6-K
Credit Suisse AG (GLDI)
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: May 7, 2024
UBS Group AG
(Registrant's
Name)
Bahnhofstrasse 45, 8001 Zurich, Switzerland
(Address of principal executive office)
Commission File Number: 1-36764
UBS AG
(Registrant's
Name)
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Aeschenvorstadt 1, 4051 Basel, Switzerland
(Address of principal executive offices)
Commission File Number: 1-15060
Credit Suisse AG
(Registrant's
Name)
Paradeplatz 8, 8001 Zurich, Switzerland
(Address of principal executive office)
Commission File Number: 1-33434
Indicate by check mark whether the registrants file or will file annual
reports under cover of Form 20-F or Form
40-
F.
Form 20-F
☒
Form 40-F
☐
This Form 6-K consists of the
First Quarter 2024 Report of UBS Group
AG, which appears immediately following
this page.
UBS
Group
First quarter
2024 report
Corporate calendar UBS Group AG
Information about future publication dates is available
at
ubs.com/global/en/investor-relations/events/calendar.html
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Imprint
Publisher: UBS Group AG, Zurich, Switzerland | ubs.com
Language: English
© UBS 2024. The key symbol and UBS are among
the registered and unregistered
trademarks of UBS. All rights reserved.
1.
UBS
Group
4
Recent developments
7
Group performance
2.
UBS business divisions
and Group Items
18
Global Wealth Management
21
Personal & Corporate Banking
24
Asset Management
26
Investment Bank
28
Non-core and Legacy
30
Group Items
3.
Risk, capital, liquidity and funding,
and balance sheet
32
Risk management and control
38
Capital management
48
Liquidity and funding management
49
Balance sheet and off-balance sheet
52
Share information and earnings per share
4.
Consolidated
financial statements
54
UBS Group AG interim consolidated
financial statements (unaudited)
5.
Significant regulated subsidiary and
sub-group information
93
Financial and regulatory key figures for
our significant regulated subsidiaries and
sub-groups
Appendix
96
Alternative performance measures
101
Abbreviations frequently used in
our financial reports
103
Information sources
104
Cautionary statement
UBS Group first quarter 2024 report
2
Terms used in this report, unless the context requires otherwise
“UBS,” “UBS Group,” “UBS Group
AG consolidated,” “Group,”
“the Group,” “we,” “us”
and “our”
UBS Group AG and its consolidated subsidiaries
“UBS AG” and “UBS
AG consolidated”
UBS AG and its consolidated subsidiaries
“Credit Suisse AG” and “Credit
Suisse AG consolidated”
Credit Suisse AG and its consolidated subsidiaries
“Credit Suisse Group“ and “Credit Suisse Group
AG consolidated”
Pre-acquisition Credit Suisse Group
”Credit Suisse”
Credit Suisse AG and its consolidated subsidiaries,
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
“Credit Suisse Group AG” and
“Credit Suisse Group AG standalone”
Credit Suisse Group AG on a standalone basis
“UBS AG standalone”
UBS AG on a standalone basis
“Credit Suisse AG standalone”
Credit Suisse 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
“Capital Release Unit (Credit Suisse)”
The Capital Release Unit division of Credit Suisse
AG and its
consolidated subsidiaries
“Corporate Center (Credit Suisse)”
The Corporate Center division of Credit Suisse AG
and its
consolidated subsidiaries
“Investment Bank (Credit Suisse)”
The Investment Bank division of Credit Suisse AG and
its
consolidated subsidiaries
“Swiss Bank (Credit Suisse)”
The Swiss Bank division of Credit Suisse AG and
its consolidated
subsidiaries
“1m”
One million, i.e., 1,000,000
“1bn”
One billion, i.e., 1,000,000,000
“1trn”
One trillion, i.e., 1,000,000,000,000
In this report, unless the context requires otherwise,
references to any gender shall apply to all genders.
Alternative performance measures
An alternative performance measure (an APM) is a financial measure of historical or
future financial performance,
financial position
or cash
flows other
than a
financial measure
defined or
specified in
the applicable
recognized
accounting standards
or
in other
applicable regulations.
We
report
a
number of
APMs
in
the discussion
of
the
financial and
operating performance
of the
Group, our
business divisions
and Group
Items. We
use APMs
to provide
a
more
complete
picture of
our
operating performance
and
to
reflect
management’s view
of
the
fundamental
drivers
of
our
business
results. A
definition
of
each
APM,
the
method
used
to
calculate
it
and
the
information
content are presented
under “Alternative performance measures”
in the
appendix to this
report. Our APMs
may
qualify
as
non-GAAP
measures
as
defined
by
US
Securities
and
Exchange
Commission
(SEC)
regulations.
Our
underlying results are APMs and are non-GAAP
financial measures.
›
Refer to the “Group performance” section of this report and to “Alternative performance measures” in the
appendix to this report for additional information about underlying results
Comparability
Comparative information in this report is presented
as follows.
Profit
and
loss
information
for
the
first
quarter
of
2024
and
the
fourth
quarter
of
2023
is
presented
on
a
consolidated basis, each
including Credit
Suisse data
for three
months. Information for
the first
quarter of
2023
includes pre-acquisition UBS data only.
Balance
sheet
information
as
at
31 March
2024
and
31 December
2023
includes
UBS
and
Credit
Suisse
consolidated information, prior balance sheet
dates reflect pre-acquisition UBS information
only.
UBS Group first quarter 2024 report
3
Our key figures
As of or for the quarter ended
USD m, except where indicated
31.3.24
31.12.23
1
31.3.23
Group results
Total revenues
12,739
10,855
8,744
Credit loss expense / (release)
106
136
38
Operating expenses
10,257
11,470
7,210
Operating profit / (loss) before tax
2,376
(751)
1,495
Net profit / (loss) attributable to shareholders
1,755
(279)
1,029
Diluted earnings per share (USD)
2
0.52
(0.09)
0.32
Profitability and growth
3,4,5
Return on equity (%)
8.2
(1.3)
7.2
Return on tangible equity (%)
9.0
(1.4)
8.1
Underlying return on tangible equity (%)
6
9.6
4.8
8.7
Return on common equity tier 1 capital (%)
9.0
(1.4)
9.1
Underlying return on common equity tier 1 capital (%)
6
9.6
4.7
9.8
Return on leverage ratio denominator, gross (%)
3.1
2.6
3.4
Cost / income ratio (%)
80.5
105.7
82.5
Underlying cost / income ratio (%)
6
77.2
93.0
81.7
Effective tax rate (%)
25.8
n.m.
7
30.7
Net profit growth (%)
70.6
n.m.
(51.8)
Resources
3
Total assets
1,607,120
1,717,246
1,053,134
Equity attributable to shareholders
85,260
86,108
56,754
Common equity tier 1 capital
8
78,147
78,485
44,590
Risk-weighted assets
8
526,437
546,505
321,660
Common equity tier 1 capital ratio (%)
8
14.8
14.4
13.9
Going concern capital ratio (%)
8
17.8
16.9
17.9
Total loss-absorbing capacity ratio (%)
8
37.5
36.5
34.3
Leverage ratio denominator
8
1,599,646
1,695,403
1,014,446
Common equity tier 1 leverage ratio (%)
8
4.9
4.6
4.4
Liquidity coverage ratio (%)
9
220.2
215.7
161.9
Net stable funding ratio (%)
126.4
124.7
117.7
Other
Invested assets (USD bn)
4,10,11
5,848
5,714
4,184
Personnel (full-time equivalents)
111,549
112,842
73,814
Market capitalization
2,12
106,440
107,355
74,276
Total book value per share (USD)
2
26.59
26.83
18.59
Tangible book value per share (USD)
2
24.29
24.49
16.54
1 Comparative-period information has been revised.
Refer to “Note 2 Accounting for the
acquisition of the Credit Suisse Group”
in the “Consolidated financial statements” section
of the UBS Group Annual
Report
2023, available under “Annual reporting” at ubs.com/investors, for more information.
2 Refer to the “Share information and earnings per share”
section of this report for more information.
3 Refer to the “Targets,
capital guidance and ambitions” section of
the UBS Group Annual Report 2023, available
under “Annual reporting” at ubs.com/investors, for more information about our performance targets.
4 Refer to “Alternative
performance measures” in the appendix
to this report for
the definition and calculation method.
5 Profit or loss information for
each of the first quarter
of 2024 and the
fourth quarter of 2023
is presented on a
consolidated basis, including for each quarter Credit Suisse data for three months and for the purpose of the calculation of
return measures has been annualized multiplying such by four.
Profit or loss information for
the first quarter of
2023 includes pre-acquisition UBS data
for three months and for
the purpose of the
calculation of return measures has
been annualized multiplying such
by four.
6 Refer to the “Group
performance”
section of this report for more information about underlying results.
7 The effective tax rate for the
fourth quarter of 2023 is not a meaningful measure,
due to the distortive effect of current unbenefited tax losses
at the former Credit Suisse entities.
8 Based on the Swiss systemically relevant bank framework as
of 1 January 2020. Refer to the “Capital management” section
of this report for more information.
9 The disclosed
ratios represent quarterly averages for the quarters presented and are calculated based on an average of 61 data points in the first quarter of 2024, 63 data
points in the fourth quarter of 2023 and 64 data points in
the first quarter
of 2023. Refer
to the “Liquidity
and funding management”
section of this
report for more
information.
10 Consists of invested
assets for Global
Wealth Management,
Asset Management and
Personal & Corporate Banking. Refer to “Note 32 Invested assets and net new money” in the “Consolidated
financial statements” section of the UBS Group Annual Report 2023, available under “Annual
reporting”
at ubs.com/investors,
for more information.
11 Starting with the second
quarter of 2023,
invested assets include invested
assets from associates
in the Asset
Management business division,
to better reflect
the
business strategy. Comparative figures
have been restated to reflect this change.
12 In the second quarter of 2023, the calculation of
market capitalization was amended to reflect total
shares issued multiplied by
the share price at the end of the period. The calculation was previously based on total shares outstanding multiplied by the share price at the
end of the period. Market capitalization was increased by USD 10.0bn as
of 31 March 2023 as a result.
UBS Group first quarter 2024 report |
UBS Group | Recent developments
4
UBS Group
Management report
Recent developments
Integration of Credit Suisse
In the first quarter of 2024, we made
substantial progress related to the
integration of Credit Suisse. We expect
to
complete the merger of UBS AG and Credit Suisse AG on 31 May 2024, following operational testing and subject
to remaining regulatory approvals. The transition to a single US intermediate holding company is also planned for
the second quarter
of 2024 and
the merger of Credit
Suisse (Schweiz) AG
and UBS Switzerland AG
continues to
be planned for the third quarter of
- Completing the mergers of our significant legal
entities is a critical step
in enabling us
to unlock the
next phase of
the cost, capital,
funding and tax
benefits we expect
to realize in
the
second half of 2024 and by the end of 2025
and into 2026. These mergers will also facilitate
Credit Suisse Wealth
Management client migrations to UBS infrastructure across
our businesses, which we expect to
commence in the
second half of 2024.
We have achieved USD 5bn of exit rate gross cost savings, compared with the 2022 combined cost base of Credit
Suisse and UBS,
out of the
USD 13bn of exit
rate gross cost
savings that we
aim to achieve
by the end
of 2026.
Cost savings are likely to decrease
from the per quarter rate
of around USD 1bn and we aim
to achieve USD 1.5bn
of additional exit rate gross cost savings in the
remainder of 2024.
During the first
quarter of 2024,
Non-core and Legacy
continued to exit
positions and
reduced risk-weighted
assets
by USD 16bn
and the
leverage ratio
denominator by
USD 49bn. UBS
and entities
associated with
Apollo Global
Management
(Apollo)
and
Atlas
SP
Partners
(Atlas)
entered
into
agreements
to
conclude
an
investment
management agreement and
a transition
services agreement
with Atlas
SP. As
part of
these agreements,
Apollo
has also
purchased USD 8bn
of senior
secured financing
facilities. We
recognized a
net gain
of USD 272m
from
these
transactions.
Credit
Suisse
AG
recognized
a
net
loss
of
USD 0.9bn.
The
difference
primarily
reflects
adjustments that UBS Group
made under IFRS Accounting
Standards as part of
the purchase price allocation
at the
closing of the acquisition of the Credit Suisse
Group.
On 6 May
2024, Credit
Suisse (Schweiz)
AG repaid
further funding
drawn under
the Emergency
Liquidity Assistance
(ELA) facility, reducing
the amount of
funding outstanding under
the ELA
from CHF
19bn to CHF
9bn as of
that
date. The remaining CHF 9bn are expected
to be repaid in the coming months.
Regulatory and legal developments
Swiss Federal Council releases its report on systemically
important banks
In April
2024, the
Swiss Federal
Council released
its report
on banking
stability that
evaluates the
regulation of
systemically important banks.
The report
includes a
comprehensive review
of the
acquisition of the
Credit Suisse
Group
and
concludes
that
the
existing
Swiss
too-big-to-fail
(TBTF)
regime
must
be
further
developed
and
strengthened. The
Swiss Federal
Council proposes
to introduce
a broad
package of
measures, focused
on three
areas: strengthening prevention, strengthening liquidity and expanding the crisis
toolkit.
Preventive measures include
proposals to strengthen
the capital base,
to improve resolvability
and tighten capital
requirements
for
global
systemically
important
banks
(G-SIBs),
including
the
introduction
of
forward-looking
elements for institution-specific Pillar 2 capital surcharges
and increased capital adequacy requirements for foreign
participations.
The Swiss Federal
Council also recommended
preventive measures related
to corporate governance,
such as a senior management regime and stricter regulations
regarding bonuses. To strengthen liquidity, the Swiss
Federal Council intends to significantly expand the potential for the
Swiss National Bank to provide more liquidity
in a
crisis. Furthermore,
the Swiss
Federal Council
reiterated its
support for
the introduction
of a
public liquidity
backstop. To expand
the crisis toolkit,
the Swiss Federal
Council proposed measures
that aim to minimize
legal risks
associated with the execution of resolution
measures.
UBS Group first quarter 2024 report |
UBS Group | Recent developments
5
In the first half
of 2025, the Swiss
Federal Council is expected
to present two packages
to implement the
proposed
measures:
one
with
changes
at
the
ordinance
level,
which
can
be
adopted
by
the
Swiss
Federal
Council,
and
another,
which
will
be
submitted
to
the
Parliament,
with
proposed
legislative
amendments.
The
Swiss
Federal
Council has
stated that
when drafting
these two
packages it
will take
into account
the findings
of the
Parliamentary
Investigation Committee concerning
the role of the Swiss authorities
in the rescue of the Credit Suisse
Group. Due
to the broad range of possible outcomes, the impact of the proposals on UBS can be fully assessed only when the
implementation details become clearer.
FINMA publishes ordinances with implementing
provisions for the revised Swiss Capital Adequacy
Ordinance
In
March
2024,
the
Swiss
Financial
Market
Supervisory
Authority
(FINMA)
published
five
new
ordinances
to
implement
the
final
Basel III
standards
in
Switzerland,
replacing
various
existing
FINMA
circulars,
including
ordinances on operational
risks and market
risks. The ordinances
contain the implementing
provisions for the
Swiss
Federal
Council’s
revised
Capital
Adequacy
Ordinance
for
banks
(the
CAO)
and
they
will
enter
into
force
on
1 January 2025.
Shortening the securities settlement cycle to
T+1
In the US,
a shortened
T+1 settlement cycle
will apply to
securities transactions
beginning on
28 May 2024. In
April
2024, the UK
Accelerated Settlement Taskforce
issued a report
proposing a phased
approach to the
adoption of
T+1 settlement
and the
establishing of a
technical working
group to review
the operational
and behavioral
changes
required for a T+1 settlement cycle.
Recommendations for changes
are planned to be made by
the end of 2025 to
enable
the
market
to
prepare,
with
the
move
to
T+1
expected
to
take
place before
the
end
of
2027.
The
UK
government has accepted the recommendations and confirmed it will work with the
EU and Switzerland to see if
similar timeframes will be pursued and,
therefore,
if alignment is possible.
New Retirement Security Rule adopted for
US retirement and pension accounts
In April 2024,
the US
Department of
Labor (the
DOL) adopted
a new Retirement
Security Rule,
related amendments
to existing
rules governing
transactions between
covered plans
and parties
in interest,
and amendments
to the
“qualified professional asset manager” transaction exemption. The
Retirement Security Rule expands the scope of
transactions
subject
to
requirements
of
the
Employment
Retirement
Income
Security
Act
by
expanding
the
relationships
and
advice
that
create
a
fiduciary
relationship
between
an
investment
professional
and
a
plan
or
beneficiary, particularly in relation to
individual retirement accounts
(IRAs). The amendments
to existing transaction
exemptions generally
limit or
prohibit the
use of
those exemptions
for transactions
involving IRAs,
with the
intention
of
requiring
transactions
involving
IRAs
to
rely
upon
an
exemption
(PTE
2020-2)
imposing
specific
impartiality,
conflict-of-interest and compliance requirements. Global Wealth Management US
treats established IRA accounts
as fiduciary
relationships in
accordance with
PTE 2020-2.
We are assessing
the effect
of the
changes on
our business
with IRA accounts.
In connection with the
adoption of the
Retirement Security Rule,
the DOL also amended
PTE 2020-2 to expand
the
scope of
affiliated persons
for which
a criminal
conviction or
determinations of
misconduct disqualify
an investment
professional from using the exemption and to add a
one-year transition period for a newly disqualified investment
professional
to
transition
the
related
business.
The
amendments
to
the
qualified
professional
asset
manager
exemption also expand the scope of
events that may trigger disqualification and add
a similar one-year transition
provision. In each case, the DOL retains the
ability to grant an individual exemption
from the disqualification.
The Swiss National Bank will raise the minimum
reserve requirement for banks
In April 2024, the Swiss National Bank
(the SNB) announced that it will raise
the minimum reserve requirement for
domestic banks from 2.5%
to 4%, and it
will therefore amend the
National Bank Ordinance as
of 1 July 2024.
The
SNB further announced
that liabilities arising
from cancelable customer
deposits (excluding
tied pension provisions)
will be included in
full in the
calculation of the
minimum reserve requirement, as
is the case with
the other relevant
liabilities.
This
revokes
the
previous
exception
under
which
only
20%
of
these
liabilities
counted
toward
the
calculation. Based
on preliminary
internal assessments, UBS
expects a
negative impact
of USD 70m
to USD 80m
per annum on net interest income to result from these changes.
UBS Group first quarter 2024 report |
UBS Group | Recent developments
6
Other developments
Capital returns
On 24 April
2024, the
shareholders approved a
dividend of
USD 0.70 per
share at
the Annual
General Meeting.
The dividend was paid on 3 May 2024 to shareholders
of record on 2 May 2024.
Our 2022
share repurchase program
was concluded on
28 March 2024.
A total
of 298,537,950
UBS Group
AG
shares were acquired under that program, at an aggregate
purchase price of CHF 5,010m, of which CHF 1,202m
were acquired in 2023
prior to the announcement
of the acquisition of
the Credit Suisse
Group.
On 12 April 2023,
the Swiss
Takeover Board
approved the
use of
up to
178,031,942 shares
repurchased under
the 2022
program,
and originally intended for cancellation, for
the acquisition of the Credit Suisse Group.
On 3 April 2024, we
launched a new
2024 share repurchase
program of up
to USD 2bn over two
years. We expect
to execute up
to USD 1bn of
repurchases in 2024,
commencing after the
completion of the
merger of UBS AG
and
Credit Suisse AG.
›
Refer to the “Share information and earnings per share” section of this report for more information
Credit Suisse’s wealth management business
in Japan
In April 2024, UBS and Sumitomo Mitsui Trust
Holdings, Inc. (SuMi TRUST Holdings) announced that their wealth
management entity, UBS SuMi
TRUST Wealth
Management Co.,
Ltd. (UBS
SuMi), will
acquire Credit Suisse’s
wealth
management business in
Japan, including all
of Credit Suisse’s client
advisors and the
assets they manage
in Japan.
Following completion, UBS
and SuMi TRUST Holdings
will rebalance their investments
in UBS SuMi to maintain
the
current ownership structure (UBS
51% / SuMi TRUST Holdings 49%).
UBS will continue to consolidate the
entity.
The transaction is expected to close in the fourth quarter
of 2024 and is not expected to have a material effect on
the common equity tier 1 capital of the Group.
UBS Group first quarter 2024 report |
UBS Group | Group performance
7
Group performance
Income statement
For the quarter ended
% change from
USD m
31.3.24
31.12.23
31.3.23
4Q23
1Q23
Net interest income
1,940
2,095
1,388
(7)
40
Other net income from financial instruments measured
at fair value through profit or loss
4,182
3,158
2,681
32
56
Net fee and commission income
6,492
5,780
4,606
12
41
Other income
124
(179)
69
79
Total revenues
12,739
10,855
8,744
17
46
Credit loss expense / (release)
106
136
38
(22)
177
Personnel expenses
6,949
7,061
4,620
(2)
50
General and administrative expenses
2,413
2,999
2,065
(20)
17
Depreciation, amortization and impairment of non-financial
assets
895
1,409
525
(37)
70
Operating expenses
10,257
11,470
7,210
(11)
42
Operating profit / (loss) before tax
2,376
(751)
1,495
59
Tax expense / (benefit)
612
(473)
459
33
Net profit / (loss)
1,764
(278)
1,037
70
Net profit / (loss) attributable to non-controlling interests
9
1
8
7
Net profit / (loss) attributable to shareholders
1,755
(279)
1,029
71
Comprehensive income
Total comprehensive income
(245)
2,695
1,833
Total comprehensive income attributable to non-controlling interests
(5)
18
13
Total comprehensive income attributable to shareholders
(240)
2,677
1,820
UBS Group first quarter 2024 report |
UBS Group | Group performance
8
Selected financial information of our business divisions and Group Items
For the quarter ended 31.3.24
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group Items
Total
Total revenues as reported
6,143
2,423
776
2,751
1,001
(355)
12,739
of which: PPA effects and other integration items
1
234
256
293
(4)
779
Total revenues (underlying)
5,909
2,166
776
2,458
1,001
(351)
11,960
Credit loss expense / (release)
(3)
44
0
32
36
(2)
106
Operating expenses as reported
5,044
1,404
665
2,164
1,011
(33)
10,257
of which: integration-related expenses and PPA effects
2
404
160
71
143
242
1
1,021
Operating expenses (underlying)
4,640
1,245
594
2,022
769
(34)
9,236
Operating profit / (loss) before tax as reported
1,102
975
111
555
(46)
(320)
2,376
Operating profit / (loss) before tax (underlying)
1,272
878
182
404
197
(315)
2,617
For the quarter ended 31.12.23
3
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group Items
Total
Total revenues as reported
5,554
2,083
825
2,141
145
107
10,855
of which: PPA effects and other integration items
1
349
306
277
12
944
of which: losses related to investment in SIX Group
(190)
(317)
(508)
Total revenues (underlying)
5,395
2,094
825
1,864
145
95
10,419
Credit loss expense / (release)
(8)
85
(1)
48
15
(2)
136
Operating expenses as reported
5,282
1,398
704
2,283
1,787
16
11,470
of which: integration-related expenses and PPA effects
2
502
187
64
167
750
109
1,780
of which: acquisition-related costs
(1)
(1)
Operating expenses (underlying)
4,780
1,210
639
2,116
1,037
(92)
9,690
Operating profit / (loss) before tax as reported
280
601
122
(190)
(1,657)
93
(751)
Operating profit / (loss) before tax (underlying)
624
800
186
(300)
(907)
189
592
For the quarter ended 31.3.23
4
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group Items
Total
Total revenues as reported
4,788
1,277
503
2,365
23
(211)
8,744
Total revenues (underlying)
4,788
1,277
503
2,365
23
(211)
8,744
Credit loss expense / (release)
15
16
0
7
0
0
38
Operating expenses as reported
3,561
663
408
1,866
699
14
7,210
of which: acquisition-related costs
70
70
Operating expenses (underlying)
3,561
663
408
1,866
699
(57)
7,140
Operating profit / (loss) before tax as reported
1,212
598
95
492
(676)
(225)
1,495
Operating profit / (loss) before tax (underlying)
1,212
598
95
492
(676)
(155)
1,566
1 Includes accretion of PPA
adjustments on financial instruments and other
PPA effects, as well
as temporary and incremental items
directly related to the integration.
2 Includes temporary, incremental
operating
expenses directly related to the integration, as well as amortization of newly recognized intangibles resulting from the acquisition of the Credit Suisse Group.
3 Comparative-period information has been restated for
changes in business
division perimeters,
Group Treasury
allocations and Non-core
and Legacy cost
allocations. Refer
to “Changes to
segment reporting in
2024” in the
“UBS business divisions
and Group Items”
section below and “Note
3 Segment reporting” in
the “Consolidated financial statements”
section of this report
for more information.
4 Comparative-period information has
been restated for changes
in Group
Treasury allocations.
Refer to “Changes to segment
reporting in 2024” in the
“UBS business divisions and Group
Items” section below and “Note
3 Segment reporting” in the “Consolidated
financial statements”
section of this report for more information.
Integration-related expenses, by business division and Group Items
For the quarter ended
USD m
31.3.24
31.12.23
Global Wealth Management
432
500
Personal & Corporate Banking
140
161
Asset Management
71
64
Investment Bank
143
167
Non-core and Legacy
242
750
Group Items
1
109
Total integration-related expenses
1,029
1,751
of which: total revenues
37
0
of which: operating expenses
992
1,751
of which: personnel expenses
555
794
of which: general and administrative expenses
355
455
of which: depreciation, amortization and impairment of non-financial
assets
82
503
UBS Group first quarter 2024 report |
UBS Group | Group performance
9
Introduction to underlying results
In addition to
reporting our
results in accordance
with IFRS
Accounting Standards,
we report underlying
results that
exclude items of profit or loss that management believes
are not representative of the underlying performance.
In
the
first
quarter
of
2024,
underlying
revenues
exclude
purchase
price
allocation
(PPA)
effects
and
other
integration items. PPA
effects mainly consist
of PPA
adjustments on financial
instruments measured at
amortized
cost, including
off-balance sheet
positions, arising
from the
acquisition of
the Credit
Suisse Group.
Accretion of
PPA
adjustments on financial
instruments is accelerated
when the related
financial instrument is
derecognized before
its contractual maturity.
No adjustment is
made for accretion
of PPA
adjustments on financial
instruments within
the Non-core and Legacy business division,
due to the nature of
its business model. In 2023, underlying revenues
also exclude losses relating to our investment
in SIX Group.
Underlying expenses exclude
integration-related expenses that
are temporary, incremental
and directly
related to
the integration of
Credit Suisse into UBS,
including costs of
internal staff and contractors
substantially dedicated to
integration activities, retention
awards, redundancy costs,
incremental expenses from
the shortening of useful
lives
of property,
equipment and
software, and
impairment charges
relating to these
assets. Classification
as integration-
related expenses does
not affect the
timing of recognition
and measurement
of those expenses
or the presentation
thereof
in
the
income
statement. Integration-related
expenses
incurred
by
Credit
Suisse
also
included
expenses
associated with restructuring
programs that existed prior to the acquisition.
Results: 1Q24 vs 1Q23
Reported operating
profit before
tax increased
by USD 881m,
or 59%,
to USD 2,376m, reflecting
an increase
in
total revenues, partly offset
by higher operating expenses
and net credit loss expenses.
Total revenues increased by
USD 3,995m, or
46%, to
USD 12,739m, largely
due to
the consolidation
of Credit
Suisse revenues
of USD 3,829m,
and included accretion
impacts resulting from
PPA adjustments on financial
instruments and other PPA
effects of
USD 815m. This increase was mainly driven
by a USD 2,054m increase in total
combined net interest income and
other
net
income
from
financial
instruments
measured
at
fair
value
through
profit
or
loss
and
a
USD 1,886m
increase
in
net
fee
and
commission
income.
Other
income
also
increased
by
USD 55m.
Operating
expenses
increased by USD 3,047m, or
42%, to USD 10,257m, largely due
to the consolidation of Credit
Suisse expenses of
USD 2,903m,
and
included
integration-related
expenses
of
USD 992m.
This
increase
was
mainly
driven
by
a
USD 2,329m increase
in
personnel expenses.
Depreciation, amortization
and impairment
of non-financial
assets
also increased
by USD 370m,
and general
and administrative
expenses increased
by USD 348m,
with those
increases
partly
offset by
the prior-year
quarter including
a
USD 665m increase
in provisions
related to
the US
residential
mortgage-backed securities (RMBS) litigation matter.
Underlying results 1Q24 vs 1Q23
For the purpose of determining underlying results for the
first quarter of 2024, we excluded PPA effects and other
integration
items
of
USD 779m
from
total
revenues
and
integration-related
expenses
and
PPA
effects
of
USD 1,021m from operating expenses.
On
an
underlying
basis,
profit
before
tax
increased
by
USD 1,051m,
or
67%,
to
USD 2,617m,
reflecting
a
USD 3,216m increase in underlying total revenues,
partly offset by a USD 2,096m increase in
underlying operating
expenses and
net credit loss
expenses
of USD 106m, compared
with net
credit loss
expenses
of USD 38m in
the
first quarter of 2023.
Total revenues: 1Q24 vs 1Q23
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 2,054m
to USD 6,123m,
mainly driven
by the
consolidation
of USD 2,965m
of Credit
Suisse
revenues,
and
included
USD 517m
of
accretion
impacts
resulting
from
PPA
adjustments
on
financial
instruments and other PPA effects.
Personal & Corporate Banking increased
by USD 871m to USD 1,704m,
largely attributable to the consolidation
of
USD 814m
of
Credit
Suisse
revenues,
and
included
USD 240m
of
accretion
of
PPA
adjustments
on
financial
instruments and other PPA effects. The remaining increase was mainly
driven by higher deposit margins, resulting
from higher interest rates, partly
offset by shifts to lower-margin
deposit products.
Excluding the aforementioned
accretion effects, underlying net interest
income was USD 1,268m.
UBS Group first quarter 2024 report |
UBS Group | Group performance
10
Global Wealth Management increased
by USD 555m to
USD 2,354m, largely attributable to
the consolidation of
USD 798m
of
Credit
Suisse
revenues,
and
included
USD 257m
of
accretion
of
PPA
adjustments
on
financial
instruments and other
PPA effects. The
remaining variance
was attributable
to lower deposit
margins, including
the
effects
of
shifts
to
lower-margin
products,
partly
offset
by
higher
rates
and
deposit
volumes.
Excluding
the
aforementioned accretion effects, underlying net
interest income was USD 1,615m.
Non-core and Legacy
increased by USD 890m
to USD 908m, which
included net gains from
position exits, along with
net interest income
from securitized products
and credit products.
Revenues also included
a net gain
of USD 272m
from the conclusion of agreements with
Apollo relating to the former Credit
Suisse securitized products group.
Group Items was negative USD 406m, compared with negative USD 252m in the
prior-year quarter, including the
consolidation of USD 124m
losses from Credit Suisse.
The remaining variance was
attributable to the net
effects of
Group hedging and own debt,
including hedge accounting ineffectiveness, within Group
Treasury and an increase
in funding costs
related to deferred
tax. The results
across the
periods were driven
by mark-to-market effects
on
portfolio-level economic hedges due to higher
interest rates and cross-currency-basis widening.
The Investment Bank decreased by USD 114m to USD 1,562m. This result included the consolidation of USD 22m
of Credit
Suisse revenues
and USD 17m
of accretion of
PPA adjustments
on financial
instruments and
other PPA
effects. The decrease was mainly attributable to lower revenues in Derivatives & Solutions, mostly driven by Rates,
due to
lower levels
of both
volatility and
client activity.
This was
partly offset
by
an increase
in Global
Banking,
mainly from higher revenues in Leveraged
Capital Markets.
›
Refer to the relevant business division commentary in the “UBS business divisions and Group Items” section of this
report for more information about business-division-specific revenues
›
Refer to “Integration of Credit Suisse” in the “Recent developments” section and “Note 2 Accounting for the
acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more
information about the conclusion of agreements with Apollo
›
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
USD m
31.3.24
31.12.23
1
31.3.23
1
4Q23
1Q23
Net interest income from financial instruments measured
at amortized cost and fair value through other
comprehensive income
355
597
962
(41)
(63)
Net interest income from financial instruments measured
at fair value through profit or loss and other
1,585
1,498
425
6
273
Other net income from financial instruments measured
at fair value through profit or loss
4,182
3,158
2,681
32
56
Total
6,123
5,253
4,069
17
50
Global Wealth Management
2,354
2,268
1,799
4
31
of which: net interest income
1,873
1,871
1,487
0
26
of which: transaction-based income from foreign exchange and other
intermediary activity
2
482
397
312
21
54
Personal & Corporate Banking
1,704
1,704
833
0
105
of which: net interest income
1,508
1,510
704
0
114
of which: transaction-based income from foreign exchange and other
intermediary activity
2
196
194
129
1
52
Asset Management
(1)
10
(5)
(84)
Investment Bank
1,562
982
1,676
59
(7)
Non-core and Legacy
908
(25)
18
Group Items
(406)
315
(252)
61
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 “Changes to
segment reporting in
2024” in the “UBS
business divisions and Group
Items” section below and
“Note 3 Segment reporting”
in the “Consolidated financial
statements” section of this
report for more information.
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.
Net fee and commission income
Net fee and commission income
increased by USD 1,886m to USD 6,492m, and included
USD 306m of accretion
of PPA adjustments
on financial
instruments and
other PPA effects,
which was
included in
other fee
and commission
income, mainly in the Investment Bank.
Fees for portfolio management
and related services
increased by USD 841m
to USD 3,051m, largely
attributable to
the consolidation of USD 596m
of Credit Suisse revenues, as well as positive
market performance.
Excluding the consolidation of
USD 108m of Credit
Suisse revenues, net brokerage
fees increased by
USD 125m,
reflecting an increase in Cash Equities across all regions in Execution Services in the Investment Bank, as well as in
Global
Wealth Management,
due
to higher
levels
of client
activity, particularly
in
the Americas
and
Asia Pacific
regions.
›
Refer to “Note 5 Net fee and commission income” in the “Consolidated financial statements” section of this report
for more information
UBS Group first quarter 2024 report |
UBS Group | Group performance
11
Other income
Other income was USD 124m, compared with USD 69m in the prior-year quarter.
The increase was largely due to
a
USD 48m increase
in share
of net
profits
of associates
and joint
ventures,
mainly due
to the
consolidation of
USD 42m of Credit Suisse revenues.
›
Refer to “Note 6 Other income” in the “Consolidated financial statements” section of this report for more
information
Credit loss expense / release: 1Q24 vs
1Q23
Total net credit loss expenses in the first quarter of 2024 were USD 106m, compared with net credit loss expenses
of USD 38m in
the prior-year quarter, reflecting net
releases of USD 45m related
to performing positions and
net
expenses of USD 151m on credit-impaired positions.
›
Refer to “Note 9 Expected credit loss measurement” in the “Consolidated financial statements” section of this
report for more information
Credit loss expense / (release)
Performing positions
Credit-impaired positions
USD m
Stages 1 and 2
Stage 3
Purchased
Total
For the quarter ended 31.3.24
Global Wealth Management
(12)
7
2
(3)
Personal & Corporate Banking
(13)
64
(7)
44
Asset Management
0
0
0
0
Investment Bank
7
26
(1)
32
Non-core and Legacy
(26)
37
25
36
Group Items
(2)
0
0
(2)
Total
(45)
133
18
106
For the quarter ended 31.12.23
1
Global Wealth Management
(12)
3
0
(8)
Personal & Corporate Banking
(14)
95
4
85
Asset Management
0
0
0
(1)
Investment Bank
(13)
60
1
48
Non-core and Legacy
(1)
25
(9)
15
Group Items
(2)
0
0
(2)
Total
(43)
183
(4)
136
For the quarter ended 31.3.23
Global Wealth Management
15
0
15
Personal & Corporate Banking
15
0
16
Asset Management
0
0
0
Investment Bank
(5)
12
7
Non-core and Legacy
0
0
0
Group Items
0
0
0
Total
26
12
38
1
Comparative-period information has been restated for changes in business division perimeters. Refer to “Changes to segment reporting in 2024” in
the “UBS business divisions and Group Items” section and “Note
3 Segment reporting” in the “Consolidated financial statements” section of this report for more information.
Operating expenses: 1Q24 vs 1Q23
Operating expenses
For the quarter ended
% change from
USD m
31.3.24
31.12.23
31.3.23
4Q23
1Q23
Personnel expenses
6,949
7,061
4,620
(2)
50
of which: salaries and variable compensation
5,863
5,728
3,885
2
51
of which: variable compensation – financial advisors
1
1,267
1,176
1,111
8
14
General and administrative expenses
2,413
2,999
2,065
(20)
17
of which: net expenses for litigation, regulatory and similar
matters
(5)
8
721
of which: other general and administrative expenses
2,418
2,992
1,345
(19)
80
Depreciation, amortization and impairment of non-financial
assets
895
1,409
525
(37)
70
Total operating expenses
10,257
11,470
7,210
(11)
42
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.
UBS Group first quarter 2024 report |
UBS Group | Group performance
12
Personnel expenses
Personnel expenses
increased by
USD 2,329m to
USD 6,949m, mainly
due to
the consolidation
of Credit
Suisse
expenses of
USD 2,015m, and
included
integration-related expenses
of
USD 555m covering
awards
granted to
employees
to
support
retention
and
operational
stability
and
severance
expenses.
Salaries
and
variable
compensation
increased
by
USD 1,978m,
due
to
the
aforementioned
effects
and
also
due
to
higher
variable
compensation, including
an increase in financial
advisor compensation,
reflecting higher compensable
revenues, as
well as salary adjustments,
and foreign currency effects.
›
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 348m to USD 2,413m, largely
due to the consolidation of
Credit Suisse expenses of USD 587m, and
included total integration-related expenses
of USD 355m, mainly due to
USD 278m of consulting and outsourcing costs. Excluding the aforementioned effects, general and administrative
expenses decreased, largely due
to the prior-year quarter including an expense
for provisions
of USD 665m related
to
the
US
RMBS
litigation
matter
and
USD 43m
bank
levy
expenses,
partly
offset
by
a
USD 64m
increase
in
technology costs in the first quarter of 2024.
We believe that the industry continues to operate in an environment in which expenses
associated with litigation,
regulatory and similar matters will remain elevated
for the foreseeable future, and we continue
to be exposed to a
number
of
significant
claims
and
regulatory
matters.
The
outcome
of
many
of
these
matters,
the
timing
of
a
resolution, and the
potential effects
of resolutions on
our future business,
financial results
or financial condition
are
extremely difficult to predict.
›
Refer to “Note 8 General and administrative expenses” in the “Consolidated financial statements” section of this
report for more information
›
Refer to “Note 15 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this
report for more information about litigation, regulatory and similar matters
›
Refer to the “Regulatory and legal developments” and “Risk factors” sections of the UBS Group Annual Report
2023, available under “Annual reporting” at
ubs.com/investors
, for more information about litigation, regulatory
and similar matters
Depreciation, amortization and impairment of
non-financial assets
Depreciation, amortization and impairment
of non-financial assets
increased by USD 370m
to USD 895m, largely
due to the consolidation of
Credit Suisse expenses of
USD 301m, and included total integration-related
expenses
of USD 82m,
mainly attributable
to accelerated
depreciation of
right-of-use assets
associated with
real estate
leases.
Tax: 1Q24 vs 1Q23
The Group had a net income tax expense of USD 612m in
the first quarter of 2024, compared with USD 459m in
the prior-year quarter.
The net current
tax expense
was USD 468m, compared
with USD 487m, and
primarily related to
the taxable profits
of UBS Switzerland AG and other entities.
There was a
net deferred tax
expense of USD 144m,
compared with
a benefit of
USD 28m in the
prior-year quarter,
with
such
expense
primarily
relating
to
the
amortization
of
deferred
tax
assets
(DTAs)
previously
recognized
in
relation to tax losses carried forward and
deductible temporary differences.
The Group’s effective tax rate for the quarter was
25.8%, which is higher than its structural rate of 23%, because
its net profit includes operating losses
of certain entities, reflecting integration-related expenses and restructuring
costs, that
did not
result in
any tax
benefits because
they cannot
be offset
with profits
of other
entities in
the Group,
and did not result
in any DTA recognition.
The Group’s tax
expense for the remaining
nine months of 2024
may be
impacted if further such operating
losses are incurred in these entities, and
the amount of that impact will
depend
on the amount of those losses. The Group’s effective tax rate is expected to decrease toward the structural rate
in
subsequent years.
UBS Group first quarter 2024 report |
UBS Group | Group performance
13
Total comprehensive income attributable
to shareholders
In
the
first
quarter of
2024,
total
comprehensive income
attributable to
shareholders
was
negative USD 240m,
reflecting a net profit of
USD 1,755m and other
comprehensive income (OCI),
net of tax, of
negative USD 1,994m.
Foreign currency translation OCI was negative USD 1,277m, mainly resulting from a weakening of the Swiss franc
and the euro against the US dollar.
OCI
related
to
cash
flow
hedges
was
negative
USD 583m,
mainly
reflecting
net
unrealized
losses
on
US
dollar
hedging derivatives resulting from
increases in the relevant
US dollar long-term interest
rates, partly offset by
net
losses on hedging instruments that were reclassified
from OCI to the income statement.
OCI related to own credit on financial liabilities designated at fair value was negative USD 68m, primarily due to a
tightening of our own credit spreads.
Defined benefit plan OCI
was negative USD 56m,
mainly reflecting negative
pre-tax OCI in our
Swiss pension plans
of USD 92m, partly offset by
positive pre-tax OCI in our
non-Swiss plans of USD 30m, mainly
driven by US pension
plans.
