UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
Date: November 7, 2023
UBS AG
(Registrant's Name)
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Aeschenvorstadt 1, 4051 Basel, Switzerland
(Address of principal executive offices)
Commission File Number: 1-15060
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form
40-
F.
Form 20-F
☒
☐
This Form 6-K consists of the Third Quarter 2023 Report of UBS AG, which appears immediately following this
page.
Third
quarter
2023
report
Corporate calendar UBS AG
Publication of the fourth quarter 2023 report Tuesday, 6 February 2024
Publication of the Annual Report 2023 Thursday, 28 March 2024
Publication of the first quarter 2024 report Tuesday, 7 May 2024
Publication dates of future quarterly and annual reports and results are made available as
part of the corporate calendar of UBS AG at ubs.com/investors.
Contacts
General inquiries
ubs.com/contact
Zurich +41-44-234 1111
London +44-207-567 8000
New York +1-212-821 3000
Hong Kong +852-2971 8888
Singapore +65-6495 8000
Investor Relations
UBS’s Investor Relations team
manages relationships with
institutional investors, research
analysts and credit rating agencies.
ubs.com/investors
Zurich +41-44-234 4100
New York +1-212-882 5734
Media Relations
UBS’s Media Relations team manages
relationships with global media and
journalists.
ubs.com/media
Zurich +41-44-234 8500
mediarelations@ubs.com
London +44-20-7567 4714
ubs-media-relations@ubs.com
New York +1-212-882 5858
mediarelations@ubs.com
Hong Kong +852-2971 8200
sh-mediarelations-ap@ubs.com
Imprint
Publisher: UBS AG, Zurich, Switzerland | ubs.com
Language: English
© UBS 2023. The key symbol and UBS are among the registered and unregistered
trademarks of UBS. All rights reserved.
1.
UBS AG
4
6
2.
Business divisions and
Group Items
13
15
17
19
21
22
3.
Risk, capital, liquidity and funding,
and balance sheet
24
30
37
38
4.
Consolidated
financial statements
42
Appendix
72
76
78
79
UBS AG third 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
“UBS AG” and “UBS AG consolidated”
UBS AG and its consolidated subsidiaries
“Credit Suisse AG” and “Credit Suisse AG consolidated”
Credit Suisse AG and its consolidated subsidiaries
“Credit Suisse Group“ and “Credit Suisse Group AG consolidated”
Pre-acquisition Credit Suisse Group
”Credit Suisse”
Credit Suisse AG and its consolidated subsidiaries, Credit Suisse
Services AG and other small former Credit Suisse Group entities now
directly held by UBS Group AG
“UBS Group AG” and “UBS Group AG standalone”
UBS Group AG on a standalone basis
“Credit Suisse Group AG” and “Credit Suisse Group AG standalone”
Credit Suisse Group AG on a standalone basis
“UBS AG standalone”
UBS AG on a standalone basis
“Credit Suisse AG standalone”
Credit Suisse AG on a standalone basis
“UBS Switzerland AG” and “UBS Switzerland AG standalone”
UBS Switzerland AG on a standalone basis
“UBS Europe SE consolidated”
UBS Europe SE and its consolidated subsidiaries
“UBS Americas Holding LLC” and “UBS Americas Holding LLC consolidated”
UBS Americas Holding LLC and its consolidated subsidiaries
“1m”
One million, i.e., 1,000,000
“1bn”
One billion, i.e., 1,000,000,000
“1trn”
One trillion, i.e., 1,000,000,000,000
In this report, unless the context requires otherwise, references to any gender shall apply to all genders.
Alternative performance measures
An alternative performance measure (an APM) is a financial measure of historical or future financial performance,
financial position or cash flows other than a financial measure defined or specified in the applicable recognized
accounting standards or in other applicable regulations. A number of APMs are reported in UBS’s external reports
(annual, quarterly and other reports). APMs are used to provide a more complete picture of operating performance
and to reflect management’s view of the fundamental drivers of the business results. A definition of each APM, the
method used to calculate it and the information content are presented under “Alternative performance measures”
in the appendix to this report. These APMs may qualify as non-GAAP measures as defined by US Securities and
Exchange Commission (SEC) regulations.
UBS AG third quarter 2023 report
UBS AG consolidated key figures
UBS AG consolidated key figures
As of or for the quarter ended
As of or year-to-date
USD m, except where indicated
30.9.23
30.6.23
31.12.22
30.9.22
30.9.23
30.9.22
Results
Total revenues
Credit loss expense / (release)
Operating expenses
Operating profit / (loss) before tax
Net profit / (loss) attributable to shareholders
Profitability and growth
1
Return on equity (%)
Return on tangible equity (%)
Return on common equity tier 1 capital (%)
Return on leverage ratio denominator, gross (%)
Cost / income ratio (%)
Net profit growth (%)
Resources
Total assets
Equity attributable to shareholders
Common equity tier 1 capital
2
Risk-weighted assets
2
Common equity tier 1 capital ratio (%)
2
Going concern capital ratio (%)
2
Total loss-absorbing capacity ratio (%)
2
Leverage ratio denominator
2
Common equity tier 1 leverage ratio (%)
2
Liquidity coverage ratio (%)
3
Net stable funding ratio (%)
Other
Invested assets (USD bn)
1,4,5
Personnel (full-time equivalents)
1 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method. 2 Based on the Swiss systemically relevant bank framework as of 1 January 2020. Refer to
the “Capital management” section of this report for more information. 3 The disclosed ratios represent quarterly averages for the quarters presented and are calculated based on an average of 63 data points in the
third quarter of 2023 and 15 data points in the second quarter of 2023. Refer to the “Liquidity and funding management” section of this report for more information. 4 Consists of invested assets for Global Wealth
Management, Asset Management and Personal & Corporate Banking. Refer to “Note 31 Invested assets and net new money” in the “UBS AG consolidated financial statements” section of the Annual Report 2022
for more information. 5 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.
UBS AG third quarter 2023 report |
UBS AG | Recent developments 4
UBS AG
Management report
Recent developments
Integration of Credit Suisse
We aim to substantially complete the integration for the Group by the end of 2026 and to achieve gross cost
reductions of over USD 10bn by that time compared with the pre-acquisition 2022 combined cost base of UBS and
Credit Suisse. We plan to merge UBS AG with Credit Suisse AG and Credit Suisse (Schweiz) AG with UBS Switzerland
AG in 2024 and to transition to a single US intermediate holding company in the first half of 2024. The client
migration to a combined platform for UBS Switzerland AG and Credit Suisse (Schweiz) AG is targeted for 2025.
Starting with the third quarter of 2023, we report five business divisions in line with International Financial Reporting
Standards (IFRS), reflecting the way we are managing our businesses and engaging with clients: Global Wealth
Management, Personal & Corporate Banking, Asset Management, the Investment Bank, and Non-core and Legacy.
We separately report Group Items.
›
Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial
statements” section of the UBS Group third quarter 2023 report for more information
Regulatory and legal developments
Introduction of a public liquidity backstop in Switzerland
In September 2023, the Swiss Federal Council adopted a dispatch and draft legislation on the introduction of a
public liquidity backstop (a PLB) for systemically important banks (SIBs). The proposed legislative changes aim to
establish the PLB as part of ordinary law in order to enable the Swiss government and the Swiss National Bank (the
SNB) to support an SIB domiciled in Switzerland with liquidity in the process of resolution, in line with other financial
centers. The introduction of the PLB is intended to increase the confidence of market participants in the ability of
SIBs to be successfully recapitalized and remain solvent in a crisis. Furthermore, the draft legislation provides that
SIBs will pay the Swiss Confederation an annual fee to mitigate a potential impact on competition and to
compensate the Swiss Confederation for its guarantee to the SNB of the PLB, if required.
In addition to the PLB, the proposed legislative changes would enact into ordinary law additional provisions
contained in the emergency ordinance of March 2023, including mandated clawback of variable compensation in
the event that government support is provided to an SIB.
In a next step, the Swiss Parliament will assess the proposed legislation, and if adopted, legislative changes are
expected to come into force by January 2025, at the earliest.
Findings of the group of experts on banking stability
In September 2023, a group of experts on banking stability, mandated by the Swiss Federal Department of Finance,
published a report considering the role of banks and the legal and regulatory framework related to the stability of
the Swiss financial center. The report concludes that the Swiss capital regulation is working as intended and that
there is no need for a major revision. However, the report sees a need for reforms with regard to banking supervision
and proposes that the relevant authorities be granted broader powers. Furthermore, the report suggests
improvements regarding liquidity regulations, including a proposal to extend the supply of liquidity in the case of a
crisis. The report also suggests that Swiss authorities should make improvements with regard to crisis preparation
and management. The Swiss Federal Council will consider the findings of the group of experts in its too-big-to-fail
(TBTF) review report to be presented by April 2024.
UBS AG third quarter 2023 report |
UBS AG | Recent developments 5
Revisions to the Swiss Liquidity Ordinance
In the third quarter of 2023, the Swiss Financial Market Supervisory Authority (FINMA) communicated the liquidity
requirements arising from the revisions to the Swiss Liquidity Ordinance, with the aim of strengthening the resilience
of SIBs in Switzerland. The impacted legal entities of the UBS Group expect to be compliant with these requirements
when they become effective on 1 January 2024.
Swiss Federal Council consultation to strengthen the Swiss anti-money-laundering framework
In August 2023, the Swiss Federal Council launched a consultation on a bill to strengthen the Swiss anti-money-
laundering framework, with the aim of reinforcing the integrity and competitiveness of Switzerland as a financial
and business location. The measures aim to comply with the international standards of the Financial Action Task
Force (the FATF). Among other matters, key elements of the proposal include the introduction of a non-public
register managed by the Federal Department of Justice and Police containing information about the beneficial
owners of companies and other legal entities in Switzerland, as well as due diligence requirements for activities
with an increased risk of money laundering. The consultation ends in November 2023, and we expect to implement
operational controls if the bill is implemented as proposed.
US banking regulators’ changes to the resolution framework and long-term debt requirements
In August 2023, the Federal Reserve Board and the Federal Deposit Insurance Corporation issued joint proposals
on long-term debt requirements and resolution planning guidance for large banks. The long-term debt proposal
would require certain large bank-holding companies, intermediate holding companies and insured depositories with
USD 100bn or more in total assets to maintain a minimum amount of long-term debt, intended to enhance the
resilience and resolvability of such organizations. Large banking organizations would also be prohibited from certain
activities that could complicate the resolution or would lead to contagion risks. If the proposals are implemented,
UBS Bank USA would be subject to the long-term debt requirement, which would be incremental to the
requirements already imposed upon its parent organization, UBS Americas Holding LLC. The resolution planning
guidance proposed by US banking regulators would cover our US-based entities and calls for certain enhancements
in the requirements of the submitted resolution plans.
Disclosures on cybersecurity incidents and cybersecurity risk management, strategy and governance
In September 2023, the new rules from the SEC to enhance and standardize disclosure requirements related to
cybersecurity incidents and cybersecurity risk management, strategy and governance became effective. Among
other changes, the rules require foreign private issuers, including UBS AG, to annually report material information
regarding their cybersecurity risk management, strategy and governance on Form 20-F. The Form 20-F disclosures
will become applicable with annual reports for fiscal years ending on or after 15 December 2023.
Other developments
Sale of UBS Hana Asset Management Co., Ltd. in the fourth quarter of 2023
In October 2023, UBS AG completed the sale of its 51% stake in UBS Hana Asset Management Co., Ltd. to Hana
Securities. UBS AG expects to record a pre-tax gain on sale of approximately USD 20m (net of a foreign currency
translation loss) in Asset Management in the fourth quarter of 2023.
UBS AG third quarter 2023 report |
UBS AG | UBS AG consolidated performance 6
UBS AG consolidated performance
Income statement
For the quarter ended
% change from
Year-to-date
USD m
30.9.23
30.6.23
30.9.22
2Q23
3Q22
30.9.23
30.9.22
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
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
Results: 3Q23 vs 3Q22
Operating profit before tax decreased by USD 884m, or 41%, to USD 1,275m, reflecting an increase in operating
expenses, partly offset by an increase in total revenues. Operating expenses, which in the third quarter of 2023
included USD 421m of integration-related expenses, increased by USD 895m, or 15%, to USD 7,047m. This was
mainly due to increases of USD 508m and USD 334m, respectively, in general and administrative expenses and
personnel expenses. Total revenues increased by USD 40m to USD 8,348m. Net fee and commission income
increased by USD 171m and combined net interest income and other net income from financial instruments
measured at fair value through profit or loss increased by USD 94m. These increases were partly offset by a
USD 225m decrease in other income. Net credit loss expenses were USD 27m, compared with net credit loss releases
of USD 3m in the prior-year quarter.
Integration-related expenses primarily included higher real estate costs and higher consulting fees in general and
administrative expenses, as well as higher personnel expenses, which were mainly due to salaries, related to the
integration of Credit Suisse.
Integration-related expenses are defined as expenses that are temporary, incremental and directly related to the
integration of Credit Suisse. They generally include costs of internal staff and contractors substantially dedicated to
integration activities, 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 in the
income statement.
Total revenues: 3Q23 vs 3Q22
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 94m to USD 3,451m, mainly driven by Personal & Corporate Banking, partly offset
by the Investment Bank.
UBS AG third quarter 2023 report |
UBS AG | UBS AG consolidated performance 7
Personal & Corporate Banking increased by USD 300m to USD 929m, largely due to higher net interest income,
mainly driven by higher deposit margins, which resulted from rising interest rates, and higher loan revenues, partly
offset by lower deposit fees. The prior-year quarter also included a benefit from the Swiss National Bank (SNB)
deposit exemption.
The Investment Bank decreased by USD 218m to USD 1,142m. Derivatives & Solutions decreased by USD 301m,
driven by Foreign Exchange, Rates and Equity Derivatives, due to lower levels of both volatility and client activity.
This was partly offset by an USD 82m increase in Global Banking, mainly reflecting an improvement in mark-to-
market and from higher revenues in Public Capital Markets.
›
Refer to “Note 3 Net interest income” in the “Consolidated financial statements” section of this report for more
information about net interest income
Net interest income and other net income from financial instruments measured at fair value through profit or loss
For the quarter ended
% change from
Year-to-date
USD m
30.9.23
30.6.23
30.9.22
2Q23
3Q22
30.9.23
30.9.22
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
Global Wealth Management
of which: net interest income
of which: transaction-based income from foreign exchange and other intermediary
activity
Personal & Corporate Banking
of which: net interest income
of which: transaction-based income from foreign exchange and other intermediary
activity
Asset Management
Investment Bank
2
Global Banking
Global Markets
Non-core and Legacy
3
Group Items
3
1 Mainly includes spread-related income in connection with client-driven transactions, foreign-currency translation effects and income and expenses from precious metals, which are included in the income statement
line Other net income from financial instruments measured at fair value through profit or loss. The amounts reported on this line are one component of Transaction -based income in the management discussion and
analysis in the “Global Wealth Management” and “Personal & Corporate Banking” sections of this report. 2 Investment Bank information is provided at the business-line level rather than by financial statement
reporting line, in order to reflect the underlying business activities, which is consistent with the structure of the management discussion and analysis in the “Investment Bank” section of this report. 3 Starting with
the third quarter of 2023, Non-core and Legacy represents a separate reportable segment and Group Functions has been renamed Group Items. Prior periods have been revised to reflect these changes.
Net fee and commission income
Net fee and commission income increased by USD 171m to USD 4,666m.
Portfolio management and related services and investment fund fees increased by USD 145m and USD 20m,
respectively, driven by Global Wealth Management and Asset Management, mainly reflecting higher invested assets
resulting from positive market performance.
Underwriting fees decreased by USD 45m to USD 143m, mainly driven by Global Banking in the Investment Bank,
reflecting lower equity underwriting revenues, partly offset by higher debt underwriting revenues.
›
Refer to “Note 4 Net fee and commission income” in the “Consolidated financial statements” section of this report
for more information
Other income
Other income was USD 231m, compared with USD 456m in the prior-year quarter. The decrease was largely due
to the prior-year quarter including gains in Global Wealth Management of USD 133m and USD 86m, respectively,
on the sales of our domestic wealth management business in Spain and our wholly owned subsidiary UBS Swiss
Financial Advisers AG, as well as a USD 70m gain related to a legacy litigation settlement. This was partially offset
by USD 36m higher income from associates and joint ventures, largely attributable to a gain that resulted from a
change to the equity method measurement basis for our investment in SIX Group. Furthermore, in the third quarter
of 2023, there was a USD 29m increase in shared services costs charged to other subsidiaries of UBS Group AG,
mainly related to acquisition-related costs.
UBS AG third quarter 2023 report |
UBS AG | UBS AG consolidated performance 8
Credit loss expense / release: 3Q23 vs 3Q22
Total net credit loss expenses were USD 27m, compared with net credit loss releases of USD 3m in the prior-year
quarter, reflecting net credit loss expenses of USD 20m related to stage 1 and 2 positions and USD 6m related to
stage 3 positions.
›
Refer to “Note 7 Expected credit loss measurement” in the “Consolidated financial statements” section of this
report for more information
Credit loss expense / (release)
USD m
Global
Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
1
Group
Items
1
Total
For the quarter ended 30.9.23
Stages 1 and 2
Stage 3
Total credit loss expense / (release)
For the quarter ended 30.6.23
Stages 1 and 2
Stage 3
Total credit loss expense / (release)
For the quarter ended 30.9.22
Stages 1 and 2
Stage 3
Total credit loss expense / (release)
1 Starting with the third quarter of 2023, Non-core and Legacy represents a separate reportable segment and Group Functions has been renamed Group Items. Prior periods have been revised to reflect these changes.
Operating expenses: 3Q23 vs 3Q22
Operating expenses
For the quarter ended
% change from
Year-to-date
USD m
30.9.23
30.6.23
30.9.22
2Q23
3Q22
30.9.23
30.9.22
Personnel expenses
of which: salaries and variable compensation
of which: variable compensation – financial advisors
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. 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 334m to USD 3,951m. Salaries and variable compensation increased by
USD 280m, mainly due to salary adjustments, higher variable compensation, foreign currency effects, and USD 53m
of integration-related expenses in connection with the acquisition of the Credit Suisse Group, as well as a USD 57m
increase in financial advisor compensation, reflecting higher compensable revenues.
›
Refer to “Note 5 Personnel expenses” in the “Consolidated financial statements” section of this report for more
information
General and administrative expenses
General and administrative expenses increased by USD 508m to USD 2,585m, mostly driven by integration-related
expenses of USD 328m, largely reflected in higher shared services costs charged by other subsidiaries of UBS
Group AG, higher real estate costs and higher consulting fees.
UBS AG third quarter 2023 report |
UBS AG | UBS AG consolidated performance 9
We believe that the industry continues to operate in an environment in which expenses associated with litigation,
regulatory and similar matters will remain elevated for the foreseeable future and we continue to be exposed to a
number of significant claims and regulatory matters. The outcome of many of these matters, the timing of a
resolution, and the potential effects of resolutions on our future business, financial results or financial condition are
extremely difficult to predict.
›
Refer to “Note 6 General and administrative expenses” in the “Consolidated financial statements” section of this
report for more information
›
Refer to “Note 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 Annual Report 2022 for more
information about litigation, regulatory and similar matters on a UBS Group AG consolidated basis
Depreciation, amortization and impairment of non-financial assets
Depreciation, amortization and impairment of non-financial assets increased by USD 52m to USD 510m, mainly
driven by higher depreciation of internally developed software, reflecting a higher level of capitalized costs, as well
as higher costs in respect of leasehold improvements, primarily related to integration-related expenses.
Tax: 3Q23 vs 3Q22
Income tax expenses were USD 339m for the third quarter of 2023, representing an effective tax rate of 26.6%,
compared with USD 551m and an effective tax rate of 25.5% for the prior-year quarter. Current tax expenses were
USD 484m, compared with USD 347m, and related to the taxable profits of UBS Switzerland AG and other entities.
There was a net deferred tax benefit of USD 145m, compared with an expense of USD 204m in the prior-year
quarter. This included a benefit of USD 133m that resulted from the recognition of deferred tax assets (DTAs) for
tax credits carried forward in relation to US corporate alternative minimum tax and a benefit of USD 89m in respect
of 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 an expense of USD 75m that
primarily related to the amortization of DTAs previously recognized in relation to tax losses carried forward and
deductible temporary differences of UBS Americas Inc.
Excluding any potential effects from the remeasurement of DTAs in connection with the business planning process
or that result from any material jurisdictional statutory tax rate changes that could be enacted, a tax rate for the
fourth quarter of 2023 of around 23% is expected for UBS AG and its consolidated subsidiaries.
Total comprehensive income attributable to shareholders
In the third quarter of 2023, total comprehensive income attributable to shareholders was negative USD 86m,
reflecting net profit of USD 932m and other comprehensive income (OCI), net of tax, of negative USD 1,018m.
OCI related to cash flow hedges was negative USD 372m, mainly reflecting net unrealized losses on US dollar
hedging derivatives resulting from increases in the relevant US dollar long-term interest rates.
Foreign currency translation OCI was negative USD 348m, mainly resulting from a weakening of the Swiss franc
and the euro against the US dollar.
OCI related to own credit on financial liabilities designated at fair value was negative USD 284m, primarily due to
a tightening of UBS’s 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 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 (CET1) capital
›
Refer to “Note 20 Fair value measurement” in the “UBS AG consolidated financial statements” section of the
Annual Report 2022 for more information about own credit on financial liabilities designated at fair value
›
Refer to “Note 26 Post-employment benefit plans” in the “UBS AG consolidated financial statements” section of the
Annual Report 2022 for more information about OCI related to defined benefit plans
UBS AG third quarter 2023 report |
UBS AG | UBS AG consolidated performance 10
Sensitivity to interest rate movements
As of 30 September 2023, 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 of approximately USD 1.0bn in Global Wealth Management and
Personal & Corporate Banking in the first year after such a shift. Of this increase, approximately USD 0.6bn,
USD 0.2bn and USD 0.1bn would result from changes in Swiss franc, US dollar and euro interest rates, respectively.
