UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
Date: August 14, 2024
(Registrant's Name)
Bahnhofstrasse 45, 8001 Zurich, Switzerland
(Address of principal executive office)
Commission File Number: 1-36764
UBS AG
(Registrant's Name)
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Aeschenvorstadt 1, 4051 Basel, Switzerland
(Address of principal executive offices)
Commission File Number: 1-15060
Indicate by check mark whether the registrants file or will file annual reports under cover of Form 20-F or Form
40-
F.
Form 20-F
☒
☐
This Form 6-K consists of the Second Quarter 2024 Report of UBS Group AG, which appears immediately following
this page.
Second quarter
1.
UBS
Group
4
7
2.
UBS business divisions
and Group Items
19
23
26
29
32
34
3.
Risk, capital, liquidity and funding,
and balance sheet
36
42
51
52
55
4.
Consolidated
financial statements
57
Appendix
98
102
104
105
Corporate calendar UBS Group AG
Publication of the UBS AG second quarter 2024 report Friday, 23 August 2024
Information about future publication dates is available at
ubs.com/global/en/investor-relations/events/calendar.html
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Imprint
Publisher: UBS Group AG, Zurich, Switzerland | ubs.com
Language: English
© UBS 2024. The key symbol and UBS are among the registered and unregistered
trademarks of UBS. All rights reserved.
UBS Group second quarter 2024 report
Terms used in this report, unless the context requires otherwise
“UBS,” “UBS Group,” “UBS Group AG consolidated,” “Group,” “we,” “us” and “our”
UBS Group AG and its consolidated subsidiaries
“UBS AG” and “UBS AG consolidated”
UBS AG and its consolidated subsidiaries
“Credit Suisse AG” and “Credit Suisse AG consolidated”
Credit Suisse AG and its consolidated subsidiaries before the merger
with UBS AG
“Credit Suisse Group“ and “Credit Suisse Group AG consolidated”
Pre-acquisition Credit Suisse Group
”Credit Suisse”
Credit Suisse AG and its consolidated subsidiaries before the merger
with UBS AG, Credit Suisse Services AG, and other small former
Credit Suisse Group entities now directly held by UBS Group AG
“UBS Group AG” and “UBS Group AG standalone”
UBS Group AG on a standalone basis
“UBS AG standalone”
UBS AG on a standalone basis
“UBS Switzerland AG” and “UBS Switzerland AG standalone”
UBS Switzerland AG on a standalone basis
“UBS Europe SE consolidated”
UBS Europe SE and its consolidated subsidiaries
“UBS Americas Holding LLC” and “UBS Americas Holding LLC consolidated”
UBS Americas Holding LLC and its consolidated subsidiaries
“1m”
One million, i.e., 1,000,000
“1bn”
One billion, i.e., 1,000,000,000
“1trn”
One trillion, i.e., 1,000,000,000,000
In this report, unless the context requires otherwise, references to any gender shall apply to all genders.
Alternative performance measures
An alternative performance measure (an APM) is a financial measure of historical or future financial performance,
financial position or cash flows other than a financial measure defined or specified in the applicable recognized
accounting standards or in other applicable regulations. We report a number of APMs in the discussion of the
financial and operating performance of the Group, our business divisions and Group Items. We use APMs to provide
a more complete picture of our operating performance and to reflect management’s view of the fundamental
drivers of our business results. A definition of each APM, the method used to calculate it and the information
content are presented under “Alternative performance measures” in the appendix to this report. Our APMs may
qualify as non-GAAP measures as defined by US Securities and Exchange Commission (SEC) regulations. Our
underlying results are APMs and are non-GAAP financial measures.
›
Refer to the “Group performance” section of this report and to “Alternative performance measures” in the
appendix to this report for additional information about underlying results
Comparability
Comparative information in this report is presented as follows.
Profit and loss information for the second quarter of 2024, the first quarter of 2024 and the fourth quarter of 2023
is presented on a consolidated basis, each including UBS and Credit Suisse data for three months. Information for
the second quarter of 2023 includes three months of data for UBS and one month (June 2023) for Credit Suisse.
Year-to-date information for 2024 includes six months of data for UBS and six months for Credit Suisse.
Comparative year-to-date information for 2023 includes six months of data for UBS and one month (June 2023)
for Credit Suisse.
Balance sheet information presented in this report includes UBS and Credit Suisse consolidated information.
Significant regulated subsidiary and sub-group information
Regulatory key figures for our significant regulated subsidiaries and sub-groups will be published on 23 August
2024 and will be available under “Quarterly reporting” at
ubs.com/investors
.
UBS Group second quarter 2024 report
Our key figures
As of or for the quarter ended
As of or year-to-date
USD m, except where indicated
30.6.24
31.3.24
1
31.12.23
1
30.6.23
1
30.6.24
30.6.23
1
Group results
Total revenues
Negative goodwill
Credit loss expense / (release)
Operating expenses
Operating profit / (loss) before tax
Net profit / (loss) attributable to shareholders
Diluted earnings per share (USD)
2
Profitability and growth
3,4,5
Return on equity (%)
Return on tangible equity (%)
Underlying return on tangible equity (%)
6,7
Return on common equity tier 1 capital (%)
Underlying return on common equity tier 1 capital (%)
6,7
Return on leverage ratio denominator, gross (%)
Cost / income ratio (%)
8
Underlying cost / income ratio (%)
6,8
Effective tax rate (%)
n.m.
9
Net profit growth (%)
n.m.
n.m.
Resources
3
Total assets
Equity attributable to shareholders
Common equity tier 1 capital
10
Risk-weighted assets
10
Common equity tier 1 capital ratio (%)
10
Going concern capital ratio (%)
10
Total loss-absorbing capacity ratio (%)
10
Leverage ratio denominator
10
Common equity tier 1 leverage ratio (%)
10
Liquidity coverage ratio (%)
11
Net stable funding ratio (%)
Other
Invested assets (USD bn)
4,12,13
Personnel (full-time equivalents)
Market capitalization
2,14
Total book value per share (USD)
2
Tangible book value per share (USD)
2
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
2 Refer to the “Share information and earnings per share” section of this report for more information. 3 Refer to the “Targets, capital guidance and ambitions” section of the UBS Group Annual Report 2023,
available under “Annual reporting” at ubs.com/investors, for more information about our performance targets. 4 Refer to “Alternative performance measures” in the appendix to this report for the definition and
calculation method. 5 Profit or loss information for each of the second quarter of 2024, the first quarter of 2024 and the fourth quarter of 2023 is presented on a consolidated basis, including for each quarter Credit
Suisse data for three months, and for the purpose of the calculation of return measures has been annualized multiplying such by four. Profit or loss information for the second quarter of 2023 is presented on a
consolidated basis, including Credit Suisse data for one month (June 2023), and for the purpose of the calculation of return measures has been annualized multiplying such by four. Profit or loss information for the
first six months of 2024 is presented on a consolidated basis, including Credit Suisse data for six months, and for the purpose of the calculation of return measures has been annualized by multiplying such by two.
Profit or loss information for the first six months of 2023 is presented on a consolidated basis, including Credit Suisse data for one month, and for the purpose of the calculation of return measures has been annualized
by multiplying such by two. 6 Refer to the “Group performance” section of this report for more information about underlying results. 7 Comparative-period information for the first quarter of 2024 has been
restated to reflect the updated underlying tax impact. 8 Negative goodwill is not used in the calculation as it is presented in a separate reporting line and is not part of total revenues. 9 The effective tax rate for
the fourth quarter of 2023 is not a meaningful measure, due to the distortive effect of current unbenefited tax losses at the former Credit Suisse entities. 10 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. 11 The disclosed ratios represent quarterly averages for the quarters presented and are calculated based on an
average of 61 data points in the second quarter of 2024, 61 data points in the first quarter of 2024, 63 data points in the fourth quarter of 2023 and 64 data points in the second quarter of 2023. Refer to the
“Liquidity and funding management” section of this report for more information. 12 Consists of invested assets for Global Wealth Management, Asset Management and Personal & Corporate Banking. Refer to
“Note 32 Invested assets and net new money” in the “Consolidated financial statements” section of the UBS Group Annual Report 2023, available under “Annual reporting” at ubs.com/investors, for more information.
13 Include invested assets from associates in the Asset Management business division. 14 The calculation of market capitalization reflects total shares issued multiplied by the share price at the end of the period.
UBS Group second quarter 2024 report |
UBS Group | Recent developments 4
UBS Group
Management report
Recent developments
Integration of Credit Suisse
We made substantial progress related to the integration of Credit Suisse in the second quarter of 2024. The merger
of UBS AG and Credit Suisse AG was completed on 31 May 2024 with strong support from regulators across the
globe. UBS AG succeeded to all rights and obligations of Credit Suisse AG, including all outstanding Credit
Suisse AG debt instruments.
On 7 June 2024, we completed the transition to a single US intermediate holding company.
On 1 July 2024, we completed the merger of UBS Switzerland AG and Credit Suisse (Schweiz) AG. UBS
Switzerland AG succeeded to all rights and obligations of Credit Suisse (Schweiz) AG.
The merger of UBS AG and Credit Suisse AG and that of UBS Switzerland AG and Credit Suisse (Schweiz) AG are
critical steps in enabling us to unlock the next phase of the cost, capital, funding and tax benefits we expect to
realize by the end of 2026. They will facilitate the migration of clients and operations to integrated UBS platforms
over time, in line with business-, client- and product-specific requirements.
The measurement period adjustments effected under IFRS Accounting Standards in the second quarter of 2024
resulted in a decrease in provisional negative goodwill to USD 27.3bn from the USD 27.7bn previously reported in
the UBS Group Annual Report 2023. Retained earnings have been revised to reflect the impact on the prior-period
income statement of net USD 0.5bn. With the measurement period adjustments and the finalization of the amount
of negative goodwill in the second quarter of 2024, the accounting for the acquisition of the Credit Suisse Group
is complete.
›
Refer to “Note 2 Accounting for the merger of UBS AG and Credit Suisse AG” in the “Consolidated financial
statements” section of the UBS AG second quarter 2024 report, which will be available as of 23 August 2024 under
“Quarterly reporting” at
ubs.com/investors
, for more information about the accounting for the merger of UBS AG
and Credit Suisse AG
›
Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial
statements” section of this report for more information about the accounting for the acquisition of the Credit
Suisse Group and the finalization of the purchase price allocation
In the second quarter of 2024, we realized an additional USD 0.9bn in gross cost savings, for a total of around
USD 6bn in annualized exit rate gross cost savings compared with the 2022 combined cost base of Credit Suisse
and UBS. We now expect to achieve around USD 7bn of gross cost savings by the end of 2024, or around 55% of
our ambition of around USD 13bn by the end of 2026.
In the second quarter of 2024, Credit Suisse (Schweiz) AG fully repaid the funding drawn under the Emergency
Liquidity Assistance (ELA) facility, reducing the amount of funding outstanding under the ELA facility from CHF 19bn
to zero.
UBS Group second quarter 2024 report |
UBS Group | Recent developments 5
In June 2024, the Credit Suisse supply chain finance funds (the SCFFs) made a voluntary offer to the SCFFs investors
to redeem all outstanding fund units. The offer expired on 31 July 2024, and fund units representing around 92%
of the SCFFs’ net asset value were tendered in the offer and accepted. Fund units accepted in the offer were
redeemed at 90% of the net asset value determined on 25 February 2021, net of any payments made by the
relevant fund to the fund investors since that time. Investors whose units were redeemed released any claims they
may have had against the SCFFs, Credit Suisse or UBS. The offer aimed to provide fund investors with an accelerated
exit from their positions and a high level of financial recovery and was funded by the acquisition of a new class of
fund units by UBS. The offer did not have a material effect on the financial results or common equity tier 1 capital
of UBS Group AG, given provisions recorded in connection with the acquisition of the Credit Suisse Group. On a
subsidiary level, UBS AG on a consolidated basis recorded in the second quarter of 2024 a provision of around
USD 0.9bn in connection with the offer. The offer did not have a material effect on UBS AG on a standalone basis.
The investment in the SCFFs is managed in the Non-core and Legacy business division.
On 13 August 2024, UBS entered into an agreement to sell Select Portfolio Servicing, the US mortgage servicing
business of Credit Suisse managed in the Non-core and Legacy business division. Completion of the transaction is
subject to regulatory approvals and other customary closing conditions. The transaction is expected to close in the
first quarter of 2025. UBS Group does not expect to recognize a material profit or loss upon completion of the
transaction. Based on balances as of 30 June 2024, the completion of the transaction would reduce the Group’s
risk-weighted assets by around USD 1.3bn and the Group’s leverage ratio denominator by around USD 1.7bn.
Regulatory and legal developments
Swiss Federal Council releases its report on systemically important banks
In April 2024, the Swiss Federal Council released its report on banking stability that evaluates the regulation of
systemically important banks. The Swiss Federal Council concluded that the existing Swiss too-big-to-fail (TBTF)
regime must be further developed and strengthened and therefore proposed the introduction of a broad package
of measures that focused on three areas: strengthening prevention, strengthening liquidity and expanding the crisis
toolkit. In the first half of 2025, the Swiss Federal Council is expected to present two packages, one with changes
at the ordinance level and another with legislative amendments, to implement the proposed measures. Due to the
broad range of possible outcomes, the impact of the proposals on UBS can be fully assessed only when the
implementation details become clearer.
›
Refer to “Regulatory and legal developments” in the “Recent developments” section of the UBS Group first quarter
2024 report, available under “Quarterly reporting” at
ubs.com/investors
, for more information
Dev
elopments related to the final Basel III implementation
In June 2024, the Swiss Federal Council confirmed that the amendments to the Capital Adequacy Ordinance that
will incorporate the final Basel III standards into Swiss law will enter into force on 1 January 2025. Also in June
2024, the European Commission confirmed its intention to implement the final Basel III requirements as of
1 January 2025, except for the market risk capital requirements, the implementation of which will be delayed until
at least 1 January 2026. The implementation timeline to incorporate the final Basel III standards in the US is expected
to be delayed beyond July 2025, as banking agencies continue to discuss amendments to their proposals. The UK
has previously stated its intention to implement the final Basel III standards by 1 July 2025; however, it has delayed
the publication of its final rules until the autumn of 2024.
We expect that the adoption of the final Basel III standards in January 2025 will lead to an increase of around 5%
in UBS Group risk-weighted assets, driven mainly by the Fundamental Review of the Trading Book. This estimate is
based on our current understanding of the relevant standards. We are in an active dialogue with the Swiss Financial
Market Supervisory Authority regarding various aspects of the final rules. Our estimate does not take into account
mitigating actions, nor does it reflect the impact of the output floor, which is to be phased in over time.
Switzerland takes measures to strengthen its anti-money-laundering framework
In May 2024, the Swiss Federal Council adopted a dispatch on strengthening its anti-money-laundering framework.
Key elements include a non-publicly accessible federal register of beneficial owners, due diligence for particularly
risky activities in legal professions, measures to prevent the circumvention of applicable sanctions under the
Embargo Act, and due diligence obligations for cash payments in the real estate business and in precious metals
trading. The measures are subject to parliamentary approval and, therefore, entry into force is not expected before
2026. Although the final assessment will only be concluded once the final law has been published, UBS expects
that additional operational controls will be required to implement the amended framework.
Swiss Federal Council consults about extended sustainability reporting requirements
In June 2024, the Swiss Federal Council launched a consultation on extended sustainability reporting requirements
UBS Group second quarter 2024 report |
UBS Group | Recent developments 6
with the aim of strengthening existing rules in the Swiss Code of Obligations. Under the proposed rules, a wider
scope of companies would have to report on the risks of their business activities in the areas of the environment,
human rights and corruption, as well as on measures taken against such risks. Affected companies would have the
choice of reporting according to either the EU sustainability reporting requirements or another equivalent standard
for sustainability reporting. The consultation will last until October 2024, and if the changes are adopted as
proposed, UBS will be subject to the extended requirements.
The EU requires a physical presence for cross-border banking services
In June 2024, EU legislators published the final banking rules that include amendments to the Capital Requirements
Regulation and the Capital Requirements Directive. The amendments include, alongside measures to implement
the final elements of the Basel III standards, a requirement for non-EU firms to establish a physical presence within
the EU when providing certain banking services, including deposit-taking and commercial lending, to EU-domiciled
clients and counterparties, unless an exemption is obtained. The changes will affect the cross -border provision of
lending services and will require UBS to adapt its approaches to providing such services to clients and counterparties
in the EU. The requirement will become effective in January 2027, with grandfathering provisions for contracts
entered into before 11 July 2026.
The EU adopts the Artificial Intelligence Act
In July 2024, the EU published the Artificial Intelligence Act (the EU AI Act). Among other matters, the EU AI Act
classifies AI according to its risk, with the majority of obligations being placed on providers of high-risk AI systems
and with some obligations for users who deploy an AI system in a professional capacity. The EU AI Act entered into
force in August 2024, and it will be phased in over the next 36 months. UBS is assessing the potential impact of
the uses of AI and the EU AI Act.
Other developments
Organizational changes
Robert Karofsky, a member of the Group Executive Board (the GEB) since 2018, was President Investment Bank
until 1 July 2024, when he became Co-President Global Wealth Management and President UBS Americas. In the
latter role he succeeded Naureen Hassan, who retired from UBS effective 1 July 2024.
Iqbal Khan, a member of the GEB since 2019, was President Global Wealth Management until 1 July 2024, when
he became Co-President Global Wealth Management jointly with Robert Karofsky. He will also assume the role of
President UBS Asia Pacific, effective 1 September 2024, succeeding Edmund Koh, who will step down from the
GEB on that date.
George Athanasopoulos and Marco Valla joined the GEB on 1 July 2024 as Co-Presidents Investment Bank.
Damian Vogel has been appointed Group Chief Risk Officer and became a member of the GEB on 1 July 2024,
succeeding Christian Bluhm, who stepped down from the GEB effective 1 July 2024 and will remain at UBS in an
advisory capacity.
Stefan Seiler has been a member of the GEB since 2023 and Head Group Human Resources and Corporate Services;
as of 1 July 2024 his responsibilities have been expanded to include Group Communications & Branding.
Ulrich Körner, the former CEO of Credit Suisse AG, stepped down from the GEB at the end of June 2024, following
the merger of UBS AG and Credit Suisse AG and will retire from UBS later this year.
UBS Group second quarter 2024 report |
UBS Group | Group performance 7
Group performance
Income statement
For the quarter ended
% change from
Year-to-date
USD m
30.6.24
31.3.24
30.6.23
1
1Q24
2Q23
30.6.24
30.6.23
1
Net interest income
Other net income from financial instruments measured at fair value through profit or loss
Net fee and commission income
Other income
Total revenues
Negative goodwill
Credit loss expense / (release)
Personnel expenses
General and administrative expenses
Depreciation, amortization and impairment of non-financial assets
Operating expenses
Operating profit / (loss) before tax
Tax expense / (benefit)
Net profit / (loss)
Net profit / (loss) attributable to non-controlling interests
Net profit / (loss) attributable to shareholders
Comprehensive income
Total comprehensive income
Total comprehensive income attributable to non-controlling interests
Total comprehensive income attributable to shareholders
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
UBS Group second quarter 2024 report |
UBS Group | Group performance 8
Selected financial information of the business divisions and Group Items
For the quarter ended 30.6.24
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group Items
Total
Total revenues as reported
of which: PPA effects and other integration items
1
Total revenues (underlying)
Credit loss expense / (release)
Operating expenses as reported
of which: integration-related expenses and PPA effects
2
Operating expenses (underlying)
Operating profit / (loss) before tax as reported
Operating profit / (loss) before tax (underlying)
For the quarter ended 31.3.24
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group Items
Total
Total revenues as reported
of which: PPA effects and other integration items
1
Total revenues (underlying)
Credit loss expense / (release)
Operating expenses as reported
of which: integration-related expenses and PPA effects
2
Operating expenses (underlying)
Operating profit / (loss) before tax as reported
Operating profit / (loss) before tax (underlying)
For the quarter ended 30.6.23
3
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group Items
Negative
goodwill
4
Total
Total revenues as reported
of which: PPA effects and other integration items
1
Total revenues (underlying)
Negative goodwill
Credit loss expense / (release)
Operating expenses as reported
of which: integration-related expenses and PPA effects
2
of which: acquisition-related costs
Operating expenses (underlying)
Operating profit / (loss) before tax as reported
Operating profit / (loss) before tax (underlying)
1 Includes accretion of PPA adjustments on financial instruments and other PPA effects, as well as temporary and incremental items directly related to the integration. 2 Includes temporary, incremental operating
expenses directly related to the integration, as well as amortization of newly recognized intangibles resulting from the acquisition of the Credit Suisse Group. 3 Comparative-period information has been restated for
changes in business division perimeters, Group Treasury allocations and Non-core and Legacy cost allocations. Refer to “Note 3 Segment reporting” in the “Consolidated financial statements” section of this report
and to “Changes to segment reporting in 2024” in the “UBS business divisions and Group Items” section and the “Equity attribution” section of the UBS Group first quarter 2024 report, available under “Quarterly
reporting” at ubs.com/investors, for more information. 4 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial
statements” section of this report for more information.
UBS Group second quarter 2024 report |
UBS Group | Group performance 9
Selected financial information of the business divisions and Group Items (continued)
Year-to-date 30.6.24
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group Items
Total
Total revenues as reported
of which: PPA effects and other integration items
1
Total revenues (underlying)
Credit loss expense / (release)
Operating expenses as reported
of which: integration-related expenses and PPA effects
2
Operating expenses (underlying)
Operating profit / (loss) before tax as reported
Operating profit / (loss) before tax (underlying)
Year-to-date 30.6.23
3
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group Items
Negative
goodwill
4
Total
Total revenues as reported
of which: PPA effects and other integration items
1
Total revenues (underlying)
Negative goodwill
Credit loss expense / (release)
Operating expenses as reported
of which: integration-related expenses and PPA effects
2
of which: acquisition-related costs
Operating expenses (underlying)
Operating profit / (loss) before tax as reported
Operating profit / (loss) before tax (underlying)
1 Includes accretion of PPA adjustments on financial instruments and other PPA effects, as well as temporary and incremental items directly related to the integration. 2 Includes temporary, incremental operating
expenses directly related to the integration, as well as amortization of newly recognized intangibles resulting from the acquisition of the Credit Suisse Group. 3 Comparative-period information has been restated for
changes in business division perimeters, Group Treasury allocations and Non-core and Legacy cost allocations. Refer to “Note 3 Segment reporting” in the “Consolidated financial statements” section of this report
and to “Changes to segment reporting in 2024” in the “UBS business divisions and Group Items” section and the “Equity attribution” section of the UBS Group first quarter 2024 report, available under “Quarterly
reporting” at ubs.com/investors, for more information. 4 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial
statements” section of this report for more information.
Integration-related expenses, by business division and Group Items
For the quarter ended
Year-to-date
USD m
30.6.24
31.3.24
30.6.23
30.6.24
30.6.23
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Non-core and Legacy
Group Items
Total integration-related expenses
of which: total revenues
of which: operating expenses
of which: personnel expenses
of which: general and administrative expenses
of which: depreciation, amortization and impairment of non-financial assets
UBS Group second quarter 2024 report |
UBS Group | Group performance 10
2Q24 compared with 2Q23
The acquisition of the Credit Suisse Group has had a significant impact on the results from June 2023 onward,
including the recognition of negative goodwill, impacts from accretion of purchase price allocation (PPA)
adjustments on financial instruments, and integration-related expenses. This discussion and analysis of results
compares the second quarter of 2024, which covers three full months of post-acquisition results, with the second
quarter of 2023, which included only one month of post-acquisition results. This is a material driver in many of the
increases across both revenues and operating expenses.
›
Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial
statements” section of this report for more information about the accounting for the acquisition of the Credit
Suisse Group and the finalization of the purchase price allocation and negative goodwill
Underlying results
In addition to reporting our results in accordance with IFRS Accounting Standards, we report underlying results that
exclude items of profit or loss that management believes are not representative of the underlying performance.
In the second quarter of 2024, underlying revenues exclude PPA effects and other integration items. PPA effects
mainly consist of PPA adjustments on financial instruments measured at amortized cost, including off-balance sheet
positions, arising from the acquisition of the Credit Suisse Group. Accretion of PPA adjustments on financial
instruments is accelerated when the related financial instrument is derecognized before its contractual maturity. No
adjustment is made for accretion of PPA adjustments on financial instruments within the Non-core and Legacy
business division, due to the nature of its business model.
Underlying expenses exclude integration-related expenses that are temporary, incremental and directly related to
the integration of Credit Suisse into UBS, including costs of internal staff and contractors substantially dedicated to
integration activities, retention awards, redundancy costs, incremental expenses from the shortening of useful lives
of property, equipment and software, and impairment charges relating to these assets. Classification as integration-
related expenses does not affect the timing of recognition and measurement of those expenses or the presentation
thereof in the income statement. Expenses associated with Credit Suisse restructuring programs that existed prior
to the acquisition are also included in integration-related expenses.
Results: 2Q24 vs 2Q23
Reported net profit attributable to shareholders decreased by USD 26,195m to USD 1,136m, due to the prior-year
quarter including negative goodwill of USD 27,264m relating to the acquisition of the Credit Suisse Group.
Excluding the impacts of negative goodwill in the prior-year quarter, operating profit before tax increased by
USD 1,038m, reflecting an increase in total revenues and lower net credit loss expenses, partly offset by higher
operating expenses. Total revenues increased by USD 2,364m, or 25%, to USD 11,904m, and included an increase
of USD 429m in accretion impacts resulting from PPA adjustments on financial instruments and other PPA effects.
The increase in total revenues was mainly driven by a USD 1,403m increase in net fee and commission income and
a USD 994m increase in total combined net interest income and other net income from financial instruments
measured at fair value through profit or loss, partly offset by a USD 35m decrease in other income. Operating
expenses increased by USD 1,854m, or 22%, to USD 10,340m, and included integration-related expenses of
USD 1,344m. This increase was mainly driven by USD 1,468m higher personnel expenses and USD 350m higher
general and administrative expenses. Net credit loss expenses were USD 95m compared with USD 623m in the
second quarter of 2023.
Underlying results 2Q24 vs 2Q23
Underlying results for the second quarter of 2024 excluded PPA effects and other integration items of USD 780m
from total revenues and integration-related expenses and PPA effects of USD 1,372m from operating expenses.
On an underlying basis, profit before tax increased by USD 1,169m to USD 2,060m, reflecting a USD 1,962m
increase in underlying total revenues and net credit loss expenses of USD 95m, compared with net credit loss
expenses of USD 623m in the second quarter of 2023, partly offset by a USD 1,321m increase in underlying
operating expenses.
UBS Group second quarter 2024 report |
UBS Group | Group performance 11
Total revenues: 2Q24 vs 2Q23
Net interest income and other net income from financial instruments measured at fair value through profit or loss
Total combined net interest income and other net income from financial instruments measured at fair value through
profit or loss increased by USD 994m to USD 5,218m and included an increase of USD 169m in accretion impacts
resulting from PPA adjustments on financial instruments and other PPA effects.
Personal & Corporate Banking increased by USD 307m to USD 1,564m, driven by the consolidation of Credit Suisse
revenues for the full quarter, and included USD 221m of accretion of PPA adjustments on financial instruments and
other PPA effects, compared with USD 128m in the second quarter of 2023. These effects were partly offset by
higher liquidity costs, as well as lower deposit margins resulting from shifts to lower-margin deposit products.
Non-core and Legacy increased by USD 254m to USD 310m, mainly due to the consolidation of Credit Suisse revenues
for the full quarter. Total revenues reflected net gains from position exits, along with net interest income from
securitized products and credit products.
The Investment Bank increased by USD 248m to USD 1,528m and included USD 10m of accretion of PPA
adjustments on financial instruments and other PPA effects. Excluding the aforementioned PPA effects, there was
an increase in Global Banking, mainly from higher revenues across Public Capital Markets. In addition, there was
an increase in Execution Services revenues, due to increases in Cash Equities across all regions, as well as higher
revenues in Derivatives & Solutions, reflecting increases across all products.
Global Wealth Management increased by USD 183m to USD 2,232m, driven by the consolidation of Credit Suisse
revenues for the full quarter, and included USD 240m of accretion of PPA adjustments on financial instruments and
other PPA effects, compared with USD 181m in the second quarter of 2023. The remaining variance was driven by
lower deposit margins, including the effects of shifts to lower-margin deposit products, partly offset by higher rates
and deposit volumes. The remaining variance was also due to higher liquidity costs and lower loan revenues,
reflecting lower average volumes. In addition, there was an increase in transaction-based income, largely
attributable to higher levels of client activity.
›
Refer to the relevant business division commentary in the “UBS business divisions and Group Items” section of this
report for more information about business-division-specific revenues
›
Refer to “Note 4 Net interest income” in the “Consolidated financial statements” section of this report for more
information about net interest income
Net interest income and other net income from financial instruments measured at fair value through profit or loss
For the quarter ended
% change from
Year-to-date
USD m
30.6.24
31.3.24
1
30.6.23
1
1Q24
2Q23
30.6.24
30.6.23
1
Net interest income from financial instruments measured at amortized cost and fair
value through other comprehensive income
Net interest income from financial instruments measured at fair value through profit or
loss and other
Other net income from financial instruments measured at fair value through profit or
loss
Total
Global Wealth Management
of which: net interest income
of which: transaction-based income from foreign exchange and other intermediary
activity
2
Personal & Corporate Banking
of which: net interest income
of which: transaction-based income from foreign exchange and other intermediary
activity
2
Asset Management
Investment Bank
Non-core and Legacy
3
Group Items
3
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
2 Comparative-period information has been restated for changes in business division perimeters, Group Treasury allocations and Non-core and Legacy cost allocations. Refer to “Note 3 Segment reporting” in the
“Consolidated financial statements” section of this report and to “Changes to segment reporting in 2024” in the “UBS business divisions and Group Items” section and the “Equity attribution” section of the UBS
Group first quarter 2024 report, available under “Quarterly reporting” at ubs.com/investors, for more information. 3 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.
UBS Group second quarter 2024 report |
UBS Group | Group performance 12
Net fee and commission income
Net fee and commission income increased by USD 1,403m to USD 6,531m and included an increase of USD 260m
in accretion of PPA adjustments on financial instruments and other PPA effects, which was included in other fee
and commission income, predominantly in the Investment Bank.
Fees for portfolio management and related services and investment fund fees increased by USD 586m and
USD 205m, respectively, predominantly in Global Wealth Management and Asset Management. These increases
were largely attributable to positive market performance, as well as the consolidation of Credit Suisse revenues.
Net brokerage fees increased by USD 182m to USD 1,038m, reflecting an increase in Cash Equities across all regions
in Execution Services in the Investment Bank, as well as an increase in Global Wealth Management that was due to
higher levels of client activity, particularly in the Americas and Asia Pacific regions.
›
Refer to “Note 5 Net fee and commission income” in the “Consolidated financial statements” section of this report
for more information
Other income
Other income was USD 154m, compared with USD 188m in the second quarter of 2023. The decrease was mainly
due to a USD 44m decrease in gains recognized on repurchases of UBS’s own debt instruments. This was partly
offset by a USD 28m net gain in Asset Management from the sale of our Brazilian real estate fund management
business.
›
Refer to “Note 6 Other income” in the “Consolidated financial statements” section of this report for more
information
›
Refer to “Asset Management” in the “UBS business divisions and Group Items” section of this report for more
information about the sale of business
Credit loss expense / release: 2Q24 vs 2Q23
Total net credit loss expenses in the second quarter of 2024 were USD 95m, compared with net credit loss expenses
of USD 623m in the prior-year quarter, reflecting net releases of USD 22m related to performing positions and net
expenses of USD 116m on credit-impaired positions. The decrease is largely attributable to the prior-year quarter
including the initial recognition of expected credit loss allowances and provisions of USD 548m for the purchased
non-credit-impaired portfolios as part of the acquisition of the Credit Suisse Group.
›
Refer to “Note 9 Expected credit loss measurement” in the “Consolidated financial statements” section of this
report for more information
Credit loss expense / (release)
Performing positions
Credit-impaired positions
USD m
Stages 1 and 2
Stage 3
Purchased
Total
For the quarter ended 30.6.24
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Non-core and Legacy
Group Items
Total
For the quarter ended 31.3.24
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Non-core and Legacy
Group Items
Total
For the quarter ended 30.6.23
1
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Non-core and Legacy
Group Items
Total
1 Comparative-period information has been restated for changes in business division perimeters. Refer to “Changes to segment reporting in 2024” in the “UBS business divisions and Group Items” section of the
UBS Group first quarter 2024 report, available under “Quarterly reporting” at ubs.com/investors, and “Note 3 Segment reporting” in the “Consolidated financial statements” section of this report for more information.
UBS Group second quarter 2024 report |
UBS Group | Group performance 13
Operating expenses: 2Q24 vs 2Q23
Operating expenses
For the quarter ended
% change from
Year-to-date
USD m
30.6.24
31.3.24
30.6.23
1Q24
2Q23
30.6.24
30.6.23
Personnel expenses
of which: salaries and variable compensation
of which: variable compensation – financial advisors
1
General and administrative expenses
of which: net expenses for litigation, regulatory and similar matters
of which: other general and administrative expenses
Depreciation, amortization and impairment of non-financial assets
Total operating expenses
1 Consists of cash and deferred compensation awards and is based on compensable revenues and firm tenure using a formulaic approach. Also includes expenses related to compensation commitments with financial
advisors entered into at the time of recruitment that are subject to vesting requirements.
Personnel expenses
Personnel expenses increased by USD 1,468m to USD 7,119m, largely due to the consolidation of Credit Suisse
expenses for the full period. Salaries and variable compensation increased by USD 1,254m, due to the
aforementioned consolidation effect and also due to higher severance-related expenses, as well as an increase in
financial advisor compensation, which reflected higher compensable revenues.
›
Refer to “Note 7 Personnel expenses” in the “Consolidated financial statements” section of this report for more
information
General and administrative expenses
General and administrative expenses increased by USD 350m to USD 2,318m, largely due to the consolidation of
Credit Suisse expenses for the full quarter, and included a USD 305m increase in integration-related expenses,
which was largely attributable to outsourcing and consulting costs. In addition, general and administrative expenses
in the second quarter of 2024 included releases of USD 150m of IFRS 3 acquisition-related contingent liabilities
following the resolution of the relevant matter. These increases were partly offset by USD 106m in acquisition costs
incurred in the prior-year quarter.
›
Refer to “Note 8 General and administrative expenses” in the “Consolidated financial statements” section of this
report for more information
›
Refer to “Note 15 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this
report for more information about litigation, regulatory and similar matters
›
Refer to the “Regulatory and legal developments” and “Risk factors” sections of the UBS Group Annual Report
2023, available under “Annual reporting” at
ubs.com/investors
, for more information about litigation, regulatory
and similar matters
Depreciation, amortization and impairment of non-financial assets
Depreciation, amortization and impairment of non-financial assets increased by USD 37m to USD 903m, largely
due to the consolidation of Credit Suisse expenses. This increase was partly offset by a USD 150m decrease in
integration-related expenses, largely attributable to USD 206m impairment of software projects in progress in the
prior-year quarter resulting from a reprioritization of software development activity following the acquisition of the
Credit Suisse Group.
UBS Group second quarter 2024 report |
UBS Group | Group performance 14
Tax: 2Q24 vs 2Q23
The Group had a net income tax expense of USD 293m in the second quarter of 2024, compared with USD 361m
in the prior-year quarter.
The net current tax expense was USD 310m, compared with USD 368m, and primarily related to the taxable profits
of UBS Switzerland AG and other entities. There was a net deferred tax benefit of USD 17m, compared with
USD 7m in the prior-year quarter. This included benefits of USD 197m in respect of increases in recognized deferred
tax assets (DTAs), reflecting updated expectations of future profits that are available to utilize tax losses carried
forward and deductible temporary differences, following the merger of UBS AG and Credit Suisse AG and other
entity reorganizations in the quarter. These were partly offset by a net expense of USD 180m primarily related to
the amortization of DTAs previously recognized in relation to tax losses carried forward and deductible temporary
differences.
The Group’s effective tax rate for the quarter was 20.0%, although it would have been 33.4% without the
aforementioned deferred tax benefits of USD 197m. This is higher than the Group’s structural rate of 23%, because
its net profit includes operating losses of certain entities, reflecting integration-related expenses, that did not result
in any tax benefits because they cannot be offset with profits of other entities in the Group, and did not result in
any DTA recognition. The Group’s effective tax rate for the second half of 2024 may be higher than the Group’s
structural rate if further such operating losses are incurred in these entities, and the amount of that impact will
depend on the amount of those losses. The Group’s effective tax rate is expected to decrease toward the structural
rate in subsequent years.
Total comprehensive income attributable to shareholders
In the second quarter of 2024, total comprehensive income attributable to shareholders was USD 1,596m,
reflecting a net profit of USD 1,136m and other comprehensive income (OCI), net of tax, of USD 460m.
OCI related to cash flow hedges was USD 256m, mainly reflecting net losses on hedging instruments that were
reclassified from OCI to the income statement, partly offset by net unrealized losses on US dollar hedging derivatives
resulting from increases in the relevant US dollar long-term interest rates.
OCI related to own credit on financial liabilities designated at fair value was USD 228m, primarily due to a widening
of our own credit spreads.
›
Refer to “Statement of comprehensive income” in the “Consolidated financial statements” section of this report for
more information
›
Refer to “Reconciliation of equity under IFRS Accounting Standards to Swiss SRB common equity tier 1 capital” in
the “Capital management” section of this report for more information about the effects of OCI on common equity
tier 1 capital
›
Refer to “Note 21 Fair value measurement” in the “Consolidated financial statements” section of the UBS Group
Annual Report 2023, available under “Annual reporting” at
ubs.com/investors
, for more information about own
credit on financial liabilities designated at fair value
UBS Group second quarter 2024 report |
UBS Group | Group performance 15
Sensitivity to interest rate movements
As of 30 June 2024, it is estimated that a parallel shift in yield curves by +100 basis points could lead to a combined
increase in annual net interest income from our banking book of approximately USD 1.6bn in the first year after
such a shift. Of this increase, approximately USD 0.9bn, USD 0.4bn and USD 0.2bn would result from changes in
Swiss franc, US dollar and euro interest rates, respectively. A parallel shift in yield curves by –100 basis points could
lead to a combined decrease in annual net interest income of approximately USD 1.5bn in the first year after such
a shift, showing similar currency contributions as for the aforementioned increase in rates.
These estimates are based on a hypothetical scenario of an immediate change in interest rates, equal across all
currencies and relative to implied forward rates as of 30 June 2024 applied to our banking book. These estimates
further assume no change to balance sheet size and product mix, stable foreign exchange rates, and no specific
management action. These estimates do not represent a forecast of net interest income variability.
›
Refer to the “Risk management and control” section of this report for information about interest rate risk in the
banking book
Key figures and personnel
Below is an overview of selected key figures of the Group. For further information about key figures related to
capital management, refer to the “Capital management” section of this report.
Cost / income ratio: 2Q24 vs 2Q23
The cost / income ratio was 86.9%, compared with 88.9% and on an underlying basis, the cost / income ratio was
80.6%, compared with 83.5%. Both movements mainly reflected an increase in total revenues, partly offset by an
increase in operating expenses.