›
Refer to “Statement of comprehensive income” in the “Consolidated financial statements” section of this report for
more information
›
Refer to “Reconciliation of equity under IFRS Accounting Standards to Swiss SRB common equity tier 1 capital” in
the “Capital management” section of this report for more information about the effects of OCI on common equity
tier 1 capital
›
Refer to “Note 21 Fair value measurement” in the “Consolidated financial statements” section of the UBS Group
Annual Report 2023, available under “Annual reporting” at
ubs.com/investors
, for more information about own
credit on financial liabilities designated at fair value
›
Refer to “Note 27 Post-employment benefit plans” in the “Consolidated financial statements” section of the UBS
Group Annual Report 2023, available under “Annual reporting” at
ubs.com/investors
, for more information about
OCI related to defined benefit plans
Sensitivity to interest rate movements
As
of
31 March
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 1.5bn in
the first
year after
such a
shift. Of
this increase,
approximately USD 0.9bn, 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 1.5bn in
the first
year after such a shift, showing similar currency
contributions as for the aforementioned increase
in 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 31 March
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 the
Group. For
further information
about key
figures related
to
capital management, refer to the “Capital management”
section of this report.
Cost / income ratio: 1Q24 vs 1Q23
The cost / income
ratio was 80.5%, compared with
82.5%, mainly reflecting an increase
in total revenues, partly
offset by an increase in operating expenses.
On an underlying basis, the
cost / income ratio was
77.2%, compared
with 81.7%, mainly reflecting an increase in total revenues, partly
offset by an increase in operating expenses.
Personnel: 1Q24 vs 4Q23
The number of internal and external personnel employed was 136,622 (workforce count) as of 31 March 2024, a
net
decrease
of
1,840
compared
with
31 December
2023.
The
number
of
internal
personnel
employed
as
of
31 March 2024 was 111,549
(full-time equivalents), a net decrease
of 1,293 compared with
31 December 2023.
The number of external
staff was approximately 25,073 (workforce count)
as of 31 March 2024, a net
decrease of
approximately 546 compared with 31 December 2023.
UBS Group first quarter 2024 report |
UBS Group | Group performance
14
Equity, CET1 capital and returns
As of or for the quarter ended
USD m, except where indicated
31.3.24
31.12.23
1
31.3.23
Net profit
Net profit / (loss) attributable to shareholders
1,755
(279)
1,029
Equity
Equity attributable to shareholders
85,260
86,108
56,754
Less: goodwill and intangible assets
7,384
7,515
6,272
Tangible equity attributable to shareholders
77,877
78,593
50,481
Less: other CET1 adjustments
(270)
107
5,891
CET1 capital
78,147
78,485
44,590
Returns
Return on equity (%)
8.2
(1.3)
7.2
Return on tangible equity (%)
9.0
(1.4)
8.1
Underlying return on tangible equity (%)
9.6
4.8
8.7
Return on CET1 capital (%)
9.0
(1.4)
9.1
Underlying return on CET1 capital (%)
9.6
4.7
9.8
1 Comparative-period information has been revised.
Refer to “Note 2 Accounting for the acquisition
of the Credit Suisse Group” in the
“Consolidated financial statements” section of
the UBS Group Annual Report
2023, available under “Annual reporting” at ubs.com/investors,
for more information.
Common equity tier 1 capital: 1Q24 vs 4Q23
During the first quarter of 2024,
our common equity tier 1 (CET1)
capital decreased by USD 0.3bn to
USD 78.1bn,
mainly reflecting an
operating profit
before tax
of USD 2.4bn, more
than offset
by negative effects
from foreign
currency
translation
of
USD 1.3bn,
dividend
accruals
of
USD 0.6bn,
current
tax
expenses
of
USD 0.5bn
and
amortization of transitional CET1 PPA adjustments (interest rate and own credit) of USD 0.4bn
(net of tax).
Return on common equity tier 1 capital: 1Q24
vs 1Q23
The annualized
return on
CET1 capital
was 9.0%,
compared with
9.1%, driven
by the
impact of
an increase
in
average CET1
capital, partly
offset by
higher net
profit attributable
to shareholders.
On an
underlying basis,
the
return on CET1 capital was 9.6%, compared with 9.8%.
Risk-weighted assets: 1Q24 vs 4Q23
During the first quarter of 2024, RWA decreased by USD
20.1bn to USD 526.4bn, primarily driven
by decreases of
USD 13.1bn resulting from asset size and
other movements as well as USD 11.2bn
resulting from currency effects,
partly offset by USD 4.2bn resulting from model updates and methodology
changes.
Common equity tier 1 capital ratio: 1Q24 vs 4Q23
Our CET1 capital ratio increased to 14.8% from 14.4%,
mainly reflecting the aforementioned decrease in RWA.
Leverage ratio denominator: 1Q24 vs 4Q23
The leverage ratio denominator (the LRD) decreased by USD 95.8bn to USD 1,599.6bn, driven by currency effects
of USD 56.3bn and asset size and other movements
of USD 39.4bn.
Common equity tier 1 leverage ratio: 1Q24
vs 4Q23
Our CET1 leverage ratio increased to 4.9% from 4.6%, mainly
due to the aforementioned decrease in the LRD.
UBS Group first quarter 2024 report |
UBS Group | Group performance
15
Outlook
Although monetary easing is expected
in the Eurozone,
the US and Switzerland,
the timing and magnitude of rate
cuts by
central banks
are unclear, as inflation
remains above
their target
range.
In addition,
the ongoing
geopolitical
tensions,
combined
with
consequential
elections
in
several
major
economies,
continue
to
create
uncertainty
regarding the macroeconomic and geopolitical outlooks.
In the second quarter of 2024, we
expect a low-to-mid single-digit decline
in net interest income in Global Wealth
Management,
due to moderately
lower lending and deposit
volumes and lower
interest rates in Switzerland,
partly
offset by additional
revenues,
primarily from higher
US dollar rates,
combined with our
repricing efforts. We
expect
a mid-to-high single-digit decrease
in net interest
income in Personal
& Corporate Banking in
US dollar terms,
as
the Swiss central bank’s interest rate
cut in March 2024 takes
effect for a full quarter.
In line with our strategy
to
actively reduce assets and costs in Non-core and Legacy, we continue to expect revenues in the closing out of any
positions to
approximately reflect
their current
book values.
We also
expect our
reported revenues
to include
around
USD 0.6bn of pull-to-par and other PPA accretion effects,
while we incur around USD 1.3bn of integration-related
expenses. The tax rate for
the second quarter is expected
to return to more elevated
levels, with our effective tax
rate still expected to be around 40% by the
end of 2024.
In addition to executing on our integration
plans, we will remain focused on serving
our clients, following through
on our strategy, investing in our people and remaining a pillar of economic support in the communities where we
live and work.
UBS Group first quarter 2024 report |
UBS business divisions and Group Items
16
UBS business divisions and
Group Items
Management report
Our businesses
We report five business divisions in
line with IFRS Accounting Standards: Global Wealth
Management, Personal &
Corporate Banking,
Asset
Management, the
Investment Bank,
and
Non-core
and
Legacy.
Non-core and
Legacy
includes positions
and businesses
not aligned
with our
strategy and
policies. Those
consist of
the assets
and liabilities
reported as part
of the
former Capital
Release Unit (Credit
Suisse) and certain
assets and liabilities
of the
former
Investment Bank
(Credit Suisse),
the former
Corporate Center
(Credit Suisse)
and other
former Credit
Suisse business
divisions.
Non-core
and
Legacy
also
includes
the
remaining
assets
and
liabilities
of
UBS’s
Non-core
and
Legacy
Portfolio, previously
reported in
Group Functions
(now renamed
to Group
Items), and
smaller amounts
of assets
and liabilities
of UBS’s
business divisions
that we
have assessed
as not
strategic in
light of
the acquisition
of the
Credit Suisse Group.
Our Group functions
are support and
control functions that
provide services to
the Group. Virtually
all costs and
revenues incurred
by the
support and
control functions
are allocated
to the
business divisions,
leaving a
residual
amount, mainly
related to
certain Group
funding and
hedging items,
that we
refer to
as Group
Items in
our segment
reporting.
Changes to segment reporting in 2024
Following
the
acquisition
of
the
Credit
Suisse
Group,
we
continue
to
refine
our
reporting
structure
and
organizational setup to align
with interests of stakeholders
and further incentivize
our business divisions to
achieve
Group-wide goals.
As previously
announced, in
the first
quarter of
2024 certain
changes
were made,
with an
impact
on reporting for
our business divisions and
Group Items (but with
no impact for the
UBS Group as
a whole). The
changes, summarized below,
improve the consistency
of our reporting
across the UBS
Group and align
our funding
and
cost allocation
methodologies with
the business
divisions
that
control and
manage
the
costs. The
changes
outlined
below
were
effective
as
of
1 January
2024
and
prior-period
information
has
been
adjusted
for
comparability.
Change in business division perimeters
We have transferred
certain businesses
from Swiss
Bank (Credit Suisse),
previously included
in Personal
& Corporate
Banking, to Global Wealth Management. The change predominantly related to the high net worth client segment
and represents approximately
USD 72bn in invested assets and
approximately USD 0.6bn in annualized
revenues.
A number of other smaller business shifts were also executed
between the business divisions in the first quarter
of
2024.
Changes to Group Treasury allocations
Starting with the first quarter of 2024, nearly all Group Treasury
costs that historically were retained and reported
in Group Items
have been
allocated
to the
business divisions.
Costs continued
to be
retained in Group
Items include
costs related to hedging and own debt, and deferred tax
asset (DTA)
funding costs.
We have also aligned internal
funds transfer pricing methodologies
applied by Credit Suisse
entities to UBS’s funds
transfer pricing methodology.
These changes resulted in
funding costs of approximately USD 0.3bn,
for 2023, moving from
Group Items to the
business divisions, predominantly related to
the second half of 2023.
UBS Group first quarter 2024 report |
UBS business divisions and Group Items
17
Going forward,
we expect
Group Items’
underlying loss
before tax,
excluding litigation
and income
from Group
hedging and own debt, to average approximately
USD 100m per quarter.
In
parallel
with
the
changes
noted
above,
we
increased
the
allocation
of
balance
sheet
resources
from
Group
Treasury to the business divisions, resulting in a shift of approximately USD 168bn of total assets, USD 9bn of risk-
weighted
assets
(RWA) and
USD 173bn
of
leverage
ratio
denominator (LRD)
from
Group
Items
to
the
business
divisions as of 31 December 2023.
Updated
cost allocations
We have reallocated USD 0.3bn of annualized costs from
Non-core and Legacy to the business divisions, with the
aim of avoiding stranded costs in Non-core and Legacy
at the end of the integration process.
›
Refer to “Note 3 Segment reporting” in the “Consolidated financial statements” section of this report for more
information about segment results and the effects of changes in segment reporting
Changes in equity attribution
We have updated our equity attribution framework to align the capital ratios
for RWA and LRD more closely
with
our current Group capital targets,
increasing the equity attributed to the
business divisions. We have also reflected
the increased allocation of balance sheet resources previously retained in Group Items in
the attribution of equity,
resulting in
the attribution
of around
USD 14bn of
additional equity
to the
business divisions.
Going forward,
equity
retained in
Group Items
relates to DTAs,
accruals for shareholder
returns and unrealized
gains / losses
from cash
flow hedges.
›
Refer to the “Equity attribution” section of this report for more information about the equity attribution
framework
UBS Group first quarter 2024 report |
UBS business divisions and Group Items |
Global Wealth Management
18
Global Wealth Management
Global Wealth Management
As of or for the quarter ended
% change from
USD m, except where indicated
31.3.24
31.12.23
1
31.3.23
2
4Q23
1Q23
Results
Net interest income
1,873
1,871
1,487
0
26
Recurring net fee income
3
3,024
2,900
2,454
4
23
Transaction-based income
3
1,212
955
843
27
44
Other income
33
(172)
4
805
Total revenues
6,143
5,554
4,788
11
28
Credit loss expense / (release)
(3)
(8)
15
(64)
Operating expenses
5,044
5,282
3,561
(5)
42
Business division operating profit / (loss) before tax
1,102
280
1,212
294
(9)
Underlying results
Total revenues as reported
6,143
5,554
4,788
11
28
of which: PPA effects and other integration items
4
234
349
(33)
of which: PPA effects recognized in net interest income
257
321
(20)
of which: PPA effects and other integration items recognized in transaction-based income
(24)
28
of which: losses related to investment in SIX Group
(190)
Total revenues (underlying)
3
5,909
5,395
4,788
10
23
Credit loss expense / (release)
(3)
(8)
15
(64)
Operating expenses as reported
5,044
5,282
3,561
(5)
42
of which: integration-related expenses and PPA effects
3,5
404
502
(20)
Operating expenses (underlying)
3
4,640
4,780
3,561
(3)
30
of which: expenses for litigation, regulatory and similar matters
12
49
11
(76)
11
Business division operating profit / (loss) before tax as reported
1,102
280
1,212
294
(9)
Business division operating profit / (loss) before tax (underlying)
3
1,272
624
1,212
104
5
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
3
(9.1)
(73.5)
(7.5)
Cost / income ratio (%)
3
82.1
95.1
74.4
Average attributed equity (USD bn)
6
33.1
33.3
24.7
(1)
34
Return on attributed equity (%)
3,6
13.3
3.4
19.7
Financial advisor compensation
7
1,267
1,176
1,111
8
14
Net new fee-generating assets (USD bn)
3
17.6
(3.4)
19.7
Fee-generating assets (USD bn)
3
1,731
1,661
1,335
4
30
Net new assets (USD bn)
3
27.4
20.1
39.8
Invested assets (USD bn)
3
4,023
3,922
2,962
3
36
Loans, gross (USD bn)
8
306.3
322.1
223.8
(5)
37
Customer deposits (USD bn)
8
482.4
485.0
330.3
(1)
46
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
3,9
0.3
0.5
0.3
Advisors (full-time equivalents)
10,338
10,469
9,117
(1)
13
Underlying performance measures
Pre-tax profit growth (year-on-year, %)
3
5.0
(41.1)
(7.5)
Cost / income ratio (%)
3
78.5
88.6
74.4
1 Comparative figures have
been restated for changes
in business division perimeters,
Group Treasury
allocations and Non-core and
Legacy cost allocations,
as well as changes in
the equity attribution framework.
Refer to “Changes to segment
reporting in 2024” in the “UBS
business divisions and Group Items” section, the
“Equity attribution” section and “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 Comparative figures have been restated for changes in
Group Treasury allocations.
Refer to “Changes to segment reporting in 2024” in
the
“UBS business divisions and Group Items” section and “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.
3 Refer to
“Alternative performance
measures” in the appendix
to this report for the
definition and calculation method.
We started to report
fee-generating assets and net
new fee-generating assets on
a consolidated basis,
including Credit Suisse data, from the
fourth quarter of 2023 onward.
4 Includes accretion of PPA
adjustments on financial instruments
and other PPA
effects, as well as temporary
and incremental items directly
related to the integration.
5 Includes temporary, incremental operating expenses directly related to the integration, as well as amortization of newly recognized intangibles resulting from the acquisition of the Credit
Suisse Group.
6 Refer to the “Equity attribution” section of this report for more information about the equity attribution framework.
7 Relates to licensed professionals with the ability to provide investment advice
to clients in the Americas.
Consists of cash and
deferred compensation awards
and is based on
compensable revenues and firm
tenure using a formulaic
approach. Also includes expenses
related to compensation
commitments with financial advisors entered
into at the time of recruitment
that are subject to vesting
requirements. Recruitment loans
to financial advisors were USD
1,726m as of 31 March 2024.
8 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.
9 Refer to the
“Risk management and
control” section of this report for more information about (credit-)impaired exposures. Excludes loans to financial advisors.
Results: 1Q24 vs 1Q23
Profit before tax decreased by
USD 110m, or 9%, to
USD 1,102m, mainly
due to higher operating
expenses, partly
offset by higher
total revenues. Underlying profit
before tax was USD
1,272m, after excluding USD 234m related
to purchase price allocation (PPA)
effects and other integration items,
as well as integration-related expenses and
PPA effects of USD 404m.
UBS Group first quarter 2024 report |
UBS business divisions and Group Items |
Global Wealth Management
19
Total revenues
Total
revenues increased
by USD 1,355m, or
28%, to
USD 6,143m, largely driven
by the
consolidation of Credit
Suisse revenues, and
included the
aforementioned USD 234m
of PPA effects and
other integration
items. Excluding
these effects, underlying total revenues were USD 5,909m.
Net interest income
increased by USD 386m,
or 26%, to USD 1,873m,
largely driven by
the consolidation of
Credit
Suisse net interest income, and included USD 257m
of accretion of PPA adjustments on financial instruments and
other PPA effects.
The remaining variance was attributable to lower
deposit margins,
including the effects of shifts
to
lower-margin
products,
partly
offset
by
higher
rates
and
deposit
volumes.
Excluding
the
aforementioned
accretion effects, underlying net interest income
was USD 1,615m.
Recurring net fee income increased by USD 570m, or 23%, to USD 3,024m,
mainly driven by the consolidation of
Credit Suisse recurring net fee income and positive
market performance.
Transaction-based income increased
by USD 369m, or 44%,
to USD 1,212m, mainly driven
by the consolidation of
Credit
Suisse
transaction-based
income,
and
included
USD 6m
of
accretion
of
PPA
adjustments
on
financial
instruments and other
PPA effects, as
well as
higher levels
of client
activity, particularly in
the Americas and
Asia
Pacific
regions. Transaction-based
income
also
included negative
USD 30m of
temporary
and
incremental items
directly related
to the
integration. Excluding
negative USD 24m
resulting
from the
aforementioned accretion
effects
and temporary and incremental items,
underlying transaction-based income was
USD 1,236m.
Other income increased by USD 29m to USD
33m, mainly due to the consolidation
of Credit Suisse other income.
Credit loss expense / release
Net credit loss releases were USD 3m,
compared with net expenses of USD 15m in
the first quarter of 2023.
Operating expenses
Operating expenses increased by USD
1,483m, or 42%, to USD 5,044m,
largely due to the consolidation
of Credit
Suisse
expenses,
and
included
integration-related
expenses
of
USD 402m
and
higher
financial
advisor
compensation.
Excluding
integration-related
expenses
and
PPA
effects
of
USD 404m,
underlying
operating
expenses were USD 4,640m.
Invested assets: 1Q24 vs 4Q23
Invested assets increased
by USD 101bn, or
3%, to USD 4,023bn,
mainly driven by
positive market performance
of
USD 127.5bn
and
net
new
asset
inflows
of
USD 27.4bn,
partly
offset
by
negative
foreign
currency
effects
of
USD 47.3bn.
Loans: 1Q24 vs 4Q23
Loans decreased by USD 15.8bn to USD 306.3bn,
mainly driven by negative foreign currency effects and net new
loan outflows of USD 6.6bn.
Customer deposits: 1Q24 vs 4Q23
Customer deposits decreased
by USD 2.6bn to
USD 482.4bn, mainly driven
by negative foreign
currency effects,
partly offset by net new deposit inflows, mainly into
fixed-term deposit products.
UBS Group first quarter 2024 report |
UBS business divisions and Group Items |
Global Wealth Management
20
Regional breakdown of performance measures
As of or for the quarter ended 31.3.24
USD bn, except where indicated
Americas
1
Switzerland
2
EMEA
2
Asia Pacific
2
Global
3
Global Wealth
Management
Total revenues (USD m)
2,727
1,033
1,198
948
236
6,143
Operating profit / (loss) before tax (USD m)
252
377
331
315
(174)
1,102
Operating profit / (loss) before tax (underlying) (USD m)
4
252
377
331
315
(4)
1,272
Cost / income ratio (%)
4
90.5
63.7
72.8
67.1
82.1
Cost / income ratio (underlying) (%)
4
90.5
63.7
72.8
67.1
78.5
Loans, gross
95.7
5
107.2
59.1
43.5
0.8
306.3
Net new loans
(1.8)
(1.1)
(2.2)
(1.4)
(0.1)
(6.6)
Net new fee-generating assets
4
12.9
0.5
2.0
2.3
(0.1)
17.6
Fee-generating assets
4
990
213
371
155
1
1,731
Net new assets
4
13.7
7.7
(0.2)
6.4
(0.2)
27.4
Net new assets growth rate (%)
4
2.9
4.2
(0.1)
3.9
2.8
Invested assets
4
1,979
736
662
641
5
4,023
Advisors (full-time equivalents)
6,079
1,402
1,704
1,064
89
10,338
1 Including the following business units: United
States and Canada; and Latin
America.
2 In the third quarter of
2023, the invested assets of
Global Financial Intermediaries were transferred
from EMEA and Asia
Pacific to the Switzerland region, to better align it to
the management structure. These changes were applied prospectively and had no impact on previous
quarters.
3 Includes minor functions, which are not included
in the four regions individually presented
in this table, and also includes impacts
from accretion of purchase price allocation adjustments
on financial instruments and other PPA effects and
integration-related expenses.
4 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method.
5 Loans include customer brokerage receivables, which are presented in a separate
reporting
line on the balance sheet.
Regional comments 1Q24 vs 1Q23, except where
indicated
Americas
Profit
before
tax
decreased
by
USD 114m
to
USD 252m.
Total
revenues
increased
by
USD 117m,
or
4%,
to
USD 2,727m, driven by higher recurring fees
and transaction-based income as well as the
consolidation of Credit
Suisse revenues,
partly offset
by lower
net interest
income. The
cost /
income ratio
increased to
90.5% from
85.4%.
Loans decreased 1% compared with the fourth quarter 2023, to USD 95.7bn, mainly reflecting USD
1.8bn of net
new loan outflows. Net new asset inflows were USD
13.7bn.
Switzerland
Profit
before
tax
increased
by
USD 127m
to
USD 377m.
Total
revenues
increased
by
USD 511m,
or
98%,
to
USD 1,033m, driven by the
consolidation of Credit
Suisse revenues as
well as the
transfer of the
Global Financial
Intermediaries business to the Switzerland region. The cost / income ratio increased to 63.7% from 52.4%. Loans
decreased 7%
compared with
the fourth
quarter 2023,
to USD 107.2bn,
driven by
negative foreign
currency effects
and USD 1.1bn of net new loan outflows. Net
new asset inflows were USD 7.7bn.
EMEA
Profit
before
tax
decreased
by
USD 21m
to
USD 331m.
Total
revenues
increased
by
USD 214m,
or
22%,
to
USD 1,198m, largely
driven by
the consolidation
of Credit
Suisse revenues,
partly offset
by the
transfer of
the Global
Financial
Intermediaries
business
to
the
Switzerland
region.
The
cost / income
ratio
increased
to
72.8%
from
64.2%. Loans decreased 5% compared with the fourth
quarter 2023, to USD 59.1bn, driven by
USD 2.2bn of net
new loan outflows.
Net new asset outflows were USD 0.2bn.
Asia Pacific
Profit
before
tax
increased
by
USD 64m
to
USD 315m.
Total
revenues
increased
by
USD 273m,
or
40%,
to
USD 948m, mainly
driven by
the consolidation
of Credit
Suisse revenues
and increases
in transaction-based
income.
The cost / income ratio
increased to 67.1%
from 62.8%. Loans decreased 5% compared
with the fourth quarter
2023, to
USD 43.5bn, driven by
USD 1.4bn of net
new loan
outflows and negative
foreign currency
effects. Net
new asset inflows were USD 6.4bn.
Global
Operating loss before tax
was USD 174m, mainly including USD 404m
of the aforementioned integration-related
expenses
and
PPA
effects,
partly
offset
by
the
aforementioned
USD 234m
related
to
PPA
effects
and
other
integration items.
UBS Group first quarter 2024 report |
UBS business divisions and Group Items |
Personal & Corporate Banking
21
Personal & Corporate Banking
Personal & Corporate Banking – in Swiss francs
As of or for the quarter ended
% change from
CHF m, except where indicated
31.3.24
31.12.23
1
31.3.23
2
4Q23
1Q23
Results
Net interest income
1,332
1,320
650
1
105
Recurring net fee income
3
348
332
210
5
66
Transaction-based income
3
449
431
309
4
45
Other income
11
(251)
10
17
Total revenues
2,139
1,832
1,179
17
81
Credit loss expense / (release)
39
74
14
(47)
174
Operating expenses
1,241
1,222
613
2
103
Business division operating profit / (loss) before tax
859
537
552
60
56
Underlying results
Total revenues as reported
2,139
1,832
1,179
17
81
of which: PPA effects and other integration items
4
226
267
(15)
of which: PPA effects recognized in net interest income
212
235
(10)
of which: PPA effects and other integration items recognized in transaction-based income
14
31
(55)
of which: losses related to investment in SIX Group
(267)
Total revenues (underlying)
3
1,913
1,833
1,179
4
62
Credit loss expense / (release)
39
74
14
(47)
174
Operating expenses as reported
1,241
1,222
613
2
103
of which: integration-related expenses and PPA effects
3,5
141
162
(13)
Operating expenses (underlying)
3
1,100
1,060
613
4
79
of which: expenses for litigation, regulatory and similar matters
0
0
0
Business division operating profit / (loss) before tax as reported
859
537
552
60
56
Business division operating profit / (loss) before tax (underlying)
3
774
699
552
11
40
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
3
55.7
6.5
39.7
Cost / income ratio (%)
3
58.0
66.7
52.0
Average attributed equity (CHF bn)
6
19.1
19.3
10.0
(1)
90
Return on attributed equity (%)
3,6
18.0
11.1
22.0
Loans, gross (CHF bn)
252.9
251.8
144.3
0
75
Customer deposits (CHF bn)
255.9
257.8
165.3
(1)
55
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
3,7
1.2
1.0
0.8
Underlying performance measures
Pre-tax profit growth (year-on-year, %)
3
40.3
38.8
39.7
Cost / income ratio (%)
3
57.5
57.8
52.0
1 Comparative figures have been
restated for changes in
business division perimeters,
Group Treasury
allocations and Non-core and
Legacy cost allocations,
as well as changes in
the equity attribution framework.
Refer to “Changes to segment
reporting in 2024” in the “UBS
business divisions and Group Items” section, the
“Equity attribution” section and “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 Comparative figures have been restated for changes in
Group Treasury allocations.
Refer to “Changes to segment reporting in 2024” in
the
“UBS business divisions and Group Items” section and “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.
3 Refer to
“Alternative performance
measures” in the
appendix to this
report for the
definition and calculation
method.
4 Includes accretion of
PPA adjustments
on financial instruments
and other PPA
effects, as
well as
temporary and incremental items directly related to the integration.
5 Includes temporary, incremental operating expenses
directly related to the integration, as well as amortization
of newly recognized intangibles
resulting from the acquisition of the Credit Suisse
Group.
6 Refer to the “Equity attribution” section of
this report for more information about the equity
attribution framework.
7 Refer to the “Risk management
and control” section of this report for more information about (credit-)impaired exposures.
UBS Group first quarter 2024 report |
UBS business divisions and Group Items |
Personal & Corporate Banking
22
Results
:
1Q24 vs 1Q23
Profit before tax increased by CHF 307m,
or 56%, to CHF 859m,
mainly due to the
acquisition of the Credit
Suisse
Group. Underlying profit before
tax was CHF 774m,
after excluding CHF 226m
related to purchase price allocation
(PPA) effects and other integration items, as well as integration-related expenses and PPA effects of CHF 141m.
Total revenues
Total
revenues increased by CHF 960m, or 81%, to CHF 2,139m, mainly due to the consolidation of Credit Suisse
revenues, and included the aforementioned CHF 226m of PPA
effects and other integration items. The remaining
increase
largely
reflected
increases
across
net
interest
income,
transaction-based
income
and
recurring
net
fee
income. Underlying total revenues were CHF 1,913m.
Net interest income increased by CHF 682m, or 105%, to CHF 1,332m, largely due to the
consolidation of Credit
Suisse net interest income, and included CHF 212m
of accretion of PPA adjustments on
financial instruments and
other
PPA
effects.
The
remaining
increase
was
mainly
driven
by
higher
deposit
margins,
resulting
from
higher
interest
rates,
partly
offset
by
shifts
to
lower-margin
deposit
products.
Excluding
the
aforementioned
accretion
effects, underlying net interest income was
CHF 1,120m.
Recurring net
fee income
increased by
CHF 138m, or
66%, to
CHF 348m, mainly
due to the
consolidation of
Credit
Suisse recurring
net fee income,
with the remaining
increase including
higher revenues
from custody and
mandate-
based fees.
Transaction-based
income increased
by CHF 140m,
or 45%,
to CHF 449m,
largely due
to the
consolidation of
Credit
Suisse transaction-based income, and included CHF 20m of accretion of PPA adjustments on financial instruments
and
other
PPA
effects,
partly
offset
by
a
decrease
mainly
driven
by
lower
credit
card
fees
from
private
clients.
Transaction-based income also
included negative
CHF 6m of
temporary and
incremental items
directly related
to
the integration. Excluding
CHF 14m of the
aforementioned accretion
effects and temporary
and incremental
items,
underlying transaction-based income was
CHF 435m.
Other income was stable at CHF 11m.
Credit loss expense / release
Net credit
loss expenses
were
CHF 39m, compared
with net
expenses of
CHF 14m in
the first
quarter of
2023,
largely due to the consolidation of Credit Suisse.
Operating expenses
Operating expenses increased by CHF 628m, or 103%, to CHF 1,241m, largely due to the consolidation of Credit
Suisse expenses, and
included integration-related expenses
of CHF 119m. Excluding
integration-related expenses
and PPA effects of CHF 141m, underlying operating expenses were CHF 1,100m.
UBS Group first quarter 2024 report |
UBS business divisions and Group Items |
Personal & Corporate Banking
23
Personal & Corporate Banking – in US dollars
As of or for the quarter ended
% change from
USD m, except where indicated
31.3.24
31.12.23
1
31.3.23
2
4Q23
1Q23
Results
Net interest income
1,508
1,510
704
0
114
Recurring net fee income
3
394
379
227
4
73
Transaction-based income
3
508
492
335
3
52
Other income
13
(299)
10
22
Total revenues
2,423
2,083
1,277
16
90
Credit loss expense / (release)
44
85
16
(48)
179
Operating expenses
1,404
1,398
663
0
112
Business division operating profit / (loss) before tax
975
601
598
62
63
Underlying results
Total revenues as reported
2,423
2,083
1,277
16
90
of which: PPA effects and other integration items
4
256
306
(16)
of which: PPA effects recognized in net interest income
240
270
(11)
of which: PPA effects and other integration items recognized in transaction-based income
16
36
(56)
of which: losses related to investment in SIX Group
(317)
Total revenues (underlying)
3
2,166
2,094
1,277
3
70
Credit loss expense / (release)
44
85
16
(48)
179
Operating expenses as reported
1,404
1,398
663
0
112
of which: integration-related expenses and PPA effects
3,5
160
187
(15)
Operating expenses (underlying)
3
1,245
1,210
663
3
88
of which: expenses for litigation, regulatory and similar matters
0
0
0
Business division operating profit / (loss) before tax as reported
975
601
598
62
63
Business division operating profit / (loss) before tax (underlying)
3
878
800
598
10
47
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
3
63.1
13.7
39.6
Cost / income ratio (%)
3
58.0
67.1
52.0
Average attributed equity (USD bn)
6
21.9
21.8
10.9
1
102
Return on attributed equity (%)
3,6
17.8
11.0
22.0
Loans, gross (USD bn)
280.3
299.2
157.6
(6)
78
Customer deposits (USD bn)
283.6
306.2
180.5
(7)
57
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
3,7
1.2
1.0
0.8
Underlying performance measures
Pre-tax profit growth (year-on-year, %)
3
46.9
51.2
39.6
Cost / income ratio (%)
3
57.5
57.8
52.0
1 Comparative figures have been
restated for changes in
business division perimeters, Group
Treasury allocations
and Non-core and Legacy
cost allocations, as
well as changes in the
equity attribution framework.
Refer to “Changes to segment
reporting in 2024” in the “UBS
business divisions and Group Items”
section, the “Equity attribution” section and
“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 Comparative figures have been restated for changes in Group
Treasury allocations.
Refer to “Changes to segment reporting in 2024” in the
“UBS business divisions and Group Items”
section and “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.
3 Refer to
“Alternative performance
measures” in the
appendix to this
report for the
definition and calculation
method.
4 Includes accretion of
PPA adjustments
on financial instruments
and other PPA
effects, as
well as
temporary and incremental items directly related to the integration.
5 Includes temporary, incremental operating expenses
directly related to the integration, as well as amortization of newly recognized intangibles
resulting from the acquisition of the Credit Suisse Group.
6 Refer to the “Equity attribution” section of this report
for more information about the equity attribution framework.
7 Refer to the “Risk management
and control” section of this report for more information about (credit-)impaired exposures.
UBS Group first quarter 2024 report |
UBS business divisions and Group Items |
Asset Management
24
Asset Management
Asset Management
As of or for the quarter ended
% change from
USD m, except where indicated
31.3.24
31.12.23
1
31.3.23
2
4Q23
1Q23
Results
Net management fees
3
745
745
479
0
56
Performance fees
30
52
23
(42)
29
Net gain from disposals
27
Total revenues
776
825
503
(6)
54
Credit loss expense / (release)
0
(1)
0
Operating expenses
665
704
408
(5)
63
Business division operating profit / (loss) before tax
111
122
95
(9)
17
Underlying results
Total revenues as reported
776
825
503
(6)
54
Total revenues (underlying)
4
776
825
503
(6)
54
Credit loss expense / (release)
0
(1)
0
Operating expenses as reported
665
704
408
(5)
63
of which: integration-related expenses
4
71
64
10
Operating expenses (underlying)
4
594
639
408
(7)
46
of which: expenses for litigation, regulatory and similar matters
0
6
0
Business division operating profit / (loss) before tax as reported
111
122
95
(9)
17
Business division operating profit / (loss) before tax (underlying)
4
182
186
95
(2)
91
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
4
16.6
(1.9)
(45.6)
Cost / income ratio (%)
4
85.8
85.3
81.2
Average attributed equity (USD bn)
5
2.6
2.6
1.8
2
45
Return on attributed equity (%)
4,5
16.7
18.8
20.8
Gross margin on invested assets (bps)
4,6
19
21
18
Underlying performance measures
Pre-tax profit growth (year-on-year, %)
4
91.5
50.2
(45.6)
Cost / income ratio (%)
4
76.6
77.5
81.2
Information by business line / asset
class
Net new money (USD bn)
4
Equities
3.3
(6.4)
(4.1)
Fixed Income
13.8
(5.6)
19.2
of which: money market
10.4
1.4
18.0
Multi-asset & Solutions
1.7
0.9
1.3
Hedge Fund Businesses
(0.2)
(1.6)
(0.9)
Real Estate & Private Markets
0.3
0.3
(1.2)
Total net new money excluding associates
18.9
(12.4)
14.4
of which: net new money excluding money market
8.6
(13.8)
(3.6)
Associates
7
2.1
0.1
(0.3)
Total net new money
6
21.0
(12.2)
14.1
Invested assets (USD bn)
4
Equities
683
644
481
6
42
Fixed Income
450
445
320
1
41
of which: money market
145
134
138
9
6
Multi-asset & Solutions
278
274
161
1
72
Hedge Fund Businesses
58
57
55
3
6
Real Estate & Private Markets
148
156
100
(6)
48
Total invested assets excluding associates
1,617
1,577
1,117
3
45
of which: passive strategies
750
715
468
5
60
Associates
7
74
72
24
3
210
Total invested assets
6
1,691
1,649
1,140
3
48
UBS Group first quarter 2024 report |
UBS business divisions and Group Items |
Asset Management
25
Asset Management (continued)
As of or for the quarter ended
% change from
USD m, except where indicated
31.3.24
31.12.23
1
31.3.23
2
4Q23
1Q23
Information by region
Invested assets (USD bn)
4
Americas
424
402
321
5
32
Asia Pacific
6
214
211
177
2
21
EMEA (excluding Switzerland)
374
354
274
6
36
Switzerland
679
682
369
0
84
Total invested assets
6
1,691
1,649
1,140
3
48
Information by channel
Invested assets (USD bn)
4
Third-party institutional
960
939
626
2
53
Third-party wholesale
176
177
123
(1)
43
UBS’s wealth management businesses
482
461
368
4
31
Associates
7
74
72
24
3
210
Total invested assets
6
1,691
1,649
1,140
3
48
1 Comparative figures have been
restated for changes in
business division perimeters,
Group Treasury
allocations and Non-core and
Legacy cost allocations,
as well as changes in
the equity attribution framework.
Refer to “Changes to segment
reporting in 2024” in the “UBS
business divisions and Group Items” section, the
“Equity attribution” section and “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 Comparative figures have been restated for changes
in Group Treasury allocations.
Refer to “Changes to segment reporting in 2024” in
the
“UBS business divisions and Group Items” section and “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.
3 Net management
fees include transaction
fees, fund
administration revenues
(including net interest
and trading income
from lending activities
and foreign-exchange hedging
as part of
the fund services
offering), distribution fees,
incremental fund-related
expenses,
gains or
losses from
seed money
and co-investments,
funding costs,
the negative
pass-through impact
of third-party
performance fees,
and other
items that
are not
Asset
Management’s performance fees.
4 Refer to “Alternative performance measures”
in the appendix to this report for the definition and calculation method.
5 Refer to the “Equity attribution” section of this report
for more information about the equity attribution framework.
6 Starting with the second quarter of 2023, net new money
and invested assets include net new money and invested assets
from associates, to better
reflect the business strategy.
Comparative figures have been
restated to reflect this change.
7 The invested assets and
net new money amounts reported
for associates are prepared in
accordance with their local
regulatory requirements and practices.
Results: 1Q24 vs 1Q23
Profit before tax increased by USD 16m, or 17%, to USD 111m, mainly due to the acquisition of the Credit Suisse
Group. Underlying profit before tax was USD 182m,
after excluding integration-related expenses
of USD 71m.
Total revenues
Total
revenues
increased
by
USD 273m,
or
54%,
to
USD 776m,
reflecting
the
consolidation
of
Credit
Suisse
revenues.
Net management fees increased by USD 266m, or
56%, to USD 745m, largely due to
the consolidation of Credit
Suisse net management fees and also
due to the first quarter
of 2023 including negative pass-through fees, with
the
corresponding
offset
in
performance
fees.
The
increase
was
also
due
to
positive
market
performance
and
foreign currency effects, partly offset by continued
margin compression.
Performance fees
increased by
USD 7m, or
29%, to
USD 30m, mainly
due to
the consolidation
of Credit
Suisse
performance fees and increases in Hedge Fund Businesses,
Fixed Income and Real Estate & Private Markets, partly
offset by a decrease due to the first quarter
of 2023 including the aforementioned
pass-through fees.
Operating expenses
Operating expenses increased by USD 257m, or 63%, to USD 665m, mainly reflecting the
consolidation of Credit
Suisse
expenses,
and
included
integration-related
expenses of
USD 71m. The
increase
was
also
due
to
adverse
foreign currency effects and increases in technology expenses and general and administrative expenses. Excluding
the aforementioned integration-related expenses, underlying
operating expenses were USD 594m.
Invested assets: 1Q24 vs 4Q23
Invested assets
increased by
USD 42bn
to USD 1,691bn,
mainly reflecting
positive market
performance
of USD 72bn
and positive net
new money of
USD 21bn, partly offset
by adverse foreign currency
effects of USD 48bn.
Excluding
money market flows and associates, net new
money was positive USD 9bn.
UBS Group first quarter 2024 report |
UBS business divisions and Group Items |
Investment Bank
26
Investment Bank
Investment Bank
As of or for the quarter ended
% change from
USD m, except where indicated
31.3.24
31.12.23
1
31.3.23
2
4Q23
1Q23
Results
Advisory
189
191
171
(1)
11
Capital Markets
683
649
213
5
220
Global Banking
872
840
384
4
127
Execution Services
463
412
419
12
11
Derivatives & Solutions
873
447
1,022
95
(15)
Financing
542
442
539
23
1
Global Markets
1,878
1,301
1,980
44
(5)
of which: Equities
1,353
1,006
1,313
35
3
of which: Foreign Exchange, Rates and Credit
525
295
667
78
(21)
Total revenues
2,751
2,141
2,365
28
16
Credit loss expense / (release)
32
48
7
(33)
355
Operating expenses
2,164
2,283
1,866
(5)
16
Business division operating profit / (loss) before tax
555
(190)
492
13
Underlying results
Total revenues as reported
2,751
2,141
2,365
28
16
of which: PPA effects
3
293
277
6
of which: PPA effects recognized in Global Banking revenue line
288
275
5
Total revenues (underlying)
4
2,458
1,864
2,365
32
4
Credit loss expense / (release)
32
48
7
(33)
355
Operating expenses as reported
2,164
2,283
1,866
(5)
16
of which: integration-related expenses
4
143
167
(15)
Operating expenses (underlying)
4
2,022
2,116
1,866
(4)
8
of which: expenses for litigation, regulatory and similar matters
(1)
13
45
Business division operating profit / (loss) before tax as reported
555
(190)
492
13
Business division operating profit / (loss) before tax (underlying)
4
404
(300)
492
(18)
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
4
12.7
(270.2)
(47.0)
Cost / income ratio (%)
4
78.7
106.6
78.9
Average attributed equity (USD bn)
5
17.0
16.8
14.7
1
15
Return on attributed equity (%)
4,5
13.1
(4.5)
13.4
Underlying performance measures
Pre-tax profit growth (year-on-year, %)
4
(17.8)
(368.8)
(51.8)
Cost / income ratio (%)
4
82.3
113.5
78.9
Return on attributed equity (%)
4,5
9.5
(7.1)
13.4
1 Comparative figures have
been restated for changes in
business division perimeters, Group
Treasury allocations
and Non-core and Legacy
cost allocations, as
well as changes in the
equity attribution framework.
Refer to “Changes to segment
reporting in 2024” in the “UBS
business divisions and Group Items”
section, the “Equity attribution” section and
“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 Comparative figures have been restated for changes
in Group Treasury allocations.
Refer to “Changes to segment reporting in 2024” in the
“UBS business divisions and Group Items”
section and “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.
3 Includes
accretion of PPA adjustments on financial instruments and other PPA effects.
4 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method.
5 Refer to the
“Equity attribution” section of this report for more information about the equity attribution framework.
UBS Group first quarter 2024 report |
UBS business divisions and Group Items |
Investment Bank
27
Results: 1Q24 vs 1Q23
Profit before
tax increased
by USD 63m,
or 13%,
to USD 555m,
mainly driven
by higher
total revenues,
partly offset
by higher operating expenses.
Underlying profit before tax
was USD 404m, after excluding
USD 293m of purchase
price allocation (PPA) effects and integration-related
expenses of USD 143m.
