AMUB 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: November 8, 2024
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 registrant files 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 AG, which
appears immediately following this
page.
UBS AG
Third quarter
2024 report
Corporate calendar UBS AG
Information about future publication dates is generally
available at
ubs.com/global/en/investor-relations/events/calendar.html
Contacts
General inquiries
ubs.com/contact
Zurich +41-44-234 1111
London +44-207-567 8000
New York +1-212-821 3000
Hong Kong +852-2971 8888
Singapore +65-6495 8000
Investor Relations
UBS’s Investor Relations team
manages relationships with
institutional investors, research
analysts and credit rating agencies.
ubs.com/investors
Zurich +41-44-234 4100
New York +1-212-882 5734
Media Relations
UBS’s Media Relations team manages
relationships with global media and
journalists.
ubs.com/media
Zurich +41-44-234 8500
London +44-20-7567 4714
New York +1-212-882 5858
Hong Kong +852-2971 8200
Imprint
Publisher: UBS 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 AG
4
Recent developments
6
UBS AG consolidated performance
2.
Business divisions and
Group Items
14
Global Wealth Management
16
Personal & Corporate Banking
18
Asset Management
20
Investment Bank
22
Non-core and Legacy
23
Group Items
3.
Risk, capital, liquidity and funding,
and balance sheet
25
Risk management and control
31
Capital management
38
Liquidity and funding management
39
Balance sheet and off-balance sheet
4.
Consolidated
financial statements
43
UBS AG interim consolidated financial
statements (unaudited)
82
Comparison between UBS AG
consolidated and UBS Group AG
consolidated
Appendix
84
Alternative performance measures
88
Abbreviations frequently used in
our financial reports
90
Information sources
91
Cautionary statement
1
UBS AG third quarter 2024 report
2
Terms used in this report, unless the context requires otherwise
“UBS”, “UBS Group”, “UBS Group
AG consolidated”, “Group” and
“the Group”
UBS Group AG and its consolidated subsidiaries
“UBS AG”, “UBS
AG consolidated”, “we”, “us” and
“our”
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. A number of APMs are reported in UBS’s 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
under “Alternative performance
measures”
in the
appendix to
this report.
These APMs
may qualify
as non-GAAP
measures as
defined by
US Securities
and
Exchange Commission (SEC) regulations.
Comparability
Comparative information in this report is
presented as follows.
Profit and
loss information
for the third
quarter of
2024 is based
entirely on
consolidated data
following the
merger
of UBS AG and
Credit Suisse AG. Profit
and loss information for the
second quarter of 2024 includes
one month
(June 2024)
of post-merger consolidated
data and
two months of
pre-merger UBS AG
data only
(April and
May
2024). Profit and
loss information for
the fourth quarter
of 2023 and
the third quarter
of 2023 includes
pre-merger
UBS
AG
data only.
Year-to-date information
for
2024 includes
four
months (June
to
September 2024)
of
post-
merger consolidated data and five
months of pre-merger UBS AG
data only (January to May
2024). Comparative
year-to-date information for 2023 includes pre-merger
UBS AG data only.
Balance
sheet
information
as
at
30 September
2024
and
30 June
2024
includes
post-merger
consolidated
information. Balance sheet dates prior to 30 June
2024 reflect pre-merger UBS AG information
only.
Comparison between UBS AG consolidated
and UBS Group AG consolidated
A
comparison
of
selected
financial
and
capital
information
of
UBS
AG
consolidated
and
of
UBS
Group
AG
consolidated is provided after the Notes to the UBS AG
interim consolidated financial statements.
UBS AG third quarter 2024 report
3
UBS AG consolidated key figures
UBS AG consolidated 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
30.9.23
30.9.24
30.9.23
Results
Total revenues
11,997
9,900
8,014
8,348
31,006
25,661
Credit loss expense / (release)
167
84
62
27
303
80
Operating expenses
10,640
10,012
7,618
7,047
28,329
21,393
Operating profit / (loss) before tax
1,191
(196)
333
1,275
2,374
4,188
Net profit / (loss) attributable to shareholders
996
(264)
235
932
1,738
3,055
Profitability and growth
1
Return on equity (%)
4.2
(1.4)
1.7
7.0
3.1
7.4
Return on tangible equity (%)
4.5
(1.6)
2.0
8.0
3.4
8.3
Return on common equity tier 1 capital (%)
4.8
(1.7)
2.1
8.6
3.6
9.5
Return on leverage ratio denominator, gross (%)
3.0
3.0
3.0
3.2
3.1
3.3
Cost / income ratio (%)
88.7
101.1
95.1
84.4
91.4
83.4
Net profit growth (%)
6.9
n.m.
(84.5)
(41.7)
(43.1)
(45.1)
Resources
Total assets
1,626,893
1,564,664
1,156,016
1,097,536
1,626,893
1,097,536
Equity attributable to shareholders
96,943
93,392
55,234
52,836
96,943
52,836
Common equity tier 1 capital
2
84,423
83,001
44,130
43,378
84,423
43,378
Risk-weighted assets
2
515,520
509,953
333,979
321,134
515,520
321,134
Common equity tier 1 capital ratio (%)
2
16.4
16.3
13.2
13.5
16.4
13.5
Going concern capital ratio (%)
2
19.5
19.2
17.0
17.1
19.5
17.1
Total loss-absorbing capacity ratio (%)
2
38.2
38.6
33.3
33.8
38.2
33.8
Leverage ratio denominator
2
1,611,151
1,564,001
1,104,408
1,042,106
1,611,151
1,042,106
Common equity tier 1 leverage ratio (%)
2
5.2
5.3
4.0
4.2
5.2
4.2
Liquidity coverage ratio (%)
3
196.3
194.1
189.7
176.6
196.3
176.6
Net stable funding ratio (%)
126.8
127.7
119.6
121.7
126.8
121.7
Other
Invested assets (USD bn)
1,4
6,199
5,871
4,505
4,227
6,199
4,227
Personnel (full-time equivalents)
69,185
70,750
47,590
48,015
69,185
48,015
1 Refer to “Alternative
performance measures” in the appendix to
this report for the definition and
calculation method.
2 Based on the Swiss systemically
relevant bank framework as of
1 January 2020. Refer to
the “Capital management” section of this report for more information.
3 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, of which 40 data points were
before the merger of UBS AG and Credit Suisse
AG (i.e. from 2 April 2024 until
30 May 2024), and 21 data points
were after the merger (i.e.
from 31 May 2024
until 30 June 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.
4 Consists of invested assets for Global Wealth Management, Asset Management (including invested assets from
associates) and Personal & Corporate Banking. Refer to
“Note 31 Invested assets and net new money” in the “Consolidated financial statements” section of the UBS AG Annual Report 2023, available under “Annual reporting” at ubs.com/investors, for more information.
UBS AG third quarter 2024 report |
UBS AG | Recent developments
4
UBS AG
Management report
Recent developments
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.
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 AG
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 UBS AG’s
risk-weighted
assets
(RWA)
by
around
USD 1.4bn
and
UBS AG’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, the Swiss
Financial Market Supervisory
Authority (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.
UBS AG third quarter 2024 report |
UBS AG | Recent developments
5
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.
We expect that the adoption of the final
Basel III standards in January 2025 will have
a similar impact on UBS AG
consolidated as
on UBS Group,
leading to low
single-digit percentage
increases in
UBS AG’s consolidated
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.
UBS AG third quarter 2024 report |
UBS AG | UBS AG consolidated performance
6
UBS AG consolidated performance
Income statement
For the quarter ended
% change from
Year-to-date
USD m
30.9.24
30.6.24
30.9.23
2Q24
3Q23
30.9.24
30.9.23
Net interest income
1,560
722
984
116
59
3,088
3,678
Other net income from financial instruments measured
at fair value through profit or loss
3,592
3,271
2,467
10
46
9,809
7,476
Net fee and commission income
6,334
5,601
4,666
13
36
17,084
13,883
Other income
510
306
231
67
120
1,025
624
Total revenues
11,997
9,900
8,348
21
44
31,006
25,661
Credit loss expense / (release)
167
84
27
98
528
303
80
Personnel expenses
5,788
4,797
3,951
21
46
14,746
11,697
General and administrative expenses
4,014
4,584
2,585
(12)
55
11,584
8,011
Depreciation, amortization and impairment of non-financial
assets
838
631
510
33
64
2,000
1,686
Operating expenses
10,640
10,012
7,047
6
51
28,329
21,393
Operating profit / (loss) before tax
1,191
(196)
1,275
(7)
2,374
4,188
Tax expense / (benefit)
194
28
339
601
(43)
587
1,115
Net profit / (loss)
997
(224)
936
6
1,787
3,072
Net profit / (loss) attributable to non-controlling interests
1
40
5
(98)
(85)
49
17
Net profit / (loss) attributable to shareholders
996
(264)
932
7
1,738
3,055
Comprehensive income
Total comprehensive income
3,623
271
(93)
3,724
2,251
Total comprehensive income attributable to non-controlling interests
21
20
(6)
3
37
8
Total comprehensive income attributable to shareholders
3,602
251
(86)
3,687
2,243
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
30.9.24
30.9.23
Global Wealth Management
416
378
133
1,022
156
Personal & Corporate Banking
171
113
50
368
58
Asset Management
86
69
19
189
21
Investment Bank
154
161
102
430
130
Non-core and Legacy
268
187
115
515
115
Group Items
21
9
47
30
288
Total integration-related expenses
1,116
916
467
2,555
768
of which: total revenues
35
10
0
45
0
of which: operating expenses
1,081
906
467
2,510
768
3Q24 compared with 3Q23
The legal merger
of UBS AG
and Credit Suisse
AG on 31 May
2024 has had
a significant impact
on the results
from
June 2024 onward. This discussion and analysis of results compares the
third quarter of 2024, which covers three
full months of post-merger results, with the third
quarter of 2023, which included only pre-merger results. This
is
a material driver in many of the increases across
both revenues and operating expenses.
›
Refer to “Note 2 Accounting for the merger of UBS AG and Credit Suisse AG” in the “Consolidated financial
statements” section of this report for more information about the accounting for the merger of UBS AG and Credit
Suisse AG
Results: 3Q24 vs 3Q23
Operating profit
before
tax decreased
by USD 84m,
or 7%,
to USD 1,191m,
reflecting an
increase in
operating
expenses,
partly
offset
by
higher
total
revenues.
Operating
expenses
increased
by
USD 3,593m,
or
51%,
to
USD 10,640m, largely due
to an increase of USD 1,837m
in personnel expenses
and an increase of USD 1,429m
in
general and administrative expenses.
Depreciation, amortization and impairment of non-financial assets increased
by USD 328m. Total
revenues increased by USD 3,649m, or 44%, to USD 11,997m, largely due to a USD 1,702m
increase in combined net interest income
and other net income from financial instruments measured
at fair value
through profit
or loss
and due
to a
USD 1,668m increase
in net
fee and
commission
income. Other
income increased
by USD 279m. Net credit loss expenses were USD 167m, compared with
USD 27m in the third quarter of 2023.
UBS AG third quarter 2024 report |
UBS AG | UBS AG consolidated performance
7
Integration-related
expenses
in
general
and
administrative
expenses,
primarily
included
shared
services
costs
charged
from
other
companies
in
the
UBS
Group
reporting
scope,
consulting
fees
and
outsourcing
costs.
Integration-related
personnel
expenses
were
mainly
due
to
salaries
and
variable
compensation
related
to
the
integration
of
Credit
Suisse.
In
addition,
there
was
accelerated
depreciation
of
properties
and
leasehold
improvements in depreciation, amortization and
impairment of non-financial assets.
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 1,702m to USD 5,153m,
mainly driven by
increases in Global Wealth Management,
Personal & Corporate Banking and the Investment
Bank.
Global Wealth Management increased by USD 527m
to USD 2,089m, mainly driven by the consolidation
of Credit
Suisse AG net interest income. The remaining variance was due to 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 variance was also due
to lower loan revenues, reflecting lower
average volumes.
Personal & Corporate Banking increased by USD 543m
to USD 1,449m, largely due to the consolidation of Credit
Suisse AG net
interest income,
with the
remaining variance
mainly attributable
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.
The
Investment
Bank
increased
by
USD 369m
to
USD 1,513m,
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.
In addition, there
was an
increase
in
Execution
Services
revenues,
mainly
due
to
higher
Cash
Equities
revenues
across
all
regions.
These
increases were partly offset by lower revenues
in Financing, particularly in the Capital Markets
Financing business.
Non-core
and
Legacy increased
by
USD 31m
to
USD 63m, mainly
due
to
the
consolidation of
Credit
Suisse AG
revenues. Total
revenues reflected
net gains
from position
exits, along
with net
interest income
from securitized
products and credit products.
Group Items was USD 14m compared with
negative USD 178m. Higher gains during the
third quarter of 2024 in
Group hedging and own debt,
including hedge accounting ineffectiveness, were driven
by mark-to-market effects
on portfolio-level economic hedges, mainly due
to decreasing interest rates.
›
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
2Q24
3Q23
30.9.24
30.9.23
1
Net interest income from financial instruments measured
at amortized cost and fair value
through other comprehensive income
(485)
(188)
617
158
(486)
2,454
Net interest income from financial instruments measured
at fair value through profit or
loss and other
2,045
910
368
125
456
3,573
1,224
Other net income from financial instruments measured
at fair value through profit or loss
3,592
3,271
2,467
10
46
9,809
7,476
Total
5,153
3,993
3,451
29
49
12,896
11,154
Global Wealth Management
2,089
1,640
1,562
27
34
5,287
5,075
of which: net interest income
1,662
1,317
1,269
26
31
4,183
4,192
of which: transaction-based income from foreign exchange and other
intermediary
activity
2
427
323
294
32
45
1,104
883
Personal & Corporate Banking
1,449
1,023
906
42
60
3,376
2,685
of which: net interest income
1,233
863
775
43
59
2,868
2,298
of which: transaction-based income from foreign exchange and other
intermediary
activity
2
216
161
130
34
65
509
387
Asset Management
24
(11)
(14)
1
(28)
Investment Bank
3
1,513
1,507
1,144
0
32
4,577
4,033
Non-core and Legacy
63
121
32
(48)
99
203
76
Group Items
14
(288)
(178)
(548)
(688)
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 for more
information. Comparatives
may additionally
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 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.
3 Investment Bank information is provided
at the business-line level rather than by financial statement reporting line, in order to reflect the underlying business
activities, which is consistent with the structure
of the management discussion and analysis in the “Investment Bank” section of this report.
UBS AG third quarter 2024 report |
UBS AG | UBS AG consolidated performance
8
Net fee and commission income
Net fee and commission income increased by USD 1,668m
to USD 6,334m.
Fees
for
portfolio
management
and
related
services
and
investment
fund
fees
increased
by
USD 788m
and
USD 359m, respectively,
predominantly in
Global Wealth
Management and
Asset Management.
These increases
were largely attributable
to the consolidation
of Credit
Suisse AG revenues,
as well
as positive market
performance.
Net brokerage
fees increased by
USD 304m to USD 1,042m,
predominantly due to
higher revenues
in Execution
Services
in
the
Investment
Bank,
mainly
due
to
increases
in
Cash
Equities
across
all
regions,
as
well
as
higher
revenues in
Global Wealth
Management,
which were
mainly due to
the consolidation
of Credit
Suisse revenues
and
higher levels of client activity, particularly in
the Americas, Asia Pacific and Switzerland
regions.
›
Refer to “Note 5 Net fee and commission income” in the “Consolidated financial statements” section of this report
for more information
Other income
Other
income
was
USD 510m,
compared
with
USD 231m
in
the
third
quarter
of
2023,
which
included
the
consolidation of Credit Suisse AG income. The increase was largely due to a USD 119m gain related to the sale of
our investment in an associate, recognized within the Investment Bank and in Non-core
and Legacy,
as well as an
USD 84m gain
in Asset
Management from
the closing
of the
remaining portion
of the
sale of
our Brazilian
real
estate fund management business.
›
Refer to “Note 6 Other income” in the “Consolidated financial statements” section of this report for more
information
Credit loss expense / release: 3Q24 vs
3Q23
Total
net
credit loss
expenses in
the
third quarter
of 2024
were USD 167m,
reflecting net
releases of
USD 15m
related
to
performing
positions
and
net
expenses
of
USD 182m
on
credit-impaired
positions.
Net
credit
loss
expenses were USD 27m
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
Total
For the quarter ended 30.9.24
Global Wealth Management
(11)
14
3
Personal & Corporate Banking
(10)
94
84
Asset Management
0
0
0
Investment Bank
9
(4)
4
Non-core and Legacy
(2)
77
76
Group Items
0
0
0
Total
(15)
182
167
For the quarter ended 30.6.24
Global Wealth Management
(14)
12
(2)
Personal & Corporate Banking
(15)
125
110
Asset Management
0
0
0
Investment Bank
1
(2)
(1)
Non-core and Legacy
(1)
(22)
(23)
Group Items
0
0
0
Total
(29)
113
84
For the quarter ended 30.9.23
Global Wealth Management
(7)
15
8
Personal & Corporate Banking
16
(15)
1
Asset Management
0
0
0
Investment Bank
10
7
17
Non-core and Legacy
0
(1)
(1)
Group Items
1
0
1
Total
20
6
27
UBS AG third quarter 2024 report |
UBS AG | UBS AG consolidated performance
9
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
2Q24
3Q23
30.9.24
30.9.23
Personnel expenses
5,788
4,797
3,951
21
46
14,746
11,697
of which: salaries and variable compensation
4,999
4,205
3,431
19
46
12,824
10,151
of which: variable compensation – financial advisors
1
1,335
1,291
1,150
3
16
3,893
3,372
General and administrative expenses
4,014
4,584
2,585
(12)
55
11,584
8,011
of which: net expenses for litigation, regulatory and similar
matters
(47)
1,161
8
1,121
784
Depreciation, amortization and impairment of non-financial
assets
838
631
510
33
64
2,000
1,686
Total operating expenses
10,640
10,012
7,047
6
51
28,329
21,393
1 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
increased
by
USD 1,837m
to
USD 5,788m,
which
included
the
consolidation
of
Credit
Suisse AG
expenses.
Salaries and
variable
compensation increased
by
USD 1,568m,
due
to
the
aforementioned
consolidation
effect,
as
well
as
annual
salary
increases
and
unfavorable
foreign
currency
exchange
impacts.
In
addition, financial advisor compensation
increased, reflecting 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 increased
by USD 1,429m
to USD 4,014m,
largely due
to a
USD 767m increase
in shared services costs charged
by other subsidiaries of
UBS Group AG, which included
the effect of consolidating
Credit Suisse
AG expenses.
Consulting, legal
and audit
fees increased
by USD
153m
and outsourcing
costs increased
by USD 138m. Excluding the aforementioned effects, the remaining increase is largely due to the consolidation of
Credit Suisse AG expenses.
›
Refer to “Note 8 General and administrative expenses” in the “Consolidated financial statements” section of this
report for more information
›
Refer to “Note 16 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 AG Annual Report 2023,
available under “Annual reporting” at
ubs.com/investors
, for more information about litigation, regulatory and
similar matters on a UBS AG consolidated basis
Depreciation, amortization and impairment of
non-financial assets
Depreciation, amortization and
impairment of
non-financial assets increased
by USD 328m
to USD 838m, which
included
the
consolidation
of
Credit
Suisse
AG
expenses.
Excluding
the
aforementioned
effect,
there
was
a
USD 107m
increase
in
depreciation
of
internally
generated
capitalized
software,
reflecting
a
higher
level
of
capitalized cost,
as well as a USD 47m increase in depreciation of both owned and own use leased properties due
to an increase in accelerated depreciation related to decisions to vacate
properties.
Tax: 3Q24 vs 3Q23
UBS AG had a
net income tax
expense of USD 194m
in the third
quarter of 2024,
compared with USD 339m
in the
prior-year quarter.
The net current
tax expense
was USD 343m, compared
with USD 484m, and
primarily related to
the taxable profits
of UBS Switzerland AG and other entities.
There
was
a
net
deferred
tax
benefit
of
USD 150m,
compared
with
USD 145m
in
the
prior-year
quarter.
This
included benefits
of USD 218m
in respect
of increases
in recognized
deferred tax
assets (DTAs),
which included
USD 41m reflecting updated
expectations of
future profits that
are available
to utilize
tax losses
carried forward,
USD 120m in respect of
an increase in
tax loss DTAs
and USD 57m in
respect of an increase
in tax credits
carried
forward in relation to US corporate alternative minimum
tax. These benefits were partly offset by a net expense
of
USD 68m that primarily related
to the amortization of
DTAs previously recognized in
relation to tax losses
carried
forward and deductible temporary differences.
UBS AG third quarter 2024 report |
UBS AG | UBS AG consolidated performance
10
Total comprehensive income attributable
to shareholders
In the third quarter of 2024, total comprehensive income
attributable to shareholders was USD 3,602m, reflecting
a net profit of USD 996m and other comprehensive income
(OCI), net of tax, of USD 2,606m.
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 1,461m,
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 119m, primarily reflecting
negative pre-tax OCI in our
non-Swiss plans
of
USD 102m,
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 20 Fair value measurement” in the “Consolidated financial statements” section of the UBS AG
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 26 Post-employment benefit plans” in the “Consolidated financial statements” section of the
UBS AG 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
Key figures and personnel
Below is
an overview
of selected
key figures
of UBS AG
consolidated. 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
88.7%, compared
with 84.4%,
mainly reflecting
an increase
in operating
expenses,
partly offset by an increase in total revenues.
Personnel: 3Q24 vs 2Q24
The number
of internal
personnel employed
as of
30 September 2024
was 69,185
(full-time equivalents),
a net
decrease of 1,565
compared with 30 June 2024.
UBS AG third quarter 2024 report |
UBS AG | UBS AG consolidated performance
11
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
30.9.24
30.9.23
Net profit
Net profit attributable to shareholders
996
(264)
932
1,738
3,055
Equity
Equity attributable to shareholders
96,943
93,392
52,836
96,943
52,836
less: goodwill and intangible assets
6,739
7,023
6,240
6,739
6,240
Tangible equity attributable to shareholders
90,204
86,369
46,596
90,204
46,596
less: other CET1 adjustments
5,781
3,368
3,218
5,781
3,218
CET1 capital
84,423
83,001
43,378
84,423
43,378
Returns
Return on equity (%)
4.2
(1.4)
7.0
3.1
7.4
Return on tangible equity (%)
4.5
(1.6)
8.0
3.4
8.3
Return on CET1 capital (%)
4.8
(1.7)
8.6
3.6
9.5
Common equity tier 1 capital: 3Q24 vs 2Q24
During the third quarter of 2024, CET1 capital increased by USD 1.4bn to USD 84.4bn, primarily due to operating
profit before tax of
USD 1.2bn, foreign currency translation
gains of USD 1.5bn
and an increase
in eligible deferred
tax assets recognized for temporary differences of USD 0.3bn, partly
offset by dividend accruals
of USD 1.0bn and
current tax expenses
of USD 0.3bn.
