UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
Date: February 6, 2024
UBS Group AG
(Registrant's Name)
Bahnhofstrasse 45, 8001 Zurich, Switzerland
(Address of principal executive office)
Commission File Number: 1-36764
UBS AG
(Registrant's Name)
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Aeschenvorstadt 1, 4051 Basel, Switzerland
(Address of principal executive offices)
Commission File Number: 1-15060
Credit Suisse AG
(Registrant's Name)
Paradeplatz 8, 8001 Zurich, Switzerland
(Address of principal executive office)
Commission File Number: 1-33434
Indicate by check mark whether the registrants file or will file annual reports under cover of Form 20-F or Form
40-
F.
Form 20-F
☒
☐
This Form 6-K consists of the Fourth Quarter 2023 Report of UBS Group AG, which appears immediately following
this page.
Fourth
quarter
2023
report
Corporate calendar UBS Group AG
Publication of the Annual Report 2023: Thursday, 28 March 2024
Publication of the Sustainability Report 2023: Thursday, 28 March 2024
Annual General Meeting 2024: Wednesday, 24 April 2024
Publication of the first quarter 2024 report: Tuesday, 7 May 2024
Publication of the second quarter 2024 report: Wednesday, 31 July 2024
Publication dates of future quarterly and annual reports and results are made available as
part of the corporate calendar of UBS Group AG at
ubs.com/investors
.
Contacts
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relationships with institutional investors,
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UBS Group AG, Office of the Group
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sh-shareholder-services@ubs.com
Zurich +41-44-235 6652
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inquiries in the US.
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Imprint
Publisher: UBS Group AG, Zurich, Switzerland | ubs.com
Language: English
© UBS 2024. The key symbol and UBS are among the registered and unregistered
trademarks of UBS. All rights reserved.
1.
UBS
Group
4
9
2.
UBS business divisions
and Group Items
20
23
25
27
29
30
3.
Risk, capital, liquidity and funding,
and balance sheet
32
38
46
47
49
4.
Consolidated
financial information
52
Appendix
73
78
80
81
UBS Group fourth quarter 2023 report
Terms used in this report, unless the context requires otherwise
“UBS,” “UBS Group,” “UBS Group AG consolidated,” “Group,” “the Group,” “we,” “us” and “our”
UBS Group AG and its consolidated subsidiaries
“Pre-acquisition UBS”
UBS before the acquisition of the Credit Suisse Group
“UBS AG” and “UBS AG consolidated”
UBS AG and its consolidated subsidiaries
“Credit Suisse AG” and “Credit Suisse AG consolidated”
Credit Suisse AG and its consolidated subsidiaries
“Credit Suisse Group“ and “Credit Suisse Group AG consolidated”
Credit Suisse Group before the acquisition by UBS
”Credit Suisse”
Credit Suisse AG and its consolidated subsidiaries, Credit Suisse
Services AG, and other small former Credit Suisse Group entities
now directly held by UBS Group AG
“UBS Group AG” and “UBS Group AG standalone”
UBS Group AG on a standalone basis
“Credit Suisse Group AG” and “Credit Suisse Group AG standalone”
Credit Suisse Group AG on a standalone basis
“UBS AG standalone”
UBS AG on a standalone basis
“Credit Suisse AG standalone”
Credit Suisse AG on a standalone basis
“UBS Switzerland AG” and “UBS Switzerland AG standalone”
UBS Switzerland AG on a standalone basis
“UBS Europe SE consolidated”
UBS Europe SE and its consolidated subsidiaries
“UBS Americas Holding LLC” and “UBS Americas Holding LLC consolidated”
UBS Americas Holding LLC and its consolidated subsidiaries
“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 fourth and third quarters of 2023 is presented on a consolidated basis, including
for each quarter Credit Suisse data for three months. Information for the prior-year quarters includes pre-acquisition
UBS data only. Year-to-date information for 2023 includes seven months (from June to December, inclusive) of
Credit Suisse data. Comparative year-to-date information for 2022 includes pre-acquisition UBS data only.
Balance sheet information as at 31 December 2023 and 30 September 2023 includes UBS and Credit Suisse
consolidated information. Prior balance sheet dates reflect pre-acquisition UBS information only.
UBS Group fourth quarter 2023 report
Our key figures
As of or for the quarter ended
As of or for the year ended
USD m, except where indicated
31.12.23
30.9.23
1
31.12.22
31.12.23
31.12.22
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 (%)
Return on common equity tier 1 capital (%)
Underlying return on common equity tier 1 capital (%)
Return on leverage ratio denominator, gross (%)
Cost / income ratio (%)
6
Underlying cost / income ratio (%)
6
Effective tax rate (%)
n.m.
7
n.m.
7
Net profit growth (%)
n.m.
n.m.
Resources
3
Total assets
Equity attributable to shareholders
Common equity tier 1 capital
8
Risk-weighted assets
8
Common equity tier 1 capital ratio (%)
8
Going concern capital ratio (%)
8
Total loss-absorbing capacity ratio (%)
8
Leverage ratio denominator
8
Common equity tier 1 leverage ratio (%)
8
Liquidity coverage ratio (%)
9
Net stable funding ratio (%)
Other
Invested assets (USD bn)
4,10,11
Personnel (full-time equivalents)
Market capitalization
2,12
Total book value per share (USD)
2
Tangible book value per share (USD)
2
1 Comparative-period information has been revised. Refer to “Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial information” 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 “Recent developments” section of this report for more information about the updated targets,
guidance and ambitions. 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 fourth quarter of 2023
and the third 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 2023 includes seven months (June to December 2023, inclusive) of Credit Suisse data for the year-to-date return measure. 6 Negative goodwill is not used in
the calculation as it is presented in a separate reporting line and is not part of total revenues. 7 The effective tax rate for the fourth and third quarters of 2023 is not a meaningful measure, due to the distortive
effect of current unbenefited tax losses at the former Credit Suisse entities. 8 Based on the Swiss systemically relevant bank framework as of 1 January 2020. Refer to the “Capital management” section of this
report for more information. 9 The disclosed ratios represent quarterly averages for the quarters presented and are calculated based on an average of 63 data points in the fourth quarter of 2023, 63 data points in
the third quarter of 2023 and 63 data points in the fourth quarter of 2022. Refer to the “Liquidity and funding management” section of this report for more information. 10 Consists of invested assets for Global
Wealth Management, Asset Management and Personal & Corporate Banking. Refer to “Note 31 Invested assets and net new money” in the “Consolidated financial statements” section of the Annual Report 2022
for more information. 11 Starting with the second quarter of 2023, invested assets include invested assets from associates in the Asset Management business division, to better reflect the business strategy.
Comparative figures have been restated to reflect this change. 12 In the second quarter of 2023, the calculation of market capitalization was amended to reflect total shares issued multiplied by the share price at
the end of the period. The calculation was previously based on total shares outstanding multiplied by the share price at the end of the period. Market capitalization has been increased by USD 7.8bn as of 31 December
2022 as a result.
UBS Group fourth quarter 2023 report |
UBS Group | Recent developments 4
UBS Group
Management report
Recent developments
Integration of Credit Suisse
We continue to execute on our integration plans, working toward the substantial completion of the integration by
the end of 2026. We achieved around USD 4bn in exit rate gross cost savings as of year-end 2023 compared to the
full year 2022 for UBS and the Credit Suisse Group combined. Our strategy for the wind down of Non-core and
Legacy led to reductions of USD 6bn in risk-weighted assets (RWA), the three quarters of which came from active
unwinds, and USD 19bn in LRD in the fourth quarter.
