
by
USD 37m
to
USD 7,120m.
Litigation,
regulatory
and
similar
matters reflected a release
of USD 227m, predominantly
due to releases of USD
234m of IFRS 3 acquisition-related
contingent liabilities following settlements of the relevant matter in 2024, compared with expenses of
USD 802m
in the first nine months of 2023, which included a USD 665m increase in provisions recognized
in the first quarter
of 2023 related
to the US
residential mortgage-backed securities litigation
matter. The nine-month
period ended
30 September 2023 also
included a one-time expense
of USD 289m related to
a provision for an
onerous contract.
In addition, the
prior-year period included
USD 202m of
acquisition costs. These
decreases were
partly offset by
the
consolidation of Credit
Suisse expenses,
higher technology costs
and an increase
in integration-related expenses,
mainly related to consulting, legal and outsourcing
costs.
Depreciation, amortization
and impairment of
non-financial assets increased
by USD 463m to
USD 2,804m, largely
due to the consolidation of Credit
Suisse expenses for the full period,
a USD 173m increase in internally
generated
capitalized
software,
reflecting
a
higher
level
of
capitalized
cost,
and
a
USD 136m
increase
in
accelerated
depreciation of real
estate as a
result of decisions
to vacate certain
leased and owned
properties. This was
partly
offset by the recognition of a USD 206m impairment in
the second quarter of 2023 related to software projects
in
progress resulting from a reprioritization
of software development activity in
the context of the
acquisition of the
Credit Suisse Group.
Outlook
In the third
quarter of 2024 we
saw strong client activity
against a market backdrop
that, while constructive, still
exhibited periods of high volatility and dislocation.
Entering the fourth quarter, we see a continuation of these market conditions sustained
by the prospects of a soft
landing in
the US
economy. However,
the macroeconomic
outlook in
the rest
of the
world remains
clouded. In
addition to seasonality,
the ongoing geopolitical conflicts
and the upcoming US elections
are creating uncertainties
that are likely to affect investor behavior.
In the fourth quarter,
we anticipate a mid-single
digit decline in net
interest income in Global
Wealth Management
and a
low single-digit
decline in
Personal &
Corporate Banking.
Non-core and
Legacy is
expected to
generate a
quarterly pre-tax loss in line with our earlier guidance.
The Group’s non-personnel
costs are expected
to show a
seasonal sequential uptick.
The Group’s quarterly
tax rate
is expected to be
around 35%. Integration-related expenses are
expected to be around USD 1.2bn
and accretion
of PPA effects to contribute around USD 0.5bn
to the Group’s total revenues.
As we stay close
to clients, helping
them navigate this
environment, and execute
on our priorities,
we will continue
to invest
to drive
sustainable long-term
value for
our stakeholders
while maintaining
a balance
sheet for
all seasons.
UBS Group third quarter 2024 report |
UBS business divisions and Group Items
17
UBS business divisions and
Group Items
Management report
Our businesses
We report
five business
divisions, each
of which
qualifies as
an operating
segment pursuant
to IFRS
Accounting
Standards: Global Wealth Management,
Personal & Corporate Banking,
Asset Management, the Investment
Bank,
and Non-core
and Legacy.
Non-core and
Legacy includes
positions and
businesses not
aligned with
our strategy
and policies. Those
consist of the
assets and liabilities
reported as part
of the
former Capital Release
Unit (Credit
Suisse) and certain
assets and liabilities
of the former
Investment Bank (Credit
Suisse), the former
Corporate Center
(Credit Suisse) and other former Credit Suisse business divisions. Non-core and Legacy also includes the remaining
assets and
liabilities of
UBS’s Non-core
and Legacy
Portfolio, previously
reported in
Group Functions
(which has
been renamed
Group Items),
and smaller
amounts of
assets and
liabilities of
UBS’s business
divisions that
have been
assessed as not strategic in light of the acquisition
of the Credit Suisse Group.
Our Group functions
are support and
control functions that
provide services to
the Group. Virtually
all costs and
revenues incurred
by the
support and
control functions
are allocated
to the
business divisions,
leaving a
residual
amount, mainly
related to
certain Group
funding and
hedging items,
that we
refer to
as Group
Items in
our segment
reporting.
UBS Group third quarter 2024 report |
UBS business divisions and Group Items |
Global Wealth Management
18
Global Wealth Management
Global Wealth Management
1
As of or for the quarter ended
% change from
Year-to-date
USD m, except where indicated
30.9.24
30.6.24
30.9.23
2
2Q24
3Q23
30.9.24
30.9.23
2
Results
Net interest income
1,811
1,825
1,991
(1)
(9)
5,509
5,211
Recurring net fee income
3
3,235
3,104
2,965
4
9
9,363
8,088
Transaction-based income
3
1,144
1,105
977
4
17
3,461
2,669
Other income
10
19
19
(50)
(50)
63
34
Total revenues
6,199
6,053
5,953
2
4
18,395
16,002
Credit loss expense / (release)
2
(1)
10
(78)
(2)
174
Operating expenses
5,112
5,183
5,017
(1)
2
15,340
12,663
Business division operating profit / (loss) before tax
1,085
871
926
25
17
3,057
3,165
Underlying results
Total revenues as reported
6,199
6,053
5,953
2
4
18,395
16,002
of which: PPA effects and other integration items
4
224
233
388
(4)
(42)
691
574
of which: PPA effects recognized in net interest income
221
240
371
(8)
(40)
717
552
of which: PPA effects and other integration items recognized in transaction-based income
3
(6)
17
(81)
(27)
22
Total revenues (underlying)
3
5,975
5,820
5,565
3
7
17,705
15,428
Credit loss expense / (release)
2
(1)
10
(78)
(2)
174
Operating expenses as reported
5,112
5,183
5,017
(1)
2
15,340
12,663
of which: integration-related expenses and PPA effects
3,5
419
523
448
(20)
(6)
1,347
516
Operating expenses (underlying)
3
4,693
4,660
4,569
1
3
13,993
12,147
of which: expenses for litigation, regulatory and similar matters
18
17
22
6
(19)
46
73
Business division operating profit / (loss) before tax as reported
1,085
871
926
25
17
3,057
3,165
Business division operating profit / (loss) before tax (underlying)
3
1,280
1,161
986
10
30
3,713
3,107
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
3
17.2
(15.3)
(36.3)
(3.4)
(19.2)
Cost / income ratio (%)
3
82.5
85.6
84.3
83.4
79.1
Average attributed equity (USD bn)
6
33.5
32.9
33.1
2
1
33.2
27.9
Return on attributed equity (%)
3,6
13.0
10.6
11.2
12.3
15.1
Financial advisor compensation
7
1,335
1,291
1,150
3
16
3,892
3,372
Net new fee-generating assets (USD bn)
3
14.6
16.3
48.4
Fee-generating assets (USD bn)
3
1,858
1,764
5
1,858
Net new assets (USD bn)
3
24.7
26.9
38.0
79.0
108.2
Invested assets (USD bn)
3
4,259
4,038
3,685
5
16
4,259
3,685
Loans, gross (USD bn)
8
311.5
305.2
318.2
2
(2)
311.5
318.2
Customer deposits (USD bn)
8
481.9
476.2
456.3
1
6
481.9
456.3
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
3,9
0.4
0.4
0.4
0.4
0.4
Advisors (full-time equivalents)
9,897
10,068
10,738
(2)
(8)
9,897
10,738
Underlying performance measures
Pre-tax profit growth (year-on-year, %)
3
29.9
27.7
(20.1)
19.5
(16.0)
Cost / income ratio (%)
3
78.5
80.1
82.1
79.0
78.7
Return on attributed equity (%)
3,6
15.3
14.1
11.9
14.9
14.8
1 Comparatives may differ due to 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 Comparative
figures have
been restated
for changes in
business division
perimeters, Group
Treasury allocations
and Non-core
and Legacy
cost allocations,
as well as
changes in
the equity
attribution framework. Refer to “Note 3 Segment reporting” in the
“Consolidated financial statements” section of this report and to “Changes to
segment reporting in 2024” in the “UBS business divisions
and Group
Items” section and the “Equity attribution” section of the UBS Group first quarter 2024 report, available under “Quarterly reporting” at ubs.com/investors, for more information.
3 Refer to “Alternative performance
measures” in the appendix to this report for the definition and calculation method. We started to report fee-generating assets and net new fee-generating assets on a consolidated basis,
including Credit Suisse data,
from the fourth
quarter of 2023
onward.
4 Includes accretion
of PPA
adjustments on financial
instruments and other
PPA effects,
as well as
temporary and
incremental items directly
related to the
integration.
5 Includes temporary, incremental operating expenses
directly related to the integration, as well as amortization of newly recognized intangibles
resulting from the acquisition of the Credit Suisse Group.
6 Refer to
the “Equity attribution” section of this report for more information about the equity attribution framework.
7 Relates to licensed professionals with the ability to provide investment advice to clients in the Americas.
Consists of cash and deferred compensation awards
and is based on compensable revenues and firm
tenure using a formulaic approach. Also
includes expenses related to compensation commitments
with financial
advisors entered into at the time of recruitment that are subject to vesting requirements.
Recruitment loans to financial advisors were USD 1,749m as of 30 September 2024.
8 Loans and Customer deposits in this
table include customer brokerage receivables
and payables, respectively,
which are presented in separate reporting
lines 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: 3Q24 vs 3Q23
Profit
before
tax increased
by
USD 159m, or
17%, to
USD 1,085m, mainly
due to
higher total
revenues, partly
offset
by
higher
operating expenses.
Underlying
profit
before
tax
was
USD 1,280m,
an
increase
of
30%,
after
excluding USD 419m
of integration-related
expenses and
purchase price
allocation (PPA)
effects from
operating
expenses, as well as USD 224m
of PPA effects and other integration items from total revenues.
UBS Group third quarter 2024 report |
UBS business divisions and Group Items |
Global Wealth Management
19
Total revenues
Total
revenues
increased
by
USD 246m, or
4%,
to USD 6,199m,
largely driven
by
higher
recurring
net fee
and
transaction-based income, partly offset by lower net interest income. Total revenues included the aforementioned
USD 224m of
PPA
effects and
other integration
items, which represented
a USD 164m
decrease compared
with
the USD 388m recorded
for such effects
and items in
the third
quarter of 2023. Excluding
these PPA
effects and
other integration items, underlying total revenues were USD 5,975m,
an increase of 7%.
Net interest income decreased by USD 180m, or 9%, to USD 1,811m
and included USD 221m
of accretion of PPA
adjustments on
financial instruments
and other
PPA effects,
compared with
USD 371m in
the third
quarter of
2023.
The remaining decrease
was largely driven
by lower deposit
margins, including the
effects of shifts
to lower-margin
deposit
products
and
the
effects
of
liquidity
and
funding
costs,
partly
offset
by
higher
deposit
volumes.
The
remaining
decrease
was
also
due
to
lower
loan
revenues,
reflecting
lower
average
volumes.
Excluding
the
aforementioned accretion and other effects, underlying
net interest income was USD 1,590m, a decrease
of 2%.
Recurring
net
fee
income
increased
by
USD 270m,
or
9%,
to
USD 3,235m,
mainly
driven
by
positive
market
performance.
Transaction-based income
increased by
USD 167m, or
17%, to
USD 1,144m, mainly
driven by
higher levels
of client
activity,
particularly
in
the
Americas,
Asia
Pacific
and
Switzerland
regions.
Transaction-based
income
included
USD 6m of accretion of PPA adjustments on financial instruments
and other PPA effects, compared with USD 17m
in the
third quarter
of 2023;
the third
quarter of
2024 also
included negative
USD 3m of
temporary and
incremental
items
directly
related
to
the
integration
of
Credit
Suisse. Excluding
USD 3m
resulting
from
the
aforementioned
accretion
and
other
effects
and
temporary
and
incremental
items,
underlying
transaction-based
income
was
USD 1,140m, an increase of 19%.
Credit loss expense / release
Net credit loss expenses decreased by USD 8m to USD 2m.
Operating expenses
Operating
expenses
increased
by
USD 95m,
or
2%,
to
USD 5,112m,
largely
due
to
an
increase
in
personnel
expenses,
which
resulted
from
higher
financial
advisor
compensation
reflecting
an
increase
in
compensable
revenues. Operating expenses included integration-related
expenses of USD 417m, which represented a USD 29m
decrease
compared with
the USD 446m
of integration-related
expenses recorded
for the
third quarter
of 2023.
Excluding
integration-related
expenses
and
PPA
effects
of
USD 419m,
underlying
operating
expenses
were
USD 4,693m, an increase of 3%.
Invested assets: 3Q24 vs 2Q24
Invested
assets
increased
by
USD 221bn
to
USD 4,259bn,
mainly
driven
by
positive
market
performance
of
USD 146.7bn, positive foreign currency effects of USD 53.7bn and
net new asset inflows of USD 24.7bn.
Loans: 3Q24 vs 2Q24
Loans increased by
USD 6.3bn to
USD 311.5bn, driven
by positive
foreign currency effects,
partly offset
by negative
net new loans of USD 3.0bn.
Customer deposits: 3Q24 vs 2Q24
Customer deposits
increased
by
USD 5.7bn to
USD 481.9bn, mainly
driven by
positive
foreign
currency
effects,
partly offset by net new deposit outflows of USD 3.9bn.
Results: 9M24 vs 9M23
Profit before tax decreased
by USD 108m, or 3%,
to USD 3,057m, mainly
due to higher operating
expenses, partly
offset by the
impact from the
acquisition of the
Credit Suisse Group
and by higher
total revenues. Underlying
profit
before tax was USD 3,713m,
an increase of 20%,
after excluding USD 1,347m
of integration-related expenses
and
PPA effects from
operating expenses, as
well as USD 691m
of PPA
effects and other
integration items from
total
revenues.
UBS Group third quarter 2024 report |
UBS business divisions and Group Items |
Global Wealth Management
20
Total revenues increased by USD 2,393m,
or 15%, to USD 18,395m, largely
driven by the consolidation of
Credit
Suisse revenues for
the full period,
as well as
higher recurring
net fee and
transaction-based income.
Total revenues
included the
aforementioned
USD 691m
of PPA
effects and
other integration
items, which
represented a
USD 117m
increase compared with the USD 574m recorded for
such effects and items in the nine months
of 2023. Excluding
these PPA effects and other integration items,
underlying total revenues were USD 17,705m,
an increase of 15%.
Net interest income
increased by USD 298m,
or 6%, to
USD 5,509m, largely attributable
to the
consolidation of
Credit Suisse net interest
income for the
full period, and included
USD 717m of accretion of
PPA adjustments on
financial
instruments
and
other
PPA
effects,
compared
with
USD 552m
in
the
first
nine
months
of
2023.
The
remaining variance was largely
driven by lower deposit
revenues, mainly as a result
of lower margins and including
the effects of shifts to lower-margin deposit products.
The remaining variance was also due to higher liquidity and
funding costs,
as well
as
lower loan
revenues,
reflecting lower
average volumes.
Excluding
the aforementioned
accretion and other effects, underlying net interest
income was USD 4,791m, an increase
of 3%.
Recurring net
fee income
increased by
USD 1,275m, or
16%, to
USD 9,363m, mainly
driven by
positive market
performance and the consolidation of Credit
Suisse recurring net fee income for the full period.
Transaction-based income
increased by
USD 792m, or
30%, to
USD 3,461m, mainly
driven by
higher levels
of client
activity, particularly
in the
Americas and
Asia Pacific
regions, and
the consolidation
of Credit
Suisse transaction-
based income for the full period. Transaction-based
income included USD 21m of accretion
of PPA adjustments on
financial instruments
and other
PPA effects,
compared with
USD 22m in
the first
nine months
of 2023;
the first
nine months of 2024
also included negative USD 48m of
temporary and incremental items directly
related to the
integration of Credit
Suisse. Excluding negative USD 27m
resulting from the
aforementioned accretion and other
effects and temporary and incremental items, underlying transaction-based income was USD 3,488m, an increase
of 32%.
Other income increased by USD 29m to
USD 63m, mainly due to the
consolidation of Credit Suisse other income
for the full period.
Net credit
loss releases
were USD 2m,
compared with
net credit loss
expenses of
USD 174m in the
first nine
months
of 2023. Prior-year period net
credit loss expenses were largely driven
by the initial recognition of expected credit
loss allowances and provisions with respect
to Credit-Suisse-related positions.
Operating expenses
increased by
USD 2,677m, or
21%, to
USD 15,340m, largely
due to
the consolidation
of Credit
Suisse
expenses
for
the
full
period.
Operating
expenses
included
integration-related
expenses
of
USD 1,340m,
which represented an USD 827m increase compared
with the USD 513m of integration-related expenses recorded
for the
first nine
months of
- The
remaining variance
was due
to higher
personnel expenses,
primarily reflecting
an increase in
financial advisor compensation reflecting
higher compensable revenues, and
also due
to increased
technology expenses.
Excluding integration-related
expenses and
PPA effects of
USD 1,347m, underlying
operating
expenses were USD 13,993m, an increase of
15%.
Regional breakdown of performance measures
As of or for the quarter ended 30.9.24
USD bn, except where indicated
Americas
1
Switzerland
EMEA
Asia Pacific
Global
2
Global Wealth
Management
Total revenues (USD m)
2,838
1,043
1,169
919
230
6,199
Operating profit / (loss) before tax (USD m)
330
368
304
286
(204)
1,085
Operating profit / (loss) before tax (underlying) (USD m)
3
330
368
304
286
(8)
1,280
Cost / income ratio (%)
3
88.1
65.0
74.2
69.4
82.5
Cost / income ratio (underlying) (%)
3
88.1
65.0
74.2
69.4
78.5
Loans, gross
96.5
4
111.5
59.7
42.8
0.9
311.5
Net new loans
0.0
(1.3)
(1.5)
0.0
(0.1)
(3.0)
Net new fee-generating assets
3
7.5
1.6
1.0
4.5
(0.1)
14.6
Fee-generating assets
3
1,063
236
388
170
1
1,858
Net new assets
3
8.0
9.4
0.7
7.3
(0.8)
24.7
Net new assets growth rate (%)
3
1.6
5.0
0.5
4.7
2.4
Invested assets
3
2,096
796
684
678
5
4,259
Advisors (full-time equivalents)
5,986
1,331
1,522
949
109
9,897
1 Including the following business units: United States
and Canada; and Latin America.
2 Includes minor functions, which
are not included in the four regions
individually presented in this table,
and also includes
impacts from accretion of
PPA adjustments on
financial instruments and other
PPA effects and
integration-related expenses.
3 Refer to “Alternative
performance measures” in the
appendix to this report
for the
definition and calculation method.
4 Loans include customer brokerage receivables,
which are presented in a separate reporting line on the balance sheet.
UBS Group third quarter 2024 report |
UBS business divisions and Group Items |
Global Wealth Management
21
Regional comments 3Q24 vs 3Q23, except where
indicated
Americas
Profit
before
tax
increased
by
USD 32m
to
USD 330m.
Total
revenues
increased
by
USD 236m,
or
9%,
to
USD 2,838m, mainly
driven by
higher recurring
net fee
income and
transaction-based
income, partly
offset by
lower
net interest income.
The cost / income
ratio decreased
to 88.1%
from 89.1%. Loans
were broadly stable
compared
with the second quarter of 2024, at USD 96.5bn.
Net new asset inflows were USD 8.0bn.
Switzerland
Profit
before
tax
increased
by
USD 51m
to
USD 368m.
Total
revenues
increased
by
USD 48m,
or
5%,
to
USD 1,043m, mostly driven
by higher transaction-based income
and recurring net
fee income. The
cost / income
ratio
decreased
to
65.0%
from
66.2%.
Loans
increased
5%
compared
with
the
second
quarter
of
2024,
to
USD 111.5bn, mainly reflecting
positive foreign currency
effects, partly offset
by USD 1.3bn of
negative net new
loans. Net new asset inflows were USD 9.4bn.
EMEA
Profit
before
tax
increased
by
USD 75m
to
USD 304m.
Total
revenues
increased
by
USD 31m,
or
3%,
to
USD 1,169m, mainly driven
by higher recurring
net fee income
and transaction-based income.
The cost / income
ratio
decreased
to
74.2%
from
79.1%.
Loans
increased
1%
compared
with
the
second
quarter
of
2024,
to
USD 59.7bn, mainly
driven by
positive foreign
currency effects,
partly offset
by USD 1.5bn
of negative
net new
loans. Net new asset inflows were USD 0.7bn.
Asia Pacific
Profit
before
tax
increased
by
USD 154m
to
USD 286m.
Total
revenues
increased
by
USD 106m,
or
13%,
to
USD 919m,
mainly
driven
by
increases
in
transaction-based
income,
recurring
net
fee
income
and
net
interest
income. The cost / income ratio
decreased to 69.4% from 84.2%. Loans increased
1% compared with the second
quarter of
2024, to
USD 42.8bn, mainly
driven by
positive foreign
currency effects.
Net new
asset inflows
were
USD 7.3bn.
Global
Operating loss before tax
was USD 204m, mainly including USD 419m
of the aforementioned integration-related
expenses and
PPA
effects in
operating expenses,
partly offset
by the
aforementioned USD 224m
related to
PPA
effects and other integration items in total revenues.
UBS Group third quarter 2024 report |
UBS business divisions and Group Items |
Personal & Corporate Banking
22
Personal & Corporate Banking
Personal & Corporate Banking – in Swiss francs
1
As of or for the quarter ended
% change from
Year-to-date
CHF m, except where indicated
30.9.24
30.6.24
30.9.23
2
2Q24
3Q23
30.9.24
30.9.23
2
Results
Net interest income
1,227
1,225
1,387
0
(12)
3,783
3,030
Recurring net fee income
3
363
357
345
1
5
1,068
805
Transaction-based income
3
439
463
479
(5)
(8)
1,350
1,159
Other income
29
16
31
79
(7)
56
53
Total revenues
2,056
2,061
2,242
0
(8)
6,257
5,048
Credit loss expense / (release)
71
92
147
(23)
(52)
202
359
Operating expenses
1,258
1,266
1,246
(1)
1
3,765
2,698
Business division operating profit / (loss) before tax
728
703
849
3
(14)
2,290
1,991
Underlying results
Total revenues as reported
2,056
2,061
2,242
0
(8)
6,257
5,048
of which: PPA effects and other integration items
4
239
223
297
7
(20)
688
425
of which: PPA effects recognized in net interest income
219
201
259
9
(15)
632
374
of which: PPA effects and other integration items recognized in transaction-based income
20
22
38
(7)
(47)
56
52
Total revenues (underlying)
3
1,818
1,838
1,945
(1)
(7)
5,569
4,622
Credit loss expense / (release)
71
92
147
(23)
(52)
202
359
Operating expenses as reported
1,258
1,266
1,246
(1)
1
3,765
2,698
of which: integration-related expenses and PPA effects
3,5
170
165
155
3
10
477
188
Operating expenses (underlying)
3
1,088
1,101
1,091
(1)
0
3,288
2,509
of which: expenses for litigation, regulatory and similar matters
0
0
(9)
(59)
0
(8)
Business division operating profit / (loss) before tax as reported
728
703
849
3
(14)
2,290
1,991
Business division operating profit / (loss) before tax (underlying)
3
659
645
707
2
(7)
2,079
1,753
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
3
(14.3)
19.2
97.6
15.0
62.9
Cost / income ratio (%)
3
61.2
61.4
55.6
60.2
53.4
Average attributed equity (CHF bn)
6
18.9
19.4
19.0
(3)
(1)
19.1
13.7
Return on attributed equity (%)
3,6
15.4
14.5
17.9
15.9
19.4
Net interest margin (bps)
3
199
195
217
202
202
Loans, gross (CHF bn)
244.2
249.5
254.5
(2)
(4)
244.2
254.5
Customer deposits (CHF bn)
252.3
254.7
253.9
(1)
(1)
252.3
253.9
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
3,7
1.2
1.1
0.8
1.2
0.8
Underlying performance measures
Pre-tax profit growth (year-on-year, %)
3
(6.8)
30.5
64.5
18.5
43.4
Cost / income ratio (%)
3
59.9
59.9
56.1
59.0
54.3
Return on attributed equity (%)
3,6
13.9
13.3
14.9
14.5
17.1
1 Comparatives may differ due to
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 Comparative
figures have
been restated
for changes
in business
division perimeters,
Group Treasury
allocations and
Non-core and
Legacy cost allocations,
as well
as changes
in the
equity
attribution framework. Refer to “Note 3 Segment reporting” in the “Consolidated financial
statements” section of this report and to “Changes to segment reporting in
2024” in the “UBS business divisions and Group
Items” section and the “Equity attribution” section of the UBS Group first quarter 2024 report, available under “Quarterly reporting” at ubs.com/investors, for more information.
3 Refer to “Alternative performance
measures” in the appendix
to this report for
the definition and calculation
method.
4 Includes accretion of
PPA adjustments on
financial instruments and other
PPA effects,
as well as temporary
and incremental
items directly related to the integration.
5 Includes temporary, incremental operating expenses directly related to the integration, as well as amortization of newly recognized intangibles resulting from the acquisition
of the Credit Suisse Group.
6 Refer to the “Equity
attribution” section of this report
for more information about
the equity attribution framework.
7 Refer to the “Risk
management and control” section
of this
report for more information about (credit-)impaired exposures.
Results
:
3Q24 vs 3Q23
Profit before tax decreased by CHF 121m, or 14%, to
CHF 728m, mainly due to lower
total revenues, partly offset
by lower net credit
loss expenses.
Underlying profit before tax was
CHF 659m, a decrease of 7%,
after excluding
CHF 239m of
purchase price
allocation (PPA)
effects and
other integration
items from
total revenues,
as well
as
excluding integration-related expenses and PPA effects of CHF 170m from operating expenses.
Total revenues
Total
revenues decreased by CHF 186m, or 8%, to
CHF 2,056m, largely reflecting lower
net interest income. Total
revenues included the aforementioned CHF 239m
of PPA effects and other integration items, which represented a
CHF 58m
decrease compared with the
CHF 297m recorded for such
effects and items in
the third quarter of
2023.
Excluding
the
aforementioned
PPA
effects
and
other
integration
items,
underlying
total
revenues
were
CHF 1,818m, a decrease of 7%.
UBS Group third quarter 2024 report |
UBS business divisions and Group Items |
Personal & Corporate Banking
23
Net interest income
decreased by CHF 160m,
or 12%, to CHF 1,227m
and included CHF 219m
of accretion of
PPA
adjustments on
financial instruments
and other
PPA effects,
compared with
CHF 259m in the
third quarter
of 2023.
The remaining
decrease was
mainly due
to higher
liquidity and
funding costs,
as well
as lower
deposit margins
resulting
from
both
lower
reinvestment
rates
and
shifts
to
lower-margin
deposit
products.
Excluding
the
aforementioned accretion and other effects,
underlying net interest income was CHF 1,008m,
a decrease of 11%.
Recurring net fee income increased by CHF 18m,
or 5%, to CHF 363m, mainly due to higher custody
asset levels.
Transaction-based income
decreased by
CHF 40m, or
8%, to
CHF 439m, and
included an
CHF 18m decrease
in
accretion of PPA adjustments
on financial instruments and
other PPA effects, which
were CHF 20m compared with
CHF 38m
in
the
third
quarter of
2023.
The
decrease
in
transaction-based income
was
also
due
to
lower
trade
finance
revenues,
partly
offset
by
higher
card
fees.
Excluding
the
aforementioned
accretion
and
other
effects,
underlying transaction-based income was
CHF 419m, a decrease of 5%.
Other income was broadly stable at CHF 29m.
Credit loss expense / release
Net credit loss expenses were CHF 71m,
mainly reflecting net credit loss expenses of CHF 80m
on credit-impaired
positions with
a small
number of
corporate counterparties,
partly offset
by net
credit loss
releases of
CHF 9m related
to performing positions. These compared with net credit loss expenses of CHF 147m in the third quarter of 2023,
which reflected both performing and credit-impaired positions.
Operating expenses
Operating expenses increased
by CHF 12m, or
1%, to CHF 1,258m
and included integration-related
expenses of
CHF 148m, which represented a CHF 16m increase compared with the CHF 132m of integration-related expenses
recorded
for
the
third
quarter
of
2023.
Excluding
integration-related
expenses
and
PPA
effects
of
CHF 170m,
underlying operating expenses were CHF 1,088m,
broadly stable year over year.
Results: 9M24 vs 9M23
Profit
before tax
increased by
CHF 299m,
or 15%,
to CHF
2,290m, mainly
due to
the acquisition
of the
Credit
Suisse Group.
Underlying profit
before tax was
CHF 2,079m, an
increase of
19%, after
excluding CHF 688m
of PPA
effects and other integration items from total revenues, as well as excluding integration-related expenses and PPA
effects of CHF 477m from operating expenses.
Total revenues increased
by CHF 1,209m,
or 24%, to
CHF 6,257m, mainly
due to the
consolidation of Credit
Suisse
revenues
for
the
full
period.
Total
revenues
included
the
aforementioned
CHF 688m
of
PPA
effects
and
other
integration items,
which represented
a CHF 263m
increase compared
with the CHF 425m
recorded for such
effects
and items in the first nine months of 2023.
Excluding the aforementioned PPA effects
and other integration items,
underlying total revenues were CHF 5,569m,
an increase of 20%.
Net interest
income increased by
CHF 753m, or
25%, to
CHF 3,783m, largely
as a
result of
the consolidation of
Credit Suisse net
interest income for the
full period,
and included CHF 632m of
accretion of PPA
adjustments on
financial instruments and other PPA effects, compared
with CHF 374m in the first nine months
of 2023. Excluding
the aforementioned accretion
and other effects,
underlying net interest
income was CHF 3,151m,
an increase of
19%.
Recurring net
fee income
increased by
CHF 263m, or
33%, to
CHF 1,068m, mainly
due to
the consolidation
of
Credit Suisse
recurring net fee
income for
the full
period, with
the remaining increase
including higher revenues
from increased custody asset levels.
Transaction-based income
increased by CHF 191m,
or 16%, to
CHF 1,350m, largely as
a result of the
consolidation
of
Credit
Suisse
transaction-based
income
for
the
full
period.
Transaction-based
income
included
CHF 63m
of
accretion of PPA adjustments on financial instruments and other PPA
effects, compared with CHF 52m in the first
nine months of 2023; the first nine months of 2024 also
included negative CHF 7m of temporary and incremental
items directly
related to
the integration
of Credit
Suisse. Excluding
CHF 56m resulting
from the
aforementioned
accretion
and
other
effects
and
temporary
and
incremental
items,
underlying
transaction-based
income
was
CHF 1,294m, an increase of 17%.
Other income was broadly stable at CHF 56m.
UBS Group third quarter 2024 report |
UBS business divisions and Group Items |
Personal & Corporate Banking
24
Net credit
loss expenses
were CHF 202m,
mainly reflecting
net credit
loss expenses
on credit-impaired
positions
with
a
small
number of
corporate
counterparties, partly
offset
by
net credit
loss
releases
related
to
performing
positions. These
compared with
net credit
loss expenses
of CHF 359m
in the
first nine
months of
2023, largely
driven
by the
initial recognition
of expected
credit loss
allowances and
provisions with
respect to
Credit-Suisse-
related positions.
Operating expenses increased by CHF 1,067m,
or 40%, to CHF 3,765m, largely due to the
consolidation of Credit
Suisse expenses for the full
period. Operating expenses
included integration-related expenses
of CHF 409m, which
represented a CHF 251m increase compared with the CHF 158m of
integration-related expenses recorded for the
first
nine
months
of
2023.
Excluding
integration-related
expenses
and
PPA
effects
of
CHF 477m,
underlying
operating expenses were CHF 3,288m, an increase
of 31%.
Personal & Corporate Banking – in US dollars
1
As of or for the quarter ended
% change from
Year-to-date
USD m, except where indicated
30.9.24
30.6.24
30.9.23
2
2Q24
3Q23
30.9.24
30.9.23
2
Results
Net interest income
1,429
1,350
1,559
6
(8)
4,288
3,367
Recurring net fee income
3
422
394
387
7
9
1,210
893
Transaction-based income
3
510
510
539
0
(5)
1,528
1,287
Other income
33
17
34
88
(3)
63
58
Total revenues
2,394
2,272
2,517
5
(5)
7,089
5,604
Credit loss expense / (release)
83
103
160
(19)
(48)
229
398
Operating expenses
1,465
1,396
1,400
5
5
4,265
2,996
Business division operating profit / (loss) before tax
846
773
957
9
(12)
2,594
2,210
Underlying results
Total revenues as reported
2,394
2,272
2,517
5
(5)
7,089
5,604
of which: PPA effects and other integration items
4
278
246
333
13
(16)
780
477
of which: PPA effects recognized in net interest income
255
221
290
15
(12)
717
418
of which: PPA effects and other integration items recognized in transaction-based income
23
24
43
(2)
(46)
64
58
Total revenues (underlying)
3
2,116
2,026
2,184
4
(3)
6,308
5,128
Credit loss expense / (release)
83
103
160
(19)
(48)
229
398
Operating expenses as reported
1,465
1,396
1,400
5
5
4,265
2,996
of which: integration-related expenses and PPA effects
3,5
198
182
174
9
14
540
211
Operating expenses (underlying)
3
1,267
1,213
1,226
4
3
3,725
2,785
of which: expenses for litigation, regulatory and similar matters
0
0
(9)
(56)
0
(9)
Business division operating profit / (loss) before tax as reported
846
773
957
9
(12)
2,594
2,210
Business division operating profit / (loss) before tax (underlying)
3
766
710
798
8
(4)
2,354
1,945
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
3
(11.6)
18.0
116.7
17.4
72.3
Cost / income ratio (%)
3
61.2
61.4
55.6
60.2
53.5
Average attributed equity (USD bn)
6
21.8
21.4
21.4
2
2
21.7
15.2
Return on attributed equity (%)
3,6
15.5
14.5
17.9
15.9
19.4
Net interest margin (bps)
3
202
194
221
201
204
Loans, gross (USD bn)
288.4
277.6
277.9
4
4
288.4
277.9
Customer deposits (USD bn)
297.9
283.4
277.2
5
7
297.9
277.2
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
3,7
1.2
1.1
0.8
1.2
0.8
Underlying performance measures
Pre-tax profit growth (year-on-year, %)
3
(4.1)
29.4
80.7
21.0
51.6
Cost / income ratio (%)
3
59.9
59.9
56.1
59.1
54.3
Return on attributed equity (%)
3,6
14.1
13.3
14.9
14.5
17.1
1 Comparatives may differ due to
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 Comparative
figures have
been restated
for changes
in business
division perimeters,
Group Treasury
allocations and
Non-core and
Legacy cost allocations,
as well
as changes
in the
equity
attribution framework. Refer to “Note 3 Segment reporting” in the “Consolidated financial
statements” section of this report and to “Changes to segment reporting in
2024” in the “UBS business divisions and Group
Items” section and the “Equity attribution” section of the UBS Group first quarter 2024 report, available under “Quarterly reporting” at ubs.com/investors, for more information.
3 Refer to “Alternative performance
measures” in the appendix
to this report for
the definition and calculation
method.
4 Includes accretion of
PPA adjustments on
financial instruments and other
PPA effects,
as well as temporary
and incremental
items directly related to the integration.
5 Includes temporary, incremental operating expenses directly related to the integration, as well as amortization of newly recognized intangibles resulting from the acquisition
of the Credit Suisse Group.
6 Refer to the “Equity
attribution” section of this report
for more information about
the equity attribution framework.
7 Refer to the “Risk
management and control” section
of this
report for more information about (credit-)impaired exposures.
UBS Group third quarter 2024 report |
UBS business divisions and Group Items |
Asset Management
25
Asset Management
Asset Management
1
As of or for the quarter ended
% change from
Year-to-date
USD m, except where indicated
30.9.24
30.6.24
30.9.23
2
2Q24
3Q23
30.9.24
30.9.23
2
Results
Net management fees
3
755
711
757
6
0
2,212
1,809
Performance fees
46
28
18
62
157
104
52
Net gain from disposals
72
28
152
100
Total revenues
873
768
775
14
13
2,416
1,861
Credit loss expense / (release)
0
0
0
0
1
Operating expenses
722
638
738
13
(2)
2,025
1,649
Business division operating profit / (loss) before tax
151
130
37
16
309
392
211
Underlying results
Total revenues as reported
873
768
775
14
13
2,416
1,861
Total revenues (underlying)
4
873
768
775
14
13
2,416
1,861
Credit loss expense / (release)
0
0
0
0
1
Operating expenses as reported
722
638
738
13
(2)
2,025
1,649
of which: integration-related expenses
4
86
98
126
(12)
(32)
255
140
Operating expenses (underlying)
4
636
540
612
18
4
1,770
1,509
of which: expenses for litigation, regulatory and similar matters
6
0
1
6
2
Business division operating profit / (loss) before tax as reported
151
130
37
16
309
392
211
Business division operating profit / (loss) before tax (underlying)
4
237
228
163
4
46
647
351
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
4
309.1
64.8
(73.7)
85.9
(83.5)
Cost / income ratio (%)
4
82.7
83.0
95.2
83.8
88.6
Average attributed equity (USD bn)
5
2.7
2.7
3.1
1
(13)
2.7
2.3
Return on attributed equity (%)
4,5
22.4
19.5
4.8
19.6
12.4
Gross margin on invested assets (bps)
4
20
18
20
19
18
Underlying performance measures
Pre-tax profit growth (year-on-year, %)
4
45.5
145.3
16.2
84.4
(17.6)
Cost / income ratio (%)
4
72.8
70.3
79.0
73.2
81.1
Return on attributed equity (%)
4,5
35.2
34.2
21.1
32.3
20.6
Information by business line / asset
class
Net new money (USD bn)
4
Equities
(4.9)
(8.2)
(5.7)
(9.8)
2.4
Fixed Income
5.3
(5.1)
4.6
14.0
23.5
of which: money market
4.7
(0.9)
5.7
14.2
20.9
Multi-asset & Solutions
(0.6)
(2.1)
(0.5)
(1.0)
1.3
Hedge Fund Businesses
(0.5)
0.0
(1.7)
(0.7)
(2.6)
Real Estate & Private Markets
0.7
0.0
0.7
1.0
2.4
Total net new money excluding associates
0.0
(15.5)
(2.6)
3.4
26.9
of which: net new money excluding money market
(4.8)
(14.6)
(8.3)
(10.8)
6.0
Associates
6
2.0
3.7
1.2
7.8
1.0
Total net new money
2.0
(11.8)
(1.5)
11.2
27.9
Invested assets (USD bn)
4
Equities
747
691
588
8
27
747
588
Fixed Income
471
450
446
5
6
471
446
of which: money market
153
146
146
5
5
153
146
Multi-asset & Solutions
285
277
248
3
15
285
248
Hedge Fund Businesses
60
59
58
2
4
60
58
Real Estate & Private Markets
152
147
149
4
2
152
149
Total invested assets excluding associates
1,714
1,624
1,489
6
15
1,714
1,489
of which: passive strategies
806
756
642
7
26
806
642
Associates
6
83
77
70
8
18
83
70
Total invested assets
1,797
1,701
1,559
6
15
1,797
1,559
UBS Group third quarter 2024 report |
UBS business divisions and Group Items |
Asset Management
26
Asset Management (continued)
1
As of or for the quarter ended
% change from
Year-to-date
USD m, except where indicated
30.9.24
30.6.24
30.9.23
2
2Q24
3Q23
30.9.24
30.9.23
2
Information by region
Invested assets (USD bn)
4
Americas
438
426
387
3
13
438
387
Asia Pacific
7
229
213
225
7
2
229
225
EMEA (excluding Switzerland)
403
380
328
6
23
403
328
Switzerland
728
682
619
7
18
728
619
Total invested assets
1,797
1,701
1,559
6
15
1,797
1,559
Information by channel
Invested assets (USD bn)
4
Third-party institutional
1,010
959
899
5
12
1,010
899
Third-party wholesale
182
181
162
0
12
182
162
UBS’s wealth management businesses
522
484
427
8
22
522
427
Associates
6
83
77
70
8
18
83
70
Total invested assets
1,797
1,701
1,559
6
15
1,797
1,559
1 Comparatives may differ due to 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 Comparative
figures have
been restated
for changes in
business division
perimeters, Group
Treasury allocations
and Non-core
and Legacy
cost allocations,
as well as
changes in
the equity
attribution framework. Refer to “Note 3 Segment reporting” in the
“Consolidated financial statements” section of this report and to “Changes to
segment reporting in 2024” in the “UBS business
divisions and Group
Items” section and the “Equity
attribution” section of the
UBS Group first quarter 2024
report, available under “Quarterly
reporting” at ubs.com/investors,
for more information.
3 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.
4 Refer to “Alternative performance
measures” in the appendix to this report for
the definition and calculation method.
5 Refer to the “Equity attribution” section of
this report for more information about
the equity attribution framework.
6 The invested assets and net new money amounts reported for associates are prepared in accordance with their
local regulatory requirements and practices.
7 Includes invested
assets from associates.
Results: 3Q24 vs 3Q23
Profit before tax increased by
USD 114m, or 309%, to USD
151m, mainly due to a
USD 72m net gain from
both
the closing of the
remaining portion of
the sale of our
Brazilian real estate
fund management business
and the sale
of
our
shareholding
in
Credit
Suisse
Insurance
Linked
Strategies
Ltd
(CSILS).
Underlying
profit
before
tax
was
USD 237m, an increase of 46%, after excluding
integration-related expenses of USD 86m.
Total revenues
Total
revenues
increased
by
USD 98m,
or
13%,
to
USD 873m,
mainly
reflecting
the
total
net
gain
from
the
aforementioned sales.
Net management
fees decreased
by USD 2m
to USD 755m,
mainly reflecting
continued margin
compression, partly
offset by positive market performance and foreign currency effects. In addition, net management fees in the third
quarter of 2024 included a revaluation of USD 19m
related to a real estate fund co-investment.
Performance fees
increased by
USD 28m, or
157%, to
USD 46m, mostly
due to increases
in Hedge Fund
Businesses
and Fixed Income.
Operating expenses
Operating expenses
decreased by
USD 16m, or
2%, to
USD 722m
and included
integration-related expenses
of
USD 86m, which represented a USD 40m decrease compared with the USD 126m of integration-related expenses
recorded
for
the
third
quarter of
2023.
This
decrease
was
almost
entirely
offset
by
higher
personnel expenses,
reflecting
higher
revenues,
and
higher
expenses
for
litigation,
regulatory
and
similar
matters.
Excluding
the
aforementioned integration-related expenses, underlying
operating expenses were USD 636m, an increase
of 4%.
Invested assets: 3Q24 vs 2Q24
Invested
assets
increased
by
USD 96bn
to
USD 1,797bn,
mainly
reflecting
favorable
foreign
currency
effects
of
USD 53bn, positive market performance of
USD 45bn and net new money of USD
2bn. There was also a USD 4bn
decrease in invested
assets mainly related
to both the
sale of our shareholding
in CSILS and
the sale of
our Brazilian
real estate
fund management
business. Excluding
money market
flows and
associates, net
new money
was negative
USD 5bn.
