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: January 27, 2017
UBS Group AG
Commission File Number: 1-36764
UBS AG
Commission File Number: 1-15060
(Registrants' Name)
Bahnhofstrasse 45, Zurich, Switzerland
(Address of principal executive office)
Indicate by check mark whether the registrants file or will
file annual reports under cover of Form 20‑F or Form 40-F.
This Form 6-K consists of the Fourth Quarter 2016 Report of
UBS Group AG and UBS AG, which appears immediately following this page.
Our financial results
Fourth
quarter
2016
report
Corporate
calendar UBS Group AG*
Publication of the Annual Report 2016: Friday,
10 March 2017
Publication of the first quarter 2017 report: Friday, 28
April 2017
Annual General Meeting 2017: Thursday,
4 May 2017
Publication of the second quarter 2017 report: Friday, 28
July 2017
Publication of the third quarter 2017 report: Friday, 27
October 2017
Corporate
calendar UBS AG*
Publication of the Annual Report 2016: Friday,
10 March 2017
* Refer to the corporate calendar at
www.ubs.com/investors
for more information
Switchboards
For all general inquiries.
www.ubs.com/contact
Zurich +41-44-234 1111
London +44-20-7567 8000
New York +1-212-821 3000
Hong Kong +852-2971 8888
Investor Relations
UBS’s Investor Relations team
supports
institutional, professional and retail
investors from our offices in Zurich,
London, New York and Hong Kong.
UBS Group AG, Investor Relations
P.O. Box, CH-8098 Zurich, Switzerland
www.ubs.com/investors
Hotline Zurich +41-44-234 4100
Hotline New York +1-212-882 5734
Fax (Zurich) +41-44-234 3415
Media Relations
UBS’s Media Relations team supports
global media and journalists from
our offices in Zurich, London, New York
and Hong Kong.
www.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 5857
mediarelations-ny@ubs.com
Hong Kong +852-2971 8200
sh-mediarelations-ap@ubs.com
Office of the Group Company
Secretary
The Group Company Secretary receives
inquiries on compensation and related
issues addressed to members of the
Board of Directors.
UBS Group AG, Office of the Group
Company Secretary
P.O. Box, CH-8098 Zurich, Switzerland
sh-company-secretary@ubs.com
Hotline +41-44-235 6652
Fax +41-44-235 8220
Shareholder Services
UBS’s Shareholder Services team, a
unit
of the Group Company Secretary Office,
is responsible for the registration of the
global registered shares.
UBS Group AG, Shareholder Services
P.O. Box, CH-8098 Zurich, Switzerland
sh-shareholder-services@ubs.com
Hotline +41-44-235 6652
Fax +41-44-235 8220
US Transfer Agent
For global registered share-related
inquiries in the US.
Computershare Trust Company NA
P.O. Box 30170
College Station
TX 77842-3170, USA
Shareholder online inquiries:
https://www-us.computershare.com/
investor/Contact
Shareholder website:
www.computershare.com/investor
Calls from the US +1-866-305-9566
Calls from outside
the US +1-781-575-2623
TDD for hearing impaired
+1-800-231-5469
TDD for foreign shareholders
+1-201-680-6610
Publisher: UBS Group AG, Zurich, Switzerland
| www.ubs.com
Language: English
© UBS 2017. The key symbol and UBS
are among the registered and unregistered trademarks of UBS. All rights
reserved.
Fourth quarter 2016 report
UBS Group key figures
|
|
As of or for the quarter ended
|
|
As of or for the year ended
|
CHF million, except where
indicated
|
|
31.12.16
|
30.9.16
|
31.12.15
|
|
31.12.16
|
31.12.15
|
|
|
|
|
|
|
|
|
Group results
|
|
|
|
|
|
|
|
Operating income
|
|
7,055
|
7,029
|
6,775
|
|
28,320
|
30,605
|
Operating expenses
|
|
6,206
|
6,152
|
6,541
|
|
24,128
|
25,116
|
Operating profit / (loss) before tax
|
|
848
|
877
|
234
|
|
4,192
|
5,489
|
Net profit / (loss) attributable to shareholders
|
|
738
|
827
|
949
|
|
3,306
|
6,203
|
Diluted earnings per share (CHF)¹
|
|
0.19
|
0.22
|
0.25
|
|
0.86
|
1.64
|
|
|
|
|
|
|
|
|
Key performance indicators²
|
|
|
|
|
|
|
|
Profitability
|
|
|
|
|
|
|
|
Return on tangible equity (%)
|
|
6.5
|
7.3
|
8.1
|
|
7.2
|
13.7
|
Return on assets, gross (%)
|
|
3.0
|
2.9
|
2.8
|
|
3.0
|
3.1
|
Cost / income ratio (%)
|
|
87.7
|
87.5
|
95.7
|
|
85.1
|
81.8
|
Growth
|
|
|
|
|
|
|
|
Net profit growth (%)
|
|
(22.2)
|
(60.0)
|
10.6
|
|
(46.7)
|
79.0
|
Net new money growth for combined wealth management businesses
(%)³
|
|
(1.1)
|
2.1
|
2.9
|
|
2.1
|
2.2
|
Resources
|
|
|
|
|
|
|
|
Common equity tier 1 capital ratio (fully applied, %)⁴
|
|
13.8
|
14.0
|
14.5
|
|
13.8
|
14.5
|
Going concern leverage ratio (phase-in, %)⁵
|
|
6.4
|
6.2
|
|
|
6.4
|
|
|
|
|
|
|
|
|
|
Additional information
|
|
|
|
|
|
|
|
Profitability
|
|
|
|
|
|
|
|
Return on equity (RoE) (%)
|
|
5.5
|
6.2
|
6.9
|
|
6.1
|
11.8
|
Return on risk-weighted assets, gross (%)⁶
|
|
12.9
|
13.1
|
12.9
|
|
13.2
|
14.4
|
Resources
|
|
|
|
|
|
|
|
Total assets
|
|
935,016
|
935,206
|
942,819
|
|
935,016
|
942,819
|
Equity attributable to shareholders
|
|
53,723
|
53,300
|
55,313
|
|
53,723
|
55,313
|
Common equity tier 1 capital (fully applied)⁴
|
|
30,693
|
30,254
|
30,044
|
|
30,693
|
30,044
|
Common equity tier 1 capital (phase-in)⁴
|
|
37,788
|
37,207
|
40,378
|
|
37,788
|
40,378
|
Risk-weighted assets (fully applied)⁴
|
|
222,677
|
216,830
|
207,530
|
|
222,677
|
207,530
|
Common equity tier 1 capital ratio (phase-in, %)⁴
|
|
16.8
|
16.9
|
19.0
|
|
16.8
|
19.0
|
Going concern capital ratio (fully applied, %)⁵
|
|
17.9
|
18.0
|
|
|
17.9
|
|
Going concern capital ratio (phase-in, %)⁵
|
|
24.7
|
24.8
|
|
|
24.7
|
|
Common equity tier 1 leverage ratio (fully applied, %)⁷
|
|
3.5
|
3.4
|
3.3
|
|
3.5
|
3.3
|
Going concern leverage ratio (fully applied, %)⁵
|
|
4.6
|
4.4
|
|
|
4.6
|
|
Leverage ratio denominator (fully applied)⁷
|
|
870,470
|
877,313
|
897,607
|
|
870,470
|
897,607
|
Liquidity coverage ratio (%)⁸
|
|
132
|
124
|
124
|
|
132
|
124
|
Other
|
|
|
|
|
|
|
|
Invested assets (CHF billion)⁹
|
|
2,821
|
2,747
|
2,689
|
|
2,821
|
2,689
|
Personnel (full-time equivalents)
|
|
59,387
|
59,946
|
60,099
|
|
59,387
|
60,099
|
Market capitalization
|
|
61,420
|
50,941
|
75,147
|
|
61,420
|
75,147
|
Total book value per share (CHF)
|
|
14.47
|
14.37
|
14.75
|
|
14.47
|
14.75
|
Tangible book value per share (CHF)
|
|
12.71
|
12.66
|
13.00
|
|
12.71
|
13.00
|
1 Weighted average shares outstanding for diluted earnings per
share were 3,828 million shares in the fourth quarter of 2016 (third quarter
of 2016: 3,812 million shares; fourth quarter of 2015: 3,852 million shares)
and 3,824 million shares for the year ended 31 December 2016 (year ended 31
December 2015: 3,781 million shares). 2 Refer to the “Measurement of
performance” section of our Annual Report 2015. 3 Based on adjusted net
new money, which excludes the negative effect on net new money (third quarter
of 2015: CHF 3.3 billion, second quarter of 2015: CHF 6.6 billion) in Wealth
Management from our balance sheet and capital optimization program. 4
Based on the Basel III framework as applicable for Swiss systemically
relevant banks (SRBs). Refer to the “Capital management” section of this
report for more information. 5 Based on the revised Swiss SRB framework
that became effective on 1 July 2016. 6 Based on fully applied
risk-weighted assets. 7 Calculated in accordance with Swiss SRB rules.
Refer to the “Capital management” section of this report for more
information. 8 Refer to the “Balance sheet, liquidity and funding
management” section of this report for more information. Figures represent a
3-month average. 9 Includes invested assets for Personal & Corporate
Banking.
|
UBS Group
Management report
Terms used
in this report, unless the context requires otherwise
“UBS,” “UBS Group,”
“UBS Group AG (consolidated),” UBS Group AG and
its consolidated subsidiaries
“Group,” “the Group,” “we,” “us” and “our”
“UBS AG
(consolidated)” UBS
AG and its consolidated subsidiaries
“UBS
Group AG” and “UBS Group AG (standalone)” UBS
Group AG on a standalone basis
“UBS AG”
and “UBS AG (standalone)” UBS
AG on a standalone basis
“UBS
Switzerland AG” UBS
Switzerland AG on a standalone basis
“UBS
Limited” UBS
Limited on a standalone basis
Recent developments
Key
financial reporting changes
Change in equity attribution framework
In the first quarter of 2017, we have
revised our equity attribution framework to reflect the revision in 2016 of the
too big to fail provisions applicable to Swiss systematically relevant banks.