Legal structure integration
In December 2023, the Board of Directors of UBS Group AG (the BoD) approved the merger of UBS AG and Credit
Suisse AG, and both entities entered into a definitive merger agreement. The completion of the merger is subject
to regulatory approvals and is expected to occur by the end of the second quarter of 2024. We also expect to
complete the transition to a single US intermediate holding company in the second quarter of 2024 and the planned
merger of UBS Switzerland AG and Credit Suisse (Schweiz) AG in the third quarter of 2024.
Completing the mergers of our significant legal entities is a critical step in enabling us to unlock the next phase of
the cost, capital and funding synergies we expect to realize in 2025 and 2026. These significant-legal-entity mergers
are a pre-requisite for the first wave of client migrations and will allow us to begin streamlining and
decommissioning legacy Credit Suisse platforms in the second half of 2024.
Updated targets, guidance and ambitions
Based on our execution of the integration of Credit Suisse to date and the completion of our business planning
process, we have updated our performance targets and capital guidance for the Group. We have also set ambitions
for each of the business divisions that collectively are building blocks toward achieving our targets.
We aim to deliver by the end of 2026:
–
an underlying return on common equity tier 1 capital (RoCET1) of around 15% (exit rate);
–
an underlying cost / income ratio of less than 70% (exit rate); and
–
exit rate gross cost savings of approximately USD 13bn by the end of 2026 compared to full year 2022 for UBS
and Credit Suisse combined. Gross cost savings will create capacity to reinvest for growth and to enhance the
resilience of our infrastructure.
We confirm our capital guidance and aim to maintain:
–
a common equity tier 1 (CET1) capital ratio of around 14%; and
–
a CET1 leverage ratio of greater than 4.0%
As we complete the execution of the integration, including cost and capital efficiency measures, we believe our
scale and client franchises will position us to sustainably deliver higher returns. We therefore aim to deliver a
reported RoCET1 of around 18% in 2028.
We expect Group RWA to be around USD 510bn by the end of 2026, assuming constant foreign exchange rates,
including an estimated USD 25bn day-1 increase for the finalization of Basel III in 2025 (of which USD 10bn in Non-
core and Legacy) and an increase of around USD 10bn in our core businesses from the alignment of Credit Suisse
to UBS risk models. We expect to offset these increases with RWA reductions in Non-core and Legacy, with the
remaining portfolio there representing around 5% of Group RWA at the end of 2026. We also expect business-led
actions to optimize returns on RWA in our core businesses to result in a further decrease in RWA around USD 15bn.
UBS Group fourth quarter 2023 report |
UBS Group | Recent developments 5
Business division ambitions
Our business divisions aim to achieve the following.
–
Global Wealth Management: surpass USD 5trn of invested assets over the next five years, with around
USD 100bn of net new assets annually through 2025 building to around USD 200bn annually by 2028, and an
underlying cost / income ratio of less than 70% by the end of 2026 (exit rate).
–
Personal & Corporate Banking: an underlying cost / income ratio of less than 50% by the end of 2026 (exit rate).
–
Asset Management: an underlying cost / income ratio of less than 70% by the end of 2026 (exit rate).
–
The Investment Bank: an underlying return on attributed equity of approximately 15% through the cycle, while
operating with no more than 25% of the Group’s RWA.
–
Non-core and Legacy: an underlying profit-before-tax loss of less than USD 1bn (exit rate), underlying costs of
less than USD 1bn (exit rate), and a share of around 5% of Group RWA, all by the end of 2026.
Capital returns
For 2023, the Board of Directors plans to propose a dividend to UBS Group AG shareholders of USD 0.70 per share.
Subject to approval at the Annual General Meeting, scheduled for 24 April 2024, the dividend will be paid on 3 May
2024 to shareholders of record on 2 May 2024. The ex-dividend date will be 30 April 2024. We remain committed
to progressive increase in dividends and are accruing for a mid-teens percentage increase in the dividend per share
for the 2024 financial year.
In 2023, we bought back USD 1.3bn of shares before we announced the acquisition of the Credit Suisse Group. In
2024, we plan to repurchase up to USD 1bn of our shares commencing after the completion of the merger of UBS
AG and Credit Suisse AG. Our ambition is for share repurchases to exceed our pre-acquisition levels by 2026.
Regulatory and legal developments
Swiss Federal Council adopts amendments to the Capital Adequacy Ordinance
In November 2023, the Swiss Federal Council adopted amendments to the Capital Adequacy Ordinance (the CAO)
for banks to incorporate the final Basel III standards adopted by the Basel Committee on Banking Supervision (the
BCBS) in Swiss law. The amended CAO will enter into force on 1 January 2025. The final degree of alignment
between the Swiss implementation and those in other jurisdictions remains still uncertain at this stage. Although
EU legislators target implementation by January 2025, the implementation timelines in the UK and the US have
been delayed until July 2025. The Swiss Federal Department of Finance will inform the Swiss Federal Council about
the status of international implementation by the end of July 2024, at the latest. We currently estimate that the
revised Basel III framework would lead to a further net increase in risk-weighted assets of approximately USD 25bn,
of which USD 10bn in Non-core and Legacy. This estimate is based on static balances, before taking into account
mitigating actions, as well as not reflecting the impact of the output floor, which is phased in over time.
Revisions to the Swiss Liquidity Ordinance
The too-big-to-fail (TBTF) liquidity requirements communicated by the Swiss Financial Market Supervisory Authority
(FINMA) in the third quarter of 2023 became effective on 1 January 2024. The affected legal entities of the UBS
Group are compliant with these requirements.
Financial Stability Board updates list of global systemically important banks
In November 2023, the Financial Stability Board (the FSB) published the 2023 list of global systemically important
banks (G-SIBs). UBS has been moved from Bucket 1 to Bucket 2, corresponding to an increased FSB common equity
tier 1 capital surcharge requirement of 1.5% from 1.0%, effective from 1 January 2025. Credit Suisse has been
removed from the list. As UBS is subject to higher requirements under the Swiss CAO, the change does not affect
the capital requirements applicable to UBS.
UBS Group fourth quarter 2023 report |
UBS Group | Recent developments 6
Implementation of global minimum taxation in Switzerland
In June 2023, the Swiss electorate voted in favor of the introduction of a minimum corporate tax rate of 15%
applicable to companies with a consolidated turnover of more than EUR 750m, as stipulated by the Global Anti-
Base Erosion Model Rules (Pillar Two) of the Organisation for Economic Co-operation and Development. In
December 2023, the Swiss Federal Council decided on a partial adoption in Switzerland, by way of an ordinance,
and, as a result, a domestic minimum top-up tax regime became effective from 1 January 2024, ensuring a Swiss
local minimal tax burden of at least 15%. Switzerland will not implement any top-up tax regime in 2024 with
respect to non-Swiss taxation below 15%. The Swiss Federal Council will further observe international
developments and decide at a later stage if and when any top-up tax with respect to non-Swiss taxation below
15% will be introduced in Switzerland. UBS does not expect the implementation of global minimum taxation in
Switzerland to materially impact its effective tax rate.