UBS Group third quarter 2024 report |
UBS business divisions and Group Items |
Asset Management
27
Results: 9M24 vs 9M23
Profit before tax
increased by
USD 181m, or
86%, to USD 392m,
mainly reflecting
a USD 100m net
gain from
both
the sale of our
Brazilian real estate fund management business and
the sale of our
shareholding in CSILS, as well
as the consolidation of
Credit Suisse for the full
period. Underlying profit
before tax was USD 647m,
an increase of
84%, after excluding integration-related expenses
of USD 255m.
Total revenues
increased by
USD 555m, or
30%, to
USD 2,416m, primarily reflecting
the consolidation of
Credit
Suisse revenues for
the full
period. Total
revenues in the
first nine
months of 2024
included the
USD 100m total
net gain from the aforementioned sales.
Net management fees increased by USD 403m, or 22%, to USD 2,212m, largely
attributable to the consolidation
of Credit
Suisse net management
fees for the
full period,
positive market
performance and
foreign currency
effects,
as well
as the
revaluation of a
real estate
fund co-investment, partly
offset by
continued margin compression.
In
addition, the first nine months of 2023 included the fee income of the former UBS Hana Asset Management Co.,
Ltd. and negative pass-through fees, with the corresponding
offset in performance fees.
Performance fees
increased
by USD 52m,
or 101%,
to USD 104m,
mostly due
to increases
in Hedge
Fund Businesses
and Fixed Income,
as well as
the consolidation of
Credit Suisse performance
fees for the
full period. These
increases
were partly offset by lower performance fees
related to the aforementioned pass-through
fees in 2023.
Operating expenses
increased by
USD 376m, or
23%, to
USD 2,025m, mainly
reflecting the
consolidation of
Credit
Suisse expenses for the
full period. Operating
expenses included integration-related
expenses of USD 255m,
which
represented a USD 115m increase compared with the USD 140m of integration-related expenses recorded for the
first
nine
months
of
2023.
Excluding
the
aforementioned
integration-related
expenses,
underlying
operating
expenses were USD 1,770m, an increase of
17%.
UBS Group third quarter 2024 report |
UBS business divisions and Group Items |
Investment Bank
28
Investment Bank
Investment Bank
1
As of or for the quarter ended
% change from
Year-to-date
USD m, except where indicated
30.9.24
30.6.24
30.9.23
2
2Q24
3Q23
30.9.24
30.9.23
2
Results
Advisory
220
239
195
(8)
13
648
560
Capital Markets
516
736
514
(30)
0
1,935
1,019
Global Banking
736
974
708
(24)
4
2,582
1,578
Execution Services
3
440
405
317
9
39
1,247
1,002
Derivatives & Solutions
3
964
897
671
7
44
2,795
2,444
Financing
506
526
465
(4)
9
1,574
1,538
Global Markets
1,910
1,829
1,453
4
31
5,616
4,984
of which: Equities
1,432
1,355
1,076
6
33
4,140
3,545
of which: Foreign Exchange, Rates and Credit
477
474
377
1
27
1,476
1,439
Total revenues
2,645
2,803
2,162
(6)
22
8,199
6,562
Credit loss expense / (release)
9
(6)
4
120
34
142
Operating expenses
2,231
2,332
2,412
(4)
(7)
6,728
6,302
Business division operating profit / (loss) before tax
405
477
(254)
(15)
1,437
118
Underlying results
Total revenues as reported
2,645
2,803
2,162
(6)
22
8,199
6,562
of which: PPA effects
4
185
310
251
(40)
(26)
787
306
of which: PPA effects recognized in Global Banking revenue line
180
306
251
(41)
(28)
775
306
Total revenues (underlying)
5
2,461
2,493
1,911
(1)
29
7,412
6,257
Credit loss expense / (release)
9
(6)
4
120
34
142
Operating expenses as reported
2,231
2,332
2,412
(4)
(7)
6,728
6,302
of which: integration-related expenses
5
156
245
368
(36)
(58)
543
529
Operating expenses (underlying)
5
2,076
2,087
2,043
(1)
2
6,185
5,773
of which: expenses for litigation, regulatory and similar matters
(1)
(1)
0
(41)
(3)
65
Business division operating profit / (loss) before tax as reported
405
477
(254)
(15)
1,437
118
Business division operating profit / (loss) before tax (underlying)
5
377
412
(136)
(9)
1,193
341
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
5
n.m.
n.m.
n.m.
n.m.
(93.4)
Cost / income ratio (%)
5
84.4
83.2
111.6
82.1
96.0
Average attributed equity (USD bn)
6
17.0
17.0
17.1
1
0
17.0
15.6
Return on attributed equity (%)
5,6
9.5
11.3
(5.9)
11.3
1.0
Underlying performance measures
Pre-tax profit growth (year-on-year, %)
5
n.m.
n.m.
n.m.
249.4
(81.8)
Cost / income ratio (%)
5
84.4
83.7
106.9
83.4
92.3
Return on attributed equity (%)
5,6
8.8
9.7
(3.2)
9.4
2.9
1 Comparatives may differ due to
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 Comparative
figures have
been restated
for changes
in business
division perimeters,
Group Treasury
allocations and
Non-core and
Legacy cost allocations,
as well
as changes
in the
equity
attribution framework. Refer to “Note 3 Segment reporting” in the “Consolidated financial
statements” section of this report and to “Changes to segment reporting in 2024”
in the “UBS business divisions and Group
Items” section and the “Equity attribution” section of the
UBS Group first quarter 2024 report, available under “Quarterly
reporting” at ubs.com/investors, for more information.
3 Comparative figures for the quarter
ended 30 September 2023 and for the
nine-month period ended 30 September 2023 have been
restated as a result of the shift
of the foreign exchange products that are traded over
electronic platforms from Execution
Services to Derivatives & Solutions. The restatement had no effect on total Global Markets revenues.
4 Includes accretion of PPA adjustments on financial instruments and other PPA effects.
5 Refer to “Alternative
performance measures” in the appendix to this report for the definition and calculation method.
6 Refer to the “Equity attribution” section of this report for more information about the equity attribution framework.
UBS Group third quarter 2024 report |
UBS business divisions and Group Items |
Investment Bank
29
Results: 3Q24 vs 3Q23
Profit before
tax was
USD 405m, compared
with a loss
before tax of
USD 254m in
the third quarter
of 2023,
mainly
due
to
higher
total
revenues and
lower
operating expenses.
Underlying profit
before
tax
was
USD 377m, after
excluding USD 185m of purchase price allocation
(PPA) effects and USD 156m of integration-related
expenses.
Total revenues
Total revenues increased by
USD 483m, or
22%, to
USD 2,645m, due
to higher
Global Markets
and Global
Banking
revenues,
and
included
USD 185m
of
PPA
effects,
which
represented
a
USD 66m
decrease
compared
with
the
USD 251m recorded for
such effects in
the third quarter
of 2023. Excluding
these effects,
underlying total
revenues
were USD 2,461m, an increase of 29%.
Global Banking
Global Banking
revenues increased
by USD 28m,
or 4%,
to USD 736m
and included
a decrease
of USD 71m
of
accretion of PPA
adjustments on financial instruments and other PPA
effects. Excluding these accretion and other
effects, underlying Global Banking revenues increased by USD 98m,
or 21%.
Advisory revenues
increased by
USD 25m, or
13%, to
USD 220m, mainly
due to
higher merger
and acquisition
transaction revenues, which increased by
USD 24m, or 13%.
Capital Markets revenues increased by
USD 2m to USD 516m and included
a decrease of USD 71m of accretion
of
PPA
adjustments
on
financial
instruments
and
other
PPA
effects.
Excluding
these
accretion
and
other
effects,
underlying
Capital
Markets
revenues
increased
by
USD 73m,
or
28%,
with
increases
across
all
products.
Debt
Capital Markets revenues increased by USD 10m, or 12%, Equity Capital Markets revenues increased by USD 5m,
or 9%, and Leveraged Capital Markets revenues
increased by USD 4m, or 4%.
Global Markets
Global Markets revenues increased by USD 457m, or
31%, to USD 1,910m, primarily driven by higher Derivatives
& Solutions and Execution Services revenues.
Execution
Services
revenues
increased
by
USD 123m,
or
39%,
to
USD 440m,
mainly
due
to
increases
in
Cash
Equities across all regions.
Derivatives &
Solutions revenues
increased by
USD 293m, or
44%, to
USD 964m, with
increases across
all products,
led by Equity Derivatives,
Foreign Exchange and Rates.
Financing revenues increased
by USD 41m, or
9%, to USD 506m
and included a
USD 67m gain from
the sale of
our investment in an associate.
Equities
Global Markets Equities revenues increased by USD 356m, or 33%,
to USD 1,432m, mostly driven by increases in
Equity Derivatives and Cash Equities, as well
as by the aforementioned gain from sale.
Foreign Exchange, Rates and Credit
Global
Markets
Foreign
Exchange,
Rates
and
Credit
revenues
increased
by
USD 100m,
or
27%,
to
USD 477m,
primarily driven by increases in Foreign Exchange and Rates.
Credit loss expense / release
Net credit loss expenses increased by USD 5m to USD 9m.
Operating expenses
Operating expenses
decreased
by USD 181m,
or 7%,
to USD 2,231m,
largely due
to a
decrease
in integration-
related expenses,
which totaled USD 156m, representing a USD 212m decrease compared with the USD 368m of
integration-related
expenses
recorded
for
the
third
quarter
of
2023.
Excluding
integration-related
expenses,
underlying operating expenses were USD 2,076m, an
increase of 2%.
Results: 9M24 vs 9M23
Profit before
tax increased by
USD 1,319m to USD 1,437m,
mainly due
to higher total
revenues, partly
offset by
higher operating
expenses. Underlying
profit before
tax was
USD 1,193m, after
excluding USD 787m
of PPA
effects
and USD 543m of integration-related expenses.
Total revenues
Total revenues increased by
USD 1,637m, or
25%, to
USD 8,199m, mainly
due to
higher Global
Banking and
Global
Markets
revenues.
The
consolidation
of
Credit
Suisse
revenues
included
USD 787m
of
PPA
effects,
which
UBS Group third quarter 2024 report |
UBS business divisions and Group Items |
Investment Bank
30
represented a USD 481m increase compared
with the USD 306m recorded for
such effects in the first
nine months
of 2023. Excluding these effects, underlying total revenues were USD
7,412m, an increase of 18%.
Global Banking
Global Banking revenues increased by USD 1,004m, or 64%, to USD 2,582m, including an increase of USD 469m
of accretion
of PPA adjustments
on financial
instruments and
other PPA effects.
Excluding these
accretion and
other
effects, underlying Global Banking revenues were USD 1,808m, an
increase of 42%.
Advisory revenues
increased by
USD 88m, or
16%, to
USD 648m, mainly
due to
higher merger
and acquisition
transaction revenues, which increased by
USD 71m, or 14%.
Capital Markets revenues
increased by USD 916m,
or 90%, to USD
1,935m, including an
increase of USD 469m
of
accretion of PPA adjustments on
financial instruments and other PPA
effects. Excluding these accretion and
other
effects, underlying Capital Markets revenues increased by
USD 447m, or 63%, with increases
across all products.
Leveraged Capital Markets revenues increased by
USD 215m, or 129%, Debt Capital
Markets revenues increased
by USD 72m, or 32%, and Equity Capital
Markets revenues increased by USD 57m,
or 33%.
Global Markets
Global Markets revenues increased by USD 632m, or
13%, to USD 5,616m, primarily driven by higher Derivatives
& Solutions and Execution Services revenues.
Execution Services revenues increased by USD 245m, or 24%, to USD 1,247m, mainly driven by increases in
Cash
Equities across all regions.
Derivatives & Solutions revenues
increased by USD 351m, or 14%,
to USD 2,795m, with increases largely
in Equity
Derivatives and Foreign Exchange revenues.
Financing
revenues
increased
by
USD 36m,
or
2%,
to
USD 1,574m
and
included
a
USD 67m
gain
from
the
aforementioned sale of our investment in an
associate.
Equities
Global Markets Equities revenues increased by USD 595m, or 17%,
to USD 4,140m, mainly driven by increases in
Equity Derivatives and Cash Equities, as well
as by the aforementioned gain from sale.
Foreign Exchange, Rates and Credit
Global Markets Foreign Exchange, Rates and Credit revenues increased by
USD 37m, or 3%, to USD 1,476m.
Credit loss expense / release
Net
credit
loss
expenses
were
USD 34m,
mainly
reflecting
net
credit
loss
expenses
on
performing
and
credit-
impaired positions.
This compared
with net
credit loss
expenses of
USD 142m in
the first
nine months
of 2023,
largely driven
by the
initial recognition
of expected
credit loss
allowances and
provisions with
respect to
Credit-
Suisse-related positions.
Operating expenses
Operating expenses increased
by USD 426m, or
7%, to USD 6,728m,
and included integration-related
expenses of
USD 543m, which represented a USD 14m increase
compared with the USD 529m of
integration-related expenses
recorded for the first nine months of 2023. Excluding
integration-related expenses, underlying operating
expenses
were USD 6,185m, an
increase of 7%,
mainly due to
the consolidation
of Credit Suisse
expenses for
the full
period,
increases in technology expenses and higher variable
compensation.
UBS Group third quarter 2024 report |
UBS business divisions and Group Items |
Non-core and Legacy
31
Non-core and Legacy
Non-core and Legacy
1
As of or for the quarter ended
% change from
Year-to-date
USD m, except where indicated
30.9.24
30.6.24
30.9.23
2
2Q24
3Q23
30.9.24
30.9.23
2
Results
Total revenues
262
401
366
(35)
(29)
1,664
551
Credit loss expense / (release)
28
(1)
59
(54)
63
178
Operating expenses
837
807
2,068
4
(60)
2,655
3,304
Operating profit / (loss) before tax
(603)
(405)
(1,762)
49
(66)
(1,054)
(2,930)
Underlying results
Total revenues as reported
262
401
366
(35)
(29)
1,664
551
Total revenues (underlying)
3
262
401
366
(35)
(29)
1,664
551
Credit loss expense / (release)
28
(1)
59
(54)
63
178
Operating expenses as reported
837
807
2,068
4
(60)
2,655
3,304
of which: integration-related expenses
3
270
325
920
(17)
(71)
837
1,024
Operating expenses (underlying)
3
567
481
1,149
18
(51)
1,817
2,279
of which: expenses for litigation, regulatory and similar matters
(91)
(172)
(2)
(47)
(279)
670
Operating profit / (loss) before tax as reported
(603)
(405)
(1,762)
49
(66)
(1,054)
(2,930)
Operating profit / (loss) before tax (underlying)
3
(333)
(80)
(842)
317
(60)
(216)
(1,906)
Performance measures and other information
Average attributed equity (USD bn)
4
8.5
10.1
10.5
(16)
(19)
9.7
4.8
Risk-weighted assets (USD bn)
44.8
49.6
79.9
(10)
(44)
44.8
79.9
Leverage ratio denominator (USD bn)
69.0
80.0
172.7
(14)
(60)
69.0
172.7
1 Comparatives may differ due to 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 Comparative
figures have
been restated
for changes in
business division
perimeters, Group
Treasury allocations
and Non-core
and Legacy
cost allocations,
as well as
changes in
the equity
attribution framework. Refer to “Note 3 Segment reporting” in the
“Consolidated financial statements” section of this report and to “Changes
to segment reporting in 2024” in the “UBS business
divisions and Group
Items” section and the “Equity attribution” section of the UBS Group first quarter 2024 report, available under “Quarterly reporting” at ubs.com/investors, for more information.
3 Refer to “Alternative performance
measures” in the appendix to this report for the definition and calculation method.
4 Refer to the “Equity attribution” section of this report for more information about the equity attribution framework.
Composition of Non-core and Legacy
USD bn
RWA
Total assets
LRD
30.9.24
30.6.24
30.9.24
30.6.24
30.9.24
30.6.24
Exposure category
Equities
1.0
1.5
4.5
6.4
4.2
7.6
Macro
4.7
5.2
33.6
33.8
14.4
16.8
Loans
4.4
5.8
4.3
7.5
6.0
6.2
Securitized products
6.4
7.7
7.8
13.2
10.4
12.8
Credit
0.4
0.7
0.2
0.2
0.7
1.3
High-quality liquid assets
31.7
32.6
31.7
32.6
Operational risk
27.1
27.1
Other
0.8
1.6
3.0
2.9
1.6
2.7
Total
44.8
49.6
85.1
96.6
69.0
80.0
Results: 3Q24 vs 3Q23
Loss before
tax was
USD 603m, compared
with a
loss
before
tax of
USD 1,762m in
the third
quarter of
2023.
Underlying
loss
before
tax was
USD 333m,
a
decrease
of
60%,
after
excluding
integration-related expenses
of
USD 270m.
Total revenues
Total
revenues
decreased
by
USD 104m,
or
29%,
to
USD 262m,
mainly
due
to
lower
net
interest
income
and
trading revenues as
a result of
portfolio reductions.
Total revenues in the third
quarter of
2024 included
a USD 67m
gain from the sale of our investment in an associate.
UBS Group third quarter 2024 report |
UBS business divisions and Group Items |
Non-core and Legacy
32
Credit loss expense / release
Net credit
loss expenses
decreased by
USD 31m to
USD 28m and
mainly reflected
net credit
loss expenses
on credit-
impaired positions with a small number of corporate counterparties.
Operating expenses
Operating expenses
decreased by
USD 1,231m, or
60%, to
USD 837m, mainly
due to
decreases
in integration-
related expenses,
professional fees,
outsourcing expenses
and personnel
expenses. Operating
expenses included
integration-related expenses of
USD 270m, which was
USD 650m lower than
the amount
recorded for
the third
quarter of 2023, which included a one-time fee
of USD 289m related to a provision
for an onerous contract, and
also real estate
expenses.
In addition,
operating expenses
in the
third quarter
of 2024
included releases
of USD 84m
of
IFRS 3
acquisition-related
contingent
liabilities
following
settlements
reached
in
that
quarter.
Excluding
the
aforementioned
integration-related expenses,
underlying
operating expenses
in
the
third
quarter
of
2024
were
USD 567m, a decrease of 51%.
Risk-weighted assets and leverage ratio denominator:
3Q24 vs 2Q24
Risk-weighted assets (RWA)
decreased by USD 4.8bn
to USD 44.8bn,
and the leverage
ratio denominator (the
LRD)
decreased
by
USD 11.0bn
to
USD 69.0bn.
The
active
unwinding
of
Non-core
and
Legacy
assets
resulted
in
a
decrease in RWA,
mainly related to the loan and securitized
products portfolios,
and a decrease in the LRD, mainly
driven by the equity, macro and securitized products portfolios.
Results: 9M24 vs 9M23
Loss before tax
was USD 1,054m, compared with
loss before tax
of USD 2,930m. Underlying loss
before tax was
USD 216m, a decrease of 89%, after excluding
integration-related expenses of USD 837m.
Total revenues
Total
revenues were
USD 1,664m, which
was USD 1,113m
higher than
the total
revenues recorded
for the
first
nine months of
2023, and included
the impact of
the consolidation of
Credit Suisse revenues
for the full
period.
Total revenues reflected net gains from
position exits,
along with net
interest income
from securitized products
and
credit products. Total revenues also
included a
net gain
of USD 272m,
after the
accounting for
the PPA adjustments
at the closing of the
acquisition of the Credit Suisse
Group, from the
sale of assets from the
former Credit Suisse
securitized
products
group
to
Apollo
Management
Holdings
and
certain
other
entities
(collectively,
Apollo).
In
addition, total
revenues included
the aforementioned
USD 67m gain
from the
sale of
our investment
in an
associate.
›
Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial
statements” section of this report for information about the conclusion of an investment management agreement
with Apollo and the transfer of senior secured asset-based financing
Credit loss expense / release
Net credit loss
expenses were USD 63m,
mainly reflecting net
credit loss expenses
on credit-impaired positions
with
a small number
of corporate counterparties,
partly offset by
net credit loss releases
related to performing
positions.
These compared with net credit loss expenses of USD 178m in
the first nine months of 2023, largely driven
by the
initial recognition of expected credit loss allowances and
provisions with respect to Credit-Suisse-related positions.
Operating expenses
Operating expenses were
USD 2,655m, which was USD 649m
lower than the
amount recorded
for the first
nine
months of
2023,
mainly due
to
decreases
in integration-related
expenses and
outsourcing
expenses. Operating
expenses
included
integration-related
expenses
of
USD 837m,
which
was
USD 187m
lower
than
the
amount
recorded for
the first
nine months
of 2023.
In addition,
operating expenses
in the
first nine
months of
2024 included
releases of
USD 234m of
IFRS 3 acquisition-related
contingent
liabilities following
settlements reached
in the
second
and third quarters
of 2024. The
first nine months of
2023 included a USD 665m
increase in provisions
related to
the US
residential mortgage-backed
securities litigation
matter,
which was
settled in
the third
quarter of
2023.
Excluding the aforementioned
integration-related expenses,
underlying operating
expenses in the
first nine months
of 2024 were USD 1,817m, a decrease of 20%.
UBS Group third quarter 2024 report |
UBS business divisions and Group Items |
Group Items
33
Group Items
Group Items
1
As of or for the quarter ended
% change from
Year-to-date
USD m
30.9.24
30.6.24
30.9.23
2
2Q24
3Q23
30.9.24
30.9.23
2
Results
Total revenues
(39)
(392)
(78)
(90)
(50)
(786)
(602)
Credit loss expense / (release)
0
0
5
(2)
7
Operating expenses
(84)
(15)
6
467
(132)
422
Operating profit / (loss) before tax
45
(377)
(89)
(652)
(1,031)
Underlying results
Total revenues as reported
(39)
(392)
(78)
(90)
(50)
(786)
(602)
of which: PPA effects and other integration items
3
(25)
(8)
(14)
(37)
(20)
Total revenues (underlying)
4
(14)
(384)
(64)
(96)
(78)
(749)
(582)
Credit loss expense / (release)
0
0
5
(2)
7
Operating expenses as reported
(84)
(15)
6
467
(132)
422
of which: integration-related expenses
4
(11)
(2)
(5)
(12)
342
of which: acquisition-related costs
26
202
Operating expenses (underlying)
4
(74)
(13)
(15)
468
401
(120)
(122)
of which: expenses for litigation, regulatory and similar matters
0
3
0
3
1
Operating profit / (loss) before tax as reported
45
(377)
(89)
(652)
(1,031)
Operating profit / (loss) before tax (underlying)
4
60
(371)
(55)
(627)
(467)
1 Comparatives may differ due to 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 Comparative
figures have
been restated
for changes in
business division
perimeters, Group
Treasury allocations
and Non-core
and Legacy
cost allocations,
as well as
changes in
the equity
attribution framework. Refer to “Note 3 Segment reporting” in the
“Consolidated financial statements” section of this report and to “Changes to
segment reporting in 2024” in the “UBS business
divisions and Group
Items” section
and the
“Equity attribution”
section of
the UBS
Group first
quarter 2024
report, available
under “Quarterly
reporting” at
ubs.com/investors,
for more
information.
3 Includes accretion
of PPA
adjustments on financial instruments
and other PPA
effects, as well as
temporary and incremental items
directly related to the
integration.
4 Refer to “Alternative
performance measures” in the
appendix to this
report for the definition and calculation method.
Results: 3Q24 vs 3Q23
Profit before tax was
USD 45m, mainly
driven by mark-to-market
gains in Group
hedging and
own debt, compared
with a loss before tax of USD 89m. Underlying profit before tax was USD 60m, after excluding negative USD 25m
of purchase price allocation (PPA)
effects and other integration items from total revenues,
and negative USD 11m
of integration-related
expenses from
operating expenses,
compared with
an underlying
loss before
tax of
USD 55m,
after excluding
USD 26m of
acquisition-related costs
and negative
USD 5m of
integration-related expenses from
operating expenses and negative USD 14m of
PPA effects and other integration items from total revenues.
Income
from
Group
hedging
and
own
debt,
including
hedge
accounting
ineffectiveness,
was
net
USD 200m,
compared with net
income of USD 100m.
The gains in
the third quarter
of 2024 were
driven by mark-to-market
effects on portfolio-level economic hedges,
mainly due to decreasing interest rates.
Results: 9M24 vs 9M23
Loss before tax decreased by USD 379m, or 37%, to USD 652m, mainly
driven by mark-to-market losses in Group
hedging and
own debt.
Underlying loss
before tax
was USD 627m,
after excluding
negative USD 37m
of PPA
effects
and
other
integration
items
from
total
revenues
and
negative
USD 12m
of
integration-related
expenses
from
operating
expenses,
compared
with
an
underlying
loss
before
tax
of
USD 467m,
after
excluding
USD 342m
of
integration-related
expenses
and
USD 202m
of
acquisition-related
costs
from
operating
expenses
and
negative
USD 20m of PPA effects and other integration
items from total revenues.
Income
from
Group
hedging
and
own
debt,
including
hedge
accounting
ineffectiveness,
was
net
negative
USD 185m, compared
with net
negative income
of USD 23m.
The losses
in the
first nine
months of
2024 were
driven by mark-to-market
effects on portfolio-level
economic hedges, mainly
due to cross-currency-basis
widening.
UBS Group third quarter 2024 report |
Risk, capital, liquidity and funding, and
balance sheet
34
Risk, capital, liquidity and
funding, and balance sheet
Management report
Table of contents
35
Risk management and control
35
Credit risk
37
Market risk
38
Country risk
39
Non-financial risk
40
Capital management
42
Total
loss-absorbing capacity
45
Risk-weighted assets
47
Leverage ratio denominator
49
Equity attribution
50
Liquidity and funding management
50
Strategy, objectives and governance
50
Liquidity coverage ratio
50
Net stable funding ratio
51
Balance sheet and off-balance sheet
51
Balance sheet assets
51
Balance sheet liabilities
52
Equity
53
Off-balance sheet
54
Share information and earnings per share
UBS Group third quarter 2024 report |
Risk, capital, liquidity and funding, and
balance sheet | Risk management and control
35
Risk management and control
This
section
provides
information
about
key
developments
during
the
reporting
period
and
should
be
read
in
conjunction with
the “Risk
management and
control” section
of the
UBS Group
Annual Report
2023, available
under “Annual
reporting” at
ubs.com/investors
, and
the “Recent
developments” section of
this report
for more
information about the integration of Credit
Suisse.
Credit risk
Overall banking products exposure
Overall banking
products exposure
increased by
USD 12bn to
USD 1,065bn as
of 30 September
2024, primarily
reflecting currency
effects, partly
offset by
negative net
new loans
in Personal
& Corporate
Banking and
Global
Wealth Management and a decrease in balances at central
banks.
Total
net credit
loss
expenses in
the
third quarter
of 2024
were USD 121m,
reflecting net
releases of
USD 15m
related to performing positions and net expenses
of USD 136m on credit-impaired positions.
›
Refer to the “Balance sheet and off-balance sheet” section of this report for more information about balance sheet
movements
›
Refer to the “Group performance” section and “Note 9 Expected credit loss measurement” in the “Consolidated
financial statements” section of this report for more information about credit loss expense / release
Loan underwriting
In the Investment Bank, mandated loan underwriting
commitments on a notional basis increased by USD 1.5bn
to
USD 4.3bn as of
30 September 2024,
driven by new
mandates, partly offset
by deal syndications
and cancellations.
As of 30 September 2024, USD 0.1bn of these
commitments had not been distributed
as originally planned.
As of
30 September 2024, Non-core and Legacy had
no loan underwriting commitments.
Loan underwriting exposures
in the Investment
Bank are classified
as held for
trading, with
fair values reflecting
the
market conditions
at the
end of
the quarter.
Credit hedges
are in place
to help
protect against
fair value
movements
in the portfolio.
UBS Group third quarter 2024 report |
Risk, capital, liquidity and funding, and
balance sheet | Risk management and control
36
Banking and traded products exposure in the business divisions and Group Items
30.9.24
USD m
Global
Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core
and Legacy
Group
Items
Total
Banking products
1,2
Gross exposure
471,513
449,650
1,671
88,207
33,493
20,529
1,065,063
of which: loans and advances to customers (on-balance sheet)
306,747
288,387
14
18,503
1,758
2,308
617,718
of which: guarantees and loan commitments (off-balance sheet)
19,348
47,158
10
34,539
2,922
17,977
121,955
Traded products
2,3
Gross exposure
14,834
4,258
0
40,420
59,512
of which: over-the-counter derivatives
10,877
3,681
0
9,585
24,143
of which: securities financing transactions
205
0
0
18,696
18,901
of which: exchange-traded derivatives
3,752
577
0
12,139
16,468
Other credit lines, gross
4
73,443
76,620
0
3,018
4
0
153,085
Total credit-impaired exposure, gross
1,442
3,695
0
398
1,098
0
6,633
of which: stage 3
1,327
3,316
0
351
163
0
5,157
of which: PCI
115
379
0
47
935
0
1,475
Total allowances and provisions for expected credit losses
317
1,393
0
328
385
7
2,431
of which: stage 1
125
319
0
122
6
7
579
of which: stage 2
69
265
0
99
3
0
436
of which: stage 3
118
807
0
106
116
0
1,147
of which: PCI
5
2
0
2
261
0
269
30.6.24
USD m
Global
Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core
and Legacy
Group
Items
Total
Banking products
1,2
Gross exposure
469,136
435,333
1,436
100,115
31,866
15,598
1,053,484
of which: loans and advances to customers (on-balance sheet)
300,567
277,634
11
17,438
5,069
130
600,849
of which: guarantees and loan commitments (off-balance sheet)
19,663
48,443
10
34,702
3,020
16,789
122,626
Traded products
2,3
Gross exposure
13,459
3,937
0
42,155
59,551
of which: over-the-counter derivatives
9,718
3,415
0
10,897
24,029
of which: securities financing transactions
343
0
0
21,079
21,422
of which: exchange-traded derivatives
3,398
522
0
10,180
14,099
Other credit lines, gross
4
69,061
77,486
0
2,294
3
87
148,931
Total credit-impaired exposure, gross
1,373
3,325
0
491
1,086
0
6,275
of which: stage 3
1,221
2,953
0
441
169
0
4,784
of which: PCI
152
371
0
50
918
0
1,492
Total allowances and provisions for expected credit losses
5
320
1,273
0
329
328
7
2,258
of which: stage 1
136
327
0
121
6
7
597
of which: stage 2
68
235
0
96
5
0
404
of which: stage 3
110
718
0
112
114
0
1,053
of which: PCI
7
(6)
0
1
203
0
204
1 IFRS 9 gross exposure
for banking products includes
the following financial instruments
in scope of expected
credit loss requirements: balances
at central banks,
amounts due from banks,
loans and advances to
customers, other financial assets at amortized cost, guarantees and irrevocable loan commitments.
2 Internal management view of credit risk, which differs in certain respects from
IFRS Accounting Standards.
3 As
counterparty risk for traded products is
managed at counterparty level, no further
split between exposures in the Investment
Bank, Non-core and Legacy,
and Group Items is provided.
4 Unconditionally revocable
committed credit lines.
5 Negative balances are representative of a net improvement in credit quality since the acquisition of the respective financial instrument,
which is reflected as a negative ECL allowance.
Collateralization of Loans and advances to customers
1
Global Wealth Management
Personal & Corporate Banking
USD m, except where indicated
30.9.24
30.6.24
30.9.24
30.6.24
Secured by collateral
301,089
292,302
249,314
237,866
Residential real estate
112,883
107,910
199,016
187,409
Commercial / industrial real estate
9,804
9,963
40,126
38,822
Cash
29,597
30,139
2,828
2,906
Equity and debt instruments
121,586
119,116
2,990
3,206
Other collateral
2
27,219
25,174
4,353
5,523
Subject to guarantees
646
705
7,262
7,398
Uncollateralized and not subject to guarantees
5,013
7,560
31,812
32,369
Total loans and advances to customers, gross
306,747
300,567
288,387
277,634
Allowances
(233)
(238)
(1,162)
(1,055)
Total loans and advances to customers, net of allowances
306,514
300,329
287,225
276,579
Collateralized loans and advances to customers in % of total loans
and advances to customers, gross (%)
98.2
97.3
86.5
85.7
1 Collateral arrangements generally
incorporate a range of
collateral, including cash, securities,
real estate and other collateral.
UBS applies a risk-based approach that
generally prioritizes collateral according
to its
liquidity profile. In the case of loan facilities with funded and unfunded elements, the collateral is first allocated to the funded
element. For legacy Credit Suisse exposure, a risk-based approach is applied that generally
prioritizes real estate collateral and prioritizes other
collateral according to its liquidity profile.
In the case of loan facilities with funded and
unfunded elements, the collateral is proportionately allocated.
2 Includes
but is not limited to life insurance contracts, rights in respect of subscription or capital commitments
from fund partners, inventory, gold and other commodities.
UBS Group third quarter 2024 report |
Risk, capital, liquidity and funding, and
balance sheet | Risk management and control
37
Market risk
UBS
Group
excluding
certain
legacy
Credit
Suisse
components
continued
to
maintain
generally
low
levels
of
management value-at-risk (VaR). Average management VaR
(1-day, 95%
confidence level) increased to USD 12m
from USD 9m in the third
quarter of 2024, mainly driven by the Investment Bank’s Rates business.
There were no
new
VaR
negative
backtesting
exceptions
in
the
third
quarter
of
2024.
The
number
of
negative
backtesting
exceptions within the most recent 250-business-day
window remained at zero.
Average
management VaR
(1-day,
98%
confidence level)
of
the
legacy
Credit
Suisse
components decreased
to
USD 11m from USD 15m in the third quarter of 2024, driven by continued strategic migration of positions to UBS
from the
former Investment
Bank (Credit
Suisse) and
reductions in
Non-core and
Legacy.
In the
third quarter
of
2024, the aforementioned legacy
Credit Suisse components had three
new negative backtesting exceptions
driven
by Non-core and
Legacy. Two backtesting
exceptions were caused
by market moves
and one backtesting
exception
was
due
to
valuation
adjustments
related
to
additional
exit
cost
reserves.
The
number
of
negative
backtesting
exceptions within the most recent 250-business-day
window increased to four from one.
As the number
of negative backtesting
exceptions for the
legacy Credit Suisse
components also remained below
five,
the Swiss
Financial Market
Supervisory Authority
(FINMA) VaR
multiplier derived
from negative
backtesting
exceptions for market risk
risk-weighted assets was unchanged
compared with the prior
quarter, at 3.0,
for both
the UBS
Group excluding
certain legacy
Credit Suisse
components and
the aforementioned
legacy Credit
Suisse
components.
Management value-at-risk (1-day, 95% confidence, 5 years of historical data) of the business divisions and Group Items
excluding certain legacy Credit Suisse components, by general market risk type
1,2
Average by risk type
USD m
Min.
Max.
Period end
Average
Equity
Interest
rates
Credit
spreads
Foreign
exchange
Commodities
Global Wealth Management
1
2
2
1
0
1
2
0
0
Personal & Corporate Banking
0
0
0
0
0
0
0
0
0
Asset Management
0
0
0
0
0
0
0
0
0
Investment Bank
5
17
13
10
3
15
8
3
5
Non-core and Legacy
1
3
1
1
0
1
1
0
0
Group Items
4
6
6
5
1
4
3
1
0
Diversification effect
3,4
(6)
(6)
(1)
(5)
(4)
(1)
0
Total as of 30.9.24
7
19
15
12
3
16
10
4
5
Total as of 30.6.24
6
15
8
9
4
13
9
4
3
Management value-at-risk (1-day, 98% confidence, 2 years of historical data) of certain legacy Credit Suisse
components of the business divisions and Group Items, by general market risk type
1,2
Average by risk type
USD m
Min.
Max.
Period end
Average
Equity
Interest
rates
Credit
spreads
Foreign
exchange
Commodities
Global Wealth Management
1
2
1
2
1
0
2
0
0
Personal & Corporate Banking
0
0
0
0
0
0
0
0
0
Asset Management
0
0
0
0
0
0
0
0
0
Investment Bank
2
3
2
2
1
1
1
0
0
Non-core and Legacy
8
11
8
9
3
3
8
1
0
Group Items
0
0
0
0
0
0
0
0
0
Diversification effect
3,4
(2)
(2)
(1)
0
(2)
(1)
0
Total as of 30.9.24
9
14
9
11
4
4
9
1
0
Total as of 30.6.24
13
17
15
15
7
8
10
1
1
1 Legacy Credit Suisse components
not included in the
UBS Group management VaR
predominantly reflect the portfolio
in Non-core and Legacy and
the transition portfolio in
the Investment Bank. These
positions
continue to
be managed
on legacy
Credit Suisse
infrastructure based
on legacy
Credit Suisse
management VaR
methodology until
full migration
of these
positions to
the UBS
infrastructure or
liquidation of
the
positions. This process is ongoing, and the management VaR
of the legacy Credit Suisse components is expected to continue decreasing over time.
2 Statistics at individual levels may not be summed to deduce the
corresponding aggregate figures. The minima and maxima for each level may occur on different
days, and, likewise, the VaR for each business line or risk type, being driven by the extreme loss tail of
the corresponding
distribution of simulated profits and losses for
that business line or risk type, may well be
driven by different days in the historical time
series, rendering invalid the simple summation of figures to arrive at
the aggregate
total.
3 The difference between the sum
of the standalone VaR for the business
divisions and Group Items and the total VaR.
4 As the minima and maxima for different business
divisions and Group Items occur
on different days, it is not meaningful to calculate a portfolio diversification effect.
Economic value of equity and net interest income
sensitivity
The economic value of equity
(EVE) sensitivity in the UBS Group
banking book to a parallel shift
in yield curves of
+1 basis
point
was
negative
USD 37.2m
as
of
30 September
2024,
compared
with
negative
USD 32.1m
as
of
30 June 2024.
This excluded
the sensitivity
of USD 6.1m
from additional
tier 1 (AT1)
capital instruments
(as per
specific
FINMA requirements)
in
contrast
to
general Basel
Committee on
Banking Supervision
(BCBS) guidance.
Exposure in the banking book of the UBS Group increased during the third quarter of 2024, driven by net interest
income stabilization initiatives.
UBS Group third quarter 2024 report |
Risk, capital, liquidity and funding, and
balance sheet | Risk management and control
38
The majority of our interest rate risk in the banking book was a reflection of the net asset duration that we ran to
offset our modeled sensitivity of net USD 28.0m (30 June 2024: USD 24.6m) assigned to our equity, goodwill and
real estate,
with the
aim of
generating a
stable net
interest income
contribution. Of
this, USD 17.2m
and USD 9.0m
were
attributable
to
the
US dollar
and
the
Swiss
franc
portfolios,
respectively,
(30 June
2024:
USD 16.1m
and
USD 7.5m, respectively).
In addition to
the aforementioned
sensitivity, we
calculate the
six interest
rate shock
scenarios prescribed
by FINMA.
The “Parallel up” scenario, assuming all
positions were fair valued, was the
most severe and would have resulted
in a
change in EVE
of negative USD 6.8bn,
or 7.5%, of
our tier 1
capital (30 June 2024:
negative USD 6.0bn, or
6.5%), which is
well below
the 15% threshold
set in the
BCBS supervisory
outlier test
for high levels
of interest
rate
risk in the banking book.
The immediate effect on our
tier 1 capital in the “Parallel up”
scenario as of 30 September
2024 would have been
a decrease of
approximately USD 0.7bn,
or 0.8%, (30 June
2024: USD 0.8bn, or
0.9%), reflecting the
fact that the
vast majority of our banking book is accrual accounted
or subject to hedge accounting. The “Parallel up”
scenario
would subsequently have a positive effect on
net interest income, assuming a constant
balance sheet.
As the overall interest rate risk sensitivity shows a greater
impact from slower asset repricing compared with faster
liabilities repricing, the “Parallel
down“ scenario was the
most beneficial and would
have resulted in
a change in
EVE of positive USD 7.3bn (30 June 2024: positive USD 6.2bn) and a small positive immediate effect on
our tier 1
capital.
›
Refer to “Interest rate risk in the banking book” in the “Risk management and control”
section of the UBS Group
Annual Report 2023, available under “Annual reporting” at
ubs.com/investors
, for more information about the
management of interest rate risk in the banking book
›
Refer to “Sensitivity to interest rate movements” in the “Group performance” section of this report for more
information about the effects of increases in interest rates on the net interest income of our banking book
Interest rate risk – banking book
30.9.24
USD m
Effect on EVE
1
– FINMA
Effect on EVE
1
– BCBS
Scenarios
CHF
EUR
GBP
USD
Other
Total
Additional tier 1 (AT1) capital
instruments
Total
+1 bp
(8.8)
(1.3)
(0.2)
(26.4)
(0.4)
(37.2)
6.1
(31.1)
Parallel up
2
(1,262.3)
(258.0)
(43.1)
(5,123.1)
(102.4)
(6,788.9)
1,100.8
(5,688.1)
Parallel down
2
1,382.8
272.4
63.9
5,450.8
94.4
7,264.2
(1,295.4)
5,968.8
Steepener
3
(548.7)
(14.2)
(12.0)
(1,328.7)
(15.5)
(1,919.2)
198.2
(1,721.0)
Flattener
4
303.5
(28.3)
4.0
155.7
(7.4)
427.4
53.2
480.5
Short-term up
5
(188.9)
(104.4)
(13.8)
(1,974.3)
(43.5)
(2,325.0)
521.3
(1,803.7)
Short-term down
6
186.8
102.9
13.2
2,088.0
44.5
2,435.4
(542.6)
1,892.8
30.6.24
USD m
Effect on EVE
1
– FINMA
Effect on EVE
1
– BCBS
Scenarios
CHF
EUR
GBP
USD
Other
Total
Additional tier 1 (AT1) capital
instruments
Total
+1 bp
(6.3)
(0.5)
0.0
(25.1)
(0.3)
(32.1)
5.3
(26.8)
Parallel up
2
(897.5)
(99.7)
11.4
(4,881.7)
(88.4)
(5,956.0)
969.0
(4,987.0)
Parallel down
2
985.8
96.6
(18.8)
5,050.0
85.4
6,199.0
(1,113.3)
5,085.7
Steepener
3
(401.8)
(45.8)
(4.4)
(1,144.3)
(24.3)
(1,620.6)
168.8
(1,451.9)
Flattener
4
228.8
30.4
5.5
17.7
4.4
286.7
48.7
335.4
Short-term up
5
(122.1)
1.3
8.7
(1,980.2)
(29.5)
(2,121.8)
457.9
(1,663.9)
Short-term down
6
126.5
(1.1)
(10.4)
2,095.7
30.7
2,241.4
(475.3)
1,766.0
1 Economic value of equity.
2 Rates across all tenors move by ±150 bps for Swiss franc, ±200 bps
for euro and US dollar, and ±250 bps for pound sterling.
3 Short-term rates decrease and long-term rates increase.
4 Short-term rates increase and long-term rates decrease.
5 Short-term rates increase more than long-term rates.
6 Short-term rates decrease more than long-term rates.
Country risk
We remain
watchful of
a range
of geopolitical
developments and
political changes
in a
number of
countries, as
well as
international tensions arising
from the
Russia–Ukraine war,
the escalation of
conflicts in
the Middle
East,
and global trade
relations.
As of
30 September 2024, our
direct exposure
to Israel
was less
than USD 0.5bn and
our direct exposure to Gulf Cooperation Council countries was less
than USD 5bn,
while direct exposure to Egypt
and Jordan
was limited, and
there was no
direct exposure
to Iran, Iraq,
Lebanon or Syria.