A parallel shift in yield curves by –100 basis points could lead to a combined decrease in annual net interest income
of approximately USD 0.9bn in Global Wealth Management and Personal & Corporate Banking 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 September 2023 applied to Global Wealth Management
and Personal & Corporate Banking. These estimates further assume no change to balance sheet size and structure,
stable foreign exchange rates, and no specific management action. These estimates do not represent a forecast of
net interest income variability.
›
Refer to the “Risk management and control” section of this report for information about interest rate risk in the
banking book
Key figures and personnel
Below is an overview of selected key figures of UBS AG consolidated. For further information about key figures
related to capital management, refer to the “Capital management” section of this report.
Cost / income ratio: 3Q23 vs 3Q22
The cost / income ratio was 84.4%, compared with 74.0%, mainly reflecting a decrease in total revenues and an
increase in operating expenses.
Personnel: 3Q23 vs 2Q23
The number of personnel employed as of 30 September 2023 increased by 126 to 48,015 (full-time equivalents).
Equity, CET1 capital and returns
As of or for the quarter ended
Year-to-date
USD m, except where indicated
30.9.23
30.6.23
30.9.22
30.9.23
30.9.22
Net profit
Net profit 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 (%)
Return on CET1 capital (%)
Common equity tier 1 capital: 3Q23 vs 2Q23
During the third quarter of 2023, CET1 capital increased by USD 0.1bn to USD 43.4bn, mainly reflecting operating
profit before tax of USD 1.3bn, almost entirely offset by current tax expenses of USD 0.5bn, additional dividend
accruals of USD 0.5bn and negative effects from foreign currency translation of USD 0.4bn.
Return on common equity tier 1 capital: 3Q23 vs 3Q22
The annualized return on CET1 capital was 8.6%, compared with 15.2%, driven by lower net profit attributable to
shareholders and an increase in average CET1 capital.
Risk-weighted assets: 3Q23 vs 2Q23
Risk-weighted assets (RWA) decreased by USD 2.3bn to USD 321.1bn, reflecting decreases of USD 4.4bn from
model updates, as well as USD 3.1bn from currency effects, partly offset by an increase of USD 5.2bn from asset
size and other movements.
UBS AG third quarter 2023 report |
UBS AG | UBS AG consolidated performance 11
Common equity tier 1 capital ratio: 3Q23 vs 2Q23
The CET1 capital ratio increased to 13.5% from 13.4%, mainly reflecting the aforementioned decrease in RWA.
Leverage ratio denominator: 3Q23 vs 2Q23
The leverage ratio denominator (the LRD) decreased by USD 6.2bn to USD 1,042.1bn, driven by currency effects of
USD 14.4bn, partly offset by asset size and other movements of USD 8.2bn.
Common equity tier 1 leverage ratio: 3Q23 vs 2Q23
The CET1 leverage ratio increased to 4.2% from 4.1%, largely due to the decrease in the LRD.
Going concern leverage ratio: 3Q23 vs 2Q23
The going concern leverage ratio increased to 5.3% from 5.2%, mainly due to the aforementioned decrease in the
LRD.
Results 9M23 vs 9M22
Operating profit before tax decreased by USD 2,983m, or 42%, to USD 4,188m.
Total revenues decreased by USD 1,177m, or 4%, to USD 25,661m. Other income decreased by USD 967m, largely
due to the prior-year period including an USD 848m gain in Asset Management from the sale of a joint venture.
Net fee and commission income decreased by USD 781m, largely due to lower investment fund fees and fees from
portfolio management and related services, in Global Wealth Management and Asset Management, mainly
reflecting negative market performance. Net brokerage fees decreased, due to lower levels of client activity in the
Investment Bank and Global Wealth Management. Underwriting fees, mainly those relating to equity, as well as
M&A and corporate finance fees, decreased due to lower related revenues in Global Banking in the Investment
Bank. These decreases were partly offset by total combined net interest income and other net income from financial
instruments measured at fair value through profit or loss increasing by USD 571m, mainly due to increases in
Personal & Corporate Banking, primarily reflecting the impact of higher interest rates on deposit revenues, and
higher loan revenues, partly offset by lower deposit fees and the prior-year period including benefits from the SNB
deposit exemption. In addition, revenues were higher in Global Wealth Management, reflecting an increase in
deposit margins, driven by higher rates. These increases were partly offset by a decrease in the Investment Bank,
due to lower levels of both volatility and client activity, predominantly in Derivatives & Solutions. This decrease was
partly offset by an increase in Financing, driven by increases across all products.
Expected credit loss expenses were USD 80m, compared with expenses of USD 22m in the prior-year period.
Operating expenses increased by USD 1,749m, or 9%, to USD 21,393m. General and administrative expenses
increased by USD 1,337m, mainly due to a USD 486m increase in expenses for litigation, regulatory and similar
matters, driven by a USD 665m increase in provisions recognized in the first quarter of 2023 related to the US
residential mortgage-backed securities litigation matter. In addition, there were increases in shared services costs
charged by other subsidiaries of UBS Group AG of USD 432m, real estate costs of USD 94m and consulting fees of
USD 69m, all mainly reflecting integration-related expenses. Depreciation, amortization and impairment of non-
financial assets increased by USD 328m, primarily relating to a USD 214m impairment of software projects in
progress resulting from a reprioritization of software development activity in the context of the integration of Credit
Suisse. Depreciation of internally developed software also increased, reflecting a higher level of capitalized costs. In
addition, there was an USD 84m increase in personnel expenses, largely driven by higher salaries, mainly reflecting
salary adjustments and integration-related expenses, partly offset by lower variable compensation, including lower
financial advisor compensation, attributable to lower compensable revenues.
UBS AG third quarter 2023 report |
UBS AG | UBS AG consolidated performance 12
Outlook
Central banks have paused interest rate increases, but uncertainties remain in terms of the appropriate level of
interest rates that will allow inflation to converge to their targets. As a result, the outlook for economic growth,
asset valuations and market volatility remains difficult to predict. In addition, the ongoing geopolitical tensions
including the conflicts in the Middle East and Ukraine continue to cloud the macroeconomic outlook.
This, in addition to normal seasonality, may affect wealth management and institutional clients’ transactional activity
in the fourth quarter of 2023. We also expect clients to continue to shift cash holdings from deposits into higher-
yielding products, resulting in similar sequential net interest income performance.
As we continue to execute on our strategy, growth and integration plans, our focus remains on offsetting some of
these ongoing challenges by helping clients to manage the inherent risks and opportunities, gaining share of wallet
and actively winding down our non-core assets and costs.
UBS AG third quarter 2023 report |
Business divisions and Group Items | Global Wealth Management 13
Business divisions and Group
Items
Management report
Starting with the third quarter of 2023, Group Functions has been renamed Group Items. The Non-core and Legacy
Portfolio, which was previously reported within Group Functions, is now included in the new reportable segment
Non-core and Legacy. Prior periods have been revised to reflect these presentational changes.
Additionally, a small amount of exposure of pre-integration UBS business divisions was included in Non-core and
Legacy, starting with the third quarter of 2023, as such exposure was assessed as not strategic in light of the
acquisition of the Credit Suisse Group.
Global Wealth Management
Global Wealth Management
1
As of or for the quarter ended
% change from
Year-to-date
USD m, except where indicated
30.9.23
30.6.23
30.9.22
2Q23
3Q22
30.9.23
30.9.22
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
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
2
Cost / income ratio (%)
2
Financial advisor compensation
3
Invested assets (USD bn)
2
Loans, gross (USD bn)
4
Customer deposits (USD bn)
4
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
2,5
Advisors (full-time equivalents)
1 Comparatives may differ as a result of adjustments following organizational changes, restatements due to the retrospective adoption of new accounting standards or changes in accounting policies, and events after
the reporting period. 2 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method. 3 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 1,764m as of 30 September 2023.
4 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. 5 Refer to the “Risk management
and control” section of this report for more information about (credit-)impaired exposures. Excludes loans to financial advisors.
Results: 3Q23 vs 3Q22
Profit before tax decreased by USD 428m, or 30%, to USD 1,006m, driven by higher operating expenses and lower
total revenues.
Total revenues
Total revenues decreased by USD 104m, or 2%, to USD 4,682m, reflecting lower other income and net interest
income, partly offset by higher recurring net fee and transaction-based income.
Net interest income decreased by USD 66m, or 5%, to USD 1,300m, mainly driven by lower loan revenues,
reflecting lower average loan volumes and margins, and due to shifts to lower-margin deposit products, partly
offset by the effect of higher deposit margins, resulting from rising interest rates.
Recurring net fee income increased by USD 137m, or 6%, to USD 2,601m, mainly reflecting positive market
performance.
UBS AG third quarter 2023 report |
Business divisions and Group Items | Global Wealth Management 14
Transaction-based income increased by USD 33m, or 5%, to USD 765m, mainly driven by higher levels of client
activity, particularly in Asia Pacific, Switzerland and EMEA.
Other income decreased by USD 209m, or 93%, to USD 15m, as the third quarter of 2022 included a USD 133m
gain from the sale of our domestic wealth management business in Spain and an USD 86m gain from the sale of
UBS Swiss Financial Advisers AG.
Credit loss expense / release
Net credit loss expenses were USD 8m, primarily related to stage 3 positions, compared with net expenses of
USD 7m in the third quarter of 2022.
Operating expenses
Operating expenses increased by USD 324m, or 10%, to USD 3,668m, mainly driven by integration-related
expenses associated with the acquisition of the Credit Suisse Group, unfavorable foreign currency effects, higher
financial advisor variable compensation and an increase in technology expenses.
Invested assets: 3Q23 vs 2Q23
Invested assets decreased by USD 51bn, or 2%, to USD 2,986bn, mainly driven by negative market performance of
USD 49bn and unfavorable foreign currency effects of USD 19bn, partly offset by net new money inflows.
Loans: 3Q23 vs 2Q23
Loans decreased by USD 5.0bn to USD 215.4bn, mainly driven by negative net new loans of USD 2.8bn, as well as
unfavorable foreign currency effects.
Customer deposits: 3Q23 vs 2Q23
Customer deposits increased by USD 3.2bn to USD 339.3bn, mainly driven by net inflows into fixed-term and
savings deposit products, partly offset by continued shifts into money market funds and US-government securities,
as well as unfavorable foreign currency effects.
Results: 9M23 vs 9M22
Profit before tax decreased by USD 538m, or 14%, to USD 3,309m, mainly driven by higher operating expenses
and lower total revenues.
Total revenues decreased by USD 153m, or 1%, to USD 14,210m, with decreases in recurring net fee, other income
and transaction-based income partly offset by increases in net interest income.
Net interest income increased by USD 460m, or 12%, to USD 4,235m, mainly driven by higher deposit margins,
resulting from rising interest rates, partly offset by the effects of shifts to lower-margin deposit products, lower
average deposit volumes, and lower loan revenues, reflecting lower average volumes and margins.
Recurring net fee income decreased by USD 293m, or 4%, to USD 7,590m, primarily driven by negative market
performance.
Transaction-based income decreased by USD 124m, or 5%, to USD 2,356m, mainly driven by lower levels of client
activity, particularly in the Americas and Asia Pacific.
Other income decreased by USD 195m, or 87%, to USD 29m, as the first nine months of 2022 included a
USD 133m gain from the sale of our domestic wealth management business in Spain and an USD 86m gain from
the sale of UBS Swiss Financial Advisers AG.
Net credit loss expenses were USD 29m, primarily related to stage 3 positions, compared with net releases of
USD 3m in the first nine months of 2022.
Operating expenses increased by USD 354m, or 3%, to USD 10,872m, mostly driven by integration-related
expenses associated with the acquisition of the Credit Suisse Group, unfavorable foreign currency effects and higher
technology expenses. These were partly offset by lower provisions for litigation, regulatory and similar matters, as
well as lower financial advisor variable compensation.
UBS AG third quarter 2023 report |
Business divisions and Group Items | Personal & Corporate Banking 15
Personal & Corporate Banking
Personal & Corporate Banking – in Swiss francs
1
As of or for the quarter ended
% change from
Year-to-date
CHF m, except where indicated
30.9.23
30.6.23
30.9.22
2Q23
3Q22
30.9.23
30.9.22
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
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
2
Cost / income ratio (%)
2
Net interest margin (bps)
2
Fee and trading income for Corporate & Institutional Clients
2
Investment products for Personal Banking (CHF bn)
2
Net new investment products for Personal Banking (CHF bn)
2
Active Digital Banking clients in Personal Banking (%)
2,3
Active Mobile Banking clients in Personal Banking (%)
2
Active Digital Banking clients in Corporate & Institutional Clients (%)
2
Loans, gross (CHF bn)
Customer deposits (CHF bn)
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
2,4
1 Comparatives may differ as a result of adjustments following organizational changes, restatements due to the retrospective adoption of new accounting standards or changes in accounting policies, and events after
the reporting period. 2 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method. 3 In the third quarter of 2023, 89.0% of clients of Personal Banking
were “activated users” of Digital Banking (i.e., clients who had logged into Digital Banking at least once in the course of their relationship with UBS). 4 Refer to the “Risk management and control” section of this
report for more information about (credit-)impaired exposures.
Results
:
3Q23 vs 3Q22
Profit before tax increased by CHF 179m, or 42%, to CHF 604m, with higher total revenues partly offset by higher
operating expenses and net credit loss expenses, compared with net credit loss releases in the third quarter of 2022.
Total revenues
Total revenues increased by CHF 263m, or 26%, to CHF 1,263m, reflecting increases across all income lines,
predominantly in net interest income.
Net interest income increased by CHF 222m to CHF 711m, mainly driven by higher deposit margins, which resulted
from rising interest rates, and higher loan revenues, partly offset by lower deposit fees. The third quarter of 2022
included a benefit from the Swiss National Bank deposit exemption.
Recurring net fee income increased by CHF 9m to CHF 215m, mainly due to higher revenues related to custody
assets and mandates, reflecting higher average volumes of underlying assets.
Transaction-based income increased by CHF 11m to CHF 296m, mainly driven by higher income from Corporate &
Institutional Clients.
Other income increased by CHF 20m to CHF 40m, mainly reflecting a one-time effect of CHF 23m that resulted
from a change to the equity method measurement basis for our investment in SIX Group.
Credit loss expense / release
Net credit loss expenses were CHF 2m, compared with net releases of CHF 15m in the third quarter of 2022.
Operating expenses
Operating expenses increased by CHF 67m, or 11%, to CHF 657m, mainly driven by integration-related expenses
associated with the acquisition of the Credit Suisse Group.
UBS AG third quarter 2023 report |
Business divisions and Group Items | Personal & Corporate Banking 16
Results: 9M23 vs 9M22
Profit before tax increased by CHF 570m, or 47%, to CHF 1,776m, with higher total revenues and lower net credit
loss expenses, partly offset by higher operating expenses.
Total revenues increased by CHF 694m, or 23%, to CHF 3,716m, reflecting increases across all income lines,
predominantly in net interest income.
Net interest income increased by CHF 620m to CHF 2,104m, mainly driven by higher deposit margins, which
resulted from rising interest rates, and higher loan revenues, partly offset by lower deposit fees. The first nine
months of 2022 included a benefit from the Swiss National Bank deposit exemption.
Recurring net fee income increased by CHF 20m to CHF 638m, mainly reflecting higher revenues from account
fees.
Transaction-based income increased by CHF 23m to CHF 910m, mainly driven by higher income from Corporate &
Institutional Clients.
Other income increased by CHF 31m to CHF 64m, mainly reflecting a one-time effect of CHF 23m that resulted
from a change to the equity method measurement basis for our investment in SIX Group.
Net credit loss expenses were CHF 25m, mainly related to model-driven credit loss expenses, compared with net
expenses of CHF 39m in the first nine months of 2022.
Total operating expenses increased by CHF 138m, or 8%, to CHF 1,915m, mainly driven by integration-related
expenses associated with the acquisition of the Credit Suisse Group, technology expenses, and accruals for variable
compensation.
Personal & Corporate Banking – in US dollars
1
As of or for the quarter ended
% change from
Year-to-date
USD m, except where indicated
30.9.23
30.6.23
30.9.22
2Q23
3Q22
30.9.23
30.9.22
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
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
2
Cost / income ratio (%)
2
Net interest margin (bps)
2
Fee and trading income for Corporate & Institutional Clients
2
Investment products for Personal Banking (USD bn)
2
Net new investment products for Personal Banking (USD bn)
2
Active Digital Banking clients in Personal Banking (%)
2,3
Active Mobile Banking clients in Personal Banking (%)
2
Active Digital Banking clients in Corporate & Institutional Clients (%)
2
Loans, gross (USD bn)
Customer deposits (USD bn)
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
2,4
1 Comparatives may differ as a result of adjustments following organizational changes, restatements due to the retrospective adoption of new accounting standards or changes in accounting policies, and events after
the reporting period. 2 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method. 3 In the third quarter of 2023, 89.0% of clients of Personal Banking
were “activated users” of Digital Banking (i.e., clients who had logged into Digital Banking at least once in the course of their relationship with UBS). 4 Refer to the “Risk management and control” section of this
report for more information about (credit-)impaired exposures.
UBS AG third quarter 2023 report |
Business divisions and Group Items | Asset Management 17
Asset Management
Asset Management
1
As of or for the quarter ended
% change from
Year-to-date
USD m, except where indicated
30.9.23
30.6.23
30.9.22
2Q23
3Q22
30.9.23
30.9.22
Results
Net management fees
2
Performance fees
Net gain from disposal of a joint venture
Total revenues
Credit loss expense / (release)
Operating expenses
Business division operating profit / (loss) before tax
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
3
Cost / income ratio (%)
3
Gross margin on invested assets (bps)
3,4
Information by business line / asset class
Invested assets (USD bn)
3
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
5
Total invested assets
4
Information by region
Invested assets (USD bn)
3
Americas
Asia Pacific
4
Europe, Middle East and Africa (excluding Switzerland)
Switzerland
Total invested assets
4
Information by channel
Invested assets (USD bn)
3
Third-party institutional
Third-party wholesale
UBS’s wealth management businesses
Associates
5
Total invested assets
4
1 Comparatives may differ as a result of adjustments following organizational changes, restatements due to the retrospective adoption of new accounting standards or changes in accounting policies, and events after
the reporting period. 2 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. 3 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method. 4 Starting with the second
quarter of 2023, invested assets include invested assets from associates, to better reflect the business strategy. Comparative figures have been restated to reflect this change. 5 The invested assets amounts reported
for associates are prepared in accordance with their local regulatory requirements and practices.
UBS AG third quarter 2023 report |
Business divisions and Group Items | Asset Management 18
Results: 3Q23 vs 3Q22
Profit before tax decreased by USD 53m, or 38%, to USD 86m, primarily reflecting higher operating expenses.
Total revenues
Total revenues were stable at USD 511m.
Net management fees decreased by USD 3m, or 1%, to USD 499m, reflecting negative interest income and the
impact of continued margin compression, almost entirely offset by positive market performance and foreign
currency effects.
Performance fees decreased by USD 3m to USD 11m, driven by decreases in Real Estate & Private Markets, partly
offset by increases in Hedge Fund Businesses.
Operating expenses
Operating expenses increased by USD 48m, or 13%, to USD 425m, mainly reflecting integration-related expenses,
adverse foreign currency effects, increases in technology and personnel expenses.
Invested assets: 3Q23 vs 2Q23
Invested assets decreased by USD 31bn, or 3%, to USD 1,157bn, reflecting negative market performance of
USD 17bn, unfavorable foreign currency effects of USD 17bn, partly offset by net new money generation of
USD 6bn. Excluding money market flows, net new money (excluding associates) was negative USD 1bn.
Results: 9M23 vs 9M22
Profit before tax decreased by USD 1,004m, or 79%, to USD 270m, primarily due to the first nine months of 2022
including a gain of USD 848m from the sale of our shareholding in the Mitsubishi Corp.-UBS Realty Inc. joint
venture. Excluding that gain, profit before tax decreased by USD 157m, or 37%, mainly reflecting lower net
management fees and higher operating expenses.
Total revenues decreased by USD 954m, or 39%, to USD 1,512m. The decrease was primarily due to the first nine
months of 2022 including the aforementioned gain of USD 848m. Excluding that gain, total revenues decreased
by USD 107m, or 7%.
Net management fees decreased by USD 108m, or 7%, to USD 1,470m, mainly reflecting negative market
performance and the impact of continued margin compression.
Performance fees increased by USD 2m, or 4%, to USD 42m.
Operating expenses increased by USD 51m, or 4%, to USD 1,243m, mainly reflecting integration-related expenses,
adverse foreign currency effects, increases in technology expenses, partly offset by decreases in personnel expenses.
UBS AG third quarter 2023 report |
Business divisions and Group Items | Investment Bank 19
Investment Bank
Investment Bank
1
As of or for the quarter ended
% change from
Year-to-date
USD m, except where indicated
30.9.23
30.6.23
30.9.22
2Q23
3Q22
30.9.23
30.9.22
Results
Advisory
Capital Markets
Global Banking
Execution Services
Derivatives & Solutions
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
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
2
Cost / income ratio (%)
2
Average VaR (1-day, 95% confidence, 5 years of historical data)
1 Comparatives may differ as a result of adjustments following organizational changes, restatements due to the retrospective adoption of new accounting standards or changes in accounting policies, and events after
the reporting period. 2 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method.
Results: 3Q23 vs 3Q22
Loss before tax was USD 89m, mainly reflecting lower total revenues and higher operating expenses, compared
with profit before tax of USD 436m in the third quarter of 2022.
Total revenues
Total revenues decreased by USD 262m, or 13%, to USD 1,769m, reflecting lower revenues in Global Markets,
partly offset by an increase in Global Banking.
Global Banking
Global Banking revenues increased by USD 35m, or 11%, to USD 364m, driven by higher Capital Markets revenues,
partly offset by lower Advisory revenues. Fee-pool-comparable revenues
1
decrease in the overall global fee pool.
2
Advisory revenues decreased by USD 30m, or 22%, to USD 106m, mainly due to lower merger and acquisition
transaction revenues, which decreased by USD 37m, or 30%, compared with a 33% decrease in the relevant global
fee pool.