Total revenues
Total
revenues increased by
USD 386m, or 16%,
to USD 2,751m, due to
higher Global Banking revenues,
which
increased by USD 488m,
or 127%,
partly offset by
lower Global
Markets revenues,
which decreased by
USD 102m,
or 5%.
The consolidation
of Credit
Suisse revenues
included USD 293m
of PPA
effects. Excluding
these effects,
underlying total revenues were USD 2,458m.
Global Banking
Global Banking
revenues increased
by USD 488m,
or 127%,
to USD 872m,
mainly due
to USD 288m
of PPA effects.
Excluding these effects,
underlying Global Banking revenues
increased by USD 200m,
or 52%. The
overall global
fee pool
1,2
increased 18%.
Advisory revenues
increased by
USD 18m, or
11%, to
USD 189m, mainly
due to
higher merger
and acquisition
transaction revenues. The relevant global
fee pool
2
decreased 10%.
Capital
Markets
revenues
increased
by
USD 470m,
or
220%,
to
USD 683m,
mainly
due
to
USD 288m
of
the
aforementioned PPA effects.
Excluding these effects,
underlying Capital Markets
revenues increased by
USD 182m,
or 85%, with increases across all products. Leveraged Capital Markets revenues increased by USD 99m, or 245%,
Debt Capital Markets revenues increased by USD 39m, or 58%, and Equity Capital Markets revenues increased
by
USD 32m, or 58%. The relevant global fee
pools
1,2
increased by 58%, 26% and 58%, respectively.
Global Markets
Global Markets revenues decreased by USD 102m, or 5%, to
USD 1,878m, primarily driven by lower Derivatives
&
Solutions revenues, partly offset by higher Execution Services revenues.
Execution Services
revenues increased
by USD 44m, or
11%, to USD 463m,
due to increases
in Cash Equities
across
all regions.
Derivatives & Solutions revenues decreased by
USD 149m, or 15%, to
USD 873m, mostly driven by
Rates, due to
lower levels of both volatility and client activity.
Financing revenues increased by USD 3m, or
1%, to USD 542m.
Equities
Global Markets Equities revenues increased by USD 40m, or
3%, to USD 1,353m.
Foreign Exchange, Rates and Credit
Global Markets
Foreign
Exchange, Rates
and
Credit
revenues
decreased by
USD 142m, or
21%,
to USD 525m,
primarily driven by lower Rates revenues.
Credit loss expense / release
Net credit loss expenses were USD 32m, compared with net expenses
of USD 7m in the first quarter of 2023.
Operating expenses
Operating expenses increased by
USD 298m, or 16%, to
USD 2,164m, largely due to
the consolidation of Credit
Suisse expenses,
and included integration-related expenses of USD 143m. Excluding integration-related expenses,
underlying operating expenses were USD 2,022m.
1
UBS fee-pool-comparable revenues consist 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.
2
Source: Dealogic, as of 29 March 2024.
UBS Group first quarter 2024 report |
UBS business divisions and Group Items |
Non-core and Legacy
28
Non-core and Legacy
Non-core and Legacy
As of or for the quarter ended
% change from
USD m
31.3.24
31.12.23
1
31.3.23
2
4Q23
1Q23
Results
Total revenues
1,001
145
23
588
Credit loss expense / (release)
36
15
0
139
Operating expenses
1,011
1,787
699
(43)
45
Operating profit / (loss) before tax
(46)
(1,657)
(676)
(97)
(93)
Underlying results
Total revenues as reported
1,001
145
23
588
Total revenues (underlying)
3
1,001
145
23
588
Credit loss expense / (release)
36
15
0
139
Operating expenses as reported
1,011
1,787
699
(43)
45
of which: integration-related expenses
3
242
750
Operating expenses (underlying)
3
769
1,037
699
(26)
10
of which: expenses for litigation, regulatory and similar matters
(16)
(33)
665
Operating profit / (loss) before tax as reported
(46)
(1,657)
(676)
(97)
(93)
Operating profit / (loss) before tax (underlying)
3
197
(907)
(676)
Performance measures and other information
Average attributed equity
4
10.6
9.5
1.1
12
889
Risk-weighted assets (USD bn)
57.9
74.0
13.1
(22)
342
Leverage ratio denominator (USD bn)
119.9
168.5
6.1
(29)
1 Comparative figures have
been restated for changes
in business division perimeters,
Group Treasury
allocations and Non-core and
Legacy cost allocations,
as well as changes in
the equity attribution framework.
Refer to “Changes to segment
reporting in 2024” in the “UBS
business divisions and Group Items” section, the
“Equity attribution” section and “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 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.
3 Refer to “Alternative
performance measures” in the appendix
to this report for the
definition and calculation
method.
4 Refer to the “Equity attribution” section of this report for more information about the equity attribution framework.
Composition of Non-core and Legacy
USD bn
RWA
Total assets
LRD
31.3.24
31.12.23
31.3.24
31.12.23
31.3.24
31.12.23
Exposure category
Equities
2.3
3.4
15.1
20.5
10.3
14.3
Macro
6.5
9.9
47.0
56.7
20.0
26.2
Loans
8.9
11.6
10.1
14.0
12.8
16.4
Securitized products
10.2
14.1
17.9
27.5
20.2
29.7
Credit
1.1
3.1
3.3
5.4
3.5
5.5
High-quality liquid assets
50.3
74.4
50.3
74.4
Operational risk
27.1
30.0
Other
1.8
1.9
2.1
3.0
2.9
1.9
Total
57.9
74.0
145.9
201.4
119.9
168.5
UBS Group first quarter 2024 report |
UBS business divisions and Group Items |
Non-core and Legacy
29
Results: 1Q24 vs 1Q23
Loss before
tax was
USD 46m,
compared
with a
loss
before
tax of
USD 676m. Underlying
gain before
tax was
USD 197m, after excluding integration-related expenses
of USD 242m.
Total revenues
Total revenues increased by USD 978m
to USD 1,001m,
mainly due to
the transfer
of assets and
liabilities into
Non-
core and
Legacy following the acquisition
of the Credit
Suisse Group. Revenues
included net gains
from position
exits, along with net
interest income from securitized
products and credit
products. Revenues also included a
net
gain of USD 272m
from the conclusion of agreements with Apollo relating to the former Credit Suisse securitized
products group.
›
Refer to “Integration of Credit Suisse” in the “Recent developments” section and “Note 2 Accounting for the
acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more
information about the concluding of agreements with Apollo
Credit loss expense / release
Net
credit
loss
expenses
were
USD 36m,
compared
with
net
expenses
of
USD 0m.
Net
credit
loss
expenses
of
USD 62m related
to credit-impaired
(stage 3 and
purchased credit-impaired)
positions, mainly
across our Credit
and
Equities businesses,
were partly offset by net credit loss releases of USD 26m related to stage 1 and 2 positions.
Operating expenses
Operating
expenses
increased
by
USD 312m
to
USD 1,011m, mainly
due
to
the
consolidation
of
Credit
Suisse
expenses, and included integration-related
expenses of USD 242m, driven
by corporate services. The
first quarter
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
- Excluding integration-related
expenses, underlying
operating expenses were USD 769m.
Risk-weighted assets and leverage ratio denominator:
1Q24 vs 4Q23
Risk-weighted assets
were reduced by
USD 16.1bn to
USD 57.9bn, while
the leverage
ratio denominator
decreased
by
USD 48.6bn to
USD 119.9bn. These
changes were
mainly driven
by active
unwinds of
Non-core
and Legacy
assets,
most
notably
reflecting
the
sale
of
USD 8bn
of
senior
secured
financing
facilities
provided
to
Apollo,
reductions in the loan inventory in the credit portfolio,
and exit of the life finance business in the
US.
UBS Group first quarter 2024 report |
UBS business divisions and Group Items |
Group Items
30
Group Items
Group Items
As of or for the quarter ended
% change from
USD m
31.3.24
31.12.23
1
31.3.23
2
4Q23
1Q23
Results
Total revenues
(355)
107
(211)
68
Credit loss expense / (release)
(2)
(2)
0
Operating expenses
(33)
16
14
Operating profit / (loss) before tax
(320)
93
(225)
42
Underlying results
Total revenues as reported
(355)
107
(211)
68
of which: PPA effects
3
(4)
12
Total revenues (underlying)
4
(351)
95
(211)
66
Credit loss expense / (release)
(2)
(2)
0
Operating expenses as reported
(33)
16
14
of which: integration-related expenses
4
1
109
of which: acquisition-related costs
(1)
70
Operating expenses (underlying)
4
(34)
(92)
(57)
(63)
(41)
of which: expenses for litigation, regulatory and similar matters
0
(28)
1
Operating profit / (loss) before tax as reported
(320)
93
(225)
42
Operating profit / (loss) before tax (underlying)
4
(315)
189
(155)
104
1 Comparative figures have
been restated for changes
in business division perimeters,
Group Treasury
allocations and Non-core and
Legacy cost allocations,
as well as changes in
the equity attribution framework.
Refer to “Changes to segment
reporting in 2024” in the “UBS
business divisions and Group Items” section, the
“Equity attribution” section and “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 Comparative figures have been restated for changes in
Group Treasury allocations.
Refer to “Changes to segment reporting in 2024” in
the
“UBS business divisions and Group Items” section and “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.
3 Includes
accretion of PPA adjustments on financial instruments and other PPA
effects.
4 Refer to “Alternative performance measures” in the appendix to
this report for the definition and calculation method.
Results: 1Q24 vs 1Q23
Loss before tax
was USD 320m,
mainly driven
by mark-to-market
losses in
Group hedging
and own
debt,
compared
with a
loss of
USD 225m. Underlying
loss before
tax was
USD 315m, after
excluding USD 5m
of purchase
price
allocation effects
and integration-related
expenses, compared
with an
underlying loss
of USD 155m,
after excluding
acquisition-related costs of USD 70m.
Income
from
Group
hedging
and
own
debt,
including
hedge
accounting
ineffectiveness,
was
net
negative
USD 191m, compared with net negative income of USD 68m. The results across the periods were driven by mark-
to-market effects
on portfolio-level
economic hedges
due to
higher interest
rates and
cross-currency-basis
widening.
In addition, the first quarter of 2024 included a USD 25m donation expense and an
USD 11m increase in funding
costs related to deferred tax assets.
UBS Group first quarter 2024 report |
Risk, capital, liquidity and funding,
and balance sheet
31
Risk, capital, liquidity and
funding, and balance sheet
Management report
Table of contents
32
Risk management and control
32
Credit risk
34
Market risk
35
Country risk
36
Non-financial risk
38
Capital management
40
Total
loss-absorbing capacity
43
Risk-weighted assets
45
Leverage ratio denominator
47
Equity attribution
48
Liquidity and funding management
48
Strategy, objectives and governance
48
Liquidity coverage ratio
48
Net stable funding ratio
49
Balance sheet and off-balance sheet
49
Balance sheet assets
49
Balance sheet liabilities
50
Equity
51
Off-balance sheet
52
Share information and earnings per share
UBS Group first quarter 2024 report |
Risk, capital, liquidity and funding,
and balance sheet | Risk management and
control
32
Risk management and control
This
section
provides
information
about
key
developments
during
the
reporting
period
and
should
be
read
in
conjunction with
the “Risk
management and
control” section
of the
UBS Group
Annual Report
2023, available
under “Annual
reporting” at
ubs.com/investors
, and
the “Recent
developments” section of
this report
for more
information about the integration of Credit
Suisse.
Credit risk
Overall banking products exposure
Overall banking products
exposure decreased by
USD 88bn to USD 1,092bn as
of 31 March
2024, mainly driven
by a
decrease in
balances at
central banks,
as well
as a
decrease in
loans and
advances to
customers due
to negative
currency effects.
Total net
credit loss
expenses
in the
first quarter
of 2024
were USD 106m,
reflecting net
releases of
USD 45m related
to performing positions and net expenses
of USD 151m on credit-impaired positions.
›
Refer to the “Balance sheet and off-balance sheet” section of this report for more information about balance sheet
movements
›
Refer to the “Group performance” section and “Note 9 Expected credit loss measurement” in the “Consolidated
financial statements” section of this report for more information about credit loss expense / release
Loan underwriting
In the Investment Bank,
mandated loan underwriting
commitments on a
notional basis decreased by
USD 0.1bn to
USD 1.9bn
as
of
31 March
2024.
In
Non-core
and
Legacy,
exposure
decreased
by
USD 0.5bn
to
USD 0.5bn
following the cancellation of the largest mandated exposure. As of 31 March 2024, USD 0.1bn
and USD 0.5bn of
commitments
in
the
Investment
Bank
and
in
Non-core
and
Legacy,
respectively,
have
not
been
distributed
as
originally planned.
Loan underwriting exposures are classified as
held for trading, with fair
values reflecting the market conditions at
the end of the quarter. Credit hedges are
in place to help protect against fair value movements
in the portfolio.
UBS Group first quarter 2024 report |
Risk, capital, liquidity and funding,
and balance sheet | Risk management and
control
33
Banking and traded products exposure in our business divisions and Group Items
31.3.24
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
471,001
448,792
1,694
106,280
47,997
15,889
1,091,653
of which: loans and advances to customers (on-balance sheet)
301,544
280,328
17
17,988
6,623
483
606,983
of which: guarantees and loan commitments (off-balance sheet)
20,727
53,044
60
34,778
3,427
17,001
129,036
Traded products
2,3,4
Gross exposure
13,933
4,969
0
44,191
63,093
of which: over-the-counter derivatives
9,817
4,511
0
12,556
26,885
of which: securities financing transactions
342
0
0
21,418
21,760
of which: exchange-traded derivatives
3,774
458
0
10,216
14,448
Other credit lines, gross
5
80,663
67,597
0
2,568
3
86
150,918
Total credit-impaired exposure, gross
1,095
3,425
0
642
1,875
0
7,038
of which: stage 3
919
3,051
0
591
753
0
5,315
of which: PCI
176
375
0
51
1,122
0
1,724
Total allowances and provisions for expected credit losses
326
1,211
0
375
324
7
2,243
of which: stage 1
146
334
0
124
10
6
620
of which: stage 2
70
239
0
93
4
0
406
of which: stage 3
97
627
0
158
154
0
1,035
of which: PCI
13
12
0
1
156
0
182
31.12.23
6
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
495,846
482,822
1,699
115,203
73,092
10,555
1,179,217
of which: loans and advances to customers (on-balance sheet)
317,137
299,150
13
16,993
8,117
131
641,542
of which: guarantees and loan commitments (off-balance sheet)
22,706
57,494
59
36,230
3,235
18,109
137,834
Traded products
2,3,4
Gross exposure
11,812
4,748
0
47,630
64,191
of which: over-the-counter derivatives
8,397
4,116
0
12,400
24,913
of which: securities financing transactions
371
19
0
23,044
23,434
of which: exchange-traded derivatives
3,045
613
0
12,186
15,844
Other credit lines, gross
5
83,077
75,334
0
4,714
5
126
163,256
Total credit-impaired exposure, gross
1,662
3,066
0
469
1,169
1
6,367
of which: stage 3
1,022
2,632
0
408
290
1
4,352
of which: PCI
640
434
0
61
879
0
2,014
Total allowances and provisions for expected credit losses
392
1,231
1
358
271
8
2,261
of which: stage 1
176
364
1
133
20
7
700
of which: stage 2
63
259
0
78
16
0
416
of which: stage 3
98
590
0
146
158
0
993
of which: PCI
55
19
0
1
77
0
153
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 Credit Suisse traded products
are presented
before reflection
of the
impact of
the purchase
price allocation
performed under
IFRS 3,
Business Combinations,
following the
acquisition of
the Credit
Suisse Group
by UBS.
The acquisition
date
adjustment is less than USD 1bn and, if applied, would lead to a reduction in
our reported traded products exposure.
5 Unconditionally revocable committed credit lines.
6 Comparative figures in this table have
been restated for changes
in business division
perimeters and Group
Treasury allocations.
Refer to “Changes to
segment reporting in 2024”
in the “UBS business
divisions and Group Items”
section and “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.
Collateralization of Loans and advances to customers
1
Global Wealth Management
Personal & Corporate Banking
USD m, except where indicated
31.3.24
31.12.23
2
31.3.24
31.12.23
2
Secured by collateral
293,109
308,120
240,880
259,734
Residential real estate
107,299
111,755
189,360
204,184
Commercial / industrial real estate
10,033
10,860
39,677
42,560
Cash
31,095
36,813
2,926
3,269
Equity and debt instruments
119,722
122,079
3,399
3,666
Other collateral
3
24,960
26,613
5,518
6,055
Subject to guarantees
837
1,048
7,708
8,132
Uncollateralized and not subject to guarantees
7,598
7,969
31,739
31,284
Total loans and advances to customers, gross
301,544
317,137
280,328
299,150
Allowances
(226)
(181)
(966)
(987)
Total loans and advances to customers, net of allowances
301,319
316,957
279,362
298,163
Collateralized loans and advances to customers in % of total loans
and advances to customers, gross (%)
97.2
97.2
85.9
86.8
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. Credit Suisse applies
a risk-based approach 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 Comparative figures in this table
have been restated for
changes in business division
perimeters. Refer to
“Changes to segment reporting
in 2024” in the
“UBS business divisions
and Group Items” section
and 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.
3 Includes but is
not limited to life
insurance contracts,
rights in respect
of subscription or
capital
commitments from fund partners, inventory, gold and other commodities.
UBS Group first quarter 2024 report |
Risk, capital, liquidity and funding,
and balance sheet | Risk management and
control
34
Market risk
The UBS
Group excluding
Credit Suisse
continued to
maintain generally
low levels
of management
value-at-risk
(VaR). Average management VaR
(1-day,
95% confidence level) increased marginally to USD 17m from USD 16m
in the first quarter of
- There were
no new VaR
negative backtesting exceptions in the first
quarter of 2024.
The number
of negative
backtesting exceptions
within the
most recent
250-business-day window
remained at
zero.
Credit Suisse’s average management VaR (1-day, 98% confidence level) decreased to
USD 17m from USD 23m in
the first
quarter of
2024, driven
by continued
strategic migration
of positions
to UBS
from the
Investment Bank
(Credit
Suisse)
and
reductions
in
Non-core
and
Legacy.
In
the
first
quarter
of
2024,
Credit
Suisse
had
no
new
negative
backtesting
exceptions.
The
number
of
negative
backtesting
exceptions
within
the
most
recent
250-
business-day window decreased to one from
three at the end of 2023.
The
Swiss
Financial
Market
Supervisory
Authority
(FINMA)
VaR
multiplier
derived
from
negative
backtesting
exceptions for market risk
risk-weighted assets was unchanged
compared with the prior
quarter, at 3.0,
for both
the UBS Group excluding Credit Suisse and Credit
Suisse.
Management value-at-risk (1-day, 95% confidence, 5 years of historical data) of our business divisions and Group Items
excluding Credit Suisse components, by general market risk type
1
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
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
11
23
13
17
7
17
8
3
3
Non-core and Legacy
1
2
1
1
0
1
1
0
0
Group Items
4
5
4
4
1
4
3
1
0
Diversification effect
2,3
(6)
(6)
(1)
(5)
(4)
(1)
0
Total as of 31.3.24
12
23
13
17
7
18
9
3
3
Total as of 31.12.23
11
24
19
16
9
16
7
2
3
Management value-at-risk (1-day, 98% confidence, 2 years of historical data) of the Credit Suisse components of our
business divisions and Group Items, by general market risk type
1
Average by risk type
USD m
Min.
Max.
Period end
Average
Equity
Interest
rates
Credit
spreads
Foreign
exchange
Commodities
Global Wealth Management
1
3
2
2
1
0
1
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
4
4
11
4
6
5
1
2
0
0
Non-core and Legacy
12
16
13
14
6
6
12
0
0
Group Items
0
0
0
0
0
0
0
0
0
Diversification effect
2,3
(3)
(5)
(3)
3
(3)
0
0
Total as of 31.3.24
15
21
17
17
9
10
12
1
1
Total as of 31.12.23
20
25
21
23
11
12
16
1
1
1 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 value-at-risk (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.
2 The difference between the sum of the standalone VaR for the business divisions and Group Items and the total VaR.
3 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.
4 The Investment
Bank management VaR
consists of positions that we currently plan to retain going forward and were previously reported under Non-core and Legacy.
Economic value of equity and net interest income
sensitivity
The economic value of equity
(EVE) sensitivity in the UBS Group
banking book to a parallel shift
in yield curves of
+1 basis
point
was
negative
USD 31.3m
as
of
31 March
2024,
compared
with
negative
USD 30.1m
as
of
31 December 2023. This
excludes the sensitivity
of USD 5.4m from
additional tier 1 (AT1)
capital instruments (as
per specific FINMA requirements)
in contrast to general
Basel Committee on
Banking Supervision (BCBS)
guidance.
Exposure in the banking
book of the
UBS Group increased during the
first quarter of 2024,
due to interest rate
risk
hedges of recent AT1
issuances and a repositioning of the Swiss franc exposure
in anticipation of the subsequent
Swiss National Bank rate cut in March 2024.
UBS Group first quarter 2024 report |
Risk, capital, liquidity and funding,
and balance sheet | Risk management and
control
35
The majority of
our interest rate
risk in
the banking
book is
a reflection of
the net asset
duration that
we run
to
offset our modeled
sensitivity of net
USD 23.4m (31 December 2023:
USD 24.3m) assigned to
our equity, goodwill
and
real
estate,
with
the aim
of
generating
a
stable
net
interest
income
contribution. Of
this,
USD 16.7m and
USD 5.7m
are
attributable
to
the
US
dollar
and
the
Swiss
franc
portfolios,
respectively
(31 December
2023:
USD 17.6m and USD 5.6m, respectively).
In addition to
the aforementioned
sensitivity, we
calculate the
six interest
rate shock
scenarios prescribed
by FINMA.
The “Parallel up” scenario, assuming all
positions were fair valued, was the
most severe and would have resulted
in a change in EVE
of negative USD 5.9bn, or
6.3%, of our tier 1
capital (31 December 2023:
negative USD 5.7bn,
or 6.1%), which is well below
the 15% threshold as per
the BCBS supervisory outlier test
for high levels of interest
rate risk in the banking book.
The immediate effect
on our tier 1
capital in the
“Parallel up” scenario
as of 31 March
2024 would have
been a
decrease of approximately
USD 0.9bn, or 0.9%,
(31 December 2023: USD 0.9bn,
or 0.9%), reflecting the
fact that
the
vast
majority
of
our
banking
book
is
accrual
accounted
or
subject
to
hedge
accounting.
The
“Parallel
up”
scenario would subsequently have a positive effect
on net interest income, assuming a constant
balance sheet.
›
Refer to “Interest rate risk in the banking book” in the “Risk management and control”
section of the UBS Group
Annual Report 2023, available under “Annual reporting” at
ubs.com/investors
, for more information about the
management of interest rate risk in the banking book
›
Refer to “Sensitivity to interest rate movements” in the “Group performance” section of this report for more
information about the effects of increases in interest rates on the net interest income of our banking book
Interest rate risk – banking book
31.3.24
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
(4.5)
(0.7)
0.1
(26.1)
(0.1)
(31.3)
5.4
(25.9)
Parallel up
2
(661.4)
(132.6)
26.4
(5,044.0)
(43.6)
(5,855.3)
1,000.1
(4,855.2)
Parallel down
2
703.7
132.7
(32.3)
5,252.2
40.4
6,096.8
(1,153.4)
4,943.4
Steepener
3
(306.6)
(13.0)
(5.4)
(1,205.2)
(40.7)
(1,570.9)
179.8
(1,391.1)
Flattener
4
176.4
(7.8)
9.7
39.4
30.3
248.0
44.7
292.7
Short-term up
5
(79.6)
(45.8)
17.5
(2,032.0)
10.7
(2,129.2)
469.6
(1,659.5)
Short-term down
6
80.5
45.9
(17.8)
2,167.5
(9.6)
2,266.4
(487.7)
1,778.8
31.12.23
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
(3.7)
(0.6)
0.1
(26.0)
0.2
(30.1)
4.9
(25.2)
Parallel up
2
(548.9)
(119.3)
16.2
(5,027.2)
(0.9)
(5,680.2)
904.6
(4,775.5)
Parallel down
2
561.8
124.3
(29.2)
5,216.0
2.8
5,875.7
(1,044.5)
4,831.3
Steepener
3
(305.3)
(13.1)
(11.9)
(1,037.0)
(33.8)
(1,401.1)
93.4
(1,307.6)
Flattener
4
189.6
(5.0)
14.0
(124.2)
30.8
105.2
109.6
214.8
Short-term up
5
(27.3)
(39.4)
19.4
(2,171.3)
23.9
(2,194.7)
486.3
(1,708.4)
Short-term down
6
26.5
41.8
(21.8)
2,312.1
(26.8)
2,331.9
(507.8)
1,824.1
1 Economic value of equity.
2 Rates across all tenors move by ±150 bps for Swiss franc, ±200 bps
for euro and US dollar, and ±250 bps for pound sterling.
3 Short-term rates decrease and long-term rates increase.
4 Short-term rates increase and long-term rates decrease.
5 Short-term rates increase more than long-term rates.
6 Short-term rates decrease more than long-term rates.
Country risk
We remain
watchful of
a range
of geopolitical
developments and
political changes
in a
number of
countries, as
well as international tensions
arising from the Russia–Ukraine war, conflicts in the
Middle East and US–China
trade
relations. Our direct exposure to Israel is
less than USD 0.5bn and
our direct exposure to Gulf Cooperation
Council
countries is less
than USD 7bn. We
have limited direct
exposure to
Egypt, Jordan
and Lebanon, and
we have no
direct exposure to
Iran, Iraq or
Syria. Our direct
exposure to Russia,
Belarus and Ukraine
is immaterial, and
potential
second-order impacts, such as European energy security, continue to be monitored.
Inflation has abated to some extent in major Western economies, though there are still concerns regarding future
developments, and central banks’
monetary policy is in the
spotlight. The potential for
“higher-for-longer” interest
rates raises the prospect of a global recession.
There are ongoing concerns regarding the property sector
in China.
This combination of factors translates into
a more uncertain and volatile
environment, which increases the risk of
financial market disruption.
UBS Group first quarter 2024 report |
Risk, capital, liquidity and funding,
and balance sheet | Risk management and
control
36
We continue to monitor
potential trade policy
disputes, as well as
economic and political
developments in addition
to those mentioned above. We
are closely watching elections in
a number of key
markets in 2024. Our
exposure
to emerging market countries is less than
10% of our total country exposure, mainly
in Asia.
›
Refer to the “Risk management and control” section of the UBS Group Annual Report 2023, available under
“Annual reporting” at
ubs.com/investors
, for more information
Non-financial risk
We continue to actively manage the non-financial risks emerging from the acquisition of the Credit Suisse Group,
including the
current operation
of dual
corporate structures,
and the
scale, pace
and complexity
of the
required
integration activities.
These activities continue
to be managed
via the program
run by our
Group Integration Office.
The integration of Credit Suisse requires data to
be migrated into 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.
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.
There is an
increased risk
of cyber-related
operational disruption
to business
activities at
our locations
and / or 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.
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 first
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. Following a post-incident
review
of
the
ION
XTP
ransomware
attack,
we
are
improving
our
frameworks
for
managing
third
parties
that
support
our
important
business
services
and
continue
with
actions
to
enhance
our
cyber-risk
assessments
and
controls over
third-party vendors.
We continue
to invest
in improving
our technology
infrastructure and
information
security governance to improve our defense,
detection and response capabilities
against cyberattacks.
In addition, we
are working to
enhance our operational
resilience to address
these heightened risks and
to meet
regulatory deadlines through 2026. We are implementing a global framework designed to drive enhancements in
operational resilience
across all
business divisions
and relevant
jurisdictions, as
well as
working with
the third
parties,
including vendors,
that are of
critical importance
to our operations,
to assess their
operational resilience
against our
standards.
The increasing interest
in data-driven
advisory processes,
and use of
artificial intelligence
(AI) and machine
learning,
is opening up new questions
related to the fairness of
AI algorithms, data life cycle
management, data ethics,
data
privacy and security, and
records management. In
addition, new risks
continue to emerge,
such as those that
result
from the demand from
our clients for distributed
ledger technology, blockchain-based
assets and cryptocurrencies;
however,
we
currently
have
limited
exposure
to
such
risks,
and
relevant
control
frameworks
for
them
are
implemented and reviewed on a regular basis
as they 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
environmental,
social
and
governance
regulations
and
major
legislation,
such
as
the
Consumer
Duty
regulation in the United
Kingdom, the Swiss Financial
Services Act (FIDLEG) in
Switzerland, Regulation Best
Interest
(Reg BI) in the
US and the Markets
in Financial Instruments
Directive II (MiFID II)
in the EU, all significantly
affect the
industry and have required adjustments to
control processes.
UBS Group first quarter 2024 report |
Risk, capital, liquidity and funding,
and balance sheet | Risk management and
control
37
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,
know-your-client 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 clients are migrated to UBS
platforms.
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 across
our activities,
which is designed to align our standards and conduct with these objectives and to retain momentum on fostering
a strong culture.
On 5 January 2024,
we integrated the
UBS and Credit
Suisse conduct risk
frameworks to align
the
handling of conduct risk across the firm.
In September
2022, the
US Securities
and Exchange
Commission (the
SEC) and
the Commodity
Futures Trading
Commission (the CFTC)
issued settlement
orders relating to
communications recordkeeping
requirements in
our US
broker-dealers
and
our
registered
swap
dealers.
In
response
to
identified
shortcomings,
we
are
continuing
to
implement a global remediation program.
UBS Group first quarter 2024 report |
Risk, capital, liquidity and funding,
and balance sheet | Capital management
38
Capital management
The
disclosures
in
this
section
are
provided
for
UBS Group AG
on
a
consolidated
basis
and
focus
on
key
developments during
the reporting
period and
information in
accordance with
the Basel III
framework, as
applicable
to Swiss systemically relevant banks (SRBs).
They should be read in conjunction
with “Capital management” in the
“Capital, liquidity and funding,
and balance sheet” section
of the UBS Group
Annual Report 2023, available
under
“Annual
reporting”
at
ubs.com/investors
,
which
provides
more
information
about
our
capital
management
objectives, planning and activities, as
well as the Swiss SRB total loss-absorbing capacity
(TLAC) framework.
UBS Group AG is a
holding company and
conducts substantially all
of its
operations through UBS AG
and Credit
Suisse AG, and subsidiaries
thereof. UBS Group AG, UBS AG
and Credit Suisse AG
have contributed a
significant
portion
of
their
respective
capital
to,
and
provide
substantial
liquidity
to,
such
subsidiaries.
Many
of
these
subsidiaries
are
subject
to
regulations
requiring
compliance
with
minimum
capital,
liquidity
and
similar
requirements.
›
Refer to the 31 March 2024 Pillar 3 Report, available under “Pillar 3 disclosures” at
ubs.com/investors
, for more
information relating to additional regulatory disclosures for UBS Group AG on a consolidated basis, as well as the
significant regulated subsidiaries and sub-groups of UBS Group AG
›
Refer to the
UBS AG first
quarter 2024
report, available
under “Quarterly
reporting” at
ubs.com/investors
, for more
information
about capital
and other
regulatory
information
for UBS AG
consolidated,
in accordance
with the Basel
III
framework,
as applicable
to Swiss SRBs
Swiss SRB going and gone concern requirements and information
As of 31.3.24
RWA
LRD
USD m, except where indicated
in %
in %
Required going concern capital
Total going concern capital
14.77
1
77,731
5.00
1
79,982
Common equity tier 1 capital
10.47
55,094
3.50
2
55,988
of which: minimum capital
4.50
23,690
1.50
23,995
of which: buffer capital
5.50
28,954
2.00
31,993
of which: countercyclical buffer
0.47
2,450
Maximum additional tier 1 capital
4.30
22,637
1.50
23,995
of which: additional tier 1 capital
3.50
18,425
1.50
23,995
of which: additional tier 1 buffer capital
0.80
4,211
Eligible going concern capital
Total going concern capital
17.75
93,467
5.84
93,467
Common equity tier 1 capital
14.84
78,147
4.89
78,147
Total loss-absorbing additional tier 1 capital
3
2.91
15,320
0.96
15,320
of which: high-trigger loss-absorbing additional tier 1 capital
2.68
14,103
0.88
14,103
of which: low-trigger loss-absorbing additional tier 1 capital
0.23
1,217
0.08
1,217
Required gone concern capital
Total gone concern loss-absorbing capacity
4,5,6
10.73
7
56,460
3.75
7
59,987
of which: base requirement including add-ons for market share and LRD
10.73
56,460
3.75
59,987
Eligible gone concern capital
Total gone concern loss-absorbing capacity
19.75
103,986
6.50
103,986
Total tier 2 capital
0.10
537
0.03
537
of which: non-Basel III-compliant tier 2 capital
0.10
537
0.03
537
TLAC-eligible senior unsecured debt
19.65
103,449
6.47
103,449
Total loss-absorbing capacity
Required total loss-absorbing capacity
25.49
134,191
8.75
139,969
Eligible total loss-absorbing capacity
37.51
197,453
12.34
197,453
Risk-weighted assets / leverage ratio denominator
Risk-weighted assets
526,437
Leverage ratio denominator
1,599,646
1 Includes
applicable add-ons
of 1.44%
for risk-weighted
assets (RWA)
and 0.50%
for leverage
ratio denominator
(LRD).
2 Our
minimum CET1
leverage ratio
requirement of
3.50% consists
of a
1.5% base
requirement, a 1.5% base buffer capital requirement, a 0.25% LRD add-on requirement
and a 0.25% market share add-on requirement
based on our Swiss credit business.
3 Includes outstanding low-trigger loss-
absorbing additional tier 1
capital instruments, which
are available under the
Swiss systemically relevant
bank framework to meet
the going concern requirements
until their first call
date. As of
their first call date,
these instruments are eligible to meet the gone concern requirements.
4 A maximum of 25% of the gone concern requirements can be met with instruments that have a remaining maturity of between one and two
years. Once at least 75% of the minimum gone concern requirement has
been met with instruments that have a remaining maturity of greater than
two years, all instruments that have a remaining maturity of between
one and two years remain eligible to be included in the total gone concern capital.
5 From 1 January 2023, the resolvability discount on the gone concern capital requirements for systemically important banks (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, the
Swiss
Financial Market Supervisory
Authority (FINMA) will
have 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 Group first quarter 2024 report |
Risk, capital, liquidity and funding,
and balance sheet | Capital management
39
We are subject to
the going and gone
concern requirements of
the Swiss Capital Adequacy
Ordinance that 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 31 March
2024.
Transitional purchase price allocation
adjustments for regulatory capital
As part of the acquisition of
the Credit Suisse Group in 2023,
the assets acquired and liabilities
assumed, including
contingent liabilities, were
recognized at fair
value as
of the
acquisition date in
accordance with IFRS 3,
Business
Combinations
. The purchase price allocation
(PPA) fair value adjustments
required under IFRS 3 were recognized
as
part of
negative goodwill and
included
effects on
financial instruments measured
at amortized
cost, such as
fair
value impacts
from interest
rates and
own credit,
that are
expected to
accrete back
to par
through the
income
statement as the instruments are held to maturity. Similar own-credit-related effects have also been recognized as
part of the
PPA adjustments
on financial liabilities
measured at
fair value. As
agreed with the
Swiss Financial
Market
Supervisory Authority (FINMA), a
transitional common equity tier 1
(CET1) capital treatment has
been applied for
certain of
these fair
value adjustments, given
the substantially
temporary nature of
the IFRS-3-accounting-driven
effects. As such,
equity reductions under
IFRS Accounting Standards
of USD 5.9bn (before
tax) and USD 5.0bn
(net
of tax) as of the acquisition date have been neutralized
for CET1 capital calculation purposes, of
which USD 1.0bn
(net
of
tax)
relates
to
own-credit-related
fair
value
adjustments.
The
transitional
treatment
is
subject
to
linear
amortization and will
be reduced
to nil
by 30 June 2027.
The amortization of
transitional CET1 PPA
adjustments
(interest rate
and own
credit) since
the acquisition
date totaled
USD 1.0bn (net
of tax)
as of
31 March 2024,
an
increase of USD 0.4bn (net of tax) in the first
quarter of 2024.
Additional capital requirements for
UBS Group AG consolidated and UBS
AG standalone under current
requirements
As
a
result
of
the
acquisition
of
the
Credit
Suisse
Group,
the
capital
add-on
for
UBS
Group
AG
consolidated,
reflecting the degree of
systemic importance, which is based
on market share and
LRD, will increase to
reflect its
greater market
share and
LRD after
an appropriate
transition period
to be
agreed with
FINMA. We
currently estimate
that this will add around USD 10bn to the Group’s tier one capital requirement, when fully
phased in. The phase-
in
of
the
increased
capital
requirements
will
commence
from
the
end
of
2025
and
will
be
completed
by
the
beginning of 2030, at the latest.
Effective at the
time of
the merger with
Credit Suisse AG,
UBS AG
standalone will continue
to adhere to
capital
requirements
on
a
fully
applied
basis,
including
risk-weights
of
250%
and
400%
for
Swiss
and
foreign
participations, respectively,
and after the removal
of the regulatory
filter that had been
granted to Credit
Suisse AG
standalone prior to the merger.
A transition to the UBS
approach for the treatment
of Credit Suisse AG standalone
participations would have reduced CET1 capital
by around USD 9bn, using Credit
Suisse balances as of 31 March
2023.
UBS Group first quarter 2024 report |
Risk, capital, liquidity and funding,
and balance sheet | Capital management
40
Total loss-absorbing capacity
The table below provides Swiss SRB going and gone concern information based on the Swiss SRB
framework and
requirements that are discussed under “Capital management” in the “Capital, liquidity and funding, and
balance
sheet” section of the UBS Group Annual Report 2023,
available under “Annual reporting” at
ubs.com/investors
.
Swiss SRB going and gone concern information
USD m, except where indicated
31.3.24
31.12.23
Eligible going concern capital
Total going concern capital
93,467
92,377
Total tier 1 capital
93,467
92,377
Common equity tier 1 capital
78,147
78,485
Total loss-absorbing additional tier 1 capital
15,320
13,892
of which: high-trigger loss-absorbing additional tier 1 capital
14,103
12,678
of which: low-trigger loss-absorbing additional tier 1 capital
1,217
1,214
Eligible gone concern capital
Total gone concern loss-absorbing capacity
103,986
107,106
Total tier 2 capital
537
538
of which: non-Basel III-compliant tier 2 capital
537
538
TLAC-eligible senior unsecured debt
103,449
106,567
Total loss-absorbing capacity
Total loss-absorbing capacity
197,453
199,483
Risk-weighted assets / leverage ratio denominator
Risk-weighted assets
526,437
546,505
Leverage ratio denominator
1,599,646
1,695,403
Capital and loss-absorbing capacity ratios (%)
Going concern capital ratio
17.8
16.9
of which: common equity tier 1 capital ratio
14.8
14.4
Gone concern loss-absorbing capacity ratio
19.8
19.6
Total loss-absorbing capacity ratio
37.5
36.5
Leverage ratios (%)
Going concern leverage ratio
5.8
5.4
of which: common equity tier 1 leverage ratio
4.9
4.6
Gone concern leverage ratio
6.5
6.3
Total loss-absorbing capacity leverage ratio
12.3
11.8
Total loss-absorbing capacity and movement
Our TLAC decreased by USD 2.0bn to USD 197.5bn
in the first quarter of 2024.
Going concern capital and movement
Our going concern
capital increased by
USD 1.1bn to USD 93.5bn.
Our CET1 capital
decreased by
USD 0.3bn to
USD 78.1bn, mainly reflecting
an operating profit
before tax
of USD 2.4bn, more
than offset
by negative effects
from foreign
currency translation
of USD 1.3bn,
dividend accruals
of USD 0.6bn,
current tax
expenses of
USD 0.5bn
and amortization of transitional CET1 PPA adjustments (interest rate and own credit) of USD
0.4bn (net of tax).
Our
loss-absorbing
additional
tier 1
(AT1)
capital
increased
by
USD 1.4bn
to
USD 15.3bn,
mainly
reflecting
the
issuance of two AT1 capital instruments equivalent
to a total of USD 1.5bn.
Following the approval of a minimum amount of conversion capital by
UBS Group AG’s shareholders at the 2024
Annual General
Meeting, AT1
capital instruments
issued from
the beginning
of the
fourth quarter
of 2023 are
now,
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.
UBS Group first quarter 2024 report |
Risk, capital, liquidity and funding,
and balance sheet | Capital management
41
Gone concern loss-absorbing capacity and movement
Our
total
gone
concern
loss-absorbing
capacity
decreased
by
USD 3.1bn
to
USD 104.0bn
and
included
USD 103.4bn of TLAC-eligible senior
unsecured debt instruments.
The decrease of USD 3.1bn mainly reflected
the
call of
USD 2.1bn equivalent of
TLAC-eligible senior
unsecured debt
instruments, a
USD 1.9bn equivalent TLAC-
eligible
senior unsecured
debt instrument
that ceased
to be
eligible
as gone
concern capital
when we
issued
a
notice of redemption of
the instrument in
the first quarter
of 2024, a USD 2.4bn
senior unsecured debt instrument
that was
no longer
TLAC eligible
due to
its residual tenor
falling below
one year, and negative
impacts from
interest
rate risk hedge, foreign
currency translation and
other effects. These
decreases were partly offset
by new issuances
totaling USD 5.4bn equivalent of TLAC-eligible
senior unsecured debt instruments.
›
Refer to “Bondholder information” at
ubs.com/investors
for more information about the eligibility of capital and
senior unsecured debt instruments and about key features and terms and conditions of capital instruments
Loss-absorbing capacity and leverage ratios
Our CET1 capital ratio increased to 14.8% from 14.4%,
primarily reflecting an USD 20.1bn decrease in RWA.
Our CET1 leverage ratio increased to 4.9%
from 4.6%, mainly reflecting a USD 95.8bn
decrease in the LRD.
Our
gone
concern
loss-absorbing
capacity
ratio
increased
to
19.8%
from
19.6%,
due
to
the
aforementioned
decrease in RWA,
partly offset by a decrease in gone concern loss-absorbing
capacity of USD 3.1bn.