Our direct
exposure to
Russia as
of 30 September
2024 was
less than
USD 0.5bn,
and our
direct exposure
to Belarus
and Ukraine
remained
immaterial.
Potential second-order impacts, such as European
energy security, continue to be monitored.
UBS Group third quarter 2024 report |
Risk, capital, liquidity and funding, and
balance sheet | Risk management and control
39
Inflation has abated
to some extent
in major Western
economies, although there
are still concerns
regarding future
developments, and central banks’ monetary
policies are in the spotlight. In
China, stress in the property sector
and
strained local
government finances
continue to
have an
adverse impact
on economic
growth,
raising the
risk of
financial instability. This
combination of factors
translates into
a more
uncertain and volatile
environment, which
increases the risk of financial market disruption.
We continue to monitor
potential trade policy
disputes, as well as
economic and political
developments in addition
to those mentioned
above. We are closely
watching elections and
their aftermath in a
number of key
markets in
- As
of 30 September
2024, our
exposure to
emerging
market countries
was less
than 10%
of our
total country
exposure and mainly to certain countries
in Asia.
›
Refer to the “Risk management and control” section of the UBS Group Annual Report 2023, available under
“Annual reporting” at
ubs.com/investors
, for more information
Non-financial risk
We continue to actively manage the non-financial risks emerging from the acquisition of the Credit Suisse Group.
Progress continues to be made regarding the legal entity mergers, client account migrations
to UBS platforms, the
integration of policies, systems
and controls,
and operational integration.
These activities continue to be managed
via the program run by our Group Integration Office.
Through this
period of
change, we
place an
increased focus
on maintaining
and enhancing
our control
environment
and continue to cooperate with regulators in relation to the submission and execution
of implementation plans to
meet regulatory requirements, including remediation requirements applicable to Credit Suisse
AG. In addition, the
Group is closely monitoring
non-financial risk indicators, to detect
any potential for adverse impacts
on the control
environment.
The integration of Credit Suisse requires data to
be migrated to the UBS environment,
and we aim to ensure that
we have robust controls to preserve
data integrity, quality and availability,
to mitigate data migration risks,
and to
meet regulatory expectations.
There is an increased risk of cyber-related operational
disruption to business activities at our
locations and those of
third-party suppliers
due to operating
an enlarged
group of entities.
This is combined
with the increasingly
dynamic
threat environment,
which is
intensified by current
geopolitical factors
and evidenced
by the increased
volumes and
sophistication
of
cyberattacks
against
financial
institutions
globally.
We
continue
to
invest
in
improving
our
technology
infrastructure
and
information
security
governance
in
order
to
improve
our
cyberattack
defense,
detection and response capabilities.
Cyberattacks on
third-party vendors
have affected
our operations
in the
past and
continue to
be a
source of
residual
risk to our business.
No cyber events occurred
in the third quarter
of 2024 related to
our own infrastructure,
or the
infrastructure of any third party, that
had material financial or operational
effects on us. We remain on heightened
alert to respond
to and mitigate
elevated cybersecurity
and information-security
threats. We maintain
a program to
advance
our
frameworks
for
managing
third
parties
that
support
our
important
business
services,
and
we
are
continuing with actions to enhance our cyber-risk
assessments and controls over third-party vendors.
In addition, we
are working to
enhance our operational
resilience to address
these heightened risks and
to meet
regulatory deadlines through
- We have implemented
a global framework designed
to drive enhancements in
operational
resilience
across
all
business
divisions
and
relevant
jurisdictions,
and
we
are
working
with
the
third
parties, including
vendors, that
are of
critical importance
to our
operations, to
assess their
operational resilience
against our standards.
The increasing interest
in data-driven
advisory processes,
and use of
artificial intelligence
(AI) and machine
learning,
is opening up new questions
related to the fairness of
AI algorithms, data life cycle
management, data ethics,
data
privacy and security, and
records management. In
addition, new risks
continue to emerge,
such as those that
result
from the demand from
our clients for distributed
ledger technology, blockchain-based
assets and cryptocurrencies;
however, we currently have limited exposure to such risks, and
relevant control frameworks are implemented and
reviewed on a regular basis as these risks evolve.
Competition to find new business
opportunities, products and services
across the financial services sector,
both for
firms and
for customers,
is increasing,
particularly during
periods of
market volatility
and economic
uncertainty.
Thus, suitability
risk, product
selection, cross-divisional
service offerings,
quality of
advice and
price transparency
remain areas of heightened focus for UBS and
for the industry as a whole.
UBS Group third quarter 2024 report |
Risk, capital, liquidity and funding, and
balance sheet | Risk management and control
40
Evolving regulations,
such as those relating
to environmental, social
and governance matters
and the upcoming EU
Markets in Financial Instruments Directive III (MiFID
III), as well as the EU Artificial Intelligence Act, are expected to
have significant impacts
on the financial sector and to require ongoing adjustments
to policies, processes, controls
and surveillance.
Cross-border
risk
(including
unintended
permanent
establishment)
remains
an
area
of
regulatory
attention
for
global
financial
institutions,
including
a
focus
on
market
access,
such
as
third-country
market
access
into
the
European Economic Area, and taxation of US persons. We maintain a series of controls designed to
address these
risks, and we are increasing the number of controls
that are automated.
Financial crime, including
money laundering, terrorist
financing, sanctions violations,
fraud, bribery and corruption,
continues
to
present
a
major
risk,
as
technological
innovation
and
geopolitical
developments
increase
the
complexity of
doing business
and heightened regulatory
attention continues.
Money laundering
and financial
fraud
techniques are becoming increasingly sophisticated, including growing use of
AI, and geopolitical volatility makes
the sanctions landscape more
complex. The extensive and
continuously evolving sanctions arising
from the Russia–
Ukraine war require
constant attention to
prevent circumvention risks, while
the conflicts in
the Middle East may
increase terrorist financing
risks. An effective
financial crime prevention
program therefore remains
essential for us.
We are
focused on
strategic enhancements
to our
global anti-money-laundering
(AML), know-your-client
(KYC)
and
sanctions programs
to respond
to new
and existing
regulatory requirements
and
to respond
to developing
threats,
as
well
as
alignment
of
standards
and
processes
as
Credit
Suisse
client
accounts
are
migrated
to
UBS
platforms.
In the
US, UBS AG has
been subject to
a Consent Order
with the
Office of the
Comptroller of the
Currency (the
OCC)
since
May 2018
relating
to
our
US
branch
AML
and
KYC
programs.
In
response,
we
have
introduced
significant improvements
to our
framework for
the purpose
of
ensuring sustainable
remediation of
US-relevant
Bank Secrecy Act / AML issues across relevant
US legal entities.
Achieving
fair
outcomes
for
our
clients,
upholding
market
integrity
and
cultivating
the
highest
standards
of
employee conduct are of critical importance to
us. We maintain a conduct risk
framework, which we continue to
refine, across our activities, and which is designed
to align our standards and conduct
with these objectives and to
retain momentum on fostering a strong culture.
Capital management
The
disclosures
in
this
section
are
provided
for
UBS Group AG
on
a
consolidated
basis
and
focus
on
key
developments during
the reporting
period and
information in
accordance with
the Basel III
framework, as
applicable
to Swiss systemically relevant banks (SRBs).
They should be read in conjunction
with “Capital management” in the
“Capital, liquidity and funding,
and balance sheet” section
of the UBS Group
Annual Report 2023, available
under
“Annual
reporting”
at
ubs.com/investors
,
which
provides
more
information
about
our
capital
management
objectives, planning and activities, as
well as the Swiss SRB total loss-absorbing
capacity (TLAC) framework.
UBS Group AG
is
a
holding
company
and
conducts
substantially
all
of
its
operations
through
UBS AG
and
subsidiaries thereof. UBS Group AG and UBS AG contribute a significant portion of their respective capital to, and
provide substantial
liquidity to,
such subsidiaries.
Many of
these subsidiaries
are subject
to regulations
requiring
compliance with minimum capital, liquidity
and similar requirements.
›
Refer to the 30 September 2024 Pillar 3 Report, which will be available as of 8 November 2024 under “Pillar 3
disclosures” at
ubs.com/investors
, for more information about additional regulatory disclosures for UBS Group AG
on a consolidated basis, as well as the significant regulated subsidiaries and sub-groups of UBS Group AG
›
Refer to the
UBS AG third
quarter 2024
report, which
will be available
as of 8 November
2024 under
“Quarterly
reporting”
at
ubs.com/investors
, for more information
about capital
and other regulatory
information
for UBS AG
consolidated,
in accordance
with the Basel
III framework,
as applicable
to Swiss
SRBs
UBS Group third quarter 2024 report |
Risk, capital, liquidity and funding, and
balance sheet | Capital management
41
We
are
subject
to
the
going
and
gone
concern requirements
of
the
Swiss
Capital
Adequacy Ordinance,
which
include the too-big-to-fail
(TBTF) provisions applicable
to Swiss
SRBs. The
table below provides
the risk-weighted
asset (RWA)-
and leverage ratio
denominator (LRD)-based
requirements and information
as of 30 September
2024.
Swiss SRB going and gone concern requirements and information
As of 30.9.24
RWA
LRD
USD m, except where indicated
in %
in %
Required going concern capital
Total going concern capital
14.85
1
77,144
5.00
1
80,417
Common equity tier 1 capital
10.55
54,811
3.50
2
56,292
of which: minimum capital
4.50
23,371
1.50
24,125
of which: buffer capital
5.50
28,565
2.00
32,167
of which: countercyclical buffer
0.55
2,875
Maximum additional tier 1 capital
4.30
22,333
1.50
24,125
of which: additional tier 1 capital
3.50
18,178
1.50
24,125
of which: additional tier 1 buffer capital
0.80
4,155
Eligible going concern capital
Total going concern capital
17.53
91,024
5.66
91,024
Common equity tier 1 capital
14.29
74,213
4.61
74,213
Total loss-absorbing additional tier 1 capital
3
3.24
16,810
1.05
16,810
of which: high-trigger loss-absorbing additional tier 1 capital
3.00
15,572
0.97
15,572
of which: low-trigger loss-absorbing additional tier 1 capital
0.24
1,239
0.08
1,239
Required gone concern capital
Total gone concern loss-absorbing capacity
4,5,6
10.73
7
55,702
3.75
7
60,313
of which: base requirement including add-ons for market share and LRD
10.73
55,702
3.75
60,313
Eligible gone concern capital
Total gone concern loss-absorbing capacity
20.00
103,882
6.46
103,882
Total tier 2 capital
0.06
289
0.02
289
of which: non-Basel III-compliant tier 2 capital
0.06
289
0.02
289
TLAC-eligible senior unsecured debt
19.95
103,593
6.44
103,593
Total loss-absorbing capacity
Required total loss-absorbing capacity
25.58
132,846
8.75
140,730
Eligible total loss-absorbing capacity
37.53
194,906
12.12
194,906
Risk-weighted assets / leverage ratio denominator
Risk-weighted assets
519,363
Leverage ratio denominator
1,608,341
1 Includes
applicable add-ons
of 1.44%
for risk-weighted
assets (RWA)
and 0.50%
for leverage
ratio denominator
(LRD).
2 Our
minimum CET1
leverage ratio
requirement of
3.50% consists
of a
1.5% base
requirement, a 1.5% base buffer capital requirement, a 0.25% LRD add-on requirement
and a 0.25% market share add-on requirement
based on our Swiss credit business.
3 Includes outstanding low-trigger loss-
absorbing additional tier 1
capital instruments, which
are available under the
Swiss systemically relevant
bank framework to meet
the going concern requirements
until their first call
date. As of
their first call date,
these instruments are eligible to meet the gone concern requirements.
4 A maximum of 25% of the gone concern requirements can be met with instruments that have a remaining maturity of between one and two
years. Once at least 75% of the minimum gone concern requirement has
been met with instruments that have a remaining maturity of greater than
two years, all instruments that have a remaining maturity of between
one and two years remain eligible to be included
in the total gone concern capital.
5 From 1 January 2023, the
resolvability discount on the gone concern
capital requirements for systemically important banks has
been replaced with reduced base gone concern capital requirements equivalent to 75% of the total going concern requirements (excluding countercyclical buffer requirements).
6 As of July 2024, the Swiss Financial
Market Supervisory Authority (FINMA) has the authority to impose a surcharge of up to 25% of the total going concern capital requirements should obstacles to an SIB’s resolvability be identified in future resolvability
assessments.
7 Includes applicable add-ons of 1.08% for RWA and 0.38% for LRD.
Amortization of transitional purchase
price allocation adjustments for regulatory
capital
As part of the acquisition of
the Credit Suisse Group in 2023,
the assets acquired and liabilities
assumed, including
contingent liabilities, were
recognized at fair
value as of
the acquisition date
in accordance with
IFRS 3,
Business
Combinations
. The purchase price allocation
(PPA) fair value adjustments
required under IFRS 3 were
recognized as
part of
negative goodwill and
included effects
on financial instruments
measured at
amortized cost, such
as fair
value impacts
from interest
rates and
own credit,
that are
expected to
accrete back
to par
through the
income
statement
as
the
instruments
are
held
to
maturity.
The
Swiss
Financial
Market
Supervisory
Authority
(FINMA)
approved a transitional common equity tier 1
(CET1) capital treatment for certain of
these fair value adjustments,
given
the
substantially
temporary
nature
of
the
IFRS-3-accounting-driven
effects,
which
neutralized
equity
reductions
under
IFRS
Accounting
Standards
of
USD 5.9bn
(before
tax)
and
USD 5.0bn
(net
of
tax)
as
of
the
acquisition date. The transitional treatment
was subject to linear amortization through
30 June 2027.
UBS Group third quarter 2024 report |
Risk, capital, liquidity and funding, and
balance sheet | Capital management
42
In the third quarter of 2024, we
voluntarily accelerated the amortization
of the remaining transitional CET1
capital
PPA adjustments,
resulting in
a USD 3.4bn
decrease in
CET1 capital
and a
reduction in
our CET1
capital ratio
of
approximately 65 basis
points. As
these
transitional adjustments
only
applied
to UBS
Group
AG,
the regulatory
capital position of UBS
AG was not impacted
by the decision to
fully amortize them. On
a standalone basis as
of
30 September 2024, UBS AG’s fully applied CET1 capital ratio is expected to be around 13.3%. Additional capital
information and final capital figures for UBS AG standalone
will be published with our 30 September 2024 Pillar
3
report, which will be available as of 8 November
2024 under “Pillar 3 disclosures” at
ubs.com/investors
.
Additional capital requirements for
UBS Group AG consolidated under current
requirements
As a result
of the
acquisition of
the Credit
Suisse Group
in 2023,
the capital
add-on for
UBS Group AG
consolidated
that
reflects
the
Group’s
degree
of
systemic
importance
and
is
based
on
market
share
and
LRD
will
increase
commensurate with
the higher
market share
and LRD
of UBS
Group AG consolidated
after the
acquisition. We
currently estimate that this
will add around USD 10bn
to the Group’s tier 1 capital
requirement, when fully phased
in. The phase-in of the
increased capital requirements will
commence from the end of
2025 and will be completed
by the beginning of 2030, at the latest.
Total loss-absorbing capacity
The table below provides Swiss SRB going and gone concern information based on the Swiss SRB
framework and
requirements that are discussed under “Capital management” in the “Capital, liquidity and funding, and
balance
sheet” section of the UBS Group Annual Report 2023,
available under “Annual reporting” at
ubs.com/investors
.
Swiss SRB going and gone concern information
USD m, except where indicated
30.9.24
30.6.24
31.12.23
Eligible going concern capital
Total going concern capital
91,024
91,804
91,894
Total tier 1 capital
91,024
91,804
91,894
Common equity tier 1 capital
74,213
76,104
78,002
Total loss-absorbing additional tier 1 capital
16,810
15,700
13,892
of which: high-trigger loss-absorbing additional tier 1 capital
15,572
14,475
12,678
of which: low-trigger loss-absorbing additional tier 1 capital
1,239
1,225
1,214
Eligible gone concern capital
Total gone concern loss-absorbing capacity
103,882
105,886
107,106
Total tier 2 capital
289
536
538
of which: non-Basel III-compliant tier 2 capital
289
536
538
TLAC-eligible senior unsecured debt
103,593
105,350
106,567
Total loss-absorbing capacity
Total loss-absorbing capacity
194,906
197,690
199,000
Risk-weighted assets / leverage ratio denominator
Risk-weighted assets
519,363
511,376
546,505
Leverage ratio denominator
1,608,341
1,564,201
1,695,403
Capital and loss-absorbing capacity ratios (%)
Going concern capital ratio
17.5
18.0
16.8
of which: common equity tier 1 capital ratio
14.3
14.9
14.3
Gone concern loss-absorbing capacity ratio
20.0
20.7
19.6
Total loss-absorbing capacity ratio
37.5
38.7
36.4
Leverage ratios (%)
Going concern leverage ratio
5.7
5.9
5.4
of which: common equity tier 1 leverage ratio
4.6
4.9
4.6
Gone concern leverage ratio
6.5
6.8
6.3
Total loss-absorbing capacity leverage ratio
12.1
12.6
11.7
UBS Group third quarter 2024 report |
Risk, capital, liquidity and funding, and
balance sheet | Capital management
43
Total loss-absorbing capacity and movement
Our TLAC decreased by USD 2.8bn to USD 194.9bn
in the third quarter of 2024.
Going concern capital and movement
Our going concern capital decreased
by USD 0.8bn to USD 91.0bn. Our
CET1 capital decreased by USD
1.9bn to
USD 74.2bn,
mainly
as
operating
profit
before
tax
of
USD 1.9bn
and
foreign
currency
translation
gains
of
USD 1.3bn were more than offset by the effect of our voluntary acceleration of the amortization of the remaining
transitional
CET1
capital
PPA
adjustments
of
USD 3.4bn
(net
of
tax)
and
the
regular
amortization
of
these
adjustments during the
quarter of USD 0.3bn
(net of tax),
as well as
dividend accruals of
USD 0.6bn,
current tax
expenses of USD 0.4bn, and a
negative effect from
compensation-
and own-share-related capital components of
USD 0.3bn.
Share
repurchases
of
USD 0.5bn
carried
out
in
the
third
quarter
of
2024
under
our
2024
share
repurchase program did not affect our
CET1 capital position,
as there was an equal
reduction in the capital
reserve
for potential share repurchases.
Our loss-absorbing additional
tier 1 (AT1) capital
increased by USD 1.1bn to
USD 16.8bn, reflecting the
issuance of
new AT1
capital instruments
equivalent to
USD 1.6bn and positive
impacts from interest
rate risk
hedge, foreign
currency translation and other effects, partly
offset by the call of AT1 capital instruments
equivalent to USD 1.0bn.
Following the approval of a maximum amount of conversion capital by UBS Group AG’s shareholders at the 2024
Annual General
Meeting, AT1
capital instruments
issued from
the beginning
of the
fourth quarter
of 2023
are,
upon the
occurrence of
a trigger event
or a
viability event,
subject to
conversion into
UBS Group AG
ordinary shares
rather than a
write-down. AT1 capital instruments
issued prior to
the fourth quarter of
2023 remain subject to
a
write-down.
Gone concern loss-absorbing capacity and movement
Our
total
gone
concern
loss-absorbing
capacity
decreased
by
USD 2.0bn
to
USD 103.9bn
and
included
USD 103.6bn of TLAC-eligible senior
unsecured debt instruments.
The decrease of USD 2.0bn mainly reflected
the
call of USD 6.4bn equivalent of TLAC-eligible senior unsecured debt instruments, as well as USD 3.1bn equivalent
of TLAC-eligible
senior unsecured
debt instruments
and a
USD 0.3bn tier 2
instrument ceasing
to be
eligible as
gone
concern
capital,
as
they
entered
the
final
year
before
maturity.
These
effects
were
partly
offset
by
new
issuances of TLAC-eligible senior
unsecured debt instruments totaling
USD 1.8bn equivalent and positive impacts
from interest rate risk hedge, foreign currency translation and other effects.
›
Refer to “Bondholder information” at
ubs.com/investors
for more information about the eligibility of capital and
senior unsecured debt instruments and about key features and terms and conditions of capital instruments
Loss-absorbing capacity and leverage ratios
Our CET1 capital ratio
decreased to 14.3% from
14.9%,
reflecting a USD 1.9bn decrease
in CET1 capital and an
USD 8.0bn increase in RWA.
Our
CET1
leverage
ratio
decreased
to
4.6%
from
4.9%,
reflecting
a
USD 44.1bn
increase
in
the
LRD
and
a
USD 1.9bn decrease in CET1 capital.
Our
gone
concern
loss-absorbing
capacity
ratio
decreased
to
20.0%
from
20.7%,
due
to
a
decrease
in
gone
concern loss-absorbing capacity of USD 2.0bn
and the aforementioned increase in RWA.
Our gone
concern leverage ratio
decreased to 6.5%
from 6.8%, due
to the
aforementioned increase in
the LRD
and a decrease in gone concern loss-absorbing
capacity of USD 2.0bn.
UBS Group third quarter 2024 report |
Risk, capital, liquidity and funding, and
balance sheet | Capital management
44
Swiss SRB total loss-absorbing capacity movement
USD m
Going concern capital
Swiss SRB
Common equity tier 1 capital as of 30.6.24
76,104
Operating profit / (loss) before tax
1,929
Current tax (expense) / benefit
(378)
Foreign currency translation effects, before tax
1,324
Share repurchase program
(549)
Capital reserve for potential share repurchases
549
Voluntary acceleration of the amortization of the remaining transitional CET1 capital
PPA adjustments, net of tax
(3,371)
Regular amortization of the transitional CET1 capital PPA adjustments, net of tax
(293)
Compensation-
and own-share-related capital components
(296)
Other
1
(805)
Common equity tier 1 capital as of 30.9.24
74,213
Loss-absorbing additional tier 1 capital as of 30.6.24
15,700
Issuance of high-trigger loss-absorbing additional tier 1 capital
1,631
Call of high-trigger loss-absorbing additional tier 1 capital
(1,015)
Interest rate risk hedge, foreign currency translation and other effects
495
Loss-absorbing additional tier 1 capital as of 30.9.24
16,810
Total going concern capital as of 30.6.24
91,804
Total going concern capital as of 30.9.24
91,024
Gone concern loss-absorbing capacity
Tier 2 capital as of 30.6.24
536
Debt no longer eligible as gone concern loss-absorbing capacity
due to residual tenor falling to below one year
(251)
Interest rate risk hedge, foreign currency translation and other effects
5
Tier 2 capital as of 30.9.24
289
TLAC-eligible unsecured debt as of 30.6.24
105,350
Issuance of TLAC-eligible senior unsecured debt
1,787
Call of TLAC-eligible senior unsecured debt
(6,367)
Debt no longer eligible as gone concern loss-absorbing capacity
due to residual tenor falling to below one year
(3,052)
Interest rate risk hedge, foreign currency translation and other effects
5,875
TLAC-eligible unsecured debt as of 30.9.24
103,593
Total gone concern loss-absorbing capacity as of 30.6.24
105,886
Total gone concern loss-absorbing capacity as of 30.9.24
103,882
Total loss-absorbing capacity
Total loss-absorbing capacity as of 30.6.24
197,690
Total loss-absorbing capacity as of 30.9.24
194,906
1 Includes dividend accruals for 2024 (negative USD 0.6bn) and movements related to other items.
Reconciliation of equity under IFRS Accounting Standards to Swiss SRB common equity tier 1 capital
USD m
30.9.24
30.6.24
31.12.23
Total equity under IFRS Accounting Standards
87,589
84,218
86,156
Equity attributable to non-controlling interests
(564)
(535)
(531)
Defined benefit plans, net of tax
(883)
(951)
(965)
Deferred tax assets recognized for tax loss carry-forwards
(2,681)
(2,817)
(3,039)
Deferred tax assets for unused tax credits
(238)
(181)
(97)
Goodwill, net of tax
1
(5,752)
(5,730)
(5,750)
Intangible assets, net of tax
(788)
(776)
(894)
Compensation-related components (not recognized in net profit)
(2,432)
(2,147)
(2,186)
Expected losses on advanced internal ratings-based portfolio less provisions
(665)
(638)
(713)
Unrealized (gains) / losses from cash flow hedges, net of tax
1,830
3,373
3,109
Own credit related to (gains) / losses on financial liabilities
measured at fair value that existed at the balance sheet date, net of tax
1,359
1,059
1,291
Own credit related to (gains) / losses on derivative financial instruments
that existed at the balance sheet date
(72)
(76)
(89)
Prudential valuation adjustments
(217)
(231)
(368)
Accruals for dividends to shareholders for 2023
(2,240)
Capital reserve for potential share repurchases
(301)
(850)
Transitional CET1 capital PPA adjustments, net of tax
3,664
4,316
Other
(1,970)
2
(1,281)
2
3
Total common equity tier 1 capital
74,213
76,104
78,002
1 Includes goodwill related to significant investments in financial institutions of USD 20m as
of 30 September 2024 (USD 19m as of 30 June 2024,
USD 20m as of 31 December 2023) presented on the balance sheet
line Investments in associates.
2 Includes dividend accruals for 2024 and other items.
UBS Group third quarter 2024 report |
Risk, capital, liquidity and funding, and
balance sheet | Capital management
45
Additional information
Sensitivity to currency movements
Risk-weighted assets
We estimate that a 10% depreciation of the US dollar against other currencies would have increased our RWA by
USD 24bn and our
CET1 capital
by USD 2.4bn as
of 30 September
2024 (30 June
2024: USD 22bn and
USD 2.5bn,
respectively) and decreased our CET1
capital ratio by 18 basis points
(30 June 2024: 15 basis
points). Conversely, a
10% appreciation of the US dollar against other currencies would have decreased
our RWA by USD 21bn and our
CET1 capital by USD 2.2bn
(30 June 2024: USD 20bn and USD
2.3bn, respectively) and increased our CET1
capital
ratio by 18 basis points (30 June 2024: 14 basis
points).
Leverage ratio denominator
We estimate that a
10% depreciation of the
US dollar against other
currencies would have increased
our LRD by
USD 109bn
as
of
30
September
2024
(30
June
2024:
USD 101bn)
and
decreased
our
CET1
leverage
ratio
by
15 basis points
(30 June
2024: 14 basis
points). Conversely,
a
10%
appreciation of
the US
dollar against
other
currencies would
have decreased
our LRD
by USD 99bn
(30 June
2024: USD 91bn)
and increased
our CET1
leverage
ratio by 16 basis points (30 June 2024: 15 basis
points).
The aforementioned
sensitivities do
not consider
foreign currency
translation effects
related to
defined benefit
plans
other than those related to the currency
translation of the net equity of foreign operations.
›
Refer to “Active management of sensitivity to foreign exchange movements” under “Capital management” in the
“Capital, liquidity and funding, and balance sheet” section of the UBS Group Annual Report 2023, available under
“Annual reporting” at
ubs.com/investors
, for more information
Risk-weighted assets
During the third
quarter of 2024,
RWA increased
by USD 8.0bn
to USD 519.4bn,
driven by an
USD 11.2bn increase
in currency effects,
partly offset by decreases of USD
1.7bn resulting from asset size
and other movements, as well
as USD 1.6bn resulting from model updates
and methodology changes.
Movement in risk-weighted assets, by key driver
USD bn
RWA as of
30.6.24
Currency
effects
Model updates
and
methodology
changes
Asset size and
other
1
RWA as of
30.9.24
Credit and counterparty credit risk
2
310.2
10.6
(3.0)
(3.7)
314.1
Non-counterparty-related risk
3
33.2
0.7
1.0
34.8
Market risk
22.5
1.4
1.0
25.0
Operational risk
145.4
145.4
Total
511.4
11.2
(1.6)
(1.7)
519.4
1 Includes the
Pillar 3 categories
“Asset
size”, “Credit quality
of counterparties”,
“Acquisitions
and disposals” and
“Other”. For
more information, refer
to the 30
September 2024 Pillar
3 Report, which
will be
available as of 8
November 2024 under “Pillar
3 disclosures” at
ubs.com/investors.
2 Includes settlement risk,
credit valuation adjustments,
equity and investments in
funds exposures in
the banking book, and
securitization exposures in the banking book.
3 Non-counterparty-related risk includes deferred tax assets recognized for temporary differences,
property, equipment, software and other items.
Credit and counterparty credit risk
Credit
and
counterparty
credit
risk
RWA
increased
by
USD
3.9bn
to
USD 314.1bn
as
of
30
September
2024,
including currency effects of USD 10.6bn.
Asset size and other movements resulted in
a USD 3.7bn decrease in RWA:
–
Non-core and
Legacy RWA
decreased by
USD 4.0bn,
mainly driven
by our
actions to
actively unwind
the portfolio,
in addition to the natural roll-off.
–
Personal & Corporate Banking RWA decreased by
USD 0.9bn, mainly driven by negative net
new loans.
–
Asset Management RWA decreased by USD 0.4bn,
mainly due to lower RWA from equity
investments in funds.
–
Global Wealth Management RWA decreased by
USD 0.1bn, mainly driven by negative net new
loans.
–
Investment Bank RWA increased by USD 1.4bn,
mainly due to higher RWA from loans and loan
commitments.
–
Group Items RWA increased by USD 0.4bn.
UBS Group third quarter 2024 report |
Risk, capital, liquidity and funding, and
balance sheet | Capital management
46
Model updates
and methodology
changes resulted
in a
RWA decrease
of USD
3.0bn, mainly
reflecting an
RWA
decrease of USD 2.3bn related
to the recalibration of certain
multipliers as a result
of improvements to models
and
an RWA
reduction of
USD 0.7bn related
to model
updates
and harmonizations
for structured
margin loans
and
similar products in Global Wealth Management.
›
Refer to the 30 September 2024 Pillar 3 Report, which will be available as of 8 November 2024 under “Pillar 3
disclosures” at
ubs.com/investors
, for more information
›
Refer to “Credit risk” in the “Risk management and control” section of this report for more information
Market risk
Market risk RWA increased
by USD 2.4bn to USD 25.0bn
in the third quarter of
2024, mainly driven by
an increase
of USD 1.4bn
from a
capital buffer
newly introduced
by FINMA
to capitalize
potential maturity
mismatches between
positions and hedges in the
incremental risk charge (the IRC). The
IRC, including the capital buffer, will
no longer
be applicable with
the adoption of
the final Basel III
standards (including the Fundamental
Review of the
Trading
Book) in January
- Additionally,
in the third
quarter of 2024,
we observed an
increase of USD 1.0bn
from asset
size and
other movements
that reflected
updates from
the monthly
risks-not-in-value-at-risk assessment,
which was
partially offset by the de-risking within Non-core
and Legacy.
›
Refer to the 30 September 2024 Pillar 3 Report, which will be available as of 8 November 2024 under “Pillar 3
disclosures” at
ubs.com/investors,
for more information
›
Refer to “Market risk” in the “Risk management and control” section of this report for more information
Operational risk
Operational risk RWA were unchanged at USD
145.4bn.
›
Refer to “Note 15 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this
report for more information
›
Refer to “Non-financial risk” in the “Risk management and control” section of the UBS Group Annual Report 2023,
available under “Annual reporting” at
ubs.com/investors
, for information about the AMA models
Outlook
We expect
that the
adoption of
the final
Basel III standards
in January
2025 will
lead to
a low
single-digit percentage
increase in the UBS
Group’s RWA, reducing
the CET1 capital
ratio by around 30
basis points. This estimate
is based
on
our
current understanding
of
the
relevant
standards
as
we
are
in
an
active
dialogue
with
FINMA
regarding
various aspects of the final rules. Our estimate for the RWA and CET1 capital ratio does not take into account the
impact of the output floor, which is to be
phased in over time.
We expect RWA from credit and counterparty credit risk model updates
and methodology changes to decrease by
around USD 2bn in the fourth quarter
of 2024, mainly reflecting a decrease related to
the recalibration of certain
multipliers as a result of
improvements to models and other model
updates,
which is expected to be
partly offset
by increases due to the migration of Credit Suisse
portfolios to UBS models, as well as methodology
changes.
UBS Group third quarter 2024 report |
Risk, capital, liquidity and funding, and
balance sheet | Capital management
47
Risk-weighted assets, by business division and Group Items
USD bn
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Manage-
ment
Investment
Bank
Non-core and
Legacy
Group
Items
Total
RWA
30.9.24
Credit and counterparty credit risk
1
95.0
129.5
7.2
63.8
13.6
5.2
314.1
Non-counterparty-related risk
2
6.8
3.1
0.7
3.8
1.7
18.8
34.8
Market risk
1.9
0.4
0.0
20.2
2.5
0.0
25.0
Operational risk
63.2
19.3
7.2
24.4
27.1
4.2
145.4
Total
166.8
152.3
15.1
112.2
44.8
28.1
519.4
30.6.24
Credit and counterparty credit risk
1
93.8
123.8
7.4
63.4
17.4
4.5
310.2
Non-counterparty-related risk
2
6.6
3.1
0.7
3.7
1.6
17.4
33.2
Market risk
1.9
0.5
0.0
16.6
3.5
0.0
22.5
Operational risk
63.2
19.3
7.2
24.4
27.1
4.2
145.4
Total
165.5
146.7
15.4
108.1
49.6
26.1
511.4
30.9.24 vs 30.6.24
Credit and counterparty credit risk
1
1.2
5.7
(0.3)
0.4
(3.9)
0.7
3.9
Non-counterparty-related risk
2
0.2
0.0
0.0
0.1
0.0
1.3
1.7
Market risk
0.0
(0.1)
0.0
3.6
(1.0)
0.0
2.4
Operational risk
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Total
1.3
5.6
(0.3)
4.0
(4.8)
2.1
8.0
1 Includes settlement risk, credit valuation adjustments,
equity and investments in funds exposures in the
banking book, and securitization exposures in the
banking book.
2 Non-counterparty-related risk includes
deferred tax assets recognized for temporary differences (30 September
2024: USD 18.0bn; 30 June 2024: USD 16.6bn), as well as property,
equipment, software and other items (30 September 2024: USD
16.8bn;
30 June 2024: USD 16.6bn).
Leverage ratio denominator
During the third quarter of 2024, the LRD
increased by USD 44.1bn to USD 1,608.3bn, driven by currency effects
of USD 53.6bn,
partly offset by asset size and other movements
of USD 9.5bn.
Movement in leverage ratio denominator, by key driver
USD bn
LRD as of
30.6.24
Currency
effects
Asset size and
other
LRD as of
30.9.24
On-balance sheet exposures (excluding derivatives and securities
financing transactions)
1,205.8
44.9
(9.2)
1,241.6
Derivatives
125.2
2.4
6.1
133.7
Securities financing transactions
168.4
4.2
(0.9)
171.7
Off-balance sheet items
72.3
2.0
(1.9)
72.4
Deduction items
(7.5)
0.1
(3.6)
(11.0)
Total
1,564.2
53.6
(9.5)
1,608.3
UBS Group third quarter 2024 report |
Risk, capital, liquidity and funding, and
balance sheet | Capital management
48
The LRD movements described below exclude
currency effects.
On-balance sheet exposures (excluding derivatives and securities
financing transactions) decreased by USD 9.2bn,
mainly reflecting a decrease in cash and balances at central banks, as well as decreases in lending balances due to
negative net new loans mainly in Personal & Corporate Banking
and Global Wealth Management.
There was also
a decrease in
trading portfolio assets
in Non-core and
Legacy driven by
our actions to
actively unwind the
portfolio,
in addition to the natural roll-off. These decreases were
partly offset by increases in other financial assets in Group
Treasury and
trading portfolio
assets, primarily
driven by
an increase
in positions
held in
the Investment
Bank to
hedge client positions, as well as market-driven
increases.
Derivative exposures increased by USD 6.1bn,
mainly due to client-driven increases in the
Investment Bank.
Securities financing transactions decreased
by USD 0.9bn.
Off-balance sheet items decreased by USD 1.9bn,
primarily driven by lower commitments.
Deduction items increased by
USD 3.6bn to USD 11.0bn from USD
7.5bn, due to our voluntary
acceleration of the
amortization of the remaining transitional CET1
capital PPA adjustments in the third quarter
of 2024.
›
Refer to the “Balance sheet and off-balance sheet” section of this report for more information about balance sheet
movements
›
Refer to “Amortization of transitional purchase price allocation adjustments for regulatory capital” in this section
for more information about the change in deduction items
Outlook
We expect
that the
adoption of
the final
Basel III standards
in January
2025 will
lead to
a low
single-digit percentage
increase in the
UBS Group’s LRD,
reducing the CET1
leverage ratio
by around 10 basis
points. This
estimate is
based
on our current understanding of the relevant standards.
Leverage ratio denominator, by business division and Group Items
USD bn
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group Items
Total
30.9.24
On-balance sheet exposures
504.9
429.2
5.7
238.8
46.0
17.0
1,241.6
Derivatives
10.8
3.3
0.0
106.0
13.4
0.1
133.7
Securities financing transactions
66.3
45.3
0.0
52.6
7.5
0.0
171.7
Off-balance sheet items
18.6
32.3
0.1
18.6
2.5
0.2
72.4
Items deducted from Swiss SRB tier 1 capital
(5.4)
(1.0)
(1.2)
(0.4)
(0.5)
(2.5)
(11.0)
Total
595.2
509.0
4.7
415.6
69.0
14.8
1,608.3
30.6.24
On-balance sheet exposures
492.5
407.9
5.3
234.1
49.8
16.3
1,205.8
Derivatives
9.0
2.5
0.0
97.1
16.6
0.0
125.2
Securities financing transactions
59.3
42.9
0.1
53.5
12.5
0.1
168.4
Off-balance sheet items
18.1
33.7
0.2
18.4
1.7
0.3
72.3
Items deducted from Swiss SRB tier 1 capital
(3.5)
1.5
(1.2)
(0.4)
(0.6)
(3.4)
(7.5)
Total
575.4
488.5
4.3
402.6
80.0
13.4
1,564.2
30.9.24 vs 30.6.24
On-balance sheet exposures
12.4
21.3
0.4
4.8
(3.7)
0.7
35.7
Derivatives
1.9
0.8
0.0
8.9
(3.2)
0.1
8.5
Securities financing transactions
7.0
2.4
0.0
(0.8)
(5.1)
(0.2)
3.3
Off-balance sheet items
0.5
(1.4)
0.0
0.2
0.9
(0.1)
0.1
Items deducted from Swiss SRB tier 1 capital
(1.9)
(2.6)
0.0
0.0
0.1
0.9
(3.5)
Total
19.9
20.5
0.3
13.0
(11.0)
1.4
44.1
UBS Group third quarter 2024 report |
Risk, capital, liquidity and funding, and
balance sheet | Capital management
49
Equity attribution
Under our equity attribution
framework, tangible equity
is attributed based on
equally weighted average
RWA and
average LRD, which both include resource allocations from our Group functions to the business divisions. Average
RWA and LRD are converted
to CET1 capital equivalents
using target capital ratios.
If the attributed tangible equity
calculated under the weighted-driver approach is less than
the CET1 capital equivalent of risk-based capital (RBC)
for any business division,
the CET1 capital equivalent of RBC is used
as a floor for that business division.
In addition to
tangible equity,
we allocate equity
to the business
divisions to
support goodwill
and intangible
assets.
We
also
allocate
to
the
business
divisions
attributed
equity
related
to
CET1
capital
deduction
items
that
are
attributable
to
divisional
activities,
such
as
compensation-related
components
or
expected
losses
on
the
advanced internal
ratings-based
portfolio
less
provisions.
We
attribute
all
remaining
capital
deduction
items
to
Group Items.
These primarily
include equity
related to
deferred tax
assets, accruals
for shareholder
returns, and
unrealized gains / losses from cash flow hedges.
›
Refer to the “Balance sheet and off-balance sheet” section of this report for more information about movements in
equity attributable to shareholders
Average attributed equity
For the quarter ended
Year-to-date
USD bn
30.9.24
30.6.24
30.9.23
1
30.9.24
30.9.23
1
Global Wealth Management
33.5
32.9
33.1
33.2
27.9
Personal & Corporate Banking
21.8
21.4
21.4
21.7
15.2
Asset Management
2.7
2.7
3.1
2.7
2.3
Investment Bank
17.0
17.0
17.1
17.0
15.6
Non-core and Legacy
8.5
10.1
10.5
9.7
4.8
Group Items
2
1.8
0.2
(0.8)
0.7
4.9
Average equity attributed to business divisions and Group Items
85.4
84.2
84.4
84.9
70.8
1 Comparative figures have been restated
to reflect the changes to the
equity attribution framework. Refer
to the “Equity attribution” section of
the UBS Group first quarter 2024
report, available under “Quarterly
reporting” at ubs.com/investors,
for more information.
2 Includes average attributed equity
related to capital deduction
items for deferred tax assets,
accruals for shareholder returns and
unrealized gains / losses
from cash flow hedges.
UBS Group third quarter 2024 report |
Risk, capital, liquidity and funding, and
balance sheet | Liquidity and funding management
50
Liquidity and funding management
Strategy, objectives and governance
This
section
provides
liquidity
and
funding
management
information
and
should
be
read
in
conjunction
with
“Liquidity and funding
management” in
the “Capital,
liquidity and funding,
and balance sheet”
section of the
UBS
Group
Annual
Report
2023,
available
under
“Annual
reporting”
at
ubs.com/investors
,
which
provides
more
information
about
the
Group’s
strategy,
objectives
and
governance
in
connection
with
liquidity
and
funding
management.
Liquidity coverage ratio
The
quarterly average
liquidity coverage
ratio
(the LCR)
of the
UBS
Group
decreased 12.7 percentage
points to
199.2%, remaining
above the
prudential requirement
communicated by
the Swiss
Financial Market
Supervisory
Authority (FINMA). The movement in the quarterly average LCR was primarily driven by
a decrease in high-quality
liquid assets of USD 17.6bn to USD 360.6bn, mainly reflecting lower cash available,
due to the funding of trading
assets and an increase
in Swiss regulatory
minimum reserve requirements.
The average net
cash outflows increased
by USD 2.6bn to USD 181.1bn, reflecting higher
net outflows from derivatives and higher
outflows from deposits,
partly offset by lower outflows from irrevocable
loan commitments.
›
Refer to the
30 September 2024 Pillar 3 Report, which will be available as of 8 November 2024 under “Pillar 3
disclosures” at
ubs.com/investors
, for more information about the LCR
Liquidity coverage ratio
USD bn, except where indicated
Average 3Q24
1
Average 2Q24
1
High-quality liquid assets
360.6
378.2
Net cash outflows
2
181.1
178.5
Liquidity coverage ratio (%)
3
199.2
212.0
1 Calculated based on an average of 65 data points in the third quarter of 2024 and 61 data points in
the second quarter of 2024.
2 Represents the net cash outflows expected over a stress period of 30 calendar
days.
3 Calculated after the application of haircuts and inflow and outflow rates, as well as,
where applicable, caps on Level 2 assets and cash inflows.
Net stable funding ratio
As
of 30 September
2024, the
net stable
funding ratio
(the NSFR)
of the
UBS Group
decreased 1.2 percentage
points to 126.9%, remaining above the prudential
requirement communicated by FINMA.