Swiss Federal Council implements statutory anchoring of stock exchange protective measures
In November 2023, the Swiss Federal Council adopted an amendment to the Financial Market Infrastructure Act
that enacts a measure aimed at protecting the Swiss stock exchange infrastructure into Swiss law with effect from
1 January 2024. This ruling followed the EU’s decision to withdraw equivalence for the Swiss stock exchange
regulation in 2019. The protective measure enables EU firms to trade Swiss shares on the Swiss trading venues,
even without EU equivalence. In the event of equivalence recognition by the EU, the measure may be deactivated
at any time.
Switzerland and the UK sign a mutual recognition agreement for financial services
In December 2023, the Swiss Confederation and the UK signed a mutual recognition agreement (the MRA) for
financial services to facilitate cross-border financial activities. The MRA is supplemented by measures to enhance
supervisory cooperation and coordination. The MRA envisages a memorandum of understanding between FINMA
and the Bank of England on resolution arrangements, and it is expected to enable Swiss banks to provide cross-
border investment services to high net worth UK-domiciled clients and to allow UK and Swiss over-the-counter
derivatives counterparties to choose whether to rely on Swiss or UK risk mitigation rules (except for physically settled
foreign exchange swaps and forwards). The agreement is expected to apply from 2026, depending on the
completion of parliamentary approval in both countries.
Swiss Federal Council launches a new version of the Swiss Climate Scores
In December 2023, the Swiss Federal Council announced that it intends to further improve climate transparency
for financial products and to further develop the voluntary Swiss Climate Scores (the SCS), which were introduced
in 2022. The SCS provide investors with information about the extent to which their financial investments are
compatible with climate goals. The updated SCS, which will apply from 1 January 2025, will continue to prescribe
disclosures by financial institutions on climate alignment and climate change mitigation characteristics of financial
products and will newly prescribe disclosure of exposures to renewable energy. UBS has committed to the voluntary
use of the SCS.
US Federal Deposit Insurance Corporation approves a special assessment to recover losses incurred by the Deposit
Insurance Fund
In November 2023, the US Federal Deposit Insurance Corporation (the FDIC) approved a final rule to implement a
special assessment to recover losses incurred by the Deposit Insurance Fund in connection with the failures of Silicon
Valley Bank and Signature Bank in March 2023. The assessment is based on the estimated uninsured deposits of
each depositary institution at year-end 2022. The assessment will be collected over an eight-quarter period starting
in January 2024. UBS Bank USA has recorded a charge for the full amount of its estimated assessment of USD 60m
in the fourth quarter of 2023.
US banking agencies issue climate risk management principles
In October 2023, the Federal Reserve Board (the FRB), the Office of the Comptroller of the Currency (the OCC) and
the FDIC approved guidance on the principles for climate-related financial risk management. The final principles
describe how climate-related risks can be addressed in the management of traditional financial risks. The principles
cover six areas: governance; policies, procedures and limits; strategic planning; risk management; data, risk
measurement and reporting; and scenario analysis. The guidance applies to our US-based operations. UBS is
evaluating the guidance to ensure the principles are addressed by Group practices.
UBS Group fourth quarter 2023 report |
UBS Group | Recent developments 7
US banking agencies adopt amendments to Community Reinvestment Act regulations
In October 2023, the FRB, the FDIC and the OCC adopted revisions to their regulations implementing the
Community Reinvestment Act (the CRA). The CRA encourages banks to meet the credit needs of the communities
in which they do business, with a focus on low- and moderate-income communities. The final rule would implement
separate evaluations for retail lending, retail services and products, community development financing, and
community development services for banks with over USD 2bn in total assets. For large banks with over USD 10bn
in total assets, the evaluation of retail services and products will cover digital delivery systems. The final rule also
updates requirements on the reporting of exposures. The rule has an implementation date of 1 April 2024, with
additional phase-in periods for general provisions and reporting that extend out to April 2027. UBS Bank USA
expects a modest level of increased monitoring and reporting requirements.
Developments related to shortening the standard settlement cycle for securities transactions
US securities markets will transition to one business day after the trade date (T+1) settlement of most transactions
in May 2024. In October 2023, the European Securities and Market Authority (ESMA) launched a call for evidence
on shortening the standard settlement cycle for securities transactions from two business days after the trade date
(T+2) to T+1. ESMA aims to perform an assessment of the costs and benefits linked to the potential reduction of
the securities settlement cycle in the EU and intends to submit the results of its assessment to the European
Commission and publish a final report in the fourth quarter of 2024, at the latest. The UK Treasury has also
established an Accelerated Settlement Taskforce to consider whether the UK should follow the US and transition
to a T+1 settlement. The UK task force is expected to publish its findings by early 2024, with further work being
planned during 2024. UBS is implementing and testing required enhancements based on the US rules and will
prepare for further implementation according to the evolving rules and market practice in the UK, the EU and
Switzerland.
Other developments
Changes to the Pension Fund of Credit Suisse in Switzerland
In December 2023, the Board of Trustees of the Pension Fund of Credit Suisse decided to align its Swiss pension
scheme to that of the Pension Fund of UBS, effective as of 1 January 2027.
On that date, the Swiss defined benefit pension plan of the Credit Suisse Pension Fund will adopt the plan rules of
the UBS Pension Fund. The retirement capital savings plan based on Article 1e of the Ordinance on Occupational
retirement, Survivors’ and Disability Pension Plans will remain in place as of this date but will be closed for further
contributions.
In accordance with International Financial Reporting Standards, these decisions and related mitigating measures led
to an increase in UBS’s pension obligations in Switzerland resulting in a one-time pre-tax loss of USD 245m (CHF
207m) and an offsetting gain in other comprehensive income in the fourth quarter of 2023 with no impact on
equity and CET1 capital.
Sale of UBS Hana Asset Management Co., Ltd.
In October 2023, we completed the sale of our 51% stake in UBS Hana Asset Management Co., Ltd. to Hana
Securities and recorded a pre-tax gain on sale of USD 23m (net of a foreign currency translation loss) in Asset
Management in the fourth quarter of 2023.
Sale of Brazilian real estate fund management business in 2024
In December 2023, we signed an agreement to sell our Brazilian real estate fund management business, Credit
Suisse Hedging-Griffo Real Estate, to Patria Investments for up to BRL 650m (approximately USD 130m). After the
sale, we will continue to offer Patria’s funds to our wealth management clients in Brazil. The transaction is subject
to the approval of the investors in the relevant funds and customary anti-trust approvals.
Changes to the Board of Directors
On 12 January 2024, the BoD announced that it intends to nominate Gail Kelly for election to the Board at the
Annual General Meeting on 24 April 2024. Dieter Wemmer will not stand for re-election after eight years of Board
membership.
UBS Group fourth quarter 2023 report |
UBS Group | Recent developments 8
Changes to the Group Executive Board
On 24 January 2024, UBS Group AG announced that Aleksandar Ivanovic will join the Group Executive Board (the
GEB) as President Asset Management and Beatriz Martin Jimenez will become the GEB Lead for Sustainability and
Impact in addition to her existing responsibilities. They are succeeding Suni Harford, who is retiring from the firm.
The changes are effective from 1 March 2024.
Material weaknesses in the Credit Suisse Group’s internal control over financial reporting
As previously disclosed, UBS Group, UBS AG and Credit Suisse AG are subject to requirements under the Sarbanes–
Oxley Act of 2002 with respect to financial reporting. This requires us to perform system and process evaluation
and testing of internal controls over financial reporting to enable management to assess the effectiveness of our
internal controls. Credit Suisse Group disclosed material weaknesses in its internal controls over financial reporting
for the periods ended 31 December 2022 and 2021. A material weakness is a deficiency or a combination of
deficiencies in internal controls over financial reporting such that there is a reasonable possibility that a material
misstatement of a registrant’s financial statements will not be prevented or detected on a timely basis. Evaluation
of the impacts of the material weaknesses identified in Credit Suisse’s internal control over financial reporting will
form part of our annual assessment, which will be disclosed as part of our Annual Report 2023.