Our gone concern leverage
ratio increased to 6.5%
from 6.3%, due to
the aforementioned decrease in the
LRD,
partly offset by the aforementioned decrease
in gone concern loss-absorbing capacity.
Swiss SRB total loss-absorbing capacity movement
USD m
Going concern capital
Swiss SRB
Common equity tier 1 capital as of 31.12.23
78,485
Operating profit / (loss) before tax
2,376
Current tax (expense) / benefit
(468)
Foreign currency translation effects, before tax
(1,290)
Amortization of transitional CET1 purchase price allocation adjustments, net of
tax
(350)
Other
1
(607)
Common equity tier 1 capital as of 31.3.24
78,147
Loss-absorbing additional tier 1 capital as of 31.12.23
13,892
Issuance of high-trigger loss-absorbing additional tier 1 capital
1,483
Interest rate risk hedge, foreign currency translation and other effects
(55)
Loss-absorbing additional tier 1 capital as of 31.3.24
15,320
Total going concern capital as of 31.12.23
92,377
Total going concern capital as of 31.3.24
93,467
Gone concern loss-absorbing capacity
Tier 2 capital as of 31.12.23
538
Interest rate risk hedge, foreign currency translation and other effects
(1)
Tier 2 capital as of 31.3.24
537
TLAC-eligible unsecured debt as of 31.12.23
106,567
Issuance of TLAC-eligible senior unsecured debt
5,438
Call of TLAC-eligible senior unsecured debt
(3,970)
Debt no longer eligible as gone concern loss-absorbing capacity
due to residual tenor falling to below one year
(2,424)
Interest rate risk hedge, foreign currency translation and other effects
(2,162)
TLAC-eligible unsecured debt as of 31.3.24
103,449
Total gone concern loss-absorbing capacity as of 31.12.23
107,106
Total gone concern loss-absorbing capacity as of 31.3.24
103,986
Total loss-absorbing capacity
Total loss-absorbing capacity as of 31.12.23
199,483
Total loss-absorbing capacity as of 31.3.24
197,453
1 Includes dividend accruals for the current year and movements related to other items.
UBS Group first quarter 2024 report |
Risk, capital, liquidity and funding,
and balance sheet | Capital management
42
Reconciliation of equity under IFRS Accounting Standards to Swiss SRB common equity tier 1 capital
USD m
31.3.24
31.12.23
Total equity under IFRS Accounting Standards
85,766
86,639
Equity attributable to non-controlling interests
(506)
(531)
Defined benefit plans, net of tax
(935)
(965)
Deferred tax assets recognized for tax loss carry-forwards
(2,865)
(3,039)
Deferred tax assets for unused tax credits
(173)
(97)
Goodwill, net of tax
1
(5,738)
(5,750)
Intangible assets, net of tax
(811)
(894)
Compensation-related components (not recognized in net profit)
(1,548)
(2,186)
Expected losses on advanced internal ratings-based portfolio less provisions
(664)
(713)
Unrealized (gains) / losses from cash flow hedges, net of tax
3,621
3,109
Own credit related to (gains) / losses on financial liabilities
measured at fair value that existed at the balance sheet date, net of tax
1,308
1,291
Own credit related to (gains) / losses on derivative financial instruments
that existed at the balance sheet date
(72)
(89)
Prudential valuation adjustments
(316)
(368)
Accruals for dividends to shareholders for 2023
(2,240)
(2,240)
Transitional CET1 purchase price allocation adjustments, net of tax
3,966
4,316
Other
2
(650)
3
Total common equity tier 1 capital
78,147
78,485
1 Includes goodwill related to
significant investments in
financial institutions of USD
19m as of 31
March 2024 (USD 20m
as of 31 December
- presented on the
balance sheet line Investments
in associates.
2 Includes dividend accruals for the current year and other items.
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 22bn and
our CET1
capital by
USD 2.5bn as
of 31
March 2024
(31 December
2023: USD 24bn
and USD 2.6bn,
respectively)
and
decreased
our
CET1
capital
ratio
by
14 basis
points
(31
December
2023:
13 basis
points).
Conversely,
a
10%
appreciation
of
the
US
dollar
against
other
currencies
would
have
decreased
our
RWA
by
USD 20bn and our
CET1 capital by
USD 2.3bn (31 December
2023: USD 21bn and
USD 2.4bn, respectively) and
increased our CET1 capital ratio by 14 basis points (31
December 2023: 13 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 104bn
as
of
31
March
2024
(31
December
2023:
USD 114bn)
and
decreased
our
CET1
leverage
ratio
by
15 basis points
(31 December
2023: 15 basis
points). Conversely, a
10% appreciation
of the
US dollar
against other
currencies would have decreased our LRD by USD 94bn (31 December 2023:
USD 103bn) and increased our CET1
leverage ratio by 15 basis points (31 December
2023: 15 basis points).
The aforementioned
sensitivities do
not consider
foreign currency
translation effects
related to
defined benefit
plans
other than those related to the currency
translation of the net equity of foreign operations.
›
Refer to “Active management of sensitivity to currency movements” under “Capital management” in the “Capital,
liquidity and funding, and balance sheet” section of the UBS Group Annual Report 2023, available under “Annual
reporting” at
ubs.com/investors
, for more information
UBS Group first quarter 2024 report |
Risk, capital, liquidity and funding,
and balance sheet | Capital management
43
Estimated effect on capital from litigation,
regulatory and similar matters subject to
provisions and contingent
liabilities
We have estimated the
loss in capital that
we could incur
as a result of
the risks associated
with the matters
related
to
UBS AG
and
subsidiaries
described
in
“Note 15
Provisions
and
contingent
liabilities”
in
the
“Consolidated
financial
statements”
section
of
this
report.
We
have
employed
for
this
purpose
the
advanced
measurement
approach (AMA) methodology
that we use
when determining
the capital requirements
associated with
operational
risks, based on a
99.9% confidence level
over a 12-month horizon.
The methodology takes
into consideration UBS
and industry experience for the AMA
operational risk categories to which
those matters correspond, as well
as the
external environment affecting risks of these types, in
isolation from other areas. On this basis, with respect to the
litigation,
regulatory
and
similar
matters
related
to
UBS AG and
subsidiaries,
we estimate
the
maximum loss
in
capital that we
could incur over
a 12-month period
as a result
of our risks
associated with these
operational risk
categories at USD 4.2bn as of 31 March 2024.
This estimate is not related
to and does not take into
account any
provisions
recognized
for
any
of
these
matters
and
does
not
constitute
a
subjective
assessment
of
our
actual
exposure in any of these matters.
›
Refer to “Non-financial risk” in the “Risk management and control” section of the UBS Group Annual Report 2023,
available under “Annual reporting” at
ubs.com/investors
, for more information
›
Refer to “Note 15 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this
report for more information
Risk-weighted assets
During the first quarter of 2024, RWA decreased by USD
20.1bn to USD 526.4bn, primarily driven by decreases
of
USD 13.1bn resulting from
asset size and other
movements,
as well as USD 11.2bn
resulting from currency
effects,
partly offset by USD 4.2bn resulting from model
updates and methodology changes.
Movement in risk-weighted assets, by key driver
USD bn
RWA as of
31.12.23
Currency
effects
Model updates
and
methodology
changes
Asset size and
other
1
RWA as of
31.3.24
Credit and counterparty credit risk
2
345.3
(10.5)
(0.6)
(10.8)
323.5
Non-counterparty-related risk
3
34.4
(0.8)
(0.5)
33.1
Market risk
21.4
4.8
(1.8)
24.4
Operational risk
145.4
145.4
Total
546.5
(11.2)
4.2
(13.1)
526.4
1 Includes the Pillar 3 categories “Asset size,” “Credit quality of counterparties,” “Acquisitions
and disposals” and “Other.”
For more information, refer to the 31 March 2024 Pillar 3 Report, available under “Pillar 3
disclosures” at ubs.com/investors.
2 Includes settlement risk, credit valuation
adjustments, equity exposures in
the banking book, investments in
funds 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
were USD 323.5bn
as of
31 March
- The
decrease of
USD 21.8bn
included currency effects of USD 10.5bn.
Asset size and other movements resulted in
a USD 10.8bn decrease in RWA.
–
Non-core
and
Legacy
RWA
decreased
by
USD 10.3bn,
mainly
driven
by
our
actions
to
actively
unwind
the
portfolio, in addition to the natural roll-off.
–
Global Wealth Management RWA decreased by
USD 2.3bn, mainly driven by lower RWA from
loans.
–
Investment Bank RWA decreased by USD 0.7bn,
mainly due to lower RWA from derivatives
and loans.
–
Personal & Corporate Banking RWA increased
by USD 1.4bn.
–
Group Items
RWA increased
by USD 1.0bn,
mainly as
higher RWA
from the
high-quality liquid
asset portfolio
and
nostro accounts were partly offset by lower RWA
from securities financing transactions.
–
Asset Management RWA increased by USD 0.1bn.
UBS Group first quarter 2024 report |
Risk, capital, liquidity and funding,
and balance sheet | Capital management
44
Model updates
and methodology
changes resulted
in a
RWA decrease
of USD 0.6bn,
mainly reflecting
an RWA
decrease of
USD 1.5bn related
to the
recalibration of
certain multipliers
as a
result of
improvements to
models,
partly
offset
by
RWA
increases
from
model
updates
related
to
income-producing
real
estate,
derivatives,
and
securities financing transactions.
›
Refer to “Changes to segment reporting in 2024” in the “UBS business divisions and Group Items” section and
“Note 3 Segment reporting” in the “Consolidated financial statements” section of this report for more information
about the realignment of the business divisions and the updates related to allocations from Group Treasury
in the
first quarter of 2024
›
Refer to the 31 March 2024 Pillar 3 Report, available under “Pillar 3 disclosures” at
ubs.com/investors
, for more
information
›
Refer to “Credit risk” in the “Risk management and control” section of this report for more information
Market risk
Market
risk
RWA increased
by
USD 3.0bn to
USD 24.4bn in
the
first
quarter of
2024,
driven
by
an
increase of
USD 4.8bn that stems
from the
FINMA-approved integration of
time decay
into regulatory VaR
and stressed VaR
for derivatives with optionality,
which was partly offset by an improvement in the profit and loss representation of
derivatives with multiple underlyings.
This impact was partly offset
by a decrease of USD 1.8bn
from asset size and
other movements in
the Investment Bank
and in Non-core and
Legacy
.
The FINMA-agreed temporary
measure that
was
introduced
in
the
fourth
quarter
of
2022,
and
scheduled
to
be
lifted
with
the
implementation
of
the
aforementioned changes,
has not yet been
removed.
The temporary time decay RWA
buffer that was introduced
in the third quarter of 2021 has dropped to
an immaterial level.
›
Refer to the 31 March 2024 Pillar 3 Report, available under “Pillar 3 disclosures” at
ubs.com/investors,
for more
information
›
Refer to “Market risk” in the “Risk management and control” section of this report for more information
Operational risk
Operational risk RWA
were unchanged at
USD 145.4bn. In the
first quarter of
2024, we updated the
methodology
that we
use to
allocate operational
risk RWA
to the
business divisions
and Group
Items. The
updated allocation
reflects relative
changes in
financial metrics
and operational
losses as
observed at
year-end 2023,
following the
changes in
business
division perimeters.
The transfer
of certain
businesses
from Swiss
Bank (Credit
Suisse), previously
included in Personal & Corporate Banking, resulted in increased operational risk RWA
allocation to Global Wealth
Management in the first quarter of 2024.
›
Refer to “Note 15 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this
report for more information
›
Refer to “Non-financial risk” in the “Risk management and control” section of the UBS Group Annual Report 2023,
available under “Annual reporting” at
ubs.com/investors
, for information about the AMA models
Outlook
We expect
an RWA
reduction of
around USD 2bn
from credit
and counterparty credit
risk model
updates in
the
second quarter
of 2024,
mainly related
to the
recalibration of
certain multipliers
as a
result of
improvements to
models. This decrease in RWA is expected
to be offset by increases in the second
half of 2024, primarily as a result
of the
migration of
Credit Suisse
portfolios to
UBS models.
The extent
and timing
of RWA
changes may
vary as
model
updates
are
completed
and
receive
regulatory
approval,
along
with
changes
in
the
composition
of
the
relevant portfolios. Furthermore,
we expect exposures
in Non-core
and Legacy to
reduce as a
result of maturities
and active unwinding of positions.
UBS Group first quarter 2024 report |
Risk, capital, liquidity and funding,
and balance sheet | Capital management
45
Risk-weighted assets, by business division and Group Items
1
USD bn
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Manage-
ment
Investment
Bank
Non-core and
Legacy
Group
Items
Total
RWA
31.3.24
Credit and counterparty credit risk
2
95.0
127.8
7.6
64.3
25.3
3.5
323.5
Non-counterparty-related risk
3
6.7
3.2
0.7
3.7
1.7
17.0
33.1
Market risk
2.2
0.6
0.0
17.9
3.7
0.0
24.4
Operational risk
63.2
19.3
7.2
24.4
27.1
4.2
145.4
Total
167.1
150.9
15.6
110.2
57.9
24.7
526.4
31.12.23
Credit and counterparty credit risk
2
99.0
133.0
7.6
67.1
35.9
2.7
345.3
Non-counterparty-related risk
3
6.8
3.4
0.8
3.8
2.5
17.1
34.4
Market risk
1.8
0.2
0.0
13.8
5.6
0.0
21.4
Operational risk
59.4
17.6
7.2
25.0
30.0
6.2
145.4
Total
167.1
154.2
15.6
109.7
74.0
25.9
546.5
31.3.24 vs 31.12.23
Credit and counterparty credit risk
2
(4.0)
(5.2)
0.0
(2.9)
(10.6)
0.8
(21.8)
Non-counterparty-related risk
3
(0.1)
(0.2)
(0.1)
(0.1)
(0.7)
0.0
(1.2)
Market risk
0.4
0.3
0.0
4.1
(1.8)
0.0
3.0
Operational risk
3.8
1.7
0.0
(0.6)
(2.9)
(2.0)
0.0
Total
0.0
(3.3)
0.0
0.5
(16.1)
(1.2)
(20.1)
1 From the
first quarter of
2024 onward,
we have started
to further push
out risk-weighted
assets from Group
Items to the
business divisions.
Prior periods have
been restated to
reflect these changes.
Refer to
“Changes to segment reporting in 2024” in the “UBS
business divisions and Group Items” section, the “Equity attribution”
section and “Note 3 Segment reporting” in the “Consolidated financial
statements” section
of this report for more information about the realignment of the business divisions.
2 Includes settlement risk, credit valuation adjustments, equity 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
(31 March 2024: USD 16.4bn;
31 December 2023: USD
16.4bn), as well as
property, equipment,
software and other items (31 March 2024: USD 16.7bn; 31 December 2023: USD 18.0bn).
Leverage ratio denominator
During the first quarter of
2024, the LRD decreased by
USD 95.8bn to USD 1,599.6bn, driven by currency effects
of USD 56.3bn and asset size and other movements
of USD 39.4bn.
Movement in leverage ratio denominator, by key driver
USD bn
LRD as of
31.12.23
Currency
effects
Asset size and
other
LRD as of
31.3.24
On-balance sheet exposures (excluding derivatives and securities
financing transactions)
1,329.2
(47.7)
(45.5)
1,236.0
Derivatives
128.1
(2.8)
3.6
129.0
Securities financing transactions
165.4
(3.4)
4.4
166.5
Off-balance sheet items
79.9
(2.2)
(2.2)
75.5
Deduction items
(7.2)
(0.2)
0.2
(7.3)
Total
1,695.4
(56.3)
(39.4)
1,599.6
The LRD movements described below exclude
currency effects.
On-balance sheet exposures
(excluding derivatives and
securities financing transactions)
decreased by USD 45.5bn,
mainly due to
a decrease
in cash and
central bank
balances driven
by repayment
of funding
from the
Swiss National
Bank, lower lending balances and trading portfolio assets mainly in Non-core and Legacy, driven by our actions to
actively
unwind
the
portfolio,
in
addition
to
the
natural
roll-off,
including
the
conclusion
of
an
investment
management agreement with Apollo. These decreases
were partly offset by higher trading portfolio assets, mainly
in the Investment Bank,
driven by higher inventory held to hedge client
positions.
Derivative exposures increased by USD 3.6bn,
mainly driven by higher exposures in the Investment
Bank.
UBS Group first quarter 2024 report |
Risk, capital, liquidity and funding,
and balance sheet | Capital management
46
Securities financing
transactions increased by
USD 4.4bn,
mainly due
to client-driven
increases in
the Investment
Bank, partly offset by roll-offs of excess
cash re-investments in Group Treasury.
Off-balance sheet items decreased by USD 2.2bn,
driven by a decrease in commitments.
›
Refer to the “Balance sheet and off-balance sheet” section of this report for more information about balance sheet
movements
›
Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial
statements” section of this report for more information about the conclusion of the investment management
agreement with Apollo
Leverage ratio denominator, by business division and Group Items
1
USD bn
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group Items
Total
31.3.24
On-balance sheet exposures
494.2
414.4
5.6
231.3
76.8
13.7
1,236.0
Derivatives
9.9
5.4
0.0
92.5
21.3
(0.1)
129.0
Securities financing transactions
55.1
42.6
0.1
48.3
20.2
0.3
166.5
Off-balance sheet items
20.0
34.3
0.2
17.5
2.3
1.2
75.5
Items deducted from Swiss SRB tier 1 capital
(3.3)
1.7
(1.2)
(0.4)
(0.6)
(3.5)
(7.3)
Total
575.8
498.4
4.7
389.2
119.9
11.6
1,599.6
31.12.23
On-balance sheet exposures
514.4
442.8
5.8
235.3
117.7
13.2
1,329.2
Derivatives
8.7
3.2
0.0
90.6
25.5
0.1
128.1
Securities financing transactions
50.4
40.0
0.1
50.6
24.3
0.2
165.4
Off-balance sheet items
22.2
37.0
0.2
18.5
1.7
0.3
79.9
Items deducted from Swiss SRB tier 1 capital
(3.2)
1.9
(1.2)
(0.4)
(0.7)
(3.6)
(7.2)
Total
592.5
524.8
4.9
394.5
168.5
10.2
1,695.4
31.3.24 vs 31.12.23
On-balance sheet exposures
(20.2)
(28.4)
(0.2)
(4.0)
(40.9)
0.5
(93.1)
Derivatives
1.3
2.2
0.0
1.9
(4.2)
(0.2)
0.9
Securities financing transactions
4.7
2.6
0.0
(2.2)
(4.1)
0.1
1.0
Off-balance sheet items
(2.2)
(2.7)
0.0
(1.0)
0.6
0.9
(4.5)
Items deducted from Swiss SRB tier 1 capital
(0.2)
(0.1)
0.0
0.0
0.0
0.1
(0.1)
Total
(16.7)
(26.4)
(0.2)
(5.3)
(48.6)
1.4
(95.8)
1 From the first quarter of 2024 onward, we have started to further push out LRD from Group Items to the business divisions.
Prior periods have been restated to reflect these changes. Refer to “Changes to segment
reporting in 2024” in
the “UBS business divisions
and Group Items” section,
the “Equity attribution”
section and “Note 3
Segment reporting” in
the “Consolidated financial statements”
section of this report
for
more information about the realignment of the business divisions.
UBS Group first quarter 2024 report |
Risk, capital, liquidity and funding,
and balance sheet | Capital management
47
Equity attribution
As
of
1 January
2024,
we
have
updated
our
equity
attribution
framework.
Specifically,
we
have
increased
the
allocation of tangible equity to
the business divisions by
aligning the capital ratios for
risk-weighted assets (RWA)
and the leverage
ratio denominator (the
LRD) more closely
with our current
Group capital targets.
Alongside the
updates to our equity
attribution framework, we
have reflected the
increased allocation of
balance sheet resources
previously retained centrally.
As a result, Group
Items primarily retains
equity related to
deferred tax assets,
accruals
for shareholder
returns or
unrealized gains
/ losses
from cash
flow hedges.
Prior periods
have
been restated
to
reflect these changes.
Under our equity attribution
framework, tangible equity
is attributed based on
equally weighted average
RWA and
average LRD, which both include resource allocations from our Group functions to the business divisions. Average
RWA and LRD
are converted to
common equity tier 1
(CET1) capital equivalents using
target capital ratios.
If the
attributed tangible equity calculated
under the weighted-driver approach
is less than
the CET1 capital
equivalent
of risk-based capital (RBC) for any
business division,
the CET1 capital equivalent of RBC
is used as a
floor for that
business division.
›
Refer to the “Balance sheet and off-balance sheet” section of this report for more information about movements in
equity attributable to shareholders
Average attributed equity
For the quarter ended
USD bn
31.3.24
31.12.23
1
31.3.23
1
Global Wealth Management
33.1
33.3
24.7
Personal & Corporate Banking
21.9
21.8
10.9
Asset Management
2.6
2.6
1.8
Investment Bank
17.0
16.8
14.7
Non-core and Legacy
10.6
9.5
1.1
Group Items
2
0.5
1.0
3.7
Average equity attributed to business divisions and Group Items
85.7
84.9
56.8
1 Prior periods
have been restated
to reflect the
changes to the
equity attribution framework.
2 Includes average attributed
equity related to
capital deduction items
for deferred tax
assets, dividend accruals
or
unrealized gains / losses from cash flow hedge.
UBS Group first quarter 2024 report |
Risk, capital, liquidity and funding,
and balance sheet | Liquidity and funding management
48
Liquidity and funding management
Strategy, objectives and governance
This
section
provides
liquidity
and
funding
management
information
and
should
be
read
in
conjunction
with
“Liquidity and funding
management” in
the “Capital,
liquidity and funding,
and balance sheet”
section of the
UBS
Group
Annual
Report
2023,
available
under
“Annual
reporting”
at
ubs.com/investors
,
which
provides
more
information
about
the
Group’s
strategy,
objectives
and
governance
in
connection
with
liquidity
and
funding
management.
Liquidity coverage ratio
The
quarterly
average
liquidity
coverage
ratio
(the
LCR)
of
the
UBS
Group
increased
4.6 percentage
points
to
220.2%,
remaining above
the prudential
requirement communicated
by
the Swiss
Financial Market
Supervisory
Authority (FINMA).
The
movement in
the quarterly
average LCR
was primarily
driven by
an
increase in
high-quality
liquid assets
of
USD 7.0bn to USD 422.6bn, mostly driven by higher cash available
from customer deposits and loan repayments.
The
average
net
cash
outflows
decreased
by
USD 0.7bn
to
USD 192.1bn,
reflecting
higher
net
inflows
from
securities financing
transactions and
lower outflows
from derivatives
and loan
commitments, which
were partly
offset by higher net outflows from customer deposits
and loans.
›
Refer to the
31 March 2024 Pillar 3 Report, available under “Pillar 3 disclosures” at
ubs.com/investors
, for more
information about the LCR
Liquidity coverage ratio
USD bn, except where indicated
Average 1Q24
1
Average 4Q23
1
High-quality liquid assets
422.6
415.6
Net cash outflows
2
192.1
192.8
Liquidity coverage ratio (%)
3
220.2
215.7
1 Calculated based on an average of
61 data points in the first quarter
of 2024 and 63 data points in
the fourth quarter of 2023.
2 Represents the net cash outflows expected
over a stress period of 30 calendar
days.
3 Calculated after the application of haircuts and inflow and outflow rates, as well as,
where applicable, caps on Level 2 assets and cash inflows.
Net stable funding ratio
As of 31 March 2024, the net stable funding ratio of the
UBS Group increased 1.8 percentage points to 126.4%,
remaining above the prudential requirement
communicated by FINMA.
Available
stable
funding
decreased
by
USD 39.4bn
to
USD 887.0bn,
mostly
reflecting
decreases
in
customer
deposits, debt issued
and regulatory capital.
Required stable funding
decreased by USD 41.6bn
to USD 701.6bn,
predominantly reflecting lower lending assets,
mainly driven by negative currency effects.
›
Refer to the 31 March 2024 Pillar 3 Report, available under “Pillar 3 disclosures” at
ubs.com/investors
, for more
information about the NSFR
Net stable funding ratio
USD bn, except where indicated
31.3.24
31.12.23
Available stable funding
887.0
926.4
Required stable funding
701.6
743.2
Net stable funding ratio (%)
126.4
124.7
UBS Group first quarter 2024 report |
Risk, capital, liquidity and funding,
and balance sheet | Balance sheet and off-balance
sheet
49
Balance sheet and off-balance sheet
This
section
provides
balance
sheet
and
off-balance sheet
information
and
should
be
read
in
conjunction
with
“Balance sheet
and off-balance
sheet” in
the “Capital,
liquidity and
funding, and
balance sheet”
section of
the
UBS Group
Annual Report
2023, available
under “Annual reporting”
at
ubs.com/investors
, which
provides more
information about the balance sheet and off-balance
sheet positions.
Balances disclosed in this
report represent quarter-end
positions, unless indicated
otherwise. Intra-quarter balances
fluctuate in the ordinary course of business and
may differ from quarter-end positions.
Balance sheet assets (31 March 2024 vs
31 December 2023)
Total assets were USD 1,607.1bn as of
31 March 2024, a decrease of USD 110.1bn
compared with 31 December
2023.
Cash and balances at
central banks decreased
by USD 42.6bn, mainly due
to repayment of funding
from the Swiss
National Bank
(the SNB)
and currency
effects. Lending
assets decreased
by USD 33.6bn,
driven by
negative currency
effects of
approximately USD
28.4bn. Derivatives
and cash
collateral receivables
on derivative
instruments
decreased
by USD 20.3bn, mainly in Derivatives &
Solutions in the Investment Bank,
primarily reflecting decreases in foreign
currency contracts, where
the contracts in
place at the
end of
March 2024
had lower values
compared with the
contracts
in
place
at
the
end
of
December
2023,
as
well
as
reductions in
Non-core
and
Legacy.
Trading assets
decreased by USD 9.5bn,
mainly in
Non-core and Legacy,
reflecting the unwinding
of the
Credit Suisse
business,
including the closure of an investment management agreement
with Apollo, partly offset by higher inventory
held
to hedge client positions in Derivatives & Solutions.
›
Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group”
in the “Consolidated financial
statements” section of this report for more information about the conclusion of the investment management
agreement with Apollo
Assets
As of
% change from
USD bn
31.3.24
31.12.23
31.12.23
Cash and balances at central banks
271.5
314.1
(14)
Lending
1
627.4
661.0
(5)
Securities financing transactions at amortized cost
101.6
99.0
3
Trading assets
160.1
169.6
(6)
Derivatives and cash collateral receivables on derivative instruments
205.9
226.2
(9)
Brokerage receivables
22.8
21.0
8
Other financial assets measured at amortized cost
62.7
65.5
(4)
Other financial assets measured at fair value
2
101.7
106.3
(4)
Non-financial assets
53.2
54.5
(2)
Total assets
1,607.1
1,717.2
(6)
1 Consists of Loans and advances to customers and Amounts due from banks.
2 Consists of Financial assets at fair value not held for trading and Financial assets measured at
fair value through other comprehensive
income.
Balance sheet liabilities (31 March 2024 vs
31 December 2023)
Total liabilities
were USD 1,521.4bn
as of
31 March 2024,
a decrease
of USD 109.2bn
compared with
31 December
2023.
Derivatives and
cash collateral
payables on
derivative instruments
decreased by
USD 33.5bn, mainly
in Derivatives &
Solutions, primarily reflecting
decreases in foreign
currency contracts with
the same drivers
as on the
asset side and
a decrease in cash collateral
payables on derivative instruments
driven by decreases in derivative
financial assets, as
well as reductions in Non-core
and Legacy.
Short-term borrowings decreased
by USD 29.2bn, mainly related
to the
repayment
of
funding from
the
SNB,
as
well
as
net maturities
of
commercial paper
and
certificates of
deposit.
Customer
deposits
decreased
by
USD 28.0bn,
predominantly
reflecting
currency
effects
of
approximately
USD 25.6bn. Debt
issued designated
at fair value
and long-term debt
issued measured at
amortized cost
decreased
by USD 17.0bn, mainly driven by net redemption of debt issued designated at fair value in Derivatives & Solutions
in the Investment Bank, and net maturities of
debt issued measured at amortized cost in Group
Treasury.
The “Liabilities,
by product
and currency”
table
in this
section provides
more information
about our
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
UBS Group first quarter 2024 report |
Risk, capital, liquidity and funding,
and balance sheet | Balance sheet and off-balance
sheet
50
Liabilities and equity
As of
% change from
USD bn
31.3.24
31.12.23
31.12.23
Short-term borrowings
1,2
80.3
109.5
(27)
Securities financing transactions at amortized cost
13.0
14.4
(10)
Customer deposits
764.0
792.0
(4)
Debt issued designated at fair value and long-term debt issued measured
at amortized cost
2
310.6
327.6
(5)
Trading liabilities
35.8
34.2
5
Derivatives and cash collateral payables on derivative instruments
200.3
233.8
(14)
Brokerage payables
46.6
42.5
10
Other financial liabilities measured at amortized cost
21.4
20.9
2
Other financial liabilities designated at fair value
28.1
29.5
(5)
Non-financial liabilities
21.3
26.3
(19)
Total liabilities
1,521.4
1,630.6
(7)
Share capital
0.3
0.3
0
Share premium
13.0
13.2
(2)
Treasury shares
(5.2)
(4.8)
8
Retained earnings
76.4
74.9
2
Other comprehensive income
3
0.7
2.5
(73)
Total equity attributable to shareholders
85.3
86.1
(1)
Equity attributable to non-controlling interests
0.5
0.5
(5)
Total equity
85.8
86.6
(1)
Total liabilities and equity
1,607.1
1,717.2
(6)
1 Consists of short-term debt issued measured at amortized cost and amounts due to banks, which includes amounts due to central banks.
2 The classification of debt issued measured at amortized cost into short-
term and long-term is based
on original contractual
maturity and therefore long-term
debt also includes debt
with a remaining time
to maturity of less
than one year.
This classification does
not consider any
early
redemption features.
3 Excludes other comprehensive income related to defined benefit plans and own credit, which is recorded directly in Retained earnings.
Equity (31 March 2024 vs 31 December 2023)
Equity attributable to shareholders decreased
by USD 848m to USD 85,260m as of 31
March 2024.
The decrease of USD 848m
was mainly driven by
net treasury share activity
that reduced equity by
USD 954m. This
was
predominantly
due
to
the
purchase
of
USD 1,002m
of
shares
in
relation
to
employee
share-based
compensation plans.
In addition,
total comprehensive
income attributable
to shareholders
was negative
USD 240m,
reflecting a net profit
of USD 1,755m and
negative other comprehensive
income (OCI) of USD 1,994m.
OCI mainly
included negative OCI related
to foreign currency translation
of USD 1,277m and negative
cash flow hedge OCI of
USD 583m.
These
decreases
were
partly
offset
by
deferred
share-based
compensation
awards
expensed
in
the
income
statement of USD 334m.
The payment of the 2023 dividend of USD 0.70 per
share, approved by shareholders at the 2024 Annual General
Meeting, reduced equity attributable to shareholders
by USD 2.3bn in the second quarter of 2024.
›
Refer to the “Group performance” and “Consolidated financial statements” sections of this report for more
information
›
Refer to “Reconciliation of equity under IFRS Accounting Standards to Swiss SRB common equity tier 1 capital” in
the “Capital management” section of this report for more information about the effects of OCI on common equity
tier 1 capital
UBS Group first quarter 2024 report |
Risk, capital, liquidity and funding,
and balance sheet | Balance sheet and off-balance
sheet
51
Liabilities, by product and currency
USD equivalent
All currencies
of which: USD
of which: CHF
of which: EUR
USD bn
31.3.24
31.12.23
31.3.24
31.12.23
31.3.24
31.12.23
31.3.24
31.12.23
Short-term borrowings
80.3
109.5
32.4
49.2
28.5
41.5
8.4
8.3
of which: amounts due to banks
47.9
71.0
10.0
20.4
28.1
41.1
3.5
3.1
of which: short-term debt issued
1,2
32.5
38.5
22.3
28.8
0.4
0.3
4.9
5.2
Securities financing transactions at amortized cost
13.0
14.4
8.6
7.8
1.5
2.4
2.6
3.3
Customer deposits
764.0
792.0
313.7
311.8
302.1
328.0
78.4
80.6
of which: demand deposits
222.0
240.9
56.1
57.4
101.4
114.9
35.1
38.3
of which: retail savings / deposits
175.5
186.1
29.6
28.9
141.7
152.6
4.1
4.5
of which: sweep deposits
37.6
41.0
37.6
41.0
0.0
0.0
0.0
0.0
of which: time deposits
328.8
324.0
190.3
184.4
58.9
60.5
39.2
37.8
Debt issued designated at fair value and long-term debt issued measured
at
amortized cost
2
310.6
327.6
177.0
185.8
41.6
44.7
65.3
69.6
Trading liabilities
35.8
34.2
11.0
12.6
1.4
1.1
10.1
9.3
Derivatives and cash collateral payables on derivative instruments
200.3
233.8
156.2
181.0
5.7
9.9
24.0
26.7
Brokerage payables
46.6
42.5
35.7
31.5
0.6
0.7
2.9
2.4
Other financial liabilities measured at amortized cost
21.4
20.9
11.5
11.3
4.2
3.9
1.9
2.0
Other financial liabilities designated at fair value
28.1
29.5
4.1
6.8
0.1
0.1
3.9
3.5
Non-financial liabilities
21.3
26.3
12.5
13.2
2.9
4.2
3.5
4.4
Total liabilities
1,521.4
1,630.6
762.7
810.9
388.5
436.5
200.7
210.0
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 (31 March 2024 vs
31 December 2023)
Guarantees decreased by USD 4.3bn,
mainly driven by a
decrease in sponsored repo clearing in
Group Treasury,
as
well as currency effects.
Irrevocable loan commitments
decreased by USD 4.3bn,
primarily driven by
the unwinding
of
the
Credit
Suisse
business
in
Non-Core
and
Legacy,
as
well
as
currency
effects.
Committed
unconditionally
revocable credit lines decreased by USD 12.4bn, mainly reflecting currency effects.
Off-balance sheet
As of
% change from
USD bn
31.3.24
31.12.23
31.12.23
Guarantees
1,2
39.6
43.9
(10)
Irrevocable loan commitments
1
87.3
91.6
(5)
Committed unconditionally revocable credit lines
150.9
163.3
(8)
Forward starting reverse repurchase and securities borrowing agreements
17.6
18.4
(4)
1 Guarantees and irrevocable loan commitments are shown net of sub-participations.
2 Includes guarantees measured at fair value through profit or loss.
UBS Group first quarter 2024 report |
Risk, capital, liquidity and funding,
and balance sheet | Share information and earnings
per share
52
Share information and earnings per share
UBS Group AG
shares
are
listed
on
the
SIX
Swiss
Exchange
(SIX).
They
are
also
listed
on
the
New
York
Stock
Exchange (the NYSE) as global registered shares. Each share has
a nominal value of USD 0.10. Shares issued were
unchanged in the first quarter of 2024 compared
with the fourth quarter of 2023.
We
held
256m
shares
as
of
31 March
2024,
of
which
121m
shares
had
been
acquired
under
our
2022
share
repurchase program for cancellation
purposes. The remaining 135m
shares are primarily held
to hedge our
share
delivery obligations related to employee share-based
compensation and participation plans.
Treasury
shares
held
increased
by
2m
shares
in
the
first
quarter
of
2024.
This
mainly
reflected
25.0m
shares
purchased
from
the
market
to
hedge
future
share
delivery
obligations
related
to
employee
share-based
compensation awards, largely offset by the
delivery of treasury shares under our share-based
compensation plans.
Shares
acquired
under
our
2022
program
totaled
121m
as
of
31 March
2024
for
a
total
acquisition
cost
of
USD 2,277m (CHF 2,138m). This program concluded on 28 March 2024 and the 121m shares repurchased under
this program will
be canceled by
means of
a capital
reduction, pending approval
by the
shareholders at a
future
Annual General Meeting.
On
3 April
2024,
we
launched
a
new
2024
share
repurchase
program
of
up
to
USD 2bn
over
two
years.
As
previously communicated, we expect
to repurchase up
to USD 1bn of
our shares in
2024, commencing after
the
completion of the merger of UBS AG and Credit
Suisse AG.
›
Refer to the “Recent developments” section of this report for more information about the integration of Credit
Suisse
›
Refer to the “Equity, CET1 capital and returns” table in the “Group performance” section of this report
for more
information about equity attributable to shareholders and tangible equity attributable to shareholders
As of or for the quarter ended
31.3.24
31.12.23
31.3.23
Basic and diluted earnings (USD m)
Net profit / (loss) attributable to shareholders for basic
EPS
1,755
(279)
1,029
Less: (profit) / loss on own equity derivative contracts
0
0
0
Net profit / (loss) attributable to shareholders for diluted
EPS
1,755
(279)
1,029
Weighted average shares outstanding
Weighted average shares outstanding for basic EPS
1
3,205,234,203
3,225,500,133
3,072,799,315
Effect of dilutive potential shares resulting from notional
employee shares, in-the-money options and warrants outstanding
2
159,939,399
123,601
3
140,868,722
Weighted average shares outstanding for diluted EPS
3,365,173,602
3,225,623,734
3,213,668,037
Earnings per share (USD)
Basic
0.55
(0.09)
0.33
Diluted
0.52
(0.09)
0.32
Shares outstanding and potentially dilutive instruments
Shares issued
3,462,087,722
3,462,087,722
3,524,635,722
Treasury shares
4
255,661,512
253,233,437
472,352,835
of which: related to the 2021 share repurchase program
62,548,000
of which: related to the 2022 share repurchase program
120,506,008
120,506,008
298,537,950
Shares outstanding
3,206,426,210
3,208,854,285
3,052,282,887
Potentially dilutive instruments
5
11,621,246
163,417,391
3
4,859,813
Other key figures
Total book value per share (USD)
26.59
26.83
18.59
Tangible book value per share (USD)
24.29
24.49
16.54
Share price (USD)
6
30.74
31.01
21.07
Market capitalization (USD m)
7
106,440
107,355
74,276
1 The weighted average shares outstanding for basic earnings per share (EPS) are calculated by taking the number of shares at the beginning of the period, adjusted by the number of shares acquired or issued during
the period, multiplied by a time-weighted factor for the period outstanding. As a result, balances are
affected by the timing of acquisitions and issuances during the period.
2 The weighted average number of shares
for notional employee
awards with
performance conditions
reflects all
potentially dilutive
shares that
are expected to
vest under
the terms of
the awards.
3 Due to
the net loss
in the
fourth quarter
of 2023,
155,065,831 weighted average
potential shares from
unvested notional share
awards were not
included in the
calculation of diluted
EPS as they
were not dilutive
for the quarter
ended 31 December 2023.
Such
shares are only taken into account
for the diluted EPS calculation when their
conversion to ordinary shares would decrease
earnings per share or increase the
loss per share, in accordance
with IAS 33, Earnings per
Share.
4 Based on a settlement date view.
5 Reflects potential shares that could dilute basic EPS in the future,
but were not dilutive
for any of the periods presented. Mainly includes equity-based awards
subject
to absolute and relative performance conditions and equity derivative contracts. For the quarter ended 31 December 2023, also includes 155,065,831 weighted average potential shares
from unvested notional share
awards that were not included in the calculation
of diluted EPS as they were not dilutive.
6 Represents the share price as listed
on the SIX Swiss Exchange, translated
to US dollars using the closing exchange
rate
as of the respective date.
7 The calculation of market
capitalization was amended in the second quarter
of 2023 to reflect total shares issued
multiplied by the share price at the end
of the period. The calculation
was previously based on total shares outstanding multiplied by the share price at the end of the period. Market
capitalization was increased by USD 10.0bn as of 31 March 2023 as a result.