Available
stable
funding increased
by
USD 22.0bn to
USD 904.3bn, mainly
driven
by
higher customer
deposits,
largely due to currency effects.
Required stable funding increased by
USD 23.8bn to USD 712.8bn, primarily reflecting
increases in trading assets
and in lending assets, with the latter increase
mainly driven by currency effects.
›
Refer to the 30 September 2024 Pillar 3 Report, which will be available as of 8 November 2024 under “Pillar 3
disclosures” at
ubs.com/investors
, for more information about the NSFR
Net stable funding ratio
USD bn, except where indicated
30.9.24
30.6.24
Available stable funding
904.3
882.3
Required stable funding
712.8
689.0
Net stable funding ratio (%)
126.9
128.0
UBS Group third quarter 2024 report |
Risk, capital, liquidity and funding, and
balance sheet | Balance sheet and off-balance
sheet
51
Balance sheet and off-balance sheet
This
section
provides
balance
sheet
and
off-balance sheet
information
and
should
be
read
in
conjunction
with
“Balance sheet
and off-balance
sheet” in
the “Capital,
liquidity and
funding, and
balance sheet”
section of
the
UBS Group
Annual Report
2023, available
under “Annual reporting”
at
ubs.com/investors
, which
provides more
information about the balance sheet and off-balance
sheet positions.
Balances disclosed in this
report represent quarter-end
positions, unless indicated
otherwise. Intra-quarter balances
fluctuate in the ordinary course of business
and may differ from quarter-end positions.
Balance sheet assets (30 September
2024 vs 30 June 2024)
Total assets
were USD 1,623.9bn
as of
30 September 2024,
an increase
of USD 62.9bn
compared with
30 June
2024, largely reflecting currency effects
as a result of the depreciation of the US
dollar.
Derivatives and
cash collateral
receivables on
derivative instruments
increased by
USD 23.1bn, predominantly
in
Derivatives
&
Solutions
and
Financing
in
the
Investment
Bank,
primarily
reflecting
increases
in
foreign
currency
contracts, where the contracts in
place at the end
of September 2024 had a
higher fair value compared with the
contracts in
place at
the end
of June
2024, and
in equity
contracts,
reflecting market-driven
increases.
Lending
assets increased by USD 16.4bn,
primarily reflecting currency
effects of approximately USD
25.8bn,
partly offset by
negative net
new loans
in Personal
&
Corporate Banking
and
Global Wealth
Management.
Securities financing
transactions at
amortized cost
increased
by
USD 10.1bn, mainly
reflecting net
new
excess cash
reinvestment in
Group Treasury.
Trading assets
increased by
USD 10.0bn, primarily
driven by
an increase
in inventory
held in
the
Investment Bank to
hedge client positions,
as well as
market-driven increases,
partly offset by
the unwinding of
the
Credit Suisse
business in
Non-core and
Legacy.
Other financial
assets measured
at fair
value increased
by USD 6.2bn,
mainly reflecting currency effects and increases
in securities financing transactions
measured at fair value.
These increases were partly offset by
a USD 5.0bn decrease in Cash
and balances at central banks,
mainly due to
net redemptions
of debt
issued, net
increases in
securities financing
transactions and
net new
customer deposit
outflows,
partly
offset
by
inflows
reflecting
negative
net
new
loans
and
by
currency
effects
of
approximately
USD 10.2bn.
Assets
As of
% change from
USD bn
30.9.24
30.6.24
30.6.24
Cash and balances at central banks
243.3
248.3
(2)
Lending
1
637.5
621.1
3
Securities financing transactions at amortized cost
92.1
82.0
12
Trading assets
172.0
162.0
6
Derivatives and cash collateral receivables on derivative instruments
206.3
183.2
13
Brokerage receivables
24.7
25.3
(2)
Other financial assets measured at amortized cost
61.2
60.4
1
Other financial assets measured at fair value
2
131.6
125.4
5
Non-financial assets
55.4
53.2
4
Total assets
1,623.9
1,561.0
4
1 Consists of Loans and advances to customers and Amounts due from banks.
2 Consists of Financial assets at fair value not held for trading and Financial assets measured at fair
value through other comprehensive
income.
Balance sheet liabilities (30 September
2024 vs 30 June 2024)
Total liabilities were USD 1,536.4bn as of 30 September 2024, an increase of USD 59.6bn compared
with 30 June
2024, largely reflecting currency effects as
a result of the depreciation of the US dollar.
Derivatives and cash collateral payables
on derivative instruments increased by
USD 26.2bn, predominantly in the
Investment
Bank,
primarily
reflecting
the
same
drivers
as
on
the
asset
side.
Customer
deposits
increased
by
USD 19.2bn,
primarily driven
by currency
effects of
approximately USD 24.6bn, partly
offset by
net new
deposit
outflows. Brokerage payables increased by USD
6.2bn, mainly reflecting increases in client activity
levels.
UBS Group third quarter 2024 report |
Risk, capital, liquidity and funding, and
balance sheet | Balance sheet and off-balance
sheet
52
These increases were partly offset by a
USD 2.0bn decrease in Debt issued designated at
fair value and long-term
debt issued measured at amortized cost,
mainly driven by net redemptions of
debt issued measured at amortized
cost in Group Treasury, which were largely offset
by currency effects of approximately USD 6.6bn.
The “Liabilities,
by product
and currency”
table
in this
section provides
more information
about the
Group’s funding
sources.
›
Refer to “Bondholder information” at
ubs.com/investors
for more information about capital and senior debt
instruments
›
Refer to the “Consolidated financial statements” section of this report for more information
Liabilities and equity
As of
% change from
USD bn
30.9.24
30.6.24
30.6.24
Short-term borrowings
1,2
61.9
61.7
0
Securities financing transactions at amortized cost
16.4
14.9
10
Customer deposits
776.0
756.8
3
Debt issued designated at fair value and long-term debt issued measured
at amortized cost
2
305.5
307.5
(1)
Trading liabilities
36.4
33.5
9
Derivatives and cash collateral payables on derivative instruments
208.1
181.9
14
Brokerage payables
52.4
46.2
13
Other financial liabilities measured at amortized cost
21.2
21.4
(1)
Other financial liabilities designated at fair value
35.3
31.9
11
Non-financial liabilities
23.2
21.0
11
Total liabilities
1,536.4
1,476.8
4
Share capital
0.3
0.3
0
Share premium
11.8
11.7
0
Treasury shares
(6.1)
(5.5)
10
Retained earnings
77.2
76.2
1
Other comprehensive income
3
3.8
0.9
312
Total equity attributable to shareholders
87.0
83.7
4
Equity attributable to non-controlling interests
0.6
0.5
6
Total equity
87.6
84.2
4
Total liabilities and equity
1,623.9
1,561.0
4
1 Consists of short-term debt issued measured at amortized cost and amounts due to banks, which includes amounts due to central banks.
2 The classification of debt issued measured at amortized cost into short-
term and long-term is based
on original contractual
maturity and therefore long-term
debt also includes debt
with a remaining time
to maturity of less
than one year.
This classification does
not consider any
early
redemption features.
3 Excludes other comprehensive income related to defined benefit plans and own credit, which is recorded directly in Retained earnings.
Equity (30 September 2024 vs 30 June 2024)
Equity attributable to shareholders increased
by USD 3,342m to USD 87,025m as of
30 September 2024.
The
net
increase
of
USD 3,342m
was
mainly
driven
by
positive
total
comprehensive
income
attributable
to
shareholders
of
USD 3,883m, reflecting
a
net
profit
of
USD 1,425m
and
other
comprehensive
income
(OCI)
of
USD 2,459m. OCI
mainly included
cash flow
hedge OCI
of USD 1,593m,
OCI related to
foreign currency
translation
of USD 1,333m
and negative
OCI related to
own credit
on financial liabilities
designated at
fair value of
USD 323m.
This increase
was partly
offset by
net treasury
share activity,
which reduced
equity by
USD 798m, predominantly
due to the repurchasing of USD 549m
of shares under our 2024 share repurchase program and the purchasing of
USD 254m of shares in relation to employee
share-based compensation plans.
›
Refer to the “Group performance” and “Consolidated financial statements” sections of this report for more
information
›
Refer to “Reconciliation of equity under IFRS Accounting Standards to Swiss SRB common equity tier 1 capital” in
the “Capital management” section of this report for more information about the effects of OCI on common equity
tier 1 capital
›
Refer to the “Share information and earnings per share”
section of this report for more information about our
share repurchase programs
UBS Group third quarter 2024 report |
Risk, capital, liquidity and funding, and
balance sheet | Balance sheet and off-balance
sheet
53
Liabilities, by product and currency
All currencies
of which: USD
of which: CHF
of which: EUR
USD bn
30.9.24
30.6.24
30.9.24
30.6.24
30.9.24
30.6.24
30.9.24
30.6.24
Short-term borrowings
61.9
61.7
28.9
32.0
7.9
8.0
11.2
8.6
of which: amounts due to banks
28.1
26.8
10.0
10.0
7.4
7.5
3.5
3.2
of which: short-term debt issued
1,2
33.9
34.9
18.9
22.0
0.5
0.5
7.7
5.4
Securities financing transactions at amortized cost
16.4
14.9
8.8
8.5
3.3
2.7
3.6
2.5
Customer deposits
776.0
756.8
310.0
307.2
320.0
301.9
75.8
76.8
of which: demand deposits
228.2
220.1
55.4
54.8
109.1
101.3
34.8
35.3
of which: retail savings / deposits
189.1
177.8
33.7
31.0
151.2
142.7
4.2
4.0
of which: sweep deposits
34.5
35.7
34.5
35.7
0.0
0.0
0.0
0.0
of which: time deposits
324.2
323.3
186.4
185.8
59.7
57.9
36.8
37.5
Debt issued designated at fair value and long-term debt issued measured
at amortized
cost
2
305.5
307.5
167.6
174.8
45.0
42.6
67.6
64.5
Trading liabilities
36.4
33.5
14.5
12.7
1.7
1.1
10.4
9.7
Derivatives and cash collateral payables on derivative instruments
208.1
181.9
167.2
145.0
4.2
3.5
21.9
21.0
Brokerage payables
52.4
46.2
41.7
35.4
0.7
0.7
2.6
2.9
Other financial liabilities measured at amortized cost
21.2
21.4
11.0
11.5
4.2
4.2
2.0
1.5
Other financial liabilities designated at fair value
35.3
31.9
6.3
6.1
0.1
0.1
6.9
4.9
Non-financial liabilities
23.2
21.0
13.0
11.5
4.0
3.8
3.0
2.9
Total liabilities
1,536.4
1,476.8
769.1
744.8
391.0
368.6
205.0
195.0
1 Short-term debt issued consists of
certificates of deposit, commercial paper,
acceptances and promissory notes, and
other money market paper.
2 The classification of
debt issued measured at amortized
cost into
short-term and long-term is based on original contractual maturity and therefore long-term debt also includes debt with a remaining time to maturity of less than one year.
This classification does not consider any early
redemption features.
Off-balance sheet (30 September 2024
vs 30 June 2024)
Committed
unconditionally
revocable
credit
lines
increased
by
USD 4.2bn,
driven
by
currency
effects.
Forward
starting reverse repurchase and securities borrowing agreements increased by USD
6.4bn, reflecting an increase in
levels of business division activity in short-dated
securities financing transactions.
Off-balance sheet
As of
% change from
USD bn
30.9.24
30.6.24
30.6.24
Guarantees
1,2
39.6
38.8
2
Irrevocable loan commitments
1
80.5
81.9
(2)
Committed unconditionally revocable credit lines
153.1
148.9
3
Forward starting reverse repurchase and securities borrowing agreements
16.1
9.7
65
1 Guarantees and irrevocable loan commitments are shown net of sub-participations.
2 Includes guarantees measured at fair value through profit or loss.
UBS Group third quarter 2024 report |
Risk, capital, liquidity and funding, and
balance sheet | Share information and earnings
per share
54
Share information and earnings per share
UBS Group AG
shares
are
listed
on
the
SIX
Swiss
Exchange
(SIX).
They
are
also
listed
on
the
New
York
Stock
Exchange (the NYSE) as global registered shares. Each share has
a nominal value of USD 0.10. Shares issued were
unchanged in the third quarter of 2024 compared
with the second quarter of 2024.
We held
276m shares as
of 30 September 2024,
of which
144m shares
had been
acquired under our
2022 and
2024 share repurchase
programs
for cancellation
purposes. The
remaining 132m
shares are primarily
held to hedge
our share delivery obligations related to employee
share-based compensation and participation
plans.
Treasury
shares
held
increased
by
16m
shares
in
the
third
quarter
of
2024.
This
mainly
reflected
19.1m
shares
repurchased under our 2024 program and 7.2m shares purchased from the market to hedge future share delivery
obligations related to employee share-based compensation awards, partly offset by the delivery of treasury shares
under our share-based compensation plans.
Shares
acquired under
our
2024
program
totaled 23m
as
of
30 September 2024
for
a
total acquisition
cost
of
USD 700m (CHF 610m).
As previously
communicated, we expect
to repurchase
a total
of up
to USD 1bn
of our
shares in 2024.
Shares acquired
under our
2022 program
totaled 121m
as of
30 September 2024
for a
total acquisition
cost of
USD 2,277m (CHF 2,138m). This program concluded
on 28 March 2024, and the 121m shares repurchased
under
this program will be canceled by means of a
capital reduction, subject to approval by the shareholders at a future
Annual General Meeting.
›
Refer to the “Equity, CET1 capital and returns” table in the “Group performance” section of this report
for more
information about equity attributable to shareholders and tangible equity attributable to shareholders
As of or for the quarter ended
As of or year-to-date
30.9.24
30.6.24
30.9.23
1
30.9.24
30.9.23
1
Basic and diluted earnings (USD m)
Net profit / (loss) attributable to shareholders for basic
EPS
1,425
1,136
(715)
4,315
27,645
less: (profit) / loss on own equity derivative contracts
0
0
(1)
0
(2)
Net profit / (loss) attributable to shareholders for diluted
EPS
1,424
1,136
(715)
4,315
27,643
.
Weighted average shares outstanding
Weighted average shares outstanding for basic EPS
2
3,196,573,895
3,212,672,606
3,229,878,446
3,204,826,901
3,128,272,554
Effect of dilutive potential shares resulting from notional
employee shares, in-the-money
options and warrants outstanding
3
147,480,584
146,621,312
380,852
4
151,321,464
139,759,974
Weighted average shares outstanding for diluted EPS
3,344,054,479
3,359,293,918
3,230,259,298
3,356,148,365
3,268,032,528
.
Earnings per share (USD)
Basic
0.45
0.35
(0.22)
1.35
8.84
Diluted
0.43
0.34
(0.22)
1.29
8.46
.
Shares outstanding and potentially dilutive instruments
Shares issued
3,462,087,722
3,462,087,722
3,462,087,722
3,462,087,722
3,462,087,722
Treasury shares
5
276,381,209
259,953,381
228,822,625
276,381,209
228,822,625
of which: related to the 2022 share repurchase program
120,506,008
120,506,008
120,506,008
120,506,008
120,506,008
of which: related to the 2024 share repurchase program
23,479,400
4,406,000
23,479,400
Shares outstanding
3,185,706,513
3,202,134,341
3,233,265,097
3,185,706,513
3,233,265,097
Potentially dilutive instruments
6
13,561,823
14,636,947
160,925,793
4
13,600,262
8,518,394
.
Other key figures
Total book value per share (USD)
27.32
26.13
25.75
27.32
25.75
Tangible book value per share (USD)
25.10
23.85
23.44
25.10
23.44
Share price (USD)
7
30.77
29.43
24.77
30.77
24.77
Market capitalization (USD m)
8
106,528
101,903
85,768
106,528
85,768
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more
information.
2 The weighted average shares outstanding
for basic earnings per share (EPS) are calculated by taking the number of shares at the beginning of the period, adjusted by the number of
shares acquired or issued during
the period, multiplied by a time-weighted factor for the period outstanding. As a
result, balances are affected by the timing of acquisitions and issuances during the period.
3 The weighted average number of shares
for notional
employee awards
with performance
conditions reflects
all potentially
dilutive shares
that are
expected to
vest under
the terms
of the
awards.
4 Due
to the
net loss
in the
third quarter
of 2023,
148,423,317 weighted average potential
shares from unvested notional
share awards were not
included in the calculation
of diluted EPS as
they were not dilutive
for the quarter ended
30 September 2023. Such
shares are only taken into account for
the diluted EPS calculation when their conversion
to ordinary shares would decrease earnings
per share or increase the loss per
share, in accordance with IAS 33,
Earnings per
Share.
5 Based on a settlement date view.
6 Reflects potential shares that could dilute basic EPS in
the future but were not dilutive for any of the periods
presented. Mainly includes equity-based awards subject
to absolute and relative performance
conditions and equity derivative
contracts. For
the quarter ended 30
September 2023, it also
includes 148,423,317 weighted average
potential shares from unvested
notional
share awards that were not included in the calculation of diluted EPS as they were not dilutive.
7 Represents the share price as listed on the SIX Swiss Exchange, translated to US dollars using the closing exchange
rate as of the respective date.
8 The calculation of market capitalization reflects total shares issued multiplied
by the share price at the end of the period.
Ticker symbols UBS Group AG
Security identification codes
Trading exchange
SIX / NYSE
Bloomberg
Reuters
ISIN
CH0244767585
SIX Swiss Exchange
UBSG
UBSG SW
UBSG.S
Valoren
24 476 758
New York Stock Exchange
UBS
UBS UN
UBS.N
CUSIP
CINS H42097 10 7
UBS Group third quarter 2024 report |
Consolidated financial statements
55
Consolidated financial
statements
Unaudited
Table of contents
UBS Group AG interim consolidated financial statements
(unaudited)
56
Income statement
57
Statement of comprehensive income
58
Balance sheet
59
Statement of changes in equity
60
Statement of cash flows
61
1
Basis of accounting
63
2
Accounting for the acquisition of the Credit Suisse Group
67
3
Segment reporting
68
4
Net interest income
69
5
Net fee and commission income
69
6
Other income
69
7
Personnel expenses
70
8
General and administrative expenses
70
9
Expected credit loss measurement
78
10
Fair value measurement
84
11
Derivative instruments
85
12
Other assets and liabilities
86
13
Debt issued designated at fair value
86
14
Debt issued measured at amortized cost
86
15
Provisions and contingent liabilities
96
16
Events after the reporting period
UBS Group third quarter 2024 report |
Consolidated financial statements | UBS Group
AG interim consolidated financial statements
(unaudited)
56
UBS Group AG interim consolidated financial
statements (unaudited)
Income statement
For the quarter ended
Year-to-date
USD m
Note
30.9.24
30.6.24
30.9.23
1
30.9.24
30.9.23
1
Interest income from financial instruments measured at
amortized cost and fair value through
other comprehensive income
4
8,766
9,320
9,932
28,165
21,707
Interest expense from financial instruments measured at
amortized cost
4
(9,022)
(9,319)
(9,082)
(28,064)
(18,777)
Net interest income from financial instruments measured
at fair value through profit or loss and other
4
2,050
1,533
1,257
5,168
2,272
Net interest income
4
1,794
1,535
2,107
5,270
5,202
Other net income from financial instruments measured
at fair value through profit or loss
3,681
3,684
3,226
11,547
8,425
Fee and commission income
5
7,170
7,211
6,669
21,461
17,357
Fee and commission expense
5
(653)
(679)
(613)
(1,921)
(1,566)
Net fee and commission income
5
6,517
6,531
6,056
19,540
15,790
Other income
6
341
154
305
619
563
Total revenues
12,334
11,904
11,695
36,976
29,979
Negative goodwill
2
27,264
Credit loss expense / (release)
9
121
95
239
322
901
Personnel expenses
7
6,889
7,119
7,567
20,957
17,838
General and administrative expenses
8
2,389
2,318
3,124
7,120
7,157
Depreciation, amortization and impairment of non-financial
assets
1,006
903
950
2,804
2,341
Operating expenses
10,283
10,340
11,640
30,880
27,336
Operating profit / (loss) before tax
1,929
1,469
(184)
5,773
29,006
Tax expense / (benefit)
502
293
526
1,407
1,346
Net profit / (loss)
1,428
1,175
(711)
4,366
27,660
Net profit / (loss) attributable to non-controlling interests
3
40
4
51
15
Net profit / (loss) attributable to shareholders
1,425
1,136
(715)
4,315
27,645
Earnings per share (USD)
Basic
0.45
0.35
(0.22)
1.35
8.84
Diluted
0.43
0.34
(0.22)
1.29
8.46
1 Comparative-period information has been revised. Refer to Note 2 for more information.
UBS Group third quarter 2024 report |
Consolidated financial statements | UBS Group
AG interim consolidated financial statements
(unaudited)
57
Statement of comprehensive income
For the quarter ended
Year-to-date
USD m
30.9.24
30.6.24
30.9.23
1
30.9.24
30.9.23
1
Comprehensive income attributable to shareholders
2
Net profit / (loss)
1,425
1,136
(715)
4,315
27,645
Other comprehensive income that may be reclassified to the income
statement
Foreign currency translation
Foreign currency translation movements related to net assets of foreign operations, before tax
2,404
(268)
(1,425)
(1,337)
(435)
Effective portion of changes in fair value of hedging instruments
designated as net investment hedges, before tax
(1,081)
291
806
1,392
300
Foreign currency translation differences on foreign operations reclassified to the
income statement
2
2
2
4
(1)
Effective portion of changes in fair value of hedging instruments
designated as net investment hedges reclassified
to
the income statement
0
0
0
1
(3)
Income tax relating to foreign currency translations, including the effect of
net investment hedges
9
0
4
22
(2)
Subtotal foreign currency translation, net of tax
1,333
25
(615)
81
(141)
Financial assets measured at fair value through other comprehensive income
Net unrealized gains / (losses), before tax
2
0
(2)
2
0
Net realized (gains) / losses reclassified to the income statement
from equity
0
0
0
0
1
Income tax relating to net unrealized gains / (losses)
0
0
0
0
0
Subtotal financial assets measured at fair value through other comprehensive
income, net of tax
2
0
(2)
2
0
Cash flow hedges of interest rate risk
Effective portion of changes in fair value of derivative instruments designated
as cash flow hedges, before tax
1,579
(417)
(1,198)
(84)
(2,126)
Net (gains) / losses reclassified to the income statement from
equity
388
668
580
1,600
1,339
Income tax relating to cash flow hedges
(374)
5
92
(250)
91
Subtotal cash flow hedges, net of tax
1,593
256
(526)
1,266
(695)
Cost of hedging
Cost of hedging, before tax
(19)
(19)
(1)
(47)
5
Income tax relating to cost of hedging
0
0
0
0
0
Subtotal cost of hedging, net of tax
(19)
(19)
(1)
(47)
5
Total other comprehensive income that may be reclassified to the income statement, net
of tax
2,910
262
(1,144)
1,302
(832)
Other comprehensive income that will not be reclassified to the income
statement
Defined benefit plans
Gains / (losses) on defined benefit plans, before tax
(138)
(38)
(62)
(238)
(54)
Income tax relating to defined benefit plans
10
8
(7)
23
(36)
Subtotal defined benefit plans, net of tax
(128)
(30)
(69)
(215)
(91)
Own credit on financial liabilities designated at fair value
Gains / (losses) from own credit on financial liabilities designated
at fair value, before tax
(317)
231
(715)
(156)
(1,119)
Income tax relating to own credit on financial liabilities designated
at fair value
(6)
(3)
29
(7)
72
Subtotal own credit on financial liabilities designated at
fair value, net of tax
(323)
228
(686)
(163)
(1,047)
Total other comprehensive income that will not be reclassified to the income statement,
net of tax
(451)
198
(755)
(378)
(1,138)
Total other comprehensive income
2,459
460
(1,899)
924
(1,970)
Total comprehensive income attributable to shareholders
3,883
1,596
(2,614)
5,239
25,675
Comprehensive income attributable to non-controlling
interests
Net profit / (loss)
3
40
4
51
15
Total other comprehensive income that will not be reclassified to the income statement,
net of tax
24
(21)
(12)
(11)
(12)
Total comprehensive income attributable to non-controlling interests
27
18
(8)
40
4
Total comprehensive income
Net profit / (loss)
1,428
1,175
(711)
4,366
27,660
Other comprehensive income
2,482
439
(1,911)
913
(1,981)
of which: other comprehensive income that may be reclassified
to the income statement
2,910
262
(1,144)
1,302
(832)
of which: other comprehensive income that will not be reclassified
to the income statement
(428)
176
(767)
(389)
(1,150)
Total comprehensive income
3,910
1,614
(2,622)
5,279
25,679
1 Comparative-period information has been revised. Refer to Note 2 for more information.
2 Refer to the “Group performance” section of this report for more information.
UBS Group third quarter 2024 report |
Consolidated financial statements | UBS Group
AG interim consolidated financial statements
(unaudited)
58
Balance sheet
USD m
Note
30.9.24
30.6.24
31.12.23
1
Assets
Cash and balances at central banks
243,261
248,336
314,060
Amounts due from banks
21,716
21,959
21,146
Receivables from securities financing transactions measured at amortized
cost
92,104
82,028
99,039
Cash collateral receivables on derivative instruments
11
47,209
43,637
50,082
Loans and advances to customers
9
615,820
599,105
639,669
Other financial assets measured at amortized cost
12
61,169
60,431
65,455
Total financial assets measured at amortized cost
1,081,280
1,055,494
1,189,451
Financial assets at fair value held for trading
10
171,983
162,025
169,633
of which: assets pledged as collateral that may be sold or repledged
by counterparties
46,599
43,452
51,263
Derivative financial instruments
10, 11
159,068
139,597
176,084
Brokerage receivables
10
24,656
25,273
21,037
Financial assets at fair value not held for trading
10
129,416
123,266
104,018
Total financial assets measured at fair value through profit or loss
485,124
450,161
470,773
Financial assets measured at fair value through other comprehensive income
10
2,179
2,167
2,233
Investments in associates
2,484
2,236
2,373
Property, equipment and software
16,571
16,440
17,849
Goodwill and intangible assets
7,048
7,313
7,515
Deferred tax assets
10,254
10,651
10,682
Other non-financial assets
12
19,002
16,514
16,049
Total assets
1,623,941
1,560,976
1,716,924
Liabilities
Amounts due to banks
28,058
26,750
70,962
Payables from securities financing transactions measured at amortized cost
16,374
14,872
14,394
Cash collateral payables on derivative instruments
11
33,757
32,843
41,582
Customer deposits
775,994
756,830
792,029
Debt issued measured at amortized cost
14
227,168
229,223
237,817
Other financial liabilities measured at amortized cost
12
21,171
21,383
20,851
Total financial liabilities measured at amortized cost
1,102,523
1,081,902
1,177,633
Financial liabilities at fair value held for trading
10
36,437
33,493
34,159
Derivative financial instruments
10, 11
174,296
149,069
192,181
Brokerage payables designated at fair value
10
52,403
46,198
42,522
Debt issued designated at fair value
10, 13
112,218
113,209
128,289
Other financial liabilities designated at fair value
10, 12
35,256
31,875
29,484
Total financial liabilities measured at fair value through profit or loss
410,610
373,844
426,635
Provisions and contingent liabilities
15
9,245
9,293
12,412
Other non-financial liabilities
12
13,974
11,720
14,089
Total liabilities
1,536,352
1,476,758
1,630,769
Equity
Share capital
346
346
346
Share premium
11,755
11,742
13,216
Treasury shares
(6,051)
(5,498)
(4,796)
Retained earnings
77,197
76,176
74,397
Other comprehensive income recognized directly in equity, net of tax
3,777
917
2,462
Equity attributable to shareholders
87,025
83,683
85,624
Equity attributable to non-controlling interests
564
535
531
Total equity
87,589
84,218
86,156
Total liabilities and equity
1,623,941
1,560,976
1,716,924
1 Comparative-period information has been revised. Refer to Note 2 for more information.
UBS Group third quarter 2024 report |
Consolidated financial statements | UBS Group
AG interim consolidated financial statements
(unaudited)
59
Statement of changes in equity
USD m
Share
capital and
share
premium
Treasury
shares
Retained
earnings
OCI
recognized
directly in
equity,
net of tax
1
of which:
foreign
currency
translation
of which:
cash flow
hedges
Total equity
attributable to
shareholders
Balance as of 1 January 2024
2,3
13,562
(4,796)
74,397
2,462
5,584
(3,109)
85,624
Acquisition of treasury shares
(2,693)
4
(2,693)
Delivery of treasury shares under share-based compensation
plans
(1,282)
1,335
53
Other disposal of treasury shares
2
102
4
104
Share-based compensation expensed in the income statement
883
883
Tax (expense) / benefit
15
15
Dividends
(1,128)
5
(1,128)
5
(2,256)
Equity classified as obligation to purchase own shares
(42)
(42)
Translation effects recognized directly in retained earnings
(14)
14
14
0
Share of changes in retained earnings of associates and
joint ventures
(3)
(3)
New consolidations / (deconsolidations) and other increases
/ (decreases)
92
7
99
Total comprehensive income for the period
3,937
1,302
81
1,266
5,239
of which: net profit / (loss)
4,315
4,315
of which: OCI, net of tax
(378)
1,302
81
1,266
924
Balance as of 30 September 2024
2
12,101
(6,051)
77,197
3,777
5,666
(1,830)
87,025
Non-controlling interests as of 30 September 2024
564
Total equity as of 30 September 2024
87,589
Balance as of 1 January 2023
2
13,850
(6,874)
50,004
(103)
4,128
(4,234)
56,876
Purchase price consideration for Credit Suisse Group acquisition,
before consideration of
share-based compensation awards
6
619
2,928
3,547
Impact of share-based compensation awards from Credit Suisse Group
acquisition
6
162
162
Impact of the settlement of pre-existing relationships from
Credit Suisse Group acquisition
6
(61)
(61)
Acquisition of treasury shares
(2,353)
4
(2,353)
Delivery of treasury shares under share-based compensation
plans
(856)
946
91
Other disposal of treasury shares
6
177
4
182
Cancellation of treasury shares related to the 2021
share repurchase program
7
(561)
1,115
(554)
0
Share-based compensation expensed in the income statement
791
791
Tax (expense) / benefit
7
7
Dividends
(839)
5
(839)
5
(1,679)
Equity classified as obligation to purchase own shares
21
21
Translation effects recognized directly in retained earnings
18
(18)
(18)
0
Share of changes in retained earnings of associates and joint
ventures
(1)
(1)
New consolidations / (deconsolidations) and other increases
/ (decreases)
2
1
3
Total comprehensive income for the period
26,507
(832)
(141)
(695)
25,675
of which: net profit / (loss)
27,645
27,645
of which: OCI, net of tax
(1,138)
(832)
(141)
(695)
(1,970)
Balance as of 30 September 2023
2,3
13,204
(4,122)
75,135
(953)
3,987
(4,947)
83,265
Non-controlling interests as of 30 September 2023
542
8
Total equity as of 30 September 2023
3
83,807
1 Excludes other comprehensive income related to defined
benefit plans and own credit that is recorded
directly in Retained earnings.
2 Excludes non-controlling interests.
3 Comparative-period information has
been revised. Refer to Note 2 for more information.
4 Includes treasury shares acquired and disposed of by the Investment Bank in its capacity
as a market maker with regard to UBS
shares and related derivatives,
and to hedge
certain issued structured
debt instruments. These
acquisitions and disposals
are reported based
on the sum
of the net
monthly movements.
5 Reflects the payment
of an ordinary
cash dividend of
USD 0.70 per dividend-bearing share in
May 2024 (2023: USD 0.55 per dividend-bearing
share paid in April 2023). Swiss
tax law requires Switzerland-domiciled companies with
shares listed on a Swiss
stock exchange
to pay no more than
50% of dividends from
capital contribution reserves,
with the remainder required
to be paid from retained
earnings.
6 Refer to Note 2
for more information.
7 Reflects the cancellation
of
62,548,000 shares purchased under
UBS’s 2021 share
repurchase program as approved
by shareholders at the
2023 Annual General
Meeting. Swiss tax law
requires Switzerland-domiciled companies
with shares
listed on a Swiss stock exchange to reduce capital contribution reserves by at least 50% of the total capital reduction amount exceeding the nominal value upon cancellation of the shares.
8 Includes an increase of
USD 285m in the second quarter of 2023 due to the acquisition of the Credit Suisse Group.
UBS Group third quarter 2024 report |
Consolidated financial statements | UBS Group
AG interim consolidated financial statements
(unaudited)
60
Statement of cash flows
Year-to-date
USD m
30.9.24
30.9.23
1
Cash flow from / (used in) operating activities
Net profit / (loss)
4,366
27,660
Non-cash items included in net profit and other adjustments
Depreciation, amortization and impairment of non-financial
assets
2,804
2,341
Credit loss expense / (release)
322
901
Share of net (profits) / loss of associates and joint ventures and
impairment related to associates
(177)
(118)
Deferred tax expense / (benefit)
252
(152)
Net loss / (gain) from investing activities
(178)
26
Net loss / (gain) from financing activities
4,287
(1,921)
Negative goodwill
(27,264)
Other net adjustments
2
2,213
3,496
Net change in operating assets and liabilities
2
Amounts due from banks and amounts due to banks
1,416
4,813
Receivables from securities financing transactions measured at amortized
cost
6,392
7,351
Payables from securities financing transactions measured at amortized cost
169
(1,044)
Cash collateral on derivative instruments
(4,578)
(5,826)
Loans and advances to customers
21,557
22,190
Customer deposits
(15,220)
20,701
Financial assets and liabilities at fair value held for trading and derivative financial
instruments
1,882
(5,696)
Brokerage receivables and payables
6,498
(10,517)
Financial assets at fair value not held for trading and other financial assets
and liabilities
(12,866)
11,109
Provisions and other non-financial assets and liabilities
(1,495)
1,624
Income taxes paid, net of refunds
(1,682)
(1,544)
Net cash flow from / (used in) operating activities
3
15,961
48,131
Cash flow from / (used in) investing activities
Cash and cash equivalents acquired upon the acquisition of the
Credit Suisse Group
108,406
Purchase of subsidiaries, associates and intangible assets
(1)
Disposal of subsidiaries, associates and intangible assets
188
47
Purchase of property, equipment and software
(1,470)
(1,227)
Disposal of property, equipment and software
46
63
Net (purchase) / redemption of financial assets measured
at fair value through other comprehensive income
28
25
Purchase of debt securities measured at amortized cost
(3,841)
(11,632)
Disposal and redemption of debt securities measured at amortized
cost
6,857
7,227
Net cash flow from / (used in) investing activities
1,807
102,908
Cash flow from / (used in) financing activities
Repayment of Swiss National Bank funding
(42,587)
(56,516)
Net issuance (repayment) of short-term debt measured at amortized
cost
(5,127)
3,084
Net movements in treasury shares and own equity derivative
activity
(2,570)
(2,100)
Distributions paid on UBS shares
(2,256)
(1,679)
Issuance of debt designated at fair value and long-term debt measured
at amortized cost
81,200
88,028
Repayment of debt designated at fair value and long-term debt measured
at amortized cost
(109,952)
(82,904)
Inflows from securities financing transactions measured at amortized
cost
4
4,979
Outflows from securities financing transactions measured at amortized
cost
4
(3,165)
Net cash flows from other financing activities
(595)
(481)
Net cash flow from / (used in) financing activities
(80,073)
(52,568)
Total cash flow
Cash and cash equivalents at the beginning of the period
340,207
195,321
Net cash flow from / (used in) operating, investing and financing
activities
(62,305)
98,472
Effects of exchange rate differences on cash and cash equivalents
2
(2,492)
(1,497)
Cash and cash equivalents at the end of the period
5
275,410
6
292,296
of which: cash and balances at central banks
5
243,261
262,215
of which: amounts due from banks
5
20,031
18,946
of which: money market paper
5,7
11,917
11,135
Additional information
Net cash flow from / (used in) operating activities includes:
Interest received in cash
41,643
30,680
Interest paid in cash
37,323
23,541
Dividends on equity investments, investment funds and associates received
in cash
8
2,260
1,867
1 Comparative-period
information has been
revised. Refer
to Note 2
for more information.
2 Foreign currency
translation and
foreign exchange effects
on operating
assets and liabilities
and on cash
and cash
equivalents are
presented within
the Other
net adjustments
line. Does
not include
foreign currency
hedge effects
related to
foreign exchange
swaps.
3 Includes cash
receipts from
the sale
of loans
and loan
commitments of USD 11,957m
and USD 2,758m
within Non-core and
Legacy for the
nine-month periods ended
30 September 2024
and 30 September 2023,
respectively.
4 Reflects cash
flows from securities
financing transactions measured at amortized cost that use UBS debt instruments as the
underlying.
5 Includes only balances with an original maturity of three months or less.
6
The balance includes USD 0.2bn
related to cash held in Assets of disposal
groups held for sale, recognized
within Other non-financial assets.
7 Money market paper is included
in the balance sheet under Financial assets
at fair value not held for
trading (30 September 2024: USD 11,130m; 30 September 2023:
USD 10,158m), Other financial assets measured at amortized cost
(30 September 2024: USD 457m; 30 September 2023: USD 393m) and
Financial
assets at fair value held for trading (30 September 2024: USD 331m; 30 September
2023: USD 583m).
8 Includes dividends received from associates reported within Net cash
flow from / (used in) investing activities.
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
61
Notes to the UBS Group AG interim consolidated
financial statements (unaudited)
Note 1
Basis of accounting
Basis of preparation
The consolidated
financial statements
(the financial
statements) of
UBS Group AG and
its subsidiaries
(together,
UBS
or
the
Group)
are
prepared
in
accordance
with
IFRS
Accounting
Standards, as
issued
by
the
International
Accounting Standards
Board (the
IASB), and
are
presented in
US
dollars. These
interim
financial statements
are
prepared in accordance with IAS 34,
Interim Financial Reporting
.
In preparing
these interim financial
statements, the same
accounting policies and
methods of
computation have
been applied as in the
UBS Group AG consolidated annual
financial statements for
the period ended 31 December
2023, except for the changes described in this Note and changes
in segment reporting as set out in Note 3. These
interim
financial
statements
are
unaudited
and
should
be
read
in
conjunction
with
UBS Group AG’s
audited
consolidated financial statements in
the UBS Group Annual Report
2023 and the “Management
report” sections
of this report. In the opinion of management, all necessary adjustments have
been made for a fair presentation of
the Group’s financial position, results of
operations and cash flows.
Preparation of
these interim financial
statements requires management
to make
estimates and
assumptions that
affect
the
reported
amounts
of
assets,
liabilities,
income,
expenses
and
disclosures
of
contingent
assets
and
liabilities. These estimates
and assumptions are based
on the best available
information. Actual results
in the future
could differ
from such
estimates and
differences may
be material
to the
financial statements.
Revisions to
estimates,
based on regular
reviews, are recognized
in the period
in which they
occur. For more
information about areas of
estimation
uncertainty
that
are
considered
to
require
critical
judgment,
refer
to
“Note 1a
Material
accounting
policies” in the “Consolidated financial statements”
section of the UBS Group Annual Report
2023.
Amendments to IAS 12,
Income Taxes
UBS
has
applied
for
the
purposes
of
these
financial
statements
the
exception
that
was
introduced
by
the
amendments to
IAS 12,
Income Taxes
, issued in
May 2023
in relation to
top-up taxes
on income
under Global
Anti-
Base Erosion
Rules that
have been
imposed under
legislation that
has been
enacted or
substantively enacted
to
implement the Pillar
Two model rules published by the
Organisation for Economic
Co-operation and Development.
The exception
requires that
deferred tax
assets and
deferred tax
liabilities be
neither recognized
nor disclosed
in
respect of such top-up taxes.
Other amendments to IFRS Accounting Standards
A number of minor amendments
to IFRS Accounting Standards became
effective from 1 January 2024 or
later and
have had no material effect on the Group.
IFRS 18,
Presentation and Disclosure in Financial
Statements
In April 2024, the IASB issued a new standard,
IFRS 18,
Presentation and Disclosure in Financial Statements,
which
replaces IAS 1,
Presentation of Financial Statements
. The main changes introduced by IFRS 18 relate
to:
–
the structure of income statements;
–
new disclosure requirements for management performance
measures; and
–
enhanced guidance on aggregation and disaggregation of information on
the face of financial
statements and
in the notes thereto.
IFRS 18 is effective from 1 January 2027 and
will also apply to comparative information. UBS
will first apply these
new requirements in
the Annual Report
2027 and, for
interim reporting, in
the first quarter
2027 interim report.
UBS is assessing the impact of the
new requirements on its reporting
but expects it to be limited. UBS
will take the
opportunity to refine the grouping of items in the primary financial statements and
in the notes thereto based on
new principles of aggregation and disaggregation
in IFRS 18.
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
62
Note 1
Basis of accounting (continued)
Amendments to IFRS 9,
Financial Instruments
, and IFRS 7,
Financial Instruments: Disclosures
In
May
2024,
the
IASB
issued
Amendments
to
the
Classification
and
Measurement
of
Financial
Instruments
–
Amendments to IFRS 9 and IFRS 7
(the Amendments).
The Amendments relate to:
–
derecognition of financial liabilities settled
through electronic transfer systems;
–
assessment
of
contractual
cash
flow
characteristics
in
classifying
financial
assets,
including
those
with
environmental, social and
corporate governance and
similar features, non-recourse
features, and
contractually
linked instruments; and
–
disclosure of information about
financial instruments with contingent features
that can change
the amount of
contractual
cash
flows,
as
well
as
equity
instruments
designated
at
fair
value
through
other
comprehensive
income.
The Amendments
are effective
from 1 January 2026,
with early
application permitted either
for the
entire set
of
amendments or
for only
those that relate
to classification of
financial instruments. UBS
is currently
assessing the
impact of the new requirements on its financial
statements.
Currency translation rates
The
following table
shows the
rates of
the main
currencies used
to translate
the financial
information of
UBS’s
operations with a functional currency other
than the US dollar into US dollars.
Closing exchange rate
Average rate
1
As of
For the quarter ended
Year-to-date
30.9.24
30.6.24
31.12.23
30.9.23
30.9.24
30.6.24
30.9.23
30.9.24
30.9.23
1 CHF
1.18
1.11
1.19
1.09
1.17
1.10
1.12
1.13
1.11
1 EUR
1.11
1.07
1.10
1.06
1.10
1.07
1.08
1.08
1.08
1 GBP
1.34
1.26
1.28
1.22
1.31
1.26
1.26
1.28
1.25
100 JPY
0.69
0.62
0.71
0.67
0.68
0.63
0.69
0.66
0.71
1 Monthly income statement items of operations with a functional currency other than the US dollar are
translated into US dollars using month-end rates.
Disclosed average rates for a quarter represent an average of
three month-end rates, weighted according to the income and expense volumes of
all operations of the Group with the same functional
currency for each month. Weighted average rates for individual business divisions
may deviate from the weighted average rates for the Group.
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
63
Note 2
Accounting for the acquisition of the Credit
Suisse Group
The transaction
On 12 June
2023, UBS Group AG
acquired Credit
Suisse Group AG,
succeeding by
operation of
Swiss law
to all
assets and liabilities of Credit Suisse Group AG, and became the direct
or indirect shareholder of all of the
former
direct and indirect subsidiaries of
Credit Suisse Group AG. The acquisition
of Credit Suisse Group AG constituted
a
business combination under IFRS 3,
Business Combinations
, and was required to be accounted for by applying the
acquisition method of accounting.
