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UBS UBS Group AG - Registered Shares

Filed: 27 Apr 21, 7:28am

 



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: April 27, 2021

 

UBS Group AG

Commission File Number: 1-36764

 

UBS AG

Commission File Number: 1-15060

 

 

(Registrants' Name)

 

Bahnhofstrasse 45, Zurich, Switzerland

Aeschenvorstadt 1, Basel, Switzerland

(Address of principal executive offices)

 

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 2021 Report of UBS Group AG and an additional risk

factor disclosure, which appears immediately following this page.

 

 


 

First Quarter 2021 Report

 


 

 

Our financial results

 

First quarter 2021 report

 

 


 

Corporate calendar UBS Group AG

 

1.

UBS
Group

4

Recent developments

7

Group performance

  

2.

UBS business divisions and
Group Functions

14

Global Wealth Management

17

Personal & Corporate Banking

19

Asset Management

21

Investment Bank

23

Group Functions

24

Selected financial information of our business divisions and Group Functions

  

3.

Risk, capital, liquidity and funding, and balance sheet

27

Risk management and control

33

Capital management

44

Liquidity and funding management

45

Balance sheet and off-balance sheet

48

Share information and earnings per share

  

4.

Consolidated
financial statements

51

UBS Group AG interim consolidated financial statements (unaudited)

92

UBS AG interim consolidated financial information (unaudited)

  

5.

Significant regulated subsidiary and sub-group information

96

Financial and regulatory key figures for our significant regulated subsidiaries and sub-groups

 

 

 

Appendix

 

 

98

Alternative performance measures

101

Abbreviations frequently used in
our financial reports

103

Information sources

104

Cautionary statement

 

 

  
Publication of the second quarter 2021 report:                      Tuesday, 20 July 2021

Publication of the third quarter 2021 report:                          Tuesday, 26 October 2021

Publication of the fourth quarter 2021 report:                       Monday, 24 January 2022

 

Corporate calendar UBS AG*

Publication of the first quarter 2021 report:                           Friday, 30 April 2021

*Publication dates of future quarterly and annual reports and results are made available as part of the corporate calendar of UBS AG at ubs.com/investors 

Contacts

Switchboards

For all general inquiries
ubs.com/contact 

Zurich +41-44-234 1111
London +44-207-567 8000
New York +1-212-821 3000
Hong Kong +852-2971 8888

Singapore +65-6495 8000

Investor Relations

Institutional, professional and retail
investors are supported by UBS’s Investor Relations team.

UBS Group AG, Investor Relations
P.O. Box, CH-8098 Zurich, Switzerland

ubs.com/investors

Zurich +41-44-234 4100
New York +1-212-882 5734

Media Relations

Global media and journalists are supported by UBS’s Media Relations team.

ubs.com/media

Zurich +41-44-234 8500
mediarelations@ubs.com

London +44-20-7567 4714
ubs-media-relations@ubs.com

New York +1-212-882 5858
mediarelations@ubs.com

Hong Kong +852-2971 8200
sh-mediarelations-ap@ubs.com


Office of the Group Company Secretary

The Group Company Secretary receives
inquiries on compensation and related
issues addressed to members of the
Board of Directors.

UBS Group AG, Office of the Group Company Secretary
P.O. Box, CH-8098 Zurich, Switzerland

sh-company-secretary@ubs.com

+41-44-235 6652

Shareholder Services

UBS’s Shareholder Services team, a unit
of the Group Company Secretary’s office,
is responsible for the registration of UBS Group AG registered shares.

UBS Group AG, Shareholder Services
P.O. Box, CH-8098 Zurich, Switzerland

sh-shareholder-services@ubs.com

+41-44-235 6652

US Transfer Agent

For global registered share-related
inquiries in the US.

Computershare Trust Company NA
P.O. Box 505000
Louisville, KY 40233-5000, USA

Shareholder online inquiries:
www-us.computershare.com/
investor/Contact

Shareholder website:
computershare.com/investor 

Calls from the US
+1-866-305-9566
Calls from outside the US
+1-781-575-2623
TDD for hearing impaired
+1-800-231-5469
TDD for foreign shareholders
+1-201-680-6610

Imprint

Publisher: UBS Group AG, Zurich, Switzerland | ubs.com 
Language: English

© UBS 2021. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved.

 

 

 

 

 

  

 


First quarter 2021 report 

Our key figures

 

 

As of or for the quarter ended

USD million, except where indicated

 

31.3.21

31.12.20

31.3.20

Group results

 

 

 

 

Operating income

 

 8,705 

 8,117 

 7,934 

Operating expenses

 

 6,407 

 6,132 

 5,926 

Operating profit / (loss) before tax

 

 2,298 

 1,985 

 2,008 

Net profit / (loss) attributable to shareholders

 

 1,824 

 1,636 

 1,595 

Diluted earnings per share (USD)1

 

 0.49 

 0.44 

 0.43 

Profitability and growth2

 

 

 

 

Return on equity (%)

 

 12.4 

 11.0 

 11.4 

Return on tangible equity (%)

 

 14.0 

 12.4 

 12.8 

Return on common equity tier 1 capital (%)

 

 18.2 

 16.8 

 17.7 

Return on risk-weighted assets, gross (%)

 

 12.0 

 11.4 

 12.0 

Return on leverage ratio denominator, gross (%)3

 

 3.3 

 3.2 

 3.5 

Cost / income ratio (%)

 

 73.8 

 74.9 

 72.3 

Effective tax rate (%)

 

 20.5 

 17.2 

 20.4 

Net profit growth (%)

 

 14.3 

 126.7 

 39.8 

Resources2

 

 

 

 

Total assets

 

 1,107,712 

 1,125,765 

 1,098,110 

Equity attributable to shareholders

 

 58,026 

 59,445 

 57,917 

Common equity tier 1 capital4

 

 40,426 

 39,890 

 36,659 

Risk-weighted assets4

 

 287,828 

 289,101 

 286,256 

Common equity tier 1 capital ratio (%)4

 

 14.0 

 13.8 

 12.8 

Going concern capital ratio (%)4

 

 19.6 

 19.4 

 18.1 

Total loss-absorbing capacity ratio (%)4

 

 35.0 

 35.2 

 32.7 

Leverage ratio denominator3,4

 

 1,038,225 

 1,037,150 

 955,943 

Common equity tier 1 leverage ratio (%)3,4

 

 3.89 

 3.85 

 3.83 

Going concern leverage ratio (%)3,4

 

 5.4 

 5.4 

 5.4 

Total loss-absorbing capacity leverage ratio (%)4

 

 9.7 

 9.8 

 9.8 

Liquidity coverage ratio (%)5

 

 151 

 152 

 139 

Other

 

 

 

 

Invested assets (USD billion)6

 

 4,306 

 4,187 

 3,236 

Personnel (full-time equivalents)

 

 71,779 

 71,551 

 69,437 

Market capitalization1

 

 54,536 

 50,013 

 33,649 

Total book value per share (USD)1

 

 16.47 

 16.74 

 16.16 

Total book value per share (CHF)1

 

 15.57 

 14.82 

 15.57 

Tangible book value per share (USD)1

 

 14.65 

 14.91 

 14.37 

Tangible book value per share (CHF)1

 

 13.85 

 13.21 

 13.85 

1 Refer to the “Share information and earnings per share” section of this report for more information.    2 Refer to the “Performance targets and capital guidance” section of our Annual Report 2020 for more information about our performance targets.    3 Leverage ratio denominators and leverage ratios for the respective periods in 2020 do not reflect the effects of the temporary exemption that applied from 25 March 2020 until 1 January 2021 and was granted by FINMA in connection with COVID-19. Refer to the “Regulatory and legal developments” section of our Annual Report 2020 for more information.    4 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.    5 Refer to the “Liquidity and funding management” section of this report for more information.    6 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 our Annual Report 2020 for more information.

 

 

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 our Group Functions. 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.

 

 

2 


 

UBS Group

Management report

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 consolidated”

UBS AG and its consolidated subsidiaries

“UBS Group AG” and “UBS Group AG standalone”

UBS Group AG on a standalone basis

“UBS AG” and “UBS AG standalone”

UBS AG on a standalone basis

“UBS Switzerland AG” and “UBS Switzerland AG standalone”

UBS Switzerland AG on a standalone basis

“UBS Europe SE consolidated”

UBS Europe SE and its consolidated subsidiaries

“UBS Americas Holding LLC” and

“UBS Americas Holding LLC consolidated”

UBS Americas Holding LLC and its consolidated subsidiaries

 

 

 


Recent developments 

Recent developments

Strategy and organization update

Purpose and strategy

Today, UBS is a strong financial institution. This is the result of who we are – and our goals, our offering, our networks, our financial strengths. And it is because of where we are today that we can push ourselves further. That is why, from this day forward, everything we do will start with our purpose:

Reimagining the power of investing.

Connecting people for a better world.

Our purpose is underpinned by a newly defined vision, our client promise, and five strategic imperatives.

Our vision

Convene THE global ecosystem for investing - where thought leadership is impactful, people and ideas are connected and opportunities are brought to life.

Our client promise

Helping clients is the essence of what we do. And in today’s world, how we do that is what differentiates us. Therefore, we will reimagine customer service to deliver a client experience that is

     Personalized – Our products and services are as personal as your needs.

     Relevant – What you get is relevant and matters to you.

     On-time – You set the speed and can act on opportunities anytime and anywhere.

     Seamless – Interacting with us is simple, seamless and intuitive.

Our strategic imperatives

     Clients, Connections, Contributors – Delivering the power of investing

     Focus – Play where we are positioned to win

     Technology – Make technology our differentiator

     Simplification and efficiency – Increase ease of doing businesses and enable our journey

     Culture – Mobilize employees behind our future vision and to act as one firm

 

These outline the actions we are taking to unlock the power of UBS and evolve into a more client-focused, more agile, more digital firm. We will continue to update our strategy and imperatives as we progress on our plans.

    Refer to ubs.com/purpose for additional information on our purpose and our vision, client promise and strategic imperatives

Sustainability

Sustainability is at the core of our purpose. We have adopted new sustainability standards, including our net zero commitment. We have announced new, tougher environmental standards and will develop a detailed road map for achieving net zero greenhouse gas emissions across all of our operations by 2050. We have long been on the path to a more sustainable future, as evidenced by our leading sustainability ratings as well as our strong sustainable finance business performance, and this is the next step in our journey. We also appointed Suni Harford as the Group Executive Board sponsor to lead our efforts on sustainability and impact, setting new financing standards and further evolving plans to support our clients’ transition to a low-carbon world. As a founding member, we’ll work closely with peers in the Net Zero Banking Alliance toward a lower-carbon global economy.

    Refer to ubs.com/sustainability for additional information

Organization changes

Mike Dargan will join the Group Executive Board as Chief Digital and Information Officer (CDIO) effective 1 May 2021. Aligned with our strategic imperatives, the new CDIO function will play a crucial role in further driving technology to become a true differentiator for UBS and will replace the former Group Chief Operating Officer function. The CDIO organization will comprise the current Group Technology teams, as well as Group Corporate Services. Business-aligned operations will be moved into the respective business divisions, with shared operations functions remaining with CDIO.

In addition, Markus Diethelm has decided to step down from his current role as Group General Counsel effective 1 November 2021. He will remain in a senior advisor role into 2022 with responsibility for select legacy litigation cases. Barbara Levi will succeed Markus Diethelm as Group General Counsel effective 1 November 2021. She joins UBS from Rio Tinto Group, where she is Chief Legal Officer & External Affairs and a member of the Executive Committee. Prior to that, she served as Group General Counsel of Rio Tinto.

Our response to COVID-19

The measures taken by governments in response to the COVID‑19 pandemic, including severe constraints on movement, limitation of public gatherings, requirements to work from home where possible, and the partial or complete closing or restriction of non-essential retail and business activity, continue to adversely affect global economic activity.

The negative effects of the COVID-19-related crisis on our financial and capital positions remained limited in the first quarter of 2021.  

The program established by the Swiss Federal Council in March 2020 to support small and medium-sized entities (SMEs) by granting loans closed on 31 July 2020. As of that date, we had committed CHF 2.7 billion of loans up to CHF 0.5 million, which are 100% guaranteed by the Swiss government, and CHF 0.6 billion of loans between CHF 0.5 million and CHF 20 million, which are 85% government-guaranteed. The total amount drawn on our loan commitments under the program was CHF 1.8 billion on 31 March 2021.

We remain committed to donating any economic profits from the government-backed lending program to COVID-19 relief efforts. However, we did not make any profits from this program in the first quarter of 2021.

 

4 


 

Regulatory and legal developments

Trading venue recognition between Switzerland and the UK

As a result of the EU’s decision to not extend equivalence to Swiss trading venues beyond the end of June 2019, mutual recognition of trading venues between Switzerland and EU Member States was interrupted. In February 2021, following its withdrawal from the EU, the UK granted equivalence to Switzerland’s stock exchanges. As a result, shares issued by Swiss-incorporated companies can be admitted to trading on UK trading venues; shares issued by UK-incorporated companies continue to be admitted to trading on Swiss venues. These mutual recognition decisions have been taken in the context of a broader process toward deepening bilateral cooperation on financial services between Switzerland and the UK.

Revision of the Swiss Anti-Money Laundering Act

In March 2021, the Swiss Parliament granted final approval for the revision of the Swiss Anti-Money Laundering (AML) Act, which incorporates most, but not all, of the recommendations from the enhanced follow-up process of the Financial Action Task Force on Money Laundering (the FATF). The revision will introduce into Swiss law further specifications of the obligation to file suspicious activity reports and increase the frequency of client data reviews. It will also improve transparency by incorporating additional legal requirements for associations with elevated risks of terrorist financing. However, the FATF’s recommendation to extend the scope of the Swiss AML Act to advisors (e.g., attorneys, fiduciaries and tax advisors) was not adopted by the Swiss Parliament. The revisions are expected to enter into force in 2022 and UBS is in the process of making adjustments to its AML processes to reflect the new requirements.

Swiss Withholding Tax Act

In April 2021, the Swiss Federal Council adopted a dispatch on the Withholding Tax Act reform, which seeks to strengthen Swiss debt capital markets. The proposal aims to maintain the withholding tax on interest carried on bank accounts by natural persons with tax domicile in Switzerland, abolishes the tax on bond interest payments and discontinues the stamp duty on domestic bonds. The dispatch is expected to be subject to parliamentary debate later in 2021.

FINMA’s assessment of the recovery and resolution planning

In March 2021, the Swiss Financial Market Supervisory Authority (FINMA) published its annual assessment of the recovery and resolution plans of systemically important financial institutions in Switzerland. The report noted that FINMA had approved UBS’s group recovery plan and assessed its Swiss Emergency Plan as effective. It also highlighted that UBS has made further progress in improving its global resolvability by building up the necessary capabilities and removing obstacles to the implementation of the resolution strategy, while pointing out areas for further improvement.

Review of restrictions on the business model of PostFinance AG

In January 2021, the Swiss Federal Council announced that it intends to privatize PostFinance AG, a Swiss systemically important bank, which is held by the state-owned Swiss Post AG. As a result, the prohibition on PostFinance AG granting mortgages and other types of loans would be lifted, among other changes. An expert commission has been asked to develop a detailed proposal, which the Federal Council will use to draw up draft rules. As the envisaged changes require a revision of the Post Organization Act, the Swiss Parliament will ultimately decide on any changes. If the revision passes the legislative process, the reform could further intensify competition in the Swiss mortgage market.

US measures on capital adequacy, capital distribution restrictions and leverage capital relief

In March 2021, US banking regulators decided to not extend the temporary exclusion of central bank deposits and US Treasury securities from the leverage exposure calculation for the supplementary leverage ratio beyond March 2021. The temporary exemption was applicable to UBS Americas Holding LLC (UBSAH) with respect to US regulatory capital requirements. In addition, the Federal Reserve announced that the limits on capital distributions imposed during the COVID-19 pandemic would be removed after 30 June 2021. As a result, capital distributions by UBSAH will generally be permitted for as long as it meets regulatory capital requirements, including the incremental stress capital buffer set by the Federal Reserve Board as part of its Comprehensive Capital Analysis and Review stress test (CCAR). UBSAH’s stress capital buffer requirement, currently 6.7%, will be assessed and may be revised in the 2021 CCAR process, the results of which are expected to be announced by the Federal Reserve Board in June 2021.

Registration under the US security-based swaps regulations

UBS AG will be required to register as a security-based swap dealer with the Securities and Exchange Commission (the SEC) by 1 November 2021. In connection with the registration, UBS AG has made a substituted compliance application that would permit the bank to comply with comparable provisions of Swiss law instead of the corresponding SEC regulations. FINMA has entered into negotiations with the SEC to agree a memorandum of understanding. A failure to obtain substituted compliance may require UBS to restructure its operations and would likely result in substantial costs to implement additional SEC requirements.

Recent developments regarding LIBOR

In March 2021, the UK Financial Conduct Authority (the FCA) confirmed that the one-week and two-month US dollar London Interbank Offered Rate (USD LIBOR) settings, along with all GBP, EUR, CHF and JPY LIBOR settings, will, immediately after 31 December 2021, either cease to be provided by any administrator or no longer be representative of the underlying market. The FCA further confirmed that the remaining USD LIBOR settings will cease immediately after 30 June 2023. With respect to USD LIBORs, the Federal Reserve Board has issued guidance that banks should, with limited exceptions, cease to enter into new contracts referencing USD LIBORs as soon as practicable and in any event no later than 31 December 2021.

The extension of certain USD tenors to June 2023 will help the market to deal with certain tough legacy contracts that cannot easily transition from LIBOR.

 

 

5 


Recent developments 

Climate-related risks; environmental, social and governance (ESG) matters

The first quarter of 2021 saw a number of sustainability-related policy developments, with a particular focus on disclosure requirements, across various jurisdictions.

In January 2021, FINMA finalized the consultation on a partial revision of FINMA Circular 2016/01 “Disclosure – banks,” specifying new climate-related financial disclosure requirements, based on the recommendations of the Task Force on Climate-related Financial Disclosures (the TCFD). These requirements include principles-based elements on governance, strategy and risk management, as well as quantitative information on climate-related financial risks, and apply to Swiss systemically important banks, including UBS. The revised Circular will become applicable for the 2021 reporting year. Since we are already committed to aligning our climate disclosure within the five-year pathway outlined by the TCFD recommendations, the impact on UBS is expected to be limited.

In March 2021, the EU Sustainable Finance Disclosures Regulation (the SFDR) became applicable. The regulation defines standards regarding, among other matters, how investors should be informed about sustainability risks and how the impact of investments on the environment and society should be disclosed. This regulation concerns any prospectus of UBS’s EU-domiciled and -marketed funds.

Similarly, in March 2021, the European Financial Reporting Advisory Group (the ERFRAG) provided recommendations about the development of EU sustainability reporting standards to the European Commission (the EC). Based on these recommendations, the EC published a legislative proposal for a revised Non-Financial Reporting Directive (NFRD) in 2021 that will require firms to publish enhanced information about their activities with regard to ESG-related matters.

Final BCBS Principles and UK rules on operational resilience

In March 2021, the Basel Committee on Banking Supervision (the BCBS) published the final Principles for Operational Resilience (the BCBS Principles), which provide global standards intended to strengthen the ability of banks to withstand operational risk-related events that could cause significant operational failures. The BCBS Principles are expected to shape future requirements on operational resilience set out by key regulators.

Similarly, in March 2021, the Bank of England (the BoE), the Prudential Regulation Authority (the PRA) and the FCA published the final rules on the UK operational resilience framework. The new rules require firms to identify their important business services, set impact tolerances for these and commence testing against severe but plausible scenarios by 31 March 2022. Firms are expected to introduce the required resilience reinforcements by 31 March 2025. The UK rules will apply to UBS AG London Branch and other Group entities that provide services to UBS AG London Branch.

    Refer to “Operational risk” in the “Risk management and control” section of this report for more information


Other developments

Amendments to IFRS as a consequence of Interest Rate Benchmark Reform

On 1 January 2021, UBS adopted Interest Rate Benchmark Reform – Phase 2, Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, addressing a number of issues in financial reporting areas that arise when interbank offered rates (IBORs) are reformed or replaced, in particular in the area of hedge accounting. The amendments also introduced additional disclosure requirements covering how UBS is managing the transition to alternative benchmark rates, its progress as of the reporting date and the risks to which it is exposed because of the transition.

    Refer to “Note 1 Basis of accounting and other financial reporting effects” and “Note 13 Interest rate benchmark reform” in the “Consolidated financial statements” section of this report for more information

New performance measure for our Global Wealth Management business

Beginning with the first quarter of 2021, we introduced net new fee-generating assets as a new performance measure for our Global Wealth Management business. The new measure captures the growth in clients’ invested assets from net flows related to mandates, investment funds with recurring fees, hedge funds and private markets investments, combined with dividend and interest payments into mandates, less fees paid to UBS by clients. The underlying assets and products generate most of Global Wealth Management’s recurring net fee income and a portion of its transaction-based income. We will disclose fee-generating assets and net new fee-generating assets quarterly for Global Wealth Management, including a split by region.

Compared with net new money, net new fee-generating assets exclude flows related to assets that primarily generate revenues when traded in the form of commissions and transaction spreads, or borrowed against in the form of net interest income, and also exclude deposit flows that generate net interest income, and custody positions that generate custody fees.

We will no longer report net new money for Global Wealth Management in our quarterly reports, but will continue to disclose this measure in our annual reports.

 

  

6 


 

Group performance

Income statement

 

 

 

 

 

 

 

 

 

For the quarter ended

 

% change from

USD million

 

31.3.21

31.12.20

31.3.20

 

4Q20

1Q20

Net interest income

 

 1,613 

 1,622 

 1,330 

 

 (1) 

 21 

Other net income from financial instruments measured at fair value through profit or loss

 

 1,309 

 1,453 

 1,807 

 

 (10) 

 (28) 

Credit loss (expense) / release

 

 28 

 (66) 

 (268) 

 

 

 

Fee and commission income

 

 6,169 

 5,543 

 5,477 

 

 11 

 13 

Fee and commission expense

 

 (478) 

 (459) 

 (456) 

 

 4 

 5 

Net fee and commission income

 

 5,691 

 5,084 

 5,021 

 

 12 

 13 

Other income

 

 64 

 24 

 43 

 

 161 

 46 

Total operating income

 

 8,705 

 8,117 

 7,934 

 

 7 

 10 

Personnel expenses

 

 4,801 

 3,989 

 4,321 

 

 20 

 11 

General and administrative expenses

 

 1,089 

 1,515 

 1,133 

 

 (28) 

 (4) 

Depreciation and impairment of property, equipment and software

 

 508 

 617 

 456 

 

 (18) 

 12 

Amortization and impairment of goodwill and intangible assets

 

 8 

 10 

 16 

 

 (16) 

 (46) 

Total operating expenses

 

 6,407 

 6,132 

 5,926 

 

 4 

 8 

Operating profit / (loss) before tax

 

 2,298 

 1,985 

 2,008 

 

 16 

 14 

Tax expense / (benefit)

 

 471 

 341 

 410 

 

 38 

 15 

Net profit / (loss)

 

 1,827 

 1,645 

 1,598 

 

 11 

 14 

Net profit / (loss) attributable to non-controlling interests

 

 3 

 9 

 3 

 

 (65) 

 7 

Net profit / (loss) attributable to shareholders

 

 1,824 

 1,636 

 1,595 

 

 11 

 14 

 

 

 

 

 

 

 

 

Comprehensive income

 

 

 

 

 

 

 

Total comprehensive income

 

 (339) 

 1,728 

 4,195 

 

 

 

Total comprehensive income attributable to non-controlling interests

 

 (9) 

 27 

 (2) 

 

 

 426 

Total comprehensive income attributable to shareholders

 

 (330) 

 1,701 

 4,197 

 

 

 

 

7 


Group performance  

Results: 1Q21 vs 1Q20

Profit before tax increased by USD 290 million, or 14%, to USD 2,298 million, reflecting higher operating income, partly offset by an increase in operating expenses. Operating income increased by USD 771 million, or 10%, to USD 8,705 million, mainly reflecting a USD 670 million increase in net fee and commission income and a USD 296 million decrease in credit loss expenses, partly offset by a USD 215 million decrease in net interest income and other net income from financial instruments measured at fair value through profit or loss. Operating expenses increased by USD 481 million, or 8%, to USD 6,407 million, mainly reflecting a USD 480 million increase in personnel expenses.


Operating income in the first quarter of 2021 included a loss of USD 774 million on a default by a US-based client of our prime brokerage business, presented within Other net income from financial instruments measured at fair value through profit or loss. The associated effect on net profit attributable to shareholders was a reduction of USD 434 million. The loss was recognized within the Financing business in the Investment Bank, which provided prime brokerage services to the client, and arose as a result of closing out a significant portfolio of swaps with the client following the default, and the unwinding of related hedges. We have exited all remaining exposures in April 2021, with related losses recognized in the second quarter of 2021 which are immaterial for the Group.

 

 

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 million

 

31.3.21

31.12.20

31.3.20

 

4Q20

1Q20

Net interest income from financial instruments measured at amortized cost and fair value through other comprehensive income

 

 1,264 

 1,254 

 1,069 

 

 1 

 18 

Net interest income from financial instruments measured at fair value through profit or loss

 

 349 

 368 

 261 

 

 (5) 

 34 

Other net income from financial instruments measured at fair value through profit or loss

 

 1,309 

 1,453 

 1,807 

 

 (10) 

 (28) 

Total

 

 2,922 

 3,075 

 3,137 

 

 (5) 

 (7) 

Global Wealth Management

 

 1,300 

 1,226 

 1,331 

 

 6 

 (2) 

of which: net interest income

 

 997 

 1,011 

 1,031 

 

 (1) 

 (3) 

of which: transaction-based income from foreign exchange and other intermediary activity1

 

 303 

 215 

 300 

 

 41 

 1 

Personal & Corporate Banking

 

 605 

 600 

 609 

 

 1 

 (1) 

of which: net interest income

 

 513 

 503 

 511 

 

 2 

 0 

of which: transaction-based income from foreign exchange and other intermediary activity1

 

 92 

 96 

 97 

 

 (5) 

 (6) 

Asset Management

 

 (7) 

 (1) 

 (3) 

 

 795 

 134 

Investment Bank2

 

 1,084 

 1,167 

 1,610 

 

 (7) 

 (33) 

Global Banking

 

 143 

 124 

 112 

 

 16 

 28 

Global Markets

 

 941 

 1,043 

 1,498 

 

 (10) 

 (37) 

Group Functions

 

 (60) 

 83 

 (409) 

 

 

 (85) 

1 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.    2 Investment Bank information is provided at the business line level rather than by financial statement reporting line in order to reflect the underlying business activities, which is consistent with the structure of the management discussion and analysis in the “Investment Bank” section of this report.