2
Capital Markets revenues increased by USD 65m, or 34%, to USD 258m, mainly due to higher Leveraged Capital
Markets revenues, with a USD 36m, or 76%, increase in fees, and prior-year mark-to-market losses of USD 28m
which did not recur. Leveraged Capital Markets outperformed the relevant global fee pool
2
Global Markets
Global Markets revenues decreased by USD 297m, or 17%, to USD 1,405m, primarily driven by lower Derivatives
& Solutions revenues.
Execution Services revenues were stable at USD 374m.
Derivatives & Solutions revenues decreased by USD 304m, or 35%, to USD 562m, mostly driven by Foreign
Exchange, Rates and Equity Derivatives, due to lower levels of both volatility and client activity.
UBS AG third quarter 2023 report |
Business divisions and Group Items | Investment Bank 20
Financing revenues increased by USD 8m, or 2%, to USD 468m, supported by increased client balances.
Equities
Global Markets Equities revenues decreased by USD 64m, or 6%, to USD 1,043m, mainly driven by a decrease in
Equity Derivatives revenues.
Foreign Exchange, Rates and Credit
Global Markets Foreign Exchange, Rates and Credit revenues decreased by USD 233m, or 39%, to USD 362m,
primarily driven by lower Foreign Exchange and Rates revenues.
Credit loss expense / release
Net credit loss expenses were USD 17m, compared with net expenses of USD 4m in the third quarter of 2022.
Operating expenses
Operating expenses increased by USD 249m, or 16%, to USD 1,840m, mainly driven by integration-related
expenses associated with the acquisition of the Credit Suisse Group, and by higher technology expenses.
Results: 9M23 vs 9M22
Profit before tax decreased by USD 1,231m, or 71%, to USD 500m, mainly reflecting lower total revenues and
higher operating expenses.
Total revenues decreased by USD 1,027m, or 15%, to USD 6,004m, reflecting lower revenues in Global Markets
and Global Banking.
Global Banking revenues decreased by USD 138m, or 11%, to USD 1,118m, reflecting lower Advisory and Capital
Markets revenues. Fee-pool-comparable revenues
1
global fee pool.
2
Advisory revenues decreased by USD 124m, or 22%, to USD 437m, mostly due to lower merger and acquisition
transaction revenues, which decreased by USD 125m, or 25%, compared with a 32% decrease in the relevant
global fee pool.
2
Capital Markets revenues decreased by USD 14m, or 2%, to USD 681m.
Global Markets revenues decreased by USD 888m, or 15%, to USD 4,887m, driven by lower Derivatives & Solutions
and Execution Services revenues, partly offset by higher Financing revenues.
Execution Services revenues decreased by USD 117m, or 9%, to USD 1,154m, mainly driven by Cash Equities
revenues, due to lower exchange-traded volumes.
Derivatives & Solutions revenues decreased by USD 927m, or 30%, to USD 2,194m, mostly driven by decreases in
Equity Derivatives, Foreign Exchange and Rates, due to lower levels of both volatility and client activity.
Financing revenues increased by USD 154m, or 11%, to USD 1,538m, with increases across all products.
Global Markets Equities revenues decreased by USD 604m, or 15%, to USD 3,480m, mainly driven by Equity
Derivatives revenues.
Global Markets Foreign Exchange, Rates and Credit revenues decreased by USD 285m, or 17%, to USD 1,407m,
largely driven by Foreign Exchange and Rates.
Net credit loss expenses were USD 25m, compared with net releases of USD 20m in the first nine months of 2022.
Operating expenses increased by USD 160m, or 3%, to USD 5,480m, mainly driven by integration-related expenses
associated with the acquisition of the Credit Suisse Group.
1
market movements on loan portfolios; and Debt Capital Markets, excluding revenues related to debt underwriting of UBS instruments.
2
UBS AG third quarter 2023 report |
Business divisions and Group Items | Non-core and Legacy 21
Non-core and Legacy
Non-core and Legacy
1
As of or for the quarter ended
% change from
Year-to-date
USD m
30.9.23
30.6.23
30.9.22
2Q23
3Q22
30.9.23
30.9.22
Results
Total revenues
Credit loss expense / (release)
Operating expenses
Operating profit / (loss) before tax
1 Starting with the third quarter of 2023, Non-core and Legacy represents a separate reportable segment, which includes Non-core and Legacy Portfolio previously reported within Group Functions. Prior periods have
been revised to reflect this presentational change. Additionally, a small amount of exposure of pre-integration UBS business divisions was included in Non-core and Legacy starting with the third quarter of 2023, as
it was assessed as not strategic in light of the acquisition of the Credit Suisse Group.
Results: 3Q23 vs 3Q22
Loss before tax was USD 106m, compared with a profit before tax of USD 52m.
Total revenues
Total revenues decreased by USD 42m, or 54%, to USD 35m, mainly due to the third quarter of 2022 including
income of USD 62m related to a legacy litigation settlement.
Operating expenses
Operating expenses increased by USD 117m to USD 142m, largely due to integration-related expenses of
USD 115m.
Results: 9M23 vs 9M22
Loss before tax was USD 774m, compared with a profit before tax of USD 98m.
Total revenues
Total revenues decreased by USD 97m, or 53%, to USD 87m, mainly due to the first nine months of 2022 including
income of USD 62m related to a legacy litigation settlement. In addition, valuation gains on our portfolio of auction
rate securities in the first nine months of 2023 were USD 54m lower than in the prior-year period.
Operating expenses
Operating expenses increased by USD 777m to USD 861m, largely reflecting an increase in provisions of USD 665m
related to the US residential mortgage-backed securities litigation matter and integration-related expenses of
USD 115m.
UBS AG third quarter 2023 report |
Business divisions and Group Items | Group Items 22
Group Items
Group Items
1
As of or for the quarter ended
% change from
Year-to-date
USD m
30.9.23
30.6.23
30.9.22
2Q23
3Q22
30.9.23
30.9.22
Results
Total revenues
Credit loss expense / (release)
Operating expenses
Operating profit / (loss) before tax
1 Starting with the third quarter of 2023, Group Functions has been renamed Group Items, and Non-core and Legacy Portfolio, which was previously reported within Group Functions, was included in Non-core and
Legacy, which represents a separate reportable segment. Prior periods have been revised to reflect these presentational changes.
Results: 3Q23 vs 3Q22
Loss before tax was USD 299m, compared with a loss of USD 339m.
Income from accounting asymmetries, including hedge accounting ineffectiveness, was net negative USD 11m,
compared with net negative income of USD 177m. The impacts in the prior-year quarter were driven by mark-to-
market effects on portfolio-level economic hedges due to rising interest rates and cross-currency-basis movements.
Income related to centralized Group Treasury risk management was negative USD 6m, compared with positive
USD 17m.
In addition, the third quarter of 2023 included an increase of USD 61m in funding costs related to deferred tax
assets (DTAs).
Results: 9M23 vs 9M22
Loss before tax was USD 1,082m, compared with a loss of USD 1,045m.
This included income from accounting asymmetries, including hedge accounting ineffectiveness, of net negative
USD 136m, compared with net negative income of USD 562m. Income related to centralized Group Treasury risk
management was positive USD 19m, compared with negative USD 38m in the first nine months of 2022.
Furthermore, the first nine months of 2023 included integration-related expenses of USD 288m associated with the
acquisition of the Credit Suisse Group and an increase of USD 241m in funding costs related to DTAs, partly offset
by remeasurement losses of USD 46m on properties held for sale in the first nine months of 2022.
UBS AG third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet 23
Risk, capital, liquidity and
funding, and balance sheet
Management report
Table of contents
24
24
26
27
28
30
31
Total loss-absorbing capacity
34
35
37
37
37
37
38
38
38
38
39
40
UBS AG third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 24
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 Annual Report 2022.
Credit risk
Overall banking products exposure
Overall banking products exposure decreased by USD 6bn to USD 688bn as of 30 September 2023, driven by a
USD 11bn decrease in loans and advances to customers, partly offset by a USD 3bn increase in guarantees and loan
commitments and a USD 2bn increase in cash and balances at central banks.
Total net credit loss expenses were USD 27m, reflecting USD 20m net credit loss expenses related to stage 1 and 2
positions and USD 6m net credit loss expenses related to stage 3 positions.
In aggregate, exposure related to traded products increased by USD 8bn to USD 51bn during the third quarter of
2023, mainly driven by market movements and increased clearing activities.
›
Refer to the “Balance sheet and off-balance sheet” section of this report for more information about balance sheet
movements
›
Refer to the “UBS AG consolidated performance” section and “Note 7 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 0.9bn to
USD 2.8bn as of 30 September 2023, driven by new deals. USD 0.1bn of commitments had not yet been distributed
as originally planned as of 30 September 2023.
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 AG third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 25
Banking and traded products exposure in the business divisions and Group Items
30.9.23
USD m
Global
Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core
and Legacy
1
Group
Items
1
Total
Banking products
2,3
Gross exposure
of which: loans and advances to customers (on-balance sheet)
of which: guarantees and loan commitments (off-balance sheet)
Traded products
4,5
Gross exposure
of which: over-the-counter derivatives
of which: securities financing transactions
of which: exchange-traded derivatives
Other credit lines, gross
6
Total credit-impaired exposure, gross
Total allowances and provisions for expected credit losses
of which: stage 1
of which: stage 2
of which: stage 3
30.6.23
USD m
Global
Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core
and Legacy
1
Group
Items
1
Total
Banking products
3
Gross exposure
of which: loans and advances to customers (on-balance sheet)
of which: guarantees and loan commitments (off-balance sheet)
Traded products
4,5
Gross exposure
of which: over-the-counter derivatives
of which: securities financing transactions
of which: exchange-traded derivatives
Other credit lines, gross
6
Total credit-impaired exposure, gross
Total allowances and provisions for expected credit losses
of which: stage 1
of which: stage 2
of which: stage 3
1 Starting with the third quarter of 2023, Non-core and Legacy represents a separate reportable segment and Group Functions has been renamed Group Items. Prior periods have been revised to reflect these changes.
2 In the third quarter of 2023, a small amount of exposure of pre-integration UBS business divisions was included in Non-core and Legacy, as it was assessed as not strategic in light of the acquisition of the Credit
Suisse Group. 3 IFRS 9 gross exposure including other financial assets at amortized cost, but excluding cash, receivables from securities financing transactions, cash collateral receivables on derivative instruments,
financial assets at fair value through other comprehensive income, irrevocable committed prolongation of existing loans and unconditionally revocable committed credit lines, and forward starting reverse repurchase
and securities borrowing agreements. 4 Internal management view of credit risk, which differs in certain respects from IFRS. 5 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. 6 Unconditionally revocable committed credit lines.
Collateralization of Loans and advances to customers
1
Global Wealth Management
Personal & Corporate Banking
USD m, except where indicated
30.9.23
30.6.23
30.9.23
30.6.23
Secured by collateral
Residential real estate
Commercial / industrial real estate
Cash
Equity and debt instruments
Other collateral
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 AG applies a risk-based approach that generally prioritizes collateral according to
its liquidity profile.
UBS AG third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 26
Market risk
UBS AG consolidated continued to maintain generally low levels of management value-at-risk (VaR). Average
management VaR (1-day, 95% confidence level) increased from USD 13m to USD 17m at the end of the third
quarter of 2023 driven by Global Markets in the Investment Bank.
There were no new VaR negative backtesting exceptions in the third quarter of 2023. The number of negative
backtesting exceptions within the most recent 250-business-day window decreased from one to zero. The Swiss
Financial Market Supervisory Authority (FINMA) VaR multiplier derived from backtesting exceptions for market risk
risk-weighted assets was unchanged compared with the prior quarter, at 3.0.
Management value-at-risk (1-day, 95% confidence, 5 years of historical data) of the business divisions and
Group Items by general market risk type
1
Average by risk type
USD m
Min.
Max.
Period end
Average
Equity
Interest
rates
Credit
spreads
Foreign
exchange
Commodities
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Non-core and Legacy
Group Items
Diversification effect
2,3
Total as of 30.9.23
Total as of 30.6.23
1 Statistics at individual levels may not be summed to deduce the corresponding aggregate figures. The minima and maxima for each level may occur on different days, and, likewise, the value-at-risk (VaR) for each
business line or risk type, being driven by the extreme loss tail of the corresponding distribution of simulated profits and losses for that business line or risk type, may well be driven by different days in the historical
time series, rendering invalid the simple summation of figures to arrive at the aggregate total. 2 The difference between the sum of the standalone VaR for the business divisions and Group Items and the total VaR.
3 As the minima and maxima for different business divisions and Group Items occur on different days, it is not meaningful to calculate a portfolio diversification effect.
Economic value of equity and net interest income sensitivity
The economic value of equity (EVE) sensitivity in the banking book of UBS AG to a +1 basis point parallel shift in
yield curves was negative USD 24.8m as of 30 September 2023, compared with negative USD 23.5m as of 30 June
2023. This excludes the sensitivity of USD 2.5m from additional tier 1 (AT1) capital instruments (as per specific
FINMA requirements) in contrast to general Basel Committee on Banking Supervision (BCBS) guidance. The quarter-
on-quarter change was driven by a longer modeled duration assigned to its own equity.
The majority of UBS AG’s interest rate risk in the banking book is a reflection of the net asset duration that it runs
to offset its modeled sensitivity of net USD 20.3m (30 June 2023: USD 18.8m) assigned to its equity, goodwill and
real estate, with the aim of generating a stable net interest income contribution. Of this, USD 14.4m and USD 4.9m
are attributable to the US dollar and the Swiss franc portfolios, respectively, (30 June 2023: USD 12.8m and
USD 5.1m, respectively).
In addition to the sensitivity mentioned above, UBS AG calculates the six interest rate shock scenarios prescribed by
FINMA. The “Parallel up” scenario, assuming all positions were fair valued, was the most severe and would have
resulted in a change in EVE of negative USD 4.6bn, or 8.4%, of UBS AG’s tier 1 capital (30 June 2023: negative
USD 4.4bn, or 7.9%), which is well below the 15% threshold as per the BCBS supervisory outlier test for high levels
of interest rate risk in the banking book.
The immediate effect on UBS AG’s tier 1 capital in the “Parallel up” scenario as of 30 September 2023 would have
been a decrease of USD 0.6bn, or 1.0% (30 June 2023: USD 0.4bn, or 0.7%), reflecting the fact that the vast
majority of its 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. UBS AG also applies
granular internal interest rate shock scenarios to its banking book positions to monitor the book’s specific risk
profile.
UBS AG third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 27
Interest rate risk – banking book
30.9.23
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
30.6.23
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
UBS AG remains watchful of a range of geopolitical developments and political changes in a number of countries,
as well as international tensions arising from the Russia–Ukraine war, the escalating conflict in the Middle East and
US–China trade relations. UBS AG’s direct exposure to Israel is USD 0.1bn, mainly from collateralized over-the-
counter derivatives exposure to Israeli banks. Direct exposure to Gulf Cooperation Council countries is USD 2.1bn,
while direct exposure to Egypt, Jordan and Lebanon is limited, and there is no direct exposure to Iran, Iraq or Syria.
UBS AG’s direct exposure to Russia, Belarus and Ukraine is immaterial, and potential second-order impacts, such as
European energy security, continue to be monitored. UBS AG has significant country risk exposure to major
European economies, including France, Germany and the UK.
Inflation has abated to some extent in major Western economies, though there are still concerns regarding future
developments, and central banks’ monetary policy is in the spotlight. The potential for “higher-for-longer” interest
rates raises the prospect of a global recession, particularly as Chinese economic growth has been muted. This
combination of factors translates into a more uncertain and volatile environment, which increases the risk of
financial market disruptions.
UBS AG continues to monitor potential trade policy disputes, as well as economic and political developments in
addition to those mentioned above. In 2023, several emerging markets have faced economic, political and market
pressures, particularly in light of interest rate hikes and a stronger US dollar. UBS AG’s exposure to emerging market
countries is 4% of its total country exposure, mainly in Asia.
›
Refer to the “Risk management and control” section of the Annual Report 2022 for more information on a
UBS Group AG consolidated basis
UBS AG third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 28
Non-financial risk
1
UBS is actively managing the non-financial risks emerging from the acquisition of the Credit Suisse Group, including
the current operation of dual corporate structures, and the scale, pace and complexity of the required integration
activities. These activities continue to be managed by our program run by the Group Integration Office. We place
an increased focus on maintaining and enhancing our control environment and continue to cooperate with
regulators to submit and execute implementation plans to meet regulatory requirements, including regulatory
remediation requirements applicable to Credit Suisse AG. In addition, the Group is closely monitoring operational
risk indicators, including attrition, to detect any potential for adverse impacts on the control environment.
There is an increased risk of cyber-related operational disruption to business activities at our locations and / or those
of third parties 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.
UBS was not affected by significant cyber events in the third quarter of 2023 but, due to the high threat level
observed, remains on heightened alert to respond to and mitigate new threats. Given this backdrop, we are
continuing to invest in improving our technology infrastructure to enhance our information security and data
protection and improve our defense, detection and response capabilities against cyberattacks, including addressing
regulatory expectations and advancing overall organizational development. In addition, the Group faces multiple
related regulatory deadlines to enhance operational resilience between 2023 and 2026. To that end, a global
framework designed to drive enhancements in operational resilience continues to be implemented across all
business divisions and jurisdictions, as well as being provided to third parties, including third-party vendors, that are
of critical importance to us.
Following a post-incident review of the ION XTP ransomware attack, we are proceeding with improvements to our
frameworks for managing third parties that support our important business services and continue with actions to
enhance our cyber-risk assessments and controls over third-party vendors.
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. We seek to enhance our frameworks to implement controls for
these risks and to meet regulatory expectations. In addition, new risks continue to emerge, such as those which
result from the demand from our clients for distributed ledger technology, blockchain-based assets and
cryptocurrencies; although we currently have limited exposure to such risks, and relevant control frameworks for
them are implemented and reviewed on a regular basis as they evolve.
Competition to find new business opportunities across the financial services sector, both for firms and for customers,
is increasing, particularly during periods of market volatility and rising interest rates. Thus, suitability risk, product
selection, cross-divisional service offerings, quality of advice and price transparency also remain areas of heightened
focus for UBS and for the industry as a whole.
Sustainable investing, 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 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.
Unintended permanent establishment remains an area of ongoing attention and the risk that tax authorities may,
on the basis of new interpretations of existing law, seek to impose taxation. We maintain a series of controls
designed to address these risks, and we are increasing the number of controls that are automated.
UBS AG third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 29
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. An effective financial crime prevention
program therefore remains essential for UBS. Money laundering and financial fraud techniques are becoming
increasingly sophisticated, and geopolitical volatility makes the sanctions landscape more complex, such as the
extensive and continuously evolving sanctions arising from the Russia–Ukraine war, which also requires constant
attention to prevent circumvention risks.
In the US, the Office of the Comptroller of the Currency (the OCC) issued a Cease and Desist Order against us in
May 2018 relating to our US branch anti-money-laundering (AML) and know-your-client (KYC) programs. In
response, we initiated an extensive program for the purpose of ensuring sustainable remediation of US-relevant
Bank Secrecy Act / AML issues across all our US legal entities. We have introduced significant improvements to the
framework and continue to evolve it in response to new and emerging risks.
We continue to focus on strategic enhancements to our global AML, KYC and sanctions programs.
In September 2022, the 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, we continue to focus on a program to remediate
identified shortcomings.
1
UBS AG third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Capital management 30
Capital management
The disclosures in this section are provided for UBS AG on a consolidated basis and focus on key developments
during the reporting period and information in accordance with the Basel III framework, as applicable to Swiss
systemically relevant banks (SRBs). They should be read in conjunction with “Capital management” in the “Capital,
liquidity and funding, and balance sheet” section of the Annual Report 2022, which provides more information
about relevant capital management objectives, planning and activities, as well as the Swiss SRB total loss-absorbing
capacity framework, on a UBS Group AG consolidated basis.
UBS AG has contributed a significant portion of capital to, and provides substantial liquidity to, its subsidiaries.
Many of these subsidiaries are subject to regulations requiring compliance with minimum capital, liquidity and
similar requirements.
›
Refer to the 30 September 2023 Pillar 3 Report, available under “Pillar 3 disclosures” at
ubs.com/investors
, for more
information about additional regulatory disclosures for UBS Group AG on a consolidated basis, as well as its
significant regulated subsidiaries and sub-groups
Swiss SRB going and gone concern requirements and information
As of 30.9.23
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
of which: high-trigger loss-absorbing additional tier 1 capital
of which: low-trigger loss-absorbing additional tier 1 capital
3
Required gone concern capital
Total gone concern loss-absorbing capacity
4,5,6
of which: base requirement including add-ons for market share and LRD
7
7
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 3.5% 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 Existing outstanding low-trigger
additional tier 1 capital instruments qualify as going concern capital at the UBS AG consolidated level, as agreed with FINMA, until their first call date. As of their first call date, these instruments are eligible to meet
the gone concern requirements. 4 A maximum of 25% of the gone concern requirements can be met with instruments that have a remaining maturity of between one and two years. Once at least 75% of the
minimum gone concern requirement has been met with instruments that have a remaining maturity of greater than two years, all instruments that have a remaining maturity of between one and two years remain
eligible to be included in the total gone concern capital. 5 From 1 January 2023, the resolvability discount on the gone concern capital requirements for systemically important banks (SIBs) has been replaced with
reduced base gone concern capital requirements equivalent to 75% of the total going concern requirements (excluding countercyclical buffer requirements). 6 As of July 2024, FINMA will have the authority to
impose a surcharge of up to 25% of the total going concern capital requirements should obstacles to an SIB’s resolvability be identified in future resolvability assessments. 7 Includes applicable add-ons of 1.08%
for RWA and 0.38% for LRD.
UBS AG third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Capital management 31
UBS AG, on a consolidated basis, is subject to the going and gone concern requirements of the Swiss Capital
Adequacy Ordinance that include the too-big-to-fail (TBTF) provisions applicable to Swiss SRBs. The table above
provides the risk-weighted asset (RWA)- and leverage ratio denominator (LRD)-based requirements and information
as of 30 September 2023.