Purchase price adjustments arising from the acquisition of the Credit Suisse Group
UBS accounted for the acquisition as a business combination under IFRS 3, Business Combinations, applying the
acquisition method of accounting. After establishing the initial purchase price allocation as published in the UBS
Group second quarter 2023 report, we are required for the subsequent 12-month period to monitor developments
that may suggest that the fair values established as of the acquisition balance sheet date (31 May 2023) could be
different. Fair value adjustments are accounted for retrospectively with previously reported financial information
revised as of the acquisition date.
UBS Group fourth quarter 2023 report |
UBS Group | Group performance 9
Group performance
Income statement
For the quarter ended
% change from
For the year ended
USD m
31.12.23
30.9.23
1
31.12.22
3Q23
4Q22
31.12.23
31.12.22
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 “Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial information” section of this report for more information.
UBS Group fourth quarter 2023 report |
UBS Group | Group performance 10
Selected financial information of our business divisions and Group Items
For the quarter ended 31.12.23
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: accretion of PPA adjustments on financial instruments and
other effects
of which: losses related to investment in SIX Group
Total revenues (underlying)
Credit loss expense / (release)
Operating expenses as reported
of which: integration-related expenses
of which: acquisition-related costs
of which: amortization from newly recognized intangibles resulting from
the acquisition of the Credit Suisse Group
Operating expenses (underlying)
Operating profit / (loss) before tax as reported
Operating profit / (loss) before tax (underlying)
For the quarter ended 30.9.23 revised
1
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: accretion of PPA adjustments on financial instruments and
other effects
Total revenues (underlying)
Credit loss expense / (release)
Operating expenses as reported
of which: integration-related expenses
of which: acquisition-related costs
of which: amortization from newly recognized intangibles resulting from
the acquisition of the Credit Suisse Group
Operating expenses (underlying)
Operating profit / (loss) before tax as reported
Operating profit / (loss) before tax (underlying)
For the quarter ended 31.12.22
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: gain from sales of real estate
Total revenues (underlying)
Credit loss expense / (release)
Operating expenses as reported
Operating profit / (loss) before tax as reported
Operating profit / (loss) before tax (underlying)
1 Comparative-period information has been revised. Refer to “Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial information” section of this report for more information.
UBS Group fourth quarter 2023 report |
UBS Group | Group performance 11
Selected financial information of our business divisions and Group Items
For the year ended 31.12.23
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group Items
Negative
goodwill
Total
Total revenues as reported
of which: accretion of PPA adjustments on financial
instruments and other effects
of which: losses related to investment in SIX Group
Total revenues (underlying)
Negative goodwill
Credit loss expense / (release)
Operating expenses as reported
of which: integration-related expenses
of which: acquisition-related costs
of which: amortization from newly recognized intangibles
resulting from the acquisition of the Credit Suisse Group
Operating expenses (underlying)
Operating profit / (loss) before tax as reported
Operating profit / (loss) before tax (underlying)
For the year ended 31.12.22
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: net gain from disposals
of which: gains from sales of subsidiary and business
of which: losses in the first quarter of 2022 from
transactions with Russian counterparties
of which: litigation settlement
of which: gain from sales of real estate
Total revenues (underlying)
Credit loss expense / (release)
Operating expenses as reported
Operating profit / (loss) before tax as reported
Operating profit / (loss) before tax (underlying)
Integration-related expenses by business division and Group Items
For the quarter ended
For the year
ended
USD m
31.12.23
30.9.23
31.12.23
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Non-core and Legacy
Group Items
Total net integration-related expenses
of which: personnel expenses
of which: general and administrative expenses
of which: depreciation, amortization and impairment of non-financial assets
Underlying results
In addition to reporting our results in accordance with International Financial Reporting Standards (IFRS), we report
underlying results that exclude items of profit or loss that management believes are not representative of the
underlying performance.
In the fourth quarter of 2023, underlying revenues exclude accretion of purchase price allocation (PPA) adjustments
on financial instruments measured at amortized cost, including off-balance sheet positions, and other related
effects, arising from the acquisition of the Credit Suisse Group. Accretion of PPA adjustments on financial
instruments is accelerated when the related financial instrument is terminated or disposed of before its contractual
maturity. Underlying revenues also exclude losses relating to our investment in SIX Group.
UBS Group fourth quarter 2023 report |
UBS Group | Group performance 12
Underlying expenses exclude integration-related expenses that are temporary, incremental and directly related to
the integration of Credit Suisse into UBS, including costs of internal staff and contractors substantially dedicated to
integration activities, retention awards, redundancy costs, incremental expenses from the shortening of useful lives
of property, equipment and software, and impairment charges relating to these assets. Classification as integration-
related expenses does not affect the timing of recognition and measurement of those expenses or the presentation
thereof in the income statement. Integration-related expenses incurred by Credit Suisse also included expenses
associated with restructuring programs that existed prior to the acquisition.
Acquisition-related costs consist of costs directly attributable to the acquisition of the Credit Suisse Group and
mainly include consulting and legal fees.
Results: 4Q23 vs 4Q22
Reported operating loss before tax was USD 751m, compared with an operating profit before tax of USD 1,937m,
primarily reflecting higher operating expenses and a net credit loss expense of USD 136m, compared with USD 7m
in the fourth quarter of 2022, partly offset by an increase in total revenues. Operating expenses increased by
USD 5,385m, or 88%, to USD 11,470m, largely due to the consolidation of Credit Suisse expenses of USD 4,100m,
and included total integration-related expenses of USD 1,751m. Excluding the aforementioned effects, personnel
expenses increased, reflecting salary adjustments, higher variable compensation and foreign currency effects.
General and administrative expenses increased mainly due to higher technology costs, as well as an expense of
USD 60m for the US Federal Deposit Insurance Corporation special deposit insurance assessment, relating to the
2023 failures of Silicon Valley Bank and Signature Bank.
Total revenues increased by USD 2,826m, or 35%, to USD 10,855m, largely due to the consolidation of Credit
Suisse revenues of USD 2,942m, which included USD 925m of accretion impacts resulting from PPA adjustments
on financial instruments and other effects. Total combined net interest income and other net income from financial
instruments measured at fair value through profit or loss increased by USD 1,789m, with an increase of USD 1,879m
attributable to the consolidation of Credit Suisse. Net fee and commission income increased by USD 1,421m, mainly
attributable to a larger invested assets base, following the acquisition of the Credit Suisse Group, which contributed
USD 1,070m of this increase. This was partly offset by other income of negative USD 179m compared with positive
USD 206m in the fourth quarter of 2022, largely due to losses of USD 508m relating to our investment in SIX
Group, which reflect UBS’s share of impairments taken by SIX Group on its investment in Worldline and on goodwill
related to its subsidiary, BME.
Underlying results 4Q23 vs 4Q22
Underlying results for the fourth quarter of 2023 exclude USD 944m of accretion impacts resulting from PPA
adjustments on financial instruments and other effects, as well as losses of USD 508m from our investment in SIX
Group, from total revenues. We also excluded integration-related expenses of USD 1,751m, amortization from
newly recognized intangibles resulting from the acquisition of the Credit Suisse Group of USD 29m, and a reversal
of acquisition-related costs of USD 1m from operating expenses.