Return on common equity tier 1 capital: 3Q24
vs 3Q23
The annualized
return on
CET1 capital
was 4.8%,
compared with
8.6%, driven
by an
increase in
average CET1
capital, partly offset by higher net profit attributable to
shareholders.
Risk-weighted assets: 3Q24 vs 2Q24
During the third quarter of 2024, RWA increased by USD 5.6bn
to USD 515.5bn, driven by a USD 10.8bn
increase
in currency effects, partly offset by
decreases of USD 3.6bn 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
The CET1
capital ratio
increased to
16.4% from
16.3%, reflecting
the aforementioned
increase in
CET1 capital,
partly offset by the aforementioned increase in RWA.
Leverage ratio denominator: 3Q24 vs 2Q24
During the third quarter of 2024, the
LRD increased by USD 47.2bn to USD 1,611.2bn, driven by currency effects
of USD 54.2bn, partly offset by asset size and other
movements of USD 7.1bn.
Common equity tier 1 leverage ratio: 3Q24
vs 2Q24
The CET1 leverage ratio decreased to 5.2%
from 5.3%, reflecting the aforementioned increase
in the LRD, partly
offset by the aforementioned increase in CET1 capital.
Results 9M24 vs 9M23
Operating profit before tax
decreased by USD 1,814m,
or 43%, to USD 2,374m, reflecting
a USD 6,936m
increase
in operating expenses,
which was
partly offset by
a USD 5,345m
increase in total
revenues. Net credit
loss expenses
were USD 303m
compared with net credit loss expenses
of USD 80m
in the first nine months of 2023.
Net fee
and commission
income increased
by USD 3,201m
to USD 17,084m.
Portfolio management
and related
service
fees
and
investment
fund
fees
increased
by
USD 1,458m
and
USD 561m
respectively,
predominantly
in
Global
Wealth
Management
and
Asset
Management,
respectively,
largely
attributable
to
positive
market
performance
and
due
to
the
consolidation
of
Credit
Suisse AG
revenues.
Net
brokerage
fees
increased
by
USD 686m, mainly reflecting higher
levels of client
activity and the
consolidation of Credit
Suisse AG revenues in
Global Wealth Management,
as well as due to increases
in Cash Equities across all regions in Execution Services in
the
Investment
Bank.
M&A
and
corporate
finance
fees
increased
by
USD 265m, mainly
due
to
higher
advisory
revenues in our Global
Banking business within the
Investment Bank.
Underwriting fees increased by
USD 208m,
largely attributable to a USD 158m increase
in debt underwriting revenues, mainly due to
increased deal volumes
in the Global Banking business in the Investment
Bank.
UBS AG third quarter 2024 report |
UBS AG | UBS AG consolidated performance
12
Total combined
net interest
income and
other net
income from
financial instruments
measured at
fair value
through
profit or
loss increased
by USD 1,742m
to USD 12,896m.
Revenues in
Global Wealth
Management increased by
USD 212m, mainly driven by an
increase in transaction-based income mostly due to
higher levels of client activity
and an
increase resulting from
the consolidation of
Credit Suisse AG
revenues. This increase
was partly offset
by
lower deposit
revenues, mainly
as a
result
of lower
margins and
including the
effects of
shifts to
lower-margin
deposit
products,
higher
liquidity
and
funding
costs,
as
well
as
lower
loan
revenues,
reflecting
lower
average
volumes.
Personal
&
Corporate
Banking
increased
by
USD 691m,
largely
due
to
the
consolidation
of
Credit
Suisse AG net interest income. The
Investment Bank increased by
USD 544m, reflecting an increase in
Derivatives
& Solutions
revenues, mainly
due to
increases in
Equity Derivatives
and Foreign
Exchange,
and higher
revenues from
Public
Capital
Markets
in
Global
Banking,
partly
offset
by
lower
Financing
revenues,
particularly
in
the
Capital
Markets Financing business.
Other income
was USD 1,025m,
compared with
USD 624m in
the first
nine months
of 2023,
and included
the
consolidation of Credit Suisse income. This change was mainly due to a USD 119m gain related to
the sale of our
investment in an
associate,
as well as
a USD 113m gain
in Asset Management
from the sale
of our Brazilian
real
estate fund management
business. Other income
also included higher
costs charged to shared
services subsidiaries
of UBS Group AG.
General and
administrative expenses
increased by
USD 3,573m to
USD 11,584m, largely
due
to
a
USD 1,952m
increase in shared services costs charged by other subsidiaries of
the UBS Group. Litigation, regulatory and similar
matters increased by USD 337m, largely
reflecting UBS agreeing in the second
quarter of 2024 to fund an offer
by
the Credit Suisse supply chain finance funds
to redeem all of the outstanding units
of the respective funds, partly
offset
by
a
USD 665m
increase
in
provisions
recognized
in
the
first
half
of
2023
related
to
the
US
residential
mortgage-backed
securities
litigation
matter.
Excluding
the
aforementioned
effect,
general
and
administrative
expenses
increased
due
to
the
inclusion
of
Credit
Suisse AG
expenses
and
higher
expenses
for
consulting,
technology and outsourcing costs.
Personnel
expenses
increased
by
USD 3,049m
to
USD 14,746m,
which
included
the
consolidation
of
Credit
Suisse AG expenses.
Salaries and variable compensation increased by USD 2,673m, including
the aforementioned
consolidation effect,
as well as an increase in financial advisor compensation,
which reflected higher compensable
revenues.
Depreciation, amortization and impairment of
non-financial assets increased by USD 314m to
USD 2,000m, which
included
the
consolidation
of
Credit
Suisse AG
expenses.
Excluding
the
aforementioned
consolidation
effect,
depreciation of internally developed
software increased by
USD 158m, reflecting
a higher level of capitalized
costs,
and depreciation
of owned
and own
use leased
properties increased
by USD
100m. These
increases
were partly
offset by a USD 206m impairment of software projects in progress in the second quarter of 2023 resulting from a
reprioritization of software development activity
following 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
outcome of the US elections create
uncertainties
that are likely to affect investor behavior.
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 AG third quarter 2024 report |
Business divisions and Group Items
13
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.
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.
This discussion and
analysis of the
results of
the business divisions
and Group Items
compares the
results for the
third quarter of 2024, which
are based entirely on
consolidated data following the merger of
UBS AG and Credit
Suisse AG, with those for the third quarter of 2023, which only included
pre-merger UBS AG consolidated results.
It also compares the nine-month period ended 30 September 2024, based on
four months of post-merger results
and five months
of pre-merger
UBS AG consolidated
results only,
with the nine-month
period ended 30 September
2023, which
included
pre-merger UBS AG
consolidated results
only. This
is a
material driver
in many
of the
increases
across both revenues and operating expenses.
UBS AG third quarter 2024 report |
Business divisions and Group Items |
Global Wealth Management
14
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
1,662
1,317
1,269
26
31
4,183
4,192
Recurring net fee income
3
3,235
2,893
2,601
12
24
8,821
7,590
Transaction-based income
3
1,143
960
765
19
49
3,088
2,356
Other income
16
22
15
(29)
5
74
29
Total revenues
6,056
5,192
4,650
17
30
16,166
14,167
Credit loss expense / (release)
3
(2)
8
(62)
10
29
Operating expenses
5,131
4,473
3,668
15
40
13,579
10,872
Business division operating profit / (loss) before tax
922
720
974
28
(5)
2,577
3,267
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
3
(5.4)
(34.3)
(32.1)
(21.1)
(15.1)
Cost / income ratio (%)
3
84.7
86.2
78.9
84.0
76.7
Financial advisor compensation
4
1,335
1,291
1,150
3
16
3,892
3,372
Invested assets (USD bn)
3
4,259
4,038
2,986
5
43
4,259
2,986
Loans, gross (USD bn)
5
313.5
307.4
215.4
2
46
313.5
215.4
Customer deposits (USD bn)
5
482.2
477.0
339.3
1
42
482.2
339.3
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
3,6
0.4
0.4
0.3
0.4
0.3
Advisors (full-time equivalents)
9,897
10,068
8,916
(2)
11
9,897
8,916
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 Group Treasury allocations. Refer to “Note 3 Segment reporting” in the “Consolidated financial statements” section of this report for more
information.
3 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method.
4 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.
5 Loans
and Customer deposits in this table include customer brokerage receivables
and payables, respectively,
which are presented in a separate reporting line on the balance sheet.
6 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
decreased by USD 52m,
or 5%, to
USD 922m, mainly driven
by higher operating
expenses, almost
entirely
offset by
higher
total
revenues,
and
included a
positive
impact
from the
merger
of
UBS AG
and
Credit
Suisse AG.
Total revenues
Total
revenues
increased
by
USD 1,406m,
or
30%,
to
USD 6,056m,
mainly
due
to
the
consolidation
of
Credit
Suisse AG revenues. The remaining
increase largely reflected increases
in recurring net fee
income and transaction-
based income, partly offset by decreases in net interest income.
Net interest income
increased by USD 393m,
or 31%, to USD 1,662m,
mainly driven by
the consolidation of
Credit
Suisse AG net interest income. The remaining variance was due to 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 variance was also due
to lower loan revenues, reflecting lower
average volumes.
Recurring net fee income increased by USD 634m, or 24%, to USD 3,235m, mainly driven by the consolidation
of
Credit Suisse AG recurring net fee income
and positive market performance.
Transaction-based income increased
by USD 378m, or 49%,
to USD 1,143m, mainly driven
by the consolidation of
Credit
Suisse AG transaction-based
income and
higher levels
of
client activity,
particularly in
the Americas,
Asia
Pacific and Switzerland regions.
Credit loss expense / release
Net credit loss expenses decreased by USD 5m to USD 3m.
Operating expenses
Operating expenses
increased
by
USD 1,463m, or
40%, to
USD 5,131m, mostly
driven
by
the
consolidation of
Credit
Suisse AG
operating
expenses.
The
remaining
variance
was
due
to
higher
personnel
expenses,
primarily
reflecting
an
increase
in
financial
advisor
compensation
reflecting
higher
compensable
revenues.
Operating
expenses also included higher integration-related expenses.
UBS AG third quarter 2024 report |
Business divisions and Group Items |
Global Wealth Management
15
Invested assets: 3Q24 vs 2Q24
Invested assets increased
by USD 221bn, or
5%, 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.
Loans: 3Q24 vs 2Q24
Loans increased
by USD 6.1bn
to USD 313.5bn,
driven by positive
foreign currency
effects, partly offset
by negative
net new loans.
Customer deposits: 3Q24 vs 2Q24
Customer
deposits increased
by
USD 5.2bn to
USD 482.2bn, mainly
driven
by
positive
foreign
currency effects,
partly offset by net new deposit outflows.
Results: 9M24 vs 9M23
Profit before tax
decreased by USD 690m,
or 21%, to
USD 2,577m, mainly driven by
higher operating expenses,
partly
offset
by
higher
total
revenues,
and
included
a
positive
impact
from
the
merger
of
UBS AG
and
Credit
Suisse AG.
Total
revenues increased
by
USD 1,999m, or
14%, to
USD 16,166m, mainly
due
to
the
consolidation of
Credit
Suisse AG revenues. The remaining
increase largely reflected
increases in recurring
net fee income and transaction-
based income, partly offset by decreases in net
interest income.
Net interest income
decreased by USD 9m
to USD 4,183m, mainly
driven by lower
deposit revenues, mainly
as a
result
of
lower
margins
and
including
the
effects
of
shifts
to
lower-margin
deposit
products.
In
addition,
the
decrease was
due to
higher liquidity
and funding
costs, as
well as
lower loan
revenues, reflecting lower
average
volumes. These effects were partly offset by
the consolidation of Credit Suisse AG net interest
income.
Recurring net
fee income
increased by
USD 1,231m, or
16%, to
USD 8,821m, mainly
driven by
positive market
performance and the consolidation of Credit
Suisse AG recurring net fee income.
Transaction-based income
increased by
USD 732m, or
31%, to
USD 3,088m, mainly
driven by
higher levels
of client
activity,
particularly
in
the
Americas
and
Asia
Pacific
regions,
and
due
to
the
consolidation of
Credit
Suisse AG
transaction-based income.
Other income increased
by USD 45m to
USD 74m, mainly due
to an
increase in shared
services costs charged
to
other subsidiaries of UBS Group AG, mainly related
to secondments, as well as due to dividends
received.
Net credit loss expenses decreased by USD 19m
to USD 10m.
Operating expenses
increased by
USD 2,707m, or
25%, to
USD 13,579m, mostly
driven by
the consolidation
of
Credit
Suisse AG
operating
expenses.
The
remaining
variance
was
due
to
higher
personnel
expenses,
primarily
reflecting
an
increase
in
financial
advisor
compensation
reflecting
higher
compensable
revenues.
Operating
expenses also included higher integration-related
expenses.
UBS AG third quarter 2024 report |
Business divisions and Group Items |
Personal & Corporate Banking
16
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
1,059
781
690
36
53
2,522
2,077
Recurring net fee income
3
340
271
215
25
58
833
638
Transaction-based income
3
422
353
296
20
42
1,075
910
Other income
56
11
40
396
38
81
64
Total revenues
1,877
1,417
1,242
32
51
4,510
3,689
Credit loss expense / (release)
72
98
2
(26)
180
25
Operating expenses
1,244
905
657
37
89
2,864
1,915
Business division operating profit / (loss) before tax
561
413
583
36
(4)
1,467
1,749
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
3
(3.8)
(32.9)
37.1
(16.2)
45.0
Cost / income ratio (%)
3
66.3
63.9
53.0
63.5
51.9
Net interest margin (bps)
3
169
156
188
168
191
Loans, gross (CHF bn)
247.4
253.2
147.8
(2)
67
247.4
147.8
Customer deposits (CHF bn)
253.5
256.4
168.7
(1)
50
253.5
168.7
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
3,4
1.4
1.3
0.8
1.4
0.8
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 Group Treasury allocations. Refer to “Note 3 Segment reporting” in the “Consolidated financial statements” section of this report 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 “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 22m, or 4%, to CHF 561m, as higher total revenues were more than offset by
higher operating expenses and net credit loss expenses.
Total revenues
Total
revenues
increased
by
CHF 635m,
or
51%,
to
CHF 1,877m,
mainly
due
to
the
consolidation
of
Credit
Suisse AG revenues, with the remaining variance largely reflecting increases across
almost all revenue lines.
Net interest income increased by
CHF 369m to CHF 1,059m, largely due to
the consolidation of Credit Suisse AG
net interest income, with the
remaining variance mainly attributable 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.
Recurring net
fee income
increased by
CHF 125m to
CHF 340m,
mainly due
to the
consolidation of
Credit Suisse
AG
recurring net
fee income,
with the
remaining increase
including higher
revenues from
increased custody
asset levels.
Transaction-based
income
increased
by
CHF 126m
to
CHF 422m,
largely
due
to
the
consolidation
of
Credit
Suisse AG transaction-based income.
Other income increased by CHF 16m to CHF
56m.
Credit loss expense / release
Net credit loss expenses
were CHF 72m, 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 2m
in the third quarter of 2023.
Operating expenses
Operating expenses increased
by CHF 587m, or
89%, to CHF 1,244m,
largely due to
the consolidation of
Credit
Suisse AG expenses, and included higher integration-related
expenses.
UBS AG third quarter 2024 report |
Business divisions and Group Items |
Personal & Corporate Banking
17
Results: 9M24 vs 9M23
Profit before tax
decreased by CHF 282m,
or 16%, to CHF 1,467m,
as higher total
revenues were more
than offset
by higher operating expenses and net credit
loss expenses.
Total
revenues
increased
by
CHF 821m,
or
22%,
to
CHF 4,510m,
mainly
due
to
the
consolidation
of
Credit
Suisse AG revenues, with the remaining variance
largely reflecting increases
in all revenue lines.
Net interest income increased by
CHF 445m to CHF 2,522m, largely due to
the consolidation of Credit Suisse AG
net interest income.
Recurring net
fee income
increased by
CHF 195m to
CHF 833m,
mainly due
to the
consolidation of
Credit Suisse
AG
recurring net
fee income,
with the
remaining increase
including higher
revenues from
increased custody
asset levels.
Transaction-based
income
increased
by
CHF 165m
to
CHF 1,075m,
largely
due
to
the
consolidation
of
Credit
Suisse AG transaction-based income.
Other income increased by CHF 17m to CHF
81m.
Net credit
loss expenses
were CHF 180m,
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 25m in the first nine months
of 2023.
Operating expenses increased by
CHF 949m, or 50%,
to CHF 2,864m, largely
due to the
consolidation of Credit
Suisse AG expenses, and included higher integration-related
expenses.
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
1,233
863
775
43
59
2,868
2,298
Recurring net fee income
3
396
300
241
32
64
946
705
Transaction-based income
3
492
389
333
26
48
1,220
1,007
Other income
64
12
45
423
45
93
70
Total revenues
2,185
1,564
1,394
40
57
5,127
4,080
Credit loss expense / (release)
84
110
1
(24)
203
27
Operating expenses
1,449
999
739
45
96
3,257
2,118
Business division operating profit / (loss) before tax
653
455
654
44
0
1,667
1,935
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
3
(0.2)
(33.5)
49.8
(13.9)
52.9
Cost / income ratio (%)
3
66.3
63.9
53.0
63.5
51.9
Net interest margin (bps)
3
172
155
191
169
192
Loans, gross (USD bn)
292.2
281.8
161.3
4
81
292.2
161.3
Customer deposits (USD bn)
299.4
285.3
184.1
5
63
299.4
184.1
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
3,4
1.4
1.3
0.8
1.4
0.8
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 Group Treasury allocations. Refer to “Note 3 Segment reporting” in the “Consolidated financial statements” section of this report 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 “Risk management and control” section of this report
for more
information about (credit-)impaired exposures.
UBS AG third quarter 2024 report |
Business divisions and Group Items |
Asset Management
18
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
758
582
500
30
52
1,827
1,471
Performance fees
46
23
11
98
313
91
42
Net gain from disposals
84
28
196
113
Total revenues
888
634
511
40
74
2,031
1,513
Credit loss expense / (release)
0
0
0
0
(1)
Operating expenses
720
513
425
40
69
1,691
1,243
Business division operating profit / (loss) before tax
168
121
86
39
96
340
271
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
4
95.6
35.0
(38.1)
25.6
(78.8)
Cost / income ratio (%)
4
81.1
80.8
83.2
83.3
82.2
Gross margin on invested assets (bps)
4
20
17
17
18
18
Information by business line / asset
class
Invested assets (USD bn)
4
Equities
747
691
494
8
51
747
494
Fixed Income
471
448
324
5
45
471
324
of which: money market
153
146
143
5
7
153
143
Multi-asset & Solutions
285
277
164
3
73
285
164
Hedge Fund Businesses
60
59
55
2
10
60
55
Real Estate & Private Markets
152
147
98
4
55
152
98
Total invested assets excluding associates
1,714
1,622
1,134
6
51
1,714
1,134
of which: passive strategies
806
756
487
7
66
806
487
Associates
5
83
77
23
8
265
83
23
Total invested assets
1,797
1,699
1,157
6
55
1,797
1,157
Information by region
Invested assets (USD bn)
4
Americas
438
426
333
3
32
438
333
Asia Pacific
6
229
213
168
7
36
229
168
EMEA (excluding Switzerland)
403
378
291
7
39
403
291
Switzerland
728
682
366
7
99
728
366
Total invested assets
1,797
1,699
1,157
6
55
1,797
1,157
Information by channel
Invested assets (USD bn)
4
Third-party institutional
1,010
957
638
6
58
1,010
638
Third-party wholesale
182
181
115
0
58
182
115
UBS’s wealth management businesses
522
484
382
8
37
522
382
Associates
5
83
77
23
8
265
83
23
Total invested assets
1,797
1,699
1,157
6
55
1,797
1,157
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 Group Treasury allocations. Refer to “Note 3 Segment reporting” in the “Consolidated financial statements” section of this report 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 The invested assets amounts
reported for associates are prepared in accordance with their local regulatory requirements and practices.
6 Includes invested assets from associates.
Results: 3Q24 vs 3Q23
Profit before
tax increased
by USD 82m,
or 96%,
to USD 168m,
mainly reflecting
the impact
from the
consolidation
of Credit Suisse AG, which included an
USD 84m gain from the closing of the
remaining portion of the sale of our
Brazilian real estate fund management business.
Total revenues
Total revenues increased by
USD 377m, or
74%, to
USD 888m, mainly
due to
the consolidation
of Credit
Suisse AG
revenues,
and included the USD 84m gain from the aforementioned
sale.
Net management
fees increased
by USD 258m,
or 52%,
to USD 758m,
largely driven
by the consolidation
of Credit
Suisse AG net management fees. The remaining
increase
largely
reflected
positive market performance and foreign
currency effects,
partly
offset by
continued margin
compression. 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.
UBS AG third quarter 2024 report |
Business divisions and Group Items |
Asset Management
19
Performance
fees
increased by
USD 35m,
or
313%, to
USD 46m,
mostly
due
to
increases
in
Fixed
Income
and
Hedge Fund Businesses,
and included Credit Suisse AG performance
fees.
Operating expenses
Operating expenses
increased by
USD 295m, or
69%, to
USD 720m, largely
due
to the
consolidation of
Credit
Suisse AG operating expenses,
and included higher integration-related expenses.
Invested assets: 3Q24 vs 2Q24
Invested assets
increased by
USD 98bn, or
6%, 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 2bn
decrease
in
invested
assets
mainly
related
to
the
sale
of
our
Brazilian
real
estate
fund
management
business. Excluding money market flows
and associates, net new money was negative
USD 5bn.
Results: 9M24 vs 9M23
Profit before
tax increased
by USD 69m,
or 26%,
to USD 340m,
mainly reflecting
the impact
from the
consolidation
of Credit Suisse AG, which included a USD 113m gain from
the sale of our Brazilian real estate fund management
business.
Total revenues
increased by
USD 518m, or
34%, to
USD 2,031m, primarily reflecting
the consolidation of
Credit
Suisse AG revenues, and included the USD 113m
gain from the aforementioned sale.
Net management fees increased by USD 356m, or 24%, to USD 1,827m, largely
attributable to the consolidation
of Credit Suisse
AG net management
fees, 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 49m, or
119%, to
USD 91m, mainly
due to increases
in Hedge Fund
Businesses
and Fixed
Income, and
included Credit
Suisse AG performance
fees. These
increases were
partly offset
by lower
performance fees related to the aforementioned
pass-through fees in 2023.