 

Operating income: 1Q21 vs 1Q20

Total operating income increased by USD 771 million, or 10%, to USD 8,705 million.

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 decreased by USD 215 million to USD 2,922 million, mainly driven by the Investment Bank, partly offset by Group Functions.

The Investment Bank decreased by USD 526 million to USD 1,084 million, mainly driven by the aforementioned loss in our prime brokerage business, reported within Financing in Global Markets. This was partly offset by a USD 295 million increase in the Derivatives & Solutions business, driven by a constructive market environment across equity derivatives and credit products, partly offset by a decrease in revenues relating to foreign exchange and rates products, reflecting a strong first quarter of 2020, which benefited from increased market volumes. In addition, Execution Services decreased by USD 69 million, reflecting lower revenues from foreign exchange products that are traded over electronic platforms.

Group Functions increased by USD 349 million, from negative USD 409 million to negative USD 60 million. This was mainly driven by a USD 194 million increase in Non-core and Legacy Portfolio, mainly due to valuation gains of USD 61 million on auction rate securities, compared with valuation losses of USD 143 million in the first quarter of 2020. In addition, the Group Treasury result was negative USD 59 million, compared with negative USD 214 million in the prior-year quarter. The improvement was mainly due to net positive effects related to accounting asymmetries, including hedge accounting ineffectiveness, and income related to centralized Group Treasury risk management.

    Refer to “Note 3 Net interest income” in the “Consolidated financial statements” section of this report for more information about net interest income


8 


 

Net fee and commission income

Net fee and commission income increased by USD 670 million to USD 5,691 million.

Fees for portfolio management and related services increased by USD 225 million to USD 2,284 million, largely driven by Global Wealth Management, mainly reflecting the effect of higher average fee-generating assets.

Underwriting fees increased by USD 192 million to USD 392 million, driven by higher equity underwriting revenues from public offerings in the Investment Bank.

Investment fund fees increased by USD 141 million to USD 1,436 million, largely driven by Asset Management. This reflected an increase in management fees, which mainly resulted from a higher average invested asset base, and an increase in performance-based fees driven by the Hedge Fund Businesses, which were partly offset by lower fees in the Equities business.

Net brokerage fees increased by USD 132 million to USD 1,290 million, reflecting higher levels of client activity in the Cash Equities business of the Investment Bank and in Global Wealth Management.

    Refer to “Note 4 Net fee and commission income” in the “Consolidated financial statements” section of this report for more information


Other income

Other income was USD 64 million, compared with USD 43 million, mainly driven by a valuation gain of USD 37 million in Personal & Corporate Banking and Global Wealth Management, related to UBS’s equity ownership of SIX Group.

    Refer to the “Personal & Corporate Banking” and “Global Wealth Management” sections of this report for more information

Credit loss expense / release

Total net credit loss releases were USD 28 million during the first quarter of 2021, compared with net credit loss expenses of USD 268 million in the prior-year quarter, reflecting net releases of USD 26 million related to stage 1 and 2 positions and net releases of USD 3 million related to credit-impaired (stage 3) positions.

    Refer to “Note 7 Expected credit loss measurement” in the “Consolidated financial statements” section of this report for more information


 

Credit loss (expense) / release

 

 

 

 

 

 

USD million

Global

Wealth

Management

Personal &

Corporate

Banking

Asset

Management

Investment

Bank

Group

Functions

Total

For the quarter ended 31.3.21

 

 

 

 

 

 

Stages 1 and 2

 4 

 16 

 0 

 5 

 0 

 26 

Stage 3

 (2) 

 8 

 0 

 (4) 

 0 

 3 

Total credit loss (expense) / release

 3 

 23 

 0 

 2 

 0 

 28 

 

 

 

 

 

 

 

For the quarter ended 31.12.20

 

 

 

 

 

 

Stages 1 and 2

 8 

 7 

 0 

 18 

 0 

 33 

Stage 3

 (1) 

 15 

 0 

 (108) 

 (4) 

 (99) 

Total credit loss (expense) / release

 7 

 22 

 0 

 (91) 

 (5) 

 (66) 

 

 

 

 

 

 

 

For the quarter ended 31.3.20

 

 

 

 

 

 

Stages 1 and 2

 (12) 

 (16) 

 0 

 (62) 

 0 

 (89) 

Stage 3

 (41) 

 (62) 

 0 

 (60) 

 (16) 

 (179) 

Total credit loss (expense) / release

 (53) 

 (77) 

 0 

 (122) 

 (16) 

 (268) 

 

 

 

 

9 


Group performance  

Operating expenses

 

 

 

 

 

 

 

 

 

For the quarter ended

 

% change from

USD million

 

31.3.21

31.12.20

31.3.20

 

4Q20

1Q20

Personnel expenses

 

 4,801 

 3,989 

 4,321 

 

 20 

 11 

of which: salaries and variable compensation

 

 2,871 

 2,247 

 2,561 

 

 28 

 12 

of which: financial advisor compensation1

 

 1,170 

 1,077 

 1,094 

 

 9 

 7 

of which: other personnel expenses2

 

 759 

 665 

 666 

 

 14 

 14 

General and administrative expenses

 

 1,089 

 1,515 

 1,133 

 

 (28) 

 (4) 

of which: net expenses for litigation, regulatory and similar matters

 

 9 

 148 

 6 

 

 (94) 

 48 

of which: other general and administrative expenses

 

 1,080 

 1,367 

 1,127 

 

 (21) 

 (4) 

Depreciation and impairment of property, equipment and software

 

 508 

 617 

 456 

 

 (18) 

 12 

Amortization and impairment of goodwill and intangible assets

 

 8 

 10 

 16 

 

 (16) 

 (46) 

Total operating expenses

 

 6,407 

 6,132 

 5,926 

 

 4 

 8 

1 Financial advisor compensation consists of grid-based compensation based directly on compensable revenues generated by financial advisors and supplemental compensation calculated on the basis of financial advisor productivity, firm tenure, assets and other variables. It also includes expenses related to compensation commitments with financial advisors entered into at the time of recruitment that are subject to vesting requirements.    2 Consists of expenses related to contractors, social security, post-employment benefit plans, and other personnel expenses.

 

Operating expenses: 1Q21 vs 1Q20

Operating expenses increased by USD 481 million, or 8%, to USD 6,407 million.

Personnel expenses

Personnel expenses increased by USD 480 million to USD 4,801 million, mainly reflecting USD 310 million higher expenses for salaries and variable compensation. Salary costs mainly increased due to foreign currency translation effects and the insourcing of certain activities from third-party vendors into our Business Solutions Centers. Variable compensation increased, mainly due to the first quarter of 2020 including a reduction in relation to funding valuation losses booked within accounting asymmetries in Group Treasury and also due to improved business performance in the first quarter of 2021.

In addition, financial advisor compensation increased by USD 76 million, as a result of higher compensable revenues in the Americas, and social security expenses increased by USD 57 million, broadly in line with the aforementioned increase in expenses for salaries and variable compensation.

    Refer to “Note 5 Personnel expenses” in the “Consolidated financial statements” section of this report for more information

General and administrative expenses

General and administrative expenses decreased by USD 44 million to USD 1,089 million. This was mainly driven by lower consulting fees, as well as a decrease in travel and entertainment expenses as a result of COVID-19-related restrictions. In addition, there was a decrease in outsourcing costs. These effects were partly offset by higher IT expenses and bank levy costs.  

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 6 General and administrative expenses” in the “Consolidated financial statements” section of this report for more information

    Refer to “Note 14 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this report and to the “Regulatory and legal developments” and “Risk factors” sections of our Annual Report 2020 for more information about litigation, regulatory and similar matters

Depreciation, amortization and impairment

Depreciation and impairment of property, equipment and software increased by USD 52 million to USD 508 million, mainly resulting from higher depreciation of internally generated software, largely reflecting an increase in capitalized assets.

Tax: 1Q21 vs 1Q20

We recognized income tax expenses of USD 471 million for the first quarter of 2021, representing an effective tax rate of 20.5%, compared with USD 410 million for the first quarter of 2020 and an effective tax rate of 20.4%.

Current tax expenses were USD 406 million, compared with USD 222 million, and related to taxable profits of UBS Switzerland AG and other entities.

Deferred tax expenses were USD 65 million, compared with USD 188 million, and primarily related to the amortization of deferred tax assets previously recognized in relation to tax losses carried forward and deductible temporary differences of UBS Americas Inc.

We expect a tax rate of around 25% for the remaining nine months of 2021, excluding any potential effects from the reassessment of deferred tax assets in connection with our business planning process and any potential US corporate tax rate changes or other jurisdictional statutory tax rate changes that could be enacted during the year.

 

10 


 

Total comprehensive income attributable to shareholders: 1Q21 vs 1Q20

Total comprehensive income attributable to shareholders was negative USD 330 million, compared with positive USD 4,197 million. Net profit attributable to shareholders was USD 1,824 million, compared with USD 1,595 million, and other comprehensive income (OCI) attributable to shareholders, net of tax, was negative USD 2,154 million, compared with positive USD 2,602 million.

In the first quarter of 2021, OCI related to cash flow hedges was negative USD 1,160 million, mainly reflecting a decrease in unrealized gains on US dollar hedging derivatives resulting from significant increases in the relevant US dollar long-term interest rates. In the first quarter of 2020, OCI related to cash flow hedges was positive USD 1,505 million.

Foreign currency translation OCI was negative USD 744 million, mainly resulting from the weakening of the Swiss franc (6%) and the euro (4%) against the US dollar. OCI related to foreign currency translation in the first quarter of 2020 was negative USD 145 million.

Defined benefit plan OCI was negative USD 113 million in the first quarter of 2021, mainly reflecting negative net pre-tax OCI related to the Swiss pension plan of USD 254 million. This was driven by an extraordinary employer contribution of USD 254 million that increased the gross plan assets but led to an OCI loss as no net pension asset could be recognized on the balance sheet as of 31 March 2021 due to the asset ceiling. As announced in 2018, UBS agreed to mitigate the effects from changes to the Swiss pension plan implemented in 2019 by contributing up to CHF 720 million (USD 762 million at the closing exchange rate as of 31 March 2021) in three installments in 2020, 2021 and 2022. The extraordinary contribution of USD 254 million in the first quarter of 2021 reflects the second installment paid.

Net pre-tax OCI related to our non-Swiss pension plans was positive USD 119 million, mainly driven by the UK and US pension plans. In the first quarter of 2020, defined benefit plan OCI was positive USD 153 million.

OCI associated with financial assets measured at fair value through OCI was negative USD 102 million, compared with positive USD 147 million, and primarily reflected net unrealized losses of USD 131 million following increases in the relevant US dollar long-term interest rates in the first quarter of 2021.

OCI related to own credit on financial liabilities designated at fair value was negative USD 29 million, primarily due to a tightening of our own credit spreads. In the first quarter of 2020, OCI related to own credit on financial liabilities designated at fair value was positive USD 934 million, as our own credit spreads significantly widened during that quarter due to the economic effects of the COVID-19 pandemic.

    Refer to “Statement of comprehensive income” in the “Consolidated financial statements” section of this report for more information

    Refer to “Note 8 Fair value measurement” in the “Consolidated financial statements” section of this report for more information about own credit on financial liabilities designated at fair value

    Refer to “Note 26 Post-employment benefit plans” in the “Consolidated financial statements” section of our Annual Report 2020 for more information about OCI related to defined benefit plans


Sensitivity to interest rate movements

As of 31 March 2021, we estimate that a parallel shift in yield curves by +100 basis points could lead to a combined increase in annual net interest income of approximately USD 1.6 billion in Global Wealth Management and Personal & Corporate Banking. A parallel shift in yield curves by –100 basis points could lead to a combined reduction in annual net interest income of approximately USD 0.4 billion.

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 2021 applied to our banking book. These estimates further assume no change to balance sheet size and structure, constant foreign exchange rates and no specific management action.

    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 we provide 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: 1Q21 vs 1Q20

The cost / income ratio was 73.8%, compared with 72.3%. The increase in income was more than offset by an increase in expenses. The cost / income ratio is measured based on income before credit loss expenses or releases.

Common equity tier 1 capital: 1Q21 vs 4Q20

During the first quarter of 2021, our common equity tier 1 (CET1) capital increased by USD 0.5 billion to USD 40.4 billion, mainly reflecting operating profit before tax of USD 2.3 billion, partly offset by negative foreign currency translation effects of USD 0.8 billion, current tax expenses of USD 0.4 billion, accruals for capital returns to shareholders of USD 0.3 billion and negative defined benefit plans effects of USD 0.2 billion. Our share repurchases of USD 1.1 billion in the first quarter of 2021 did not affect our CET1 capital position as there was an equal reduction in the capital reserve for potential share repurchases.

Return on CET1 capital: 1Q21 vs 1Q20

The annualized return on CET1 capital (RoCET1) was 18.2%, compared with 17.7%, driven by an increase in net profit attributable to shareholders, partly offset by higher average CET1 capital.

Risk-weighted assets: 1Q21 vs 4Q20

Risk-weighted assets (RWA) decreased by USD 1.3 billion to USD 287.8 billion, driven by currency effects of USD 5.6 billion, partly offset by increases from asset size and other movements of USD 2.9 billion, methodology and policy changes of USD 1.1 billion, model updates of USD 0.2 billion, and regulatory add-ons of USD 0.1 billion.

 

11 


Group performance  

Common equity tier 1 capital ratio: 1Q21 vs 4Q20

Our CET1 capital ratio increased 0.2 percentage points to 14.0%, reflecting an increase in CET1 capital of USD 0.5 billion and a USD 1.3 billion decrease of RWA.

Leverage ratio denominator: 1Q21 vs 4Q20

The leverage ratio denominator (LRD) was stable at USD 1,038 billion, as the asset size and other movements of USD 30 billion were largely offset by currency effects of USD 29 billion.

Common equity tier 1 leverage ratio: 1Q21 vs 4Q20

Our CET1 leverage ratio increased from 3.85% to 3.89% in the first quarter of 2021, due to the aforementioned increase in CET1 capital.


Going concern leverage ratio: 1Q21 vs 4Q20

Our going concern leverage ratio remained stable at 5.4% in the first quarter of 2021.

Personnel: 1Q21 vs 4Q20

We employed 71,779 personnel (full-time equivalents) as of 31 March 2021, a net increase of 228 compared with 31 December 2020. This mainly reflects the ongoing insourcing of certain activities from third-party vendors to our Business Solutions Centers.

 

 

 

Return on equity and CET1 capital

 

 

 

 

 

 

As of or for the quarter ended

USD million, except where indicated

 

31.3.21

31.12.20

31.3.20

 

 

 

 

 

Net profit

 

 

 

 

Net profit / (loss) attributable to shareholders

 

 1,824 

 1,636 

 1,595 

 

 

 

 

 

Equity

 

 

 

 

Equity attributable to shareholders

 

 58,026 

 59,445 

 57,917 

Less: goodwill and intangible assets

 

 6,427 

 6,480 

 6,407 

Tangible equity attributable to shareholders

 

 51,599 

 52,965 

 51,510 

Less: other CET1 deductions

 

 11,173 

 13,075 

 14,851 

CET1 capital

 

 40,426 

 39,890 

 36,659 

 

 

 

 

 

Returns

 

 

 

 

Return on equity (%)

 

 12.4 

 11.0 

 11.4 

Return on tangible equity (%)

 

 14.0 

 12.4 

 12.8 

Return on CET1 capital (%)

 

 18.2 

 16.8 

 17.7 

 

 

 

Outlook

Investor sentiment remained positive in the first quarter of 2021, helped by the strong rebound in economic activity and greater optimism regarding the further recovery, supported by mass COVID-19 vaccination campaigns around the globe. Significant fiscal stimulus, notably in the US, along with the prospect of continued accommodative monetary policy, contributed to generally more positive views on the timing and extent of a sustainable economic recovery.

However, economic, social, and geopolitical tensions remain, raising questions around the sustainability and shape of the recovery. Persistently high numbers of COVID-19 infections and hospitalizations, as well as lockdowns and similar measures imposed to control the pandemic, add to these existing concerns, as well as the severity and duration of the effects of the pandemic in certain economic sectors.


Our clients value strength and expert guidance, particularly in these uncertain times, and we remain focused on supporting them with advice and solutions. We expect our revenues in the second quarter of 2021 to be influenced by seasonal factors, such as lower client activity compared with the first quarter of 2021. Higher asset prices should have a positive effect on recurring fee income in our asset gathering businesses. However, the continued uncertainty about the environment and economic recovery could affect both asset prices and client activity.

With our balance sheet for all seasons and our diversified business model, UBS remains well positioned to drive sustainable long-term value for our clients and shareholders.

  

12 


 

UBS business
divisions
and Group Functions

 Management report

  

 


Global Wealth Management 

Global Wealth Management

Global Wealth Management1

 

 

 

 

 

 

 

As of or for the quarter ended

 

% change from

USD million, except where indicated

 

31.3.21

31.12.20

31.3.20

 

4Q20

1Q20

 

 

 

 

 

 

 

 

Results

 

 

 

 

 

 

 

Net interest income

 

 997 

 1,011 

 1,031 

 

 (1) 

 (3) 

Recurring net fee income2

 

 2,629 

 2,468 

 2,434 

 

 7 

 8 

Transaction-based income3

 

 1,183 

 776 

 1,113 

 

 52 

 6 

Other income

 

 37 

 15 

 21 

 

 146 

 72 

Income

 

 4,845 

 4,269 

 4,600 

 

 13 

 5 

Credit loss (expense) / release

 

 3 

 7 

 (53) 

 

 (60) 

 

Total operating income

 

 4,848 

 4,277 

 4,547 

 

 13 

 7 

Total operating expenses

 

 3,439 

 3,412 

 3,329 

 

 1 

 3 

Business division operating profit / (loss) before tax

 

 1,409 

 864 

 1,218 

 

 63 

 16 

 

 

 

 

 

 

 

 

Performance measures and other information

 

 

 

 

 

 

 

Financial advisor variable compensation4,5

 

 1,048 

 955 

 964 

 

 10 

 9 

Compensation commitments with recruited financial advisors4,6

 

 123 

 122 

 130 

 

 0 

 (6) 

Pre-tax profit growth (%)

 

 15.7 

 12.8 

 41.1 

 

 

 

Cost / income ratio (%)

 

 71.0 

 79.9 

 72.4 

 

 

 

Average attributed equity (USD billion)7

 

 18.3 

 17.7 

 16.5 

 

 3 

 11 

Return on attributed equity (%)7

 

 30.8 

 19.5 

 29.6 

 

 

 

Risk-weighted assets (USD billion)7

 

 88.2 

 87.2 

 78.8 

 

 1 

 12 

Leverage ratio denominator (USD billion)7,8

 

 380.6 

 371.2 

 310.6 

 

 3 

 23 

Goodwill and intangible assets (USD billion)

 

 5.1 

 5.1 

 5.1 

 

 (1) 

 0 

Net new fee-generating assets (USD billion)

 

 36.2 

 18.0 

 5.5 

 

 101 

 558 

Fee-generating assets (USD billion)

 

 1,328 

 1,277 

 988 

 

 4 

 34 

Fee-generating asset margin (bps)9

 

 86.0 

 82.4 

 90.3 

 

 

 

Invested assets (USD billion)

 

 3,108 

 3,016 

 2,339 

 

 3 

 33 

Client assets (USD billion)10

 

 3,530 

 3,382 

 2,591 

 

 4 

 36 

Loans, gross (USD billion)11

 

 219.4 

 213.1 

 184.6 

 

 3 

 19 

Customer deposits (USD billion)11

 

 336.7 

 348.0 

 310.9 

 

 (3) 

 8 

Recruitment loans to financial advisors4

 

 1,867 

 1,872 

 1,997 

 

 0 

 (7) 

Other loans to financial advisors4

 

 607 

 697 

 703 

 

 (13) 

 (14) 

Impaired loan portfolio as a percentage of total loan portfolio, gross (%)12,13

 

 0.3 

 0.4 

 0.5 

 

 

 

Advisors (full-time equivalents)

 

 9,582 

 9,575 

 9,983 

 

 0 

 (4) 

1 Comparatives may differ as a result of 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 Recurring net fee income consists 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, as well as credit card fees and administrative fees for accounts.    3 Transaction-based income consists of the non-recurring portion of net fee and commission income, mainly composed of brokerage and transaction-based investment fund 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.    4 Relates to licensed professionals with the ability to provide investment advice to clients in the Americas.    5 Financial advisor variable compensation consists of formulaic compensation based directly on compensable revenues generated by financial advisors and supplemental compensation calculated on the basis of financial advisor productivity, firm tenure, new assets and other variables.    6 Compensation commitments with recruited financial advisors represent expenses related to compensation commitments granted to financial advisors at the time of recruitment that are subject to vesting requirements.    7 Refer to the “Capital management” section of this report for more information.    8 The leverage ratio denominators for the respective periods in 2020 do not reflect the effects of the temporary exemption that applied from 25 March 2020 until 1 January 2021 and was granted by FINMA in connection with COVID-19. Refer to the “Regulatory and legal developments” section of our Annual Report 2020 for more information.    9 Calculated as revenues from fee-generating assets (a portion of which is included in recurring fee income and a portion of which is included in transaction-based income, annualized as applicable) divided by average fee-generating assets for the relevant mandate fee billing period. For the US, fees have been billed on daily balances since the fourth quarter of 2020 and average fee-generating assets is calculated as the average of the monthly average balances. Prior to the fourth quarter of 2020, billing was based on prior quarter-end balances, and the average fee-generating assets was thus the prior quarter-end balance. For balances outside of the US, billing is based on prior month-end balances and average fee-generating assets is thus the average of the prior month-end balances.    10 Client assets are composed of invested assets and other assets held purely for transactional purposes or custody only.    11 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.    12 Refer to the “Risk management and control” section of this report for more information about (credit-)impaired exposures.    13 Excludes loans to financial advisors.

 

14 


 

Results: 1Q21 vs 1Q20

Profit before tax increased by USD 191 million, or 16%, to USD 1,409 million, reflecting higher operating income, partly offset by higher operating expenses.

Operating income

Total operating income increased by USD 301 million, or 7%, to USD 4,848 million, mainly driven by higher recurring net fee and transaction-based income, partly offset by lower net interest income.

Net interest income decreased by USD 34 million, or 3%, to USD 997 million, largely due to lower deposit revenues, driven by a decrease in margins, mainly as a result of lower US dollar interest rates, despite higher deposit volumes. This was partly offset by higher loan revenues resulting from higher loan volumes and margins.

Recurring net fee income increased by USD 195 million, or 8%, to USD 2,629 million, mainly driven by higher average fee-generating assets.

Transaction-based income increased by USD 70 million, or 6%, to USD 1,183 million, driven by continued high levels of client activity in a constructive market environment.

Other income increased by USD 16 million to USD 37 million, mainly reflecting a valuation gain of USD 9 million on our equity ownership of SIX Group.

Net credit loss releases were USD 3 million, compared with net expenses of USD 53 million. Net credit loss releases from stage 1 and 2 positions were USD 4 million, compared with net expenses of USD 12 million. Stage 3 net credit loss expenses were USD 2 million, compared with net expenses of USD 41 million.


Operating expenses

Total operating expenses increased by USD 110 million, or 3%, to USD 3,439 million. The increase was mostly driven by higher financial advisor variable compensation, reflecting higher compensable revenues in the Americas, as well as higher technology expenses. This was partly offset by lower expenses for travel and marketing as a result of COVID-19-related impacts, and a decrease in professional fees.

Fee-generating assets: 1Q21 vs 4Q20

Fee-generating assets increased by USD 51 billion, or 4%, to USD 1,328 billion, driven by net new fee-generating asset inflows of USD 36.2 billion and net positive effects from market performance and foreign currency translation of USD 15.2 billion. Net new fee-generating assets were USD 36.2 billion, with net inflows in all regions.

The fee-generating asset margin decreased 4 basis points to 86 basis points compared with the first quarter of 2020, primarily driven by flows into mandates and funds with lower fees, including single share-class funds in the US without trailing distribution fees. Compared with the fourth quarter of 2020, fee-generating asset margin increased 4 basis points, primarily reflecting higher transactional activity in mandates.

    Refer to the “Recent developments” section of this report for more information about fee-generating assets

Loans: 1Q21 vs 4Q20

Loans increased by USD 6.3 billion, or 3%, to USD 219.4 billion, primarily driven by net new loans of USD 10.5 billion, partly offset by USD 4.2 billion from foreign exchange translation. Net new loans were largely driven by an increase in Lombard loans. Loan penetration was stable at 7.1%.