Effective 1 January 2017, the weighting used
for the attribution of tangible equity has been changed from an equal driver
weighting of one-third each for average fully applied risk-weighted assets
(RWA), average fully applied leverage ratio denominator (LRD) and average risk-based
capital (RBC) to 50% each for RWA and LRD. Average fully applied RWA and LRD
continue to be converted to their common equity tier 1 (CET1) capital
equivalents based on capital ratios of 11% and 3.75%, respectively, which are above
future regulatory requirements. If the tangible attributed equity calculated
under the weighted driver approach is less than the CET1 capital equivalent of
RBC for any business division, the CET1 capital equivalent of RBC will be used
as a floor for that business division.
In addition to tangible equity, we continue
to allocate equity to our businesses to support goodwill and intangible assets.
However, we now also attribute to the business divisions equity for goodwill
and intangible assets resulting from the acquisition of Paine Webber that was
held centrally in Group items within Corporate Center – Services under the
previous framework.
Also, we attribute all Basel III capital
deduction items within Group items. These deduction items include deferred tax
assets, unrealized gains from cash flow hedges, and compensation- and own share-related
components. Previously, Group items only included an amount of attributed
equity for certain capital deduction items. In addition, the total amount of
attributed equity equals average shareholders’ equity with any residual
difference reported within Group items, whereas such difference was previously
reported separately.
Corporate Center – Group Asset and Liability
Management (Group ALM)
attributes to the business
divisions and other Corporate Center units
equity
pertaining to LRD and RWA directly associated with activity that Group ALM
manages centrally on their behalf
. This attribution is
primarily based on
the level of high-quality liquid assets that is required to meet the Group’s
minimum liquidity coverage ratio requirement of 110%. Group ALM continues to
retain attributed equity related to liquidity and funding surpluses, i.e., at
levels above regulatory requirements, together with that related to its own
activities.
®
Refer to “Equity attribution and return on attributed equity” in the
“Capital management” section of this report for more information
Regulatory and legal developments
Changes to our legal structure
During the fourth quarter, we merged
UBS Deutschland AG
and our
Wealth Management subsidiaries in Germany, Italy, Luxembourg
(including its branches in Austria, Denmark and Sweden), the Netherlands and
Spain into our new European legal entity, UBS Europe SE, which is headquartered
in Frankfurt, Germany, and regulated by BaFin, the German Federal Financial
Supervisory Authority.
As of 1 January 2017, we completed the
transfer of remaining shared services employees in the US to our US service
company, UBS Business Solutions US LLC. During 2017, we expect to transfer
shared services functions in Switzerland and in the UK from UBS AG to UBS
Business Solutions AG.
®
Refer to “Disclosure for legal entities”
at
www.ubs.com/investors
for an
overview on our legal structure
We continue to consider further changes to
the Group's legal structure in response to capital and other regulatory
requirements.
Switzerland begins automatic exchange of
information
Automatic exchange of information in
tax matters (AEI) between Switzerland and all EU member states and a number of
other countries took effect on 1 January 2017. The first exchange of
information between Switzerland and tax authorities in these countries will
begin in 2018 based on 2017 data. The Swiss Federal Department of Finance has
initiated consultations to extend the standard to additional countries.
We have experienced outflows of cross-border
client assets as a result of changes in local tax regimes or their enforcement.
EC proposes implementation rules for MREL and Basel III
reforms
The European Commission (EC)
published proposals to implement the Financial Stability Board (FSB) total
loss-absorbing capacity (TLAC) standard into the EU Minimum Requirement for own
funds and Eligible Liabilities (MREL) regime, as well as the remaining elements
of the Basel III reforms into EU law. The proposals envisage that global
systemically important institutions (G-SIIs) would be subject to MREL
requirements calculated at 16% of risk-weighted assets and 6% of the leverage
exposure measure as of 1 January 2019, increasing to 18% and 6.75%,
respectively, as of 1 January 2022. Additionally, banks would be subject to a
3% tier 1 leverage ratio requirement as part of the aforementioned 6% leverage
exposure requirement, with the possibility of a G-SII add-on, and a minimum net
stable funding ratio of 100%. The proposed rules would also (i) introduce an
internal MREL requirement for material EU subsidiaries of non-EU G-SIIs; (ii)
require non-EU G-SIIs with two or more EU entities to establish an EU-domiciled
holding company; and (iii) create a new asset class of non-preferred senior
debt, which would rank below other senior debt in insolvency. Internal MREL is
the loss-absorbing capacity that a G-SII commits to material subsidiaries. These
proposals would apply to UBS's legal entities in all EU member states,
including UBS Limited and UBS Europe SE, and their precise impact on UBS will
depend on the final rules and their implementation at a national level.
Further developments on TLAC and MREL
requirements
The FSB issued a consultative
document on guiding principles on the internal TLAC of global systemically
important banks (G-SIBs) to support authorities and crisis management groups
(CMGs) in the implementation of TLAC requirements in their jurisdictions. The
principles define, among other things, (i) the roles and responsibilities of
host and home regulators and that of the CMGs in the identification of material
sub-groups that would be subject to TLAC requirements; (ii) the way in which
the size and location of internal TLAC within a material sub-group of a G-SIB
is determined; and (iii) the FSB’s expectations with regard to the cooperation
and coordination between home and host authorities when internal TLAC is
triggered. The core features of internal TLAC in relation to size, triggers and
eligibility of instruments remain unchanged compared with the requirements
detailed in the FSB's TLAC Principles and Term Sheet published in November
2015.
The US Federal Reserve Board issued a final
rule that will apply TLAC requirements, minimum long-term debt requirements,
and clean holding company requirements to all US G-SIBs and to foreign G-SIBs'
US intermediate holding companies (covered IHCs) such as UBS Americas Holding
LLC. The final rule reflects only minor changes from the initial proposal and
will require covered IHCs to maintain debt to the parent G-SIB qualifying as
TLAC (internal TLAC) of at least the greatest of 16% of risk-weighted assets,
plus any capital conservation buffer, 6% of leverage exposure, if the leverage
ratio applies, or 8% of average total consolidated assets, including eligible
long-term debt of at least the greatest of 6% of risk-weighted assets, 2.5% of
leverage exposure or 3.5% of average total consolidated assets. The clean
holding company requirement prohibits covered IHCs from having liabilities to
unrelated third parties that exceed 5% of its total TLAC unless all of its TLAC
is contractually subordinated to third-party liabilities. It further prohibits
a covered IHC from incurring short-term debt, entering into derivatives with
unaffiliated parties and issuing certain guarantees. The rule becomes effective
as of 1 January 2019.
The Bank of England published the final UK
MREL rules, including minimum standards for domestic systemically important
banks (D-SIBs) in the UK, such as UBS Limited. Starting from 1 January 2020,
D-SIBs will have to meet MREL requirements amounting to the greater of (i) a
multiple, initially less than two and increasing to two as of 1 January 2022,
of the Pillar 1 requirement of 8% and an institution-specific add-on, or (ii)
if subject to a leverage ratio requirement, two times the applicable
requirement of currently 3%.