IFRS 3 measurement period adjustments
for the acquisition of the Credit Suisse
Group
The acquisition of
Credit Suisse Group
AG was made
without the ordinary
due diligence procedures
and outside
the conventional time
frame for an
acquisition of
this scale and
nature. As
such, complete
information about all
relevant facts and
circumstances as of
the acquisition date
was not practically
available to UBS
at the time
when
the initial acquisition accounting was applied for the purpose of the UBS Group second quarter 2023 report, with
the amounts that form part of
the business combination accounting therefore
considered provisional and subject
to further measurement period
adjustments if new
information about facts
and circumstances existing on
the date
of the acquisition were to
be obtained within one year from
the acquisition date. The acquisition of Credit
Suisse
Group AG resulted in
provisional negative
goodwill of
USD 27.7bn reported
in the
UBS Group
Annual Report
2023.
For details
of the
accounting for the
acquisition, including measurement
period adjustments effected
during the
year ended 31 December
2023, refer to
“Note 1a Material accounting
policies” and “Note 2
Accounting for the
acquisition of
the Credit
Suisse Group”
in the
“Consolidated financial
statements”
section of
the UBS
Group Annual
Report 2023.
In the
second quarter
of 2024,
in light of
the additional
information about
circumstances existing
on the
acquisition
date that became available to management, IFRS 3 measurement period adjustments of USD 0.2bn were made in
relation to
Provisions and contingent liabilities
(refer to
“Change in provisions and contingent
liabilities”
below). In
addition,
fair
value
measurement
adjustments
of
USD 0.3bn
were
made
to
the
acquisition
date
fair
values
of
exposures associated with Russia, as well as
other positions in Non-core and Legacy,
following the completion of a
detailed review.
The adjustments
reflect management’s
final conclusions
on critical
assumptions and
judgments,
which are within a range of reasonably possible outcomes, relating to significant uncertainties that
existed on the
acquisition date. Comparative-period information
has been revised accordingly.
The measurement
period adjustments
effected in
the second
quarter of
2024 resulted
in a
decrease in
negative
goodwill to USD 27.3bn from
the provisional amount of
USD 27.7bn previously reported
in the UBS Group Annual
Report 2023. Retained earnings
have been revised
to reflect the
impact on the
prior-period income statement of
net
USD 0.5bn.
With
the
measurement
period
adjustments
effected
in
the
second
quarter
of
2024
and
the
finalization of the amount of negative goodwill,
the acquisition accounting for the transaction
is complete.
Change in provisions and contingent liabilities
In
addition
to
the
existing
USD 1.3bn
litigation provisions
previously
recorded
by
the
Credit
Suisse
Group,
UBS
recognized
on
the
acquisition
date
USD 5.6bn
in
Provisions
and
contingent
liabilities
for
additional
litigation
provisions
and contingent
liabilities, which
includes USD 1.6bn
for litigation
provisions
to reflect
management’s
assessment
of
the
associated
probability,
timing
and
amount
considering
new
information,
and
USD 4.0bn
contingent liabilities for certain
obligations in respect of
litigation, regulatory and similar
matters identified in the
purchase
price
allocation.
The
timing
and
actual
amount
of
outflows
associated
with
litigation
matters
are
uncertain.
UBS
has
continued
to
assess
the
development
of
these
obligations
and
the
amount
and
timing
of
potential outflows. The USD 4.0bn of contingent liabilities reflect an
increase of USD 0.2bn in the
second quarter
of 2024 from the USD 3.8bn previously reported in the UBS Group Annual Report
2023.
Effect of measurement period adjustments on
the acquisition date balance sheet
The table
below sets
out the
identifiable net
assets attributable
to the
acquisition of
the Credit
Suisse Group
as
adjusted to reflect
the effects of
measurement period adjustments
made in the
second quarter
of 2024, as
detailed
above.
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
64
Note 2
Accounting for the acquisition of the Credit
Suisse Group (continued)
USD m
Purchase price consideration, after consideration of share-based compensation awards
3,710
Credit Suisse Group net identifiable assets on the acquisition
date
Assets
As previously
reported in the UBS
Group Annual Report
2023
Measurement period
adjustments made in
the second quarter
2024
Revised
Cash and balances at central banks
93,012
(89)
92,923
Amounts due from banks
13,590
(15)
13,575
Receivables from securities financing transactions measured at amortized
cost
26,194
26,194
Cash collateral receivables on derivative instruments
20,878
20,878
Loans and advances to customers
247,219
(175)
247,044
Other financial assets measured at amortized cost
13,428
(43)
13,385
Total financial assets measured at amortized cost
414,322
(322)
414,000
Financial assets at fair value held for trading
56,237
56,237
Derivative financial instruments
62,162
62,162
Brokerage receivables
366
366
Financial assets at fair value not held for trading
54,199
54,199
Total financial assets measured at fair value through profit or loss
172,964
172,964
Financial assets measured at fair value through other comprehensive income
0
0
Investments in associates
1,569
1,569
Property, equipment and software
6,055
6,055
Intangible assets
1,287
1,287
Deferred tax assets
998
998
Other non-financial assets
6,892
6,892
Total assets
604,088
(322)
603,766
Liabilities
Amounts due to banks
107,617
107,617
Payables from securities financing transactions measured at amortized cost
11,911
11,911
Cash collateral payables on derivative instruments
10,939
10,939
Customer deposits
183,119
183,119
Debt issued measured at amortized cost
110,491
110,491
Other financial liabilities measured at amortized cost
7,992
7,992
Total financial liabilities measured at amortized cost
432,070
432,070
Financial liabilities at fair value held for trading
5,711
5,711
Derivative financial instruments
67,782
67,782
Brokerage payables designated at fair value
316
316
Debt issued designated at fair value
44,909
44,909
Other financial liabilities designated at fair value
7,574
7,574
Total financial liabilities measured at fair value through profit or loss
126,292
126,292
Provisions and contingent liabilities
9,945
161
10,106
Other non-financial liabilities
3,901
3,901
Total liabilities
572,209
161
572,370
Non-controlling interests
(285)
(285)
Fair value of net assets acquired
31,594
(483)
31,110
Settlement of pre-existing relationships
135
135
Negative goodwill resulting from the acquisition
27,748
(483)
27,264
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
65
Note 2
Accounting for the acquisition of the Credit
Suisse Group (continued)
The
tables
below
set
out
the
consequential
impact
of
the
measurement
period
adjustments
on
the
previously
reported
income
statements
for
the
nine-month
period
ended
30 September
2023
and
the
quarter
ended
30 September 2023,
the balance
sheet as of
31 December 2023,
and the cumulative
effect of measurement
period
adjustments on the statement of cash flows
for the nine-month period ended 30 September
2023.
Effect of the measurement period adjustments on the income statement for the nine-month period and the quarter
ended 30 September 2023
For the quarter ended 30 September 2023
For the nine-month period ended 30 September 2023
USD m
As previously
reported in the
UBS Group
third quarter
2023 report
Measurement
period
adjustments
made in the
fourth quarter
of 2023
Revised
As previously
reported in the
UBS Group
third quarter
2023 report
Measurement
period
adjustments
made in the
fourth quarter
of 2023
Measurement
period
adjustment
made in the
UBS Group
Annual Report
2023
Measurement
period
adjustments
made in the
second quarter
of 2024
Revised
Net interest income
2,107
2,107
5,202
5,202
Other net income from financial instruments measured
at fair value through profit or loss
3,212
14
3,226
8,410
14
8,425
Fee and commission income
6,683
(14)
6,669
17,371
(14)
17,357
Fee and commission expense
(613)
(613)
(1,566)
(1,566)
Net fee and commission income
6,071
(14)
6,056
15,804
(14)
15,790
Other income
305
305
563
563
Total revenues
11,695
11,695
29,979
29,979
Negative goodwill
28,925
(1,177)
(483)
27,264
Credit loss expense / (release)
306
(67)
239
967
(67)
901
Personnel expenses
7,571
(4)
7,567
17,842
(4)
17,838
General and administrative expenses
3,124
3,124
7,157
7,157
Depreciation, amortization and impairment of non-
financial assets
950
950
2,341
2,341
Operating expenses
11,644
(4)
11,640
27,340
(4)
27,336
Operating profit / (loss) before tax
(255)
71
(184)
30,597
71
(1,177)
(483)
29,006
Tax expense / (benefit)
526
526
1,346
1,346
Net profit / (loss)
(781)
71
(711)
29,251
71
(1,177)
(483)
27,660
Net profit / (loss) attributable to non-controlling
interests
4
4
15
15
Net profit / (loss) attributable to shareholders
(785)
71
(715)
29,235
71
(1,177)
(483)
27,645
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
66
Note 2
Accounting for the acquisition of the Credit
Suisse Group (continued)
Effect of the measurement period adjustments on the balance sheet as of 31 December 2023
USD m
As of 31 December 2023
Assets
As previously
reported in the
UBS Group first
quarter 2024
report
Measurement
period
adjustment
made in the
second quarter
of 2024
Revised
Total financial assets measured at amortized cost
1,189,773
(322)
1,189,451
of which: Cash and balances at central banks
314,148
(89)
314,060
of which: Amounts due from banks
21,161
(15)
21,146
of which: Loans and advances to customers
639,844
(175)
639,669
of which: Other financial assets measured at amortized cost
65,498
(43)
65,455
Total assets
1,717,246
(322)
1,716,924
Liabilities
Provisions and contingent liabilities
12,250
161
12,412
Total liabilities
1,630,607
161
1,630,769
Equity
Equity attributable to shareholders
86,108
(483)
85,624
of which: Retained earnings
74,880
(483)
74,397
Total equity
86,639
(483)
86,156
Total liabilities and equity
1,717,246
(322)
1,716,924
Effect of the measurement period adjustments on the statement of cash flows for the nine-month period ended
30
September 2023
For the nine-month period ended 30 September 2023
USD m
As previously
reported in the
UBS Group third
quarter 2023
report
Cumulative
measurement
period
adjustment
Revised
Cash flow from / (used in) operating activities
Net profit / (loss)
29,251
(1,590)
27,660
of which: Credit loss expense / (release)
967
(67)
901
of which: Negative goodwill
(28,925)
1,661
(27,264)
Net cash flow from / (used in) operating activities
48,131
48,131
of which: Loans and advances to customers and customer deposits
43,632
(741)
42,891
of which: Financial assets and liabilities at fair value held for trading
and derivative financial instruments
(8,521)
2,824
(5,696)
of which: Financial assets at fair value not held for trading and other financial
assets and liabilities
13,185
(2,076)
11,109
of which: Provisions and other non-financial assets and
liabilities
1,637
(12)
1,624
Net cash flow from / (used in) investing activities
103,013
(104)
102,908
of which: Cash and cash equivalents acquired upon acquisition of
the Credit Suisse Group
108,510
(104)
108,406
Net cash flow from / (used in) financing activities
(52,568)
(52,568)
Total cash flow
Cash and cash equivalents at the beginning of the period
195,321
195,321
Net cash flow from / (used in) operating, investing and financing
activities
98,576
(104)
98,472
Effects of exchange rate differences on cash and cash equivalents
(1,497)
(1,497)
Cash and cash equivalents at the end of the period
292,400
(104)
292,296
of which: cash and balances at central banks
262,304
(89)
262,215
of which: amounts due from banks
18,961
(15)
18,946
of which: money market paper
11,135
11,135
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
67
Note 2
Accounting for the acquisition of the Credit
Suisse Group (continued)
Conclusion of an investment management agreement
with Apollo and the transfer of senior
secured
asset-based financing
In
the
first
quarter
of
2024,
Credit
Suisse
entered
into
agreements
with
entities
managed
by
Atlas
Securitized
Products Management Holdings
(Atlas) and
other affiliates
of Apollo Management
Holdings (collectively,
Apollo)
to
conclude
the
investment
management
agreement
under
which
Atlas
has
managed
Credit
Suisse’s
retained
portfolio of
assets of
its
former securitized
products group.
Following the
closure of
this
agreement,
the assets
previously managed by Atlas are to be managed in
Non-core and Legacy.
The parties also agreed to conclude the
transition services
agreement under
which Credit
Suisse has
provided services
to Atlas.
In addition,
Credit Suisse AG
entered into
an agreement
with Apollo
Capital Management
(ACM) and
other parties
managed, controlled
and / or
advised by
ACM or
its affiliates
(collectively,
the Assignees)
to transfer
USD 8.0bn of
senior secured
asset-based
financing, with
USD 6.0bn funded
as of
31 December 2023
recognized as
financial assets
at fair
value held
for
trading
at
a
fair
value
of
USD 5.5bn
and
the
remaining
notional
of
USD 2.0bn
recognized
as
derivative
loan
commitments at a fair
value of USD 0.15bn, with the
fair values of both financing
components derecognized from
the Group’s balance
sheet as
of 31 March 2024.
As part
of the loan
transfer, the Group extended
a one-year
senior
swingline facility
to the
Assignees with
a
total
amount as
of 30 September
2024 of
USD 750m (30 June
2024:
USD 750m), which is accounted for as an
off-balance sheet irrevocable commitment. In the
first quarter of 2024,
the Group recognized
a net
gain of
USD 0.3bn from
the conclusion
of the
investment management
agreement and
the
assignment
of
the
loan
facilities,
after
the
accounting
for
the
purchase
price
allocation
adjustments at
the
closing of the acquisition of the Credit Suisse Group.
Agreement to sell Select Portfolio Servicing
On 13 August 2024,
UBS entered
into an agreement
to sell Select
Portfolio Servicing, the US
mortgage servicing
business of Credit
Suisse, which is
managed in Non-core
and Legacy.
Completion of the transaction
is subject to
regulatory approvals
and other customary
closing conditions. The
associated assets and
liabilities are
disclosed in
Assets of disposal groups held for sale
and
Liabilities of disposal groups held for sale
, respectively,
within Note 12
in these financial statements.
The transaction is expected
to close in the first
quarter of 2025. The UBS
Group does
not expect to recognize a material profit or loss upon
completion of the transaction.
Note 3
Segment reporting
As part of
the continued refinement
of UBS’s reporting
structure and organizational setup,
in the first
quarter of
2024 certain
changes were
made, with
an impact
on segment
reporting for
UBS’s business
divisions and
Group
Items. Prior-period information has been adjusted
for comparability. The changes are as follows.
–
Change
in
business
division
perimeters:
UBS
has
transferred
certain
businesses
from
Swiss
Bank
(Credit
Suisse),
previously
included
in
Personal
&
Corporate
Banking,
to
Global
Wealth
Management.
The
change
predominantly related to the high
net worth client segment and
represents approximately USD 72bn
in invested
assets and approximately
USD 0.6bn in annualized
revenues. A
number of
other smaller
business shifts
were also
executed between the business divisions in the
first quarter of 2024.
–
Changes to Group Treasury allocations:
UBS has allocated to the business divisions nearly all Group Treasury
costs that historically
were retained and
reported in Group
Items. Costs
that continue to
be retained in
Group
Items include costs related
to hedging and own
debt, and deferred tax
asset funding costs. UBS
has also aligned
the internal funds
transfer pricing methodologies
applied by Credit
Suisse entities to
UBS’s funds transfer
pricing
methodology.
These changes
resulted in
funding costs
of approximately
USD 0.3bn
for 2023,
moving from
Group
Items
to
the
business
divisions,
predominantly
related
to
the
second
half
of
2023.
In
parallel
with
the
aforementioned changes, UBS
has increased
the allocation of
balance sheet resources
from Group
Treasury to
the business divisions.
–
Updated cost
allocations:
UBS has
reallocated USD 0.3bn of
annualized costs from
Non-core and
Legacy to
the other business divisions, with
the aim of avoiding
stranded costs in Non-core and
Legacy at the end
of the
integration process.
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
68
Note 3
Segment reporting (continued)
Following
the
collective
changes
outlined
above,
prior-period
information
for
the
nine-month
period
ended
30 September 2023 has been
restated, resulting in decreases
in Operating profit / (loss)
before tax of USD 42m for
Global Wealth Management, USD 150m
for Personal & Corporate Banking and USD 7m for the Investment Bank,
and
increases in
Operating profit
/
(loss) before
tax of
USD 106m
for Group
Items,
USD 84m
for Non-core
and
Legacy and USD 9m for Asset Management.
Prior-period information as
of 31 December
2023 has also
been restated, resulting
in increases
of Total
assets of
USD 98.4bn
in
Global
Wealth
Management, USD 13.3bn
in
Personal
&
Corporate Banking,
USD 28.9bn
in
the
Investment
Bank
and
USD 28.6bn
in
Non-core
and
Legacy,
with
a
corresponding
decrease
of
Total
assets
of
USD 169.2bn in Group Items.
These changes had no effect on the reported
results or financial position of the Group.
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group Items
UBS Group
For the nine months ended 30 September 2024
1
Total revenues
18,395
7,089
2,416
8,199
1,664
(786)
36,976
Credit loss expense / (release)
(2)
229
0
34
63
(2)
322
Operating expenses
15,340
4,265
2,025
6,728
2,655
(132)
30,880
Operating profit / (loss) before tax
3,057
2,594
392
1,437
(1,054)
(652)
5,773
Tax expense / (benefit)
1,407
Net profit / (loss)
4,366
As of 30 September 2024
Total assets
577,847
474,725
24,096
448,583
85,082
13,609
1,623,941
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group Items
Negative
goodwill
2
UBS Group
For the nine months ended 30 September 2023
1
Total revenues
16,002
5,604
1,861
6,562
551
(602)
29,979
Negative goodwill
27,264
27,264
Credit loss expense / (release)
174
398
1
142
178
7
901
Operating expenses
12,663
2,996
1,649
6,302
3,304
422
27,336
Operating profit / (loss) before tax
3,165
2,210
211
118
(2,930)
(1,031)
27,264
29,006
Tax expense / (benefit)
1,346
Net profit / (loss)
27,660
As of 31 December 2023
2,3
Total assets
567,648
483,794
21,804
428,269
201,131
14,277
1,716,924
1 Refer to “Note 3 Segment reporting” in the “Consolidated financial statements” section of the UBS Group Annual Report 2023 for more information about the Group’s reporting segments.
2 Comparative-period
information has been revised. Refer to Note 2 for more information.
3 Comparative-period information has been restated for Group Treasury
allocations.
Note 4
Net interest income
For the quarter ended
Year-to-date
USD m
30.9.24
30.6.24
30.9.23
1
30.9.24
30.9.23
1
Interest income from loans and deposits
2
8,051
8,403
9,117
25,543
19,367
Interest income from securities financing transactions measured
at amortized cost
3
898
1,136
1,094
3,252
2,863
Interest income from other financial instruments measured
at amortized cost
346
328
307
1,021
847
Interest income from debt instruments measured at fair
value through other comprehensive income
26
26
27
80
75
Interest income from derivative instruments designated as cash
flow hedges
(556)
(574)
(613)
(1,731)
(1,446)
Total interest income from financial instruments measured at amortized cost and fair
value through other comprehensive
income
8,766
9,320
9,932
28,165
21,707
Interest expense on loans and deposits
4
4,887
5,074
4,780
15,400
9,798
Interest expense on securities financing transactions measured
at amortized cost
5
558
541
575
1,594
1,555
Interest expense on debt issued
3,531
3,655
3,676
10,926
7,311
Interest expense on lease liabilities
46
49
52
145
113
Total interest expense from financial instruments measured at amortized cost
9,022
9,319
9,082
28,064
18,777
Total net interest income from financial instruments measured at amortized cost and fair
value through other comprehensive
income
(256)
2
850
101
2,930
Net interest income from financial instruments measured at fair value through profit
or loss and other
2,050
1,533
1,257
5,168
2,272
Total net interest income
1,794
1,535
2,107
5,270
5,202
1 Comparative-period information
has been revised.
Refer to Note
2 for more
information.
2 Consists of
interest income from
cash and balances
at central banks,
amounts due from
banks, and cash
collateral
receivables on derivative instruments, as well as negative interest on amounts due to banks, customer deposits, and cash collateral payables on derivative instruments.
3 Includes interest income on receivables from
securities financing transactions and negative interest, including
fees, on payables from securities financing transactions.
4 Consists of interest expense on
amounts due to banks, cash collateral payables on
derivative
instruments, and customer deposits, as well as negative interest on cash and balances
at central banks, amounts due from banks, and cash collateral receivables on derivative instruments.
5 Includes interest expense
on payables from securities financing transactions and negative interest, including fees, on receivables
from securities financing transactions.
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
69
Note 5
Net fee and commission income
For the quarter ended
Year-to-date
USD m
30.9.24
30.6.24
30.9.23
1
30.9.24
30.9.23
1
Underwriting fees
153
233
99
579
379
M&A and corporate finance fees
242
272
239
772
616
Brokerage fees
1,122
1,144
1,008
3,417
2,817
Investment fund fees
1,530
1,401
1,239
4,188
3,613
Portfolio management and related services
3,117
3,071
3,011
9,238
7,707
Other
1,008
1,090
1,073
3,267
2,224
Total fee and commission income
2
7,170
7,211
6,669
21,461
17,357
of which: recurring
4,679
4,484
4,391
13,570
11,593
of which: transaction-based
2,447
2,697
2,261
7,785
5,713
of which: performance-based
44
30
17
106
51
Fee and commission expense
653
679
613
1,921
1,566
Net fee and commission income
6,517
6,531
6,056
19,540
15,790
1 Comparative-period
information has
been revised.
Refer to
Note 2
for more
information.
2 Includes
third-party fee
and commission
income for
the third
quarter of
2024 of
USD 4,155m for
Global Wealth
Management (second
quarter of 2024:
USD 4,011m; third
quarter of 2023:
USD 3,732m), USD 726m
for Personal
& Corporate
Banking (second
quarter of
2024: USD 876m;
third quarter
of 2023:
USD 734m),
USD 928m for
Asset Management
(second quarter
of 2024:
USD 924m; third
quarter of
2023: USD 956m),
USD 1,297m for
the Investment
Bank (second
quarter of
2024: USD 1,322m;
third quarter
of 2023:
USD 1,184m), USD 102m for Non-core and Legacy (second quarter of 2024: USD 125m; third quarter of 2023: negative USD 2m) and negative USD 37m for Group Items (second quarter of 2024: negative USD 47m;
third quarter of 2023: USD 64m). Comparative-period information has been restated for changes in business division perimeters, Group Treasury
allocations and Non-core and Legacy cost allocations. Refer to Note 3
for more information.
Note 6
Other income
For the quarter ended
Year-to-date
USD m
30.9.24
30.6.24
30.9.23
30.9.24
30.9.23
Associates, joint ventures and subsidiaries
Net gains / (losses) from acquisitions and disposals of
subsidiaries
1
(14)
(2)
(2)
(17)
4
Net gains / (losses) from disposals of investments in associates
and joint ventures
132
2
2
0
132
2
0
Share of net profits of associates and joint ventures
67
52
81
177
118
Total
185
52
79
292
122
Income from properties
3
14
15
13
44
27
Net gains / (losses) from properties held for sale
(14)
(2)
11
(18)
11
Other
156
4
89
201
301
4
404
Total other income
341
154
305
619
563
1 Includes foreign exchange gains / (losses) reclassified from other comprehensive income related to the disposal
or closure of foreign operations.
2 Includes a gain of USD 135m related to the sale
of our investment
in an associate.
3 Includes rent received from
third parties.
4 Includes a USD 72m
net gain in Asset Management
from the sale of
our Brazilian real estate
fund management business and
from the sale of
our
shareholding in Credit Suisse Insurance Linked Strategies Ltd (nine-month period ended 30
September 2024: USD 100m).
Note 7
Personnel expenses
For the quarter ended
Year-to-date
USD m
30.9.24
30.6.24
30.9.23
1
30.9.24
30.9.23
1
Salaries and variable compensation
2
5,805
6,058
6,424
17,726
15,114
of which: variable compensation – financial advisors
3
1,335
1,291
1,150
3,893
3,372
Contractors
82
82
96
250
243
Social security
409
419
470
1,236
1,042
Post-employment benefit plans
338
309
320
1,014
817
Other personnel expenses
255
251
256
731
622
Total personnel expenses
6,889
7,119
7,567
20,957
17,838
1 Comparative-period information has been revised. Refer
to Note 2 for more information.
2 Includes role-based allowances.
3 Consists of cash and deferred compensation awards and is
based on compensable
revenues and firm
tenure using a
formulaic approach. Also includes
expenses related to compensation
commitments with financial advisors
entered into at
the time of recruitment
that are subject
to vesting requirements.
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
70
Note 8
General and administrative expenses
For the quarter ended
Year-to-date
USD m
30.9.24
30.6.24
30.9.23
30.9.24
30.9.23
Outsourcing costs
455
463
455
1,341
1,014
Technology costs
580
567
552
1,734
1,287
Consulting, legal and audit fees
349
394
521
1,146
1,053
Real estate and logistics costs
311
302
593
902
942
Market data services
178
188
208
565
472
Marketing and communication
130
137
108
381
249
Travel and entertainment
69
87
61
228
188
Litigation, regulatory and similar matters
1
(69)
(153)
12
(227)
802
Other
384
334
614
1,049
1,151
Total general and administrative expenses
2,389
2,318
3,124
7,120
7,157
1 Reflects the net increase
/ (decrease) in provisions
for litigation, regulatory and similar
matters recognized in the
income statement, as well
as a decrease in acquired
contingent liabilities measured under
IFRS 3.
Refer to Note 15b for more information.
Note 9
Expected credit loss measurement
a) Credit loss expense / release
Total net credit loss
expenses in the
third quarter of 2024
were USD 121m, reflecting
USD 15m net releases
related
to performing positions and USD 136m net
expenses on credit-impaired positions.
Stage 1 and 2 net releases of USD 15m
included scenario-update-related net
releases of USD 8m, mainly from real
estate lending,
and portfolio changes.
Credit loss expenses of USD 136m for credit-impaired positions primarily related to Personal & Corporate Banking
and Non-core and Legacy exposures with a small
number of corporate counterparties.
Credit loss expense / (release)
Performing positions
Credit-impaired positions
USD m
Stages 1 and 2
Stage 3
Purchased
Total
For the quarter ended 30.9.24
Global Wealth Management
(11)
12
1
2
Personal & Corporate Banking
(10)
94
0
83
Asset Management
0
0
0
0
Investment Bank
9
0
0
9
Non-core and Legacy
(2)
0
30
28
Group Items
0
0
0
0
Total
(15)
106
30
121
For the quarter ended 30.6.24
Global Wealth Management
(13)
12
0
(1)
Personal & Corporate Banking
(15)
132
(14)
103
Asset Management
0
0
0
0
Investment Bank
7
(14)
1
(6)
Non-core and Legacy
(1)
3
(2)
(1)
Group Items
0
0
0
0
Total
(22)
132
(15)
95
For the quarter ended 30.9.23
1
Global Wealth Management
(10)
15
6
10
Personal & Corporate Banking
77
60
23
160
Asset Management
0
0
0
0
Investment Bank
(6)
10
0
4
Non-core and Legacy
4
20
34
59
Group Items
5
0
0
5
Total
71
105
63
239
1 Comparative-period information
has been restated
for changes in business
division perimeters. Refer
to “Changes to segment
reporting in 2024”
in the “UBS business
divisions and Group
Items” section of
the
UBS Group first quarter 2024 report, available under “Quarterly reporting” at ubs.com/investors,
and Note 3 for more information.
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
71
Note 9
Expected credit loss measurement (continued)
b) Changes to ECL models, scenarios, scenario
weights and post-model adjustments
Scenarios and scenario weights
The expected
credit loss
(ECL) scenarios,
along with
their related
macroeconomic factors and
market data,
were
reviewed in light of
the economic and political conditions prevailing
in the third quarter
of 2024 through a
series
of governance meetings, with input and feedback
from UBS Risk and Finance experts across the business divisions
and regions. ECLs for
former Credit Suisse positions
were calculated based
on Credit Suisse’s models,
including the
same scenarios
and scenario weight inputs as for UBS.
UBS kept
the scenarios
and scenario
weights in
line with
those applied
in the
UBS Group
second quarter
2024
report.
The baseline scenario was updated
with the latest macroeconomic forecasts
as of 30 September 2024. The
assumptions on a calendar-year basis are included
in the table below.
The mild
debt crisis
scenario and
the stagflationary
geopolitical crisis
scenario were
updated based
on the
latest
market data, but the assumptions remained
broadly unchanged.
The scenario-update-related
ECL releases
in the
third quarter
of 2024
mainly stemmed
from real
estate lending,
driven by the upward revision of Swiss house
price and rental income levels, as well as
interest rate assumptions in
the stagflation scenario.
Post-model adjustments
Total
stage 1 and
2
allowances and
provisions
were
USD 1,015m
as of
30 September 2024
and
included post-
model
adjustments
of
USD 281m
(30 June
2024:
USD 300m).
Post-model
adjustments
are
intended
to
cover
uncertainty levels, including the geopolitical
situation,
and to align
outputs from Credit
Suisse models with those
from UBS models for dedicated segments.
Comparison of shock factors
Baseline
Key parameters
2023
2024
2025
Real GDP growth (annual percentage change)
US
2.9
2.6
1.6
Eurozone
0.5
0.6
1.2
Switzerland
0.7
1.4
1.5
Unemployment rate (%, annual average)
US
3.6
4.1
4.3
Eurozone
6.6
6.5
6.9
Switzerland
2.0
2.4
2.6
Fixed income: 10-year government bonds (%, Q4)
USD
3.9
3.8
3.8
EUR
2.0
2.1
2.1
CHF
0.7
0.4
0.5
Real estate (annual percentage change, Q4)
US
5.3
2.4
2.9
Eurozone
(1.1)
0.6
3.1
Switzerland
0.1
3.0
4.0
Economic scenarios and weights applied
Assigned weights in %
ECL scenario
30.9.24
30.6.24
30.9.23
Baseline
60.0
60.0
60.0
Mild debt crisis
15.0
15.0
15.0
Stagflationary geopolitical crisis
25.0
25.0
25.0
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
72
Note 9
Expected credit loss measurement (continued)
c) ECL-relevant balance sheet and off-balance
sheet positions including ECL allowances
and provisions
The following tables
provide information
about financial
instruments and
certain non-financial
instruments that
are
subject
to
ECL
requirements.
For
amortized-cost
instruments,
the
carrying
amount
represents
the
maximum
exposure to credit risk, taking
into account the allowance for
credit losses. Financial assets measured at
fair value
through other comprehensive
income (FVOCI) are
also subject to ECL;
however, unlike amortized-cost
instruments,
the allowance
for credit
losses for
FVOCI instruments
does not
reduce the
carrying amount
of these financial
assets.
Instead, the
carrying amount
of financial
assets measured
at FVOCI
represents the
maximum exposure
to credit
risk.
In addition to recognized financial assets, certain off-balance sheet financial instruments and other credit lines are
also subject to ECL.
The maximum exposure to
credit risk for off-balance
sheet financial instruments is calculated
based on the maximum contractual amounts.
USD m
30.9.24
Carrying amount
1
ECL allowances
2
Financial instruments measured at amortized cost
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Cash and balances at central banks
243,261
243,130
15
0
116
(55)
0
(25)
0
(30)
Amounts due from banks
21,716
21,510
194
0
13
(31)
(5)
(2)
0
(24)
Receivables from securities financing transactions measured at
amortized cost
92,104
92,104
0
0
0
(1)
(1)
0
0
0
Cash collateral receivables on derivative instruments
47,209
47,209
0
0
0
0
0
0
0
0
Loans and advances to customers
615,820
585,415
25,794
3,623
987
(1,898)
(332)
(321)
(1,033)
(212)
of which: Private clients with mortgages
266,225
254,487
10,381
1,275
82
(188)
(54)
(82)
(40)
(12)
of which: Real estate financing
89,752
84,386
5,095
256
16
(59)
(25)
(31)
(5)
2
of which: Large corporate clients
29,450
24,471
3,947
679
353
(555)
(79)
(101)
(279)
(97)
of which: SME clients
23,662
19,323
2,920
1,171
247
(635)
(56)
(49)
(520)
(9)
of which: Lombard
149,956
149,500
351
39
66
(40)
(7)
(1)
(18)
(14)
of which: Credit cards
2,145
1,658
446
42
0
(44)
(7)
(11)
(26)
0
of which: Commodity trade finance
3,753
3,595
153
4
0
(88)
(13)
(1)
(74)
0
of which: Ship / aircraft financing
8,059
7,548
510
0
0
(45)
(36)
(8)
0
(2)
of which: Consumer financing
2,990
2,756
142
49
43
(88)
(21)
(26)
(46)
4
Other financial assets measured at amortized cost
61,169
60,465
528
167
10
(136)
(33)
(8)
(87)
(9)
of which: Loans to financial advisors
2,677
2,494
82
101
0
(46)
(4)
(1)
(41)
0
Total financial assets measured at amortized cost
1,081,280
1,049,833
26,530
3,790
1,126
(2,121)
(371)
(356)
(1,120)
(275)
Financial assets measured at fair value through other comprehensive
income
2,179
2,179
0
0
0
0
0
0
0
0
Total on-balance sheet financial assets in scope of ECL requirements
1,083,458
1,052,012
26,530
3,790
1,126
(2,121)
(371)
(356)
(1,120)
(275)
Total exposure
ECL provisions
2
Off-balance sheet (in scope of ECL)
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Guarantees
41,449
40,019
1,279
125
27
(64)
(24)
(18)
(23)
2
of which: Large corporate clients
8,120
7,470
620
29
1
(26)
(8)
(9)
(9)
0
of which: SME clients
2,616
2,214
301
84
17
(10)
(4)
(4)
(4)
2
of which: Financial intermediaries and hedge funds
22,056
21,983
73
0
0
(12)
(8)
(4)
0
0
of which: Lombard
4,197
3,985
206
6
0
(6)
0
0
(6)
0
of which: Commodity trade finance
1,773
1,771
1
0
0
(1)
(1)
0
0
0
Irrevocable loan commitments
80,506
76,601
3,736
123
47
(158)
(113)
(45)
(3)
3
of which: Large corporate clients
48,794
45,464
3,208
84
39
(118)
(77)
(34)
(6)
0
Forward starting reverse repurchase and securities borrowing
agreements
16,063
16,063
0
0
0
0
0
0
0
0
Unconditionally revocable loan commitments
153,085
150,287
2,543
255
0
(86)
(68)
(17)
0
0
of which: Real estate financing
11,547
11,249
297
1
0
(7)
(6)
0
0
0
of which: Large corporate clients
16,378
15,853
523
3
0
(24)
(16)
(6)
(2)
0
of which: SME clients
11,099
10,381
509
209
0
(36)
(29)
(6)
0
0
of which: Lombard
62,624
62,562
61
1
0
0
0
0
0
0
of which: Credit cards
10,400
9,910
487
3
0
(9)
(7)
(2)
0
0
Irrevocable committed prolongation of existing loans
3,701
3,691
5
5
0
(3)
(3)
0
0
0
Total off-balance sheet financial instruments and other credit lines
294,805
286,660
7,564
507
73
(310)
(208)
(80)
(27)
5
Total allowances and provisions
(2,431)
(579)
(436)
(1,147)
(269)
1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective
ECL allowances.
2 Negative balances are representative of a net improvement in
credit quality since the acquisition of the respective financial instrument, which is reflected as a negative ECL allowance.
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
73
Note 9
Expected credit loss measurement (continued)
USD m
30.6.24
Carrying amount
1
ECL allowances
2
Financial instruments measured at amortized cost
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Cash and balances at central banks
248,336
248,244
16
0
76
(60)
(1)
(27)
0
(32)
Amounts due from banks
21,959
21,627
319
0
13
(28)
(6)
0
0
(22)
Receivables from securities financing transactions measured at
amortized cost
82,028
82,028
0
0
0
(2)
(2)
0
0
0
Cash collateral receivables on derivative instruments
43,637
43,637
0
0
0
0
0
0
0
0
Loans and advances to customers
599,105
569,476
25,249
3,287
1,093
(1,743)
(355)
(298)
(937)
(153)
of which: Private clients with mortgages
252,724
241,499
10,077
1,062
86
(167)
(57)
(77)
(30)
(3)
of which: Real estate financing
86,854
82,018
4,507
243
86
(53)
(28)
(31)
(2)
8
of which: Large corporate clients
28,773
23,888
3,829
700
357
(526)
(93)
(94)
(272)
(67)
of which: SME clients
23,406
19,585
2,531
1,049
241
(515)
(60)
(38)
(414)
(3)
of which: Lombard
148,268
147,272
875
54
66
(41)
(6)
(2)
(16)
(16)
of which: Credit cards
1,927
1,479
408
40
0
(41)
(6)
(11)
(25)
0
of which: Commodity trade finance
5,792
5,556
222
11
2
(125)
(19)
(2)
(104)
0
of which: Ship / aircraft financing
8,284
7,846
421
3
15
(44)
(38)
(4)
0
(2)
of which: Consumer financing
2,902
2,703
119
39
41
(68)
(20)
(21)
(27)
0
Other financial assets measured at amortized cost
60,431
59,710
533
171
16
(131)
(34)
(8)
(84)
(5)
of which: Loans to financial advisors
2,601
2,408
83
110
0
(47)
(4)
(1)
(41)
0
Total financial assets measured at amortized cost
1,055,494
1,024,721
26,117
3,458
1,198
(1,964)
(397)
(333)
(1,021)
(212)
Financial assets measured at fair value through other comprehensive
income
2,167
2,167
0
0
0
0
0
0
0
0
Total on-balance sheet financial assets in scope of ECL requirements
1,057,661
1,026,888
26,117
3,458
1,198
(1,964)
(397)
(333)
(1,021)
(212)
Total exposure
ECL provisions
2
Off-balance sheet (in scope of ECL)
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Guarantees
40,759
39,176
1,382
159
44
(63)
(25)
(14)
(26)
2
of which: Large corporate clients
8,290
7,390
820
67
15
(24)
(10)
(8)
(7)
0
of which: SME clients
2,540
2,153
287
77
22
(10)
(5)
(3)
(4)
2
of which: Financial intermediaries and hedge funds
21,270
21,080
189
0
0
(11)
(8)
(3)
0
0
of which: Lombard
3,895
3,872
10
13
0
(4)
0
0
(4)
0
of which: Commodity trade finance
1,642
1,628
13
0
0
(1)
(1)
0
0
0
Irrevocable loan commitments
81,867
77,447
4,236
145
39
(147)
(104)
(43)
(6)
6
of which: Large corporate clients
46,697
42,890
3,699
73
34
(126)
(84)
(36)
(6)
0
Forward starting reverse repurchase and securities borrowing
agreements
9,724
9,724
0
0
0
0
0
0
0
0
Unconditionally revocable loan commitments
148,932
146,532
2,154
245
0
(81)
(69)
(12)
0
0
of which: Real estate financing
11,705
11,154
552
0
0
(7)
(7)
0
0
0
of which: Large corporate clients
16,000
15,677
314
9
0
(23)
(16)
(4)
(2)
0
of which: SME clients
11,002
10,575
346
80
0
(34)
(29)
(5)
0
0
of which: Lombard
60,962
60,934
26
1
0
0
0
0
0
0
of which: Credit cards
10,056
9,576
477
4
0
(8)
(6)
(2)
0
0
Irrevocable committed prolongation of existing loans
3,329
3,319
7
2
0
(2)
(2)
0
0
0
Total off-balance sheet financial instruments and other credit lines
284,611
276,199
7,779
551
83
(294)
(200)
(70)
(31)
8
Total allowances and provisions
(2,258)
(597)
(404)
(1,053)
(204)
1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective ECL allowances.
2 Negative balances are representative of a net improvement in credit
quality since the acquisition of the respective financial instrument, which is reflected as a negative ECL allowance.
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
74
Note 9
Expected credit loss measurement (continued)
USD m
31.12.23
Carrying amount
1,2
ECL allowances
3
Financial instruments measured at amortized cost
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Cash and balances at central banks
314,060
314,025
18
0
18
(48)
0
(26)
0
(22)
Amounts due from banks
21,146
21,092
17
0
38
(12)
(6)
(1)
0
(5)
Receivables from securities financing transactions measured at
amortized cost
99,039
99,039
0
0
0
(2)
(2)
0
0
0
Cash collateral receivables on derivative instruments
50,082
50,082
0
0
0
0
0
0
0
0
Loans and advances to customers
639,669
610,922
24,408
2,869
1,470
(1,698)
(423)
(289)
(862)
(123)
of which: Private clients with mortgages
268,616
256,614
10,695
929
378
(209)
(62)
(97)
(39)
(11)
of which: Real estate financing
97,817
92,084
5,367
270
97
(103)
(41)
(31)
(21)
(11)
of which: Large corporate clients
30,084
25,671
3,182
700
532
(575)
(105)
(70)
(312)
(89)
of which: SME clients
25,957
22,155
2,919
754
129
(402)
(71)
(42)
(277)
(13)
of which: Lombard
156,353
156,299
3
50
0
(41)
(13)
(11)
(17)
0
of which: Credit cards
2,041
1,564
438
39
0
(42)
(6)
(11)
(24)
0
of which: Commodity trade finance
5,727
5,662
25
22
18
(130)
(18)
(1)
(111)
0
of which: Ship / aircraft financing
9,214
8,920
273
4
17
(51)
(48)
(3)
0
(1)
of which: Consumer financing
2,982
2,795
92
38
57
(59)
(22)
(17)
(20)
0
Other financial assets measured at amortized cost
65,455
64,268
968
158
61
(151)
(41)
(10)
(94)
(5)
of which: Loans to financial advisors
2,615
2,422
79
114
0
(49)
(4)
(1)
(44)
0
Total financial assets measured at amortized cost
1,189,451
1,159,428
25,410
3,027
1,587
(1,911)
(473)
(326)
(956)
(156)
Financial assets measured at fair value through other comprehensive
income
2,233
2,233
0
0
0
0
0
0
0
0
Total on-balance sheet financial assets in scope of ECL requirements
1,191,684
1,161,661
25,410
3,027
1,587
(1,911)
(473)
(326)
(956)
(156)
Total exposure
ECL provisions
3
Off-balance sheet (in scope of ECL)
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Guarantees
46,191
44,487
1,495
151
58
(73)
(28)
(22)
(23)
0
of which: Large corporate clients
9,267
8,138
1,023
89
17
(31)
(11)
(13)
(7)
0
of which: SME clients
2,839
2,469
337
31
2
(14)
(4)
(5)
(5)
0
of which: Financial intermediaries and hedge funds
22,922
22,876
46
0
0
(12)
(8)
(3)
0
0
of which: Lombard
5,045
5,045
0
0
0
(1)
0
0
(1)
0
of which: Commodity trade finance
2,037
2,027
9
0
0
(1)
(1)
0
0
0
Irrevocable loan commitments
91,643
87,080
4,297
218
48
(178)
(117)
(51)
(14)
4
of which: Large corporate clients
50,696
46,708
3,881
59
48
(149)
(94)
(41)
(12)
(2)
Forward starting reverse repurchase and securities borrowing
agreements
18,444
18,444
0
0
0
0
0
0
0
0
Unconditionally revocable loan commitments
163,256
160,456
2,654
146
0
(95)
(78)
(17)
0
0
of which: Real estate financing
15,846
15,033
813
0
0
(14)
(11)
(3)
0
0
of which: Large corporate clients
17,139
16,678
454
8
0
(23)
(17)
(6)
0
0
of which: SME clients
11,658
11,253
375
29
0
(38)
(33)
(5)
0
0
of which: Lombard
77,618
77,618
0
1
0
0
0
0
0
0
of which: Credit cards
10,458
9,932
522
4
0
(10)
(8)
(2)
0
0
Irrevocable committed prolongation of existing loans
4,608
4,593
11
4
0
(4)
(4)
0
0
0
Total off-balance sheet financial instruments and other credit lines
324,141
315,060
8,456
519
106
(350)
(226)
(90)
(37)
3
Total allowances and provisions
(2,261)
(700)
(416)
(993)
(153)
1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective ECL allowances.