Operating expenses increased by
USD 448m, or 36%, to
USD 1,691m, largely due
to the consolidation of
Credit
Suisse AG operating expenses,
and included higher integration-related expenses.
UBS AG third quarter 2024 report |
Business divisions and Group Items | Investment
Bank
20
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
226
106
(3)
107
611
437
Capital Markets
339
399
259
(15)
31
1,087
684
Global Banking
558
625
365
(11)
53
1,698
1,122
Execution Services
3
440
405
312
9
41
1,243
992
Derivatives & Solutions
3
949
880
628
8
51
2,762
2,379
Financing
506
526
466
(4)
9
1,574
1,538
Global Markets
1,895
1,811
1,406
5
35
5,579
4,909
of which: Equities
1,417
1,337
1,039
6
36
4,114
3,483
of which: Foreign Exchange, Rates and Credit
477
474
367
1
30
1,465
1,426
Total revenues
2,453
2,436
1,770
1
39
7,277
6,030
Credit loss expense / (release)
4
(1)
17
35
25
Operating expenses
2,240
2,200
1,840
2
22
6,523
5,480
Business division operating profit / (loss) before tax
209
237
(87)
(12)
718
526
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
4
n.m.
67.2
n.m.
36.6
(69.6)
Cost / income ratio (%)
4
91.3
90.3
103.9
89.6
90.9
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 Group Treasury allocations. Refer to “Note 3 Segment reporting” in the “Consolidated financial statements” section of this report 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 Refer to “Alternative
performance measures” in the
appendix to this report for the definition and calculation method.
Results: 3Q24 vs 3Q23
Profit before
tax increased
by
USD 296m
to USD 209m,
mainly reflecting
higher total
revenues, partly
offset by
higher operating expenses.
Total revenues
Total revenues increased by USD 683m, or
39%, to USD 2,453m,
reflecting increases in
Global Markets
and Global
Banking.
Global Banking
Global Banking revenues
increased by USD 193m,
or 53%, to
USD 558m, with increases
in Advisory and
Capital
Markets.
Advisory revenues increased by USD 114m, or 107%, to USD 220m, mostly due to higher merger and
acquisition
transaction revenues, which increased by
USD 115m, or 132%.
Capital Markets
revenues increased
by USD 80m,
or 31%,
to USD 339m,
mainly due
to higher
Debt Capital
Markets
revenues,
which
increased
by
USD 21m,
or
27%,
Leveraged
Capital
Markets
revenues,
which
increased
by
USD 13m, or 16%, and Equity Capital Markets
revenues, which increased by USD 10m, or 24%.
Global Markets
Global Markets revenues increased by USD 489m, or
35%, to USD 1,895m, primarily driven by higher Derivatives
& Solutions and Execution Services revenues.
Execution
Services
revenues
increased
by
USD 128m,
or
41%,
to
USD 440m,
mainly
due
to
increases
in
Cash
Equities across all regions.
Derivatives &
Solutions revenues
increased by
USD 321m, or
51%, to
USD 949m, with
increases across
all products,
led by Equity Derivatives,
Foreign Exchange and Rates.
Financing revenues increased
by USD 40m, or
9%, to USD 506m
and included a
USD 51m gain from
the sale of
our investment in an associate.
Equities
Global Markets Equities revenues increased by USD 378m, or 36%,
to USD 1,417m, mostly driven by increases in
Equity Derivatives and Cash Equities, as well
as by the aforementioned gain from sale.
UBS AG third quarter 2024 report |
Business divisions and Group Items | Investment
Bank
21
Foreign Exchange, Rates and Credit
Global
Markets
Foreign
Exchange,
Rates
and
Credit
revenues
increased
by
USD 110m,
or
30%,
to
USD 477m,
primarily driven by increases in Foreign Exchange and Rates.
Credit loss expense / release
Net credit loss expenses decreased by USD 13m to USD 4m.
Operating expenses
Operating expenses increased by
USD 400m, or 22%, to
USD 2,240m, mainly due to
the consolidation of Credit
Suisse AG expenses, with
the remaining increase
including higher variable
compensation and
increased technology
expenses.
Results: 9M24 vs 9M23
Profit before tax increased
by USD 192m, or 37%, to
USD 718m, mainly due to
higher total revenues, partly
offset
by higher operating expenses.
Total
revenues
increased
by
USD 1,247m,
or
21%,
to
USD 7,277m,
reflecting
increases
in
Global
Markets
and
Global Banking.
Global Banking revenues increased by USD 576m, or 51%, to USD 1,698m, reflecting higher Capital Markets and
Advisory revenues.
Advisory revenues increased
by USD 174m, or
40%, to
USD 611m, mostly due
to higher
merger and acquisition
transaction revenues, which increased by
USD 157m, or 41%.
Capital Markets
revenues increased
by USD 403m,
or 59%,
to USD 1,087m,
mainly due
to higher
Leveraged Capital
Markets revenues, which
increased by USD 229m,
or 155%,
Debt Capital
Markets revenues, which
increased by
USD 94m, or 46%, and Equity Capital Markets
revenues, which increased by USD 78m, or 51%.
Global Markets revenues increased by USD 670m, or 14%, to
USD 5,579m, primarily driven by higher Derivatives
& Solutions and Execution Services revenues.
Execution Services revenues increased by USD 251m, or 25%, to USD 1,243m, mainly driven by increases in
Cash
Equities across all regions.
Derivatives & Solutions
revenues increased by USD 383m,
or 16%, to
USD 2,762m, mainly driven
by increases in
Equity Derivatives and Foreign Exchange
revenues.
Financing
revenues
increased
by
USD 36m,
or
2%,
to
USD 1,574m
and
included
a
USD 51m
gain
from
the
aforementioned sale of our investment in an
associate.
Equities
Global Markets Equities revenues increased by USD 631m, or 18%,
to USD 4,114m, 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 39m, or 3%, to USD 1,465m.
Net credit loss expenses increased by USD 10m to
USD 35m.
Operating
expenses
increased
by
USD 1,043m,
or
19%,
to
USD 6,523m,
mainly
driven
by
integration-related
expenses,
with
the
remaining
increase
including
the
consolidation
of
Credit
Suisse AG
expenses
and
expenses
related to secondment of Credit Suisse employees
prior to the merger of UBS AG and Credit Suisse
AG.
UBS AG third quarter 2024 report |
Business divisions and Group Items |
Non-core and Legacy
22
Non-core and Legacy
Non-core and Legacy
1
As of or for the quarter ended
% change from
Year-to-date
USD m
30.9.24
30.6.24
30.9.23
2Q24
3Q23
30.9.24
30.9.23
Results
Total revenues
225
165
35
37
537
411
87
Credit loss expense / (release)
76
(23)
(1)
53
(1)
Operating expenses
851
1,552
142
(45)
499
2,542
861
Operating profit / (loss) before tax
(701)
(1,365)
(106)
(49)
561
(2,184)
(774)
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.
Results: 3Q24 vs 3Q23
Loss before
tax was
USD 701m, primarily
driven by
the impact
of the
merger of
UBS AG and
Credit Suisse AG,
compared with a loss before tax of USD 106m.
Total revenues
Total
revenues were
USD 225m, which
was USD 190m
higher than
the amount recorded
in the
third quarter
of
2023,
mainly
due
to
the
consolidation
of
Credit
Suisse AG
revenues.
Total
revenues
reflected
net
gains
from
position exits, along with net interest income from securitized products and
credit products. Total
revenues in the
third quarter of 2024 also included a USD 67m gain from the sale
of our investment in an associate.
Credit loss expense / release
Net
credit loss
expenses were
USD 76m, almost
entirely
driven by
credit-impaired
positions,
compared with
net
credit loss releases of USD 1m in the third quarter of 2023.
Operating expenses
Operating
expenses
were
USD 851m,
compared
with
operating
expenses
of
USD 142m
recorded
in
the
third
quarter of 2023,
largely due to
the consolidation of
Credit Suisse AG
expenses, and included
integration-related
expenses of
USD 268m. Operating
expenses also
included litigation
releases of
USD 71m, largely
reflecting UBS
agreeing in the second
quarter of 2024
to fund an
offer by the
Credit Suisse supply
chain finance funds
(the SCFFs)
to redeem all of the outstanding units of the respective
funds.
Results: 9M24 vs 9M23
Loss before tax
was USD 2,184m, primarily driven
by the impact
of the merger of
UBS AG and Credit
Suisse AG,
compared with a loss before tax of USD 774m.
Total revenues
Total
revenues were USD 411m, which was USD 324m higher than
the amount recorded in the first
nine months
of 2023,
mainly due
to the
consolidation of
Credit Suisse AG
revenues. Total
revenues reflected
net gains
from
position exits,
along with
net interest
income from
securitized products
and credit
products. Total
revenues also
included the aforementioned USD 67m gain from the sale of
our investment in an associate.
Credit loss expense / release
Net
credit loss
expenses were
USD 53m, almost
entirely
driven by
credit-impaired
positions,
compared with
net
credit loss releases of USD 1m.
Operating expenses
Operating expenses were
USD 2,542m, compared with
operating expenses of
USD 861m recorded in the first
nine
months of 2023,
largely due to
the consolidation of Credit
Suisse AG expenses, and
included integration-related
expenses of
USD 515m. Operating
expenses also
included litigation
expenses of
USD 1,074m, largely
reflecting UBS
agreeing in the second quarter
of 2024 to fund an
offer by the SCFFs to redeem
all of the outstanding
units of the
respective
funds.
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.
UBS AG third quarter 2024 report |
Business divisions and Group Items |
Group Items
23
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
190
(90)
(13)
(6)
(216)
Credit loss expense / (release)
0
0
1
1
1
Operating expenses
250
275
233
(9)
7
737
819
Operating profit / (loss) before tax
(61)
(365)
(246)
(83)
(75)
(744)
(1,036)
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 Group Treasury allocations. Refer to “Note 3 Segment reporting” in the “Consolidated financial statements” section of this report for more
information.
Results: 3Q24 vs 3Q23
Loss before
tax decreased by
USD 185m to
USD 61m, mostly driven
by higher
gains in
Group hedging
and own
debt,
including
hedge
accounting ineffectiveness,
reflecting
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 292m
to USD 744m,
mainly due
to lower
integration-related expenses, partly
offset by higher shared services costs charged
by other subsidiaries of UBS Group AG.
UBS AG third quarter 2024 report |
Risk, capital, liquidity and funding, and balance
sheet
24
Risk, capital, liquidity and
funding, and balance sheet
Management report
Table of contents
25
Risk management and control
25
Credit risk
27
Market risk
29
Country risk
29
Non-financial risk
31
Capital management
32
Total
loss-absorbing capacity
35
Risk-weighted assets
37
Leverage ratio denominator
38
Liquidity and funding management
38
Strategy, objectives and governance
38
Liquidity coverage ratio
38
Net stable funding ratio
39
Balance sheet and off-balance sheet
39
Balance sheet assets
40
Balance sheet liabilities
41
Equity
41
Off-balance sheet
UBS AG third quarter 2024 report |
Risk, capital, liquidity and funding, and balance
sheet | Risk management and control
25
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 AG 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.
Following the merger of UBS AG and Credit Suisse AG in May 2024, the risk profile of UBS AG consolidated does
not differ materially from that of UBS Group AG.
Credit risk
Overall banking products exposure
Overall banking
products exposure
increased by
USD 11bn to
USD 1,075bn 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 167m,
reflecting net
releases of
USD 15m
related to performing positions and net expenses
of USD 182m 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 “UBS AG consolidated 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 AG third quarter 2024 report |
Risk, capital, liquidity and funding, and balance
sheet | Risk management and control
26
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
473,574
453,535
1,676
88,252
34,389
23,098
1,074,524
of which: loans and advances to customers (on-balance sheet)
308,796
292,153
14
18,536
2,321
6,304
628,124
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
73,445
76,634
0
3,018
4
1,512
154,613
Total credit-impaired exposure, gross
1,501
4,251
0
396
1,509
0
7,658
Total allowances and provisions for expected credit losses
362
1,877
0
332
1,069
7
3,646
of which: stage 1
126
319
0
122
6
7
579
of which: stage 2
69
265
0
99
189
0
623
of which: stage 3
167
1,292
0
111
873
0
2,445
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
471,272
439,621
1,436
100,219
32,673
18,174
1,063,396
of which: loans and advances to customers (on-balance sheet)
302,690
281,758
11
17,517
5,763
3,866
611,606
of which: guarantees and loan commitments (off-balance sheet)
19,663
48,474
10
34,702
3,020
16,789
122,657
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
77,501
0
2,294
3
1,591
150,450
Total credit-impaired exposure, gross
1,416
3,887
0
492
1,575
0
7,371
Total allowances and provisions for expected credit losses
370
1,762
0
338
1,000
7
3,478
of which: stage 1
136
327
0
121
6
7
597
of which: stage 2
68
235
0
96
207
0
606
of which: stage 3
166
1,200
0
122
787
0
2,275
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.
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
302,941
294,290
252,097
240,669
Residential real estate
114,161
109,196
200,931
189,385
Commercial / industrial real estate
9,980
10,165
40,955
39,608
Cash
29,646
30,182
2,836
2,913
Equity and debt instruments
121,758
119,365
2,993
3,209
Other collateral
2
27,396
25,383
4,382
5,553
Subject to guarantees
663
724
7,428
7,595
Uncollateralized and not subject to guarantees
5,191
7,676
32,628
33,494
Total loans and advances to customers, gross
308,796
302,690
292,153
281,758
Allowances
(278)
(290)
(1,582)
(1,471)
Total loans and advances to customers, net of allowances
308,518
302,400
290,572
280,287
Collateralized loans and advances to customers in % of total loans
and advances to customers, gross (%)
98.1
97.2
86.3
85.4
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 AG third quarter 2024 report |
Risk, capital, liquidity and funding, and balance
sheet | Risk management and control
27
Market risk
UBS AG
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
UBS AG
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 AG
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
UBS AG’s 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 6.2m
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 UBS AG
increased during
the third
quarter of
2024, driven
by net
interest income
stabilization
initiatives.
UBS AG third quarter 2024 report |
Risk, capital, liquidity and funding, and balance
sheet | Risk management and control
28
The majority of
UBS AG’s interest rate
risk in the banking
book was a
reflection of the
net asset duration that
it ran
to offset its modeled sensitivity of net USD 28.0m
(30 June 2024: USD 24.6m) assigned to its 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, UBS AG calculates 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
6.7%, of
UBS AG’s tier 1
capital (30 June 2024:
negative
USD 6.0bn, or 6.1%),
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 UBS AG’s tier 1
capital in the
“Parallel up” scenario
as of 30 September
2024 would have
been a
decrease of
approximately USD 0.7bn, or
0.7%, (30 June
2024: USD 0.8bn, or
0.9%), reflecting the
fact
that the vast
majority of UBS AG’s
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 UBS AG’s
tier 1 capital.
UBS AG also
applies granular
internal interest
rate shock
scenarios to
its banking
book positions
to monitor
the
book’s specific risk profile.
›
Refer to “Interest rate risk in the banking book” in the “Risk management and control” section of the UBS AG
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 “UBS AG consolidated performance” section of this report
for more information about the effects of increases in interest rates on the net interest income of UBS AG’s
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)
(0.3)
(26.4)
(0.4)
(37.2)
6.2
(31.0)
Parallel up
2
(1,263.3)
(247.3)
(58.9)
(5,110.1)
(103.0)
(6,782.7)
1,111.4
(5,671.3)
Parallel down
2
1,383.9
257.2
81.8
5,434.1
95.0
7,252.0
(1,307.1)
5,944.9
Steepener
3
(548.4)
(5.8)
(11.2)
(1,326.8)
(15.0)
(1,907.2)
197.9
(1,709.4)
Flattener
4
303.0
(35.0)
0.1
156.5
(8.1)
416.6
55.9
472.5
Short-term up
5
(189.7)
(107.3)
(22.6)
(1,967.6)
(44.3)
(2,331.4)
528.1
(1,803.4)
Short-term down
6
187.6
105.7
22.5
2,081.0
45.3
2,442.1
(549.7)
1,892.4
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)
(0.4)
0.0
(25.0)
(0.3)
(32.1)
5.4
(26.7)
Parallel up
2
(901.1)
(88.6)
(4.1)
(4,870.1)
(89.1)
(5,953.1)
979.7
(4,973.5)
Parallel down
2
984.3
82.0
(1.7)
5,036.6
86.1
6,187.3
(1,119.7)
5,067.5
Steepener
3
(402.3)
(38.4)
(3.7)
(1,145.1)
(23.8)
(1,613.2)
170.4
(1,442.8)
Flattener
4
224.5
24.7
1.8
21.0
3.7
275.8
53.5
329.3
Short-term up
5
(128.3)
(0.4)
0.3
(1,972.2)
(30.3)
(2,131.0)
467.7
(1,663.3)
Short-term down
6
123.6
0.6
(1.5)
2,087.4
31.5
2,241.6
(476.2)
1,765.3
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.
UBS AG third quarter 2024 report |
Risk, capital, liquidity and funding, and balance
sheet | Risk management and control
29
Country risk
UBS AG remains 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, UBS AG’s direct exposure to Israel was less
than USD 0.5bn
and
its
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.
UBS AG’s direct
exposure
to
Russia
as
of
30 September
2024
was
less
than
USD 0.5bn,
and
its
direct
exposure
to
Belarus
and
Ukraine remained
immaterial.
Potential second-order
impacts, such
as European
energy security,
continue to
be
monitored.
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.
UBS AG continues
to monitor
potential trade
policy disputes,
as well
as economic
and political
developments in
addition to those mentioned
above. It is closely
watching elections and
their aftermath in
a number of key
markets
in 2024.
As of
30 September 2024,
UBS AG’s exposure
to emerging
market countries
was less
than 10%
of its
total country exposure and mainly to certain countries
in Asia.
›
Refer to the “Risk management and control” section of the UBS AG 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.
UBS AG third quarter 2024 report |
Risk, capital, liquidity and funding, and balance
sheet | Risk management and control
30
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.
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.
UBS AG third quarter 2024 report |
Risk, capital, liquidity and funding, and balance
sheet | Capital management
31
Capital management
The disclosures
in this
section are
provided for
UBS 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 AG
Annual Report
2023, available
under “Annual
reporting” at
ubs.com/investors
, which provides more information about relevant capital management objectives,
planning
and
activities, as
well
as
the
Swiss
SRB
total
loss-absorbing capacity
(TLAC) framework,
on
a
UBS AG
consolidated basis.
UBS AG contributes
a significant portion
of capital to,
and provides substantial
liquidity to, its
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, available 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
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
14.92
1
76,926
5.02
1
80,896
Common equity tier 1 capital
10.62
54,759
3.52
2
56,728
of which: minimum capital
4.50
23,198
1.50
24,167
of which: buffer capital
5.50
28,354
2.00
32,223
of which: countercyclical buffer
0.56
2,869
Maximum additional tier 1 capital
4.30
22,167
1.50
24,167
of which: additional tier 1 capital
3.50
18,043
1.50
24,167
of which: additional tier 1 buffer capital
0.80
4,124
Eligible going concern capital
Total going concern capital
19.53
100,673
6.25
100,673
Common equity tier 1 capital
16.38
84,423
5.24
84,423
Total loss-absorbing additional tier 1 capital
3.15
16,250
1.01
16,250
of which: high-trigger loss-absorbing additional tier 1 capital
2.91
15,012
0.93
15,012
of which: low-trigger loss-absorbing additional tier 1 capital
3
0.24
1,239
0.08
1,239
Required gone concern capital
Total gone concern loss-absorbing capacity
4,5,6
10.73
55,290
3.75
60,418
of which: base requirement including add-ons for market share and LRD
10.73
7
55,290
3.75
7
60,418
Eligible gone concern capital
Total gone concern loss-absorbing capacity
18.71
96,473
5.99
96,473
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 unsecured debt
18.66
96,184
5.97
96,184
Total loss-absorbing capacity
Required total loss-absorbing capacity
25.65
132,216
8.77
141,314
Eligible total loss-absorbing capacity
38.24
197,146
12.24
197,146
Risk-weighted assets / leverage ratio denominator
Risk-weighted assets
515,520
Leverage ratio denominator
1,611,151
1 Includes applicable add-ons of 1.51% for risk-weighted assets (RWA) and 0.52% for leverage
ratio denominator (LRD), of which 7 basis points for RWA and 2 basis points
for LRD reflect the FINMA Pillar 2 capital
add-on of USD 338m related to the supply chain
finance funds matter at Credit Suisse.
2 Our minimum CET1 leverage ratio requirement of
3.52% consists of a 1.5% base requirement, a
1.5% base buffer capital
requirement, a 0.25% LRD add-on requirement, a 0.25% market share add-on requirement based on our Swiss credit business and a 0.02% Pillar 2 capital add-on
related to the supply chain finance funds matter at
Credit Suisse.
3 Existing outstanding low-trigger additional
tier 1 capital instruments qualify as
going concern capital at the UBS
AG consolidated level, as agreed
with FINMA, 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 (SIBs) 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, 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.
UBS AG third quarter 2024 report |
Risk, capital, liquidity and funding, and balance
sheet | Capital management
32
UBS AG,
on
a
consolidated basis,
is
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 above
provides the
risk-weighted asset
(RWA)- and leverage
ratio denominator
(LRD)-based requirements
and information
as of 30 September 2024.
UBS AG and UBS Switzerland AG are subject
to going and gone concern requirements
on a standalone basis.
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 AG 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
100,673
98,133
56,628
Total tier 1 capital
100,673
98,133
56,628
Common equity tier 1 capital
84,423
83,001
44,130
Total loss-absorbing additional tier 1 capital
16,250
15,132
12,498
of which: high-trigger loss-absorbing additional tier 1 capital
15,012
13,907
11,286
of which: low-trigger loss-absorbing additional tier 1 capital
1,239
1,225
1,212
Eligible gone concern capital
Total gone concern loss-absorbing capacity
96,473
98,833
54,458
Total tier 2 capital
289
536
538
of which: non-Basel III-compliant tier 2 capital
289
536
538
TLAC-eligible unsecured debt
96,184
98,297
53,920
Total loss-absorbing capacity
Total loss-absorbing capacity
197,146
196,966
111,086
Risk-weighted assets / leverage ratio denominator
Risk-weighted assets
515,520
509,953
333,979
Leverage ratio denominator
1,611,151
1,564,001
1,104,408
Capital and loss-absorbing capacity ratios (%)
Going concern capital ratio
19.5
19.2
17.0
of which: common equity tier 1 capital ratio
16.4
16.3
13.2
Gone concern loss-absorbing capacity ratio
18.7
19.4
16.3
Total loss-absorbing capacity ratio
38.2
38.6
33.3
Leverage ratios (%)
Going concern leverage ratio
6.2
6.3
5.1
of which: common equity tier 1 leverage ratio
5.2
5.3
4.0
Gone concern leverage ratio
6.0
6.3
4.9
Total loss-absorbing capacity leverage ratio
12.2
12.6
10.1
UBS AG third quarter 2024 report |
Risk, capital, liquidity and funding, and balance
sheet | Capital management
33
Total loss-absorbing capacity and movement
TLAC increased by USD 0.2bn to USD 197.1bn
in the third quarter of 2024.