On an underlying basis, profit before tax decreased by USD 1,277m, or 68%, to USD 592m, reflecting a
USD 3,605m increase in underlying operating expenses and a USD 129m increase in credit loss expenses, partly
offset by a USD 2,458m increase in underlying total revenues.
Total revenues: 4Q23 vs 4Q22
Net interest income and other net income from financial instruments measured at fair value through profit or loss
Total combined net interest income and other net income from financial instruments measured at fair value through
profit or loss increased by USD 1,789m to USD 5,253m, mainly driven by the consolidation of USD 1,879m of Credit
Suisse revenues, and included USD 571m of accretion from PPA adjustments on financial instruments and other
effects.
Personal & Corporate Banking net interest income increased by USD 1,089m to USD 1,722m, largely attributable
to the consolidation of USD 932m of Credit Suisse net interest income, and included USD 373m of accretion of PPA
adjustments on financial instruments and other effects. The remaining increase was mainly driven by higher deposit
margins, which resulted from higher interest rates, partly offset by lower deposit fees. Excluding accretion effects,
underlying net interest income was USD 1,349m.
UBS Group fourth quarter 2023 report |
UBS Group | Group performance 13
Global Wealth Management net interest income increased by USD 373m, to USD 1,872m, largely attributable to
the consolidation of Credit Suisse net interest income, and included USD 261m of accretion of PPA adjustments on
financial instruments and other effects, and the effects of higher deposit margins, resulting from higher interest
rates, partly offset by shifts to lower-margin deposit products. Excluding accretion effects, underlying net interest
income was USD 1,611m.
›
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
Net interest income and other net income from financial instruments measured at fair value through profit or loss
For the quarter ended
% change from
For the year ended
USD m
31.12.23
30.9.23
1
31.12.22
3Q23
4Q22
31.12.23
31.12.22
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
1 Comparative-period information has been revised. Refer to “Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial information” section of this report for more information.
Net fee and commission income
Net fee and commission income increased by USD 1,421m to USD 5,780m, which included USD 353m of accretion
resulting from PPA adjustments in financial instruments.
Fees for portfolio management and related services increased by USD 845m to USD 2,966m, largely attributable to
the consolidation of USD 662m of Credit Suisse revenues, as well as positive market performance.
Other fee and commission income increased by USD 654m to USD 1,081m, largely attributable to the consolidation
of USD 603m of Credit Suisse revenues, which included USD 353m of accretion resulting from PPA adjustments in
financial instruments.
Other income
Other income was negative USD 179m, compared with positive USD 206m in the fourth quarter of 2022. The
decrease was largely due to USD 508m losses relating to our investment in SIX Group. These losses reflected UBS’s
share of impairments taken by SIX Group on its investment in Worldline and on goodwill related to its subsidiary,
BME. The decrease was partly offset by income of USD 75m relating to mortgage-servicing rights and USD 41m
relating to insurance and similar contracts acquired as part of the Credit Suisse Group. The insurance and similar
contracts are hedged with derivative instruments, with offsetting gains and losses in the income statement within
Other net income from financial instruments measured at fair value through profit or loss.
included a gain of USD 68m from the sale of real estate in Group Items and a USD 41m gain in Global Wealth
Management on the sale of our US alternative investments administration business.
Credit loss expense / release: 4Q23 vs 4Q22
Total net credit loss expenses in the fourth quarter of 2023 were USD 136m, compared with net credit loss expenses
of USD 7m in the prior-year quarter, reflecting net releases of USD 43m related to performing positions, and net
expenses of USD 180m on credit-impaired positions.
›
Refer to the “Risk management and control” section of this report for expected credit loss (ECL) allowances by
business division as of 31 December 2023 and to the “Consolidated financial statements” section of the UBS
Group AG Annual Report 2023, which will be available as of 28 March 2024 under “Annual reporting” at
ubs.com/investors
, for detailed disclosures about ECL exposures, allowances, coverage ratios, underlying scenarios,
scenario assumptions and post-model adjustments
UBS Group fourth quarter 2023 report |
UBS Group | Group performance 14
Credit loss expense / (release)
Performing positions
Credit-impaired positions
USD m
Stages 1 and 2
Stage 3
Purchased
Total
For the quarter ended 31.12.23
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Non-core and Legacy
Group Items
Total
For the quarter ended 30.9.23
1
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Non-core and Legacy
Group Items
Total
For the quarter ended 31.12.22
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Group Items
Total
1 Certain prior-period figures as of or for the quarter ended 30 September 2023 have been revised due to effects of measurement period adjustments in relation to the acquisition of the Credit Suisse Group. Refer to
“Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial information” section of this report for more information.
Operating expenses: 4Q23 vs 4Q22
Operating expenses
For the quarter ended
% change from
For the year ended
USD m
31.12.23
30.9.23
1
31.12.22
3Q23
4Q22
31.12.23
31.12.22
Personnel expenses
of which: salaries and variable compensation
of which: variable compensation – financial advisors
2
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 Comparative-period information has been revised. Refer to “Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial information” section of this report for more information.
2 Consists of cash and deferred compensation awards and is based on compensable revenues and firm tenure using a formulaic approach. It 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 2,939m to USD 7,061m, mainly due to the consolidation of Credit Suisse
expenses of USD 2,349m, and included integration-related expenses of USD 794m covering post-employment
benefit plans, awards granted to employees to support retention and operational stability, severance expenses, and
the alignment of Credit Suisse processes to the UBS variable compensation framework. Salaries and variable
compensation increased by USD 2,250m, due to the aforementioned effects, and also due to salary adjustments,
higher variable compensation, and foreign currency effects. Associated social security costs also increased by USD
221m. Pension and other post-employment benefit plans increased by USD 375m, largely driven by an increase in
the pension plan obligation of the Swiss pension plan of Credit Suisse following the decision to align the Swiss
pension scheme to that of UBS, which resulted in a pre-tax loss of USD 245m (CHF 207m) in the fourth quarter of
2023 and an offsetting gain in other comprehensive income due to the asset ceiling.
›
Refer to the “Recent developments” section of this report for more information about the pension scheme changes
in the Swiss pension plan of Credit Suisse
UBS Group fourth quarter 2023 report |
UBS Group | Group performance 15
General and administrative expenses
General and administrative expenses increased by USD 1,579m to USD 2,999m, largely due to the consolidation of
Credit Suisse expenses of USD 963m, as well as higher technology and outsourcing costs, and included total
integration-related expenses of USD 455m, mainly from higher consulting and real estate costs. UBS recorded bank
levy expenses of USD 75m, reflecting an increase of USD 34m compared with the prior-year quarter, as well as an
expense of USD 60m for the US Federal Deposit Insurance Corporation special deposit insurance assessment
relating to the 2023 failures of Silicon Valley Bank and Signature Bank.
We believe that the industry continues to operate in an environment in which expenses associated with litigation,
regulatory and similar matters will remain elevated for the foreseeable future, and we continue to be exposed to a
number of significant claims and regulatory matters. The outcome of many of these matters, the timing of a
resolution, and the potential effects of resolutions on our future business, financial results or financial condition are
extremely difficult to predict.