Ticker symbols UBS Group AG
Security identification codes
Trading exchange
SIX / NYSE
Bloomberg
Reuters
ISIN
CH0244767585
SIX Swiss Exchange
UBSG
UBSG SW
UBSG.S
Valoren
24 476 758
New York Stock Exchange
UBS
UBS UN
UBS.N
CUSIP
CINS H42097 10 7
UBS Group first quarter 2024 report |
Consolidated financial statements
53
Consolidated financial
statements
Unaudited
Table of contents
UBS Group AG interim consolidated financial statements
(unaudited)
54
Income statement
55
Statement of comprehensive income
56
Balance sheet
57
Statement of changes in equity
58
Statement of cash flows
59
1
Basis of accounting
60
2
Accounting for the acquisition of the Credit Suisse Group
61
3
Segment reporting
62
4
Net interest income
63
5
Net fee and commission income
63
6
Other income
63
7
Personnel expenses
64
8
General and administrative expenses
64
9
Expected credit loss measurement
70
10
Fair value measurement
76
11
Derivative instruments
77
12
Other assets and liabilities
78
13
Debt issued designated at fair value
78
14
Debt issued measured at amortized cost
78
15
Provisions and contingent liabilities
UBS Group first quarter 2024 report |
Consolidated financial statements |
UBS Group AG interim consolidated financial
statements (unaudited)
54
UBS Group AG interim consolidated financial
statements (unaudited)
Income statement
For the quarter ended
USD m
Note
31.3.24
31.12.23
31.3.23
Interest income from financial instruments measured at
amortized cost and fair value through
other comprehensive income
4
10,078
10,036
4,777
Interest expense from financial instruments measured at
amortized cost
4
(9,724)
(9,440)
(3,814)
Net interest income from financial instruments measured
at fair value through profit or loss and other
4
1,585
1,498
425
Net interest income
4
1,940
2,095
1,388
Other net income from financial instruments measured
at fair value through profit or loss
4,182
3,158
2,681
Fee and commission income
5
7,080
6,409
5,053
Fee and commission expense
5
(588)
(629)
(447)
Net fee and commission income
5
6,492
5,780
4,606
Other income
6
124
(179)
69
Total revenues
12,739
10,855
8,744
Credit loss expense / (release)
9
106
136
38
Personnel expenses
7
6,949
7,061
4,620
General and administrative expenses
8
2,413
2,999
2,065
Depreciation, amortization and impairment of non-financial
assets
895
1,409
525
Operating expenses
10,257
11,470
7,210
Operating profit / (loss) before tax
2,376
(751)
1,495
Tax expense / (benefit)
612
(473)
459
Net profit / (loss)
1,764
(278)
1,037
Net profit / (loss) attributable to non-controlling interests
9
1
8
Net profit / (loss) attributable to shareholders
1,755
(279)
1,029
Earnings per share (USD)
Basic
0.55
(0.09)
0.33
Diluted
0.52
(0.09)
0.32
UBS Group first quarter 2024 report |
Consolidated financial statements |
UBS Group AG interim consolidated financial
statements (unaudited)
55
Statement of comprehensive income
For the quarter ended
USD m
31.3.24
31.12.23
31.3.23
Comprehensive income attributable to shareholders
1
Net profit / (loss)
1,755
(279)
1,029
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
(3,473)
4,197
236
Effective portion of changes in fair value of hedging instruments
designated as net investment hedges, before tax
2,182
(2,620)
(127)
Foreign currency translation differences on foreign operations reclassified to the
income statement
0
60
(1)
Effective portion of changes in fair value of hedging instruments
designated as net investment hedges reclassified
to the income statement
1
(25)
(1)
Income tax relating to foreign currency translations, including the effect of
net investment hedges
13
(15)
(2)
Subtotal foreign currency translation, net of tax
(1,277)
1,597
106
Financial assets measured at fair value through other comprehensive income
Net unrealized gains / (losses), before tax
0
8
2
Net realized (gains) / losses reclassified to the income statement
from equity
0
(4)
0
Income tax relating to net unrealized gains / (losses)
0
0
0
Subtotal financial assets measured at fair value through other comprehensive
income, net of tax
0
3
2
Cash flow hedges of interest rate risk
Effective portion of changes in fair value of derivative instruments designated
as cash flow hedges, before tax
(1,246)
1,803
387
Net (gains) / losses reclassified to the income statement from
equity
544
566
349
Income tax relating to cash flow hedges
119
(399)
(130)
Subtotal cash flow hedges, net of tax
(583)
1,970
606
Cost of hedging
Cost of hedging, before tax
(9)
(24)
(5)
Income tax relating to cost of hedging
0
0
0
Subtotal cost of hedging, net of tax
(9)
(24)
(5)
Total other comprehensive income that may be reclassified to the income statement, net
of tax
(1,870)
3,546
709
Other comprehensive income that will not be reclassified to the income
statement
Defined benefit plans
Gains / (losses) on defined benefit plans, before tax
(62)
164
25
Income tax relating to defined benefit plans
6
(33)
6
Subtotal defined benefit plans, net of tax
(56)
131
31
Own credit on financial liabilities designated at fair value
Gains / (losses) from own credit on financial liabilities designated
at fair value, before tax
(69)
(731)
69
Income tax relating to own credit on financial liabilities designated
at fair value
2
10
(17)
Subtotal own credit on financial liabilities designated at
fair value, net of tax
(68)
(721)
51
Total other comprehensive income that will not be reclassified to the income statement,
net of tax
(124)
(591)
83
Total other comprehensive income
(1,994)
2,956
791
Total comprehensive income attributable to shareholders
(240)
2,677
1,820
Comprehensive income attributable to non-controlling
interests
Net profit / (loss)
9
1
8
Total other comprehensive income that will not be reclassified to the income statement,
net of tax
(14)
17
5
Total comprehensive income attributable to non-controlling interests
(5)
18
13
Total comprehensive income
Net profit / (loss)
1,764
(278)
1,037
Other comprehensive income
(2,008)
2,973
796
of which: other comprehensive income that may be reclassified
to the income statement
(1,870)
3,546
709
of which: other comprehensive income that will not be reclassified
to the income statement
(138)
(573)
87
Total comprehensive income
(245)
2,695
1,833
1 Refer to the “Group performance” section of this report for more information.
UBS Group first quarter 2024 report |
Consolidated financial statements |
UBS Group AG interim consolidated financial
statements (unaudited)
56
Balance sheet
USD m
Note
31.3.24
31.12.23
Assets
Cash and balances at central banks
271,527
314,148
Amounts due from banks
22,143
21,161
Receivables from securities financing transactions measured at amortized
cost
101,650
99,039
Cash collateral receivables on derivative instruments
11
46,714
50,082
Loans and advances to customers
9
605,283
639,844
Other financial assets measured at amortized cost
12
62,750
65,498
Total financial assets measured at amortized cost
1,110,067
1,189,773
Financial assets at fair value held for trading
10
160,104
169,633
of which: assets pledged as collateral that may be sold or repledged
by counterparties
49,382
51,263
Derivative financial instruments
10, 11
159,229
176,084
Brokerage receivables
10
22,796
21,037
Financial assets at fair value not held for trading
10
99,612
104,018
Total financial assets measured at fair value through profit or loss
441,741
470,773
Financial assets measured at fair value through other comprehensive income
10
2,078
2,233
Investments in associates
2,250
2,373
Property, equipment and software
16,770
17,849
Goodwill and intangible assets
7,384
7,515
Deferred tax assets
10,614
10,682
Other non-financial assets
12
16,217
16,049
Total assets
1,607,120
1,717,246
Liabilities
Amounts due to banks
47,857
70,962
Payables from securities financing transactions measured at amortized cost
12,961
14,394
Cash collateral payables on derivative instruments
11
37,293
41,582
Customer deposits
763,959
792,029
Debt issued measured at amortized cost
14
226,251
237,817
Other financial liabilities measured at amortized cost
12
21,356
20,851
Total financial liabilities measured at amortized cost
1,109,677
1,177,633
Financial liabilities at fair value held for trading
10
35,758
34,159
Derivative financial instruments
10, 11
163,042
192,181
Brokerage payables designated at fair value
10
46,628
42,522
Debt issued designated at fair value
10, 13
116,806
128,289
Other financial liabilities designated at fair value
10, 12
28,140
29,484
Total financial liabilities measured at fair value through profit or loss
390,374
426,635
Provisions and contingent liabilities
15
10,914
12,250
Other non-financial liabilities
12
10,388
14,089
Total liabilities
1,521,354
1,630,607
Equity
Share capital
346
346
Share premium
12,972
13,216
Treasury shares
(5,157)
(4,796)
Retained earnings
76,436
74,880
Other comprehensive income recognized directly in equity, net of tax
663
2,462
Equity attributable to shareholders
85,260
86,108
Equity attributable to non-controlling interests
506
531
Total equity
85,766
86,639
Total liabilities and equity
1,607,120
1,717,246
UBS Group first quarter 2024 report |
Consolidated financial statements |
UBS Group AG interim consolidated financial
statements (unaudited)
57
Statement of changes in equity
USD m
Share
capital and
share
premium
Treasury
shares
Retained
earnings
OCI
recognized
directly in
equity,
net of tax
1
of which:
foreign
currency
translation
of which:
cash flow
hedges
Total equity
attributable to
shareholders
Balance as of 1 January 2024
2
13,562
(4,796)
74,880
2,462
5,584
(3,109)
86,108
Acquisition of treasury shares
(1,008)
3
(1,008)
Delivery of treasury shares under share-based compensation
plans
(595)
627
32
Other disposal of treasury shares
1
20
3
21
Share-based compensation expensed in the income statement
334
334
Tax (expense) / benefit
5
5
Equity classified as obligation to purchase own shares
1
1
Translation effects recognized directly in retained earnings
(72)
72
72
0
Share of changes in retained earnings of associates and
joint ventures
(1)
(1)
New consolidations / (deconsolidations) and other increases
/ (decreases)
11
(3)
8
Total comprehensive income for the period
1,631
(1,870)
(1,277)
(583)
(240)
of which: net profit / (loss)
1,755
1,755
of which: OCI, net of tax
(124)
(1,870)
(1,277)
(583)
(1,994)
Balance as of 31 March 2024
2
13,318
(5,157)
76,436
663
4,307
(3,621)
85,260
Non-controlling interests as of 31 March 2024
506
Total equity as of 31 March 2024
85,766
Balance as of 1 January 2023
2
13,850
(6,874)
50,004
(103)
4,128
(4,234)
56,876
Acquisition of treasury shares
(2,270)
3
(2,270)
Delivery of treasury shares under share-based compensation
plans
(798)
845
47
Other disposal of treasury shares
(4)
57
3
53
Share-based compensation expensed in the income statement
199
199
Tax (expense) / benefit
7
7
Equity classified as obligation to purchase own shares
22
22
Translation effects recognized directly in retained earnings
24
(24)
(24)
0
Share of changes in retained earnings of associates and
joint ventures
0
0
New consolidations / (deconsolidations) and other increases
/ (decreases)
0
0
Total comprehensive income for the period
1,111
709
106
606
1,820
of which: net profit / (loss)
1,029
1,029
of which: OCI, net of tax
83
709
106
606
791
Balance as of 31 March 2023
2
13,275
(8,242)
51,140
581
4,234
(3,652)
56,754
Non-controlling interests as of 31 March 2023
352
Total equity as of 31 March 2023
57,106
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 Includes treasury shares acquired and
disposed of by the Investment Bank in its capacity as a market
maker with regard to UBS shares and related derivatives,
and to hedge certain issued structured debt instruments.
These acquisitions and disposals are
reported based on the sum of the net monthly movements.
UBS Group first quarter 2024 report |
Consolidated financial statements |
UBS Group AG interim consolidated financial
statements (unaudited)
58
Statement of cash flows
Year-to-date
USD m
31.3.24
31.3.23
Cash flow from / (used in) operating activities
Net profit / (loss)
1,764
1,037
Non-cash items included in net profit and other adjustments:
Depreciation, amortization and impairment of non-financial
assets
895
525
Credit loss expense / (release)
106
38
Share of net (profits) / loss of associates and joint ventures and
impairment related to associates
(58)
(10)
Deferred tax expense / (benefit)
144
(28)
Net loss / (gain) from investing activities
12
(87)
Net loss / (gain) from financing activities
(3,460)
3,442
Other net adjustments
1
16,762
(816)
Net change in operating assets and liabilities:
1
Amounts due from banks and amounts due to banks
1,547
1,855
Receivables from securities financing transactions measured at amortized
cost
(5,686)
7,827
Payables from securities financing transactions measured at amortized cost
(71)
5,666
Cash collateral on derivative instruments
(692)
(1,891)
Loans and advances to customers
6,401
(483)
Customer deposits
(2,545)
(22,226)
Financial assets and liabilities at fair value held for trading and derivative financial
instruments
(4,422)
(6,125)
Brokerage receivables and payables
2,577
(4,618)
Financial assets at fair value not held for trading and other financial assets
and liabilities
2,891
(7,182)
Provisions and other non-financial assets and liabilities
(4,035)
(1,483)
Income taxes paid, net of refunds
(585)
(545)
Net cash flow from / (used in) operating activities
11,544
2
(25,106)
Cash flow from / (used in) investing activities
Purchase of property, equipment and software
(413)
(375)
Disposal of property, equipment and software
28
0
Net (purchase) / redemption of financial assets measured
at fair value through other comprehensive income
550
10
Purchase of debt securities measured at amortized cost
(851)
(4,255)
Disposal and redemption of debt securities measured at amortized
cost
2,002
2,225
Net cash flow from / (used in) investing activities
1,315
(2,396)
Cash flow from / (used in) financing activities
Repayment of Swiss National Bank funding
(22,082)
Net issuance (repayment) of short-term debt measured at amortized
cost
(5,851)
(2,429)
Net movements in treasury shares and own equity derivative
activity
(973)
(2,191)
Issuance of debt designated at fair value and long-term debt measured
at amortized cost
28,469
26,811
Repayment of debt designated at fair value and long-term debt measured
at amortized cost
(39,137)
(23,193)
Inflows from securities financing transactions measured at amortized
cost
3
1,000
Outflows from securities financing transactions measured at amortized
cost
3
(2,052)
Net cash flows from other financing activities
(192)
(126)
Net cash flow from / (used in) financing activities
(40,818)
(1,128)
Total cash flow
Cash and cash equivalents at the beginning of the period
340,311
195,321
Net cash flow from / (used in) operating, investing and financing
activities
(27,959)
(28,629)
Effects of exchange rate differences on cash and cash equivalents
1
(12,852)
747
Cash and cash equivalents at the end of the period
4
299,499
167,439
of which: cash and balances at central banks
5
271,527
144,099
of which: amounts due from banks
5
20,014
13,439
of which: money market paper
5,6
7,958
9,901
Additional information
Net cash flow from / (used in) operating activities includes:
Interest received in cash
14,382
7,047
Interest paid in cash
12,123
5,859
Dividends on equity investments, investment funds and associates
received in cash
7
582
525
1 Foreign currency translation and foreign exchange effects on operating assets and liabilities and on cash and cash equivale
nts are presented within the Other net adjustments line. Does not include foreign currency
hedge effects related to foreign
exchange swaps.
2 Includes cash receipts from
the sale of loans and
loan commitments of USD 7,464m
within the Non-core and Legacy
business division.
3 Reflects cash flows
from securities financing transactions
measured at amortized cost that use UBS debt instruments as the underlying.
4 USD 5,592m and USD 4,137m of Cash and cash equivalents (mainly
reflected in Amounts due
from banks) were restricted as of
31 March 2024 and 31 March 2023,
respectively. The
amount as of 31 March 2024
includes cash and cash equivalents
pledged to the depositor protection
system in Switzerland,
following new requirements that became
effective in the fourth
quarter of 2023. Refer
to ”Note 23 Restricted and transferred
financial assets” in the ”Consolidated
financial statements” section of the
UBS Group
Annual report 2023 for more information.
5 Includes only balances with an original maturity of three months or less.
6 Money market paper is included in the balance sheet under Financial assets at fair value not
held for trading (31 March 2024: USD 6,854m; 31 March 2023: USD 9,644m), Other financial assets measured at amortized cost (31 March 2024: USD 221m; 31 March 2023: USD 218m), Financial assets measured
at fair value through other comprehensive income (31
March 2024: USD 420m; 31 March 2023: USD 0m) and
Financial assets at fair value held for trading
(31 March 2024: USD 463m; 31 March 2023: USD 39m).
7 Includes dividends received from associates reported within Net cash flow from / (used in) investing activities.
UBS Group first quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial
statements (unaudited)
59
Notes to the UBS Group AG interim consolidated
financial statements (unaudited)
Note 1
Basis of accounting
Basis of preparation
The consolidated
financial statements
(the financial
statements) of
UBS Group AG and
its subsidiaries
(together,
UBS
or
the
Group)
are
prepared
in
accordance
with
IFRS
Accounting
Standards, as
issued
by
the
International
Accounting Standards
Board (the
IASB), and
are
presented in
US
dollars. These
interim
financial statements
are
prepared in accordance with IAS 34,
Interim Financial Reporting
.
In preparing
these interim financial
statements, the same
accounting policies and
methods of
computation have
been applied as in the
UBS Group AG consolidated annual
financial statements for
the period ended 31 December
2023, except for the changes described in this Note and changes
in segment reporting as set out in Note 3. These
interim
financial
statements
are
unaudited
and
should
be
read
in
conjunction
with
UBS Group AG’s
audited
consolidated financial statements in
the UBS Group Annual Report
2023 and the “Management
report” sections
of this report. In the opinion of management, all necessary adjustments
have been made for a fair presentation of
the Group’s financial position, results
of operations and cash flows.
Preparation of
these interim financial
statements requires management
to make
estimates and
assumptions that
affect
the
reported
amounts
of
assets,
liabilities,
income,
expenses
and
disclosures
of
contingent
assets
and
liabilities. These estimates
and assumptions are based
on the best available
information. Actual results
in the future
could differ
from such
estimates and
differences may
be material
to the
financial statements.
Revisions to
estimates,
based on regular
reviews, are recognized
in the period
in which they
occur. For more
information about areas of
estimation
uncertainty
that
are
considered
to
require
critical
judgment,
refer
to
“Note 1a
Material
accounting
policies” in the “Consolidated financial statements”
section of the UBS Group Annual Report
2023.
Amendments to IAS 12,
Income Taxes
UBS
has
applied
for
the
purposes
of
these
financial
statements
the
exception
that
was
introduced
by
the
amendments to
IAS 12,
Income Taxes
, issued in
May 2023
in relation to
top-up taxes
on income
under Global
Anti-
Base Erosion
Rules that
have been
imposed under
legislation that
has been
enacted or
substantively enacted
to
implement the Pillar
Two model rules published by the
Organisation for Economic
Co-operation and Development.
The exception
requires that
deferred tax
assets and
deferred tax
liabilities be
neither recognized
nor disclosed
in
respect of such top-up taxes.
Other amendments to IFRS Accounting Standards
A number of
minor amendments to
IFRS Accounting Standards
became effective from
1 January 2024 and
have
had no material effect on the Group.
IFRS 18,
Presentation and Disclosure in Financial
Statements
In April 2024, the IASB issued a new standard,
IFRS 18,
Presentation and Disclosure in Financial Statements,
which
replaces IAS 1,
Presentation of Financial Statements
. The main changes introduced by IFRS 18 relate
to:
–
the structure of income statements;
–
new disclosure requirements for management performance
measures (MPMs); and
–
enhanced guidance on
aggregation / disaggregation of
information on the
face of financial
statements and in
the notes thereto.
IFRS 18 will be
effective from 1 January
2027 and will
also apply to
comparative information. UBS will
first apply
these new
requirements in
the Annual
Report 2027
and, for
interim reporting,
in the
first quarter
2027 interim
report. UBS is assessing the impact of the new
requirements on its reporting, but expects limited impact. UBS will
take the opportunity to
refine the grouping of
items in the
primary financial statements and in
the notes thereto
based on new principles of aggregation and
disaggregation in IFRS 18.
UBS Group first quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial
statements (unaudited)
60
Note 1
Basis of accounting (continued)
Currency translation rates
The
following table
shows the
rates of
the main
currencies used
to translate
the financial
information of
UBS’s
operations with a functional currency other
than the US dollar into US dollars.
Closing exchange rate
Average rate
1
As of
For the quarter ended
31.3.24
31.12.23
31.3.23
31.3.24
31.12.23
31.3.23
1 CHF
1.11
1.19
1.09
1.13
1.13
1.08
1 EUR
1.08
1.10
1.08
1.08
1.08
1.08
1 GBP
1.26
1.28
1.23
1.26
1.25
1.22
100 JPY
0.66
0.71
0.75
0.67
0.68
0.75
1 Monthly income statement items of operations with a functional currency other than the US dollar are translated into US dollars using month-end rates. Disclosed average rates for a quarter represent an average of
three month-end rates,
weighted according
to the
income and expense
volumes of
all operations
of the
Group with the
same functional
currency for each
month. Weighted
average rates
for individual business
divisions may deviate from the weighted average rates for the Group.
Note 2
Accounting for the acquisition of the Credit
Suisse Group
The transaction
On 12 June
2023, UBS Group AG
acquired Credit
Suisse Group AG,
succeeding by
operation of
Swiss law
to all
assets and liabilities of Credit Suisse Group AG, and became the direct
or indirect shareholder of all of the
former
direct and indirect subsidiaries of
Credit Suisse Group AG. The acquisition
of Credit Suisse Group AG constituted
a
business combination under IFRS 3,
Business Combinations
, and was required to be accounted for by applying the
acquisition method of accounting.
IFRS 3 measurement period adjustments
for the acquisition of the Credit Suisse
Group
The acquisition of
Credit Suisse Group
AG was made
without the ordinary
due diligence procedures
and outside
the conventional time
frame for an
acquisition of
this scale and
nature. As
such, complete
information about all
relevant facts and circumstances as of
the acquisition date were not practically available to
UBS at the time when
the initial acquisition accounting was applied for the purpose of the UBS Group second quarter 2023 report, with
the amounts that form part of
the business combination accounting therefore considered
provisional and subject
to further measurement period
adjustments if new
information about facts
and circumstances existing on
the date
of the acquisition is obtained
within one year from the acquisition
date. The acquisition of Credit Suisse
Group AG
resulted
in
provisional
negative
goodwill
of
USD 27.7bn.
No
adjustments
were
made
to
the
acquisition
date
accounting during the first quarter of 2024.
For details
of the
accounting for
the acquisition,
including measurement
period adjustments,
refer to
“Note 1a
Material
accounting
policies”
and
“Note 2
Accounting
for
the
acquisition
of
the
Credit
Suisse
Group”
in
the
“Consolidated
financial
statements”
section
of
the
UBS
Group
Annual
Report
2023.
For
changes
to
segment
reporting, including change in business division
perimeters,
refer to Note 3.
UBS Group first quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial
statements (unaudited)
61
Note 2
Accounting for the acquisition of the Credit
Suisse Group (continued)
Conclusion of an investment management agreement
with Apollo and the transfer of senior
secured
asset-based financing
In
the
first
quarter
of
2024,
Credit
Suisse
entered
into
agreements
with
entities
managed
by
Atlas
Securitized
Products Management Holdings
(Atlas) and
other affiliates
of Apollo Management
Holdings (collectively,
Apollo)
to
conclude
the
investment
management
agreement
under
which
Atlas
has
managed
Credit
Suisse’s
retained
portfolio of
assets of
its
former securitized
products group.
Following the
closure of
this
agreement,
the assets
previously managed by Atlas are to be managed in
Non-core and Legacy.
The parties also agreed to conclude the
transition services
agreement under
which Credit
Suisse has
provided services
to Atlas.
In addition,
Credit Suisse
AG entered into
an agreement
with Apollo
Capital Management
(ACM) and
other parties
managed, controlled
and
/ or advised
by ACM or
its affiliates (collectively, the Assignees)
to transfer USD 8.0bn
of senior secured
asset-based
financing, with
USD 6.0bn funded
as of
31 December 2023
recognized as
financial assets
at fair
value held
for
trading
at
a
fair
value
of
USD 5.5bn
and
the
remaining
notional
of
USD 2.0bn
recognized
as
derivative
loan
commitments at
a fair
value of
USD 0.15bn. As
part of
the loan
transfer,
Credit Suisse
AG extended
a one-year
USD 750m senior
swingline facility
to the
Assignees, which
is accounted
for as
an off
-balance sheet
irrevocable
commitment as of
31 March 2024. In
the first quarter
of 2024, the
UBS Group recognized a
net gain of
USD 0.3bn
from the conclusion of the investment management
agreement and the assignment of the loan facilities.
Derecognition of loans and loan commitments
In addition to the
transfers with Apollo
noted above, during
the first quarter
of 2024 the
Group recognized further
gains of USD 0.4bn from exiting certain loans and loan commitments acquired
as a result of the acquisition of the
Credit Suisse Group,
including USD 0.2bn in
relation to the securitized
products book and USD
0.2bn in relation to
the corporate lending book, mainly driven by disposals to third parties and natural roll-offs, accelerated by actions
to actively unwind the portfolio in Non-core and Legacy.
Note 3
Segment reporting
As part of
the continued refinement
of UBS’s reporting
structure and organizational setup,
in the first
quarter of
2024 certain
changes were
made, with
an impact
on segment
reporting for
UBS’s business
divisions and
Group
Items. Prior-period information has been adjusted
for comparability. The changes are as follows:
–
Change
in
business
division
perimeters:
UBS
has
transferred
certain
businesses
from
Swiss
Bank
(Credit
Suisse),
previously
included
in
Personal
&
Corporate
Banking,
to
Global
Wealth
Management.
The
change
predominantly related to the high
net worth client segment and
represents approximately USD 72bn
in invested
assets and approximately
USD 0.6bn in annualized
revenues. A
number of
other smaller
business shifts
were also
executed between the business divisions in the
first quarter of 2024.
–
Changes to Group Treasury allocations:
UBS has allocated to the business divisions nearly all Group Treasury
costs that historically were
retained and reported in
Group Items. Costs continued
to be retained in Group
Items
include costs related to hedging
and own debt, and deferred
tax asset funding costs. UBS
has also aligned the
internal funds
transfer pricing
methodologies applied
by Credit
Suisse entities
to UBS’s
funds transfer
pricing
methodology.
These
changes
resulted
in
funding
costs
of
approximately
USD 0.3bn,
for
2023,
moving
from
Group Items
to the
business divisions,
predominantly related
to the
second half
of 2023.
In parallel
with the
changes noted above, UBS
has increased the
allocation of balance sheet
resources from Group Treasury
to the
business divisions.
–
Updated
cost allocations:
UBS has
reallocated USD 0.3bn
of annualized
costs from
Non-core and
Legacy to
the
business
divisions,
with
the
aim
of
avoiding
stranded
costs
in
Non-core
and
Legacy
at
the
end
of
the
integration process.
Following the
collective changes
outlined above,
prior-period information
for the
first quarter
of 2023
has been
restated, resulting in decreases
in Operating profit /
(loss) before tax of
USD 3m for Global Wealth
Management,
USD 1m for Personal
& Corporate
Banking and of
USD 11m for Group
Items, and increases
in Operating profit
/
(loss) before tax
of USD 1m
for Asset Management
and USD 15m
for the Investment
Bank, with
no change to
Non-
core and Legacy.
UBS Group first quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial
statements (unaudited)
62
Note 3
Segment reporting (continued)
Prior-period information as
of 31 December
2023 has also
been restated, resulting
in increases
of Total
assets of
USD 98.4bn
in
Global
Wealth
Management, USD 13.3bn
in
Personal
&
Corporate Banking,
USD 28.9bn
in
the
Investment
Bank
and
USD
28.6bn
in
Non-core
and
Legacy
with
a
corresponding
decrease
of
total
assets
of
USD 169.2bn in Group Items.
These changes had no effect on the reported
results or financial position of the Group.
›
Refer to the “Management report” sections of this report and the “Consolidated financial statements” section of
the UBS Group Annual Report 2023 for more information about the Group’s
business divisions
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group Items
UBS Group
For the quarter ended 31 March 2024
Total revenues
6,143
2,423
776
2,751
1,001
(355)
12,739
Credit loss expense / (release)
(3)
44
0
32
36
(2)
106
Operating expenses
5,044
1,404
665
2,164
1,011
(33)
10,257
Operating profit / (loss) before tax
1,102
975
111
555
(46)
(320)
2,376
Tax expense / (benefit)
612
Net profit / (loss)
1,764
As of 31 March 2024
Total assets
552,990
460,290
22,316
412,686
145,858
12,979
1,607,120
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group Items
UBS Group
For the quarter ended 31 March 2023
1
Total revenues
4,788
1,277
503
2,365
23
(211)
8,744
Credit loss expense / (release)
15
16
0
7
0
0
38
Operating expenses
3,561
663
408
1,866
699
14
7,210
Operating profit / (loss) before tax
1,212
598
95
492
(676)
(225)
1,495
Tax expense / (benefit)
459
Net profit / (loss)
1,037
As of 31 December 2023
1
Total assets
567,648
483,794
21,804
428,269
201,453
14,277
1,717,246
1 Comparative-period information has been restated for Group Treasury allocations.
Note 4
Net interest income
For the quarter ended
USD m
31.3.24
31.12.23
31.3.23
Interest income from loans and deposits
1
9,089
9,201
4,106
Interest income from securities financing transactions measured
at amortized cost
2
1,217
1,085
766
Interest income from other financial instruments measured
at amortized cost
347
340
259
Interest income from debt instruments measured at fair
value through other comprehensive income
27
28
23
Interest income from derivative instruments designated as cash
flow hedges
(602)
(617)
(376)
Total interest income from financial instruments measured at amortized cost and fair
value through other comprehensive income
10,078
10,036
4,777
Interest expense on loans and deposits
3
5,439
5,213
1,994
Interest expense on securities financing transactions measured
at amortized cost
4
495
412
365
Interest expense on debt issued
3,740
3,761
1,429
Interest expense on lease liabilities
50
53
26
Total interest expense from financial instruments measured at amortized cost
9,724
9,440
3,814
Total net interest income from financial instruments measured at amortized cost and fair
value through other comprehensive income
355
597
962
Net interest income from financial instruments measured at fair value through profit
or loss and other
1,585
1,498
425
Total net interest income
1,940
2,095
1,388
1 Consists of interest
income from cash and
balances at central
banks, amounts due
from banks, and
cash collateral receivables
on derivative instruments,
as well as negative
interest on amounts
due to banks,
customer deposits, and cash collateral
payables on derivative instruments.
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, and
customer deposits,
as well as
negative interest on
cash and
balances at central banks, amounts due from banks,
and cash collateral receivables on derivative instruments.
4 Includes interest expense on payables from securities financing
transactions and negative interest,
including fees, on receivables from securities financing transactions.
UBS Group first quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial
statements (unaudited)
63
Note 5
Net fee and commission income
For the quarter ended
USD m
31.3.24
31.12.23
31.3.23
Underwriting fees
194
189
127
M&A and corporate finance fees
259
224
178
Brokerage fees
1,150
725
880
Investment fund fees
1,257
1,223
1,178
Portfolio management and related services
3,051
2,966
2,210
Other
1,169
1,081
479
Total fee and commission income
1
7,080
6,409
5,053
of which: recurring
4,407
4,318
3,413
of which: transaction-based
2,641
2,048
1,616
of which: performance-based
32
43
24
Fee and commission expense
588
629
447
Net fee and commission income
6,492
5,780
4,606
1 Includes third-party fee and commission income for the
first quarter of 2024 of USD 3,986m for Global Wealth
Management (fourth quarter of 2023: USD 3,690m; first quarter of
2023: USD 3,145m), USD 708m
for Personal &
Corporate Banking (fourth
quarter of 2023:
USD 691m; first quarter
of 2023: USD 449m),
USD 941m for Asset Management
(fourth quarter of 2023:
USD 961m; first quarter
of 2023: USD 687m)
USD 1,332m for the Investment Bank (fourth quarter
of 2023: USD 1,240m; first quarter of 2023:
USD 770m), USD 5m for Group Items (fourth quarter of 2023:
negative USD 233m; first quarter of 2023: USD 3m)
and USD 108m for
Non-core and Legacy
(fourth quarter of
2023: USD 60m; first
quarter of 2023:
USD 0m). Comparative-period
information has been
restated for changes
in business division
perimeters, Group
Treasury allocations and Non-core and Legacy cost allocations.
Refer to the “Management report” section of this report and Note 3 for more information.
Note 6
Other income
For the quarter ended
USD m
31.3.24
31.12.23
31.3.23
Associates, joint ventures and subsidiaries
Net gains / (losses) from acquisitions and disposals of
subsidiaries
1
(1)
20
2
Net gains / (losses) from disposals of investments in associates
and joint ventures
(2)
4
0
Share of net profits of associates and joint ventures
58
(465)
2
10
Total
55
(442)
12
Net gains / (losses) from disposals of financial assets measured
at fair value through other comprehensive income
0
4
0
Income from properties
3
14
13
4
Net gains / (losses) from properties held for sale
(1)
1
0
Other
56
4
245
5
54
6
Total other income
124
(179)
69
1 Includes foreign exchange gains / (losses) reclassified
from other comprehensive income related to the
disposal or closure of foreign operations.
2 Includes a USD 508m share of proportionate
impairment losses
reflected in the
SIX Group profit
and loss, of
which USD 317m was
reported in Personal
and Corporate Banking
and USD 190m was
reported in Global Wealth
Management.
3 Includes rent received
from third
parties.
4 Effective from the first quarter of
2024, fees received from mortgage-servicing
rights are reflected within “Net fee
and commission income.”
Fees received from mortgage-servicing
rights received in the
first quarter of 2024
amounted to USD 71m.
5 Includes income of USD 75m
related to mortgage-servicing rights
and income of USD 41m related
to insurance and similar
contracts acquired as part
of the Credit
Suisse Group
6 Includes income of USD 35m due to extinguishment gains on own bonds.
Note 7
Personnel expenses
For the quarter ended
USD m
31.3.24
31.12.23
31.3.23
Salaries and variable compensation
1
5,863
5,728
3,885
of which: variable compensation – financial advisors
2
1,267
1,176
1,111
Contractors
86
90
70
Social security
409
431
279
Post-employment benefit plans
367
544
3
236
Other personnel expenses
225
268
151
Total personnel expenses
6,949
7,061
4,620
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.
3 Includes a
USD 245m increase
in the pension
plan obligation of
the Swiss
pension plan of Credit Suisse following the decision to align that pension plan to UBS’s Swiss pension
plan.
UBS Group first quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial
statements (unaudited)
64
Note 8
General and administrative expenses
For the quarter ended
USD m
31.3.24
31.12.23
31.3.23
Outsourcing costs
423
478
248
Technology costs
588
564
322
Consulting, legal and audit fees
403
565
181
Real estate and logistics costs
289
400
142
Market data services
199
212
113
Marketing and communication
115
159
52
Travel and entertainment
72
90
54
Litigation, regulatory and similar matters
1
(5)
8
721
Other
330
523
232
Total general and administrative expenses
2,413
2,999
2,065
1 Reflects the net increase / (decrease) in provisions
for litigation, regulatory and similar matters recognized in the income
statement. The current quarter includes a decrease in acquired contingent liabilities measured
under IFRS 3 of USD 50m as well as changes in other provisions for litigation measured under IAS 37 of USD 45m (refer to Note 15b for more information).
Note 9
Expected credit loss measurement
a) Credit loss expense / release
Total net credit loss expenses in the first quarter of
2024
were USD 106m, reflecting USD 45m net releases related
to performing positions and USD 151m net
expenses on credit-impaired positions.
Stage 1 and 2 net releases of USD 45m primarily
related
to releases in Non-core and Legacy,
mainly due to
repayments and stage transfers from performing
to credit impaired. Such releases
also included
net releases from
scenario effects of USD 13m across Global Wealth
Management,
the Investment Bank and Personal & Corporate
Banking. Credit loss expenses of USD 151m for
credit-impaired positions are substantially
distributed across Non-
core and Legacy, Personal & Corporate Banking
and the Investment Bank.
Credit loss expense / (release)
Performing positions
Credit-impaired positions
USD m
Stages 1 and 2
Stage 3
Purchased
Total
For the quarter ended 31.3.24
Global Wealth Management
(12)
7
2
(3)
Personal & Corporate Banking
(13)
64
(7)
44
Asset Management
0
0
0
0
Investment Bank
7
26
(1)
32
Non-core and Legacy
(26)
37
25
36
Group Items
(2)
0
0
(2)
Total
(45)
133
18
106
For the quarter ended 31.12.23
1
Global Wealth Management
(12)
3
0
(8)
Personal & Corporate Banking
(14)
95
4
85
Asset Management
0
0
0
(1)
Investment Bank
(13)
60
1
48
Non-core and Legacy
(1)
25
(9)
15
Group Items
(2)
0
0
(2)
Total
(43)
183
(4)
136
For the quarter ended 31.3.23
Global Wealth Management
15
0
15
Personal & Corporate Banking
15
0
16
Asset Management
0
0
0
Investment Bank
(5)
12
7
Non-core and Legacy
0
0
0
Group Items
0
0
0
Total
26
12
38
1
Comparative-period information has been restated for changes in business division perimeters. Refer to “Changes to segment reporting in 2024” in
the “UBS business divisions and Group Items” section and “Note
3 Segment reporting” in the “Consolidated financial statements” section of this report for more information.
UBS Group first quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial
statements (unaudited)
65
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 first quarter of 2024
through a series of
governance meetings,
with input
and feedback
from UBS Risk
and Finance
experts across
the business
divisions and
regions. ECLs
for Credit
Suisse AG positions
were
calculated based
on Credit
Suisse AG’s models,
including the
same scenarios
and scenario weight inputs as for
UBS’s existing business activity.
UBS
kept scenarios
and scenario
weights in
line
with those
applied
in the
2023
annual reporting.
The
baseline
scenario
was
updated
with
the
latest
macroeconomic
forecasts
as
of
31 March
2024.
The
assumptions
on
a
calendar-year basis are
included in the table
below and imply a
more optimistic outlook
for the US and Switzerland
for 2024. The outlook for the US for 2025 is
marginally less optimistic, while that for
Switzerland is unchanged.
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. Refer to the table below.
Post-model adjustments
Total
stage 1 and 2
allowances and provisions
were USD 1,026m as
of 31 March 2024
and included post-model
adjustments
of
USD 286m
(31 December
2023:
USD 326m).
Post-model
adjustments are
intended
to
cover for
uncertainty levels, including
the geopolitical situation
and to
align outputs
for Credit
Suisse model
with those of
UBS for dedicated
segments. During the
first quarter 2024,
post-model adjustments
decreased by USD 40m
due to
higher model driven outputs, exposure decreases and foreign exchange
translation.
Comparison of shock factors
Baseline
Key parameters
2023
2024
2025
Real GDP growth (annual percentage change)
US
2.5
2.3
1.4
Eurozone
0.5
0.6
1.2
Switzerland
0.8
1.3
1.5
Unemployment rate (%, annual average)
US
3.6
3.9
4.1
Eurozone
6.5
6.7
6.8
Switzerland
2.0
2.3
2.3
Fixed income: 10-year government bonds (%, Q4)
USD
3.9
4.1
4.1
EUR
2.0
2.2
2.2
CHF
0.7
0.7
0.7
Real estate (annual percentage change, Q4)
US
5.2
2.5
2.0
Eurozone
(1.0)
0.9
2.6
Switzerland
0.1
1.0
2.5
Economic scenarios and weights applied
Assigned weights in %
ECL scenario
31.3.24
31.12.23
31.3.23
Baseline
60.0
60.0
60.0
Mild debt crisis
15.0
15.0
–
Stagflationary geopolitical crisis
25.0
25.0
25.0
Global crisis
–
–
15.0
UBS Group first quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial
statements (unaudited)
66
Note 9
Expected credit loss measurement (continued)
c) ECL-relevant balance sheet and off-balance
sheet positions including ECL allowances
and provisions
The following tables
provide information
about financial
instruments and
certain non-financial
instruments that
are
subject
to
ECL
requirements.
For
amortized-cost
instruments,
the
carrying
amount
represents
the
maximum
exposure to credit risk, taking
into account the allowance for
credit losses. Financial assets measured at
fair value
through other comprehensive
income (FVOCI) are
also subject to ECL;
however, unlike amortized-cost
instruments,
the allowance
for credit
losses for
FVOCI instruments
does not
reduce the
carrying amount
of these financial
assets.
Instead, the
carrying amount
of financial
assets measured
at FVOCI
represents the
maximum exposure
to credit
risk.
In addition to recognized financial assets, certain off-balance sheet financial instruments and other credit lines are
also subject to ECL.
The maximum exposure to
credit risk for off-balance
sheet financial instruments is calculated
based on the maximum contractual amounts.
USD m
31.3.24
Carrying amount
1
ECL allowances
Financial instruments measured at amortized cost
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Cash and balances at central banks
271,527
271,378
17
0
132
(55)
0
(25)
0
(30)
Amounts due from banks
22,143
22,042
65
0
36
(24)
(6)
0
0
(18)
Receivables from securities financing transactions measured at
amortized cost
101,650
101,650
0
0
0
(2)
(2)
0
0
0
Cash collateral receivables on derivative instruments
46,714
46,714
0
0
0
0
0
0
0
0
Loans and advances to customers
605,283
571,497
28,773
3,742
1,272
(1,700)
(362)
(284)
(920)
(134)
of which: Private clients with mortgages
251,891
239,416
11,319
923
233
(196)
(55)
(92)
(39)
(10)
of which: Real estate financing
90,220
84,485
5,444
179
111
(64)
(27)
(28)
(9)
0
of which: Large corporate clients
29,008
23,954
3,917
689
447
(580)
(91)
(83)
(318)
(87)
of which: SME clients
24,276
20,506
2,745
951
74
(442)
(64)
(32)
(335)
(11)
of which: Lombard
150,759
149,153
931
549
126
(61)
(7)
(1)
(41)
(12)
of which: Credit cards
1,840
1,402
399
38
0
(40)
(6)
(10)
(23)
0
of which: Commodity trade finance
5,358
5,169
165
11
12
(123)
(17)
(2)
(104)
0
of which: Ship / aircraft financing
8,777
7,998
776
3
0
(47)
(40)
(7)
0
0
of which: Consumer financing
2,912
2,629
199
35
49
(64)
(20)
(19)
(24)
0
Other financial assets measured at amortized cost
62,750
61,988
574
166
22
(134)
(35)
(9)
(83)
(6)
of which: Loans to financial advisors
2,615
2,430
70
115
0
(49)
(6)
(1)
(43)
0
Total financial assets measured at amortized cost
1,110,067
1,075,268
29,428
3,908
1,463
(1,915)
(405)
(318)
(1,003)
(189)
Financial assets measured at fair value through other comprehensive
income
2,078
2,078
0
0
0
0
0
0
0
0
Total on-balance sheet financial assets in scope of ECL requirements
1,112,145
1,077,346
29,428
3,908
1,463
(1,915)
(405)
(318)
(1,003)
(189)
Total exposure
ECL provisions
Off-balance sheet (in scope of ECL)
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Guarantees
41,744
40,211
1,314
173
45
(64)
(27)
(18)
(19)
1
of which: Large corporate clients
8,643
7,710
841
78
14
(25)
(10)
(11)
(4)
0
of which: SME clients
2,670
2,274
286
86
23
(9)
(4)
(3)
(2)
1
of which: Financial intermediaries and hedge funds
20,920
20,865
55
0
0
(11)
(8)
(3)
0
0
of which: Lombard
3,959
3,947
6
5
0
(7)
0
0
(7)
0
of which: Commodity trade finance
2,088
2,077
11
0
0
(1)
(1)
0
0
0
Irrevocable loan commitments
87,292
82,700
4,335
230
27
(173)
(112)
(54)
(13)
6
of which: Large corporate clients
48,060
44,281
3,682
77
21
(152)
(93)
(47)
(13)
0
Forward starting reverse repurchase and securities borrowing
agreements
17,649
17,649
0
0
0
0
0
0
0
0
Unconditionally revocable loan commitments
150,918
148,116
2,616
186
0
(89)
(73)
(15)
0
0
of which: Real estate financing
12,318
11,616
703
0
0
(10)
(10)
0
0
0
of which: Large corporate clients
16,793
16,422
358
12
0
(25)
(18)
(7)
0
0
of which: SME clients
10,548
10,205
313
30
0
(36)
(31)
(5)
0
0
of which: Lombard
61,036
60,901
133
1
0
0
0
0
0
0
of which: Credit cards
10,049
9,560
485
4
0
(9)
(8)
(2)
0
0
Irrevocable committed prolongation of existing loans
3,719
3,709
7
3
0
(3)
(3)
0
0
0
Total off-balance sheet financial instruments and other credit lines
301,322
292,385
8,271
593
72
(328)
(215)
(88)
(32)
7
Total allowances and provisions
(2,243)
(620)
(406)
(1,035)
(182)
1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective
ECL allowances.