In November 2022, the Swiss Federal Council adopted amendments to the Banking Act and the Banking Ordinance,
which entered into force as of 1 January 2023. The amendments replaced the resolvability discount on the gone
concern capital requirements for systemically important banks (SIBs), including UBS, with reduced base gone
concern capital requirements equivalent to 75% of the total going concern requirements (excluding countercyclical
buffer requirements). In addition, as of July 2024, the Swiss Financial Market Supervisory Authority (FINMA) will
have the authority to impose a surcharge of up to 25% of the total going concern capital requirements based on
obstacles to an SIB’s resolvability identified in future resolvability assessments. UBS AG’s consolidated total gone
concern requirements remained substantially unchanged in the third quarter of 2023 as a result of these changes.
UBS AG and UBS Switzerland AG are subject to going and gone concern requirements on a standalone basis.
Total loss-absorbing capacity
The table below provides Swiss SRB going and gone concern information based on the Swiss SRB framework and
requirements that are discussed under “Capital management” in the “Capital, liquidity and funding, and balance
sheet” section of the Annual Report 2022. Changes to the Swiss SRB framework and requirements after the
publication of the Annual Report 2022 are described above.
Swiss SRB going and gone concern information
USD m, except where indicated
30.9.23
30.6.23
31.12.22
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: low-trigger loss-absorbing 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
UBS AG third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Capital management 32
Total loss-absorbing capacity and movement
Total loss-absorbing capacity (TLAC) increased by USD 1.8bn to USD 108.4bn in the third quarter of 2023.
Going concern capital and movement
Going concern capital was broadly stable at USD 55.0bn. Common equity tier 1 (CET1) capital increased by
USD 0.1bn to USD 43.4bn, mainly reflecting operating profit before tax of USD 1.3bn, offset by current tax
expenses of USD 0.5bn, additional dividend accruals of USD 0.5bn and negative effects from foreign currency
translation of USD 0.4bn.
Additional tier 1 capital decreased by USD 0.1bn to USD 11.7bn, reflecting interest rate risk hedge, foreign currency
translation and other effects.
Gone concern loss-absorbing capacity and movement
Total gone concern loss-absorbing capacity increased by USD 1.8bn to USD 53.3bn, mainly due to three new
issuances of TLAC-eligible senior unsecured debt denominated in US dollars of USD 4.5bn, partly offset by a call of
one TLAC-eligible unsecured debt instrument denominated in US dollars of USD 1.3bn, and interest rate risk hedge,
foreign currency translation and other effects. On 18 October 2023, UBS announced that it would redeem TLAC-
eligible senior unsecured debt on 8 November 2023 (ISIN CH0445624981 with a nominal amount of JPY 130bn,
issued on 9 November 2018). This instrument remained eligible as gone concern capital as of 30 September 2023.
›
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
The CET1 capital ratio increased to 13.5% from 13.4%, mainly reflecting a USD 2.3bn decrease in RWA.
The CET1 leverage ratio increased to 4.2% from 4.1%, largely due to a USD 6.2bn decrease in the LRD.
The gone concern loss-absorbing capacity ratio increased to 16.6% from 15.9%, mainly due to the aforementioned
increase in gone concern loss-absorbing capacity.
The gone concern leverage ratio increased to 5.1% from 4.9%, mainly reflecting the aforementioned increase in
gone concern loss-absorbing capacity.
Swiss SRB total loss-absorbing capacity movement
USD m
Going concern capital
Swiss SRB
Common equity tier 1 capital as of 30.6.23
Operating profit before tax
Current tax (expense) / benefit
Foreign currency translation effects, before tax
Other
1
Common equity tier 1 capital as of 30.9.23
Loss-absorbing additional tier 1 capital as of 30.6.23
Interest rate risk hedge, foreign currency translation and other effects
Loss-absorbing additional tier 1 capital as of 30.9.23
Total going concern capital as of 30.6.23
Total going concern capital as of 30.9.23
Gone concern loss-absorbing capacity
Tier 2 capital as of 30.6.23
Interest rate risk hedge, foreign currency translation and other effects
Tier 2 capital as of 30.9.23
TLAC-eligible senior unsecured debt as of 30.6.23
Issuance of TLAC-eligible senior unsecured debt
Call of TLAC-eligible senior unsecured debt
Interest rate risk hedge, foreign currency translation and other effects
TLAC-eligible senior unsecured debt as of 30.9.23
Total gone concern loss-absorbing capacity as of 30.6.23
Total gone concern loss-absorbing capacity as of 30.9.23
Total loss-absorbing capacity
Total loss-absorbing capacity as of 30.6.23
Total loss-absorbing capacity as of 30.9.23
1 Includes dividend accruals for the current year (negative USD 0.5bn) and movements related to other items.
UBS AG third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Capital management 33
Reconciliation of IFRS equity to Swiss SRB common equity tier 1 capital
USD m
30.9.23
30.6.23
31.12.22
Total IFRS equity
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
Deferred tax assets on temporary differences, excess over threshold
Goodwill, net of tax
1
Intangible assets, net of tax
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 2022
Other
2
Total common equity tier 1 capital
1 Includes goodwill related to significant investments in financial institutions of USD 19m as of 30 September 2023 (USD 19m as of 30 June 2023; USD 20m as of 31 December 2022) presented on the balance sheet
line Investments in associates. 2 Includes dividend accruals for the current year and other items.
Additional information
Sensitivity to currency movements
Risk-weighted assets
UBS AG estimates that a 10% depreciation of the US dollar against other currencies would have increased its RWA
by USD 14bn and its CET1 capital by USD 1.4bn as of 30 September 2023 (30 June 2023: USD 14bn and
USD 1.4bn, respectively) and decreased its CET1 capital ratio 14 basis points (30 June 2023: 13 basis points).
Conversely, a 10% appreciation of the US dollar against other currencies would have decreased its RWA by
USD 12bn and its CET1 capital by USD 1.3bn (30 June 2023: USD 13bn and USD 1.3bn, respectively) and increased
its CET1 capital ratio 13 basis points (30 June 2023: 13 basis points).
Leverage ratio denominator
UBS AG estimates that a 10% depreciation of the US dollar against other currencies would have increased its LRD
by USD 63bn as of 30 September 2023 (30 June 2023: USD 63bn) and decreased its CET1 leverage ratio 11 basis
points (30 June 2023: 11 basis points). Conversely, a 10% appreciation of the US dollar against other currencies
would have decreased its LRD by USD 57bn (30 June 2023: USD 57bn) and increased its CET1 leverage ratio
11 basis points (30 June 2023: 11 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 Annual Report 2022 for more information on a
UBS Group AG consolidated basis
Estimated effect on capital from litigation, regulatory and similar matters subject to provisions and contingent
liabilities
The estimated loss in capital that UBS AG could incur as a result of the risks associated with the matters is described
in “Note 15 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this report.
UBS AG has employed for this purpose the advanced measurement approach (AMA) methodology that UBS uses
when determining the capital requirements associated with operational risks, based on a 99.9% confidence level
over a 12-month horizon. The methodology takes into consideration UBS and industry experience for the AMA
operational risk categories to which those matters correspond, as well as the external environment affecting risks
of these types, in isolation from other areas. On this basis, the maximum loss in capital that it could incur over a
12-month period as a result of the risks associated with these operational risk categories has been estimated at
USD 4.0bn as of 30 September 2023. This estimate is not related to and does not take into account any provisions
recognized for any of these matters and does not constitute a subjective assessment of the actual exposure in any
of these matters.
›
Refer to “Non-financial risk” in the “Risk management and control” section of the Annual Report 2022 for more
information on a UBS Group AG consolidated basis
›
Refer to “Note 15 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this
report for more information
UBS AG third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Capital management 34
Risk-weighted assets
During the third quarter of 2023, RWA decreased by USD 2.3bn to USD 321.1bn, reflecting decreases of USD 4.4bn
from model updates and USD 3.1bn from currency effects, partly offset by an increase of USD 5.2bn from asset
size and other movements.
Movement in risk-weighted assets by key driver
USD bn
RWA as of
30.6.23
Currency
effects
Methodology
and policy
changes
Model
updates /
changes
Regulatory
add-ons
Asset size
and other
1
RWA as of
30.9.23
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 September 2023 Pillar 3 Report, available under
“Pillar 3 disclosures” at ubs.com/investors. 2 Includes settlement risk, credit valuation adjustments, equity and investments in funds exposures in the banking book, and securitization exposures in the banking book.
3 Non-counterparty-related risk includes deferred tax assets recognized for temporary differences, property, equipment, software and other items.
Credit and counterparty credit risk
Credit and counterparty credit risk RWA were USD 207.0bn as of 30 September 2023. The increase of USD 1.5bn
included a decrease related to currency effects of USD 3.0bn.
Asset size and other movements resulted in a USD 4.0bn increase in RWA.
–
Global Wealth Management RWA increased by USD 1.3bn, mainly due to higher RWA from loan balances that
carry a higher risk weighting when measured under the standardized approach.
–
Personal & Corporate Banking RWA increased by USD 1.1bn, primarily driven by higher RWA from loans.
–
Investment Bank RWA increased by USD 0.7bn, mainly due to an increase in RWA from loan commitments, partly
offset by lower RWA from securities financing transactions.
–
Group Items RWA increased by USD 1.1bn, mainly driven by higher RWA from nostro accounts, derivatives, and
securities financing transactions.
–
Asset Management RWA increased by USD 0.1bn.
–
Non-core and Legacy RWA decreased by USD 0.2bn.
Model updates resulted in an RWA increase of USD 0.4bn. RWA increases of USD 1.0bn related to the phase-in of
model updates for hedge funds, USD 0.5bn related to updates to the Lombard model, USD 0.3bn related to a
model update for income-producing real estate and USD 0.3bn related to the Swiss corporate model were partly
offset by an RWA decrease of USD 1.5bn related to the recalibration of certain multipliers as a result of
improvements to models. The remaining variance was spread across various small model updates.
›
Refer to the “Risk management and control” section of this report for more information
›
Refer to the 30 September 2023 Pillar 3 Report, available under “Pillar 3 disclosures” at
ubs.com/investors
, for more
information on a UBS Group AG consolidated basis
›
Refer to “Credit risk models” in the “Risk management and control” section of the Annual Report 2022 for more
information on a UBS Group AG consolidated basis
›
Refer to the “Recent developments” section of this report for more information about the Non-core and Legacy
business division
Market risk
Market risk RWA increased by USD 1.4bn to USD 15.5bn in the third quarter of 2023, driven by an increase of
USD 1.3bn from asset size and other movements in Global Markets in the Investment Bank and an increase of
USD 0.1bn related to ongoing parameter updates of the value-at-risk (VaR) model. UBS is in discussions with FINMA
regarding the integration of time decay into the regulatory VaR, which would replace the current add-on.
›
Refer to the “Risk management and control” section of this report for more information
›
Refer to the 30 September 2023 Pillar 3 Report, available under “Pillar 3 disclosures” at
information on a UBS Group AG consolidated basis
›
Refer to ”Market risk” in the “Risk management and control” section of the Annual Report 2022 for more
information on a UBS Group AG consolidated basis
UBS AG third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Capital management 35
Operational risk
Operational risk RWA decreased by USD 4.9bn to USD 76.5bn. In the second quarter of 2023 we reflected
diversification effects at the level of UBS Group AG consolidated, which were allocated partly to UBS AG
consolidated in the third quarter of 2023. Furthermore, in the third quarter of 2023, we updated our methodology
that we use to allocate operational risk RWA to the business divisions and Group Items. The updated methodology
has been prospectively applied starting with the third quarter of 2023.
›
Refer to “Integration of Credit Suisse” in the “Recent developments” section of the UBS Group third quarter 2023
for more information about the updated allocation of operational risk RWA to the business divisions and Group
Items
›
Refer to “Note 15 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this
report for more information about the French cross-border matter
›
Refer to “Non-financial risk” in the “Risk management and control” section of the Annual Report 2022 for
information about the advanced measurement approach model on a UBS Group AG consolidated basis
Risk-weighted assets by business division and Group Items
USD bn
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
1
Group
Items
1
Total
RWA
30.9.23
Credit and counterparty credit risk
2
Non-counterparty-related risk
3
Market risk
Operational risk
Total
30.6.23
Credit and counterparty credit risk
2
Non-counterparty-related risk
3
Market risk
Operational risk
Total
30.9.23 vs 30.6.23
Credit and counterparty credit risk
2
Non-counterparty-related risk
3
Market risk
Operational risk
Total
1 Starting with the third quarter of 2023, Non-core and Legacy represents a separate reportable segment and Group Functions has been renamed Group Items. Prior periods have been revised to reflect these changes.
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 (30 September 2023: USD 11.0bn; 30 June 2023: USD 10.9bn), as well as property, equipment, software and other items (30 September 2023: USD 11.1bn;
30 June 2023: USD 11.5bn).
Leverage ratio denominator
During the third quarter of 2023, the LRD decreased by USD 6.2bn to USD 1,042.1bn, driven by currency effects
of USD 14.4bn, partly offset by asset size and other movements of USD 8.2bn.
Movement in leverage ratio denominator by key driver
USD bn
LRD as of
30.6.23
Currency
effects
Asset size and
other
LRD as of
30.9.23
On-balance sheet exposures (excluding derivatives and securities financing transactions)
1
Derivatives
Securities financing transactions
Off-balance sheet items
Deduction items
Total
1 The exposures exclude derivative financial instruments, cash collateral receivables on derivative instruments, receivables from securities financing transactions, and margin loans, as well as prime brokerage receivables
and financial assets at fair value not held for trading, both related to securities financing transactions. These exposures are presented separately under Derivatives and Securities financing transactions in this table.
UBS AG third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Capital management 36
The LRD movements described below exclude currency effects.
On-balance sheet exposures decreased by USD 1.0bn, mainly due to lower lending balances and trading portfolio
assets, partly offset by higher central bank balances and high-quality liquid asset securities.
Derivative exposures increased by USD 7.2bn, mainly due to market-driven movements on foreign-currency
contracts and higher trading volumes in equity contracts in the Investment Bank.
Securities financing transactions increased by USD 2.0bn, mainly due to client-driven increases in brokerage
receivables.
›
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
1
Group Items
1
Total
30.9.23
Total IFRS assets
Difference in scope of consolidation
2
Less: derivatives and securities financing transactions
3
On-balance sheet exposures
Derivatives
Securities financing transactions
Off-balance sheet items
Items deducted from Swiss SRB tier 1 capital
Total
30.6.23
Total IFRS assets
Difference in scope of consolidation
2
Less: derivatives and securities financing transactions
3
On-balance sheet exposures
Derivatives
Securities financing transactions
Off-balance sheet items
Items deducted from Swiss SRB tier 1 capital
Total
30.9.23 vs 30.6.23
Total IFRS assets
Difference in scope of consolidation
2
Less: derivatives and securities financing transactions
3
On-balance sheet exposures
Derivatives
Securities financing transactions
Off-balance sheet items
Items deducted from Swiss SRB tier 1 capital
Total
1 Starting with the third quarter of 2023, Non-core and Legacy represents a separate reportable segment and Group Functions has been renamed Group Items. Prior periods have been revised to reflect these changes.
2 Represents the difference between the IFRS and the regulatory scope of consolidation, which is the applicable scope for the leverage ratio denominator calculation. 3 The exposures consist of derivative financial
instruments, cash collateral receivables on derivative instruments, receivables from securities financing transactions, and margin loans, as well as prime brokerage receivables and financial assets at fair value not held
for trading, both related to securities financing transactions, all of which are in accordance with the regulatory scope of consolidation. These exposures are presented separately under Derivatives and Securities
financing transactions in this table.
UBS AG third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Liquidity and funding management 37
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
Annual Report 2022, 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 UBS AG consolidated increased 5.6 percentage points to
176.6%. The average LCR for the third quarter of 2023 was calculated based on a simple average of 63 data points
in the third quarter of 2023. The average LCR for the second quarter of 2023 was reported for the first time and
calculated based on a simple average of 15 data points in the second quarter of 2023 from the formal date of the
acquisition of the Credit Suisse Group, i.e., 12 June 2023, until 30 June 2023. The movement in the average LCR
was primarily driven by an increase in high-quality liquid assets (HQLA) of USD 6.1bn to USD 230.9bn, mainly due
to proceeds received from debt issued. Net cash outflows remained largely unchanged at USD 131.0bn.
Refer to the
30 September 2023 Pillar 3 Report, available under “Pillar 3 disclosures” at
ubs.com/investors
, and to
“Liquidity and funding management” in the “Capital, liquidity and funding, and balance sheet” section of the
Annual Report 2022 for more information about the LCR on a UBS Group AG consolidated basis
Liquidity coverage ratio
USD bn, except where indicated
Average 3Q23
1
Average 2Q23
1
High-quality liquid assets
Net cash outflows
2
Liquidity coverage ratio (%)
3
1 Calculated based on an average of 63 data points in the third quarter and 15 data points in the second quarter of 2023. 2 Represents the net cash outflows expected over a stress period of 30 calendar days.
3 Calculated after the application of haircuts and inflow and outflow rates, as well as, where applicable, caps on Level 2 assets and cash inflows.
Net stable funding ratio
As of 30 September 2023, the net stable funding ratio (the NSFR) of UBS AG consolidated increased 3.5 percentage
points to 121.7%.
Required stable funding decreased by USD 10.5bn to USD 467.1bn, mainly driven by lower lending and trading
assets, partly offset by higher derivative balances. Available stable funding increased by USD 4.0bn to USD 568.5bn,
mainly driven by debt issued at fair value.
›
Refer to the 30 September 2023 Pillar 3 Report, available under “Pillar 3 disclosures” at
ubs.com/investors
, and to
“Liquidity and funding management” in the “Capital, liquidity and funding, and balance sheet” section of the
Annual Report 2022 for more information about the NSFR on a UBS Group AG consolidated basis
Net stable funding ratio
USD bn, except where indicated
30.9.23
30.6.23
Available stable funding
568.5
564.5
Required stable funding
467.1
477.6
Net stable funding ratio (%)
121.7
118.2
UBS AG third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Balance sheet and off-balance sheet 38
Balance sheet and off-balance sheet
Strategy, objectives and governance
This section provides balance sheet and off-balance sheet information and should be read in conjunction with
“Balance sheet and off-balance sheet” in the “Capital, liquidity and funding, and balance sheet” section of the
Annual Report 2022, which provides more information about the balance sheet and off-balance sheet positions.
Balances disclosed in this report represent quarter-end positions, unless indicated otherwise. Intra-quarter balances
fluctuate in the ordinary course of business and may differ from quarter-end positions.
Balance sheet assets (30 September 2023 vs 30 June 2023)
Total assets were USD 1,097.5bn as of 30 September 2023. The increase of USD 1.2bn included negative currency
effects of approximately USD 13.7bn.
Derivatives and cash collateral receivables on derivative instruments increased by USD 12.2bn, mainly in Derivatives
& Solutions in the Investment Bank, primarily reflecting market-driven movements on foreign-currency contracts
amid volatility in exchange rates. Brokerage receivables increased by USD 3.2bn, mainly in Financing in the
Investment Bank, driven by lower netting effects. The increases were largely offset by a decrease in lending assets
by USD 12.5bn, reflecting currency effects of approximately USD 6.3bn and lower balances with UBS Group AG.
Trading assets decreased by USD 2.5bn, primarily reflecting lower inventory levels held to hedge client positions in
Financing.
›
Refer to the “Consolidated financial statements” section of this report for more information
Assets
As of
% change from
USD bn
30.9.23
30.6.23
30.6.23
Cash and balances at central banks
Lending
1
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
2
Non-financial assets
Total assets
1 Consists of Loans and advances to customers and Amounts due from banks. 2 Consists of Financial assets at fair value not held for trading and Financial assets measured at fair value through other comprehensive
income.
Balance sheet liabilities (30 September 2023 vs 30 June 2023)
Total liabilities were USD 1,044.4bn as of 30 September 2023. The increase of USD 1.4bn included negative
currency effects of approximately USD 12.1bn.
Derivatives and cash collateral payables on derivative instruments increased by USD 7.0bn, mainly in Derivatives &
Solutions, primarily reflecting market-driven movements, broadly in line with the asset side. Debt issued designated
at fair value and long-term debt issued measured at amortized cost increased by USD 6.8bn, mainly driven by
issuances of debt issued designated at fair value in Derivatives & Solutions. The increases were partly offset by a
USD 6.1bn decrease in securities financing transactions at amortized cost, mainly reflecting roll-offs. Trading
liabilities decreased by USD 3.6bn, in Financing, mainly reflecting a decrease in short positions due to lower hedging
requirements. Brokerage payables decreased by USD 2.4bn, with a decrease in client deposits.
Customer deposits were broadly stable, with net inflows, mainly in Global Wealth Management, of USD 7.7bn,
primarily reflecting higher time deposits, largely offset by currency effects and lower balances with UBS Group AG.
The “Liabilities by product and currency” table in this section provides more information about 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 AG third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Balance sheet and off-balance sheet 39
Liabilities and equity
As of
% change from
USD bn
30.9.23
30.6.23
30.6.23
Short-term borrowings
1,2
Securities financing transactions at amortized cost
Customer deposits
Funding from UBS Group AG measured at amortized cost
Debt issued designated at fair value and long-term debt issued measured at amortized cost
2
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
Retained earnings
Other comprehensive income
3
Total equity attributable to shareholders
Equity attributable to non-controlling interests
Total equity
Total liabilities and equity
1 Consists of short-term debt issued measured at amortized cost and amounts due to banks. 2 The classification of debt issued measured at amortized cost into short-term and long-term is based on original
contractual maturity and therefore long-term debt also includes debt with a remaining time to maturity of less than one year. This classification does not consider any early redemption features. 3 Excludes other
comprehensive income related to defined benefit plans and own credit, which is recorded directly in Retained earnings.
Equity (30 September 2023 vs 30 June 2023)
Equity attributable to shareholders decreased by USD 86m to USD 52,836m as of 30 September 2023.