Personnel: 2Q24 vs 1Q24
The number of internal and external personnel employed was 133,038 (workforce count) as of 30 June 2024, a
net decrease of 3,584 compared with 31 March 2024. The number of internal personnel employed as of 30 June
2024 was 109,991 (full-time equivalents), a net decrease of 1,558 compared with 31 March 2024. The number of
external staff was approximately 23,047 (workforce count) as of 30 June 2024, a net decrease of approximately
2,026 compared with 31 March 2024.
Equity, CET1 capital and returns
As of or for the quarter ended
Year-to-date
USD m, except where indicated
30.6.24
31.3.24
1
30.6.23
1
30.6.24
30.6.23
1
Net profit
Net profit / (loss) attributable to shareholders
Equity
Equity attributable to shareholders
less: goodwill and intangible assets
Tangible equity attributable to shareholders
less: other CET1 adjustments
CET1 capital
Returns
Return on equity (%)
Return on tangible equity (%)
Underlying return on tangible equity (%)
2
Return on CET1 capital (%)
Underlying return on CET1 capital (%)
2
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
2
Comparative-period information for the first quarter of 2024 has been restated to reflect the updated underlying tax impact.
UBS Group second quarter 2024 report |
UBS Group | Group performance 16
Common equity tier 1 capital: 2Q24 vs 1Q24
During the second quarter of 2024, our common equity tier 1 (CET1) capital decreased by USD 1.6bn to
USD 76.1bn, mainly as the operating profit before tax of USD 1.5bn and a USD 0.1bn increase in eligible deferred
tax assets recognized for temporary differences were more than offset by a net share repurchase effect of
USD 1.0bn, a USD 1.0bn negative effect from compensation- and own-share-related capital components, dividend
accruals of USD 0.6bn, current tax expenses of USD 0.3bn, and amortization of transitional CET1 capital PPA
adjustments (interest rate and own credit) of USD 0.3bn (net of tax). The net share repurchase effect of USD 1.0bn
reflects actual share repurchases of USD 0.15bn under our new, 2024 share repurchase program and the
establishing of a USD 0.85bn capital reserve for potential share repurchases.
Return on common equity tier 1 capital: 2Q24 vs 2Q23
The annualized return on CET1 capital was 5.9%, compared with 177.5%, driven by lower net profit attributable
to shareholders, predominantly due to the recognition of negative goodwill in the prior-year quarter. On an
underlying basis, the return on CET1 capital was 8.4%, compared with 2.9%.
Risk-weighted assets: 2Q24 vs 1Q24
During the second quarter of 2024, RWA decreased by USD 15.1bn to USD 511.4bn, driven by decreases of
USD 11.6bn resulting from asset size and other movements, as well as USD 3.5bn resulting from model updates
and methodology changes.
Common equity tier 1 capital ratio: 2Q24 vs 1Q24
Our CET1 capital ratio increased to 14.9% from 14.8%, mainly reflecting the aforementioned decrease in RWA,
partly offset by a USD 1.6bn decrease in CET1 capital.
Leverage ratio denominator: 2Q24 vs 1Q24
The leverage ratio denominator (the LRD) decreased by USD 35.4bn to USD 1,564.2bn, driven by asset size and
other movements of USD 33.4bn, as well as currency effects of USD 2.1bn.
Common equity tier 1 leverage ratio: 2Q24 vs 1Q24
Our CET1 leverage ratio was broadly unchanged at 4.9%, reflecting the aforementioned decrease in the LRD, offset
by a USD 1.6bn decrease in CET1 capital.
Results 6M24 vs 6M23
Operating profit before tax decreased by USD 25,347m, or 87%, to USD 3,844m, as the prior-year period included
negative goodwill of USD 27,264m relating to the acquisition of the Credit Suisse Group. Total revenues increased
by USD 6,358m, which was partly offset by USD 4,901m higher operating expenses. Net credit loss expenses were
USD 201m compared with net credit loss expenses of USD 662m in the first six months of 2023.
Total combined net interest income and other net income from financial instruments measured at fair value through
profit or loss increased by USD 3,048m to USD 11,341m, and included an increase of USD 679m in accretion
impacts resulting from PPA adjustments on financial instruments and other PPA effects. Personal & Corporate
Banking increased by USD 1,179m, mainly due to higher net interest income, largely attributable to the
consolidation of Credit Suisse net interest income for the full period, which included USD 462m of accretion of PPA
adjustments on financial instruments and other PPA effects, compared with USD 128m in the first half of 2023,
partly offset by higher liquidity costs. Non-core and Legacy increased by USD 1,144m, mainly due to the
consolidation of Credit Suisse revenues for the full period. Non-core and Legacy revenues reflected net gains from
position exits, along with net interest income from securitized products and credit products, as well as a net gain
of USD 272m, after the accounting for the PPA adjustments at the closing of the acquisition of the Credit Suisse
Group, from the sale of assets from the former Credit Suisse securitized products group to Apollo Management
Holdings and certain other entities (collectively, Apollo). Global Wealth Management revenues increased by
USD 739m, predominantly as a result of the consolidation of Credit Suisse revenues for the full period, and included
USD 497m of accretion of PPA adjustments on financial instruments and other PPA effects, compared with
USD 181m in the first half of 2023. The remaining variance was driven by lower deposit margins, including the
effects of shifts to lower-margin deposit products, partly offset by higher rates and deposit volumes. The remaining
variance was also due to higher liquidity costs and lower loan revenues, reflecting lower average volumes.
›
Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial
statements” section of this report for information about the conclusion of an investment management agreement
with Apollo and the transfer of senior secured asset-based financing
UBS Group second quarter 2024 report |
UBS Group | Group performance 17
Net fee and commission income increased by USD 3,289m to USD 13,023m and included a USD 565m increase in
accretion of PPA adjustments on financial instruments and other PPA effects, which was included in other fee and
commission income, mainly in the Investment Bank. Portfolio management and related service fees increased by
USD 1,426m, and investment fund fees increased by USD 284m, predominantly in Global Wealth Management
and Asset Management, respectively, largely attributable to the consolidation of Credit Suisse revenues for the full
period and due to positive market performance. Net brokerage fees increased by USD 414m, reflecting an increase
in Execution Services in the Investment Bank mainly due to higher levels of client activity, as well as an increase in
Global Wealth Management, mainly due to the consolidation of Credit Suisse and higher levels of client activity.
M&A and corporate finance fees increased by USD 152m, reflecting an increase in advisory revenues in our Global
Banking business within the Investment Bank.
Personnel expenses increased by USD 3,797m to USD 14,068m, largely due to the consolidation of Credit Suisse
expenses for the full period, and included an increase of USD 1,022m of integration-related expenses, which were
largely related to salaries, severance and variable compensation. Salaries and variable compensation increased by
USD 3,233m, due to the aforementioned effects and included an increase in financial advisor compensation due to
higher compensable revenues.
General and administrative expenses increased by USD 698m to USD 4,731m, largely due to the consolidation of
Credit Suisse expenses for the full period, and included an increase of USD 660m in integration-related expenses
that were largely attributable to higher consulting fees and outsourcing costs. In addition, general and
administrative expenses included releases of USD 150m of IFRS 3 acquisition-related contingent liabilities following
the resolution of the relevant matter in the first half of 2024. These increases were partly offset by a USD 665m
increase in provisions recognized in the first quarter of 2023 related to the US residential mortgage-backed securities
litigation matter, as well as USD 176m of acquisition costs in the prior-year period.
Depreciation, amortization and impairment of non-financial assets increased by USD 407m to USD 1,798m, largely
due to the consolidation of Credit Suisse expenses for the full period and USD 112m higher accelerated depreciation
related to decisions to vacate leasehold properties. This was partly offset by the recognition of an impairment in the
second quarter of 2023 related to software projects in progress of USD 206m resulting from a reprioritization of
software development activity in the context of the acquisition of the Credit Suisse Group.
Outlook
The macroeconomic outlook continues to be clouded by ongoing conflicts, other geopolitical tensions and the
upcoming US elections. We expect these uncertainties to persist for the foreseeable future, and they will likely lead
to higher market volatility compared with the first half of the year.
Entering the third quarter, we are seeing positive investor sentiment and continued momentum in client and
transactional activity. Also visible are moderate net interest income headwinds from ongoing mix shifts in Global
Wealth Management and the effects of the second Swiss National Bank rate cut, not yet captured in our deposit
pricing in Personal & Corporate Banking.
As we execute our integration plans, we expect to incur in the third quarter of 2024 around USD 1.1bn of
integration-related expenses, while the pace of gross cost savings will decline modestly sequentially. Integration-
related expenses should be partly offset by around USD 0.6bn accretion of purchase accounting effects.
For the second half of 2024, we estimate Non-core and Legacy will record an underlying pre-tax loss of around
USD 1bn as revenues are expected to reflect moderate short-term upside to current book values and continued
sequential progress on costs. In the absence of a better-than-expected reported Non-core and Legacy performance,
we continue to expect our effective tax rate for the second half of 2024 to be around 35%.
Our diversified business model positions us well to deliver sustainable long-term value for shareholders across
various market conditions. We remain focused on supporting our clients while positioning the Group for future
growth.
UBS Group second quarter 2024 report |
UBS business divisions and Group Items 18
UBS business divisions and
Group Items
Management report
Our businesses
We report five business divisions in line with IFRS Accounting Standards: Global Wealth Management, Personal &
Corporate Banking, Asset Management, the Investment Bank, and Non-core and Legacy. Non-core and Legacy
includes positions and businesses not aligned with our strategy and policies. Those consist of the assets and liabilities
reported as part of the former Capital Release Unit (Credit Suisse) and certain assets and liabilities of the former
Investment Bank (Credit Suisse), the former Corporate Center (Credit Suisse) and other former Credit Suisse business
divisions. Non-core and Legacy also includes the remaining assets and liabilities of UBS’s Non-core and Legacy
Portfolio, previously reported in Group Functions (which has been renamed Group Items), and smaller amounts of
assets and liabilities of UBS’s business divisions that have been assessed as not strategic in light of the acquisition
of the Credit Suisse Group.
Our Group functions are support and control functions that provide services to the Group. Virtually all costs and
revenues incurred by the support and control functions are allocated to the business divisions, leaving a residual
amount, mainly related to certain Group funding and hedging items, that we refer to as Group Items in our segment
reporting.
This discussion and analysis of the results of the business divisions and Group Items compares the second quarter
of 2024, which covers three full months of post-acquisition results, with the second quarter of 2023, which included
only one month of post-acquisition results. It also compares the six-month period ended 30 June 2024, which
covers six full months of post-acquisition results, with the six-month period ended 30 June 2023, which included
only one month of post-acquisition results. This is a material driver in many of the increases across both total
revenues and operating expenses.
UBS Group second quarter 2024 report |
UBS business divisions and Group Items | Global Wealth Management 19
Global Wealth Management
Global Wealth Management
1
As of or for the quarter ended
% change from
Year-to-date
USD m, except where indicated
30.6.24
31.3.24
30.6.23
2
1Q24
2Q23
30.6.24
30.6.23
2
Results
Net interest income
Recurring net fee income
3
Transaction-based income
3
Other income
Total revenues
Credit loss expense / (release)
Operating expenses
Business division operating profit / (loss) before tax
Underlying results
Total revenues as reported
of which: PPA effects and other integration items
4
of which: PPA effects recognized in net interest income
of which: PPA effects and other integration items recognized in transaction-based income
Total revenues (underlying)
3
Credit loss expense / (release)
Operating expenses as reported
of which: integration-related expenses and PPA effects
3,5
Operating expenses (underlying)
3
of which: expenses for litigation, regulatory and similar matters
Business division operating profit / (loss) before tax as reported
Business division operating profit / (loss) before tax (underlying)
3
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
3
Cost / income ratio (%)
3
Average attributed equity (USD bn)
6
Return on attributed equity (%)
3,6
Financial advisor compensation
7
Net new fee-generating assets (USD bn)
3
Fee-generating assets (USD bn)
3
Net new assets (USD bn)
3
Invested assets (USD bn)
3
Loans, gross (USD bn)
8
Customer deposits (USD bn)
8
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
3,9
Advisors (full-time equivalents)
Underlying performance measures
Pre-tax profit growth (year-on-year, %)
3
Cost / income ratio (%)
3
Return on attributed equity (%)
3,6
1 Comparatives may differ due to adjustments following organizational changes, restatements due to the retrospective adoption of new accounting standards or changes in accounting policies, and events after the
reporting period. 2 Comparative figures have been restated for changes in business division perimeters, Group Treasury allocations and Non-core and Legacy cost allocations, as well as changes in the equity
attribution framework. Refer to “Note 3 Segment reporting” in the “Consolidated financial statements” section of this report and to “Changes to segment reporting in 2024” in the “UBS business divisions and Group
Items” section and the “Equity attribution” section of the UBS Group first quarter 2024 report, available under “Quarterly reporting” at ubs.com/investors, for more information. 3 Refer to “Alternative performance
measures” in the appendix to this report for the definition and calculation method. We started to report fee-generating assets and net new fee-generating assets on a consolidated basis, including Credit Suisse data,
from the fourth quarter of 2023 onward. 4 Includes accretion of PPA adjustments on financial instruments and other PPA effects, as well as temporary and incremental items directly related to the integration.
5 Includes temporary, incremental operating expenses directly related to the integration, as well as amortization of newly recognized intangibles resulting from the acquisition of the Credit Suisse Group. 6 Refer to
the “Equity attribution” section of this report for more information about the equity attribution framework. 7 Relates to licensed professionals with the ability to provide investment advice to clients in the Americas.
Consists of cash and deferred compensation awards and is based on compensable revenues and firm tenure using a formulaic approach. Also includes expenses related to compensation commitments with financial
advisors entered into at the time of recruitment that are subject to vesting requirements. Recruitment loans to financial advisors were USD 1,715m as of 30 June 2024. 8 Loans and Customer deposits in this table
include customer brokerage receivables and payables, respectively, which are presented in separate reporting lines on the balance sheet. 9 Refer to the “Risk management and control” section of this report for
more information about (credit-)impaired exposures. Excludes loans to financial advisors.
Results: 2Q24 vs 2Q23
Profit before tax decreased by USD 157m, or 15%, to USD 871m, mainly due to higher operating expenses, partly
offset by the impact from the acquisition of the Credit Suisse Group. Underlying profit before tax was USD 1,161m,
after excluding USD 523m of integration-related expenses and purchase price allocation (PPA) effects from
operating expenses, as well as USD 233m of PPA effects and other integration items from total revenues.
UBS Group second quarter 2024 report |
UBS business divisions and Group Items | Global Wealth Management 20
Total revenues
Total revenues increased by USD 792m, or 15%, to USD 6,053m, largely driven by the consolidation of Credit
Suisse revenues for the full quarter. Total revenues included the aforementioned USD 233m of PPA effects and
other integration items, which represented a USD 47m increase compared with the USD 186m recorded for such
effects and items in the second quarter of 2023. Excluding these effects, underlying total revenues were
USD 5,820m.
Net interest income increased by USD 93m, or 5%, to USD 1,825m, largely driven by the consolidation of Credit
Suisse net interest income for the full quarter. Net interest income included USD 240m of accretion of PPA
adjustments on financial instruments and other PPA effects, compared with USD 181m in the second quarter of
2023. The remaining variance was driven by lower deposit margins, including the effects of shifts to lower-margin
deposit products, partly offset by higher rates and deposit volumes. The remaining variance was also due to higher
liquidity costs and lower loan revenues, reflecting lower average volumes. Excluding the aforementioned accretion
effects, underlying net interest income was USD 1,586m.
Recurring net fee income increased by USD 435m, or 16%, to USD 3,104m, mainly driven by positive market
performance and the consolidation of Credit Suisse recurring net fee income for the full quarter.
Transaction-based income increased by USD 256m, or 30%, to USD 1,105m, mainly driven by higher levels of client
activity, particularly in the Americas and Asia Pacific regions, as well as the consolidation of Credit Suisse transaction-
based income for the full quarter. Transaction-based income included USD 8m of accretion of PPA adjustments on
financial instruments and other PPA effects, compared with USD 4m in the second quarter of 2023; the second
quarter of 2024 also included negative USD 15m of temporary and incremental items directly related to the
integration of Credit Suisse. Excluding negative USD 6m resulting from the aforementioned accretion effects and
temporary and incremental items, underlying transaction-based income was USD 1,111m.
Other income increased by USD 7m to USD 19m, mainly due to the consolidation of Credit Suisse other income for
the full period.
Credit loss expense / release
Net credit loss releases were USD 1m, compared with net credit loss expenses of USD 149m in the second quarter
of 2023. Prior-year quarter net credit loss expenses were largely driven by the initial recognition of expected credit
loss allowances and provisions with respect to Credit-Suisse-related positions.
Operating expenses
Operating expenses increased by USD 1,098m, or 27%, to USD 5,183m, largely due to the consolidation of Credit
Suisse expenses for the full quarter. Operating expenses included integration-related expenses of USD 521m, which
represented a USD 454m increase compared with the USD 67m of integration-related expenses recorded in the
second quarter of 2023. The remaining variance was due to an increase in financial advisor compensation reflecting
higher compensable revenues. Excluding integration-related expenses and PPA effects of USD 523m, underlying
operating expenses were USD 4,660m.
Invested assets: 2Q24 vs 1Q24
Invested assets increased by USD 15bn to USD 4,038bn, mainly driven by net new asset inflows of USD 26.9bn and
positive market performance of USD 26bn, partly offset by reclassification of USD 32bn of certain Credit Suisse
client assets from invested assets to custody-only assets and by negative foreign currency effects of USD 7bn. The
reclassification resulted from Credit Suisse client portfolio reviews for the purpose of alignment to UBS policies and
also from market exits.
Loans: 2Q24 vs 1Q24
Loans decreased by USD 1.1bn to USD 305.2bn, mainly driven by negative net new loans of USD 1.5bn.
Customer deposits: 2Q24 vs 1Q24
Customer deposits decreased by USD 6.2bn to USD 476.2bn, mainly driven by net new deposit outflows of
USD 6.0bn.
Results: 6M24 vs 6M23
Profit before tax decreased by USD 267m, or 12%, to USD 1,972m, mainly due to higher operating expenses, partly
offset by the impact from the acquisition of the Credit Suisse Group and by higher total revenues. Underlying profit
before tax was USD 2,433m, after excluding USD 928m of integration-related expenses and PPA effects from
operating expenses, as well as USD 467m of PPA effects and other integration items from total revenues.
UBS Group second quarter 2024 report |
UBS business divisions and Group Items | Global Wealth Management 21
Total revenues increased by USD 2,147m, or 21%, to USD 12,196m, largely driven by the consolidation of Credit
Suisse revenues for the full period. Total revenues included the aforementioned USD 467m of PPA effects and other
integration items, which represented a USD 281m increase compared with the USD 186m recorded for such effects
and items in the first half of 2023. Excluding these effects, underlying total revenues were USD 11,729m.
Net interest income increased by USD 479m, or 15%, to USD 3,698m, largely attributable to the consolidation of
Credit Suisse net interest income for the full period. Net interest income included USD 497m of accretion of PPA
adjustments on financial instruments and other PPA effects, compared with USD 181m in the first half of 2023.
The remaining variance was driven by lower deposit margins, including the effects of shifts to lower-margin deposit
products, partly offset by higher rates and deposit volumes. The remaining variance was also due to higher liquidity
costs and lower loan revenues, reflecting lower average volumes. Excluding the aforementioned accretion effects,
underlying net interest income was USD 3,201m.
Recurring net fee income increased by USD 1,005m, or 20%, to USD 6,128m, mainly driven by the consolidation
of Credit Suisse recurring net fee income for the full period and by positive market performance.
Transaction-based income increased by USD 625m, or 37%, to USD 2,317m, mainly driven by the consolidation of
Credit Suisse transaction-based income for the full period, and by higher levels of client activity, particularly in the
Americas and Asia Pacific regions. Transaction-based income included USD 14m of accretion of PPA adjustments
on financial instruments and other PPA effects, compared with USD 4m in the first half of 2023; the first half of
2024 also included negative USD 44m of temporary and incremental items directly related to the integration of
Credit Suisse. Excluding negative USD 30m resulting from the aforementioned accretion effects and temporary and
incremental items, underlying transaction-based income was USD 2,347m.
Other income increased by USD 38m to USD 53m, mainly due to the consolidation of Credit Suisse other income
for the full period.
Net credit loss releases were USD 4m, compared with net credit loss expenses of USD 164m in the first half of 2023.
Prior-year period net credit loss expenses were largely driven by the initial recognition of expected credit loss
allowances and provisions with respect to Credit-Suisse-related positions.
Operating expenses increased by USD 2,582m, or 34%, to USD 10,228m, largely due to the consolidation of Credit
Suisse expenses for the full period. Operating expenses included integration-related expenses of USD 923m, which
represented an USD 856m increase compared with the USD 67m of integration-related expenses recorded in the
first half of 2023. The remaining variance was due to an increase in financial advisor compensation reflecting higher
compensable revenues. Excluding integration-related expenses and PPA effects of USD 928m, underlying operating
expenses were USD 9,300m.
Regional breakdown of performance measures
As of or for the quarter ended 30.6.24
USD bn, except where indicated
Americas
1
Switzerland
2
EMEA
2
Asia Pacific
2
Global
3
Global Wealth
Management
Total revenues (USD m)
Operating profit / (loss) before tax (USD m)
Operating profit / (loss) before tax (underlying) (USD m)
4
Cost / income ratio (%)
4
Cost / income ratio (underlying) (%)
4
Loans, gross
5
Net new loans
Net new fee-generating assets
4
Fee-generating assets
4
Net new assets
4
Net new assets growth rate (%)
4
Invested assets
4
Advisors (full-time equivalents)
1 Including the following business units: United States and Canada; and Latin America. 2 In the third quarter of 2023, Global Financial Intermediaries was transferred from EMEA and Asia Pacific to the Switzerland
region, to better align it to the management structure. These changes were applied prospectively and had no impact on previous quarters. 3 Includes minor functions, which are not included in the four regions
individually presented in this table, and also includes impacts from accretion of PPA adjustments on financial instruments and other PPA effects and integration-related expenses. 4 Refer to “Alternative performance
measures” in the appendix to this report for the definition and calculation method. 5 Loans include customer brokerage receivables, which are presented in a separate reporting line on the balance sheet.
UBS Group second quarter 2024 report |
UBS business divisions and Group Items | Global Wealth Management 22
Regional comments 2Q24 vs 2Q23, except where indicated
Americas
Profit before tax decreased by USD 36m to USD 247m. Total revenues increased by USD 177m, or 7%, to
USD 2,761m, mainly driven by higher recurring net fee income and transaction-based income, as well as the
consolidation of Credit Suisse revenues, partly offset by lower net interest income. The cost / income ratio increased
to 90.9% from 88.5%. Loans increased 1% compared with the first quarter of 2024, to USD 96.4bn, mainly
reflecting USD 1.1bn of net new loans. Net new asset inflows were USD 6.2bn.
Switzerland
Profit before tax increased by USD 80m to USD 322m. Total revenues increased by USD 355m, or 55%, to
USD 1,003m, mostly driven by the consolidation of Credit Suisse revenues, as well as the transfer of the Global
Financial Intermediaries business to the Switzerland region. The cost / income ratio increased to 68.1% from
62.1%. Loans decreased 1% compared with the first quarter of 2024, to USD 106.7bn, mainly reflecting USD 1.4bn
of negative net new loans, partly offset by positive foreign currency effects. Net new asset inflows were
USD 11.9bn.
EMEA
Profit before tax decreased by USD 12m to USD 302m. Total revenues increased by USD 45m, or 4%, to
USD 1,159m, largely driven by the consolidation of Credit Suisse revenues, partly offset by the transfer of the Global
Financial Intermediaries business to the Switzerland region. The cost / income ratio increased to 73.8% from
70.8%. Loans decreased by USD 0.2bn compared with the first quarter of 2024, to USD 58.9bn, mainly driven by
USD 0.4bn of negative net new loans. Net new asset inflows were USD 1.1bn.
Asia Pacific
Profit before tax increased by USD 162m to USD 310m. Total revenues increased by USD 174m, or 24%, to
USD 903m, mainly driven by the consolidation of Credit Suisse revenues and increases in transaction-based income,
partly offset by lower net interest income. The cost / income ratio decreased to 66.0% from 76.7%. Loans
decreased 3% compared with the first quarter of 2024, to USD 42.2bn, mainly driven by USD 0.8bn of negative
net new loans and negative foreign currency effects. Net new asset inflows were USD 8.2bn.
Global
Operating loss before tax was USD 311m, mainly including USD 523m of the aforementioned integration-related
expenses and PPA effects, partly offset by the aforementioned USD 233m related to PPA effects and other
integration items.
UBS Group second quarter 2024 report |
UBS business divisions and Group Items | Personal & Corporate Banking 23
Personal & Corporate Banking
Personal & Corporate Banking – in Swiss francs
1
As of or for the quarter ended
% change from
Year-to-date
CHF m, except where indicated
30.6.24
31.3.24
30.6.23
2
1Q24
2Q23
30.6.24
30.6.23
2
Results
Net interest income
Recurring net fee income
3
Transaction-based income
3
Other income
Total revenues
Credit loss expense / (release)
Operating expenses
Business division operating profit / (loss) before tax
Underlying results
Total revenues as reported
of which: PPA effects and other integration items
4
of which: PPA effects recognized in net interest income
of which: PPA effects and other integration items recognized in transaction-based income
Total revenues (underlying)
3
Credit loss expense / (release)
Operating expenses as reported
of which: integration-related expenses and PPA effects
3,5
Operating expenses (underlying)
3
of which: expenses for litigation, regulatory and similar matters
Business division operating profit / (loss) before tax as reported
Business division operating profit / (loss) before tax (underlying)
3
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
3
Cost / income ratio (%)
3
Average attributed equity (CHF bn)
6
Return on attributed equity (%)
3,6
Net interest margin (bps)
3
Loans, gross (CHF bn)
Customer deposits (CHF bn)
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
3,7
Underlying performance measures
Pre-tax profit growth (year-on-year, %)
3
Cost / income ratio (%)
3
Return on attributed equity (%)
3,6
1 Comparatives may differ due to adjustments following organizational changes, restatements due to the retrospective adoption of new accounting standards or changes in accounting policies, and events after the
reporting period. 2 Comparative figures have been restated for changes in business division perimeters, Group Treasury allocations and Non-core and Legacy cost allocations, as well as changes in the equity
attribution framework. Refer to “Note 3 Segment reporting” in the “Consolidated financial statements” section of this report and to “Changes to segment reporting in 2024” in the “UBS business divisions and Group
Items” section and the “Equity attribution” section of the UBS Group first quarter 2024 report, available under “Quarterly reporting” at ubs.com/investors, for more information. 3 Refer to “Alternative performance
measures” in the appendix to this report for the definition and calculation method. 4 Includes accretion of PPA adjustments on financial instruments and other PPA effects, as well as temporary and incremental
items directly related to the integration. 5 Includes temporary, incremental operating expenses directly related to the integration, as well as amortization of newly recognized intangibles resulting from the acquisition
of the Credit Suisse Group. 6 Refer to the “Equity attribution” section of this report for more information about the equity attribution framework. 7 Refer to the “Risk management and control” section of this
report for more information about (credit-)impaired exposures.
Results
:
2Q24 vs 2Q23
Profit before tax increased by CHF 113m, or 19%, to CHF 703m, mainly due to the acquisition of the Credit Suisse
Group. Underlying profit before tax was CHF 645m, after excluding CHF 223m of purchase price allocation (PPA)
effects and other integration items from total revenues, as well as integration-related expenses and PPA effects of
CHF 165m from operating expenses.
Total revenues
Total revenues increased by CHF 434m, or 27%, to CHF 2,061m, mainly due to the consolidation of Credit Suisse
revenues for the full quarter. Total revenues included the aforementioned CHF 223m of PPA effects and other
integration items, which represented a CHF 95m increase compared with the CHF 128m recorded for such effects
and items in the second quarter of 2023. The remaining variance largely reflected lower net interest income.
Excluding the aforementioned PPA effects and other integration items, underlying total revenues were
CHF 1,838m.
UBS Group second quarter 2024 report |
UBS business divisions and Group Items | Personal & Corporate Banking 24
Net interest income increased by CHF 232m, or 23%, to CHF 1,225m, largely due to the consolidation of Credit
Suisse net interest income for the full quarter. Net interest income included CHF 201m of accretion of PPA
adjustments on financial instruments and other PPA effects, compared with CHF 115m in the second quarter of
2023. The remaining variance was mainly attributable to higher liquidity costs, as well as lower deposit margins
resulting from shifts to lower-margin deposit products. Excluding the aforementioned accretion effects, underlying
net interest income was CHF 1,024m.
Recurring net fee income increased by CHF 106m, or 42%, to CHF 357m, mainly due to the consolidation of Credit
Suisse recurring net fee income for the full quarter, with the remaining increase including higher revenues from
increased custody asset levels.
Transaction-based income increased by CHF 92m, or 25%, to CHF 463m, largely due to the consolidation of Credit
Suisse transaction-based income for the full quarter. Transaction-based income included CHF 23m of accretion of
PPA adjustments on financial instruments and other PPA effects, compared with CHF 13m in the second quarter of
2023; the second quarter of 2024 also included negative CHF 1m of temporary and incremental items directly
related to the integration of Credit Suisse. Excluding CHF 22m resulting from the aforementioned accretion effects
and temporary and incremental items, underlying transaction-based income was CHF 441m.
Other income increased by CHF 4m to CHF 16m.
Credit loss expense / release
Net credit loss expenses were CHF 92m, mainly reflecting net credit loss expenses of CHF 105m on credit-impaired
positions with a small number of corporate counterparties, partly offset by net credit loss releases of CHF 13m
related to performing positions. These compared with net credit loss expenses of CHF 198m in the second quarter
of 2023, largely driven by the initial recognition of expected credit loss allowances and provisions with respect to
Credit-Suisse-related positions.
Operating expenses
Operating expenses increased by CHF 427m, or 51%, to CHF 1,266m, largely due to the consolidation of Credit
Suisse expenses for the full quarter. Operating expenses included integration-related expenses of CHF 142m, which
represented a CHF 116m increase compared with the CHF 26m of integration-related expenses recorded in the
second quarter of 2023. Excluding integration-related expenses and PPA effects of CHF 165m, underlying operating
expenses were CHF 1,101m.
Results: 6M24 vs 6M23
Profit before tax increased by CHF 420m, or 37%, to CHF 1,562m, mainly due to the acquisition of the Credit
Suisse Group. Underlying profit before tax was CHF 1,420m, after excluding CHF 449m of PPA effects and other
integration items from total revenues, as well as integration-related expenses and PPA effects of CHF 307m from
operating expenses.
Total revenues increased by CHF 1,395m, or 50%, to CHF 4,201m, mainly due to the consolidation of Credit Suisse
revenues for the full period. Total revenues included the aforementioned CHF 449m of PPA effects and other
integration items, which represented a CHF 321m increase compared with the CHF 128m recorded for such effects
and items in the first half of 2023. The remaining variance was mainly due to lower net interest income. Excluding
the aforementioned PPA effects and other integration items, underlying total revenues were CHF 3,751m.
Net interest income increased by CHF 914m, or 56%, to CHF 2,557m, largely attributable to the consolidation of
Credit Suisse net interest income for the full period. Net interest income included CHF 413m of accretion of PPA
adjustments on financial instruments and other PPA effects, compared with CHF 115m in the first half of 2023. The
remaining variance was mainly attributable to higher liquidity costs. Excluding the aforementioned accretion effects,
underlying net interest income was CHF 2,143m.
Recurring net fee income increased by CHF 244m, or 53%, to CHF 705m, mainly attributable to the consolidation
of Credit Suisse recurring net fee income for the full period, with the remaining increase including higher revenues
from increased custody asset levels.
UBS Group second quarter 2024 report |
UBS business divisions and Group Items | Personal & Corporate Banking 25
Transaction-based income increased by CHF 231m, or 34%, to CHF 911m, largely attributable to the consolidation
of Credit Suisse transaction-based income for the full period. Transaction-based income included CHF 43m of
accretion of PPA adjustments on financial instruments and other PPA effects, compared with CHF 13m in the first
half of 2023; the first half of 2024 also included negative CHF 7m of temporary and incremental items directly
related to the integration of Credit Suisse. Excluding CHF 36m
resulting from the aforementioned accretion effects
and temporary and incremental items, underlying transaction-based income was CHF 876m.
Other income increased by CHF 5m to CHF 27m.
Net credit loss expenses were CHF 132m, mainly reflecting net credit loss expenses of CHF 158m on credit-impaired
positions with a small number of corporate counterparties,
partly offset by net credit loss releases of CHF 25m
related to performing positions. These compared with net credit loss expenses of CHF 213m in the first half of
2023, largely driven by the initial recognition of expected credit loss allowances and provisions with respect to
Credit-Suisse-related positions.
Operating expenses increased by CHF 1,055m, or 73%, to CHF 2,507m, largely due to the consolidation of Credit
Suisse expenses for the full period. Operating expenses included integration-related expenses of CHF 261m, which
represented a CHF 235m increase compared with the CHF 26m of integration-related expenses recorded in the first
half of 2023. Excluding integration-related expenses and PPA effects of CHF 307m, underlying operating expenses
were CHF 2,200m.
Personal & Corporate Banking – in US dollars
1
As of or for the quarter ended
% change from
Year-to-date
USD m, except where indicated
30.6.24
31.3.24
30.6.23
2
1Q24
2Q23
30.6.24
30.6.23
2
Results
Net interest income
Recurring net fee income
3
Transaction-based income
3
Other income
Total revenues
Credit loss expense / (release)
Operating expenses
Business division operating profit / (loss) before tax
Underlying results
Total revenues as reported
of which: PPA effects and other integration items
4
of which: PPA effects recognized in net interest income
of which: PPA effects and other integration items recognized in transaction-based income
Total revenues (underlying)
3
Credit loss expense / (release)
Operating expenses as reported
of which: integration-related expenses and PPA effects
3,5
Operating expenses (underlying)
3
of which: expenses for litigation, regulatory and similar matters
Business division operating profit / (loss) before tax as reported
Business division operating profit / (loss) before tax (underlying)
3
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
3
Cost / income ratio (%)
3
Average attributed equity (USD bn)
6
Return on attributed equity (%)
3,6
Net interest margin (bps)
3
Loans, gross (USD bn)
Customer deposits (USD bn)
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
3,7
Underlying performance measures
Pre-tax profit growth (year-on-year, %)
3
Cost / income ratio (%)
3
Return on attributed equity (%)
3,6
1 Comparatives may differ due to adjustments following organizational changes, restatements due to the retrospective adoption of new accounting standards or changes in accounting policies, and events after the
reporting period. 2 Comparative figures have been restated for changes in business division perimeters, Group Treasury allocations and Non-core and Legacy cost allocations, as well as changes in the equity
attribution framework. Refer to “Note 3 Segment reporting” in the “Consolidated financial statements” section of this report and to “Changes to segment reporting in 2024” in the “UBS business divisions and Group
Items” section and the “Equity attribution” section of the UBS Group first quarter 2024 report, available under “Quarterly reporting” at ubs.com/investors, for more information. 3 Refer to “Alternative performance
measures” in the appendix to this report for the definition and calculation method. 4 Includes accretion of PPA adjustments on financial instruments and other PPA effects, as well as temporary and incremental
items directly related to the integration. 5 Includes temporary, incremental operating expenses directly related to the integration, as well as amortization of newly recognized intangibles resulting from the acquisition
of the Credit Suisse Group. 6 Refer to the “Equity attribution” section of this report for more information about the equity attribution framework. 7 Refer to the “Risk management and control” section of this
report for more information about (credit-)impaired exposures.
UBS Group second quarter 2024 report |
UBS business divisions and Group Items | Asset Management 26
Asset Management
Asset Management
1
As of or for the quarter ended
% change from
Year-to-date
USD m, except where indicated
30.6.24
31.3.24
30.6.23
2
1Q24
2Q23
30.6.24
30.6.23
2
Results
Net management fees
3
Performance fees
Net gain from disposals
Total revenues
Credit loss expense / (release)
Operating expenses
Business division operating profit / (loss) before tax
Underlying results
Total revenues as reported
Total revenues (underlying)
4
Credit loss expense / (release)
Operating expenses as reported
of which: integration-related expenses
4
Operating expenses (underlying)
4
of which: expenses for litigation, regulatory and similar matters
Business division operating profit / (loss) before tax as reported
Business division operating profit / (loss) before tax (underlying)
4
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
4
Cost / income ratio (%)
4
Average attributed equity (USD bn)
5
Return on attributed equity (%)
4,5
Gross margin on invested assets (bps)
4
Underlying performance measures
Pre-tax profit growth (year-on-year, %)
4
Cost / income ratio (%)
4
Return on attributed equity (%)
4,5
Information by business line / asset class
Net new money (USD bn)
4
Equities
Fixed Income
of which: money market
Multi-asset & Solutions
Hedge Fund Businesses
Real Estate & Private Markets
Total net new money excluding associates
of which: net new money excluding money market
Associates
6
Total net new money
Invested assets (USD bn)
4
Equities
Fixed Income
of which: money market
Multi-asset & Solutions
Hedge Fund Businesses
Real Estate & Private Markets
Total invested assets excluding associates
of which: passive strategies
Associates
6
Total invested assets
7
UBS Group second quarter 2024 report |
UBS business divisions and Group Items | Asset Management 27
Asset Management (continued)
1
As of or for the quarter ended
% change from
Year-to-date
USD m, except where indicated
30.6.24
31.3.24
30.6.23
2
1Q24
2Q23
30.6.24
30.6.23
2
Information by region
Invested assets (USD bn)
4
Americas
Asia Pacific
8
EMEA (excluding Switzerland)
Switzerland
Total invested assets
7
Information by channel
Invested assets (USD bn)
4
Third-party institutional
Third-party wholesale
UBS’s wealth management businesses
Associates
6
Total invested assets
7
1 Comparatives may differ due to adjustments following organizational changes, restatements due to the retrospective adoption of new accounting standards or changes in accounting policies, and events after the
reporting period. 2 Comparative figures have been restated for changes in business division perimeters, Group Treasury allocations and Non-core and Legacy cost allocations, as well as changes in the equity
attribution framework. Refer to “Note 3 Segment reporting” in the “Consolidated financial statements” section of this report and to “Changes to segment reporting in 2024” in the “UBS business divisions and Group
Items” section and the “Equity attribution” section of the UBS Group first quarter 2024 report, available under “Quarterly reporting” at ubs.com/investors, for more information. 3 Net management fees include
transaction fees, fund administration revenues (including net interest and trading income from lending activities and foreign-exchange hedging as part of the fund services offering), distribution fees, incremental fund-
related expenses, gains or losses from seed money and co-investments, funding costs, the negative pass-through impact of third-party performance fees, and other items that are not Asset Management’s performance
fees. 4 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method. 5 Refer to the “Equity attribution” section of this report for more information about
the equity attribution framework. 6 The invested assets and net new money amounts reported for associates are prepared in accordance with their local regulatory requirements and practices. 7 Invested assets as
of 30 June 2023 have not been restated for the cross-investments of Asset Management (Credit Suisse) and legacy UBS Asset Management. 8 Includes invested assets from associates.