›
Refer to “Provisions and contingent liabilities” in the “Consolidated financial information” section of this report for
more information about litigation, regulatory and similar matters
›
Refer to “Regulatory and legal developments” in the Annual Report 2022 and “Risks relating to UBS” filed on Form
6-K together with the UBS Group second quarter 2023 report for more information
Depreciation, amortization and impairment of non-financial assets
Depreciation, amortization and impairment of non-financial assets increased by USD 866m to USD 1,409m, largely
due to the consolidation of Credit Suisse expenses of USD 789m and included total integration-related expenses of
USD 503m, mainly attributable to impairment and accelerated depreciation of right-of-use assets associated with
real estate leases. Excluding the aforementioned effects, depreciation of internally developed software increased
by USD 34m, reflecting a higher level of capitalized costs.
Tax: 4Q23 vs 4Q22
The Group had a net income tax benefit of USD 473m for the fourth quarter of 2023, compared with a net income
tax expense of USD 280m for the prior-year quarter. The net current tax expense was USD 69m, compared with
USD 349m. This included current tax expenses of USD 375m relating to the taxable profits of UBS Switzerland AG
and other entities, which were mostly offset by benefits in respect of decreases in accruals for US taxes, including
USD 152m that primarily related to state and local taxes and USD 154m that related to corporate alternative
minimum tax (CAMT).
There was a net deferred tax benefit of USD 542m, compared with a benefit of USD 69m in the prior-year quarter.
This included benefits of USD 591m in respect of remeasurements of deferred tax assets (DTAs), which included
USD 457m in respect of DTA revaluations for certain entities in connection with our business planning process and
USD 134m in respect of an increase in DTAs that resulted from an increase in the expected value of future tax
deductions for deferred compensation awards, due to an increase in the Group’s share price during the quarter.
These benefits were partly offset by a net expense of USD 49m that included USD 154m related to a decrease in
DTAs in respect of CAMT credits carried forward, partly offset by a benefit of USD 105m that mainly related to a
decrease in DTA amortization that was previously recognized in the year.
If the aforementioned benefits of USD 591m in respect of remeasurements of DTAs and USD 152m in respect of
the reversal of the current tax expense accrual that primarily related to state and local taxes are excluded, the Group
would have had a tax expense of USD 270m in relation to its pre-tax loss for the quarter. This is because that loss
includes operating losses of certain entities, reflecting integration-related expenses and restructuring costs, that did
not result in any tax benefits because they cannot be offset with profits of other entities in the Group, and did not
result in any DTA recognition. The Group’s tax expense for 2024 may be similarly impacted if further such operating
losses are incurred.
UBS Group fourth quarter 2023 report |
UBS Group | Group performance 16
Total comprehensive income attributable to shareholders
In the fourth quarter of 2023, total comprehensive income attributable to shareholders was USD 2,677m, reflecting
a net loss of USD 279m and other comprehensive income (OCI), net of tax, of USD 2,956m.
OCI related to cash flow hedges was USD 1,970m, mainly reflecting net unrealized gains on US dollar hedging
derivatives resulting from significant decreases in the relevant US dollar long-term interest rates.
Foreign currency translation OCI was USD 1,597m, mainly resulting from a significant strengthening of the Swiss
franc and the euro against the US dollar.
Defined benefit plan OCI was USD 131m, mainly reflecting pre-tax OCI gains in the Credit Suisse Swiss pension
plan of USD 231m. This largely reflected an increase in the pension plan obligation of the Swiss pension plan of
Credit Suisse following the decision to align the Swiss pension scheme to that of UBS, which resulted in a pre-tax
loss of USD 245m (CHF 207m) in the fourth quarter of 2023 and an offsetting gain in OCI due to the asset ceiling.
The OCI gains related to the Swiss pension plan of Credit Suisse were partly offset by pre-tax OCI losses related to
the UBS non-Swiss pension plans of USD 116m.
OCI related to own credit on financial liabilities designated at fair value was negative USD 721m, primarily due to
a tightening of our own credit spreads.
›
Refer to “Statement of comprehensive income” in the “Consolidated financial information” section of this report
for more information
›
Refer to “Reconciliation of IFRS equity 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 “Recent developments” section of this report for more information about the pension scheme changes
in the Swiss pension plan of Credit Suisse
›
Refer to “Note 20 Fair value measurement” in the “Consolidated financial statements” section of the Annual Report
2022 for more information about own credit on financial liabilities designated at fair value
Sensitivity to interest rate movements
As of 31 December 2023, we 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 1.8bn in the first
year after such a shift. Of this increase, approximately USD 1.1bn, USD 0.4bn and USD 0.1bn would result from
changes in Swiss franc, US dollar and euro interest rates, respectively. A parallel shift in yield curves by –100 basis
points could lead to a combined decrease in annual net interest income of approximately USD 1.9bn in the first
year after such a shift, showing similar currency contributions as for the aforementioned increase in rates.
These estimates are based on a hypothetical scenario of an immediate change in interest rates, equal across all
currencies and relative to implied forward rates as of 31 December 2023 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: 4Q23 vs 4Q22
The cost / income ratio was 105.7%, compared with 75.8%, mainly reflecting an increase in operating expenses,
partly offset by an increase in total revenues. The operating loss incurred by Credit Suisse entities is reflected in the
overall increase of the ratio for the UBS Group. On an underlying basis, the cost / income ratio was 93.0%,
compared with 76.4%, mainly reflecting an increase in operating expenses on an underlying basis, partly offset by
an increase in total revenues on an underlying basis.
Personnel: 4Q23 vs 3Q23
The number of personnel employed was 138,462 (workforce count) as of 31 December 2023, a net decrease of
4,336 compared with 30 September 2023. The number of internal personnel employed as of 31 December 2023
was 112,842 (full-time equivalents), a net decrease of 3,139 compared with 30 September 2023. The number of
external staff was approximately 25,619 (workforce count), a net decrease of approximately 1,198 compared with
30 September 2023.
UBS Group fourth quarter 2023 report |
UBS Group | Group performance 17
Equity, CET1 capital and returns
As of or for the quarter ended
As of or for the year ended
USD m, except where indicated
31.12.23
30.9.23
1
31.12.22
31.12.23
31.12.22
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 deductions
CET1 capital
Returns
Return on equity (%)
Return on tangible equity (%)
Underlying return on tangible equity (%)
Return on CET1 capital (%)
Underlying return on CET1 capital (%)
1 Comparative-period information has been revised. Refer to “Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial information” section of this report for more information.
Common equity tier 1 capital: 4Q23 vs 3Q23
During the fourth quarter of 2023, our common equity tier 1 (CET1) capital increased by USD 0.7bn to USD 79.3bn,
mainly as the operating loss before tax of USD 0.8bn, dividend accruals of USD 0.8bn, compensation- and own
share-related capital components of USD 0.6bn and amortization of transitional CET1 PPA adjustments (interest
rate and own credit) of USD 0.3bn were more than offset by USD 1.6bn of positive effects from foreign currency
translation and a USD 1.5bn increase in eligible DTAs on temporary differences. Previously unrecognized DTAs on
temporary differences were recognized primarily in connection with our business planning process and an election
to capitalize compensation-related costs for US tax purposes.
Return on CET1 capital: 4Q23 vs 4Q22
The annualized return on CET1 capital was negative 1.4%, compared with positive 14.7%, driven by a loss
attributable to shareholders compared with a profit in the prior-year quarter and the impact of an increase in
average CET1 capital. On an underlying basis, the return on CET1 capital was 4.7%, compared with 14.1%.