Going concern capital and movement
Going concern capital increased by USD 2.5bn
to USD 100.7bn. Common equity tier 1 (CET1) capital
increased by
USD 1.4bn to USD 84.4bn, primarily due to operating profit before tax of USD 1.2bn, foreign currency translation
gains
of
USD 1.5bn
and
an
increase
in
eligible
deferred
tax
assets
recognized
for
temporary
differences
of
USD 0.3bn, partly offset by dividend accruals
of USD 1.0bn and current tax expenses of
USD 0.3bn.
Loss-absorbing additional tier 1 (AT1) capital issued by the Group
and on lent to UBS AG increased by
USD 1.1bn
to USD 16.3bn,
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 by
UBS Group AG
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.
The corresponding
AT1 capital
instruments on
lent to
UBS AG contain
the same
provisions.
Gone concern loss-absorbing capacity and movement
Total
gone concern loss-absorbing capacity decreased by
USD 2.4bn to USD 96.5bn and
included USD 96.2bn of
TLAC-eligible unsecured debt instruments that were issued by the Group and on lent to UBS AG.
The decrease of
USD 2.4bn mainly reflected the call of USD 6.4bn equivalent of TLAC-eligible unsecured debt instruments, as well
as USD 3.1bn equivalent of TLAC-eligible
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 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 and key features
and terms and conditions of capital instruments
Loss-absorbing capacity and leverage ratios
The CET1
capital ratio
increased to
16.4% from
16.3%, reflecting
a USD 1.4bn
increase
in CET1
capital, partly
offset by a USD 5.6bn increase in RWA.
The CET1 leverage ratio decreased to 5.2% from 5.3%, driven
by a USD 47.2bn increase in the LRD, partly offset
by the aforementioned increase in CET1 capital.
The gone concern loss-absorbing
capacity ratio decreased to
18.7% from 19.4%, reflecting a
USD 2.4bn decrease
in gone concern loss-absorbing capacity and
the aforementioned increase in RWA.
The gone concern leverage
ratio decreased to 6.0%
from 6.3%, reflecting the
aforementioned increase in
the LRD
and the aforementioned decrease in gone concern
loss-absorbing capacity.
UBS AG third quarter 2024 report |
Risk, capital, liquidity and funding, and balance
sheet | Capital management
34
Swiss SRB total loss-absorbing capacity movement
USD m
Going concern capital
Swiss SRB
Common equity tier 1 capital as of 30.6.24
83,001
Operating profit / (loss) before tax
1,191
Current tax (expense) / benefit
(343)
Foreign currency translation effects, before tax
1,453
Eligible deferred tax assets on temporary differences
266
Other
1
(1,144)
Common equity tier 1 capital as of 30.9.24
84,423
Loss-absorbing additional tier 1 capital as of 30.6.24
15,132
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
503
Loss-absorbing additional tier 1 capital as of 30.9.24
16,250
Total going concern capital as of 30.6.24
98,133
Total going concern capital as of 30.9.24
100,673
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
98,297
Issuance of TLAC-eligible unsecured debt
1,787
Call of TLAC-eligible 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
5,519
TLAC-eligible unsecured debt as of 30.9.24
96,184
Total gone concern loss-absorbing capacity as of 30.6.24
98,833
Total gone concern loss-absorbing capacity as of 30.9.24
96,473
Total loss-absorbing capacity
Total loss-absorbing capacity as of 30.6.24
196,966
Total loss-absorbing capacity as of 30.9.24
197,146
1 Includes dividend accruals for 2024 (negative USD 1.0bn) 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
97,822
94,247
55,569
Equity attributable to non-controlling interests
(879)
(855)
(335)
Defined benefit plans, net of tax
(872)
(940)
(336)
Deferred tax assets recognized for tax loss carry-forwards
(2,682)
(2,819)
(3,004)
Deferred tax assets for unused tax credits
(238)
(181)
(97)
Deferred tax assets on temporary differences, excess over threshold
(1,233)
Goodwill, net of tax
1
(6,257)
(6,235)
(5,750)
Intangible assets, net of tax
(125)
(129)
(146)
Expected losses on advanced internal ratings-based portfolio less provisions
(665)
(652)
(532)
Unrealized (gains) / losses from cash flow hedges, net of tax
1,830
3,373
2,961
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
1,058
313
Own credit related to (gains) / losses on derivative financial instruments
that existed at the balance sheet date
(72)
(76)
(63)
Prudential valuation adjustments
(217)
(231)
(177)
Accruals for dividends to shareholders for 2023
(3,000)
Other
(4,580)
2
(3,560)
2
(39)
Total common equity tier 1 capital
84,423
83,001
44,130
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 AG third quarter 2024 report |
Risk, capital, liquidity and funding, and balance
sheet | Capital management
35
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 23bn and our
CET1 capital
by USD 2.7bn as
of 30 September
2024 (30 June
2024: USD 22bn and
USD 2.6bn,
respectively) and decreased our CET1
capital ratio by 19
basis points (30 June 2024:
18 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 2.5bn
(30 June 2024: USD 20bn and USD
2.4bn, respectively) and increased our CET1
capital
ratio by 19 basis points (30 June 2024: 18
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
17
basis
points
(30
June
2024:
16
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 18 basis points (30 June 2024: 17
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 AG 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
5.6bn to USD 515.5bn, driven by a USD 10.8bn
increase
in currency effects, partly offset
by decreases of USD 3.6bn 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
312.8
10.3
(3.0)
(4.6)
315.6
Non-counterparty-related risk
3
29.1
0.5
(0.1)
29.6
Market risk
22.5
1.4
1.0
25.0
Operational risk
145.4
145.4
Total
510.0
10.8
(1.6)
(3.6)
515.5
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, available 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
2.7bn USD 315.6bn as
of 30 September
2024, including
currency effects of USD 10.3bn.
Asset size and other movements resulted in
a USD 4.6bn decrease in RWA:
–
Non-core and
Legacy RWA
decreased by
USD 3.9bn,
mainly driven
by our
actions to
actively unwind
the portfolio,
in addition to the natural roll-off.
–
Personal & Corporate Banking RWA decreased
by USD 1.5bn, mainly driven by negative
net new loans.
–
Global Wealth Management RWA decreased by
USD 0.6bn, mainly driven by negative net new
loans.
–
Asset Management RWA decreased by USD 0.3bn,
mainly due to lower RWA from equity
investments in funds.
–
Investment Bank RWA increased by USD 1.2bn,
mainly due to higher RWA from loans and loan
commitments.
–
Group Items RWA increased by USD 0.4bn.
UBS AG third quarter 2024 report |
Risk, capital, liquidity and funding, and balance
sheet | Capital management
36
Model updates and
methodology changes resulted in
an 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, available under “Pillar 3 disclosures” at
ubs.com/investors
, for more
information on a UBS Group AG consolidated basis
›
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 the Swiss Financial Market Supervisory Authority (FINMA)
to capitalize potential maturity
mismatches between positions
and hedges in the
incremental risk charge (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 2025. 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, available under “Pillar 3 disclosures” at
ubs.com/investors,
for more
information on a UBS Group AG consolidated basis
›
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 “Non-financial risk” in the “Risk management and control” section of the UBS AG Annual Report 2023,
available under “Annual reporting” at
ubs.com/investors
, for information about the advanced measurement
approach model
Risk-weighted assets, 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
RWA
30.9.24
Credit and counterparty credit risk
1
95.2
129.9
7.1
63.8
13.7
5.8
315.6
Non-counterparty-related risk
2
5.6
2.3
0.6
3.3
0.9
16.9
29.6
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
165.9
151.9
14.9
111.7
44.2
26.9
515.5
30.6.24
Credit and counterparty credit risk
1
94.5
125.0
7.2
63.7
17.5
5.0
312.8
Non-counterparty-related risk
2
5.5
2.4
0.6
3.2
0.8
16.6
29.1
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
165.2
147.1
15.0
108.0
48.9
25.8
510.0
30.9.24 vs 30.6.24
Credit and counterparty credit risk
1
0.7
5.0
(0.1)
0.2
(3.8)
0.8
2.7
Non-counterparty-related risk
2
0.1
0.0
0.0
0.0
0.0
0.3
0.4
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
0.7
4.8
(0.1)
3.8
(4.7)
1.1
5.6
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 16.2bn; 30 June 2024: USD 15.8bn), as well as property,
equipment, software and other items (30 September 2024: USD
13.3bn;
30 June 2024: USD 13.4bn).
UBS AG third quarter 2024 report |
Risk, capital, liquidity and funding, and balance
sheet | Capital management
37
Leverage ratio denominator
During the third quarter of 2024, the LRD
increased by USD 47.2bn to USD 1,611.2bn, driven by currency effects
of USD 54.2bn, partly offset by asset size and other
movements of USD 7.1bn.
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
1,208.8
45.6
(10.5)
1,243.9
Derivatives
125.2
2.4
6.2
133.9
Securities financing transactions
168.4
4.2
(1.0)
171.7
Off-balance sheet items
72.5
2.1
(2.0)
72.5
Deduction items
(11.0)
(0.1)
0.2
(10.8)
Total
1,564.0
54.2
(7.1)
1,611.2
1 The exposures exclude derivative financial
instruments, cash collateral receivables on derivative instruments, receivables from
securities financing transactions, and margin loans, as
well as prime brokerage receivables
and financial assets at fair value not held for trading, both related to securities financing transactions.
These exposures are presented separately under Derivatives
and Securities financing transactions in this table.
The LRD movements described below exclude
currency effects.
On-balance sheet exposures
(excluding derivatives and
securities financing transactions)
decreased by USD 10.5bn,
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 6.2bn,
mainly due to client-driven increases in the
Investment Bank.
Securities financing transactions decreased
by USD 1.0bn.
Off-balance sheet exposures decreased by USD
2.0bn, primarily driven by lower commitments.
›
Refer to the “Balance sheet and off-balance sheet” section of this report for more information about balance sheet
movements
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
505.6
431.6
5.3
238.5
44.3
18.7
1,243.9
Derivatives
10.9
3.3
0.0
105.9
13.4
0.4
133.9
Securities financing transactions
66.0
45.1
0.0
52.6
8.1
(0.2)
171.7
Off-balance sheet items
18.6
32.3
0.1
18.6
2.5
0.4
72.5
Items deducted from Swiss SRB tier 1 capital
(5.3)
(0.8)
(1.2)
(0.4)
(0.5)
(2.6)
(10.8)
Total
595.7
511.5
4.2
415.2
67.8
16.6
1,611.2
30.6.24
On-balance sheet exposures
494.0
411.4
4.9
234.0
48.5
16.0
1,208.8
Derivatives
9.0
2.4
0.0
97.1
16.6
0.2
125.2
Securities financing transactions
59.3
42.9
0.1
53.4
12.7
0.1
168.4
Off-balance sheet items
18.0
33.8
0.2
18.3
1.8
0.5
72.5
Items deducted from Swiss SRB tier 1 capital
(5.3)
(0.8)
(1.2)
(0.4)
(0.6)
(2.7)
(11.0)
Total
575.0
489.7
3.9
402.4
79.0
14.0
1,564.0
30.9.24 vs 30.6.24
On-balance sheet exposures
11.6
20.2
0.4
4.6
(4.3)
2.7
35.1
Derivatives
1.9
0.9
0.0
8.8
(3.2)
0.2
8.6
Securities financing transactions
6.8
2.2
0.0
(0.8)
(4.6)
(0.3)
3.3
Off-balance sheet items
0.6
(1.5)
0.0
0.2
0.8
(0.1)
0.0
Items deducted from Swiss SRB tier 1 capital
0.0
0.0
0.0
0.0
0.1
0.1
0.1
Total
20.8
21.9
0.3
12.8
(11.2)
2.6
47.2
UBS AG third quarter 2024 report |
Risk, capital, liquidity and funding, and balance
sheet | Liquidity and funding management
38
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 AG
Annual
Report
2023,
available
under
“Annual
reporting”
at
ubs.com/investors
,
which
provides
more
information
about
UBS AG’s
strategy,
objectives
and
governance
in
connection
with
liquidity
and
funding
management.
Liquidity coverage ratio
The quarterly average
liquidity coverage ratio
(the LCR) of
UBS AG consolidated increased
2.2 percentage points to
196.3%. The
movement in
the quarterly
average LCR
was primarily
driven by
an
increase in
high-quality liquid
assets
(HQLA)
of
USD 80.3bn
to
USD 360.6bn.
This
increase
was
substantially attributable
to
the
effect
of
the
merger of
UBS AG and
Credit Suisse AG, with
only 21
days of
post-merger effect being
included in
the average
LCR for the second quarter of 2024.
The increase
in HQLA
was partly
offset by
a USD 40.1bn
increase in
net cash
outflows to
USD 183.7bn, substantially
attributable to the effect of the merger of UBS AG
and Credit Suisse AG, with only 21 days of post-merger effect
being included in the average
LCR for the second quarter of 2024.
›
Refer to “Liquidity coverage ratio” in the “Liquidity and funding management” section of the UBS AG second
quarter 2024 report, available under “Quarterly reporting” at
ubs.com/investors
, for more information about the
basis of calculation for the average LCR for the second quarter of 2024
›
Refer to the
30 September 2024 Pillar 3 Report, available under “Pillar 3 disclosures” at
ubs.com/investors
, and to
“Liquidity and funding management” in the “Capital, liquidity and funding, and balance sheet” section of the
UBS AG Annual Report 2023, available under “Annual reporting” at
ubs.com/investors
, for more information about
the LCR on a UBS AG consolidated basis
Liquidity coverage ratio
USD bn, except where indicated
Average 3Q24
1
Average 2Q24
1
High-quality liquid assets
360.6
280.3
Net cash outflows
2
183.7
143.6
Liquidity coverage ratio (%)
3
196.3
194.1
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, of which 40 data
points were before the merger of UBS AG
and Credit Suisse AG
(i.e. from
2 April 2024
until 30 May
2024), and
21 data
points were after
the merger (i.e.
from 31
May 2024
until 30 June
2024). The
post-merger,
21-day average
LCR of UBS
AG consolidated
was 203.6%.
2 Represents the net cash outflows
expected over a stress period
of 30 calendar days.
3 Calculated after the application
of haircuts, 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) decreased 0.9 percentage
points to 126.8%.
Available
stable
funding increased
by
USD 20.6bn to
USD 903.4bn, mainly
driven
by
higher customer
deposits,
largely due to currency effects. Required stable funding increased by USD 21.3bn to USD 712.7bn, predominantly
reflecting increases in trading assets and lending
assets, with the latter increase mainly driven by
currency effects.
›
Refer to the 30 September 2024 Pillar 3 Report, available under “Pillar 3 disclosures” at
ubs.com/investors
, and to
“Liquidity and funding management” in the “Capital, liquidity and funding, and balance sheet” section of the
UBS AG Annual Report 2023, available under “Annual reporting” at
ubs.com/investors
, for more information about
the NSFR on a UBS AG consolidated basis
Net stable funding ratio
USD bn, except where indicated
30.9.24
30.6.24
Available stable funding
903.4
882.8
Required stable funding
712.7
691.5
Net stable funding ratio (%)
126.8
127.7
UBS AG third quarter 2024 report |
Risk, capital, liquidity and funding, and balance
sheet | Balance sheet and off-balance sheet
39
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 AG
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 1,626.9bn
as of
30 September 2024,
an increase
of USD 62.2bn
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 22.8bn, 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 16.0bn,
primarily reflecting currency
effects of approximately USD
26.3bn, 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 9.8bn, 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 6.1bn,
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 10.6bn.
›
Refer to the “Consolidated financial statements” section of this report for more information
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
645.4
629.4
3
Securities financing transactions at amortized cost
92.1
82.0
12
Trading assets
172.2
162.4
6
Derivatives and cash collateral receivables on derivative instruments
206.9
184.1
12
Brokerage receivables
24.7
25.3
(2)
Other financial assets measured at amortized cost
61.6
60.8
1
Other financial assets measured at fair value
2
131.3
125.2
5
Non-financial assets
49.5
47.2
5
Total assets
1,626.9
1,564.7
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.
UBS AG third quarter 2024 report |
Risk, capital, liquidity and funding, and balance
sheet | Balance sheet and off-balance sheet
40
Balance sheet liabilities (30 September
2024 vs 30 June 2024)
Total liabilities were USD 1,529.1bn as of 30 September 2024, an increase of USD 58.7bn 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 25.9bn, predominantly in the
Investment
Bank,
primarily
reflecting
the
same
drivers
as
on
the
asset
side.
Customer
deposits
increased
by
USD 18.9bn, primarily
driven by
currency effects
of approximately
USD 24.8bn, partly
offset by
net new
deposit
outflows. Brokerage payables increased by
USD 6.2bn, mainly reflecting increases in client activity
levels.
These increases were partly offset by a
USD 3.9bn 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 partly offset
by currency effects of approximately USD 4.8bn.
The “Liabilities,
by product and currency” table in this section
provides more information about 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
14.8
10
Customer deposits
779.6
760.7
2
Funding from UBS Group AG measured at amortized cost
112.3
111.7
0
Debt issued designated at fair value and long-term debt issued measured
at amortized cost
2
182.1
186.0
(2)
Trading liabilities
36.4
33.5
9
Derivatives and cash collateral payables on derivative instruments
208.7
182.8
14
Brokerage payables
52.4
46.2
13
Other financial liabilities measured at amortized cost
21.9
22.1
(1)
Other financial liabilities designated at fair value
41.1
36.8
11
Non-financial liabilities
16.3
14.0
16
Total liabilities
1,529.1
1,470.4
4
Share capital
0.4
0.4
0
Share premium
84.8
84.8
0
Retained earnings
8.0
7.4
8
Other comprehensive income
3
3.8
0.8
393
Total equity attributable to shareholders
96.9
93.4
4
Equity attributable to non-controlling interests
0.9
0.9
3
Total equity
97.8
94.2
4
Total liabilities and equity
1,626.9
1,564.7
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.
UBS AG third quarter 2024 report |
Risk, capital, liquidity and funding, and balance
sheet | Balance sheet and off-balance sheet
41
Equity (30 September 2024 vs 30 June 2024)
Equity attributable to shareholders increased
by USD 3,551m to USD 96,943m as of
30 September 2024.
The
increase
of
USD 3,551m
was
mainly
driven
by
total
comprehensive income
attributable
to
shareholders
of
USD 3,602m, reflecting
a
net
profit of
USD 996m and
other comprehensive
income
(OCI) of
USD 2,606m. OCI
mainly included cash flow hedge OCI
of USD 1,593m,
OCI related to foreign currency
translation of USD 1,461m
and negative own credit on financial liabilities
designated at fair value of USD 323m.