Results: 2Q24 vs 2Q23
Profit before tax increased by USD 51m, or 65%, to USD 130m, mainly due to
the acquisition of the Credit Suisse
Group and also due to a USD 28m net gain from the initial portion of the sale of our Brazilian real estate fund
management business. Underlying profit before tax was USD 228m, after excluding integration-related expenses
of USD 98m. We expect to record in the third quarter of 2024 an additional USD 60m in pre-tax profit on gains
from disposals, mainly from closing the residual portions of this transaction.
Total revenues
Total revenues increased by USD 185m, or 32%, to USD 768m, mainly reflecting the consolidation of Credit Suisse
revenues for the full quarter. Total revenues in the second quarter of 2024 included the aforementioned USD 28m
net gain from the sale of our Brazilian real estate fund management business.
Net management fees increased by USD 139m, or 24%, to USD 711m, mainly reflecting the consolidation of Credit
Suisse net management fees for the full quarter. The increase was also due to positive market performance and
higher transaction fees in the Real Estate business, partly offset by continued margin compression.
Performance fees increased by USD 17m, or 162%, to USD 28m, mostly due to increases in Hedge Fund Businesses
and the consolidation of Credit Suisse performance fees for the full quarter, partly offset by lower performance fees
in Fixed Income.
Operating expenses
Operating expenses increased by USD 135m, or 27%, to USD 638m, mainly reflecting the consolidation of Credit
Suisse expenses for the full quarter. Operating expenses included integration-related expenses of USD 98m, which
represented an USD 84m increase compared with the USD 14m of integration-related expenses recorded in the
second quarter of 2023. Excluding the aforementioned integration-related expenses, underlying operating expenses
were USD 540m.
Invested assets: 2Q24 vs 1Q24
Invested assets increased by USD 10bn to USD 1,701bn, mainly reflecting positive market performance of
USD 24bn, partly offset by negative net new money of USD 12bn and adverse foreign currency effects of USD 1bn.
Excluding money market flows and associates, net new money was negative USD 15bn.
UBS Group second quarter 2024 report |
UBS business divisions and Group Items | Asset Management 28
Results: 6M24 vs 6M23
Profit before tax increased by USD 67m, or 39%, to USD 241m, mainly due to the acquisition of the Credit Suisse
Group and also due to a USD 28m net gain from the initial portion of the sale of our Brazilian real estate fund
management business. Underlying profit before tax was USD 410m, after excluding integration-related expenses
of USD 169m.
Total revenues increased by USD 457m, or 42%, to USD 1,543m, primarily reflecting the consolidation of Credit
Suisse revenues for the full period. Total revenues in the first half of 2024 included the aforementioned USD 28m
net gain from the sale of our Brazilian real estate fund management business.
Net management fees increased by USD 404m, or 38%, to USD 1,456m, largely attributable to the consolidation
of Credit Suisse net management fees for the full period, positive market performance and foreign currency effects,
partly offset by continued margin compression. In addition, the first half of 2023 included negative pass-through
fees, with the corresponding offset in performance fees.
Performance fees increased by USD 25m, or 71%, to USD 59m, mostly due to an increase in Hedge Fund Businesses
and also due to the consolidation of Credit Suisse performance fees for the full period. These increases were partly
offset by lower performance fees related to the aforementioned pass-through fees in the first half of 2023.
Operating expenses increased by USD 392m, or 43%, to USD 1,303m, mainly reflecting the consolidation of Credit
Suisse expenses for the full period. Operating expenses included integration-related expenses of USD 169m, which
represented a USD 155m increase compared with the USD 14m of integration-related expenses recorded in the first
half of 2023. Excluding the aforementioned integration-related expenses, underlying operating expenses were
USD 1,134m.
UBS Group second quarter 2024 report |
UBS business divisions and Group Items | Investment Bank 29
Investment Bank
Investment Bank
1
As of or for the quarter ended
% change from
Year-to-date
USD m, except where indicated
30.6.24
31.3.24
30.6.23
2
1Q24
2Q23
30.6.24
30.6.23
2
Results
Advisory
Capital Markets
Global Banking
Execution Services
3
Derivatives & Solutions
3
Financing
Global Markets
of which: Equities
of which: Foreign Exchange, Rates and Credit
Total revenues
Credit loss expense / (release)
Operating expenses
Business division operating profit / (loss) before tax
Underlying results
Total revenues as reported
of which: PPA effects
4
of which: PPA effects recognized in Global Banking revenue line
Total revenues (underlying)
5
Credit loss expense / (release)
Operating expenses as reported
of which: integration-related expenses
5
Operating expenses (underlying)
5
of which: expenses for litigation, regulatory and similar matters
Business division operating profit / (loss) before tax as reported
Business division operating profit / (loss) before tax (underlying)
5
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
5
n.m.
n.m.
Cost / income ratio (%)
5
Average attributed equity (USD bn)
6
Return on attributed equity (%)
5,6
Underlying performance measures
Pre-tax profit growth (year-on-year, %)
5
n.m.
n.m.
Cost / income ratio (%)
5
Return on attributed equity (%)
5,6
1 Comparatives may differ due to adjustments following organizational changes, restatements due to the retrospective adoption of new accounting standards or changes in accounting policies, and events after the
reporting period. 2 Comparative figures have been restated for changes in business division perimeters, Group Treasury allocations and Non-core and Legacy cost allocations, as well as changes in the equity
attribution framework. Refer to “Note 3 Segment reporting” in the “Consolidated financial statements” section of this report and to “Changes to segment reporting in 2024” in the “UBS business divisions and Group
Items” section and the “Equity attribution” section of the UBS Group first quarter 2024 report, available under “Quarterly reporting” at ubs.com/investors, for more information. 3 Comparative figures have been
restated as a result of the shift of the foreign exchange products that are traded over electronic platforms from Execution Services to Derivatives & Solutions. The restatement had no effect on total Global Markets
revenues. 4 Includes accretion of PPA adjustments on financial instruments and other PPA effects. 5 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation
method. 6 Refer to the “Equity attribution” section of this report for more information about the equity attribution framework.
UBS Group second quarter 2024 report |
UBS business divisions and Group Items | Investment Bank 30
Results: 2Q24 vs 2Q23
Profit before tax was USD 477m, mainly due to higher total revenues, partly offset by higher operating expenses,
compared with a loss before tax of USD 121m. Underlying profit before tax was USD 412m, after excluding
USD 310m of purchase price allocation (PPA) effects and USD 245m of integration-related expenses.
Total revenues
Total revenues increased by USD 767m, or 38%, to USD 2,803m, due to higher Global Banking and Global Markets
revenues. The consolidation of Credit Suisse revenues included USD 310m of PPA effects, which represented a
USD 255m increase compared with the USD 55m recorded for such effects in the second quarter of 2023. Excluding
these effects, underlying total revenues were USD 2,493m.
Global Banking
Global Banking revenues increased by USD 489m, or 101%, to USD 974m, including an increase of USD 251m of
accretion of PPA adjustments on financial instruments and other PPA effects. Excluding these effects, underlying
Global Banking revenues increased by USD 238m, or 55%. The overall global fee pool
1,2
increased 21%.
Advisory revenues increased by USD 45m, or 23%, to USD 239m, mainly due to higher merger and acquisition
transaction revenues, which increased by USD 31m, or 19%. The relevant global fee pool
1,2
increased 9%.
Capital Markets revenues increased by USD 445m, or 152%, to USD 736m, including an increase of USD 251m of
accretion of PPA adjustments on financial instruments and other PPA effects. Excluding these effects, underlying
Capital Markets revenues increased by USD 193m, or 82%, with increases across all products. Leveraged Capital
Markets revenues increased by USD 112m, or 336%, Debt Capital Markets revenues increased by USD 23m, or
31%, and Equity Capital Markets revenues increased by USD 21m, or 30%. The relevant global fee pools
1,2
increased 47%, 20% and 22%, respectively.
Global Markets
Global Markets revenues increased by USD 278m, or 18%, to USD 1,829m, primarily driven by higher Derivatives
& Solutions and Execution Services revenues.
Execution Services revenues increased by USD 77m, or 23%, to USD 405m, mainly due to increases in Cash Equities
across all regions.
Derivatives & Solutions revenues increased by USD 208m, or 30%, to USD 897m, with increases across all products.
Financing revenues decreased by USD 7m, or 1%, to USD 526m.
Equities
Global Markets Equities revenues increased by USD 200m, or 17%, to USD 1,355m, mostly driven by increases in
Equity Derivatives and Cash Equities.
Foreign Exchange, Rates and Credit
Global Markets Foreign Exchange, Rates and Credit revenues increased by USD 78m, or 20%, to USD 474m,
primarily driven by increases in Foreign Exchange and Credit.
Credit loss expense / release
Net credit loss releases were USD 6m, compared with net credit loss expenses of USD 132m in the second quarter
of 2023. Prior-year quarter net credit loss expenses were largely driven by the initial recognition of expected credit
loss allowances and provisions with respect to Credit-Suisse-related positions.
Operating expenses
Operating expenses increased by USD 307m, or 15%, to USD 2,332m, largely due to an increase in variable
compensation relating to higher revenues. Operating expenses included integration-related expenses of USD 245m,
which represented an USD 84m increase compared with the USD 161m of integration-related expenses recorded
in the second quarter of 2023. Excluding integration-related expenses, underlying operating expenses were
USD 2,087m.
Results: 6M24 vs 6M23
Profit before tax increased by USD 660m, or 178%, to USD 1,032m, mainly due to higher total revenues, partly
offset by higher operating expenses. Underlying profit before tax was USD 816m, after excluding USD 603m of PPA
effects and USD 387m of integration-related expenses.
UBS Group second quarter 2024 report |
UBS business divisions and Group Items | Investment Bank 31
Total revenues
Total revenues increased by USD 1,153m, or 26%, to USD 5,554m, mainly due to higher Global Banking and Global
Markets revenues. The consolidation of Credit Suisse revenues included USD 603m of PPA effects, which
represented a USD 548m increase compared with the USD 55m recorded for such effects in the first half of 2023.
Excluding these effects, underlying total revenues were USD 4,951m.
Global Banking
Global Banking revenues increased by USD 977m, or 112%, to USD 1,847m, including an increase of USD 540m
of accretion of PPA adjustments on financial instruments and other PPA effects. Excluding these effects, underlying
Global Banking revenues were USD 1,252m. The overall global fee pool
1,2
increased 25%.
Advisory revenues increased by USD 63m, or 17%, to USD 428m, mainly due to higher merger and acquisition
transaction revenues, which increased by USD 47m, or 15%. The relevant global fee pool
1,2
Capital Markets revenues increased by USD 914m, or 181%, to USD 1,419m, including an increase of USD 540m
of accretion of PPA adjustments on financial instruments and other PPA effects. Excluding these effects, underlying
Capital Markets revenues increased by USD 374m, or 83%, with increases across all products. Leveraged Capital
Markets revenues increased by USD 211m, or 286%, Debt Capital Markets revenues increased by USD 62m, or
44%, and Equity Capital Markets revenues increased by USD 53m, or 42%. The relevant global fee pools
1,2
increased 61%, 26% and 38%, respectively.
Global Markets
Global Markets revenues increased by USD 176m, or 5%, to USD 3,707m, primarily driven by higher Execution
Services and Derivatives & Solutions revenues.
Execution Services revenues increased by USD 122m, or 18%, to USD 807m, mainly driven by increases in Cash
Equities across all regions.
Derivatives & Solutions revenues increased by USD 58m, or 3%, to USD 1,831m, with increases in Equity Derivatives,
Credit and Foreign Exchange, partly offset by lower Rates revenues.
Financing revenues were stable year on year.
Equities
Global Markets Equities revenues increased by USD 240m, or 10%, to USD 2,708m, mainly driven by increases in
Equity Derivatives and Cash Equities.
Foreign Exchange, Rates and Credit
Global Markets Foreign Exchange, Rates and Credit revenues decreased by USD 63m, or 6%, to USD 999m, mainly
driven by lower Rates revenues, partly offset by increases in Credit and Foreign Exchange.
Credit loss expense / release
Net credit loss expenses were USD 26m, compared with net credit loss expenses of USD 139m in the first half of
2023. Prior-year period net credit loss expenses were largely driven by the initial recognition of expected credit loss
allowances and provisions with respect to Credit-Suisse-related positions.
Operating expenses
Operating expenses increased by USD 605m, or 16%, to USD 4,496m, largely due to the consolidation of Credit
Suisse expenses for the full period. Operating expenses included integration-related expenses of USD 387m, which
represented a USD 226m increase compared with the USD 161m of integration-related expenses recorded in the
first half of 2023. Excluding integration-related expenses, underlying operating expenses were USD 4,109m.
1
market movements on loan portfolios; and Debt Capital Markets, excluding revenues related to debt underwriting of UBS instruments.
2
UBS Group second quarter 2024 report |
UBS business divisions and Group Items | Non-core and Legacy 32
Non-core and Legacy
Non-core and Legacy
1
As of or for the quarter ended
% change from
Year-to-date
USD m, except where indicated
30.6.24
31.3.24
30.6.23
2
1Q24
2Q23
30.6.24
30.6.23
2
Results
Total revenues
Credit loss expense / (release)
Operating expenses
Operating profit / (loss) before tax
Underlying results
Total revenues as reported
Total revenues (underlying)
3
Credit loss expense / (release)
Operating expenses as reported
of which: integration-related expenses
3
Operating expenses (underlying)
3
of which: expenses for litigation, regulatory and similar matters
Operating profit / (loss) before tax as reported
Operating profit / (loss) before tax (underlying)
3
Performance measures and other information
Average attributed equity
4
Risk-weighted assets (USD bn)
Leverage ratio denominator (USD bn)
1 Comparatives may differ due to adjustments following organizational changes, restatements due to the retrospective adoption of new accounting standards or changes in accounting policies, and events after the
reporting period. 2 Comparative figures have been restated for changes in business division perimeters, Group Treasury allocations and Non-core and Legacy cost allocations, as well as changes in the equity
attribution framework. Refer to “Note 3 Segment reporting” in the “Consolidated financial statements” section of this report and to “Changes to segment reporting in 2024” in the “UBS business divisions and Group
Items” section and the “Equity attribution” section of the UBS Group first quarter 2024 report, available under “Quarterly reporting” at ubs.com/investors, for more information. 3 Refer to “Alternative performance
measures” in the appendix to this report for the definition and calculation method. 4 Refer to the “Equity attribution” section of this report for more information about the equity attribution framework.
Composition of Non-core and Legacy
1
USD bn
RWA
Total assets
LRD
30.6.24
31.3.24
30.6.24
31.3.24
30.6.24
31.3.24
Exposure category
Equities
Macro
Loans
Securitized products
Credit
High-quality liquid assets
Operational risk
Other
Total
1 During the second quarter of 2024, we have revised allocations and methodologies across the combined Group.
UBS Group second quarter 2024 report |
UBS business divisions and Group Items | Non-core and Legacy 33
Results: 2Q24 vs 2Q23
Loss before tax was USD 405m, compared with a loss before tax of USD 493m in the second quarter of 2023.
Underlying loss before tax was USD 80m, after excluding integration-related expenses of USD 325m.
Total revenues
Total revenues were USD 401m, which was USD 239m higher than the total revenues recorded in the second
quarter of 2023, mainly due to the consolidation of Credit Suisse revenues for the full quarter. Total revenues
reflected net gains from position exits, along with net interest income from securitized products and credit products.
Credit loss expense / release
Net credit loss releases were USD 1m, compared with net credit loss expenses of USD 119m in the second quarter
of 2023. Prior-year quarter net credit loss expenses were largely driven by the initial recognition of expected credit
loss allowances and provisions with respect to Credit-Suisse-related positions.
Operating expenses
Operating expenses were USD 807m, which was USD 271m higher than the amount recorded in the second quarter
of 2023, mainly due to the consolidation of Credit Suisse expenses for the full quarter. Operating expenses included
integration-related expenses of USD 325m, which was USD 220m higher than the amount recorded in the second
quarter of 2023, reflecting both a full quarter of expenses and progress made with the execution of the Non-core
and Legacy strategy. In addition, operating expenses in the second quarter of 2024 included releases of USD 150m
of IFRS 3 acquisition-related contingent liabilities following the resolution of the relevant matter. Excluding the
aforementioned integration-related expenses, underlying operating expenses in the second quarter of 2024 were
USD 481m.
Risk-weighted assets and leverage ratio denominator: 2Q24 vs 1Q24
Risk-weighted assets decreased by USD 8.3bn to USD 49.6bn, and the leverage ratio denominator decreased by
USD 39.9bn to USD 80.0bn. These changes were primarily driven by active unwinds of Non-core and Legacy assets
in the loan, securitized products and macro portfolios. High-quality liquid assets decreased by USD 17.7bn.
Results: 6M24 vs 6M23
Loss before tax was USD 451m, compared with loss before tax of USD 1,169m in the first half of 2023. Underlying
profit before tax was USD 117m, after excluding integration-related expenses of USD 568m.
Total revenues
Total revenues were USD 1,402m, which was USD 1,217m higher than the total revenues recorded in the first half
of 2023, mainly due to the consolidation of Credit Suisse revenues for the full period. Total revenues reflected net
gains from position exits, along with net interest income from securitized products and credit products. Total
revenues also included a net gain of USD 272m, after the accounting for the PPA adjustments at the closing of the
acquisition of the Credit Suisse Group, from the sale of assets from the former Credit Suisse securitized products
group to Apollo Management Holdings and certain other entities (collectively, Apollo).
›
Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial
statements” section of this report for information about the conclusion of an investment management agreement
with Apollo and the transfer of senior secured asset-based financing
Credit loss expense / release
Net credit loss expenses were USD 35m, compared with net credit loss expenses of USD 119m in the first half of
2023. Prior-year period net credit loss expenses were largely driven by the initial recognition of expected credit loss
allowances and provisions with respect to Credit-Suisse-related positions.
Operating expenses
Operating expenses were USD 1,818m, which was USD 583m higher than the amount recorded in the first half of
2023, mainly due to the consolidation of Credit Suisse expenses for the full period. Operating expenses included
integration-related expenses of USD 568m, which was USD 463m higher than the amount recorded in the first half
of 2023, reflecting both a full period of expenses and progress made with the execution of the Non-core and Legacy
strategy. In addition, operating expenses in the first half of 2024 included releases of USD 150m of IFRS 3
acquisition-related contingent liabilities following the resolution of the relevant matter. The first half of 2023
included a USD 665m increase in provisions related to the US residential mortgage-backed securities litigation
matter, which was settled in the third quarter of 2023. Excluding the aforementioned integration-related expenses,
underlying operating expenses in the first half of 2024 were USD 1,250m.
UBS Group second quarter 2024 report |
UBS business divisions and Group Items | Group Items 34
Group Items
Group Items
1
As of or for the quarter ended
% change from
Year-to-date
USD m
30.6.24
31.3.24
30.6.23
2
1Q24
2Q23
30.6.24
30.6.23
2
Results
Total revenues
Credit loss expense / (release)
Operating expenses
Operating profit / (loss) before tax
Underlying results
Total revenues as reported
of which: PPA effects and other integration items
3
Total revenues (underlying)
4
Credit loss expense / (release)
Operating expenses as reported
of which: integration-related expenses
4
of which: acquisition-related costs
Operating expenses (underlying)
4
of which: expenses for litigation, regulatory and similar matters
Operating profit / (loss) before tax as reported
Operating profit / (loss) before tax (underlying)
4
1 Comparatives may differ due to adjustments following organizational changes, restatements due to the retrospective adoption of new accounting standards or changes in accounting policies, and events after the
reporting period. 2 Comparative figures have been restated for changes in business division perimeters, Group Treasury allocations and Non-core and Legacy cost allocations, as well as changes in the equity
attribution framework. Refer to “Note 3 Segment reporting” in the “Consolidated financial statements” section of this report and to “Changes to segment reporting in 2024” in the “UBS business divisions and Group
Items” section and the “Equity attribution” section of the UBS Group first quarter 2024 report, available under “Quarterly reporting” at ubs.com/investors, for more information. 3 Includes accretion of PPA
adjustments on financial instruments and other PPA effects, as well as temporary and incremental items directly related to the integration. 4 Refer to “Alternative performance measures” in the appendix to this
report for the definition and calculation method.
Results: 2Q24 vs 2Q23
Loss before tax was USD 377m, mainly driven by mark-to-market losses in Group hedging and own debt, compared
with a loss before tax of USD 717m. Underlying loss before tax was USD 371m, after excluding negative USD 6m
of purchase price allocation (PPA) effects and other integration items, as well as integration-related expenses,
compared with an underlying loss before tax of USD 257m, after excluding integration-related expenses of
USD 348m, acquisition-related costs of USD 106m and PPA effects of USD 6m.
Income from Group hedging and own debt, including hedge accounting ineffectiveness, was net negative
USD 194m, compared with net negative income of USD 55m. The results across the two quarters were driven by
mark-to-market effects on portfolio-level economic hedges due to higher interest rates and cross-currency-basis
widening.
Results: 6M24 vs 6M23
Loss before tax was USD 698m, mainly driven by mark-to-market losses in Group hedging and own debt, compared
with a loss before tax of USD 942m. Underlying loss before tax was USD 687m, after excluding negative USD 11m
of PPA effects and other integration items, as well as integration-related expenses, compared with an underlying
loss before tax of USD 412m, after excluding integration-related expenses of USD 348m, acquisition-related costs
of USD 176m and PPA effects of USD 6m.
Income from Group hedging and own debt, including hedge accounting ineffectiveness, was net negative
USD 385m, compared with net negative income of USD 123m. The results across the two periods were driven by
mark-to-market effects on portfolio-level economic hedges due to higher interest rates and cross-currency-basis
widening.
UBS Group second quarter 2024 report |
Risk, capital, liquidity and funding, and balance sheet 35
Risk, capital, liquidity and
funding, and balance sheet
Management report
Table of contents
36
36
38
39
40
42
44
47
49
50
51
51
51
51
52
52
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53
54
55
UBS Group second quarter 2024 report |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 36
Risk management and control
This section provides information about key developments during the reporting period and should be read in
conjunction with the “Risk management and control” section of the UBS Group Annual Report 2023, available
under “Annual reporting” at
ubs.com/investors
, and the “Recent developments” section of this report for more
information about the integration of Credit Suisse.
Credit risk
Overall banking products exposure
Overall banking products exposure decreased by USD 38bn to USD 1,053bn as of 30 June 2024, mainly driven by
a decrease in balances at central banks, due to the repayment of the remaining funding drawn under the Swiss
National Bank Emergency Liquidity Assistance facility.
Total net credit loss expenses in the second quarter of 2024 were USD 95m, reflecting net releases of USD 22m
related to performing positions and net expenses of USD 116m on credit-impaired positions.
›
Refer to the “Balance sheet and off-balance sheet” section of this report for more information about balance sheet
movements
›
Refer to the “Group performance” section and “Note 9 Expected credit loss measurement” in the “Consolidated
financial statements” section of this report for more information about credit loss expense / release
Loan underwriting
In the Investment Bank, mandated loan underwriting commitments on a notional basis increased by USD 0.8bn to
USD 2.8bn as of 30 June 2024, driven by new mandates, partly offset by deal syndications and cancellations. In
Non-core and Legacy, the underwriting portfolio was unchanged at USD 0.5bn. As of 30 June 2024, USD 0.2bn
and USD 0.5bn of commitments in the Investment Bank and in Non-core and Legacy, respectively, have not been
distributed as originally planned.
Loan underwriting exposures are classified as held for trading, with fair values reflecting the market conditions at
the end of the quarter. Credit hedges are in place to help protect against fair value movements in the portfolio.
UBS Group second quarter 2024 report |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 37
Banking and traded products exposure in the business divisions and Group Items
30.6.24
USD m
Global
Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core
and Legacy
Group
Items
Total
Banking products
1,2
Gross exposure
of which: loans and advances to customers (on-balance sheet)
of which: guarantees and loan commitments (off-balance sheet)
Traded products
2,3
Gross exposure
of which: over-the-counter derivatives
of which: securities financing transactions
of which: exchange-traded derivatives
Other credit lines, gross
5
Total credit-impaired exposure, gross
of which: stage 3
of which: PCI
Total allowances and provisions for expected credit losses
6
of which: stage 1
of which: stage 2
of which: stage 3
of which: PCI
31.3.24
7
USD m
Global
Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core
and Legacy
Group
Items
Total
Banking products
1,2
Gross exposure
of which: loans and advances to customers (on-balance sheet)
of which: guarantees and loan commitments (off-balance sheet)
Traded products
2,3,4
Gross exposure
of which: over-the-counter derivatives
of which: securities financing transactions
of which: exchange-traded derivatives
Other credit lines, gross
5
Total credit-impaired exposure, gross
of which: stage 3
of which: PCI
Total allowances and provisions for expected credit losses
6
of which: stage 1
of which: stage 2
of which: stage 3
of which: PCI
1 IFRS 9 gross exposure for banking products includes the following financial instruments in scope of expected credit loss requirements: balances at central banks, amounts due from banks, loans and advances to
customers, other financial assets at amortized cost, guarantees and irrevocable loan commitments. 2 Internal management view of credit risk, which differs in certain respects from IFRS Accounting Standards. 3 As
counterparty risk for traded products is managed at counterparty level, no further split between exposures in the Investment Bank, Non-core and Legacy, and Group Items is provided. 4 Credit Suisse traded products
are presented before reflection of the impact of the purchase price allocation performed under IFRS 3, Business Combinations, following the acquisition of the Credit Suisse Group by UBS. The acquisition date
adjustment is less than USD 1bn and, if applied, would lead to a reduction in our reported traded products exposure. 5 Unconditionally revocable committed credit lines. 6 Negative balances are representative of
a net improvement in credit quality since the acquisition of the respective financial instrument, which is reflected as a negative ECL allowance. 7 Comparative-period information has been revised. Refer to “Note 2
Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
Collateralization of Loans and advances to customers
1
Global Wealth Management
Personal & Corporate Banking
USD m, except where indicated
30.6.24
31.3.24
30.6.24
31.3.24
Secured by collateral
Residential real estate
Commercial / industrial real estate
Cash
Equity and debt instruments
Other collateral
2
Subject to guarantees
Uncollateralized and not subject to guarantees
Total loans and advances to customers, gross
Allowances
Total loans and advances to customers, net of allowances
Collateralized loans and advances to customers in % of total loans and advances to customers, gross (%)
1 Collateral arrangements generally incorporate a range of collateral, including cash, securities, real estate and other collateral. UBS applies a risk-based approach that generally prioritizes collateral according to its
liquidity profile. In the case of loan facilities with funded and unfunded elements, the collateral is first allocated to the funded element. For legacy Credit Suisse exposure, a risk-based approach is applied that generally
prioritizes real estate collateral and prioritizes other collateral according to its liquidity profile. In the case of loan facilities with funded and unfunded elements, the collateral is proportionately allocated. 2 Includes
but is not limited to life insurance contracts, rights in respect of subscription or capital commitments from fund partners, inventory, gold and other commodities.
UBS Group second quarter 2024 report |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 38
Market risk
UBS Group excluding certain legacy Credit Suisse components continued to maintain generally low levels of
management value-at-risk (VaR). Average management VaR (1-day, 95% confidence level) decreased to USD 9m
from USD 17m in the second quarter of 2024, mainly driven by the Investment Bank’s Rates business. There were
no new VaR negative backtesting exceptions in the second quarter of 2024. The number of negative backtesting
exceptions within the most recent 250-business-day window remained at zero.
Average management VaR (1-day, 98% confidence level) of the legacy Credit Suisse components decreased to
USD 15m from USD 17m in the second quarter of 2024, driven by continued strategic migration of positions to
UBS from the former Investment Bank (Credit Suisse) and reductions in Non-core and Legacy. In the second quarter
of 2024, the aforementioned legacy Credit Suisse components had no new negative backtesting exceptions. The
number of negative backtesting exceptions within the most recent 250-business-day window remained at one.
The Swiss Financial Market Supervisory Authority (FINMA) VaR multiplier derived from negative backtesting
exceptions for market risk risk-weighted assets was unchanged compared with the prior quarter, at 3.0, for both
the UBS Group excluding certain legacy Credit Suisse components and the aforementioned legacy Credit Suisse
components.
Management value-at-risk (1-day, 95% confidence, 5 years of historical data) of the business divisions and Group Items
excluding certain legacy Credit Suisse components, by general market risk type
1,2
Average by risk type
USD m
Min.
Max.
Period end
Average
Equity
Interest
rates
Credit
spreads
Foreign
exchange
Commodities
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Non-core and Legacy
Group Items
Diversification effect
3,4
Total as of 30.6.24
Total as of 31.3.24
Management value-at-risk (1-day, 98% confidence, 2 years of historical data) of certain legacy Credit Suisse
components of the business divisions and Group Items, by general market risk type
1,2
Average by risk type
USD m
Min.
Max.
Period end
Average
Equity
Interest
rates
Credit
spreads
Foreign
exchange
Commodities
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Non-core and Legacy
Group Items
Diversification effect
3,4
Total as of 30.6.24
Total as of 31.3.24
1 Legacy Credit Suisse components not included in the UBS Group management VaR reflect predominantly the portfolio in Non-core and Legacy and the transition portfolio in the Investment Bank. These positions
continue to be managed on legacy Credit Suisse infrastructure based on legacy Credit Suisse management VaR methodology until full migration of these positions to the UBS infrastructure or liquidation of the
positions. This process is ongoing, and the management VaR of the legacy Credit Suisse components is expected to continue decreasing over time. 2 Statistics at individual levels may not be summed to deduce the
corresponding aggregate figures. The minima and maxima for each level may occur on different days, and, likewise, the VaR for each business line or risk type, being driven by the extreme loss tail of the corresponding
distribution of simulated profits and losses for that business line or risk type, may well be driven by different days in the historical time series, rendering invalid the simple summation of figures to arrive at the aggregate
total. 3 The difference between the sum of the standalone VaR for the business divisions and Group Items and the total VaR. 4 As the minima and maxima for different business divisions and Group Items occur
on different days, it is not meaningful to calculate a portfolio diversification effect.
Economic value of equity and net interest income sensitivity
The economic value of equity (EVE) sensitivity in the UBS Group banking book to a parallel shift in yield curves of
+1 basis point was negative USD 32.1m as of 30 June 2024, compared with negative USD 31.3m as of 31 March
2024. This excluded the sensitivity of USD 5.3m from additional tier 1 (AT1) capital instruments (as per specific
FINMA requirements) in contrast to general Basel Committee on Banking Supervision (BCBS) guidance. Exposure in
the banking book of the UBS Group increased during the second quarter of 2024, driven by a longer modeled
duration assigned to own equity.
UBS Group second quarter 2024 report |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 39
The majority of our interest rate risk in the banking book was a reflection of the net asset duration that we ran to
offset our modeled sensitivity of net USD 24.6m (31 March 2024: USD 23.4m) assigned to our equity, goodwill and
real estate, with the aim of generating a stable net interest income contribution. Of this, USD 16.1m and USD 7.5m
were attributable to the US dollar and the Swiss franc portfolios, respectively, (31 March 2024: USD 16.7m and
USD 5.7m, respectively).
In addition to the aforementioned sensitivity, we calculate the six interest rate shock scenarios prescribed by FINMA.
The “Parallel up” scenario, assuming all positions were fair valued, was the most severe and would have resulted
in a change in EVE of negative USD 6.0bn, or 6.5%, of our tier 1 capital (31 March 2024: negative USD 5.9bn, or
6.3%), which is well below the 15% threshold set in the BCBS supervisory outlier test for high levels of interest rate
risk in the banking book.
The immediate effect on our tier 1 capital in the “Parallel up” scenario as of 30 June 2024 would have been a
decrease of approximately USD 0.8bn, or 0.9%, (31 March 2024: USD 0.9bn, or 0.9%), reflecting the fact that the
vast majority of our banking book is accrual accounted or subject to hedge accounting. The “Parallel up” scenario
would subsequently have a positive effect on net interest income, assuming a constant balance sheet.
As the overall interest rate risk sensitivity shows a greater impact from slower asset repricing compared to faster
liabilities repricing, the “Parallel down“ scenario was the most beneficial and would have resulted in a change in
EVE of positive USD 6.2bn (31 March 2024: positive USD 6.1bn) and a small positive immediate effect on our tier 1
capital.
›
Refer to “Interest rate risk in the banking book” in the “Risk management and control” section of the UBS Group
Annual Report 2023, available under “Annual reporting” at
ubs.com/investors
, for more information about the
management of interest rate risk in the banking book
›
Refer to “Sensitivity to interest rate movements” in the “Group performance” section of this report for more
information about the effects of increases in interest rates on the net interest income of our banking book
Interest rate risk – banking book
30.6.24
USD m
Effect on EVE
1
Effect on EVE
1
Scenarios
CHF
EUR
GBP
USD
Other
Total
Additional tier 1 (AT1) capital
instruments
Total
+1 bp
Parallel up
2
Parallel down
2
Steepener
3
Flattener
4
Short-term up
5
Short-term down
6
31.3.24
USD m
Effect on EVE
1
Effect on EVE
1
Scenarios
CHF
EUR
GBP
USD
Other
Total
Additional tier 1 (AT1) capital
instruments
Total
+1 bp
Parallel up
2
Parallel down
2
Steepener
3
Flattener
4
Short-term up
5
Short-term down
6
1 Economic value of equity. 2 Rates across all tenors move by ±150 bps for Swiss franc, ±200 bps for euro and US dollar, and ±250 bps for pound sterling. 3 Short-term rates decrease and long-term rates increase.
4 Short-term rates increase and long-term rates decrease. 5 Short-term rates increase more than long-term rates. 6 Short-term rates decrease more than long-term rates.
Country risk
We remain watchful of a range of geopolitical developments and political changes in a number of countries, as
well as international tensions arising from the Russia–Ukraine war, conflicts in the Middle East and global trade
relations. As of 30 June 2024, our direct exposure to Israel was less than USD 0.5bn and our direct exposure to
Gulf Cooperation Council countries was less than USD 4bn, while direct exposure to Egypt, Jordan and Lebanon
was limited, and there was no direct exposure to Iran, Iraq or Syria. Our direct exposure to Russia, Belarus and
Ukraine as of 30 June 2024 was immaterial, and potential second-order impacts, such as European energy security,
continue to be monitored.
UBS Group second quarter 2024 report |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 40
Inflation has abated to some extent in major Western economies, although there are still concerns regarding future
developments, and central banks’ monetary policies are in the spotlight. There are ongoing concerns regarding the
property sector in China. This combination of factors translates into a more uncertain and volatile environment,
which increases the risk of financial market disruption.
We continue to monitor potential trade policy disputes, as well as economic and political developments in addition
to those mentioned above. We are closely watching elections and their aftermath in a number of key markets in
2024. As of 30 June 2024, our exposure to emerging market countries was less than 10% of our total country
exposure and mainly to certain countries in Asia.
›
Refer to the “Risk management and control” section of the UBS Group Annual Report 2023, available under
“Annual reporting” at
ubs.com/investors
, for more information
Non-financial risk
We continue to actively manage the non-financial risks emerging from the acquisition of the Credit Suisse Group.
The completion of the merger of the parent banks, i.e., UBS AG and Credit Suisse AG, facilitates the migration of
clients and operations from Credit Suisse to integrated UBS platforms over time. These activities continue to be
managed via the program run by our Group Integration Office.
Through this period of change, we place an increased focus on maintaining and enhancing our control environment
and continue to cooperate with regulators in relation to the submission and execution of implementation plans to
meet regulatory requirements, including remediation requirements applicable to Credit Suisse AG. In addition, the
Group is closely monitoring non-financial risk indicators, to detect any potential for adverse impacts on the control
environment.
The integration of Credit Suisse requires data to be migrated to the UBS environment, and we aim to ensure that
we have robust controls to preserve data integrity, quality and availability, to mitigate data migration risks, and to
meet regulatory expectations.
There is an increased risk of cyber-related operational disruption to business activities at our locations and those of
third-party suppliers due to operating an enlarged group of entities. This is combined with the increasingly dynamic
threat environment, which is intensified by current geopolitical factors and evidenced by the increased volumes and
sophistication of cyberattacks against financial institutions globally. We continue to invest in improving our
technology infrastructure and information security governance in order to improve our cyberattack defense,
detection and response capabilities.
Cyberattacks on third-party vendors have affected our operations in the past and continue to be a source of residual
risk to our business. No cyber events occurred in the second quarter of 2024 related to our own infrastructure, or
the infrastructure of any third party, that had material financial or operational effects on us. We remain on
heightened alert to respond to and mitigate elevated cybersecurity and information security threats. We maintain
a program to advance our frameworks for managing third parties that support our important business services, and
we are continuing with actions to enhance our cyber-risk assessments and controls over third-party vendors.
In addition, we are working to enhance our operational resilience to address these heightened risks and to meet
regulatory deadlines through 2026. We have implemented a global framework designed to drive enhancements in
operational resilience across all business divisions and relevant jurisdictions, and we are working with the third
parties, including vendors, that are of critical importance to our operations, to assess their operational resilience
against our standards.
The increasing interest in data-driven advisory processes, and use of artificial intelligence (AI) and machine learning,
is opening up new questions related to the fairness of AI algorithms, data life cycle management, data ethics, data
privacy and security, and records management. In addition, new risks continue to emerge, such as those that result
from the demand from our clients for distributed ledger technology, blockchain-based assets and cryptocurrencies;
however, we currently have limited exposure to such risks, and relevant control frameworks are implemented and
reviewed on a regular basis as these risks evolve.
Competition to find new business opportunities, products and services across the financial services sector, both for
firms and for customers, is increasing, particularly during periods of market volatility and economic uncertainty.
Thus, suitability risk, product selection, cross-divisional service offerings, quality of advice and price transparency
remain areas of heightened focus for UBS and for the industry as a whole.
UBS Group second quarter 2024 report |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 41
Evolving environmental, social and governance regulations and major legislation, such as the Consumer Duty
regulation in the United Kingdom, the Swiss Financial Services Act (FIDLEG) in Switzerland, Regulation Best Interest
(Reg BI) in the US and the Markets in Financial Instruments Directive II (MiFID II) in the EU, all significantly affect the
industry and have required adjustments to control processes.
Cross-border risk (including unintended permanent establishment) remains an area of regulatory attention for
global financial institutions, including a focus on market access, such as third-country market access into the
European Economic Area, and taxation of US persons. We maintain a series of controls designed to address these
risks, and we are increasing the number of controls that are automated.
Financial crime, including money laundering, terrorist financing, sanctions violations, fraud, bribery and corruption,
continues to present a major risk, as technological innovation and geopolitical developments increase the
complexity of doing business and heightened regulatory attention continues. Money laundering and financial fraud
techniques are becoming increasingly sophisticated, including growing use of AI, and geopolitical volatility makes
the sanctions landscape more complex. The extensive and continuously evolving sanctions arising from the Russia–
Ukraine war require constant attention to prevent circumvention risks, while the conflicts in the Middle East may
increase terrorist financing risks. An effective financial crime prevention program therefore remains essential for us.
We are focused on strategic enhancements to our global anti-money-laundering, know-your-client and sanctions
programs to respond to new and existing regulatory requirements and to respond to developing threats, as well as
alignment of standards and processes as Credit Suisse clients are migrated to UBS platforms.