Group performance
Income statement
|
|
|
|
|
|
|
|
|
|
|
|
|
For the quarter ended
|
|
% change from
|
|
For the year ended
|
CHF million
|
|
31.12.16
|
30.9.16
|
31.12.15
|
|
3Q16
|
4Q15
|
|
31.12.16
|
31.12.15
|
Net interest income
|
|
1,762
|
1,775
|
1,759
|
|
(1)
|
0
|
|
6,413
|
6,732
|
Credit loss (expense) / recovery
|
|
(24)
|
(4)
|
(59)
|
|
500
|
(59)
|
|
(37)
|
(117)
|
Net interest income after credit loss expense
|
|
1,738
|
1,771
|
1,700
|
|
(2)
|
2
|
|
6,376
|
6,615
|
Net fee and commission income
|
|
4,161
|
4,056
|
4,218
|
|
3
|
(1)
|
|
16,397
|
17,140
|
Net trading income
|
|
946
|
1,098
|
898
|
|
(14)
|
5
|
|
4,948
|
5,742
|
of which: net trading income
excluding own credit
|
|
946
|
1,098
|
863
|
|
(14)
|
10
|
|
4,948
|
5,190
|
of which: own credit on
financial liabilities designated at fair value
|
|
|
|
35
|
|
|
|
|
|
553
|
Other income
|
|
209
|
104
|
(41)
|
|
101
|
|
|
599
|
1,107
|
Total operating income
|
|
7,055
|
7,029
|
6,775
|
|
0
|
4
|
|
28,320
|
30,605
|
of which: net interest and
trading income
|
|
2,708
|
2,873
|
2,657
|
|
(6)
|
2
|
|
11,361
|
12,474
|
Personnel expenses
|
|
3,868
|
3,942
|
3,843
|
|
(2)
|
1
|
|
15,720
|
15,981
|
General and administrative expenses
|
|
2,063
|
1,939
|
2,413
|
|
6
|
(15)
|
|
7,332
|
8,107
|
Depreciation and impairment of property, equipment and software
|
|
255
|
248
|
260
|
|
3
|
(2)
|
|
985
|
920
|
Amortization and impairment of intangible assets
|
|
21
|
23
|
24
|
|
(9)
|
(13)
|
|
91
|
107
|
Total operating expenses
|
|
6,206
|
6,152
|
6,541
|
|
1
|
(5)
|
|
24,128
|
25,116
|
Operating profit / (loss) before tax
|
|
848
|
877
|
234
|
|
(3)
|
262
|
|
4,192
|
5,489
|
Tax expense / (benefit)
|
|
109
|
49
|
(715)
|
|
122
|
|
|
805
|
(898)
|
Net profit / (loss)
|
|
739
|
829
|
950
|
|
(11)
|
(22)
|
|
3,388
|
6,386
|
Net profit / (loss) attributable to non-controlling interests
|
|
1
|
1
|
1
|
|
0
|
0
|
|
82
|
183
|
Net profit / (loss)
attributable to shareholders
|
|
738
|
827
|
949
|
|
(11)
|
(22)
|
|
3,306
|
6,203
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
173
|
191
|
1,164
|
|
(9)
|
(85)
|
|
2,272
|
5,781
|
Total comprehensive income attributable to non-controlling
interests
|
|
(12)
|
7
|
38
|
|
|
|
|
352
|
83
|
Total comprehensive income
attributable to shareholders
|
|
185
|
184
|
1,126
|
|
1
|
(84)
|
|
1,919
|
5,698
|
Performance by business division and Corporate Center unit –
reported and adjusted¹˒²
|
|
|
For the quarter ended 31.12.16
|
CHF million
|
|
Wealth Manage-
ment
|
Wealth Manage-
ment Americas
|
Personal &
Corporate
Banking
|
Asset
Manage-
ment
|
Investment
Bank
|
CC –
Services³
|
CC –
Group ALM
|
CC – Non-
core and
Legacy
Portfolio
|
UBS
|
Operating income as reported
|
|
1,782
|
2,076
|
941
|
499
|
2,014
|
(59)
|
(144)
|
(53)
|
7,055
|
of which: gains on sale of
financial assets available for sale⁴
|
|
|
10
|
|
|
78
|
|
|
|
88
|
of which: net foreign
currency translation gains⁵
|
|
|
|
|
|
|
|
27
|
|
27
|
Operating income (adjusted)
|
|
1,782
|
2,066
|
941
|
499
|
1,936
|
(59)
|
(171)
|
(53)
|
6,940
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses as reported
|
|
1,413
|
1,737
|
567
|
356
|
1,708
|
256
|
0
|
170
|
6,206
|
of which: personnel-related
restructuring expenses
|
|
15
|
1
|
2
|
1
|
40
|
114
|
0
|
0
|
174
|
of which:
non-personnel-related restructuring expenses
|
|
25
|
0
|
0
|
5
|
5
|
163
|
0
|
0
|
197
|
of which: restructuring
expenses allocated from CC Services
|
|
103
|
30
|
19
|
5
|
72
|
(237)
|
0
|
8
|
0
|
Operating expenses (adjusted)
|
|
1,270
|
1,706
|
546
|
344
|
1,592
|
216
|
0
|
162
|
5,834
|
of which: expenses for
provisions for litigation, regulatory and similar matters
|
|
62
|
53
|
7
|
1
|
14
|
(2)
|
0
|
27
|
162
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit / (loss)
before tax as reported
|
|
368
|
339
|
374
|
144
|
306
|
(315)
|
(144)
|
(223)
|
848
|
Operating profit / (loss)
before tax (adjusted)
|
|
511
|
360
|
395
|
156
|
344
|
(275)
|
(171)
|
(215)
|
1,105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the quarter ended 30.9.16
|
CHF million
|
|
Wealth Manage-
ment
|
Wealth Manage-
ment Americas
|
Personal &
Corporate
Banking
|
Asset
Manage-
ment
|
Investment
Bank
|
CC –
Services³
|
CC –
Group ALM
|
CC – Non-
core and
Legacy
Portfolio
|
UBS
|
Operating income as reported
|
|
1,809
|
1,938
|
995
|
481
|
1,796
|
(66)
|
30
|
46
|
7,029
|
of which: gains related to
investments in associates
|
|
|
|
21
|
|
|
|
|
|
21
|
Operating income (adjusted)
|
|
1,809
|
1,938
|
974
|
481
|
1,796
|
(66)
|
30
|
46
|
7,008
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses as reported
|
|
1,305
|
1,618
|
542
|
377
|
1,635
|
152
|
0
|
523
|
6,152
|
of which: personnel-related
restructuring expenses
|
|
28
|
1
|
0
|
9
|
60
|
159
|
0
|
0
|
257
|
of which:
non-personnel-related restructuring expenses
|
|
10
|
0
|
0
|
2
|
3
|
173
|
0
|
0
|
187
|
of which: restructuring
expenses allocated from CC Services
|
|
101
|
37
|
40
|
24
|
118
|
(327)
|
0
|
7
|
0
|
Operating expenses (adjusted)
|
|
1,166
|
1,580
|
501
|
343
|
1,454
|
148
|
0
|
516
|
5,708
|
of which: expenses for
provisions for litigation, regulatory and similar matters
|
|
(2)
|
9
|
(3)
|
2
|
2
|
2
|
0
|
408
|
419
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit / (loss)
before tax as reported
|
|
504
|
320
|
453
|
104
|
161
|
(218)
|
30
|
(477)
|
877
|
Operating profit / (loss)
before tax (adjusted)
|
|
643
|
358
|
473
|
138
|
342
|
(214)
|
30
|
(470)
|
1,300
|
Performance by business
division and Corporate Center unit – reported and adjusted¹˒²
(continued)
|
|
|
For the quarter ended 31.12.15
|
CHF million
|
|
Wealth Manage-
ment
|
Wealth Manage-
ment Americas
|
Personal &
Corporate
Banking
|
Asset
Manage-
ment
|
Investment
Bank
|
CC –
Services³
|
CC –
Group ALM
|
CC – Non-
core and
Legacy
Portfolio
|
UBS
|
Operating income as reported
|
|
1,869
|
1,885
|
915
|
568
|
1,721
|
(54)
|
(59)
|
(71)
|
6,775
|
of which: net foreign
currency translation gains⁵
|
|
|
|
|
|
|
|
115
|
|
115
|
of which: own credit on
financial liabilities designated at fair value
|
|
|
|
|
|
|
|
35
|
|
35
|
of which: gains / (losses)
on sale of subsidiaries and businesses
|
|
(28)
|
|
|
56
|
|
|
|
|
28
|
of which: net losses related
to the buyback of debt
|
|
|
|
|
|
|
|
(257)
|
|
(257)
|
Operating income (adjusted)
|
|
1,897
|
1,885
|
915
|
512
|
1,721
|
(54)
|
48
|
(71)
|
6,854
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses as reported
|
|
1,526
|
1,871
|
560
|
397
|
1,641
|
291
|
(3)
|
258
|
6,541
|
of which: personnel-related
restructuring expenses
|
|
3
|
0
|
0
|
3
|
12
|
144
|
0
|
1
|
164
|
of which:
non-personnel-related restructuring expenses
|
|
14
|
0
|
0
|
8
|
2
|
252
|
0
|
0
|
276
|
of which: restructuring
expenses allocated from CC Services
|
|
116
|
50
|
41
|
27
|
129
|
(377)
|
0
|
15
|
0
|
Operating expenses (adjusted)
|
|
1,393
|
1,821
|
519
|
359
|
1,498
|
272
|
(3)
|
241
|
6,100
|
of which: expenses for
provisions for litigation, regulatory and similar matters
|
|
79
|
233
|
0
|
(3)
|
4
|
1
|
0
|
51
|
365
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit / (loss)
before tax as reported
|
|
344
|
14
|
355
|
171
|
80
|
(345)
|
(56)
|
(329)
|
234
|
Operating profit / (loss)
before tax (adjusted)
|
|
505
|
64
|
396
|
153
|
223
|
(326)
|
51
|
(312)
|
754
|
1 Adjusted results are non-GAAP financial measures as defined by
SEC regulations. 2 Comparative figures in this table may differ from those
originally published in quarterly and annual reports due to adjustments
following organizational changes, restatements due to the retrospective
adoption of new accounting standards or changes in accounting policies, and
events after the reporting period. 3 CC Services operating expenses
presented in this table are after service allocations to business divisions
and other Corporate Center units. 4 Includes a gain on the partial sale of
our investment in Markit in the Investment Bank. 5 Related to the
disposal of foreign subsidiaries and branches.