2 Information has been revised. Refer to Note 2 for more information.
3 Negative balances are representative of a net improvement in credit quality since the acquisition of the respective financial instrument, which is reflected
as a negative ECL allowance.
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
75
Note 9
Expected credit loss measurement (continued)
The table
below provides information
about the gross
carrying amount of
exposures subject to
ECL and
the ECL
coverage ratio for UBS’s core
loan portfolios (i.e.
Loans and advances to customers
and
Loans to financial advisors
)
and
relevant
off-balance
sheet
exposures.
Cash
and
balances
at
central
banks
,
Amounts
due
from
banks
,
Receivables from
securities
financing transactions
,
Cash collateral
receivables
on derivative
instruments
and
Financial
assets measured
at fair
value through
other comprehensive
income
are not included
in the
table below, due
to their
lower sensitivity to ECL.
ECL coverage ratios are calculated by dividing ECL
allowances and provisions by the gross carrying amount of the
related exposures.
The
overall
coverage
ratio
for
performing
positions
was
unchanged
at
11 basis
points.
Coverage
ratios
for
performing positions related to real estate lending (on-balance sheet) decreased by 1 basis point to 5 basis points.
Coverage ratios
for performing
positions related
to corporate
lending (on-balance
sheet)
decreased by
1 basis point
to 56 basis points.
Coverage ratios for core loan portfolio
30.9.24
Gross carrying amount (USD m)
ECL coverage (bps)
On-balance sheet
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
PCI
Private clients with mortgages
266,413
254,541
10,464
1,314
93
7
2
79
5
303
1,244
Real estate financing
89,811
84,411
5,126
261
14
7
3
61
6
191
0
Total real estate lending
356,224
338,952
15,590
1,575
108
7
2
73
5
284
859
Large corporate clients
30,005
24,549
4,048
958
450
185
32
248
63
2,910
2,152
SME clients
24,296
19,380
2,969
1,692
256
261
29
165
47
3,076
351
Total corporate lending
54,301
43,929
7,017
2,649
706
219
31
213
56
3,016
1,500
Lombard
149,996
149,507
351
58
80
3
0
21
1
3,173
1,789
Credit cards
2,189
1,664
457
68
0
203
40
251
85
3,879
0
Commodity trade finance
3,841
3,608
154
78
0
230
37
89
39
9,474
0
Ship / aircraft financing
8,104
7,584
518
0
2
56
47
148
54
0
10,239
Consumer financing
3,077
2,777
168
95
38
285
75
1,544
158
4,819
0
Other loans and advances to customers
39,986
37,726
1,860
134
265
39
9
56
11
1,898
3,217
Loans to financial advisors
2,723
2,497
83
142
0
169
15
135
18
2,892
0
Total other lending
209,916
205,363
3,592
575
386
24
6
163
9
4,015
2,510
Total
1
620,441
588,244
26,198
4,799
1,199
31
6
123
11
2,239
1,768
Gross exposure (USD m)
ECL coverage (bps)
Off-balance sheet
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
PCI
Private clients with mortgages
7,687
7,428
221
38
0
5
5
32
5
39
0
Real estate financing
12,680
12,341
338
1
0
6
6
1
6
0
0
Total real estate lending
20,366
19,769
559
39
0
6
5
14
5
39
0
Large corporate clients
73,307
68,801
4,350
115
40
23
15
115
21
1,482
82
SME clients
15,639
14,318
996
308
17
33
28
165
37
33
0
Total corporate lending
88,946
83,119
5,346
423
57
25
17
124
23
427
0
Lombard
70,232
69,957
268
7
0
1
0
2
0
8,523
0
Credit cards
10,400
9,910
487
3
0
8
7
38
8
0
0
Commodity trade finance
3,128
3,124
4
0
0
9
8
288
9
0
0
Ship / aircraft financing
2,239
2,233
6
0
0
31
28
1,006
31
0
0
Consumer financing
150
150
0
0
0
0
0
0
0
0
0
Financial intermediaries and hedge funds
36,770
36,332
438
0
0
4
3
87
4
0
0
Other off-balance sheet commitments
46,510
46,002
456
36
16
9
6
146
8
828
705
Total other lending
169,429
167,709
1,659
46
16
5
3
79
4
1,893
0
Total
2
278,742
270,597
7,564
507
73
11
8
106
10
529
0
Total on- and off-balance sheet
3
899,183
858,841
33,762
5,307
1,273
25
6
119
11
2,076
1,625
1 Includes Loans and advances
to customers and Loans
to financial advisors,
which are presented on
the balance sheet line Other
financial assets measured
at amortized cost.
2 Excludes Forward
starting reverse
repurchase and securities borrowing agreements.
3 Includes on-balance sheet exposure, gross and off-balance sheet exposure (notional) and the related
ECL coverage ratio (bps).
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
76
Note 9
Expected credit loss measurement (continued)
Coverage ratios for core loan portfolio
30.6.24
Gross carrying amount (USD m)
ECL coverage (bps)
On-balance sheet
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
PCI
Private clients with mortgages
252,892
241,557
10,154
1,092
89
7
2
76
5
272
337
Real estate financing
86,907
82,045
4,538
245
78
6
3
69
7
72
0
Total real estate lending
339,798
323,602
14,692
1,337
167
6
3
74
6
235
0
Large corporate clients
29,299
23,981
3,923
972
424
180
39
240
67
2,798
1,580
SME clients
23,922
19,646
2,569
1,463
244
215
31
146
44
2,831
123
Total corporate lending
53,221
43,627
6,491
2,435
668
196
35
203
57
2,818
1,048
Lombard
148,308
147,278
877
71
82
3
0
23
1
2,328
1,951
Credit cards
1,968
1,485
419
64
0
208
39
252
86
3,826
0
Commodity trade finance
5,917
5,575
224
115
2
211
33
92
36
9,037
0
Ship / aircraft financing
8,329
7,883
426
3
17
53
48
103
51
0
1,176
Consumer financing
2,970
2,723
140
66
41
229
73
1,500
143
4,091
0
Other loans and advances to customers
40,339
37,661
2,277
131
270
41
8
80
12
3,532
2,630
Loans to financial advisors
2,647
2,412
84
151
0
176
18
146
22
2,736
0
Total other lending
210,478
205,018
4,447
601
412
25
6
134
9
4,323
2,160
Total
1
603,497
572,247
25,631
4,372
1,247
30
6
117
11
2,235
1,236
Gross exposure (USD m)
ECL coverage (bps)
Off-balance sheet
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
PCI
Private clients with mortgages
8,091
7,834
226
31
0
4
4
23
4
11
0
Real estate financing
12,715
12,143
572
0
0
5
6
0
5
0
0
Total real estate lending
20,805
19,977
798
31
0
5
5
0
5
11
0
Large corporate clients
71,060
66,029
4,833
149
49
24
17
100
22
987
0
SME clients
15,352
14,421
720
189
22
33
27
207
36
197
0
Total corporate lending
86,412
80,450
5,553
338
71
26
19
114
25
546
0
Lombard
68,071
68,017
40
14
0
1
0
0
0
2,887
0
Credit cards
10,056
9,576
477
4
0
8
7
35
8
0
0
Commodity trade finance
3,732
3,712
20
0
0
7
7
13
7
0
0
Ship / aircraft financing
1,836
1,817
19
0
0
11
11
0
11
0
0
Consumer financing
152
152
0
0
0
0
0
0
0
0
0
Financial intermediaries and hedge funds
46,338
45,878
461
0
0
3
2
74
3
0
0
Other off-balance sheet commitments
37,485
36,897
411
163
13
7
4
55
4
538
0
Total other lending
167,670
166,049
1,427
181
13
3
2
52
3
710
0
Total
2
274,888
266,475
7,778
550
84
11
7
90
10
570
0
Total on- and off-balance sheet
3
878,385
838,722
33,409
4,923
1,331
24
7
111
11
2,049
1,202
1 Includes Loans and advances
to customers and Loans to financial
advisors, which are presented
on the balance sheet line
Other financial assets measured
at amortized cost.
2 Excludes Forward starting
reverse
repurchase and securities borrowing agreements.
3 Includes on-balance sheet exposure, gross and off-balance sheet exposure (notional) and the related
ECL coverage ratio (bps).
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
77
Note 9
Expected credit loss measurement (continued)
Coverage ratios for core loan portfolio
31.12.23
Gross carrying amount (USD m)
ECL coverage (bps)
On-balance sheet
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
PCI
Private clients with mortgages
268,825
256,675
10,792
968
389
8
2
90
6
399
283
Real estate financing
97,920
92,124
5,398
290
108
11
4
57
7
713
980
Total real estate lending
366,745
348,800
16,190
1,258
497
9
3
79
6
472
434
Large corporate clients
30,660
25,775
3,252
1,012
620
188
41
215
60
3,083
1,429
SME clients
26,359
22,226
2,961
1,031
142
153
32
141
45
2,689
893
Total corporate lending
57,019
48,001
6,213
2,042
762
172
37
180
53
2,884
1,329
Lombard
156,394
156,312
15
67
0
3
1
7,616
2
2,487
0
Credit cards
2,083
1,571
449
63
0
200
40
253
87
3,801
0
Commodity trade finance
5,858
5,681
26
133
18
223
32
365
34
8,333
6
Ship / aircraft financing
9,265
8,968
276
4
17
56
54
99
55
0
315
Consumer financing
3,041
2,817
110
58
57
195
79
1,559
135
3,422
7
Other loans and advances to customers
40,961
39,196
1,419
105
242
21
10
39
11
3,981
0
Loans to financial advisors
2,665
2,426
80
159
0
185
17
122
20
2,793
0
Total other lending
220,267
216,971
2,373
589
334
21
7
210
9
4,376
9
Total
1
644,031
613,772
24,777
3,889
1,593
27
7
117
11
2,329
773
Gross exposure (USD m)
ECL coverage (bps)
Off-balance sheet
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
PCI
Private clients with mortgages
9,782
9,505
261
15
0
6
5
27
6
40
0
Real estate financing
17,107
16,281
826
0
0
9
8
44
9
0
0
Total real estate lending
26,889
25,786
1,088
15
0
8
7
40
8
40
0
Large corporate clients
77,103
71,524
5,357
157
65
26
17
111
24
1,217
242
SME clients
16,762
15,868
812
80
2
40
29
196
37
640
0
Total corporate lending
93,865
87,392
6,170
236
67
29
19
122
26
1,022
221
Lombard
86,173
86,173
0
1
0
0
0
0
0
0
0
Credit cards
10,458
9,932
522
4
0
10
8
35
10
0
0
Commodity trade finance
4,640
4,628
13
0
0
6
5
151
6
0
0
Ship / aircraft financing
1,053
1,053
0
0
0
26
26
0
26
0
0
Consumer financing
153
153
0
0
0
0
0
0
0
0
0
Financial intermediaries and hedge funds
42,578
42,325
253
0
0
3
3
142
3
0
0
Other off-balance sheet commitments
39,887
39,174
411
263
39
7
4
111
5
453
0
Total other lending
184,944
183,438
1,199
268
39
3
2
85
3
486
0
Total
2
305,697
296,616
8,456
519
106
11
8
107
10
717
0
Total on- and off-balance sheet
3,4
949,729
910,388
33,233
4,408
1,699
22
7
114
11
2,140
706
1 Includes Loans and advances to
customers and Loans to financial
advisors, which are presented on
the balance sheet line Other
financial assets measured at amortized cost.
2 Excludes Forward starting
reverse
repurchase and securities borrowing agreements.
3 Includes on-balance sheet exposure, gross and off-balance sheet exposure (notional) and the related ECL coverage ratio (bps).
4
Information has been revised.
Refer to Note 2 for more information.
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
78
Note 10
Fair value measurement
a) Fair value hierarchy
The fair
value hierarchy
classification of
financial and
non-financial assets
and liabilities
measured at
fair value
is
summarized in the table below.
During the
first nine months
of 2024,
assets and liabilities
that were transferred
from Level 2
to Level 1, or
from
Level 1 to Level 2, and were held for the entire
reporting period were not material.
Determination of fair values from quoted market
prices or valuation techniques
1
30.9.24
30.6.24
31.12.23
USD m
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial assets measured at fair value on a recurring basis
Financial assets at fair value held for trading
136,785
30,051
5,148
171,983
124,602
29,381
8,042
162,025
118,975
28,045
22,613
169,633
of which: Equity instruments
124,895
1,049
172
126,116
112,416
827
185
113,429
102,602
1,403
321
104,325
of which: Government bills / bonds
4,005
4,642
18
8,665
5,603
5,319
75
10,997
6,995
8,763
73
15,830
of which: Investment fund units
6,649
1,003
176
7,827
5,677
1,222
240
7,139
8,392
1,124
129
9,645
of which: Corporate and municipal bonds
1,232
19,007
863
21,102
896
16,569
900
18,365
984
12,801
1,284
15,069
of which: Loans
0
4,118
3,712
7,830
0
5,246
6,419
11,666
0
3,837
19,618
23,456
of which: Asset-backed securities
4
225
163
393
10
192
169
370
3
112
133
248
Derivative financial instruments
1,484
155,018
2,566
159,068
836
136,437
2,325
139,597
622
172,903
2,559
176,084
of which: Foreign exchange
828
60,634
177
61,639
331
50,521
121
50,974
347
78,060
253
78,659
of which: Interest rate
0
46,499
640
47,139
0
48,437
403
48,840
0
55,190
407
55,597
of which: Equity / index
0
40,818
996
41,815
0
32,239
1,154
33,392
0
34,174
1,299
35,473
of which: Credit
0
2,694
608
3,302
0
2,553
478
3,031
0
3,456
513
3,969
of which: Commodities
6
4,027
18
4,051
3
2,563
16
2,582
1
1,869
13
1,883
Brokerage receivables
0
24,656
0
24,656
0
25,273
0
25,273
0
21,037
0
21,037
Financial assets at fair value not held for trading
45,904
75,445
8,067
129,416
34,766
80,555
7,945
123,266
30,717
64,865
8,435
104,018
of which: Financial assets for unit-linked
investment contracts
18,274
6
0
18,280
16,957
6
0
16,963
15,877
7
0
15,884
of which: Corporate and municipal bonds
85
15,701
152
15,937
61
14,338
210
14,609
62
16,722
215
17,000
of which: Government bills / bonds
27,043
8,036
0
35,079
17,262
7,817
0
25,079
14,306
4,801
0
19,107
of which: Loans
0
4,464
2,545
7,010
0
3,699
2,553
6,252
0
4,252
2,258
6,510
of which: Securities financing transactions
0
45,665
484
46,149
0
53,069
268
53,337
0
36,857
52
36,909
of which: Asset-backed securities
0
1,058
553
1,611
0
1,108
500
1,608
0
1,525
180
1,704
of which: Auction rate securities
0
0
190
190
0
0
191
191
0
0
1,208
1,208
of which: Investment fund units
409
421
645
1,475
395
421
670
1,486
367
548
678
1,592
of which: Equity instruments
93
0
3,023
3,117
92
5
2,896
2,993
105
38
3,097
3,241
Financial assets measured at fair value through other comprehensive income on
a recurring basis
Financial assets measured at fair value through
other comprehensive income
65
2,114
0
2,179
62
2,105
0
2,167
68
2,165
0
2,233
of which: Commercial paper and certificates
of deposit
0
1,935
0
1,935
0
1,891
0
1,891
0
1,948
0
1,948
of which: Corporate and municipal bonds
65
178
0
243
62
205
0
267
68
207
0
276
Non-financial assets measured at fair value on a recurring basis
Precious metals and other physical commodities
6,965
0
0
6,965
6,445
0
0
6,445
5,930
0
0
5,930
Non-financial assets measured at fair value on a non-recurring basis
Other non-financial assets
2
0
0
110
110
0
0
43
43
0
0
31
31
Total assets measured at fair value
191,203
287,284
15,891
494,378
166,712
273,750
18,354
458,817
156,312
289,015
33,639
478,966
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
79
Note 10
Fair value measurement (continued)
Determination of fair values from quoted market
prices or valuation techniques (continued)
1
30.9.24
30.6.24
31.12.23
USD m
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial liabilities measured at fair value on a recurring basis
Financial liabilities at fair value held for trading
26,197
10,041
199
36,437
24,476
8,906
111
33,493
27,684
6,315
161
34,159
of which: Equity instruments
19,375
552
58
19,986
16,956
417
66
17,438
18,266
248
92
18,606
of which: Corporate and municipal bonds
29
8,054
135
8,218
33
7,118
35
7,186
28
4,981
62
5,071
of which: Government bills / bonds
4,390
1,069
0
5,458
6,171
1,260
5
7,437
8,559
905
0
9,464
of which: Investment fund units
2,403
285
4
2,691
1,315
38
4
1,357
832
118
4
954
Derivative financial instruments
1,633
167,309
5,354
174,296
876
143,744
4,448
149,069
771
185,815
5,595
192,181
of which: Foreign exchange
881
68,418
36
69,335
326
51,640
48
52,014
457
89,394
36
89,887
of which: Interest rate
0
43,065
298
43,363
0
47,021
243
47,264
0
52,673
246
52,920
of which: Equity / index
0
48,901
4,299
53,200
0
38,001
3,379
41,380
0
38,046
3,333
41,380
of which: Credit
0
3,426
422
3,848
0
3,456
371
3,827
0
4,081
619
4,700
of which: Commodities
5
3,303
38
3,345
2
1,951
14
1,967
0
1,437
21
1,458
of which: Loan commitments measured at
FVTPL
0
73
188
260
0
1,547
288
1,835
0
135
1,037
1,172
Financial liabilities designated at fair value on a recurring basis
Brokerage payables designated at fair value
0
52,403
0
52,403
0
46,198
0
46,198
0
42,522
0
42,522
Debt issued designated at fair value
0
99,674
12,545
112,218
0
100,223
12,986
113,209
0
113,012
15,276
128,289
Other financial liabilities designated at fair value
0
32,730
2,525
35,256
0
28,484
3,391
31,875
0
26,878
2,606
29,484
of which: Financial liabilities related to unit-
linked investment contracts
0
18,389
0
18,389
0
17,080
0
17,080
0
15,992
0
15,992
of which: Securities financing transactions
0
10,784
0
10,784
0
7,699
0
7,699
0
7,416
0
7,416
of which: Over-the-counter debt instruments
and others
0
3,557
2,525
6,082
0
3,705
3,391
7,096
0
3,471
2,606
6,076
Total liabilities measured at fair value
27,830
362,156
20,623
410,610
25,352
327,555
20,936
373,844
28,454
374,542
23,638
426,635
1 Bifurcated embedded derivatives are presented on the same balance sheet
lines as their host contracts and are not included in
this table. The fair value of these derivatives was not material for the periods
presented.
2 Other non-financial assets primarily consist of properties and other non-current assets held for sale, which are measured at the
lower of their net carrying amount or fair value less costs to sell.
b) Valuation adjustments
The table below summarizes the changes
in deferred day-1 profit or loss reserves during the
relevant period.
Deferred day-1 profit or loss is generally released into
Other net income from financial instruments measured
at fair
value
through
profit
or
loss
when
the
pricing
of
equivalent
products
or
the
underlying
parameters
become
observable or when the transaction is closed out.
Deferred day-1 profit or loss reserves
For the quarter ended
Year-to-date
USD m
30.9.24
30.6.24
30.9.23
30.9.24
30.9.23
Reserve balance at the beginning of the period
388
384
402
404
422
Profit / (loss) deferred on new transactions
85
59
37
187
196
(Profit) / loss recognized in the income statement
(54)
(55)
(42)
(170)
(228)
Foreign currency translation
(1)
(1)
(1)
(2)
(1)
Reserve balance at the end of the period
418
388
396
418
389
The table below summarizes other valuation
adjustment reserves recognized on the
balance sheet.
Other valuation adjustment reserves on the
balance sheet
As of
USD m
30.9.24
30.6.24
31.12.23
Own credit adjustments on financial liabilities designated at fair value
1
(1,367)
(1,062)
(1,287)
of which: debt issued designated at fair value
(1,395)
(1,085)
(1,297)
of which: other financial liabilities designated at fair value
27
23
10
Credit valuation adjustments
2
(145)
(104)
(145)
Funding and debit valuation adjustments
(94)
(81)
(116)
Other valuation adjustments
(1,617)
(1,745)
(2,654)
of which: liquidity
(1,076)
(1,230)
(2,051)
of which: model uncertainty
(542)
(516)
(603)
1 Own credit adjustments on financial liabilities designated at fair value includes amounts for TLAC notes.
2 Amount does not include reserves against defaulted counterparties.
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
80
Note 10
Fair value measurement (continued)
c) Level 3 instruments: valuation techniques
and inputs
The
table
below
presents material
Level 3
assets
and
liabilities,
together
with
the
valuation
techniques
used
to
measure fair value,
as well as
the inputs used
in a given
valuation technique that are
considered significant as of
30 September 2024 and unobservable, and a range
of values for those unobservable inputs.
The range of values
represents the highest- and
lowest-level inputs used in the valuation
techniques. Therefore, the
range does not reflect the level of uncertainty regarding a particular input or an assessment of the reasonableness of
the Group’s estimates and assumptions, but rather the different underlying characteristics of the relevant
assets and
liabilities held by the Group.
The significant unobservable
inputs disclosed in
the table below
are consistent with
those included in
“Note 21 Fair
value measurement” in the “Consolidated financial
statements” section of the UBS Group
Annual Report 2023.
Valuation techniques and inputs
used in the fair value measurement of Level
3 assets and liabilities
Fair value
Significant unobservable
input(s)
1
Range of inputs
Assets
Liabilities
Valuation technique(s)
30.9.24
31.12.23
USD bn
30.9.24
31.12.23
30.9.24
31.12.23
low
high
weighted
average
2
low
high
weighted
average
2
unit
1
Financial assets and liabilities at fair value held for
trading and Financial assets at fair value not held for
trading
Corporate and municipal
bonds
1.0
1.5
0.1
0.1
Relative value to
market comparable
Bond price equivalent
17
126
98
5
126
99
points
Discounted expected
cash flows
Discount margin
829
829
829
135
491
463
basis
points
Traded loans,
loans
designated at fair value
and guarantees
6.4
22.0
0.0
0.0
Relative value to
market comparable
Loan price equivalent
1
258
81
1
120
88
points
Discounted expected
cash flows
Credit spread
18
1,533
334
19
2,681
614
basis
points
Investment fund units
3
0.8
0.8
0.0
0.0
Relative value to
market comparable
Net asset value
Equity instruments
3
3.2
3.4
0.1
0.1
Relative value to
market comparable
Price
Debt issued designated at
fair value
4
12.5
15.3
Other financial liabilities
designated at fair value
2.5
2.6
Discounted expected
cash flows
Funding spread
106
201
51
201
basis
points
Derivative financial instruments
Interest rate
0.6
0.4
0.3
0.2
Option model
Volatility of interest rates
47
156
45
154
basis
points
Volatility of inflation
1
6
1
6
%
IR-to-IR correlation
70
99
4
100
%
Discounted expected
cash flows
Funding spread
5
20
basis
points
Credit
0.6
0.5
0.4
0.6
Discounted expected
cash flows
Credit spreads
2
1,270
1
2,421
basis
points
Credit correlation
50
66
50
66
%
Credit volatility
60
60
60
60
%
Recovery rates
0
100
14
100
%
Equity / index
1.0
1.3
4.3
3.3
Option model
Equity dividend yields
0
11
0
17
%
Volatility of equity stocks,
equity and other indices
4
140
4
142
%
Equity-to-FX correlation
(40)
70
(40)
77
%
Equity-to-equity correlation
0
100
(50)
100
%
Loan commitments
measured at FVTPL
0.2
1.0
Relative value to
market comparable
Loan price equivalent
15
100
35
102
points
1 The ranges of significant unobservable inputs are represented in points,
percentages and basis points. Points are a percentage
of par (e.g. 100 points would be 100% of par).
2 Weighted averages are provided for
most non-derivative financial instruments and were calculated
by weighting inputs based on the
fair values of the respective instruments. Weighted averages are
not provided for inputs related
to Other financial liabilities
designated at fair value
and Derivative financial instruments,
as this would not
be meaningful.
3 The range
of inputs is not
disclosed, as there is
a dispersion of values
given the diverse nature
of the investments.
4 Debt issued designated at fair value primarily consists of UBS structured notes, which include variable maturity notes with various equity and foreign exchange underlying risks, as well as rates-linked and credit-linked
notes, all of
which have embedded
derivative parameters
that are considered
to be unobservable.
The equivalent
derivative instrument parameters
for debt issued
or embedded derivatives
for over-the-counter
debt
instruments are presented in the respective derivative financial instruments lines in this table.
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
81
Note 10
Fair value measurement (continued)
d) Level 3 instruments: sensitivity to changes
in unobservable input assumptions
The table below summarizes those financial assets and liabilities classified as Level 3 for
which a change in one or
more of
the unobservable
inputs to
reflect reasonably
possible alternative
assumptions would
change fair
value
significantly, and the estimated effect thereof.
The
sensitivity data
shown below
presents an
estimation of
valuation uncertainty
based
on
reasonably possible
alternative values for Level 3
inputs at the balance sheet
date and does not represent
the estimated effect of stress
scenarios. Typically,
these financial
assets and
liabilities are
sensitive to
a combination
of inputs
from Levels 1–3.
Although well-defined interdependencies
may exist
between Level 1 / 2 parameters
and Level 3
parameters (e.g.
between interest rates,
which are generally
Level 1 or Level 2,
and prepayments,
which are generally
Level 3), these
have not been incorporated
in the table. Furthermore,
direct interrelationships between
the Level 3 parameters are
not a significant element of the valuation uncertainty.
Sensitivity of fair value measurements to changes
in unobservable input assumptions
1
30.9.24
30.6.24
31.12.23
USD m
Favorable
changes
Unfavorable
changes
Favorable
changes
Unfavorable
changes
Favorable
changes
Unfavorable
changes
Traded loans, loans measured at fair value and guarantees
295
(271)
453
(433)
635
(600)
Securities financing transactions
32
(28)
34
(31)
30
(32)
Auction rate securities
9
(6)
8
(6)
67
(21)
Asset-backed securities
40
(44)
44
(48)
39
(36)
Equity instruments
353
(318)
428
(403)
430
(413)
Investment fund units
138
(139)
140
(141)
135
(137)
Loan commitments measured at FVTPL
88
(83)
85
(110)
313
(343)
Interest rate derivatives, net
145
(47)
139
(81)
217
(103)
Credit derivatives, net
119
(122)
124
(128)
140
(131)
Foreign exchange derivatives, net
4
(4)
3
(4)
5
(4)
Equity / index derivatives, net
690
(695)
651
(546)
521
(443)
Other
281
(134)
83
(90)
281
(276)
Total
2,194
(1,891)
2,192
(2,021)
2,815
(2,538)
1 Sensitivity of issued and over-the-counter debt instruments is reported with the equivalent derivative
or Other.
e) Level 3 instruments: movements during
the period
The table below presents additional information about material Level 3 assets and liabilities measured at fair value
on a recurring basis. Level 3 assets and liabilities
may be hedged with instruments
classified as Level 1 or Level 2 in
the fair
value hierarchy
and, as
a
result,
realized and
unrealized gains
and losses
included in
the table
may not
include the effect of related hedging
activity. Furthermore, the realized and unrealized gains and
losses presented
in the table are not
limited solely to those
arising from Level 3 inputs,
as valuations are generally
derived from both
observable and unobservable parameters.
Assets
and
liabilities
transferred
into
or
out
of
Level 3
are
presented
as
if
those
assets
or
liabilities
had
been
transferred on 1 January 2024.
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
82
Note 10
Fair value measurement (continued)
Movements of Level 3 instruments
USD bn
Balance
at the
beginning
of the
period
Credit
Suisse
Level 3
assets and
liabilities
acquired
Net gains /
losses
included in
compre-
hensive
income
1
of which:
related to
instruments
held at the
end of the
period
Purchases
Sales
Issuances
Settlements
Transfers
into
Level 3
Transfers
out of
Level 3
Foreign
currency
translation
Balance
at the
end
of the
period
For the nine months ended 30 September 2024
2
Financial assets at fair value held for
trading
22.6
0.4
(0.3)
1.0
(13.6)
1.3
(7.1)
1.4
(0.9)
(0.0)
5.1
of which: Equity instruments
0.3
(0.0)
(0.0)
0.0
(0.1)
0.0
(0.0)
0.1
(0.1)
(0.0)
0.2
of which: Corporate and municipal
bonds
1.3
(0.2)
(0.1)
0.4
(0.7)
0.0
(0.0)
0.0
(0.1)
0.0
0.9
of which: Loans
19.6
0.7
(0.2)
0.4
(11.6)
1.3
(7.1)
1.2
(0.7)
(0.0)
3.7
Derivative financial instruments –
assets
2.6
(0.0)
(0.1)
0.0
(0.2)
0.9
(1.0)
0.7
(0.4)
(0.0)
2.6
of which: Interest rate
0.4
0.1
0.1
0.0
(0.2)
0.3
(0.2)
0.2
0.0
(0.0)
0.6
of which: Equity / index
1.3
(0.1)
(0.1)
0.0
(0.0)
0.4
(0.4)
0.1
(0.3)
(0.0)
1.0
of which: Credit
0.5
(0.1)
(0.0)
0.0
(0.0)
0.1
(0.2)
0.3
(0.0)
(0.0)
0.6
Financial assets at fair value not held
for trading
8.4
0.1
(0.1)
0.4
(0.6)
1.5
(2.2)
0.8
(0.2)
(0.1)
8.1
of which: Loans
2.3
0.1
0.1
0.2
0.0
0.9
(0.7)
0.0
(0.1)
(0.1)
2.5
of which: Auction rate securities
1.2
0.0
(0.0)
0.0
0.0
0.0
(1.1)
0.0
0.0
0.0
0.2
of which: Equity instruments
3.1
(0.0)
(0.1)
0.1
(0.2)
0.0
0.0
0.1
0.0
(0.0)
3.0
of which: Investment fund units
0.7
0.0
0.0
0.1
(0.2)
0.0
(0.0)
0.0
(0.0)
(0.0)
0.6
of which: Asset-backed securities
0.2
0.0
(0.0)
0.0
(0.1)
0.0
0.0
0.5
(0.1)
(0.0)
0.6
Derivative financial instruments –
liabilities
5.6
(0.0)
0.8
0.0
(0.2)
1.8
(1.8)
0.5
(0.4)
(0.1)
5.4
of which: Interest rate
0.2
0.1
0.3
0.0
(0.0)
0.0
(0.1)
0.1
(0.0)
(0.0)
0.3
of which: Equity / index
3.3
0.8
0.9
0.0
(0.0)
1.6
(1.4)
0.4
(0.4)
(0.0)
4.3
of which: Credit
0.6
(0.1)
(0.1)
0.0
(0.0)
0.1
(0.1)
(0.0)
(0.0)
(0.0)
0.4
of which: Loan commitments
measured at FVTPL
1.0
(0.7)
(0.2)
0.0
(0.1)
0.0
(0.0)
(0.0)
(0.0)
(0.0)
0.2
Debt issued designated at fair value
15.3
0.2
0.5
0.0
0.0
3.3
(3.0)
1.2
(4.4)
0.0
12.5
Other financial liabilities designated at
fair value
2.6
(0.0)
0.0
0.0
(0.0)
0.8
(1.2)
0.4
(0.1)
(0.0)
2.5
For the nine months ended 30 September 2023
3
Financial assets at fair value held for
trading
1.5
26.2
(0.8)
(0.6)
0.8
(6.8)
3.2
(0.0)
1.1
(0.6)
(0.0)
24.5
of which: Investment fund units
0.1
0.1
0.0
0.0
0.0
(0.0)
0.0
(0.0)
0.0
(0.0)
(0.0)
0.1
of which: Corporate and municipal
bonds
0.5
1.1
(0.3)
(0.0)
0.6
(0.8)
0.0
0.0
0.1
(0.1)
(0.0)
1.2
of which: Loans
0.6
23.1
(0.4)
(0.4)
0.1
(5.4)
3.2
(0.0)
0.9
(0.4)
(0.0)
21.6
Derivative financial instruments –
assets
1.5
1.4
0.3
0.2
0.0
(0.0)
0.7
(0.4)
0.2
(0.5)
(0.0)
3.1
of which: Interest rate
0.5
0.2
0.2
0.2
0.0
0.0
0.1
(0.1)
0.0
(0.1)
(0.0)
0.8
of which: Equity / index
0.7
0.5
0.1
0.1
0.0
(0.0)
0.4
(0.2)
0.1
(0.3)
(0.0)
1.3
of which: Credit
0.3
0.2
(0.0)
(0.1)
0.0
(0.0)
0.1
(0.0)
0.1
(0.0)
0.0
0.6
Financial assets at fair value not held
for trading
3.7
4.2
0.2
0.2
1.0
(1.4)
0.0
(0.1)
0.6
(0.1)
(0.0)
8.1
of which: Loans
0.7
0.8
0.3
0.3
0.2
(0.5)
0.0
(0.0)
0.4
(0.1)
(0.0)
1.9
of which: Auction rate securities
1.3
0.0
0.0
0.0
0.0
(0.1)
0.0
0.0
0.0
0.0
0.0
1.2
of which: Equity instruments
0.8
2.1
(0.0)
(0.0)
0.5
(0.3)
0.0
(0.1)
0.1
0.0
(0.0)
3.0
Derivative financial instruments –
liabilities
1.7
4.5
(0.3)
(0.2)
0.0
(0.2)
1.3
(1.0)
0.2
(0.8)
(0.0)
5.4
of which: Interest rate
0.1
0.2
(0.0)
0.0
0.0
0.0
0.1
(0.1)
0.0
(0.1)
(0.0)
0.3
of which: Equity / index
1.2
1.7
(0.2)
(0.0)
0.0
(0.0)
0.8
(0.4)
0.1
(0.2)
(0.0)
2.9
of which: Credit
0.3
0.3
0.1
0.1
0.0
(0.0)
0.4
(0.1)
0.0
(0.4)
(0.0)
0.6
of which: Loan commitments
measured at FVTPL
0.0
2.0
(0.2)
(0.2)
0.0
(0.2)
0.0
(0.3)
0.0
0.0
0.0
1.3
Debt issued designated at fair value
10.5
8.5
0.0
(0.1)
0.0
0.0
4.7
(4.0)
1.0
(3.1)
(0.1)
17.5
Other financial liabilities designated at
fair value
0.7
2.1
0.1
0.1
0.0
(0.0)
0.1
(0.1)
0.0
(0.1)
(0.0)
2.8
1 Net gains / losses included
in comprehensive income are recognized
in Net interest income and
Other net income from financial
instruments measured at fair value
through profit or loss in
the Income statement,
and also in Gains / (losses) from own credit
on financial liabilities designated at fair value,
before tax in the Statement of comprehensive income.
2 Total Level 3 assets as of 30
September 2024 were USD 15.9bn
(31 December 2023: USD 33.6bn). Total Level 3 liabilities as of 30 September
2024 were USD 20.6bn (31 December 2023: USD 23.6bn).
3 Comparative-period information has been revised. Please refer to “Note
2 Accounting for the acquisition of the Credit Suisse Group” in the UBS Group Annual Report 2023 for more information about the IFRS 3 measurement
period adjustments.
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
83
Note 10
Fair value measurement (continued)
f) Financial instruments not measured
at fair value
The table
below reflects
the estimated
fair values
of financial
instruments not
measured at
fair value.
Valuation
principles applied
when determining fair
value estimates for
financial instruments not
measured at
fair value
are
consistent with those described in “Note 21
Fair value measurement” in the “Consolidated financial statements”
section of the UBS Group Annual Report 2023.
Financial instruments not measured at fair value
30.9.24
30.6.24
31.12.23
USD bn
Carrying
amount
Fair value
Carrying
amount
Fair value
Carrying
amount
1
Fair value
Assets
Cash and balances at central banks
243.3
243.3
248.3
248.3
314.1
314.1
Amounts due from banks
21.7
21.7
22.0
22.0
21.1
21.2
Receivables from securities financing transactions measured at amortized
cost
92.1
92.1
82.0
82.0
99.0
99.0
Cash collateral receivables on derivative instruments
47.2
47.2
43.6
43.6
50.1
50.1
Loans and advances to customers
615.8
615.8
599.1
594.6
639.7
633.5
Other financial assets measured at amortized cost
61.2
59.8
60.4
58.2
65.5
63.9
Liabilities
Amounts due to banks
28.1
28.1
26.8
26.8
71.0
71.0
Payables from securities financing transactions measured at amortized cost
16.4
16.4
14.9
14.9
14.4
14.4
Cash collateral payables on derivative instruments
33.8
33.8
32.8
32.8
41.6
41.5
Customer deposits
776.0
777.2
756.8
757.3
792.0
792.9
Debt issued measured at amortized cost
227.2
233.1
229.2
233.8
237.8
241.3
Other financial liabilities measured at amortized cost
2
16.1
16.1
16.3
16.2
15.3
15.2
1 Comparative-period information has been revised. Refer to Note 2 for more information.
2 Excludes lease liabilities.
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
84
Note 11
Derivative instruments
a) Derivative instruments
As of 30.9.24, USD bn
Derivative
financial
assets
Derivative
financial
liabilities
Notional values
related to derivative
financial assets and
liabilities
1
Other
notional
values
2
Derivative financial instruments
Interest rate
47.1
43.4
4,052
19,927
Credit derivatives
3.3
3.8
166
Foreign exchange
61.6
69.3
7,850
270
Equity / index
41.8
53.2
1,545
99
Commodities
4.1
3.3
169
21
Other
3
1.1
1.2
172
Total derivative financial instruments, based on netting under IFRS Accounting Standards
4
159.1
174.3
13,954
20,317
Further netting potential not recognized on the balance
sheet
5
(144.4)
(155.1)
of which: netting of recognized financial liabilities / assets
(122.0)
(122.0)
of which: netting with collateral received / pledged
(22.4)
(33.1)
Total derivative financial instruments, after consideration of further netting potential
14.7
19.2
As of 30.6.24, USD bn
Derivative financial instruments
Interest rate
48.8
47.3
3,472
20,200
Credit derivatives
3.0
3.8
170
Foreign exchange
51.0
52.0
7,148
213
Equity / index
33.4
41.4
1,432
96
Commodities
2.6
2.0
153
18
Other
3
0.8
2.6
151
Total derivative financial instruments, based on netting under IFRS Accounting Standards
4
139.6
149.1
12,526
20,526
Further netting potential not recognized on the balance
sheet
5
(124.4)
(132.4)
of which: netting of recognized financial liabilities / assets
(101.3)
(101.3)
of which: netting with collateral received / pledged
(23.1)
(31.1)
Total derivative financial instruments, after consideration of further netting potential
15.2
16.7
As of 31.12.23, USD bn
Derivative financial instruments
Interest rate
55.6
52.9
3,524
20,074
Credit derivatives
4.0
4.7
275
Foreign exchange
78.7
89.9
6,913
180
Equity / index
35.5
41.4
1,397
95
Commodities
2.0
1.6
143
16
Other
3
0.4
1.6
117
Total derivative financial instruments, based on netting under IFRS Accounting Standards
4
176.1
192.2
12,369
20,366
Further netting potential not recognized on the balance
sheet
5
(162.8)
167.9
of which: netting of recognized financial liabilities / assets
(133.0)
(133.0)
of which: netting with collateral received / pledged
(29.8)
(35.0)
Total derivative financial instruments, after consideration of further netting potential
13.3
24.2
1 In cases where derivative
financial instruments are presented
on a net basis
on the balance sheet,
the respective notional
values of the netted
derivative financial instruments
are still presented on
a gross basis.
Notional amounts of client-cleared ETD and OTC transactions
through central clearing counterparties are not disclosed, as they
have a significantly different risk profile.
2 Other notional values relate to derivatives
that are cleared through either
a central counterparty or an
exchange and settled on a
daily basis (except for
OTC derivatives settled through collateralized-to-market arrangements, which are presented under
Derivative
financial assets and Derivative financial liabilities). The fair value of these derivatives is presented on the balance sheet net of the corresponding cash margin under Cash collateral receivables on derivative instruments
and Cash collateral payables on derivative
instruments and was not material for all
periods presented.
3 Includes Loan commitments measured at FVTPL, as
well as unsettled purchases and sales of non-derivative
financial instruments for which
the changes in the
fair value between trade
date and settlement date
are recognized as derivative
financial instruments.
4 Financial assets and liabilities
are presented net
on the
balance sheet if UBS
has the unconditional and
legally enforceable right to
offset the recognized amounts,
both in the normal
course of business and
in the event of
default, bankruptcy or insolvency
of UBS or its
counterparties, and intends
either to settle
on a net
basis or to
realize the asset
and settle the
liability simultaneously.
5 Reflects the
netting potential in
accordance with enforceable
master netting and
similar
arrangements where not all criteria for a net presentation on the balance sheet have been met. Refer to “Note 22 Offsetting financial assets and financial liabilities” in
the “Consolidated financial statements” section
of the UBS Group Annual Report 2023 for more information.
b) Cash collateral on derivative instruments
USD bn
Receivables
30.9.24
Payables
30.9.24
Receivables
30.6.24
Payables
30.6.24
Receivables
31.12.23
Payables
31.12.23
Cash collateral on derivative instruments, based on netting under IFRS Accounting
Standards
1
47.2
33.8
43.6
32.8
50.1
41.6
Further netting potential not recognized on the balance
sheet
2
(28.7)
(18.2)
(27.2)
(19.0)
(32.9)
(26.4)
of which: netting of recognized financial liabilities / assets
(26.4)
(15.9)
(24.6)
(16.5)
(29.7)
(23.2)
of which: netting with collateral received / pledged
(2.3)
(2.3)
(2.5)
(2.5)
(3.2)
(3.2)
Cash collateral on derivative instruments, after consideration of further netting potential
18.5
15.5
16.5
13.8
17.2
15.2
1 Financial assets and liabilities are presented
net on the balance sheet if UBS
has the unconditional and legally enforceable
right to offset the recognized amounts,
both in the normal course of business
and in the
event of default,
bankruptcy or insolvency
of UBS or
its counterparties, and
intends either to
settle on a
net basis or
to realize the
asset and settle
the liability simultaneously.
2 Reflects the
netting potential in
accordance with enforceable
master netting and
similar
arrangements where not
all criteria for
a net presentation
on the balance
sheet have been
met. Refer to
“Note 22 Offsetting
financial assets and
financial
liabilities” in the “Consolidated financial statements” section of the UBS Group Annual Report 2023 for more information.