Achieving fair outcomes for our clients, upholding market integrity and cultivating the highest standards of
employee conduct are of critical importance to us. We maintain a conduct risk framework across our activities,
which is designed to align our standards and conduct with these objectives and to retain momentum on fostering
a strong culture. On 5 January 2024, we integrated the UBS and Credit Suisse conduct risk frameworks to align the
handling of conduct risk across the firm.
In September 2022, the US Securities and Exchange Commission (the SEC) and the Commodity Futures Trading
Commission (the CFTC) issued settlement orders relating to communications recordkeeping requirements in our US
broker-dealers and our registered swap dealers. In response to identified shortcomings, we are continuing to
implement a global remediation program.
UBS Group second quarter 2024 report |
Risk, capital, liquidity and funding, and balance sheet | Capital management 42
Capital management
The disclosures in this section are provided for UBS Group AG on a consolidated basis and focus on key
developments during the reporting period and information in accordance with the Basel III framework, as applicable
to Swiss systemically relevant banks (SRBs). They should be read in conjunction with “Capital management” in the
“Capital, liquidity and funding, and balance sheet” section of the UBS Group Annual Report 2023, available under
“Annual reporting” at
ubs.com/investors
, which provides more information about our capital management
objectives, planning and activities, as well as the Swiss SRB total loss-absorbing capacity (TLAC) framework.
UBS Group AG is a holding company and conducts substantially all of its operations through UBS AG and
subsidiaries thereof. UBS Group AG and UBS AG contribute a significant portion of their respective capital to, and
provide substantial liquidity to, such subsidiaries. Many of these subsidiaries are subject to regulations requiring
compliance with minimum capital, liquidity and similar requirements.
›
Refer to the 30 June 2024 Pillar 3 Report, which will be available as of 23 August 2024 under “Pillar 3 disclosures” at
ubs.com/investors
, for more information about additional regulatory disclosures for UBS Group AG on a
consolidated basis, as well as the significant regulated subsidiaries and sub-groups of UBS Group AG
›
Refer to the UBS AG second quarter 2024 report, which will be available as of 23 August 2024 under “Quarterly
reporting” at
ubs.com/investors
, for more information about capital and other regulatory information for UBS AG
consolidated, in accordance with the Basel III framework, as applicable to Swiss SRBs
We are subject to the going and gone concern requirements of the Swiss Capital Adequacy Ordinance, which
include the too-big-to-fail (TBTF) provisions applicable to Swiss SRBs. The table below provides the risk-weighted
asset (RWA)- and leverage ratio denominator (LRD)-based requirements and information as of 30 June 2024.
Swiss SRB going and gone concern requirements and information
As of 30.6.24
RWA
LRD
USD m, except where indicated
in %
in %
Required going concern capital
Total going concern capital
1
1
Common equity tier 1 capital
2
of which: minimum capital
of which: buffer capital
of which: countercyclical buffer
Maximum additional tier 1 capital
of which: additional tier 1 capital
of which: additional tier 1 buffer capital
Eligible going concern capital
Total going concern capital
Common equity tier 1 capital
Total loss-absorbing additional tier 1 capital
3
of which: high-trigger loss-absorbing additional tier 1 capital
of which: low-trigger loss-absorbing additional tier 1 capital
Required gone concern capital
Total gone concern loss-absorbing capacity
4,5,6
7
7
of which: base requirement including add-ons for market share and LRD
Eligible gone concern capital
Total gone concern loss-absorbing capacity
Total tier 2 capital
of which: non-Basel III-compliant tier 2 capital
TLAC-eligible senior unsecured debt
Total loss-absorbing capacity
Required total loss-absorbing capacity
Eligible total loss-absorbing capacity
Risk-weighted assets / leverage ratio denominator
Risk-weighted assets
Leverage ratio denominator
1 Includes applicable add-ons of 1.44% for risk-weighted assets (RWA) and 0.50% for leverage ratio denominator (LRD). 2 Our minimum CET1 leverage ratio requirement of 3.50% consists of a 1.5% base
requirement, a 1.5% base buffer capital requirement, a 0.25% LRD add-on requirement and a 0.25% market share add-on requirement based on our Swiss credit business. 3 Includes outstanding low-trigger loss-
absorbing additional tier 1 capital instruments, which are available under the Swiss systemically relevant bank framework to meet the going concern requirements until their first call date. As of their first call date,
these instruments are eligible to meet the gone concern requirements. 4 A maximum of 25% of the gone concern requirements can be met with instruments that have a remaining maturity of between one and two
years. Once at least 75% of the minimum gone concern requirement has been met with instruments that have a remaining maturity of greater than two years, all instruments that have a remaining maturity of between
one and two years remain eligible to be included in the total gone concern capital. 5 From 1 January 2023, the resolvability discount on the gone concern capital requirements for systemically important banks (SIBs)
has been replaced with reduced base gone concern capital requirements equivalent to 75% of the total going concern requirements (excluding countercyclical buffer requirements). 6 As of July 2024, the Swiss
Financial Market Supervisory Authority (FINMA) has the authority to impose a surcharge of up to 25% of the total going concern capital requirements should obstacles to an SIB’s resolvability be identified in future
resolvability assessments. 7 Includes applicable add-ons of 1.08% for RWA and 0.38% for LRD.
UBS Group second quarter 2024 report |
Risk, capital, liquidity and funding, and balance sheet | Capital management 43
Transitional purchase price allocation adjustments for regulatory capital
As agreed with the Swiss Financial Market Supervisory Authority (FINMA), as part of the acquisition of the Credit
Suisse Group in 2023, a transitional common equity tier 1 (CET1) capital treatment has been applied for certain
purchase price allocation (PPA) fair value adjustments required under IFRS 3,
Business Combinations
, due to the
substantially temporary nature of these IFRS-3-accounting-driven effects related to interest rate and own credit. As
such, equity reductions under IFRS Accounting Standards of USD 5.9bn (before tax) and USD 5.0bn (net of tax) as
of the acquisition date have been neutralized for CET1 capital calculation purposes, of which USD 1.0bn (net of
tax) related to own-credit-related fair value adjustments. The transitional treatment is subject to linear amortization
and will be reduced to nil by 30 June 2027. The amortization of transitional CET1 capital PPA adjustments since the
acquisition date totaled USD 1.3bn (net of tax) as of 30 June 2024, an increase of USD 0.3bn (net of tax) in the
second quarter of 2024.
›
Refer to “Capital management” in the “Capital, liquidity and funding, and balance sheet” section of the UBS Group
Annual Report 2023, available under “Annual reporting” at
ubs.com/investors
, for more information
Finalization of IFRS 3 measurement period adjustments for the acquisition of the Credit Suisse Group
In the second quarter of 2024, in light of the additional information about circumstances existing on the acquisition
date that became available to management, IFRS 3 measurement period adjustments totaling USD 0.5bn were
made. The adjustments reflect our final conclusions on critical assumptions and judgments, which are within a
range of reasonably possible outcomes, relating to significant uncertainties that existed on the acquisition date.
With the measurement period adjustments effected in the second quarter of 2024, the accounting for the
acquisition of the Credit Suisse Group is complete. Comparative periods for CET1 capital information have been
revised accordingly. We have applied the amended measurement for LRD and RWA calculation purposes
prospectively from the second quarter of 2024.
›
Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial
statements” section of this report for more information about the IFRS 3 measurement period adjustments
Additional capital requirements for UBS Group AG consolidated and UBS AG standalone under current
requirements
As a result of the acquisition of the Credit Suisse Group in 2023, the capital add-on for UBS Group AG consolidated
that reflects the Group’s degree of systemic importance and is based on market share and LRD will increase
commensurate with the higher market share and LRD of UBS Group AG consolidated after the acquisition. We
currently estimate that this will add around USD 10bn to the Group’s tier 1 capital requirement, when fully phased
in. The phase-in of the increased capital requirements will commence from the end of 2025 and will be completed
by the beginning of 2030, at the latest.
Following the merger of UBS AG and Credit Suisse AG in the second quarter of 2024, UBS AG’s capital position
remains strong. On a standalone basis as of 30 June 2024, UBS AG’s fully applied CET1 capital ratio is expected to
be around 13.5%. The CET1 capital ratio reflects the removal of the regulatory concession that had been granted
to Credit Suisse AG standalone prior to the merger which allowed for the measurement of investments in
subsidiaries under the portfolio valuation method instead of under the individual valuation method, and it includes
risk weights of 250% and 400% for Swiss and foreign participations, respectively. Additional capital information
and final capital figures for UBS AG standalone will be published with our 30 June 2024 Pillar 3 report, which will
be available as of 23 August 2024 under “Pillar 3 disclosures” at
ubs.com/investors
.
UBS Group second quarter 2024 report |
Risk, capital, liquidity and funding, and balance sheet | Capital management 44
Total loss-absorbing capacity
The table below provides Swiss SRB going and gone concern information based on the Swiss SRB framework and
requirements that are discussed under “Capital management” in the “Capital, liquidity and funding, and balance
sheet” section of the UBS Group Annual Report 2023, available under “Annual reporting” at
ubs.com/investors
.
Swiss SRB going and gone concern information
USD m, except where indicated
30.6.24
31.3.24
1
31.12.23
1
Eligible going concern capital
Total going concern capital
Total tier 1 capital
Common equity tier 1 capital
Total loss-absorbing additional tier 1 capital
of which: high-trigger loss-absorbing additional tier 1 capital
of which: low-trigger loss-absorbing additional tier 1 capital
Eligible gone concern capital
Total gone concern loss-absorbing capacity
Total tier 2 capital
of which: non-Basel III-compliant tier 2 capital
TLAC-eligible senior unsecured debt
Total loss-absorbing capacity
Total loss-absorbing capacity
Risk-weighted assets / leverage ratio denominator
Risk-weighted assets
Leverage ratio denominator
Capital and loss-absorbing capacity ratios (%)
Going concern capital ratio
of which: common equity tier 1 capital ratio
Gone concern loss-absorbing capacity ratio
Total loss-absorbing capacity ratio
Leverage ratios (%)
Going concern leverage ratio
of which: common equity tier 1 leverage ratio
Gone concern leverage ratio
Total loss-absorbing capacity leverage ratio
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
Total loss-absorbing capacity and movement
Our TLAC increased by USD 0.7bn to USD 197.7bn in the second quarter of 2024.
Going concern capital and movement
Our going concern capital decreased by USD 1.2bn to USD 91.8bn. Our CET1 capital decreased by USD 1.6bn to
USD 76.1bn, mainly as the operating profit before tax of USD 1.5bn and an increase in eligible deferred tax assets
recognized for temporary differences of USD 0.1bn were more than offset by a net share repurchase effect of
USD 1.0bn, a negative effect from compensation- and own-share-related capital components of USD 1.0bn,
dividend accruals of USD 0.6bn, current tax expenses of USD 0.3bn, and amortization of transitional CET1 capital
PPA adjustments (interest rate and own credit) of USD 0.3bn (net of tax). The net share repurchase effect of
USD 1.0bn reflects actual share repurchases of USD 0.15bn under our new, 2024 share repurchase program and
the establishing of a USD 0.85bn capital reserve for potential share repurchases.
Our loss-absorbing additional tier 1 (AT1) capital increased by USD 0.4bn to USD 15.7bn, mainly reflecting the
issuance of one AT1 capital instrument equivalent to USD 0.4bn.
Following the approval of a maximum amount of conversion capital by UBS Group AG’s shareholders at the 2024
Annual General Meeting, AT1 capital instruments issued from the beginning of the fourth quarter of 2023 are now,
upon the occurrence of a trigger event or a viability event, subject to conversion into UBS Group AG ordinary shares
rather than a write-down. AT1 capital instruments issued prior to the fourth quarter of 2023 remain subject to a
write-down.
UBS Group second quarter 2024 report |
Risk, capital, liquidity and funding, and balance sheet | Capital management 45
Gone concern loss-absorbing capacity and movement
Our total gone concern loss-absorbing capacity increased by USD 1.9bn to USD 105.9bn and included USD 105.4bn
of TLAC-eligible senior unsecured debt instruments. The increase of USD 1.9bn mainly reflected new issuances
totaling USD 2.3bn equivalent of TLAC-eligible senior unsecured debt instruments, partly offset by a USD 0.1bn
equivalent TLAC-eligible senior unsecured debt instrument that ceased to be eligible as gone concern capital as it
entered the final year before maturity, and negative impacts from interest rate risk hedge, foreign currency
translation and other effects.
›
Refer to “Bondholder information” at
for more information about the eligibility of capital and
senior unsecured debt instruments and about key features and terms and conditions of capital instruments
Loss-absorbing capacity and leverage ratios
Our CET1 capital ratio increased to 14.9% from 14.8%, primarily reflecting a USD 15.1bn decrease in RWA, partly
offset by a USD 1.6bn decrease in CET1 capital.
Our CET1 leverage ratio was broadly unchanged at 4.9%, reflecting a USD 35.4bn decrease in the LRD, offset by a
USD 1.6bn decrease in CET1 capital.
Our gone concern loss-absorbing capacity ratio increased to 20.7% from 19.8%, due to the aforementioned
decrease in RWA and an increase in gone concern loss-absorbing capacity of USD 1.9bn.
Our gone concern leverage ratio increased to 6.8% from 6.5%, due to the aforementioned decrease in the LRD
and the aforementioned increase in gone concern loss-absorbing capacity.
Swiss SRB total loss-absorbing capacity movement
1
USD m
Going concern capital
Swiss SRB
Common equity tier 1 capital as of 31.3.24
Operating profit / (loss) before tax
Current tax (expense) / benefit
Share repurchase program
Capital reserve for potential share repurchases
Compensation- and own-share-related capital components
Amortization of transitional CET1 capital purchase price allocation adjustments, net of tax
Deferred tax assets on temporary differences
Other
2
Common equity tier 1 capital as of 30.6.24
Loss-absorbing additional tier 1 capital as of 31.3.24
Issuance of high-trigger loss-absorbing additional tier 1 capital
Interest rate risk hedge, foreign currency translation and other effects
Loss-absorbing additional tier 1 capital as of 30.6.24
Total going concern capital as of 31.3.24
Total going concern capital as of 30.6.24
Gone concern loss-absorbing capacity
Tier 2 capital as of 31.3.24
Interest rate risk hedge, foreign currency translation and other effects
Tier 2 capital as of 30.6.24
TLAC-eligible unsecured debt as of 31.3.24
Issuance of TLAC-eligible senior unsecured debt
Debt no longer eligible as gone concern loss-absorbing capacity due to residual tenor falling to below one year
Interest rate risk hedge, foreign currency translation and other effects
TLAC-eligible unsecured debt as of 30.6.24
Total gone concern loss-absorbing capacity as of 31.3.24
Total gone concern loss-absorbing capacity as of 30.6.24
Total loss-absorbing capacity
Total loss-absorbing capacity as of 31.3.24
Total loss-absorbing capacity as of 30.6.24
1 Comparative-period information as of 31 March 2024 has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report
for more information. 2 Includes dividend accruals for 2024 (negative USD 0.6bn) and movements related to other items.
UBS Group second quarter 2024 report |
Risk, capital, liquidity and funding, and balance sheet | Capital management 46
Reconciliation of equity under IFRS Accounting Standards to Swiss SRB common equity tier 1 capital
USD m
30.6.24
31.3.24
1
31.12.23
1
Total equity under IFRS Accounting Standards
Equity attributable to non-controlling interests
Defined benefit plans, net of tax
Deferred tax assets recognized for tax loss carry-forwards
Deferred tax assets for unused tax credits
Goodwill, net of tax
2
Intangible assets, net of tax
Compensation-related components (not recognized in net profit)
Expected losses on advanced internal ratings-based portfolio less provisions
Unrealized (gains) / losses from cash flow hedges, net of tax
Own credit related to (gains) / losses on financial liabilities measured at fair value that existed at the balance sheet date, net of tax
Own credit related to (gains) / losses on derivative financial instruments that existed at the balance sheet date
Prudential valuation adjustments
Accruals for dividends to shareholders for 2023
Capital reserve for potential share repurchases
Transitional CET1 purchase price allocation adjustments, net of tax
Other
3
3
Total common equity tier 1 capital
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
2 Includes goodwill related to significant investments in financial institutions of USD 19m as of 30 June 2024 (USD 19m as of 31 March 2024, USD 20m as of 31 December 2023) presented on the balance sheet
line Investments in associates. 3 Includes dividend accruals for 2024 and other items.
Additional information
Sensitivity to currency movements
Risk-weighted assets
We estimate that a 10% depreciation of the US dollar against other currencies would have increased our RWA by
USD 22bn and our CET1 capital by USD 2.5bn as of 30 June 2024 (31 March 2024: USD 22bn and USD 2.5bn,
respectively) and decreased our CET1 capital ratio by 15 basis points (31 March 2024: 14 basis points). Conversely,
a 10% appreciation of the US dollar against other currencies would have decreased our RWA by USD 20bn and
our CET1 capital by USD 2.3bn (31 March 2024: USD 20bn and USD 2.3bn, respectively) and increased our CET1
capital ratio by 14 basis points (31 March 2024: 14 basis points).
Leverage ratio denominator
We estimate that a 10% depreciation of the US dollar against other currencies would have increased our LRD by
USD 101bn as of 30 June 2024 (31 March 2024: USD 104bn) and decreased our CET1 leverage ratio by 14 basis
points (31 March 2024: 15 basis points). Conversely, a 10% appreciation of the US dollar against other currencies
would have decreased our LRD by USD 91bn (31 March 2024: USD 94bn) and increased our CET1 leverage ratio
by 15 basis points (31 March 2024: 15 basis points).
The aforementioned sensitivities do not consider foreign currency translation effects related to defined benefit plans
other than those related to the currency translation of the net equity of foreign operations.
›
Refer to “Active management of sensitivity to foreign exchange movements” under “Capital management” in the
“Capital, liquidity and funding, and balance sheet” section of the UBS Group Annual Report 2023, available under
“Annual reporting” at
ubs.com/investors
, for more information
UBS Group second quarter 2024 report |
Risk, capital, liquidity and funding, and balance sheet | Capital management 47
Risk-weighted assets
During the second quarter of 2024, RWA decreased by USD 15.1bn to USD 511.4bn, driven by decreases of
USD 11.6bn resulting from asset size and other movements, as well as USD 3.5bn resulting from model updates
and methodology changes.
Movement in risk-weighted assets, by key driver
USD bn
RWA as of
31.3.24
Currency
effects
Model updates
and
methodology
changes
Asset size and
other
1
RWA as of
30.6.24
Credit and counterparty credit risk
2
Non-counterparty-related risk
3
Market risk
Operational risk
Total
1 Includes the Pillar 3 categories “Asset size,” “Credit quality of counterparties,” “Acquisitions and disposals” and “Other. ” For more information, refer to the 30 June 2024 Pillar 3 Report, which will be available
as of 23 August 2024 under “Pillar 3 disclosures” at ubs.com/investors. 2 Includes settlement risk, credit valuation adjustments, equity and investments in funds exposures in the banking book, and securitization
exposures in the banking book. 3 Non-counterparty-related risk includes deferred tax assets recognized for temporary differences, property, equipment, software and other items.
Credit and counterparty credit risk
Credit and counterparty credit risk RWA decreased by USD 13.2bn to USD 310.2bn as of 30 June 2024.
Asset size and other movements resulted in a USD 9.9bn decrease in RWA:
–
Non-core and Legacy RWA decreased by USD 7.9bn, mainly driven by our actions to actively unwind the portfolio,
in addition to the natural roll-off.
–
Personal & Corporate Banking RWA decreased by USD 3.9bn, mainly driven by a decrease in loan balances.
–
Global Wealth Management RWA decreased by USD 0.4bn, mainly driven by a decrease in loan balances.
–
Asset Management RWA decreased by USD 0.2bn.
–
Investment Bank RWA increased by USD 1.4bn, mainly due to higher RWA from higher levels of client activity in
derivatives.
–
Group Items RWA increased by USD 1.1bn, mainly due to an RWA increase related to an investment that for
regulatory purposes is treated as in an associate.
Model updates and methodology changes resulted in a RWA decrease of USD 3.3bn, mainly reflecting an RWA
decrease of USD 1.6bn related to the recalibration of certain multipliers as a result of improvements to models and
an RWA decrease of USD 0.8bn from methodology changes related to commercial real estate and large corporate
loans. The remaining difference was spread across other smaller model updates.
›
Refer to the 30 June 2024 Pillar 3 Report, which will be available as of 23 August 2024 under “Pillar 3 disclosures” at
ubs.com/investors
, for more information
›
Refer to “Credit risk” in the “Risk management and control” section of this report for more information
Market risk
Market risk RWA decreased by USD 1.9bn to USD 22.5bn in the second quarter of 2024, mainly driven by a decrease
of USD 1.7bn from asset size and other movements that reflected updates from the monthly risks-not-in-VaR
assessments.
›
Refer to the 30 June 2024 Pillar 3 Report, which will be available as of 23 August 2024 under “Pillar 3 disclosures” at
ubs.com/investors,
›
Refer to “Market risk” in the “Risk management and control” section of this report for more information
Operational risk
Operational risk RWA were unchanged at USD 145.4bn.
›
Refer to “Note 15 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this
report for more information
›
Refer to “Non-financial risk” in the “Risk management and control” section of the UBS Group Annual Report 2023,
available under “Annual reporting” at
ubs.com/investors
, for information about the AMA models
UBS Group second quarter 2024 report |
Risk, capital, liquidity and funding, and balance sheet | Capital management 48
Outlook
We expect that the adoption of the final Basel III standards in January 2025 will lead to an increase of around 5%
in UBS Group risk-weighted assets, driven mainly by the Fundamental Review of the Trading Book. This estimate is
based on our current understanding of the relevant standards. We are in an active dialogue with FINMA regarding
various aspects of the final rules. Our estimate does not take into account mitigating actions, nor does it reflect the
impact of the output floor, which is to be phased in over time.
We also expect an RWA reduction of around USD 5bn from credit and counterparty credit risk model updates in
the second half of 2024, mainly related to the recalibration of certain multipliers as a result of improvements to
models, partly offset by increases primarily as a result of the migration of Credit Suisse portfolios to UBS models.
The extent and timing of RWA changes may vary as model updates are completed and receive regulatory approval,
along with changes in the composition of the relevant portfolios.
Risk-weighted assets, by business division and Group Items
USD bn
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Manage-
ment
Investment
Bank
Non-core and
Legacy
Group
Items
Total
RWA
30.6.24
Credit and counterparty credit risk
1
Non-counterparty-related risk
2
Market risk
Operational risk
Total
31.3.24
Credit and counterparty credit risk
1
Non-counterparty-related risk
2
Market risk
Operational risk
Total
30.6.24 vs 31.3.24
Credit and counterparty credit risk
1
Non-counterparty-related risk
2
Market risk
Operational risk
Total
1 Includes settlement risk, credit valuation adjustments, equity and investments in funds exposures in the banking book, and securitization exposures in the banking book. 2 Non-counterparty-related risk includes
deferred tax assets recognized for temporary differences (30 June 2024: USD 16.6bn; 31 March 2024: USD 16.4bn), as well as property, equipment, software and other items (30 June 2024: USD 16.6bn; 31 March
2024: USD 16.7bn).
UBS Group second quarter 2024 report |
Risk, capital, liquidity and funding, and balance sheet | Capital management 49
Leverage ratio denominator
During the second quarter of 2024, the LRD decreased by USD 35.4bn to USD 1,564.2bn, driven by asset size and
other movements of USD 33.4bn, as well as currency effects of USD 2.1bn.
Movement in leverage ratio denominator, by key driver
USD bn
LRD as of
31.3.24
Currency
effects
Asset size and
other
LRD as of
30.6.24
On-balance sheet exposures (excluding derivatives and securities financing transactions)
Derivatives
Securities financing transactions
Off-balance sheet items
Deduction items
Total
The LRD movements described below exclude currency effects.
On-balance sheet exposures (excluding derivatives and securities financing transactions) decreased by USD 29.0bn,
mainly due to a decrease in cash and central bank balances driven by the repayment of the remaining funding
drawn under the Swiss National Bank Emergency Liquidity Assistance facility and lower lending balances.
Furthermore, there were also decreases in trading portfolio assets in Non-core and Legacy, driven by our actions to
actively unwind the portfolio, in addition to the natural roll-off. These decreases were partly offset by higher trading
portfolio assets, driven by higher inventory held to hedge client positions in the Investment Bank and purchases of
high-quality liquid securities in Group Treasury.
Derivative exposures decreased by USD 3.3bn, mainly driven by the continued reductions in Non-core and Legacy,
as well as market-driven movements.
Securities financing transactions increased by USD 2.5bn, primarily from higher levels of client activity.
Off-balance sheet items decreased by USD 3.2bn, primarily driven by lower irrevocable loan commitments.
›
Refer to the “Balance sheet and off-balance sheet” section of this report for more information about balance sheet
movements
Leverage ratio denominator, by business division and Group Items
USD bn
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group Items
Total
30.6.24
On-balance sheet exposures
Derivatives
Securities financing transactions
Off-balance sheet items
Items deducted from Swiss SRB tier 1 capital
Total
31.3.24
On-balance sheet exposures
Derivatives
Securities financing transactions
Off-balance sheet items
Items deducted from Swiss SRB tier 1 capital
Total
30.6.24 vs 31.3.24
On-balance sheet exposures
Derivatives
Securities financing transactions
Off-balance sheet items
Items deducted from Swiss SRB tier 1 capital
Total
UBS Group second quarter 2024 report |
Risk, capital, liquidity and funding, and balance sheet | Capital management 50
Equity attribution
Under our equity attribution framework, tangible equity is attributed based on equally weighted average RWA and
average LRD, which both include resource allocations from our Group functions to the business divisions. Average
RWA and LRD are converted to CET1 capital equivalents using target capital ratios. If the attributed tangible equity
calculated under the weighted-driver approach is less than the CET1 capital equivalent of risk-based capital (RBC)
for any business division, the CET1 capital equivalent of RBC is used as a floor for that business division.
In addition to tangible equity, we allocate equity to the business divisions to support goodwill and intangible assets.
We also allocate to the business divisions attributed equity related to CET1 deduction items that are attributable to
divisional activities, such as compensation-related components or expected losses on the advanced internal ratings-
based portfolio less provisions. We attribute all remaining capital deduction items to Group Items. These primarily
include equity related to deferred tax assets, accruals for shareholder returns, and unrealized gains / losses from
cash flow hedges.
›
Refer to the “Balance sheet and off-balance sheet” section of this report for more information about movements in
equity attributable to shareholders
Average attributed equity
For the quarter ended
Year-to-date
USD bn
30.6.24
31.3.24
1
30.6.23
2
30.6.24
30.6.23
2
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Non-core and Legacy
Group Items
3
Average equity attributed to business divisions and Group Items
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
2 Comparative figures have been restated to reflect the changes to the equity attribution framework. Refer to the “Equity attribution” section of the UBS Group first quarter 2024 report, available under “Quarterly
reporting” at ubs.com/investors, for more information. 3 Includes average attributed equity related to capital deduction items for deferred tax assets, accruals for shareholder returns and unrealized gains / losses
from cash flow hedges.
UBS Group second quarter 2024 report |
Risk, capital, liquidity and funding, and balance sheet | Liquidity and funding management 51
Liquidity and funding management
Strategy, objectives and governance
This section provides liquidity and funding management information and should be read in conjunction with
“Liquidity and funding management” in the “Capital, liquidity and funding, and balance sheet” section of the UBS
Group Annual Report 2023, available under “Annual reporting” at
ubs.com/investors
, which provides more
information about the Group’s strategy, objectives and governance in connection with liquidity and funding
management.
Liquidity coverage ratio
The quarterly average liquidity coverage ratio (the LCR) of the UBS Group decreased 8.2 percentage points to
212.0%, remaining above the prudential requirement communicated by the Swiss Financial Market Supervisory
Authority (FINMA). The movement in the quarterly average LCR was primarily driven by a decrease in high-quality
liquid assets of USD 44.4bn to USD 378.2bn, mainly due to the repayment of the remaining funding drawn under
the Swiss National Bank Emergency Liquidity Assistance facility and an increase in trading assets. The average net
cash outflows decreased by USD 13.7bn to USD 178.5bn, reflecting lower outflows from deposits and loan
commitments and higher net inflows from securities financing transactions.
›
Refer to the
30 June 2024 Pillar 3 Report, which will be available as of 23 August 2024 under “Pillar 3 disclosures” at
ubs.com/investors
, for more information about the LCR
Liquidity coverage ratio
USD bn, except where indicated
Average 2Q24
1
Average 1Q24
1
High-quality liquid assets
Net cash outflows
2
Liquidity coverage ratio (%)
3
1 Calculated based on an average of 61 data points in the second quarter of 2024 and 61 data points in the first quarter of 2024. 2 Represents the net cash outflows expected over a stress period of 30 calendar
days. 3 Calculated after the application of haircuts and inflow and outflow rates, as well as, where applicable, caps on Level 2 assets and cash inflows.
Net stable funding ratio
As of 30 June 2024, the net stable funding ratio (the NSFR) of the UBS Group increased 1.6 percentage points to
128.0%, remaining above the prudential requirement communicated by FINMA.
Available stable funding decreased by USD 4.8bn to USD 882.3bn, mainly driven by lower customer deposits, partly
offset by higher debt issued measured at amortized cost. Required stable funding decreased by USD 12.5bn to
USD 689.0bn, predominantly reflecting lower lending assets and derivative balances, partly offset by higher trading
assets and securities financing transactions.
›
Refer to the 30 June 2024 Pillar 3 Report, which will be available as of 23 August 2024 under “Pillar 3 disclosures” at
ubs.com/investors
, for more information about the NSFR
Net stable funding ratio
USD bn, except where indicated
30.6.24
31.3.24
Available stable funding
Required stable funding
Net stable funding ratio (%)
UBS Group second quarter 2024 report |
Risk, capital, liquidity and funding, and balance sheet | Balance sheet and off-balance sheet 52
Balance sheet and off-balance sheet
This section provides balance sheet and off-balance sheet information and should be read in conjunction with
“Balance sheet and off-balance sheet” in the “Capital, liquidity and funding, and balance sheet” section of the
UBS Group Annual Report 2023, available under “Annual reporting” at
ubs.com/investors
, which provides more
information about the balance sheet and off-balance sheet positions.
Balances disclosed in this report represent quarter-end positions, unless indicated otherwise. Intra-quarter balances
fluctuate in the ordinary course of business and may differ from quarter-end positions.
Balance sheet assets (30 June 2024 vs 31 March 2024)
Total assets were USD 1,561.0bn as of 30 June 2024, a decrease of USD 45.8bn compared with 31 March 2024.
Cash and balances at central banks decreased by USD 23.1bn, mainly due to the repayment of the remaining
funding drawn under the Swiss National Bank Emergency Liquidity Assistance (ELA) facility. Derivatives and cash
collateral receivables on derivative instruments decreased by USD 22.7bn, mainly in Non-core and Legacy, reflecting
the unwinding of the Credit Suisse business, as well as market-driven movements. Securities financing transactions
at amortized cost decreased by USD 19.6bn, mainly reflecting net roll-offs of trades measured at amortized cost
with the proceeds largely invested into securities financing transactions measured at fair value. Lending assets
decreased by USD 6.1bn, primarily reflecting negative net new loans in the asset-gathering businesses and
reductions in Non-core and Legacy.
These decreases were partly offset by a USD 23.7bn increase in Other financial assets measured at fair value, mainly
reflecting the aforementioned increases in securities financing transactions measured at fair value and purchases of
securities in the high-quality liquid asset portfolio.
Assets
As of
% change from
USD bn
30.6.24
31.3.24
1
31.3.24
Cash and balances at central banks
Lending
2
Securities financing transactions at amortized cost
Trading assets
Derivatives and cash collateral receivables on derivative instruments
Brokerage receivables
Other financial assets measured at amortized cost
Other financial assets measured at fair value
3
Non-financial assets
Total assets
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
2 Consists of Loans and advances to customers and Amounts due from banks. 3 Consists of Financial assets at fair value not held for trading and Financial assets measured at fair value through other comprehensive
income.
Balance sheet liabilities (30 June 2024 vs 31 March 2024)
Total liabilities were USD 1,476.8bn as of 30 June 2024, a decrease of USD 44.7bn compared with 31 March 2024.
Short-term borrowings decreased by USD 18.6bn, mainly related to the repayment of the remaining funding drawn
under the ELA facility. Derivatives and cash collateral payables on derivative instruments decreased by USD 18.4bn,
mainly in Non-core and Legacy, primarily reflecting the same drivers as on the asset side. Customer deposits
decreased by USD 7.2bn, mainly driven by net new deposits outflows, mainly in Global Wealth Management.
The “Liabilities, by product and currency” table in this section provides more information about our funding sources.
›
Refer to “Bondholder information” at
for more information about capital and senior debt
instruments
›
Refer to the “Consolidated financial statements” section of this report for more information
UBS Group second quarter 2024 report |
Risk, capital, liquidity and funding, and balance sheet | Balance sheet and off-balance sheet 53
Liabilities and equity
As of
% change from
USD bn
30.6.24
31.3.24
1
31.3.24
Short-term borrowings
2,3
Securities financing transactions at amortized cost
Customer deposits
Debt issued designated at fair value and long-term debt issued measured at amortized cost
3
Trading liabilities
Derivatives and cash collateral payables on derivative instruments
Brokerage payables
Other financial liabilities measured at amortized cost
Other financial liabilities designated at fair value
Non-financial liabilities
Total liabilities
Share capital
Share premium
Treasury shares
Retained earnings
Other comprehensive income
4
Total equity attributable to shareholders
Equity attributable to non-controlling interests
Total equity
Total liabilities and equity
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
2 Consists of short-term debt issued measured at amortized cost and amounts due to banks, which includes amounts due to central banks. 3 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. 4 Excludes other comprehensive income related to defined benefit plans and own credit, which is recorded directly in Retained earnings.
Equity (30 June 2024 vs 31 March 2024)
Equity attributable to shareholders decreased by USD 1,094m to USD 83,683m as of 30 June 2024.
The decrease of USD 1,094m was mainly driven by distributions to shareholders of USD 2,256m, reflecting a
dividend payment of USD 0.70 per share. In addition, net treasury share activity reduced equity by USD 825m,
predominantly due to the purchase of USD 715m of shares in relation to employee share-based compensation plans
and repurchases of USD 151m of shares under our new, 2024 share repurchase program.
These decreases were partly offset by positive total comprehensive income attributable to shareholders of
USD 1,596m, reflecting a net profit of USD 1,136m and other comprehensive income (OCI) of USD 460m, and an
increase in deferred share-based compensation awards expensed in the income statement of USD 276m. OCI mainly
included OCI related to cash flow hedge OCI of USD 256m and own credit on financial liabilities designated at fair
value of USD 228m.
›
Refer to the “Group performance” and “Consolidated financial statements” sections of this report for more
information
›
Refer to “Reconciliation of equity under IFRS Accounting Standards to Swiss SRB common equity tier 1 capital” in
the “Capital management” section of this report for more information about the effects of OCI on common equity
tier 1 capital
›
Refer to the “Share information and earnings per share” section of this report for more information about our
share repurchase programs
UBS Group second quarter 2024 report |
Risk, capital, liquidity and funding, and balance sheet | Balance sheet and off-balance sheet 54
Liabilities, by product and currency
All currencies
of which: USD
of which: CHF
of which: EUR
USD bn
30.6.24
31.3.24
1
30.6.24
31.3.24
1
30.6.24
31.3.24
1
30.6.24
31.3.24
1
Short-term borrowings
61.7
80.3
32.0
32.4
8.0
28.5
8.6
8.4
of which: amounts due to banks
26.8
47.9
10.0
10.0
7.5
28.1
3.2
3.5
of which: short-term debt issued
2,3
34.9
32.5
22.0
22.3
0.5
0.4
5.4
4.9
Securities financing transactions at amortized cost
14.9
13.0
8.5
8.6
2.7
1.5
2.5
2.6
Customer deposits
756.8
764.0
307.2
313.7
301.9
302.1
76.8
78.4
of which: demand deposits
220.1
222.0
54.8
56.1
101.3
101.4
35.3
35.1
of which: retail savings / deposits
177.8
175.5
31.0
29.6
142.7
141.7
4.0
4.1
of which: sweep deposits
35.7
37.6
35.7
37.6
0.0
0.0
0.0
0.0
of which: time deposits
323.3
328.8
185.8
190.3
57.9
58.9
37.5
39.2
Debt issued designated at fair value and long-term debt issued measured at
amortized cost
3
307.5
310.6
174.8
177.0
42.6
41.6
64.5
65.3
Trading liabilities
33.5
35.8
12.7
11.0
1.1
1.4
9.7
10.1
Derivatives and cash collateral payables on derivative instruments
181.9
200.3
145.0
156.2
3.5
5.7
21.0
24.0
Brokerage payables
46.2
46.6
35.4
35.7
0.7
0.6
2.9
2.9
Other financial liabilities measured at amortized cost
21.4
21.4
11.5
11.5
4.2
4.2
1.5
1.9
Other financial liabilities designated at fair value
31.9
28.1
6.1
4.1
0.1
0.1
4.9
3.9
Non-financial liabilities
21.0
21.5
11.5
12.6
3.8
2.9
2.9
3.5
Total liabilities
1,476.8
1,521.5
744.8
762.8
368.6
388.5
195.0
200.8
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
2 Short-term debt issued consists of certificates of deposit, commercial paper, acceptances and promissory notes, and other money market paper. 3 The classification of debt issued measured at amortized cost into
short-term and long-term is based on original contractual maturity and therefore long-term debt also includes debt with a remaining time to maturity of less than one year. This classification does not consider any early
redemption features.
Off-balance sheet (30 June 2024 vs 31 March 2024)
There was a decrease of USD 5.4bn in irrevocable loan commitments, primarily driven by Personal & Corporate
Banking. There was a USD 7.9bn decrease in forward starting reverse repurchase and securities borrowing
agreements, mainly driven by roll-offs of trades measured at amortized cost, with the new trades measured at fair
value and these agreements being accounted for as derivative.
Off-balance sheet
As of
% change from
USD bn
30.6.24
31.3.24
31.3.24
Guarantees
1,2
Irrevocable loan commitments
1
Committed unconditionally revocable credit lines
Forward starting reverse repurchase and securities borrowing agreements
1 Guarantees and irrevocable loan commitments are shown net of sub-participations. 2 Includes guarantees measured at fair value through profit or loss.
UBS Group second quarter 2024 report |
Risk, capital, liquidity and funding, and balance sheet | Share information and earnings per share 55
Share information and earnings per share
UBS Group AG shares are listed on the SIX Swiss Exchange (SIX). They are also listed on the New York Stock
Exchange (the NYSE) as global registered shares. Each share has a nominal value of USD 0.10. Shares issued were
unchanged in the second quarter of 2024 compared with the first quarter of 2024.
We held 260m shares as of 30 June 2024, of which 125m shares had been acquired under our 2022 and 2024
share repurchase programs for cancellation purposes. The remaining 135m shares are primarily held to hedge our
share delivery obligations related to employee share-based compensation and participation plans.
Treasury shares held increased by 4m shares in the second quarter of 2024. This mainly reflected 16.2m shares
purchased from the market to hedge future share delivery obligations related to employee share-based
compensation awards and repurchases of 4.4m shares under our new, 2024 program, largely offset by the delivery
of treasury shares under our share-based compensation plans.