|
Performance by business division and Corporate Center unit –
reported and adjusted¹˒²
|
|
|
For the year ended 31.12.16
|
CHF million
|
|
Wealth Manage- ment
|
Wealth Manage-
ment Americas
|
Personal &
Corporate
Banking
|
Asset
Manage-
ment
|
Investment Bank
|
CC –
Services³
|
CC –
Group ALM
|
CC – Non-
core and
Legacy
Portfolio
|
UBS
|
Operating income as reported
|
|
7,291
|
7,782
|
3,984
|
1,931
|
7,688
|
(102)
|
(219)
|
(36)
|
28,320
|
of which: gains on sale of
financial assets available for sale⁴
|
|
21
|
10
|
102
|
|
78
|
|
|
|
211
|
of which: gains on sales of
real estate
|
|
|
|
|
|
|
120
|
|
|
120
|
of which: gains related to
investments in associates
|
|
|
|
21
|
|
|
|
|
|
21
|
of which: net foreign
currency translation losses⁵
|
|
|
|
|
|
|
|
(122)
|
|
(122)
|
of which: losses on sales of
subsidiaries and businesses
|
|
(23)
|
|
|
|
|
|
|
|
(23)
|
Operating income (adjusted)
|
|
7,293
|
7,772
|
3,861
|
1,931
|
7,610
|
(222)
|
(97)
|
(36)
|
28,113
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses as reported
|
|
5,343
|
6,675
|
2,224
|
1,479
|
6,684
|
747
|
(1)
|
976
|
24,128
|
of which: personnel-related
restructuring expenses
|
|
53
|
7
|
4
|
15
|
154
|
518
|
0
|
1
|
751
|
of which:
non-personnel-related restructuring expenses
|
|
55
|
0
|
0
|
15
|
14
|
623
|
0
|
0
|
706
|
of which: restructuring
expenses allocated from CC Services
|
|
339
|
132
|
113
|
70
|
410
|
(1,084)
|
0
|
21
|
0
|
Operating expenses (adjusted)
|
|
4,896
|
6,536
|
2,107
|
1,379
|
6,107
|
690
|
(1)
|
955
|
22,670
|
of which: expenses for
provisions for litigation, regulatory and similar matters
|
|
69
|
96
|
3
|
(2)
|
42
|
2
|
0
|
482
|
693
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit / (loss)
before tax as reported
|
|
1,948
|
1,107
|
1,760
|
452
|
1,004
|
(849)
|
(218)
|
(1,012)
|
4,192
|
Operating profit / (loss)
before tax (adjusted)
|
|
2,397
|
1,236
|
1,754
|
552
|
1,503
|
(912)
|
(96)
|
(991)
|
5,443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended 31.12.15
|
CHF million
|
|
Wealth Manage- ment
|
Wealth Manage-
ment Americas
|
Personal &
Corporate
Banking
|
Asset
Manage-
ment
|
Investment Bank
|
CC –
Services³
|
CC –
Group ALM
|
CC – Non-
core and
Legacy
Portfolio
|
UBS
|
Operating income as reported
|
|
8,155
|
7,381
|
3,877
|
2,057
|
8,821
|
241
|
277
|
(203)
|
30,605
|
of which: own credit on
financial liabilities designated at fair value
|
|
|
|
|
|
|
|
553
|
|
553
|
of which: gains on sales of
real estate
|
|
|
|
|
|
|
378
|
|
|
378
|
of which: gains on sales of
subsidiaries and businesses
|
|
169
|
|
|
56
|
|
|
|
|
225
|
of which: net foreign
currency translation gains⁵
|
|
|
|
|
|
|
|
88
|
|
88
|
of which: gains related to
investments in associates
|
|
15
|
|
66
|
|
|
|
|
|
81
|
of which: gains on sale of
financial assets available for sale⁴
|
|
|
|
|
|
11
|
|
|
|
11
|
of which: net losses related
to the buyback of debt
|
|
|
|
|
|
|
|
(257)
|
|
(257)
|
Operating income (adjusted)
|
|
7,971
|
7,381
|
3,811
|
2,001
|
8,810
|
(137)
|
(107)
|
(203)
|
29,526
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses as reported
|
|
5,465
|
6,663
|
2,231
|
1,474
|
6,929
|
1,059
|
(5)
|
1,301
|
25,116
|
of which: personnel-related
restructuring expenses
|
|
20
|
0
|
2
|
4
|
14
|
406
|
0
|
14
|
460
|
of which:
non-personnel-related restructuring expenses
|
|
38
|
0
|
0
|
11
|
7
|
719
|
0
|
0
|
775
|
of which: restructuring
expenses allocated from CC Services
|
|
265
|
137
|
99
|
68
|
376
|
(986)
|
0
|
43
|
0
|
of which: gain related to a
change to retiree benefit plans in the US
|
|
|
(21)
|
|
|
|
|
|
|
(21)
|
of which: impairment of an
intangible asset
|
|
|
|
|
|
11
|
|
|
|
11
|
Operating expenses (adjusted)
|
|
5,142
|
6,547
|
2,130
|
1,392
|
6,522
|
919
|
(5)
|
1,245
|
23,891
|
of which: expenses for
provisions for litigation, regulatory and similar matters
|
|
104
|
351
|
(2)
|
(3)
|
2
|
15
|
0
|
620
|
1,087
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit / (loss)
before tax as reported
|
|
2,689
|
718
|
1,646
|
584
|
1,892
|
(818)
|
282
|
(1,503)
|
5,489
|
Operating profit / (loss)
before tax (adjusted)
|
|
2,828
|
834
|
1,681
|
610
|
2,288
|
(1,056)
|
(102)
|
(1,447)
|
5,635
|
1 Adjusted results are non-GAAP financial measures as defined by
SEC regulations. 2 Comparative figures in this table may differ from those
originally published in quarterly and annual reports due to adjustments
following organizational changes, restatements due to the retrospective
adoption of new accounting standards or changes in accounting policies, and
events after the reporting period. 3 CC Services operating expenses
presented in this table are after service allocations to business divisions and
other Corporate Center units. 4 Includes gains on partial sales of our
investment in Markit in 2016 and 2015 in the Investment Bank as well as a
gain on the sale of our investment in Visa Europe in 2016 in Wealth
Management and Personal & Corporate Banking. 5 Related to the disposal
of foreign subsidiaries and branches.
|
Results: 2016
We recorded net profit attributable
to shareholders of CHF 3,306 million in 2016, which included a net tax expense
of CHF 805 million. In 2015, net profit attributable to shareholders was CHF
6,203 million, which included a net tax benefit of CHF 898 million.
Profit before tax was
CHF 4,192 million in 2016 compared with CHF 5,489 million in 2015 and adjusted
profit before tax was CHF 5,443 million compared with CHF 5,635 million.
As of 31 December 2016, the Group achieved
CHF 1.6 billion of annualized net cost savings, an improvement from CHF 1.1
billion at year-end 2015, and is on track to achieve its CHF 2.1 billion target
by the end of 2017.
UBS’s Board of Directors intends to propose a
dividend of CHF 0.60 per share to shareholders for the financial year 2016. Subject
to shareholder approval, the dividend will be paid out of capital contribution
reserves on 10 May 2017 to shareholders of record as of 9 May 2017. The
ex-dividend date will be 8 May 2017.
Results: 4Q16 vs 4Q15
We recorded a profit before tax of
CHF 848 million compared with CHF 234 million. Operating income increased by
CHF 280 million or 4%, mainly reflecting a CHF 250 million increase in other
income and CHF 51 million higher combined net interest and trading income.
Operating expenses decreased by CHF 335 million or 5% due to CHF 350 million
lower general and administrative expenses, primarily reflecting CHF 203 million
lower net expenses for provisions for litigation, regulatory and similar
matters. This was partly offset by CHF 25 million higher personnel expenses.
In addition to reporting our results in
accordance with International Financial Reporting Standards (IFRS), we report
adjusted results that exclude items that management believes are not
representative of the underlying performance of our businesses. Such adjusted
results are non-GAAP financial measures as defined by SEC regulations. For the
purpose of determining adjusted results for the fourth quarter of 2016, we
excluded gains of CHF 88 million on sale of financial assets available for
sale, net foreign currency translation gains of CHF 27 million and net
restructuring expenses of CHF 372 million. For the fourth quarter of 2015,
we excluded net foreign currency translation gains of CHF 115 million, an own
credit gain of CHF 35 million, net gains of CHF 28 million on the sale of
subsidiaries and businesses, as well as net losses of CHF 257 million related
to the buyback of debt in a tender offer and net restructuring expenses of CHF
441 million.
On this adjusted basis, profit before tax was
CHF 1,105 million compared with CHF 754 million, reflecting CHF 266 million
lower operating expenses and CHF 86 million higher operating income.
Operating income:
4Q16 vs 4Q15
Total operating income was CHF 7,055
million compared with CHF 6,775 million. On an adjusted basis, total operating
income increased by CHF 86 million or 1% to CHF 6,940 million.
Net interest and trading income
Total combined net interest and
trading income increased by CHF 51 million to CHF 2,708 million. Excluding the
own credit gain of CHF 35 million in the fourth quarter of 2015, adjusted net
interest and trading income increased by CHF 86 million, primarily reflecting
increases in the Investment Bank and Wealth Management Americas, partly offset
by a decrease in Corporate Center – Group ALM.
Net fee and commission income
Net fee and commission income was CHF
4,161 million compared with CHF 4,218 million, primarily reflecting declines in
investment fund and equity underwriting fees and lower net brokerage fees,
partly offset by higher portfolio management and advisory fees.
Credit loss expense / recovery
Total net credit loss expenses were
CHF 24 million compared with CHF 59 million, mainly reflecting lower expenses
related to the energy sector in the Investment Bank.
®
Refer to the “Risk management and control” section of this report
for more information
Other income
Other income was positive CHF 209
million compared with negative CHF 41 million. The fourth quarter of 2016
included gains of CHF 88 million on sale of financial assets available for sale
and net foreign currency translation gains of CHF 27 million, while the same
quarter a year earlier included net foreign currency translation gains of CHF
115 million, net gains of CHF 28 million on the sale of subsidiaries and
businesses as well as net losses of CHF 257 million related to the buyback of
debt in a tender offer. Excluding these items, adjusted other income increased
by CHF 21 million to CHF 94 million.
Operating expenses: 4Q16 vs 4Q15
Total operating expenses decreased by
CHF 335 million or 5% to CHF 6,206 million. Net restructuring expenses
decreased to CHF 372 million from CHF 441 million, mainly related to lower
expenses for outsourcing of IT and other services.
Excluding net restructuring expenses,
adjusted total operating expenses decreased by CHF 266 million or 4% to CHF 5,834
million, primarily reflecting CHF 203 million lower net expenses for provisions
for litigation, regulatory and similar matters.