    Refer to the “Risk management and control” section of this report for more information

 

15 


Global Wealth Management 

Regional breakdown of performance measures

 

 

 

As of or for the quarter ended 31.3.21

USD billion, except where indicated

Americas1

Switzerland

EMEA2

Asia Pacific

Global Wealth Management3

Total operating income (USD million)

 2,547 

 465 

 952 

 881 

 4,848 

Total operating expenses (USD million)

 2,080 

 274 

 665 

 413 

 3,439 

Operating profit / (loss) before tax (USD million)

 467 

 191 

 287 

 468 

 1,409 

Cost / income ratio (%)

 81.7 

 59.0 

 69.9 

 46.9 

 71.0 

Loans, gross

 77.94

 40.4 

 47.9 

 52.6 

 219.4 

Net new loans

 5.5 

 0.9 

 0.7 

 3.4 

 10.5 

Loan penetration (%)5

 4.7 

 14.8 

 7.8 

 9.1 

 7.1 

Fee-generating assets

 793 

 112 

 311 

 112 

 1,328 

Net new fee-generating assets

 17.2 

 3.3 

 6.9 

 8.8 

 36.2 

Invested assets

 1,642 

 274 

 613 

 576 

 3,108 

Advisors (full-time equivalents)

 6,335 

 691 

 1,557 

 909 

 9,582 

1 Including the following business units: United States and Canada; and Latin America.    2 Including the following business units: Europe; Central and Eastern Europe, Greece and Israel; and Middle East and Africa.    3 Including minor functions, which are not included in the four regions individually presented in this table, with USD 3 million of total operating income, USD 7 million of total operating expenses, USD 4 million of operating loss before tax, USD 0.6 billion of loans, USD 0.0 billion of net new loan outflows, USD 1 billion of fee-generating assets, USD 0.1 billion of net new fee-generating asset outflows, USD 3 billion of invested assets and 90 advisors in the first quarter of 2021.    4 Loans include customer brokerage receivables, which are presented in a separate reporting line on the balance sheet.    5 Loans, gross as a percentage of invested assets.

 

 

Regional comments 1Q21 vs 1Q20, except where indicated

Americas

Profit before tax increased by USD 87 million to USD 467 million. Operating income increased by USD 155 million to USD 2,547 million, mainly driven by higher recurring net fee income, reflecting higher average fee-generating assets, and lower credit loss expenses. The cost / income ratio decreased from 83.1% to 81.7%. Loans increased 7% compared with the fourth quarter of 2020, to USD 78 billion, reflecting USD 5.5 billion of net new loans which were mostly in Lombard. Fee-generating assets increased 5% sequentially to USD 793 billion, mainly driven by positive market performance of USD 19.3 billion and net new fee-generating assets of USD 17.2 billion.

Switzerland

Profit before tax increased by USD 7 million to USD 191 million. Operating income increased by USD 25 million to USD 465 million, mainly driven by higher recurring net fee income and net interest income, as well as credit loss releases compared with credit loss expenses in the first quarter of 2020. The cost / income ratio increased from 57.4% to 59.0%. Loans decreased 3% sequentially to USD 40 billion, mainly reflecting foreign currency effects which were partly offset by USD 0.9 billion of net new loans. Fee-generating assets increased 1% sequentially to USD 112 billion, mainly driven by USD 3.3 billion of net new fee-generating assets.

 


EMEA

Profit before tax increased by USD 28 million to USD 287 million. Operating income increased by USD 36 million to USD 952 million, mainly driven by recurring net fee income and credit loss releases, compared with credit loss expenses. The cost / income ratio decreased from 70.4% to 69.9%. Loans decreased 1% compared with the fourth quarter of 2020, to USD 48 billion, mainly reflecting foreign currency effects which were partly offset by USD 0.7 billion of net new loans. Fee-generating assets increased 2% sequentially to USD 311 billion, mainly driven by USD 6.9 billion of net new fee-generating assets.

Asia Pacific

Profit before tax increased by USD 70 million to USD 468 million. Operating income increased by USD 86 million to USD 881 million, mainly driven by transaction-based and recurring net fee income. The cost / income ratio decreased from 49.8% to 46.9%. Loans increased 6% compared with the fourth quarter of 2020, to USD 53 billion, reflecting USD 3.4 billion of net new loans. Fee-generating assets increased 9% sequentially to USD 112 billion, mainly driven by USD 8.8 billion of net new fee-generating assets.

 

  

16 


 

Personal & Corporate Banking

Personal & Corporate Banking – in Swiss francs1

 

 

 

 

 

 

 

 

 

As of or for the quarter ended

 

% change from

CHF million, except where indicated

 

31.3.21

31.12.20

31.3.20

 

4Q20

1Q20

 

 

 

 

 

 

 

 

Results

 

 

 

 

 

 

 

Net interest income

 

 470 

 455 

 493 

 

 3 

 (5) 

Recurring net fee income2

 

 182 

 177 

 170 

 

 3 

 7 

Transaction-based income3

 

 239 

 230 

 264 

 

 4 

 (9) 

Other income

 

 38 

 14 

 19 

 

 168 

 107 

Income

 

 929 

 876 

 946 

 

 6 

 (2) 

Credit loss (expense) / release

 

 22 

 20 

 (74) 

 

 7 

 

Total operating income

 

 950 

 896 

 871 

 

 6 

 9 

Total operating expenses

 

 593 

 578 

 549 

 

 3 

 8 

Business division operating profit / (loss) before tax

 

 358 

 318 

 322 

 

 12 

 11 

 

 

 

 

 

 

 

 

Performance measures and other information

 

 

 

 

 

 

 

Average attributed equity (CHF billion)4

 

 8.3 

 8.2 

 8.4 

 

 1 

 (2) 

Return on attributed equity (%)4

 

 17.3 

 15.5 

 15.3 

 

 

 

Pre-tax profit growth (%)

 

 11.0 

 4.1 

 (16.4) 

 

 

 

Cost / income ratio (%)

 

 63.8 

 66.0 

 58.0 

 

 

 

Net interest margin (bps)

 

 137 

 133 

 149 

 

 

 

Risk-weighted assets (CHF billion)4

 

 64.7 

 63.8 

 65.0 

 

 1 

 0 

Leverage ratio denominator (CHF billion)4,5

 

 224.8 

 219.9 

 218.3 

 

 2 

 3 

Business volume for Personal Banking (CHF billion)

 

 182 

 179 

 168 

 

 2 

 9 

Net new business volume for Personal Banking (CHF billion)

 

 3.4 

 2.1 

 3.2 

 

 

 

Net new business volume growth for Personal Banking (%)6

 

 7.6 

 4.8 

 7.6 

 

 

 

Active Digital Banking clients in Personal Banking (%)7

 

 69.4 

 68.1 

 64.5 

 

 

 

Active Digital Banking clients in Corporate & Institutional Clients (%)8

 

 79.3 

 78.8 

 77.6 

 

 

 

Mobile Banking log-in share in Personal Banking (%)9

 

 70.2 

 70.3 

 64.7 

 

 

 

Client assets (CHF billion)10

 

 727 

 702 

 640 

 

 4 

 14 

Loans, gross (CHF billion)

 

 138.1 

 136.4 

 132.8 

 

 1 

 4 

Customer deposits (CHF billion)

 

 162.5 

 161.1 

 153.0 

 

 1 

 6 

Secured loan portfolio as a percentage of total loan portfolio, gross (%)

 

 92.6 

 92.9 

 91.6 

 

 

 

Impaired loan portfolio as a percentage of total loan portfolio, gross (%)11

 

 1.1 

 1.1 

 1.0 

 

 

 

1 Comparatives may differ as a result of 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 Recurring net fee income consists 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, as well as administrative fees for accounts.    3 Transaction-based income consists 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.    4 Refer to the “Capital management” section of this report for more information.    5 The leverage ratio denominators for the respective periods in 2020 do not reflect the effects of the temporary exemption that applied from 25 March 2020 until 1 January 2021 and was granted by FINMA in connection with COVID-19. Refer to the “Regulatory and legal developments” section of our Annual Report 2020 for more information.    6 Calculated as net new business volume for the period (annualized as applicable) divided by business volume at the beginning of the period.    7 “Clients” refers to the number of unique business relationships operated by Personal Banking and “active” means at least one log-in within the past month (log-in time stamp is allocated to all business relationship numbers in a digital banking contract). Excluded are 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. In the first quarter of 2021, 86.3% of clients of Personal Banking were “activated users” of Digital Banking (i.e., clients who had logged into Digital Banking at least once in the course of their relationship with UBS).    8 “Clients” refers to the number of unique business relationships or legal entities operated by Corporate & Institutional Clients and “active” means at least one log-in within the past month (log-in time stamp is allocated to all business relationship numbers or per legal entity in a digital banking contract). Excluded are clients that do not have an account, mono-product clients and clients that have defaulted on loans or credit facilities.    9 Mobile Banking app log-ins as a percentage of total log-ins via E-Banking and Mobile Banking app in Personal Banking (if a digital banking contract is linked to multiple business relationships, the log-in is attributed to the business relationship with the most banking products in use).    10 Client assets are composed of invested assets and other assets held purely for transactional purposes or custody only. Net new money is not measured for Personal & Corporate Banking.    11 Refer to the “Risk management and control” section of this report for more information about (credit-)impaired exposures.

 

 

17 


Personal & Corporate Banking 

Results: 1Q21 vs 1Q20

Profit before tax increased by CHF 36 million, or 11%, to CHF 358 million, reflecting credit loss releases compared with credit loss expenses in the first quarter of 2020, partly offset by higher operating expenses and lower income.

Operating income

Total operating income increased by CHF 79 million, or 9%, to CHF 950 million, reflecting credit loss releases compared with credit loss expenses in the first quarter of 2020, as well as higher other income and recurring net fee income. This was partly offset by lower transaction-based and net interest income.

Net interest income decreased by CHF 23 million to CHF 470 million, mainly driven by lower deposit revenues, reflecting a decrease in margins mainly as a result of lower US dollar interest rates.

Recurring net fee income increased by CHF 12 million to CHF 182 million, primarily reflecting higher custody, mandate and investment fund fees.


Transaction-based income decreased by CHF 25 million to CHF 239 million, mainly driven by lower revenue from credit card and foreign exchange transactions, reflecting lower spending on travel and leisure by clients due to the COVID-19 pandemic.

Other income increased by CHF 19 million to CHF 38 million, mainly reflecting a valuation gain of CHF 26 million on our equity ownership of SIX Group.

Net credit loss releases for the first quarter of 2021 were CHF 22 million, compared with net expenses of CHF 74 million. Stage 1 and 2 net releases were CHF 14 million, compared with expenses of CHF 15 million. Stage 3 net releases were CHF 8 million, compared with expenses of CHF 60 million.

Operating expenses

Total operating expenses increased by CHF 44 million, or 8%, to CHF 593 million, reflecting higher investments in technology and real estate expenses due to accelerated depreciation resulting from the closure of 44 branches in the first quarter of 2021.

 

 

Personal & Corporate Banking – in US dollars1

 

 

 

 

 

 

 

 

 

As of or for the quarter ended

 

% change from

USD million, except where indicated

 

31.3.21

31.12.20

31.3.20

 

4Q20

1Q20

 

 

 

 

 

 

 

 

Results

 

 

 

 

 

 

 

Net interest income

 

 513 

 503 

 511 

 

 2 

 0 

Recurring net fee income2

 

 198 

 196 

 177 

 

 1 

 12 

Transaction-based income3

 

 261 

 255 

 274 

 

 2 

 (5) 

Other income

 

 41 

 16 

 19 

 

 158 

 113 

Income

 

 1,013 

 970 

 981 

 

 4 

 3 

Credit loss (expense) / release

 

 23 

 22 

 (77) 

 

 5 

 

Total operating income

 

 1,037 

 992 

 904 

 

 4 

 15 

Total operating expenses

 

 647 

 640 

 570 

 

 1 

 14 

Business division operating profit / (loss) before tax

 

 389 

 353 

 334 

 

 10 

 16 

 

 

 

 

 

 

 

 

Performance measures and other information

 

 

 

 

 

 

 

Average attributed equity (USD billion)4

 

 9.1 

 9.0 

 8.7 

 

 1 

 5 

Return on attributed equity (%)4

 

 17.1 

 15.6 

 15.3 

 

 

 

Pre-tax profit growth (%)

 

 16.5 

 13.6 

 (13.5) 

 

 

 

Cost / income ratio (%)

 

 63.9 

 66.0 

 58.0 

 

 

 

Net interest margin (bps)

 

 137 

 133 

 149 

 

 

 

Risk-weighted assets (USD billion)4

 

 68.4 

 72.1 

 67.4 

 

 (5) 

 1 

Leverage ratio denominator (USD billion)4,5

 

 237.8 

 248.3 

 226.5 

 

 (4) 

 5 

Business volume for Personal Banking (USD billion)

 

 193 

 202 

 174 

 

 (4) 

 11 

Net new business volume for Personal Banking (USD billion)

 

 3.7 

 2.3 

 3.3 

 

 

 

Net new business volume growth for Personal Banking (%)6

 

 7.4 

 4.8 

 7.7 

 

 

 

Active Digital Banking clients in Personal Banking (%)7

 

 69.4 

 68.1 

 64.5 

 

 

 

Active Digital Banking clients in Corporate & Institutional Clients (%)8

 

 79.3 

 78.8 

 77.6 

 

 

 

Mobile Banking log-in share in Personal Banking (%)9

 

 70.2 

 70.3 

 64.7 

 

 

 

Client assets (USD billion)10

 

 769 

 793 

 665 

 

 (3) 

 16 

Loans, gross (USD billion)

 

 146.0 

 154.0 

 137.9 

 

 (5) 

 6 

Customer deposits (USD billion)

 

 171.9 

 181.9 

 158.8 

 

 (6) 

 8 

Secured loan portfolio as a percentage of total loan portfolio, gross (%)

 

 92.6 

 92.9 

 91.6 

 

 

 

Impaired loan portfolio as a percentage of total loan portfolio, gross (%)11

 

 1.1 

 1.1 

 1.0 

 

 

 

1 Comparatives may differ as a result of 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 Recurring net fee income consists 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, as well as administrative fees for accounts.    3 Transaction-based income consists 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.    4 Refer to the “Capital management” section of this report for more information.    5 The leverage ratio denominators for the respective periods in 2020 do not reflect the effects of the temporary exemption that applied from 25 March 2020 until 1 January 2021 and was granted by FINMA in connection with COVID-19. Refer to the “Regulatory and legal developments” section of our Annual Report 2020 for more information.    6 Calculated as net new business volume for the period (annualized as applicable) divided by business volume at the beginning of the period.    7 “Clients” refers to the number of unique business relationships operated by Personal Banking and “active” means at least one log-in within the past month (log-in time stamp is allocated to all business relationship numbers in a digital banking contract). Excluded are 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. In the first quarter of 2021, 86.3% of clients of Personal Banking were “activated users” of Digital Banking (i.e., clients who had logged into Digital Banking at least once in the course of their relationship with UBS).    8 “Clients” refers to the number of unique business relationships or legal entities operated by Corporate & Institutional Clients and “active” means at least one log-in within the past month (log-in time stamp is allocated to all business relationship numbers or per legal entity in a digital banking contract). Excluded are clients that do not have an account, mono-product clients and clients that have defaulted on loans or credit facilities.    9 Mobile Banking app log-ins as a percentage of total log-ins via E-Banking and Mobile Banking app in Personal Banking (if a digital banking contract is linked to multiple business relationships, the log-in is attributed to the business relationship with the most banking products in use).    10 Client assets are composed of invested assets and other assets held purely for transactional purposes or custody only. Net new money is not measured for Personal & Corporate Banking.    11 Refer to the “Risk management and control” section of this report for more information about (credit-)impaired exposures.

  

18 


 

Asset Management

Asset Management1

 

 

 

 

 

 

 

 

 

As of or for the quarter ended

 

% change from

USD million, except where indicated

 

31.3.21

31.12.20

31.3.20

 

4Q20

1Q20

 

 

 

 

 

 

 

 

Results

 

 

 

 

 

 

 

Net management fees2

 

 545 

 518 

 477 

 

 5 

 14 

Performance fees

 

 92 

 255 

 36 

 

 (64) 

 153 

Credit loss (expense) / release

 

 0 

 0 

 0 

 

 

 

Total operating income

 

 637 

 774 

 514 

 

 (18) 

 24 

Total operating expenses

 

 410 

 372 

 357 

 

 10 

 15 

Business division operating profit / (loss) before tax

 

 227 

 401 

 157 

 

 (43) 

 45 

 

 

 

 

 

 

 

 

Performance measures and other information

 

 

 

 

 

 

 

Average attributed equity (USD billion)3

 

 2.2 

 2.1 

 1.8 

 

 4 

 22 

Return on attributed equity (%)3

 

 40.8 

 74.9 

 34.4 

 

 

 

Pre-tax profit growth (%)

 

 44.7 

 123.1 

 51.7 

 

 

 

Cost / income ratio (%)

 

 64.4 

 48.1��

 69.5 

 

 

 

Risk-weighted assets (USD billion)3

 

 8.0 

 6.9 

 6.0 

 

 15 

 33 

Leverage ratio denominator (USD billion)3,4

 

 5.4 

 5.8 

 4.9 

 

 (6) 

 10 

Goodwill and intangible assets (USD billion)

 

 1.2 

 1.2 

 1.3 

 

 0 

 (8) 

Net margin on invested assets (bps)5

 

 8 

 15 

 7 

 

 (47) 

 13 

Gross margin on invested assets (bps)

 

 23 

 30 

 24 

 

 (23) 

 (3) 

 

 

 

 

 

 

 

 

Information by business line / asset class

 

 

 

 

 

 

 

Net new money (USD billion)

 

 

 

 

 

 

 

Equities6

 

 6.4 

 25.1 

 15.0 

 

 

 

Fixed Income

 

 13.5 

 (12.0) 

 18.6 

 

 

 

of which: money market

 

 4.3 

 (15.8) 

 9.9 

 

 

 

Multi-asset & Solutions6

 

 3.7 

 7.7 

 0.0 

 

 

 

Hedge Fund Businesses

 

 2.0 

 0.7 

 (2.2) 

 

 

 

Real Estate & Private Markets

 

 0.6 

 0.6 

 1.3 

 

 

 

Total net new money

 

 26.2 

 22.2 

 32.7 

 

 

 

of which: net new money excluding money market

 

 21.9 

 38.0 

 22.8 

 

 

 

 

 

 

 

 

 

 

 

Invested assets (USD billion)

 

 

 

 

 

 

 

Equities6

 

 526 

 506 

 312 

 

 4 

 69 

Fixed Income

 

 279 

 274 

 265 

 

 2 

 5 

of which: money market

 

 101 

 97 

 111 

 

 4 

 (9) 

Multi-asset & Solutions6

 

 175 

 172 

 130 

 

 2 

 35 

Hedge Fund Businesses

 

 50 

 48 

 39 

 

 6 

 30 

Real Estate & Private Markets

 

 92 

 93 

 87 

 

 (2) 

 5 

Total invested assets

 

 1,121 

 1,092 

 832 

 

 3 

 35 

of which: passive strategies

 

 469 

 457 

 324 

 

 3 

 45 

 

 

 

 

 

 

 

 

Information by region

 

 

 

 

 

 

 

Invested assets (USD billion)

 

 

 

 

 

 

 

Americas

 

 267 

 254 

 215 

 

 5 

 24 

Asia Pacific

 

 185 

 181 

 138 

 

 2 

 34 

Europe, Middle East and Africa (excluding Switzerland)

 

 305 

 294 

 196 

 

 4 

 56 

Switzerland

 

 364 

 363 

 283 

 

 0 

 29 

Total invested assets

 

 1,121 

 1,092 

 832 

 

 3 

 35 

 

 

 

 

 

 

 

 

Information by channel

 

 

 

 

 

 

 

Invested assets (USD billion)

 

 

 

 

 

 

 

Third-party institutional

 

 656 

 648 

 497 

 

 1 

 32 

Third-party wholesale

 

 133 

 128 

 86 

 

 4 

 55 

UBS’s wealth management businesses

 

 332 

 316 

 249 

 

 5 

 33 

Total invested assets

 

 1,121 

 1,092 

 832 

 

 3 

 35 

1 Comparatives may differ as a result of 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 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 which are not Asset Management’s performance fees.    3 Refer to the “Capital management” section of this report for more information.    4 The leverage ratio denominators for the respective periods in 2020 do not reflect the effects of the temporary exemption that applied from 25 March 2020 until 1 January 2021 and was granted by FINMA in connection with COVID-19. Refer to the “Regulatory and legal developments” section of our Annual Report 2020 for more information.    5 Calculated as operating profit before tax (annualized as applicable) divided by average invested assets.    6 Comparative figures have been restated as a result of an adjustment in asset classification, effective as of 1 April 2020, in order to better reflect the underlying nature of certain assets, following an internal asset reporting review in light of the evolution of our separately managed accounts initiative in the US with Global Wealth Management. The restatement had no effect on total net new money and no effect on total invested assets. It resulted in an increase of USD 10 billion, or 3%, in invested assets in Equities and a decrease of USD 10 billion, or 7%, in invested assets in Multi-asset & Solutions in the first quarter of 2020.

19 


Asset Management 

Results: 1Q21 vs 1Q20

Profit before tax increased by USD 70 million, or 45%, to USD 227 million, reflecting continued growth in invested assets and positive operating leverage.

Operating income

Total operating income increased by USD 123 million, or 24%, to USD 637 million.

Net management fees increased by USD 68 million, or 14%, to USD 545 million, on a higher average invested asset base, reflecting a combination of a constructive market backdrop, continued strong net new money generation and positive currency translation effects.

Performance fees increased by USD 56 million to USD 92 million, mainly in our Hedge Fund Businesses, partly offset by lower performance fees in our Equities business.


Operating expenses

Total operating expenses increased by USD 53 million, or 15%, to USD 410 million, predominantly driven by personnel expenses, reflecting higher compensable revenues.

Invested assets: 1Q21 vs 4Q20  

Invested assets increased by USD 29 billion to USD 1,121 billion, reflecting positive market performance of USD 29 billion and net new money inflows of USD 26 billion, partly offset by negative foreign currency translation effects of USD 26 billion.

Excluding money market flows, net new money inflows were USD 22 billion.

 

  

20 


 

Investment Bank

Investment Bank1,2

 

 

 

 

 

 

 

 

 

As of or for the quarter ended

 

% change from

USD million, except where indicated

 

31.3.21

31.12.20

31.3.20

 

4Q20

1Q20

 

 

 

 

 

 

 

 

Results

 

 

 

 

 

 

 

Advisory

 

 223 

 190 

 199 

 

 17 

 12 

Capital Markets

 

 565 

 478 

 334 

 

 18 

 69 

Global Banking

 

 788 

 669 

 534 

 

 18 

 48 

Execution Services3

 

 555 

 428 

 590 

 

 30 

 (6) 

Derivatives & Solutions

 

 1,246 

 660 

 984 

 

 89 

 27 

Financing

 

 (319) 

 346 

 464 

 

 

 

Global Markets

 

 1,483 

 1,433 

 2,037 

 

 3 

 (27) 

of which: Equities

 

 920 

 1,065 

 1,148 

 

 (14) 

 (20) 

of which: Foreign Exchange, Rates and Credit

 

 563 

 368 

 889 

 

 53 

 (37) 

Income

 

 2,271 

 2,102 

 2,571 

 

 8 

 (12) 

Credit loss (expense) / release

 

 2 

 (91) 

 (122) 

 

 

 

Total operating income

 

 2,273 

 2,011 

 2,449 

 

 13 

 (7) 

Total operating expenses

 

 1,862 

 1,482 

 1,741 

 

 26 

 7 

Business division operating profit / (loss) before tax

 

 412 

 529 

 709 

 

 (22) 

 (42) 

 

 

 

 

 

 

 

 

Performance measures and other information

 

 

 

 

 

 

 

Pre-tax profit growth (%)

 

 (41.9) 

 

 241.6 

 

 

 

Average attributed equity (USD billion)4

 

 13.0 

 12.6 

 12.4 

 

 3 

 4 

Return on attributed equity (%)4

 

 12.7 

 16.8 

 22.8 

 

 

 

Cost / income ratio (%)

 

 82.0 

 70.5 

 67.7 

 

 

 

Risk-weighted assets (USD billion)4

 

 95.0 

 94.3 

 102.8 

 

 1 

 (8) 

Return on risk-weighted assets, gross (%)

 

 9.6 

 9.0 

 11.2 

 

 

 

Leverage ratio denominator (USD billion)4,5

 

 329.7 

 315.5 

 297.4 

 

 4 

 11 

Return on leverage ratio denominator, gross (%)5

 

 2.8 

 2.7 

 3.5 

 

 

 

Goodwill and intangible assets (USD billion)

 

 0.1 

 0.2 

 0.0 

 

 (10) 

 

Average VaR (1-day, 95% confidence, 5 years of historical data)

 

 11 

 9 

 13 

 

 14 

 (19) 

1 Comparative figures in this table have been restated to reflect the new structure of the Investment Bank, split into Global Banking and Global Markets. Global Banking has two product verticals: Capital Markets and Advisory. Global Markets combines Equities and Foreign Exchange, Rates and Credit (FRC), with three product verticals: Execution Services, Derivatives & Solutions, and Financing.    2 Comparatives may additionally differ as a result of 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 Execution & Platform, which was disclosed in previous periods, has been renamed Execution Services.    4 Refer to the “Capital management” section of this report for more information.    5 The leverage ratio denominators for the respective periods in 2020 do not reflect the effects of the temporary exemption that applied from 25 March 2020 until 1 January 2021 and was granted by FINMA in connection with COVID-19. Refer to the “Regulatory and legal developments” section of our Annual Report 2020 for more information.

 

21 


Investment Bank 

Results: 1Q21 vs 1Q20

Profit before tax decreased by USD 297 million, or 42%, to USD 412 million, driven by a loss related to the default of a
US-based client of our prime brokerage business, reported within Financing in Global Markets. This was partly offset by increased operating income in Global Banking and Derivatives & Solutions within Global Markets.

    Refer to the “Group performance” section of this report for more information about the loss in the prime brokerage business

Operating income

Total operating income decreased by USD 176 million, or 7%, to USD 2,273 million, reflecting lower revenues in Global Markets, partly offset by higher revenues in Global Banking and credit loss releases compared with credit loss expenses in the first quarter of 2020.

Global Banking

Global Banking revenues increased by USD 254 million, or 48%, to USD 788 million, predominantly driven by higher Capital Markets revenues.

Advisory revenues increased by USD 24 million, or 12%, to USD 223 million, mainly due to higher revenues from merger and acquisition transactions, compared with a 3% increase in the global fee pool.

Capital Markets revenues increased by USD 231 million, or 69%, to USD 565 million, mainly reflecting a USD 183 million, or 174%, increase in Equity Capital Markets revenues, compared with an increase in the global fee pool of 342%, driven by elevated IPO activity. In addition, Leveraged Capital Markets revenues increased by USD 153 million to USD 119 million, exceeding the increase in the global fee pool of 35%, mainly as the first quarter of 2020 included mark-to-market losses in leveraged capital markets, corporate lending and real estate finance portfolios. These increases were partly offset by mark-to-market losses in a portfolio of hedging instruments used to hedge the Investment Bank’s lending and leveraged loan portfolio, compared with gains recognized in the first quarter of 2020.