The decrease of USD 86m was mainly driven by negative total comprehensive income attributable to shareholders
of USD 86m, reflecting net profit of USD 932m and negative other comprehensive income (OCI) of USD 1,018m.
OCI mainly included negative cash flow hedge OCI of USD 372m, negative OCI related to foreign currency
translation of USD 348m and negative OCI related to own credit on financial liabilities designated at fair value of
USD 284m.
›
Refer to the “UBS AG consolidated performance” and “Consolidated financial statements” sections 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
Liabilities by product and currency
USD equivalent
All currencies
of which: USD
of which: CHF
of which: EUR
USD bn
30.9.23
30.6.23
30.9.23
30.6.23
30.9.23
30.6.23
30.9.23
30.6.23
Short-term borrowings
52.6
51.9
36.0
33.0
3.9
4.5
5.1
6.0
of which: amounts due to banks
16.2
16.3
8.9
8.2
3.8
4.3
0.5
0.7
of which: short-term debt issued
1,2
36.4
35.6
27.2
24.8
0.1
0.1
4.6
5.3
Securities financing transactions at amortized cost
6.2
12.3
5.3
11.8
0.0
0.0
0.3
0.2
Customer deposits
521.5
521.7
226.7
217.9
197.0
202.2
48.7
51.8
of which: demand deposits
145.9
162.6
40.0
42.1
58.4
63.8
25.5
31.1
of which: retail savings / deposits
148.1
153.8
30.9
30.0
112.7
118.9
4.4
4.9
of which: sweep deposits
40.2
45.5
40.2
45.5
0.0
0.0
0.0
0.0
of which: time deposits
187.4
159.8
115.6
100.4
25.9
19.5
18.8
15.8
Funding from UBS Group AG measured at amortized cost
63.4
61.4
39.7
37.0
2.4
2.5
18.9
19.5
Debt issued designated at fair value and long-term debt issued measured at amortized
cost
2
112.5
105.7
72.1
65.7
16.4
16.4
14.3
13.8
Trading liabilities
32.0
35.6
11.3
11.1
1.1
1.3
9.1
12.7
Derivatives and cash collateral payables on derivative instruments
165.8
158.8
139.3
133.7
3.5
2.6
13.7
11.8
Brokerage payables
41.0
43.4
30.7
32.4
0.5
0.7
2.1
2.4
Other financial liabilities measured at amortized cost
11.1
11.7
6.8
5.1
2.6
2.3
0.1
1.6
Other financial liabilities designated at fair value
30.0
31.4
7.7
7.2
0.0
0.1
4.4
4.8
Non-financial liabilities
8.1
9.1
2.1
3.1
1.7
1.7
2.2
2.2
Total liabilities
1,044.4
1,043.0
577.8
558.2
229.2
234.2
118.9
126.8
1 Short-term debt issued consists of certificates of deposit, commercial paper, acceptances and promissory notes, and other money market paper. 2 The classification of debt issued measured at amortized cost into
short-term and long-term is based on original contractual maturity and therefore long-term debt also includes debt with a remaining time to maturity of less than one year. This classification does not consider any
early redemption features.
UBS AG third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Balance sheet and off-balance sheet 40
Off-balance sheet (30 September 2023 vs 30 June 2023)
Guarantees increased by USD 1.0bn, mainly in Group Treasury, relating to guarantees issued to corporate clients.
Loan commitments increased by USD 2.3bn, mainly in the Investment Bank. Committed unconditionally revocable
credit lines decreased by USD 2.1bn, mainly driven by credit lines provided to clients in Global Wealth Management
and in Global Banking in the Investment Bank. Forward starting reverse repurchase agreements increased by
USD 5.4bn, in Group Treasury, reflecting fluctuations in levels of business division activity in short-dated securities
financing transactions.
Off-balance sheet
As of
% change from
USD bn
30.9.23
30.6.23
30.6.23
Guarantees
1,2
Loan commitments
1
Committed unconditionally revocable credit lines
Forward starting reverse repurchase agreements
1 Guarantees and loan commitments are shown net of sub-participations. 2 Includes guarantees measured at fair value through profit or loss.
UBS AG third quarter 2023 report |
Consolidated financial statements 41
Consolidated financial
statements
Unaudited
Table of contents
UBS AG interim consolidated financial
statements (unaudited)
42
43
44
45
46
47
1
48
2
49
3
49
4
49
5
50
6
50
7
57
8
63
9
64
10
65
11
65
12
65
13
66
14
66
15
UBS AG third quarter 2023 report |
Consolidated financial statements | UBS AG interim consolidated financial statements (unaudited) 42
UBS AG interim consolidated
financial statements (unaudited)
Income statement
For the quarter ended
Year-to-date
USD m
Note
30.9.23
30.6.23
30.9.22
30.9.23
30.9.22
Interest income from financial instruments measured at amortized cost and fair value through
other comprehensive income
3
Interest expense from financial instruments measured at amortized cost
3
Net interest income from financial instruments measured at fair value through profit or loss
and other
3
Net interest income
3
Other net income from financial instruments measured at fair value through profit or loss
Fee and commission income
4
Fee and commission expense
4
Net fee and commission income
4
Other income
Total revenues
Credit loss expense / (release)
7
Personnel expenses
5
General and administrative expenses
6
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
UBS AG third quarter 2023 report |
Consolidated financial statements | UBS AG interim consolidated financial statements (unaudited) 43
Statement of comprehensive income
For the quarter ended
Year-to-date
USD m
30.9.23
30.6.23
30.9.22
30.9.23
30.9.22
Comprehensive income attributable to shareholders
1
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
Effective portion of changes in fair value of hedging instruments designated as net investment hedges, before tax
Foreign currency translation differences on foreign operations reclassified to the income statement
Effective portion of changes in fair value of hedging instruments designated as net investment hedges reclassified to
the income statement
Income tax relating to foreign currency translations, including the effect of net investment hedges
Subtotal foreign currency translation, net of tax
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
Reclassification of financial assets to Other financial assets measured at amortized cost
2
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
Net (gains) / losses reclassified to the income statement from equity
Income tax relating to cash flow hedges
Subtotal cash flow hedges, net of tax
Cost of hedging
Cost of hedging, before tax
Income tax relating to cost of hedging
Subtotal cost of hedging, net of tax
Total other comprehensive income that may be reclassified to the income statement, net of tax
Other comprehensive income that will not be reclassified to the income statement
Defined benefit plans
Gains / (losses) on defined benefit plans, before tax
Income tax relating to defined benefit plans
Subtotal defined benefit plans, net of tax
Own credit on financial liabilities designated at fair value
Gains / (losses) from own credit on financial liabilities designated at fair value, before tax
Income tax relating to own credit on financial liabilities designated at fair value
Subtotal own credit on financial liabilities designated at fair value, net of tax
Total other comprehensive income that will not be reclassified to the income statement, net of tax
Total other comprehensive income
Total comprehensive income attributable to shareholders
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
Total comprehensive income attributable to non-controlling interests
Total comprehensive income
Net profit / (loss)
Other comprehensive income
of which: other comprehensive income that may be reclassified to the income statement
of which: other comprehensive income that will not be reclassified to the income statement
Total comprehensive income
1 Refer to the “UBS AG consolidated performance” section of this report for more information. 2 Effective 1 April 2022, a portfolio of assets previously classified as Financial assets measured at fair value through
other comprehensive income was reclassified to Other financial assets measured at amortized cost. As a result, the related cumulative fair value losses of USD 449m before tax and USD 333m after tax, previously
recognized in Other comprehensive income, have been removed from equity and adjusted against the value of the assets at the reclassification date.
UBS AG third quarter 2023 report |
Consolidated financial statements | UBS AG interim consolidated financial statements (unaudited) 44
Balance sheet
USD m
Note
30.9.23
30.6.23
31.12.22
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
Total financial assets measured at amortized cost
Financial assets at fair value held for trading
of which: assets pledged as collateral that may be sold or repledged by counterparties
Derivative financial instruments
8, 9
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
Goodwill and intangible assets
Deferred tax assets
Other non-financial assets
Total assets
Liabilities
Amounts due to banks
Payables from securities financing transactions measured at amortized cost
Cash collateral payables on derivative instruments
Customer deposits
Funding from UBS Group AG measured at amortized cost
Debt issued measured at amortized cost
13
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
8, 9
Brokerage payables designated at fair value
Debt issued designated at fair value
8, 12
Other financial liabilities designated at fair value
8, 10
Total financial liabilities measured at fair value through profit or loss
Provisions
Other non-financial liabilities
Total liabilities
Equity
Share capital
Share premium
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
UBS AG third quarter 2023 report |
Consolidated financial statements | UBS AG interim consolidated financial statements (unaudited) 45
Statement of changes in equity
USD m
Share
capital and
share
premium
Retained
earnings
OCI recognized
directly in
equity,
net of tax
1
of which:
foreign
currency
translation
of which:
cash flow
hedges
Total equity
attributable to
shareholders
Balance as of 1 January 2023
2
Premium on shares issued and warrants exercised
3
Tax (expense) / benefit
Dividends
Translation effects recognized directly in retained earnings
Share of changes in retained earnings of associates and joint ventures
New consolidations / (deconsolidations) and other increases / (decreases)
Total comprehensive income for the period
of which: net profit / (loss)
of which: OCI, net of tax
Balance as of 30 September 2023
2
Non-controlling interests as of 30 September 2023
Total equity as of 30 September 2023
Balance as of 1 January 2022
2
Tax (expense) / benefit
Dividends
Translation effects recognized directly in retained earnings
Share of changes in retained earnings of associates and joint ventures
New consolidations / (deconsolidations) and other increases / (decreases)
Total comprehensive income for the period
of which: net profit / (loss)
of which: OCI, net of tax
Balance as of 30 September 2022
2
Non-controlling interests as of 30 September 2022
Total equity as of 30 September 2022
1 Excludes other comprehensive income related to defined benefit plans and own credit that is recorded directly in Retained earnings. 2 Excludes non-controlling interests. 3 Includes decreases related to recharges
by UBS Group AG for share-based compensation awards granted to employees of UBS AG or its subsidiaries.
UBS AG third quarter 2023 report |
Consolidated financial statements | UBS AG interim consolidated financial statements (unaudited) 46
Statement of cash flows
Year-to-date
USD m
30.9.23
30.9.22
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 (profit) / loss of associates and joint ventures and impairment related to associates
Deferred tax expense / (benefit)
Net loss / (gain) from investing activities
Net loss / (gain) from financing activities
Other net adjustments
Net change in operating assets and liabilities:
1
Amounts due from banks and amounts due to banks
Securities financing transactions measured at amortized cost
Cash collateral on derivative instruments
Loans and advances to customers and customer deposits
Financial assets and liabilities at fair value held for trading and derivative financial instruments
Brokerage receivables and payables
Financial assets at fair value not held for trading and other financial assets and liabilities
Provisions and other non-financial assets and liabilities
Income taxes paid, net of refunds
Net cash flow from / (used in) operating activities
Cash flow from / (used in) investing activities
Purchase of subsidiaries, associates and intangible assets
Disposal of subsidiaries, associates and intangible assets
Purchase of property, equipment and software
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
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
Net issuance (repayment) of short-term debt measured at amortized cost
Distributions paid on UBS AG shares
Issuance of debt designated at fair value and long-term debt measured at amortized cost
2
Repayment of debt designated at fair value and long-term debt measured at amortized cost
2
Net cash flows from other financing activities
Net cash flow from / (used in) financing activities
Total cash flow
Cash and cash equivalents at the beginning of the period
Net cash flow from / (used in) operating, investing and financing activities
Effects of exchange rate differences on cash and cash equivalents
Cash and cash equivalents at the end of the period
3
of which: cash and balances at central banks
4
of which: amounts due from banks
4
of which: money market paper
4,5
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
6
1 Movements in this section exclude foreign currency translation and foreign exchange effects, which are presented within the Other net adjustments line. 2 Includes funding from UBS Group AG measured at
amortized cost (recognized on the balance sheet in Funding from UBS Group AG) and measured at fair value (recognized on the balance sheet in Other financial liabilities designated at fair value). 3 USD 3,360m
and USD 3,855m of cash and cash equivalents (mainly reflected in Amounts due from banks) were restricted as of 30 September 2023 and 30 September 2022, respectively. Refer to “Note 22 Restricted and
transferred financial assets” in the “Consolidated financial statements” section of the Annual Report 2022 for more information. 4 Includes only balances with an original maturity of three months or less. 5 Money
market paper is included on the balance sheet under Financial assets at fair value not held for trading (30 September 2023: USD 10,158m; 30 September 2022: USD 3,898m), Other financial assets measured at
amortized cost (30 September 2023: USD 187m; 30 September 2022: USD 5,943m), and Financial assets at fair value held for trading (30 September 2023: USD 199m; 30 September 2022: USD 91m). 6 Includes
dividends received from associates reported within Net cash flow from / (used in) investing activities.
UBS AG third quarter 2023 report |
Consolidated financial statements | Notes to the UBS AG interim consolidated financial statements (unaudited) 47
Notes to the UBS AG interim consolidated financial
statements (unaudited)
Note 1 Basis of accounting
Basis of preparation
The consolidated financial statements (the financial statements) of UBS AG and its subsidiaries (together, UBS AG)
are prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International
Accounting Standards Board (the IASB), and are presented in US dollars. These interim financial statements are
prepared in accordance with IAS 34,
Interim Financial Reporting
.
In preparing these interim financial statements, the same accounting policies and methods of computation have
been applied as in the UBS AG consolidated annual financial statements for the period ended 31 December 2022,
except for the changes described in this Note. These interim financial statements are unaudited and should be read
in conjunction with UBS AG’s audited consolidated financial statements in the Annual Report 2022 and the
“Management report” sections of this report. In the opinion of management, all necessary adjustments have been
made for a fair presentation of UBS AG’s financial position, results of operations and cash flows.
Preparation of these interim financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, income, expenses and disclosures of contingent assets and
liabilities. These estimates and assumptions are based on the best available information. Actual results in the future
could differ from such estimates and differences may be material to the financial statements. Revisions to estimates,
based on regular reviews, are recognized in the period in which they occur. For more information about areas of
estimation uncertainty that are considered to require critical judgment, refer to “Note 1a Material accounting
policies” in the “Consolidated financial statements” section of the Annual Report 2022.
IFRS 17,
Insurance Contracts
Effective from 1 January 2023, UBS AG has adopted IFRS 17,
Insurance Contracts
, which sets out the accounting
requirements for contractual rights and obligations that arise from insurance contracts issued and reinsurance
contracts held. The adoption has had no effect on UBS AG’s financial statements. UBS AG does not provide
insurance services in any market.
Other amendments to IFRS
Effective from 1 January 2023, UBS AG has adopted a number of minor amendments to IFRS, which have had no
significant effect on UBS AG.
Amendments to IAS 12,
Income Taxes
In May 2023, the IASB issued amendments to IAS 12,
Income Taxes
, whereby, under an exception, deferred tax
assets (DTAs) and deferred tax liabilities (DTLs) will not be recognized in respect of top-up tax on income under the
Global Anti-Base Erosion Rules that is imposed under tax law that is enacted or substantively enacted to implement
the Pillar Two model rules published by the Organisation for Economic Co-operation and Development. This
exception applies immediately upon the issuance of the amendments and it is, therefore, potentially relevant to
these financial statements and subsequent financial statements. Although countries are starting to implement the
rules, UBS AG did not have any DTAs or DTLs on 30 September 2023 that had not been recognized as a result of
the application of this exception. The exception is expected to be removed by the IASB in due course, although the
timing of that has not been specified. The amendments also introduced new disclosure requirements in relation to
top-up tax, which will first apply to UBS AG’s financial statements for the year ended 31 December 2023.
UBS AG third quarter 2023 report |
Consolidated financial statements | Notes to the UBS AG interim consolidated financial statements (unaudited) 48
Note 1 Basis of accounting (continued)
Currency translation rates
The following table shows the rates of the main currencies used to translate the financial information of UBS AG’s
operations with a functional currency other than the US dollar into US dollars.
Closing exchange rate
Average rate
1
As of
For the quarter ended
Year-to-date
30.9.23
30.6.23
31.12.22
30.9.22
30.9.23
30.6.23
30.9.22
30.9.23
30.9.22
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 UBS AG with the same functional currency for each month. Weighted average rates for individual business divisions
may deviate from the weighted average rates for UBS AG.
Note 2 Segment reporting
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
1
Group
Items
1
UBS AG
For the nine months ended 30 September 2023
2
Net interest income
Non-interest income
Total revenues
Credit loss expense / (release)
Operating expenses
Operating profit / (loss) before tax
Tax expense / (benefit)
Net profit / (loss)
As of 30 September 2023
2
Total assets
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
1
Group
Items
1
UBS AG
For the nine months ended 30 September 2022
2
Net interest income
Non-interest income
Total revenues
Credit loss expense / (release)
Operating expenses
Operating profit / (loss) before tax
Tax expense / (benefit)
Net profit / (loss)
As of 31 December 2022
2
Total assets
1 Starting with the third quarter of 2023, Non-core and Legacy (previously reported within Group Functions) represents a separate reportable segment and Group Functions has been renamed Group Items. Prior
periods have been revised to reflect these presentational changes. 2 Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group“ in the “Consolidated financial statements“ section of the UBS Group
third quarter 2023 report about UBS AG’s reporting segments.
UBS AG third quarter 2023 report |
Consolidated financial statements | Notes to the UBS AG interim consolidated financial statements (unaudited) 49
Note 3 Net interest income
For the quarter ended
Year-to-date
USD m
30.9.23
30.6.23
30.9.22
30.9.23
30.9.22
Interest income from loans and deposits
1
Interest income from securities financing transactions measured at amortized cost
2
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
Total interest income from financial instruments measured at amortized cost and fair value through other comprehensive income
Interest expense on loans and deposits
3
Interest expense on securities financing transactions measured at amortized cost
4
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 Consists of interest income from cash and balances at central banks, loans and advances to banks and customers, and cash collateral receivables on derivative instruments, as well as negative interest on amounts
due to banks, customer deposits, and cash collateral payables on derivative instruments. 2 Includes interest income on receivables from securities financing transactions and negative interest, including fees, on
payables from securities financing transactions. 3 Consists of interest expense on amounts due to banks, cash collateral payables on derivative instruments, customer deposits, and funding from UBS Group AG, as
well as negative interest on cash and balances at central banks, loans and advances to banks, and cash collateral receivables on derivative instruments. 4 Includes interest expense on payables from securities financing
transactions and negative interest, including fees, on receivables from securities financing transactions.
Note 4 Net fee and commission income
For the quarter ended
Year-to-date
USD m
30.9.23
30.6.23
30.9.22
30.9.23
30.9.22
Underwriting fees
M&A and corporate finance fees
Brokerage fees
Investment fund fees
Portfolio management and related services
Other
Total fee and commission income
1
of which: recurring
of which: transaction-based
of which: performance-based
Fee and commission expense
Net fee and commission income
1 Reflects third-party fee and commission income for the third quarter of 2023 of USD 3,212m for Global Wealth Management (second quarter of 2023: USD 3,134m; third quarter of 2022: USD 3,106m), USD 466m
for Personal & Corporate Banking (second quarter of 2023: USD 465m; third quarter of 2022: USD 398m), USD 679m for Asset Management (second quarter of 2023: USD 673m; third quarter of 2022: USD 682m),
USD 735m for the Investment Bank (second quarter of 2023: USD 731m; third quarter of 2022: USD 782m), USD 0m for Group Items (second quarter of 2023: USD 4m; third quarter of 2022: USD 2m) and USD 5m
for Non-core and Legacy (second quarter of 2023: USD 0m; third quarter of 2022: USD 0m).
Note 5 Personnel expenses
For the quarter ended
Year-to-date
USD m
30.9.23
30.6.23
30.9.22
30.9.23
30.9.22
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. It also includes expenses related to
compensation commitments with financial advisors entered into at the time of recruitment that are subject to vesting requirements.
UBS AG third quarter 2023 report |
Consolidated financial statements | Notes to the UBS AG interim consolidated financial statements (unaudited) 50
Note 6 General and administrative expenses
For the quarter ended
Year-to-date
USD m
30.9.23
30.6.23
30.9.22
30.9.23
30.9.22
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
Other
of which: shared services costs charged by UBS Group AG or its subsidiaries
Total general and administrative expenses
1 Reflects the net increase in provisions for litigation, regulatory and similar matters recognized in the income statement. Refer to Note 15b for more information.
Note 7 Expected credit loss measurement
a) Credit loss expense / release
Total net credit loss expenses in the third quarter of 2023 were USD 27m, reflecting USD 20m net credit loss
expenses related to stage 1 and 2 positions and USD 6m net credit loss expenses related to stage 3 positions.
Stage 1 and 2 net expenses included: scenario-related net expenses of USD 6m; net releases of USD 1m from model
changes, mainly in Global Wealth Management and the Investment Bank; and additional net expenses of USD 15m
from book quality and size changes.
Stage 3 net credit loss expenses were USD 6m, driven by net expenses of USD 15m in Global Wealth Management
and USD 7m in the Investment Bank, partly offset by net releases of USD 15m in Personal & Corporate Banking on
various corporate lending positions.
Credit loss expense / (release)
USD m
Global
Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
1
Group
Items
1
Total
For the quarter ended 30.9.23
Stages 1 and 2
Stage 3
Total credit loss expense / (release)
For the quarter ended 30.6.23
Stages 1 and 2
Stage 3
Total credit loss expense / (release)
For the quarter ended 30.9.22
Stages 1 and 2
Stage 3
Total credit loss expense / (release)
1 Starting with the third quarter of 2023, Non-core and Legacy represents a separate reportable segment and Group Functions has been renamed Group Items. Prior periods have been revised to reflect these changes.
b) Changes to ECL models, scenarios, scenario weights and post-model adjustments
Scenarios and weights
The expected credit loss (ECL) scenarios, along with their related macroeconomic factors and market data, were
reviewed in light of the economic and political conditions prevailing in the third quarter of 2023 through a series
of governance meetings, with input and feedback from UBS Risk and Finance experts across the business divisions
and regions
UBS AG third quarter 2023 report |
Consolidated financial statements | Notes to the UBS AG interim consolidated financial statements (unaudited) 51
Note 7 Expected credit loss measurement (continued)
The baseline scenario was updated with the latest macroeconomic forecasts as of 30 September 2023. The
assumptions on a calendar-year basis are included in the table below and imply a more optimistic outlook for the
US for the remainder of 2023 and 2024, while projections have become slightly more pessimistic for the Eurozone
and Switzerland.