Personnel expenses
Personnel expenses increased by CHF 25
million to CHF 3,868 million. On an adjusted basis, personnel expenses
increased by CHF 15 million to CHF 3,694 million, mainly reflecting higher
expenses for variable compensation, primarily as expenses for accruals for
variable compensation in the Investment Bank were more evenly spread across the
year in 2016 compared with 2015. This was largely offset by lower salary
expenses resulting from our cost reduction programs and lower pension costs for
our Swiss pension plan, reflecting the effect of changes to demographic and
financial assumptions.
General and administrative expenses
General and administrative expenses
decreased by CHF 350 million to CHF 2,063 million and by CHF 261 million to
CHF 1,876 million on an adjusted basis, mainly reflecting CHF 203 million
lower net expenses for provisions for litigation, regulatory and similar
matters, as well as a decrease in professional fees and travel and
entertainment expenses. In addition, the expense for the annual UK bank levy
decreased to CHF 132 million from CHF 166 million, primarily due to currency
effects.
At this point in time, we believe that the
industry continues to operate in an environment in which expenses associated
with litigation, regulatory and similar matters will remain elevated for the
foreseeable future and we continue to be exposed to a number of significant
claims and regulatory matters. The outcome of many of these matters, the timing
of a resolution, and the potential effects of resolutions on our future
business, financial results or financial condition, are extremely difficult to
predict.
®
Refer to “Provisions and contingent liabilities” in the
“Consolidated financial information” section of this report and to “Material
legal and regulatory risks arise in the conduct of our business” in the “Risk
factors” section of our Annual Report 2015 for more information on litigation,
regulatory and similar matters
Depreciation, impairment and
amortization
Depreciation and impairment of
property, equipment and software was CHF 255 million compared with CHF 260 million.
In the fourth quarter of 2016 and after performing an analysis to assess the
average lifespan of software placed into service as part of our recent
transformation efforts, we extended the estimated useful life for certain
software from five to seven years, resulting in CHF 26 million lower
depreciation expenses. The decrease in depreciation expenses was partly offset
by higher impairment expenses, primarily related to property.
Tax: 4Q16 vs 4Q15
We recognized a net income tax
expense of CHF 109 million compared with a net income tax benefit of CHF 715
million.
The fourth quarter 2016 net income tax
expense included a tax benefit in respect of a net upward revaluation of
deferred tax assets of CHF 166 million, following the completion of our
business planning process. This net benefit reflected an increase in US
deferred tax assets of CHF 136 million, an increase in Swiss deferred tax
assets of CHF 82 million as well as other increases of CHF 19 million, partly
offset by a decrease of CHF 71 million in respect of UK deferred tax assets. The
net income tax expense in the quarter also included tax expenses of CHF 275
million in respect of taxable profits arising in 2016. This reflected current
tax expenses of CHF 203 million and deferred tax expenses of CHF 72 million, with
the latter primarily representing amortization of prior-year Swiss temporary
difference deferred tax assets.
The tax benefit for the fourth quarter of
2015 included an upward revaluation of US deferred tax assets in relation to
the extension of the forecast period for US taxable profits to seven years from
six. In 2016, there was no extension of the forecast period.
For 2017, we forecast a full-year tax rate of
approximately 25%, excluding the effects on the tax rate of any change in the
level of deferred tax assets resulting from their reassessment or any statutory
tax rate changes.
Total comprehensive income attributable
to shareholders: 4Q16 vs 4Q15
Total comprehensive income
attributable to shareholders was CHF 185 million compared with CHF 1,126
million. Net profit attributable to shareholders was CHF 738 million compared
with CHF 949 million and other comprehensive income (OCI) attributable to
shareholders was negative CHF 553 million compared with positive CHF 177
million.
In the fourth quarter of 2016, OCI related to
cash flow hedges was negative CHF 1,033 million, mainly reflecting a decrease
in unrealized gains on hedging derivatives that resulted from increases in
long-term interest rates. In the fourth quarter of 2015, OCI related to cash
flow hedges was negative CHF 419 million.
Defined benefit plan
OCI was negative CHF 234 million compared with positive CHF 202 million. We
recorded net pre-tax OCI losses of CHF 390 million related to our Swiss pension
plan, reflecting OCI gains of CHF 1,134 million from a decrease in the defined
benefit obligation (DBO) and CHF 222 million from an increase in the fair value
of the underlying plan assets, more than offset by OCI losses of CHF 1,746
million related to the excess of the pension surplus over the estimated future
economic benefit. The OCI gains of CHF 1,134 million from the decrease in DBO
primarily reflected gains of CHF 1,125 million due to a significant increase in
the applicable discount rate from 0.4% as of 30 September 2016 to 0.7% as of
31 December 2016. This increase in discount rate included the effect of changes
in yield curve construction, which had a negative effect on OCI of CHF 408
million. In addition, changes in estimate related to the life expectancy
assumption resulted in OCI gains of CHF 701 million. The aforementioned OCI gains
were partly offset by an OCI experience loss of CHF 438 million, reflecting the
effects of differences between the previous actuarial assumptions and what
actually occurred, and OCI losses of CHF 255 million following an increase in
the assumed rate of interest credit on retirement savings.
Net pre-tax OCI related to the non-Swiss
pension plans was positive CHF 89 million, primarily in the UK, mainly due to
net reductions in defined benefit obligations resulting from increases in
applicable discount rates, partly offset by losses resulting from decreases in
the fair value of underlying plan assets.
OCI associated with financial assets
available for sale was negative CHF 145 million compared with negative CHF 59
million and mainly reflected net unrealized losses following increases in
long-term interest rates as well as the reclassification of net gains from OCI
to the income statement upon sale of certain investments, predominantly a further
partial sale of our investment in Markit.
Foreign currency translation OCI was CHF 845
million, which primarily resulted from the strengthening of the US dollar
against the Swiss franc. OCI related to foreign currency translation in the
same quarter last year was CHF 452 million.
OCI related to own credit on financial
liabilities designated at fair value was CHF 15 million in the fourth quarter
of 2016.
®
Refer to the “Statement of comprehensive income” in the
“Consolidated financial information” section of this report for more information
®
Refer to “Note 28 Pension and other post-employment benefit plans”
in the “Consolidated financial statements” section of our Annual Report 2015
for more information on other comprehensive income related to defined benefit
plans
Sensitivity to interest rate movements
As of 31 December 2016, we estimate
that a parallel shift in yield curves by +100 basis points could lead to a
combined increase in annual net interest income of approximately CHF 0.7
billion in Wealth Management, Wealth Management Americas and Personal &
Corporate Banking. Of this increase, approximately CHF 0.4 billion would result
from changes in US dollar interest rates. Including the estimated impact
related to pension fund assets and liabilities, the immediate effect of such a
shift on shareholders’ equity would be a decrease of approximately CHF 1.6
billion recognized in OCI, of which approximately CHF 1.3 billion would result
from changes in US dollar interest rates. Since the majority of this negative
OCI impact on shareholders’ equity is related to cash flow hedges, which is not
recognized for the purposes of calculating regulatory capital, the immediate
impact on regulatory capital would be an increase of approximately CHF 0.3
billion. The aforementioned estimates are based on an immediate increase in
interest rates, equal across all currencies and relative to implied forward
rates applied to our banking book and available-for-sale portfolios.
We estimate that if interest rates implied by
forward rates at the end of 2016 were to materialize over the next three years,
our net interest income in Wealth Management, Wealth Management Americas and
Personal & Corporate Banking would increase compared with current levels by
around CHF 0.2 billion in 2017 and by around CHF 1.1 billion cumulatively over
the next three years. This increase would primarily be driven by Wealth
Management and Wealth Management Americas, which would benefit most from an
increase in US dollar interest rates, and would more than offset a decline in
Personal & Corporate Banking, whose net interest income is mostly generated
in Swiss francs and where forward rates imply continued negative interest
rates.
Should interest rates remain constant at the
levels prevailing at the end of 2016, the corresponding cumulative increase in
net interest income over the next three years compared with current levels
would be around CHF 0.2 billion.
The above estimates further assume no change
to balance sheet size and structure, constant foreign exchange rates and no
management action.
Net profit attributable to
non-controlling interests:
4Q16 vs 4Q15
Net profit attributable to
non-controlling interests was unchanged at CHF 1 million.
For 2017, we currently expect to attribute
approximately CHF 70 million of net profit to non-controlling interests, of
which CHF 45 million in the first quarter and CHF 25 million in the fourth
quarter. From 2018, we expect to attribute less than CHF 10 million per year.
Key figures and personnel
Cost / income ratio: 4Q16 vs 4Q15
The cost / income ratio was 87.7%
compared with 95.7%. On an adjusted basis, the cost / income ratio was 83.8%
compared with 88.2%.
Return on
tangible equity: 4Q16 vs 4Q15
The annualized return on tangible
equity (RoTE) was 6.5% compared with 8.1%. On an adjusted basis, the annualized
RoTE was 8.2% compared with 11.4%.
Common equity tier 1 capital ratio: 4Q16
vs 3Q16
Our fully applied CET1 capital ratio
decreased 0.2 percentage points to 13.8%, mainly resulting from a CHF 6 billion
increase in risk-weighted assets (RWA).
®
Refer to the “Capital management” section of this report for more
information
Risk-weighted assets: 4Q16 vs 3Q16
RWA increased by CHF 6 billion to CHF
223 billion on a fully applied basis. This increase was mainly due to CHF 7
billion higher market risk RWA, primarily due to higher average stressed and
regulatory value-at-risk (VaR) levels during the quarter, primarily driven by
various factors across our Equities and Foreign Exchange, Rates and Credit
businesses, including option expiries and stronger client flows.