Global Markets

Global Markets revenues decreased by USD 554 million, or 27%, to USD 1,483 million, driven by a loss in our Financing business, partly offset by higher revenues in equity derivatives and cash equities products.

Execution Services revenues decreased by USD 35 million, or 6%, to USD 555 million. Higher revenues from cash equities were more than offset by lower revenues from foreign exchange products that are traded over electronic platforms, as spreads tightened and volumes decreased in more normalized market conditions compared with the prior year, which was affected by the COVID-19 pandemic.

Derivatives & Solutions revenues increased by USD 262 million, or 27%, to USD 1,246 million, reflecting a constructive market environment for equity derivatives and credit products. This increase was partly offset by a decrease in revenues from
foreign exchange and rates products, reflecting a strong first quarter of 2020, which benefited from increased market volumes.

Financing recorded a loss of USD 319 million, driven by a USD 774 million loss on a default of a US-based client of our prime brokerage business.

    Refer to the “Group performance” section of this report for more information about the loss in the prime brokerage business

Of which: Equities

Equities revenues decreased by USD 228 million, or 20%, to USD 920 million, mainly driven by the aforementioned loss in our prime brokerage business, partly offset by higher revenues in equity derivatives and cash equities products.

Of which: Foreign Exchange, Rates and Credit

Foreign Exchange, Rates and Credit revenues decreased by USD 326 million, or 37%, to USD 563 million. The decrease was mostly driven by lower revenues in Foreign Exchange and Rates, compared with strong revenues in the first quarter of 2020, which benefited from increased market volumes and volatility in the wake of the COVID-19 pandemic. These effects were partly offset by increases in Credit revenues.

Credit loss expense / release

Net credit loss releases were USD 2 million, compared with net expenses of USD 122 million. Stage 1 and 2 net releases of USD 5 million were partly offset by Stage 3 net expenses of USD 4 million recognized across various positions. The first quarter of 2020 included USD 62 million of stage 1 and 2 net credit loss expenses and USD 60 million of stage 3 net credit loss expenses.

Operating expenses

Total operating expenses increased by USD 121 million, or 7%, to USD 1,862 million, largely driven by higher personnel expenses, mainly reflecting increased headcount and foreign currency translation effects.

Risk-weighted assets and leverage ratio denominator: 1Q21 vs 4Q20

Risk-weighted assets

Total risk-weighted assets (RWA) increased by USD 1 billion, or 1%, to USD 95 billion.

    Refer to the “Capital management” section of this report for more information

Leverage ratio denominator

The leverage ratio denominator increased by USD 14 billion, or 4%, to USD 330 billion, mainly reflecting a USD 16 billion increase in derivative and securities financing transaction exposures, partly offset by a USD 2 billion decrease in on-balance sheet exposures.

    Refer to the “Capital management” section of this report for more information

 

  

22 


 

Group Functions

Group Functions1

 

 

 

 

 

 

 

 

 

As of or for the quarter ended

 

% change from

USD million, except where indicated

 

31.3.21

31.12.20

31.3.20

 

4Q20

1Q20

 

 

 

 

 

 

 

 

Results

 

 

 

 

 

 

 

Total operating income

 

 (90) 

 63 

 (480) 

 

 

 (81) 

Total operating expenses

 

 49 

 225 

 (71) 

 

 (78) 

 

Operating profit / (loss) before tax

 

 (139) 

 (161) 

 (410) 

 

 (14) 

 (66) 

of which: Group Treasury

 

 (104) 

 (42) 

 (131) 

 

 151 

 (20) 

of which: Non-core and Legacy Portfolio

 

 5 

 69 

 (219) 

 

 (93) 

 

of which: Group Services

 

 (39) 

 (189) 

 (60) 

 

 (79) 

 (34) 

 

 

 

 

 

 

 

 

Additional information

 

 

 

 

 

 

 

Risk-weighted assets (USD billion)2

 

 28.3 

 28.7 

 31.3 

 

 (1) 

 (9) 

Leverage ratio denominator (USD billion)2,3

 

 84.7 

 96.2 

 116.4 

 

 (12) 

 (27) 

1 Comparatives may differ as a result of 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 Refer to the “Capital management” section of this report for more information.    3 The leverage ratio denominators for the respective periods in 2020 do not reflect the effects of the temporary exemption that applied from 25 March 2020 until 1 January 2021 and was granted by FINMA in connection with COVID-19. Refer to the “Regulatory and legal developments” section of our Annual Report 2020 for more information.

 

Results: 1Q21 vs 1Q20

Group Functions recorded a loss before tax of USD 139 million, compared with a loss of USD 410 million.

Group Treasury

The Group Treasury result was negative USD 104 million, compared with negative USD 131 million.

This included net negative income of USD 92 million from accounting asymmetries, including hedge accounting ineffectiveness, compared with net negative income of USD 167 million.

Income related to centralized Group Treasury risk management was negative USD 2 million, compared with negative USD 77 million, mainly driven by additional liquidity costs in relation to COVID-19 market stress in the first quarter of 2020.

Operating expenses increased by USD 108 million to USD 12 million, mainly due to a reduction in variable compensation booked in the first quarter of 2020. This reduction was recorded in relation to funding valuation losses booked within accounting asymmetries, which were largely attributable to a widening of funding spreads on derivatives.


Non-core and Legacy Portfolio

The Non-core and Legacy Portfolio result was positive USD 5 million, compared with negative USD 219 million. This result was mainly due to valuation gains of USD 61 million on our USD 1.6 billion portfolio of auction rate securities (ARS), compared with valuation losses of USD 143 million in the same period last year. Our remaining exposures to ARS were all rated investment grade as of 31 March 2021.

In addition, the first quarter of 2020 included credit loss expenses of USD 16 million.

Group Services

The Group Services result was negative USD 39 million, compared with negative USD 60 million. This mainly resulted from lower funding costs related to deferred tax assets.

  

23 


Selected financial information of our business divisions and Group Functions 

Selected financial information of our business divisions and Group Functions

Selected financial information of our business divisions and Group Functions1

 

 

For the quarter ended 31.3.21

USD million

 

Global Wealth Management

Personal &

Corporate

Banking

Asset

Manage-

ment

Investment Bank

Group Functions

Total

Operating income

 

 4,848 

 1,037 

 637 

 2,273 

 (90) 

 8,705 

 

 

 

 

 

 

 

 

Operating expenses

 

 3,439 

 647 

 410 

 1,862 

 49 

 6,407 

 

 

 

 

 

 

 

 

Operating profit / (loss) before tax

 

 1,409 

 389 

 227 

 412 

 (139) 

 2,298 

 

 

 

 

 

 

 

 

 

 

For the quarter ended 31.12.20

USD million

 

Global Wealth Management

Personal &

Corporate

Banking

Asset

Manage-

ment

Investment Bank

Group Functions

Total

Operating income

 

 4,277 

 992 

 774 

 2,011 

 63 

 8,117 

of which: valuation gain on auction rate securities2

 

 

 

 

 

 134 

 134 

 

 

 

 

 

 

 

 

Operating expenses

 

 3,412 

 640 

 372 

 1,482 

 225 

 6,132 

of which: impairment of internally generated software3

 

 

 

 

 

 67 

 67 

 

 

 

 

 

 

 

 

Operating profit / (loss) before tax

 

 864 

 353 

 401 

 529 

 (161) 

 1,985 

 

 

 

 

 

 

 

 

 

 

For the quarter ended 31.3.20

USD million

 

Global Wealth Management

Personal &

Corporate

Banking

Asset

Manage-

ment

Investment Bank

Group Functions

Total

Operating income

 

 4,547 

 904 

 514 

 2,449 

 (480) 

 7,934 

 

 

 

 

 

 

 

 

Operating expenses

 

 3,329 

 570 

 357 

 1,741 

 (71) 

 5,926 

of which: net restructuring expenses

 

 61 

 1 

 5 

 19 

 0 

 86 

 

 

 

 

 

 

 

 

Operating profit / (loss) before tax

 

 1,218 

 334 

 157 

 709 

 (410) 

 2,008 

1 The “of which” components of operating income and operating expenses disclosed in this table are items that are not recurring or necessarily representative of the underlying business performance for the reporting period specified.    2 Reflects a valuation gain recognized as a result of a recovery in underlying market conditions, following a change in valuation methodology. Refer to “Note 21 Fair value measurement” in the “Consolidated financial statements” section of our Annual Report 2020 for more information. This gain was more than offset by valuation losses recognized earlier in 2020.    3 Relates to impairment of internally generated software resulting from a decision in the fourth quarter of 2020 to not proceed with an internal business transfer from UBS Switzerland AG to UBS AG.

  

24 


 

Risk, capital, liquidity and funding, and balance sheet

Management report

 

 

 



 

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 our Annual Report 2020.

The ongoing COVID-19 pandemic and the associated containment measures continue to cause economic dislocation. The related effects on credit, market, country and operational risk in the first quarter of 2021 are reflected in the following sections.

    Refer to the “Recent developments” section of this report for more information about our response to COVID-19


Credit risk

Credit loss expense / release

Total net credit loss releases were USD 28 million, reflecting net releases of USD 26 million related to stage 1 and 2 positions and net releases of USD 3 million related to credit-impaired (stage 3) positions.

    Refer to “Note 7 Expected credit loss measurement” in the “Consolidated financial statements” section of this report for more information about credit loss expense / release

    Refer to “Note 1 Summary of significant accounting policies”, “Note 9 Financial assets at amortized cost and other positions in scope of expected credit loss measurement” and “Note 20 Expected credit loss measurement” in the “Consolidated financial statements” section of our Annual Report 2020 for more information about the scenario updates

 

 

Credit loss (expense) / release

 

 

 

 

 

 

USD million

Global

Wealth

Management

Personal &

Corporate

Banking

Asset

Management

Investment

Bank

Group

Functions

Total

For the quarter ended 31.3.21

 

 

 

 

 

 

Stages 1 and 2

 4 

 16 

 0 

 5 

 0 

 26 

Stage 3

 (2) 

 8 

 0 

 (4) 

 0 

 3 

Total credit loss (expense) / release

 3 

 23 

 0 

 2 

 0 

 28 

 

 

 

 

 

 

 

For the quarter ended 31.12.20

 

 

 

 

 

 

Stages 1 and 2

 8 

 7 

 0 

 18 

 0 

 33 

Stage 3

 (1) 

 15 

 0 

 (108) 

 (4) 

 (99) 

Total credit loss (expense) / release

 7 

 22 

 0 

 (91) 

 (5) 

 (66) 

 

 

 

 

 

 

 

 

 

27 


Risk, capital, liquidity and funding, and balance sheet | Risk management and control 

Overall banking products exposures

Overall banking products exposure decreased marginally, by USD 2 billion to USD 637 billion as of 31 March 2021.

The credit-impaired gross exposure decreased by USD 325 million to USD 3,453 million. The decrease stemmed mainly from Global Wealth Management and Personal & Corporate Banking.

In Personal & Corporate Banking, loans and advances to customers decreased by USD 7.9 billion, mainly driven by the effects of the US dollar appreciating against the Swiss franc on a mostly Swiss franc-denominated portfolio. In Global Wealth Management, the USD 6.1 billion increase in loans and advances to customers was mainly driven by higher volumes of Lombard loans in the US and Asia Pacific. In the Investment Bank, loans and advances to customers decreased by USD 1.2 billion.

Exposure related to traded products increased by USD 5.2 billion during the first quarter of 2021, driven by a combination of increased market movements and client activity in both the Investment Bank and Global Wealth Management.

Committed credit facilities

We did not observe an increase in drawing of committed credit facilities by clients in the first quarter of 2021. We manage our credit risk on the aggregate of drawn and committed undrawn credit facilities and model full drawing of committed facilities in our stress testing framework.

Loan underwriting

In the Investment Bank, new loan underwriting activity and distributions continued to be robust during the first quarter of 2021. As of 31 March 2021, mandated loan underwriting commitments totaled USD 4.5 billion on a notional basis (compared with USD 4.9 billion as of 31 December 2020). As of 31 March 2021, USD 0.3 billion of commitments had not yet been distributed as originally planned.

Loan underwriting exposures are 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.


Swiss mortgage portfolio

Of our USD 159 billion total Swiss real estate portfolio, USD 144 billion related to residential real estate, USD 6 billion to commercial retail and office real estate, and USD 9 billion to industrial and other real estate.

The residential portfolio consists of USD 119 billion for single-family homes (average LTV of 54%) and USD 25 billion in residential income-producing real estate (average LTV of 52%). We are also carefully monitoring the level of risk in our Swiss commercial retail and office real estate portfolio (average LTV of 45%) and its resilience to the economic impact of COVID-19.

    Refer to the “Risk management and control” section of our Annual Report 2020 for more information about our Swiss mortgage portfolio

Exposure to the Swiss economy and Swiss corporates

Within Personal & Corporate Banking, certain industry sectors continue to exhibit higher risk due to COVID-19 and the associated containment measures. Industries with a negative outlook include tourism and media, and, to a lesser degree: retail; culture, sports and education; and watches. Our exposure to the tourism sector (including hotels, restaurants and transport) totaled USD 2.0 billion as of 31 March 2021, with hotels accounting for USD 1.0 billion of this exposure. Our other exposures included the following: USD 1.5 billion to the retail sector; USD 1.0 billion to the culture, sports and education sector; USD 0.3 billion to the watch sector; and USD 0.2 billion to the media sector. Apart from a few large counterparties, our exposures within these sectors are highly diversified across Switzerland.

 

 

28 


 

Banking and traded products exposure in our business divisions and Group Functions

 

 

31.3.21

USD million

 

Global Wealth

Management

Personal &

Corporate

Banking

Asset

Management

Investment

Bank

Group

Functions

Total

Banking products1

 

 

 

 

 

 

 

Gross exposure

 

 312,061 

 216,848 

 3,033 

 58,459 

 46,637 

 637,037 

of which: loans and advances to customers (on-balance sheet)

 

 214,417 

 146,027 

 1 

 12,799 

 4,547 

 377,791 

of which: guarantees and loan commitments (off-balance sheet)

 

 9,787 

 26,969 

 0 

 15,747 

 3,128 

 55,630 

Traded products2,3

 

 

 

 

 

 

 

Gross exposure

 

 11,746 

 812 

 0 

 43,944 

 56,502 

of which: over-the-counter derivatives

 

 8,956 

 795 

 0 

 14,413 

 24,164 

of which: securities financing transactions

 

 0 

 0 

 0 

 21,273 

 21,273 

of which: exchange-traded derivatives

 

 2,790 

 17 

 0 

 8,258 

 11,065 

Other credit lines, gross4

 

 11,322 

 23,925 

 0 

 4,148 

 29 

 39,424 

 

 

 

 

 

 

 

 

Total credit-impaired exposure, gross (stage 3)

 

 1,105 

 1,899 

 0 

 443 

 7 

 3,453 

Total allowances and provisions for expected credit losses (stages 1 to 3)

 

 304 

 769 

 1 

 295 

 9 

 1,378 

of which: stage 1

 

 99 

 125 

 0 

 74 

 3 

 301 

of which: stage 2

 

 51 

 186 

 0 

 53 

 0 

 290 

of which: stage 3 (allowances and provisions for credit-impaired exposures)

 

 153 

 458 

 1 

 169 

 6 

 787 

 

 

 

 

 

 

 

 

 

 

31.12.20

USD million

 

Global Wealth Management

Personal &

Corporate

Banking

Asset

Management

Investment

Bank

Group

Functions

Total

Banking products1

 

 

 

 

 

 

 

Gross exposure

 

 300,368 

 227,139 

 3,374 

 56,237 

 52,199 

 639,317 

of which: loans and advances to customers (on-balance sheet)

 

 208,324 

 153,975 

 1 

 13,964 

 4,324 

 380,589 

of which: guarantees and loan commitments (off-balance sheet)

 

 10,153 

 28,814 

 0 

 15,936 

 3,550 

 58,453 

Traded products2,3

 

 

 

 

 

 

 

Gross exposure

 

 9,919 

 1,201 

 0 

 40,215 

 51,335 

of which: over-the-counter derivatives

 

 6,946 

 1,182 

 0 

 11,236 

 19,364 

of which: securities financing transactions

 

 0 

 0 

 0 

 21,753 

 21,753 

of which: exchange-traded derivatives

 

 2,973 

 19 

 0 

 7,227 

 10,218 

Other credit lines, gross4

 

 12,201 

 24,950 

 0 

 2,952 

 31 

 40,134 

 

 

 

 

 

 

 

 

Total credit-impaired exposure, gross (stage 3)

 

 1,324 

 1,997 

 0 

 450 

 7 

 3,778 

Total allowances and provisions for expected credit losses (stages 1 to 3)

 

 318 

 842 

 1 

 298 

 10 

 1,468 

of which: stage 1

 

 103 

 130 

 0 

 70 

 3 

 306 

of which: stage 2

 

 54 

 216 

 0 

 63 

 0 

 333 

of which: stage 3 (allowances and provisions for credit-impaired exposures)

 

 160 

 497 

 1 

 165 

 6 

 829 

1 IFRS 9 gross exposure including other financial assets at amortized cost, but excluding cash, receivables from securities financing transactions, cash collateral receivables on derivative instruments, financial assets at FVOCI, irrevocable committed prolongation of existing loans and unconditionally revocable committed credit lines, and forward starting reverse repurchase and securities borrowing agreements.    2 Internal management view of credit risk, which differs in certain respects from IFRS.    3 As counterparty risk for traded products is managed at counterparty level, no further split between exposures in the Investment Bank and Group Functions is provided.    4 Unconditionally revocable committed credit lines.  

 

 

Global Wealth Management and Personal & Corporate Banking loans and advances to customers, gross

 

 

Global Wealth Management

 

Personal & Corporate Banking

USD million

 

31.3.21

31.12.20

 

31.3.21

31.12.20

Secured by residential property

 

 59,114 

 60,021 

 

 105,205 

 111,554 

Secured by commercial / industrial property1

 

 3,243 

 3,273 

 

 18,694 

 19,623 

Secured by cash

 

 22,155 

 22,722 

 

 2,594 

 2,860 

Secured by securities

 

 112,359 

 104,652 

 

 1,783 

 2,003 

Secured by guarantees and other collateral

 

 15,564 

 15,605 

 

 7,011 

 6,942 

Unsecured loans and advances to customers

 

 1,980 

 2,051 

 

 10,739 

 10,994 

Total loans and advances to customers, gross

 

 214,417 

 208,324 

 

 146,027 

 153,975 

Allowances

 

 (186) 

 (190) 

 

 (616) 

 (676) 

Total loans and advances to customers, net of allowances

 

 214,231 

 208,134 

 

 145,411 

 153,299 

1 Includes exposures with mixed collateral as security, where the primary purpose of the loan is not to finance a specific property.

 

29 


Risk, capital, liquidity and funding, and balance sheet | Risk management and control 

Market risk

We continued to maintain generally low levels of management value-at-risk (VaR). Average management VaR (1‑day, 95% confidence level) increased marginally, from USD 11 million in the fourth quarter of 2020 to USD 12 million.


There was one Group VaR negative backtesting exception in the first quarter of 2021 related to a loss in the prime brokerage business as explained in the Group performance section of this report. There were no further negative backtesting exceptions within the most recent 250-business-day window, and therefore, the Swiss Financial Market Supervisory Authority (FINMA) VaR multiplier derived from backtesting exceptions for market risk risk-weighted assets remained unchanged compared with the prior quarter, at 3.0.

 

Management value-at-risk (1-day, 95% confidence, 5 years of historical data) of our business divisions and

Group Functions by general market risk type1

 

 

 

 

 

 

Average by risk type

USD million

 

Min.

Max.

Period end

Average

Equity

Interest

rates

Credit

spreads

Foreign

exchange

Commodities

Global Wealth Management

 

 1 

 1 

 1 

 1 

 0 

 1 

 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

 

 3 

 36 

 35 

 11 

 8 

 8 

 8 

 3 

 3 

Group Functions

 

 6 

 7 

 6 

 6 

 0 

 4 

 5 

 1 

 0 

Diversification effect2,3

 

 

 

 (7) 

 (6) 

 0 

 (4) 

 (6) 

 (1) 

 0 

Total as of 31.3.21

 

 4 

 36 

 36 

 12 

 8 

 9 

 8 

 3 

 3 

Total as of 31.12.20

 

 8 

 14 

 11 

 11 

 7 

 8 

 8 

 3 

 3 

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 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 Functions and the VaR for the Group as a whole.    3 As the minima and maxima for different business divisions and Group Functions occur on different days, it is not meaningful to calculate a portfolio diversification effect.

 

As of 31 March 2021, the interest rate sensitivity of our banking book to a +1-basis-point parallel shift in yield curves was negative USD 31.4 million, compared with negative USD 27.2 million as of 31 December 2020. The change in the interest rate sensitivity was driven by the execution of transactions that aim to protect our net interest income should interest rates decrease and the issuance of additional tier 1 (AT1) capital instruments. The reported interest rate sensitivity excludes the additional tier 1 (AT1) capital instruments as per FINMA Pillar 3 disclosure requirements, with a sensitivity of USD 5.2 million per basis point, and our equity, goodwill and real estate, with a modeled sensitivity of USD 21.4 million per basis point, of which USD 5.2 million and USD 15.3 million are attributable to the Swiss franc and the US dollar portfolios, respectively.

The most adverse of the six FINMA interest rate scenarios was the “Parallel up” scenario, which resulted in a change in the economic value of equity of negative USD 6.2 billion, representing a pro forma reduction of 11.0% of tier 1 capital, which is well below the regulatory outlier test of 15% of tier 1 capital. The immediate effect of the “Parallel up” scenario on tier 1 capital as of 31 March 2021 would be a reduction of 1.1%, or USD 0.6 billion, arising from the part of our banking book that is measured at fair value through profit or loss and from the financial assets measured at fair value through other comprehensive income. This scenario would, however, have a positive effect on net interest income.

    Refer to “Interest rate risk in the banking book” in the “Market risk” section of our Annual Report 2020 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 equity, capital and net interest income of Global Wealth Management and Personal & Corporate Banking

 

Interest rate risk – banking book

 

 

 

 

 

 

 

USD million

+1 bp

Parallel up1

Parallel down1

Steepener2

Flattener3

Short-term up4

Short-term down5

CHF

 (4.9) 

 (692.7) 

 784.9 

 (360.2) 

 224.2 

 (60.5) 

 64.8 

EUR

 (1.2) 

 (224.5) 

 250.4 

 (61.8) 

 19.7 

 (49.1) 

 42.4 

GBP

 0.0 

 5.1 

 (7.9) 

 (10.0) 

 9.2 

 12.9 

 (10.2) 

USD

 (24.9) 

 (5,153.4) 

 4,622.3 

 (1,185.5) 

 (5.8) 

 (1,952.6) 

 2,236.1 

Other

 (0.5) 

 (113.5) 

 (42.7) 

 0.8 

 (42.8) 

 (79.9) 

 (28.5) 

Total effect on economic value of equity as per Pillar 3 requirement as of 31.3.21

 (31.4) 

 (6,179.0) 

 5,607.0 

 (1,616.6) 

 204.5 

 (2,129.3) 

 2,304.7 

Additional tier 1 (AT1) capital instruments

 5.2 

 995.7 

 (1,088.6) 

 22.2 

 194.8 

 587.3 

 (612.6) 

Total including AT1 capital instruments as of 31.3.21

 (26.2) 

 (5,183.2) 

 4,518.4 

 (1,594.4) 

 399.3 

 (1,542.0) 

 1,692.1 

Total effect on economic value of equity as per Pillar 3 requirement as of 31.12.20

 (27.2) 

 (5,604.8) 

 4,956.9 

 (849.1) 

 (394.1) 

 (2,332.7) 

 2,435.2 

Total including AT1 capital instruments as of 31.12.20

 (23.0) 

 (4,789.7) 

 4,088.5 

 (942.0) 

 (121.2) 

 (1,759.1) 

 1,836.2 

1 Rates across all tenors move by ±150 bps for Swiss franc, ±200 bps for euro and US dollar and ±250 bps for pound sterling.    2 Short-term rates decrease and long-term rates increase.    3 Short-term rates increase and long-term rates decrease.    4 Short-term rates increase more than long-term rates.    5 Short-term rates decrease more than long-term rates.

 

30 


 

Country risk

The COVID-19 pandemic, and its impact on growth, employment, debt dynamics and supply chains, has become an important driver of country risk, and we expect this to be the case for at least the near future. While case numbers have come down amid vaccination roll-outs in some major economies, such as the US and the UK, several large European countries (e.g., France, Germany and Italy) experienced new COVID-19 spikes, which dampened the Eurozone growth outlook for the second quarter of 2021. We expect measures taken by governments and central banks that are intended to support their economies to give rise to increased sovereign risk.


We remain watchful of developments in Europe and political changes in a number of countries. Our direct exposure to peripheral European countries is limited, although we have significant country risk exposure to the major European economies, including the UK, Germany and France.

We continue to monitor potential trade policy disputes, as well as economic and political developments, notably in Hong Kong.

A number of emerging markets are facing economic, political and market pressures, particularly in light of challenges related to the COVID-19 pandemic. Our exposure to emerging market countries is well diversified.