›
Refer to the “UBS AG consolidated 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
Liabilities, by product and currency
USD equivalent
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
14.8
8.8
8.5
3.3
2.7
3.6
2.5
Customer deposits
779.6
760.7
311.4
308.3
320.9
303.4
76.9
77.8
of which: demand deposits
231.6
223.5
56.6
55.7
109.9
102.5
35.9
36.3
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
324.4
323.7
186.6
185.9
59.8
58.1
36.8
37.5
Funding from UBS Group AG measured at amortized cost
112.3
111.7
76.4
74.8
2.8
2.6
29.5
29.3
Debt issued designated at fair value and long-term debt issued measured
at amortized
cost
2
182.1
186.0
86.0
95.6
43.9
41.7
33.6
31.2
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
208.7
182.8
167.4
145.3
4.2
3.5
22.3
21.3
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
21.9
22.1
12.4
13.1
3.5
3.5
2.0
1.4
Other financial liabilities designated at fair value
41.1
36.8
10.1
9.2
0.1
0.2
8.2
6.0
Non-financial liabilities
16.3
14.0
8.1
6.5
3.0
2.9
2.6
2.4
Total liabilities
1,529.1
1,470.4
765.6
741.4
392.0
370.2
203.0
193.0
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 4.1bn,
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
154.6
150.5
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 AG third quarter 2024 report |
Consolidated financial statements
42
Consolidated financial
statements
Unaudited
Table of contents
UBS AG interim consolidated financial
statements (unaudited)
43
Income statement
44
Statement of comprehensive income
45
Balance sheet
46
Statement of changes in equity
47
Statement of cash flows
48
1
Basis of accounting
51
2
Accounting for the merger of UBS AG and Credit Suisse AG
53
3
Segment reporting
54
4
Net interest income
54
5
Net fee and commission income
54
6
Other income
55
7
Personnel expenses
55
8
General and administrative expenses
56
9
Expected credit loss measurement
63
10
Fair value measurement
69
11
Derivative instruments
70
12
Other assets and liabilities
71
13
Funding from UBS Group AG measured at amortized cost
71
14
Debt issued designated at fair value
71
15
Debt issued measured at amortized cost
72
16
Provisions and contingent liabilities
81
17
Events after the reporting period
82
Comparison between UBS AG consolidated and
UBS Group AG consolidated
UBS AG third quarter 2024 report |
Consolidated financial statements | UBS
AG interim consolidated financial statements
(unaudited)
43
UBS 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
30.9.24
30.9.23
Interest income from financial instruments measured at
amortized cost and fair value through
other comprehensive income
4
8,335
6,892
5,974
21,467
16,272
Interest expense from financial instruments measured at
amortized cost
4
(8,820)
(7,080)
(5,357)
(21,952)
(13,818)
Net interest income from financial instruments measured
at fair value through profit or loss
and other
4
2,045
910
368
3,573
1,224
Net interest income
4
1,560
722
984
3,088
3,678
Other net income from financial instruments measured
at fair value through profit or loss
3,592
3,271
2,467
9,809
7,476
Fee and commission income
5
6,986
6,190
5,097
18,783
15,180
Fee and commission expense
5
(652)
(589)
(431)
(1,699)
(1,297)
Net fee and commission income
5
6,334
5,601
4,666
17,084
13,883
Other income
6
510
306
231
1,025
624
Total revenues
11,997
9,900
8,348
31,006
25,661
Credit loss expense / (release)
9
167
84
27
303
80
Personnel expenses
7
5,788
4,797
3,951
14,746
11,697
General and administrative expenses
8
4,014
4,584
2,585
11,584
8,011
Depreciation, amortization and impairment of non-financial
assets
838
631
510
2,000
1,686
Operating expenses
10,640
10,012
7,047
28,329
21,393
Operating profit / (loss) before tax
1,191
(196)
1,275
2,374
4,188
Tax expense / (benefit)
194
28
339
587
1,115
Net profit / (loss)
997
(224)
936
1,787
3,072
Net profit / (loss) attributable to non-controlling interests
1
40
5
49
17
Net profit / (loss) attributable to shareholders
996
(264)
932
1,738
3,055
UBS AG third quarter 2024 report |
Consolidated financial statements | UBS
AG interim consolidated financial statements
(unaudited)
44
Statement of comprehensive 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
Comprehensive income attributable to shareholders
1
Net profit / (loss)
996
(264)
932
1,738
3,055
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
2,460
(109)
(646)
787
(114)
Effective portion of changes in fair value of hedging instruments
designated as net investment hedges, before tax
(1,008)
78
292
(123)
18
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
8
2
4
22
(1)
Subtotal foreign currency translation, net of tax
1,461
(27)
(348)
690
(102)
Financial assets measured at fair value through other comprehensive income
Net unrealized gains / (losses), before tax
2
0
(1)
1
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
(1)
1
1
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
(335)
(940)
169
(1,635)
Net (gains) / losses reclassified to the income statement from
equity
388
626
479
1,506
1,241
Income tax relating to cash flow hedges
(374)
2
89
(255)
86
Subtotal cash flow hedges, net of tax
1,593
294
(372)
1,420
(308)
Cost of hedging
Cost of hedging, before tax
(8)
(20)
(1)
(34)
5
Income tax relating to cost of hedging
0
0
0
0
0
Subtotal cost of hedging, net of tax
(8)
(20)
(1)
(34)
5
Total other comprehensive income that may be reclassified to the income statement, net
of tax
3,048
247
(722)
2,077
(405)
Other comprehensive income that will not be reclassified to the income
statement
Defined benefit plans
Gains / (losses) on defined benefit plans, before tax
(127)
42
6
(50)
26
Income tax relating to defined benefit plans
8
0
(17)
0
(49)
Subtotal defined benefit plans, net of tax
(119)
41
(12)
(49)
(23)
Own credit on financial liabilities designated at fair value
Gains / (losses) from own credit on financial liabilities designated
at fair value, before tax
(317)
228
(312)
(70)
(455)
Income tax relating to own credit on financial liabilities designated
at fair value
(6)
(2)
27
(8)
71
Subtotal own credit on financial liabilities designated at
fair value, net of tax
(323)
226
(284)
(78)
(384)
Total other comprehensive income that will not be reclassified to the income statement,
net of tax
(442)
267
(296)
(128)
(408)
Total other comprehensive income
2,606
514
(1,018)
1,949
(812)
Total comprehensive income attributable to shareholders
3,602
251
(86)
3,687
2,243
Comprehensive income attributable to non-controlling
interests
Net profit / (loss)
1
40
5
49
17
Total other comprehensive income that will not be reclassified to the income statement,
net of tax
20
(20)
(11)
(11)
(9)
Total comprehensive income attributable to non-controlling interests
21
20
(6)
37
8
Total comprehensive income
Net profit / (loss)
997
(224)
936
1,787
3,072
Other comprehensive income
2,626
494
(1,029)
1,937
(822)
of which: other comprehensive income that may be reclassified
to the income statement
3,048
247
(722)
2,077
(405)
of which: other comprehensive income that will not be reclassified
to the income statement
(422)
247
(307)
(139)
(417)
Total comprehensive income
3,623
271
(93)
3,724
2,251
1 Refer to the “UBS AG consolidated performance” section of this report for more information.
UBS AG third quarter 2024 report |
Consolidated financial statements | UBS
AG interim consolidated financial statements
(unaudited)
45
Balance sheet
USD m
Note
30.9.24
30.6.24
31.12.23
Assets
Cash and balances at central banks
243,261
248,335
171,806
Amounts due from banks
20,162
20,457
28,206
Receivables from securities financing transactions measured at amortized
cost
92,104
82,028
74,128
Cash collateral receivables on derivative instruments
11
47,209
43,637
32,300
Loans and advances to customers
9
625,249
608,910
405,633
Other financial assets measured at amortized cost
12
61,566
60,826
54,334
Total financial assets measured at amortized cost
1,089,553
1,064,192
766,407
Financial assets at fair value held for trading
10
172,190
162,358
135,098
of which: assets pledged as collateral that may be sold or repledged
by counterparties
46,601
43,452
44,524
Derivative financial instruments
10, 11
159,720
140,415
131,728
Brokerage receivables
10
24,656
25,273
20,883
Financial assets at fair value not held for trading
10
129,141
123,020
63,754
Total financial assets measured at fair value through profit or loss
485,706
451,065
351,463
Financial assets measured at fair value through other comprehensive income
10
2,179
2,167
2,233
Investments in associates
2,483
2,233
983
Property, equipment and software
12,848
12,990
11,044
Goodwill and intangible assets
6,739
7,023
6,265
Deferred tax assets
9,678
9,877
9,244
Other non-financial assets
12
17,707
15,117
8,377
Total assets
1,626,893
1,564,664
1,156,016
Liabilities
Amounts due to banks
28,058
26,750
16,720
Payables from securities financing transactions measured at amortized cost
16,358
14,847
5,782
Cash collateral payables on derivative instruments
11
34,267
33,691
34,886
Customer deposits
779,604
760,693
555,673
Funding from UBS Group AG measured at amortized cost
13
112,262
111,725
67,282
Debt issued measured at amortized cost
15
109,460
112,520
69,784
Other financial liabilities measured at amortized cost
12
21,923
22,125
12,713
Total financial liabilities measured at amortized cost
1,101,933
1,082,350
762,840
Financial liabilities at fair value held for trading
10
36,441
33,493
31,712
Derivative financial instruments
10, 11
174,449
149,089
140,707
Brokerage payables designated at fair value
10
52,403
46,198
42,275
Debt issued designated at fair value
10, 14
106,527
108,405
86,341
Other financial liabilities designated at fair value
10, 12
41,055
36,834
27,366
Total financial liabilities measured at fair value through profit or loss
410,875
374,019
328,401
Provisions
16
5,009
4,763
2,524
Other non-financial liabilities
12
11,253
9,285
6,682
Total liabilities
1,529,071
1,470,417
1,100,448
Equity
Share capital
386
386
386
Share premium
84,776
84,825
24,638
Retained earnings
8,019
7,417
28,235
Other comprehensive income recognized directly in equity, net of tax
3,762
764
1,974
Equity attributable to shareholders
96,943
93,392
55,234
Equity attributable to non-controlling interests
879
855
335
Total equity
97,822
94,247
55,569
Total liabilities and equity
1,626,893
1,564,664
1,156,016
UBS AG third quarter 2024 report |
Consolidated financial statements | UBS
AG interim consolidated financial statements
(unaudited)
46
Statement of changes in equity
USD m
Share
capital and
share
premium
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
25,024
28,235
1,974
4,947
(2,961)
55,234
Equity recognized due to the merger of UBS AG and Credit Suisse
AG
3
60,571
(18,848)
(291)
(291)
41,432
Premium on shares issued and warrants exercised
0
0
Tax (expense) / benefit
8
8
Dividends
(3,000)
(3,000)
Translation effects recognized directly in retained earnings
(3)
3
3
0
Share of changes in retained earnings of associates and
joint ventures
(3)
(3)
New consolidations / (deconsolidations) and other increases
/ (decreases)
(441)
4
26
(414)
Total comprehensive income for the period
1,610
2,077
690
1,420
3,687
of which: net profit / (loss)
1,738
1,738
of which: OCI, net of tax
(128)
2,077
690
1,420
1,949
Balance as of 30 September 2024
2
85,162
8,019
3,762
5,637
(1,830)
96,943
Non-controlling interests as of 30 September 2024
879
5
Total equity as of 30 September 2024
97,822
Balance as of 1 January 2023
2
24,985
31,746
(133)
4,098
(4,234)
56,598
Premium on shares issued and warrants exercised
(5)
6
(5)
Tax (expense) / benefit
0
0
Dividends
(6,000)
(6,000)
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)
0
0
Total comprehensive income for the period
2,648
(405)
(102)
(308)
2,243
of which: net profit / (loss)
3,055
3,055
of which: OCI, net of tax
(408)
(405)
(102)
(308)
(812)
Balance as of 30 September 2023
2
24,981
28,410
(556)
3,996
(4,560)
52,836
Non-controlling interests as of 30 September 2023
345
Total equity as of 30 September 2023
53,181
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 Refer to Note 2 for more information.
4 Mainly reflecting
effects from transactions
between Credit Suisse
AG and its
subsidiaries and UBS
AG and its
subsidiaries prior to
the merger in
May 2024.
5 Includes an increase
of USD 490m
in the second
quarter of 2024
due to the
merger of UBS
AG and
Credit Suisse AG.
6 Includes decreases
related to recharges
by UBS Group
AG for share-based
compensation awards
granted to employees
of UBS AG
or its
subsidiaries.
UBS AG third quarter 2024 report |
Consolidated financial statements | UBS
AG interim consolidated financial statements
(unaudited)
47
Statement of cash flows
Year-to-date
USD m
30.9.24
30.9.23
Cash flow from / (used in) operating activities
Net profit / (loss)
1,787
3,072
Non-cash items included in net profit and other adjustments
Depreciation, amortization and impairment of non-financial
assets
2,000
1,686
Credit loss expense / (release)
303
80
Share of net (profit) / loss of associates and joint ventures
and impairment related to associates
(107)
(79)
Deferred tax expense / (benefit)
(477)
(208)
Net loss / (gain) from investing activities
(98)
33
Net loss / (gain) from financing activities
5,574
(423)
Other net adjustments
1
(5,705)
1,333
Net change in operating assets and liabilities
1,2
Amounts due from banks and amounts due to banks
2,968
(3,255)
Receivables from securities financing transactions measured at amortized
cost
10,729
5,747
Payables from securities financing transactions measured at amortized cost
1,189
2,061
Cash collateral on derivative instruments
(11,320)
(5,375)
Loans and advances to customers
14,141
3,255
Customer deposits
(13,449)
(6,322)
Financial assets and liabilities at fair value held for trading and derivative financial
instruments
(11,213)
(15,217)
Brokerage receivables and payables
6,159
(10,726)
Financial assets at fair value not held for trading and other financial assets
and liabilities
(15,823)
178
Provisions and other non-financial assets and liabilities
738
370
Income taxes paid, net of refunds
(1,275)
(1,321)
Net cash flow from / (used in) operating activities
(13,879)
3
(25,111)
Cash flow from / (used in) investing activities
Cash and cash equivalents obtained due to the merger of UBS
AG and Credit Suisse AG
4
121,258
Purchase of subsidiaries, associates and intangible assets
(1)
Disposal of subsidiaries, associates and intangible assets
166
35
Purchase of property, equipment and software
(1,066)
(947)
Disposal of property, equipment and software
9
33
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
123,412
(5,260)
Cash flow from / (used in) financing activities
Repayment of Swiss National Bank funding
(10,304)
Net issuance (repayment) of short-term debt measured at amortized
cost
(3,882)
6,658
Distributions paid on UBS AG shares
(3,000)
(6,000)
Issuance of debt designated at fair value and long-term debt measured
at amortized cost
5
82,921
84,278
Repayment of debt designated at fair value and long-term debt measured
at amortized cost
5
(98,381)
(65,547)
Inflows from securities financing transactions measured at amortized
cost
6
4,979
Outflows from securities financing transactions measured at amortized
cost
6
(1,113)
Net cash flows from other financing activities
(457)
(369)
Net cash flow from / (used in) financing activities
(29,238)
19,020
Total cash flow
Cash and cash equivalents at the beginning of the period
190,469
195,200
Net cash flow from / (used in) operating, investing and financing
activities
80,296
(11,350)
Effects of exchange rate differences on cash and cash equivalents
1
3,153
(713)
Cash and cash equivalents at the end of the period
7
273,918
8
183,136
of which: cash and balances at central banks
7
243,261
161,640
of which: amounts due from banks
7
18,540
10,950
of which: money market paper
7,9
11,915
10,545
Additional information
Net cash flow from / (used in) operating activities includes:
Interest received in cash
34,522
23,579
Interest paid in cash
30,623
18,052
Dividends on equity investments, investment funds and associates
received in cash
10
2,234
1,812
1 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.
2 Excludes non-cash items
arising from the accounting
for the merger of UBS
AG and Credit Suisse
AG. Refer to
Note 2 for more information.
3 Includes cash
receipts from the sale of loans and loan commitments of USD 2,980m within Non-core and Legacy for the nine-month period ended 30 September 2024.
4 Refer to Note 2 for more information about the merger of
UBS AG and Credit Suisse AG.
5 Includes funding from UBS Group AG measured at amortized cost (recognized
on the balance sheet in Funding from UBS Group AG) and
measured at fair value (recognized on the
balance sheet in Debt issued designated at fair value and Other financial liabilities designated at fair value).
6 Reflects cash flows from securities financing transactions measured at amortized cost that use UBS debt
instruments as the underlying.
7 Includes only balances with an original maturity of
three months or less.
8 The balance includes USD 0.2bn related to cash held
in Assets of disposal groups held for
sale, recognized
within Other
non-financial assets.
9 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 455m; 30
September 2023: USD 187m) and Financial assets at fair
value held for trading (30 September 2024: USD 331m;
30 September 2023: USD 199m).
10 Includes dividends received from associates reported within Net cash flow from / (used in) investing activities.
UBS AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
48
Notes to the UBS AG interim consolidated financial
statements (unaudited)
Note 1
Basis of accounting
Basis of preparation
The consolidated financial statements (the financial statements) of UBS AG and its subsidiaries (together, UBS AG)
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 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. Note 2 sets
out
the
accounting
for
the
merger
of
UBS AG
and
Credit
Suisse AG.
These
interim
financial
statements
are
unaudited
and
should
be
read
in
conjunction
with
UBS AG’s
audited
consolidated
financial
statements
in
the
UBS AG Annual
Report 2023
and the
“Management report”
sections of
this report,
including the
disclosures in
“Integration of Credit
Suisse” in the “Recent
developments” section of
this report. In
the opinion of management,
all
necessary
adjustments
have
been
made
for
a
fair
presentation
of
UBS AG’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 this
Note and
Note 2, as
well as
“Note 1a Material accounting policies” in the “Consolidated financial statements” section of the UBS AG Annual
Report 2023.
Amendments to IAS 12,
Income Taxes
UBS AG
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 UBS AG.
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.
UBS AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
49
Note 1
Basis of accounting (continued)
IFRS 18 is
effective from
1 January 2027
and will
also apply
to comparative
information. UBS AG
will first
apply
these new
requirements in
the Annual
Report 2027
and, for
interim reporting,
in the
first quarter
2027 interim
report. UBS AG
is assessing
the impact
of the
new requirements
on its
reporting but
expects it
to be
limited. UBS AG
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.
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
(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 AG
is currently
assessing
the impact of the new requirements on its
financial statements.
Incremental accounting policies related
to the transactions and activities associated
with the merger of
UBS AG and Credit Suisse AG
Business combinations under common control
UBS AG’s
material
accounting
policies
in
respect
of
business
combinations
are
set
out
in
“Note 1a
Material
accounting
policies,
item
1
Consolidation”
in
the
“Consolidated
financial
statements”
section
of
the
UBS AG
Annual
Report
2023.
The
merger
of
UBS AG
and
Credit
Suisse AG
on
31 May
2024
constitutes
a
business
combination under
common control
as defined
in IFRS
3,
Business Combinations
, i.e.
a business
combination in
which the combining entities or businesses are ultimately
controlled by the same entity both
before and after the
business combination and where
that control is
not transitory.
Business combinations under common control
are
outside
the
scope
of
IFRS 3.
In
the
absence
of
specific
accounting
requirements
in
IFRS
Accounting Standards,
UBS AG has
adopted an
accounting policy
that provides
relevant information
for the
economic decision-making
needs of users and is reflective of the economic substance
of the transaction.
UBS AG accounts for business
combinations under common
control using the historic
carrying values of
assets and
liabilities of
the transferred
entity
or business
as of
the date
of
the transfer,
determined under
IFRS Accounting
Standards.
The
balances
of
each
of
the
equity
reserves
of
the
transferred
entity,
accumulated
after
that
entity
becomes part of the
UBS Group, are combined with
the corresponding equity reserves (
Share premium
,
Retained
earnings
and
Other
comprehensive income
recognized directly
in
equity,
net
of
tax
)
of
UBS AG.
The
difference
between the
aggregate carrying
value of
the assets
and liabilities
and equity
reserves is
recognized as
an adjustment
to
Share premium
, net
of any
consideration that
may be
payable. Comparative
periods prior
to the
dates of
business
combinations under common control are not restated,
because such transactions
are accounted for prospectively.
Allowances and provisions for expected credit
losses
UBS AG’s material accounting
policies in respect of
allowances and provisions for
expected credit losses are
set out
in
“Note 1a
Material
accounting policies,
item 2g
Allowances and
provisions
for
expected
credit
losses”
in
the
“Consolidated financial
statements” section
of the
UBS AG Annual
Report 2023.
Financial instruments
acquired
through
a business
combination under
common control
that are
not classified
by UBS AG
at fair
value through
profit or loss are subject to IFRS 9 expected credit loss requirements.
UBS AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
50
Note 1
Basis of accounting (continued)
Goodwill and other intangible assets
UBS AG’s
material
accounting policies
regarding
goodwill
are
set
out
in
“Note 1a
Material
accounting policies,
item 9 Goodwill”
in the “Consolidated
financial statements”
section of the
UBS AG Annual Report
- Goodwill
recognized
in
the
transferred
entity
prior
to
the
date
of
the
business
combination
under
common
control
is
recognized in
these financial statements
at the
historic carrying value,
subsequently allocated to
respective cash-
generating units and tested for impairment.
Business
combinations
under
common
control
do
not
result
in
a
recognition
of
incremental
goodwill
or
other
intangible assets,
in addition
to those
already recognized
by the
transferred entity
prior to
the date
of business
combination under common control.
Currency translation rates
The following table shows the rates of the
main currencies used to translate the
financial information of UBS AG’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
1.14
1.11
1 EUR
1.11
1.07
1.10
1.06
1.10
1.07
1.08
1.09
1.08
1 GBP
1.34
1.26
1.28
1.22
1.31
1.26
1.26
1.28
1.24
100 JPY
0.69
0.62
0.71
0.67
0.69
0.63
0.69
0.66
0.72
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
UBS AG with
the same functional
currency for each
month. Weighted average
rates for individual
business
divisions may deviate from the weighted average rates for UBS AG.
UBS AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
51
Note 2
Accounting for the merger of UBS AG and
Credit Suisse AG
Merger of UBS AG and Credit Suisse AG
The merger of UBS AG and Credit Suisse AG effected on 31 May 2024
with no consideration payable by UBS AG
constitutes a business combination under
common control accounted for based
on the accounting policies set out
in Note 1 to these financial statements.
Assets and liabilities
UBS AG accounted
for the
merger with
Credit Suisse AG
using the
historic carrying
values of
the assets
and liabilities
of Credit Suisse AG as
at the date
of the transaction
(31 May 2024), determined
under IFRS Accounting
Standards.
–
No fair
value adjustments
were made
to assets
and liabilities
(which is
different to
the UBS
Group AG consolidated
financial statements where
acquisition method accounting
was required under
IFRS 3,
Business Combinations
,
on 31 May 2023 for the acquisition of Credit
Suisse Group AG).
–
UBS AG has elected
to retain historic
accumulated depreciation and impairment
of non-financial assets
arising
since
31 May 2023, i.e.
the
date
on
which
Credit
Suisse AG
came
to
be
under
the
common
control
of
UBS
Group AG.
–
Expected credit
loss allowances
and provisions
for performing
and credit-impaired
exposures were
recognized
under IFRS 9.
–
No new
goodwill, intangible
assets or
contingent liabilities
have been
recognized as
a result
of the
merger of
UBS AG and Credit Suisse AG.
–
Uniform accounting policies for like transactions and events
have been applied throughout UBS AG
and Credit
Suisse AG as of 31 May 2023 (the date of the
acquisition of Credit Suisse Group AG by
UBS Group AG).
Equity reserves
The equity
reserve balances
of Credit
Suisse AG recorded
from 31 May
2023 to
31 May 2024
have been
added
across
to the
corresponding equity
reserves
of UBS AG,
except for
the foreign
currency
translation reserve
that
UBS AG
has
elected
to
reset
and
has
been
added
to
Share
premium
.
As
a
result,
the
net
investment
hedge
accounting reserve
has been
added to
Retained earnings
as if
no net
investment hedge
accounting had
been applied
by Credit Suisse. The results of Credit Suisse AG from 31
May 2023
to 31 May 2024 have been added
to
Retained
earnings
. Equity reserve balances
of Credit Suisse AG recorded prior
to 31 May 2023 (i.e.
the date on which
Credit
Suisse AG came under the common control of UBS
Group AG) have not been retained.
The
difference between
the aggregated
carrying value
of the
assets and
liabilities and
equity reserves
has been
recognized as
an adjustment
to
Share premium
(reflecting the
contribution of
the Credit
Suisse AG business
to
UBS AG from the common parent, UBS Group
AG).
Comparability
Profit and loss
information for
the third quarter
of 2024
is based
entirely on consolidated
data following
the merger
of UBS AG and Credit
Suisse AG. Profit and loss
information for the second
quarter of 2024 includes one
month
(June 2024)
of post-merger
consolidated data
and two
months of
pre-merger UBS AG
data only
(April and
May
2024). Profit
and loss
information for
the third
quarter of
2023 includes pre
-merger UBS AG data
only.
Year-to-
date information for 2024 includes four months (June to September
- of post-merger consolidated data and
five
months of
pre-merger UBS AG
data only
(January to
May 2024).
Comparative year-to-date
information for
2023 includes pre-merger UBS AG data only.
Balance
sheet
information
as
at
30 September
2024
and
30 June
2024
includes
post-merger
consolidated
information. Balance sheet dates prior to 30 June
2024 reflect pre-merger UBS AG information
only.
The comparative periods prior to the
merger date have not been restated,
as the transaction has been accounted
for
prospectively
since
31 May
2024,
i.e.
the
date
on
which
the
merger
of
UBS AG
and
Credit
Suisse AG
was
effected.