The mild debt crisis scenario, the stagflationary geopolitical crisis scenario and the asset price inflation scenario were
updated based on the latest market data, but the assumptions remain broadly unchanged. UBS kept scenarios and
scenario weights in line with those applied in the second quarter of 2023. Refer to the table below.
At the beginning of the second quarter of 2023, UBS replaced the global crisis scenario applied at year-end 2022
and at the end of the first quarter of 2023 with the mild debt crisis scenario.
Post-model adjustments
Total stage 1 and 2 allowances and provisions amounted to USD 561m as of 30 September 2023 and included
post-model adjustments of USD 125m (30 June 2023: USD 131m). Overlays are to cover for uncertainty levels,
including the geopolitical situation.
Comparison of shock factors
Baseline
Key parameters
2022
2023
2024
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
Switzerland
Economic scenarios and weights applied
Assigned weights in %
ECL scenario
30.9.23
30.6.23
30.9.22
Asset price inflation
Baseline
Severe Russia–Ukraine conflict scenario
–
–
Mild debt crisis
–
Stagflationary geopolitical crisis
–
Global crisis
–
–
UBS AG third quarter 2023 report |
Consolidated financial statements | Notes to the UBS AG interim consolidated financial statements (unaudited) 52
Note 7 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
30.9.23
Carrying amount
1
ECL allowances
Financial instruments measured at amortized cost
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Cash and balances at central banks
Loans and advances to banks
2
Receivables from securities financing transactions
Cash collateral receivables on derivative instruments
Loans and advances to customers
of which: Private clients with mortgages
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Lombard
of which: Credit cards
of which: Commodity trade finance
Other financial assets measured at amortized cost
of which: Loans to financial advisors
Total financial assets measured at amortized cost
Financial assets measured at fair value through other comprehensive income
Total on-balance sheet financial assets in scope of ECL requirements
Total exposure
ECL provisions
Off-balance sheet (in scope of ECL)
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Guarantees
of which: Large corporate clients
of which: SME clients
of which: Financial intermediaries and hedge funds
of which: Lombard
of which: Commodity trade finance
Irrevocable loan commitments
of which: Large corporate clients
Forward starting reverse repurchase and securities borrowing agreements
Unconditionally revocable loan commitments
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Lombard
of which: Credit cards
of which: Commodity trade finance
Irrevocable committed prolongation of existing loans
Total off-balance sheet financial instruments and other credit lines
Total allowances and provisions
1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective ECL allowances. 2 Includes USD 7.6bn against Credit Suisse AG.
UBS AG third quarter 2023 report |
Consolidated financial statements | Notes to the UBS AG interim consolidated financial statements (unaudited) 53
Note 7 Expected credit loss measurement (continued)
USD m
30.6.23
Carrying amount
1
ECL allowances
Financial instruments measured at amortized cost
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Cash and balances at central banks
Loans and advances to banks
2
Receivables from securities financing transactions
Cash collateral receivables on derivative instruments
Loans and advances to customers
of which: Private clients with mortgages
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Lombard
of which: Credit cards
of which: Commodity trade finance
Other financial assets measured at amortized cost
of which: Loans to financial advisors
Total financial assets measured at amortized cost
Financial assets measured at fair value through other comprehensive income
Total on-balance sheet financial assets in scope of ECL requirements
Total exposure
ECL provisions
Off-balance sheet (in scope of ECL)
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Guarantees
of which: Large corporate clients
of which: SME clients
of which: Financial intermediaries and hedge funds
of which: Lombard
of which: Commodity trade finance
Irrevocable loan commitments
of which: Large corporate clients
Forward starting reverse repurchase and securities borrowing agreements
Unconditionally revocable loan commitments
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Lombard
of which: Credit cards
of which: Commodity trade finance
Irrevocable committed prolongation of existing loans
Total off-balance sheet financial instruments and other credit lines
Total allowances and provisions
1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective ECL allowances. 2 Includes USD 7.8bn against Credit Suisse AG.
UBS AG third quarter 2023 report |
Consolidated financial statements | Notes to the UBS AG interim consolidated financial statements (unaudited) 54
Note 7 Expected credit loss measurement (continued)
USD m
31.12.22
Carrying amount
1
ECL allowances
Financial instruments measured at amortized cost
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Cash and balances at central banks
Loans and advances to banks
Receivables from securities financing transactions
Cash collateral receivables on derivative instruments
Loans and advances to customers
of which: Private clients with mortgages
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Lombard
of which: Credit cards
of which: Commodity trade finance
Other financial assets measured at amortized cost
of which: Loans to financial advisors
Total financial assets measured at amortized cost
Financial assets measured at fair value through other comprehensive income
Total on-balance sheet financial assets in scope of ECL requirements
Total exposure
ECL provisions
Off-balance sheet (in scope of ECL)
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Guarantees
of which: Large corporate clients
of which: SME clients
of which: Financial intermediaries and hedge funds
of which: Lombard
of which: Commodity trade finance
Irrevocable loan commitments
of which: Large corporate clients
Forward starting reverse repurchase and securities borrowing agreements
Unconditionally revocable loan commitments
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Lombard
of which: Credit cards
of which: Commodity trade finance
Irrevocable committed prolongation of existing loans
Total off-balance sheet financial instruments and other credit lines
Total allowances and provisions
1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective ECL allowances.
UBS AG third quarter 2023 report |
Consolidated financial statements | Notes to the UBS AG interim consolidated financial statements (unaudited) 55
Note 7 Expected credit loss measurement (continued)
The table below provides information about the ECL gross exposure and the ECL coverage ratio for UBS AG’s core
loan portfolios (i.e.,
Loans and advances to customers
and
) and relevant off-balance
sheet exposures.
Cash and balances at central banks
,
Loans and advances to banks
,
Receivables from securities
financing transactions
,
Cash collateral receivables on derivative instruments
Financial assets measured at fair
value through other comprehensive income
ECL.
ECL coverage ratios are calculated by dividing ECL allowances and provisions by the gross carrying amount of the
related exposures.
Coverage ratios for core loan portfolio
30.9.23
Gross carrying amount (USD m)
ECL coverage (bps)
On-balance sheet
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
Private clients with mortgages
Real estate financing
Total real estate lending
Large corporate clients
SME clients
Total corporate lending
Lombard
Credit cards
Commodity trade finance
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
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
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
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 assets measured at amortized cost. 2 Excludes Forward starting reverse repurchase
and securities borrowing agreements. 3 Includes on-balance sheet exposure, gross and off-balance sheet exposure (notional) and the related ECL coverage ratio (bps).
UBS AG third quarter 2023 report |
Consolidated financial statements | Notes to the UBS AG interim consolidated financial statements (unaudited) 56
Note 7 Expected credit loss measurement (continued)
Coverage ratios for core loan portfolio
30.6.23
Gross carrying amount (USD m)
ECL coverage (bps)
On-balance sheet
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
Private clients with mortgages
Real estate financing
Total real estate lending
Large corporate clients
SME clients
Total corporate lending
Lombard
Credit cards
Commodity trade finance
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
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
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
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 assets measured at amortized cost. 2 Excludes Forward starting reverse repurchase
and securities borrowing agreements. 3 Includes on-balance sheet exposure, gross and off-balance sheet exposure (notional) and the related ECL coverage ratio (bps).
Coverage ratios for core loan portfolio
31.12.22
Gross carrying amount (USD m)
ECL coverage (bps)
On-balance sheet
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
Private clients with mortgages
Real estate financing
Total real estate lending
Large corporate clients
SME clients
Total corporate lending
Lombard
Credit cards
Commodity trade finance
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
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
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
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 assets measured at amortized cost. 2 Excludes Forward starting reverse repurchase
and securities borrowing agreements. 3 Includes on-balance sheet exposure, gross and off-balance sheet exposure (notional) and the related ECL coverage ratio (bps).
UBS AG third quarter 2023 report |
Consolidated financial statements | Notes to the UBS AG interim consolidated financial statements (unaudited) 57
Note 8 Fair value measurement
a) Fair value hierarchy
The fair value hierarchy classification of financial and non-financial assets and liabilities measured at fair value is
summarized in the table below.
During the first nine months of 2023, assets and liabilities that were transferred from Level 2 to Level 1, or from
Level 1 to Level 2, and were held for the entire reporting period were not material.
Determination of fair values from quoted market prices or valuation techniques
1
30.9.23
30.6.23
31.12.22
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: 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 AG third quarter 2023 report |
Consolidated financial statements | Notes to the UBS AG interim consolidated financial statements (unaudited) 58
Note 8 Fair value measurement (continued)
Determination of fair values from quoted market prices or valuation techniques (continued)
1
30.9.23
30.6.23
31.12.22
USD m
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial liabilities measured at fair value on a recurring basis
Financial liabilities at fair value held for trading
26,219
5,673
98
31,990
29,147
6,330
139
35,616
23,578
5,823
114
29,515
of which: Equity instruments
of which: Corporate and municipal bonds
of which: Government bills / bonds
of which: Investment fund units
Derivative financial instruments
1,097
130,503
1,778
133,377
974
124,250
2,144
127,367
640
152,582
1,684
154,906
of which: Foreign exchange
of which: Interest rate
of which: Equity / index
of which: Credit
of which: Commodities
Financial liabilities designated at fair value on a recurring basis
Brokerage payables designated at fair value
0
40,982
0
40,982
0
43,357
0
43,357
0
45,085
0
45,085
Debt issued designated at fair value
0
73,787
9,814
83,601
0
68,909
9,832
78,741
0
62,603
9,240
71,842
Other financial liabilities designated at fair value
0
27,949
2,062
30,011
0
29,204
2,221
31,425
0
30,055
1,978
32,033
of which: Financial liabilities related to unit-linked
investment contracts
of which: Securities financing transactions
of which: Funding from UBS Group AG
of which: Over-the-counter debt instruments and
others
Total liabilities measured at fair value
27,317
278,893
13,752
319,962
30,121
272,049
14,336
316,506
24,219
296,148
13,015
333,382
1 Bifurcated embedded derivatives are presented on the same balance sheet lines as their host contracts and are not included in this table. The fair value of these derivatives was not material for the periods presented.
2 Other non-financial assets primarily consist of properties and other non-current assets held for sale, which are measured at the lower of their net carrying amount or fair value less costs to sell.
b) Valuation adjustments
The table below summarizes the changes in deferred day-1 profit or loss reserves during the relevant period.
Deferred day-1 profit or loss is generally released into
Other net income from financial instruments measured at fair
value through profit or loss
when the pricing of equivalent products or the underlying parameters become
observable or when the transaction is closed out.
Deferred day-1 profit or loss reserves
For the quarter ended
Year-to-date
USD m
30.9.23
30.6.23
30.9.22
30.9.23
30.9.22
Reserve balance at the beginning of the period
Profit / (loss) deferred on new transactions
(Profit) / loss recognized in the income statement
Foreign currency translation
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
30.9.23
30.6.23
31.12.22
Own credit adjustments on financial liabilities designated at fair value
of which: debt issued designated at fair value
of which: other financial liabilities designated at fair value
Credit valuation adjustments
1
Funding and debit valuation adjustments
Other valuation adjustments
of which: liquidity
of which: model uncertainty
1 Amount does not include reserves against defaulted counterparties.
UBS AG third quarter 2023 report |
Consolidated financial statements | Notes to the UBS AG interim consolidated financial statements (unaudited) 59
Note 8 Fair value measurement (continued)
c) Level 3 instruments: valuation techniques and inputs
The table below presents material Level 3 assets and liabilities, together with the valuation techniques used to
measure fair value, as well as the inputs used in a given valuation technique that are considered significant as of
30 September 2023 and unobservable, and a range of values for those unobservable inputs.
The range of values represents the highest- and lowest-level inputs used in the valuation techniques. Therefore, the
range does not reflect the level of uncertainty regarding a particular input or an assessment of the reasonableness of
UBS AG’s estimates and assumptions, but rather the different underlying characteristics of the relevant assets and
liabilities held by UBS AG.
The significant unobservable inputs disclosed in the table below are consistent with those included in “Note 20 Fair
value measurement” in the “Consolidated financial statements” section of the Annual Report 2022.
Valuation techniques and inputs used in the fair value measurement of Level 3 assets and liabilities
Fair value
Significant unobservable
input(s)
1
Range of inputs
Assets
Liabilities
Valuation technique(s)
30.9.23
31.12.22
USD bn
30.9.23
31.12.22
30.9.23
31.12.22
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
0.9
0.8
0.0
0.0
Relative value to
market comparable
Bond price equivalent
4
99
72
14
112
85
points
Discounted expected
cash flows
Discount margin
374
374
412
412
basis
points
Traded loans, loans
measured at fair value, loan
commitments and
guarantees
2.3
1.7
0.0
0.0
Relative value to
market comparable
Loan price equivalent
6
100
99
30
100
97
points
Discounted expected
cash flows
Credit spread
200
275
252
200
200
200
basis
points
Market comparable
and securitization
model
Credit spread
152
1,763
326
145
1,350
322
basis
points
Auction rate securities
1.2
1.3
Discounted expected
cash flows
Credit spread
135
208
150
115
196
144
basis
points
Investment fund units
3
0.2
0.3
0.0
0.0
Relative value to
market comparable
Net asset value
Equity instruments
3
1.1
0.9
0.1
0.1
Relative value to
market comparable
Price
Debt issued designated at
fair value
4
9.8
9.2
Other financial liabilities
designated at fair value
2.1
2.0
Discounted expected
cash flows
Funding spread
25
175
23
175
basis
points
Derivative financial instruments
Interest rate
0.6
0.5
0.1
0.1
Option model
Volatility of interest rates
80
124
75
143
basis
points
Credit
0.4
0.3
0.2
0.3
Discounted expected
cash flows
Credit spreads
9
189
9
565
basis
points
Bond price equivalent
3
223
3
277
points
Equity / index
0.5
0.7
1.3
1.2
Option model
Equity dividend yields
0
9
0
20
%
Volatility of equity stocks,
equity and other indices
4
125
4
120
%
Equity-to-FX correlation
70
84
%
Equity-to-equity
correlation
100
100
%
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 AG structured notes, which include variable maturity notes with various equity and foreign exchange underlying risks, as well as rates-
linked and credit-linked notes, all of which have embedded derivative parameters that are considered to be unobservable. The equivalent derivative instrument parameters are presented in the respective derivative
financial instruments lines in this table.
UBS AG third quarter 2023 report |
Consolidated financial statements | Notes to the UBS AG interim consolidated financial statements (unaudited) 60
Note 8 Fair value measurement (continued)
d) Level 3 instruments: sensitivity to changes in unobservable input assumptions
The table below summarizes those financial assets and liabilities classified as Level 3 for which a change in one or
more of the unobservable inputs to reflect reasonably possible alternative assumptions would change fair value
significantly, and the estimated effect thereof.
The sensitivity data shown below presents an estimation of valuation uncertainty based on reasonably possible
alternative values for Level 3 inputs at the balance sheet date and does not represent the estimated effect of stress
scenarios. Typically, these financial assets and liabilities are sensitive to a combination of inputs from Levels 1–3.
Although well-defined interdependencies may exist between Level 1 / 2 parameters and Level 3 parameters (e.g.,
between interest rates, which are generally Level 1 or Level 2, and prepayments, which are generally Level 3), these
have not been incorporated in the table. Furthermore, direct interrelationships between the Level 3 parameters are
not a significant element of the valuation uncertainty.
Sensitivity of fair value measurements to changes in unobservable input assumptions
1
30.9.23
30.6.23
31.12.22
USD m
Favorable
changes
Unfavorable
changes
Favorable
changes
Unfavorable
changes
Favorable
changes
Unfavorable
changes
Traded loans, loans measured at fair value, loan commitments and guarantees
Securities financing transactions
Auction rate securities
Asset-backed securities
Equity instruments
Interest rate derivatives, net
Credit derivatives, net
Foreign exchange derivatives, net
Equity / index derivatives, net
Other
Total
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 at the beginning of the year.
��
UBS AG third quarter 2023 report |
Consolidated financial statements | Notes to the UBS AG interim consolidated financial statements (unaudited) 61
Note 8 Fair value measurement (continued)
Movements of Level 3 instruments
USD bn
Balance at
the beginning
of the period
Net gains /
losses
included in
compre-
hensive
income
1
of which:
related to
instruments
held at the
end of the
period
Purchases
Sales
Issuances
Settlements
Transfers
into
Level 3
Transfers
out of
Level 3
Foreign
currency
translation
Balance at
the end
of the period
For the nine months ended 30 September 2023
2
Financial assets at fair value held for
trading
0.0
of which: Investment fund units
0.0
0.0
of which: Corporate and municipal
bonds
0.0
0.0
of which: Loans
0.0
0.0
Derivative financial instruments –
assets
of which: Interest rate
0.0
0.0
of which: Equity / index
0.0
0.0
of which: Credit
0.0
0.0
Financial assets at fair value not held
for trading
0.0
of which: Loans
0.0
of which: Auction rate securities
0.0
0.0
0.0
0.0
0.0
0.0
of which: Equity instruments
0.0
0.0
0.0
Derivative financial instruments –
liabilities
of which: Interest rate
0.0
of which: Equity / index
0.0
0.0
of which: Credit
0.0
0.0
Debt issued designated at fair value
0.0
0.0
Other financial liabilities designated at
fair value
0.0
0.0
For the nine months ended 30 September 2022
Financial assets at fair value held for
trading
0.0
of which: Investment fund units
0.0
0.0
of which: Corporate and municipal
bonds
0.0
0.0
of which: Loans
0.0
0.0
Derivative financial instruments –
assets
0.0
0.0
of which: Interest rate
0.0
0.0
of which: Equity / index
0.0
0.0
of which: Credit
0.0
0.0
Financial assets at fair value not held
for trading
of which: Loans
0.0
of which: Auction rate securities
0.0
0.0
0.0
0.0
0.0
0.0
of which: Equity instruments
0.0
0.0
0.0
Derivative financial instruments –
liabilities
0.0
0.0
of which: Interest rate
0.0
0.0
of which: Equity / index
0.0
0.0
of which: Credit
0.0
0.0
Debt issued designated at fair value
0.0
0.0
Other financial liabilities designated at
fair value
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 September 2023 were USD 7.4bn
(31 December 2022: USD 6.7bn). Total Level 3 liabilities as of 30 September 2023 were USD 13.8bn (31 December 2022: USD 13.0bn).
UBS AG third quarter 2023 report |
Consolidated financial statements | Notes to the UBS AG interim consolidated financial statements (unaudited) 62
Note 8 Fair value measurement (continued)
f) Financial instruments not measured at fair value
The table below reflects the estimated fair values of financial instruments not measured at fair value. Valuation
principles applied when determining fair value estimates for financial instruments not measured at fair value are
consistent with those described in “Note 20 Fair value measurement” in the “Consolidated financial statements”
section of the Annual Report 2022.
Financial instruments not measured at fair value
30.9.23
30.6.23
31.12.22
USD bn
Carrying
amount
Fair value
Carrying
amount
Fair value
Carrying
amount
Fair value
Assets
Cash and balances at central banks
Loans and advances to 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
Funding from UBS Group AG measured at amortized cost
Debt issued measured at amortized cost
Other financial liabilities measured at amortized cost
1
1 Excludes lease liabilities.
UBS AG third quarter 2023 report |
Consolidated financial statements | Notes to the UBS AG interim consolidated financial statements (unaudited) 63
Note 9
Derivative instruments
a) Derivative instruments
As of 30.9.23, 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
0.5
0.6
121
Total derivative financial instruments, based on IFRS netting
4
Further netting potential not recognized on the balance sheet
5
of which: netting of recognized financial liabilities / assets
of which: netting with collateral received / pledged
Total derivative financial instruments, after consideration of further netting potential
As of 30.6.23, USD bn
Derivative financial instruments
Interest rate
Credit derivatives
Foreign exchange
Equity / index
Commodities
Other
3
0.5
0.5
121
Total derivative financial instruments, based on IFRS netting
4
Further netting potential not recognized on the balance sheet
5
of which: netting of recognized financial liabilities / assets
of which: netting with collateral received / pledged
Total derivative financial instruments, after consideration of further netting potential
As of 31.12.22, USD bn
Derivative financial instruments
Interest rate
Credit derivatives
Foreign exchange
Equity / index
Commodities
Other
3
0.2
0.1
50
Total derivative financial instruments, based on IFRS netting
4
Further netting potential not recognized on the balance sheet
5
of which: netting of recognized financial liabilities / assets
of which: netting with collateral received / pledged
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 transactions through central clearing counterparties are not disclosed, as they have a significantly different risk profile. 2 Other notional values relate to derivatives
that are cleared through either a central counterparty or an exchange. The fair value of these derivatives is presented on the balance sheet net of the corresponding cash margin under Cash collateral receivables on
derivative instruments and Cash collateral payables on derivative instruments and was not material for all periods presented. 3 Includes mainly Loan commitments measured at FVTPL, as well as unsettled purchases
and sales of non-derivative financial instruments, for which the changes in the fair value between trade date and settlement date are recognized as derivative financial instruments. 4 Financial assets and liabilities
are presented net on the balance sheet if UBS AG 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 AG or its counterparties, and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. 5 Reflects the netting potential in accordance with enforceable
master netting and similar arrangements where not all criteria for a net presentation on the balance sheet have been met. Refer to “Note 21 Offsetting financial assets and financial liabilities” in the “Consolidated
financial statements” section of the Annual Report 2022 for more information.