    Refer to the “Risk management and control” section of our Annual Report 2020 for more information

 

 

Exposures to Eurozone countries rated lower than AAA / Aaa by at least one major rating agency

 

USD million

 

31.3.21

 

31.12.20

 

 

Banking products, gross1

 

Traded products

 

Trading inventory

 

Total

 

Total

 

 

Before

hedges

Net of

hedges

 

Before

hedges

Net of

hedges

 

Net long per issuer

 

 

Net of

hedges

 

 

Net of

hedges

Austria

 

 195 

 194 

 

 301 

 301 

 

 601 

 

 1,097 

 1,096 

 

 1,665 

 1,664 

Belgium

 

 168 

 168 

 

 197 

 197 

 

 37 

 

 401 

 401 

 

 869 

 869 

Finland

 

 21 

 21 

 

 63 

 63 

 

 222 

 

 305 

 305 

 

 394 

 394 

France

 

 1,453 

 1,452 

 

 1,913 

 1,788 

 

 5,141 

 

 8,507 

 8,381 

 

 7,473 

 7,344 

Greece

 

 17 

 14 

 

 0 

 0 

 

 8 

 

 26 

 22 

 

 23 

 15 

Ireland

 

 532 

 504 

 

 31 

 31 

 

 149 

 

 712 

 684 

 

 938 

 909 

Italy

 

 1,212 

 1,175 

 

 247 

 246 

 

 54 

 

 1,513 

 1,475 

 

 1,571 

 1,528 

Portugal

 

 30 

 30 

 

 12 

 12 

 

 8 

 

 51 

 51 

 

 55 

 55 

Spain

 

 401 

 308 

 

 156 

 155 

 

 201 

 

 758 

 664 

 

 822 

 724 

Other2

 

 902 

 877 

 

 27 

 27 

 

 30 

 

 959 

 934 

 

 1,096 

 1,071 

Total

 

 4,932 

 4,742 

 

 2,947 

 2,822 

 

 6,449 

 

 14,328 

 14,013 

 

 14,907 

 14,573 

1 Before deduction of IFRS 9 ECL allowances and provisions.    2 Represents aggregate exposures to Andorra, Cyprus, Estonia, Latvia, Lithuania, Malta, Monaco, Montenegro, San Marino, Slovakia and Slovenia.

 

 

Operational risk

Operational resilience, conduct and financial crime remain the key non-financial risk themes for UBS and the financial services industry. Operational resilience also continues to be a focus area for regulators globally, with a particular emphasis on measures taken to respond to the ongoing COVID-19 pandemic. 

To address continuously developing regulatory requirements on resilience (including the Basel Principles and the UK policy statement released on 31 March 2021), we have established a global program to enhance our current capabilities. The existing resilience built into our operations and the effectiveness of our business continuity management and operational risk procedures (including those which apply to third-party service providers) have been critical in handling the ongoing COVID-19 pandemic and have enabled us to continue to serve our clients without material impact. We have maintained stable operations while complying with governmental requirements regarding containment that have been imposed in many of our principal locations, and we remain focused on the safety and well-being of our staff, with a particular focus on countries severely impacted by the third wave.  

    Refer to the “Recent developments” section of this report for more information


Increases in the sophistication of cyberattacks and related frauds are being seen worldwide. To date, our security controls, regular communications to help employees stay cybersafe while working remotely, and enhanced monitoring of cyber threats have been effective, with cybersecurity incidents that occurred during the first quarter of 2021 not having had any significant impact.

UBS maintains its focus on innovation and digitalization to create value for our clients. In order to deliver this we focus on timely changes to frameworks, including consideration of new or revised controls, working practices and oversight with the aim of mitigating any new risks introduced. 

Achieving fair outcomes for our clients, upholding market integrity and cultivating the highest standards of employee conduct are of critical importance to the firm. As such, management of conduct risks is an integral part of our risk framework. We continue to focus on effectively embedding the conduct risk framework across our activities, enhancing management information and maintaining momentum on fostering a strong culture.

 

31 


Risk, capital, liquidity and funding, and balance sheet | Risk management and control 

Remote working arrangements can also lead to increased conduct risk, inherent risk of fraudulent activities, potential increases in the number of suspicious transactions, and increased information security risks (in particular regarding client identifying data and unpublished price-sensitive information). Our increased monitoring and supervision remain in place for remote working, including programs to educate clients and employees on fraud risk, where our protocols for interaction to mitigate this risk have been updated. We are staying abreast of emerging trends in order to deploy further mitigating activity as necessary.

In addition to the effects of COVID-19, financial crime (e.g., 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.

An effective financial crime prevention program remains essential for UBS. Money laundering and financial fraud techniques are becoming increasingly sophisticated, while geopolitical volatility makes the sanctions landscape more complex, and new risks emerge, such as virtual currencies and related activities or investments.

The Office of the Comptroller of the Currency issued a Cease and Desist Order against the firm in May 2018 related to our US branch know-your-customer (KYC) and anti-money-laundering (AML) programs. In response, we initiated an extensive program for the purpose of ensuring sustainable remediation of US- relevant Bank Secrecy Act / AML issues across all US legal entities. We introduced significant improvements to the framework in 2019 and 2020, and are continuing to implement these improvements, which we believe will yield the planned enhancements to our AML controls.

We continue to focus on strategic enhancements for AML / KYC and sanctions programs on a global scale to cope with evolving risk profiles and regulatory expectations, including the exploration of new technologies and more sophisticated rules-based monitoring, using self-learning systems to identify potentially suspicious transactions and behavior.

  

32 


 

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 our Annual Report 2020, which provides more information about our capital management objectives, planning and activities, as well as the Swiss SRB total loss-absorbing capacity framework.

Additional regulatory disclosures for UBS Group AG on a consolidated basis are provided in our 31 March 2021 Pillar 3 report. The Pillar 3 report also includes information relating to our significant regulated subsidiaries and sub-groups (UBS AG standalone, UBS Switzerland AG standalone, UBS Europe SE consolidated and UBS Americas Holding LLC consolidated) as of 31 March 2021 and is available under “Pillar 3 disclosures” at ubs.com/investors

Capital and other regulatory information for UBS AG consolidated in accordance with the Basel III framework, as applicable to Swiss SRBs, will be provided in the UBS AG first quarter 2021 report, which will be available as of 30 April 2021 under “Quarterly reporting” at ubs.com/investors. 

UBS Group AG is a holding company and conducts substantially all of its operations through UBS AG and subsidiaries thereof. UBS Group AG and UBS AG 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.

 

33 


Risk, capital, liquidity and funding, and balance sheet | Capital management 

Swiss SRB requirements and information

We are subject to the going and gone concern requirements of the Swiss Capital Adequacy Ordinance (the CAO) that include the too-big-to-fail provisions applicable to Swiss SRBs, which became effective on 1 July 2016 and were phased in until 1 January 2020. Information about the Swiss SRB capital framework, and about Swiss SRB going and gone concern requirements that were phased in until the end of 2019, is provided under “Capital management” in the “Capital, liquidity and funding, and balance sheet” section of our Annual Report 2019 

Instruments meeting gone concern requirements are eligible until one year before maturity, subject to a maximum of 25% of the gone concern requirements which can be met with instruments that have a remaining maturity of between one and two years (i.e., are in the last year of eligibility). Once at least 75% of the 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. Our gone concern instruments are reasonably evenly distributed across maturities, with no major cliffs; therefore this 25% restriction has not affected us and we do not expect that it will affect us in the future.

The aforementioned requirements are also applicable to UBS AG consolidated. UBS Switzerland AG and UBS AG are subject to going and gone concern requirements on a standalone basis, as detailed in our 31 March 2021 Pillar 3 report, which is available under “Pillar 3 disclosures” at ubs.com/investors. 

The table below provides the risk-weighted assets (RWA)- and leverage ratio denominator (LRD)-based requirements and information as of 31 March 2021.

  

Swiss SRB going and gone concern requirements and information

As of 31.3.21

 

          RWA

 

          LRD

USD million, except where indicated

 

in %

 

 

in %

 

Required going concern capital

 

 

 

 

 

 

Total going concern capital

 

 13.961

 40,193 

 

 4.881

 50,613 

Common equity tier 1 capital

 

 9.66 

 27,816 

 

 3.382

 35,040 

of which: minimum capital

 

 4.50 

 12,952 

 

 1.50 

 15,573 

of which: buffer capital

 

 5.14 

 14,794 

 

 1.88 

 19,467 

of which: countercyclical buffer

 

 0.02 

 70 

 

 

 

Maximum additional tier 1 capital

 

 4.30 

 12,377 

 

 1.50 

 15,573 

of which: additional tier 1 capital

 

 3.50 

 10,074 

 

 1.50 

 15,573 

of which: additional tier 1 buffer capital

 

 0.80 

 2,303 

 

 

 

 

 

 

 

 

 

 

Eligible going concern capital

 

 

 

 

 

 

Total going concern capital

 

 19.56 

 56,288 

 

 5.42 

 56,288 

Common equity tier 1 capital

 

 14.05 

 40,426 

 

 3.89 

 40,426 

Total loss-absorbing additional tier 1 capital3

 

 5.51 

 15,862 

 

 1.53 

 15,862 

of which: high-trigger loss-absorbing additional tier 1 capital

 

 4.64 

 13,361 

 

 1.29 

 13,361 

of which: low-trigger loss-absorbing additional tier 1 capital

 

0.87

 2,501 

 

 0.24 

2,501

 

 

 

 

 

 

 

Required gone concern capital4

 

 

 

 

 

 

Total gone concern loss-absorbing capacity5

 

 10.59 

 30,468 

 

 3.76 

 39,012 

of which: base requirement

 

 12.86 

 37,015 

 

 4.50 

 46,720 

of which: additional requirement for market share and LRD

 

 1.08 

 3,109 

 

 0.38 

 3,893 

of which: applicable reduction on requirements

 

 (3.35) 

 (9,655) 

 

 (1.12) 

 (11,601) 

of which: rebate granted (equivalent to 47.5% of maximum rebate)

 

 (2.54) 

 (7,301) 

 

 (0.89) 

 (9,247) 

of which: reduction for usage of low-trigger tier 2 capital instruments

 

 (0.82) 

 (2,355) 

 

 (0.23) 

 (2,355) 

 

 

 

 

 

 

 

Eligible gone concern capital

 

 

 

 

 

 

Total gone concern loss-absorbing capacity

 

 15.42 

 44,381 

 

 4.27 

 44,381 

Total tier 2 capital

 

 1.82 

 5,253 

 

 0.51 

 5,253 

of which: low-trigger loss-absorbing tier 2 capital

 

 1.64 

 4,709 

 

 0.45 

 4,709 

of which: non-Basel III-compliant tier 2 capital

 

 0.19 

 544 

 

 0.05 

 544 

TLAC-eligible senior unsecured debt

 

 13.59 

 39,129 

 

 3.77 

 39,129 

 

 

 

 

 

 

 

Total loss-absorbing capacity

 

 

 

 

 

 

Required total loss-absorbing capacity

 

 24.55 

 70,661 

 

 8.63 

 89,626 

Eligible total loss-absorbing capacity

 

 34.98 

 100,669 

 

 9.70 

 100,669 

 

 

 

 

 

 

 

Risk-weighted assets / leverage ratio denominator

 

 

 

 

 

 

Risk-weighted assets

 

 

 287,828 

 

 

 

Leverage ratio denominator

 

 

 

 

 

 1,038,225 

1 Includes applicable add-ons of 1.08% for RWA and 0.375% for LRD.    2 Our minimum CET1 leverage ratio requirement of 3.375% consists of a 1.5% base requirement, a 1.5% base buffer capital requirement, a 0.25% LRD add-on requirement and a 0.125% market share add-on requirement based on our Swiss credit business.    3 Includes outstanding low-trigger loss-absorbing additional tier 1 (AT1) capital instruments, which are available under the Swiss SRB 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 The gone concern requirement after the application of the rebate for resolvability measures and the reduction for the use of higher quality capital instruments is floored at 8.6% and 3% for the RWA- and LRD-based requirements, respectively. This means that the combined reduction may not exceed 5.34 percentage points for the RWA-based requirement of 13.94% and 1.875 percentage points for the LRD-based requirement of 4.875%.   

 

34 


 

Total loss-absorbing capacity

The table below provides Swiss SRB going and gone concern information based on the rules that have been effective since 1 January 2020.

 

Swiss SRB going and gone concern information

 

 

 

 

 

 

 

USD million, except where indicated

 

31.3.21

31.12.20

 

 

 

 

Eligible going concern capital

 

 

 

Total going concern capital

 

 56,288 

 56,178 

Total tier 1 capital

 

 56,288 

 56,178 

Common equity tier 1 capital

 

 40,426 

 39,890 

Total loss-absorbing additional tier 1 capital

 

 15,862 

 16,288 

of which: high-trigger loss-absorbing additional tier 1 capital

 

 13,361 

 13,711 

of which: low-trigger loss-absorbing additional tier 1 capital

 

 2,501 

 2,577 

 

 

 

 

Eligible gone concern capital

 

 

 

Total gone concern loss-absorbing capacity

 

 44,381 

 45,545 

Total tier 2 capital

 

 5,253 

 7,744 

of which: low-trigger loss-absorbing tier 2 capital

 

 4,709 

 7,201 

of which: non-Basel III-compliant tier 2 capital

 

 544 

 543 

TLAC-eligible senior unsecured debt

 

 39,129 

 37,801 

 

 

 

 

Total loss-absorbing capacity

 

 

 

Total loss-absorbing capacity

 

 100,669 

 101,722 

 

 

 

 

Risk-weighted assets / leverage ratio denominator

 

 

 

Risk-weighted assets

 

 287,828 

 289,101 

Leverage ratio denominator1

 

 1,038,225 

 1,037,150 

 

 

 

 

Capital and loss-absorbing capacity ratios (%)

 

 

 

Going concern capital ratio

 

 19.6 

 19.4 

of which: common equity tier 1 capital ratio

 

 14.0 

 13.8 

Gone concern loss-absorbing capacity ratio

 

 15.4 

 15.8 

Total loss-absorbing capacity ratio

 

 35.0 

 35.2 

 

 

 

 

Leverage ratios (%)1

 

 

 

Going concern leverage ratio

 

 5.4 

 5.4 

of which: common equity tier 1 leverage ratio

 

 3.89 

 3.85 

Gone concern leverage ratio

 

 4.3 

 4.4 

Total loss-absorbing capacity leverage ratio

 

 9.7 

 9.8 

1 The leverage ratio denominator (LRD) and leverage ratios for 31 December 2020 do not reflect the effects of the temporary exemption that applied from 25 March 2020 until 1 January 2021 and was granted by FINMA in connection with COVID-19. Refer to the “Regulatory and legal developments” section and to “Application of the temporary COVID-19-related FINMA exemption of central bank sight deposits” in the “Capital, liquidity and funding, and balance sheet” section of our Annual Report 2020, available under “Annual reporting” at ubs.com/investors, for more information.

 

35 


Risk, capital, liquidity and funding, and balance sheet | Capital management 

Total loss-absorbing capacity and movement

Our total loss-absorbing capacity (TLAC) was stable at USD 100.7 billion in the first quarter of 2021.

Going concern capital and movement

During the first quarter of 2021, our going concern capital was stable at USD 56.3 billion. Our common equity tier 1 (CET1) capital increased by USD 0.5 billion to USD 40.4 billion, mainly reflecting operating profit before tax of USD 2.3 billion, partly offset by negative foreign currency translation effects of USD 0.8 billion, current tax expenses of USD 0.4 billion, accruals for capital returns to shareholders of USD 0.3 billion and negative defined benefit plans effects of USD 0.2 billion. Our share repurchases of USD 1.1 billion in the first quarter of 2021 did not affect our CET1 capital position as there was an equal reduction in the capital reserve for potential share repurchases.

Our additional tier 1 (AT1) capital decreased by USD 0.4 billion to USD 15.9 billion, reflecting effects from interest rate risk hedges, foreign currency translation and other factors.

Gone concern loss-absorbing capacity and movement

Our total gone concern loss-absorbing capacity decreased by USD 1.2 billion to USD 44.4 billion, mainly reflecting a decrease of eligibility of three TLAC-eligible senior unsecured debt instruments denominated in US dollars and Swiss francs due to shortening of residual tenor, the call of a EUR 2 billion low-trigger tier 2 capital instrument, and effects from interest rate risk hedges and foreign currency translation. These decreases were partly offset by the issuance of ten new TLAC-eligible senior unsecured debt instruments denominated in US dollars, euro, Swiss francs and Australian dollars, which amounted to a total of USD 5.8 billion equivalent.

    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 0.2 percentage points to 14.0%, reflecting an increase in CET1 capital of USD 0.5 billion and a USD 1.3 billion decrease in RWA.

Our CET1 leverage ratio increased from 3.85% to 3.89% due to the aforementioned increase in CET1 capital.

Our gone concern loss-absorbing capacity ratio decreased from 15.8% to 15.4%, mainly driven by the aforementioned decrease in gone concern loss-absorbing capacity and partly offset by the aforementioned decrease of RWA.

Our gone concern leverage ratio decreased from 4.4% to 4.3%, mainly due to the aforementioned decrease in gone concern loss-absorbing capacity.

 

Reconciliation of IFRS equity to Swiss SRB common equity tier 1 capital

 

 

 

USD million

 

31.3.21

31.12.20

Total IFRS equity

 

 58,333 

 59,765 

Equity attributable to non-controlling interests

 

 (307) 

 (319) 

Defined benefit plans, net of tax

 

 (104) 

 (41) 

Deferred tax assets recognized for tax loss carry-forwards

 

 (5,582) 

 (5,617) 

Deferred tax assets on temporary differences, excess over threshold

 

 

 (5) 

Goodwill, net of tax1

 

 (6,243) 

 (6,319) 

Intangible assets, net of tax

 

 (265) 

 (296) 

Compensation-related components (not recognized in net profit)

 

 (1,420) 

 (1,349) 

Expected losses on advanced internal ratings-based portfolio less provisions

 

 (342) 

 (330) 

Unrealized (gains) / losses from cash flow hedges, net of tax

 

 (1,138) 

 (2,321) 

Own credit related to gains / losses on financial liabilities measured at fair value that existed at the balance sheet date

 

 401 

 382 

Own credit related to gains / losses on derivative financial instruments that existed at the balance sheet date

 

 (48) 

 (45) 

Unrealized gains related to debt instruments at fair value through OCI, net of tax

 

 (96) 

 (152) 

Prudential valuation adjustments

 

 (152) 

 (150) 

Accruals for dividends to shareholders for 2020

 

 (1,314) 

 (1,314) 

Capital reserve for potential share repurchases

 

 (949) 

 (2,000) 

Other2

 

 (349) 

 0 

Total common equity tier 1 capital

 

 40,426 

 39,890 

1 Includes goodwill related to significant investments in financial institutions of USD 388 million as of 31 March 2021 (31 December 2020: USD 413 million) presented on the balance sheet line Investments in associates.    2 Includes accruals for dividends to shareholders for the current year and other items.    

 

36 


 

Swiss SRB total loss-absorbing capacity movement

 

USD million

 

 

 

Going concern capital

Swiss SRB

Common equity tier 1 capital as of 31.12.20

 39,890 

Operating profit before tax

 2,298 

Current tax (expense) / benefit

 (406) 

Foreign currency translation effects

 (754) 

Share repurchase programs

 (1,051) 

Defined benefit plans1

 (176) 

Capital reserve for potential share repurchases

 1,051 

Other2

 (427) 

Common equity tier 1 capital as of 31.3.21

 40,426 

Loss-absorbing additional tier 1 capital as of 31.12.20

 16,288 

Issuance of a high-trigger loss-absorbing additional tier 1 capital instrument

 1,500 

Call of a high-trigger loss-absorbing additional tier 1 capital instrument

 (1,500) 

Interest rate risk hedge, foreign currency translation and other effects

 (426) 

Loss-absorbing additional tier 1 capital as of 31.3.21

 15,862 

Total going concern capital as of 31.12.20

 56,178 

Total going concern capital as of 31.3.21

 56,288 

 

 

Gone concern loss-absorbing capacity

 

Tier 2 capital as of 31.12.20

 7,744 

Call of a low-trigger loss-absorbing tier 2 capital instrument

 (2,415) 

Interest rate risk hedge, foreign currency translation and other effects

 (76) 

Tier 2 capital as of 31.3.21

 5,253 

TLAC-eligible senior unsecured debt as of 31.12.20

 37,801 

Issuance of TLAC-eligible senior unsecured debt instruments

 5,847 

Decrease in eligibility due to shortening of residual tenor

 (2,813) 

Interest rate risk hedge, foreign currency translation and other effects

 (1,707) 

TLAC-eligible senior unsecured debt as of 31.3.21

 39,129 

Total gone concern loss-absorbing capacity as of 31.12.20

 45,545 

Total gone concern loss-absorbing capacity as of 31.3.21

 44,381 

 

 

Total loss-absorbing capacity

 

Total loss-absorbing capacity as of 31.12.20

 101,722 

Total loss-absorbing capacity as of 31.3.21

 100,669 

1 Includes a USD 254 million payment of the second installment to employees’ retirement assets in the Swiss pension fund, as announced in 2018. A similar contribution will be made in the first quarter of 2022. Refer to “Note 26 Post-employment benefit plans” in the “Consolidated financial statements” section of our Annual Report 2020 for more information.    2 Includes movements related to accruals for dividends for the current year and other items.

  

 

37 


Risk, capital, liquidity and funding, and balance sheet | Capital management 

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 12 billion and our CET1 capital by USD 1.3 billion as of 31 March 2021 (31 December 2020: USD 13 billion and USD 1.3 billion, respectively) and decreased our CET1 capital ratio 15 basis points (31 December 2020: 15 basis points). Conversely, we estimate that a 10% appreciation of the US dollar against other currencies would have decreased our RWA by USD 11 billion and our CET1 capital by USD 1.2 billion (31 December 2020: USD 12 billion and USD 1.2 billion, respectively) and increased our CET1 capital ratio 15 basis points (31 December 2020: 15 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 63 billion as of 31 March 2021 (31 December 2020: USD 65 billion) and decreased our Swiss SRB going concern leverage ratio 16 basis points (31 December 2020: 16 basis points). Conversely, we estimate that a 10% appreciation of the US dollar against other currencies would have decreased our LRD by USD 57 billion (31 December 2020: USD 58 billion) and increased our Swiss SRB going concern leverage ratio 16 basis points (31 December 2020: 16 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 our Annual Report 2020 for more information


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 described in “Note 14 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this report. We have used for this purpose the advanced measurement approach (AMA) methodology that we apply 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 standalone basis, 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 4.0 billion as of 31 March 2021. 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 “Operational risk” in the “Risk management and control” section of our Annual Report 2020 for more information

    Refer to “Note 14 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this report for more information

 

38 


 

Risk-weighted assets

During the first quarter of 2021, RWA decreased by USD 1.3 billion to USD 287.8 billion, driven by currency effects of USD 5.6 billion, partly offset by increases from asset size and other movements of USD 2.9 billion, methodology and policy changes of USD 1.1 billion, model updates of USD 0.2 billion, and regulatory add-ons of USD 0.1 billion.       

 

Movement in risk-weighted assets by key driver

USD billion

 

RWA as of 31.12.20

Currency

effects

Methodology and policy changes

Model updates / changes

Regulatory add-ons

Asset size and other1

RWA as of 31.3.21

Credit and counterparty credit risk2

 

 178.1 

 (5.2) 

 1.1 

 0.2 

 

 4.6 

 178.9 

Non-counterparty-related risk3

 

 23.4 

 (0.4) 

 

 

 

 (0.2) 

 22.8 

Market risk

 

 11.8 

 

 

 0.0 

 0.1 

 (1.5) 

 10.4 

Operational risk

 

 75.8 

 

 

 

 

 0.0 

 75.8 

Total

 

 289.1 

 (5.6) 

 1.1 

 0.2 

 0.1 

 2.9 

 287.8 

1 Includes the Pillar 3 categories “Asset size,” “Credit quality of counterparties,” “Acquisitions and disposals” and “Other.” For more information, refer to our Pillar 3 report, which is available under “Pillar 3 disclosures” at ubs.com/investors.    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, property, equipment, software and other items.

 

Credit and counterparty credit risk

Credit and counterparty credit risk RWA increased by USD 0.8 billion to USD 178.9 billion as of 31 March 2021. The RWA movements described below exclude currency effects.

Asset size and other movements resulted in a USD 4.6 billion increase in RWA.

     Investment Bank RWA increased by USD 3.4 billion, driven by loans and loan commitments, as well as higher derivatives RWA, mainly due to increased trading activity.

     Asset Management RWA increased by USD 1.1 billion, driven by higher RWA related to investments in funds.

     Global Wealth Management RWA increased by USD 0.5 billion, driven by loans.

     Personal & Corporate Banking RWA decreased by USD 0.4 billion, driven by lower RWA on loans, as well as lower RWA relating to a shift in the composition of the high quality liquid assets (HQLA) portfolio.

 

Changes to counterparty credit ratings and loss given default resulted in a net decrease of less than USD 2 billion in RWA during the first quarter of 2021.

RWA increased by USD 1.3 billion from model updates, as well as methodology and policy changes, resulting in an increase in credit valuation adjustment risk related to derivatives for Lombard clients and an increase for real estate portfolios, partly offset by decreases for derivatives and securities financing transactions (SFTs).

We expect that further methodology changes and model updates will increase credit and counterparty credit risk RWA by around USD 3 billion in the second quarter of 2021. The extent and timing of RWA changes may vary as methodology changes and model updates are completed and receive regulatory approval. In addition, changes in the composition of the relevant portfolios and other market factors will affect RWA. 

    Refer to the “Risk management and control” section of this report and our 31 March 2021 Pillar 3 report, which is available under “Pillar 3 disclosures” at ubs.com/investorsfor more information

    Refer to “Credit risk models” in the “Risk management and control” section of our Annual Report 2020 for more information


Market risk

Market risk RWA decreased by USD 1.5 billion to USD 10.4 billion in the first quarter of 2021, driven by a decrease of USD 1.5 billion in asset size and other movements in the Investment Bank’s Global Markets business. This decrease was due to lower average stressed VaR levels, mainly as a result of the Investment Bank’s equities trading business. This was partially offset by an increase in regulatory VaR RWA.

    Refer to the “Risk management and control” section of this report and our 31 March 2021 Pillar 3 report, which is available under “Pillar 3 disclosures” at ubs.com/investors, for more information

    Refer to ”Market risk” in the “Risk management and control” section of our Annual Report 2020 for more information

Operational risk

Operational risk RWA were USD 75.8 billion as of 31 March 2021, unchanged from 31 December 2020.