Risk-weighted assets: 4Q23 vs 3Q23
Risk-weighted assets (RWA) were unchanged at USD 546.5bn, primarily as decreases of USD 15.1bn due to asset
size and other movements and USD 0.5bn due to model updates were offset by increases of USD 14.8bn due to
currency effects and USD 0.7bn due to methodology and policy changes
.
Common equity tier 1 capital ratio: 4Q23 vs 3Q23
Our CET1 capital ratio increased to 14.5% from 14.4%, reflecting the aforementioned increase in CET1 capital.
Leverage ratio denominator: 4Q23 vs 3Q23
The leverage ratio denominator (the LRD) increased by USD 79.6bn to USD 1,695.4bn, driven by currency effects
of USD 68.4bn and asset size and other movements of USD 11.1bn.
Common equity tier 1 leverage ratio: 4Q23 vs 3Q23
Our CET1 leverage ratio decreased to 4.7% from 4.9%, reflecting a USD 79.6bn increase in the LRD, partly offset
by a USD 0.7bn increase in CET1 capital.
Going concern leverage ratio: 4Q23 vs 3Q23
Our going concern leverage ratio decreased to 5.5% from 5.7%, reflecting the aforementioned increase in the
LRD, partly offset by an increase in going concern capital of USD 1.6bn.
UBS Group fourth quarter 2023 report |
UBS Group | Group performance 18
Outlook
Central banks are widely expected to lower short-term interest rates in 2024. The timing and magnitude of such
cuts are still highly uncertain, given the ongoing debate around the pace of inflation converging with central bank
targets. In addition, ongoing geopolitical tensions, including the conflicts in the Middle East and Eastern Europe,
may impact supply chains and inflation, with consequences for the macroeconomic outlook and market volatility.
Notwithstanding the challenges mentioned above, we continue to execute on our strategy and integration plans
at pace, and we will actively reduce non-core assets and costs. In the first quarter of 2024, we expect revenues to
be positively influenced by seasonal factors, such as higher client activity levels compared with the fourth quarter
of 2023. We also expect the Investment Bank to return to profitability, due to improving market activity, a growing
banking pipeline and advanced progress on the integration. We expect NII for Personal & Corporate Banking and
Global Wealth Management combined, and in US dollar terms, to be roughly flat sequentially in the first quarter,
with higher rates broadly offsetting the residual effects of deposit mix shifts and the initial impact of financial
resource optimization. These factors are expected to result in substantial sequential improvement in reported net
profit in the first quarter, including around USD 1bn of integration-related expenses and around USD 0.7bn of pull
to par and other purchase price allocation (PPA) accretion effects.
Our focus remains on helping clients navigate challenging market environments to manage the inherent risks and
opportunities while continuing to grow our invested assets and delivering on our financial targets.
UBS Group fourth quarter 2023 report |
UBS business divisions and Group Items | Global Wealth Management 19
UBS business divisions and
Group Items
Management report
We started to report five business divisions in line with International Financial Reporting Standards (IFRS) in the third
quarter of 2023: Global Wealth Management, Personal & Corporate Banking, Asset Management, the Investment
Bank, and Non-core and Legacy. At the same time, Group Functions was renamed Group Items and excludes UBS’s
former Non-core and Legacy Portfolio and includes certain of the assets and liabilities of the former Credit Suisse
Corporate Center.
Information for the fourth quarter of 2022 represents the results of UBS Group operations prior to the acquisition
of the Credit Suisse Group, but is presented in line with the new business division structure. As we execute on our
integration plans, it is expected that allocation methodologies for profit and loss and balance sheet to the business
divisions and into Group Items will continue to be reviewed and refined.
UBS Group fourth quarter 2023 report |
UBS business divisions and Group Items | Global Wealth Management 20
Global Wealth Management
Global Wealth Management
As of or for the quarter ended
% change from
As of or for the year
ended
USD m, except where indicated
31.12.23
30.9.23
31.12.22
1
3Q23
4Q22
31.12.23
31.12.22
1
Results
Net interest income
Recurring net fee income
2
Transaction-based income
2
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: gains from sales of subsidiary and business
of which: accretion of PPA adjustments on financial instruments and other effects
of which: losses related to investment in SIX Group
Total revenues (underlying)
2
Credit loss expense / (release)
Operating expenses as reported
of which: integration-related expenses
2
Operating expenses (underlying)
2
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)
2
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
2
Cost / income ratio (%)
2
Average attributed equity (USD bn)
3
Return on attributed equity (%)
2,3
Financial advisor compensation
4
Net new fee-generating assets (USD bn)
2
Fee-generating assets (USD bn)
2
Net new assets (USD bn)
2
Invested assets (USD bn)
2
Loans, gross (USD bn)
5
Customer deposits (USD bn)
5
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
2,6
Advisors (full-time equivalents)
Underlying performance measures
Pre-tax profit growth (year-on-year, %)
2
Cost / income ratio (%)
2
1 Information reflects Global Wealth Management as reported in the fourth quarter of 2022 and the twelve months of 2022, respectively. 2 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, starting with the fourth quarter of
2023. 3 Refer to the “Capital management” section of the UBS Group first quarter 2023 report for more information about the equity attribution framework. 4 Relates to licensed professionals with the ability to
provide investment advice to clients in the Americas. Consists of cash and deferred compensation awards and is based on compensable revenues and firm tenure using a formulaic approach. It 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 1,754m as of 31
December 2023. 5 Loans and Customer deposits in this table include customer brokerage receivables and payables, respectively, which are presented in a separate reporting line on the balance sheet. 6 Refer to
the “Risk management and control” section of this report for more information about (credit-)impaired exposures. Excludes loans to financial advisors.
Results: 4Q23 vs 4Q22
Profit before tax decreased by USD 677m, or 64%, to USD 381m, mainly driven by higher operating expenses,
partly offset by higher total revenues, which included the impact from the acquisition of the Credit Suisse Group.
Excluding USD 284m of accretion of purchase price allocation (PPA) adjustments on financial instruments and other
effects, losses of USD 190m related to our investment in SIX Group and integration-related expenses of USD 490m,
underlying profit before tax was USD 778m.
UBS Group fourth quarter 2023 report |
UBS business divisions and Group Items | Global Wealth Management 21
Total revenues
Total revenues increased by USD 843m, or 18%, to USD 5,444m, mainly due to the consolidation of Credit Suisse
revenues, and included USD 284m of accretion of PPA adjustments on financial instruments and other effects. The
increase was partly offset by the aforementioned losses of USD 190m. Excluding accretion effects and the
aforementioned losses, underlying total revenues were USD 5,351m.
Net interest income increased by USD 373m, or 25%, to USD 1,872m, largely attributable to the consolidation of
Credit Suisse net interest income, and included USD 261m of accretion of PPA adjustments on financial instruments
and other effects, and the effects of higher deposit margins, resulting from higher interest rates, partly offset by
shifts to lower-margin deposit products. Excluding accretion effects, underlying net interest income was
USD 1,611m.
Recurring net fee income increased by USD 419m, or 17%, to USD 2,818m, attributable to the consolidation of
Credit Suisse recurring net fee income, as well as positive market performance.
Transaction-based income increased by USD 269m, or 41%, to USD 927m, largely attributable to the consolidation
of Credit Suisse transaction-based income, and included USD 23m of accretion of PPA adjustments on financial
instruments and other effects, as well as higher levels of client activity. Excluding accretion effects, underlying
transaction-based income was USD 904m.