UBS Group first quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial
statements (unaudited)
67
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
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Cash and balances at central banks
314,148
314,025
18
0
106
(48)
0
(26)
0
(22)
Amounts due from banks
21,161
21,107
17
0
38
(12)
(6)
(1)
0
(5)
Receivables from securities financing transactions measured at
amortized cost
99,039
99,039
0
0
0
(2)
(2)
0
0
0
Cash collateral receivables on derivative instruments
50,082
50,082
0
0
0
0
0
0
0
0
Loans and advances to customers
639,844
611,019
24,408
2,869
1,548
(1,698)
(423)
(289)
(862)
(123)
of which: Private clients with mortgages
268,616
256,614
10,695
929
378
(209)
(62)
(97)
(39)
(11)
of which: Real estate financing
97,817
92,084
5,367
270
97
(103)
(41)
(31)
(21)
(11)
of which: Large corporate clients
30,084
25,671
3,182
700
532
(575)
(105)
(70)
(312)
(89)
of which: SME clients
25,957
22,155
2,919
754
129
(402)
(71)
(42)
(277)
(13)
of which: Lombard
156,353
156,299
3
50
0
(41)
(13)
(11)
(17)
0
of which: Credit cards
2,041
1,564
438
39
0
(42)
(6)
(11)
(24)
0
of which: Commodity trade finance
5,727
5,662
25
22
18
(130)
(18)
(1)
(111)
0
of which: Ship / aircraft financing
9,214
8,920
273
4
17
(51)
(48)
(3)
0
(1)
of which: Consumer financing
2,982
2,795
92
38
57
(59)
(22)
(17)
(20)
0
Other financial assets measured at amortized cost
65,498
64,311
968
158
61
(151)
(41)
(10)
(94)
(5)
of which: Loans to financial advisors
2,615
2,422
79
114
0
(49)
(4)
(1)
(44)
0
Total financial assets measured at amortized cost
1,189,773
1,159,583
25,410
3,027
1,753
(1,911)
(473)
(326)
(956)
(156)
Financial assets measured at fair value through other comprehensive
income
2,233
2,233
0
0
0
0
0
0
0
0
Total on-balance sheet financial assets in scope of ECL requirements
1,192,006
1,161,816
25,410
3,027
1,753
(1,911)
(473)
(326)
(956)
(156)
Total exposure
ECL provisions
Off-balance sheet (in scope of ECL)
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Guarantees
46,191
44,487
1,495
151
58
(73)
(28)
(22)
(23)
0
of which: Large corporate clients
9,267
8,138
1,023
89
17
(31)
(11)
(13)
(7)
0
of which: SME clients
2,839
2,469
337
31
2
(14)
(4)
(5)
(5)
0
of which: Financial intermediaries and hedge funds
22,922
22,876
46
0
0
(12)
(8)
(3)
0
0
of which: Lombard
5,045
5,045
0
0
0
(1)
0
0
(1)
0
of which: Commodity trade finance
2,037
2,027
9
0
0
(1)
(1)
0
0
0
Irrevocable loan commitments
91,643
87,080
4,297
218
48
(178)
(117)
(51)
(14)
4
of which: Large corporate clients
50,696
46,708
3,881
59
48
(149)
(94)
(41)
(12)
(2)
Forward starting reverse repurchase and securities borrowing
agreements
18,444
18,444
0
0
0
0
0
0
0
0
Unconditionally revocable loan commitments
163,256
160,456
2,654
146
0
(95)
(78)
(17)
0
0
of which: Real estate financing
15,846
15,033
813
0
0
(14)
(11)
(3)
0
0
of which: Large corporate clients
17,139
16,678
454
8
0
(23)
(17)
(6)
0
0
of which: SME clients
11,658
11,253
375
29
0
(38)
(33)
(5)
0
0
of which: Lombard
77,618
77,618
0
1
0
0
0
0
0
0
of which: Credit cards
10,458
9,932
522
4
0
(10)
(8)
(2)
0
0
Irrevocable committed prolongation of existing loans
4,608
4,593
11
4
0
(4)
(4)
0
0
0
Total off-balance sheet financial instruments and other credit lines
324,141
315,060
8,456
519
106
(350)
(226)
(90)
(37)
3
Total allowances and provisions
(2,261)
(700)
(416)
(993)
(153)
1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective
ECL allowances.
UBS Group first quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial
statements (unaudited)
68
Note 9
Expected credit loss measurement (continued)
The table
below provides information
about the gross
carrying amount of
exposures subject to
ECL and
the ECL
coverage ratio for
UBS’s core loan portfolios
(i.e.,
Loans and advances
to customers
and
Loans to financial
advisors
)
and
relevant
off-balance
sheet
exposures.
Cash
and
balances
at
central
banks
,
Amounts
due
from
banks
,
Receivables from
securities
financing transactions
,
Cash collateral
receivables
on derivative
instruments
and
Financial
assets measured
at fair
value through
other comprehensive
income
are not included
in the
table below, due
to their
lower sensitivity to ECL.
ECL coverage ratios are calculated by dividing ECL
allowances and provisions by the gross carrying amount of the
related exposures.
Coverage ratios for core loan portfolio
31.3.24
Gross carrying amount (USD m)
ECL coverage (bps)
On-balance sheet
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
PCI
Private clients with mortgages
252,087
239,471
11,412
962
243
8
2
81
6
406
395
Real estate financing
90,284
84,512
5,472
188
111
7
3
50
6
493
0
Total real estate lending
342,372
323,984
16,884
1,150
354
8
3
71
6
420
270
Large corporate clients
29,587
24,045
4,001
1,008
534
196
38
208
62
3,160
1,632
SME clients
24,718
20,570
2,777
1,286
85
179
31
114
41
2,602
1,305
Total corporate lending
54,305
44,615
6,777
2,293
619
188
35
169
53
2,847
1,587
Lombard
150,820
149,160
932
590
138
4
0
10
1
699
840
Credit cards
1,879
1,408
410
61
0
211
41
256
89
3,802
0
Commodity trade finance
5,481
5,186
168
115
12
224
32
144
35
9,044
0
Ship / aircraft financing
8,823
8,038
782
3
0
53
50
84
53
0
0
Consumer financing
2,976
2,649
218
59
49
215
77
884
138
4,093
31
Other loans and advances to customers
40,327
36,818
2,886
389
234
21
9
31
11
657
626
Loans to financial advisors
2,664
2,435
71
157
0
186
23
160
27
2,716
0
Total other lending
212,971
205,695
5,466
1,375
434
22
6
91
9
1,900
606
Total
1
609,647
574,295
29,127
4,819
1,406
29
6
98
11
1,998
953
Gross exposure (USD m)
ECL coverage (bps)
Off-balance sheet
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
PCI
Private clients with mortgages
7,907
7,590
289
29
0
7
6
34
7
24
0
Real estate financing
13,652
12,919
732
0
0
7
8
0
7
0
0
Total real estate lending
21,559
20,509
1,021
29
0
7
7
4
7
23
0
Large corporate clients
73,534
68,451
4,881
168
35
28
18
133
25
995
0
SME clients
15,269
14,438
678
130
23
34
29
216
38
181
0
Total corporate lending
88,803
82,889
5,559
297
58
29
20
143
27
640
0
Lombard
68,645
68,477
161
7
0
1
0
1
0
9,921
0
Credit cards
10,049
9,560
485
4
0
9
8
34
9
0
0
Commodity trade finance
4,446
4,429
18
0
0
6
6
127
6
0
0
Ship / aircraft financing
1,643
1,643
0
0
0
13
12
0
13
0
0
Consumer financing
167
167
0
0
0
0
0
0
0
0
0
Financial intermediaries and hedge funds
48,923
48,619
304
0
0
3
2
114
3
0
0
Other off-balance sheet commitments
39,437
38,444
723
256
14
6
4
40
4
257
0
Total other lending
173,310
171,338
1,691
267
14
3
2
49
3
493
0
Total
2
283,672
274,736
8,271
593
72
12
8
106
11
543
0
Total on- and off-balance sheet
3
893,319
849,030
37,399
5,412
1,479
23
7
100
11
1,838
860
1 Includes Loans and
advances to customers and
Loans to financial advisors,
which are presented on
the balance sheet line Other
financial
assets measured at amortized
cost.
2 Excludes Forward
starting reverse
repurchase and securities borrowing agreements.
3 Includes on-balance sheet exposure, gross and off-balance sheet exposure (notional) and the related
ECL coverage ratio (bps).
UBS Group first quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial
statements (unaudited)
69
Note 9
Expected credit loss measurement (continued)
Coverage ratios for core loan portfolio
31.12.23
Gross carrying amount (USD m)
ECL coverage (bps)
On-balance sheet
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
PCI
Private clients with mortgages
268,825
256,675
10,792
968
389
8
2
90
6
399
283
Real estate financing
97,920
92,124
5,398
290
108
11
4
57
7
713
980
Total real estate lending
366,745
348,800
16,190
1,258
497
9
3
79
6
472
434
Large corporate clients
30,660
25,775
3,252
1,012
620
188
41
215
60
3,083
1,429
SME clients
26,359
22,226
2,961
1,031
142
153
32
141
45
2,689
893
Total corporate lending
57,019
48,001
6,213
2,042
762
172
37
180
53
2,884
1,329
Lombard
156,394
156,312
15
67
0
3
1
7,616
2
2,487
0
Credit cards
2,083
1,571
449
63
0
200
40
253
87
3,801
0
Commodity trade finance
5,858
5,681
26
133
18
223
32
365
34
8,333
6
Ship / aircraft financing
9,265
8,968
276
4
17
56
54
99
55
0
315
Consumer financing
3,041
2,817
110
58
57
195
79
1,559
135
3,422
7
Other loans and advances to customers
41,136
39,293
1,419
105
320
21
10
39
11
3,981
0
Loans to financial advisors
2,665
2,426
80
159
0
185
17
122
20
2,793
0
Total other lending
220,442
217,068
2,373
589
412
21
7
210
9
4,376
8
Total
1
644,206
613,869
24,777
3,889
1,671
27
7
117
11
2,329
737
Gross exposure (USD m)
ECL coverage (bps)
Off-balance sheet
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
PCI
Private clients with mortgages
9,782
9,505
261
15
0
6
5
27
6
40
0
Real estate financing
17,107
16,281
826
0
0
9
8
44
9
0
0
Total real estate lending
26,889
25,786
1,088
15
0
8
7
40
8
40
0
Large corporate clients
77,103
71,524
5,357
157
65
26
17
111
24
1,217
242
SME clients
16,762
15,868
812
80
2
40
29
196
37
640
0
Total corporate lending
93,865
87,392
6,170
236
67
29
19
122
26
1,022
221
Lombard
86,173
86,173
0
1
0
0
0
0
0
0
0
Credit cards
10,458
9,932
522
4
0
10
8
35
10
0
0
Commodity trade finance
4,640
4,628
13
0
0
6
5
151
6
0
0
Ship / aircraft financing
1,053
1,053
0
0
0
26
26
0
26
0
0
Consumer financing
153
153
0
0
0
0
0
0
0
0
0
Financial intermediaries and hedge funds
42,578
42,325
253
0
0
3
3
142
3
0
0
Other off-balance sheet commitments
39,887
39,174
411
263
39
7
4
111
5
453
0
Total other lending
184,944
183,438
1,199
268
39
3
2
85
3
486
0
Total
2
305,697
296,616
8,456
519
106
11
8
107
10
717
0
Total on- and off-balance sheet
3
949,904
910,485
33,233
4,408
1,777
22
7
114
11
2,140
675
1 Includes Loans and advances
to customers and Loans
to financial advisors,
which are presented on
the balance sheet line
Other financial assets measured
at amortized cost.
2 Excludes Forward
starting reverse
repurchase and securities borrowing agreements.
3 Includes on-balance-sheet exposure, gross and off-balance-sheet exposure (notional) and the related
ECL coverage ratio (bps).
UBS Group first quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial
statements (unaudited)
70
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 three
months of 2024, assets and
liabilities that were transferred from
Level 2 to Level 1, or
from
Level 1 to Level 2, and were held for the entire
reporting period were not material.
Determination of fair values from quoted market
prices or valuation techniques
1
31.3.24
31.12.23
USD m
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
116,980
30,734
12,390
160,104
118,975
28,045
22,613
169,633
of which: Equity instruments
103,929
344
247
104,520
102,602
1,403
321
104,325
of which: Government bills / bonds
5,972
6,652
35
12,659
6,995
8,763
73
15,830
of which: Investment fund units
6,022
1,943
234
8,198
8,392
1,124
129
9,645
of which: Corporate and municipal bonds
1,052
16,152
1,045
18,250
984
12,801
1,284
15,069
of which: Loans
0
5,499
10,606
16,105
0
3,837
19,618
23,456
of which: Asset-backed securities
4
139
119
262
3
112
133
248
Derivative financial instruments
1,146
155,710
2,373
159,229
622
172,903
2,559
176,084
of which: Foreign exchange
416
61,337
197
61,951
347
78,060
253
78,659
of which: Interest rate
0
52,144
402
52,546
0
55,190
407
55,597
of which: Equity / index
0
36,489
1,186
37,675
0
34,174
1,299
35,473
of which: Credit
0
2,590
434
3,024
0
3,456
513
3,969
of which: Commodities
7
3,001
2
3,011
1
1,869
13
1,883
Brokerage receivables
0
22,796
0
22,796
0
21,037
0
21,037
Financial assets at fair value not held for trading
31,065
59,843
8,704
99,612
30,717
64,865
8,435
104,018
of which: Financial assets for unit-linked investment contracts
16,458
25
0
16,482
15,877
7
0
15,884
of which: Corporate and municipal bonds
60
14,532
217
14,809
62
16,722
215
17,000
of which: Government bills / bonds
14,065
7,019
0
21,083
14,306
4,801
0
19,107
of which: Loans
0
3,710
2,167
5,878
0
4,252
2,258
6,510
of which: Securities financing transactions
0
32,840
98
32,938
0
36,857
52
36,909
of which: Asset-backed securities
0
1,169
500
1,668
0
1,525
180
1,704
of which: Auction rate securities
0
0
1,211
1,211
0
0
1,208
1,208
of which: Investment fund units
371
458
688
1,517
367
548
678
1,592
of which: Equity instruments
111
1
3,017
3,130
105
38
3,097
3,241
Financial assets measured at fair value through other comprehensive income on
a recurring basis
Financial assets measured at fair value through other comprehensive
income
67
2,011
0
2,078
68
2,165
0
2,233
of which: Commercial paper and certificates of deposit
0
1,783
0
1,783
0
1,948
0
1,948
of which: Corporate and municipal bonds
67
179
0
246
68
207
0
276
Non-financial assets measured at fair value on a recurring basis
Precious metals and other physical commodities
6,466
0
0
6,466
5,930
0
0
5,930
Non-financial assets measured at fair value on a non-recurring basis
Other non-financial assets
2
0
0
35
35
0
0
31
31
Total assets measured at fair value
155,725
271,093
23,502
450,320
156,312
289,015
33,639
478,966
UBS Group first quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial
statements (unaudited)
71
Note 10
Fair value measurement (continued)
Determination of fair values from quoted market
prices or valuation techniques (continued)
1
31.3.24
31.12.23
USD m
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
26,785
8,771
202
35,758
27,684
6,315
161
34,159
of which: Equity instruments
18,996
294
66
19,356
18,266
248
92
18,606
of which: Corporate and municipal bonds
34
6,966
132
7,132
28
4,981
62
5,071
of which: Government bills / bonds
6,596
1,232
0
7,828
8,559
905
0
9,464
of which: Investment fund units
1,159
216
3
1,378
832
118
4
954
Derivative financial instruments
967
156,208
5,867
163,042
771
185,815
5,595
192,181
of which: Foreign exchange
372
58,684
51
59,107
457
89,394
36
89,887
of which: Interest rate
0
49,966
307
50,273
0
52,673
246
52,920
of which: Equity / index
0
41,522
4,302
45,825
0
38,046
3,333
41,380
of which: Credit
0
3,205
525
3,731
0
4,081
619
4,700
of which: Commodities
3
2,618
20
2,642
0
1,437
21
1,458
of which: Loan commitments measured at FVTPL
0
127
555
682
0
135
1,037
1,172
Financial liabilities designated at fair value on a recurring basis
Brokerage payables designated at fair value
0
46,628
0
46,628
0
42,522
0
42,522
Debt issued designated at fair value
0
102,823
13,983
116,806
0
113,012
15,276
128,289
Other financial liabilities designated at fair value
0
25,490
2,650
28,140
0
26,878
2,606
29,484
of which: Financial liabilities related to unit-linked investment contracts
0
16,612
0
16,612
0
15,992
0
15,992
of which: Securities financing transactions
0
5,121
0
5,121
0
7,416
0
7,416
of which: Over-the-counter debt instruments and others
0
3,757
2,650
6,407
0
3,471
2,606
6,076
Total liabilities measured at fair value
27,752
339,920
22,703
390,374
28,454
374,542
23,638
426,635
1 Bifurcated embedded derivatives are presented on the same balance sheet lines
as their host contracts and are not included in this table. The fair value of these derivatives was not
material for the periods presented.
2 Other non-financial assets primarily consist of properties and other non-current assets held for sale, which are measured at the
lower of their net carrying amount or fair value less costs to sell.
b) Valuation adjustments
The table below summarizes the changes
in deferred day-1 profit or loss reserves during the
relevant period.
Deferred day-1 profit or loss is generally released into
Other net income from financial instruments measured
at fair
value
through
profit
or
loss
when
the
pricing
of
equivalent
products
or
the
underlying
parameters
become
observable or when the transaction is closed out.
Deferred day-1 profit or loss reserves
For the quarter ended
USD m
31.3.24
31.12.23
31.3.23
Reserve balance at the beginning of the period
404
396
422
Profit / (loss) deferred on new transactions
42
54
91
(Profit) / loss recognized in the income statement
(62)
(48)
(113)
Foreign currency translation
0
1
0
Reserve balance at the end of the period
384
404
399
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
31.3.24
31.12.23
Own credit adjustments on financial liabilities designated at fair value
1
(1,315)
(1,287)
of which: debt issued designated at fair value
(1,334)
(1,297)
of which: other financial liabilities designated at fair value
19
10
Credit valuation adjustments
2
(118)
(145)
Funding and debit valuation adjustments
(107)
(116)
Other valuation adjustments
(2,135)
(2,654)
of which: liquidity
(1,588)
(2,051)
of which: model uncertainty
(547)
(603)
1 Own credit adjustments on financial liabilities designated at fair value includes amounts for TLAC notes.
2 Amount does not include reserves against defaulted counterparties.
UBS Group first quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial
statements (unaudited)
72
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
31 March 2024 and unobservable, and a range
of values for those unobservable inputs.
The range of values
represents the highest- and
lowest-level inputs used in the valuation
techniques. Therefore, the
range does not reflect the level of uncertainty regarding a particular input or an assessment of the reasonableness of
the Group’s estimates and assumptions, but rather the different underlying characteristics of the relevant
assets and
liabilities held by the Group.
The significant unobservable
inputs disclosed in
the table below
are consistent with
those included in
“Note 21 Fair
value measurement” in the “Consolidated financial
statements” section of the UBS Group
Annual Report 2023.
Valuation techniques and inputs
used in the fair value measurement of Level
3 assets and liabilities
Fair value
Significant unobservable
input(s)
1
Range of inputs
Assets
Liabilities
Valuation technique(s)
31.3.24
31.12.23
USD bn
31.3.24
31.12.23
31.3.24
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
1.3
1.5
0.1
0.1
Relative value to
market comparable
Bond price equivalent
8
126
98
5
126
99
points
Discounted expected
cash flows
Discount margin
486
486
486
135
491
463
basis
points
Traded loans,
loans
measured at fair value,
loan commitments and
guarantees
12.9
22.0
0.0
0.0
Relative value to
market comparable
Loan price equivalent
1
142
83
1
120
88
points
Discounted expected
cash flows
Credit spread
19
2,374
513
19
2,681
614
basis
points
Market comparable
and securitization
model
Credit spread
122
1,803
310
162
1,849
318
basis
points
Option model
Gap risk
0
2
0
0
2
0
%
Auction rate securities
1.2
1.2
Discounted expected
cash flows
Credit spread
135
208
151
135
205
150
basis
points
Investment fund units
3
0.8
0.8
0.0
0.0
Relative value to
market comparable
Net asset value
Equity instruments
3
3.4
3.4
0.1
0.1
Relative value to
market comparable
Price
Debt issued designated at
fair value
4
14.0
15.3
Other financial liabilities
designated at fair value
2.7
2.6
Discounted expected
cash flows
Funding spread
106
201
51
201
basis
points
Derivative financial instruments
Interest rate
0.4
0.4
0.3
0.2
Option model
Volatility of interest rates
41
87
45
154
basis
points
Volatility of inflation
1
6
1
6
%
IR-to-IR correlation
3
100
4
100
%
Credit
0.4
0.5
0.5
0.6
Discounted expected
cash flows
Credit spreads
3
1,804
1
2,421
basis
points
Credit correlation
50
66
50
66
%
Credit volatility
60
60
60
60
%
Bond price equivalent
1
133
2
242
points
Recovery rates
0
100
14
100
%
Equity / index
1.3
1.3
4.3
3.3
Option model
Equity dividend yields
0
19
0
17
%
Volatility of equity stocks,
equity and other indices
4
152
4
142
%
Equity-to-FX correlation
(35)
78
(40)
77
%
Equity-to-equity correlation
(50)
100
(50)
100
%
Loan commitments
measured at FVTPL
0.5
1.0
Relative value to
market comparable
Loan price equivalent
10
100
35
102
points
1 The ranges of significant unobservable inputs are represented in points, percentages and basis points.
Points are a percentage of par (e.g., 100 points would be 100% of par).
2 Weighted averages are provided for
most non-derivative financial instruments and were calculated
by weighting inputs based on the
fair values of the respective instruments. Weighted averages are
not provided for inputs related
to Other financial liabilities
designated at fair value
and Derivative financial instruments,
as this would not
be meaningful.
3 The range
of inputs is not
disclosed, as there is
a dispersion of values
given the diverse nature
of the investments.
4 Debt issued designated at fair value primarily consists of UBS structured notes, which include variable maturity notes with various equity and foreign exchange underlying risks, as well as rates-linked and credit-linked
notes, all of
which have embedded
derivative parameters
that are considered
to be unobservable.
The equivalent
derivative instrument parameters
for debt issued
or embedded derivatives
for over-the-counter
debt
instruments are presented in the respective derivative financial instruments lines in this table.
UBS Group first quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial
statements (unaudited)
73
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
31.3.24
31.12.23
USD m
Favorable
changes
Unfavorable
changes
Favorable
changes
Unfavorable
changes
Traded loans, loans measured at fair value and guarantees
441
(407)
635
(600)
Securities financing transactions
37
(33)
30
(32)
Auction rate securities
39
(25)
67
(21)
Asset-backed securities
54
(58)
39
(36)
Equity instruments
447
(428)
430
(413)
Investment fund units
142
(144)
135
(137)
Loan commitments measured at FVTPL
148
(176)
313
(343)
Interest rate derivatives, net
209
(102)
217
(103)
Credit derivatives, net
117
(117)
140
(131)
Foreign exchange derivatives, net
4
(4)
5
(4)
Equity / index derivatives, net
563
(498)
521
(443)
Other
126
(141)
281
(276)
Total
2,327
(2,133)
2,815
(2,538)
1 Sensitivity of issued and over-the-counter debt instruments is reported with the equivalent derivative
or Other.
e) Level 3 instruments: movements during
the period
The table below presents additional information about material Level 3 assets and liabilities measured at fair value
on a recurring basis. Level 3 assets and liabilities
may be hedged with instruments
classified as Level 1 or Level 2 in
the fair
value hierarchy
and, as
a
result,
realized and
unrealized gains
and losses
included in
the table
may not
include the effect of related hedging
activity. Furthermore, the realized and unrealized gains and
losses presented
in the table are not
limited solely to those
arising from Level 3 inputs,
as valuations are generally
derived from both
observable and unobservable parameters.
Assets
and
liabilities
transferred
into
or
out
of
Level 3
are
presented
as
if
those
assets
or
liabilities
had
been
transferred on 1 January 2024.
UBS Group first quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial
statements (unaudited)
74
Note 10
Fair value measurement (continued)
Movements of Level 3 instruments
USD bn
Balance
at the
beginning
of the
period
Net gains /
losses
included in
compre-
hensive
income
1
of which:
related to
instruments
held at the
end of the
period
Purchases
Sales
Issuances
Settlements
Transfers
into
Level 3
Transfers
out of
Level 3
Foreign
currency
translation
Balance
at the
end
of the
period
For the three months ended 31 March 2024
2
Financial assets at fair value held for trading
22.6
(0.2)
(0.0)
0.4
(8.9)
0.9
(3.4)
1.6
(0.7)
(0.1)
12.4
of which: Equity instruments
0.3
(0.0)
0.0
0.0
(0.0)
0.0
(0.0)
0.1
(0.1)
(0.0)
0.2
of which: Corporate and municipal bonds
1.3
(0.1)
(0.0)
0.3
(0.4)
0.0
(0.0)
0.0
(0.0)
(0.0)
1.0
of which: Loans
19.6
0.4
(0.0)
0.0
(7.8)
0.9
(3.3)
1.4
(0.5)
(0.0)
10.6
Derivative financial instruments – assets
2.6
0.1
0.1
0.0
(0.0)
0.4
(0.4)
0.1
(0.3)
(0.0)
2.4
of which: Interest rate
0.4
0.1
0.1
0.0
(0.0)
0.1
(0.1)
0.0
(0.1)
0.0
0.4
of which: Equity / index
1.3
(0.1)
(0.1)
0.0
(0.0)
0.3
(0.2)
0.0
(0.1)
(0.0)
1.2
of which: Credit
0.5
(0.0)
0.0
0.0
(0.0)
0.0
(0.1)
0.1
(0.1)
(0.0)
0.4
Financial assets at fair value not held for trading
8.4
(0.0)
(0.1)
0.1
(0.1)
0.4
(0.4)
0.4
(0.1)
(0.1)
8.7
of which: Loans
2.3
0.1
0.1
0.0
(0.0)
0.2
(0.3)
0.0
(0.1)
(0.0)
2.2
of which: Auction rate securities
1.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
1.2
of which: Equity instruments
3.1
(0.0)
(0.1)
0.0
(0.0)
0.0
(0.0)
0.0
0.0
(0.1)
3.0
Derivative financial instruments – liabilities
5.6
0.3
0.3
0.0
(0.2)
1.6
(1.2)
0.3
(0.6)
(0.0)
5.9
of which: Interest rate
0.2
0.1
0.1
0.0
0.0
0.0
(0.1)
0.0
(0.0)
0.0
0.3
of which: Equity / index
3.3
0.5
0.4
0.0
(0.0)
1.5
(0.8)
0.2
(0.3)
(0.0)
4.3
of which: Credit
0.6
(0.0)
(0.0)
0.0
(0.0)
0.1
(0.2)
0.1
(0.1)
(0.0)
0.5
of which: Loan commitments measured at FVTPL
1.0
(0.1)
(0.1)
0.0
(0.2)
0.0
(0.0)
0.0
(0.2)
(0.0)
0.6
Debt issued designated at fair value
15.3
0.2
0.2
0.0
0.0
1.6
(1.4)
0.9
(2.5)
(0.1)
14.0
Other financial liabilities designated at fair value
2.6
(0.2)
(0.1)
0.0
(0.0)
0.0
(0.3)
0.5
(0.0)
(0.0)
2.7
For the three months ended 31 March 2023
Financial assets at fair value held for trading
1.5
0.1
0.1
0.1
(0.6)
0.1
0.0
0.1
(0.1)
0.0
1.1
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
0.1
(0.2)
0.0
0.0
0.0
(0.0)
0.0
0.4
of which: Loans
0.6
0.0
0.0
0.0
(0.4)
0.1
0.0
0.0
(0.0)
(0.0)
0.3
Derivative financial instruments – assets
1.5
(0.1)
(0.1)
0.0
0.0
0.2
(0.1)
0.0
(0.1)
0.0
1.3
of which: Interest rate
0.5
(0.0)
(0.0)
0.0
0.0
0.0
(0.0)
0.0
(0.1)
(0.0)
0.4
of which: Equity / index
0.7
(0.1)
(0.1)
0.0
0.0
0.1
(0.1)
0.0
(0.0)
0.0
0.6
of which: Credit
0.3
0.0
0.0
0.0
0.0
0.0
(0.0)
0.0
(0.0)
0.0
0.3
Financial assets at fair value not held for trading
3.7
0.0
0.0
0.3
(0.2)
0.0
0.0
0.0
(0.0)
0.0
3.8
of which: Loans
0.7
0.0
0.0
0.1
0.0
0.0
0.0
0.0
(0.0)
(0.0)
0.8
of which: Auction rate securities
1.3
0.0
0.0
0.0
(0.0)
0.0
0.0
0.0
0.0
0.0
1.3
of which: Equity instruments
0.8
0.0
0.0
0.1
(0.1)
0.0
0.0
0.0
0.0
0.0
0.9
Derivative financial instruments – liabilities
1.7
0.1
0.1
0.0
0.0
0.4
(0.2)
0.0
0.1
0.0
2.1
of which: Interest rate
0.1
(0.0)
(0.0)
0.0
0.0
0.1
(0.0)
0.0
0.2
(0.0)
0.4
of which: Equity / index
1.2
0.1
0.1
0.0
0.0
0.2
(0.1)
0.0
(0.0)
0.0
1.4
of which: Credit
0.3
(0.0)
(0.0)
0.0
0.0
0.0
0.0
0.0
(0.0)
0.0
0.3
Debt issued designated at fair value
10.5
0.4
0.4
0.0
0.0
1.3
(1.3)
0.3
(0.7)
0.0
10.5
Other financial liabilities designated at fair value
0.7
0.0
0.0
0.0
0.0
0.1
(0.0)
0.0
(0.2)
(0.0)
0.6
1 Net gains / losses included
in comprehensive income are recognized
in Net interest income and
Other net income from financial
instruments measured at fair value
through profit or loss in
the Income statement,
and also in
Gains / (losses)
from own credit
on financial liabilities
designated at fair
value, before
tax in the
Statement of comprehensive
income.
2 Total
Level 3 assets as
of 31 March 2024
were USD 23.5bn
(31 December 2023: USD 33.6bn). Total Level 3 liabilities as of 31 March 2024 were USD 22.7bn (31 December 2023:
USD 23.6bn).
UBS Group first quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial
statements (unaudited)
75
Note 10
Fair value measurement (continued)
f) Financial instruments not measured
at fair value
The table
below reflects
the estimated
fair values
of financial
instruments not
measured at
fair value.
Valuation
principles applied
when determining fair
value estimates for
financial instruments not
measured at
fair value
are
consistent with those described in “Note 21
Fair value measurement” in the “Consolidated financial statements”
section of the UBS Group Annual Report 2023.
Financial instruments not measured at fair value
31.3.24
31.12.23
USD bn
Carrying
amount
Fair value
Carrying
amount
Fair value
Assets
Cash and balances at central banks
271.5
271.5
314.1
314.1
Amounts due from banks
22.1
22.2
21.2
21.2
Receivables from securities financing transactions measured at amortized
cost
101.6
101.7
99.0
99.0
Cash collateral receivables on derivative instruments
46.7
46.7
50.1
50.1
Loans and advances to customers
605.3
600.2
639.8
633.7
Other financial assets measured at amortized cost
62.8
60.7
65.5
64.0
Liabilities
Amounts due to banks
47.9
47.8
71.0
71.0
Payables from securities financing transactions measured at amortized cost
13.0
12.9
14.4
14.4
Cash collateral payables on derivative instruments
37.3
37.3
41.6
41.5
Customer deposits
764.0
764.8
792.0
792.9
Debt issued measured at amortized cost
226.3
230.9
237.8
241.3
Other financial liabilities measured at amortized cost
1
16.2
16.0
15.3
15.2
1 Excludes lease liabilities.
UBS Group first quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial
statements (unaudited)
76
Note 11
Derivative instruments
a) Derivative instruments
As of 31.3.24, 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
52.5
50.3
3,469
21,010
Credit derivatives
3.0
3.7
206
Foreign exchange
62.0
59.1
7,014
224
Equity / index
37.7
45.8
1,439
92
Commodities
3.0
2.6
152
20
Other
3
1.0
1.5
182
Total derivative financial instruments, based on netting under IFRS Accounting Standards
4
159.2
163.0
12,461
21,346
Further netting potential not recognized on the balance
sheet
5
(141.5)
(147.9)
of which: netting of recognized financial liabilities / assets
(115.7)
(115.7)
of which: netting with collateral received / pledged
(25.8)
(32.1)
Total derivative financial instruments, after consideration of further netting potential
17.7
15.2
As of 31.12.23, USD bn
Derivative financial instruments
Interest rate
55.6
52.9
3,524
20,074
Credit derivatives
4.0
4.7
275
Foreign exchange
78.7
89.9
6,913
180
Equity / index
35.5
41.4
1,397
95
Commodities
2.0
1.6
143
16
Other
3
0.4
1.6
117
Total derivative financial instruments, based on netting under IFRS Accounting Standards
4
176.1
192.2
12,369
20,366
Further netting potential not recognized on the balance
sheet
5
(162.8)
(167.9)
of which: netting of recognized financial liabilities / assets
(133.0)
(133.0)
of which: netting with collateral received / pledged
(29.8)
(35.0)
Total derivative financial instruments, after consideration of further netting potential
13.3
24.2
1 In cases where derivative
financial instruments are presented
on a net basis
on the balance sheet,
the respective notional
values of the netted
derivative financial instruments
are still presented on
a gross basis.
Notional amounts of client-cleared ETD and OTC transactions
through central clearing counterparties are not disclosed, as they
have a significantly different risk profile.
2 Other notional values relate to derivatives
that are cleared through either
a central counterparty or an
exchange and settled on a
daily basis (except for
OTC derivatives settled through collateralized-to-market arrangements, which are presented under
Derivative
financial assets and Derivative financial liabilities). The fair value of these derivatives is presented on the balance sheet net of the corresponding cash margin under Cash collateral receivables on derivative instruments
and Cash collateral payables
on derivative instruments
and was not material
for all periods presented.
3 Includes mainly Loan commitments
measured at FVTPL, as
well as unsettled purchases
and sales of non-
derivative financial instruments for which the changes in the fair value
between trade date and settlement date are recognized as derivative
financial instruments.
4 Financial assets and liabilities are presented net
on the balance sheet if UBS has the unconditional and legally enforceable right to offset the recognized amounts, both in the normal course of business and in the event of default, bankruptcy or insolvency of UBS or
its counterparties, and intends either to
settle on a net basis or to
realize the asset and settle the liability
simultaneously.
5 Reflects the netting potential
in accordance with enforceable master netting and
similar
arrangements where not all criteria for a net presentation on the balance sheet have been met. Refer to “Note 22 Offsetting financial assets and financial liabilities” in
the “Consolidated financial statements” section
of the UBS Group Annual Report 2023 for more information.
b) Cash collateral on derivative instruments
USD bn
Receivables
31.3.24
Payables
31.3.24
Receivables
31.12.23
Payables
31.12.23
Cash collateral on derivative instruments, based on netting under IFRS Accounting
Standards
1
46.7
37.3
50.1
41.6
Further netting potential not recognized on the balance
sheet
2
(28.8)
(22.6)
(32.9)
(26.4)
of which: netting of recognized financial liabilities / assets
(26.0)
(19.8)
(29.7)
(23.2)
of which: netting with collateral received / pledged
(2.8)
(2.8)
(3.2)
(3.2)
Cash collateral on derivative instruments, after consideration of further netting potential
17.9
14.7
17.2
15.2
1 Financial assets and liabilities are presented
net on the balance sheet if UBS
has the unconditional and legally enforceable
right to offset the recognized amounts,
both in the normal course of business
and in the
event of default,
bankruptcy or insolvency
of UBS or
its counterparties, and
intends either to
settle on a
net basis or
to realize the
asset and settle
the liability simultaneously.
2 Reflects the
netting potential in
accordance with enforceable
master netting and
similar arrangements where
not all criteria
for a net
presentation on the
balance sheet have
been met. Refer
to “Note 22
Offsetting financial assets
and financial
liabilities” in the “Consolidated financial statements” section of the UBS Group Annual Report 2023 for more information.
UBS Group first quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial
statements (unaudited)
77
Note
12
Other assets and liabilities
a) Other financial assets measured at amortized
cost
USD m
31.3.24
31.12.23
Debt securities
43,031
45,057
Loans to financial advisors
2,615
2,615
Fee- and commission-related receivables
2,472
2,619
Finance lease receivables
5,948
6,288
Settlement and clearing accounts
395
338
Accrued interest income
2,981
3,163
Other
1
5,308
5,418
Total other financial assets measured at amortized cost
62,750
65,498
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
31.3.24
31.12.23
Precious metals and other physical commodities
6,466
5,930
Deposits and collateral provided in connection with litigation,
regulatory and similar matters
1
2,736
2,726
Prepaid expenses
2,048
2,080
Current tax assets
1,620
1,456
VAT,
withholding tax and other tax receivables
952
1,327
Properties and other non-current assets held for sale
156
188
Other
2,239
2,342
Total other non-financial assets
16,217
16,049
1 Refer to Note 15 for more information.
c) Other financial liabilities measured at
amortized cost
USD m
31.3.24
31.12.23
Other accrued expenses
3,063
3,270
Accrued interest expenses
6,482
6,692
Settlement and clearing accounts
2,234
1,519
Lease liabilities
5,213
5,502
Other
4,364
3,868
Total other financial liabilities measured at amortized cost
21,356
20,851
d) Other financial liabilities designated at
fair value
USD m
31.3.24
31.12.23
Financial liabilities related to unit-linked investment contracts
16,612
15,992
Securities financing transactions
5,121
7,416
Over-the-counter debt instruments and other
6,407
6,076
Total other financial liabilities designated at fair value
28,140
29,484
e) Other non-financial liabilities
USD m
31.3.24
31.12.23
Compensation-related liabilities
6,530
9,746
of which: net defined benefit liability
772
796
Current tax liabilities
1,447
1,460
Deferred tax liabilities
330
325
VAT,
withholding tax and other tax payables
888
1,120
Deferred income
670
635
Other
524
802
Total other non-financial liabilities
10,388
14,089
UBS Group first quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial
statements (unaudited)
78
Note
13
Debt issued designated at fair value
USD m
31.3.24
31.12.23
Equity-linked
1
56,608
60,573
Rates-linked
25,940
28,883
Credit-linked
6,756
7,730
Fixed-rate
17,359
20,541
Commodity-linked
3,618
3,844
Other
6,525
6,718
of which: debt that contributes to total loss-absorbing capacity
4,476
4,629
Total debt issued designated at fair value
2
116,806
128,289
1 Includes investment fund unit-linked instruments issued.
2 As of 31 March 2024, 99% of Total debt issued designated at fair value was unsecured.
Note
14
Debt issued measured at amortized cost
USD m
31.3.24
31.12.23
Short-term debt
1
32,485
38,530
Senior unsecured debt
143,540
147,547
of which: contributes to total loss-absorbing capacity (TLAC)
98,973
101,939
Covered bonds
6,498
5,214
Subordinated debt
16,446
17,644
of which: eligible as high-trigger loss-absorbing additional
tier 1 capital instruments
12,021
10,744
of which: eligible as low-trigger loss-absorbing additional
tier 1 capital instruments
1,217
1,214
of which: eligible as non-Basel III-compliant tier 2 capital
instruments
537
538
Debt issued through the Swiss central mortgage institutions
25,669
27,377
Other long-term debt
1,613
1,506
Long-term debt
2
193,766
199,288
Total debt issued measured at amortized cost
3,4
226,251
237,817
1 Debt with an original contractual maturity
of less than one year,
includes mainly certificates of deposit and
commercial paper.
2 Debt with an original contractual
maturity greater than or equal to one
year. The
classification of debt
issued into
short-term and
long-term does
not consider
any early redemption
features.
3 Net of
bifurcated embedded
derivatives,
the fair value
of which
was not
material for
the periods
presented.
4 Except for Covered bonds (100% secured), Debt issued through the Swiss central mortgage institutions (100% secured) and Other long
-term debt (92% secured), 100% of the balance was unsecured
as of 31 March 2024.
Note 15
Provisions and contingent liabilities
a) Provisions and contingent liabilities
The table below presents an overview of total provisions
and contingent liabilities.
USD m
31.3.24
31.12.23
Provisions related to expected credit losses (IFRS 9,
Financial Instruments
)
1
328
350
Provisions related to Credit Suisse loan commitments (IFRS
3,
Business Combinations
)
1,667
1,924
Provisions related to litigation, regulatory and similar matters
(IAS 37,
Provisions, Contingent Liabilities and Contingent Assets
)
3,920
4,020
Acquisition-related contingent liabilities (IFRS 3,
Business Combinations
)
3,783
3,832
Restructuring, real-estate and other provisions (IAS 37,
Provisions, Contingent Liabilities and Contingent Assets
)
1,216
2,123
Total provisions and contingent liabilities
10,914
12,250
1 Refer to Note 9c for more information.
The table below presents additional information for provisions under IAS 37,
Provisions, Contingent Liabilities and
Contingent Assets
.
USD m
Litigation,
regulatory and
similar matters
1
Restructuring
2
Real estate
3
Other
4
Total
Balance as of 31 December 2023
4,020
741
259
1,123
6,144
Increase in provisions recognized in the income statement
59
122
2
20
203
Release of provisions recognized in the income statement
(15)
(44)
(2)
(796)
(857)
Provisions used in conformity with designated purpose
(102)
(155)
(4)
(12)
(273)
Foreign currency translation and other movements
(44)
(3)
(17)
(17)
(82)
Balance as of 31 March 2024
3,920
662
238
317
5,136
1 Consists of provisions for losses resulting from legal, liability and compliance risks.
2 Consists of USD 443m of provisions for onerous contracts related to real estate as of 31 March 2024 (31 December 2023: USD
448m) and USD 218m
of personnel-related restructuring provisions
as of 31 March
2024 (31 December 2023:
USD 294m).