    Refer to “Operational risk” in the “Risk management and control” section of our Annual Report 2020 for information about the advanced measurement approach model

 

39 


Risk, capital, liquidity and funding, and balance sheet | Capital management 

Risk-weighted assets by business division and Group Functions

USD billion

 

Global Wealth

Management

Personal &

Corporate

Banking

Asset

Manage-

ment

Investment

Bank

Group Functions

Total

RWA

 

 

31.3.21

Credit and counterparty credit risk1

 

 47.9 

 59.2 

 4.0 

 60.7 

 7.0 

 178.9 

Non-counterparty-related risk2

 

 6.2 

 2.0 

 0.6 

 3.4 

 10.6 

 22.8 

Market risk

 

 1.3 

 0.0 

 0.0 

 7.7 

 1.3 

 10.4 

Operational risk

 

 32.8 

 7.2 

 3.3 

 23.2 

 9.3 

 75.8 

Total

 

 88.2 

 68.4 

 8.0 

 95.0 

 28.3 

 287.8 

 

 

 

 

 

 

 

 

 

 

31.12.20

Credit and counterparty credit risk1

 

 46.7 

 62.8 

 2.9 

 58.5 

 7.2 

 178.1 

Non-counterparty-related risk2

 

 6.2 

 2.1 

 0.7 

 3.6 

 10.7 

 23.4 

Market risk

 

 1.4 

 0.0 

 0.0 

 9.0 

 1.4 

 11.8 

Operational risk

 

 32.8 

 7.2 

 3.3 

 23.2 

 9.3 

 75.8 

Total

 

 87.2 

 72.1 

 6.9 

 94.3 

 28.7 

 289.1 

 

 

 

 

 

 

 

 

 

 

31.3.21 vs 31.12.20

Credit and counterparty credit risk1

 

 1.1 

 (3.6) 

 1.1 

 2.2 

 (0.1) 

 0.8 

Non-counterparty-related risk2

 

 0.0 

 (0.1) 

 (0.1) 

 (0.2) 

 (0.1) 

 (0.5) 

Market risk

 

 (0.1) 

 0.0 

 0.0 

 (1.3) 

 (0.1) 

 (1.5) 

Operational risk

 

 0.0 

 0.0 

 0.0 

 0.0 

 0.0 

 0.0 

Total

 

 1.0 

 (3.7) 

 1.0 

 0.7 

 (0.4) 

 (1.3) 

1 Includes settlement risk, credit valuation adjustments, equity exposures in the banking book and securitization exposures in the banking book.    2 Non-counterparty-related risk includes deferred tax assets recognized for temporary differences (31 March 2021: USD 9.9 billion; 31 December 2020: USD 10.0 billion), property, equipment, software and other items (31 March 2021: USD 12.9 billion; 31 December 2020: USD 13.4 billion).

 

40 


 

Leverage ratio denominator

During the first quarter of 2021, the LRD was stable at USD 1,038 billion, as the asset size and other movements of USD 30 billion were largely offset by currency effects of USD 29 billion.

  

Movement in leverage ratio denominator by key driver

USD billion

 

LRD as of

31.12.201

Currency

effects

Asset size and

other

LRD as of

31.3.21

On-balance sheet exposures (excluding derivative exposures and SFTs)2

 

 806.6 

 (24.6) 

 8.2 

 790.2 

Derivative exposures

 

 96.6 

 (1.8) 

 11.4 

 106.2 

Securities financing transactions

 

 115.3 

 (1.5) 

 9.4 

 123.2 

Off-balance sheet items

 

 31.3 

 (0.9) 

 0.8 

 31.2 

Deduction items

 

 (12.8) 

 0.1 

 0.0 

 (12.6) 

Total

 

 1,037.1 

 (28.7) 

 29.8 

 1,038.2 

1 The respective period shown ending on 31 December 2020 does not reflect the effects of the temporary exemption that applied from 25 March 2020 until 1 January 2021 and was granted by FINMA in connection with COVID-19. Refer to the “Regulatory and legal developments” section and to “Application of the temporary COVID-19-related FINMA exemption of central bank sight deposits” in the “Capital, liquidity and funding, and balance sheet” section of our Annual Report 2020, available under “Annual reporting” at ubs.com/investors, for more information.    2 Excludes derivative financial instruments, cash collateral receivables on derivative instruments, cash collateral on securities borrowed, reverse repurchase agreements, margin loans and prime brokerage receivables related to securities financing transactions, which are presented separately under Derivative exposures and Securities financing transactions in this table.   

 

The LRD movements described below exclude currency effects.

On-balance sheet exposures increased by USD 8 billion, mainly driven by higher lending assets, largely in Global Wealth Management, and an increase in cash and balances at central banks, partly offset by lower HQLA securities and lower trading assets.

Derivative exposures increased by USD 11 billion, mainly reflecting an increase in potential future exposure and market-driven movements in the Investment Bank.


SFTs increased by USD 9 billion, mainly driven by excess cash re-investment in Group Functions and an increase in securities borrowing activities in the Investment Bank.

    Refer to the “Balance sheet and off-balance sheet” section of this report for more information about balance sheet movements

  

41 


Risk, capital, liquidity and funding, and balance sheet | Capital management 

Leverage ratio denominator by business division and Group Functions

USD billion

 

Global Wealth

Management

Personal &

Corporate

Banking

Asset

Management

Investment

Bank

Group Functions

Total

 

 

31.3.21

Total IFRS assets

 

 377.0 

 221.4 

 28.6 

 370.8 

 109.9 

 1,107.7 

Difference in scope of consolidation2

 

 (0.2) 

 0.0 

 (21.5) 

 0.0 

 0.1 

 (21.5) 

Less: derivative exposures and SFTs3

 

 (29.7) 

 (15.1) 

 (0.6) 

 (194.5) 

 (56.1) 

 (295.9) 

On-balance sheet exposures

 

 347.2 

 206.3 

 6.5 

 176.3 

 53.9 

 790.2 

Derivative exposures

 

 6.7 

 3.2 

 0.0 

 89.7 

 6.6 

 106.2 

Securities financing transactions

 

 25.6 

 12.6 

 0.6 

 55.6 

 28.9 

 123.2 

Off-balance sheet items

 

 6.4 

 15.8 

 0.0 

 8.3 

 0.7 

 31.2 

Items deducted from Swiss SRB tier 1 capital

 

 (5.3) 

 (0.1) 

 (1.6) 

 (0.2) 

 (5.4) 

 (12.6) 

Total

 

 380.6 

 237.8 

 5.4 

 329.7 

 84.7 

 1,038.2 

 

 

 

 

 

 

 

 

 

 

31.12.201

Total IFRS assets

 

 367.7 

 231.7 

 28.6 

 369.7 

 128.1 

 1,125.8 

Difference in scope of consolidation2

 

 (0.1) 

 

 (21.1) 

 0.0 

 0.1 

 (21.2) 

Less: derivative exposures and SFTs3

 

 (34.0) 

 (16.7) 

 (0.7) 

 (191.6) 

 (54.9) 

 (298.0) 

On-balance sheet exposures

 

 333.6 

 215.0 

 6.7 

 178.0 

 73.3 

 806.6 

Derivative exposures

 

 6.6 

 2.0 

 0.0 

 82.7 

 5.3 

 96.6 

Securities financing transactions

 

 30.1 

 15.1 

 0.7 

 46.5 

 22.9 

 115.3 

Off-balance sheet items

 

 6.1 

 16.3 

 0.0 

 8.5 

 0.4 

 31.3 

Items deducted from Swiss SRB tier 1 capital

 

 (5.2) 

 (0.1) 

 (1.6) 

 (0.3) 

 (5.5) 

 (12.8) 

Total

 

 371.2 

 248.3 

 5.8 

 315.5 

 96.2 

 1,037.1 

 

 

 

31.3.21 vs 31.12.20

Total IFRS assets

 

 9.3 

 (10.3) 

 0.0 

 1.2 

 (18.2) 

 (18.1) 

Difference in scope of consolidation2

 

 0.0 

 0.0 

 (0.4) 

 0.0 

 0.0 

 (0.4) 

Less: derivative exposures and SFTs3

 

 4.3 

 1.6 

 0.1 

 (2.9) 

 (1.2) 

 2.0 

On-balance sheet exposures

 

 13.6 

 (8.7) 

 (0.3) 

 (1.7) 

 (19.4) 

 (16.4) 

Derivative exposures

 

 0.1 

 1.1 

 0.0 

 7.0 

 1.4 

 9.6 

Securities financing transactions

 

 (4.5) 

 (2.5) 

 (0.2) 

 9.0 

 6.0 

 7.9 

Off-balance sheet items

 

 0.3 

 (0.5) 

 0.0 

 (0.2) 

 0.3 

 (0.1) 

Items deducted from Swiss SRB tier 1 capital

 

 (0.1) 

 0.0 

 0.0 

 0.0 

 0.1 

 0.1 

Total

 

 9.4 

 (10.6) 

 (0.4) 

 14.1 

 (11.5) 

 1.1 

1 The respective period shown ending on 31 December 2020 does not reflect the effects of the temporary exemption that applied from 25 March 2020 until 1 January 2021 and was granted by FINMA in connection with COVID-19. Refer to the “Regulatory and legal developments” section and to “Application of the temporary COVID-19-related FINMA exemption of central bank sight deposits” in the “Capital, liquidity and funding, and balance sheet” section of our Annual Report 2020, available under “Annual reporting” at ubs.com/investors, for more information.    2 Represents the difference between the IFRS and the regulatory scope of consolidation, which is the applicable scope for the LRD calculation.    3 Consists of derivative financial instruments, cash collateral receivables on derivative instruments, receivables from securities financing transactions, and margin loans, as well as prime brokerage receivables and financial assets at fair value not held for trading, both related to securities financing transactions, in accordance with the regulatory scope of consolidation, which are presented separately under Derivative exposures and Securities financing transactions.  

 

  

42 


 

Equity attribution and return on attributed equity

Under our equity attribution framework, tangible equity is attributed based on a weighting of 50% each for average risk-weighted assets (RWA) and average leverage ratio denominator (LRD), which both include resource allocations from Group Functions to the business divisions (the BDs). Average RWA and LRD are converted to common equity tier 1 (CET1) capital equivalents using capital ratios of 12.5% and 3.75%, respectively. 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 BD, the CET1 capital equivalent of RBC is used as a floor for that BD.

In addition to tangible equity, we allocate equity to the BDs to support goodwill and intangible assets.

Furthermore, we allocate to the BDs attributed equity related to certain CET1 deduction items, such as compensation-related components and expected losses on the advanced internal ratings-based portfolio less general provisions.


We attribute all remaining Basel III capital deduction items to Group Functions. These items include deferred tax assets (DTAs) recognized for tax loss carry-forwards, DTAs on temporary differences in excess of the threshold, accruals for shareholder returns, and unrealized gains from cash flow hedges.

    Refer to the “Capital, liquidity and funding, and balance sheet” section of our Annual Report 2020 for more information about the equity attribution framework

    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 billion

 

31.3.21

31.12.20

31.3.20

Global Wealth Management

 

 18.3 

 17.7 

 16.5 

Personal & Corporate Banking

 

 9.1 

 9.0 

 8.7 

Asset Management

 

 2.2 

 2.1 

 1.8 

Investment Bank

 

 13.0 

 12.6 

 12.4 

Group Functions

 

 16.1 

 18.0 

 16.8 

of which: deferred tax assets1

 

 6.3 

 6.5 

 6.9 

of which: related to retained RWA and LRD2,3

 

 3.3 

 3.5 

 2.8 

of which: accruals for shareholder returns and others4

 

 6.5 

 8.0 

 7.0 

Average equity attributed to business divisions and Group Functions

 

 58.7 

 59.4 

 56.2 

1 Includes average attributed equity related to the Basel III capital deduction items for deferred tax assets (deferred tax assets recognized for tax loss carry-forwards and deferred tax assets on temporary differences, excess over threshold), as well as retained RWA and LRD related to deferred tax assets.    2 Excludes average attributed equity related to retained RWA and LRD related to deferred tax assets.    3 The temporary exemption that applied from 25 March 2020 until 1 January 2021 and that was granted by FINMA in connection with COVID-19 was not applied when calculating average attributed equity for the respective periods in 2020. Refer to the “Regulatory and legal developments” section of our Annual Report 2020 for more information.    4 The decrease in attributed equity related to accruals for shareholder returns and others compared with the fourth quarter of 2020 is primarily driven by lower unrealized gains from cash flow hedges and lower accruals for shareholder returns.

 

Return on attributed equity1

 

 

For the quarter ended

USD billion

 

31.3.21

31.12.20

31.3.20

Global Wealth Management

 

 30.8 

 19.5 

 29.6 

Personal & Corporate Banking

 

 17.1 

 15.6 

 15.3 

Asset Management

 

 40.8 

 74.9 

 34.4 

Investment Bank

 

 12.7 

 16.8 

 22.8 

1 Return on attributed equity for Group Functions is not shown, as it is not meaningful.

43 


Risk, capital, liquidity and funding, and balance sheet | Liquidity and funding management 

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 our Annual Report 2020, which provides more information about the Group’s strategy, objectives and governance in connection with liquidity and funding management.


Liquidity coverage ratio

The UBS Group quarterly average liquidity coverage ratio (LCR) remained broadly unchanged and above the prudential requirement communicated by the Swiss Financial Market Supervisory Authority (FINMA).

    Refer to our 31 March 2021 Pillar 3 report, available under “Pillar 3 disclosures” at ubs.com/investors, for more information about the liquidity coverage ratio

    Refer to “Liquidity and funding management” in the “Capital, liquidity and funding, and balance sheet” section of our Annual Report 2020 for more information about liquidity management and the liquidity coverage ratio

 

Liquidity coverage ratio

 

 

 

USD billion, except where indicated

 

Average 1Q211

Average 4Q201

High-quality liquid assets

 

 221 

 214 

Net cash outflows

 

 146 

 141 

Liquidity coverage ratio (%)2

 

 151 

 152 

1 Calculated based on an average of 63 data points in the first quarter of 2021 and 63 data points in the fourth quarter of 2020.    2 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 2021, our estimated pro forma net stable funding ratio (NSFR) was 114%, a decrease of 5 percentage points compared with 31 December 2020. This reflected a USD 15 billion decrease in available stable funding, driven by lower customer deposits, largely reflecting currency effects, which was slightly offset by increases in debt issued. Required stable funding increased by USD 6 billion, driven by an increase in derivative financial instruments.


The NSFR regulation was finalized in the fourth quarter of 2020 with the release of the revised FINMA Circular 2015/2 “Liquidity risks – banks.” We are on schedule to implement the final regulation by July 2021.

    Refer to “Liquidity and funding management” in the “Capital, liquidity and funding, and balance sheet” section of our Annual Report 2020 for more information about the NSFR

 

Pro forma net stable funding ratio

 

 

 

USD billion, except where indicated

 

31.3.21

31.12.20

Available stable funding

 

 548 

 563 

Required stable funding

 

 479 

 473 

Pro forma net stable funding ratio (%)

 

 114 

 119 

  

44 


 

Balance sheet and off-balance sheet

Strategy, objectives and governance

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 our Annual Report 2020, which provides more information about the Group’s 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 2021 vs 31 December 2020)

As of 31 March 2021, balance sheet assets totaled USD 1,108 billion, a decrease of USD 18 billion compared with 31 December 2020, which included a decrease from currency effects of approximately USD 28 billion.

Other financial assets measured at amortized cost and fair value decreased by USD 12 billion, mainly driven by a shift within the high-quality liquid asset (HQLA) portfolio from securities into cash. Derivatives and cash collateral receivables on derivative instruments decreased by USD 9 billion, mainly reflecting market-driven movements in interest rate contracts in Non-core and Legacy Portfolio, as well as our Derivatives & Solutions business in the Investment Bank, resulting from the steepening of the interest rate curve. Trading portfolio assets decreased by USD 5 billion, mainly due to lower inventory levels held in the Investment Bank to hedge client positions.

These decreases were partly offset by an USD 8 billion increase in securities financing transactions at amortized cost, driven by re-investment of excess cash in Group Treasury and an increase in securities borrowing activities in the Investment Bank. Cash and balances at central banks increased by USD 1 billion, as net cash inflows of USD 8 billion, mainly from the aforementioned shift within the HQLA portfolio into cash and net new issuances of long-term debt measured at amortized cost and debt designated at fair value in Group Treasury, were largely offset by currency effects.

Lending assets were stable, as an increase in lending of USD 14 billion, mainly reflecting higher Lombard loans in Global Wealth Management in the Americas, was almost entirely offset by currency effects.

    Refer to the “Consolidated financial statements” section of this report for more information

 

Assets

 

 

 

 

 

 

 

As of

 

% change from

USD billion

 

31.3.21

31.12.20

 

31.12.20

Cash and balances at central banks

 

 158.9 

 158.2 

 

 0 

Lending1

 

 395.2 

 395.0 

 

 0 

Securities financing transactions at amortized cost

 

 82.4 

 74.2 

 

 11 

Trading portfolio2

 

 120.6 

 125.4 

 

 (4) 

Derivatives and cash collateral receivables on derivative instruments

 

 183.3 

 192.4 

 

 (5) 

Brokerage receivables

 

 24.2 

 24.7 

 

 (2) 

Other financial assets measured at amortized cost and fair value3

 

 82.9 

 95.1 

 

 (13) 

Non-financial assets and financial assets for unit-linked investment contracts

 

 60.2 

 60.9 

 

 (1) 

Total assets

 

 1,107.7 

 1,125.8 

 

 (2) 

1 Consists of loans and advances to banks and customers.    2 Consists of financial assets at fair value held for trading.    3 Consists of financial assets at fair value not held for trading, financial assets measured at fair value through other comprehensive income and other financial assets measured at amortized cost, but excludes financial assets for unit-linked investment contracts.

 

 

Liabilities (31 March 2021 vs 31 December 2020)

Total liabilities decreased by USD 17 billion to USD 1,049 billion as of 31 March 2021, which included a decrease from currency effects of approximately USD 23 billion.

Customer deposits decreased by USD 19 billion in Global Wealth Management and Personal & Corporate Banking, largely reflecting currency effects. Derivatives and cash collateral payables on derivative instruments decreased by USD 16 billion, mainly reflecting market-driven movements on interest rate contracts in line with the aforementioned movement on the asset side, as well as market-driven movements on foreign exchange and equity contracts in the Investment Bank. Other financial liabilities at amortized cost and fair value decreased by USD 2 billion, mainly due to net maturities of securities financing transactions measured at fair value. Non-financial liabilities and financial liabilities related to unit-linked investment contracts decreased by USD 2 billion, mainly reflecting a decrease in compensation-related liabilities.

 

45 


Risk, capital, liquidity and funding, and balance sheet | Balance sheet and off-balance sheet 

These decreases were partly offset by a USD 10 billion increase in debt issued designated at fair value and long-term debt issued measured at amortized cost. This reflected net new issuances of debt measured at fair value in our Derivatives & Solutions business in the Investment Bank and net new issuances of senior unsecured debt, as well as senior unsecured debt that contributes to total loss-absorbing capacity (TLAC), partly offset by the early redemption of a loss-absorbing tier 2 capital instrument and a loss-absorbing additional tier 1 (AT1) instrument in Group Treasury. Brokerage payables increased by USD 7 billion, mainly in our Financing business in the Investment Bank, as clients deposited cash with the Group to subsequently re-invest in the market. Trading portfolio liabilities increased by USD 3 billion, driven by the Investment Bank, mainly reflecting increases ahead of the dividend season, an increase in short positions to hedge client transactions and lower netting effects following disposals of trading portfolio assets. Short-term borrowings increased by USD 2 billion, driven by higher amounts due to banks in the Investment Bank.

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


Equity (31 March 2021 vs 31 December 2020)

Equity attributable to shareholders decreased to USD 58,026 million as of 31 March 2021, from USD 59,445 million as of 31 December 2020.

Total comprehensive income attributable to shareholders was negative USD 330 million, reflecting net profit of USD 1,824 million and negative other comprehensive income (OCI) of USD 2,154 million. OCI mainly included negative cash flow hedge OCI of USD 1,160 million, negative OCI related to foreign currency translation of USD 744 million, negative defined benefit plan OCI of USD 113 million and negative OCI related to debt instruments measured at fair value through OCI of USD 102 million.

Share premium decreased by USD 536 million, mainly due to the delivery of treasury shares under share-based compensation plans.

Net treasury share activity decreased equity attributable to shareholders by USD 555 million, reflecting repurchases of USD 883 million of shares under our 2021–2024 share repurchase program and USD 112 million of shares under our 2018–2021 share repurchase program completed on 2 February 2021, partly offset by the aforementioned delivery of treasury shares. The shares repurchased under our 2018–2021 share repurchase program will be canceled by means of a capital reduction, as approved by shareholders at the 2021 Annual General Meeting.

The payment of the 2020 dividend of USD 0.37 per share, approved by the Annual General Meeting on 8 April 2021, reduced equity attributable to shareholders by USD 1.3 billion in April 2021.

    Refer to the “Consolidated financial statements” and “Group performance” sections of this report for more information

    Refer to the “Share information and earnings per share” section of this report for more information about the share repurchase programs

 

Liabilities and equity

 

 

 

 

 

 

 

As of

 

% change from

USD billion

 

31.3.21

31.12.20

 

31.12.20

Short-term borrowings1

 

 60.0 

 57.7 

 

 4 

Securities financing transactions at amortized cost

 

 6.7 

 6.3 

 

 5 

Customer deposits

 

 505.4 

 524.6 

 

 (4) 

Debt issued designated at fair value and long-term debt issued measured at amortized cost2

 

 163.8 

 153.8 

 

 7 

Trading portfolio3

 

 37.1 

 33.6 

 

 10 

Derivatives and cash collateral payables on derivative instruments

 

 182.6 

 198.4 

 

 (8) 

Brokerage payables

 

 45.6 

 38.7 

 

 18 

Other financial liabilities measured at amortized cost and fair value4

 

 16.8 

 19.1 

 

 (12) 

Non-financial liabilities and financial liabilities related to unit-linked investment contracts

 

 31.5 

 33.7 

 

 (6) 

Total liabilities

 

 1,049.4 

 1,066.0 

 

 (2) 

Share capital

 

 0.3 

 0.3 

 

 0 

Share premium

 

 16.2 

 16.8 

 

 (3) 

Treasury shares

 

 (4.6) 

 (4.1) 

 

 14 

Retained earnings

 

 40.5 

 38.8 

 

 4 

Other comprehensive income5

 

 5.6 

 7.6 

 

 (27) 

Total equity attributable to shareholders

 

 58.0 

 59.4 

 

 (2) 

Equity attributable to non-controlling interests

 

 0.3 

 0.3 

 

 (4) 

Total equity

 

 58.3 

 59.8 

 

 (2) 

Total liabilities and equity

 

 1,107.7 

 1,125.8 

 

 (2) 

1 Consists of short-term debt issued measured at amortized cost and amounts due to 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 Consists of financial liabilities at fair value held for trading.    4 Consists of other financial liabilities measured at amortized cost and other financial liabilities designated at fair value, but excludes financial liabilities related to unit-linked investment contracts.    5 Excludes other comprehensive income related to defined benefit plans and own credit, which is recorded directly in retained earnings.

46 


 

Liabilities by product and currency

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

USD billion

 

As a percentage of total liabilities

 

 

All currencies

 

All currencies

 

USD

 

CHF

 

EUR

 

Other

 

 

31.3.21

31.12.20

 

31.3.21

31.12.20

 

31.3.21

31.12.20

 

31.3.21

31.12.20

 

31.3.21

31.12.20

 

31.3.21

31.12.20

Short-term borrowings

 

60.0

57.7

 

5.7

5.4

 

2.8

3.0

 

0.5

0.6

 

1.0

1.0

 

1.4

0.9

of which: due to banks

 

12.6

11.0

 

1.2

1.0

 

0.4

0.3

 

0.5

0.5

 

0.1

0.1

 

0.3

0.1

of which: short-term debt issued1

 

47.4

46.7

 

4.5

4.4

 

2.5

2.7

 

0.0

0.0

 

0.9

0.9

 

1.1

0.8

Securities financing transactions at amortized cost

 

6.7

6.3

 

0.6

0.6

 

0.5

0.5

 

0.0

0.0

 

0.0

0.0

 

0.1

0.1

Customer deposits

 

505.4

524.6

 

48.2

49.2

 

19.9

19.7

 

19.0

20.1

 

5.1

5.2

 

4.2

4.2

of which: demand deposits

 

232.1

236.4

 

22.1

22.2

 

7.4

7.4

 

7.0

7.2

 

4.2

4.3

 

3.5

3.4

of which: retail savings / deposits

 

219.2

220.9

 

20.9

20.7

 

8.9

8.3

 

11.4

11.8

 

0.5

0.5

 

0.0

0.0

of which: time deposits

 

36.1

40.3

 

3.4

3.8

 

2.5

2.8

 

0.2

0.2

 

0.1

0.1

 

0.7

0.7

of which: fiduciary deposits

 

18.0

27.0

 

1.7

2.5

 

1.0

1.2

 

0.4

0.9

 

0.3

0.3

 

0.1

0.1

Debt issued designated at fair value and long-term debt issued measured at amortized cost2

 

163.8

153.8

 

15.6

14.4

 

8.4

7.6

 

1.6

1.6

 

3.9

3.7

 

1.6

1.5

Trading portfolio

 

37.1

33.6

 

3.5

3.2

 

1.5

1.3

 

0.1

0.1

 

0.8

0.5

 

1.2

1.2

Derivatives and cash collateral payables on derivative instruments

 

182.6

198.4

 

17.4

18.6

 

14.2

15.2

 

0.3

0.2

 

1.8

2.0

 

1.1

1.1

Brokerage payables

 

45.6

38.7

 

4.3

3.6

 

3.3

2.7

 

0.0

0.0

 

0.3

0.2

 

0.7

0.7

Other financial liabilities measured at amortized cost and fair value3

 

16.8

19.1

 

1.6

1.8

 

0.8

1.1

 

0.2

0.2

 

0.3

0.2

 

0.3

0.3

Non-financial liabilities and financial liabilities related to unit-linked investment contracts

 

31.5

33.7

 

3.0

3.2

 

0.5

0.6

 

0.1

0.2

 

0.1

0.2

 

2.2

2.2

Total liabilities

 

1,049.4

1,066.0

 

100.0

100.0

 

52.0

51.6

 

21.9

23.0

 

13.2

13.1

 

12.9

12.3

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.    3 Consists of other financial liabilities measured at amortized cost and other financial liabilities designated at fair value, but excludes financial liabilities related to unit-linked investment contracts.