Other income was negative USD 172m, compared with positive other income of USD 45m, largely due to the losses
of USD 190m related to our investment in SIX Group. The fourth quarter of 2022 included a USD 41m gain from
the sale of our US alternative investments administration business. Excluding the aforementioned losses related to
our investment, underlying other income was positive USD 18m.
Credit loss expense / release
Net credit loss releases were USD 7m, compared with net expenses of USD 3m in the fourth quarter of 2022.
Operating expenses
Operating expenses increased by USD 1,530m, or 43%, to USD 5,070m, largely due to the consolidation of Credit
Suisse expenses, integration-related expenses and higher financial advisor variable compensation. In addition, the
fourth quarter of 2023 included a charge of USD 60m for the special assessment by the US Federal Deposit
Insurance Corporation (the FDIC) to recover losses incurred by the Deposit Insurance Fund in connection with the
failures of Silicon Valley Bank and Signature Bank. Excluding integration-related expenses of USD 490m, underlying
operating expenses were USD 4,580m.
Net new assets introduction
In the fourth quarter of 2023, we introduced net new assets as a new performance measure, to increase
comparability with our peers. The new measure is determined as the net amount of inflows and outflows of invested
assets, plus interest and dividends. Excluded are movements due to market performance, foreign exchange
translation, and fees, as well as the effects on invested assets of strategic decisions by UBS to exit markets or
services. We will continue to disclose net new money in our Annual Reports.
Invested assets: 4Q23 vs 3Q23
Invested assets increased by USD 233bn, or 6%, to USD 3,850bn, mainly driven by positive market performance
(excluding the aforementioned interest and dividends, which are now included in net new assets) of USD 167bn,
positive foreign currency effects of USD 59bn and net new asset inflows of USD 21.8bn.
Loans: 4Q23 vs 3Q23
Loans increased by USD 1.4bn to USD 284.3bn, driven by positive foreign currency effects, partly offset by net new
loan outflows of USD 6.9bn.
Customer deposits: 4Q23 vs 3Q23
Customer deposits increased by USD 27.0bn to USD 466.9bn, mainly driven by net inflows into fixed-term and
savings deposit products and positive foreign currency effects, partly offset by continued shifts into money market
funds and US-government securities.
UBS Group fourth quarter 2023 report |
UBS business divisions and Group Items | Global Wealth Management 22
Regional breakdown of performance measures
As of or for the quarter ended 31.12.23
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, the invested assets of Global Financial Intermediaries were transferred from EMEA and Asia
Pacific to the Switzerland region, to better align it to the management structure. These changes were applied prospectively and had no impact on previous quarters. 3 Includes minor functions, which are not included
in the four regions individually presented in this table, and also includes impacts from accretion of purchase price allocation adjustments on financial instruments and other effects and integration-related expenses.
4 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method. 5 Loans include customer brokerage receivables, which are presented in a separate reporting
line on the balance sheet.
Regional comments 4Q23 vs 4Q22, except where indicated
Americas
Profit before tax decreased by USD 273m to USD 102m. Total revenues decreased by USD 53m, or 2%, to
USD 2,587m, driven by lower net interest income and other income, partly offset by the consolidation of Credit
Suisse revenues and higher transaction-based income. In addition, the fourth quarter of 2023 included the
aforementioned charge of USD 60m for the special assessment by the FDIC. The cost / income ratio increased to
96.1% from 85.9%. Loans decreased 2% compared with the third quarter of 2023, to USD 97.3bn, mainly
reflecting USD 3.2bn of net new loan outflows. Net new asset inflows were USD 13.4bn.
Switzerland
Profit before tax increased by USD 169m to USD 341m. Total revenues increased by USD 404m, or 92%, to
USD 844m, 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 60.1% from 59.8%. Loans
increased 7% compared with the third quarter of 2023, to USD 76.9bn, mainly driven by positive foreign currency
effects. Net new asset inflows were USD 1.0bn.
EMEA
Profit before tax decreased by USD 93m to USD 238m. Total revenues increased by USD 222m, or 24%, to
USD 1,150m, 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 79.3% from 64.3%.
Loans were stable compared with the third quarter of 2023, at USD 63.4bn, as positive foreign currency effects
were almost entirely offset by USD 1.1bn of net new loan outflows. Net new asset outflows were USD 5.7bn.
Asia Pacific
Profit before tax decreased by USD 81m to USD 97m. Total revenues increased by USD 177m, or 30%, to
USD 763m, mainly driven by the consolidation of Credit Suisse revenues, partly offset by lower net interest income.
The cost / income ratio increased to 87.7% from 69.7%. Loans decreased 3% compared with the third quarter of
2023, to USD 45.8bn, mostly reflecting USD 2.5bn of net new loan outflows. Net new asset inflows were
USD 13.5bn.
Global
Loss before tax was USD 396m, mainly due to USD 490m of integration-related expenses and the losses of
USD 190m related to our investment in SIX Group, partly offset by USD 284m of accretion of PPA adjustments on
financial instruments and other effects.
UBS Group fourth quarter 2023 report |
UBS business divisions and Group Items | Personal & Corporate Banking 23
Personal & Corporate Banking
Personal & Corporate Banking – in Swiss francs
As of or for the quarter ended
% change from
As of or for the year
ended
CHF m, except where indicated
31.12.23
30.9.23
31.12.22
1
3Q23
4Q22
31.12.23
31.12.22
1
Results
Net interest income
Recurring net fee income
2
Transaction-based income
2
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: accretion of PPA adjustments on financial instruments and other effects
of which: losses related to investment in SIX Group
Total revenues (underlying)
2
Credit loss expense / (release)
Operating expenses as reported
of which: integration-related expenses
2
of which: amortization from newly recognized intangibles resulting from the acquisition of
the Credit Suisse Group
Operating expenses (underlying)
2
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)
2
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
2
Cost / income ratio (%)
2
Average attributed equity (CHF bn)
3
Return on attributed equity (%)
2,3
Loans, gross (CHF bn)
Customer deposits (CHF bn)
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
2,4
Underlying performance measures
Pre-tax profit growth (year-on-year, %)
2
Cost / income ratio (%)
2
1 Information reflects Personal & Corporate Banking as reported in the fourth quarter of 2022 and the twelve months of 2022, respectively. 2 Refer to “Alternative performance measures” in the appendix to this
report for the definition and calculation method. 3 Refer to the “Capital management” section of the UBS Group first quarter 2023 report for more information about the equity attribution framework. 4 Refer to
the “Risk management and control” section of this report for more information about (credit-)impaired exposures.
Results
:
4Q23 vs 4Q22
Profit before tax increased by CHF 197m, or 39%, to CHF 701m, mainly due to the acquisition of the Credit Suisse
Group. Underlying profit before tax was CHF 794m, after excluding CHF 362m of accretion of purchase price
allocation (PPA) adjustments on financial instruments and other effects, losses of CHF 267m related to our
investment in SIX Group, integration-related expenses of CHF 163m and CHF 25m of amortization from newly
recognized intangibles resulting from the acquisition of the Credit Suisse Group.
Total revenues
Total revenues increased by CHF 1,057m, or 98%, to CHF 2,136m, mainly due to the consolidation of Credit Suisse
revenues, and included CHF 362m of accretion of PPA adjustments on financial instruments and other effects, with
the underlying increase largely reflecting increases across almost all business income lines, predominantly in net
interest income, partly offset by the