3 Mainly includes provisions
for reinstatement costs with
respect to leased properties.
4 Mainly includes provisions related to employee benefits and operational risks.
Information about provisions and
contingent liabilities in respect of
litigation, regulatory and similar matters,
as a
class,
is
included
in
Note
15b.
There
are
no
material
contingent
liabilities
associated
with
the
other
classes
of
provisions.
UBS Group first quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial
statements (unaudited)
79
Note 15
Provisions and contingent liabilities
(continued)
b) Litigation, regulatory and similar matters
The Group operates in
a legal and regulatory
environment that exposes it to
significant litigation and similar risks
arising from disputes
and regulatory proceedings. As
a result,
UBS (which for
purposes of this
Note may
refer to
UBS
Group
AG
and/or
one
or
more
of
its
subsidiaries,
as
applicable)
is
involved
in
various
disputes
and
legal
proceedings, including litigation, arbitration,
and regulatory and criminal investigations.
Such matters are subject
to many uncertainties,
and the outcome and the
timing of resolution are
often difficult to
predict,
particularly in
the
earlier
stages
of
a
case.
There
are
also
situations
where
the Group
may
enter into
a
settlement
agreement.
This
may
occur
in
order
to
avoid
the
expense,
management
distraction
or
reputational
implications of
continuing to
contest liability,
even
for those
matters for
which
the Group
believes it
should be
exonerated. The uncertainties inherent in all such matters affect the amount and timing of any potential outflows
for both matters
with respect to
which provisions have
been established and
other contingent liabilities.
The Group
makes
provisions
for
such
matters
brought
against
it
when,
in
the
opinion
of
management
after
seeking legal
advice, it
is more
likely than
not that
the Group
has a
present legal
or constructive obligation
as a
result of
past
events, it
is probable
that an
outflow of
resources will
be required,
and the
amount can
be reliably
estimated. Where
these factors
are
otherwise satisfied,
a
provision may
be
established for
claims that
have
not
yet been
asserted
against the
Group, but
are nevertheless
expected to
be, based
on
the Group’s
experience with
similar asserted
claims.
If
any
of
those
conditions
is
not
met,
such
matters
result
in
contingent
liabilities.
If
the
amount
of
an
obligation cannot
be reliably
estimated, a
liability exists
that is
not recognized
even if
an outflow
of resources
is
probable. Accordingly, no
provision is
established even if
the potential
outflow of resources
with respect
to such
matters could be significant. Developments relating to a matter that occur after the relevant reporting period, but
prior
to
the
issuance
of
financial
statements, which
affect
management’s assessment
of
the
provision
for
such
matter
(because,
for
example,
the
developments provide
evidence of
conditions that
existed
at
the
end
of
the
reporting
period),
are
adjusting
events
after
the
reporting period
under
IAS
10
and
must
be
recognized in
the
financial statements for the reporting period.
Specific litigation, regulatory and other matters are
described below, including all such matters that
management
considers to be material and others that management believes to be of significance to the Group due to potential
financial,
reputational
and
other
effects.
The
amount
of
damages
claimed,
the
size
of
a
transaction
or
other
information is
provided where
available and
appropriate in order
to assist
users in
considering the
magnitude of
potential exposures.
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. It
is
not
practicable
to
provide
an
aggregate
estimate
of
liability
for
our
litigation, regulatory
and similar
matters as
a class
of contingent
liabilities beyond
what has
been identified
as a
consequence of
the acquisition
of Credit
Suisse as
set out
below. Doing
so would
require UBS
to provide
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. Although
UBS therefore cannot provide a
numerical estimate of the future
losses that could arise
from litigation,
regulatory and
similar matters,
UBS believes
that the
aggregate amount
of possible
future losses
from this class that are more than remote
substantially exceeds the level of current
provisions.
UBS Group first quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial
statements (unaudited)
80
Note 15
Provisions and contingent liabilities
(continued)
Litigation, regulatory
and similar
matters may
also result
in non-monetary
penalties and
consequences. A
guilty plea
to, or conviction of, a crime could have material consequences for UBS. Resolution of regulatory proceedings may
require UBS to obtain waivers of regulatory disqualifications to maintain certain operations, may entitle regulatory
authorities to limit, suspend or terminate
licenses and regulatory authorizations, and may
permit financial market
utilities to
limit, suspend
or terminate
UBS’s participation
in such
utilities. Failure
to obtain
such waivers,
or any
limitation, suspension
or termination
of licenses,
authorizations or
participations, could
have material
consequences
for UBS.
The
risk
of
loss
associated with
litigation, regulatory
and
similar matters
is
a
component of
operational risk
for
purposes of determining
capital requirements.
Information concerning
our capital requirements
and the calculation
of operational risk for this purpose is included
in the “Capital management” section
of this report.
Matters related
to Credit
Suisse entities
are separately
described herein.
The amounts
shown in
the table
below
reflect
the
provisions
recorded
under
IFRS
Accounting
Standards
accounting
principles.
In
connection
with
the
acquisition of
Credit Suisse,
UBS Group
AG additionally
has reflected
in its
purchase accounting
under IFRS
3 a
further
valuation
adjustment
of
USD
3.8bn
reflecting
an
updated
estimate
of
outflows
relating
to
contingent
liabilities for all present
obligations included in the scope
of the acquisition at
fair value upon closing, even
if it is
not probable that they will result in an
outflow of resources, significantly decreasing the recognition threshold for
litigation liabilities beyond those that generally
apply under IFRS Accounting Standards and
US GAAP.
Provisions for litigation, regulatory and similar matters
by business division and in Group Items
1
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core
and Legacy
Group Items
UBS Group
Balance as of 31 December 2023
1,235
157
15
294
2,186
134
4,020
Increase in provisions recognized in the income statement
12
0
0
1
46
0
59
Release of provisions recognized in the income statement
(1)
0
0
(2)
(12)
0
(15)
Provisions used in conformity with designated purpose
(20)
0
(12)
0
(69)
0
(102)
Foreign currency translation and other movements
(26)
(4)
0
(5)
(9)
0
(44)
Balance as of 31 March 2024
1,201
152
2
288
2,142
134
3,920
1 Provisions, if any,
for the matters described in items
A2, B8 and B10 of this Note
are recorded in Global Wealth Management
;
provisions, if any,
for the matters described in items
B1, B2, B3, B4, B5, B6,
B7, B9,
B11 and B12 of this Note are recorded in Non-core and Legacy; provisions, if any, for the matters described in items B13 and B14 of this Note are recorded in Group Items. Provisions,
if any, for the matters described
in items A1 and A4 of this Note are
allocated between Global Wealth Management and Personal & Corporate Banking; and provisions, if any, for the matters described
in item A3 are allocated between the Investment
Bank and Group Items.
A. Litigation, regulatory and similar matters
involving UBS AG and subsidiaries
- 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.
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.
UBS Group first quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial
statements (unaudited)
81
Note 15
Provisions and contingent liabilities
(continued)
Our balance sheet at 31 March
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.
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 except
those for
the recovery
of approximately
USD 125m
of payments
alleged to
be fraudulent
conveyances
and
preference
payments.
In
2016,
the
bankruptcy
court
dismissed
these
claims
against
the
UBS
entities. In 2019,
the Court of Appeals
reversed the dismissal of
the BMIS Trustee’s remaining
claims, and the US
Supreme Court
subsequently denied
a petition seeking
review of the
Court of Appeals’
decision. 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.
UBS Group first quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial
statements (unaudited)
82
Note 15
Provisions and contingent liabilities
(continued)
Foreign exchange-related civil litigation:
Putative class actions have been filed since 2013 in US federal
courts and
in other jurisdictions against
UBS and other banks on
behalf of putative classes of
persons who engaged in foreign
currency transactions with any of the defendant banks. UBS has 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
under a settlement agreement that
provides for UBS to pay an
aggregate of
USD 141m and
provide cooperation
to the
settlement classes.
Certain class
members have
excluded themselves
from that
settlement
and have
filed individual
actions in
US and
English courts
against
UBS and
other banks,
alleging
violations of
US and
European competition laws
and unjust
enrichment. UBS
and the
other banks
have resolved
those individual matters.
In
2015, 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
2022, the
court denied
plaintiffs’ motion
for class
certification. In
March
2023, the court granted defendants’ summary
judgment motion, dismissing the case. Plaintiffs
have appealed.
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 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.
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,
Euroyen
TIBOR,
Yen
LIBOR,
EURIBOR,
CHF LIBOR,
GBP
LIBOR
and
seek
unspecified
compensatory
and
other
damages
under
varying
legal
theories.
USD LIBOR class
and individual
actions in
the US:
In 2013
and 2015,
the district
court in
the USD LIBOR
actions
dismissed, in whole or in
part, certain plaintiffs’ antitrust
claims, federal racketeering claims,
Commodity Exchange
Act claims, and state common law
claims, and again dismissed the
antitrust claims in 2016 following
an appeal. In
2021, the
Second Circuit affirmed
the district court’s
dismissal in part
and reversed in
part and remanded
to the
district
court
for
further
proceedings.
The
Second
Circuit,
among
other
things,
held
that
there
was
personal
jurisdiction over
UBS and
other foreign
defendants. Separately,
in 2018,
the Second
Circuit reversed
in part
the
district court’s
2015 decision
dismissing certain
individual plaintiffs’
claims and
certain of
these actions
are now
proceeding. In
April 2024,
UBS and
the remaining
defendants
in one
of the
putative class
actions, the
USD Exchange
action, reached a settlement in
principle, subject to court approval. The USD
Exchange action sought recovery on
behalf of persons
who transacted in Eurodollar
futures and options
on Eurodollar futures on
exchanges between
2005 and May 2010. In 2020, an individual action was filed in the Northern District of California against UBS 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 LIBOR
rate and monopolized
the market for
LIBOR-based consumer loans
and
credit cards.
In September
2022, the
court granted
defendants’ motion
to dismiss
the complaint
in its
entirety, while
allowing plaintiffs the opportunity to file an amended complaint. Plaintiffs filed
an amended complaint in October
2022,
and
defendants
moved
to
dismiss
the
amended
complaint.
In
October
2023,
the
court
dismissed
the
amended complaint with prejudice. In January
2024, plaintiffs appealed the dismissal to the Ninth
Circuit Court of
Appeals. Defendants filed their response
to the appeal in March 2024.
UBS Group first quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial
statements (unaudited)
83
Note 15
Provisions and contingent liabilities
(continued)
Other benchmark class actions in the US:
Yen
LIBOR / Euroyen TIBOR
– In 2017, the court dismissed one Yen LIBOR / Euroyen TIBOR action in its entirety on
standing grounds. In
2020, the appeals
court reversed the
dismissal and, subsequently, plaintiffs
in that action
filed
an amended complaint
focused on Yen
LIBOR. In 2022,
the court granted
UBS’s motion for
reconsideration and
dismissed the case against UBS. The dismissal of the case against UBS could be appealed following
the disposition
of the case against the remaining defendant in the
district court.
CHF LIBOR
– In 2017, the court
dismissed the CHF LIBOR action on standing
grounds and failure to state a
claim.
Plaintiffs
filed
an
amended
complaint,
and
the
court
granted
a
renewed
motion
to
dismiss
in
2019.
Plaintiffs
appealed. In
2021, the
Second Circuit
granted the
parties’ joint
motion to
vacate the
dismissal and
remand the
case
for further
proceedings. Plaintiffs
filed a
third amended
complaint in
November 2022
and defendants
moved to
dismiss the amended complaint in January
2023.
EURIBOR
–
In
2017,
the
court
in
the
EURIBOR
lawsuit
dismissed
the
case
as
to
UBS
and
certain
other
foreign
defendants for lack of personal jurisdiction.
Plaintiffs have appealed.
GBP LIBOR
– The court dismissed the GBP LIBOR action
in 2019. Plaintiffs have appealed.
Government bonds:
Putative class actions
have been filed
since 2015 in
US federal courts
against UBS and
other
banks
on
behalf
of
persons
who
participated
in
markets
for
US
Treasury
securities
since
2007.
A
consolidated
complaint was filed in 2017 in the US District Court
for the Southern District of New York alleging that the banks
colluded with
respect to,
and manipulated
prices of,
US Treasury
securities sold
at auction
and in
the secondary
market and
asserting claims under
the antitrust
laws and
for unjust
enrichment. Defendants’ motions
to dismiss
the consolidated complaint
were granted in 2021.
Plaintiffs filed an amended
complaint, which defendants
moved
to dismiss later
in 2021.
In March 2022,
the court granted
defendants’ motion to
dismiss that complaint,
and in
February
2024,
the
Second
Circuit
affirmed
the
district
court’s
dismissal.
Similar
class
actions
have
been
filed
concerning European government bonds and
other government bonds.
In
2021,
the
European Commission
issued
a
decision finding
that
UBS
and
six
other
banks
breached European
Union antitrust rules in 2007–2011
relating to European government
bonds. The European Commission
fined UBS
EUR 172m. UBS is appealing the amount of the fine.
With respect
to additional
matters and
jurisdictions not
encompassed by
the settlements
and orders
referred to
above, our balance sheet
at 31 March 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
for UBS 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
31 March
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.
UBS Group first quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial
statements (unaudited)
84
Note 15
Provisions and contingent liabilities
(continued)
B. Litigation, regulatory and similar matters
involving Credit Suisse entities
- 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.
Credit
Suisse continues
to evaluate
its approach
toward satisfying
its remaining
consumer relief
obligations, and Credit
Suisse currently
anticipates that
it will
take much
longer than
the five-year
period provided
in the
settlement to
satisfy
in
full
its
obligations
in
respect
of
these
consumer
relief
measures,
subject
to
risk
appetite
and
market
conditions. Credit Suisse expects to incur costs
in relation to satisfying those obligations.
The amount of consumer
relief Credit Suisse must provide also
increases after 2021 pursuant
to the original settlement
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
– CSS LLC and/or certain of its affiliates
have also been named as 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 or anticipated future litigation exposure. Unless otherwise stated,
these amounts reflect the original
unpaid principal balance amounts
as alleged in these actions and
do not include
any reduction in principal amounts since issuance.
DLJ Mortgage Capital, Inc. (DLJ) is a defendant in New York state court in: (i)
one action brought by Asset Backed
Securities Corporation
Home Equity
Loan Trust,
Series 2006-HE7,
in which plaintiff
alleges damages
of not
less than
USD 374m in an
amended complaint filed in August 2019;
in January 2020, DLJ filed
a motion to dismiss, which
the court granted in part and denied in
part in December 2023, dismissing with prejudice all notice-based claims;
in February
2024, the
parties filed
notices of
appeal; (ii)
one action
brought by
Home Equity
Asset Trust,
Series
2006-8, in
which plaintiff
alleges damages
of not
less than
USD 436m;
(iii) one
action brought
by Home
Equity
Asset Trust 2007-1,
in which plaintiff
alleges damages of
not less
than USD 420m; in
December 2018, the
court
denied DLJ’s motion for
partial summary judgment in this
action, which was affirmed
on appeal; in
March 2022,
the New
York
State Court
of Appeals
reversed the
decision and
ordered that
DLJ’s motion
for partial
summary
judgment be granted; a non-jury trial
in the action was held
between January and February 2023, and
a decision
is pending; (iv)
one action brought by
Home Equity Asset Trust
2007-2, in which
plaintiff alleges damages of
not
less than
USD 495m; and
(v) one
action brought
by CSMC
Asset-Backed Trust 2007-NC1,
in which
no damages
amount is alleged. These actions are at various
procedural stages.
- Tax and securities law matters
In
May 2014,
Credit
Suisse AG
entered
into settlement
agreements with
several US
regulators regarding
its
US
cross-border matters. As part of the agreements, Credit Suisse AG, among other things, engaged an independent
corporate monitor
that reports
to the
New York State
Department of
Financial Services.
As of
July 2018,
the monitor
concluded both
his review
and his
assignment. Credit
Suisse AG
continues to
report
to and
cooperate with
US
authorities in
accordance with
Credit
Suisse AG’s
obligations under
the
agreements,
including by
conducting a
review
of
cross-border
services
provided
by
Credit
Suisse’s
Switzerland-based Israel
Desk.
Most
recently,
Credit
Suisse AG has provided information to US authorities regarding potentially undeclared US assets held by clients at
Credit Suisse AG since the May 2014 plea. Credit Suisse AG continues
to cooperate with the authorities. 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.
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Provisions and contingent liabilities
(continued)
In February 2021,
a qui tam
complaint was filed
in the Eastern
District of Virginia, alleging
that Credit Suisse AG
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 AG 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. The case
is now on
appeal with the
US Federal Court of Appeals for the Fourth
Circuit.
- Rates-related matters
Regulatory matters
: Regulatory authorities in a number of jurisdictions, including the US, UK, EU and Switzerland,
have for an extended period of time been conducting investigations into the setting of LIBOR and other reference
rates with
respect to
a number
of currencies,
as well
as the
pricing of
certain related
derivatives. These
ongoing
investigations have included
information requests from regulators
regarding LIBOR-setting practices
and reviews of
the activities
of various
financial institutions,
including Credit
Suisse Group
AG, which
was a
member of
three LIBOR
rate-setting panels
(US Dollar
LIBOR, Swiss
Franc LIBOR
and Euro
LIBOR). Credit
Suisse is
cooperating fully
with
these investigations.
Regulatory authorities in a number of jurisdictions, including WEKO,
the European Commission (Commission), the
South
African
Competition
Commission
and
the
Brazilian
Competition
Authority
have
been
conducting
investigations into
the
trading activities,
information sharing
and
the
setting of
benchmark
rates in
the
foreign
exchange (including electronic trading) markets.
Credit Suisse continues to cooperate
with ongoing investigations.
Credit Suisse
Group AG,
Credit Suisse
AG and
Credit Suisse
Securities (Europe)
Limited (CSSEL)
received a
Statement
of Objections and
a Supplemental Statement
of Objections
from the
Commission in
July 2018
and March 2021,
respectively, alleging
that Credit
Suisse entities
engaged in
anticompetitive practices
in connection
with their
foreign
exchange trading business.
In December
2021, the
Commission issued a
formal decision imposing
a fine
of EUR
83.3m. In February 2022, Credit Suisse appealed
this decision to the EU General Court.
The
reference
rates
investigations
have
also
included
information
requests
from
regulators
concerning
supranational, sub-sovereign
and agency
(SSA) bonds
and commodities
markets. Credit
Suisse Group
AG and
CSSEL
received a
Statement of
Objections from
the Commission
in December
2018, alleging
that Credit
Suisse entities
engaged
in
anticompetitive
practices
in
connection
with
their
SSA
bonds
trading
business.
In
April
2021,
the
Commission
issued
a
formal
decision
imposing
a
fine
of
EUR
11.9m.
In
July
2021,
Credit
Suisse
appealed
this
decision to the EU General Court.
Civil litigation:
USD LIBOR litigation
– Beginning in
2011, certain Credit
Suisse entities were
named in various
putative class and
individual lawsuits
filed in
the US,
alleging banks
on the
US dollar
LIBOR panel
manipulated US
dollar LIBOR
to
benefit their reputation
and increase
profits. All
remaining matters have
been consolidated for
pre-trial purposes
into a multi-district litigation in the US
District Court for the Southern District
of New York (SDNY).
In a series of rulings between 2013 and 2019 on motions
to dismiss, the SDNY (i) narrowed the claims against
the
Credit
Suisse
entities
and
the
other
defendants
(dismissing
antitrust,
Racketeer
Influenced
and
Corrupt
Organizations Act (RICO), Commodity Exchange Act, and
state law claims), (ii) narrowed
the set of plaintiffs who
may bring claims, and
(iii) narrowed the set
of defendants in the
LIBOR actions (including the dismissal
of several
Credit Suisse entities from
various cases on personal jurisdiction
and statute of limitation grounds).
After a number
of putative class and individual plaintiffs appealed the dismissal of their antitrust
claims to the United States Court
of Appeals
for the
Second Circuit
(Second Circuit),
in
December 2021,
the Second
Circuit affirmed
in
part and
reversed in part the district court’s decision
and remanded the case to the SDNY.
Separately, in May
2017, the
plaintiffs in three
putative class
actions moved for
class certification.
In February 2018,
the SDNY
denied certification
in
two of
the actions
and
granted certification
over a
single antitrust
claim in
an
action
brought
by
over-the-counter purchasers
of
LIBOR-linked derivatives.
In
April
2024,
Credit
Suisse and
the
remaining defendants
in one of
the putative class
actions in
which class
certification was
denied, the USD
Exchange
action, reached a settlement in
principle, subject to court approval. The USD
Exchange action sought recovery on
behalf of persons
who transacted in Eurodollar
futures and options
on Eurodollar futures on
exchanges between
2005 and May 2010.
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(continued)
USD ICE LIBOR litigation
– In August 2020,
members of the
ICE LIBOR panel,
including Credit Suisse
Group AG and
certain of its affiliates, were named
in a civil action in the
US District Court for the Northern
District of California,
alleging that
panel banks
manipulated ICE
LIBOR to
profit from
variable interest
loans and
credit cards.
In December
2021, the
court denied
plaintiffs’ motion
for preliminary
and permanent
injunctions to
enjoin panel
banks from
continuing to set
LIBOR or
automatically setting
the benchmark
to zero each
day, and
in September
2022, the
court
granted
defendants’ motions
to
dismiss.
In
October
2022,
plaintiffs
filed
an
amended
complaint.
In
November
2022,
defendants filed
a
motion
to
dismiss
the
amended
complaint. In
October
2023,
the
court
dismissed
the
amended complaint with prejudice without
leave to amend. Plaintiffs have appealed.
Foreign exchange litigation
– Credit Suisse Group AG and affiliates
as well as other financial institutions
have been
named in civil lawsuits relating to the alleged
manipulation of foreign exchange
rates.
Credit Suisse AG,
together with other
financial institutions, was
named in
a consolidated putative
class action in
Israel, which made allegations similar to the consolidated class action. In April 2022, Credit Suisse entered into an
agreement to settle all claims. The settlement
remains subject to court approval.
Treasury markets
litigation
– CSS
LLC, along
with over
20 other
primary dealers
of US
treasury securities,
was named
in a number of
putative civil class
action complaints
in the US relating
to the US
treasury markets. These
complaints
generally alleged
that the
defendants colluded
to manipulate
US treasury
auctions, as
well as
the pricing
of US
treasury securities in the
when-issued market, with impacts upon
related futures and options, and
that certain of
the defendants
participated in
a group
boycott to
prevent the
emergence of
anonymous all-to-all
trading in
the
secondary market
for treasury
securities. In
March 2022,
the SDNY
granted defendants’
motion to
dismiss and
dismissed with prejudice all claims against the
defendants, and in February 2024, the Second Circuit
affirmed the
district court’s dismissal.
SSA bonds litigation
– Credit Suisse
Group AG and
certain of its affiliates,
together with other
financial institutions,
were named in
two Canadian
putative class actions,
which allege that
defendants conspired
to fix the
prices of SSA
bonds
sold
to
and
purchased from
investors
in
the
secondary
market. One
putative
class
action
was
dismissed
against
Credit
Suisse
in
February
2020.
In
October
2022,
in
the
second
action,
Credit
Suisse
entered
into
an
agreement to settle all claims. The settlement
remains subject to court approval.
Credit default swap
auction litigation
– In June
2021, Credit
Suisse Group AG
and affiliates,
along with other
banks
and entities, were 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.
In April
2022, defendants
filed a
motion to
dismiss. In
June 2023,
the court
granted in
part and
denied in
part defendants’ motion
to dismiss.
In
November 2023,
defendants filed
a motion
to enforce
the previous
CDS settlement
with 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.
- OTC trading cases
Interest rate
swaps litigation
: Credit
Suisse Group
AG and
affiliates, along
with other
financial institutions,
have
been
named
in
a
consolidated
putative
civil
class
action
complaint
and
complaints
filed
by
individual
plaintiffs
relating
to interest
rate swaps,
alleging that
dealer defendants
conspired
with trading
platforms to
prevent
the
development of interest rate swap exchanges. The individual lawsuits were brought by TeraExchange
LLC, a swap
execution facility, and affiliates; Javelin Capital Markets LLC, a swap execution facility,
and an affiliate; and trueEX
LLC, a
swap execution
facility, which claim
to have
suffered lost
profits as
a result
of defendants’
alleged conspiracy.
All interest rate swap actions have been consolidated
in a multi-district litigation in the SDNY.
Defendants moved to dismiss the
putative class and individual actions,
and the SDNY granted
in part and denied
in part these motions.
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Provisions and contingent liabilities
(continued)
In February 2019, class plaintiffs in the consolidated multi-district litigation filed a motion
for class certification. In
March 2019,
class plaintiffs
filed a
fourth amended
consolidated class
action complaint. In
January 2022,
Credit
Suisse entered into an agreement
to settle all class
action claims. The settlement
remains subject to court
approval.
Credit
default
swaps
litigation
:
In
June
2017,
Credit
Suisse
Group
AG
and
affiliates,
along
with
other
financial
institutions, were named in a
civil action filed in
the SDNY by Tera
Group, Inc. and related
entities (Tera), alleging
violations of antitrust
law in
connection with the
allegation that CDS
dealers conspired to
block Tera’s electronic
CDS trading platform from successfully entering the market.
In July 2019, the SDNY granted in part and denied in
part
defendants’
motion
to
dismiss.
In
January
2020,
plaintiffs
filed
an
amended
complaint.
In
April
2020,
defendants filed
a
motion to
dismiss.
In August
2023, the
court granted
the motion,
dismissing all
claims with
prejudice. Plaintiffs have appealed.
Stock loan litigation
: Credit Suisse
Group AG and certain
of its affiliates,
as well as
other financial institutions,
were
originally named in
a number of
civil lawsuits in
the SDNY, certain
of which are
brought by
class action plaintiffs
alleging that the
defendants conspired to
keep stock-loan
trading in
an over-the-counter market
and collectively
boycotted certain trading platforms that sought to enter the market, and certain of
which are brought by trading
platforms
that sought
to
enter the
market alleging
that the
defendants
collectively boycotted
the platforms.
In
January 2022, Credit Suisse entered into an agreement
to settle all class action claims. In February 2022, the
court
entered an
order granting preliminary
approval to
the agreement
to settle
all class
action claims.
The settlement
remains subject to final court approval.
Odd-lot corporate bond litigation
: In April 2020, CSS LLC
and other financial institutions
were named in a putative
class action complaint
filed in the SDNY,
alleging a conspiracy
among the financial
institutions to boycott
electronic
trading platforms and fix prices in the secondary market for odd-lot corporate bonds. In October 2021, the
SDNY
granted defendants’ motion to dismiss. Plaintiffs
have appealed.
- ATA litigation
Since November 2014, a series of lawsuits have been filed
against a number of banks, including Credit Suisse AG
and, in two instances, Credit Suisse AG, New York
Branch, 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, including two that were dismissed
prior to the court allowing plaintiffs to replead.
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Note 15
Provisions and contingent liabilities
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- 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
is investigating
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. Several
parties appealed the
judgment. In June 2019,
the
Criminal
Court
of
Appeals
of
Geneva
ruled
in
the
appeal
of
the
judgment
against
the
former
relationship
manager,
upholding the main findings of
the Geneva criminal court.
Several parties appealed the
decision to the
Swiss Federal
Supreme Court.
In February
2020, the Swiss
Federal Supreme
Court rendered
its judgment on
the
appeals, substantially confirming the findings
of the Criminal Court of Appeals of
Geneva.
Civil
lawsuits
have
been
initiated
against
Credit
Suisse
AG
and/or
certain
affiliates
in
Switzerland
and
other
jurisdictions, based
on the
findings established
in the
criminal proceedings
against the
former relationship
manager.
In
Singapore,
in
the
civil
lawsuit
brought
against
Credit
Suisse
Trust
Limited,
a
Credit
Suisse
AG
affiliate,
in
May 2023, the Singapore International
Commercial Court issued a
first instance judgment finding
for the plaintiffs
and
directing
the
parties’
experts
to
agree
on
the
amount
of
the
damages
award
according
to
the
calculation
method and parameters adopted by the court. As the parties’ experts were unable to agree on the amount
of the
damages, following
court directions,
the parties
filed their
proposed draft
orders with
supporting documents
in
August 2023.
In
September 2023,
the
court
ruled
that
the
damages
under
its
May 2023
judgment
are
USD 742.73m, excluding post-judgment interest. This figure does not exclude
potential overlap with the Bermuda
proceedings against Credit Suisse
Life (Bermuda) Ltd., which
are currently being appealed.
The court ordered the
parties to
ensure that
there shall
be no
double recovery
in relation
to this
award and
any sum
recovered in
the
Bermuda proceedings.
Credit Suisse
Trust Limited
has appealed
the judgment
and has
applied for
a stay
of execution
pending that appeal. In November 2023,
the court granted a stay of execution
of its May 2023 judgment pending
appeal on
the condition
that damages
awarded and
post-judgment interest
accrued are
paid into
court deposit
within 21 days, which condition was satisfied.
In Bermuda, in the civil lawsuit brought against
Credit Suisse Life (Bermuda) Ltd., a Credit Suisse
AG affiliate, trial
took place in the Supreme Court
of Bermuda in November and December 2021. The
Supreme Court of Bermuda
issued
a
first
instance
judgment
in
March
2022,
finding
for
the
plaintiff.
In
May
2022,
the
Supreme
Court
of
Bermuda
issued
an
order
awarding
damages
of
USD
607.35m
to
the
plaintiff. In
May
2022,
Credit
Suisse
Life
(Bermuda) Ltd.
appealed the
decision to
the Bermuda
Court of
Appeal. In
July 2022,
the Supreme
Court of
Bermuda
granted a stay
of execution
of its judgment
pending appeal
on the condition
that damages awarded
were paid into
an
escrow account
within 42
days, which
condition was
satisfied. In
June
2023, the
Bermuda Court
of Appeal
issued its judgment
confirming the award
issued by the
Supreme Court of
Bermuda and upholding
the Supreme
Court of Bermuda’s
finding that Credit
Suisse Life (Bermuda)
Ltd. had breached
its contractual and
fiduciary duties,
but overturning
the Supreme
Court of
Bermuda’s
finding that
Credit Suisse
Life (Bermuda)
Ltd. had
made fraudulent
misrepresentations. In July 2023, Credit Suisse Life (Bermuda) Ltd.
filed its notice of motion for leave
to appeal to
the Judicial Committee of the Privy Council and applied for a
stay of execution of the Bermuda Court of Appeal’s
judgment pending the outcome of
the appeal to the Judicial Committee
of the Privy Council on the condition
that
the
damages
awarded
remain
within
the
escrow
account
and
that
interest
be
added
to
the
escrow
account
calculated at
the Bermuda statutory
rate of
3.5%. A
hearing on
the applications for
leave to
appeal and stay
of
execution
took
place
in
December
2023.
Further,
in
December
2023,
USD
75m
was
released
from
the
escrow
account and paid to plaintiffs. In March 2024, the Bermuda Court of Appeal granted leave to appeal and ordered
that the
current stay
shall continue
pending determination
of the
appeal to
the Judicial
Committee of
the Privy
Council until and unless the
plaintiffs provide a top tier
bank guarantee for the remaining
judgment debt of USD
536.64m plus interest. The court
further ordered Credit Suisse
Life (Bermuda) Ltd. to pay
an additional USD 29.5m
into escrow in respect of accrued interest.
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Note 15
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- Mozambique matter
Credit Suisse has
been 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 consented to the entry of
a Cease and Desist Order
by the SEC. Under the
terms of the DPA, UBS Group
AG
(as successor to Credit Suisse Group AG) must continue compliance enhancement and remediation efforts agreed
by Credit Suisse, report to the DOJ on those efforts for three years and undertake additional measures as outlined
in the DPA. If the DPA’s conditions are complied with, the charges
will be dismissed at the end of the DPA’s three-
year term.
In
addition,
CSSEL entered
into
a
Plea
Agreement and
pleaded guilty
to one
count
of conspiracy
to
violate
the
US
federal
wire
fraud
statute.
CSSEL
is
bound
by
the
same
compliance,
remediation
and
reporting
obligations under
the DPA.
The
total monetary
sanctions paid
to the
DOJ and
SEC,
taking into
account various
credits and offsets,
was approximately USD 275m. Under
the terms of
the resolution with
the DOJ, Credit
Suisse
also
paid
USD
22.6m
in
restitution
to
eligible
investors
in
the
2016
Eurobonds
issued
by
the
Republic
of
Mozambique.
In
connection with
the resolution
with the
FCA, Credit
Suisse paid
a
penalty of
approximately USD
200m
and,
further to an agreement with the FCA, forgave
USD 200m of debt owed to Credit Suisse by
Mozambique.
The
FINMA
decree
concluding its
enforcement proceeding,
ordered
the
bank
to
remediate
certain
deficiencies.
Credit
Suisse’s
implementation
of
the
measures
required
under
the
FINMA
decree
has
been
reviewed
by
an
independent third
party appointed
by FINMA,
which review
recommends some
enhancements to
the measures
that
Credit Suisse has implemented. FINMA also arranged for certain existing
transactions to be reviewed by the same
independent third party on the basis of specific risk criteria, and required enhanced disclosure of certain sovereign
transactions.
In February 2019, certain Credit
Suisse entities, three former employees and
several other unrelated entities were
sued in the English High
Court by the Republic of
Mozambique seeking a declaration
that the sovereign guarantee
issued
in
connection
with
the
ProIndicus
loan
syndication
was
void,
and
damages.
Credit
Suisse
entities
subsequently filed cross
claims against several entities
controlled by Privinvest
Holding SAL (Privinvest)
that acted as
the project contractor,
Iskandar Safa, the
owner of Privinvest,
and several Mozambique
officials. In addition,
several
of the banks that participated
in the ProIndicus loan
syndicate brought claims
against Credit Suisse entities
seeking
a declaration that Credit Suisse is liable to compensate
them for alleged losses suffered as a result of any invalidity
of the
sovereign guarantee
or damages
stemming from
the alleged
loss. In
September 2023,
Credit Suisse,
the
Republic of
Mozambique,
and certain
of the
lenders in
the ProIndicus
syndicate entered
into a
settlement agreement
that, with the subsequent settlement with Privinvest entities referred to below, resolved
all claims involving Credit
Suisse entities in the English High Court.
In February 2022, Privinvest and Iskandar Safa brought a defamation claim in a Lebanese court against CSSEL and
Credit Suisse Group AG
and in November 2022, a
Privinvest employee who was the
lead negotiator on behalf
of
the Privinvest
entities in
relation to
the Mozambique
transactions, also
brought a
defamation claim
in the
same
court against
those entities.
In November
2023, UBS
Group AG (as
successor to
Credit Suisse
Group AG),
the Credit
Suisse entities,
Privinvest and
Iskandar Safa
entered into
an agreement
to settle
all claims
among them
in the
English
High Court and in Lebanon.
UBS Group first quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial
statements (unaudited)
90
Note 15
Provisions and contingent liabilities
(continued)
- Cross-border private banking matters
Credit
Suisse
offices
in
various
locations,
including
the
UK,
the
Netherlands,
France
and
Belgium,
have
been
contacted
by
regulatory
and
law
enforcement
authorities
that
are
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.
Credit Suisse has
conducted a
review of these
issues, the
UK and
French aspects
of which
have been closed, and is continuing to cooperate
with the authorities.
- 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
due December
4, 2030
(XIV ETNs).
In August
2018, plaintiffs
filed a
consolidated amended
class action complaint, naming Credit
Suisse Group AG and
certain affiliates and executives, which
asserts claims
for violations of
Sections 9(a)(4), 9(f), 10(b)
and 20(a) of
the US Securities
Exchange Act of
1934 and Rule
10b-5
thereunder and
Sections 11
and 15
of the
US Securities
Act of
1933 and
alleges that
the defendants
are responsible
for losses to investors following a decline in the value of XIV ETNs in February 2018. Defendants moved
to dismiss
the amended complaint in November 2018. In September
2019, the SDNY granted defendants’ motion to dismiss
and dismissed with prejudice all claims against the
defendants. In October 2019, plaintiffs filed a notice
of appeal.
In April 2021,
the Second Circuit
issued an order
affirming in part
and vacating in
part the SDNY’s
September 2019
decision
granting
defendants’ motion
to
dismiss
with
prejudice.
In
July
2022,
plaintiffs
filed
a
motion
for
class
certification. In
March 2023,
the court
denied plaintiffs’
motion to
certify two
of their
three alleged
classes and
granted plaintiffs’ motion to certify
their third alleged class. In March 2023, defendants
moved for reconsideration
and filed a
petition for permission
to appeal the
court’s class certification
decision to the
Second Circuit. In
April
2023,
plaintiffs
filed a
motion
seeking leave
to amend
their
complaint. In
May 2023,
plaintiffs
filed a
renewed
motion for class certification, which
defendants have opposed. In January
2024, the court issued an
order denying
plaintiffs’ motion to amend.
In March 2024, the
court denied plaintiffs’
renewed motion to
certify two of
the three
alleged classes, without
prejudice, and
denied defendants’ motion
for reconsideration on
the certification of
the
third alleged class.
DGAZ litigation
: In
January 2022,
Credit Suisse
AG was
named in
a class
action complaint
filed in
the SDNY
brought
on behalf of a putative class
of short sellers of VelocityShares
3x Inverse Natural Gas Exchange
Traded Notes linked
to the
S&P GSCI
Natural Gas
Index ER
due February
9, 2032
(DGAZ ETNs).
The complaint
asserts claims
for violations
of Section
10(b) of
the US
Securities Exchange
Act
of 1934
and Rule
10b-5 thereunder
and alleges
that Credit
Suisse is
responsible for
losses suffered
by short
sellers following
a June
2020 announcement
that Credit
Suisse
would delist
and suspend
further issuances
of the
DGAZ ETNs.
In July
2022, Credit
Suisse AG
filed a
motion to
dismiss. In March
2023, the court
granted Credit Suisse
AG’s motion to
dismiss. In May
2023, the court entered
an
order dismissing
the case
with prejudice.
In February
2024, the
Second Circuit
affirmed the
district court’s
dismissal.
- Bulgarian former clients matter
Credit
Suisse
AG
has
been responding
to an
investigation by
the
Swiss Office
of
the
Attorney General
(SOAG)
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 December
2020, the
SOAG brought
charges
against
Credit
Suisse
AG
and
other
parties.
Credit
Suisse
AG
believes
its
diligence
and
controls
complied with
applicable legal requirements and intends to defend
itself vigorously.
The trial in the Swiss Federal Criminal Court
took place in the first quarter of 2022. In June 2022,
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.
In July
2022,
Credit Suisse AG appealed the decision to the Swiss
Federal Court of Appeals.
- SCFF
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
(SCFF) 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.
UBS Group first quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial
statements (unaudited)
91
Note 15
Provisions and contingent liabilities
(continued)
In
February
2023,
FINMA
announced
the
conclusion
of
its
enforcement
proceedings
against
Credit
Suisse
in
connection with the SCFF 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
has
already
taken
extensive
organizational
measures
based
on
its
own
investigation into the
SCFF matter, particularly
to strengthen its
governance and control
processes, and FINMA
is
supportive
of
these
measures,
the
regulator
has
ordered
certain
additional
remedial
measures.
These
include
a
requirement that the most
important (approximately 500)
business relationships must be
reviewed periodically and
holistically at
the Credit
Suisse Executive
Board level,
in particular
for counterparty
risks, and that
Credit Suisse
must
set up a document
defining the responsibilities
of approximately 600 of
its highest-ranking managers.
The latter of
these measures
has been
made applicable
to UBS
Group. Separate
from the
enforcement proceeding
regarding
Credit Suisse, FINMA has 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 SCFF
matter.
The Attorney
General of
the Canton
of Zurich
has initiated
a criminal
procedure in
connection with
the SCFF
matter
and several fund investors have joined the procedure
as interested parties. In such procedure, while certain
former
and active Credit Suisse employees,
among others, have been named
as accused persons, Credit
Suisse itself is not
a party to the procedure.
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.
- Archegos
Credit
Suisse
has
received
requests
for
documents
and
information
in
connection
with
inquiries,
investigations
and/or actions
relating
to Credit
Suisse’s relationship
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. Credit Suisse is cooperating
with the authorities in these matters.
In July 2023,
the US Federal
Reserve and the
PRA announced resolutions of
their investigations of Credit
Suisse’s
relationship with Archegos. UBS Group AG, Credit Suisse AG, Credit Suisse Holdings (USA) Inc., and Credit Suisse
AG, New
York Branch
entered into
an Order
to Cease
and Desist
with the
Board of
Governors of
the Federal
Reserve
System. Under
the terms
of the
order, Credit
Suisse paid
a civil
money penalty
of USD
269m 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.
CSI
and
CSSEL
entered
into
a
settlement
agreement
with
the
PRA
providing
for
the
resolution
of
the
PRA’s
investigation, following which
the PRA
published a Final
Notice imposing a
financial penalty of
GBP 87m
on CSI
and CSSEL for breaches of various of the PRA’s
Fundamental Rules.
FINMA also entered
a decree
dated 14 July
2023 announcing
the conclusion
of its enforcement
proceeding, finding
that
Credit
Suisse
had
seriously
violated
financial
market
law
in
connection
with
its
business
relationship
with
Archegos and ordering remedial measures directed at Credit Suisse AG and UBS Group AG, as the legal successor
to
Credit
Suisse
Group
AG.
These
include
a
requirement
that
UBS
Group
AG
apply
its
restrictions
on
its
own
positions relating to individual clients throughout the financial group, as well as adjustments to the compensation
system of
the entire
financial group
to provide
for bonus
allocation criteria
that take
into account
risk appetite.
FINMA
also
announced
it
has
opened
enforcement
proceedings
against
a
former
Credit
Suisse
manager
in
connection with this matter.
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.