 

 

Off-balance sheet (31 March 2021 vs 31 December 2020)

Loan commitments decreased by USD 3 billion, mainly in Personal & Corporate Banking, largely reflecting currency effects. 


Forward starting reverse repurchase agreements increased by USD 3 billion and forward starting repurchase agreements increased by USD 2 billion, both primarily in Group Treasury, reflecting fluctuations in market activity in short-dated securities financing transactions.

 

 

Off-balance sheet

 

 

 

 

 

 

 

As of

 

% change from

USD billion

 

31.3.21

31.12.20

 

31.12.20

Guarantees1,2

 

 15.5 

 15.0 

 

 3 

Loan commitments1,3

 

 38.1 

 41.4 

 

 (8) 

Committed unconditionally revocable credit lines

 

 39.4 

 40.1 

 

 (2) 

Forward starting reverse repurchase agreements3

 

 6.0 

 3.2 

 

 84 

Forward starting repurchase agreements3

 

 2.1 

 0.4 

 

 466 

1 Guarantees and loan commitments are shown net of sub-participations.    2 Includes guarantees measured at fair value through profit or loss.    3 Derivative loan commitments, as well as forward starting repurchase and reverse repurchase agreements, measured at fair value through profit or loss are not included. Refer to “Note 9 Derivative instruments” in the “Consolidated financial statements” section of this report for more information.

  

47 


Risk, capital, liquidity and funding, and balance sheet | Share information and earnings per share 

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 CHF 0.10 per share. Shares issued were unchanged in the first quarter of 2021.

We held 336 million shares as of 31 March 2021, of which 213 million shares had been acquired under our share repurchase programs for cancelation purposes. The remaining 123 million shares are primarily held to hedge our share delivery obligations related to employee share-based compensation and participation plans.

Treasury shares held increased by 28 million shares in the first quarter of 2021. This largely reflected repurchases of 56.3 million shares under our 2021–2024 share repurchase program and 7.7 million shares under our 2018–2021 share repurchase program, partly offset by the delivery of treasury shares under share-based compensation plans.

Shares acquired under our 2018–2021 share repurchase program totaled 157 million as of 31 March 2021 (31 December
2020: 149 million) for a total acquisition cost of CHF 2,000 million (USD 2,044 million). This program was completed on 2 February 2021 and the shares repurchased under this program will be canceled by means of a capital reduction, as approved by shareholders at the 2021 Annual General Meeting.

On 8 February 2021, we commenced a new three-year share repurchase program of up to CHF 4 billion. Shares acquired under this program totaled 56 million as of 31 March 2021 for a total acquisition cost of CHF 810 million (USD 883 million).

From 1 January 2021 to 26 April 2021, we have repurchased 64 million shares for a total acquisition cost of CHF 920 million (USD 1,000 million) under the 2021–2024 share repurchase program and we repurchased 8 million shares for a total acquisition cost of CHF 100 million (USD 112 million) under the 2018–2021 share repurchase program.

    Refer to the “Return on equity and CET1 capital” 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

 

% change from

 

 

31.3.21

31.12.20

31.3.20

 

31.12.20

 

 

 

 

 

 

 

Basic and diluted earnings (USD million)

 

 

 

 

 

 

Net profit / (loss) attributable to shareholders for basic EPS

 

 1,824 

 1,636 

 1,595 

 

 11 

Less: (profit) / loss on own equity derivative contracts

 

 (1) 

 0 

 0 

 

 546 

Net profit / (loss) attributable to shareholders for diluted EPS

 

 1,823 

 1,636 

 1,595 

 

 11 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

Weighted average shares outstanding for basic EPS1

 

 3,538,422,488 

 3,568,989,134 

 3,591,853,051 

 

 (1) 

Effect of dilutive potential shares resulting from notional employee shares, in-the-money options and warrants outstanding2

 

 150,824,304 

 145,097,302 

 114,911,986 

 

 4 

Weighted average shares outstanding for diluted EPS

 

 3,689,246,792 

 3,714,086,436 

 3,706,765,037 

 

 (1) 

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

 

Basic earnings per share (USD)

 

 0.52 

 0.46 

 0.44 

 

 12 

Basic earnings per share (CHF)3

 

 0.47 

 0.41 

 0.43 

 

 15 

Diluted earnings per share (USD)

 

 0.49 

 0.44 

 0.43 

 

 12 

Diluted earnings per share (CHF)3

 

 0.45 

 0.40 

 0.41 

 

 13 

 

 

 

 

 

 

 

Shares outstanding and potentially dilutive instruments

 

 

 

 

 

 

Shares issued

 

 3,859,055,395 

 3,859,055,395 

 3,859,055,395 

 

 0 

Treasury shares4

 

 335,907,722 

 307,477,002 

 274,964,517 

 

 9 

of which: related to share repurchase program 2018–2021

 

 156,632,400 

 148,975,800 

 148,975,800 

 

 5 

of which: related to share repurchase program 2021–2024

 

 56,269,500 

 

 

 

 

Shares outstanding

 

 3,523,147,673 

 3,551,578,393 

 3,584,090,878 

 

 (1) 

Potentially dilutive instruments5

 

 11,605,954 

 14,326,517 

 29,801,232 

 

 (19) 

 

 

 

 

 

 

 

Other key figures

 

 

 

 

 

 

Total book value per share (USD)

 

 16.47 

 16.74 

 16.16 

 

(2)

Tangible book value per share (USD)

 

 14.65 

 14.91 

 14.37 

 

(2)

Share price (USD)6

 

 15.48 

 14.08 

 9.39 

 

 10 

Market capitalization (USD million)

 

 54,536 

 50,013 

 33,649 

 

9

1 The weighted average shares outstanding for basic 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 Basic and diluted earnings per share in Swiss francs are calculated based on a translation of net profit / (loss) under our US dollar presentation currency.    4 Based on a settlement date view.    5 Reflects potential shares that could dilute basic earnings per share in the future, but were not dilutive for the periods presented. It mainly includes equity derivative contracts.    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.

 

 

Ticker symbols UBS Group AG

 

 

 

 

Trading exchange

SIX / NYSE

Bloomberg

Reuters

SIX Swiss Exchange

UBSG

UBSG SW

UBSG.S

New York Stock Exchange

UBS

UBS UN

UBS.N


Security identification codes

ISIN

 

CH0244767585

Valoren

 

24 476 758

CUSIP

 

CINS H42097 10 7

  

48 


 

Consolidated financial statements

Unaudited

 

 

 



 

UBS Group AG interim consolidated financial statements (unaudited)

Income statement

 

 

 

 

 

 

 

 

 

 

For the quarter ended

USD million

 

Note

 

31.3.21

31.12.20

31.3.20

Interest income from financial instruments measured at amortized cost and fair value through

other comprehensive income

 

 3 

 

 2,097 

 2,111 

 2,455 

Interest expense from financial instruments measured at amortized cost

 

 3 

 

 (833) 

 (857) 

 (1,385) 

Net interest income from financial instruments measured at fair value through profit or loss

 

 3 

 

 349 

 368 

 261 

Net interest income

 

 3 

 

 1,613 

 1,622 

 1,330 

Other net income from financial instruments measured at fair value through profit or loss

 

 

 

 1,309 

 1,453 

 1,807 

Credit loss (expense) / release

 

 7 

 

 28 

 (66) 

 (268) 

Fee and commission income

 

 4 

 

 6,169 

 5,543 

 5,477 

Fee and commission expense

 

 4 

 

 (478) 

 (459) 

 (456) 

Net fee and commission income

 

 4 

 

 5,691 

 5,084 

 5,021 

Other income

 

 

 

 64 

 24 

 43 

Total operating income

 

 

 

 8,705 

 8,117 

 7,934 

Personnel expenses

 

 5 

 

 4,801 

 3,989 

 4,321 

General and administrative expenses

 

 6 

 

 1,089 

 1,515 

 1,133 

Depreciation and impairment of property, equipment and software

 

 

 

 508 

 617 

 456 

Amortization and impairment of goodwill and intangible assets

 

 

 

 8 

 10 

 16 

Total operating expenses

 

 

 

 6,407 

 6,132 

 5,926 

Operating profit / (loss) before tax

 

 

 

 2,298 

 1,985 

 2,008 

Tax expense / (benefit)

 

 

 

 471 

 341 

 410 

Net profit / (loss)

 

 

 

 1,827 

 1,645 

 1,598 

Net profit / (loss) attributable to non-controlling interests

 

 

 

 3 

 9 

 3 

Net profit / (loss) attributable to shareholders

 

 

 

 1,824 

 1,636 

 1,595 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share (USD)

 

 

 

 

 

 

Basic

 

 

 

 0.52 

 0.46 

 0.44 

Diluted

 

 

 

 0.49 

 0.44 

 0.43 

 

51 


UBS Group AG interim consolidated financial statements (unaudited) 

Statement of comprehensive income

 

 

 

 

 

 

For the quarter ended

USD million

 

31.3.21

31.12.20

31.3.20

 

 

 

 

 

Comprehensive income attributable to shareholders1

 

 

 

 

Net profit / (loss)

 

 1,824 

 1,636 

 1,595 

 

 

 

 

 

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

 

 (1,463) 

 1,143 

 (280) 

Effective portion of changes in fair value of hedging instruments designated as net investment hedges, before tax

 

 708 

 (539) 

 143 

Foreign currency translation differences on foreign operations reclassified to the income statement

 

 1 

 0 

 0 

Effective portion of changes in fair value of hedging instruments designated as net investment hedges reclassified to the income statement

 

 0 

 0 

 (8) 

Income tax relating to foreign currency translations, including the impact of net investment hedges

 

 10 

 (52) 

 0 

Subtotal foreign currency translation, net of tax

 

 (744) 

 552 

 (145) 

Financial assets measured at fair value through other comprehensive income

 

 

 

 

Net unrealized gains / (losses), before tax

 

 (131) 

 0 

 208 

Realized gains reclassified to the income statement from equity

 

 (8) 

 (3) 

 (9) 

Realized losses reclassified to the income statement from equity

 

 2 

 0 

 0 

Income tax relating to net unrealized gains / (losses)

 

 35 

 3 

 (51) 

Subtotal financial assets measured at fair value through other comprehensive income, net of tax

 

 (102) 

 0 

 147 

Cash flow hedges of interest rate risk

 

 

 

 

Effective portion of changes in fair value of derivative instruments designated as cash flow hedges, before tax

 

 (1,172) 

 (191) 

 1,953 

Net (gains) / losses reclassified to the income statement from equity

 

 (254) 

 (256) 

 (103) 

Income tax relating to cash flow hedges

 

 266 

 87 

 (345) 

Subtotal cash flow hedges, net of tax

 

 (1,160) 

 (360) 

 1,505 

Cost of hedging

 

 

 

 

Change in fair value of cost of hedging, before tax

 

 (13) 

 (8) 

 6 

Amortization of initial cost of hedging to the income statement

 

 7 

 7 

 2 

Income tax relating to cost of hedging

 

 0 

 0 

 0 

Subtotal cost of hedging, net of tax

 

 (6) 

 (1) 

 8 

Total other comprehensive income that may be reclassified to the income statement, net of tax

 

 (2,012) 

 191 

 1,515 

 

 

 

 

 

Other comprehensive income that will not be reclassified to the income statement

 

 

 

 

Defined benefit plans

 

 

 

 

Gains / (losses) on defined benefit plans, before tax

 

 (136) 

 37 

 10 

Income tax relating to defined benefit plans

 

 23 

 49 

 143 

Subtotal defined benefit plans, net of tax

 

 (113) 

 86 

 153 

Own credit on financial liabilities designated at fair value

 

 

 

 

Gains / (losses) from own credit on financial liabilities designated at fair value, before tax

 

 (29) 

 (211) 

 1,156 

Income tax relating to own credit on financial liabilities designated at fair value

 

 0 

 0 

 (223) 

Subtotal own credit on financial liabilities designated at fair value, net of tax

 

 (29) 

 (211) 

 934 

Total other comprehensive income that will not be reclassified to the income statement, net of tax

 

 (142) 

 (126) 

 1,086 

 

 

 

 

 

Total other comprehensive income

 

 (2,154) 

 65 

 2,602 

Total comprehensive income attributable to shareholders

 

 (330) 

 1,701 

 4,197 

 

52 


 

Statement of comprehensive income (continued)

 

 

 

 

 

 

For the quarter ended

USD million

 

31.3.21

31.12.20

31.3.20

 

 

 

 

 

Comprehensive income attributable to non-controlling interests

 

 

 

 

Net profit / (loss)

 

 3 

 9 

 3 

 

 

 

 

 

Other comprehensive income that will not be reclassified to the income statement

 

 

 

 

Foreign currency translation movements, before tax

 

 (12) 

 18 

 (5) 

Income tax relating to foreign currency translation movements

 

 0 

 0 

 0 

Subtotal foreign currency translation, net of tax

 

 (12) 

 18 

 (5) 

Total other comprehensive income that will not be reclassified to the income statement, net of tax

 

 (12) 

 18 

 (5) 

Total comprehensive income attributable to non-controlling interests

 

 (9) 

 27 

 (2) 

 

 

 

 

 

Total comprehensive income

 

 

 

 

Net profit / (loss)

 

 1,827 

 1,645 

 1,598 

Other comprehensive income

 

 (2,166) 

 83 

 2,597 

of which: other comprehensive income that may be reclassified to the income statement

 

 (2,012) 

 191 

 1,515 

of which: other comprehensive income that will not be reclassified to the income statement

 

 (155) 

 (108) 

 1,082 

Total comprehensive income

 

 (339) 

 1,728 

 4,195 

1 Refer to the “Group performance” section of this report for more information.

 

53 


UBS Group AG interim consolidated financial statements (unaudited) 

 

Balance sheet

 

 

 

 

 

USD million

 

Note

 

31.3.21

31.12.20

 

 

 

 

 

 

Assets

 

 

 

 

 

Cash and balances at central banks

 

 

 

 158,914 

 158,231 

Loans and advances to banks

 

 

 

 18,448 

 15,444 

Receivables from securities financing transactions

 

 

 

 82,384 

 74,210 

Cash collateral receivables on derivative instruments

 

 9 

 

 35,046 

 32,737 

Loans and advances to customers

 

 7 

 

 376,798 

 379,528 

Other financial assets measured at amortized cost

 

 10 

 

 26,770 

 27,194 

Total financial assets measured at amortized cost

 

 

 

 698,361 

 687,345 

Financial assets at fair value held for trading

 

 8 

 

 120,576 

 125,397 

of which: assets pledged as collateral that may be sold or repledged by counterparties

 

 

 

 48,385 

 47,098 

Derivative financial instruments

 

8, 9

 

 148,282 

 159,617 

Brokerage receivables

 

 8 

 

 24,201 

 24,659 

Financial assets at fair value not held for trading

 

 8 

 

 69,187 

 80,364 

Total financial assets measured at fair value through profit or loss

 

 

 

 362,246 

 390,037 

Financial assets measured at fair value through other comprehensive income

 

 8 

 

 8,100 

 8,258 

Investments in associates

 

 

 

 1,542 

 1,557 

Property, equipment and software

 

 

 

 12,716 

 13,109 

Goodwill and intangible assets

 

 

 

 6,427 

 6,480 

Deferred tax assets

 

 

 

 9,195 

 9,212 

Other non-financial assets

 

 10 

 

 9,125 

 9,768 

Total assets

 

 

 

 1,107,712 

 1,125,765 

 

54 


 

Balance sheet (continued)

 

 

 

 

 

USD million

 

Note

 

31.3.21

31.12.20

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Amounts due to banks

 

 

 

 12,564 

 11,050 

Payables from securities financing transactions

 

 

 

 6,651 

 6,321 

Cash collateral payables on derivative instruments

 

 9 

 

 36,571 

 37,312 

Customer deposits

 

 

 

 505,448 

 524,605 

Debt issued measured at amortized cost

 

 12 

 

 144,682 

 139,232 

Other financial liabilities measured at amortized cost

 

 10 

 

 9,257 

 9,729 

Total financial liabilities measured at amortized cost

 

 

 

 715,174 

 728,250 

Financial liabilities at fair value held for trading

 

 8 

 

 37,062 

 33,595 

Derivative financial instruments

 

8, 9

 

 146,036 

 161,102 

Brokerage payables designated at fair value

 

 8 

 

 45,600 

 38,742 

Debt issued designated at fair value

 

8, 11

 

 66,535 

 61,243 

Other financial liabilities designated at fair value

 

8, 10

 

 28,855 

 30,387 

Total financial liabilities measured at fair value through profit or loss

 

 

 

 324,088 

 325,069 

Provisions

 

 14 

 

 2,726 

 2,828 

Other non-financial liabilities

 

 10 

 

 7,391 

 9,854 

Total liabilities

 

 

 

 1,049,379 

 1,066,000 

 

 

 

 

 

 

Equity

 

 

 

 

 

Share capital

 

 

 

 338 

 338 

Share premium

 

 

 

 16,217 

 16,753 

Treasury shares

 

 

 

 (4,623) 

 (4,068) 

Retained earnings

 

 

 

 40,482 

 38,776 

Other comprehensive income recognized directly in equity, net of tax

 

 

 

 5,612 

 7,647 

Equity attributable to shareholders

 

 

 

 58,026 

 59,445 

Equity attributable to non-controlling interests

 

 

 

 307 

 319 

Total equity

 

 

 

 58,333 

 59,765 

Total liabilities and equity

 

 

 

 1,107,712 

 1,125,765 

 

55 


UBS Group AG interim consolidated financial statements (unaudited) 

 

Statement of changes in equity

 

 

 

 

USD million

Share

capital

Share

premium

Treasury

shares

Retained

earnings

Balance as of 1 January 2020

 338 

 18,064 

 (3,326) 

 34,122 

Acquisition of treasury shares

 

 

 (983)2

 

Delivery of treasury shares under share-based compensation plans

 

 (589) 

 615 

 

Other disposal of treasury shares

 

 (13) 

 592

 

Share-based compensation expensed in the income statement

 

 163 

 

 

Tax (expense) / benefit

 

 9 

 

 

Dividends

 

 

 

 

Translation effects recognized directly in retained earnings

 

 

 

 0 

Share of changes in retained earnings of associates and joint ventures

 

 

 

 (40) 

New consolidations / (deconsolidations) and other increases / (decreases)

 

 0 

 

 

Total comprehensive income for the period

 

 

 

 2,681 

of which: net profit / (loss)

 

 

 

 1,595 

of which: OCI that may be reclassified to the income statement, net of tax

 

 

 

 

of which: OCI that will not be reclassified to the income statement, net of tax – defined benefit plans

 

 

 

 153 

of which: OCI that will not be reclassified to the income statement, net of tax – own credit

 

 

 

 934 

of which: OCI that will not be reclassified to the income statement, net of tax – foreign currency translation

 

 

 

 

Balance as of 31 March 2020

 338 

 17,633 

 (3,636) 

 36,764 

 

 

 

 

 

Balance as of 1 January 2021

 338 

 16,753 

 (4,068) 

 38,776 

Acquisition of treasury shares

 

 

 (1,274)2

 

Delivery of treasury shares under share-based compensation plans

 

 (652) 

 697 

 

Other disposal of treasury shares

 

 3 

 232

 

Share-based compensation expensed in the income statement

 

 166 

 

 

Tax (expense) / benefit

 

 4 

 

 

Dividends

 

 

 

 

Equity classified as obligation to purchase own shares

 

 (56) 

 

 

Translation effects recognized directly in retained earnings

 

 

 

 23 

Share of changes in retained earnings of associates and joint ventures

 

 

 

 2 

New consolidations / (deconsolidations) and other increases / (decreases)

 

 (1) 

 

 

Total comprehensive income for the period

 

 

 

 1,682 

of which: net profit / (loss)

 

 

 

 1,824 

of which: OCI that may be reclassified to the income statement, net of tax

 

 

 

 

of which: OCI that will not be reclassified to the income statement, net of tax – defined benefit plans

 

 

 

 (113) 

of which: OCI that will not be reclassified to the income statement, net of tax – own credit

 

 

 

 (29) 

of which: OCI that will not be reclassified to the income statement, net of tax – foreign currency translation

 

 

 

 

Balance as of 31 March 2021

 338 

 16,217 

 (4,623) 

 40,482 

1 Excludes other comprehensive income related to defined benefit plans and own credit that is recorded directly in Retained earnings.    2 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.

 

56 


 

 

 

 

 

 

 

 

 

Other comprehensive

income recognized

directly in equity,

net of tax1

of which:

foreign currency translation

of which:

financial assets

measured at fair value through OCI

of which:

cash flow hedges

of which:

cost of hedging

Total equity

attributable to

shareholders

Non-controlling

interests

Total equity

 5,303 

 4,028 

 14 

 1,260 

 

 54,501 

 174 

 54,675 

 

 

 

 

 

 (983) 

 

 (983) 

 

 

 

 

 

 25 

 

 25 

 

 

 

 

 

 45 

 

 45 

 

 

 

 

 

 163 

 

 163 

 

 

 

 

 

 9 

 

 9 

 

 

 

 

 

 0 

 (3) 

 (3) 

 0 

 

 0 

 0 

 

 0 

 

 0 

 

 

 

 

 

 (40) 

 

 (40) 

 

 

 

 

 

 0 

 0 

 0 

 1,515 

 (145) 

 147 

 1,505 

 8 

 4,197 

 (2) 

 4,195 

 

 

 

 

 

 1,595 

 3 

 1,598 

 1,515 

 (145) 

 147 

 1,505 

 8 

 1,515 

 

 1,515 

 

 

 

 

 

 153 

 

 153 

 

 

 

 

 

 934 

 

 934 

 

 

 

 

 

 0 

 (5) 

 (5) 

 6,818 

 3,883 

 162 

 2,765 

 8 

 57,917 

 169 

 58,086 

 

 

 

 

 

 

 

 

 7,647 

 5,188 

 151 

 2,321 

 (13) 

 59,445 

 319 

 59,765 

 

 

 

 

 

 (1,274) 

 

 (1,274) 

 

 

 

 

 

 44 

 

 44 

 

 

 

 

 

 26 

 

 26 

 

 

 

 

 

 166 

 

 166 

 

 

 

 

 

 4 

 

 4 

 

 

 

 

 

 0 

 (3) 

 (3) 

 

 

 

 

 

 (56) 

 

 (56) 

 (23) 

 

 0 

 (23) 

 0 

 0 

 

 0 

 

 

 

 

 

 2 

 

 2 

 

 

 

 

 

 (1) 

 0 

 (1) 

 (2,012) 

 (744) 

 (102) 

 (1,160) 

 (6) 

 (330) 

 (9) 

 (339) 

 

 

 

 

 

 1,824 

 3 

 1,827 

 (2,012) 

 (744) 

 (102) 

 (1,160) 

 (6) 

 (2,012) 

 

 (2,012) 

 

 

 

 

 

 (113) 

 

 (113) 

 

 

 

 

 

 (29) 

 

 (29) 

 

 

 

 

 

 0 

 (12) 

 (12) 

 5,612 

 4,444 

 49 

 1,138 

 (19) 

 58,026 

 307 

 58,333 

 

 

 

 

 

 

 

 

 

57 


UBS Group AG interim consolidated financial statements (unaudited) 

 

Statement of cash flows

 

 

 

 

 

Year-to-date

USD million

 

31.3.21

31.3.20

 

 

 

 

Cash flow from / (used in) operating activities

 

 

 

Net profit / (loss)

 

 1,827 

 1,598 

Non-cash items included in net profit and other adjustments:

 

 

 

Depreciation and impairment of property, equipment and software

 

 508 

 456 

Amortization and impairment of goodwill and intangible assets

 

 8 

 16 

Credit loss expense / (release)

 

 (28) 

 268 

Share of net profits of associates / joint ventures and impairment of associates

 

 (53) 

 (16) 

Deferred tax expense / (benefit)

 

 65 

 188 

Net loss / (gain) from investing activities

 

 (146) 

 84 

Net loss / (gain) from financing activities

 

 (1,571) 

 (12,558) 

Other net adjustments

 

 6,628 

 (241) 

Net change in operating assets and liabilities:

 

 

��

Loans and advances to banks / amounts due to banks

 

 1,995 

 12,436 

Securities financing transactions

 

 (8,614) 

 (439) 

Cash collateral on derivative instruments

 

 (3,063) 

 (2,030) 

Loans and advances to customers

 

 (10,952) 

 (11,193) 

Customer deposits

 

 (2,823) 

 18,466 

Financial assets and liabilities at fair value held for trading and derivative financial instruments

 

 1,745 

 35,463 

Brokerage receivables and payables

 

 7,329 

 (1,903) 

Financial assets at fair value not held for trading, other financial assets and liabilities

 

 9,218 

 (2,263) 

Provisions, other non-financial assets and liabilities

 

 (1,499) 

 (2,212) 

Income taxes paid, net of refunds

 

 (212) 

 (286) 

Net cash flow from / (used in) operating activities

 

 362 

 35,832 

 

 

 

 

Cash flow from / (used in) investing activities

 

 

 

Purchase of subsidiaries, associates and intangible assets

 

 (1) 

 (1) 

Purchase of property, equipment and software

 

 (432) 

 (374) 

Disposal of property, equipment and software

 

 0 

 3 

Purchase of financial assets measured at fair value through other comprehensive income

 

 (1,376) 

 (1,835) 

Disposal and redemption of financial assets measured at fair value through other comprehensive income

 

 1,412 

 674 

Net (purchase) / redemption of debt securities measured at amortized cost

 

 4 

 38 

Net cash flow from / (used in) investing activities

 

 (393) 

 (1,496) 

 

 

 

 

 

58 


 

Statement of cash flows (continued)

 

 

 

 

 

Year-to-date

USD million

 

31.3.21

31.3.20

 

 

 

 

Cash flow from / (used in) financing activities

 

 

 

Net short-term debt issued / (repaid)

 

 1,054 

 5,751 

Net movements in treasury shares and own equity derivative activity

 

 (1,225) 

 (917) 

Repayment of lease liabilities

 

 (152) 

 (140) 

Issuance of long-term debt, including debt issued designated at fair value

 

 35,995 

 23,041 

Repayment of long-term debt, including debt issued designated at fair value

 

 (23,013) 

 (23,971) 

Net changes in non-controlling interests

 

 (3) 

 (8) 

Net cash flow from / (used in) financing activities

 

 12,654 

 3,756 

 

 

 

 

Total cash flow

 

 

 

Cash and cash equivalents at the beginning of the period

 

 173,531 

 119,873 

Net cash flow from / (used in) operating, investing and financing activities

 

 12,623 

 38,091 

Effects of exchange rate differences on cash and cash equivalents

 

 (7,983) 

 (176) 

Cash and cash equivalents at the end of the period1

 

 178,171 

 157,789 

of which: cash and balances at central banks2

 

 158,769 

 139,155 

of which: loans and advances to banks

 

 17,151 

 16,087 

of which: money market paper

 

 2,252 

 2,547 

 

 

 

 

Additional information

 

 

 

Net cash flow from / (used in) operating activities includes:

 

 

 

Interest received in cash

 

 2,756 

 3,457 

Interest paid in cash

 

 1,638 

 2,886 

Dividends on equity investments, investment funds and associates received in cash

 

 624 

 727 

1 USD 4,064 million and USD 4,370 million of cash and cash equivalents (mainly reflected in Loans and advances to banks) were restricted as of 31 March 2021 and 31 March 2020, respectively. Refer to “Note 23 Restricted and transferred financial assets” in the “Consolidated financial statements” section of the Annual Report 2020 for more information.    2 Includes only balances with an original maturity of three months or less.