UBS AG third quarter 2023 report |
Consolidated financial statements | Notes to the UBS AG interim consolidated financial statements (unaudited) 64
Note 9
Derivative instruments (continued)
b) Cash collateral on derivative instruments
USD bn
Receivables
30.9.23
Payables
30.9.23
Receivables
30.6.23
Payables
30.6.23
Receivables
31.12.22
Payables
31.12.22
Cash collateral on derivative instruments, based on IFRS netting
1
Further netting potential not recognized on the balance sheet
2
of which: netting of recognized financial liabilities / assets
of which: netting with collateral received / pledged
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 AG 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 AG or its counterparties, and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. 2 Reflects the netting potential
in accordance with enforceable master netting and similar arrangements where not all criteria for a net presentation on the balance sheet have been met. Refer to “Note 21 Offsetting financial assets and financial
liabilities” in the “Consolidated financial statements” section of the Annual Report 2022 for more information.
Note
10
Other assets and liabilities
a) Other financial assets measured at amortized cost
USD m
30.9.23
30.6.23
31.12.22
Debt securities
Loans to financial advisors
Fee- and commission-related receivables
Finance lease receivables
Settlement and clearing accounts
Accrued interest income
Other
Total other financial assets measured at amortized cost
b) Other non-financial assets
USD m
30.9.23
30.6.23
31.12.22
Precious metals and other physical commodities
Deposits and collateral provided in connection with litigation, regulatory and similar matters
1
Prepaid expenses
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
30.9.23
30.6.23
31.12.22
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
30.9.23
30.6.23
31.12.22
Financial liabilities related to unit-linked investment contracts
Securities financing transactions
Over-the-counter debt instruments and other
Funding from UBS Group AG
Total other financial liabilities designated at fair value
UBS AG third quarter 2023 report |
Consolidated financial statements | Notes to the UBS AG interim consolidated financial statements (unaudited) 65
Note 10 Other assets and liabilities (continued)
e) Other non-financial liabilities
USD m
30.9.23
30.6.23
31.12.22
Compensation-related liabilities
Current tax liabilities
Deferred tax liabilities
VAT, withholding tax and other tax payables
Deferred income
Other
Total other non-financial liabilities
Note
11
Funding from UBS Group AG measured at amortized cost
USD m
30.9.23
30.6.23
31.12.22
Senior unsecured debt that contributes to total loss-absorbing capacity (TLAC)
Senior unsecured debt other than TLAC
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
Total funding from UBS Group AG measured at amortized cost
1
1 UBS AG has also recognized funding from UBS Group AG that is designated at fair value. Refer to Note 10d for more information.
Note
12
Debt issued designated at fair value
USD m
30.9.23
30.6.23
31.12.22
Issued debt instruments
Equity-linked
1
Rates-linked and fixed-rate
Credit-linked
Commodity-linked
Other
Total debt issued designated at fair value
1 Includes investment fund unit-linked instruments issued.
Note
13
Debt issued measured at amortized cost
USD m
30.9.23
30.6.23
31.12.22
Short-term debt
1
Senior unsecured debt
Subordinated debt
of which: eligible as low-trigger loss-absorbing tier 2 capital instruments
of which: eligible as non-Basel III-compliant tier 2 capital instruments
Debt issued through the Swiss central mortgage institutions
Long-term debt
2
Total debt issued measured at amortized cost
3
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.
UBS AG third quarter 2023 report |
Consolidated financial statements | Notes to the UBS AG interim consolidated financial statements (unaudited) 66
Note 14 Interest rate benchmark reform
During 2023, UBS AG has largely completed the transition of the remaining USD London Interbank Offered Rate
(LIBOR) contracts.
UBS AG has approximately USD 3bn equivalent of yen- and US dollar-denominated funding from UBS Group AG
that, per current contractual terms, if not called on their respective call dates, would reset based directly on JPY
LIBOR and USD LIBOR. In October 2023, notification was made that approximately USD 1bn of these instruments
would be redeemed in November 2023. In addition, several contracts providing funding from UBS Group AG
reference rates indirectly derived from IBORs, if they are not called on their respective call dates. These contracts
have robust IBOR fallback language and the confirmation of interest rate calculation mechanics will be
communicated in advance of any rate resets.
Note 15 Provisions and contingent liabilities
a) Provisions
The table below presents an overview of total provisions.
USD m
30.9.23
30.6.23
31.12.22
Provisions other than provisions for expected credit losses
Provisions for expected credit losses
1
Total provisions
1 Refer to Note 7c for more information.
The table below presents additional information for provisions other than provisions for expected credit losses.
USD m
Litigation,
regulatory and
similar matters
1
Other
2
Total
Balance as of 31 December 2022
Balance as of 30 June 2023
Increase in provisions recognized in the income statement
Release of provisions recognized in the income statement
Provisions used in conformity with designated purpose
Foreign currency translation and other movements
3
Balance as of 30 September 2023
1 Consists of provisions for losses resulting from legal, liability and compliance risks. 2 Mainly includes restructuring provisions and provisions related to real estate, employee benefits and operational risks. 3 Other
movements include capitalized reinstatement costs and unwinding of discount.
Information about provisions and contingent liabilities in respect of litigation, regulatory and similar matters, as a
class, is included in Note 15b. There are no material contingent liabilities associated with the other classes of
provisions.
UBS AG third quarter 2023 report |
Consolidated financial statements | Notes to the UBS AG interim consolidated financial statements (unaudited) 67
Note 15 Provisions and contingent liabilities (continued)
b) Litigation, regulatory and similar matters
UBS operates in a legal and regulatory environment that exposes it to significant litigation and similar risks arising
from disputes and regulatory proceedings. As a result, UBS is involved in various disputes and legal proceedings,
including litigation, arbitration, and regulatory and criminal investigations. “UBS,” “we” and “our”, for purposes
of this Note, refer to UBS AG and / or one or more of its subsidiaries, as applicable.
Such matters are subject to many uncertainties, and the outcome and the timing of resolution are often difficult to
predict, particularly in the earlier stages of a case. There are also situations where UBS may enter into a settlement
agreement. This may occur in order to avoid the expense, management distraction or reputational implications of
continuing to contest liability, even for those matters for which UBS believes it should be exonerated. The
uncertainties inherent in all such matters affect the amount and timing of any potential outflows for both matters
with respect to which provisions have been established and other contingent liabilities. UBS makes provisions for
such matters brought against it when, in the opinion of management after seeking legal advice, it is more likely
than not that UBS has a present legal or constructive obligation as a result of past events, it is probable that an
outflow of resources will be required, and the amount can be reliably estimated. Where these factors are otherwise
satisfied, a provision may be established for claims that have not yet been asserted against UBS, but are nevertheless
expected to be, based on UBS’s experience with similar asserted claims. If any of those conditions is not met, such
matters result in contingent liabilities. If the amount of an obligation cannot be reliably estimated, a liability exists
that is not recognized even if an outflow of resources is probable. Accordingly, no provision is established even if
the potential outflow of resources with respect to such matters could be significant. Developments relating to a
matter that occur after the relevant reporting period, but prior to the issuance of financial statements, which affect
management’s assessment of the provision for such matter (because, for example, the developments provide
evidence of conditions that existed at the end of the reporting period), are adjusting events after the reporting
period under IAS 10 and must be recognized in the financial statements for the reporting period.
Specific litigation, regulatory and other matters are described below, including all such matters that management
considers to be material and others that management believes to be of significance to UBS due to potential
financial, reputational and other effects. The amount of damages claimed, the size of a transaction or other
information is provided where available and appropriate in order to assist users in considering the magnitude of
potential exposures.
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, in which case the matter
is treated as a contingent liability under the applicable accounting standard; or (b) we have established a provision
but expect disclosure of that fact to prejudice seriously our position with other parties in the matter because it
would reveal the fact that UBS believes an outflow of resources to be probable and reliably estimable.
With respect to certain litigation, regulatory and similar matters for which we have established provisions, we are
able to estimate the expected timing of outflows. However, the aggregate amount of the expected outflows for
those matters for which we are able to estimate expected timing is immaterial relative to our current and expected
levels of liquidity over the relevant time periods.
The aggregate amount provisioned for litigation, regulatory and similar matters as a class is disclosed in the
“Provisions” table in Note 15a above. It is not practicable to provide an aggregate estimate of liability for our
litigation, regulatory and similar matters as a class of contingent liabilities. Doing so would require UBS to provide
speculative legal assessments as to claims and proceedings that involve unique fact patterns or novel legal theories,
that have not yet been initiated or are at early stages of adjudication, or as to which alleged damages have not
been quantified by the claimants. Although UBS therefore cannot provide a numerical estimate of the future losses
that could arise from litigation, regulatory and similar matters, UBS believes that the aggregate amount of possible
future losses from this class that are more than remote substantially exceeds the level of current provisions.
UBS AG third quarter 2023 report |
Consolidated financial statements | Notes to the UBS AG interim consolidated financial statements (unaudited) 68
Note 15 Provisions and contingent liabilities (continued)
Litigation, regulatory and similar matters may also result in non-monetary penalties and consequences. A guilty plea
to, or conviction of, a crime could have material consequences for UBS. Resolution of regulatory proceedings may
require UBS to obtain waivers of regulatory disqualifications to maintain certain operations, may entitle regulatory
authorities to limit, suspend or terminate licenses and regulatory authorizations, and may permit financial market
utilities to limit, suspend or terminate UBS’s participation in such utilities. Failure to obtain such waivers, or any
limitation, suspension or termination of licenses, authorizations or participations, could have material consequences
for UBS.
The risk of loss associated with litigation, regulatory and similar matters is a component of operational risk for
purposes of determining capital requirements. Information concerning our capital requirements and the calculation
of operational risk for this purpose is included in the “Capital management” section of this report.
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
2
Group Items
2
Total
Balance as of 31 December 2022
Balance as of 30 June 2023
Increase in provisions recognized in the income statement
Release of provisions recognized in the income statement
Provisions used in conformity with designated purpose
Foreign currency translation and other movements
Balance as of 30 September 2023
1 Provisions, if any, for the matters described in item 3 of this Note are recorded in Global Wealth Management, and provisions, if any, for the matters described in item 2 are recorded in Non-core and Legacy.
Provisions, if any, for the matters described in items 1 and 5 of this Note are allocated between Global Wealth Management and Personal & Corporate Banking, and provisions, if any, for the matters described in
item 4 are allocated between the Investment Bank and Group Items. 2 Starting with the third quarter of 2023, Non-core and Legacy represents a separate reportable segment and Group Functions has been renamed
Group Items. Prior periods have been revised to reflect these changes.
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.
Since 2013, UBS (France) S.A., UBS AG and certain former employees have been under investigation in France in
relation to UBS’s cross-border business with French clients. In connection with this investigation, the investigating
judges ordered UBS AG to provide bail (“
caution
”) of EUR 1.1bn.
In 2019, the court of first instance returned a verdict finding UBS AG guilty of unlawful solicitation of clients on
French territory and aggravated laundering of the proceeds of tax fraud, and UBS (France) S.A. guilty of aiding and
abetting unlawful solicitation and of laundering the proceeds of tax fraud. The court imposed fines aggregating
EUR 3.7bn on UBS AG and UBS (France) S.A. and awarded EUR 800m of civil damages to the French state. A trial
in the French 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 3.75m, the confiscation of EUR 1bn, and awarded civil damages to the French state of EUR 800m. UBS
appealed the decision to the French Supreme Court. On 27 September 2023, the Supreme Court held a hearing
on UBS’s appeal. At the conclusion of the hearing the court stated that it will communicate its decision on
15 November 2023. The fine and confiscation imposed by the Court of Appeal are suspended during the appeal.
The civil damages award has been paid to the French state (EUR 99m of which was deducted from the bail), subject
to the result of UBS’s appeal.
Our balance sheet at 30 September 2023 reflected provisions with respect to this matter in an amount of EUR 1.1bn
(USD 1.2bn). The wide range of possible outcomes in this case contributes to a high degree of estimation
uncertainty and the provision reflects our best estimate of possible financial implications, although actual penalties
and civil damages could exceed (or may be less than) the provision amount.
UBS AG third quarter 2023 report |
Consolidated financial statements | Notes to the UBS AG interim consolidated financial statements (unaudited) 69
Note 15 Provisions and contingent liabilities (continued)
2. Claims related to sales of residential mortgage-backed securities and mortgages
From 2002 through 2007, prior to the crisis in the US residential loan market, UBS was a substantial issuer and
underwriter of US residential mortgage-backed securities (RMBS) and was a purchaser and seller of US residential
mortgages.
In 2018, the DOJ filed a civil complaint in the District Court for the Eastern District of New York. The complaint
seeks unspecified civil monetary penalties under the Financial Institutions Reform, Recovery and Enforcement Act
of 1989 related to UBS’s issuance, underwriting and sale of 40 RMBS transactions in 2006 and 2007. UBS moved
to dismiss the civil complaint in 2019. Later in 2019, the district court denied UBS’s motion to dismiss. In August
2023, UBS reached a settlement with the DOJ, under which UBS paid USD 1.435bn to resolve all civil claims by the
DOJ.
3. Madoff
In relation to the Bernard L. Madoff Investment Securities LLC (BMIS) investment fraud, UBS AG, UBS (Luxembourg)
S.A. (now UBS Europe SE, Luxembourg branch) and certain other UBS subsidiaries have been subject to inquiries
by a number of regulators, including the Swiss Financial Market Supervisory Authority (FINMA) and the Luxembourg
Commission de Surveillance du Secteur Financier. Those inquiries concerned two third-party funds established under
Luxembourg law, substantially all assets of which were with BMIS, as well as certain funds established in offshore
jurisdictions with either direct or indirect exposure to BMIS. These funds faced severe losses, and the Luxembourg
funds are in liquidation. The documentation establishing both funds identifies UBS entities in various roles, including
custodian, administrator, manager, distributor and promoter, and indicates that UBS employees serve as board
members.
In 2009 and 2010, the liquidators of the two Luxembourg funds filed claims against UBS entities, non-UBS entities
and certain individuals, including current and former UBS employees, seeking amounts totaling approximately
EUR 2.1bn, which includes amounts that the funds may be held liable to pay the trustee for the liquidation of BMIS
(BMIS Trustee).
A large number of alleged beneficiaries have filed claims against UBS entities (and non-UBS entities) for purported
losses relating to the Madoff fraud. The majority of these cases have been filed in Luxembourg, where decisions
that the claims in eight test cases were inadmissible have been affirmed by the Luxembourg Court of Appeal, and
the Luxembourg Supreme Court has dismissed a further appeal in one of the test cases.
In the US, the BMIS Trustee filed claims against UBS entities, among others, in relation to the two Luxembourg
funds and one of the offshore funds. The total amount claimed against all defendants in these actions was not less
than USD 2bn. In 2014, the US Supreme Court rejected the BMIS Trustee’s motion for leave to appeal decisions
dismissing all claims except those for the recovery of approximately USD 125m of payments alleged to be fraudulent
conveyances and preference payments. In 2016, the bankruptcy court dismissed these claims against the UBS
entities. In 2019, the Court of Appeals reversed the dismissal of the BMIS Trustee’s remaining claims, and the US
Supreme Court subsequently denied a petition seeking review of the Court of Appeals’ decision. The case has been
remanded to the Bankruptcy Court for further proceedings.
4. 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.
UBS AG third quarter 2023 report |
Consolidated financial statements | Notes to the UBS AG interim consolidated financial statements (unaudited) 70
Note 15 Provisions and contingent liabilities (continued)
Foreign exchange-related civil litigation:
in other jurisdictions against UBS and other banks on behalf of putative classes of persons who engaged in foreign
currency transactions with any of the defendant banks. UBS has resolved US federal court class actions relating to
foreign currency transactions with the defendant banks and persons who transacted in foreign exchange futures
contracts and options on such futures under a settlement agreement that provides for UBS to pay an aggregate of
USD 141m and provide cooperation to the settlement classes. Certain class members have excluded themselves
from that settlement and have filed individual actions in US and English courts against UBS and other banks, alleging
violations of US and European competition laws and unjust enrichment. UBS and the other banks have resolved
those individual matters.
In 2015, a putative class action was filed in federal court against UBS and numerous other banks on behalf of
persons and businesses in the US who directly purchased foreign currency from the defendants and alleged co-
conspirators for their own end use. In 2022, the court denied plaintiffs’ motion for class certification. In March
2023, the court granted defendants’ summary judgment motion, dismissing the case. Plaintiffs have appealed.
LIBOR and other benchmark-related regulatory matters:
regarding potential improper attempts by UBS, among others, to manipulate LIBOR and other benchmark rates at
certain times. UBS reached settlements or otherwise concluded investigations relating to benchmark interest rates
with the investigating authorities. UBS was granted conditional leniency or conditional immunity from authorities
in certain jurisdictions, including the Antitrust Division of the DOJ and the Swiss Competition Commission (WEKO),
in connection with potential antitrust or competition law violations related to certain rates. However, UBS has not
reached a final settlement with WEKO, as the Secretariat of WEKO has asserted that UBS does not qualify for full
immunity.
LIBOR and other benchmark-related civil litigation:
in the federal courts in New York against UBS and numerous other banks on behalf of parties who transacted in
certain interest rate benchmark-based derivatives. Also pending in the US and in other jurisdictions are a number
of other actions asserting losses related to various products whose interest rates were linked to LIBOR and other
benchmarks, including adjustable rate mortgages, preferred and debt securities, bonds pledged as collateral, loans,
depository accounts, investments and other interest-bearing instruments. The complaints allege manipulation,
through various means, of certain benchmark interest rates, including USD LIBOR, Euroyen TIBOR, Yen LIBOR,
EURIBOR, CHF LIBOR, GBP LIBOR and seek unspecified compensatory and other damages under varying legal
theories.
USD LIBOR class and individual actions in the US:
In 2013 and 2015, the district court in the USD LIBOR actions
dismissed, in whole or in part, certain plaintiffs’ antitrust claims, federal racketeering claims, Commodity Exchange
Act claims, and state common law claims, and again dismissed the antitrust claims in 2016 following an appeal. In
2021, the Second Circuit affirmed the district court’s dismissal in part and reversed in part and remanded to the
district court for further proceedings. The Second Circuit, among other things, held that there was personal
jurisdiction over UBS and other foreign defendants. Separately, in 2018, the Second Circuit reversed in part the
district court’s 2015 decision dismissing certain individual plaintiffs’ claims and certain of these actions are now
proceeding. In 2018, the district court denied plaintiffs’ motions for class certification in the USD class actions for
claims pending against UBS, and plaintiffs sought permission to appeal that ruling to the Second Circuit. The Second
Circuit denied the petition to appeal. In 2020, an individual action was filed in the Northern District of California
against UBS and numerous other banks alleging that the defendants conspired to fix the interest rate used as the
basis for loans to consumers by jointly setting the USD LIBOR rate and monopolized the market for LIBOR-based
consumer loans and credit cards. In September 2022, the court granted defendants’ motion to dismiss the
complaint in its entirety, while allowing plaintiffs the opportunity to file an amended complaint. Plaintiffs filed an
amended complaint in October 2022, and defendants have moved to dismiss the amended complaint. In October
2023, the court dismissed the amended complaint with prejudice.
Other benchmark class actions in the US:
Yen LIBOR / Euroyen TIBOR –
In 2017, the court dismissed one Yen LIBOR / Euroyen TIBOR action in its entirety on
standing grounds. In 2020, the appeals court reversed the dismissal and, subsequently, plaintiffs in that action filed
an amended complaint focused on Yen LIBOR. In 2022, the court granted UBS’s motion for reconsideration and
dismissed the case against UBS. The dismissal of the case against UBS could be appealed following the disposition
of the case against the remaining defendant in the district court.
UBS AG third quarter 2023 report |
Consolidated financial statements | Notes to the UBS AG interim consolidated financial statements (unaudited) 71
Note 15 Provisions and contingent liabilities (continued)
CHF LIBOR
Plaintiffs filed an amended complaint, and the court granted a renewed motion to dismiss in 2019. Plaintiffs
appealed. In 2021, the Second Circuit granted the parties’ joint motion to vacate the dismissal and remand the case
for further proceedings. Plaintiffs filed a third amended complaint in November 2022 and defendants moved to
dismiss the amended complaint in January 2023.
EURIBOR
defendants for lack of personal jurisdiction. Plaintiffs have appealed.
GBP LIBOR
Government bonds:
banks on behalf of persons who participated in markets for US Treasury securities since 2007. A consolidated
complaint was filed in 2017 in the US District Court for the Southern District of New York alleging that the banks
colluded with respect to, and manipulated prices of, US Treasury securities sold at auction and in the secondary
market and asserting claims under the antitrust laws and for unjust enrichment. Defendants’ motions to dismiss
the consolidated complaint were granted in 2021. Plaintiffs filed an amended complaint, which defendants moved
to dismiss later in 2021. In March 2022, the court granted defendants’ motion to dismiss that complaint. Plaintiffs
have appealed the dismissal. Similar class actions have been filed concerning European government bonds and
other government bonds.
In 2021, the European Commission issued a decision finding that UBS and six other banks breached European
Union antitrust rules in 2007–2011 relating to European government bonds. The European Commission fined UBS
EUR 172m. UBS is appealing the amount of the fine.
With respect to additional matters and jurisdictions not encompassed by the settlements and orders referred to
above, our balance sheet at 30 September 2023 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.
5. Swiss retrocessions
The Federal Supreme Court of Switzerland ruled in 2012, in a test case against UBS, that distribution fees paid to
a firm for distributing third-party and intra-group investment funds and structured products must be disclosed and
surrendered to clients who have entered into a discretionary mandate agreement with the firm, absent a valid
waiver. FINMA issued a supervisory note to all Swiss banks in response to the Supreme Court decision. UBS has met
the FINMA requirements and has notified all potentially affected clients.
The Supreme Court decision has resulted, and continues to result, in a number of client requests for UBS to disclose
and potentially surrender retrocessions. Client requests are assessed on a case-by-case basis. Considerations taken
into account when assessing these cases include, among other things, the existence of a discretionary mandate and
whether or not the client documentation contained a valid waiver with respect to distribution fees.