UBS Group first quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial
statements (unaudited)
92
Note 15
Provisions and contingent liabilities
(continued)
- Credit Suisse financial disclosures
Credit Suisse
Group AG
and certain
directors, officers
and executives
have been
named in
securities class action
complaints pending
in the SDNY. These complaints,
filed on behalf
of purchasers of
Credit Suisse shares, additional
tier 1 capital notes, and other securities
in 2023, allege that defendants made
misleading statements regarding: (i)
customer
outflows
in
late
2022;
(ii)
the
adequacy
of
Credit
Suisse’s
financial
reporting
controls;
and
(iii)
the
adequacy of
Credit
Suisse’s risk
management processes,
and include
allegations relating
to Credit
Suisse Group
AG’s merger with UBS Group AG. Many of the actions have been consolidated, and a motion to dismiss has
been
filed and remains pending. One
additional action, filed
in October 2023, has been
stayed pending a determination
on whether it should be consolidated with the
earlier actions.
Credit Suisse has received requests for documents and information from regulatory and governmental agencies in
connection with inquiries,
investigations and/or actions
relating to
these matters, as
well as
for other statements
regarding
Credit
Suisse’s
financial
condition,
including
from
the
SEC,
the
DOJ
and
FINMA.
Credit
Suisse
is
cooperating with the authorities in these matters.
- Merger-related litigation
Certain Credit
Suisse Group AG
affiliates and certain
directors, officers
and executives have
been named in
class
action complaints pending in
the SDNY.
One complaint, brought
on behalf of
Credit Suisse shareholders,
alleges
breaches of fiduciary duty
under Swiss law and
civil RICO claims
under United States
federal law. In February 2024,
the court granted
defendants’ motions to
dismiss the civil
RICO claims and
conditionally dismissed the Swiss
law
claims pending defendants’ acceptance of jurisdiction in Switzerland. In March 2024, having received consents to
Swiss jurisdiction from all defendants served
with the complaint, the court dismissed the Swiss
law claims against
those defendants.
Additional complaints,
brought
on behalf
of holders
of Credit
Suisse additional
tier 1
capital
notes (AT1
noteholders) allege
breaches of
fiduciary duty
under Swiss
law,
arising from
a series
of scandals
and
misconduct, which
led to Credit
Suisse Group AG’s
merger with
UBS Group AG,
causing losses
to shareholders
and
AT1 noteholders. The motion to dismiss the first of these complaints
was granted in March 2024 on the basis that
Switzerland and not New York is the most appropriate forum for litigation.
UBS Group first quarter 2024 report |
Significant regulated subsidiary and sub-group
information
93
Significant regulated subsidiary
and sub-group information
Unaudited
Financial and regulatory key figures for our significant regulated
subsidiaries and sub-groups
UBS AG
(consolidated)
UBS AG
(standalone)
UBS Switzerland AG
(standalone)
UBS Europe SE
(consolidated)
UBS Americas Holding
LLC
(consolidated)
All values in million, except where indicated
USD
USD
CHF
EUR
USD
Financial and regulatory requirements
IFRS Accounting Standards
Swiss SRB rules
IFRS Accounting
Standards
Swiss SRB rules
Swiss GAAP
Swiss SRB rules
IFRS Accounting
Standards
EU regulatory rules
US GAAP
US Basel III rules
As of or for the quarter ended
31.3.24
31.12.23
31.3.24
31.12.23
31.3.24
31.12.23
31.3.24
31.12.23
1
31.3.24
31.12.23
Financial information
2
Income statement
Total operating income
3
9,056
7,951
2,365
2,254
2,463
2,275
300
293
3,658
3,333
Total operating expenses
7,677
7,618
2,203
2,205
1,605
1,562
236
255
3,562
3,422
Operating profit / (loss) before tax
1,379
333
163
49
858
713
64
38
96
(89)
Net profit / (loss)
1,014
242
216
(48)
698
586
22
21
22
(63)
Balance sheet
Total assets
1,116,806
1,156,016
676,385
698,149
320,367
314,231
47,872
46,981
194,508
194,258
Total liabilities
1,061,443
1,100,448
621,007
642,602
303,744
298,305
43,779
42,894
169,532
169,319
Total equity
55,363
55,569
55,379
55,546
16,624
15,926
4,093
4,087
24,976
24,939
Capital
4
Common equity tier 1 capital
43,863
44,130
51,971
52,553
12,630
12,515
2,619
2,625
14,136
14,081
Additional tier 1 capital
14,204
12,498
14,204
12,498
5,000
5,000
600
600
2,838
2,837
Total going concern capital / Tier 1 capital
58,067
56,628
66,175
65,051
17,630
17,515
3,219
3,225
16,975
16,919
Tier 2 capital
537
538
532
533
199
202
Total capital
3,219
3,225
17,174
17,120
Total gone concern loss-absorbing capacity
54,773
54,458
54,768
54,452
11,243
11,176
2,528
5
2,534
5
7,400
6
7,400
6
Total loss-absorbing capacity
112,840
111,086
120,943
119,504
28,872
28,691
5,747
5,759
24,375
6
24,319
6
Risk-weighted assets and leverage
ratio denominator
4
Risk-weighted assets
328,732
333,979
356,821
354,083
111,292
107,097
12,718
12,382
75,897
73,096
Leverage ratio denominator
1,078,591
1,104,408
641,315
643,939
337,653
330,515
48,796
45,078
183,701
184,015
Supplementary leverage ratio denominator
209,750
208,242
Capital and leverage ratios (%)
4
Common equity tier 1 capital ratio
13.3
13.2
14.6
14.8
11.3
11.7
20.6
21.2
18.6
19.3
Going concern capital ratio / Tier 1 capital ratio
17.7
17.0
18.5
18.4
15.8
16.4
25.3
26.0
22.4
23.1
Total capital ratio
25.3
26.0
22.6
23.4
Total loss-absorbing capacity ratio
34.3
33.3
25.9
26.8
45.2
46.5
32.1
33.3
Tier 1 leverage ratio
6.6
7.2
9.2
9.2
Supplementary tier 1 leverage ratio
8.1
8.1
Going concern leverage ratio
5.4
5.1
10.3
10.1
5.2
5.3
Total loss-absorbing capacity leverage ratio
10.5
10.1
8.6
8.7
11.8
12.8
13.3
13.2
Gone concern capital coverage ratio
105.9
112.5
Liquidity coverage ratio
4
High-quality liquid assets (bn)
251.0
254.5
123.7
130.0
77.5
76.3
18.3
18.9
28.4
28.0
Net cash outflows (bn)
131.3
134.3
46.1
50.4
54.4
53.6
12.4
12.8
18.9
18.9
Liquidity coverage ratio (%)
191.4
189.7
268.7
7
260.2
142.5
8
142.5
147.9
148.7
149.9
147.7
Net stable funding ratio
4
Total available stable funding (bn)
589.3
602.6
274.6
279.8
224.6
222.7
13.6
13.9
107.4
107.9
Total required stable funding (bn)
484.7
503.8
288.3
304.9
166.8
166.1
11.1
10.6
80.3
81.7
Net stable funding ratio (%)
121.6
119.6
95.2
9
91.7
134.6
9
134.1
122.6
131.5
133.7
132.1
Other
Joint and several liability between UBS AG and
UBS Switzerland AG (bn)
10
3
3
1 Comparative figures have
been restated to align
with the regulatory reports as
submitted to the European
Central Bank (the ECB).
2 The financial information
disclosed does not represent
financial statements
under the respective GAAP / IFRS Accounting Standards.
3 The total operating income includes credit
loss expense or release.
4 Refer to the 31 March 2024 Pillar 3 Report, available
under “Pillar 3 disclosures”
at ubs.com/investors,
for more
information.
5 Consists of
positions that
meet the
conditions laid
down in
Art. 72a–b of
the Capital
Requirements Regulation
II with
regard to
contractual, structural
or legal
subordination.
6 Consists of eligible long-term debt that meets the
conditions specified in 12 CFR § 252.162 of
the final TLAC rules. Total
loss-absorbing capacity is the sum of tier 1
capital and eligible long-term
debt.
7 In the first quarter of 2024, the liquidity coverage ratio (the LCR) of UBS AG was 268.7%, remaining above the prudential requirements communicated by FINMA.
8 In the first quarter of 2024, the LCR of
UBS Switzerland AG, which is a Swiss SRB, was
142.5%, remaining above the prudential requirement communicated by FINMA in connection with the
Swiss Emergency Plan.
9 In accordance with Art. 17h para. 3
and 4 of the Liquidity Ordinance, UBS AG standalone is required to maintain a minimum
NSFR of at least 80% without taking into account excess funding of UBS Switzerland AG
and 100% after taking into account
such excess funding.
10 Refer to the “Capital, liquidity and
funding, and balance sheet” section of this report
for more information about the joint and several liability. Under certain circumstances, the Swiss
Banking
Act and FINMA’s Banking Insolvency Ordinance
authorize FINMA to modify, extinguish or convert to common equity liabilities of a bank in connection with
a resolution or insolvency of such bank.
UBS Group first quarter 2024 report |
Significant regulated subsidiary and sub-group
information
94
UBS Group AG
is
a
holding
company
and
conducts
substantially
all
of
its
operations
through
UBS AG,
Credit Suisse AG
and
subsidiaries
thereof.
UBS Group AG,
UBS AG
and
Credit Suisse AG
have
contributed
a
significant portion
of their
respective capital
to, and
provide substantial
liquidity to,
such subsidiaries.
Many of
these
subsidiaries
are
subject
to
regulations
requiring
compliance
with
minimum
capital,
liquidity
and
similar
requirements.
The
table
in
this
section
summarizes
the
regulatory
capital components
and
capital
ratios of
our
significant regulated subsidiaries and sub-groups determined under the regulatory framework of each subsidiary’s
or sub-group’s home jurisdiction.
Supervisory authorities generally have discretion to impose higher requirements or
to otherwise limit the activities
of subsidiaries. Supervisory
authorities also may
require entities to
measure capital
and leverage ratios
on a stressed
basis and may limit
the ability of
an entity to engage
in new activities or
take capital actions
based on the results
of
those tests.
In June 2023, the Federal Reserve Board released
the results of its 2023 Dodd–Frank Act
Stress Test (DFAST). UBS’s
US
intermediate holding
company, UBS
Americas Holding
LLC, and
Credit
Suisse’s intermediate
holding, Credit
Suisse
Holdings
(USA),
Inc.,
exceeded
the
minimum
capital
requirements
under
the
severely
adverse
scenario.
Following the completion
of the
annual DFAST and
the Comprehensive Capital
Analysis and Review
(the CCAR),
UBS Americas Holding LLC was assigned a stress capital buffer (an SCB) of 9.1% (previously 4.8%) under the SCB
rule as of
1 October 2023, resulting in
a total common equity
tier 1 (CET1) capital
requirement of 13.6%. Credit
Suisse
Holdings
(USA),
Inc.
was
assigned
an
SCB
of
7.2%
(previously
9.0%),
resulting
in
a
total
CET1
capital
requirement of 11.7%.
Additional information on
the above
entities is
provided in
the 31 March 2024
Pillar 3 Report,
which is
available
under “Pillar 3 disclosures” at
ubs.com/investors
.
UBS Group first quarter 2024 report |
Significant regulated subsidiary and sub-group
information
95
Credit Suisse AG
(consolidated)
Credit Suisse AG
(standalone)
Credit Suisse
(Schweiz) AG
(consolidated)
Credit Suisse
(Schweiz) AG
(standalone)
Credit Suisse
International
(standalone)
Credit Suisse
Holdings (USA), Inc.
(consolidated)
All values in million, except where
indicated
CHF
CHF
CHF
CHF
USD
USD
Financial and regulatory requirements
US GAAP
Swiss SRB rules
Swiss SRB rules
(phase-in)
Swiss SRB rules
Swiss SRB rules
UK regulatory rules
US Basel III rules
As of or for the quarter ended
31.3.24
31.12.23
31.3.24
31.12.23
31.3.24
31.12.23
31.3.24
31.12.23
31.3.24
31.12.23
31.3.24
31.12.23
Financial information
1
Income statement
Total operating income
2
1,606
1,268
Total operating expenses
3,011
4,005
Operating profit / (loss) before tax
(1,405)
(2,737)
Net profit / (loss)
(1,501)
(2,749)
Balance sheet
Total assets
420,376
452,507
Total liabilities
382,177
414,391
Total equity
38,199
38,116
Capital
3
Common equity tier 1 capital
38,382
38,187
32,941
33,346
11,016
11,051
10,397
10,396
12,896
12,689
8,394
9,387
Additional tier 1 capital
466
458
466
458
3,100
3,100
3,100
3,100
1,200
1,200
522
522
Total going concern capital / Tier 1 capital
38,848
38,646
33,407
33,805
14,116
14,151
13,497
13,496
14,096
13,889
8,917
9,909
Tier 2 capital
0
0
58
78
Total capital
14,096
13,889
8,974
9,987
Total gone concern loss-absorbing
capacity
37,933
38,284
37,865
38,216
8,846
9,040
8,882
9,066
4,586
4,586
3,000
3,000
Total loss-absorbing capacity
76,782
76,930
71,272
72,021
22,962
23,191
22,379
22,562
18,682
18,475
11,917
12,909
Risk-weighted assets and
leverage ratio denominator
3
Risk-weighted assets
173,285
181,690
188,418
182,772
82,172
83,254
81,504
82,611
28,068
34,698
10,427
12,979
Leverage ratio denominator
485,606
524,968
282,144
288,610
246,156
253,818
243,924
251,692
67,069
78,135
25,799
29,484
Supplementary leverage ratio denominator
28,043
34,370
Capital and leverage ratios (%)
3
Common equity tier 1 capital ratio
22.1
21.0
17.5
18.2
13.4
13.3
12.8
12.6
45.9
36.6
80.5
72.3
Going concern capital ratio / Tier 1 capital
ratio
22.4
21.3
17.7
18.5
17.2
17.0
16.6
16.3
50.2
40.0
85.5
76.4
Total capital ratio
50.2
40.0
86.1
77.0
Total loss-absorbing capacity ratio
44.3
42.3
27.9
27.9
27.5
27.3
66.6
53.2
114.3
99.5
4
Tier 1 leverage ratio
21.0
17.8
34.6
33.6
Supplementary tier 1 leverage ratio
31.8
28.8
Going concern leverage ratio
8.0
7.4
11.8
11.7
5.7
5.6
5.5
5.4
Total loss-absorbing capacity leverage
ratio
15.8
14.7
9.3
9.1
9.2
9.0
27.9
23.6
46.2
43.8
4
Gone concern capital coverage ratio
139.2
143.4
Liquidity coverage ratio
3
High-quality liquid assets (bn)
149.6
142.6
78.7
67.3
56.9
52.1
56.9
52.0
14.6
15.4
11.0
12.6
Net cash outflows (bn)
56.8
53.8
17.5
17.1
37.6
34.4
38.0
34.9
4.5
6.0
5.6
6.6
Liquidity coverage ratio (%)
263.3
5
265.1
449.1
6
393.6
151.3
7
151.3
149.6
8
149.3
340.3
280.3
199.5
195.1
Net stable funding ratio
3
Total available stable funding (bn)
272.9
287.1
160.1
160.3
133.5
128.5
131.8
126.8
26.7
30.4
15.1
15.3
Total required stable funding (bn)
199.4
213.1
129.5
121.6
116.9
118.7
115.4
116.7
20.0
24.2
7.2
8.6
Net stable funding ratio (%)
136.9
134.7
123.6
9
131.8
9
114.2
108.3
114.2
9
108.7
9
136.7
125.6
210.3
179.1
Other
Joint and several liability between Credit
Suisse AG standalone and Credit Suisse
(Schweiz) AG standalone (bn)
10
0.6
0.5
1 The financial information disclosed does not represent financial statements under the respective GAAP / IFRS Accounting Standards.
2 The total operating income includes credit loss expense or release.
3 Refer
to the 31 March 2024 Pillar 3 Report, available under “Pillar 3
disclosures” at ubs.com/investors, for more
information.
4 Comparative information has been aligned with final audited
data.
5 In the first quarter
of 2024, the liquidity coverage ratio (the LCR) of Credit Suisse AG consolidated was 263.3%, remaining above the prudential requirements communicated by FINMA.
6 In the first quarter of 2024, the LCR of Credit
Suisse AG standalone was 449.1%, remaining above the
prudential requirements communicated by FINMA.
7 In the first quarter of 2024, the
LCR of Credit Suisse (Schweiz) AG consolidated was 151.3%, remaining
above the prudential requirements
communicated by FINMA.
8 In the first quarter
of 2024, the LCR
of Credit Suisse (Schweiz)
AG standalone was 149.6%, remaining
above the prudential requirements
communicated
by FINMA.
9 In accordance with Art. 17h para. 3
and 4 of the Liquidity Ordinance, Credit
Suisse AG standalone is allowed to fulfill
the minimum NSFR of 100% by
taking into consideration any excess funding
of
Credit Suisse (Schweiz) AG standalone, and Credit Suisse AG standalone has an NSFR requirement of at least 80% without taking into
consideration any such excess funding. Credit Suisse (Schweiz) AG must always
fulfill an NSFR of at least 100% on a
standalone basis.
10 The contingent liabilities of Credit Suisse (Schweiz) AG under this joint and several liability were fully
collateralized through cash deposits from Credit Suisse
AG.
UBS Group first quarter 2024 report |
Appendix
96
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
Active Digital Banking clients in
Corporate & Institutional Clients (%)
– Personal & Corporate Banking
Calculated as the average number of active
clients for
each month in the relevant period divided by the
average number of total clients. “Clients” refers
to
the number of unique business relationships or legal
entities operated by Corporate & Institutional
Clients,
excluding clients that do not have an account,
mono-
product clients and clients that have defaulted on
loans or credit facilities. At the end of each month,
any client that has logged on at least once in
that
month is determined to be “active” (a log-in
time
stamp is allocated to all business relationship numbers
or per legal entity in a digital banking contract).
This measure provides information about the
proportion of active Digital Banking clients in the total
number of UBS clients (within the aforementioned
meaning) which are serviced by Corporate &
Institutional Clients.
Active Digital Banking clients in
Personal Banking (%)
– Personal & Corporate Banking
Calculated as the average number of active
clients for
each month in the relevant period divided by the
average number of total clients. “Clients” refers
to
the number of unique business relationships operated
by Personal Banking, excluding persons
under the age
of 15, clients who do not have a private account,
clients domiciled outside Switzerland and clients
who
have defaulted on loans or credit facilities. At the
end
of each month, any client that has logged on
at least
once in that month is determined to be “active”
(a
log-in time stamp is allocated to all business
relationship numbers in a digital banking contract).
This measure provides information about the
proportion of active Digital Banking clients in the total
number of UBS clients (within the aforementioned
meaning) who are serviced by Personal Banking.
Active Mobile Banking clients in
Personal Banking (%)
– Personal & Corporate Banking
Calculated as the average number of active
clients for
each month in the relevant period divided by the
average number of total clients. “Clients” refers
to
the number of unique business relationships operated
by Personal Banking, excluding persons
under the age
of 15, clients who do not have a private account,
clients domiciled outside Switzerland and clients
who
have defaulted on loans or credit facilities. At the
end
of each month, any client that has logged on
via the
mobile app at least once in that month is determined
to be “active” (a log-in time stamp is allocated
to all
business relationship numbers in a digital banking
contract).
This measure provides information about the
proportion of active Mobile Banking clients in the
total number of UBS clients (within the
aforementioned meaning) who are serviced by
Personal Banking.
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 gross income.
Fee and trading income for Corporate
&
Institutional Clients (USD and CHF)
– Personal & Corporate Banking
Calculated as the total of recurring net fee and
transaction-based income for Corporate &
Institutional Clients.
This measure provides information about the amount
of fee and trading income for Corporate
&
Institutional Clients.
UBS Group first quarter 2024 report |
Appendix
97
APM label
Calculation
Information content
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.
Investment products for Personal
Banking (USD and CHF)
– Personal & Corporate Banking
Calculated as the sum of investment funds
(including
UBS Vitainvest third-pillar pension funds, as
well as
money market funds), mandates and third-party life
insurance operated in Personal Banking.
This measure provides information about the volume
of investment funds (including UBS Vitainvest
third-
pillar pension funds, as well as money
market funds),
mandates and third-party life insurance operated in
Personal Banking.
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.
UBS Group first quarter 2024 report |
Appendix
98
APM label
Calculation
Information content
Net new investment products for
Personal Banking (USD and CHF)
– Personal & Corporate Banking
Calculated as the net amount of inflows and
outflows
of investment products during a specific period.
This measure provides information about the
development of investment products during a specific
period as a result of net new investment product
flows.
Net new money (USD)
– Global Wealth Management,
Asset Management
Calculated as the net amount of inflows and
outflows
of invested assets (as defined in UBS policy) recorded
during a specific period. Excluded from the calculation
are movements due to market performance, foreign
exchange translation, dividends, interest and fees,
as
well as the effects on invested assets of strategic
decisions by UBS to exit markets
or services. Net new
money is not measured for Personal & Corporate
Banking.
This measure provides information about the
development of invested assets during a
specific
period as a result of net new money flows.
Net new money growth rate (%)
– Global Wealth Management
Calculated as the net amount of inflows and
outflows
of invested assets (as defined in UBS policy) recorded
during a specific period (annualized as applicable)
divided by total invested assets at the beginning
of
the period.
This measure provides information about the growth
of invested assets during a specific period
as a result
of net new money flows.
Net profit growth (%)
Calculated as the change in net profit attributable
to
shareholders from continuing operations between
current and comparison periods divided by net profit
attributable to shareholders from continuing
operations of the comparison period.
This measure provides information about profit
growth since the comparison period.
Operating expenses (underlying)
(USD)
Calculated by adjusting operating expenses
as
reported in accordance with IFRS Accounting
Standards for items that management believes
are
not representative of the underlying performance of
the businesses.
›
Refer to the “Group performance” section of this
report for more information
This measure provides information about the amount
of operating expenses, while excluding items
that
management believes are not representative of the
underlying performance of the businesses.
Operating profit / (loss) before tax
(underlying) (USD)
Calculated by adjusting operating profit / (loss) before
tax as reported in accordance with IFRS Accounting
Standards for items that management believes
are
not representative of the underlying performance of
the businesses.
›
Refer to the “Group performance” section of this
report for more information
This measure provides information about the amount
of operating profit / (loss) before tax, while excluding
items that management believes are not
representative of the underlying performance of the
businesses.
Pre-tax profit growth (%)
– Global Wealth Management,
Personal & Corporate Banking,
Asset Management,
the Investment Bank
Calculated as the change in net profit before tax
attributable to shareholders from continuing
operations between current and comparison periods
divided by net profit before tax attributable to
shareholders from continuing operations of the
comparison period.
This measure provides information about pre-tax
profit growth since the comparison period.
Pre-tax profit growth (underlying) (%)
– Global Wealth Management,
Personal & Corporate Banking,
Asset Management,
the Investment Bank
Calculated as the change in net profit before tax
attributable to shareholders from continuing
operations between current and comparison periods
divided by net profit before tax attributable to
shareholders from continuing operations of the
comparison period. Net profit before tax attributable
to shareholders from continuing operations excludes
items that management believes are not
representative of the underlying performance of the
businesses and also excludes related tax impact.
This measure provides information about pre-tax
profit growth since the comparison period, while
excluding items that management believes
are not
representative of the underlying performance of the
businesses.
Recurring net fee income
(USD and CHF)
– Global Wealth Management,
Personal & Corporate Banking
Calculated as the total of fees for services provided
on
an ongoing basis, such as portfolio management
fees,
asset-based investment fund fees and custody
fees,
which are generated on client assets, and
administrative fees for accounts.
This measure provides information about the amount
of recurring net fee income.
Return on attributed equity
1
(%)
Calculated as annualized business division
operating
profit before tax divided by average attributed equity.
This measure provides information about the
profitability of the business divisions in relation to
attributed equity.
Return on common equity tier 1
capital
1
(%)
Calculated as annualized net profit attributable to
shareholders divided by average common equity
tier 1
capital.
This measure provides information about the
profitability of the business in relation to common
equity tier 1 capital.
Return on equity
1
(%)
Calculated as annualized net profit attributable to
shareholders divided by average equity attributable
to
shareholders.
This measure provides information about the
profitability of the business in relation to equity.
Return on leverage ratio denominator,
gross
1
(%)
Calculated as annualized total revenues divided by
average leverage ratio denominator.
This measure provides information about the revenues
of the business in relation to the leverage ratio
denominator.
UBS Group first quarter 2024 report |
Appendix
99
APM label
Calculation
Information content
Return on tangible equity
1
(%)
Calculated as annualized net profit attributable to
shareholders divided by average equity attributable
to
shareholders less average goodwill and intangible
assets.
This measure provides information about the
profitability of the business in relation to tangible
equity.
Tangible book value per share
(USD)
Calculated as equity attributable to shareholders less
goodwill and intangible assets divided by the
number
of shares outstanding.
This measure provides information about tangible net
assets on a per-share basis.
Total book value per share
(USD)
Calculated as equity attributable to shareholders
divided by the number of shares outstanding.
This measure provides information about net assets
on a per-share basis.
Total revenues (underlying)
(USD)
Calculated by adjusting total revenues as reported in
accordance with IFRS Accounting Standards for items
that management believes are not representative of
the underlying performance of the businesses.
›
Refer to the “Group performance” section of this
report for more information
This measure provides information about the amount
of total revenues, while excluding items that
management believes are not representative of the
underlying performance of the businesses.
Transaction-based income
(USD and CHF)
– Global Wealth Management,
Personal & Corporate Banking
Calculated as the total of the non-recurring portion
of
net fee and commission income, mainly composed
of
brokerage and transaction-based investment fund
fees, and credit card fees, as well as fees for payment
and foreign-exchange transactions, together with
other net income from financial instruments
measured at fair value through profit or loss.
This measure provides information about the amount
of the non-recurring portion of net fee and
commission income, together with other net
income
from financial instruments measured at fair value
through profit or loss.
Underlying cost / income ratio (%)
Calculated as underlying operating expenses
(as
defined above) divided by underlying total
revenues
(as defined above).
This measure provides information about the
efficiency of the business by comparing operating
expenses with total revenues, while excluding items
that management believes are not representative of
the underlying performance of the businesses.
Underlying net profit growth (%)
Calculated as the change in net profit attributable
to
shareholders from continuing operations between
current and comparison periods divided by net profit
attributable to shareholders from continuing
operations of the comparison period.
Net profit
attributable to shareholders from continuing
operations excludes items that management
believes
are not representative of the underlying performance
of the businesses and also excludes related tax
impact.
This measure provides information about profit
growth since the comparison period, while excluding
items that management believes are not
representative of the underlying performance of the
businesses.
Underlying return on attributed equity
1
(%)
Calculated as annualized underlying business
division
operating profit before tax (as defined above) divided
by average attributed equity.
This measure provides information about the
profitability of the business divisions in relation to
attributed equity, while excluding items that
management believes are not representative of the
underlying performance of the businesses.
Underlying return on common equity
tier 1 capital
1
(%)
Calculated as annualized net profit attributable to
shareholders divided by average common equity
tier 1
capital. Net profit attributable to shareholders
excludes items that management believes
are not
representative of the underlying performance of the
businesses and also excludes related tax impact.
This measure provides information about the
profitability of the business in relation to common
equity tier 1 capital, while excluding items that
management believes are not representative of the
underlying performance of the businesses.
Underlying return on tangible equity
1
(%)
Calculated as annualized net profit attributable to
shareholders divided by average equity attributable
to
shareholders less average goodwill and intangible
assets. Net profit attributable to shareholders excludes
items that management believes are not
representative of the underlying performance of the
businesses and also excludes related tax impact.
This measure provides information about the
profitability of the business in relation to tangible
equity, while excluding items that management
believes are not representative of the underlying
performance of the businesses.
1
Profit or loss information for each of the first quarter of
2024 and the fourth quarter of 2023 is presented on a
consolidated basis, including for each quarter Credit Suisse
data for three months, and for
the purpose
of the calculation of return measures has been annualized multiplying such by four.
Profit or loss information for the first quarter of 2023 includes pre-acquisition UBS data for three months,
and for the purpose of the
calculation of return measures has been annualized multiplying such 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 Group first quarter 2024 report |
Appendix
100
Information related to underlying return on common equity tier 1 (CET1) capital and underlying return on tangible
equity (%)
As of or for the quarter ended
USD m, except where indicated
31.3.24
31.12.23
31.3.23
Underlying operating profit / (loss) before tax
2,617
592
1,566
Underlying tax expense / (benefit)
732
(329)
459
NCI
9
1
8
Underlying net profit / (loss)
1,877
920
1,099
Underlying net profit / (loss), annualized
7,507
3,680
4,396
Tangible equity
77,877
78,593
50,481
Average tangible equity
78,235
77,440
50,545
CET1 capital
78,147
78,485
44,590
Average CET1 capital
78,316
77,947
45,024
Underlying return on tangible equity (%)
9.6
4.8
8.7
Underlying return on common equity tier 1 capital
9.6
4.7
9.8
UBS Group first quarter 2024 report |
Appendix
101
Abbreviations frequently used in our financial reports
A
ABS
asset-backed securities
AG
Aktiengesellschaft
AGM
Annual General Meeting of
shareholders
A-IRB
advanced internal ratings-
based
AIV
alternative investment
vehicle
ALCO
Asset and Liability
Committee
AMA
advanced measurement
approach
AML
anti-money laundering
AoA
Articles of Association
APM
alternative performance
measure
ARR
alternative reference rate
ARS
auction rate securities
ASF
available stable funding
AT1
additional tier 1
AuM
assets under management
B
BCBS
Basel Committee on
Banking Supervision
BIS
Bank for International
Settlements
BoD
Board of Directors
C
CAO
Capital Adequacy
Ordinance
CCAR
Comprehensive Capital
Analysis and Review
CCF
credit conversion factor
CCP
central counterparty
CCR
counterparty credit risk
CCRC
Corporate Culture and
Responsibility Committee
CDS
credit default swap
CEA
Commodity Exchange Act
CEO
Chief Executive Officer
CET1
common equity tier 1
CFO
Chief Financial Officer
CGU
cash-generating unit
CHF
Swiss franc
CIO
Chief Investment Office
C&ORC
Compliance & Operational
Risk Control
CRM
credit risk mitigation (credit
risk) or comprehensive risk
measure (market risk)
CST
combined stress test
CUSIP
Committee on Uniform
Security Identification
Procedures
CVA
credit valuation adjustment
D
DBO
defined benefit obligation
DCCP
Deferred Contingent
Capital Plan
DE&I
diversity, equity and
inclusion
DFAST
Dodd–Frank Act Stress Test
DM
discount margin
DOJ
US Department of Justice
DTA
deferred tax asset
DVA
debit valuation adjustment
E
EAD
exposure at default
EB
Executive Board
EC
European Commission
ECB
European Central Bank
ECL
expected credit loss
EGM
Extraordinary General
Meeting of shareholders
EIR
effective interest rate
EL
expected loss
EMEA
Europe, Middle East and
Africa
EOP
Equity Ownership Plan
EPS
earnings per share
ESG
environmental, social and
governance
ESR
environmental and social
risk
ETD
exchange-traded derivatives
ETF
exchange-traded fund
EU
European Union
EUR
euro
EURIBOR
Euro Interbank Offered Rate
EVE
economic value of equity
EY
Ernst & Young Ltd
F
FA
financial advisor
FCA
UK Financial Conduct
Authority
FDIC
Federal Deposit Insurance
Corporation
FINMA
Swiss Financial Market
Supervisory Authority
FMIA
Swiss Financial Market
Infrastructure Act
FSB
Financial Stability Board
FTA
Swiss Federal Tax
Administration
FVA
funding valuation
adjustment
FVOCI
fair value through other
comprehensive income
FVTPL
fair value through profit or
loss
FX
foreign exchange
G
GAAP
generally accepted
accounting principles
GBP
pound sterling
GCRG
Group Compliance,
Regulatory & Governance
GDP
gross domestic product
GEB
Group Executive Board
GHG
greenhouse gas
GIA
Group Internal Audit
GRI
Global Reporting Initiative
G-SIB
global systemically
important bank
H
HQLA
high-quality liquid assets
I
IAS
International Accounting
Standards
IASB
International Accounting
Standards Board
IBOR
interbank offered rate
IFRIC
International Financial
Reporting Interpretations
Committee
IFRS
Accounting Standards
Accounting
issued by the IASB
Standards
IRB
internal ratings-based
IRRBB
interest rate risk in the
banking book
ISDA
International Swaps and
Derivatives Association
ISIN
International Securities
Identification Number
UBS Group first quarter 2024 report |
Appendix
102
Abbreviations frequently used in our financial reports (continued)
K
KRT
Key Risk Taker
L
LAS
liquidity-adjusted stress
LCR
liquidity coverage ratio
LGD
loss given default
LIBOR
London Interbank Offered
Rate
LLC
limited liability company
LoD
lines of defense
LRD
leverage ratio denominator
LTIP
Long-Term
Incentive Plan
LTV
loan-to-value
M
M&A
mergers and acquisitions
MRT
Material Risk Taker
N
NII
net interest income
NSFR
net stable funding ratio
NYSE
New York Stock Exchange
O
OCA
own credit adjustment
OCI
other comprehensive
income
OECD
Organisation for Economic
Co-operation and
Development
OTC
over-the-counter
P
PCI
purchased credit impaired
PD
probability of default
PIT
point in time
PPA
purchase price allocation
P&L
profit or loss
Q
QCCP
Qualifying central
counterparty
R
RBC
risk-based capital
RbM
risk-based monitoring
REIT
real estate investment trust
RMBS
residential mortgage-
backed securities
RniV
risks not in VaR
RoCET1
return on CET1 capital
RoU
right-of-use
rTSR
relative total shareholder
return
RWA
risk-weighted assets
S
SA
standardized approach or
société anonyme
SA-CCR
standardized approach for
counterparty credit risk
SAR
Special Administrative
Region of the People’s
Republic of China
SDG
Sustainable Development
Goal
SEC
US Securities and Exchange
Commission
SFT
securities financing
transaction
SI
sustainable investing or
sustainable investment
SIBOR
Singapore Interbank
Offered Rate
SICR
significant increase in credit
risk
SIX
SIX Swiss Exchange
SME
small and medium-sized
entities
SMF
Senior Management
Function
SNB
Swiss National Bank
SOR
Singapore Swap Offer Rate
SPPI
solely payments of principal
and interest
SRB
systemically relevant bank
SRM
specific risk measure
SVaR
stressed value-at-risk
T
TBTF
too big to fail
TCFD
Task
Force on Climate-
related Financial Disclosures
TIBOR
Tokyo
Interbank Offered
Rate
TLAC
total loss-absorbing capacity
TTC
through the cycle
U
USD
US dollar
V
VaR
value-at-risk
VAT
value added tax
This is a
general list
of the
abbreviations frequently
used in
our financial
reporting. Not
all of the
listed abbreviations
may appear in this particular report.
UBS Group first quarter 2024 report |
Appendix
103
Information sources
Reporting publications
Annual publications
UBS
Group
Annual
Report
:
Published
in
English,
this
report
provides
descriptions
of:
the
Group
strategy
and
performance; the
strategy and
performance of
the business
divisions and
Group Items;
risk, treasury
and capital
management; corporate
governance;
the compensation
framework, including
information about
compensation for
the Board of Directors and the Group Executive Board members; and financial information, including the financial
statements.
“Auszug aus
dem Geschäftsbericht
”: This publication
provides a German
translation of
selected sections
of the UBS
Group Annual Report.
Compensation
Report
:
This
report
discusses
the
compensation
framework
and
provides
information
about
compensation for
the Board
of Directors
and the
Group Executive
Board members.
It is
available in
English and
German (
“Vergütungsbericht
”) and represents a component of the UBS
Group Annual Report.
Sustainability Report
: Published
in English,
the Sustainability Report
provides disclosures on
environmental, social
and governance topics related to the UBS Group.
It also provides certain disclosures related to diversity,
equity and
inclusion.
Quarterly publications
Quarterly financial report
: This report provides an
update on performance and strategy (where
applicable) for the
respective quarter. It is available in English.
The annual
and quarterly
publications
are available
in .pdf
and online
formats
at
ubs.com/investors
, under
“Financial
information.” Starting
with the
Annual Report
2022, printed
copies,
in any
language, of
the aforementioned
annual
publications are no longer provided.
Other information
Website
The “Investor
Relations” website
at
ubs.com/investors
provides the
following information
about UBS:
results-related
news
releases;
financial
information,
including
results-related
filings
with
the
US
Securities
and
Exchange
Commission (the SEC);
information for shareholders,
including UBS share price
charts, as well as
data and dividend
information, and
for bondholders;
the corporate
calendar; and
presentations by
management for
investors and
financial analysts. Information is available
online in English, with some information
also available in German.
Results presentations
Quarterly
results
presentations
are
webcast
live.
Recordings
of
most
presentations
can
be
downloaded
from
ubs.com/presentations
.
Messaging service
alerts
to
news
about
UBS
can
be
subscribed
for
under
“UBS
News
Alert”
at
ubs.com/global/en/investor-
relations/contact/investor-services.html
. Messages are sent in English, German, French or Italian, with an option to
select theme preferences for such alerts.
Form 20-F and other submissions to the US
Securities and Exchange Commission
UBS files periodic
reports with
and submits
other information
to the
SEC. Principal
among these
filings is the
annual
report on Form 20-F,
filed pursuant to
the US Securities
Exchange Act of 1934.
The filing of
Form 20-F is structured
as a wraparound document. Most sections of the filing can be
satisfied by referring to the UBS Group AG Annual
Report. However, there is
a small amount
of additional information in
Form 20-F that is
not presented elsewhere
and is particularly targeted at readers in the US. Readers are encouraged to refer to this additional disclosure. Any
document that filed
with the SEC
is available on
the SEC’s website:
sec.gov
. Refer to
ubs.com/investors
for more
information.
UBS Group first quarter 2024 report |
Appendix
104
Cautionary statement
regarding forward-looking statements
|
This report contains
statements that
constitute “forward-looking
statements,” including
but
not limited to management’s
outlook for UBS’s financial performance,
statements relating to the
anticipated effect of transactions
and strategic initiatives on
UBS’s
business and
future
development and
goals
or
intentions to
achieve climate,
sustainability and
other social
objectives. While
these
forward-looking
statements represent
UBS’s judgments,
expectations and
objectives concerning the
matters described,
a number
of risks,
uncertainties and
other important
factors could cause actual developments and results to differ materially from UBS’s expectations. In particular,
terrorist activity and conflicts
in the Middle East,
as well as the continuing Russia–Ukraine
war, may have significant impacts on global markets,
exacerbate global inflationary pressures, and slow
global growth.
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
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 our
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 our performance and ability to achieve our 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 increasing 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 our 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 our 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 our
reputation and the
additional consequences that this
may have on
our 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.
Our business and financial performance could be
affected by other factors identified in our past and
future filings and reports, including those filed with the
US Securities and Exchange Commission (the SEC).
More detailed information about those factors is set forth in documents furnished by UBS and filings made by UBS with
the SEC, including the UBS Group AG
and UBS AG Annual Reports
on Form 20- F for the year
ended 31 December 2023. UBS
is not under any obligation
to (and expressly disclaims any
obligation to)
update or alter its forward-looking statements, whether
as a result of new information, future events, or otherwise.
Rounding |
Numbers presented throughout this report may not add up
precisely to the totals provided in the tables and text.
Percentages and percent changes
disclosed in text and tables are
calculated on the basis of unrounded
figures. Absolute changes between reporting periods disclosed in
the text, which can be
derived from numbers presented in related tables, are calculated on
a rounded basis.
Tables |
Within tables, blank fields generally indicate non-applicability or that presentation of any content would not be meaningful, or that information is not
available as of the relevant date or for the relevant period. Zero values generally indicate that the respective figure is zero on an actual or rounded basis.
Values
that are zero on a rounded basis can be either negative
or positive on an actual basis.
Websites |
In this report, any
website addresses are provided
solely for information
and are not intended
to be active links.
UBS is not incorporating
the contents
of any such websites into this report.
UBS Group AG
P.O. Box
CH-8098 Zurich
ubs.com
This
Form
6-K
is
hereby
incorporated
by
reference
into
(1)
each
of
the
registration
statements
on
Form
F-3
(Registration Numbers
333-263376, 333-272539
and 333-272452),
and on
Form S-8
(Registration Numbers
333-
200634; 333-200635;
333-200641; 333-200665; 333-215254;
333-215255; 333-228653; 333-230312;
333-249143
and 333-272975), and
into each
prospectus outstanding under
any of the
foregoing registration statements, (2)
any
outstanding
offering
circular
or
similar
document
issued
or
authorized
by
UBS
AG
and
Credit
Suisse
AG
that
incorporates by reference any Forms 6-K of UBS AG
and Credit Suisse AG (respectively) that are incorporated
into
its registration
statements filed
with the
SEC, and
(3) the
base prospectus
of Corporate
Asset Backed
Corporation
(“CABCO”) dated June 23,
2004 (Registration Number 333-111572), the Form 8-K
of CABCO filed and dated
June
23, 2004 (SEC
File Number 001-13444), and
the Prospectus Supplements relating to
the CABCO Series 2004-101
Trust dated May 10, 2004 and May 17, 2004 (Registration Number 033-91744 and 033-91744-05).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this
report to be signed on their behalf by the undersigned, thereunto duly
authorized.
UBS Group AG
By:
/s/
Sergio Ermotti
___
Name:
Sergio Ermotti
Title:
Group Chief Executive Officer
By:
/s/ Todd Tuckner
_
Name:
Todd Tuckner
Title:
Group Chief Financial Officer
By:
/s/ Steffen Henrich
____________
Name:
Steffen Henrich
Title:
Group Controller
UBS AG
By:
/s/
Sergio Ermotti
_
Name:
Sergio Ermotti
Title:
President of the Executive Board
By:
/s/ Todd Tuckner
_
Name:
Todd Tuckner
Title:
Chief Financial Officer
By:
/s/ Steffen Henrich
_____________
Name:
Steffen Henrich
Title:
Controller
Credit Suisse AG
By:
/s/
Ulrich Körner
______________
Name:
Ulrich Körner
Title:
Chief Executive Officer
By:
/s/
Simon Grimwood
_
Name:
Simon Grimwood
Title:
Chief Financial Officer
Date:
May 7, 2024