59 


Notes to the UBS Group AG interim consolidated financial statements (unaudited) 

Notes to the UBS Group AG interim
consolidated financial statements (unaudited)

Note 1   Basis of accounting and other financial reporting effects

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 International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (the IASB), and are presented in US dollars (USD). 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 2020, except for the changes described in this Note. These interim financial statements are unaudited and should be read in conjunction with UBS Group AG’s audited consolidated financial statements included in the Annual Report 2020, and the “Management report” sections of this report. In the opinion of management, all necessary adjustments were 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 Significant accounting policies” in the “Consolidated financial statements” section of the Annual Report 2020.


Amendments to IFRS 9, IAS 39 and IFRS 7 (Interest Rate Benchmark Reform – Phase 2)

On 1 January 2021, UBS adopted Interest Rate Benchmark Reform – Phase 2, Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, addressing a number of issues in financial reporting areas that arise when interbank offered rates (IBORs) are reformed or replaced.

The amendments provide a practical expedient which permits certain changes in the contractual cash flows of debt instruments attributable to the replacement of IBORs with alternative reference rates (ARRs) to be accounted for prospectively by updating the instrument’s effective interest rate (EIR), provided (i) the change is necessary as a direct consequence of IBOR reform and (ii) the new basis for determining the contractual cash flows is economically equivalent to the previous basis.

Where some or all of a change in the basis for determining the contractual cash flows of a financial asset and liability does not meet the above criteria, the practical expedient is first applied to the changes required by interest rate benchmark reform, including updating the EIR. Any additional changes that do not qualify for the practical expedient are accounted for as modification or derecognition, with the resulting gain or loss recognized immediately in the income statement.

UBS adopted the contractual cash flow amendments with no material effect on the Group’s financial statements.

 

60 


 

Note 1   Basis of accounting and other financial reporting effects (continued)

In terms of hedge accounting, the amendments provide relief in a number of areas. The following hedge accounting reliefs are expected to benefit UBS.

     Risk components

The amendments permit UBS to designate an alternative benchmark rate as a non-contractually specified risk component, even if it is not separately identifiable at the date when it is designated, provided UBS can reasonably expect that it will meet the requirements within 24 months of the first designation and the risk component is reliably measurable. As of 31 March 2021, UBS has designated the Secured Overnight Financing Rate (SOFR), the Swiss Average Rate Overnight (SARON) and the Sterling Overnight Index Average (SONIA) as the hedged risk in USD 4.5 billion, USD 0.4 billion and USD 0.7 billion of new fair value hedges of interest rate risk related to debt instruments, respectively.

     Hedge designation

UBS will update its hedge documentation to reflect the change in designation relating to IBOR reform by the end of the reporting period in which the changes are made. Following amendments to the hedge documentation, UBS will continue its hedge relationships provided the other hedge accounting criteria and requirements of the Phase 2 amendment are met. As of 31 March 2021, no such changes have been made.


     Amounts accumulated in the cash flow hedge reserve

Upon changing the hedge designation as set out above, the accumulated amounts in the cash flow hedge reserve are assumed to be based on the alternative benchmark rate. For discontinued hedging relationships, when the interest rate benchmark on which the hedged future cash flows were based is changed as required by IBOR reform, the amount accumulated in the cash flow hedge reserve is also assumed to be based on the alternative benchmark rate for the purpose of assessing whether the hedged future cash flows are still expected to occur. As of 31 March 2021, no such changes have been made.

     Retrospective effectiveness assessment as applied to hedges designated under IAS 39         
UBS may elect to reset to zero the cumulative fair value changes of the hedged item and hedging instrument for the purpose of assessing the retrospective effectiveness of a hedging relationship. UBS will be able to make such election upon the end of the phase 1 exception for effectiveness assessment. As of 31 March 2021, no such election has been made.

    Refer to “Note 25 Hedge accounting” in the “Consolidated financial statements” section of the Annual Report 2020 for details about phase 1 accounting reliefs

 

The amendments also introduced additional disclosure requirements regarding the Group’s management of the transition to alternative benchmark rates, its progress at the reporting date and the risks to which it is exposed arising from financial instruments because of the transition.

    Refer to Note 13 for more information

 

 

  

61 


Notes to the UBS Group AG interim consolidated financial statements (unaudited) 

Note   Segment reporting

UBS’s businesses are organized globally into four business divisions: Global Wealth Management, Personal & Corporate Banking, Asset Management and the Investment Bank. All four business divisions are supported by Group Functions and qualify as reportable segments for the purpose of segment reporting. Together with Group Functions they reflect the management structure of the Group.

    Refer to “Note 2 Segment reporting” in the “Consolidated financial statements” section of the Annual Report 2020 for more information about the Group’s reporting segments


  


 

 

USD million

Global Wealth Management

Personal & Corporate Banking

Asset

Management

Investment Bank

Group Functions

UBS

 

 

 

 

 

 

 

For the quarter ended 31 March 2021

 

 

 

 

 

 

Net interest income

 997 

 513 

 (4) 

 114 

 (6) 

 1,613 

Non-interest income

 3,848 

 500 

 641 

 2,158 

 (84) 

 7,063 

Income

 4,845 

 1,013 

 637 

 2,271 

 (90) 

 8,677 

Credit loss (expense) / release

 3 

 23 

 0 

 2 

 0 

 28 

Total operating income

 4,848 

 1,037 

 637 

 2,273 

 (90) 

 8,705 

Total operating expenses

 3,439 

 647 

 410 

 1,862 

 49 

 6,407 

Operating profit / (loss) before tax

 1,409 

 389 

 227 

 412 

 (139) 

 2,298 

Tax expense / (benefit)

 

 

 

 

 

 471 

Net profit / (loss)

 

 

 

 

 

 1,827 

 

 

 

 

 

 

 

As of 31 March 2021

 

 

 

 

 

 

Total assets

 377,008 

 221,360 

 28,557 

 370,846 

 109,942 

 1,107,712 

 

 

USD million

Global Wealth Management

Personal & Corporate Banking

Asset

Management

Investment Bank

Group Functions

UBS

 

 

 

 

 

 

 

For the quarter ended 31 March 2020

 

 

 

 

 

 

Net interest income

 1,031 

 511 

 (4) 

 (95) 

 (113) 

 1,330 

Non-interest income

 3,569 

 470 

 518 

 2,666 

 (352) 

 6,871 

Income

 4,600 

 981 

 514 

 2,571 

 (465) 

 8,202 

Credit loss (expense) / release

 (53) 

 (77) 

 0 

 (122) 

 (16) 

 (268) 

Total operating income

 4,547 

 904 

 514 

 2,449 

 (480) 

 7,934 

Total operating expenses

 3,329 

 570 

 357 

 1,741 

 (71) 

 5,926 

Operating profit / (loss) before tax

 1,218 

 334 

 157 

 709 

 (410) 

 2,008 

Tax expense / (benefit)

 

 

 

 

 

 410 

Net profit / (loss)

 

 

 

 

 

 1,598 

 

 

 

 

 

 

 

As of 31 December 2020

 

 

 

 

 

 

Total assets

 367,714 

 231,657 

 28,589 

 369,683 

 128,122 

 1,125,765 

 

 

  

62 


 

 

Note 3  Net interest income

 

 

For the quarter ended

USD million

 

31.3.21

31.12.20

31.3.20

Net interest income from financial instruments measured at amortized cost and fair value through other comprehensive income

 

 

 

 

Interest income from loans and deposits1

 

 1,584 

 1,604 

 1,868 

Interest income from securities financing transactions2

 

 135 

 143 

 367 

Interest income from other financial instruments measured at amortized cost

 

 73 

 73 

 89 

Interest income from debt instruments measured at fair value through other comprehensive income

 

 35 

 19 

 17 

Interest income from derivative instruments designated as cash flow hedges

 

 268 

 271 

 113 

Total interest income from financial instruments measured at amortized cost and fair value through other comprehensive income

 

 2,097 

 2,111 

 2,455 

Interest expense on loans and deposits3

 

 137 

 160 

 463 

Interest expense on securities financing transactions4

 

 258 

 215 

 219 

Interest expense on debt issued

 

 411 

 455 

 676 

Interest expense on lease liabilities

 

 27 

 27 

 28 

Total interest expense from financial instruments measured at amortized cost

 

 833 

 857 

 1,385 

Total net interest income from financial instruments measured at amortized cost and fair value through other comprehensive income

 

 1,264 

 1,254 

 1,069 

Net interest income from financial instruments measured at fair value through profit or loss

 

 

 

 

Net interest income from financial instruments at fair value held for trading

 

 200 

 210 

 201 

Net interest income from brokerage balances

 

 197 

 187 

 137 

Net interest income from securities financing transactions at fair value not held for trading5

 

 12 

 13 

 33 

Interest income from other financial instruments at fair value not held for trading

 

 96 

 111 

 202 

Interest expense on other financial instruments designated at fair value

 

 (155) 

 (153) 

 (311) 

Total net interest income from financial instruments measured at fair value through profit or loss

 

 349 

 368 

 261 

Total net interest income

 

 1,613 

 1,622 

 1,330 

1 Consists of interest income from cash and balances at central banks, loans and advances to banks and customers, 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, loans and advances to 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.    5 Includes interest expense on securities financing transactions designated at fair value.

 

 

 

Note Net fee and commission income

 

 

For the quarter ended

USD million

 

31.3.21

31.12.20

31.3.20

Fee and commission income

 

 

 

 

Underwriting fees

 

 392 

 333 

 200 

of which: equity underwriting fees

 

 275 

 243 

 106 

of which: debt underwriting fees

 

 117 

 90 

 93 

M&A and corporate finance fees

 

 238 

 216 

 218 

Brokerage fees

 

 1,358 

 959 

 1,245 

Investment fund fees

 

 1,436 

 1,473 

 1,295 

Portfolio management and related services

 

 2,284 

 2,145 

 2,059 

Other

 

 461 

 417 

 461 

Total fee and commission income1

 

 6,169 

 5,543 

 5,477 

of which: recurring

 

 3,620 

 3,416 

 3,341 

of which: transaction-based

 

 2,454 

 1,868 

 2,098 

of which: performance-based

 

 94 

 259 

 39 

Fee and commission expense

 

 

 

 

Brokerage fees paid

 

 68 

 71 

 86 

Distribution fees paid

 

 132 

 133 

 156 

Other

 

 277 

 255 

 214 

Total fee and commission expense

 

 478 

 459 

 456 

Net fee and commission income

 

 5,691 

 5,084 

 5,021 

of which: net brokerage fees

 

 1,290 

 888 

 1,158 

1 Reflects third-party fee and commission income for the first quarter of 2021 of USD 3,673 million for Global Wealth Management (fourth quarter of 2020: USD 3,189 million; first quarter of 2020: USD 3,384 million), USD 389 million for Personal & Corporate Banking (fourth quarter of 2020: USD 407 million; first quarter of 2020: USD 354 million), USD 815 million for Asset Management (fourth quarter of 2020: USD 949 million; first quarter of 2020: USD 702 million), USD 1,278 million for the Investment Bank (fourth quarter of 2020: USD 1,049 million; first quarter of 2020: USD 1,004 million) and USD 15 million for Group Functions (fourth quarter of 2020: negative USD 51 million; first quarter of 2020: USD 33 million).

 

63 


Notes to the UBS Group AG interim consolidated financial statements (unaudited) 

Note Personnel expenses

 

 

For the quarter ended

USD million

 

31.3.21

31.12.20

31.3.20

Salaries and variable compensation

 

 2,871 

 2,247 

 2,561 

Financial advisor compensation1

 

 1,170 

 1,077 

 1,094 

Contractors

 

 98 

 104 

 84 

Social security

 

 268 

 210 

 211 

Post-employment benefit plans

 

 265 

 203 

 236 

Other personnel expenses

 

 128 

 148 

 135 

Total personnel expenses

 

 4,801 

 3,989 

 4,321 

1 Financial advisor compensation consists of grid-based compensation based directly on compensable revenues generated by financial advisors and supplemental compensation calculated on the basis of financial advisor productivity, firm tenure, assets and other variables. It also includes expenses related to compensation commitments with financial advisors entered into at the time of recruitment that are subject to vesting requirements.

 

 

 

NoteGeneral and administrative expenses1

 

 

For the quarter ended

USD million

 

31.3.21

31.12.20

31.3.20

Outsourcing costs

 

 201 

 295 

 215 

IT expenses

 

 266 

 255 

 232 

Consulting, legal and audit fees

 

 99 

 185 

 154 

Real estate and logistics costs

 

 152 

 192 

 160 

Market data services

 

 102 

 111 

 98 

Marketing & communication

 

 42 

 97 

 40 

Travel and entertainment

 

 9 

 17 

 49 

Litigation, regulatory & similar matters2

 

 9 

 148 

 6 

Other3

 

 210 

 217 

 179 

of which: UK and German bank levies

 

 41 

 38 

 15 

Total general and administrative expenses

 

 1,089 

 1,515 

 1,133 

1 In the first quarter of 2021, UBS changed the presentation of the line items within general and administrative expenses. Prior-period information reflects the new presentation structure, with no effect on Total general and administrative expenses.    2 Reflects the net increase in / (release of) provisions for litigation, regulatory and similar matters recognized in the income statement. Refer to Note 14 for more information. Also includes recoveries from third parties (first quarter of 2021: USD 0 million; fourth quarter of 2020: USD 2 million; first quarter of 2020: USD 1 million).    3 Includes charitable donations.

 

 

64 


 

Note Expected credit loss measurement

 

a) Credit loss expense

Total net credit loss releases were USD 28 million in the first quarter of 2021, reflecting a USD 26 million net release of credit losses related to stage 1 and 2 positions and USD 3 million of net credit loss releases related to credit-impaired (stage 3) positions.

The USD 26 million stage 1 and 2 net release included USD 13 million from model and risk parameter updates and USD 13 million from a combination of book quality and book size movements.

Stage 3 net credit loss releases were USD 3 million. Stage 3 net expenses of USD 4 million and USD 2 million were recognized in the Investment Bank and Global Wealth Management, respectively, across various positions. In Personal & Corporate Banking, stage 3 net releases of USD 8 million were recognized on various corporate lending positions and on defaulted real estate counterparties as collateral values increased.

 

 

Credit loss (expense) / release

 

 

 

 

 

 

USD million

Global

Wealth

Management

Personal &

Corporate

Banking

Asset

Management

Investment

Bank

Group

Functions

Total

For the quarter ended 31.3.21

 

 

 

 

 

 

Stages 1 and 2

 4 

 16 

 0 

 5 

 0 

 26 

Stage 3

 (2) 

 8 

 0 

 (4) 

 0 

 3 

Total credit loss (expense) / release

 3 

 23 

 0 

 2 

 0 

 28 

 

65 


Notes to the UBS Group AG interim consolidated financial statements (unaudited) 

 

Note Expected credit loss measurement (continued)

 

b) Changes to ECL models, scenarios, scenario weights and key inputs

Scenarios

The UBS baseline and the severe downside scenarios, as well as the related macroeconomic factors, were updated and reviewed in light of the economic and political conditions prevailing for the first quarter of 2021 through a series of governance meetings, with input and feedback from UBS risk and finance experts across the business divisions and regions.

The changes in the macroeconomic environment in the first quarter of 2021 generally include more optimistic assumptions for both the UBS baseline and severe downside scenarios compared with those applied in 2020, given improvements in economic activity and greater optimism regarding the availability and effective distribution of vaccines, and continued government support. The UBS baseline scenario assumptions on a calendar year basis are included in the table below. The updated severe downside scenario has been recalibrated to reflect the economic and COVID-19-related developments since the fourth quarter of 2020 and has seen only marginal changes, although unemployment levels are now lower.


Scenario weights and post-model adjustments

The overall scenario improvements in the first quarter resulted in stage 1 and 2 ECL net releases.

However, recent developments have raised significant questions around whether the baseline expectations will be met, given the continued uncertainty regarding the COVID-19 pandemic and its near- and mid-term outlook. As a consequence, in this quarter, management reconfirmed the scenario weights on the baseline scenario at 60% and on the severe downside scenario at 40%, and also applied a post-model adjustment of USD 92 million to offset the stage 1 and 2 ECL releases that would have otherwise arisen from the scenario update effects. As of 31 March 2021, the total post-model adjustment to offset the scenario update effects amounted to USD 208 million.

 

 

 

 

UBS Baseline

Key parameters

 

2020

2021

2022

Real GDP growth (annual percentage change)

 

 

 

 

United States

 

 (3.6) 

 6.1 

 6.0 

Eurozone

 

 (7.4) 

 5.0 

 5.3 

Switzerland

 

 (4.5) 

 3.6 

 3.0 

Unemployment rate (%, annual average)

 

 

 

 

United States

 

 8.1 

 5.5 

 4.4 

Eurozone

 

 8.5 

 9.0 

 8.3 

Switzerland

 

 3.2 

 3.6 

 3.3 

Real estate (annual percentage change, Q4)

 

 

 

 

United States

 

 3.4 

 2.8 

 2.9 

Eurozone

 

 (0.3) 

 (1.5) 

 1.7 

Switzerland

 

 4.0 

 2.0 

 1.5 

 

 

Economic scenarios and weights applied

ECL scenario

Assigned weights in %

 

31.3.21

31.12.20

31.3.20

Upside

0.0

0.0

0.0

UBS baseline

60.0

60.0

70.0

Mild downside

0.0

0.0

0.0

Severe downside

40.0

40.0

30.0


 

66 


 

 

Note Expected credit loss measurement (continued)

 

c) ECL-relevant balance sheet and off-balance sheet positions including ECL allowances and provisions

The tables below and on the following pages provide information about financial instruments and certain non-financial instruments that are subject to ECL. 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 on-balance sheet financial assets, certain off-balance sheet 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 million

 

31.3.21

 

 

Carrying amount¹ / Total exposure

 

ECL allowances / provisions

Financial instruments measured at amortized cost

 

Total

Stage 1

Stage 2

Stage 3

 

Total

Stage 1

Stage 2

Stage 3

Cash and balances at central banks

 

 158,914 

 158,914 

 0 

 0 

 

 0 

 0 

 0 

 0 

Loans and advances to banks

 

 18,448 

 18,387 

 61 

 0 

 

 (12) 

 (8) 

 (3) 

 (1) 

Receivables from securities financing transactions

 

 82,384 

 82,385 

 0 

 0 

 

 (3) 

 (3) 

 0 

 0 

Cash collateral receivables on derivative instruments

 

 35,046 

 35,046 

 0 

 0 

 

 0 

 0 

 0 

 0 

Loans and advances to customers

 

 376,798 

 355,787 

 18,995 

 2,016 

 

 (993) 

 (138) 

 (184) 

 (671) 

of which: Private clients with mortgages

 

 142,611 

 132,636 

 9,118 

 857 

 

 (158) 

 (37) 

 (86) 

 (35) 

of which: Real estate financing

 

 41,092 

 36,099 

 4,979 

 15 

 

 (56) 

 (15) 

 (41) 

 0 

of which: Large corporate clients

 

 13,305 

 11,155 

 1,673 

 477 

 

 (271) 

 (28) 

 (28) 

 (216) 

of which: SME clients

 

 14,034 

 11,620 

 1,886 

 527 

 

 (283) 

 (19) 

 (19) 

 (246) 

of which: Lombard

 

 141,139 

 141,112 

 0 

 27 

 

 (34) 

 (5) 

 0 

 (30) 

of which: Credit cards

 

 1,392 

 1,063 

 301 

 28 

 

 (33) 

 (9) 

 (8) 

 (16) 

of which: Commodity trade finance

 

 3,695 

 3,663 

 16 

 15 

 

 (101) 

 (5) 

 0 

 (96) 

Other financial assets measured at amortized cost

 

 26,770 

 26,036 

 314 

 420 

 

 (125) 

 (32) 

 (7) 

 (86) 

of which: Loans to financial advisors

 

 2,473 

 1,961 

 107 

 405 

 

 (104) 

 (26) 

 (4) 

 (75) 

Total financial assets measured at amortized cost

 

 698,361 

 676,554 

 19,371 

 2,436 

 

 (1,133) 

 (180) 

 (195) 

 (758) 

Financial assets measured at fair value through other comprehensive income

 

 8,100 

 8,100 

 0 

 0 

 

 0 

 0 

 0 

 0 

Total on-balance sheet financial assets in scope of ECL requirements

 

 706,460 

 684,654 

 19,371 

 2,436 

 

 (1,133) 

 (180) 

 (195) 

 (758) 

Off-balance sheet (in scope of ECL)

 

 

 

 

 

 

 

 

 

 

Guarantees

 

 17,493 

 15,377 

 1,952 

 164 

 

 (59) 

 (15) 

 (15) 

 (29) 

of which: Large corporate clients

 

 3,425 

 2,025 

 1,281 

 119 

 

 (17) 

 (3) 

 (5) 

 (9) 

of which: SME clients

 

 1,243 

 936 

 262 

 45 

 

 (12) 

 0 

 (1) 

 (11) 

of which: Financial intermediaries and hedge funds

 

 7,579 

 7,304 

 275 

 0 

 

 (18) 

 (9) 

 (9) 

 0 

of which: Lombard

 

 2,136 

 2,136 

 0 

 0 

 

 (2) 

 0 

 0 

 (1) 

of which: Commodity trade finance

 

 2,057 

 2,031 

 26 

 0 

 

 (4) 

 (1) 

 0 

 (3) 

Irrevocable loan commitments

 

 38,137 

 34,312 

 3,730 

 95 

 

 (138) 

 (75) 

 (63) 

 0 

of which: Large corporate clients

 

 22,943 

 19,600 

 3,278 

 65 

 

 (121) 

 (68) 

 (54) 

 0 

Forward starting reverse repurchase and securities borrowing agreements

 

 5,988 

 5,988 

 0 

 0 

 

 0 

 0 

 0 

 0 

Committed unconditionally revocable credit lines

 

 39,424 

 35,311 

 4,023 

 89 

 

 (45) 

 (27) 

 (18) 

 0 

of which: Real estate financing

 

 7,227 

 6,786 

 432 

 9 

 

 (11) 

 (5) 

 (6) 

 0 

of which: Large corporate clients

 

 4,429 

 2,713 

 1,690 

 25 

 

 (9) 

 (3) 

 (6) 

 0 

of which: SME clients

 

 5,036 

 4,120 

 878 

 39 

 

 (14) 

 (11) 

 (3) 

 0 

of which: Lombard

 

 8,566 

 8,566 

 0 

 0 

 

 (1) 

 (1) 

 0 

 0 

of which: Credit cards

 

 9,175 

 8,695 

 469 

 11 

 

 (6) 

 (5) 

 (1) 

 0 

of which: Commodity trade finance

 

 322 

 322 

 0 

 0 

 

 0 

 0 

 0 

 0 

Irrevocable committed prolongation of existing loans

 

 5,824 

 5,785 

 34 

 5 

 

 (3) 

 (3) 

 0 

 0 

Total off-balance sheet financial instruments and other credit lines

 

 106,865 

 96,773 

 9,738 

 354 

 

 (245) 

 (121) 

 (95) 

 (29) 

Total allowances and provisions

 

 

 

 

 

 

 (1,378) 

 (301) 

 (290) 

 (787) 

1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective ECL allowances.    

 

 

67 


Notes to the UBS Group AG interim consolidated financial statements (unaudited) 

 

Note Expected credit loss measurement (continued)

 

USD million

 

31.12.20

 

 

Carrying amount¹ / Total exposure

 

ECL allowance / provisions

Financial instruments measured at amortized cost

 

Total

Stage 1

Stage 2

Stage 3

 

Total

Stage 1

Stage 2

Stage 3

Cash and balances at central banks

 

 158,231 

 158,231 

 0 

 0 

 

 0 

 0 

 0 

 0 

Loans and advances to banks

 

 15,444 

 15,260 

 184 

 0 

 

 (16) 

 (9) 

 (5) 

 (1) 

Receivables from securities financing transactions

 

 74,210 

 74,210 

 0 

 0 

 

 (2) 

 (2) 

 0 

 0 

Cash collateral receivables on derivative instruments

 

 32,737 

 32,737 

 0 

 0 

 

 0 

 0 

 0 

 0 

Loans and advances to customers

 

 379,528 

 356,948 

 20,341 

 2,240 

 

 (1,060) 

 (142) 

 (215) 

 (703) 

of which: Private clients with mortgages

 

 148,175 

 138,769 

 8,448 

 959 

 

 (166)