Our balance sheet at 30 September 2023 reflected a provision with respect to matters described in this item 5 in
an amount that UBS believes to be appropriate under the applicable accounting standard. The ultimate exposure
will depend on client requests and the resolution thereof, factors that are difficult to predict and assess. Hence, as
in the case of other matters for which we have established provisions, the future outflow of resources in respect of
such matters cannot be determined with certainty based on currently available information and accordingly may
ultimately prove to be substantially greater (or may be less) than the provision that we have recognized.
UBS AG third quarter 2023 report |
Appendix 72
Appendix
Alternative performance measures
Alternative performance measures
An alternative performance measure (an APM) is a financial measure of historical or future financial performance,
financial position or cash flows other than a financial measure defined or specified in the applicable recognized
accounting standards or in other applicable regulations. A number of APMs are reported in the discussion of the
financial and operating performance of the external reports (annual, quarterly and other reports). APMs are used
to provide a more complete picture of operating performance and to reflect management’s view of the fundamental
drivers of the business results. A definition of each APM, the method used to calculate it and the information
content are presented in alphabetical order in the table below. These APMs may qualify as non-GAAP measures as
defined by US Securities and Exchange Commission (SEC) regulations.
APM label
Calculation
Information content
Active Digital Banking clients in
Corporate & Institutional Clients (%)
– Personal & Corporate Banking
Calculated as the average number of active clients for
each month in the relevant period divided by the
average number of total clients. “Clients” refers to
the number of unique business relationships or legal
entities operated by Corporate & Institutional Clients,
excluding clients that do not have an account, mono-
product clients and clients that have defaulted on
loans or credit facilities. At the end of each month,
any client that has logged on at least once in that
month is determined to be “active” (a log-in time
stamp is allocated to all business relationship numbers
or per legal entity in a digital banking contract).
This measure provides information about the
proportion of active Digital Banking clients in the total
number of UBS clients (within the aforementioned
meaning) which are serviced by Corporate &
Institutional Clients.
Active Digital Banking clients in
Personal Banking (%)
– Personal & Corporate Banking
Calculated as the average number of active clients for
each month in the relevant period divided by the
average number of total clients. “Clients” refers to
the number of unique business relationships operated
by Personal Banking, excluding persons under the age
of 15, clients who do not have a private account,
clients domiciled outside Switzerland and clients who
have defaulted on loans or credit facilities. At the end
of each month, any client that has logged on at least
once in that month is determined to be “active” (a
log-in time stamp is allocated to all business
relationship numbers in a digital banking contract).
This measure provides information about the
proportion of active Digital Banking clients in the total
number of UBS clients (within the aforementioned
meaning) who are serviced by Personal Banking.
Active Mobile Banking clients in
Personal Banking (%)
– Personal & Corporate Banking
Calculated as the average number of active clients for
each month in the relevant period divided by the
average number of total clients. “Clients” refers to
the number of unique business relationships operated
by Personal Banking, excluding persons under the age
of 15, clients who do not have a private account,
clients domiciled outside Switzerland and clients who
have defaulted on loans or credit facilities. At the end
of each month, any client that has logged on via the
mobile app at least once in that month is determined
to be “active” (a log-in time stamp is allocated to all
business relationship numbers in a digital banking
contract).
This measure provides information about the
proportion of active Mobile Banking clients in the
total number of UBS clients (within the
aforementioned meaning) who are serviced by
Personal Banking.
Cost / income ratio (%)
Calculated as operating expenses divided by total
revenues.
This measure provides information about the
efficiency of the business by comparing operating
expenses with gross income.
Fee and trading income for Corporate &
Institutional Clients (USD and CHF)
– Personal & Corporate Banking
Calculated as the total of recurring net fee and
transaction-based income for Corporate &
Institutional Clients.
This measure provides information about the amount
of fee and trading income for Corporate &
Institutional Clients.
UBS AG third quarter 2023 report |
Appendix 73
APM label
Calculation
Information content
Fee-pool-comparable revenues (USD)
– the Investment Bank
Calculated as the total of revenues from: merger-and-
acquisition-related transactions; Equity Capital
Markets, excluding derivatives; Leveraged Capital
Markets, excluding the impact of mark-to-market
movements on loan portfolios; and Debt Capital
Markets, excluding revenues related to debt
underwriting of UBS instruments.
This measure provides information about the amount
of revenues in the Investment Bank that are
comparable with the relevant global fee pools.
Gross margin on invested assets (bps)
– Asset Management
Calculated as total revenues (annualized as applicable)
divided by average invested assets.
This measure provides information about the total
revenues of the business in relation to invested assets.
Impaired loan portfolio as a percentage
of total loan portfolio, gross (%)
– Global Wealth Management,
Personal & Corporate Banking
Calculated as impaired loan portfolio divided by total
gross loan portfolio.
This measure provides information about the
proportion of impaired loan portfolio in the total gross
loan portfolio.
Integration-related expenses (USD)
Generally include costs of internal staff and
contractors substantially dedicated to integration
activities, retention awards, redundancy costs,
incremental expenses from the shortening of useful
lives of property, equipment and software, and
impairment charges relating to these assets.
Classification as integration-related expenses does not
affect the timing of recognition and measurement of
those expenses or the presentation thereof in the
income statement. Integration-related expenses
incurred by Credit Suisse also included expenses
associated with restructuring programs that existed
prior to the acquisition.
This measure provides information about expenses
that are temporary, incremental and directly related to
the integration of Credit Suisse into UBS.
Invested assets (USD and CHF)
– Global Wealth Management,
Personal & Corporate Banking,
Asset Management
Calculated as the sum of managed fund assets,
managed institutional assets, discretionary and
advisory wealth management portfolios, fiduciary
deposits, time deposits, savings accounts, and wealth
management securities or brokerage accounts.
This measure provides information about the volume
of client assets managed by or deposited with UBS for
investment purposes.
Investment products for Personal
Banking (USD and CHF)
– Personal & Corporate Banking
Calculated as the sum of investment funds (including
UBS Vitainvest third-pillar pension funds, as well as
money market funds), mandates and third-party life
insurance operated in Personal Banking.
This measure provides information about the volume
of investment funds (including UBS Vitainvest third-
pillar pension funds, as well as money market funds),
mandates and third-party life insurance operated in
Personal Banking.
Net interest margin (bps)
– Personal & Corporate Banking
Calculated as net interest income (annualized as
applicable) divided by average loans.
This measure provides information about the
profitability of the business by calculating the
difference between the price charged for lending and
the cost of funding, relative to loan value.
Net new investment products for
Personal Banking (USD and CHF)
– Personal & Corporate Banking
Calculated as the net amount of inflows and outflows
of investment products during a specific period.
This measure provides information about the
development of investment products during a specific
period as a result of net new investment product
flows.
Net new money (USD)
– Global Wealth Management,
Asset Management
Calculated as the net amount of inflows and outflows
of invested assets (as defined in UBS policy) recorded
during a specific period. Excluded from the calculation
are movements due to market performance, foreign
exchange translation, dividends, interest and fees, as
well as the effects on invested assets of strategic
decisions by UBS to exit markets or services. Net new
money is not measured for Personal & Corporate
Banking.
This measure provides information about the
development of invested assets during a specific
period as a result of net new money flows.
Net new money growth rate (%)
– Global Wealth Management
Calculated as the net amount of inflows and outflows
of invested assets (as defined in UBS policy) recorded
during a specific period (annualized as applicable)
divided by total invested assets at the beginning of
the period.
This measure provides information about the growth
of invested assets during a specific period as a result
of net new money flows.
Net profit growth (%)
Calculated as the change in net profit attributable to
shareholders from continuing operations between
current and comparison periods divided by net profit
attributable to shareholders from continuing
operations of the comparison period.
This measure provides information about profit
growth since the comparison period.
Operating expenses (underlying)
(USD)
Calculated by adjusting operating expenses as
reported in accordance with International Financial
Reporting Standards (IFRS) for items that
management believes are not representative of the
underlying performance of the businesses.
›
Refer to the “Group performance” section of the
UBS Group third quarter 2023 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.
UBS AG third quarter 2023 report |
Appendix 74
APM label
Calculation
Information content
Operating profit / (loss) before tax
(underlying) (USD)
Calculated by adjusting operating profit / (loss) before
tax as reported in accordance with International
Financial Reporting Standards (IFRS) for items that
management believes are not representative of the
underlying performance of the businesses.
›
Refer to the “Group performance” section of the
UBS Group third quarter 2023 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.
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 International Financial Reporting
Standards (IFRS) for items that management believes
are not representative of the underlying performance
of the businesses.
›
Refer to the “Group performance” section of the
UBS Group third quarter 2023 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.
UBS AG third quarter 2023 report |
Appendix 75
APM label
Calculation
Information content
Underlying net profit growth (%)
Calculated as the change in net profit attributable to
shareholders from continuing operations between
current and comparison periods divided by net profit
attributable to shareholders from continuing
operations of the comparison period. Net profit
attributable to shareholders from continuing
operations excludes items that management believes
are not representative of the underlying performance
of the businesses and also excludes related tax
impact.
This measure provides information about profit
growth since the comparison period, while excluding
items that management believes are not
representative of the underlying performance of the
businesses.
Underlying return on common equity
tier 1 capital
1
Calculated as annualized net profit attributable to
shareholders divided by average common equity tier 1
capital. Net profit attributable to shareholders
excludes items that management believes are not
representative of the underlying performance of the
businesses and also excludes related tax impact.
This measure provides information about the
profitability of the business in relation to common
equity tier 1 capital, while excluding items that
management believes are not representative of the
underlying performance of the businesses.
Underlying return on tangible equity
1
(%)
Calculated as annualized net profit attributable to
shareholders divided by average equity attributable to
shareholders less average goodwill and intangible
assets. Net profit attributable to shareholders excludes
items that management believes are not
representative of the underlying performance of the
businesses and also excludes related tax impact.
This measure provides information about the
profitability of the business in relation to tangible
equity, while excluding items that management
believes are not representative of the underlying
performance of the businesses.
1
Profit or loss information for the third quarter of 2023 includes three months of information for UBS and three months of information for Credit Suisse 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 includes three months of information for UBS and one month (June 2023) of information for Credit Suisse and, for the
purpose of the calculation of return measures, has been annualized multiplying such by four. Profit or loss information for the first nine months of 2023 includes nine months of information for UBS and four months
(June–September 2023) of information for Credit Suisse and, for the purpose of the calculation of return measures, has been annualized by dividing such by three and then multiplying by four for the year-to-date
measure.
This is a general list of the APMs used in our financial reporting. Not all of the APMs listed above may appear in
this particular report.
UBS AG third quarter 2023 report |
Appendix 76
Abbreviations frequently used in our financial reports
A
ABS asset-backed securities
AG Aktiengesellschaft
AGM Annual General Meeting of
shareholders
A-IRB advanced internal ratings-
based
AIV alternative investment
vehicle
ALCO Asset and Liability
Committee
AMA advanced measurement
approach
AML anti-money laundering
AoA Articles of Association
APM alternative performance
measure
ARR alternative reference rate
ARS auction rate securities
ASF available stable funding
AT1 additional tier 1
AuM assets under management
B
BCBS Basel Committee on
Banking Supervision
BIS Bank for International
Settlements
BoD Board of Directors
C
CAO Capital Adequacy
Ordinance
CCAR Comprehensive Capital
Analysis and Review
CCF credit conversion factor
CCP central counterparty
CCR counterparty credit risk
CCRC Corporate Culture and
Responsibility Committee
CDS credit default swap
CEA Commodity Exchange Act
CEO Chief Executive Officer
CET1 common equity tier 1
CFO Chief Financial Officer
CGU cash-generating unit
CHF Swiss franc
CIO Chief Investment Office
C&ORC Compliance & Operational
Risk Control
CRM credit risk mitigation (credit
risk) or comprehensive risk
measure (market risk)
CST combined stress test
CUSIP Committee on Uniform
Security Identification
Procedures
CVA credit valuation adjustment
D
DBO defined benefit obligation
DCCP Deferred Contingent
Capital Plan
DE&I diversity, equity and
inclusion
DFAST Dodd–Frank Act Stress Test
DM discount margin
DOJ US Department of Justice
DTA deferred tax asset
DVA debit valuation adjustment
E
EAD exposure at default
EB Executive Board
EC European Commission
ECB European Central Bank
ECL expected credit loss
EGM Extraordinary General
Meeting of shareholders
EIR effective interest rate
EL expected loss
EMEA Europe, Middle East and
Africa
EOP Equity Ownership Plan
EPS earnings per share
ESG environmental, social and
governance
ESR environmental and social
risk
ETD exchange-traded derivatives
ETF exchange-traded fund
EU European Union
EUR euro
EURIBOR Euro Interbank Offered Rate
EVE economic value of equity
EY Ernst & Young Ltd
F
FA financial advisor
FCA UK Financial Conduct
Authority
FDIC Federal Deposit Insurance
Corporation
FINMA Swiss Financial Market
Supervisory Authority
FMIA Swiss Financial Market
Infrastructure Act
FSB Financial Stability Board
FTA Swiss Federal Tax
Administration
FVA funding valuation
adjustment
FVOCI fair value through other
comprehensive income
FVTPL fair value through profit or
loss
FX foreign exchange
G
GAAP generally accepted
accounting principles
GBP pound sterling
GCRG Group Compliance,
Regulatory & Governance
GDP gross domestic product
GEB Group Executive Board
GHG greenhouse gas
GIA Group Internal Audit
GRI Global Reporting Initiative
G-SIB global systemically
important bank
H
HQLA
high-quality liquid assets
I
IAS International Accounting
Standards
IASB International Accounting
Standards Board
IBOR interbank offered rate
IFRIC International Financial
Reporting Interpretations
Committee
IFRS International Financial
Reporting Standards
IRB internal ratings-based
IRRBB interest rate risk in the
banking book
ISDA International Swaps and
Derivatives Association
ISIN International Securities
Identification Number
UBS AG third quarter 2023 report |
Appendix 77
Abbreviations frequently used in our financial reports (continued)
K
KRT Key Risk Taker
L
LAS liquidity-adjusted stress
LCR liquidity coverage ratio
LGD loss given default
LIBOR London Interbank Offered
Rate
LLC limited liability company
LoD lines of defense
LRD leverage ratio denominator
LTIP Long-Term Incentive Plan
LTV loan-to-value
M
M&A mergers and acquisitions
MRT Material Risk Taker
N
NII net interest income
NSFR net stable funding ratio
NYSE New York Stock Exchange
O
OCA own credit adjustment
OCI other comprehensive
income
OECD Organisation for Economic
Co-operation and
Development
OTC over-the-counter
P
PCI purchased credit impaired
PD probability of default
PIT point in time
PPA purchase price allocation
P&L profit or loss
Q
QCCP Qualifying central
counterparty
R
RBC risk-based capital
RbM risk-based monitoring
REIT real estate investment trust
RMBS residential mortgage-
backed securities
RniV risks not in VaR
RoCET1 return on CET1 capital
RoU right-of-use
rTSR relative total shareholder
return
RWA risk-weighted assets
S
SA standardized approach or
société anonyme
SA-CCR standardized approach for
counterparty credit risk
SAR Special Administrative
Region of the People’s
Republic of China
SDG Sustainable Development
Goal
SEC US Securities and Exchange
Commission
SFT securities financing
transaction
SI sustainable investing or
sustainable investment
SIBOR Singapore Interbank
Offered Rate
SICR significant increase in credit
risk
SIX SIX Swiss Exchange
SME small and medium-sized
entities
SMF Senior Management
Function
SNB Swiss National Bank
SOR Singapore Swap Offer Rate
SPPI solely payments of principal
and interest
SRB systemically relevant bank
SRM specific risk measure
SVaR stressed value-at-risk
T
TBTF too big to fail
TCFD Task Force on Climate-
related Financial Disclosures
TIBOR Tokyo Interbank Offered
Rate
TLAC total loss-absorbing capacity
TTC through the cycle
U
USD US dollar
V
VaR value-at-risk
VAT
value added tax
This is a general list of the abbreviations frequently used in our financial reporting. Not all of the listed abbreviations
may appear in this particular report.
UBS AG third quarter 2023 report |
Appendix 78
Information sources
Reporting publications
Annual publications
Annual Report
: Published in English, this single-volume 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, corporate responsibility and 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
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 Annual Report.
Sustainability Report
: Published in English, the Sustainability Report provides disclosures on environmental, social
and governance topics related to the UBS Group.
Diversity, Equity and Inclusion Report
: This report details UBS’s diversity, equity and inclusion priority areas of focus,
strategic goals and approach to achieving them.
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 combined UBS Group AG
and UBS AG Annual Report. However, there is a small amount of additional information in Form 20-F that is not
presented elsewhere and is particularly targeted at readers in the US. Readers are encouraged to refer to this
additional disclosure. Any document that filed with the SEC is available on the SEC’s website:
sec.gov
. Refer to
ubs.com/investors
UBS AG third quarter 2023 report |
Appendix 79
Cautionary Statement Regarding Forward-Looking Statements |
but not limited to management’s outlook for UBS’s financial performance, statements relating to the anticipated effect of transactions and strategic initiatives
on UBS’s business and future development and goals or intentions to achieve climate, sustainability and other social objectives. While these forward-looking
statements represent UBS’s judgments, expectations and objectives concerning the matters described, a number of risks, uncertainties and other important
factors could cause actual developments and results to differ materially from UBS’s expectations. In particular, recent terrorist activity and escalating armed
conflict 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 Credit Suisse has materially changed our outlook and strategic
direction and introduced new operational challenges. The integration of the Credit Suisse entities into the UBS structure is expected to take between three and
five years and presents significant risks, including the risks that UBS Group AG may be unable to achieve the cost reductions and other benefits contemplated by
the transaction. This creates significantly greater uncertainty about forward-looking statements. Other factors that may affect our performance and ability to
achieve our plans, outlook and other objectives also include, but are not limited to: (i) the degree to which UBS is successful in the execution of its strategic plans,
including its cost reduction and efficiency initiatives and its ability to manage its levels of risk-weighted assets (RWA) and leverage ratio denominator (LRD),
liquidity coverage ratio and other financial resources, including changes in RWA assets and liabilities arising from higher market volatility and the size of the
combined bank; (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 Credit Suisse; (iii) increased inflation and interest rate volatility in major markets; (iv) developments in the macroeconomic
climate and in the markets in which UBS operates or to which it is exposed, including movements in securities prices or liquidity, credit spreads, currency exchange
rates, deterioration or slow recovery in residential and commercial real estate markets, the effects of economic conditions, including increasing inflationary
pressures, market developments, increasing geopolitical tensions, and changes to national trade policies on the financial position or creditworthiness of UBS’s
clients and counterparties, as well as on client sentiment and levels of activity, including the COVID-19 pandemic and the measures taken to manage it, which
have had and may also continue to have a significant adverse effect on global and regional economic activity, including disruptions to global supply chains and
labor market displacements; (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 Credit Suisse; (vi) changes in central bank policies or the implementation
of financial legislation and regulation in Switzerland, the US, the UK, the European Union 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 Credit
Suisse, or other developments; (viii) UBS’s ability to maintain and improve its systems and controls for complying with sanctions in a timely manner and for the
detection and prevention of money laundering to meet evolving regulatory requirements and expectations, in particular in current geopolitical turmoil; (ix) the
uncertainty arising from domestic stresses in certain major economies; (x) changes in UBS’s competitive position, including whether differences in regulatory
capital and other requirements among the major financial centers adversely affect UBS’s ability to compete in certain lines of business; (xi) changes in the standards
of conduct applicable to our businesses that may result from new regulations or new enforcement of existing standards, including measures to impose new and
enhanced duties when interacting with customers and in the execution and handling of customer transactions; (xii) the liability to which UBS may be exposed,
or possible constraints or sanctions that regulatory authorities might impose on UBS, due to litigation, contractual claims and regulatory investigations, including
the potential for disqualification from certain businesses, potentially large fines or monetary penalties, or the loss of licenses or privileges as a result of regulatory
or other governmental sanctions, as well as the effect that litigation, regulatory and similar matters have on the operational risk component of our RWA, including
as a result of its acquisition of Credit Suisse, 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 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 currently existing in the Credit Suisse Group, the level of resulting impairments and write-downs, the
effect of the consummation of the integration on the operational results, share price and credit rating of UBS – delays, difficulties, or failure in closing the
transaction may cause market disruption and challenges for UBS to maintain business, contractual and operational relationships; and (xxv) the effect that these
or other factors or unanticipated events, including media reports and speculations, may have on our reputation and the additional consequences that this may
have on our business and performance. The sequence in which the factors above are presented is not indicative of their likelihood of occurrence or the potential
magnitude of their consequences. Our business and financial performance could be affected by other factors identified in our past and future filings and reports,
including those filed with the US Securities and Exchange Commission (the SEC). More detailed information about those factors is set forth in documents
furnished by UBS and filings made by UBS with the SEC, including the Annual Report on Form 20-F for the year ended 31 December 2022. 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.
UBS AG
P.O. Box, CH-8098 Zurich
P.O. Box, CH-4002 Basel
ubs.com
This Form 6-K is hereby incorporated by reference into (1) each of the registration statements of UBS AG on Form
F-3 (Registration Number 333-263376), 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 that
incorporates by reference any Forms 6-K of UBS AG that are incorporated into its registration statements filed with
the SEC, and (3) the base prospectus of Corporate Asset Backed Corporation (“CABCO”) dated June 23, 2004
(Registration Number 333-111572), the Form 8-K of CABCO filed and dated June 23, 2004 (SEC File Number 001-
13444), and the Prospectus Supplements relating to the CABCO Series 2004-101 Trust dated May 10, 2004 and May
17, 2004 (Registration Number 033-91744 and 033-91744-05).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
UBS AG
By: /s/ Sergio Ermotti
_
Name: Sergio Ermotti
Title: President of the Executive Board
By: /s/ Todd Tuckner
_
Name: Todd Tuckner
Title: Chief Financial Officer
By: /s/ Steffen Henrich
______________
Name: Steffen Henrich
Title: Controller
Date: November 7, 2023