Shares acquired under our 2022 program totaled 121m as of 30 June 2024 for a total acquisition cost of
USD 2,277m (CHF 2,138m). This program concluded on 28 March 2024 and the 121m shares repurchased under
this program will be canceled by means of a capital reduction, subject to approval by the shareholders at a future
Annual General Meeting.
On 3 April 2024, we launched a new, 2024 share repurchase program of up to USD 2bn over two years. Four
million shares had been acquired under this program as of 30 June 2024 for a total acquisition cost of USD 135m
(CHF 120m). As previously communicated, we expect to repurchase a total of up to USD 1bn of our shares in 2024.
›
Refer to the “Equity, CET1 capital and returns” table in the “Group performance” section of this report for more
information about equity attributable to shareholders and tangible equity attributable to shareholders
As of or for the quarter ended
As of or for the year ended
30.6.24
31.3.24
1
30.6.23
1
30.6.24
30.6.23
1
Basic and diluted earnings (USD m)
Net profit / (loss) attributable to shareholders for basic EPS
less: (profit) / loss on own equity derivative contracts
Net profit / (loss) attributable to shareholders for diluted EPS
.
Weighted average shares outstanding
Weighted average shares outstanding for basic EPS
2
Effect of dilutive potential shares resulting from notional employee shares, in-the-money
options and warrants outstanding
3
Weighted average shares outstanding for diluted EPS
.
Earnings per share (USD)
Basic
Diluted
.
Shares outstanding and potentially dilutive instruments
Shares issued
Treasury shares
4
of which: related to the 2022 share repurchase program
of which: related to the 2024 share repurchase program
Shares outstanding
Potentially dilutive instruments
5
.
Other key figures
Total book value per share (USD)
Tangible book value per share (USD)
Share price (USD)
6
Market capitalization (USD m)
7
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
2 The weighted average shares outstanding for basic earnings per share (EPS) are calculated by taking the number of shares at the beginning of the period, adjusted by the number of shares acquired or issued during
the period, multiplied by a time-weighted factor for the period outstanding. As a result, balances are affected by the timing of acquisitions and issuances during the period. 3 The weighted average number of shares
for notional employee awards with performance conditions reflects all potentially dilutive shares that are expected to vest under the terms of the awards. 4 Based on a settlement date view. 5 Reflects potential
shares that could dilute basic EPS in the future but were not dilutive for any of the periods presented. Mainly includes equity-based awards subject to absolute and relative performance conditions and equity derivative
contracts. 6 Represents the share price as listed on the SIX Swiss Exchange, translated to US dollars using the closing exchange rate as of the respective date. 7 The calculation of market capitalization reflects
total shares issued multiplied by the share price at the end of the period.
Ticker symbols UBS Group AG
Security identification codes
Trading exchange
SIX / NYSE
Bloomberg
Reuters
ISIN
CH0244767585
SIX Swiss Exchange
UBSG
UBSG SW
UBSG.S
Valoren
24 476 758
New York Stock Exchange
UBS
UBS UN
UBS.N
CUSIP
CINS H42097 10 7
UBS Group second quarter 2024 report |
Consolidated financial statements 56
Consolidated financial
statements
Unaudited
Table of contents
57
58
59
60
61
62
1
64
2
68
3
69
4
70
5
70
6
70
7
71
8
71
9
79
10
85
11
86
12
87
13
87
14
87
15
UBS Group second quarter 2024 report |
Consolidated financial statements | UBS Group AG interim consolidated financial statements (unaudited) 57
UBS Group AG interim consolidated financial
statements (unaudited)
Income statement
For the quarter ended
Year-to-date
USD m
Note
30.6.24
31.3.24
30.6.23
1
30.6.24
30.6.23
1
Interest income from financial instruments measured at amortized cost and fair value through
other comprehensive income
4
Interest expense from financial instruments measured at amortized cost
4
(9,319 )
(9,724 )
(5,880 )
(19,042 )
(9,695 )
Net interest income from financial instruments measured at fair value through profit or loss and other
4
Net interest income
4
Other net income from financial instruments measured at fair value through profit or loss
Fee and commission income
5
Fee and commission expense
5
(679 )
(588 )
(507 )
(1,268 )
(954 )
Net fee and commission income
5
Other income
6
Total revenues
Negative goodwill
2
Credit loss expense / (release)
9
Personnel expenses
7
General and administrative expenses
8
Depreciation, amortization and impairment of non-financial assets
Operating expenses
Operating profit / (loss) before tax
Tax expense / (benefit)
Net profit / (loss)
Net profit / (loss) attributable to non-controlling interests
Net profit / (loss) attributable to shareholders
Earnings per share (USD)
Basic
Diluted
1 Comparative-period information has been revised. Refer to Note 2 for more information.
UBS Group second quarter 2024 report |
Consolidated financial statements | UBS Group AG interim consolidated financial statements (unaudited) 58
Statement of comprehensive income
For the quarter ended
Year-to-date
USD m
30.6.24
31.3.24
30.6.23
1
30.6.24
30.6.23
1
Comprehensive income attributable to shareholders
2
Net profit / (loss)
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
(268 )
(3,473 )
(3,741 )
Effective portion of changes in fair value of hedging instruments designated as net investment hedges, before tax
(379 )
(506 )
Foreign currency translation differences on foreign operations reclassified to the income statement
(3 )
(3 )
Effective portion of changes in fair value of hedging instruments designated as net investment hedges reclassified to
the income statement
(1 )
(2 )
Income tax relating to foreign currency translations, including the effect of net investment hedges
(4 )
(5 )
Subtotal foreign currency translation, net of tax
(1,277 )
(1,252 )
Financial assets measured at fair value through other comprehensive income
Net unrealized gains / (losses), before tax
Net realized (gains) / losses reclassified to the income statement from equity
Income tax relating to net unrealized gains / (losses)
Subtotal financial assets measured at fair value through other comprehensive income, net of tax
Cash flow hedges of interest rate risk
Effective portion of changes in fair value of derivative instruments designated as cash flow hedges, before tax
(417 )
(1,246 )
(1,314 )
(1,663 )
(928 )
Net (gains) / losses reclassified to the income statement from equity
Income tax relating to cash flow hedges
Subtotal cash flow hedges, net of tax
(583 )
(775 )
(327 )
(169 )
Cost of hedging
Cost of hedging, before tax
(19 )
(9 )
(28 )
Income tax relating to cost of hedging
Subtotal cost of hedging, net of tax
(19 )
(9 )
(28 )
Total other comprehensive income that may be reclassified to the income statement, net of tax
(1,870 )
(397 )
(1,608 )
Other comprehensive income that will not be reclassified to the income statement
Defined benefit plans
Gains / (losses) on defined benefit plans, before tax
(38 )
(62 )
(17 )
(100 )
Income tax relating to defined benefit plans
(35 )
(29 )
Subtotal defined benefit plans, net of tax
(30 )
(56 )
(53 )
(87 )
(21 )
Own credit on financial liabilities designated at fair value
Gains / (losses) from own credit on financial liabilities designated at fair value, before tax
(69 )
(473 )
(404 )
Income tax relating to own credit on financial liabilities designated at fair value
(3 )
(1 )
Subtotal own credit on financial liabilities designated at fair value, net of tax
(68 )
(413 )
(362 )
Total other comprehensive income that will not be reclassified to the income statement, net of tax
(124 )
(466 )
(383 )
Total other comprehensive income
(1,994 )
(862 )
(1,535 )
(71 )
Total comprehensive income attributable to shareholders
(240 )
Comprehensive income attributable to non-controlling interests
Net profit / (loss)
Total other comprehensive income that will not be reclassified to the income statement, net of tax
(21 )
(14 )
(5 )
(35 )
Total comprehensive income attributable to non-controlling interests
(5 )
(2 )
Total comprehensive income
Net profit / (loss)
Other comprehensive income
(2,008 )
(867 )
(1,570 )
(71 )
of which: other comprehensive income that may be reclassified to the income statement
(1,870 )
(397 )
(1,608 )
of which: other comprehensive income that will not be reclassified to the income statement
(138 )
(470 )
(383 )
Total comprehensive income
(245 )
1 Comparative-period information has been revised. Refer to Note 2 for more information. 2 Refer to the “Group performance” section of this report for more information.
UBS Group second quarter 2024 report |
Consolidated financial statements | UBS Group AG interim consolidated financial statements (unaudited) 59
Balance sheet
USD m
Note
30.6.24
31.3.24
1
31.12.23
1
Assets
Cash and balances at central banks
Amounts due from banks
Receivables from securities financing transactions measured at amortized cost
Cash collateral receivables on derivative instruments
11
Loans and advances to customers
9
Other financial assets measured at amortized cost
12
Total financial assets measured at amortized cost
Financial assets at fair value held for trading
10
of which: assets pledged as collateral that may be sold or repledged by counterparties
Derivative financial instruments
10, 11
Brokerage receivables
10
Financial assets at fair value not held for trading
10
Total financial assets measured at fair value through profit or loss
Financial assets measured at fair value through other comprehensive income
10
Investments in associates
Property, equipment and software
Goodwill and intangible assets
Deferred tax assets
Other non-financial assets
12
Total assets
Liabilities
Amounts due to banks
Payables from securities financing transactions measured at amortized cost
Cash collateral payables on derivative instruments
Customer deposits
Debt issued measured at amortized cost
Other financial liabilities measured at amortized cost
Total financial liabilities measured at amortized cost
Financial liabilities at fair value held for trading
Derivative financial instruments
10, 11
Brokerage payables designated at fair value
Debt issued designated at fair value
10, 13
Other financial liabilities designated at fair value
10, 12
Total financial liabilities measured at fair value through profit or loss
Provisions and contingent liabilities
Other non-financial liabilities
Total liabilities
Equity
Share capital
Share premium
Treasury shares
(5,498 )
(5,157 )
(4,796 )
Retained earnings
Other comprehensive income recognized directly in equity, net of tax
Equity attributable to shareholders
Equity attributable to non-controlling interests
Total equity
Total liabilities and equity
1 Comparative-period information has been revised. Refer to Note 2 for more information.
UBS Group second quarter 2024 report |
Consolidated financial statements | UBS Group AG interim consolidated financial statements (unaudited) 60
Statement of changes in equity
USD m
Share
capital and
share
premium
Treasury
shares
Retained
earnings
OCI
recognized
directly in
equity,
net of tax
1
of which:
foreign
currency
translation
of which:
cash flow
hedges
Total equity
attributable to
shareholders
Balance as of 1 January 2024
2,3
(4,796 )
(3,109 )
Acquisition of treasury shares
(1,900 )
4
(1,900 )
Delivery of treasury shares under share-based compensation plans
(1,051 )
Other disposal of treasury shares
4
Share-based compensation expensed in the income statement
Tax (expense) / benefit
Dividends
(1,128 )
5
(1,128 )
5
(2,256 )
Equity classified as obligation to purchase own shares
(27 )
(27 )
Translation effects recognized directly in retained earnings
(63 )
Share of changes in retained earnings of associates and joint ventures
(1 )
(1 )
New consolidations / (deconsolidations) and other increases / (decreases)
Total comprehensive income for the period
(1,608 )
(1,252 )
(327 )
of which: net profit / (loss)
of which: OCI, net of tax
(1,608 )
(1,252 )
(327 )
(1,535 )
Balance as of 30 June 2024
2
(5,498 )
(3,373 )
Non-controlling interests as of 30 June 2024
Total equity as of 30 June 2024
Balance as of 1 January 2023
2
(6,874 )
(103 )
(4,234 )
Purchase price consideration for Credit Suisse Group acquisition, before consideration of
share-based compensation awards
6
Impact of share-based compensation awards from Credit Suisse Group acquisition
6
Impact of the settlement of pre-existing relationships from Credit Suisse Group acquisition
6
(61 )
(61 )
Acquisition of treasury shares
(2,318 )
4
(2,318 )
Delivery of treasury shares under share-based compensation plans
(798 )
Other disposal of treasury shares
(1 )
4
Cancellation of treasury shares related to the 2021 share repurchase program
7
(561 )
(554 )
Share-based compensation expensed in the income statement
Tax (expense) / benefit
Dividends
(839 )
5
(839 )
5
(1,679 )
Equity classified as obligation to purchase own shares
(19 )
(19 )
Translation effects recognized directly in retained earnings
(48 )
(48 )
New consolidations / (deconsolidations) and other increases / (decreases)
Total comprehensive income for the period
(169 )
of which: net profit / (loss)
of which: OCI, net of tax
(383 )
(169 )
(71 )
Balance as of 30 June 2023
2,3
(4,208 )
(4,451 )
Non-controlling interests as of 30 June 2023
8
Total equity as of 30 June 2023
1 Excludes other comprehensive income related to defined benefit plans and own credit that is recorded directly in Retained earnings. 2 Excludes non-controlling interests. 3 Comparative-period information has
been revised. Refer to Note 2 for more information. 4 Includes treasury shares acquired and disposed of by the Investment Bank in its capacity as a market maker with regard to UBS shares and related derivatives,
and to hedge certain issued structured debt instruments. These acquisitions and disposals are reported based on the sum of the net monthly movements. 5 Reflects the payment of an ordinary cash dividend of
USD
to pay no more than
% of dividends from capital contribution reserves, with the remainder required to be paid from retained earnings. 6 Refer to Note 2 for more information. 7 Reflects the cancellation of
listed on a Swiss stock exchange to reduce capital contribution reserves by at least
% of the total capital reduction amount exceeding the nominal value upon cancellation of the shares. 8 Includes an increase of
USD
m in the second quarter of 2023 due to the acquisition of the Credit Suisse Group.
UBS Group second quarter 2024 report |
Consolidated financial statements | UBS Group AG interim consolidated financial statements (unaudited) 61
Statement of cash flows
Year-to-date
USD m
30.6.24
30.6.23
1
Cash flow from / (used in) operating activities
Net profit / (loss)
Non-cash items included in net profit and other adjustments
Depreciation, amortization and impairment of non-financial assets
Credit loss expense / (release)
Share of net (profits) / loss of associates and joint ventures and impairment related to associates
(110 )
(36 )
Deferred tax expense / (benefit)
(35 )
Net loss / (gain) from investing activities
(84 )
Net loss / (gain) from financing activities
(3,961 )
Negative goodwill
(27,264 )
Other net adjustments
2
(1,559 )
Net change in operating assets and liabilities
2
Amounts due from banks and amounts due to banks
Receivables from securities financing transactions measured at amortized cost
Payables from securities financing transactions measured at amortized cost
(38 )
Cash collateral on derivative instruments
(2,120 )
(3,409 )
Loans and advances to customers
Customer deposits
(9,900 )
(11,419 )
Financial assets and liabilities at fair value held for trading and derivative financial instruments
(4,779 )
(5,782 )
Brokerage receivables and payables
(101 )
(5,141 )
Financial assets at fair value not held for trading and other financial assets and liabilities
(15,110 )
Provisions and other non-financial assets and liabilities
(1,986 )
Income taxes paid, net of refunds
(1,223 )
(925 )
Net cash flow from / (used in) operating activities
3
Cash flow from / (used in) investing activities
Cash and cash equivalents acquired upon the acquisition of the Credit Suisse Group
Purchase of subsidiaries, associates and intangible assets
Disposal of subsidiaries, associates and intangible assets
Purchase of property, equipment and software
(913 )
(830 )
Disposal of property, equipment and software
Net (purchase) / redemption of financial assets measured at fair value through other comprehensive income
Purchase of debt securities measured at amortized cost
(1,850 )
(7,541 )
Disposal and redemption of debt securities measured at amortized cost
Net cash flow from / (used in) investing activities
Cash flow from / (used in) financing activities
Repayment of Swiss National Bank funding
(42,587 )
(27,813 )
Net issuance (repayment) of short-term debt measured at amortized cost
(3,384 )
Net movements in treasury shares and own equity derivative activity
(1,786 )
(2,136 )
Distributions paid on UBS shares
(2,256 )
(1,679 )
Issuance of debt designated at fair value and long-term debt measured at amortized cost
Repayment of debt designated at fair value and long-term debt measured at amortized cost
(71,389 )
(49,777 )
Inflows from securities financing transactions measured at amortized cost
4
Outflows from securities financing transactions measured at amortized cost
4
(2,052 )
Net cash flows from other financing activities
(404 )
(274 )
Net cash flow from / (used in) financing activities
(61,916 )
(25,056 )
Total cash flow
Cash and cash equivalents at the beginning of the period
Net cash flow from / (used in) operating, investing and financing activities
(47,510 )
Effects of exchange rate differences on cash and cash equivalents
2
(13,733 )
Cash and cash equivalents at the end of the period
5
of which: cash and balances at central banks
5
of which: amounts due from banks
5
of which: money market paper
5,6
Additional information
Net cash flow from / (used in) operating activities includes:
Interest received in cash
Interest paid in cash
Dividends on equity investments, investment funds and associates received in cash
7
1 Comparative-period information has been revised. Refer to Note 2 for more information. 2 Foreign currency translation and foreign exchange effects on operating assets and liabilities and on cash and cash
equivalents are presented within the Other net adjustments line. Does not include foreign currency hedge effects related to foreign exchange swaps. 3 Includes cash receipts from the sale of loans and loan
commitments of USD
m and USD
m within the Non-core and Legacy business division for the six-month periods ended 30 June 2024 and 30 June 2023, respectively. 4 Reflects cash flows from securities
financing transactions measured at amortized cost that use UBS debt instruments as the underlying. 5 Includes only balances with an original maturity of three months or less. 6 Money market paper is included
in the balance sheet under Financial assets at fair value not held for trading (30 June 2024: USD
m; 30 June 2023: USD
m), Other financial assets measured at amortized cost (30 June 2024: USD
m;
30 June 2023: USD
m), Financial assets measured at fair value through other comprehensive income (30 June 2024: USD
m; 30 June 2023: USD
m) and Financial assets at fair value held for trading (30 June
2024: USD
m; 30 June 2023: USD
m). 7 Includes dividends received from associates reported within Net cash flow from / (used in) investing activities.
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 62
Notes to the UBS Group AG interim consolidated
financial statements (unaudited)
Note 1 Basis of accounting
Basis of preparation
The consolidated financial statements (the financial statements) of UBS Group AG and its subsidiaries (together,
UBS or the Group) are prepared in accordance with IFRS Accounting Standards, as issued by the International
Accounting Standards Board (the IASB), and are presented in US dollars. These interim financial statements are
prepared in accordance with IAS 34,
Interim Financial Reporting
.
In preparing these interim financial statements, the same accounting policies and methods of computation have
been applied as in the UBS Group AG consolidated annual financial statements for the period ended 31 December
2023, except for the changes described in this Note and changes in segment reporting as set out in Note 3. These
interim financial statements are unaudited and should be read in conjunction with UBS Group AG’s audited
consolidated financial statements in the UBS Group Annual Report 2023 and the “Management report” sections
of this report. In the opinion of management, all necessary adjustments have been made for a fair presentation of
the Group’s financial position, results of operations and cash flows.
Amendments to IAS 12,
UBS has applied for the purposes of these financial statements the exception that was introduced by the
amendments to IAS 12,
Income Taxes
, issued in May 2023 in relation to top-up taxes on income under Global Anti-
Base Erosion Rules that have been imposed under legislation that has been enacted or substantively enacted to
implement the Pillar Two model rules published by the Organisation for Economic Co-operation and Development.
The exception requires that deferred tax assets and deferred tax liabilities be neither recognized nor disclosed in
respect of such top-up taxes.
Other amendments to IFRS Accounting Standards
A number of minor amendments to IFRS Accounting Standards became effective from 1 January 2024 or later and
have had no material effect on the Group.
IFRS 18,
Presentation and Disclosure in Financial Statements
In April 2024, the IASB issued a new standard, IFRS 18,
Presentation and Disclosure in Financial Statements,
replaces IAS 1,
Presentation of Financial Statements
. The main changes introduced by IFRS 18 relate to:
–
the structure of income statements;
–
new disclosure requirements for management performance measures; and
–
enhanced guidance on aggregation / disaggregation of information on the face of financial statements and in
the notes thereto.
IFRS 18 is effective from 1 January 2027 and will also apply to comparative information. UBS will first apply these
new requirements in the Annual Report 2027 and, for interim reporting, in the first quarter 2027 interim report.
UBS is assessing the impact of the new requirements on its reporting, but expects it to be limited. UBS will take the
opportunity to refine the grouping of items in the primary financial statements and in the notes thereto based on
new principles of aggregation and disaggregation in IFRS 18.
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 63
Note 1 Basis of accounting (continued)
Amendments to IFRS 9,
Financial Instruments
, and IFRS 7,
Financial Instruments: Disclosures
In May 2024, the IASB issued
Amendments to the Classification and Measurement of Financial Instruments –
Amendments to IFRS 9 and IFRS 7
The Amendments relate to:
–
derecognition of financial liabilities settled through electronic transfer;
–
assessment of contractual cash flow characteristics in classifying financial assets, including those with
environmental, social and corporate governance and similar features, non-recourse features, and contractually
linked instruments; and
–
disclosure of information about financial instruments with contingent features that can change the amount of
contractual cash flows, as well as equity instruments designated at fair value through other comprehensive
income.
The Amendments are effective from 1 January 2026, with early application permitted either for the entire set of
amendments or for only those that relate to classification of financial instruments. UBS is currently assessing the
impact of the new requirements on its financial statements.
Currency translation rates
The following table shows the rates of the main currencies used to translate the financial information of UBS’s
operations with a functional currency other than the US dollar into US dollars.
Closing exchange rate
Average rate
1
As of
For the quarter ended
Year-to-date
30.6.24
31.3.24
31.12.23
30.6.23
30.6.24
31.3.24
30.6.23
30.6.24
30.6.23
1 CHF
1 EUR
1 GBP
100 JPY
1 Monthly income statement items of operations with a functional currency other than the US dollar are translated into US dollars using month-end rates. Disclosed average rates for a quarter represent an average of
three month-end rates, weighted according to the income and expense volumes of all operations of the Group with the same functional currency for each month. Weighted average rates for individual business divisions
may deviate from the weighted average rates for the Group.
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 64
Note 2 Accounting for the acquisition of the Credit Suisse Group
The transaction
On 12 June 2023, UBS Group AG acquired Credit Suisse Group AG, succeeding by operation of Swiss law to all
assets and liabilities of Credit Suisse Group AG, and became the direct or indirect shareholder of all of the former
direct and indirect subsidiaries of Credit Suisse Group AG. The acquisition of Credit Suisse Group AG constituted a
business combination under IFRS 3,
Business Combinations
, and was required to be accounted for by applying the
acquisition method of accounting.
IFRS 3 measurement period adjustments for the acquisition of the Credit Suisse Group
The acquisition of Credit Suisse Group AG was made without the ordinary due diligence procedures and outside
the conventional time frame for an acquisition of this scale and nature. As such, complete information about all
relevant facts and circumstances as of the acquisition date was not practically available to UBS at the time when
the initial acquisition accounting was applied for the purpose of the UBS Group second quarter 2023 report, with
the amounts that form part of the business combination accounting therefore considered provisional and subject
to further measurement period adjustments if new information about facts and circumstances existing on the date
of the acquisition were to be obtained within one year from the acquisition date. The acquisition of Credit Suisse
Group AG resulted in provisional negative goodwill of USD
bn reported in the UBS Group Annual Report 2023.
For details of the accounting for the acquisition, including measurement period adjustments effected during the
year ended 31 December 2023, refer to “Note 1a Material accounting policies” and “Note 2 Accounting for the
acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of the UBS Group Annual
Report 2023.
In the second quarter of 2024, in light of the additional information about circumstances existing on the acquisition
date that became available to management, IFRS 3 measurement period adjustments of USD
bn were made in
relation to
Provisions and contingent liabilities
(refer to
“Change in provisions and contingent liabilities” below). In
addition, fair value measurement adjustments of USD
bn were made to the acquisition date fair values of
exposures associated with Russia, as well as other positions in Non-core and Legacy, following the completion of a
detailed review. The adjustments reflect management’s final conclusions on critical assumptions and judgments,
which are within a range of reasonably possible outcomes, relating to significant uncertainties that existed on the
acquisition date. Comparative-period information has been revised accordingly.
The measurement period adjustments effected in the second quarter of 2024 resulted in a decrease in negative
goodwill to USD
bn from the provisional amount of USD
bn previously reported in the UBS Group Annual
Report 2023. Retained earnings have been revised to reflect the impact on the prior-period income statement of
net USD
bn. With the measurement period adjustments effected in the second quarter of 2024 and the
finalization of the amount of negative goodwill, the acquisition accounting for the transaction is complete.
Change in provisions and contingent liabilities
In addition to the existing USD
bn litigation provisions previously recorded by the Credit Suisse Group, UBS
recognized on the acquisition date USD
bn in
Provisions and contingent liabilities
provisions and contingent liabilities, which includes USD
bn for litigation provisions to reflect management’s
assessment of the associated probability, timing and amount considering new information, and USD
bn
contingent liabilities for certain obligations in respect of litigation, regulatory and similar matters identified in the
purchase price allocation. The timing and actual amount of outflows associated with litigation matters are
uncertain. UBS has continued to assess the development of these obligations and the amount and timing of
potential outflows. The USD
bn of contingent liabilities reflect an increase of USD
bn from the USD
bn
previously reported in the UBS Group Annual Report 2023.
Effect of measurement period adjustments on the acquisition date balance sheet
The table below sets out the identifiable net assets attributable to the acquisition of the Credit Suisse Group as
adjusted to reflect the effects of measurement period adjustments made in the second quarter of 2024, as detailed
above.
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 65
Note 2 Accounting for the acquisition of the Credit Suisse Group (continued)
USD m
Purchase price consideration, after consideration of share-based compensation awards
Credit Suisse Group net identifiable assets on the acquisition date
Assets
As previously
reported in the
Annual Report 2023
Measurement period
adjustment
Revised
Cash and balances at central banks
(89 )
Amounts due from banks
(15 )
Receivables from securities financing transactions measured at amortized cost
Cash collateral receivables on derivative instruments
Loans and advances to customers
(175 )
Other financial assets measured at amortized cost
(43 )
Total financial assets measured at amortized cost
(322 )
Financial assets at fair value held for trading
Derivative financial instruments
Brokerage receivables
Financial assets at fair value not held for trading
Total financial assets measured at fair value through profit or loss
Financial assets measured at fair value through other comprehensive income
Investments in associates
Property, equipment and software
Intangible assets
Deferred tax assets
Other non-financial assets
Total assets
(322 )
Liabilities
Amounts due to banks
Payables from securities financing transactions measured at amortized cost
Cash collateral payables on derivative instruments
Customer deposits
Debt issued measured at amortized cost
Other financial liabilities measured at amortized cost
Total financial liabilities measured at amortized cost
Financial liabilities at fair value held for trading
Derivative financial instruments
Brokerage payables designated at fair value
Debt issued designated at fair value
Other financial liabilities designated at fair value
Total financial liabilities measured at fair value through profit or loss
Provisions and contingent liabilities
Other non-financial liabilities
Total liabilities
Non-controlling interests
(285 )
(285 )
Fair value of net assets acquired
(483 )
Settlement of pre-existing relationships
Negative goodwill resulting from the acquisition
(483 )
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 66
Note 2 Accounting for the acquisition of the Credit Suisse Group (continued)
The tables below set out the consequential impact of the measurement period adjustments on the previously
reported income statements for the six-month period ended 30 June 2023 and the quarter ended 30 June 2023,
the balance sheets as of 31 March 2024 and 31 December 2023, and the cumulative effect of measurement period
adjustments on the statement of cash flows for the six-month period ended 30 June 2023.
Effect of the measurement period adjustments on the income statement for the six-month period and the quarter
ended 30
June 2023
For the six-month period ended 30 June 2023
For the quarter ended 30 June 2023
USD m
Including
measurement
period
adjustments
made in the
third quarter
2023
Measurement
period
adjustment
made in the
Annual Report
2023
Measurement
period
adjustments
made in the
second
quarter 2024
Revised
As previously
reported in the
third quarter
2023 report
Measurement
period
adjustment
made in the
Annual Report
2023
Measurement
period
adjustments
made in the
second quarter
2024
Revised
Net interest income
Other net income from financial instruments measured
at fair value through profit or loss
Fee and commission income
Fee and commission expense
(954 )
(954 )
(507 )
(507 )
Net fee and commission income
Other income
Total revenues
Negative goodwill
(1,177 )
(483 )
(1,177 )
(483 )
Credit loss expense / (release)
Operating expenses
Operating profit / (loss) before tax
(1,177 )
(483 )
(1,177 )
(483 )
Tax expense / (benefit)
Net profit / (loss)
(1,177 )
(483 )
(1,177 )
(483 )
Net profit / (loss) attributable to non-controlling
interests
Net profit / (loss) attributable to shareholders
(1,177 )
(483 )
(1,177 )
(483 )
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 67
Note 2 Accounting for the acquisition of the Credit Suisse Group (continued)
Effect of the measurement period adjustments on the balance sheet as of 31 March 2024 and 31 December 2023
USD m
As of 31 March 2024
As of 31 December 2023
Assets
As previously
reported in the
first quarter
2024 report
Measurement
period
adjustment
made in the
second quarter
2024
Revised
As previously
reported in the
first quarter
2024 report
Measurement
period
adjustment
made in the
second quarter
2024
Revised
Total financial assets measured at amortized cost
(322 )
(322 )
of which: Cash and balances at central banks
(89 )
(89 )
of which: Amounts due from banks
(15 )
(15 )
of which: Loans and advances to customers
(175 )
(175 )
of which: Other financial assets measured at amortized cost
(43 )
(43 )
Total assets
(322 )
(322 )
Liabilities
Provisions and contingent liabilities
Total liabilities
Equity
Equity attributable to shareholders
(483 )
(483 )
of which: Retained earnings
(483 )
(483 )
Total equity
(483 )
(483 )
Total liabilities and equity
(322 )
(322 )
Effect of the measurement period adjustments on the statement of cash flows for the six-month period ended 30 June
2023
For the six-month period ended 30 June 2023
USD m
As previously
reported in the
third quarter
2023 report
Cumulative
measurement
period
adjustment
Revised
Cash flow from / (used in) operating activities
Net profit / (loss)
(1,661 )
of which: Negative goodwill
(28,925 )
(27,264 )
Net cash flow from / (used in) operating activities
of which: Loans and advances to customers and customer deposits
of which: Financial assets and liabilities at fair value held for trading and derivative financial instruments
(7,050 )
(5,782 )
of which: Financial assets at fair value not held for trading and other financial assets and liabilities
(1,982 )
Net cash flow from / (used in) investing activities
(104 )
of which: Cash and cash equivalents acquired upon acquisition of the Credit Suisse Group
(104 )
Net cash flow from / (used in) financing activities
(25,056 )
(25,056 )
Total cash flow
Cash and cash equivalents at the beginning of the period
Net cash flow from / (used in) operating, investing and financing
activities
(104 )
Effects of exchange rate differences on cash and cash equivalents
Cash and cash equivalents at the end of the period
(104 )
of which: cash and balances at central banks
(89 )
of which: amounts due from banks
(15 )
of which: money market paper
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 68
Note 2 Accounting for the acquisition of the Credit Suisse Group (continued)
Conclusion of an investment management agreement with Apollo and the transfer of senior secured
asset-based financing
In the first quarter of 2024, Credit Suisse entered into agreements with entities managed by Atlas Securitized
Products Management Holdings (Atlas) and other affiliates of Apollo Management Holdings (collectively, Apollo)
to conclude the investment management agreement under which Atlas has managed Credit Suisse’s retained
portfolio of assets of its former securitized products group. Following the closure of this agreement, the assets
previously managed by Atlas are to be managed in Non-core and Legacy. The parties also agreed to conclude the
transition services agreement under which Credit Suisse has provided services to Atlas. In addition, Credit Suisse AG
entered into an agreement with Apollo Capital Management (ACM) and other parties managed, controlled and / or
advised by ACM or its affiliates (collectively, the Assignees) to transfer USD
bn of senior secured asset-based
financing, with USD
bn funded as of 31 December 2023 recognized as financial assets at fair value held for
trading at a fair value of USD
bn and the remaining notional of USD
bn recognized as derivative loan
commitments at a fair value of USD
bn, with the fair values of both financing components derecognized from
the Group’s balance sheet as of 31 March 2024. As part of the loan transfer, the Group extended a one-year senior
swingline facility to the Assignees with a total balance as of 30 June 2024 of USD
m (31 March 2024:
USD
m), which is accounted for as an off-balance sheet irrevocable commitment. In the first quarter of 2024,
the Group recognized a net gain of USD
bn from the conclusion of the investment management agreement and
the assignment of the loan facilities, after the accounting for the purchase price allocation adjustments at the
closing of the acquisition of the Credit Suisse Group.
Note 3 Segment reporting
As part of the continued refinement of UBS’s reporting structure and organizational setup, in the first quarter of
2024 certain changes were made, with an impact on segment reporting for UBS’s business divisions and Group
Items. Prior-period information has been adjusted for comparability. The changes are as follows:
–
Change in business division perimeters:
UBS has transferred certain businesses from Swiss Bank (Credit
Suisse), previously included in Personal & Corporate Banking, to Global Wealth Management. The change
predominantly related to the high net worth client segment and represents approximately USD
bn in invested
assets and approximately USD
bn in annualized revenues. A number of other smaller business shifts were also
executed between the business divisions in the first quarter of 2024.
–
Changes to Group Treasury allocations:
UBS has allocated to the business divisions nearly all Group Treasury
costs that historically were retained and reported in Group Items. Costs that continue to be retained in Group
Items include costs related to hedging and own debt, and deferred tax asset funding costs. UBS has also aligned
the internal funds transfer pricing methodologies applied by Credit Suisse entities to UBS’s funds transfer pricing
methodology. These changes resulted in funding costs of approximately USD
bn for 2023, moving from Group
Items to the business divisions, predominantly related to the second half of 2023. In parallel with the
aforementioned changes, UBS has increased the allocation of balance sheet resources from Group Treasury to
the business divisions.
–
Updated cost allocations:
UBS has reallocated USD
bn of annualized costs from Non-core and Legacy to
the business divisions, with the aim of avoiding stranded costs in Non-core and Legacy at the end of the
integration process.
Following the collective changes outlined above, prior-period information for the six-month period ended 30 June
2023 has been restated, resulting in increases in Operating profit / (loss) before tax of USD
m for Global Wealth
Management, USD
m for Personal & Corporate Banking, USD
m for Asset Management and USD
m for the
Investment Bank, and decreases in Operating profit / (loss) before tax of USD
m for Group Items and USD
m
for Non-core and Legacy.
Prior-period information as of 31 December 2023 has also been restated, resulting in increases of Total assets of
USD
bn in Global Wealth Management, USD
bn in Personal & Corporate Banking, USD
bn in the
Investment Bank and USD
bn in Non-core and Legacy, with a corresponding decrease of Total assets of
USD
bn in Group Items.
These changes had no effect on the reported results or financial position of the Group.
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 69
Note 3 Segment reporting (continued)
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group Items
UBS Group
For the six months ended 30 June 2024
1
Total revenues
(747 )
Credit loss expense / (release)
(4 )
(2 )
Operating expenses
(48 )
Operating profit / (loss) before tax
(451 )
(699 )
Tax expense / (benefit)
Net profit / (loss)
As of 30 June 2024
Total assets
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group Items
Negative
goodwill
2
UBS Group
For the six months ended 30 June 2023
1
Total revenues
(524 )
Negative goodwill
Credit loss expense / (release)
Operating expenses
Operating profit / (loss) before tax
(1,169 )
(942 )
Tax expense / (benefit)
Net profit / (loss)
As of 31 December 2023
2, 3
Total assets
1 Refer to “Note 3 Segment reporting” in the “Consolidated financial statements” section of the Annual Report 2023 for more information about the Group’s reporting segments. 2 Comparative-period information
has been revised. Refer to Note 2 for more information. 3 Comparative-period information has been restated for Group Treasury allocations.
Note 4 Net interest income
For the quarter ended
Year-to-date
USD m
30.6.24
31.3.24
30.6.23
1
30.6.24
30.6.23
1
Interest income from loans and deposits
2
Interest income from securities financing transactions measured at amortized cost
3
Interest income from other financial instruments measured at amortized cost
Interest income from debt instruments measured at fair value through other comprehensive income
Interest income from derivative instruments designated as cash flow hedges
(574 )
(602 )
(457 )
(1,175 )
(833 )
Total interest income from financial instruments measured at amortized cost and fair value through other comprehensive
income
Interest expense on loans and deposits
4
Interest expense on securities financing transactions measured at amortized cost
5
Interest expense on debt issued
Interest expense on lease liabilities
Total interest expense from financial instruments measured at amortized cost
Total net interest income from financial instruments measured at amortized cost and fair value through other comprehensive
income
Net interest income from financial instruments measured at fair value through profit or loss and other
Total net interest income
1 Comparative-period information has been revised. Refer to Note 2 for more information. 2 Consists of interest income from cash and balances at central banks, amounts due from banks, and cash collateral
receivables on derivative instruments, as well as negative interest on amounts due to banks, customer deposits, and cash collateral payables on derivative instruments. 3 Includes interest income on receivables from
securities financing transactions and negative interest, including fees, on payables from securities financing transactions. 4 Consists of interest expense on amounts due to banks, cash collateral payables on derivative
instruments, and customer deposits, as well as negative interest on cash and balances at central banks, amounts due from banks, and cash collateral receivables on derivative instruments. 5 Includes interest expense
on payables from securities financing transactions and negative interest, including fees, on receivables from securities financing transactions.
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 70
Note 5 Net fee and commission income
For the quarter ended
Year-to-date
USD m
30.6.24
31.3.24
30.6.23
1
30.6.24
30.6.23
1
Underwriting fees
M&A and corporate finance fees
Brokerage fees
Investment fund fees
Portfolio management and related services
Other
Total fee and commission income
2
of which: recurring
of which: transaction-based
of which: performance-based
Fee and commission expense
Net fee and commission income
1 Comparative-period information has been revised. Refer to Note 2 for more information. 2 Includes third-party fee and commission income for the second quarter of 2024 of USD
m for Global Wealth
Management (first quarter of 2024: USD
m; second quarter of 2023: USD
m), USD
m for Personal & Corporate Banking (first quarter of 2024: USD
m; second quarter of 2023: USD
m),
USD
m for Asset Management (first quarter of 2024: USD
m; second quarter of 2023: USD
m), USD
m for the Investment Bank (first quarter of 2024: USD
m; second quarter of 2023: USD
m),
USD
m for Non-core and Legacy (first quarter of 2024: USD
m; second quarter of 2023: USD
m) and negative USD
m for Group Items (first quarter of 2024: USD
m; second quarter of 2023: USD
m).
Comparative-period information has been restated for changes in business division perimeters, Group Treasury allocations and Non-core and Legacy cost allocations. Refer to Note 3 for more information.
Note 6 Other income
For the quarter ended
Year-to-date
USD m
30.6.24
31.3.24
30.6.23
30.6.24
30.6.23
Associates, joint ventures and subsidiaries
Net gains / (losses) from acquisitions and disposals of subsidiaries
1
(2 )
(1 )
(3 )
Net gains / (losses) from disposals of investments in associates and joint ventures
(2 )
Share of net profits of associates and joint ventures
Total
Income from properties
2
Net gains / (losses) from properties held for sale
(2 )
(1 )
(4 )
Other
Total other income
1 Includes foreign exchange gains / (losses) reclassified from other comprehensive income related to the disposal or closure of foreign operations. 2 Includes rent received from third parties.