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
85
Note
12
Other assets and liabilities
a) Other financial assets measured at
amortized cost
USD m
30.9.24
30.6.24
31.12.23
1
Debt securities
42,177
41,489
45,057
Loans to financial advisors
2,677
2,601
2,615
Fee- and commission-related receivables
2,622
2,460
2,576
Finance lease receivables
6,356
6,001
6,288
Settlement and clearing accounts
475
529
338
Accrued interest income
2,267
2,599
3,163
Other
2
4,595
4,752
5,418
Total other financial assets measured at amortized cost
61,169
60,431
65,455
1 Comparative-period information has
been revised. Refer to
Note 2 for more information.
2 Predominantly includes cash collateral
provided to exchanges and
clearing houses to secure securities
trading activity
through those counterparties.
b) Other non-financial assets
USD m
30.9.24
30.6.24
31.12.23
Precious metals and other physical commodities
6,965
6,445
5,930
Deposits and collateral provided in connection with litigation,
regulatory and similar matters
1
2,847
2,761
2,726
Prepaid expenses
1,887
1,889
2,080
Current tax assets
1,846
1,866
1,456
VAT,
withholding tax and other tax receivables
1,282
1,106
1,327
Properties and other non-current assets held for sale
234
151
188
Assets of disposal groups held for sale
2
1,722
Other
2,219
2,295
2,342
Total other non-financial assets
19,002
16,514
16,049
1 Refer to Note 15 for more information.
2 Refer to Note 2 for more information about the agreement to sell Select Portfolio Servicing.
c) Other financial liabilities measured at
amortized cost
USD m
30.9.24
30.6.24
31.12.23
Other accrued expenses
3,195
3,115
3,270
Accrued interest expenses
6,409
6,872
6,692
Settlement and clearing accounts
1,780
1,815
1,519
Lease liabilities
5,094
5,097
5,502
Other
4,693
4,484
3,868
Total other financial liabilities measured at amortized cost
21,171
21,383
20,851
d) Other financial liabilities designated at
fair value
USD m
30.9.24
30.6.24
31.12.23
Financial liabilities related to unit-linked investment contracts
18,389
17,080
15,992
Securities financing transactions
10,784
7,699
7,416
Over-the-counter debt instruments and other
6,082
7,096
6,076
Total other financial liabilities designated at fair value
35,256
31,875
29,484
e) Other non-financial liabilities
USD m
30.9.24
30.6.24
31.12.23
Compensation-related liabilities
9,086
7,771
9,746
of which: net defined benefit liability
800
757
796
Current tax liabilities
1,202
1,303
1,460
Deferred tax liabilities
345
319
325
VAT,
withholding tax and other tax payables
1,115
1,070
1,120
Deferred income
644
763
635
Liabilities of disposal groups held for sale
1
1,274
Other
308
494
802
Total other non-financial liabilities
13,974
11,720
14,089
1 Refer to Note 2 for more information about the agreement to sell Select Portfolio Servicing.
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
86
Note
13
Debt issued designated at fair value
USD m
30.9.24
30.6.24
31.12.23
Equity-linked
1
56,691
55,911
60,573
Rates-linked
22,466
25,811
28,883
Credit-linked
5,990
6,510
7,730
Fixed-rate
15,811
15,271
20,541
Commodity-linked
3,638
3,507
3,844
Other
7,622
6,200
6,718
of which: debt that contributes to total loss-absorbing capacity
5,225
4,585
4,629
Total debt issued designated at fair value
2
112,218
113,209
128,289
1 Includes investment fund unit-linked instruments issued.
2 As of 30 September 2024, 99% of Total debt issued designated at fair value was unsecured
(30 June 2024: 99%).
Note
14
Debt issued measured at amortized cost
USD m
30.9.24
30.6.24
31.12.23
Short-term debt
1
33,851
34,944
38,530
Senior unsecured debt
139,417
143,832
147,547
of which: contributes to total loss-absorbing capacity
98,368
100,765
101,939
Covered bonds
10,206
8,524
5,214
Subordinated debt
15,441
14,350
17,644
of which: eligible as high-trigger loss-absorbing additional
tier 1 capital instruments
13,470
12,400
10,744
of which: eligible as low-trigger loss-absorbing additional
tier 1 capital instruments
1,239
1,225
1,214
of which: eligible as non-Basel III-compliant tier 2 capital
instruments
289
536
538
Debt issued through the Swiss central mortgage institutions
27,786
26,011
27,377
Other long-term debt
468
1,563
1,506
Long-term debt
2
193,318
194,279
199,288
Total debt issued measured at amortized cost
3,4
227,168
229,223
237,817
1 Debt with an original contractual maturity
of less than one year,
includes mainly certificates of deposit
and commercial paper.
2 Debt with an original contractual
maturity greater than or equal to
one year. The
classification of debt
issued into
short-term and
long-term does
not consider
any early redemption
features.
3 Net of
bifurcated embedded
derivatives, the
fair value
of which
was not
material for
the periods
presented.
4 Except for Covered bonds (100% secured), Debt issued through the Swiss central
mortgage institutions (100% secured) and Other long-term debt (88% secured), 100% of the balance
was unsecured
as of 30 September 2024.
Note 15
Provisions and contingent liabilities
a) Provisions and contingent liabilities
The table below presents an overview of total provisions
and contingent liabilities.
USD m
30.9.24
30.6.24
31.12.23
1
Provisions related to expected credit losses (IFRS 9,
Financial Instruments
)
2
310
294
350
Provisions related to Credit Suisse loan commitments (IFRS
3,
Business Combinations
)
1,230
1,367
1,924
Provisions related to litigation, regulatory and similar matters
(IAS 37,
Provisions, Contingent Liabilities and Contingent Assets
)
3,842
3,630
4,020
Acquisition-related contingent liabilities (IFRS 3,
Business Combinations
)
2,430
2,619
3,993
Restructuring, real-estate and other provisions (IAS 37,
Provisions, Contingent Liabilities and Contingent Assets
)
1,433
1,382
2,123
Total provisions and contingent liabilities
9,245
9,293
12,412
1 Comparative-period information has been revised. Refer to Note 2 for more information.
2 Refer to Note 9c for more information.
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
87
Note 15
Provisions and contingent liabilities
(continued)
The table below presents additional information for provisions under IAS 37,
Provisions, Contingent Liabilities and
Contingent Assets
.
USD m
Litigation,
regulatory and
similar matters
1
Restructuring
2
Real estate
3
Other
4
Total
Balance as of 31 December 2023
4,020
741
259
1,123
6,144
Balance as of 30 June 2024
3,630
827
233
322
5,013
Increase in provisions recognized in the income statement
51
271
4
27
354
Release of provisions recognized in the income statement
(35)
(66)
(2)
(18)
(121)
Reclassifications
211
5
0
0
0
211
Provisions used in conformity with designated purpose
(76)
(212)
(2)
(10)
(300)
Foreign currency translation and other movements
60
45
11
3
120
Balance as of 30 September 2024
3,842
865
245
324
5,275
1 Consists of
provisions for
losses resulting
from legal,
liability and
compliance risks.
2 Includes USD
482m of
provisions for
onerous contracts
related to
real estate
as of
30 September 2024
(30 June 2024:
USD 461m; 31 December 2023:
USD 448m), USD 322m
of personnel-related restructuring
provisions as of
30 September 2024
(30 June 2024: USD 365m;
31 December 2023: USD 294m)
and onerous
contracts
related to technology.
3 Mainly includes provisions for reinstatement
costs with respect to leased properties.
4 Mainly includes provisions related to
employee benefits and operational risks.
5 Mainly includes
reclassifications from IFRS 3 contingent liabilities
to IAS 37 provisions and a
reclassification from derivative liabilities to IAS 37
provisions in the amount of USD 92m
reflecting the funding obligation relating to investors
who did not accept the redemption offer for the Credit Suisse supply chain finance funds.
Information about provisions and
contingent liabilities in respect of
litigation, regulatory and similar matters,
as a
class,
is
included
in
Note
15b.
There
are
no
material
contingent
liabilities
associated
with
the
other
classes
of
provisions.
b) Litigation, regulatory and similar matters
The Group operates in
a legal and regulatory
environment that exposes it to
significant litigation and similar risks
arising from disputes
and regulatory proceedings. As
a result,
UBS (which for
purposes of this
Note may
refer to
UBS
Group
AG
and/or
one
or
more
of
its
subsidiaries,
as
applicable)
is
involved
in
various
disputes
and
legal
proceedings, including litigation, arbitration,
and regulatory and criminal investigations.
Such matters are subject
to many uncertainties,
and the outcome and the
timing of resolution are
often difficult to
predict,
particularly in
the
earlier
stages
of
a
case.
There
are
also
situations
where
the Group
may
enter into
a
settlement
agreement.
This
may
occur
in
order
to
avoid
the
expense,
management
distraction
or
reputational
implications of
continuing to
contest liability,
even
for those
matters for
which
the Group
believes it
should be
exonerated. The uncertainties inherent in all such matters affect the amount and timing of any potential outflows
for both matters
with respect to
which provisions have
been established and
other contingent liabilities.
The Group
makes
provisions
for
such
matters
brought
against
it
when,
in
the
opinion
of
management
after
seeking legal
advice, it
is more
likely than
not that
the Group
has a
present legal
or constructive obligation
as a
result of
past
events, it
is probable
that an
outflow of
resources will
be required,
and the
amount can
be reliably
estimated. Where
these factors
are
otherwise satisfied,
a
provision may
be
established for
claims that
have
not
yet been
asserted
against the
Group, but
are nevertheless
expected to
be, based
on
the Group’s
experience with
similar asserted
claims.
If
any
of
those
conditions
is
not
met,
such
matters
result
in
contingent
liabilities.
If
the
amount
of
an
obligation cannot
be reliably
estimated, a
liability exists
that is
not recognized
even if
an outflow
of resources
is
probable. Accordingly, no
provision is
established even if
the potential
outflow of resources
with respect
to such
matters could be significant. Developments relating to a matter that occur after the relevant reporting period, but
prior
to
the
issuance
of
financial
statements, which
affect
management’s assessment
of
the
provision
for
such
matter
(because,
for
example,
the
developments provide
evidence of
conditions that
existed
at
the
end
of
the
reporting
period),
are
adjusting
events
after
the
reporting period
under
IAS
10
and
must
be
recognized in
the
financial statements for the reporting period.
Specific litigation, regulatory and other matters are
described below, including all such matters that
management
considers to be material and others that management believes to be of significance to the Group due to potential
financial,
reputational
and
other
effects.
The
amount
of
damages
claimed,
the
size
of
a
transaction
or
other
information is
provided where
available and
appropriate in order
to assist
users in
considering the
magnitude of
potential exposures.
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
88
Note 15
Provisions and contingent liabilities
(continued)
In the case of certain matters below, we state that we have established a provision, and for the other matters, we
make no such statement. When we
make this statement and we expect
disclosure of the amount of a provision
to
prejudice seriously our
position with other
parties in the
matter because it
would reveal what
UBS believes to
be
the
probable
and
reliably estimable
outflow, we
do
not
disclose
that amount.
In
some
cases we
are
subject to
confidentiality obligations
that preclude
such disclosure.
With respect
to the
matters for
which we
do not
state
whether we have
established a provision,
either: (a) we
have not established
a provision; or
(b) we have
established
a provision
but expect
disclosure of
that fact
to prejudice
seriously our
position with
other parties
in the
matter
because it would reveal the fact that
UBS believes an outflow of resources to be probable
and reliably estimable.
With respect to certain litigation, regulatory
and similar matters for which we
have established provisions, we are
able to
estimate the expected
timing of outflows.
However, the aggregate
amount of the
expected outflows for
those matters for which we
are able to estimate expected
timing is immaterial relative to
our current and expected
levels of liquidity over the relevant time periods.
The
aggregate
amount
provisioned
for
litigation,
regulatory
and
similar
matters
as
a
class
is
disclosed
in
the
“Provisions” table in Note 15a above. UBS provides
below an estimate of the aggregate liability for
our litigation,
regulatory and
similar matters
as a
class of
contingent liabilities.
Estimates of
contingent liabilities
are inherently
imprecise and
uncertain as
these
estimates require UBS
to
make speculative
legal assessments
as
to claims
and
proceedings that involve
unique fact patterns
or novel legal
theories, that have
not yet been
initiated or are
at early
stages of
adjudication, or
as to
which
alleged damages
have
not been
quantified by
the claimants.
Taking into
account these uncertainties
and the other factors
described herein, UBS
estimates the future losses
that could arise
from litigation,
regulatory and
similar matters
disclosed below
for which
an estimate
is possible,
that are
not covered
by existing
provisions (including
provisions established
under IFRS
3 in
connection with
the acquisition
of Credit
Suisse), are in the range of USD 0bn to USD 1.8bn.
Litigation, regulatory
and similar
matters may
also result
in non-monetary
penalties and
consequences. A
guilty plea
to, or conviction of, a crime could have material consequences for UBS. Resolution of regulatory proceedings may
require UBS to obtain waivers of regulatory disqualifications to maintain certain operations, may entitle regulatory
authorities to limit, suspend or terminate
licenses and regulatory authorizations, and may
permit financial market
utilities to
limit, suspend
or terminate
UBS’s participation
in such
utilities. Failure
to obtain
such waivers,
or any
limitation, suspension
or termination
of licenses,
authorizations or
participations, could
have material
consequences
for UBS.
The
amounts
shown
in
the
table
below
reflect
the
provisions
recorded
under
IFRS
Accounting
Standards.
In
connection with
the acquisition
of Credit
Suisse, UBS
Group AG
additionally has
reflected in
its purchase
accounting
under IFRS
3 a
valuation adjustment
reflecting an
estimate of
outflows relating
to contingent
liabilities for
all present
obligations included in
the scope
of the
acquisition at fair
value upon
closing, even
if it
is not
probable that the
contingent
liability
will
result
in
an
outflow
of
resources,
significantly
decreasing
the
recognition
threshold
for
litigation
liabilities
beyond
those
that
generally apply
under
IFRS
Accounting Standards.
The
IFRS
3
acquisition-
related contingent liabilities
of USD 2.4bn at
30 September 2024 reflect
reclassifications to provisions
under IAS 37
and releases upon resolution of the relevant
matter.
Provisions for litigation, regulatory and similar matters,
by business division and in Group Items
1
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core
and Legacy
Group Items
UBS Group
Balance as of 31 December 2023
1,235
157
15
294
2,186
134
4,020
Balance as of 30 June 2024
1,199
152
2
280
1,862
135
3,630
Increase in provisions recognized in the income statement
21
0
6
1
23
0
51
Release of provisions recognized in the income statement
(4)
0
0
(2)
(30)
0
(35)
Reclassifications
2
0
0
0
0
211
0
211
Provisions used in conformity with designated purpose
(14)
0
(6)
(3)
(52)
(1)
(76)
Foreign currency translation and other movements
43
6
0
7
4
0
60
Balance as of 30 September 2024
1,247
157
2
283
2,018
135
3,842
1 Provisions, if any,
for the matters
described in items 2
and 10 of this
Note are recorded
in Global Wealth
Management. Provisions, if
any, for the
matters described in
items 5, 6, 7,
8, 9 and 11
of this Note are
recorded in Non-core and Legacy. Provisions, if any, for the matters described
in items 13 and 14 of
this Note are recorded in Group Items. Provisions, if any, for the
matters described in item 1 of this
Note are allocated
between Global Wealth Management,
Personal & Corporate
Banking and Non-core and
Legacy. Provisions,
if any, for
the matters described in item
3 of this Note are
allocated between the Investment Bank,
Non-
core and Legacy and Group Items.
Provisions, if any,
for the matters described in item 4 of
this Note are allocated between Global
Wealth Management and Personal
& Corporate Banking. Provisions,
if any, for the
matters described in
item 12 of
this Note are
allocated between
the Investment Bank
and Non-core
and Legacy.
2 Mainly includes reclassifications
from IFRS
3 contingent liabilities
to IAS 37
provisions and
a
reclassification from derivative liabilities to IAS 37 provisions in the amount of USD 92m reflecting the funding obligation relating
to investors who did not accept the redemption offer for the Credit Suisse supply chain
finance funds.
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
89
Note 15
Provisions and contingent liabilities
(continued)
- Inquiries regarding cross-border wealth management
businesses
Tax
and regulatory
authorities in
a number
of countries
have made
inquiries, served
requests for
information or
examined
employees
located
in
their
respective
jurisdictions
relating
to
the
cross-border
wealth
management
services provided by
UBS and
other financial
institutions. Credit Suisse
offices in various
locations, including
the UK,
the Netherlands, France and
Belgium, have been contacted
by regulatory and law enforcement
authorities seeking
records and information
concerning investigations
into Credit
Suisse’s historical
private banking
services on a
cross-
border basis and
in part through
its local branches
and banks.
The UK and
French aspects of
these issues have
been
closed. UBS is continuing to cooperate with
the authorities.
Since 2013, UBS
(France) S.A., UBS AG
and certain former employees
have been under investigation in
France in
relation to UBS’s cross-border business with French
clients. In connection with this investigation, the investigating
judges ordered UBS AG to provide bail (“
caution
”) of EUR 1.1bn.
In 2019,
the court of
first instance
returned a verdict
finding UBS AG
guilty of
unlawful solicitation of
clients on
French territory and aggravated
laundering of the proceeds
of tax fraud, and UBS
(France) S.A. guilty of aiding
and
abetting unlawful
solicitation and
of laundering
the proceeds
of tax
fraud. The
court imposed
fines aggregating
EUR 3.7bn on UBS AG and UBS (France) S.A. and awarded EUR 800m of
civil damages to the French state. A trial
in the
Paris Court
of Appeal
took place
in March
- In
December 2021,
the Court
of Appeal
found UBS
AG
guilty of unlawful solicitation and aggravated laundering of the proceeds of tax fraud. The court ordered a fine of
EUR
3.75m,
the
confiscation
of
EUR
1bn,
and
awarded
civil
damages
to
the
French
state
of
EUR
800m.
UBS
appealed the decision to the
French Supreme Court. The Supreme
Court rendered its judgment on
15 November
- It
upheld the
Court of
Appeal‘s decision regarding
unlawful solicitation and
aggravated laundering of
the
proceeds of tax fraud, but overturned the confiscation of EUR
1bn, the penalty of EUR 3.75m and the
EUR 800m
of civil
damages awarded
to the
French state.
The case
has been
remanded to
the Court
of Appeal
for a
retrial
regarding these overturned elements.
The French state has reimbursed the
EUR 800m of civil damages
to UBS AG.
In
May
2014,
Credit
Suisse
entered
into
settlement
agreements
with
the
SEC,
Federal
Reserve
and
New
York
Department of
Financial
Services and
plead
guilty
to conspiring
to
aid
and
abet US
taxpayers
in
filing
false
tax
returns. Credit Suisse continued to report
to and cooperate with US authorities in
accordance with its obligations
under the
plea and
agreements, including
by conducting
a review
of cross-border
services provided
by Credit
Suisse.
In this connection,
Credit Suisse provided information to US authorities regarding potentially undeclared
US assets
held by clients at
Credit Suisse since the
May 2014 plea. UBS
continues to cooperate with the
authorities in their
ongoing reviews. In
March 2023, the US
Senate Finance Committee
issued a report
criticizing Credit Suisse
AG’s
history regarding
US tax
compliance. The
report called
on the
DOJ to
investigate Credit
Suisse AG’s
compliance
with the 2014 plea.
In February 2021, a
qui tam complaint was filed
in the Eastern District of
Virginia, alleging that Credit Suisse had
violated the
False Claims Act
by failing
to disclose
all US
accounts at
the time
of the
2014 plea,
which allegedly
allowed Credit Suisse to pay a criminal fine
in 2014 that was purportedly lower
than it should have been. The DOJ
moved to dismiss
the case, and
the Court summarily
dismissed the suit.
On appeal,
the US Court
of Appeals for
the
Fourth Circuit affirmed the dismissal of the action.
Our balance sheet
at 30 September 2024
reflected a provision in
an amount that UBS
believes to be appropriate
under the
applicable accounting
standard. As
in the
case of
other matters
for which
we have
established provisions,
the future outflow of resources in respect of such matters
cannot be determined with certainty based on currently
available information
and accordingly
may ultimately
prove to
be substantially
greater (or
may be
less) than
the
provision that we have recognized.
- Madoff
In relation to
the Bernard
L. Madoff Investment
Securities LLC
(BMIS) investment
fraud, UBS
AG, UBS (Luxembourg)
S.A. (now UBS
Europe SE, Luxembourg
branch) and certain
other UBS subsidiaries have
been subject to
inquiries
by a
number of
regulators, including
the Swiss
Financial Market
Supervisory Authority
(FINMA) and
the Luxembourg
Commission
de
Surveillance
du
Secteur
Financier.
Those
inquiries
concerned
two
third-party
funds
established
under Luxembourg
law,
substantially all
assets of
which were
with BMIS,
as well
as certain
funds established
in
offshore
jurisdictions
with
either
direct
or
indirect
exposure
to
BMIS.
These
funds
faced
severe
losses,
and
the
Luxembourg funds are in liquidation. The documentation establishing both funds identifies UBS entities in various
roles,
including custodian,
administrator,
manager,
distributor and
promoter,
and indicates
that UBS
employees
serve as board members.
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
90
Note 15
Provisions and contingent liabilities
(continued)
In 2009 and 2010, the liquidators
of the two Luxembourg funds
filed claims against UBS entities,
non-UBS entities
and
certain
individuals,
including
current
and
former
UBS
employees,
seeking
amounts
totaling
approximately
EUR 2.1bn, which includes
amounts that the
funds may be
held liable to
pay the trustee
for the liquidation
of BMIS
(BMIS Trustee).
A large number of alleged beneficiaries have filed claims
against UBS entities (and non-UBS entities) for purported
losses relating to
the Madoff fraud.
The majority of
these cases have
been filed in
Luxembourg, where decisions
that the claims in eight test cases were inadmissible have been affirmed by the Luxembourg Court of Appeal, and
the Luxembourg Supreme Court has dismissed
a further appeal in one of the test
cases.
In the
US, the
BMIS Trustee
filed claims
against UBS
entities, among
others, in
relation to
the two
Luxembourg
funds and one of
the offshore funds. The
total amount claimed against
all defendants in
these actions was
not less
than USD
2bn. In
2014, the
US Supreme
Court rejected
the BMIS
Trustee’s motion for
leave to
appeal decisions
dismissing all
claims against
UBS defendants
except those
for the
recovery of
approximately USD
125m of
payments
alleged to be
fraudulent conveyances
and preference
payments. Similar
claims have
been filed against
Credit Suisse
entities seeking to recover
redemption payments. In
2016, the bankruptcy
court dismissed these
claims against the
UBS entities and
most of
the Credit
Suisse entities.
In 2019, the
Court of Appeals
reversed the
dismissal of
the BMIS
Trustee’s remaining claims. The case has been
remanded to the Bankruptcy Court
for further proceedings.
- Foreign exchange, LIBOR and benchmark rates,
and other trading practices
Foreign exchange-related regulatory matters:
Beginning in 2013, numerous authorities commenced investigations
concerning possible
manipulation of
foreign
exchange markets
and
precious
metals prices.
As
a
result
of these
investigations,
UBS
entered
into
resolutions
with
Swiss,
US
and
United
Kingdom
regulators
and
the
European
Commission. UBS
was granted
conditional immunity
by the Antitrust
Division of
the DOJ
and by
authorities in
other
jurisdictions
in
connection
with
potential
competition
law
violations
relating
to
foreign
exchange
and
precious
metals businesses. In December 2021, the European Commission issued a
decision imposing a fine of EUR 83.3m
on
Credit
Suisse
entities based
on
findings of
anticompetitive practices
in
the foreign
exchange
market. Credit
Suisse has
appealed the
decision to
the European
General Court.
UBS received
leniency and
accordingly no
fine
was assessed.
Foreign exchange-related civil litigation:
Putative class actions have been filed since 2013 in US federal
courts and
in
other
jurisdictions
against
UBS,
Credit
Suisse
and
other
banks
on
behalf
of
putative
classes
of
persons
who
engaged in foreign
currency transactions with
any of the defendant
banks. UBS and
Credit Suisse have resolved
US
federal
court class
actions relating
to foreign
currency transactions
with the
defendant banks
and persons
who
transacted in
foreign exchange
futures contracts
and options
on such
futures. Certain
class members
have excluded
themselves from
that settlement
and filed individual
actions in
US and English
courts against
UBS, Credit Suisse
and
other banks, alleging
violations of US
and European competition
laws and unjust
enrichment. UBS, Credit
Suisse
and the other
banks have resolved
those individual matters. Credit
Suisse and UBS,
together with other
financial
institutions, were named in
a consolidated putative
class action in
Israel, which made
allegations similar to those
made in the actions pursued in other jurisdictions. In April 2022,
Credit Suisse entered into an agreement to settle
all claims in
this action. In
February 2024, UBS
entered into
an agreement to
settle all
claims in
this action. Both
settlements remain subject to court approval.
A putative class action was filed in federal court against UBS and numerous other banks on behalf of persons and
businesses in the US who directly purchased foreign currency from the defendants
and alleged co-conspirators for
their own end use. In May 2024, the Second
Circuit upheld the district court’s dismissal of
the case.
LIBOR and other benchmark-related regulatory
matters:
Numerous government agencies conducted investigations
regarding potential improper attempts by UBS, among others, to manipulate LIBOR and other benchmark rates at
certain
times.
UBS
and
Credit
Suisse
reached
settlements
or
otherwise
concluded
investigations
relating
to
benchmark interest
rates with
the investigating
authorities. UBS
was granted
conditional leniency
or conditional
immunity
from
authorities
in
certain
jurisdictions,
including
the
Antitrust
Division
of
the
DOJ
and
the
Swiss
Competition Commission (WEKO), in
connection with potential
antitrust or competition
law violations related
to
certain rates.
However, UBS
has not
reached a
final settlement
with WEKO,
as the
Secretariat of
WEKO has
asserted
that UBS does not qualify for full immunity.
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
91
Note 15
Provisions and contingent liabilities
(continued)
LIBOR and
other benchmark-related
civil litigation:
A number
of putative
class actions
and other
actions are
pending
in the federal
courts in New
York against UBS
and numerous other banks
on behalf of
parties who transacted in
certain interest rate benchmark-based derivatives. Also
pending in the US
and in other jurisdictions are
a number
of other
actions asserting losses
related to
various products whose
interest rates were
linked to
LIBOR and other
benchmarks, including
adjustable rate
mortgages, preferred
and debt securities,
bonds pledged
as collateral, loans,
depository
accounts,
investments
and
other
interest-bearing
instruments.
The
complaints
allege
manipulation,
through various
means, of
certain benchmark
interest rates,
including USD LIBOR,
Yen LIBOR,
EURIBOR, CHF LIBOR,
GBP LIBOR and seek unspecified compensatory
and other damages under various
legal theories.
USD LIBOR class and individual actions in the
US:
Beginning in 2013, putative class actions
were filed in US federal
district
courts
(and
subsequently
consolidated
in
the
SDNY)
by
plaintiffs
who
engaged
in
over-the-counter
instruments,
exchange
traded
Eurodollar
futures
and
options,
bonds
or
loans
that
referenced
USD LIBOR.
The
complaints allege
violations of
antitrust law
and the
Commodities Exchange
Act, as
well breach
of contract
and
unjust enrichment. Following various rulings
by the district court
and the Second Circuit
dismissing certain of the
causes of action and allowing others to proceed, one class
action with respect to transactions in over the counter
instruments and several actions brought by
individual plaintiffs are proceeding in
the district court. UBS and Credit
Suisse
have
entered
into
settlement
agreements
in
respect
of
the
class
actions
relating
to
exchange
traded
instruments, bonds
and
loans.
These
settlements
have
received
final
court
approval
and
the
actions
have been
dismissed as
to UBS
and Credit
Suisse. In
addition, an
individual action
was filed
in the
Northern District
of California
against UBS, Credit
Suisse and numerous
other banks alleging
that the defendants
conspired to fix
the interest rate
used as the basis for
loans to consumers by jointly
setting the USD ICE LIBOR
rate and monopolized the
market for
LIBOR-based consumer
loans and
credit cards. The
court dismissed
the initial complaint
and subsequently
dismissed
an amended complaint with
prejudice. In January 2024,
plaintiffs appealed the dismissal
to the Ninth Circuit
Court
of Appeals.
Other benchmark
class actions
in the
US:
The Yen
LIBOR/Euroyen TIBOR,
EURIBOR and
GBP LIBOR
actions
have
been dismissed.
Plaintiffs have appealed the dismissals.
In November 2022, defendants have moved to dismiss the
complaint in the CHF LIBOR action. In
2023, the court
approved a settlement by Credit Suisse of the
claims against it in this matter.
Government bonds:
In 2021,
the European
Commission issued
a decision
finding that
UBS and
six other
banks
breached European
Union antitrust
rules between
2007 and
2011 relating
to European
government bonds. The
European Commission fined
UBS EUR 172m.
UBS has appealed
the amount of
the fine.
Also in 2021,
the European
Commission
issued
a
decision
finding
that
Credit
Suisse
and
four
other
banks
had
breached
European
Union
antitrust
rules
relating
to
supra-sovereign,
sovereign
and
agency
bonds
denominated
in
USD.
The
European
Commission fined
Credit Suisse EUR
11.9m. Credit
Suisse has
appealed and
the European
Commission is
scheduled
to announce its determination on appeal on
7 November 2024.
Credit Suisse, together with other financial institutions, was named in two Canadian putative class actions, which
allege that
defendants conspired to
fix the
prices of
supranational, sub-sovereign and
agency bonds sold
to and
purchased
from
investors
in
the
secondary market.
One
action
was
dismissed
against
Credit
Suisse
in
February
2020.
In
October
2022,
Credit
Suisse
entered
into
an
agreement
to
settle
all
claims
in
the
second
action.
The
settlement remains subject to court approval.
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
92
Note 15
Provisions and contingent liabilities
(continued)
Credit default
swap auction
litigation –
In June
2021, Credit
Suisse, along
with other
banks and
entities, was
named
in a
putative class
action complaint
filed in
the US
District Court
for the
District of
New Mexico
alleging manipulation
of credit default swap (CDS) final auction prices. Defendants filed a motion to enforce a previous CDS class action
settlement in the SDNY. In January 2024,
the SDNY ruled that, to the extent
claims in the New Mexico action arise
from conduct prior to 30 June 2014,
those claims are barred by the SDNY
settlement. The plaintiffs have appealed
the SDNY decision.
With respect
to additional
matters and
jurisdictions not
encompassed by
the settlements
and orders
referred to
above,
our
balance
sheet
at
30
September
2024
reflected
a
provision
in
an
amount
that
UBS
believes
to
be
appropriate under
the applicable
accounting standard.
As in
the case
of other
matters for
which we
have established
provisions, the future outflow
of resources in respect
of such matters
cannot be determined with
certainty based
on currently available information and
accordingly may ultimately prove to be
substantially greater (or may be less)
than the provision that we have recognized.
- Swiss retrocessions
The Federal Supreme Court of Switzerland ruled in 2012, in
a test case against UBS, that distribution fees paid
to
a firm for distributing third-party
and intra-group investment funds
and structured products must be disclosed
and
surrendered
to
clients
who
have
entered
into
a
discretionary
mandate agreement
with
the
firm,
absent a
valid
waiver. FINMA issued a
supervisory note
to all Swiss
banks in response
to the Supreme
Court decision.
UBS has
met
the FINMA requirements and has notified all potentially
affected clients.
The Supreme Court
decision has resulted,
and continues to
result, in a
number of client
requests to disclose
and
potentially surrender retrocessions. Client requests are assessed on a case-by-case
basis. Considerations taken into
account when
assessing these
cases include,
among other
things, the
existence of
a discretionary
mandate and
whether or not the client documentation contained
a valid waiver with respect to distribution
fees.
Our balance sheet at
30 September 2024 reflected a
provision with respect to
matters described in this item
4 in
an amount that UBS
believes to be
appropriate under the applicable accounting standard.
The ultimate exposure
will depend on client requests and the resolution thereof, factors that are difficult to predict and assess. Hence, as
in the case of other
matters for which we have
established provisions, the
future outflow of resources
in respect of
such matters
cannot be
determined with certainty
based on
currently available information
and accordingly may
ultimately prove to be substantially greater (or
may be less) than the provision that we
have recognized.
- Mortgage-related matters
Government and
regulatory
related matters
:
DOJ RMBS
settlement
– In January
2017, Credit Suisse
Securities (USA)
LLC
(CSS
LLC)
and
its
current
and
former
US
subsidiaries
and
US
affiliates
reached
a
settlement
with
the
US
Department of
Justice (DOJ)
related to
its legacy
Residential
Mortgage-Backed
Securities (RMBS)
business, a
business
conducted through
- The
settlement resolved
potential civil
claims by
the DOJ
related to certain
of those
Credit
Suisse entities’
packaging, marketing,
structuring, arrangement,
underwriting, issuance
and sale
of RMBS.
Pursuant
to the terms of the
settlement a civil monetary penalty was paid
to the DOJ in
January 2017. The settlement also
required
the
Credit
Suisse
entities
to
provide
certain
levels
of
consumer
relief
measures,
including
affordable
housing
payments
and
loan
forgiveness,
and
the
DOJ
and
Credit
Suisse
agreed
to
the
appointment
of
an
independent
monitor
to
oversee
the
completion
of
the
consumer
relief
requirements
of
the
settlement.
UBS
continues
to
evaluate
its
approach
toward
satisfying
the
remaining
consumer
relief
obligations.
The
aggregate
amount of the consumer relief obligation increased after 2021 by 5% per annum of the outstanding amount due
until these obligations are settled. The monitor
publishes reports periodically on these consumer relief matters.
Civil litigation:
Repurchase litigations
– Credit
Suisse affiliates
are defendants
in various
civil litigation
matters related
to their roles as issuer, sponsor, depositor, underwriter and/or servicer of RMBS transactions. These cases currently
include
repurchase
actions
by
RMBS
trusts
and/or
trustees,
in
which
plaintiffs
generally
allege
breached
representations and
warranties
in
respect of
mortgage loans
and
failure
to
repurchase such
mortgage loans
as
required
under
the
applicable
agreements. The
amounts disclosed
below
do
not
reflect
actual
realized
plaintiff
losses to
date. Unless
otherwise stated,
these amounts
reflect
the original
unpaid principal
balance amounts
as
alleged in these actions.
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
93
Note 15
Provisions and contingent liabilities
(continued)
DLJ Mortgage Capital, Inc. (DLJ) is a defendant in New
York state court in five actions: An action brought by Asset
Backed
Securities
Corporation
Home
Equity
Loan
Trust,
Series
2006-HE7
alleges
damages
of
not
less
than
USD 374m.
In
December 2023,
the
court granted
in
part
DLJ’s
motion
to
dismiss,
dismissing with
prejudice all
notice-based
claims;
the
parties
have
appealed.
An
action
by
Home
Equity
Asset
Trust,
Series
2006-8,
alleges
damages of not
less than
USD 436m. An action
by Home
Equity Asset Trust
2007-1 alleges damages
of not
less
than USD 420m.
A non-jury
trial in
this action
was held
between January
and February
2023, and
a decision
is
pending. An action by Home Equity Asset Trust 2007-2 alleges damages of not less than USD 495m. An action by
CSMC Asset-Backed Trust 2007-NC1 does not
allege a damages amount.
- ATA litigation
Since November 2014, a
series of lawsuits have
been filed against a
number of banks, including
Credit Suisse, in
the US District Court
for the Eastern District of
New York
(EDNY) and the SDNY
alleging claims under the
United
States Anti-Terrorism
Act (ATA)
and the Justice
Against Sponsors of Terrorism
Act. The plaintiffs
in each of
these
lawsuits are, or are relatives of, victims of various terrorist
attacks in Iraq and allege a conspiracy
and/or aiding and
abetting based on allegations that various
international financial institutions, including the defendants, agreed to
alter,
falsify or omit
information from payment
messages that involved
Iranian parties for
the express
purpose of
concealing the
Iranian parties’ financial
activities and transactions
from detection
by US
authorities. The lawsuits
allege that
this conduct
has made
it possible
for Iran
to transfer
funds to
Hezbollah and
other terrorist
organizations
actively engaged
in harming
US military
personnel and
civilians. In
January 2023,
the United
States Court
of Appeals
for the Second Circuit affirmed a September 2019 ruling by the EDNY granting defendants’ motion to dismiss the
first
filed
lawsuit.
In
October
2023,
the
United
States
Supreme
Court
denied
plaintiffs’
petition
for
a
writ
of
certiorari.
In February 2024, plaintiffs filed a
motion to vacate the judgment in the
first filed lawsuit. Of the other
seven cases, four
are stayed, including
one that was
dismissed as to
Credit Suisse and
most of the
bank defendants
prior to entry of the stay, and in three plaintiffs have filed amended complaints.
- Customer account matters
Several
clients
have
claimed
that
a
former
relationship
manager
in
Switzerland
had
exceeded
his
investment
authority
in
the
management of
their
portfolios, resulting
in
excessive concentrations
of
certain
exposures
and
investment losses. Credit
Suisse AG has
investigated the claims,
as well as
transactions among the
clients. Credit
Suisse AG filed a criminal complaint against the former relationship manager with the Geneva Prosecutor’s Office
upon which the
prosecutor initiated
a criminal investigation.
Several clients of
the former relationship
manager also
filed criminal complaints with the
Geneva Prosecutor’s Office. In
February 2018, the former relationship manager
was sentenced to five years
in prison by the Geneva criminal
court for fraud, forgery
and criminal mismanagement
and ordered
to pay
damages of approximately
USD 130m. On
appeal, the Criminal
Court of Appeals
of Geneva
and, subsequently, the Swiss Federal Supreme Court upheld the main findings of the
Geneva criminal court.
Civil lawsuits have been initiated against
Credit Suisse AG and/or certain
affiliates in various jurisdictions, based
on
the findings established in the criminal proceedings
against the former relationship manager.
In Singapore,
in a
civil lawsuit
against Credit
Suisse Trust
Limited, the
Singapore International Commercial
Court
issued a judgment
finding for
the plaintiffs and,
in September 2023,
the court awarded
damages of USD 742.73m,
excluding post-judgment
interest. This
figure does
not exclude
potential overlap
with the
Bermuda proceedings
against Credit Suisse Life (Bermuda)
Ltd., described below, and the
court ordered the parties to
ensure that there
shall be no double
recovery in relation to
this award and the
Bermuda proceedings.
On appeal from this
judgment,
in
July
2024,
the court
ordered some
changes to
the calculation
of
damages and
directed the
parties to
agree
adjustments to
the award.
The court ordered
a revised
award of USD
461m, including
interest and
costs, in
October
2024.
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
94
Note 15
Provisions and contingent liabilities
(continued)
In Bermuda, in the civil
lawsuit brought against Credit Suisse Life
(Bermuda) Ltd., the Supreme Court of Bermuda
issued a
judgment finding for
the plaintiff
and awarded
damages of
USD 607.35m to the
plaintiff. Credit Suisse
Life (Bermuda) Ltd.
appealed the decision
and in June
2023, the Bermuda
Court of Appeal
confirmed the award
issued by the
Supreme Court of Bermuda
and the finding that
Credit Suisse Life (Bermuda)
Ltd. had breached
its
contractual
and
fiduciary
duties,
but
overturning
the
finding
that
Credit
Suisse
Life
(Bermuda)
Ltd.
had
made
fraudulent misrepresentations. In
March 2024,
the Bermuda
Court of
Appeal granted
a motion
by Credit
Suisse
Life (Bermuda) Ltd for leave to appeal the judgment to the Judicial Committee of the Privy Council and the notice
of such appeal was filed.
The Court of Appeal also ordered
that the current stay continue pending determination
of the
appeal on
the condition
that the
damages awarded
remain within
the escrow
account plus
interest calculated
at the Bermuda statutory rate of
3.5%. In December 2023, USD 75m
was released from the escrow account and
paid to plaintiffs.
In
Switzerland,
civil
lawsuits
have
been
commenced
against
Credit
Suisse
AG
in
the
Court
of
First
Instance
of
Geneva, with statements of claim served in March
2023 and March 2024.
- Mozambique matter
Credit
Suisse
was
subject to
investigations by
regulatory
and
enforcement
authorities, as
well as
civil
litigation,
regarding certain Credit
Suisse entities’
arrangement of
loan financing
to Mozambique
state enterprises,
Proindicus
S.A. and Empresa Moçambicana de Atum
S.A. (EMATUM), a
distribution to private investors of loan
participation
notes (LPN) related
to the EMATUM
financing in September
2013, and certain
Credit Suisse
entities’ subsequent
role in arranging the exchange
of those LPNs for
Eurobonds issued by the Republic
of Mozambique. In 2019,
three
former Credit Suisse employees pleaded guilty in the EDNY to accepting improper personal benefits in connection
with financing transactions carried out with
two Mozambique state enterprises.
In
October 2021,
Credit
Suisse reached
settlements with
the DOJ,
the US
Securities and
Exchange Commission
(SEC), the
UK Financial
Conduct Authority
(FCA) and
FINMA to
resolve inquiries
by these
agencies, including
findings
that Credit
Suisse failed
to appropriately
organize and
conduct its
business with
due skill
and care,
and manage
risks. Credit
Suisse Group
AG entered
into a
three-year Deferred
Prosecution Agreement
(DPA) with
the DOJ
in
connection with the criminal information
charging Credit Suisse Group AG
with conspiracy to commit wire
fraud
and CSSEL entered into a Plea Agreement and pleaded guilty to one count
of conspiracy to violate the US federal
wire fraud statute.
Under the terms
of the DPA, UBS
Group AG (as
successor to Credit
Suisse Group AG) continued
compliance enhancement and remediation efforts agreed by
Credit Suisse, and undertake additional measures as
outlined in the DPA. If the DPA’s conditions are complied
with, the charges will be dismissed within six months of
the end of the DPA’s three-year term.
- ETN-related litigation
XIV litigation:
Since March 2018, three class action complaints
were filed in the SDNY on behalf
of a putative class
of purchasers
of VelocityShares
Daily Inverse
VIX Short
Term
Exchange Traded
Notes linked
to the
S&P 500
VIX
Short-Term
Futures
Index
(XIV
ETNs).
The
complaints have
been
consolidated and
asserts
claims
against
Credit
Suisse
for
violations
of
various
anti-fraud
and
anti-manipulation provisions
of
US
securities
laws
arising
from
a
decline in the value of XIV ETNs in February 2018. On appeal from an order of the SDNY dismissing all claims, the
Second Circuit issued an
order that reinstated a
portion of the
claims. In decisions
in March 2023 and
March 2024,
the court
denied class
certification for
two of
the three
classes proposed
by plaintiffs
and certified
the third
proposed
class.