®
Refer to the “Capital management” section of this report for more
information
Leverage ratio denominator: 4Q16 vs 3Q16
The Swiss SRB leverage ratio
denominator (LRD) decreased by CHF 7 billion to CHF 870 billion on a fully
applied basis, mainly reflecting effective resource management.
®
Refer to the “Capital management” section of this report for more
information
Net new money and
invested assets
Management’s discussion and analysis
on net new money and invested assets is provided in the “UBS business divisions
and Corporate Center” section of this report.
Personnel: 4Q16 vs 3Q16
We employed 59,387 personnel as of 31
December 2016, a net decrease of 559 compared with 30 September 2016, mainly
reflecting reductions of 197, 183 and 107 in Wealth Management, the Investment
Bank and Corporate Center –Services, respectively. These reductions related
primarily to our cost reduction programs.
Outlook
Although macroeconomic uncertainty,
geopolitical tensions and divisive politics continue to affect client sentiment
and transaction volumes, we have begun to observe improved investor confidence,
primarily in the US, which may benefit our wealth management businesses. Lower
than expected and negative interest rates, particularly in Switzerland and the eurozone,
continue to present headwinds to net interest margins, which may be offset by
the effect of higher US dollar interest rates. Implementing Switzerland's new
bank capital standards and the proposed further changes to the international
regulatory framework for banks will result in increasing capital requirements
and costs. UBS will continue to execute its strategy with discipline,
positioning it to mitigate these challenges and to benefit from any further
improvement in market conditions.
Return on equity
|
|
|
|
|
|
|
|
|
|
As of or for the quarter ended
|
|
As of or for the year ended
|
CHF million, except where
indicated
|
|
31.12.16
|
30.9.16
|
31.12.15
|
|
31.12.16
|
31.12.15
|
|
|
|
|
|
|
|
|
Net profit
|
|
|
|
|
|
|
|
Net profit attributable to shareholders
|
|
738
|
827
|
949
|
|
3,306
|
6,203
|
Amortization and impairment of intangible assets
|
|
21
|
23
|
24
|
|
91
|
107
|
Pre-tax adjusting items¹˒²
|
|
257
|
423
|
520
|
|
1,251
|
135
|
Tax effect on adjusting items³
|
|
(57)
|
(93)
|
(121)
|
|
(275)
|
(140)
|
Adjusted net profit attributable to shareholders
|
|
959
|
1,180
|
1,372
|
|
4,373
|
6,305
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
Equity attributable to shareholders
|
|
53,723
|
53,300
|
55,313
|
|
53,723
|
55,313
|
Less: goodwill and intangible assets
|
|
6,556
|
6,345
|
6,568
|
|
6,556
|
6,568
|
Tangible equity attributable to shareholders
|
|
47,167
|
46,955
|
48,745
|
|
47,167
|
48,745
|
|
|
|
|
|
|
|
|
Return on equity
|
|
|
|
|
|
|
|
Return on equity (%)
|
|
5.5
|
6.2
|
6.9
|
|
6.1
|
11.8
|
Return on tangible equity (%)
|
|
6.5
|
7.3
|
8.1
|
|
7.2
|
13.7
|
Adjusted return on tangible equity (%)¹
|
|
8.2
|
10.1
|
11.4
|
|
9.2
|
13.7
|
1 Adjusted results are non-GAAP financial measures as defined by
SEC regulations. 2 Refer to the “Performance by business division and
Corporate Center unit – reported and adjusted” table in this section for more
information. 3 Generally reflects an indicative tax rate of 22% on pre-tax
adjusting items.
|
UBS business
divisions
and Corporate
Center
Management report
Wealth Management
Wealth Management¹
|
|
|
|
|
|
As of or for the quarter ended
|
|
% change from
|
|
For the year ended
|
CHF million, except where
indicated
|
|
31.12.16
|
30.9.16
|
31.12.15
|
|
3Q16
|
4Q15
|
|
31.12.16
|
31.12.15
|
|
|
|
|
|
|
|
|
|
|
|
Results
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
588
|
582
|
598
|
|
1
|
(2)
|
|
2,331
|
2,326
|
Recurring net fee income²
|
|
874
|
891
|
935
|
|
(2)
|
(7)
|
|
3,548
|
3,820
|
Transaction-based income²
|
|
314
|
334
|
364
|
|
(6)
|
(14)
|
|
1,397
|
1,778
|
Other income
|
|
7
|
6
|
(28)
|
|
17
|
|
|
20
|
231
|
Income
|
|
1,782
|
1,812
|
1,869
|
|
(2)
|
(5)
|
|
7,296
|
8,155
|
Credit loss (expense) / recovery
|
|
(1)
|
(3)
|
0
|
|
(67)
|
|
|
(5)
|
0
|
Total operating income
|
|
1,782
|
1,809
|
1,869
|
|
(1)
|
(5)
|
|
7,291
|
8,155
|
Personnel expenses
|
|
543
|
600
|
609
|
|
(10)
|
(11)
|
|
2,349
|
2,532
|
General and administrative expenses
|
|
248
|
124
|
263
|
|
100
|
(6)
|
|
640
|
637
|
Services (to) / from Corporate Center and other business
divisions
|
|
621
|
579
|
652
|
|
7
|
(5)
|
|
2,348
|
2,289
|
of which: services from CC –
Services
|
|
592
|
557
|
627
|
|
6
|
(6)
|
|
2,256
|
2,209
|
Depreciation and impairment of property, equipment and software
|
|
1
|
0
|
1
|
|
|
0
|
|
2
|
5
|
Amortization and impairment of intangible assets
|
|
1
|
1
|
1
|
|
0
|
0
|
|
4
|
3
|
Total operating expenses
|
|
1,413
|
1,305
|
1,526
|
|
8
|
(7)
|
|
5,343
|
5,465
|
Business division operating
profit / (loss) before tax
|
|
368
|
504
|
344
|
|
(27)
|
7
|
|
1,948
|
2,689
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted results³
|
|
|
|
|
|
|
|
|
|
|
Total operating income as
reported
|
|
1,782
|
1,809
|
1,869
|
|
(1)
|
(5)
|
|
7,291
|
8,155
|
of which: gains / (losses)
on sales of subsidiaries and businesses
|
|
|
|
(28)
|
|
|
|
|
(23)
|
169
|
of which: gains related to
investments in associates
|
|
|
|
|
|
|
|
|
|
15
|
of which: gains on sale of
financial assets available for sale⁴
|
|
|
|
|
|
|
|
|
21
|
|
Total operating income
(adjusted)
|
|
1,782
|
1,809
|
1,897
|
|
(1)
|
(6)
|
|
7,293
|
7,971
|
Total operating expenses as
reported
|
|
1,413
|
1,305
|
1,526
|
|
8
|
(7)
|
|
5,343
|
5,465
|
of which: personnel-related
restructuring expenses
|
|
15
|
28
|
3
|
|
|
|
|
53
|
20
|
of which:
non-personnel-related restructuring expenses
|
|
25
|
10
|
14
|
|
|
|
|
55
|
38
|
of which: restructuring
expenses allocated from CC – Services
|
|
103
|
101
|
116
|
|
|
|
|
339
|
265
|
Total operating expenses
(adjusted)
|
|
1,270
|
1,166
|
1,393
|
|
9
|
(9)
|
|
4,896
|
5,142
|
Business division operating
profit / (loss) before tax as reported
|
|
368
|
504
|
344
|
|
(27)
|
7
|
|
1,948
|
2,689
|
Business division operating
profit / (loss) before tax (adjusted)
|
|
511
|
643
|
505
|
|
(21)
|
1
|
|
2,397
|
2,828
|
|
|
|
|
|
|
|
|
|
|
|
Key performance
indicators⁵
|
|
|
|
|
|
|
|
|
|
|
Pre-tax profit growth (%)
|
|
7.0
|
(21.1)
|
(46.7)
|
|
|
|
|
(27.6)
|
15.6
|
Cost / income ratio (%)
|
|
79.3
|
72.0
|
81.6
|
|
|
|
|
73.2
|
67.0
|
Net new money growth (%)
|
|
(1.7)
|
4.0
|
(1.5)
|
|
|
|
|
2.8
|
1.3
|
Gross margin on invested assets (bps)
|
|
73
|
76
|
80
|
|
(4)
|
(9)
|
|
77
|
86
|
Net margin on invested assets (bps)
|
|
15
|
21
|
15
|
|
(29)
|
0
|
|
21
|
28
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted key performance
indicators⁵
|
|
|
|
|
|
|
|
|
|
|
Pre-tax profit growth (%)
|
|
1.2
|
(7.9)
|
(27.2)
|
|
|
|
|
(15.2)
|
12.6
|
Cost / income ratio (%)
|
|
71.3
|
64.3
|
73.4
|
|
|
|
|
67.1
|
64.5
|
Net new money growth (%)
|
|
(1.7)
|
4.0
|
(1.5)
|
|
|
|
|
2.8
|
2.3
|
Gross margin on invested assets (bps)
|
|
73
|
76
|
81
|
|
(4)
|
(10)
|
|
77
|
84
|
Net margin on invested assets (bps)
|
|
21
|
27
|
22
|
|
(22)
|
(5)
|
|
25
|
30
|
Wealth Management¹ (continued)
|
|
|
|
|
|
As of or for the quarter ended
|
|
% change from
|
|
For the year ended
|
CHF million, except where
indicated
|
|
31.12.16
|
30.9.16
|
31.12.15
|
|
3Q16
|
4Q15
|
|
31.12.16
|
31.12.15
|
|
|
|
|
|
|
|
|
|
|
|
Additional information
|
|
|
|
|
|
|
|
|
|
|
Recurring income⁶
|
|
1,461
|
1,473
|
1,533
|
|
(1)
|
(5)
|
|
5,880
|
6,146
|
Recurring income as a percentage of income (%)
|
|
82.0
|
81.3
|
82.0
|
|
|
|
|
80.6
|
75.4
|
Average attributed equity (CHF billion)⁷
|
|
3.4
|
3.5
|
3.4
|
|
(3)
|
0
|
|
3.5
|
3.5
|
Return on attributed equity (%)
|
|
43.3
|
57.6
|
40.5
|
|
|
|
|
56.1
|
77.4
|
Risk-weighted assets (fully applied, CHF billion)⁸
|
|
25.8
|
26.1
|
25.3
|
|
(1)
|
2
|
|
25.8
|
25.3
|
Return on risk-weighted assets, gross (%)⁹
|
|
27.5
|
27.8
|
29.1
|
|
|
|
|
28.1
|
31.7
|
Leverage ratio denominator (fully applied, CHF billion)¹⁰
|
|
115.5
|
117.9
|
119.0
|
|
(2)
|
(3)
|
|
115.5
|
119.0
|
Goodwill and intangible assets (CHF billion)
|
|
1.3
|
1.3
|
1.3
|
|
0
|
0
|
|
1.3