Note 7 Personnel expenses
For the quarter ended
Year-to-date
USD m
30.6.24
31.3.24
30.6.23
30.6.24
30.6.23
Salaries and variable compensation
1
of which: variable compensation – financial advisors
2
Contractors
Social security
Post-employment benefit plans
Other personnel expenses
Total personnel expenses
1 Includes role-based allowances. 2 Consists of cash and deferred compensation awards and is based on compensable revenues and firm tenure using a formulaic approach. Also includes expenses related to
compensation commitments with financial advisors entered into at the time of recruitment that are subject to vesting requirements.
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 71
Note 8 General and administrative expenses
For the quarter ended
Year-to-date
USD m
30.6.24
31.3.24
30.6.23
30.6.24
30.6.23
Outsourcing costs
Technology costs
Consulting, legal and audit fees
Real estate and logistics costs
Market data services
Marketing and communication
Travel and entertainment
Litigation, regulatory and similar matters
1
(153 )
(5 )
(158 )
Other
Total general and administrative expenses
1 Reflects the net increase / (decrease) in provisions for litigation, regulatory and similar matters recognized in the income statement. Refer to Note 15b for more information.
Note 9 Expected credit loss measurement
a) Credit loss expense / release
Total net credit loss expenses in the second quarter of 2024 were USD
m, reflecting USD
m net releases related
to performing positions and USD
m net expenses on credit-impaired positions.
Stage 1 and 2 net releases of USD
m included scenario-update-related net releases of USD
m, primarily for
real estate lending driven by the upward revision of house price and rental income levels, as well as updated interest
rate assumptions across Personal & Corporate Banking and Global Wealth Management. Net credit loss expenses
for performing (stages 1 and 2) exposures to corporate counterparties were immaterial.
Credit loss expenses of USD
m for credit-impaired positions almost entirely related to Personal & Corporate
Banking exposures with a small number of corporate counterparties.
Credit loss expense / (release)
Performing positions
Credit-impaired positions
USD m
Stages 1 and 2
Stage 3
Purchased
Total
For the quarter ended 30.6.24
Global Wealth Management
(13 )
(1 )
Personal & Corporate Banking
(15 )
(14 )
Asset Management
Investment Bank
(14 )
(6 )
Non-core and Legacy
(1 )
(2 )
(1 )
Group Items
Total
(22 )
(15 )
For the quarter ended 31.3.24
Global Wealth Management
(12 )
(3 )
Personal & Corporate Banking
(13 )
(7 )
Asset Management
Investment Bank
(1 )
Non-core and Legacy
(26 )
Group Items
(2 )
(2 )
Total
(45 )
For the quarter ended 30.6.23
1
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
(4 )
Non-core and Legacy
Group Items
Total
1 Comparative-period information has been restated for changes in business division perimeters. Refer to “Changes to segment reporting in 2024” in the “UBS business divisions and Group Items” section of the
UBS Group first quarter 2024 report, available under “Quarterly reporting” at ubs.com/investors, and Note 3 for more information.
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 72
Note 9 Expected credit loss measurement (continued)
b) Changes to ECL models, scenarios, scenario weights and post-model adjustments
Scenarios and scenario weights
The expected credit loss (ECL) scenarios, along with their related macroeconomic factors and market data, were
reviewed in light of the economic and political conditions prevailing in the second quarter of 2024 through a series
of governance meetings, with input and feedback from UBS Risk and Finance experts across the business divisions
and regions. ECLs for former Credit Suisse positions were calculated based on Credit Suisse’s models, including the
same scenarios and scenario weight inputs as for UBS’s pre-merger business activity.
UBS kept the scenarios and scenario weights in line with those applied in the UBS Group first quarter 2024 report.
The baseline scenario was updated with the latest macroeconomic forecasts as of 30 June 2024. The assumptions
on a calendar-year basis are included in the table below.
The mild debt crisis scenario and the stagflationary geopolitical crisis scenario were updated based on the latest
market data, but the assumptions remained broadly unchanged. Refer to the table below for more information.
The scenario-update-related ECL releases in the second quarter of 2024 mainly stemmed from real estate lending
in Switzerland, driven by the upward revision of the house price and rental income levels, which improved in
Switzerland, as well as interest rate assumptions in the stagflation scenario.
Post-model adjustments
Total stage 1 and 2 allowances and provisions were USD
m as of 30 June 2024 and included post-model
adjustments of USD
m (31 March 2024: USD
m). Post-model adjustments are intended to cover uncertainty
levels, including the geopolitical situation, and to align outputs from Credit Suisse models with those from UBS
models for dedicated segments.
Comparison of shock factors
Baseline
Key parameters
2023
2024
2025
Real GDP growth (annual percentage change)
US
Eurozone
Switzerland
Unemployment rate (%, annual average)
US
Eurozone
Switzerland
Fixed income: 10-year government bonds (%, Q4)
USD
EUR
CHF
Real estate (annual percentage change, Q4)
US
Eurozone
(1.0 )
Switzerland
Economic scenarios and weights applied
Assigned weights in %
ECL scenario
30.6.24
31.3.24
30.6.23
Baseline
Mild debt crisis
Stagflationary geopolitical crisis
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 73
Note 9 Expected credit loss measurement (continued)
c) ECL-relevant balance sheet and off-balance sheet positions including ECL allowances and provisions
The following tables provide information about financial instruments and certain non-financial instruments that are
subject to ECL requirements. For amortized-cost instruments, the carrying amount represents the maximum
exposure to credit risk, taking into account the allowance for credit losses. Financial assets measured at fair value
through other comprehensive income (FVOCI) are also subject to ECL; however, unlike amortized-cost instruments,
the allowance for credit losses for FVOCI instruments does not reduce the carrying amount of these financial assets.
Instead, the carrying amount of financial assets measured at FVOCI represents the maximum exposure to credit risk.
In addition to recognized financial assets, certain off-balance sheet financial instruments and other credit lines are
also subject to ECL. The maximum exposure to credit risk for off-balance sheet financial instruments is calculated
based on the maximum contractual amounts.
USD m
30.6.24
Carrying amount
1
ECL allowances
2
Financial instruments measured at amortized cost
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Cash and balances at central banks
(60 )
(1 )
(27 )
(32 )
Amounts due from banks
(28 )
(6 )
(22 )
Receivables from securities financing transactions measured at
amortized cost
(2 )
(2 )
Cash collateral receivables on derivative instruments
Loans and advances to customers
(1,743 )
(355 )
(298 )
(937 )
(153 )
of which: Private clients with mortgages
(167 )
(57 )
(77 )
(30 )
(3 )
of which: Real estate financing
(53 )
(28 )
(31 )
(2 )
of which: Large corporate clients
(526 )
(93 )
(94 )
(272 )
(67 )
of which: SME clients
(515 )
(60 )
(38 )
(414 )
(3 )
of which: Lombard
(41 )
(6 )
(2 )
(16 )
(16 )
of which: Credit cards
(41 )
(6 )
(11 )
(25 )
of which: Commodity trade finance
(125 )
(19 )
(2 )
(104 )
of which: Ship / aircraft financing
(44 )
(38 )
(4 )
(2 )
of which: Consumer financing
(68 )
(20 )
(21 )
(27 )
Other financial assets measured at amortized cost
(131 )
(34 )
(8 )
(84 )
(5 )
of which: Loans to financial advisors
(47 )
(4 )
(1 )
(41 )
Total financial assets measured at amortized cost
(1,964 )
(397 )
(333 )
(1,021 )
(212 )
Financial assets measured at fair value through other comprehensive
income
Total on-balance sheet financial assets in scope of ECL requirements
(1,964 )
(397 )
(333 )
(1,021 )
(212 )
Total exposure
ECL provisions
2
Off-balance sheet (in scope of ECL)
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Guarantees
(63 )
(25 )
(14 )
(26 )
of which: Large corporate clients
(24 )
(10 )
(8 )
(7 )
of which: SME clients
(10 )
(5 )
(3 )
(4 )
of which: Financial intermediaries and hedge funds
(11 )
(8 )
(3 )
of which: Lombard
(4 )
(4 )
of which: Commodity trade finance
(1 )
(1 )
Irrevocable loan commitments
(147 )
(104 )
(43 )
(6 )
of which: Large corporate clients
(126 )
(84 )
(36 )
(6 )
Forward starting reverse repurchase and securities borrowing
agreements
Unconditionally revocable loan commitments
(81 )
(69 )
(12 )
of which: Real estate financing
(7 )
(7 )
of which: Large corporate clients
(23 )
(16 )
(4 )
(2 )
of which: SME clients
(34 )
(29 )
(5 )
of which: Lombard
of which: Credit cards
(8 )
(6 )
(2 )
Irrevocable committed prolongation of existing loans
(2 )
(2 )
Total off-balance sheet financial instruments and other credit lines
(294 )
(200 )
(70 )
(31 )
Total allowances and provisions
(2,258 )
(597 )
(404 )
(1,053 )
(204 )
1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective ECL allowances. 2 Negative balances are representative of a net improvement in
credit quality since the acquisition of the respective financial instrument, which is reflected as a negative ECL allowance.
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 74
Note 9 Expected credit loss measurement (continued)
USD m
31.3.24
Carrying amount
1,2
ECL allowances
3
Financial instruments measured at amortized cost
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Cash and balances at central banks
(55 )
(25 )
(30 )
Amounts due from banks
(24 )
(6 )
(18 )
Receivables from securities financing transactions measured at
amortized cost
(2 )
(2 )
Cash collateral receivables on derivative instruments
Loans and advances to customers
(1,700 )
(362 )
(284 )
(920 )
(134 )
of which: Private clients with mortgages
(196 )
(55 )
(92 )
(39 )
(10 )
of which: Real estate financing
(64 )
(27 )
(28 )
(9 )
of which: Large corporate clients
(580 )
(91 )
(83 )
(318 )
(87 )
of which: SME clients
(442 )
(64 )
(32 )
(335 )
(11 )
of which: Lombard
(61 )
(7 )
(1 )
(41 )
(12 )
of which: Credit cards
(40 )
(6 )
(10 )
(23 )
of which: Commodity trade finance
(123 )
(17 )
(2 )
(104 )
of which: Ship / aircraft financing
(47 )
(40 )
(7 )
of which: Consumer financing
(64 )
(20 )
(19 )
(24 )
Other financial assets measured at amortized cost
(134 )
(35 )
(9 )
(83 )
(6 )
of which: Loans to financial advisors
(49 )
(6 )
(1 )
(43 )
Total financial assets measured at amortized cost
(1,915 )
(405 )
(318 )
(1,003 )
(189 )
Financial assets measured at fair value through other comprehensive
income
Total on-balance sheet financial assets in scope of ECL requirements
(1,915 )
(405 )
(318 )
(1,003 )
(189 )
Total exposure
ECL provisions
3
Off-balance sheet (in scope of ECL)
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Guarantees
(64 )
(27 )
(18 )
(19 )
of which: Large corporate clients
(25 )
(10 )
(11 )
(4 )
of which: SME clients
(9 )
(4 )
(3 )
(2 )
of which: Financial intermediaries and hedge funds
(11 )
(8 )
(3 )
of which: Lombard
(7 )
(7 )
of which: Commodity trade finance
(1 )
(1 )
Irrevocable loan commitments
(173 )
(112 )
(54 )
(13 )
of which: Large corporate clients
(152 )
(93 )
(47 )
(13 )
Forward starting reverse repurchase and securities borrowing
agreements
Unconditionally revocable loan commitments
(89 )
(73 )
(15 )
of which: Real estate financing
(10 )
(10 )
of which: Large corporate clients
(25 )
(18 )
(7 )
of which: SME clients
(36 )
(31 )
(5 )
of which: Lombard
of which: Credit cards
(9 )
(8 )
(2 )
Irrevocable committed prolongation of existing loans
(3 )
(3 )
Total off-balance sheet financial instruments and other credit lines
(328 )
(215 )
(88 )
(32 )
Total allowances and provisions
(2,243 )
(620 )
(406 )
(1,035 )
(182 )
1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective ECL allowances. 2 Information has been revised. Refer to Note 2 for more information.
3 Negative balances are representative of a net improvement in credit quality since the acquisition of the respective financial instrument, which is reflected as a negative ECL allowance.
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 75
Note 9 Expected credit loss measurement (continued)
USD m
31.12.23
Carrying amount
1
ECL allowances
2
Financial instruments measured at amortized cost
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Cash and balances at central banks
(48 )
(26 )
(22 )
Amounts due from banks
(12 )
(6 )
(1 )
(5 )
Receivables from securities financing transactions measured at
amortized cost
(2 )
(2 )
Cash collateral receivables on derivative instruments
Loans and advances to customers
(1,698 )
(423 )
(289 )
(862 )
(123 )
of which: Private clients with mortgages
(209 )
(62 )
(97 )
(39 )
(11 )
of which: Real estate financing
(103 )
(41 )
(31 )
(21 )
(11 )
of which: Large corporate clients
(575 )
(105 )
(70 )
(312 )
(89 )
of which: SME clients
(402 )
(71 )
(42 )
(277 )
(13 )
of which: Lombard
(41 )
(13 )
(11 )
(17 )
of which: Credit cards
(42 )
(6 )
(11 )
(24 )
of which: Commodity trade finance
(130 )
(18 )
(1 )
(111 )
of which: Ship / aircraft financing
(51 )
(48 )
(3 )
(1 )
of which: Consumer financing
(59 )
(22 )
(17 )
(20 )
Other financial assets measured at amortized cost
(151 )
(41 )
(10 )
(94 )
(5 )
of which: Loans to financial advisors
(49 )
(4 )
(1 )
(44 )
Total financial assets measured at amortized cost
(1,911 )
(473 )
(326 )
(956 )
(156 )
Financial assets measured at fair value through other comprehensive
income
Total on-balance sheet financial assets in scope of ECL requirements
(1,911 )
(473 )
(326 )
(956 )
(156 )
Total exposure
ECL provisions
2
Off-balance sheet (in scope of ECL)
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Guarantees
(73 )
(28 )
(22 )
(23 )
of which: Large corporate clients
(31 )
(11 )
(13 )
(7 )
of which: SME clients
(14 )
(4 )
(5 )
(5 )
of which: Financial intermediaries and hedge funds
(12 )
(8 )
(3 )
of which: Lombard
(1 )
(1 )
of which: Commodity trade finance
(1 )
(1 )
Irrevocable loan commitments
(178 )
(117 )
(51 )
(14 )
of which: Large corporate clients
(149 )
(94 )
(41 )
(12 )
(2 )
Forward starting reverse repurchase and securities borrowing
agreements
Unconditionally revocable loan commitments
(95 )
(78 )
(17 )
of which: Real estate financing
(14 )
(11 )
(3 )
of which: Large corporate clients
(23 )
(17 )
(6 )
of which: SME clients
(38 )
(33 )
(5 )
of which: Lombard
of which: Credit cards
(10 )
(8 )
(2 )
Irrevocable committed prolongation of existing loans
(4 )
(4 )
Total off-balance sheet financial instruments and other credit lines
(350 )
(226 )
(90 )
(37 )
Total allowances and provisions
(2,261 )
(700 )
(416 )
(993 )
(153 )
1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective ECL allowances. 2 Negative balances are representative of a net improvement in credit
quality since the acquisition of the respective financial instrument, which is reflected as a negative ECL allowance.
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 76
Note 9 Expected credit loss measurement (continued)
The table below provides information about the gross carrying amount of exposures subject to ECL and the ECL
coverage ratio for UBS’s core loan portfolios (i.e.,
Loans and advances to customers
)
and relevant off-balance sheet exposures.
Cash and balances at central banks
,
Amounts due from banks
,
Receivables from securities financing transactions
,
Cash collateral receivables on derivative instruments
Financial
assets measured at fair value through other comprehensive income
lower sensitivity to ECL.
ECL coverage ratios are calculated by dividing ECL allowances and provisions by the gross carrying amount of the
related exposures.
Coverage ratios for performing positions related to real estate lending (on-balance sheet) remained unchanged at
increased
by
31 March 2024.
Coverage ratios for core loan portfolio
30.6.24
Gross carrying amount (USD m)
ECL coverage (bps)
On-balance sheet
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
PCI
Private clients with mortgages
Real estate financing
Total real estate lending
Large corporate clients
SME clients
Total corporate lending
Lombard
Credit cards
Commodity trade finance
Ship / aircraft financing
Consumer financing
Other loans and advances to customers
Loans to financial advisors
Total other lending
Total
1
Gross exposure (USD m)
ECL coverage (bps)
Off-balance sheet
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
PCI
Private clients with mortgages
Real estate financing
Total real estate lending
Large corporate clients
SME clients
Total corporate lending
Lombard
Credit cards
Commodity trade finance
Ship / aircraft financing
Consumer financing
Financial intermediaries and hedge funds
Other off-balance sheet commitments
Total other lending
Total
2
Total on- and off-balance sheet
3
1 Includes Loans and advances to customers and Loans to financial advisors, which are presented on the balance sheet line Other financial assets measured at amortized cost. 2 Excludes Forward starting reverse
repurchase and securities borrowing agreements. 3 Includes on-balance sheet exposure, gross and off-balance sheet exposure (notional) and the related ECL coverage ratio (bps).
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 77
Note 9 Expected credit loss measurement (continued)
Coverage ratios for core loan portfolio
31.3.24
Gross carrying amount (USD m)
ECL coverage (bps)
On-balance sheet
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
PCI
Private clients with mortgages
Real estate financing
Total real estate lending
Large corporate clients
SME clients
Total corporate lending
Lombard
Credit cards
Commodity trade finance
Ship / aircraft financing
Consumer financing
Other loans and advances to customers
Loans to financial advisors
Total other lending
Total
1
Gross exposure (USD m)
ECL coverage (bps)
Off-balance sheet
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
PCI
Private clients with mortgages
Real estate financing
Total real estate lending
Large corporate clients
SME clients
Total corporate lending
Lombard
Credit cards
Commodity trade finance
Ship / aircraft financing
Consumer financing
Financial intermediaries and hedge funds
Other off-balance sheet commitments
Total other lending
Total
2
Total on- and off-balance sheet
3,4
1 Includes Loans and advances to customers and Loans to financial advisors, which are presented on the balance sheet line Other financial assets measured at amortized cost. 2 Excludes Forward starting reverse
repurchase and securities borrowing agreements. 3 Includes on-balance sheet exposure, gross and off-balance sheet exposure (notional) and the related ECL coverage ratio (bps). 4 Information has been revised.
Refer to Note 2 for more information.
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 78
Note 9 Expected credit loss measurement (continued)
Coverage ratios for core loan portfolio
31.12.23
Gross carrying amount (USD m)
ECL coverage (bps)
On-balance sheet
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
PCI
Private clients with mortgages
Real estate financing
Total real estate lending
Large corporate clients
SME clients
Total corporate lending
Lombard
Credit cards
Commodity trade finance
Ship / aircraft financing
Consumer financing
Other loans and advances to customers
Loans to financial advisors
Total other lending
Total
1
Gross exposure (USD m)
ECL coverage (bps)
Off-balance sheet
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
PCI
Private clients with mortgages
Real estate financing
Total real estate lending
Large corporate clients
SME clients
Total corporate lending
Lombard
Credit cards
Commodity trade finance
Ship / aircraft financing
Consumer financing
Financial intermediaries and hedge funds
Other off-balance sheet commitments
Total other lending
Total
2
Total on- and off-balance sheet
3
1 Includes Loans and advances to customers and Loans to financial advisors, which are presented on the balance sheet line Other financial assets measured at amortized cost. 2 Excludes Forward starting reverse
repurchase and securities borrowing agreements. 3 Includes on-balance sheet exposure, gross and off-balance sheet exposure (notional) and the related ECL coverage ratio (bps).
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 79
Note 10 Fair value measurement
a) Fair value hierarchy
The fair value hierarchy classification of financial and non-financial assets and liabilities measured at fair value is
summarized in the table below.
During the first six months of 2024, assets and liabilities that were transferred from Level 2 to Level 1, or from
Level 1 to Level 2, and were held for the entire reporting period were not material.
Determination of fair values from quoted market prices or valuation techniques
1
30.6.24
31.3.24
31.12.23
USD m
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial assets measured at fair value on a recurring basis
Financial assets at fair value held for trading
of which: Equity instruments
of which: Government bills / bonds
of which: Investment fund units
of which: Corporate and municipal bonds
of which: Loans
of which: Asset-backed securities
Derivative financial instruments
of which: Foreign exchange
of which: Interest rate
of which: Equity / index
of which: Credit
of which: Commodities
Brokerage receivables
Financial assets at fair value not held for trading
of which: Financial assets for unit-linked
investment contracts
of which: Corporate and municipal bonds
of which: Government bills / bonds
of which: Loans
of which: Securities financing transactions
of which: Asset-backed securities
of which: Auction rate securities
of which: Investment fund units
of which: Equity instruments
Financial assets measured at fair value through other comprehensive income on a recurring basis
Financial assets measured at fair value through
other comprehensive income
of which: Commercial paper and certificates
of deposit
of which: Corporate and municipal bonds
Non-financial assets measured at fair value on a recurring basis
Precious metals and other physical commodities
Non-financial assets measured at fair value on a non-recurring basis
Other non-financial assets
2
Total assets measured at fair value
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 80
Note 10 Fair value measurement (continued)
Determination of fair values from quoted market prices or valuation techniques (continued)
1
30.6.24
31.3.24
31.12.23
USD m
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial liabilities measured at fair value on a recurring basis
Financial liabilities at fair value held for trading
of which: Equity instruments
of which: Corporate and municipal bonds
of which: Government bills / bonds
of which: Investment fund units
Derivative financial instruments
of which: Foreign exchange
of which: Interest rate
of which: Equity / index
of which: Credit
of which: Commodities
of which: Loan commitments measured at
FVTPL
3
Financial liabilities designated at fair value on a recurring basis
Brokerage payables designated at fair value
Debt issued designated at fair value
Other financial liabilities designated at fair value
of which: Financial liabilities related to unit-
linked investment contracts
of which: Securities financing transactions
of which: Over-the-counter debt instruments
and others
Total liabilities measured at fair value
1 Bifurcated embedded derivatives are presented on the same balance sheet lines as their host contracts and are not included in this table. The fair value of these derivatives was not material for the periods presented.
2 Other non-financial assets primarily consist of properties and other non-current assets held for sale, which are measured at the lower of their net carrying amount or fair value less costs to sell. 3 The balance as
of 30 June 2024 also includes UBS’s funding obligation arising from the offer by the Credit Suisse supply chain finance funds to redeem the outstanding units which was accounted for as a derivative liability (refer to
note 15).
b) Valuation adjustments
The table below summarizes the changes in deferred day-1 profit or loss reserves during the relevant period.
Deferred day-1 profit or loss is generally released into
Other net income from financial instruments measured at fair
value through profit or loss
observable or when the transaction is closed out.
Deferred day-1 profit or loss reserves
For the quarter ended
Year-to-date
USD m
30.6.24
31.3.24
30.6.23
30.6.24
30.6.23
Reserve balance at the beginning of the period
Profit / (loss) deferred on new transactions
(Profit) / loss recognized in the income statement
(55 )
(62 )
(75 )
(116 )
(188 )
Foreign currency translation
(1 )
(1 )
(1 )
(1 )
Reserve balance at the end of the period
The table below summarizes other valuation adjustment reserves recognized on the balance sheet.
Other valuation adjustment reserves on the balance sheet
As of
USD m
30.6.24
31.3.24
31.12.23
Own credit adjustments on financial liabilities designated at fair value
1
(1,062 )
(1,315 )
(1,287 )
of which: debt issued designated at fair value
(1,085 )
(1,334 )
(1,297 )
of which: other financial liabilities designated at fair value
Credit valuation adjustments
2
(104 )
(118 )
(145 )
Funding and debit valuation adjustments
(81 )
(107 )
(116 )
Other valuation adjustments
(1,745 )
(2,135 )
(2,654 )
of which: liquidity
(1,230 )
(1,588 )
(2,051 )
of which: model uncertainty
(516 )
(547 )
(603 )
1 Own credit adjustments on financial liabilities designated at fair value includes amounts for TLAC notes. 2 Amount does not include reserves against defaulted counterparties.
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 81
Note 10 Fair value measurement (continued)
c) Level 3 instruments: valuation techniques and inputs
The table below presents material Level 3 assets and liabilities, together with the valuation techniques used to
measure fair value, as well as the inputs used in a given valuation technique that are considered significant as of
30 June 2024 and unobservable, and a range of values for those unobservable inputs.
The range of values represents the highest- and lowest-level inputs used in the valuation techniques. Therefore, the
range does not reflect the level of uncertainty regarding a particular input or an assessment of the reasonableness of
the Group’s estimates and assumptions, but rather the different underlying characteristics of the relevant assets and
liabilities held by the Group.
The significant unobservable inputs disclosed in the table below are consistent with those included in “Note 21 Fair
value measurement” in the “Consolidated financial statements” section of the UBS Group Annual Report 2023.
Valuation techniques and inputs used in the fair value measurement of Level 3 assets and liabilities
Fair value
Significant unobservable
input(s)
1
Range of inputs
Assets
Liabilities
Valuation technique(s)
30.6.24
31.12.23
USD bn
30.6.24
31.12.23
30.6.24
31.12.23
low
high
weighted
average
2
low
high
weighted
average
2
unit
1
Financial assets and liabilities at fair value held for trading and Financial assets at fair value not held for trading
Corporate and municipal
bonds
Relative value to
market comparable
Bond price equivalent
points
Discounted expected
cash flows
Discount margin
basis
points
Traded loans, loans
designated at fair value
and guarantees
Relative value to
market comparable
Loan price equivalent
points
Discounted expected
cash flows
Credit spread
basis
points
Investment fund units
3
Relative value to
market comparable
Net asset value
Equity instruments
3
Relative value to
market comparable
Price
Debt issued designated at
fair value
4
Other financial liabilities
designated at fair value
Discounted expected
cash flows
Funding spread
basis
points
Derivative financial instruments
Interest rate
Option model
Volatility of interest rates
basis
points
Volatility of inflation
%
IR-to-IR correlation
%
Credit
Discounted expected
cash flows
Credit spreads
basis
points
Credit correlation
%
Credit volatility
%
Recovery rates
%
Equity / index
Option model
Equity dividend yields
%
Volatility of equity stocks,
equity and other indices
%
Equity-to-FX correlation
(40 )
(40 )
%
Equity-to-equity correlation
(50 )
%
Loan commitments
measured at FVTPL
Relative value to
market comparable
Loan price equivalent
points
1 The ranges of significant unobservable inputs are represented in points, percentages and basis points. Points are a percentage of par (e.g., 100 points would be 100% of par). 2 Weighted averages are provided for
most non-derivative financial instruments and were calculated by weighting inputs based on the fair values of the respective instruments. Weighted averages are not provided for inputs related to Other financial liabilities
designated at fair value and Derivative financial instruments, as this would not be meaningful. 3 The range of inputs is not disclosed, as there is a dispersion of values given the diverse nature of the investments.
4 Debt issued designated at fair value primarily consists of UBS structured notes, which include variable maturity notes with various equity and foreign exchange underlying risks, as well as rates-linked and credit-linked
notes, all of which have embedded derivative parameters that are considered to be unobservable. The equivalent derivative instrument paramet ers for debt issued or embedded derivatives for over-the-counter debt
instruments are presented in the respective derivative financial instruments lines in this table.
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 82
Note 10 Fair value measurement (continued)
d) Level 3 instruments: sensitivity to changes in unobservable input assumptions
The table below summarizes those financial assets and liabilities classified as Level 3 for which a change in one or
more of the unobservable inputs to reflect reasonably possible alternative assumptions would change fair value
significantly, and the estimated effect thereof.
The sensitivity data shown below presents an estimation of valuation uncertainty based on reasonably possible
alternative values for Level 3 inputs at the balance sheet date and does not represent the estimated effect of stress
scenarios. Typically, these financial assets and liabilities are sensitive to a combination of inputs from Levels 1–3.
Although well-defined interdependencies may exist between Level 1 / 2 parameters and Level 3 parameters (e.g.,
between interest rates, which are generally Level 1 or Level 2, and prepayments, which are generally Level 3), these
have not been incorporated in the table. Furthermore, direct interrelationships between the Level 3 parameters are
not a significant element of the valuation uncertainty.
Sensitivity of fair value measurements to changes in unobservable input assumptions
1
30.6.24
31.3.24
31.12.23
USD m
Favorable
changes
Unfavorable
changes
Favorable
changes
Unfavorable
changes
Favorable
changes
Unfavorable
changes
Traded loans, loans measured at fair value and guarantees
(433 )
(407 )
(600 )
Securities financing transactions
(31 )
(33 )
(32 )
Auction rate securities
(6 )
(25 )
(21 )
Asset-backed securities
(48 )
(58 )
(36 )
Equity instruments
(403 )
(428 )
(413 )
Investment fund units
(141 )
(144 )
(137 )
Loan commitments measured at FVTPL
(110 )
(176 )
(343 )
Interest rate derivatives, net
(81 )
(102 )
(103 )
Credit derivatives, net
(128 )
(117 )
(131 )
Foreign exchange derivatives, net
(4 )
(4 )
(4 )
Equity / index derivatives, net
(546 )
(498 )
(443 )
Other
(90 )
(141 )
(276 )
Total
(2,021 )
(2,133 )
(2,538 )
1 Sensitivity of issued and over-the-counter debt instruments is reported with the equivalent derivative or Other.
e) Level 3 instruments: movements during the period
The table below presents additional information about material Level 3 assets and liabilities measured at fair value
on a recurring basis. Level 3 assets and liabilities may be hedged with instruments classified as Level 1 or Level 2 in
the fair value hierarchy and, as a result, realized and unrealized gains and losses included in the table may not
include the effect of related hedging activity. Furthermore, the realized and unrealized gains and losses presented
in the table are not limited solely to those arising from Level 3 inputs, as valuations are generally derived from both
observable and unobservable parameters.
Assets and liabilities transferred into or out of Level 3 are presented as if those assets or liabilities had been
transferred on 1 January 2024.
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 83
Note 10 Fair value measurement (continued)
Movements of Level 3 instruments
USD bn
Balance
at the
beginning
of the
period
Credit
Suisse
Level 3
assets and
liabilities
acquired
Net gains /
losses
included in
compre-
hensive
income
1
of which:
related to
instruments
held at the
end of the
period
Purchases
Sales
Issuances
Settlements
Transfers
into
Level 3
Transfers
out of
Level 3
Foreign
currency
translation
Balance
at the
end
of the
period
For the six months ended 30 June 2024
2
Financial assets at fair value held for
trading
(0.3 )
(11.6 )
(5.7 )
(0.7 )
(0.1 )
of which: Equity instruments
(0.0 )
(0.0 )
(0.0 )
(0.0 )
(0.1 )
(0.0 )
of which: Corporate and municipal
bonds
(0.1 )
(0.0 )
(0.5 )
(0.1 )
(0.0 )
of which: Loans
(0.2 )
(9.9 )
(5.7 )
(0.6 )
(0.1 )
Derivative financial instruments –
assets
(0.0 )
(0.0 )
(0.5 )
(0.6 )
(0.0 )
of which: Interest rate
(0.0 )
(0.1 )
(0.0 )
of which: Equity / index
(0.0 )
(0.0 )
(0.0 )
(0.2 )
(0.4 )
(0.0 )
of which: Credit
(0.1 )
(0.0 )
(0.0 )
(0.1 )
(0.0 )
(0.0 )
Financial assets at fair value not held
for trading
(0.2 )
(0.3 )
(0.2 )
(1.7 )
(0.2 )
(0.1 )
of which: Loans
(0.1 )
(0.1 )
(0.0 )
(0.3 )
(0.1 )
(0.1 )
of which: Auction rate securities
(0.0 )
(1.1 )
of which: Equity instruments
(0.1 )
(0.1 )
(0.1 )
(0.1 )
Derivative financial instruments –
liabilities
(0.8 )
(0.3 )
(0.2 )
(1.4 )
(0.6 )
(0.0 )
of which: Interest rate
(0.1 )
(0.0 )
(0.0 )
(0.0 )
of which: Equity / index
(0.1 )
(1.1 )
(0.5 )
(0.0 )
of which: Credit
(0.1 )
(0.1 )
(0.0 )
(0.2 )
(0.0 )
(0.0 )
of which: Loan commitments
measured at FVTPL
(0.6 )
(0.2 )
(0.1 )
(0.0 )
(0.0 )
Debt issued designated at fair value
(0.4 )
(0.0 )
(2.9 )
(2.7 )
(0.1 )
Other financial liabilities designated at
fair value
(0.1 )
(0.0 )
(0.0 )
(0.5 )
(0.1 )
(0.0 )
For the six months ended 30 June 2023
3
Financial assets at fair value held for
trading
(0.5 )
(0.6 )
(1.9 )
(0.3 )
of which: Investment fund units
(0.0 )
(0.0 )
(0.0 )
(0.0 )
(0.0 )
of which: Corporate and municipal
bonds
(0.4 )
(0.4 )
(0.6 )
(0.0 )
of which: Loans
(0.1 )
(0.1 )
(1.1 )
(0.0 )
(0.2 )
(0.0 )
Derivative financial instruments –
assets
(0.1 )
(0.1 )
(0.0 )
(0.3 )
(0.2 )
of which: Interest rate
(0.0 )
(0.0 )
(0.0 )
of which: Equity / index
(0.1 )
(0.1 )
(0.0 )
(0.2 )
(0.2 )
(0.0 )
of which: Credit
(0.0 )
(0.0 )
(0.0 )
(0.0 )
(0.0 )
Financial assets at fair value not held
for trading
(0.4 )
(0.0 )
(0.1 )
of which: Loans
(0.0 )
(0.0 )
(0.1 )
(0.0 )
of which: Auction rate securities
(0.0 )
of which: Equity instruments
(0.0 )
(0.0 )
(0.1 )
Derivative financial instruments –
liabilities
(0.2 )
(0.4 )
(0.3 )
of which: Interest rate
(0.1 )
of which: Equity / index
(0.0 )
(0.3 )
(0.1 )
of which: Credit
(0.0 )
(0.0 )
(0.2 )
(0.0 )
of which: Loan commitments
measured at FVTPL
(0.2 )
(0.2 )
(0.2 )
Debt issued designated at fair value
(2.5 )
(0.8 )
(0.0 )
Other financial liabilities designated at
fair value
(0.1 )
(0.0 )
(0.0 )
1 Net gains / losses included in comprehensive income are recognized in Net interest income and Other net income from financial instruments measured at fair value through profit or loss in the Income statement,
and also in Gains / (losses) from own credit on financial liabilities designated at fair value, before tax in the Statement of comprehensive income. 2 Total Level 3 assets as of 30 June 2024 were USD
bn
(31 December 2023: USD
bn). Total Level 3 liabilities as of 30 June 2024 were USD
bn (31 December 2023: USD
bn). 3 Comparative-period information has been revised. Please refer to “Note 2
Accounting for the acquisition of the Credit Suisse Group” in the UBS Group Annual Report 2023 for more information about the IFRS 3 measurement period adjustments.
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 84
Note 10 Fair value measurement (continued)
f) Financial instruments not measured at fair value
The table below reflects the estimated fair values of financial instruments not measured at fair value. Valuation
principles applied when determining fair value estimates for financial instruments not measured at fair value are
consistent with those described in “Note 21 Fair value measurement” in the “Consolidated financial statements”
section of the UBS Group Annual Report 2023.
Financial instruments not measured at fair value
30.6.24
31.3.24
31.12.23
USD bn
Carrying
amount
Fair value
Carrying
amount
1
Fair value
Carrying
amount
1
Fair value
Assets
Cash and balances at central banks
Amounts due from banks
Receivables from securities financing transactions measured at amortized cost
Cash collateral receivables on derivative instruments
Loans and advances to customers
Other financial assets measured at amortized cost
Liabilities
Amounts due to banks
Payables from securities financing transactions measured at amortized cost
Cash collateral payables on derivative instruments
Customer deposits
Debt issued measured at amortized cost
Other financial liabilities measured at amortized cost
2
1 Comparative-period information has been revised. Refer to Note 2 for more information. 2 Excludes lease liabilities.
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 85
Note 11
Derivative instruments
a) Derivative instruments
As of 30.6.24, USD bn
Derivative
financial
assets
Derivative
financial
liabilities
Notional values
related to derivative
financial assets and
liabilities
1
Other
notional
values
2
Derivative financial instruments
Interest rate
Credit derivatives
Foreign exchange
Equity / index
Commodities
Other
3
Total derivative financial instruments, based on netting under IFRS Accounting Standards
4
Further netting potential not recognized on the balance sheet
5
(124.4 )
(132.4 )
of which: netting of recognized financial liabilities / assets
(101.3 )
(101.3 )
of which: netting with collateral received / pledged
(23.1 )
(31.1 )
Total derivative financial instruments, after consideration of further netting potential
As of 31.3.24, USD bn
Derivative financial instruments
Interest rate
Credit derivatives
Foreign exchange
Equity / index
Commodities
Other
3
Total derivative financial instruments, based on netting under IFRS Accounting Standards
4
Further netting potential not recognized on the balance sheet
5
(141.5 )
(147.9 )
of which: netting of recognized financial liabilities / assets
(115.7 )
(115.7 )
of which: netting with collateral received / pledged
(25.8 )
(32.1 )
Total derivative financial instruments, after consideration of further netting potential
As of 31.12.23, USD bn
Derivative financial instruments
Interest rate
Credit derivatives
Foreign exchange
Equity / index
Commodities
Other
3
Total derivative financial instruments, based on netting under IFRS Accounting Standards
4
Further netting potential not recognized on the balance sheet
5
(162.8 )
of which: netting of recognized financial liabilities / assets
(133.0 )
(133.0 )
of which: netting with collateral received / pledged
(29.8 )
(35.0 )
Total derivative financial instruments, after consideration of further netting potential
1 In cases where derivative financial instruments are presented on a net basis on the balance sheet, the respective notional values of the netted derivative financial instruments are still presented on a gross basis.