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
95
Note 15
Provisions and contingent liabilities
(continued)
- Bulgarian former clients matter
In December 2020, the Swiss Office
of the Attorney General brought charges against Credit
Suisse AG and other
parties concerning the diligence and controls applied to a historical relationship with Bulgarian former clients
who
are
alleged to
have laundered
funds through
Credit
Suisse AG
accounts. In
June 2022,
following a
trial, Credit
Suisse AG was convicted in the Swiss Federal Criminal Court of certain historical organizational
inadequacies in its
anti-money laundering framework
and ordered to pay a fine of
CHF 2m. In addition, the
court seized certain client
assets in the amount of approximately
CHF 12m and ordered Credit Suisse AG to pay
a compensatory claim in the
amount of approximately CHF
19m. Credit Suisse AG
appealed the decision to
the Swiss Federal Court
of Appeals.
Following the merger of UBS AG and Credit Suisse
AG, UBS AG confirmed the appeal.
The trial before the Federal
Court of Appeals occurred in October 2024.
- Supply chain finance funds
Credit
Suisse
has
received
requests
for
documents and
information in
connection with
inquiries, investigations,
enforcement and other
actions relating to
the supply chain finance
funds (SCFFs) matter by
FINMA, the FCA and
other regulatory and governmental agencies. The Luxembourg
Commission de Surveillance du Secteur Financier is
reviewing the
matter and
has commissioned
a report
from a
third party.
Credit Suisse
is cooperating
with these
authorities.
In
February
2023,
FINMA
announced
the
conclusion
of
its
enforcement
proceedings
against
Credit
Suisse
in
connection with the
SCFFs matter. In
its order, FINMA reported
that Credit Suisse
had seriously breached
applicable
Swiss supervisory
laws in
this context
with regard
to risk
management and
appropriate operational
structures. While
FINMA
recognized
that
Credit
Suisse
had
already
taken
extensive
organizational
measures
to
strengthen
its
governance
and
control
processes,
FINMA
ordered
certain
additional
remedial
measures.
These
include
a
requirement that
Credit Suisse
documents the
responsibilities
of approximately
600 of
its highest-ranking
managers.
This
measure
has
been
made
applicable
to
UBS
Group.
FINMA
has
also
separately
opened
four
enforcement
proceedings against former managers of Credit
Suisse.
In May 2023,
FINMA opened
an enforcement
proceeding against
Credit Suisse in
order to confirm
compliance with
supervisory requirements in response to inquiries
from FINMA’s enforcement division in the SCFFs
matter.
The Attorney
General of
the Canton
of Zurich
has initiated
a criminal
procedure in
connection with
the SCFFs
matter
and several fund investors have joined the procedure as interested parties. Certain former and active Credit Suisse
employees, among others, have been named as accused persons, but Credit Suisse itself was not made a party to
the proceeding.
Certain civil actions have
been filed by fund investors
and other parties against
Credit Suisse and/or certain
officers
and directors in various
jurisdictions, which make allegations including mis-selling and
breaches of duties of care,
diligence and
other fiduciary
duties. In June
2024, the
Credit Suisse
SCFFs made
a
voluntary offer
to the
SCFFs
investors to
redeem all
outstanding fund
units. The
offer expired
on
31 July 2024,
and
fund
units representing
around 92%
of the
SCFFs’ net
asset value
were tendered
in the
offer and
accepted. Fund
units accepted
in the
offer were redeemed at 90% of the net asset
value determined on 25 February 2021, net of any payments made
by the relevant
fund to the
fund investors
since that
time. Investors
whose units
were redeemed
released any
claims
they may have had against the SCFFs, Credit Suisse
or UBS. The offer was funded by UBS through the purchase
of
units of feeder sub-funds.
UBS Group third
quarter 2024
report |
Consolidated
financial statements
| Notes to the
UBS Group AG
interim consolidated
financial
statements (unaudited)
96
Note 15
Provisions and contingent liabilities
(continued)
- Archegos
Credit
Suisse
and
UBS
have
received
requests
for
documents
and
information
in
connection
with
inquiries,
investigations
and/or
actions
relating
to
their
relationships
with
Archegos
Capital
Management
(Archegos),
including from FINMA
(assisted by a
third party appointed
by FINMA), the
DOJ, the SEC,
the US Federal
Reserve,
the
US
Commodity
Futures
Trading
Commission
(CFTC),
the
US
Senate
Banking
Committee,
the
Prudential
Regulation Authority (PRA),
the FCA, COMCO, the
Hong Kong Competition
Commission and other regulatory
and
governmental agencies.
UBS
is
cooperating
with
the
authorities
in
these
matters.
In
July
2023,
CSI
and
CSSEL
entered into a settlement agreement
with the PRA providing for
the resolution of the PRA’s
investigation. Also in
July 2023, FINMA
issued a decree
ordering remedial measures
and the Federal
Reserve Board issued
an Order
to
Cease and Desist. Under the terms of the order,
Credit Suisse paid a civil money penalty and agreed to undertake
certain remedial
measures relating
to counterparty
credit risk
management, liquidity
risk management
and non-
financial risk management, as well as enhancements to board oversight and governance. UBS Group, as
the legal
successor to Credit Suisse Group AG,
is a party to the FINMA
decree and Federal Reserve Board
Cease and Desist
Order.
Civil
actions
relating
to
Credit
Suisse’s
relationship with
Archegos
have
been
filed
against
Credit
Suisse
and/or
certain officers and directors, including claims
for breaches of fiduciary duties.
- Credit Suisse financial disclosures
Credit Suisse
Group AG
and certain
directors, officers
and executives
have been
named in
securities class action
complaints pending
in the SDNY. These complaints,
filed on behalf
of purchasers of
Credit Suisse shares, additional
tier 1 capital
notes, and
other securities
in 2023,
allege that
defendants made
misleading statements
regarding:
(i) customer
outflows
in
late
2022;
(ii) the
adequacy
of
Credit
Suisse’s
financial
reporting
controls;
and
(iii) the
adequacy
of
Credit
Suisse’s
risk
management
processes,
and
include
allegations
relating
to
Credit
Suisse
Group AG’s merger with
UBS Group AG. Many
of the actions
have been consolidated,
and a motion
to dismiss has
been
filed
and
remains
pending.
One
additional
action,
filed
in
October
2023,
has
been
stayed
pending
a
determination on whether it should be consolidated
with the earlier actions.
Credit Suisse has received requests for documents and information from regulatory and governmental agencies in
connection with inquiries,
investigations and/or actions
relating to
these matters, as
well as
for other statements
regarding Credit Suisse’s financial condition,
including from the SEC, the DOJ
and FINMA. UBS is cooperating with
the authorities in these matters.
- Merger-related litigation
Certain Credit
Suisse Group AG
affiliates and certain
directors, officers
and executives have
been named in
class
action complaints pending in
the SDNY.
One complaint, brought
on behalf of
Credit Suisse shareholders,
alleges
breaches of fiduciary duty
under Swiss law and
civil RICO claims
under United States
federal law. In February 2024,
the court granted
defendants’ motions to
dismiss the civil
RICO claims and
conditionally dismissed the Swiss
law
claims pending defendants’ acceptance of jurisdiction in Switzerland. In March 2024, having received consents to
Swiss jurisdiction from all defendants served
with the complaint, the court dismissed the Swiss
law claims against
those defendants.
Additional complaints,
brought
on behalf
of holders
of Credit
Suisse additional
tier 1
capital
notes (AT1
noteholders) allege
breaches of
fiduciary duty
under Swiss
law,
arising from
a series
of scandals
and
misconduct, which
led to Credit
Suisse Group AG’s
merger with
UBS Group AG,
causing losses
to shareholders
and
AT1
noteholders. Motions to dismiss these
complaints were granted in
March 2024 and
September 2024 on the
basis that Switzerland is the most appropriate forum for litigation. Plaintiff in one of these cases has appealed the
dismissal.
Note 16
Events after the reporting period
In
October 2024,
UBS entered
into
an
agreement
to sell
to American
Express
Swiss Holdings
GmbH (American
Express)
its 50% interest in
Swisscard AECS GmbH (Swisscard),
a joint venture between
UBS and American Express
in Switzerland. In addition, UBS and
Swisscard entered into an
agreement to transition the Credit
Suisse-branded
card portfolios to UBS.
Both transactions are subject to
certain closing conditions and are
not expected to have
a
material impact for UBS.
UBS Group third quarter 2024 report |
Appendix
97
Appendix
Alternative performance measures
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. A
number of APMs
are reported in
the discussion of
the
financial and operating performance of
the external reports (annual, quarterly
and other reports). APMs
are used
to provide
a more
complete
picture of
operating
performance and
to reflect
management’s
view of
the fundamental
drivers
of
the
business
results. A
definition
of
each
APM,
the
method
used
to
calculate
it
and
the
information
content are presented in alphabetical order
in the table below. These APMs may
qualify as non-GAAP measures as
defined by US Securities and Exchange Commission
(SEC) regulations.
APM label
Calculation
Information content
Cost / income ratio (%)
Calculated as operating expenses divided by
total
revenues.
This measure provides information about the
efficiency of the business by comparing operating
expenses with total revenues.
Fee-generating assets (USD)
– Global Wealth Management
Calculated as the sum of discretionary and
nondiscretionary wealth management portfolios
(mandate volume) and assets where generated
revenues are predominantly of a recurring nature, i.e.
mainly investment, mutual, hedge and private-market
funds where we have a distribution agreement,
including client commitments into closed-ended
private-market funds from the date that recurring
fees are charged. Assets related to our Global
Financial Intermediaries business are excluded, as
are
assets of sanctioned clients.
This measure provides information about the volume
of invested assets that create a revenue stream,
whether as a result of the nature of the contractual
relationship with clients or through the fee structure
of the asset. An increase in the level of fee-generating
assets results in an increase in the associated revenue
stream. Assets of sanctioned clients are excluded from
fee-generating assets.
Fee-pool-comparable revenues (USD)
– the Investment Bank
Calculated as the total of revenues from: merger-and-
acquisition-related transactions; Equity Capital
Markets,
excluding derivatives; Leveraged Capital
Markets, excluding the impact of mark-to-market
movements on loan portfolios; and Debt
Capital
Markets, excluding revenues related to debt
underwriting of UBS instruments.
This measure provides information about the amount
of revenues in the Investment Bank that are
comparable with the relevant global fee pools.
Gross margin on invested assets (bps)
– Asset Management
Calculated as total revenues (annualized as applicable)
divided by average invested assets.
This measure provides information about the total
revenues of the business in relation to invested assets.
Impaired loan portfolio as a percentage
of total loan portfolio, gross (%)
– Global Wealth Management,
Personal & Corporate Banking
Calculated as impaired loan portfolio divided by
total
gross loan portfolio.
This measure provides information about the
proportion of impaired loan portfolio in the total gross
loan portfolio.
Integration-related expenses (USD)
Generally include costs of internal staff
and
contractors substantially dedicated to integration
activities, retention awards, redundancy costs,
incremental expenses from the shortening of useful
lives of property, equipment and software, and
impairment charges relating to these assets.
Classification as integration-related expenses does
not
affect the timing of recognition and measurement of
those expenses or the presentation thereof in the
income statement. Integration-related expenses
incurred by Credit Suisse also included expenses
associated with restructuring programs that existed
prior to the acquisition.
This measure provides information about expenses
that are temporary, incremental and directly related to
the integration of Credit Suisse into UBS.
Invested assets (USD and CHF)
– Global Wealth Management,
Personal & Corporate Banking,
Asset Management
Calculated as the sum of managed fund
assets,
managed institutional assets, discretionary and
advisory wealth management portfolios, fiduciary
deposits, time deposits, savings accounts,
and wealth
management securities or brokerage accounts.
This measure provides information about the volume
of client assets managed by or deposited with
UBS for
investment purposes.
UBS Group third quarter 2024 report |
Appendix
98
APM label
Calculation
Information content
Net interest margin (bps)
– Personal & Corporate Banking
Calculated as net interest income (annualized
as
applicable) divided by average loans.
This measure provides information about the
profitability of the business by calculating the
difference between the price charged for lending and
the cost of funding, relative to loan value.
Net new assets (USD)
– Global Wealth Management
Calculated as the net amount of inflows and
outflows
of invested assets (as defined in UBS policy) recorded
during a specific period, plus interest and dividends.
Excluded from the calculation are movements due to
market performance, foreign exchange translation,
fees, and the effects on invested assets of strategic
decisions by UBS to exit markets or services.
This measure provides information about the
development of invested assets during a
specific
period as a result of net new asset flows, plus the
effect of interest and dividends.
Net new assets growth rate (%)
– Global Wealth Management
Calculated as the net amount of inflows and
outflows
of invested assets (as defined in UBS policy) recorded
during a specific period (annualized as applicable),
plus interest and dividends, divided by total invested
assets at the beginning of the period.
This measure provides information about the growth
of invested assets during a specific period
as a result
of net new asset flows.
Net new fee-generating assets (USD)
– Global Wealth Management
Calculated as the net amount of fee-generating
asset
inflows and outflows, including dividend
and interest
inflows into mandates and outflows from mandate
fees paid by clients during a specific period.
Excluded
from the calculation are the effects on fee-generating
assets of strategic decisions by UBS to exit
markets or
services.
This measure provides information about the
development of fee-generating assets during
a
specific period as a result of net flows, excluding
movements due to market performance and
foreign
exchange translation, as well as the effects on fee-
generating assets of strategic decisions by UBS
to exit
markets or services.
Net new money (USD)
– Global Wealth Management,
Asset Management
Calculated as the net amount of inflows and
outflows
of invested assets (as defined in UBS policy) recorded
during a specific period. Excluded from the calculation
are movements due to market performance, foreign
exchange translation, dividends, interest and fees,
as
well as the effects on invested assets of strategic
decisions by UBS to exit markets
or services. Net new
money is not measured for Personal & Corporate
Banking.
This measure provides information about the
development of invested assets during a
specific
period as a result of net new money flows.
Net new money growth rate (%)
– Global Wealth Management
Calculated as the net amount of inflows and
outflows
of invested assets (as defined in UBS policy) recorded
during a specific period (annualized as applicable)
divided by total invested assets at the beginning
of
the period.
This measure provides information about the growth
of invested assets during a specific period
as a result
of net new money flows.
Net profit growth (%)
Calculated as the change in net profit attributable
to
shareholders from continuing operations between
current and comparison periods divided by net profit
attributable to shareholders from continuing
operations of the comparison period.
This measure provides information about profit
growth since the comparison period.
Operating expenses (underlying)
(USD)
Calculated by adjusting operating expenses
as
reported in accordance with IFRS Accounting
Standards for items that management believes
are
not representative of the underlying performance of
the businesses.
›
Refer to the “Group performance” section of this
report for more information
This measure provides information about the amount
of operating expenses, while excluding items
that
management believes are not representative of the
underlying performance of the businesses.
Operating profit / (loss) before tax
(underlying) (USD)
Calculated by adjusting operating profit / (loss) before
tax as reported in accordance with IFRS Accounting
Standards for items that management believes
are
not representative of the underlying performance of
the businesses.
›
Refer to the “Group performance” section of this
report for more information
This measure provides information about the amount
of operating profit / (loss) before tax, while excluding
items that management believes are not
representative of the underlying performance of the
businesses.
Pre-tax profit growth (%)
– Global Wealth Management,
Personal & Corporate Banking,
Asset Management,
the Investment Bank
Calculated as the change in net profit before tax
attributable to shareholders from continuing
operations between current and comparison periods
divided by net profit before tax attributable to
shareholders from continuing operations of the
comparison period.
This measure provides information about pre-tax
profit growth since the comparison period.
UBS Group third quarter 2024 report |
Appendix
99
APM label
Calculation
Information content
Pre-tax profit growth (underlying) (%)
– Global Wealth Management,
Personal & Corporate Banking,
Asset Management,
the Investment Bank
Calculated as the change in net profit before tax
attributable to shareholders from continuing
operations between current and comparison periods
divided by net profit before tax attributable to
shareholders from continuing operations of the
comparison period. Net profit before tax attributable
to shareholders from continuing operations excludes
items that management believes are not
representative of the underlying performance of the
businesses and also excludes related tax impact.
This measure provides information about pre-tax
profit growth since the comparison period, while
excluding items that management believes
are not
representative of the underlying performance of the
businesses.
Recurring net fee income
(USD and CHF)
– Global Wealth Management,
Personal & Corporate Banking
Calculated as the total of fees for services provided
on
an ongoing basis, such as portfolio management
fees,
asset-based investment fund fees and custody
fees,
which are generated on client assets, and
administrative fees for accounts.
This measure provides information about the amount
of recurring net fee income.
Return on attributed equity
1
(%)
Calculated as annualized business division
operating
profit before tax divided by average attributed equity.
This measure provides information about the
profitability of the business divisions in relation to
attributed equity.
Return on common equity tier 1
capital
1
(%)
Calculated as annualized net profit attributable to
shareholders divided by average common equity
tier 1
capital.
This measure provides information about the
profitability of the business in relation to common
equity tier 1 capital.
Return on equity
1
(%)
Calculated as annualized net profit attributable to
shareholders divided by average equity attributable
to
shareholders.
This measure provides information about the
profitability of the business in relation to equity.
Return on leverage ratio denominator,
gross
1
(%)
Calculated as annualized total revenues divided by
average leverage ratio denominator.
This measure provides information about the revenues
of the business in relation to the leverage ratio
denominator.
Return on tangible equity
1
(%)
Calculated as annualized net profit attributable to
shareholders divided by average equity attributable
to
shareholders less average goodwill and intangible
assets.
This measure provides information about the
profitability of the business in relation to tangible
equity.
Tangible book value per share
(USD)
Calculated as equity attributable to shareholders less
goodwill and intangible assets divided by the
number
of shares outstanding.
This measure provides information about tangible net
assets on a per-share basis.
Total book value per share
(USD)
Calculated as equity attributable to shareholders
divided by the number of shares outstanding.
This measure provides information about net assets
on a per-share basis.
Total revenues (underlying)
(USD)
Calculated by adjusting total revenues as reported in
accordance with IFRS Accounting Standards for items
that management believes are not representative of
the underlying performance of the businesses.
›
Refer to the “Group performance” section of this
report for more information
This measure provides information about the amount
of total revenues, while excluding items that
management believes are not representative of the
underlying performance of the businesses.
Transaction-based income
(USD and CHF)
– Global Wealth Management,
Personal & Corporate Banking
Calculated as the total of the non-recurring portion
of
net fee and commission income, mainly composed
of
brokerage and transaction-based investment fund
fees, and credit card fees, as well as fees for payment
and foreign-exchange transactions, together with
other net income from financial instruments
measured at fair value through profit or loss.
This measure provides information about the amount
of the non-recurring portion of net fee and
commission income, together with other net
income
from financial instruments measured at fair value
through profit or loss.
Underlying cost / income ratio (%)
Calculated as underlying operating expenses
(as
defined above) divided by underlying total
revenues
(as defined above).
This measure provides information about the
efficiency of the business by comparing operating
expenses with total revenues, while excluding items
that management believes are not representative of
the underlying performance of the businesses.
Underlying net profit growth (%)
Calculated as the change in net profit attributable
to
shareholders from continuing operations between
current and comparison periods divided by net profit
attributable to shareholders from continuing
operations of the comparison period.
Net profit
attributable to shareholders from continuing
operations excludes items that management
believes
are not representative of the underlying performance
of the businesses and also excludes related tax
impact.
This measure provides information about profit
growth since the comparison period, while excluding
items that management believes are not
representative of the underlying performance of the
businesses.
UBS Group third quarter 2024 report |
Appendix
100
APM label
Calculation
Information content
Underlying return on attributed equity
1
(%)
Calculated as annualized underlying business
division
operating profit before tax (as defined above) divided
by average attributed equity.
This measure provides information about the
profitability of the business divisions in relation to
attributed equity, while excluding items that
management believes are not representative of the
underlying performance of the businesses.
Underlying return on common equity
tier 1 capital
1
(%)
Calculated as annualized net profit attributable to
shareholders divided by average common equity
tier 1
capital. Net profit attributable to shareholders
excludes items that management believes
are not
representative of the underlying performance of the
businesses and also excludes related tax impact.
This measure provides information about the
profitability of the business in relation to common
equity tier 1 capital, while excluding items that
management believes are not representative of the
underlying performance of the businesses.
Underlying return on tangible equity
1
(%)
Calculated as annualized net profit attributable to
shareholders divided by average equity attributable
to
shareholders less average goodwill and intangible
assets. Net profit attributable to shareholders excludes
items that management believes are not
representative of the underlying performance of the
businesses and also excludes related tax impact.
This measure provides information about the
profitability of the business in relation to tangible
equity, while excluding items that management
believes are not representative of the underlying
performance of the businesses.
1
Profit or loss information for each of the third quarter of 2024, the second quarter of 2024, the fourth quarter of 2023 and the third quarter of 2023 is based entirely on consolidated data following the acquisition of
the Credit Suisse
Group and for
the purpose of
the calculation of
return measures has
been annualized
by multiplying such
by four.
Profit or loss
information for the
first nine months
of 2024
is based entirely
on
consolidated data following the acquisition of the Credit Suisse Group
and for the purpose of the calculation of return measures has been annualized by dividing such by three and then multiplying by four. Profit or loss
information for the first nine months of 2023 includes four months (June to September 2023) of post
-acquisition consolidated data and five months of UBS Group data only (January
to May 2023) and for the purpose
of the calculation of return measures has been annualized by dividing such by three and then multiplying by four.
This is
a general list
of the APMs
used in our
financial reporting. Not
all of
the APMs listed
above may appear
in
this particular report.
Information related to underlying return on common equity tier 1 (CET1) capital and underlying return on tangible
equity (%)
As of or for the quarter ended
As of or year-to-date
USD m, except where indicated
30.9.24
30.6.24
31.12.23
1
30.9.23
1
30.9.24
30.9.23
1
Underlying operating profit / (loss) before tax
2,386
2,060
592
914
7,063
3,371
Underlying tax expense / (benefit)
619
410
(329)
623
1,706
1,523
Net profit / (loss) attributable to non-controlling interests
3
40
1
4
51
15
Underlying net profit / (loss) attributable to shareholders
1,763
1,611
920
287
5,306
1,833
Underlying net profit / (loss) attributable to shareholders, annualized
7,054
6,442
3,680
1,148
7,075
2,444
Tangible equity
79,976
76,370
78,109
75,804
79,976
75,804
Average tangible equity
78,173
76,882
76,956
76,845
77,602
63,858
CET1 capital
74,213
76,104
78,002
76,926
74,213
76,926
Average CET1 capital
75,158
76,883
77,464
77,761
76,625
61,460
Underlying return on tangible equity (%)
9.0
8.4
4.8
1.5
9.1
3.8
Underlying return on common equity tier 1 capital (%)
9.4
8.4
4.8
1.5
9.2
4.0
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
UBS Group third quarter 2024 report |
Appendix
101
Abbreviations frequently used in our financial reports
A
ABS
asset-backed securities
AG
Aktiengesellschaft
AGM
Annual General Meeting of
shareholders
AI
artificial intelligence
A-IRB
advanced internal ratings-
based
AIV
alternative investment
vehicle
ALCO
Asset and Liability
Committee
AMA
advanced measurement
approach
AML
anti-money laundering
AoA
Articles of Association
APM
alternative performance
measure
ARR
alternative reference rate
ARS
auction rate securities
ASF
available stable funding
AT1
additional tier 1
AuM
assets under management
B
BCBS
Basel Committee on
Banking Supervision
BIS
Bank for International
Settlements
BoD
Board of Directors
C
CAO
Capital Adequacy
Ordinance
CCAR
Comprehensive Capital
Analysis and Review
CCF
credit conversion factor
CCP
central counterparty
CCR
counterparty credit risk
CCRC
Corporate Culture and
Responsibility Committee
CDS
credit default swap
CEA
Commodity Exchange Act
CEO
Chief Executive Officer
CET1
common equity tier 1
CFO
Chief Financial Officer
CGU
cash-generating unit
CHF
Swiss franc
CIO
Chief Investment Office
C&ORC
Compliance & Operational
Risk Control
CRM
credit risk mitigation (credit
risk) or comprehensive risk
measure (market risk)
CST
combined stress test
CUSIP
Committee on Uniform
Security Identification
Procedures
CVA
credit valuation adjustment
D
DBO
defined benefit obligation
DCCP
Deferred Contingent
Capital Plan
DE&I
diversity, equity and
inclusion
DFAST
Dodd–Frank Act Stress Test
DM
discount margin
DOJ
US Department of Justice
DTA
deferred tax asset
DVA
debit valuation adjustment
E
EAD
exposure at default
EB
Executive Board
EC
European Commission
ECB
European Central Bank
ECL
expected credit loss
EGM
Extraordinary General
Meeting of shareholders
EIR
effective interest rate
EL
expected loss
EMEA
Europe, Middle East and
Africa
EOP
Equity Ownership Plan
EPS
earnings per share
ESG
environmental, social and
governance
ESR
environmental and social
risk
ETD
exchange-traded derivatives
ETF
exchange-traded fund
EU
European Union
EUR
euro
EURIBOR
Euro Interbank Offered Rate
EVE
economic value of equity
EY
Ernst & Young Ltd
F
FA
financial advisor
FCA
UK Financial Conduct
Authority
FDIC
Federal Deposit Insurance
Corporation
FINMA
Swiss Financial Market
Supervisory Authority
FMIA
Swiss Financial Market
Infrastructure Act
FSB
Financial Stability Board
FTA
Swiss Federal Tax
Administration
FVA
funding valuation
adjustment
FVOCI
fair value through other
comprehensive income
FVTPL
fair value through profit or
loss
FX
foreign exchange
G
GAAP
generally accepted
accounting principles
GBP
pound sterling
GCRG
Group Compliance,
Regulatory & Governance
GDP
gross domestic product
GEB
Group Executive Board
GHG
greenhouse gas
GIA
Group Internal Audit
GRI
Global Reporting Initiative
G-SIB
global systemically
important bank
H
HQLA
high-quality liquid assets
I
IAS
International Accounting
Standards
IASB
International Accounting
Standards Board
IBOR
interbank offered rate
IFRIC
International Financial
Reporting Interpretations
Committee
IFRS
accounting standards
Accounting
issued by the IASB
Standards
IRB
internal ratings-based
IRRBB
interest rate risk in the
banking book
ISDA
International Swaps and
Derivatives Association
ISIN
International Securities
Identification Number
UBS Group third quarter 2024 report |
Appendix
102
Abbreviations frequently used in our financial reports (continued)
K
KRT
Key Risk Taker
L
LAS
liquidity-adjusted stress
LCR
liquidity coverage ratio
LGD
loss given default
LIBOR
London Interbank Offered
Rate
LLC
limited liability company
LoD
lines of defense
LRD
leverage ratio denominator
LTIP
Long-Term
Incentive Plan
LTV
loan-to-value
M
M&A
mergers and acquisitions
MRT
Material Risk Taker
N
NII
net interest income
NSFR
net stable funding ratio
NYSE
New York Stock Exchange
O
OCA
own credit adjustment
OCI
other comprehensive
income
OECD
Organisation for Economic
Co-operation and
Development
OTC
over-the-counter
P
PCI
purchased credit impaired
PD
probability of default
PIT
point in time
P&L
profit or loss
PPA
purchase price allocation
Q
QCCP
qualifying central
counterparty
R
RBC
risk-based capital
RbM
risk-based monitoring
REIT
real estate investment trust
RMBS
residential mortgage-
backed securities
RniV
risks not in VaR
RoCET1
return on CET1 capital
RoU
right-of-use
rTSR
relative total shareholder
return
RWA
risk-weighted assets
S
SA
standardized approach or
société anonyme
SA-CCR
standardized approach for
counterparty credit risk
SAR
Special Administrative
Region of the People’s
Republic of China
SDG
Sustainable Development
Goal
SEC
US Securities and Exchange
Commission
SFT
securities financing
transaction
SI
sustainable investing or
sustainable investment
SIBOR
Singapore Interbank
Offered Rate
SICR
significant increase in credit
risk
SIX
SIX Swiss Exchange
SME
small and medium-sized
entities
SMF
Senior Management
Function
SNB
Swiss National Bank
SOR
Singapore Swap Offer Rate
SPPI
solely payments of principal
and interest
SRB
systemically relevant bank
SRM
specific risk measure
SVaR
stressed value-at-risk
T
TBTF
too big to fail
TCFD
Task
Force on Climate-
related Financial Disclosures
TIBOR
Tokyo
Interbank Offered
Rate
TLAC
total loss-absorbing capacity
TTC
through the cycle
U
USD
US dollar
V
VaR
value-at-risk
VAT
value added tax
This is a
general list
of the
abbreviations frequently
used in
our financial
reporting. Not
all of the
listed abbreviations
may appear in this particular report.
UBS Group third quarter 2024 report |
Appendix
103
Information sources
Reporting publications
Annual publications
UBS
Group
Annual
Report
:
Published
in
English,
this
report
provides
descriptions
of:
the
Group
strategy
and
performance; the
strategy and
performance of
the business
divisions and
Group Items;
risk, treasury
and capital
management; corporate
governance;
the compensation
framework, including
information about
compensation for
the Board of Directors and the Group Executive Board members; and financial information, including the financial
statements.
“Auszug aus
dem Geschäftsbericht
”: This publication
provides a German
translation of
selected sections
of the UBS
Group Annual Report.
Compensation
Report
:
This
report
discusses
the
compensation
framework
and
provides
information
about
compensation for
the Board
of Directors
and the
Group Executive
Board members.
It is
available in
English and
German (
“Vergütungsbericht
”) and represents a component of the UBS
Group Annual Report.
Sustainability Report
: Published
in English,
the Sustainability Report
provides disclosures on
environmental, social
and governance topics related to the UBS Group.
It also provides certain disclosures related to diversity,
equity and
inclusion.
Quarterly publications
Quarterly financial report
: This report provides an
update on performance and strategy (where
applicable) for the
respective quarter. It is available in English.
The annual
and quarterly
publications
are available
in .pdf
and online
formats
at
ubs.com/investors
, under
“Financial
information”.
Starting with
the Annual
Report 2022,
printed copies,
in any
language, of
the aforementioned
annual
publications are no longer provided.
Other information
Website
The “Investor
Relations” website
at
ubs.com/investors
provides the
following information
about UBS:
results-related
news
releases;
financial
information,
including
results-related
filings
with
the
US
Securities
and
Exchange
Commission (the SEC);
information for shareholders,
including UBS share price
charts, as well as
data and dividend
information, and
for bondholders;
the corporate
calendar; and
presentations by
management for
investors and
financial analysts. Information is available
online in English, with some information
also available in German.
Results presentations
Quarterly
results
presentations
are
webcast
live.
Recordings
of
most
presentations
can
be
downloaded
from
ubs.com/presentations
.
Messaging service
alerts
to
news
about
UBS
can
be
subscribed
for
under
“UBS
News
Alert”
at
ubs.com/global/en/investor-
relations/contact/investor-services.html
. Messages are sent in English, German, French or Italian, with an option to
select theme preferences for such alerts.
Form 20-F and other submissions to the US
Securities and Exchange Commission
UBS files periodic
reports with
and submits
other information
to the
SEC. Principal
among these
filings is the
annual
report on Form 20-F,
filed pursuant to
the US Securities
Exchange Act of 1934.
The filing of
Form 20-F is structured
as a wraparound document. Most sections of the filing can be
satisfied by referring to the UBS Group AG Annual
Report. However, there is
a small amount
of additional information in
Form 20-F that is
not presented elsewhere
and is particularly targeted at readers in the US. Readers are encouraged to refer to this additional disclosure. Any
document that filed
with the SEC
is available on
the SEC’s website:
sec.gov
. Refer to
ubs.com/investors
for more
information.
UBS Group third quarter 2024 report |
Appendix
104
Cautionary statement
regarding forward-looking statements
|
This report contains
statements that
constitute “forward-looking
statements”,
including but
not limited to management’s
outlook for UBS’s financial performance,
statements relating to the
anticipated effect of transactions
and strategic initiatives on
UBS’s
business and
future
development and
goals
or
intentions to
achieve climate,
sustainability and
other social
objectives. While
these
forward-looking
statements represent
UBS’s judgments,
expectations and
objectives concerning the
matters described,
a number
of risks,
uncertainties and
other important
factors could cause actual
developments and results to
differ materially from UBS’s
expectations. In particular, the global economy
may be negatively affected
by
shifting political circumstances, including as a result of elections, increased tension
between world powers, growing conflicts in the Middle East, as well
as the
continuing Russia–Ukraine war.
In addition,
the ongoing
conflicts may
continue to
cause significant
population displacement, and
lead to
shortages of
vital
commodities, including energy shortages and food
insecurity outside the areas
immediately involved in armed conflict. Governmental responses
to the armed
conflicts, including, with respect to the Russia–Ukraine war, coordinated successive sets of sanctions on Russia and Belarus, and Russian and Belarusian entities
and nationals, and the uncertainty as to whether the ongoing conflicts will further widen and intensify, may continue to have significant adverse effects on the
market and macroeconomic conditions,
including in ways that
cannot be anticipated.
UBS’s acquisition of the
Credit Suisse Group
has materially changed its
outlook and strategic
direction and introduced
new operational challenges.
The integration of
the Credit Suisse
entities into the
UBS structure is expected
to take
between three
and five
years and
presents significant
risks, including
the risks
that UBS
Group AG
may be
unable to
achieve the
cost reductions
and other
benefits contemplated by the transaction. This creates
significantly greater uncertainty about forward-looking statements. Other
factors that may affect UBS’s
performance and ability to
achieve its plans, outlook
and other objectives also
include, but are
not limited to: (i) the
degree to which
UBS is successful in
the
execution of its strategic
plans, including its
cost reduction and efficiency
initiatives and its ability
to manage its levels
of risk-weighted assets
(RWA) and leverage
ratio denominator (LRD),
liquidity coverage ratio
and other financial
resources, including changes
in RWA assets and
liabilities arising from
higher market volatility
and the size of the combined Group; (ii) the degree to which
UBS is successful in implementing changes to its businesses to meet changing market, regulatory
and other
conditions, including as
a result
of the
acquisition of
the Credit
Suisse Group;
(iii) increased inflation
and interest
rate volatility
in major
markets;
(iv) developments in the macroeconomic climate
and in the markets in which UBS
operates or to which it is exposed, including
movements in securities prices or
liquidity,
credit spreads,
currency exchange
rates, deterioration
or slow
recovery in
residential and
commercial real
estate markets,
the effects
of economic
conditions, including
elevated inflationary
pressures, market
developments, increasing
geopolitical tensions,
and changes
to national
trade policies
on the
financial
position or creditworthiness of UBS’s
clients and counterparties, as well as on client sentiment and levels of activity; (v) changes in the availability of capital and
funding, including any adverse changes in UBS’s
credit spreads and credit
ratings of UBS, Credit Suisse,
sovereign issuers, structured credit
products or credit-
related exposures, as well as availability and cost of funding to meet requirements for debt eligible for total loss-absorbing capacity (TLAC), in particular in light
of the acquisition of
the Credit Suisse Group;
(vi) changes in central bank policies
or the implementation of financial legislation and
regulation in Switzerland,
the US, the UK, the EU and other financial centers that have imposed, or resulted in, or may do so in the future, more stringent or entity-specific capital, TLAC,
leverage
ratio,
net stable
funding ratio,
liquidity and
funding requirements,
heightened operational
resilience
requirements,
incremental tax
requirements,
additional levies, limitations on
permitted activities, constraints
on remuneration, constraints on
transfers of capital and liquidity
and sharing of operational costs
across the Group or other measures, and the effect these
will or would have on UBS’s business
activities; (vii) UBS’s ability to successfully
implement resolvability
and related regulatory requirements
and the potential need to
make further changes to the
legal structure or booking model
of UBS in response
to legal and
regulatory requirements and any additional requirements due to its acquisition
of the Credit Suisse Group, or other developments; (viii) UBS’s
ability to maintain
and improve its
systems and controls
for complying
with sanctions in
a timely manner
and for the
detection and prevention
of money laundering
to meet evolving
regulatory
requirements
and
expectations,
in
particular
in
current
geopolitical
turmoil;
(ix) the
uncertainty
arising
from
domestic
stresses
in
certain
major
economies; (x) changes
in UBS’s
competitive position, including
whether differences
in regulatory
capital and
other requirements
among the
major financial
centers adversely affect UBS’s ability to compete in certain lines of business;
(xi) changes in the standards of conduct applicable to its businesses that
may result
from new regulations or new enforcement of existing standards, including measures to impose new
and enhanced duties when interacting with customers
and
in the
execution and
handling of
customer transactions;
(xii) the liability
to which
UBS may
be exposed,
or possible
constraints or
sanctions that
regulatory
authorities might
impose on
UBS, due
to litigation,
contractual claims
and regulatory
investigations, including the
potential for
disqualification from
certain
businesses, potentially large fines or monetary penalties, or the loss of licenses or privileges
as a result of regulatory or other governmental sanctions, as well as
the effect that litigation, regulatory and similar matters have on the operational risk component of its RWA, including as a result of its acquisition of the Credit
Suisse Group,
as well
as the
amount of
capital available for
return to
shareholders; (xiii) the effects
on UBS’s
business, in particular
cross-border banking, of
sanctions, tax or regulatory
developments and of
possible changes in
UBS’s policies and
practices; (xiv) UBS’s ability
to retain and attract
the employees necessary
to
generate revenues
and to
manage, support
and control
its businesses,
which may
be affected
by competitive
factors; (xv) changes
in accounting
or tax
standards or policies, and determinations or interpretations affecting
the recognition of gain or loss,
the valuation of goodwill, the recognition of deferred
tax
assets and
other matters;
(xvi) UBS’s ability
to implement
new technologies and
business methods,
including digital services
and technologies, and
ability to
successfully compete with both
existing and new financial
service providers, some of
which may not
be regulated to
the same extent; (xvii) limitations
on the
effectiveness of UBS’s internal processes for risk
management, risk control, measurement and modeling,
and of financial models generally; (xviii) the occurrence
of operational failures,
such as fraud,
misconduct, unauthorized trading, financial
crime, cyberattacks, data
leakage and systems
failures, the risk
of which is
increased with
cyberattack threats
from both
nation states
and non-nation-state
actors targeting
financial institutions;
(xix) restrictions on
the ability
of UBS
Group AG and UBS AG to make payments
or distributions, including due
to restrictions on the ability of
its subsidiaries to make loans
or distributions, directly or
indirectly, or,
in the case of financial difficulties, due
to the exercise by FINMA or
the regulators of UBS’s operations in
other countries of their broad statutory
powers in relation to protective
measures, restructuring and liquidation proceedings; (xx) the degree
to which changes in regulation,
capital or legal structure,
financial results or
other factors may affect
UBS’s ability to maintain
its stated capital
return objective; (xxi) uncertainty over the
scope of actions
that may be
required by
UBS, governments
and others
for UBS
to achieve
goals relating
to climate,
environmental and
social matters,
as well
as the
evolving nature
of
underlying science and
industry and the
possibility of conflict
between different governmental
standards and regulatory
regimes; (xxii) the ability
of UBS to access
capital markets;
(xxiii) the ability
of UBS to
successfully recover from
a disaster or
other business
continuity problem
due to a
hurricane, flood,
earthquake, terrorist
attack, war, conflict (e.g. the Russia–Ukraine
war), pandemic, security
breach, cyberattack, power
loss, telecommunications
failure or other natural
or man-made
event, including the
ability to
function remotely during
long-term disruptions such
as the
COVID-19 (coronavirus) pandemic; (xxiv)
the level of
success in the
absorption of Credit Suisse, in
the integration of the two
groups and their businesses,
and in the execution of
the planned strategy regarding cost
reduction and
divestment of
any non-core
assets, the
existing assets
and liabilities
of Credit
Suisse, the
level of
resulting impairments
and write-downs,
the effect
of the
consummation of the integration on the
operational results, share price and
credit rating of UBS –
delays, difficulties, or failure in
closing the transaction may
cause market disruption and challenges for UBS to maintain business, contractual and operational relationships; and (xxv) the effect that these or other factors
or unanticipated events,
including media
reports and speculations,
may have on its
reputation and the
additional consequences
that this may
have on its
business
and performance. The sequence in which the factors above are presented is not
indicative of their likelihood of occurrence or the potential magnitude of their
consequences. UBS’s business and financial performance could be affected by other factors identified in
its past and future filings and reports,
including those
filed with the US Securities and Exchange Commission
(the SEC). More detailed information about those factors is set forth
in documents furnished by UBS and
filings made by UBS with the SEC, including the UBS Group
AG and UBS AG Annual Reports on Form 20- F for the year ended
31 December 2023. UBS is not
under any obligation to
(and expressly disclaims any obligation
to) update or alter its
forward-looking statements, whether
as a result of new information,
future
events, or otherwise.
Rounding |
Numbers presented throughout this report may not add up
precisely to the totals provided in the tables and text.
Percentages and percent changes
disclosed in text and tables are
calculated on the basis of unrounded
figures. Absolute changes between reporting periods disclosed in
the text, which can be
derived from numbers presented in related tables, are calculated on
a rounded basis.
Tables |
Within tables, blank fields generally indicate non-applicability or that presentation of any content would not be meaningful, or that information is not
available as of the relevant date or for the relevant period. Zero values generally indicate that the respective figure is zero on an actual or rounded basis.
Values
that are zero on a rounded basis can be either negative
or positive on an actual basis.
Websites |
In this report, any
website addresses are provided
solely for information
and are not intended
to be active links.
UBS is not incorporating
the contents
of any such websites into this report.
UBS Group AG
PO Box
CH-8098 Zurich
ubs.com
This
Form
6-K
is
hereby
incorporated
by
reference
into
(1)
each
of
the
registration
statements
on
Form
F-3
(Registration Numbers
333-263376 and
333-278934), and
on Form
S-8 (Registration
Numbers 333-200634;
333-
200635;
333-200641;
333-200665;
333-215254;
333-215255;
333-228653;
333-230312;
333-249143
and
333-
272975), and
into each
prospectus outstanding
under any
of the
foregoing registration
statements, (2)
any outstanding
offering circular or similar document issued
or authorized by UBS AG that incorporates by
reference any Forms 6-
K of UBS AG that are
incorporated into its registration
statements filed with the SEC,
and (3) the base prospectus of
Corporate Asset Backed
Corporation (“CABCO”)
dated June 23,
2004 (Registration
Number 333-111572), the Form
8-K
of
CABCO
filed
and
dated
June
23,
2004
(SEC
File
Number
001-13444),
and
the
Prospectus
Supplements
relating to
the CABCO
Series 2004-101
Trust
dated May
10, 2004
and May
17, 2004
(Registration Number
033-
91744 and 033-91744-05).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this
report to be signed on their behalf by the undersigned, thereunto duly
authorized.
UBS Group AG
By:
/s/
Sergio Ermotti
___
Name:
Sergio Ermotti
Title:
Group Chief Executive Officer
By:
/s/ Todd Tuckner
_
Name:
Todd Tuckner
Title:
Group Chief Financial Officer
By:
/s/ Steffen Henrich
____________
Name:
Steffen Henrich
Title:
Group Controller
UBS AG
By:
/s/
Sergio Ermotti
_
Name:
Sergio Ermotti
Title:
President of the Executive Board
By:
/s/ Todd Tuckner
_
Name:
Todd Tuckner
Title:
Chief Financial Officer
By:
/s/ Steffen Henrich
_____________
Name:
Steffen Henrich
Title:
Controller
Date:
October 30, 2024