UBS AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
52
Note 2
Accounting for the merger of UBS AG and
Credit Suisse AG (continued)
The table below presents the assets, liabilities and equity of Credit Suisse AG that were
recognized by UBS AG on
31 May 2024 as a result of the merger.
Credit Suisse AG assets, liabilities and equity
transferred to UBS AG on the merger date
USD m
Assets
Cash and balances at central banks
114,759
Amounts due from banks
6,861
Receivables from securities financing transactions measured at amortized
cost
28,380
Cash collateral receivables on derivative instruments
10,373
Loans and advances to customers
222,937
Other financial assets measured at amortized cost
10,852
Total financial assets measured at amortized cost
394,162
Financial assets at fair value held for trading
15,504
Derivative financial instruments
31,975
Brokerage receivables
130
Financial assets at fair value not held for trading
36,592
Total financial assets measured at fair value through profit or loss
84,201
Financial assets measured at fair value through other comprehensive income
0
Investments in associates
1,330
Property, equipment and software
2,627
Goodwill and intangible assets
819
Deferred tax assets
224
Other non-financial assets
5,943
Total assets
489,306
Liabilities
Amounts due to banks
20,715
Payables from securities financing transactions measured at amortized cost
6,077
Cash collateral payables on derivative instruments
6,459
Customer deposits
224,627
Funding from UBS Group AG measured at amortized cost
45,298
Debt issued measured at amortized cost
44,521
Other financial liabilities measured at amortized cost
8,984
Total financial liabilities measured at amortized cost
356,681
Financial liabilities at fair value held for trading
1,870
Derivative financial instruments
33,200
Brokerage payables designated at fair value
339
Debt issued designated at fair value
25,947
Other financial liabilities designated at fair value
5,494
Total financial liabilities measured at fair value through profit or loss
66,850
Provisions
2,817
Other non-financial liabilities
3,381
Total liabilities
429,729
Equity
Equity attributable to shareholders
1
41,432
Equity attributable to non-controlling interests
490
Total equity
41,922
1 Refer to the Statement of changes in equity in this report for more information.
Transactions between UBS AG and
Credit Suisse AG
have been
eliminated from the
balances presented
in the
table
above. They amounted to USD 7.1bn of assets
and USD 24.8bn of liabilities of Credit Suisse AG.
UBS AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
53
Note 2
Accounting for the merger of UBS AG and
Credit Suisse AG (continued)
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
to these
financial statements. The
transaction is expected
to close in
the first quarter
of 2025.
UBS AG
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 AG’s reporting structure and organizational setup, in
the first quarter
of
2024
certain
changes
to
Group
Treasury
allocations
were
made
with
an
impact
on
segment
reporting
for
UBS AG’s business divisions and Group Items.
Prior-period information has been adjusted
for comparability.
UBS AG 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.
In parallel with
these changes,
UBS AG has
increased the
allocation
of balance sheet resources from Group Treasury
to the business divisions.
Following the
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 and USD 30m for Personal & Corporate
Banking, and increases in Operating profit / (loss)
before tax
of USD
46m for
Group Items,
USD 26m
for the
Investment Bank
and USD 1m
for Asset
Management, with
no
change to Non-core and Legacy.
Prior-period information as
of 31 December
2023 has also
been restated, resulting
in increases
of Total
assets of
USD 35.6bn in Global Wealth Management,
USD 26.9bn in Personal & Corporate Banking and
USD 21.4bn in the
Investment Bank, with a corresponding decrease
of assets of USD 83.9bn in Group Items.
These changes had no effect on the reported
results or financial position of UBS AG.
›
Refer to the “Consolidated financial statements” section of the UBS AG Annual Report 2023 for more information
about UBS AG’s business divisions
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group
Items
UBS AG
For the nine months ended 30 September 2024
1
Net interest income
4,183
2,868
(38)
(2,667)
(17)
(1,243)
3,088
Non-interest income
11,982
2,259
2,069
9,944
427
1,237
27,918
Total revenues
16,166
5,127
2,031
7,277
411
(6)
31,006
Credit loss expense / (release)
10
203
0
35
53
1
303
Operating expenses
13,579
3,257
1,691
6,523
2,542
737
28,329
Operating profit / (loss) before tax
2,577
1,667
340
718
(2,184)
(744)
2,374
Tax expense / (benefit)
587
Net profit / (loss)
1,787
As of 30 September 2024
Total assets
578,624
477,040
23,655
448,284
83,715
15,576
1,626,893
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group
Functions
UBS AG
For the nine months ended 30 September 2023
1, 2
Net interest income
4,192
2,298
(26)
(1,818)
23
(991)
3,678
Non-interest income
9,975
1,782
1,539
7,848
64
775
21,983
Total revenues
14,167
4,080
1,513
6,030
87
(216)
25,661
Credit loss expense / (release)
29
27
(1)
25
(1)
1
80
Operating expenses
10,872
2,118
1,243
5,480
861
819
21,393
Operating profit / (loss) before tax
3,267
1,935
271
526
(774)
(1,036)
4,188
Tax expense / (benefit)
1,115
Net profit / (loss)
3,072
As of 31 December 2023
2
Total assets
404,747
283,980
19,662
402,415
13,845
31,368
1,156,016
1 Refer to
“Note 3 Segment
reporting” in the
“Consolidated financial statements”
section of the
UBS AG Annual
Report 2023 for
more information about
UBS AG’s
reporting segments.
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.
UBS AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
54
Note 4
Net interest 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
Interest income from loans and deposits
1
7,620
6,070
5,279
19,128
14,228
Interest income from securities financing transactions measured
at amortized cost
2
898
1,008
894
2,894
2,492
Interest income from other financial instruments measured
at amortized cost
346
320
291
989
826
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)
(532)
(517)
(1,625)
(1,350)
Total interest income from financial instruments measured at amortized cost and fair
value through other comprehensive
income
8,335
6,892
5,974
21,467
16,272
Interest expense on loans and deposits
3
6,634
5,453
4,090
16,923
10,451
Interest expense on securities financing transactions measured
at amortized cost
4
569
499
454
1,476
1,293
Interest expense on debt issued
1,575
1,099
788
3,461
2,000
Interest expense on lease liabilities
41
29
24
93
74
Total interest expense from financial instruments measured at amortized cost
8,820
7,080
5,357
21,952
13,818
Total net interest income from financial instruments measured at amortized cost and fair
value through other comprehensive
income
(485)
(188)
617
(486)
2,454
Net interest income from financial instruments measured at fair value through profit
or loss and other
2,045
910
368
3,573
1,224
Total net interest income
1,560
722
984
3,088
3,678
1 Consists of
interest income from
cash and balances
at central banks,
amounts due from
banks, and
cash collateral receivable
s
on derivative
instruments, as
well as negative
interest on amounts
due to banks,
customer deposits, and
cash collateral payables
on derivative instruments.
2 Includes interest
income on receivables
from securities financing
transactions and negative
interest, including fees,
on payables from
securities financing transactions.
3 Consists of interest expense on amounts due to banks, cash collateral payables on derivative instruments, customer deposits, and funding from UBS Group AG, as well as negative
interest on cash and balances at central banks, amounts due from banks, and cash collateral receivables on derivative instruments.
4 Includes interest expense on payables from securities financing transactions and
negative interest, including fees, on receivables from securities financing transactions.
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
30.9.24
30.9.23
Underwriting fees
174
235
143
632
424
M&A and corporate finance fees
243
262
139
739
474
Brokerage fees
1,122
1,095
784
3,237
2,464
Investment fund fees
1,552
1,358
1,193
4,111
3,550
Portfolio management and related services
3,111
2,678
2,323
8,245
6,787
Other
785
562
515
1,819
1,482
Total fee and commission income
1
6,986
6,190
5,097
18,783
15,180
of which: recurring
4,693
4,076
3,573
12,437
10,483
of which: transaction-based
2,249
2,089
1,512
6,253
4,655
of which: performance-based
44
25
11
93
42
Fee and commission expense
652
589
431
1,699
1,297
Net fee and commission income
6,334
5,601
4,666
17,084
13,883
1 Reflects third-party fee and commission income for the third quarter of 2024 of USD 4,148m for Global Wealth Management (second quarter of 2024: USD 3,697m; third quarter of 2023: USD 3,197m), USD 761m
for Personal & Corporate Banking (second quarter of 2024: USD 589m; third
quarter of 2023: USD 471m), USD 926m for Asset Management (second quarter of 2024: USD 774m;
third quarter of 2023: USD 670m),
USD 1,041m for the Investment Bank (second quarter of 2024: USD 1,110m; third quarter of 2023: USD 760m), USD 13m for
Group Items (second quarter of 2024: negative USD 22m; third quarter of 2023: negative
USD 5m) and USD 97m for Non-core
and Legacy (second quarter of 2024:
USD 42m; third quarter of
2023: USD 5m). 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
(2)
(2)
(2)
(4)
4
Net gains / (losses) from disposals of investments in associates
and joint ventures
116
2
0
0
116
2
0
Share of net profits of associates and joint ventures
67
24
55
107
79
Total
182
22
53
219
84
Income from properties
3
13
7
4
24
13
Net gains / (losses) from properties held for sale
(16)
0
8
(17)
8
Income from shared services provided to UBS Group AG or its subsidiaries
169
215
145
552
428
Other
163
4
63
21
247
4
92
Total other income
510
306
231
1,025
624
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 119m related to the sale of our investment
in an associate.
3 Includes rent received
from third parties.
4 Includes an
USD 84m gain in
Asset Management from
the sale of our
Brazilian real estate
fund management business (nine
-month period ended
30 September 2024: USD 113m).
UBS AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
55
Note 7
Personnel 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
Salaries and variable compensation
1
4,999
4,205
3,431
12,824
10,151
of which: variable compensation – financial advisors
2
1,335
1,291
1,150
3,893
3,372
Contractors
33
24
24
78
74
Social security
315
251
216
774
612
Post-employment benefit plans
242
159
133
587
446
Other personnel expenses
200
158
147
482
413
Total personnel expenses
5,788
4,797
3,951
14,746
11,697
1 Includes role-based
allowances.
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.
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
255
191
117
567
362
Technology costs
257
206
142
625
403
Consulting, legal and audit fees
315
240
162
756
430
Real estate and logistics costs
267
190
210
587
462
Market data services
177
126
97
409
297
Marketing and communication
90
70
46
226
124
Travel and entertainment
60
72
44
186
145
Litigation, regulatory and similar matters
1
(47)
1,161
8
1,121
784
Other
2,640
2,329
1,760
7,106
5,004
of which: shared services costs charged by UBS Group AG or its subsidiaries
2,330
2,097
1,563
6,360
4,408
Total general and administrative expenses
4,014
4,584
2,585
11,584
8,011
1 Reflects the net increase in provisions for Litigation, regulatory and similar matters recognized in the income statement, as well as recoveries from third parties
or other UBS Group entities. Refer to Note 16b for
more information.
UBS AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
56
Note 9
Expected credit loss measurement
a) Credit loss expense / release
Total net credit loss
expenses in the
third quarter of 2024
were USD 167m, reflecting
USD 15m net releases
related
to performing positions and USD 182m 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 182m for
credit-impaired positions
almost entirely
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
Total
For the quarter ended 30.9.24
Global Wealth Management
(11)
14
3
Personal & Corporate Banking
(10)
94
84
Asset Management
0
0
0
Investment Bank
9
(4)
4
Non-core and Legacy
(2)
77
76
Group Items
0
0
0
Total
(15)
182
167
For the quarter ended 30.6.24
Global Wealth Management
(14)
12
(2)
Personal & Corporate Banking
(15)
125
110
Asset Management
0
0
0
Investment Bank
1
(2)
(1)
Non-core and Legacy
(1)
(22)
(23)
Group Items
0
0
0
Total
(29)
113
84
For the quarter ended 30.9.23
Global Wealth Management
(7)
15
8
Personal & Corporate Banking
16
(15)
1
Asset Management
0
0
0
Investment Bank
10
7
17
Non-core and Legacy
0
(1)
(1)
Group Items
1
0
1
Total
20
6
27
UBS AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
57
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 AG
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 AG kept
the scenarios
and scenario
weights in
line with
those applied
in the
UBS AG 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 1,202m 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 AG models for dedicated segments.
›
Refer to Note 2 for more information
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 AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
58
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.
No
purchased
credit-impaired
financial
assets
were
recognized
in
the
third
quarter
of
2024.
Originated
credit-
impaired financial assets were not material
and are not presented in the table below.
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
Financial instruments measured at amortized cost
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Cash and balances at central banks
243,261
243,130
131
0
(212)
0
(212)
0
Amounts due from banks
20,162
19,949
201
13
(76)
(5)
(2)
(68)
Receivables from securities financing transactions measured at amortized
cost
92,104
92,105
0
0
(1)
(1)
0
0
Cash collateral receivables on derivative instruments
47,209
47,209
0
0
0
0
0
0
Loans and advances to customers
625,249
594,453
26,049
4,748
(2,874)
(331)
(321)
(2,222)
of which: Private clients with mortgages
268,774
256,960
10,407
1,408
(232)
(54)
(82)
(96)
of which: Real estate financing
91,028
85,545
5,201
281
(110)
(25)
(31)
(54)
of which: Large corporate clients
29,724
24,682
3,988
1,055
(798)
(79)
(101)
(619)
of which: SME clients
23,880
19,485
2,960
1,435
(787)
(56)
(49)
(681)
of which: Lombard
150,202
149,734
353
115
(121)
(7)
(1)
(114)
of which: Credit cards
2,145
1,658
446
42
(44)
(7)
(11)
(26)
of which: Commodity trade finance
3,761
3,596
153
12
(113)
(13)
(1)
(98)
of which: Ship / aircraft financing
8,300
7,782
518
0
(54)
(36)
(8)
(10)
of which: Consumer financing
2,977
2,741
142
93
(132)
(21)
(26)
(85)
Other financial assets measured at amortized cost
61,566
60,853
531
182
(146)
(33)
(8)
(106)
of which: Loans to financial advisors
2,677
2,494
82
101
(46)
(4)
(1)
(41)
Total financial assets measured at amortized cost
1,089,553
1,057,699
26,912
4,942
(3,309)
(371)
(543)
(2,395)
Financial assets measured at fair value through other comprehensive income
2,179
2,179
0
0
0
0
0
0
Total on-balance sheet financial assets in scope of ECL requirements
2
1,091,732
1,059,878
26,912
4,942
(3,309)
(371)
(543)
(2,395)
Total exposure
ECL provisions
Off-balance sheet (in scope of ECL)
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Guarantees
41,450
40,019
1,279
151
(62)
(24)
(18)
(20)
of which: Large corporate clients
8,120
7,470
620
30
(26)
(8)
(9)
(9)
of which: SME clients
2,616
2,214
301
101
(12)
(4)
(4)
(4)
of which: Financial intermediaries and hedge funds
22,810
22,737
73
0
(12)
(8)
(4)
0
of which: Lombard
4,197
3,985
206
6
(3)
0
0
(3)
of which: Commodity trade finance
1,773
1,771
1
0
(1)
(1)
0
0
Irrevocable loan commitments
80,506
76,601
3,736
169
(187)
(113)
(45)
(29)
of which: Large corporate clients
48,794
45,464
3,208
123
(119)
(77)
(34)
(7)
Forward starting reverse repurchase and securities borrowing agreements
16,063
16,063
0
0
0
0
0
0
Unconditionally revocable loan commitments
154,613
151,814
2,543
255
(86)
(68)
(17)
0
of which: Real estate financing
11,547
11,249
297
1
(7)
(6)
0
0
of which: Large corporate clients
16,378
15,853
523
3
(24)
(16)
(6)
(2)
of which: SME clients
11,099
10,381
509
209
(36)
(29)
(6)
0
of which: Lombard
62,624
62,562
61
1
0
0
0
0
of which: Credit cards
10,400
9,910
487
3
(9)
(7)
(2)
0
Irrevocable committed prolongation of existing loans
3,701
3,691
5
5
(3)
(3)
0
0
Total off-balance sheet financial instruments and other credit lines
2
296,333
288,188
7,564
581
(337)
(208)
(80)
(49)
Total allowances and provisions
2
(3,646)
(579)
(623)
(2,445)
1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective
ECL allowances.
2 Refer to Note 2 for more information about the merger of UBS AG
and Credit Suisse AG.
UBS AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
59
Note 9
Expected credit loss measurement (continued)
USD m
30.6.24
Carrying amount
1
ECL allowances
Financial instruments measured at amortized cost
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Cash and balances at central banks
248,335
248,241
94
0
(230)
(1)
(228)
0
Amounts due from banks
20,457
20,125
319
13
(73)
(5)
0
(67)
Receivables from securities financing transactions measured at amortized
cost
82,027
82,028
0
0
(2)
(2)
0
0
Cash collateral receivables on derivative instruments
43,637
43,637
0
0
0
0
0
0
Loans and advances to customers
608,910
578,841
25,506
4,563
(2,696)
(354)
(299)
(2,044)
of which: Private clients with mortgages
255,281
244,008
10,104
1,169
(181)
(56)
(77)
(48)
of which: Real estate financing
88,141
83,214
4,580
347
(104)
(28)
(31)
(46)
of which: Large corporate clients
28,619
23,612
3,867
1,140
(741)
(93)
(95)
(553)
of which: SME clients
23,698
19,766
2,591
1,341
(871)
(60)
(40)
(771)
of which: Lombard
148,546
147,529
880
137
(101)
(7)
(2)
(92)
of which: Credit cards
1,927
1,479
408
40
(41)
(6)
(11)
(25)
of which: Commodity trade finance
5,795
5,558
222
16
(149)
(18)
(2)
(129)
of which: Ship / aircraft financing
8,549
8,096
427
25
(42)
(38)
(4)
0
of which: Consumer financing
2,886
2,689
120
78
(112)
(20)
(21)
(71)
Other financial assets measured at amortized cost
60,826
60,098
537
191
(148)
(34)
(8)
(106)
of which: Loans to financial advisors
2,601
2,408
83
110
(47)
(4)
(1)
(41)
Total financial assets measured at amortized cost
1,064,192
1,032,970
26,456
4,766
(3,148)
(396)
(535)
(2,217)
Financial assets measured at fair value through other comprehensive income
2,167
2,167
0
0
0
0
0
0
Total on-balance sheet financial assets in scope of ECL requirements
2
1,066,359
1,035,137
26,456
4,766
(3,148)
(396)
(535)
(2,217)
Total exposure
ECL provisions
Off-balance sheet (in scope of ECL)
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Guarantees
40,791
39,207
1,382
203
(69)
(26)
(15)
(28)
of which: Large corporate clients
8,323
7,421
820
82
(26)
(9)
(7)
(9)
of which: SME clients
2,539
2,153
287
99
(12)
(4)
(4)
(4)
of which: Financial intermediaries and hedge funds
21,270
21,080
190
0
(11)
(8)
(3)
0
of which: Lombard
3,895
3,872
10
13
(4)
0
0
(4)
of which: Commodity trade finance
1,642
1,629
13
0
(1)
(1)
0
0
Irrevocable loan commitments
81,866
77,446
4,236
184
(178)
(104)
(44)
(30)
of which: Large corporate clients
46,696
42,890
3,699
107
(128)
(85)
(37)
(6)
Forward starting reverse repurchase and securities borrowing agreements
9,724
9,724
0
0
0
0
0
0
Unconditionally revocable loan commitments
150,450
148,053
2,154
244
(81)
(69)
(13)
0
of which: Real estate financing
11,706
11,154
552
0
(7)
(7)
0
0
of which: Large corporate clients
16,000
15,677
314
9
(22)
(16)
(4)
(2)
of which: SME clients
11,001
10,575
346
80
(34)
(28)
(5)
0
of which: Lombard
60,961
60,934
26
1
0
0
0
0
of which: Credit cards
10,056
9,576
477
4
(8)
(6)
(2)
0
Irrevocable committed prolongation of existing loans
3,328
3,319
7
2
(2)
(2)
0
0
Total off-balance sheet financial instruments and other credit lines
2
286,160
277,748
7,779
633
(330)
(201)
(71)
(58)
Total allowances and provisions
2
(3,478)
(597)
(606)
(2,275)
1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective
ECL allowances.
2 Refer to Note 2 for more information about the merger of UBS AG
and Credit Suisse AG.
UBS AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
60
Note 9
Expected credit loss measurement (continued)
USD m
31.12.23
Carrying amount
1
ECL allowances
Financial instruments measured at amortized cost
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Cash and balances at central banks
171,806
171,788
18
0
(26)
0
(26)
0
Amounts due from banks
2
28,206
28,191
14
0
(7)
(6)
(1)
0
Receivables from securities financing transactions measured at amortized
cost
74,128
74,128
0
0
(2)
(2)
0
0
Cash collateral receivables on derivative instruments
32,300
32,300
0
0
0
0
0
0
Loans and advances to customers
405,633
385,493
18,131
2,009
(935)
(173)
(185)
(577)
of which: Private clients with mortgages
174,400
163,617
9,955
828
(156)
(39)
(89)
(28)
of which: Real estate financing
54,305
50,252
4,038
15
(46)
(20)
(25)
(1)
of which: Large corporate clients
14,431
12,594
1,331
506
(241)
(34)
(32)
(174)
of which: SME clients
12,694
10,662
1,524
508
(262)
(34)
(24)
(204)
of which: Lombard
117,924
117,874
0
50
(22)
(5)
0
(17)
of which: Credit cards
2,041
1,564
438
39
(42)
(6)
(11)
(24)
of which: Commodity trade finance
2,889
2,873
12
4
(119)
(7)
0
(111)
Other financial assets measured at amortized cost
54,334
53,882
312
141
(87)
(16)
(5)
(66)
of which: Loans to financial advisors
2,615
2,422
79
114
(49)
(4)
(1)
(44)
Total financial assets measured at amortized cost
766,407
745,782
18,475
2,150
(1,057)
(197)
(217)
(643)
Financial assets measured at fair value through other comprehensive income
2,233
2,233
0
0
0
0
0
0
Total on-balance sheet financial assets in scope of ECL requirements
768,640
748,015
18,475
2,150
(1,057)
(197)
(217)
(643)
Total exposure
ECL provisions
Off-balance sheet (in scope of ECL)
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Guarantees
33,211
32,332
761
118
(40)
(14)
(7)
(19)
of which: Large corporate clients
3,624
3,051
486
87
(10)
(3)
(2)
(6)
of which: SME clients
1,506
1,299
177
31
(7)
(1)
(1)
(5)
of which: Financial intermediaries and hedge funds
22,549
22,504
46
0
(12)
(8)
(3)
0
of which: Lombard
3,009
3,009
0
0
(1)
0
0
(1)
of which: Commodity trade finance
1,811
1,803
8
0
(1)
(1)
0
0
Irrevocable loan commitments
44,018
42,085
1,878
56
(95)
(55)
(38)
(2)
of which: Large corporate clients
26,096
24,444
1,622
30
(76)
(45)
(28)
(2)
Forward starting reverse repurchase and securities borrowing agreements
10,373
10,373
0
0
0
0
0
0
Committed unconditionally revocable credit lines
47,421
45,452
1,913
56
(49)
(39)
(10)
0
of which: Real estate financing
9,439
8,854
585
0
(4)
(3)
(1)
0
of which: Large corporate clients
5,110
4,951
151
8
(6)
(4)
(3)
0
of which: SME clients
5,408
5,188
191
29
(21)
(17)
(3)
0
of which: Lombard
8,964
8,964
0
1
0
0
0
0
of which: Credit cards
10,458
9,932
522
4
(10)
(8)
(2)
0
Irrevocable committed prolongation of existing loans
4,183
4,169
11
4
(4)
(3)
0
0
Total off-balance sheet financial instruments and other credit lines
139,206
134,410
4,562
234
(188)
(111)
(56)
(21)
Total allowances and provisions
(1,244)
(308)
(272)
(664)
1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective
ECL allowances.