Notional amounts of client-cleared ETD and OTC transacti ons through central clearing counterparties are not disclosed, as they have a significantly different risk profile. 2 Other notional values relate to derivatives
that are cleared through either a central counterparty or an exchange and settled on a daily basis (except for OTC derivatives settled through collateralized-to-market arrangements, which are presented under Derivative
financial assets and Derivative financial liabilities).The fair value of these derivatives is presented on the balance sheet net of the corresponding cash margin under Cash collateral receivables on derivative instruments
and Cash collateral payables on derivative instruments and was not material for all periods presented. 3 Includes Loan commitments measured at FVTPL, as well as unsettled purchases and sales of non-derivative
financial instruments for which the changes in the fair value between trade date and settlement date are recognized as derivative financial instruments. The balance as of 30 June 2024 also includes UBS’s funding
obligation arising from the offer by the Credit Suisse supply chain finance funds to redeem the outstanding units which was accounted for as a derivative liability (refer to note 15). 4 Financial assets and liabilities
are presented net on the balance sheet if UBS has the unconditional and legally enforceable right to offset the recognized amounts, both in the normal course of business and in the event of default, bankruptcy or
insolvency of UBS or its counterparties, and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. 5 Reflects the netting potential in accordance with enforceable master
netting and similar arrangements where not all criteria for a net presentation on the balance sheet have been met. Refer to “Note 22 Offsetting financial assets and financial liabilities” in the “Consolidated financial
statements” section of the UBS Group Annual Report 2023 for more information.
b) Cash collateral on derivative instruments
USD bn
Receivables
30.6.24
Payables
30.6.24
Receivables
31.3.24
Payables
31.3.24
Receivables
31.12.23
Payables
31.12.23
Cash collateral on derivative instruments, based on netting under IFRS Accounting
Standards
1
Further netting potential not recognized on the balance sheet
2
(27.2 )
(19.0 )
(28.8 )
(22.6 )
(32.9 )
(26.4 )
of which: netting of recognized financial liabilities / assets
(24.6 )
(16.5 )
(26.0 )
(19.8 )
(29.7 )
(23.2 )
of which: netting with collateral received / pledged
(2.5 )
(2.5 )
(2.8 )
(2.8 )
(3.2 )
(3.2 )
Cash collateral on derivative instruments, after consideration of further netting potential
1 Financial assets and liabilities are presented net on the balance sheet if UBS has the unconditional and legally enforceable right to offset the recognized amounts, both in the normal course of business and in the
event of default, bankruptcy or insolvency of UBS or its counterparties, and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. 2 Reflects the netting potential in
accordance with enforceable master netting and similar arrangements where not all criteria for a net presentation on the balance sheet have been met. Refer to “Note 22 Offsetting financial assets and financial
liabilities” in the “Consolidated financial statements” section of the UBS Group Annual Report 2023 for more information.
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 86
Note
12
Other assets and liabilities
a) Other financial assets measured at amortized cost
USD m
30.6.24
31.3.24
1
31.12.23
1
Debt securities
Loans to financial advisors
Fee- and commission-related receivables
Finance lease receivables
Settlement and clearing accounts
Accrued interest income
Other
2
Total other financial assets measured at amortized cost
1 Comparative-period information has been revised. Refer to Note 2 for more information. 2 Predominantly includes cash collateral provided to exchanges and clearing houses to secure securities trading activity
through those counterparties.
b) Other non-financial assets
USD m
30.6.24
31.3.24
31.12.23
Precious metals and other physical commodities
Deposits and collateral provided in connection with litigation, regulatory and similar matters
1
Prepaid expenses
Current tax assets
VAT, withholding tax and other tax receivables
Properties and other non-current assets held for sale
Other
Total other non-financial assets
1 Refer to Note 15 for more information.
c) Other financial liabilities measured at amortized cost
USD m
30.6.24
31.3.24
31.12.23
Other accrued expenses
Accrued interest expenses
Settlement and clearing accounts
Lease liabilities
Other
Total other financial liabilities measured at amortized cost
d) Other financial liabilities designated at fair value
USD m
30.6.24
31.3.24
31.12.23
Financial liabilities related to unit-linked investment contracts
Securities financing transactions
Over-the-counter debt instruments and other
Total other financial liabilities designated at fair value
e) Other non-financial liabilities
USD m
30.6.24
31.3.24
31.12.23
Compensation-related liabilities
of which: net defined benefit liability
Current tax liabilities
Deferred tax liabilities
VAT, withholding tax and other tax payables
Deferred income
Other
Total other non-financial liabilities
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 87
Note
13
Debt issued designated at fair value
USD m
30.6.24
31.3.24
31.12.23
Equity-linked
1
Rates-linked
Credit-linked
Fixed-rate
Commodity-linked
Other
of which: debt that contributes to total loss-absorbing capacity
Total debt issued designated at fair value
2
of which: issued by UBS AG standalone with original maturity greater than one year
3
of which: issued by Credit Suisse AG standalone with original maturity greater than one year
3
of which: issued by Credit Suisse International standalone with original maturity greater than one year
3
1 Includes investment fund unit-linked instruments issued. 2 As of 30 June 2024,
% of Total debt issued designated at fair value was unsecured (31 March 2024:
%). 3 Based on original contractual maturity
without considering any early redemption features.
Note
14
Debt issued measured at amortized cost
USD m
30.6.24
31.3.24
31.12.23
Short-term debt
1
Senior unsecured debt
of which: contributes to total loss-absorbing capacity
of which: issued by UBS AG standalone with original maturity greater than one year
of which: issued by Credit Suisse AG standalone with original maturity greater than one year
Covered bonds
Subordinated debt
of which: eligible as high-trigger loss-absorbing additional tier 1 capital instruments
of which: eligible as low-trigger loss-absorbing additional tier 1 capital instruments
of which: eligible as non-Basel III-compliant tier 2 capital instruments
Debt issued through the Swiss central mortgage institutions
Other long-term debt
Long-term debt
2
Total debt issued measured at amortized cost
3,4
1 Debt with an original contractual maturity of less than one year, includes mainly certificates of deposit and commercial paper. 2 Debt with an original contractual maturity greater than or equal to one year. The
classification of debt issued into short-term and long-term does not consider any early redemption features. 3 Net of bifurcated embedded derivatives, the fair value of which was not material for the periods
presented. 4 Except for Covered bonds (
% secured), Debt issued through the Swiss central mortgage institutions (
% secured) and Other long-term debt (
% secured),
% of the balance was unsecured
as of 30 June 2024.
Note 15 Provisions and contingent liabilities
a) Provisions and contingent liabilities
The table below presents an overview of total provisions and contingent liabilities.
USD m
30.6.24
31.3.24
1
31.12.23
1
Provisions related to expected credit losses (IFRS 9,
Financial Instruments
)
2
Provisions related to Credit Suisse loan commitments (IFRS 3,
Business Combinations
)
Provisions related to litigation, regulatory and similar matters (IAS 37,
Provisions, Contingent Liabilities and Contingent Assets
)
Acquisition-related contingent liabilities (IFRS 3,
Business Combinations
)
Restructuring, real-estate and other provisions (IAS 37,
Provisions, Contingent Liabilities and Contingent Assets
)
Total provisions and contingent liabilities
1 Comparative-period information has been revised. Refer to Note 2 for more information. 2 Refer to Note 9c for more information.
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 88
Note 15 Provisions and contingent liabilities (continued)
The table below presents additional information for provisions under IAS 37,
Provisions, Contingent Liabilities and
Contingent Assets
.
USD m
Litigation,
regulatory and
similar matters
1
Restructuring
2
Real estate
3
Other
4
Total
Balance as of 31 December 2023
Balance as of 31 March 2024
Increase in provisions recognized in the income statement
Release of provisions recognized in the income statement
(41 )
(16 )
(16 )
(73 )
Reclassification of IFRS 3 contingent liabilities to IAS 37 provisions
5
Provisions used in conformity with designated purpose
(1,442 )
5
(138 )
(5 )
(21 )
(1,605 )
Foreign currency translation and other movements
(15 )
(1 )
(11 )
Balance as of 30 June 2024
1 Consists of provisions for losses resulting from legal, liability and compliance risks. 2 Consists of USD
m of provisions for onerous contracts related to real estate as of 30 June 2024 (31 March 2024: USD
m;
31 December 2023: USD
m) and USD
m of personnel-related restructuring provisions as of 30 June 2024 (31 March 2024: USD
m; 31 December 2023: USD
m). 3 Mainly includes provisions for
reinstatement costs with respect to leased properties. 4 Mainly includes provisions related to employee benefits and operational risks. 5 During the second quarter of 2024, UBS agreed to fund an offer by the
Credit Suisse supply chain finance funds to redeem all of the outstanding units of the respective funds. As a result, UBS reclassified USD
m from IFRS 3 acquisition-related contingent liabilities to IAS 37 provisions
related to litigation, regulatory and similar matters, as the probability of an outflow of resources increased, bringing the total IAS 37 provision for this matter to USD
m, with no impact on the income statement.
The provision has been used to recognize the funding obligation, which was accounted for as a derivative liability with a fair value of USD
m as of 30 June 2024.
Information about provisions and contingent liabilities in respect of litigation, regulatory and similar matters, as a
class, is included in Note 15b. There are no material contingent liabilities associated with the other classes of
provisions.
b) Litigation, regulatory and similar matters
The Group operates in a legal and regulatory environment that exposes it to significant litigation and similar risks
arising from disputes and regulatory proceedings. As a result, UBS (which for purposes of this Note may refer to
UBS Group AG and/or one or more of its subsidiaries, as applicable) is involved in various disputes and legal
proceedings, including litigation, arbitration, and regulatory and criminal investigations.
Such matters are subject to many uncertainties, and the outcome and the timing of resolution are often difficult to
predict, particularly in the earlier stages of a case. There are also situations where the Group may enter into a
settlement agreement. This may occur in order to avoid the expense, management distraction or reputational
implications of continuing to contest liability, even for those matters for which the Group believes it should be
exonerated. The uncertainties inherent in all such matters affect the amount and timing of any potential outflows
for both matters with respect to which provisions have been established and other contingent liabilities. The Group
makes provisions for such matters brought against it when, in the opinion of management after seeking legal
advice, it is more likely than not that the Group has a present legal or constructive obligation as a result of past
events, it is probable that an outflow of resources will be required, and the amount can be reliably estimated. Where
these factors are otherwise satisfied, a provision may be established for claims that have not yet been asserted
against the Group, but are nevertheless expected to be, based on the Group’s experience with similar asserted
claims. If any of those conditions is not met, such matters result in contingent liabilities. If the amount of an
obligation cannot be reliably estimated, a liability exists that is not recognized even if an outflow of resources is
probable. Accordingly, no provision is established even if the potential outflow of resources with respect to such
matters could be significant. Developments relating to a matter that occur after the relevant reporting period, but
prior to the issuance of financial statements, which affect management’s assessment of the provision for such
matter (because, for example, the developments provide evidence of conditions that existed at the end of the
reporting period), are adjusting events after the reporting period under IAS 10 and must be recognized in the
financial statements for the reporting period.
Specific litigation, regulatory and other matters are described below, including all such matters that management
considers to be material and others that management believes to be of significance to the Group due to potential
financial, reputational and other effects. The amount of damages claimed, the size of a transaction or other
information is provided where available and appropriate in order to assist users in considering the magnitude of
potential exposures.
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 89
Note 15 Provisions and contingent liabilities (continued)
In the case of certain matters below, we state that we have established a provision, and for the other matters, we
make no such statement. When we make this statement and we expect disclosure of the amount of a provision to
prejudice seriously our position with other parties in the matter because it would reveal what UBS believes to be
the probable and reliably estimable outflow, we do not disclose that amount. In some cases we are subject to
confidentiality obligations that preclude such disclosure. With respect to the matters for which we do not state
whether we have established a provision, either: (a) we have not established a provision; or (b) we have established
a provision but expect disclosure of that fact to prejudice seriously our position with other parties in the matter
because it would reveal the fact that UBS believes an outflow of resources to be probable and reliably estimable.
With respect to certain litigation, regulatory and similar matters for which we have established provisions, we are
able to estimate the expected timing of outflows. However, the aggregate amount of the expected outflows for
those matters for which we are able to estimate expected timing is immaterial relative to our current and expected
levels of liquidity over the relevant time periods.
The aggregate amount provisioned for litigation, regulatory and similar matters as a class is disclosed in the
“Provisions” table in Note 15a above. UBS provides below an estimate of the aggregate liability for our litigation,
regulatory and similar matters as a class of contingent liabilities. Estimates of contingent liabilities are inherently
imprecise and uncertain as these estimates require UBS to make speculative legal assessments as to claims and
proceedings that involve unique fact patterns or novel legal theories, that have not yet been initiated or are at early
stages of adjudication, or as to which alleged damages have not been quantified by the claimants. Taking into
account these uncertainties and the other factors described herein, UBS estimates the future losses that could arise
from litigation, regulatory and similar matters disclosed below for which an estimate is possible, that are not covered
by existing provisions (including provisions established under IFRS 3 in connection with the acquisition of Credit
Suisse), are in the range of USD
bn to USD
bn.
Litigation, regulatory and similar matters may also result in non-monetary penalties and consequences. A guilty plea
to, or conviction of, a crime could have material consequences for UBS. Resolution of regulatory proceedings may
require UBS to obtain waivers of regulatory disqualifications to maintain certain operations, may entitle regulatory
authorities to limit, suspend or terminate licenses and regulatory authorizations, and may permit financial market
utilities to limit, suspend or terminate UBS’s participation in such utilities. Failure to obtain such waivers, or any
limitation, suspension or termination of licenses, authorizations or participations, could have material consequences
for UBS.
The amounts shown in the table below reflect the provisions recorded under IFRS Accounting Standards accounting
principles. In connection with the acquisition of Credit Suisse, UBS Group AG additionally has reflected in its
purchase accounting under IFRS 3 a valuation adjustment reflecting an estimate of outflows relating to contingent
liabilities for all present obligations included in the scope of the acquisition at fair value upon closing, even if it is
not probable that the contingent liability will result in an outflow of resources, significantly decreasing the
recognition threshold for litigation liabilities beyond those that generally apply under IFRS Accounting Standards.
The IFRS 3 acquisition-related contingent liabilities of USD
bn at 30 June 2024 reflect updated estimates of
outflows, including an increase of USD
bn in IFRS 3 measurement period adjustments following additional
information about circumstances existing on the acquisition date, shifts to provisions under IAS 37 and releases
upon resolution of the relevant matter.
Provisions for litigation, regulatory and similar matters, by business division and in Group Items
1
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core
and Legacy
Group Items
UBS Group
Balance as of 31 December 2023
Balance as of 31 March 2024
Increase in provisions recognized in the income statement
Release of provisions recognized in the income statement
(11 )
(7 )
(22 )
(41 )
Reclassification of IFRS 3 contingent liabilities to IAS 37 provisions
2
Provisions used in conformity with designated purpose
2
(10 )
(5 )
(1,425 )
(1 )
(1,442 )
Foreign currency translation and other movements
(8 )
(1 )
(1 )
(4 )
(15 )
Balance as of 30 June 2024
1 Provisions, if any, for the matters described in items 2 and 10 of this Note are recorded in Global Wealth Management. Provisions, if any, for the matters described in items 5, 6, 7, 8, 9 and 11 of this Note are
recorded in Non-core and Legacy. Provisions, if any, for the matters described in items 13 and 14 of this Note are recorded in Group Items. Provisions, if any, for the matters described in item 1 of this Note are allocated
between Global Wealth Management, Personal & Corporate Banking and Non-core and Legacy. Provisions, if any, for the matters described in item 3 of this Note are allocated between the Investment Bank, Non-
core and Legacy and Group Items. Provisions, if any, for the matters described in item 4 of this Note are allocated between Global Wealth Management and Personal & Corporate Banking. Provisions, if any, for the
matters described in item 12 of this Note are allocated between the Investment Bank and Non-core and Legacy. 2 During the second quarter of 2024, UBS agreed to fund an offer by the Credit Suisse supply chain
finance funds to redeem all of the outstanding units of the respective funds. As a result, UBS reclassified USD
m from IFRS 3 acquisition-related contingent liabilities to IAS 37 provisions related to litigation,
regulatory and similar matters, as the probability of an outflow of resources increased, bringing the total IAS 37 provision for this matter to USD
m, with no impact on the income statement. The provision has
been used to recognize the funding obligation, which was accounted for as a derivative liability with a fair value of USD
m as of 30 June 2024.
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 90
Note 15 Provisions and contingent liabilities (continued)
1. Inquiries regarding cross-border wealth management businesses
Tax and regulatory authorities in a number of countries have made inquiries, served requests for information or
examined employees located in their respective jurisdictions relating to the cross-border wealth management
services provided by UBS and other financial institutions. Credit Suisse offices in various locations, including the UK,
the Netherlands, France and Belgium, have been contacted by regulatory and law enforcement authorities seeking
records and information concerning investigations into Credit Suisse’s historical private banking services on a cross-
border basis and in part through its local branches and banks. The UK and French aspects of these issues have been
closed. UBS is continuing to cooperate with the authorities.
Since 2013, UBS (France) S.A., UBS AG and certain former employees have been under investigation in France in
relation to UBS’s cross-border business with French clients. In connection with this investigation, the investigating
judges ordered UBS AG to provide bail (“
caution
”) of EUR
bn.
In 2019, the court of first instance returned a verdict finding UBS AG guilty of unlawful solicitation of clients on
French territory and aggravated laundering of the proceeds of tax fraud, and UBS (France) S.A. guilty of aiding and
abetting unlawful solicitation and of laundering the proceeds of tax fraud. The court imposed fines aggregating
EUR
bn on UBS AG and UBS (France) S.A. and awarded EUR
m of civil damages to the French state. A trial
in the Paris Court of Appeal took place in March 2021. In December 2021, the Court of Appeal found UBS AG
guilty of unlawful solicitation and aggravated laundering of the proceeds of tax fraud. The court ordered a fine of
EUR
m, the confiscation of EUR
bn, and awarded civil damages to the French state of EUR
m. UBS
appealed the decision to the French Supreme Court. The Supreme Court rendered its judgment on 15 November
2023. It upheld the Court of Appeal‘s decision regarding unlawful solicitation and aggravated laundering of the
proceeds of tax fraud, but overturned the confiscation of EUR
bn, the penalty of EUR
m and the EUR
m
of civil damages awarded to the French state. The case has been remanded to the Court of Appeal for a retrial
regarding these overturned elements. The French state has reimbursed the EUR
m of civil damages to UBS AG.
In May 2014, Credit Suisse entered into settlement agreements with the SEC, Federal Reserve and New York
Department of Financial Services and plead guilty to conspiring to aid and abet US taxpayers in filing false tax
returns. Credit Suisse continued to report to and cooperate with US authorities in accordance with its obligations
under the plea and agreements, including by conducting a review of cross-border services provided by Credit Suisse.
In this connection, Credit Suisse provided information to US authorities regarding potentially undeclared US assets
held by clients at Credit Suisse since the May 2014 plea. UBS continues to cooperate with the authorities in their
ongoing reviews. In March 2023, the US Senate Finance Committee issued a report criticizing Credit Suisse AG’s
history regarding US tax compliance. The report called on the DOJ to investigate Credit Suisse AG’s compliance
with the 2014 plea.
In February 2021, a qui tam complaint was filed in the Eastern District of Virginia, alleging that Credit Suisse had
violated the False Claims Act by failing to disclose all US accounts at the time of the 2014 plea, which allegedly
allowed Credit Suisse to pay a criminal fine in 2014 that was purportedly lower than it should have been. The DOJ
moved to dismiss the case, and the Court summarily dismissed the suit. The case is now on appeal with the US
Federal Court of Appeals for the Fourth Circuit.
Our balance sheet at 30 June 2024 reflected a provision in an amount that UBS believes to be appropriate under
the applicable accounting standard. As in the case of other matters for which we have established provisions, the
future outflow of resources in respect of such matters cannot be determined with certainty based on currently
available information and accordingly may ultimately prove to be substantially greater (or may be less) than the
provision that we have recognized.
2. Madoff
In relation to the Bernard L. Madoff Investment Securities LLC (BMIS) investment fraud, UBS AG, UBS (Luxembourg)
S.A. (now UBS Europe SE, Luxembourg branch) and certain other UBS subsidiaries have been subject to inquiries
by a number of regulators, including the Swiss Financial Market Supervisory Authority (FINMA) and the Luxembourg
Commission de Surveillance du Secteur Financier. Those inquiries concerned two third-party funds established
under Luxembourg law, substantially all assets of which were with BMIS, as well as certain funds established in
offshore jurisdictions with either direct or indirect exposure to BMIS. These funds faced severe losses, and the
Luxembourg funds are in liquidation. The documentation establishing both funds identifies UBS entities in various
roles, including custodian, administrator, manager, distributor and promoter, and indicates that UBS employees
serve as board members.
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 91
Note 15 Provisions and contingent liabilities (continued)
In 2009 and 2010, the liquidators of the two Luxembourg funds filed claims against UBS entities, non-UBS entities
and certain individuals, including current and former UBS employees, seeking amounts totaling approximately EUR
bn, which includes amounts that the funds may be held liable to pay the trustee for the liquidation of BMIS
(BMIS Trustee).
A large number of alleged beneficiaries have filed claims against UBS entities (and non-UBS entities) for purported
losses relating to the Madoff fraud. The majority of these cases have been filed in Luxembourg, where decisions
that the claims in eight test cases were inadmissible have been affirmed by the Luxembourg Court of Appeal, and
the Luxembourg Supreme Court has dismissed a further appeal in one of the test cases.
In the US, the BMIS Trustee filed claims against UBS entities, among others, in relation to the two Luxembourg
funds and one of the offshore funds. The total amount claimed against all defendants in these actions was not less
than USD
bn. In 2014, the US Supreme Court rejected the BMIS Trustee’s motion for leave to appeal decisions
dismissing all claims against UBS defendants except those for the recovery of approximately USD
m of payments
alleged to be fraudulent conveyances and preference payments. Similar claims have been filed against Credit Suisse
entities seeking to recover redemption payments. In 2016, the bankruptcy court dismissed these claims against the
UBS entities and most of the Credit Suisse entities. In 2019, the Court of Appeals reversed the dismissal of the BMIS
Trustee’s remaining claims. The case has been remanded to the Bankruptcy Court for further proceedings.
3. Foreign exchange, LIBOR and benchmark rates, and other trading practices
Foreign exchange-related regulatory matters:
concerning possible manipulation of foreign exchange markets and precious metals prices. As a result of these
investigations, UBS entered into resolutions with Swiss, US and United Kingdom regulators and the European
Commission. UBS was granted conditional immunity by the Antitrust Division of the DOJ and by authorities in other
jurisdictions in connection with potential competition law violations relating to foreign exchange and precious
metals businesses. In December 2021, the European Commission issued a decision imposing a fine of EUR
m
on Credit Suisse entities based on findings of anticompetitive practices in the foreign exchange market. Credit
Suisse has appealed the decision to the European General Court. UBS received leniency and accordingly no fine
was assessed.
Foreign exchange-related civil litigation:
in other jurisdictions against UBS, Credit Suisse and other banks on behalf of putative classes of persons who
engaged in foreign currency transactions with any of the defendant banks. UBS has resolved US federal court class
actions relating to foreign currency transactions with the defendant banks and persons who transacted in foreign
exchange futures contracts and options on such futures under a settlement agreement that provides for UBS to pay
an aggregate of USD
m. Certain class members have excluded themselves from that settlement and have filed
individual actions in US and English courts against UBS, Credit Suisse and other banks, alleging violations of US and
European competition laws and unjust enrichment. UBS and the other banks have resolved those individual matters.
In 2015, a putative class action was filed in federal court against UBS and numerous other banks on behalf of
persons and businesses in the US who directly purchased foreign currency from the defendants and alleged co-
conspirators for their own end use. In May 2024, the Second Circuit upheld the district court’s dismissal of the case.
Credit Suisse and UBS, together with other financial institutions, were named in a consolidated putative class action
in Israel, which made allegations similar to the consolidated class action. In April 2022, Credit Suisse entered into
an agreement to settle all claims. The settlement remains subject to court approval.
LIBOR and other benchmark-related regulatory matters:
regarding potential improper attempts by UBS, among others, to manipulate LIBOR and other benchmark rates at
certain times. UBS and Credit Suisse reached settlements or otherwise concluded investigations relating to
benchmark interest rates with the investigating authorities. UBS was granted conditional leniency or conditional
immunity from authorities in certain jurisdictions, including the Antitrust Division of the DOJ and the Swiss
Competition Commission (WEKO), in connection with potential antitrust or competition law violations related to
certain rates. However, UBS has not reached a final settlement with WEKO, as the Secretariat of WEKO has asserted
that UBS does not qualify for full immunity.
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 92
Note 15 Provisions and contingent liabilities (continued)
LIBOR and other benchmark-related civil litigation:
in the federal courts in New York against UBS and numerous other banks on behalf of parties who transacted in
certain interest rate benchmark-based derivatives. Also pending in the US and in other jurisdictions are a number
of other actions asserting losses related to various products whose interest rates were linked to LIBOR and other
benchmarks, including adjustable rate mortgages, preferred and debt securities, bonds pledged as collateral, loans,
depository accounts, investments and other interest-bearing instruments. The complaints allege manipulation,
through various means, of certain benchmark interest rates, including USD LIBOR, Yen LIBOR, EURIBOR, CHF LIBOR,
GBP LIBOR and seek unspecified compensatory and other damages under various legal theories.
USD LIBOR class and individual actions in the US:
Beginning in 2013, putative class actions were filed in US federal
district courts (and subsequently consolidated in the SDNY) by plaintiffs who engaged in over-the-counter
instruments, exchange traded Eurodollar futures and options, bonds or loans that referenced USD LIBOR. The
complaints allege violations of antitrust law and the Commodities Exchange Act, as well breach of contract and
unjust enrichment. Following various rulings by the district court and the Second Circuit dismissing certain of the
causes of action and allowing others to proceed, one class action with respect to transactions in over the counter
instruments and several actions brought by individual plaintiffs are proceeding in the district court. UBS and Credit
Suisse have entered into settlement agreements in respect of the class actions relating to exchange traded
instruments, bonds and loans. The exchange traded instruments settlement received preliminary approval from the
court in April 2024. The bondholder and lender action settlements received final court approval and have been
dismissed as to UBS and Credit Suisse. In addition, an individual action was filed in the Northern District of California
against UBS, Credit Suisse and numerous other banks alleging that the defendants conspired to fix the interest rate
used as the basis for loans to consumers by jointly setting the USD ICE LIBOR rate and monopolized the market for
LIBOR-based consumer loans and credit cards. The court dismissed the initial complaint and subsequently dismissed
an amended complaint with prejudice. In January 2024, plaintiffs appealed the dismissal to the Ninth Circuit Court
of Appeals.
Other benchmark class actions in the US:
The Yen LIBOR/Euroyen TIBOR, EURIBOR and GBP LIBOR actions have
been dismissed. The dismissal of Yen LIBOR/Euroyen TIBOR could be appealed and plaintiffs have appealed the
dismissal of the EURIBOR and GBP LIBOR actions.
In November 2022, defendants have moved to dismiss the complaint in the CHF LIBOR action. In 2023, the court
approved a settlement by Credit Suisse of the claims against it in this matter.
Government bonds:
breached European Union antitrust rules between 2007 and 2011 relating to European government bonds. The
European Commission fined UBS EUR. UBS has appealed the amount of the fine.
Also in 2021, the European
Commission issued a decision finding that Credit Suisse and four other banks had breached European Union
antitrust rules relating to supra-sovereign, sovereign and agency bonds denominated in USD. The European
commission fined Credit Suisse EUR
m. Credit Suisse has appealed the decision.
Putative class actions have been filed since 2015 in US federal courts against UBS, Credit Suisse and other banks
on behalf of persons who participated in markets for US Treasury securities since 2007. A consolidated complaint
was filed in 2017 SDNY alleging that the banks colluded with respect to, and manipulated prices of, US Treasury
securities sold at auction and in the secondary market and asserting claims under the antitrust laws and for unjust
enrichment. In February 2024, the Second Circuit affirmed the district court’s dismissal of the case. The matter is
now fully resolved. Similar class actions have been filed concerning European government bonds and other
government bonds.
Credit Suisse, together with other financial institutions, was named in two Canadian putative class actions, which
allege that defendants conspired to fix the prices of supranational, sub-sovereign and agency bonds sold to and
purchased from investors in the secondary market. One action was dismissed against Credit Suisse in February
2020. In October 2022, Credit Suisse entered into an agreement to settle all claims in the second action. The
settlement remains subject to court approval.
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 93
Note 15 Provisions and contingent liabilities (continued)
Credit default swap auction litigation –
In June 2021, Credit Suisse, along with other banks and entities, was named
in a putative class action complaint filed in the US District Court for the District of New Mexico alleging manipulation
of credit default swap (CDS) final auction prices. Defendants filed a motion to enforce a previous CDS class action
settlement in the SDNY. In January 2024, the SDNY ruled that, to the extent claims in the New Mexico action arise
from conduct prior to 30 June 2014, those claims are barred by the SDNY settlement. The plaintiffs have appealed
the SDNY decision.
With respect to additional matters and jurisdictions not encompassed by the settlements and orders referred to
above, our balance sheet at 30 June 2024 reflected a provision in an amount that UBS believes to be appropriate
under the applicable accounting standard. As in the case of other matters for which we have established provisions,
the future outflow of resources in respect of such matters cannot be determined with certainty based on currently
available information and accordingly may ultimately prove to be substantially greater (or may be less) than the
provision that we have recognized.
4. Swiss retrocessions
The Federal Supreme Court of Switzerland ruled in 2012, in a test case against UBS, that distribution fees paid to
a firm for distributing third-party and intra-group investment funds and structured products must be disclosed and
surrendered to clients who have entered into a discretionary mandate agreement with the firm, absent a valid
waiver. FINMA issued a supervisory note to all Swiss banks in response to the Supreme Court decision. UBS has met
the FINMA requirements and has notified all potentially affected clients.
The Supreme Court decision has resulted, and continues to result, in a number of client requests to disclose and
potentially surrender retrocessions. Client requests are assessed on a case-by-case basis. Considerations taken into
account when assessing these cases include, among other things, the existence of a discretionary mandate and
whether or not the client documentation contained a valid waiver with respect to distribution fees.
Our balance sheet at 30 June 2024 reflected a provision with respect to matters described in this item 4 in an
amount that UBS believes to be appropriate under the applicable accounting standard. The ultimate exposure will
depend on client requests and the resolution thereof, factors that are difficult to predict and assess. Hence, as in
the case of other matters for which we have established provisions, the future outflow of resources in respect of
such matters cannot be determined with certainty based on currently available information and accordingly may
ultimately prove to be substantially greater (or may be less) than the provision that we have recognized.
5. Mortgage-related matters
Government and regulatory related matters
:
DOJ RMBS settlement
LLC (CSS LLC) and its current and former US subsidiaries and US affiliates reached a settlement with the US
Department of Justice (DOJ) related to its legacy Residential Mortgage-Backed Securities (RMBS) business, a business
conducted through 2007. The settlement resolved potential civil claims by the DOJ related to certain of those Credit
Suisse entities’ packaging, marketing, structuring, arrangement, underwriting, issuance and sale of RMBS. Pursuant
to the terms of the settlement a civil monetary penalty was paid to the DOJ in January 2017. The settlement also
required the Credit Suisse entities to provide certain levels of consumer relief measures, including affordable
housing payments and loan forgiveness, and the DOJ and Credit Suisse agreed to the appointment of an
independent monitor to oversee the completion of the consumer relief requirements of the settlement. UBS
continues to evaluate its approach toward satisfying the remaining consumer relief obligations. The aggregate
amount of the consumer relief obligation increased after 2021 by
% per annum of the outstanding amount due
until these obligations are settled. The monitor publishes reports periodically on these consumer relief matters.
Civil litigation: Repurchase litigations
to their roles as issuer, sponsor, depositor, underwriter and/or servicer of RMBS transactions. These cases currently
include repurchase actions by RMBS trusts and/or trustees, in which plaintiffs generally allege breached
representations and warranties in respect of mortgage loans and failure to repurchase such mortgage loans as
required under the applicable agreements. The amounts disclosed below do not reflect actual realized plaintiff
losses to date. Unless otherwise stated, these amounts reflect the original unpaid principal balance amounts as
alleged in these actions.
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 94
Note 15 Provisions and contingent liabilities (continued)
DLJ Mortgage Capital, Inc. (DLJ) is a defendant in New York state court in five actions: An action brought by Asset
Backed Securities Corporation Home Equity Loan Trust, Series 2006-HE7 alleges damages of not less than
USD
m. In December 2023, the court granted in part DLJ’s motion to dismiss, dismissing with prejudice all
notice-based claims; the parties have appealed. An action by Home Equity Asset Trust, Series 2006-8, alleges
damages of not less than USD
m. An action by Home Equity Asset Trust 2007-1 alleges damages of not less
than USD
m. A non-jury trial in this action was held between January and February 2023, and a decision is
pending. An action by Home Equity Asset Trust 2007-2 alleges damages of not less than USD
m. An action by
CSMC Asset-Backed Trust 2007-NC1 does not allege a damages amount.
6. ATA litigation
Since November 2014, a series of lawsuits have been filed against a number of banks, including Credit Suisse, in
the US District Court for the Eastern District of New York (EDNY) and the SDNY alleging claims under the United
States Anti-Terrorism Act (ATA) and the Justice Against Sponsors of Terrorism Act. The plaintiffs in each of these
lawsuits are, or are relatives of, victims of various terrorist attacks in Iraq and allege a conspiracy and/or aiding and
abetting based on allegations that various international financial institutions, including the defendants, agreed to
alter, falsify or omit information from payment messages that involved Iranian parties for the express purpose of
concealing the Iranian parties’ financial activities and transactions from detection by US authorities. The lawsuits
allege that this conduct has made it possible for Iran to transfer funds to Hezbollah and other terrorist organizations
actively engaged in harming US military personnel and civilians. In January 2023, the United States Court of Appeals
for the Second Circuit affirmed a September 2019 ruling by the EDNY granting defendants’ motion to dismiss the
first filed lawsuit. In October 2023, the United States Supreme Court denied plaintiffs’ petition for a writ of
certiorari. In February 2024, plaintiffs filed a motion to vacate the judgment in the first filed lawsuit. Of the other
seven cases, four are stayed, including one that was dismissed as to Credit Suisse and most of the bank defendants
prior to entry of the stay, and in three plaintiffs have filed amended complaints.
7. Customer account matters
Several clients have claimed that a former relationship manager in Switzerland had exceeded his investment
authority in the management of their portfolios, resulting in excessive concentrations of certain exposures and
investment losses. Credit Suisse AG has investigated the claims, as well as transactions among the clients. Credit
Suisse AG filed a criminal complaint against the former relationship manager with the Geneva Prosecutor’s Office
upon which the prosecutor initiated a criminal investigation. Several clients of the former relationship manager also
filed criminal complaints with the Geneva Prosecutor’s Office. In February 2018, the former relationship manager
was sentenced to five years in prison by the Geneva criminal court for fraud, forgery and criminal mismanagement
and ordered to pay damages of approximately USD
m. On appeal, the Criminal Court of Appeals of Geneva
and, subsequently, the Swiss Federal Supreme Court upheld the main findings of the Geneva criminal court.
Civil lawsuits have been initiated against Credit Suisse AG and/or certain affiliates in various jurisdictions, based on
the findings established in the criminal proceedings against the former relationship manager.
In Singapore, in a civil lawsuit against Credit Suisse Trust Limited, the Singapore International Commercial Court
issued a judgment finding for the plaintiffs and, in September 2023, the court awarded damages of USD
m,
excluding post-judgment interest. This figure does not exclude potential overlap with the Bermuda proceedings
against Credit Suisse Life (Bermuda) Ltd., described below, and the court ordered the parties to ensure that there
shall be no double recovery in relation to this award and the Bermuda proceedings. On appeal from this judgment,
in July 2024, the court ordered some changes to the calculation of damages and directed the parties to agree
adjustments to the award. The court has granted a stay of execution judgment pending appeal on the condition
that damages awarded and post-judgment interest accrued are paid into court deposit.
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 95
Note 15 Provisions and contingent liabilities (continued)
In Bermuda, in the civil lawsuit brought against Credit Suisse Life (Bermuda) Ltd., the Supreme Court of Bermuda
issued a judgment finding for the plaintiff and awarded damages of USD
m to the plaintiff. Credit Suisse
Life (Bermuda) Ltd. appealed the decision and in June 2023, the Bermuda Court of Appeal confirmed the award
issued by the Supreme Court of Bermuda and the finding that Credit Suisse Life (Bermuda) Ltd. had breached its
contractual and fiduciary duties, but overturning the finding that Credit Suisse Life (Bermuda) Ltd. had made
fraudulent misrepresentations. In March 2024, the Bermuda Court of Appeal granted a motion by Credit Suisse
Life (Bermuda) Ltd for leave to appeal the judgment to the Judicial Committee of the Privy Council and the notice
of such appeal was filed. The Court of Appeal also ordered that the current stay continue pending determination
of the appeal on the condition that the damages awarded remain within the escrow account plus interest calculated
at the Bermuda statutory rate of
%. In December 2023, USD
m was released from the escrow account and
paid to plaintiffs.
In Switzerland, civil lawsuits have commenced against Credit Suisse AG in the Court of First Instance of Geneva,
with statements of claim served in March 2023 and March 2024.
8. Mozambique matter
Credit Suisse was subject to investigations by regulatory and enforcement authorities, as well as civil litigation,
regarding certain Credit Suisse entities’ arrangement of loan financing to Mozambique state enterprises, Proindicus
S.A. and Empresa Moçambicana de Atum S.A. (EMATUM), a distribution to private investors of loan participation
notes (LPN) related to the EMATUM financing in September 2013, and certain Credit Suisse entities’ subsequent
role in arranging the exchange of those LPNs for Eurobonds issued by the Republic of Mozambique. In 2019, three
former Credit Suisse employees pleaded guilty in the EDNY to accepting improper personal benefits in connection
with financing transactions carried out with two Mozambique state enterprises.
In October 2021, Credit Suisse reached settlements with the DOJ, the US Securities and Exchange Commission
(SEC), the UK Financial Conduct Authority (FCA) and FINMA to resolve inquiries by these agencies, including findings
that Credit Suisse failed to appropriately organize and conduct its business with due skill and care, and manage
risks. Credit Suisse Group AG entered into a three-year Deferred Prosecution Agreement (DPA) with the DOJ in
connection with the criminal information charging Credit Suisse Group AG with conspiracy to commit wire fraud
and CSSEL entered into a Plea Agreement and pleaded guilty to one count of conspiracy to violate the US federal
wire fraud statute Under the terms of the DPA, UBS Group AG (as successor to Credit Suisse Group AG) must
continue compliance enhancement and remediation efforts agreed by Credit Suisse, report to the DOJ on those
efforts for three years and undertake additional measures as outlined in the DPA. If the DPA’s conditions are
complied with, the charges will be dismissed at the end of the DPA’s three-year term. In addition, the FINMA decree
concluding its enforcement proceeding, ordered the bank to remediate certain deficiencies.
Beginning in 2019, Credit Suisse entities, former employees and several other unrelated entities were sued in the
English High Court by the Republic of Mozambique seeking a declaration that the sovereign guarantee issued in
connection with the ProIndicus loan syndication was void, and damages. Credit Suisse entities subsequently filed
cross claims against several entities related to the project contractor and several Mozambique officials. In addition,
several of the banks that participated in the ProIndicus loan syndicate brought claims against Credit Suisse entities
seeking compensation for any losses suffered as a result of any invalidity of the sovereign guarantee or damages
stemming from the alleged loss. In addition, the project contractor, its owner and one of its executives brought
defamation claims against Credit Suisse in Lebanon. In 2023, Credit Suisse entered into settlement agreements that
resolved all claims involving Credit Suisse entities in the English High Court.
9. ETN-related litigation
XIV litigation:
Since March 2018, three class action complaints were filed in the SDNY on behalf of a putative class
of purchasers of VelocityShares Daily Inverse VIX Short Term Exchange Traded Notes linked to the S&P 500 VIX
Short-Term Futures Index (XIV ETNs). The complaints have been consolidated and asserts claims against Credit
Suisse for violations of various anti-fraud and anti-manipulation provision of US securities laws arising from a decline
in the value of XIV ETNs in February 2018. On appeal from an order of the SDNY dismissing all claims, the Second
Circuit issued an order reinstated a portion of the claims. In decisions in March 2023 and March 2024, the court
denied class certification for two of the three classes proposed by plaintiffs and certified the third proposed class.