|
1.3
|
Net new money (CHF billion)
|
|
(4.1)
|
9.4
|
(3.4)
|
|
|
|
|
26.8
|
12.9
|
Net new money adjusted (CHF billion)¹¹
|
|
(4.1)
|
9.4
|
(3.4)
|
|
|
|
|
26.8
|
22.8
|
Invested assets (CHF billion)
|
|
977
|
967
|
947
|
|
1
|
3
|
|
977
|
947
|
Client assets (CHF billion)
|
|
1,157
|
1,144
|
1,122
|
|
1
|
3
|
|
1,157
|
1,122
|
Loans, gross (CHF billion)
|
|
101.9
|
102.6
|
105.2
|
|
(1)
|
(3)
|
|
101.9
|
105.2
|
Due to customers (CHF billion)
|
|
192.3
|
190.7
|
172.3
|
|
1
|
12
|
|
192.3
|
172.3
|
Personnel (full-time equivalents)
|
|
9,721
|
9,918
|
10,239
|
|
(2)
|
(5)
|
|
9,721
|
10,239
|
Client advisors (full-time equivalents)
|
|
3,859
|
3,924
|
4,019
|
|
(2)
|
(4)
|
|
3,859
|
4,019
|
1 Comparative figures in this table may differ from those
originally published in quarterly and annual reports due to adjustments
following organizational changes, restatements due to the retrospective
adoption of new accounting standards or changes in accounting policies, and
events after the reporting period. 2 Refer to “Operating income” in the
“Group performance” section of our Annual Report 2015 for the definitions of
recurring net fee income and transaction-based income. 3 Adjusted results
are non-GAAP financial measures as defined by SEC regulations. 4 Reflects
a gain on the sale of our investment in Visa Europe. 5 Refer to the
“Measurement of performance” section of our Annual Report 2015 for the
definitions of our key performance indicators. 6 Recurring income consists
of net interest income and recurring net fee income. 7 Refer to the
“Capital management” section of this report for more information. 8 Based
on the Basel III framework as applicable for Swiss systemically relevant
banks (SRBs). Refer to the “Capital management” section of this report for
more information. 9 Based on fully applied RWA. 10 Calculated in
accordance with Swiss SRB rules. Refer to the “Capital management” section of
this report for more information. 11 Adjusted net new money excludes the
negative effect on net new money (third quarter of 2015: CHF 3.3 billion,
second quarter of 2015: CHF 6.6 billion) from our balance sheet and capital
optimization program.
|
Regional breakdown of key
figures¹˒²
|
As of or for the quarter
ended 31.12.16
|
Europe
|
Asia Pacific
|
Switzerland
|
Emerging markets
|
of which: ultra high net worth
|
of which: Global Family Office³
|
Net new money (CHF billion)
|
(0.7)
|
0.1
|
0.8
|
(4.5)
|
2.6
|
1.9
|
Net new money growth (%)
|
(0.8)
|
0.1
|
1.8
|
(12.2)
|
1.9
|
9.0
|
Invested assets (CHF billion)
|
353
|
292
|
180
|
149
|
552
|
94
|
Gross margin on invested assets (bps)
|
66
|
65
|
84
|
95
|
49
|
49⁴
|
Client advisors (full-time equivalents)
|
1,317
|
1,016
|
744
|
681
|
805⁵
|
|
1 Refer to the “Measurement of performance” section of our
Annual Report 2015 for the definitions of our key performance indicators.
2 Based on the Wealth Management business area structure, and excluding minor
functions with 101 client advisors, CHF 3 billion of invested assets, and CHF
0.2 billion of net new money inflows in the fourth quarter of 2016. 3
Joint venture between Wealth Management and the Investment Bank. Global
Family Office is reported as a sub-segment of ultra high net worth and is
included in the ultra high net worth figures. 4 Gross margin includes
income booked in the Investment Bank. Gross margin only based on income
booked in Wealth Management is 29 basis points. 5 Represents client
advisors who exclusively serve ultra high net worth clients. In addition to
these, other client advisors may also serve certain ultra high net worth
clients, but not exclusively.
|
Results: 4Q16 vs 4Q15
Profit before tax increased by CHF 24
million or 7% to CHF 368 million and adjusted profit before tax increased by
CHF 6 million or 1 % to CHF 511 million, reflecting lower operating expenses, largely
offset by decreased operating income.
Operating income
Total operating income decreased by
CHF 87 million or 5% to CHF 1,782 million. Excluding losses of CHF 28 million
on the sale of subsidiaries and businesses in the fourth quarter of 2015,
adjusted operating income decreased by CHF 115 million or 6%, mainly due to
lower recurring net fee income and transaction-based income.
Net interest income decreased by CHF 10
million to CHF 588 million, mainly due to lower treasury-related income from
Corporate Center – Group Asset and Liability Management (Group ALM), partly
offset by higher deposit revenues.
®
Refer to the “Corporate Center – Group Asset and Liability
Management” section of this report for more information
Recurring net fee income decreased by CHF 61
million to CHF 874 million due to a decrease in investment fund fees and
custody revenues reflecting the effects of shifts to retrocession-free products,
changes in clients’ asset allocation, as well as the effects of cross-border
outflows. These were partly offset by increases in average invested assets,
discretionary and advisory mandate penetration and the effect of pricing
measures.
Transaction-based income decreased by CHF 50
million to CHF 314 million, mainly as the fourth quarter of 2015 included a fee
of CHF 45 million received from Personal & Corporate Banking for the shift
of clients, as a result of a detailed client segmentation
review.
Other income increased by CHF 35 million to
CHF 7 million, mainly due to the aforementioned losses on the sale of
subsidiaries and businesses in the fourth quarter of 2015.
Operating expenses
Total operating expenses decreased by
CHF 113 million or 7% to CHF 1,413 million and adjusted operating expenses
decreased by CHF 123 million or 9% to CHF 1,270 million. Personnel expenses
decreased by CHF 66 million to CHF 543 million and adjusted personnel expenses
decreased by CHF 78 million to CHF 528 million, driven by a decrease in staff
levels and lower pension costs for our Swiss pension plan reflecting the effect
of changes to demographic and financial assumptions, as well as lower variable
compensation expenses.
General and administrative expenses decreased
by CHF 15 million to CHF 248 million and adjusted general and administrative
expenses decreased by CHF 26 million to CHF 223
million. This was mainly driven by a CHF 17 million decrease in net
expenses for provisions for litigation, regulatory and similar matters and
lower expenses for marketing and public relations. Net expenses for services
from Corporate Center and other business divisions decreased by CHF 31 million
to CHF 621 million and adjusted net expenses for services decreased by CHF 18
million to CHF 518 million, mainly reflecting lower net expenses from Group
Technology, partly offset by higher occupancy expenses from Group Corporate
Services.
Net new money
Net new money outflows were CHF 4.1
billion compared with CHF 3.4 billion in the same quarter of the prior year.
The annualized net new money growth rate was negative 1.7% compared with
negative 1.5%. Net new money outflows in emerging markets and Europe were
partly offset by inflows in Switzerland and Asia Pacific. Total cross-border
outflows were CHF 7.4 billion compared with CHF 4.5 billion, mainly driven by
outflows in emerging markets and Asia Pacific. Net new money from ultra high
net worth clients was CHF 2.6 billion on a global basis compared with CHF 2.2
billion.
In the third quarter of 2016, net new money
was CHF 9.4 billion, driven by net inflows in all regions, except emerging
markets where cross-border outflows outweighed inflows.
Invested assets: 4Q16 vs 3Q16
Invested assets increased by CHF 10
billion to CHF 977 billion due to positive foreign currency translation effects
of CHF 16 billion, partly offset by net new money outflows of CHF 4 billion and
a net decrease of CHF 1 billion related to the sale and acquisition of
subsidiaries and businesses that did not affect net new money. Discretionary
and advisory mandate penetration decreased to 26.9% compared with 27.1%, reflecting
seasonally lower net mandate sales as well as cross-border outflows. Compared
with the fourth quarter of 2015, discretionary and advisory mandate penetration
increased by 0.5 percentage points.