2 Includes USD 14.8bn against Credit Suisse AG.
UBS AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
61
Note 9
Expected credit loss measurement (continued)
The table
below provides
information about
the ECL gross
exposure and
the ECL
coverage ratio
for UBS AG’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 decreased by 1 basis
point to 10 basis points. Compared
with
30 June 2024, coverage ratios for performing positions
related to real estate lending (on-balance sheet) decreased
by 1 basis
point to 5 basis
points, and coverage
ratios for performing
positions related to
corporate lending (on-
balance sheet) increased by 2 basis points
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
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
Private clients with mortgages
269,006
257,013
10,489
1,504
9
2
79
5
636
Real estate financing
91,138
85,570
5,233
336
12
3
60
6
1,613
Total real estate lending
360,144
342,583
15,722
1,839
9
2
72
5
814
Large corporate clients
30,522
24,760
4,088
1,673
262
32
246
62
3,697
SME clients
24,666
19,541
3,009
2,116
319
29
163
47
3,218
Total corporate lending
55,189
44,301
7,097
3,790
287
31
211
56
3,429
Lombard
150,323
149,741
354
229
8
0
21
1
4,967
Credit cards
2,189
1,664
457
68
203
40
251
85
3,879
Commodity trade finance
3,874
3,609
155
110
291
37
89
39
8,917
Ship / aircraft financing
8,354
7,818
526
11
65
46
146
52
9,831
Consumer financing
3,109
2,762
168
179
425
75
1,538
159
4,781
Other loans and advances to customers
44,942
42,306
1,891
745
107
8
55
10
5,886
Loans to financial advisors
2,723
2,497
83
142
169
15
135
18
2,892
Total other lending
215,514
210,397
3,634
1,483
46
6
162
8
5,485
Total
1
630,847
597,282
26,453
7,112
46
6
122
11
3,182
Gross exposure (USD m)
ECL coverage (bps)
Off-balance sheet
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
Private clients with mortgages
7,687
7,428
221
38
5
5
32
5
39
Real estate financing
12,680
12,341
338
1
6
6
1
6
0
Total real estate lending
20,366
19,769
559
39
6
5
14
5
39
Large corporate clients
73,307
68,801
4,350
155
23
15
115
21
1,164
SME clients
15,639
14,318
996
325
48
28
165
37
554
Total corporate lending
88,946
83,119
5,346
481
27
17
124
23
751
Lombard
70,232
69,957
268
7
1
0
2
0
12,815
Credit cards
10,400
9,910
487
3
8
7
38
8
0
Commodity trade finance
3,128
3,124
4
0
9
8
289
9
0
Ship / aircraft financing
2,239
2,233
6
0
31
28
1,006
31
0
Consumer financing
150
150
0
0
0
0
0
0
0
Financial intermediaries and hedge funds
39,035
38,597
438
0
4
3
87
4
0
Other off-balance sheet commitments
45,772
45,265
456
52
9
6
146
8
865
Total other lending
170,957
169,237
1,659
61
5
3
79
4
2,123
Total
2
280,269
272,125
7,564
581
12
8
106
10
849
Total on- and off-balance sheet
3
911,116
869,406
34,017
7,693
36
6
118
10
3,006
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 AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
62
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
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
Private clients with mortgages
255,462
244,063
10,181
1,217
7
2
76
5
397
Real estate financing
88,246
83,242
4,611
393
12
3
66
7
1,167
Total real estate lending
343,708
327,305
14,792
1,610
8
3
73
6
585
Large corporate clients
29,360
23,705
3,962
1,693
253
39
240
68
3,268
SME clients
24,569
19,827
2,631
2,112
354
31
151
45
3,649
Total corporate lending
53,929
43,532
6,593
3,804
299
35
205
58
3,480
Lombard
148,647
147,536
882
229
7
0
18
1
4,024
Credit cards
1,968
1,485
419
64
208
39
252
86
3,826
Commodity trade finance
5,945
5,576
224
144
251
33
97
35
8,910
Ship / aircraft financing
8,591
8,134
432
25
49
47
103
50
0
Consumer financing
2,998
2,709
141
149
374
74
1,506
144
4,771
Other loans and advances to customers
45,821
42,918
2,322
581
77
7
68
10
5,328
Loans to financial advisors
2,647
2,412
84
151
176
18
146
22
2,736
Total other lending
216,617
210,770
4,504
1,343
39
6
127
8
4,967
Total
1
614,254
581,607
25,889
6,758
45
6
116
11
3,086
Gross exposure (USD m)
ECL coverage (bps)
Off-balance sheet
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
Private clients with mortgages
8,090
7,833
226
31
5
4
32
5
11
Real estate financing
12,715
12,143
572
0
5
6
0
5
0
Total real estate lending
20,805
19,975
799
31
5
5
0
5
11
Large corporate clients
71,091
66,060
4,833
198
25
17
100
22
904
SME clients
15,520
14,590
719
210
51
27
207
35
1,206
Total corporate lending
86,611
80,650
5,553
408
30
19
114
25
1,060
Lombard
68,071
68,017
40
14
1
0
16
0
2,706
Credit cards
10,056
9,576
477
4
8
7
35
8
0
Commodity trade finance
3,701
3,681
20
0
9
8
53
9
0
Ship / aircraft financing
1,836
1,817
19
0
11
12
0
11
0
Consumer financing
152
152
0
0
0
0
0
0
0
Financial intermediaries and hedge funds
47,842
47,381
461
0
3
2
76
3
0
Other off-balance sheet commitments
37,362
36,774
411
177
8
5
67
5
611
Total other lending
169,020
167,398
1,427
195
4
2
57
3
751
Total
2
276,436
268,023
7,779
633
12
7
92
10
914
Total on- and off-balance sheet
3
890,690
849,630
33,668
7,391
35
7
110
11
2,900
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).
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
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
Private clients with mortgages
174,555
163,656
10,044
856
9
2
88
7
326
Real estate financing
54,351
50,272
4,063
16
9
4
61
8
594
Total real estate lending
228,906
213,928
14,107
872
9
3
81
8
331
Large corporate clients
14,671
12,628
1,363
680
164
27
237
48
2,558
SME clients
12,956
10,696
1,548
712
202
32
155
47
2,861
Total corporate lending
27,627
23,324
2,911
1,392
182
29
193
48
2,714
Lombard
117,946
117,879
0
67
2
0
0
0
2,487
Credit cards
2,083
1,571
449
63
200
40
253
87
3,801
Commodity trade finance
3,008
2,881
12
115
394
25
62
25
9,676
Other loans and advances to customers
26,997
26,083
837
77
18
10
44
11
2,379
Loans to financial advisors
2,665
2,426
80
159
185
17
122
20
2,793
Total other lending
152,699
150,840
1,378
481
18
3
117
4
4,462
Total
1
409,232
388,092
18,396
2,744
24
5
101
9
2,263
Gross exposure (USD m)
ECL coverage (bps)
Off-balance sheet
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
Private clients with mortgages
6,801
6,560
226
15
8
7
29
8
40
Real estate financing
10,662
10,064
599
0
6
5
22
6
0
Total real estate lending
17,463
16,624
824
15
6
6
24
6
40
Large corporate clients
34,829
32,446
2,259
125
27
16
147
25
628
SME clients
7,872
7,337
456
80
47
29
230
41
626
Total corporate lending
42,702
39,782
2,715
205
30
18
161
28
627
Lombard
13,609
13,609
0
1
1
1
0
1
0
Credit cards
10,458
9,932
522
4
10
8
35
10
0
Commodity trade finance
2,354
2,346
8
0
4
4
36
4
0
Financial intermediaries and hedge funds
25,378
25,148
230
0
5
4
157
5
0
Other off-balance sheet commitments
16,869
16,596
264
9
12
5
170
8
0
Total other lending
68,668
67,630
1,024
14
7
4
97
6
5,921
Total
2
128,833
124,037
4,562
234
15
9
122
13
908
Total on- and off-balance sheet
3
538,065
512,129
22,958
2,978
22
6
105
10
2,157
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 AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
63
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, and
with regard to assets and liabilities now accounted for
by UBS AG as a
result of the merger of UBS AG and
Credit Suisse AG for the period between the date of
the merger (i.e. 31 May
- and 30 September 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
136,786
30,256
5,148
172,190
124,627
29,689
8,042
162,358
115,345
17,936
1,817
135,098
of which: Equity instruments
124,897
1,049
172
126,117
112,441
830
185
113,456
99,510
721
140
100,372
of which: Government bills / bonds
4,005
4,642
18
8,665
5,603
5,319
75
10,997
6,843
2,195
14
9,052
of which: Investment fund units
6,649
1,003
176
7,827
5,677
1,222
240
7,139
8,008
1,082
9
9,098
of which: Corporate and municipal bonds
1,232
19,213
863
21,307
896
16,875
900
18,671
982
11,956
648
13,586
of which: Loans
0
4,118
3,712
7,830
0
5,246
6,420
11,666
0
1,870
904
2,775
of which: Asset-backed securities
4
225
163
393
10
192
169
370
3
111
101
215
Derivative financial instruments
1,484
155,670
2,566
159,720
836
137,254
2,325
140,415
593
129,871
1,264
131,728
of which: Foreign exchange
829
60,641
177
61,646
331
50,576
121
51,029
317
65,070
0
65,387
of which: Interest rate
0
47,143
640
47,783
0
49,199
403
49,602
0
35,028
284
35,311
of which: Equity / index
0
40,818
996
41,815
0
32,239
1,154
33,393
0
26,649
667
27,317
of which: Credit
0
2,694
608
3,302
0
2,553
478
3,031
0
1,452
301
1,752
of which: Commodities
6
4,027
18
4,051
3
2,563
16
2,582
0
1,627
12
1,639
Brokerage receivables
0
24,656
0
24,656
0
25,273
0
25,273
0
20,883
0
20,883
Financial assets at fair value not held for trading
45,903
75,172
8,066
129,141
34,765
80,293
7,961
123,020
29,529
30,124
4,101
63,754
of which: Financial assets for unit-linked
investment contracts
18,274
6
0
18,280
16,957
6
0
16,963
15,814
0
0
15,814
of which: Corporate and municipal bonds
85
15,701
152
15,937
61
14,338
210
14,609
62
16,716
215
16,994
of which: Government bills / bonds
27,043
8,036
0
35,079
17,262
7,817
0
25,079
13,262
3,332
0
16,594
of which: Loans
0
4,464
2,545
7,010
0
3,699
2,553
6,252
0
4,172
1,254
5,426
of which: Securities financing transactions
0
45,665
484
46,149
0
53,069
268
53,337
0
5,541
4
5,545
of which: Asset-backed securities
0
1,058
553
1,611
0
1,108
500
1,608
0
18
0
18
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
147
645
1,201
395
160
670
1,225
367
233
205
804
of which: Equity instruments
92
0
3,022
3,114
91
5
2,913
3,009
24
0
1,088
1,112
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
4,426
0
0
4,426
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
17
17
Total assets measured at fair value
191,203
287,867
15,890
494,960
166,735
274,615
18,371
459,721
149,962
200,979
7,198
358,139
UBS AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
64
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
26,201
10,041
199
36,441
24,476
8,906
111
33,493
25,451
6,110
151
31,712
of which: Equity instruments
19,379
552
58
19,990
16,956
417
66
17,438
16,310
236
87
16,632
of which: Corporate and municipal bonds
29
8,054
135
8,218
33
7,118
35
7,186
28
4,893
58
4,979
of which: Government bills / bonds
4,390
1,069
0
5,458
6,171
1,260
5
7,437
8,320
806
0
9,126
of which: Investment fund units
2,403
285
4
2,691
1,315
38
4
1,357
794
117
4
915
Derivative financial instruments
1,633
167,462
5,354
174,449
877
143,764
4,448
149,089
716
136,833
3,158
140,707
of which: Foreign exchange
881
68,571
36
69,488
326
51,660
48
52,034
400
71,322
21
71,743
of which: Interest rate
0
43,065
298
43,363
0
47,021
243
47,264
0
32,656
107
32,763
of which: Equity / index
0
48,901
4,299
53,200
0
38,001
3,379
41,380
0
30,209
2,717
32,926
of which: Credit
0
3,426
422
3,848
0
3,456
371
3,827
0
1,341
273
1,614
of which: Commodities
5
3,303
38
3,345
2
1,951
14
1,967
0
1,271
20
1,291
of which: Loan commitments measured at FVTPL
0
73
188
260
0
1,547
288
1,835
0
3
17
21
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
42,275
0
42,275
Debt issued designated at fair value
0
95,641
10,886
106,527
0
96,915
11,490
108,405
0
78,509
7,832
86,341
Other financial liabilities designated at fair value
0
36,873
4,182
41,055
0
31,957
4,877
36,834
0
25,069
2,297
27,366
of which: Financial liabilities related to unit-linked
investment contracts
0
18,389
0
18,389
0
17,080
0
17,080
0
15,922
0
15,922
of which: Securities financing transactions
0
10,893
0
10,893
0
7,801
0
7,801
0
6,927
0
6,927
of which: Funding from UBS Group AG
0
4,035
1,656
5,691
0
3,370
1,487
4,857
0
1,327
1,623
2,950
of which: Over-the-counter debt instruments
and others
0
3,557
2,525
6,082
0
3,706
3,390
7,096
0
892
674
1,566
Total liabilities measured at fair value
27,835
362,420
20,621
410,875
25,352
327,740
20,927
374,019
26,167
288,796
13,438
328,401
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
379
396
397
422
Effect from merger of UBS AG and Credit Suisse AG
1
1
1
Profit / (loss) deferred on new transactions
85
59
34
187
196
(Profit) / loss recognized in the income statement
(54)
(50)
(39)
(164)
(227)
Foreign currency translation
(1)
(1)
(1)
(2)
(1)
Reserve balance at the end of the period
418
388
390
418
390
1 Refer to Note 2 for more information about the merger of UBS AG and Credit Suisse AG.
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)
(312)
of which: debt issued designated at fair value
(928)
(747)
(208)
of which: other financial liabilities designated at fair value
(439)
(315)
(105)
Credit valuation adjustments
2
(145)
(104)
(37)
Funding and debit valuation adjustments
(94)
(81)
(82)
Other valuation adjustments
(1,616)
(1,744)
(730)
of which: liquidity
(1,074)
(1,229)
(308)
of which: model uncertainty
(542)
(516)
(423)
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 AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
65
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
UBS AG’s estimates
and assumptions,
but rather
the different
underlying characteristics
of the
relevant assets
and
liabilities
held by UBS
AG.
The significant unobservable
inputs disclosed in
the table below
are consistent with
those included in
“Note 20 Fair
value measurement” in the “Consolidated financial
statements” section of the UBS AG 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
0.9
0.1
0.1
Relative value to
market comparable
Bond price equivalent
17
126
98
9
114
93
points
Discounted expected
cash flows
Discount margin
829
829
829
491
491
basis
points
Traded loans,
loans
designated at fair value
and guarantees
6.4
2.3
0.0
0.0
Relative value to
market comparable
Loan price equivalent
1
258
81
6
101
98
points
Discounted expected
cash flows
Credit spread
18
1,533
334
200
275
252
basis
points
Investment fund units
3
0.8
0.2
0.0
0.0
Relative value to
market comparable
Net asset value
Equity instruments
3
3.2
1.2
0.1
0.1
Relative value to
market comparable
Price
Debt issued designated at
fair value
4
10.9
7.8
Other financial liabilities
designated at fair value
4.2
2.3
Discounted expected
cash flows
Funding spread
106
201
51
201
basis
points
Derivative financial instruments
Interest rate
0.6
0.3
0.3
0.1
Option model
Volatility of interest rates
47
156
84
112
basis
points
Volatility of inflation
1
6
%
IR-to-IR correlation
70
99
%
Discounted expected
cash flows
Funding spread
5
20
basis
points
Credit
0.6
0.3
0.4
0.3
Discounted expected
cash flows
Credit spreads
2
1,270
1
306
basis
points
Credit correlation
50
66
%
Credit volatility
60
60
%
Recovery rates
5
0
100
%
Equity / index
1.0
0.7
4.3
2.7
Option model
Equity dividend yields
0
11
0
14
%
Volatility of equity stocks,
equity and other indices
4
140
4
104
%
Equity-to-FX correlation
(40)
70
(40)
70
%
Equity-to-equity correlation
0
100
13
100
%
Loan commitments
measured at FVTPL
0.2
0.0
Relative value to
market comparable
Loan price equivalent
15
100
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.
5 Recovery rates reflect the estimated recovery that will be realized given expected defaults; they may
vary significantly depending upon the specific assets and terms of each transaction.
UBS AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
66
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)
15
(19)
Securities financing transactions
32
(28)
34
(31)
24
(24)
Auction rate securities
9
(6)
8
(6)
67
(21)
Asset-backed securities
40
(44)
44
(48)
25
(22)
Equity instruments
353
(318)
428
(403)
189
(178)
Investment fund units
138
(139)
140
(141)
21
(23)
Loan commitments measured at FVTPL
88
(83)
85
(110)
7
(10)
Interest rate derivatives, net
145
(47)
139
(81)
27
(18)
Credit derivatives, net
119
(122)
124
(128)
2
(5)
Foreign exchange derivatives, net
4
(4)
3
(4)
5
(4)
Equity / index derivatives, net
690
(695)
651
(546)
358
(285)
Other
281
(134)
83
(90)
41
(39)
Total
2,194
(1,891)
2,192
(2,021)
781
(648)
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 AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
67
Note 10
Fair value measurement (continued)
Movements of Level 3 instruments
USD bn
Balance at
the
beginning
of the
period
Effect from
merger of
UBS AG
and Credit
Suisse AG
1
Net gains /
losses
included in
compre-
hensive
income
2
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
3
Financial assets at fair value held for
trading
1.8
7.8
0.2
0.1
0.4
(3.3)
1.1
(2.6)
0.1
(0.4)
0.0
5.1
of which: Equity instruments
0.1
0.1
(0.0)
(0.0)
0.0
(0.1)
0.0
(0.0)
0.0
(0.0)
0.0
0.2
of which: Corporate and municipal
bonds
0.6
0.4
(0.1)
(0.1)
0.3
(0.3)
0.0
0.0
0.0
(0.0)
0.0
0.9
of which: Loans
0.9
7.0
0.3
0.2
0.0
(2.7)
1.1
(2.6)
0.0
(0.3)
(0.0)
3.7
Derivative financial instruments –
assets
1.3
0.7
(0.1)
(0.2)
0.0
(0.1)
0.9
(0.6)
0.7
(0.1)
(0.0)
2.6
of which: Interest rate
0.3
0.0
0.1
0.0
0.0
(0.1)
0.3
(0.1)
0.2
(0.0)
(0.0)
0.6
of which: Equity / index
0.7
0.2
(0.0)
(0.0)
0.0
(0.0)
0.5
(0.3)
0.1
(0.1)
(0.0)
1.0
of which: Credit
0.3
0.1
(0.1)
(0.0)
0.0
(0.0)
0.1
(0.1)
0.3
(0.0)
(0.0)
0.6
Financial assets at fair value not held
for trading
4.1
4.1
0.1
0.1
0.4
(0.3)
1.5
(1.9)
0.4
(0.3)
0.0
8.1
of which: Loans
1.3
0.8
0.1
0.1
0.1
0.0
0.9
(0.5)
0.0
(0.1)
(0.0)
2.5
of which: Auction rate securities
1.2
0.0
0.0
(0.0)
0.0
0.0
0.0
(1.1)
0.0
0.0
0.0
0.2
of which: Equity instruments
1.1
1.8
0.0
0.0
0.1
(0.1)
0.0
0.0
0.1
0.0
0.0
3.0
of which: Investment fund units
0.2
0.4
0.0
(0.0)
0.1
(0.1)
0.0
0.0
0.0
(0.0)
(0.0)
0.6
of which: Asset-backed securities
0.0
0.5
0.0
0.0
0.0
(0.1)
0.0
0.0
0.2
(0.1)
0.0
0.6
Derivative financial instruments –
liabilities
3.2
0.9
0.8
1.0
0.0
(0.0)
1.8
(1.6)
0.6
(0.3)
(0.0)
5.4
of which: Interest rate
0.1
0.1
0.1
0.3
0.0
(0.0)
0.0
(0.1)
0.1
(0.0)
(0.0)
0.3
of which: Equity / index
2.7
0.2
0.9
0.9
0.0
(0.0)
1.6
(1.3)
0.4
(0.3)
(0.0)
4.3
of which: Credit
0.3
0.2
(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
0.0
0.4
(0.2)
(0.1)
0.0
(0.0)
0.0
(0.0)
0.0
(0.0)
0.0
0.2
Debt issued designated at fair value
7.8
4.5
0.6
0.4
0.0
(0.0)
3.2
(2.7)
1.2
(3.8)
0.0
10.9
Other financial liabilities designated
at fair value
2.3
1.9
0.0
0.0
0.0
0.0
0.9
(0.9)
0.0
(0.1)
0.0
4.2
For the nine months ended 30 September 2023
Financial assets at fair value held for
trading
1.5
(0.0)
(0.1)
0.4
(0.7)
1.0
0.0
0.1
(0.3)
(0.0)
2.0
of which: Investment fund units
0.1
(0.0)
(0.0)
0.0
(0.0)
0.0
0.0
0.0
(0.0)
(0.0)
0.0
of which: Corporate and municipal
bonds
0.5
(0.0)
(0.0)
0.4
(0.2)
0.0
0.0
0.0
(0.0)
(0.0)
0.7
of which: Loans
0.6
0.0
(0.0)
0.0
(0.4)
1.0
0.0
0.0
(0.2)
(0.0)
1.1
Derivative financial instruments –
assets
1.5
(0.1)
(0.0)
0.0
(0.0)
0.5
(0.3)
0.1
(0.2)
0.0
1.5
of which: Interest rate
0.5
0.1
0.1
0.0
0.0
0.1
(0.0)
0.0
(0.0)
(0.0)
0.6
of which: Equity / index
0.7
(0.1)
(0.0)
0.0
0.0
0.3
(0.2)
0.0
(0.2)
(0.0)
0.5
of which: Credit
0.3
(0.1)
(0.1)
0.0
0.0
0.0
(0.0)
0.1
(0.0)
0.0
0.4
Financial assets at fair value not held
for trading
3.7
0.3
0.3
0.6
(0.6)
0.0
(0.0)
0.1
(0.1)
0.0
4.0
of which: Loans
0.7
0.3
0.3
0.2
(0.0)
0.0
(0.0)
0.1
(0.1)
(0.0)
1.1
of which: Auction rate securities
1.3
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
0.0
(0.0)
0.4
(0.2)
0.0
0.0
0.0
0.0
(0.0)
1.0
Derivative financial instruments –
liabilities
1.7
(0.1)
(0.1)
0.0
(0.0)
1.1
(0.4)
0.1
(0.5)
(0.0)
1.8
of which: Interest rate
0.1
0.0
0.0
0.0
0.0
0.1
(0.1)
0.0
(0.0)
(0.0)
0.1
of which: Equity / index
1.2
(0.1)
(0.1)
0.0
0.0
0.6
(0.3)
0.0
(0.1)
(0.0)
1.3
of which: Credit
0.3
(0.0)
(0.0)
0.0
0.0
0.3
0.0
0.0
(0.3)
(0.0)
0.2
Debt issued designated at fair value
9.2
0.1
0.0
0.0
0.0
4.5
(2.9)
0.4
(1.5)
(0.1)
9.8
Other financial liabilities designated at
fair value
2.0
(0.0)
(0.0)
0.0
0.0
0.1
(0.1)
0.0
(0.0)
(0.0)
2.1
1 Refer to Note 2 for more information about the merger of UBS AG
and Credit Suisse AG.