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 96
Note 15 Provisions and contingent liabilities (continued)
10. Bulgarian former clients matter
Credit Suisse AG had been responding to an investigation by the Swiss Office of the Attorney General (SOAG)
concerning the diligence and controls applied to a historical relationship with Bulgarian former clients who are
alleged to have laundered funds through Credit Suisse AG accounts. In December 2020, the SOAG brought charges
against Credit Suisse AG and other parties. In June 2022, following a trial, Credit Suisse AG was convicted in the
Swiss Federal Criminal Court of certain historical organizational inadequacies in its anti-money laundering
framework and ordered to pay a fine of CHF
m. In addition, the court seized certain client assets in the amount
of approximately CHF
m and ordered Credit Suisse AG to pay a compensatory claim in the amount of
approximately CHF
m. In July 2022, Credit Suisse AG appealed the decision to the Swiss Federal Court of Appeals.
11. Supply chain finance funds
Credit Suisse has received requests for documents and information in connection with inquiries, investigations,
enforcement and other actions relating to the supply chain finance funds (SCFFs) matter by FINMA, the FCA and
other regulatory and governmental agencies. The Luxembourg Commission de Surveillance du Secteur Financier is
reviewing the matter and has commissioned a report from a third party. Credit Suisse is cooperating with these
authorities.
In February 2023, FINMA announced the conclusion of its enforcement proceedings against Credit Suisse in
connection with the SCFFs matter. In its order, FINMA reported that Credit Suisse had seriously breached applicable
Swiss supervisory laws in this context with regard to risk management and appropriate operational structures. While
FINMA recognized that Credit Suisse had already taken extensive organizational measures to strengthen its
governance and control processes, FINMA ordered certain additional remedial measures. These include a
requirement that Credit Suisse documents the responsibilities of approximately
This measure has been made applicable to UBS Group. FINMA has also separately opened four enforcement
proceedings against former managers of Credit Suisse.
In May 2023, FINMA opened an enforcement proceeding against Credit Suisse in order to confirm compliance with
supervisory requirements in response to inquiries from FINMA’s enforcement division in the SCFFs matter.
The Attorney General of the Canton of Zurich has initiated a criminal procedure in connection with the SCFFs matter
and several fund investors have joined the procedure as interested parties. Certain former and active Credit Suisse
employees, among others, have been named as accused persons, but Credit Suisse itself is not a party to the
procedure.
Certain civil actions have been filed by fund investors and other parties against Credit Suisse and/or certain officers
and directors in various jurisdictions, which make allegations including mis-selling and breaches of duties of care,
diligence and other fiduciary duties. In June 2024, the Credit Suisse SCFFs made a voluntary offer to the SCFFs
investors to redeem all outstanding fund units. The offer expired on 31 July 2024, and fund units representing
around
% of the SCFFs’ net asset value were tendered in the offer and accepted. Fund units accepted in the
offer were redeemed at
% of the net asset value determined on 25 February 2021, net of any payments made
by the relevant fund to the fund investors since that time. Investors whose units were redeemed released any claims
they may have had against the SCFFs, Credit Suisse or UBS. The offer was funded by UBS through the purchase of
units of feeder sub-funds.
12. Archegos
Credit Suisse and UBS have received requests for documents and information in connection with inquiries,
investigations and/or actions relating to their relationships with Archegos Capital Management (Archegos),
including from FINMA (assisted by a third party appointed by FINMA), the DOJ, the SEC, the US Federal Reserve,
the US Commodity Futures Trading Commission (CFTC), the US Senate Banking Committee, the Prudential
Regulation Authority (PRA), the FCA, COMCO, the Hong Kong Competition Commission and other regulatory and
governmental agencies. UBS is cooperating with the authorities in these matters. In July 2023, CSI and CSSEL
entered into a settlement agreement with the PRA providing for the resolution of the PRA’s investigation. Also in
July 2023, FINMA issued a decree ordering remedial measures and the Federal Reserve Board issued an Order to
Cease and Desist. Under the terms of the order, Credit Suisse paid a civil money penalty and agreed to undertake
certain remedial measures relating to counterparty credit risk management, liquidity risk management and non-
financial risk management, as well as enhancements to board oversight and governance. UBS Group, as the legal
successor to Credit Suisse Group AG, is a party to the FINMA decree and Federal Reserve Board Cease and Desist
Order. Civil actions relating to Credit Suisse’s relationship with Archegos have been filed against Credit Suisse
and/or certain officers and directors, including claims for breaches of fiduciary duties.
UBS Group second quarter 2024 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 97
Note 15 Provisions and contingent liabilities (continued)
13. Credit Suisse financial disclosures
Credit Suisse Group AG and certain directors, officers and executives have been named in securities class action
complaints pending in the SDNY. These complaints, filed on behalf of purchasers of Credit Suisse shares, additional
tier 1 capital notes, and other securities in 2023, allege that defendants made misleading statements regarding: (i)
customer outflows in late 2022; (ii) the adequacy of Credit Suisse’s financial reporting controls; and (iii) the
adequacy of Credit Suisse’s risk management processes, and include allegations relating to Credit Suisse Group
AG’s merger with UBS Group AG. Many of the actions have been consolidated, and a motion to dismiss has been
filed and remains pending. One additional action, filed in October 2023, has been stayed pending a determination
on whether it should be consolidated with the earlier actions.
Credit Suisse has received requests for documents and information from regulatory and governmental agencies in
connection with inquiries, investigations and/or actions relating to these matters, as well as for other statements
regarding Credit Suisse’s financial condition, including from the SEC, the DOJ and FINMA. UBS is cooperating with
the authorities in these matters.
14. Merger-related litigation
Certain Credit Suisse Group AG affiliates and certain directors, officers and executives have been named in class
action complaints pending in the SDNY. One complaint, brought on behalf of Credit Suisse shareholders, alleges
breaches of fiduciary duty under Swiss law and civil RICO claims under United States federal law. In February 2024,
the court granted defendants’ motions to dismiss the civil RICO claims and conditionally dismissed the Swiss law
claims pending defendants’ acceptance of jurisdiction in Switzerland. In March 2024, having received consents to
Swiss jurisdiction from all defendants served with the complaint, the court dismissed the Swiss law claims against
those defendants. Additional complaints, brought on behalf of holders of Credit Suisse additional tier 1 capital
notes (AT1 noteholders) allege breaches of fiduciary duty under Swiss law, arising from a series of scandals and
misconduct, which led to Credit Suisse Group AG’s merger with UBS Group AG, causing losses to shareholders and
AT1 noteholders. The motion to dismiss the first of these complaints was granted in March 2024 on the basis that
Switzerland is the most appropriate forum for litigation.
UBS Group second quarter 2024 report |
Appendix 98
Appendix
Alternative performance measures
Alternative performance measures
An alternative performance measure (an APM) is a financial measure of historical or future financial performance,
financial position or cash flows other than a financial measure defined or specified in the applicable recognized
accounting standards or in other applicable regulations. A number of APMs are reported in the discussion of the
financial and operating performance of the external reports (annual, quarterly and other reports). APMs are used
to provide a more complete picture of operating performance and to reflect management’s view of the fundamental
drivers of the business results. A definition of each APM, the method used to calculate it and the information
content are presented in alphabetical order in the table below. These APMs may qualify as non-GAAP measures as
defined by US Securities and Exchange Commission (SEC) regulations.
APM label
Calculation
Information content
Cost / income ratio (%)
Calculated as operating expenses divided by total
revenues.
This measure provides information about the
efficiency of the business by comparing operating
expenses with total revenues.
Fee-generating assets (USD)
– Global Wealth Management
Calculated as the sum of discretionary and
nondiscretionary wealth management portfolios
(mandate volume) and assets where generated
revenues are predominantly of a recurring nature, i.e.,
mainly investment, mutual, hedge and private-market
funds where we have a distribution agreement,
including client commitments into closed-ended
private-market funds from the date that recurring
fees are charged. Assets related to our Global
Financial Intermediaries business are excluded, as are
assets of sanctioned clients.
This measure provides information about the volume
of invested assets that create a revenue stream,
whether as a result of the nature of the contractual
relationship with clients or through the fee structure
of the asset. An increase in the level of fee-generating
assets results in an increase in the associated revenue
stream. Assets of sanctioned clients are excluded from
fee-generating assets.
Fee-pool-comparable revenues (USD)
– the Investment Bank
Calculated as the total of revenues from: merger-and-
acquisition-related transactions; Equity Capital
Markets, excluding derivatives; Leveraged Capital
Markets, excluding the impact of mark-to-market
movements on loan portfolios; and Debt Capital
Markets, excluding revenues related to debt
underwriting of UBS instruments.
This measure provides information about the amount
of revenues in the Investment Bank that are
comparable with the relevant global fee pools.
Gross margin on invested assets (bps)
– Asset Management
Calculated as total revenues (annualized as applicable)
divided by average invested assets.
This measure provides information about the total
revenues of the business in relation to invested assets.
Impaired loan portfolio as a percentage
of total loan portfolio, gross (%)
– Global Wealth Management,
Personal & Corporate Banking
Calculated as impaired loan portfolio divided by total
gross loan portfolio.
This measure provides information about the
proportion of impaired loan portfolio in the total gross
loan portfolio.
Integration-related expenses (USD)
Generally include costs of internal staff and
contractors substantially dedicated to integration
activities, retention awards, redundancy costs,
incremental expenses from the shortening of useful
lives of property, equipment and software, and
impairment charges relating to these assets.
Classification as integration-related expenses does not
affect the timing of recognition and measurement of
those expenses or the presentation thereof in the
income statement. Integration-related expenses
incurred by Credit Suisse also included expenses
associated with restructuring programs that existed
prior to the acquisition.
This measure provides information about expenses
that are temporary, incremental and directly related to
the integration of Credit Suisse into UBS.
Invested assets (USD and CHF)
– Global Wealth Management,
Personal & Corporate Banking,
Asset Management
Calculated as the sum of managed fund assets,
managed institutional assets, discretionary and
advisory wealth management portfolios, fiduciary
deposits, time deposits, savings accounts, and wealth
management securities or brokerage accounts.
This measure provides information about the volume
of client assets managed by or deposited with UBS for
investment purposes.
UBS Group second quarter 2024 report |
Appendix 99
APM label
Calculation
Information content
Net interest margin (bps)
– Personal & Corporate Banking
Calculated as net interest income (annualized as
applicable) divided by average loans.
This measure provides information about the
profitability of the business by calculating the
difference between the price charged for lending and
the cost of funding, relative to loan value.
Net new assets (USD)
– Global Wealth Management
Calculated as the net amount of inflows and outflows
of invested assets (as defined in UBS policy) recorded
during a specific period, plus interest and dividends.
Excluded from the calculation are movements due to
market performance, foreign exchange translation,
fees, and the effects on invested assets of strategic
decisions by UBS to exit markets or services.
This measure provides information about the
development of invested assets during a specific
period as a result of net new asset flows, plus the
effect of interest and dividends.
Net new assets growth rate (%)
– Global Wealth Management
Calculated as the net amount of inflows and outflows
of invested assets (as defined in UBS policy) recorded
during a specific period (annualized as applicable),
plus interest and dividends, divided by total invested
assets at the beginning of the period.
This measure provides information about the growth
of invested assets during a specific period as a result
of net new asset flows.
Net new fee-generating assets (USD)
– Global Wealth Management
Calculated as the net amount of fee-generating asset
inflows and outflows, including dividend and interest
inflows into mandates and outflows from mandate
fees paid by clients during a specific period. Excluded
from the calculation are the effects on fee-generating
assets of strategic decisions by UBS to exit markets or
services.
This measure provides information about the
development of fee-generating assets during a
specific period as a result of net flows, excluding
movements due to market performance and foreign
exchange translation, as well as the effects on fee-
generating assets of strategic decisions by UBS to exit
markets or services.
Net new money (USD)
– Global Wealth Management,
Asset Management
Calculated as the net amount of inflows and outflows
of invested assets (as defined in UBS policy) recorded
during a specific period. Excluded from the calculation
are movements due to market performance, foreign
exchange translation, dividends, interest and fees, as
well as the effects on invested assets of strategic
decisions by UBS to exit markets or services. Net new
money is not measured for Personal & Corporate
Banking.
This measure provides information about the
development of invested assets during a specific
period as a result of net new money flows.
Net new money growth rate (%)
– Global Wealth Management
Calculated as the net amount of inflows and outflows
of invested assets (as defined in UBS policy) recorded
during a specific period (annualized as applicable)
divided by total invested assets at the beginning of
the period.
This measure provides information about the growth
of invested assets during a specific period as a result
of net new money flows.
Net profit growth (%)
Calculated as the change in net profit attributable to
shareholders from continuing operations between
current and comparison periods divided by net profit
attributable to shareholders from continuing
operations of the comparison period.
This measure provides information about profit
growth since the comparison period.
Operating expenses (underlying)
(USD)
Calculated by adjusting operating expenses as
reported in accordance with IFRS Accounting
Standards for items that management believes are
not representative of the underlying performance of
the businesses.
›
Refer to the “Group performance” section of this
report for more information
This measure provides information about the amount
of operating expenses, while excluding items that
management believes are not representative of the
underlying performance of the businesses.
Operating profit / (loss) before tax
(underlying) (USD)
Calculated by adjusting operating profit / (loss) before
tax as reported in accordance with IFRS Accounting
Standards for items that management believes are
not representative of the underlying performance of
the businesses.
›
Refer to the “Group performance” section of this
report for more information
This measure provides information about the amount
of operating profit / (loss) before tax, while excluding
items that management believes are not
representative of the underlying performance of the
businesses.
Pre-tax profit growth (%)
– Global Wealth Management,
Personal & Corporate Banking,
Asset Management,
the Investment Bank
Calculated as the change in net profit before tax
attributable to shareholders from continuing
operations between current and comparison periods
divided by net profit before tax attributable to
shareholders from continuing operations of the
comparison period.
This measure provides information about pre-tax
profit growth since the comparison period.
UBS Group second quarter 2024 report |
Appendix 100
APM label
Calculation
Information content
Pre-tax profit growth (underlying) (%)
– Global Wealth Management,
Personal & Corporate Banking,
Asset Management,
the Investment Bank
Calculated as the change in net profit before tax
attributable to shareholders from continuing
operations between current and comparison periods
divided by net profit before tax attributable to
shareholders from continuing operations of the
comparison period. Net profit before tax attributable
to shareholders from continuing operations excludes
items that management believes are not
representative of the underlying performance of the
businesses and also excludes related tax impact.
This measure provides information about pre-tax
profit growth since the comparison period, while
excluding items that management believes are not
representative of the underlying performance of the
businesses.
Recurring net fee income
(USD and CHF)
– Global Wealth Management,
Personal & Corporate Banking
Calculated as the total of fees for services provided on
an ongoing basis, such as portfolio management fees,
asset-based investment fund fees and custody fees,
which are generated on client assets, and
administrative fees for accounts.
This measure provides information about the amount
of recurring net fee income.
Return on attributed equity
1
Calculated as annualized business division operating
profit before tax divided by average attributed equity.
This measure provides information about the
profitability of the business divisions in relation to
attributed equity.
Return on common equity tier 1
capital
1
Calculated as annualized net profit attributable to
shareholders divided by average common equity tier 1
capital.
This measure provides information about the
profitability of the business in relation to common
equity tier 1 capital.
Return on equity
1
Calculated as annualized net profit attributable to
shareholders divided by average equity attributable to
shareholders.
This measure provides information about the
profitability of the business in relation to equity.
Return on leverage ratio denominator,
gross
1
Calculated as annualized total revenues divided by
average leverage ratio denominator.
This measure provides information about the revenues
of the business in relation to the leverage ratio
denominator.
Return on tangible equity
1
Calculated as annualized net profit attributable to
shareholders divided by average equity attributable to
shareholders less average goodwill and intangible
assets.
This measure provides information about the
profitability of the business in relation to tangible
equity.
Tangible book value per share
(USD)
Calculated as equity attributable to shareholders less
goodwill and intangible assets divided by the number
of shares outstanding.
This measure provides information about tangible net
assets on a per-share basis.
Total book value per share
(USD)
Calculated as equity attributable to shareholders
divided by the number of shares outstanding.
This measure provides information about net assets
on a per-share basis.
Total revenues (underlying)
(USD)
Calculated by adjusting total revenues as reported in
accordance with IFRS Accounting Standards for items
that management believes are not representative of
the underlying performance of the businesses.
›
Refer to the “Group performance” section of this
report for more information
This measure provides information about the amount
of total revenues, while excluding items that
management believes are not representative of the
underlying performance of the businesses.
Transaction-based income
(USD and CHF)
– Global Wealth Management,
Personal & Corporate Banking
Calculated as the total of the non-recurring portion of
net fee and commission income, mainly composed of
brokerage and transaction-based investment fund
fees, and credit card fees, as well as fees for payment
and foreign-exchange transactions, together with
other net income from financial instruments
measured at fair value through profit or loss.
This measure provides information about the amount
of the non-recurring portion of net fee and
commission income, together with other net income
from financial instruments measured at fair value
through profit or loss.
Underlying cost / income ratio (%)
Calculated as underlying operating expenses (as
defined above) divided by underlying total revenues
(as defined above).
This measure provides information about the
efficiency of the business by comparing operating
expenses with total revenues, while excluding items
that management believes are not representative of
the underlying performance of the businesses.
Underlying net profit growth (%)
Calculated as the change in net profit attributable to
shareholders from continuing operations between
current and comparison periods divided by net profit
attributable to shareholders from continuing
operations of the comparison period. Net profit
attributable to shareholders from continuing
operations excludes items that management believes
are not representative of the underlying performance
of the businesses and also excludes related tax
impact.
This measure provides information about profit
growth since the comparison period, while excluding
items that management believes are not
representative of the underlying performance of the
businesses.
UBS Group second quarter 2024 report |
Appendix 101
APM label
Calculation
Information content
Underlying return on attributed equity
1
(%)
Calculated as annualized underlying business division
operating profit before tax (as defined above) divided
by average attributed equity.
This measure provides information about the
profitability of the business divisions in relation to
attributed equity, while excluding items that
management believes are not representative of the
underlying performance of the businesses.
Underlying return on common equity
tier 1 capital
1
Calculated as annualized net profit attributable to
shareholders divided by average common equity tier 1
capital. Net profit attributable to shareholders
excludes items that management believes are not
representative of the underlying performance of the
businesses and also excludes related tax impact.
This measure provides information about the
profitability of the business in relation to common
equity tier 1 capital, while excluding items that
management believes are not representative of the
underlying performance of the businesses.
Underlying return on tangible equity
1
(%)
Calculated as annualized net profit attributable to
shareholders divided by average equity attributable to
shareholders less average goodwill and intangible
assets. Net profit attributable to shareholders excludes
items that management believes are not
representative of the underlying performance of the
businesses and also excludes related tax impact.
This measure provides information about the
profitability of the business in relation to tangible
equity, while excluding items that management
believes are not representative of the underlying
performance of the businesses.
1
Profit or loss information for each of the second quarter of 2024, the first quarter of 2024 and the fourth quarter of 2023 is presented on a consolidated basis, including for each quarter Credit Suisse data for three
months, and for the purpose of the calculation of return measures has been annualized multiplying such by four. Profit or loss information for the second quarter of 2023 is presented on a consolidated basis, including
Credit Suisse data for one month (June 2023), and for the purpose of the calculation of return measures has been annualized multiplying such by four. Profit or loss information for the first six months of 2024 is
presented on a consolidated basis, including Credit Suisse data for six months, and for the purpose of the calculation of return measures has been annualized by multiplying such by two. Profit or loss information for
the first six months of 2023 is presented on a consolidated basis, including Credit Suisse data for one month, and for the purpose of the calculation of return measures has been annualized by multiplying such by two.
This is a general list of the APMs used in our financial reporting. Not all of the APMs listed above may appear in
this particular report.
Information related to underlying return on common equity tier 1 (CET1) capital and underlying return on tangible
equity (%)
As of or for the quarter ended
As of or year-to-date
USD m, except where indicated
30.6.24
31.3.24
1
31.12.23
1
30.6.23
1
30.6.24
30.6.23
1
Underlying operating profit / (loss) before tax
Underlying tax expense / (benefit)
Net profit / (loss) attributable to non-controlling interests
Underlying net profit / (loss) attributable to shareholders
Underlying net profit / (loss) attributable to shareholders, annualized
Tangible equity
Average tangible equity
CET1 capital
Average CET1 capital
Underlying return on tangible equity (%)
2
Underlying return on common equity tier 1 capital
2
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
2
Comparative-period information for the first quarter of 2024 has been restated to reflect the updated underlying tax impact.
UBS Group second quarter 2024 report |
Appendix 102
Abbreviations frequently used in our financial reports
A
ABS asset-backed securities
AG Aktiengesellschaft
AGM Annual General Meeting of
shareholders
AI artificial intelligence
A-IRB advanced internal ratings-
based
AIV alternative investment
vehicle
ALCO Asset and Liability
Committee
AMA advanced measurement
approach
AML anti-money laundering
AoA Articles of Association
APM alternative performance
measure
ARR alternative reference rate
ARS auction rate securities
ASF available stable funding
AT1 additional tier 1
AuM assets under management
B
BCBS Basel Committee on
Banking Supervision
BIS Bank for International
Settlements
BoD Board of Directors
C
CAO Capital Adequacy
Ordinance
CCAR Comprehensive Capital
Analysis and Review
CCF credit conversion factor
CCP central counterparty
CCR counterparty credit risk
CCRC Corporate Culture and
Responsibility Committee
CDS credit default swap
CEA Commodity Exchange Act
CEO Chief Executive Officer
CET1 common equity tier 1
CFO Chief Financial Officer
CGU cash-generating unit
CHF Swiss franc
CIO Chief Investment Office
C&ORC Compliance & Operational
Risk Control
CRM credit risk mitigation (credit
risk) or comprehensive risk
measure (market risk)
CST combined stress test
CUSIP Committee on Uniform
Security Identification
Procedures
CVA credit valuation adjustment
D
DBO defined benefit obligation
DCCP Deferred Contingent
Capital Plan
DE&I diversity, equity and
inclusion
DFAST Dodd–Frank Act Stress Test
DM discount margin
DOJ US Department of Justice
DTA deferred tax asset
DVA debit valuation adjustment
E
EAD exposure at default
EB Executive Board
EC European Commission
ECB European Central Bank
ECL expected credit loss
EGM Extraordinary General
Meeting of shareholders
EIR effective interest rate
EL expected loss
EMEA Europe, Middle East and
Africa
EOP Equity Ownership Plan
EPS earnings per share
ESG environmental, social and
governance
ESR environmental and social
risk
ETD exchange-traded derivatives
ETF exchange-traded fund
EU European Union
EUR euro
EURIBOR Euro Interbank Offered Rate
EVE economic value of equity
EY Ernst & Young Ltd
F
FA financial advisor
FCA UK Financial Conduct
Authority
FDIC Federal Deposit Insurance
Corporation
FINMA Swiss Financial Market
Supervisory Authority
FMIA Swiss Financial Market
Infrastructure Act
FSB Financial Stability Board
FTA Swiss Federal Tax
Administration
FVA funding valuation
adjustment
FVOCI fair value through other
comprehensive income
FVTPL fair value through profit or
loss
FX foreign exchange
G
GAAP generally accepted
accounting principles
GBP pound sterling
GCRG Group Compliance,
Regulatory & Governance
GDP gross domestic product
GEB Group Executive Board
GHG greenhouse gas
GIA Group Internal Audit
GRI Global Reporting Initiative
G-SIB global systemically
important bank
H
HQLA
high-quality liquid assets
I
IAS International Accounting
Standards
IASB International Accounting
Standards Board
IBOR interbank offered rate
IFRIC International Financial
Reporting Interpretations
Committee
IFRS accounting standards
Accounting issued by the IASB
Standards
IRB internal ratings-based
IRRBB interest rate risk in the
banking book
ISDA International Swaps and
Derivatives Association
ISIN International Securities
Identification Number
UBS Group second quarter 2024 report |
Appendix 103
Abbreviations frequently used in our financial reports (continued)
K
KRT Key Risk Taker
L
LAS liquidity-adjusted stress
LCR liquidity coverage ratio
LGD loss given default
LIBOR London Interbank Offered
Rate
LLC limited liability company
LoD lines of defense
LRD leverage ratio denominator
LTIP Long-Term Incentive Plan
LTV loan-to-value
M
M&A mergers and acquisitions
MRT Material Risk Taker
N
NII net interest income
NSFR net stable funding ratio
NYSE New York Stock Exchange
O
OCA own credit adjustment
OCI other comprehensive
income
OECD Organisation for Economic
Co-operation and
Development
OTC over-the-counter
P
PCI purchased credit impaired
PD probability of default
PIT point in time
P&L profit or loss
PPA purchase price allocation
Q
QCCP qualifying central
counterparty
R
RBC risk-based capital
RbM risk-based monitoring
REIT real estate investment trust
RMBS residential mortgage-
backed securities
RniV risks not in VaR
RoCET1 return on CET1 capital
RoU right-of-use
rTSR relative total shareholder
return
RWA risk-weighted assets
S
SA standardized approach or
société anonyme
SA-CCR standardized approach for
counterparty credit risk
SAR Special Administrative
Region of the People’s
Republic of China
SDG Sustainable Development
Goal
SEC US Securities and Exchange
Commission
SFT securities financing
transaction
SI sustainable investing or
sustainable investment
SIBOR Singapore Interbank
Offered Rate
SICR significant increase in credit
risk
SIX SIX Swiss Exchange
SME small and medium-sized
entities
SMF Senior Management
Function
SNB Swiss National Bank
SOR Singapore Swap Offer Rate
SPPI solely payments of principal
and interest
SRB systemically relevant bank
SRM specific risk measure
SVaR stressed value-at-risk
T
TBTF too big to fail
TCFD Task Force on Climate-
related Financial Disclosures
TIBOR Tokyo Interbank Offered
Rate
TLAC total loss-absorbing capacity
TTC through the cycle
U
USD US dollar
V
VaR value-at-risk
VAT
value added tax
This is a general list of the abbreviations frequently used in our financial reporting. Not all of the listed abbreviations
may appear in this particular report.
UBS Group second quarter 2024 report |
Appendix 104
Information sources
Reporting publications
Annual publications
UBS Group Annual Report
: Published in English, this report provides descriptions of: the Group strategy and
performance; the strategy and performance of the business divisions and Group Items; risk, treasury and capital
management; corporate governance; the compensation framework, including information about compensation for
the Board of Directors and the Group Executive Board members; and financial information, including the financial
statements.
“Auszug aus dem Geschäftsbericht
”: This publication provides a German translation of selected sections of the UBS
Group Annual Report.
Compensation Report
: This report discusses the compensation framework and provides information about
compensation for the Board of Directors and the Group Executive Board members. It is available in English and
German (
“Vergütungsbericht
”) and represents a component of the UBS Group Annual Report.
Sustainability Report
: Published in English, the Sustainability Report provides disclosures on environmental, social
and governance topics related to the UBS Group. It also provides certain disclosures related to diversity, equity and
inclusion.
Quarterly publications
Quarterly financial report
: This report provides an update on performance and strategy (where applicable) for the
respective quarter. It is available in English.
The annual and quarterly publications are available in .pdf and online formats at
ubs.com/investors
, under “Financial
information.” Starting with the Annual Report 2022, printed copies, in any language, of the aforementioned annual
publications are no longer provided.
Other information
Website
The “Investor Relations” website at
ubs.com/investors
news releases; financial information, including results-related filings with the US Securities and Exchange
Commission (the SEC); information for shareholders, including UBS share price charts, as well as data and dividend
information, and for bondholders; the corporate calendar; and presentations by management for investors and
financial analysts. Information is available online in English, with some information also available in German.
Results presentations
Quarterly results presentations are webcast live. Recordings of most presentations can be downloaded from
ubs.com/presentations
.
Messaging service
Email alerts to news about UBS can be subscribed for under “UBS News Alert” at
ubs.com/global/en/investor-
relations/contact/investor-services.html
. Messages are sent in English, German, French or Italian, with an option to
select theme preferences for such alerts.
Form 20-F and other submissions to the US Securities and Exchange Commission
UBS files periodic reports with and submits other information to the SEC. Principal among these filings is the annual
report on Form 20-F, filed pursuant to the US Securities Exchange Act of 1934. The filing of Form 20-F is structured
as a wraparound document. Most sections of the filing can be satisfied by referring to the UBS Group AG Annual
Report. However, there is a small amount of additional information in Form 20-F that is not presented elsewhere
and is particularly targeted at readers in the US. Readers are encouraged to refer to this additional disclosure. Any
document that filed with the SEC is available on the SEC’s website:
sec.gov
. Refer to
ubs.com/investors
information.
UBS Group second quarter 2024 report |
Appendix 105
Cautionary statement regarding forward-looking statements |
not limited to management’s outlook for UBS’s financial performance, statements relating to the anticipated effect of transactions and strategic initiatives on
UBS’s business and future development and goals or intentions to achieve climate, sustainability and other social objectives. While these forward-looking
statements represent UBS’s judgments, expectations and objectives concerning the matters described, a number of risks, uncertainties and other important
factors could cause actual developments and results to differ materially from UBS’s expectations. In particular, terrorist activity and conflicts in the Middle East,
as well as the continuing Russia–Ukraine war, may have significant impacts on global markets, exacerbate global inflationary pressures, and slow global growth.
In addition, the ongoing conflicts may continue to cause significant population displacement, and lead to shortages of vital commodities, including energy
shortages and food insecurity outside the areas immediately involved in armed conflict. Governmental responses to the armed conflicts, including, with respect
to the Russia–Ukraine war, coordinated successive sets of sanctions on Russia and Belarus, and Russian and Belarusian entities and nationals, and the uncertainty
as to whether the ongoing conflicts will widen and intensify, may continue to have significant adverse effects on the market and macroeconomic conditions,
including in ways that cannot be anticipated. UBS’s acquisition of the Credit Suisse Group has materially changed its outlook and strategic direction and
introduced new operational challenges. The integration of the Credit Suisse entities into the UBS structure is expected to take between three and five years and
presents significant risks, including the risks that UBS Group AG may be unable to achieve the cost reductions and other benefits contemplated by the transaction.
This creates significantly greater uncertainty about forward-looking statements. Other factors that may affect UBS’s performance and ability to achieve its plans,
outlook and other objectives also include, but are not limited to: (i) the degree to which UBS is successful in the execution of its strategic plans, including its cost
reduction and efficiency initiatives and its ability to manage its levels of risk-weighted assets (RWA) and leverage ratio denominator (LRD), liquidity coverage ratio
and other financial resources, including changes in RWA assets and liabilities arising from higher market volatility and the size of the combined Group; (ii) the
degree to which UBS is successful in implementing changes to its businesses to meet changing market, regulatory and other conditions, including as a result of
the acquisition of the Credit Suisse Group; (iii) increased inflation and interest rate volatility in major markets; (iv) developments in the macroeconomic climate
and in the markets in which UBS operates or to which it is exposed, including movements in securities prices or liquidity, credit spreads, currency exchange rates,
deterioration or slow recovery in residential and commercial real estate markets, the effects of economic conditions, including elevated inflationary pressures,
market developments, increasing geopolitical tensions, and changes to national trade policies on the financial position or creditworthiness of UBS’s clients and
counterparties, as well as on client sentiment and levels of activity; (v) changes in the availability of capital and funding, including any adverse changes in UBS’s
credit spreads and credit ratings of UBS, Credit Suisse, sovereign issuers, structured credit products or credit-related exposures, as well as availability and cost of
funding to meet requirements for debt eligible for total loss-absorbing capacity (TLAC), in particular in light of the acquisition of the Credit Suisse Group;
(vi) changes in central bank policies or the implementation of financial legislation and regulation in Switzerland, the US, the UK, the EU and other financial centers
that have imposed, or resulted in, or may do so in the future, more stringent or entity-specific capital, TLAC, leverage ratio, net stable funding ratio, liquidity and
funding requirements, heightened operational resilience requirements, incremental tax requirements, additional levies, limitations on permitted activities,
constraints on remuneration, constraints on transfers of capital and liquidity and sharing of operational costs across the Group or other measures, and the effect
these will or would have on UBS’s business activities; (vii) UBS’s ability to successfully implement resolvability and related regulatory requirements and the potential
need to make further changes to the legal structure or booking model of UBS in response to legal and regulatory requirements and any additional requirements
due to its acquisition of the Credit Suisse Group, or other developments; (viii) UBS’s ability to maintain and improve its systems and controls for complying with
sanctions in a timely manner and for the detection and prevention of money laundering to meet evolving regulatory requirements and expectations, in particular
in current geopolitical turmoil; (ix) the uncertainty arising from domestic stresses in certain major economies; (x) changes in UBS’s competitive position, including
whether differences in regulatory capital and other requirements among the major financial centers adversely affect UBS’s ability to compete in certain lines of
business; (xi) changes in the standards of conduct applicable to its businesses that may result from new regulations or new enforcement of existing standards,
including measures to impose new and enhanced duties when interacting with customers and in the execution and handling of customer transactions; (xii) the
liability to which UBS may be exposed, or possible constraints or sanctions that regulatory authorities might impose on UBS, due to litigation, contractual claims
and regulatory investigations, including the potential for disqualification from certain businesses, potentially large fines or monetary penalties, or the loss of
licenses or privileges as a result of regulatory or other governmental sanctions, as well as the effect that litigation, regulatory and similar matters have on the
operational risk component of its RWA, including as a result of its acquisition of the Credit Suisse Group, as well as the amount of capital available for return to
shareholders; (xiii) the effects on UBS’s business, in particular cross-border banking, of sanctions, tax or regulatory developments and of possible changes in UBS’s
policies and practices; (xiv) UBS’s ability to retain and attract the employees necessary to generate revenues and to manage, support and control its businesses,
which may be affected by competitive factors; (xv) changes in accounting or tax standards or policies, and determinations or interpretations affecting the
recognition of gain or loss, the valuation of goodwill, the recognition of deferred tax assets and other matters; (xvi) UBS’s ability to implement new technologies
and business methods, including digital services and technologies, and ability to successfully compete with both existing and new financial service providers,
some of which may not be regulated to the same extent; (xvii) limitations on the effectiveness of UBS’s internal processes for risk management, risk control,
measurement and modeling, and of financial models generally; (xviii) the occurrence of operational failures, such as fraud, misconduct, unauthorized trading,
financial crime, cyberattacks, data leakage and systems failures, the risk of which is increased with cyberattack threats from both nation states and non-nation-
state actors targeting financial institutions; (xix) restrictions on the ability of UBS Group AG and UBS AG to make payments or distributions, including due to
restrictions on the ability of its subsidiaries to make loans or distributions, directly or indirectly, or, in the case of financial difficulties, due to the exercise by FINMA
or the regulators of UBS’s operations in other countries of their broad statutory powers in relation to protective measures, restructuring and liquidation
proceedings; (xx) the degree to which changes in regulation, capital or legal structure, financial results or other factors may affect UBS’s ability to maintain its
stated capital return objective; (xxi) uncertainty over the scope of actions that may be required by UBS, governments and others for UBS to achieve goals relating
to climate, environmental and social matters, as well as the evolving nature of underlying science and industry and the possibility of conflict between different
governmental standards and regulatory regimes; (xxii) the ability of UBS to access capital markets; (xxiii) the ability of UBS to successfully recover from a disaster
or other business continuity problem due to a hurricane, flood, earthquake, terrorist attack, war, conflict (e.g., the Russia–Ukraine war), pandemic, security
breach, cyberattack, power loss, telecommunications failure or other natural or man-made event, including the ability to function remotely during long-term
disruptions such as the COVID-19 (coronavirus) pandemic; (xxiv) the level of success in the absorption of Credit Suisse, in the integration of the two groups and
their businesses, and in the execution of the planned strategy regarding cost reduction and divestment of any non-core assets, the existing assets and liabilities
of Credit Suisse, the level of resulting impairments and write-downs, the effect of the consummation of the integration on the operational results, share price
and credit rating of UBS – delays, difficulties, or failure in closing the transaction may cause market disruption and challenges for UBS to maintain business,
contractual and operational relationships; and (xxv) the effect that these or other factors or unanticipated events, including media reports and speculations, may
have on its reputation and the additional consequences that this may have on its business and performance. The sequence in which the factors above are
presented is not indicative of their likelihood of occurrence or the potential magnitude of their consequences. UBS’s business and financial performance could
be affected by other factors identified in its past and future filings and reports, including those filed with the US Securities and Exchange Commission (the SEC).
More detailed information about those factors is set forth in documents furnished by UBS and filings made by UBS with the SEC, including the UBS Group AG
and UBS AG Annual Reports on Form 20- F for the year ended 31 December 2023. UBS is not under any obligation to (and expressly disclaims any obligation to)
update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.
Rounding |
disclosed in text and tables are calculated on the basis of unrounded figures. Absolute changes between reporting periods disclosed in the text, which can be
derived from numbers presented in related tables, are calculated on a rounded basis.
Tables |
available as of the relevant date or for the relevant period. Zero values generally indicate that the respective figure is zero on an actual or rounded basis. Values
that are zero on a rounded basis can be either negative or positive on an actual basis.
Websites |
of any such websites into this report.
UBS Group AG
PO Box
CH-8098 Zurich
ubs.com
This Form 6-K is hereby incorporated by reference into (1) each of the registration statements on Form F-3
(Registration Numbers 333-263376 and 333-278934), and on Form S-8 (Registration Numbers 333-200634; 333-
200635; 333-200641; 333-200665; 333-215254; 333-215255; 333-228653; 333-230312; 333-249143 and 333-
272975), and into each prospectus outstanding under any of the foregoing registration statements, (2) any outstanding
offering circular or similar document issued or authorized by UBS AG and Credit Suisse AG that incorporates by
reference any Forms 6-K of UBS AG and Credit Suisse AG (respectively) that are incorporated into its registration
statements filed with the SEC, and (3) the base prospectus of Corporate Asset Backed Corporation (“CABCO”) dated
June 23, 2004 (Registration Number 333-111572), the Form 8-K of CABCO filed and dated June 23, 2004 (SEC File
Number 001-13444), and the Prospectus Supplements relating to the CABCO Series 2004-101 Trust dated May 10,
2004 and May 17, 2004 (Registration Number 033-91744 and 033-91744-05).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this
report to be signed on their behalf by the undersigned, thereunto duly authorized.
UBS Group AG
By: /s/ Sergio Ermotti
___
Name: Sergio Ermotti
Title: Group Chief Executive Officer
By: /s/ Todd Tuckner
_
Name: Todd Tuckner
Title: Group Chief Financial Officer
By: /s/ Steffen Henrich
____________
Name: Steffen Henrich
Title: Group Controller
UBS AG
By: /s/ Sergio Ermotti
_
Name: Sergio Ermotti
Title: President of the Executive Board
By: /s/ Todd Tuckner
_
Name: Todd Tuckner
Title: Chief Financial Officer
By: /s/ Steffen Henrich
_____________
Name: Steffen Henrich
Title: Controller
Date: August 14, 2024