2 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.
3 Total Level 3 assets as of 30 September 2024 were USD 15.9bn (31 December 2023: USD 7.2bn). Total Level 3 liabilities as of 30 September 2024 were USD 20.6bn (31 December 2023:
USD 13.4bn).
UBS AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
68
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 20
Fair value measurement” in the “Consolidated financial statements”
section of the UBS AG 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
Fair
value
Assets
Cash and balances at central banks
243.3
243.3
248.3
248.3
171.8
171.8
Amounts due from banks
20.2
20.2
20.5
20.5
28.2
28.2
Receivables from securities financing transactions measured at amortized
cost
92.1
92.1
82.0
82.0
74.1
74.1
Cash collateral receivables on derivative instruments
47.2
47.2
43.6
43.6
32.3
32.3
Loans and advances to customers
625.2
620.0
608.9
598.7
405.6
396.5
Other financial assets measured at amortized cost
61.6
60.2
60.8
58.6
54.3
54.1
Liabilities
Amounts due to banks
28.1
28.1
26.8
26.7
16.7
16.7
Payables from securities financing transactions measured at amortized cost
16.4
16.4
14.8
14.9
5.8
5.8
Cash collateral payables on derivative instruments
34.3
34.3
33.7
33.7
34.9
34.9
Customer deposits
779.6
780.8
760.7
761.1
555.7
556.6
Funding from UBS Group AG measured at amortized cost
112.3
116.6
111.7
115.9
67.3
67.7
Debt issued measured at amortized cost
109.5
110.6
112.5
112.7
69.8
69.8
Other financial liabilities measured at amortized cost
1
17.6
17.6
17.8
17.8
9.8
9.8
1 Excludes lease liabilities.
UBS AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
69
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
47.8
43.4
4,058
19,927
Credit derivatives
3.3
3.8
166
Foreign exchange
61.6
69.5
7,860
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
159.7
174.4
13,970
20,317
Further netting potential not recognized on the balance
sheet
5
(145.1)
(155.3)
of which: netting of recognized financial liabilities / assets
(122.2)
(122.2)
of which: netting with collateral received / pledged
(22.9)
(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
49.6
47.3
3,478
20,200
Credit derivatives
3.0
3.8
170
Foreign exchange
51.0
52.0
7,158
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
140.4
149.1
12,543
20,526
Further netting potential not recognized on the balance
sheet
5
(125.0)
(132.1)
of which: netting of recognized financial liabilities / assets
(101.1)
(101.1)
of which: netting with collateral received / pledged
(23.9)
(31.0)
Total derivative financial instruments, after consideration of further netting potential
15.4
17.0
As of 31.12.23, USD bn
Derivative financial instruments
Interest rate
35.3
32.8
2,472
13,749
Credit derivatives
1.8
1.6
93
Foreign exchange
65.4
71.7
6,367
180
Equity / index
27.3
32.9
1,191
84
Commodities
1.6
1.3
129
16
Other
3
0.3
0.4
86
Total derivative financial instruments, based on netting under IFRS Accounting Standards
4
131.7
140.7
10,338
14,028
Further netting potential not recognized on the balance
sheet
5
(122.7)
(123.8)
of which: netting of recognized financial liabilities / assets
(99.3)
(99.3)
of which: netting with collateral received / pledged
(23.4)
(24.5)
Total derivative financial instruments, after consideration of further netting potential
9.1
16.9
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. 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 21 Offsetting financial assets and financial liabilities” in the
“Consolidated financial statements” section of the UBS AG 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
34.3
43.6
33.7
32.3
34.9
Further netting potential not recognized on the balance
sheet
2
(28.7)
(18.7)
(27.2)
(19.8)
(22.8)
(20.6)
of which: netting of recognized financial liabilities / assets
(26.4)
(16.4)
(24.6)
(17.3)
(20.4)
(17.2)
of which: netting with collateral received / pledged
(2.3)
(2.3)
(2.5)
(2.5)
(2.5)
(3.4)
Cash collateral on derivative instruments, after consideration of further netting potential
18.5
15.5
16.5
13.9
9.5
14.3
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 21
Offsetting financial assets
and financial
liabilities” in the “Consolidated
financial statements” section of the UBS AG Annual Report 2023 for more information.
UBS AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
70
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
Debt securities
42,175
41,487
43,245
Loans to financial advisors
2,677
2,601
2,615
Fee- and commission-related receivables
2,609
2,482
1,883
Finance lease receivables
6,425
6,068
1,427
Settlement and clearing accounts
461
534
311
Accrued interest income
2,319
2,648
2,004
Other
1
4,901
5,006
2,849
Total other financial assets measured at amortized cost
61,566
60,826
54,334
1 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
4,426
Deposits and collateral provided in connection with litigation,
regulatory and similar matters
1
2,060
1,969
1,379
Prepaid expenses
1,382
1,420
1,062
Current tax assets
1,802
1,832
184
VAT,
withholding tax and other tax receivables
1,168
965
561
Properties and other non-current assets held for sale
234
151
105
Assets of disposal groups held for sale
2
1,841
Other
2,254
2,334
660
Total other non-financial assets
17,707
15,117
8,377
1 Refer to Note 16 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
2,808
2,761
1,613
Accrued interest expenses
6,421
6,795
4,186
Settlement and clearing accounts
1,763
1,797
1,314
Lease liabilities
4,295
4,323
2,904
Other
6,636
6,449
2,695
Total other financial liabilities measured at amortized cost
21,923
22,125
12,713
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
15,922
Securities financing transactions
10,893
7,801
6,927
Over-the-counter debt instruments and other
6,082
7,096
1,566
Funding from UBS Group AG
1
5,691
4,857
2,950
Total other financial liabilities designated at fair value
41,055
36,834
27,366
1 Funding from UBS Group
AG consists of subordinated
debt of UBS AG
and its subsidiaries toward
UBS Group AG.
Subordinated debt consists of
unsecured debt obligations that are
contractually subordinated in
right of payment to all other present and future non-subordinated obligations of the respective issuing entity.
e) Other non-financial liabilities
USD m
30.9.24
30.6.24
31.12.23
Compensation-related liabilities
6,567
5,506
4,526
of which: net defined benefit liability
733
695
487
Current tax liabilities
1,119
1,219
932
Deferred tax liabilities
285
288
162
VAT,
withholding tax and other tax payables
972
949
712
Deferred income
717
841
276
Liabilities of disposal groups held for sale
1
1,291
Other
303
482
74
Total other non-financial liabilities
11,253
9,285
6,682
1
Refer to Note 2 for more information about the agreement to sell Select Portfolio Servicing.
UBS AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
71
Note
13
Funding from UBS Group AG measured
at amortized cost
USD m
30.9.24
30.6.24
31.12.23
Debt contributing to total loss-absorbing capacity (TLAC)
90,959
93,711
51,102
Debt eligible as high-trigger loss-absorbing additional tier
1 capital instruments
15,012
13,907
11,286
Debt eligible as low-trigger loss-absorbing additional
tier 1 capital instruments
1,239
1,225
1,212
Other
1
5,053
2,882
3,682
Total funding from UBS Group AG measured at amortized cost
2,3
112,262
111,725
67,282
1 Includes debt no longer eligible as TLAC
having a residual maturity of less than
one year and high-trigger loss-absorbing additional
tier 1 capital instruments that ceased to
be eligible when UBS Group AG
issued
notice of redemption.
2 Consists of subordinated debt of UBS AG and its subsidiaries toward UBS Group AG. Subordinated debt consists of unsecured debt obligations that are contractually subordinated
in right of
payment to all other present and future non-subordinated obligations
of the respective issuing entity.
3 UBS AG has also recognized funding from UBS
Group AG that is designated at fair value.
Refer to Note 12d
for more information.
Note
14
Debt issued designated at fair value
USD m
30.9.24
30.6.24
31.12.23
Equity-linked
1
56,691
55,911
46,269
Rates-linked
22,466
25,811
16,880
Credit-linked
5,990
6,510
4,506
Fixed-rate
15,811
15,271
14,295
Commodity-linked
3,638
3,507
3,704
Other
1,930
1,396
687
Total debt issued designated at fair value
2
106,527
108,405
86,341
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
(as of 30 June 2024: 99%).
Note
15
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
37,285
Senior unsecured debt
35,348
39,685
18,450
Covered bonds
10,265
8,583
1,006
Subordinated debt
720
715
3,008
of which: eligible as non-Basel III-compliant tier 2 capital
instruments
289
536
538
Debt issued through the Swiss central mortgage institutions
28,807
27,010
10,035
Other long-term debt
468
1,583
Long-term debt
2
75,609
77,576
32,499
Total debt issued measured at amortized cost
3,4
109,460
112,520
69,784
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.
UBS AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
72
Note 16
Provisions and contingent liabilities
a) Provisions
The table below presents an overview of total provisions.
USD m
30.9.24
30.6.24
31.12.23
Provisions other than provisions for expected credit losses
4,672
4,433
2,336
Provisions for expected credit losses
1
337
330
188
Total provisions
5,009
4,763
2,524
1 Refer to Note 9c for more information about ECL provisions recognized for off-balance sheet financial instruments and credit lines.
The table below presents additional information
for provisions other than provisions for
expected credit losses.
USD m
Litigation,
regulatory and
similar matters
1
Restructuring
2
Real estate
3
Other
4
Total
Balance as of 31 December 2023
1,810
209
135
181
2,336
Balance as of 30 June 2024
3,174
760
212
287
4,433
Increase in provisions recognized in the income statement
167
197
4
23
391
Release of provisions recognized in the income statement
(37)
(30)
(2)
(12)
(81)
Reclassifications
86
5
0
0
0
86
Provisions used in conformity with designated purpose
(70)
(186)
(3)
(12)
(271)
Foreign currency translation and other movements
60
34
12
8
114
Balance as of 30 September 2024
3,381
775
223
294
4,672
1 Consists of provisions
for losses resulting
from legal, liability
and compliance risks.
2 Consists of 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 146m),
USD 272m of
personnel-related restructuring
provisions as
of 30 September
2024 (30 June
2024: USD 299m;
31 December 2023:
USD 64m) 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 a
reclassification from derivative liabilities to IAS 37 provisions 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
16b.
There
are
no
material
contingent
liabilities
associated
with
the
other
classes
of
provisions.
b) Litigation, regulatory and similar matters
UBS 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
is involved in
various disputes and
legal proceedings,
including litigation, arbitration, and regulatory and criminal investigations. “UBS”, “we”
and “our”, for purposes
of this Note, refer to UBS AG and / or one or more
of its subsidiaries, as applicable.
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 UBS 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
UBS
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. UBS 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 UBS
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 UBS,
but are
nevertheless
expected to be, based on UBS’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
UBS
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 AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
73
Note 16
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 are in the range of USD
0bn to USD 4.2bn.
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.
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 AG
Balance as of 31 December 2023
1,220
156
12
286
4
132
1,810
Balance as of 30 June 2024
1,199
152
2
280
1,406
135
3,174
Increase in provisions recognized in the income statement
21
0
6
1
139
0
167
Release of provisions recognized in the income statement
(4)
0
0
(2)
(32)
0
(37)
Reclassifications
2
0
0
0
0
86
0
86
Provisions used in conformity with designated purpose
(14)
0
(6)
(3)
(46)
(1)
(70)
Foreign currency translation and other movements
43
6
0
7
4
0
60
Balance as of 30 September 2024
1,247
157
2
283
1,557
135
3,381
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 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 a reclassification from derivative liabilities to
IAS 37 provisions reflecting the funding obligation relating to investors
who did not accept the redemption offer for the Credit
Suisse supply
chain finance funds.
UBS AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
74
Note 16
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 AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
75
Note 16
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 AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
76
Note 16
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
appealed the
decision. On
6 November
2024, the
EU
General Court issued its decision denying Credit
Suisse’s appeal.
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 AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
77
Note 16
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 AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
78
Note 16
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 AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
79
Note 16
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 provision
s
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 AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
80
Note 16
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 AG third quarter 2024 report |
Consolidated financial statements | Notes
to the UBS AG interim consolidated financial
statements (unaudited)
81
Note 16
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.
Note 17
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 AG third quarter 2024 report |
Consolidated financial statements | Comparison between UBS AG
consolidated and UBS Group AG consolidated
82
Comparison between UBS AG consolidated and
UBS Group AG consolidated
The table below provides
a comparison of selected
financial and capital information of
UBS AG consolidated and
of UBS Group AG consolidated.
UBS AG and
UBS Group AG
both prepare
consolidated financial statements
in accordance
with IFRS
Accounting
Standards. UBS Group AG has applied acquisition accounting as defined by IFRS 3,
Business Combinations
, to the
acquisition of
the Credit
Suisse Group.
The merger
of UBS AG
and Credit
Suisse AG on
31 May 2024
has been
accounted for as
a business combination under
common control,
as defined in
IFRS 3, using
the historic carrying
values of the assets and liabilities of Credit Suisse AG as at the date
of the transaction (31 May 2024), determined
under IFRS
Accounting Standards. Therefore, differences
exist between the
accounting treatments applied
at the
UBS Group AG and
UBS AG consolidated
levels. There
are also certain
scope and
presentation differences,
as noted
below.
›
Refer to Note 2 for more information about the accounting for the merger of UBS AG and Credit Suisse AG
Assets,
liabilities,
revenues,
operating
expenses
and
tax
expenses
/
(benefits)
relating
to
UBS
Group AG and
its
directly held
subsidiaries,
including UBS
Business Solutions
AG, are
reflected in
the consolidated
financial statements
of UBS Group AG but
not in those of
UBS AG. UBS AG’s
assets, liabilities, revenues
and operating expenses
related
to transactions
with UBS
Group AG and its
directly held
subsidiaries, including
UBS Business
Solutions AG and
other
shared services subsidiaries,
are not subject to
elimination in the
UBS AG consolidated financial
statements, but are
eliminated in the UBS Group AG consolidated financial
statements.
In
the third
quarter of
2024,
UBS AG
consolidated recognized
a
net profit
of USD 997m,
while UBS Group
AG
consolidated recognized
a net profit
of USD 1,428m.
The USD 431m
difference was
mainly due to
certain purchase
price allocation (PPA)
effects recognized
at the UBS Group
AG level upon
the acquisition of
the Credit Suisse
Group
which resulted
in net
accretion income
at the
UBS Group AG
level, net
of tax
effects, whereas
UBS AG has
not
applied
acquisition
accounting
and
does
not
have
the
PPA
effects
or
the
corresponding
net
income.
Other
differences
in
net
profit
mainly
arise
as
UBS
Business
Solutions AG
and
other
shared
services
subsidiaries
of
UBS Group AG charge other legal
entities within the UBS AG consolidation scope a
markup on costs incurred for
services provided.
The equity
of UBS Group AG
consolidated was USD 10.2bn
lower than the
equity of
UBS AG consolidated as
of
30 September 2024. This difference was mainly driven by
PPA effects of USD 6.1bn recognized at
the UBS Group
AG level
upon the
acquisition of
the Credit
Suisse Group
that did
not impact
UBS AG consolidated,
primarily related
to loans and loan commitments measured at amortized cost and contingent liabilities recognized under IFRS 3 for
litigation, as well as consolidation scope differences
of USD 4.1bn.
The going concern capital of UBS Group AG consolidated
was USD 9.7bn lower than the going concern capital
of
UBS AG consolidated as of 30 September 2024,
reflecting the common equity tier 1 (CET1)
capital of UBS Group
AG
being lower
by
USD 10.2bn, partly
offset by
its
going
concern loss-absorbing
additional tier 1
(AT1) capital
being USD 0.6bn higher.
The
USD 10.2bn
lower
CET1
capital
of
UBS Group
AG
consolidated
was
primarily
due
to
UBS Group
AG
consolidated
IFRS
equity
being
USD 10.2bn
lower,
compensation-related
regulatory
capital
accruals
at
the
UBS Group AG
level and
a UBS Group
AG capital
reserve for
potential share
repurchases, partly
offset by
lower
UBS Group AG accruals for dividends to shareholders.
UBS AG third quarter 2024 report |
Consolidated financial statements | Comparison between UBS AG
consolidated and UBS Group AG consolidated
83
Comparison between UBS AG consolidated and UBS Group AG consolidated
As of or for the quarter ended 30.9.24
As of or for the quarter ended 30.6.24
USD m, except where indicated
UBS AG
consolidated
UBS Group AG
consolidated
Difference
(absolute)
UBS AG
consolidated
UBS Group AG
consolidated
Difference
(absolute)
Income statement
Total revenues
11,997
12,334
(336)
9,900
11,904
(2,003)
Credit loss expense / (release)
167
121
46
84
95
(11)
Operating expenses
10,640
10,283
357
10,012
10,340
(328)
Operating profit / (loss) before tax
1,191
1,929
(739)
(196)
1,469
(1,665)
Net profit / (loss)
997
1,428
(431)
(224)
1,175
(1,399)
Balance sheet
Total assets
1,626,893
1,623,941
2,951
1,564,664
1,560,976
3,688
Total liabilities
1,529,071
1,536,352
(7,282)
1,470,417
1,476,758
(6,341)
Total equity
97,822
87,589
10,233
94,247
84,218
10,029
Capital information
Common equity tier 1 capital
84,423
74,213
10,210
83,001
76,104
6,897
Going concern capital
100,673
91,024
9,650
98,133
91,804
6,329
Risk-weighted assets
515,520
519,363
(3,843)
509,953
511,376
(1,423)
Common equity tier 1 capital ratio (%)
16.4
14.3
2.1
16.3
14.9
1.4
Going concern capital ratio (%)
19.5
17.5
2.0
19.2
18.0
1.3
Total loss-absorbing capacity ratio (%)
38.2
37.5
0.7
38.6
38.7
0.0
Leverage ratio denominator
1,611,151
1,608,341
2,810
1,564,001
1,564,201
(200)
Common equity tier 1 leverage ratio (%)
5.2
4.6
0.6
5.3
4.9
0.4
Liquidity coverage ratio (%)
1
196.3
199.2
(2.9)
194.1
212.0
(17.9)
Net stable funding ratio (%)
126.8
126.9
(0.1)
127.7
128.0
(0.3)
1 The disclosed ratios represent quarterly averages
for the quarter presented and are 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,
of which for UBS AG
consolidated, 40 data points
were before the merger
of UBS AG and
Credit Suisse AG (i.e.
from 2 April 2024
until 30 May 2024),
and 21 data points were
after the merger (i.e.
from 31 May
2024 until 30 June 2024). Refer to the “Liquidity and funding management” section of this report for more information.
UBS AG third quarter 2024 report |
Appendix
84
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 AG third quarter 2024 report |
Appendix
85
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 the
UBS Group third quarter 2024 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 the
UBS Group third quarter 2024 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 AG third quarter 2024 report |
Appendix
86
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 (%)
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 the
UBS Group third quarter 2024 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 AG third quarter 2024 report |
Appendix
87
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 the third quarter of 2024 is based entirely on consolidated data following the merger of UBS AG and Credit
Suisse AG and for the purpose of the calculation of return measures has been
annualized by multiplying such by four.
Profit and loss information for the second
quarter of 2024 includes one month (June
- of post-merger consolidated data and
two months of pre-merger UBS AG
data only
(April and May 2024) and for the purpose of the calculation of return measures has been annualized by multiplying such by four. Profit or loss information for each of the fourth quarter of 2023 and the third quarter of
2023 includes pre-merger
UBS AG data
only 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
includes four months (June to September 2024) of post-merger consolidated data and five months of pre-merger UBS AG data only (January to May 2024) 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 pre-merger UBS AG data only 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.
UBS AG third quarter 2024 report |
Appendix
88
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 AG third quarter 2024 report |
Appendix
89
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 AG third quarter 2024 report |
Appendix
90
Information sources
Reporting publications
Annual publications
UBS
AG
Annual
Report
:
Published
in
English,
this
report
provides
descriptions
of:
the
UBS
AG
(consolidated)
performance; the
strategy and
performance of
the business
divisions and
Group Items;
risk, treasury
and capital
management; corporate governance;
and financial information, including the financial
statements.
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 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 AG third quarter 2024 report |
Appendix
91
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 AG
P.O. Box, CH-8098 Zurich
P.O. Box, CH-4002 Basel
ubs.com
This
Form 6-K
is
hereby incorporated
by reference
into (1)
the
registration statements
of
UBS AG
on
Form
F-3
(Registration
Number
333-263376
and
333-278934),
and
into
each
prospectus
outstanding
under
the
foregoing
registration statement,
(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
registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
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:
November 8, 2024