Wealth Management Americas
Wealth Management Americas – in
US dollars¹
|
|
|
|
|
|
As of or for the quarter ended
|
|
% change from
|
|
For the year ended
|
USD million, except where
indicated
|
|
31.12.16
|
30.9.16
|
31.12.15
|
|
3Q16
|
4Q15
|
|
31.12.16
|
31.12.15
|
|
|
|
|
|
|
|
|
|
|
|
Results
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
405
|
370
|
326
|
|
9
|
24
|
|
1,484
|
1,215
|
Recurring net fee income²
|
|
1,267
|
1,241
|
1,160
|
|
2
|
9
|
|
4,880
|
4,795
|
Transaction-based income²
|
|
372
|
372
|
376
|
|
0
|
(1)
|
|
1,474
|
1,614
|
Other income
|
|
16
|
5
|
12
|
|
220
|
33
|
|
35
|
32
|
Income
|
|
2,060
|
1,989
|
1,874
|
|
4
|
10
|
|
7,873
|
7,657
|
Credit loss (expense) / recovery
|
|
0
|
0
|
0
|
|
|
|
|
(3)
|
(4)
|
Total operating income
|
|
2,059
|
1,988
|
1,874
|
|
4
|
10
|
|
7,871
|
7,653
|
Personnel expenses
|
|
1,237
|
1,205
|
1,185
|
|
3
|
4
|
|
4,874
|
4,746
|
Financial advisor compensation³
|
|
757
|
736
|
713
|
|
3
|
6
|
|
2,931
|
2,921
|
Compensation commitments with recruited financial
advisors⁴
|
|
199
|
201
|
198
|
|
(1)
|
1
|
|
808
|
761
|
Salaries and other personnel costs
|
|
281
|
268
|
274
|
|
5
|
3
|
|
1,135
|
1,064
|
General and administrative expenses
|
|
166
|
128
|
348
|
|
30
|
(52)
|
|
576
|
845
|
Services (to) / from Corporate Center and other business
divisions
|
|
309
|
313
|
313
|
|
(1)
|
(1)
|
|
1,250
|
1,252
|
of which: services from CC –
Services
|
|
306
|
310
|
309
|
|
(1)
|
(1)
|
|
1,236
|
1,236
|
Depreciation and impairment of property, equipment and software
|
|
0
|
0
|
0
|
|
|
|
|
2
|
3
|
Amortization and impairment of intangible assets
|
|
10
|
13
|
13
|
|
(23)
|
(23)
|
|
50
|
53
|
Total operating expenses
|
|
1,723
|
1,660
|
1,860
|
|
4
|
(7)
|
|
6,752
|
6,899
|
Business division operating
profit / (loss) before tax
|
|
337
|
328
|
13
|
|
3
|
|
|
1,118
|
754
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted results⁵
|
|
|
|
|
|
|
|
|
|
|
Total operating income as
reported
|
|
2,059
|
1,988
|
1,874
|
|
4
|
10
|
|
7,871
|
7,653
|
of which: gains on sale of
financial assets available for sale
|
|
10
|
|
|
|
|
|
|
10
|
|
Total operating income (adjusted)
|
|
2,049
|
1,988
|
1,874
|
|
3
|
9
|
|
7,861
|
7,653
|
Total operating expenses as
reported
|
|
1,723
|
1,660
|
1,860
|
|
4
|
(7)
|
|
6,752
|
6,899
|
of which: personnel-related
restructuring expenses
|
|
1
|
1
|
0
|
|
|
|
|
7
|
0
|
of which:
non-personnel-related restructuring expenses
|
|
0
|
0
|
0
|
|
|
|
|
0
|
0
|
of which: restructuring
expenses allocated from CC – Services
|
|
29
|
38
|
50
|
|
|
|
|
134
|
141
|
of which: gain related to a
change to retiree benefit plans in the US
|
|
|
|
|
|
|
|
|
|
(21)
|
Total operating expenses
(adjusted)
|
|
1,692
|
1,621
|
1,810
|
|
4
|
(7)
|
|
6,610
|
6,779
|
Business division operating
profit / (loss) before tax as reported
|
|
337
|
328
|
13
|
|
3
|
|
|
1,118
|
754
|
Business division operating
profit / (loss) before tax (adjusted)
|
|
358
|
367
|
63
|
|
(2)
|
468
|
|
1,250
|
874
|
|
|
|
|
|
|
|
|
|
|
|
Key performance
indicators⁶
|
|
|
|
|
|
|
|
|
|
|
Pre-tax profit growth (%)
|
|
|
22.4
|
(94.0)
|
|
|
|
|
48.3
|
(23.1)
|
Cost / income ratio (%)
|
|
83.6
|
83.5
|
99.3
|
|
|
|
|
85.8
|
90.1
|
Net new money growth (%)
|
|
(0.5)
|
0.3
|
6.8
|
|
|
|
|
1.5
|
2.1
|
Gross margin on invested assets (bps)
|
|
74
|
73
|
74
|
|
1
|
0
|
|
73
|
74
|
Net margin on invested assets (bps)
|
|
12
|
12
|
1
|
|
0
|
|
|
10
|
7
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted key performance
indicators⁶
|
|
|
|
|
|
|
|
|
|
|
Pre-tax profit growth (%)
|
|
468.3
|
27.9
|
(73.0)
|
|
|
|
|
43.0
|
(15.1)
|
Cost / income ratio (%)
|
|
82.5
|
81.5
|
96.6
|
|
|
|
|
84.1
|
88.5
|
Net new money growth (%)
|
|
(0.5)
|
0.3
|
6.8
|
|
|
|
|
1.5
|
2.1
|
Gross margin on invested assets (bps)
|
|
74
|
73
|
74
|
|
1
|
0
|
|
73
|
74
|
Net margin on invested assets (bps)
|
|
13
|
13
|
2
|
|
0
|
550
|
|
12
|
8
|
Wealth Management Americas
Wealth Management Americas – in US dollars¹ (continued)
|
|
|
|
|
|
As of or for the quarter ended
|
|
% change from
|
|
For the year ended
|
USD million, except where
indicated
|
|
31.12.16
|
30.9.16
|
31.12.15
|
|
3Q16
|
4Q15
|
|
31.12.16
|
31.12.15
|
|
|
|
|
|
|
|
|
|
|
|
Additional information
|
|
|
|
|
|
|
|
|
|
|
Recurring income⁷
|
|
1,672
|
1,611
|
1,486
|
|
4
|
13
|
|
6,364
|
6,010
|
Recurring income as a percentage of income (%)
|
|
81.2
|
81.0
|
79.3
|
|
|
|
|
80.8
|
78.5
|
Average attributed equity (USD billion)⁸
|
|
2.6
|
2.7
|
2.5
|
|
(4)
|
4
|
|
2.6
|
2.6
|
Return on attributed equity (%)
|
|
51.8
|
48.6
|
2.1
|
|
|
|
|
43.0
|
29.3
|
Risk-weighted assets (fully applied, USD billion)⁹
|
|
23.4
|
24.0
|
21.9
|
|
(3)
|
7
|
|
23.4
|
21.9
|
Return on risk-weighted assets, gross (%)¹⁰
|
|
34.8
|
33.7
|
33.5
|
|
|
|
|
33.9
|
34.0
|
Leverage ratio denominator (fully applied, USD billion)¹¹
|
|
66.9
|
66.4
|
62.8
|
|
1
|
7
|
|
66.9
|
62.8
|
Goodwill and intangible assets (USD billion)
|
|
3.7
|
3.7
|
3.7
|
|
0
|
0
|
|
3.7
|
3.7
|
Net new money (USD billion)
|
|
(1.3)
|
0.8
|
16.8
|
|
|
|
|
15.4
|
21.4
|
Net new money including interest and dividend income (USD
billion)¹²
|
|
6.6
|
6.7
|
26.2
|
|
|
|
|
40.8
|
47.8
|
Invested assets (USD billion)
|
|
1,111
|
1,106
|
1,033
|
|
0
|
8
|
|
1,111
|
1,033
|
Client assets (USD billion)
|
|
1,160
|
1,155
|
1,084
|
|
0
|
7
|
|
1,160
|
1,084
|
Loans, gross (USD billion)
|
|
51.6
|
50.9
|
48.7
|
|
1
|
6
|
|
51.6
|
48.7
|
Due to customers (USD billion)
|
|
89.2
|
86.7
|
83.1
|
|
3
|
7
|
|
89.2
|
83.1
|
Recruitment loans to financial advisors
|
|
3,033
|
3,184
|
3,179
|
|
(5)
|
(5)
|
|
3,033
|
3,179
|
Other loans to financial advisors
|
|
462
|
483
|
418
|
|
(4)
|
11
|
|
462
|
418
|
Personnel (full-time equivalents)
|
|
13,526
|
13,574
|
13,611
|
|
0
|
(1)
|
|
13,526
|
13,611
|
Financial advisors (full-time equivalents)
|
|
7,025
|
7,087
|
7,140
|
|
(1)
|
(2)
|
|
7,025
|
7,140
|
1 Comparative figures in this table may differ from those
originally published in quarterly and annual reports due to adjustments
following organizational changes, restatements due to the retrospective
adoption of new accounting standards or changes in accounting policies, and
events after the reporting period. 2 Refer to “Operating income” in the
“Group performance” section of our Annual Report 2015 for the definitions of
recurring net fee income and transaction-based income. 3 Financial advisor
compensation consists of grid-based compensation based directly on
compensable revenues generated by financial advisors and supplemental
compensation calculated on the basis of financial advisor productivity, firm
tenure, assets and other variables. 4 Compensation commitments with
recruited financial advisors represents expenses related to compensation
commitments granted to financial advisors at the time of recruitment which
are subject to vesting requirements. 5 Adjusted results are non-GAAP
financial measures as defined by SEC regulations. 6 Refer to the
“Measurement of performance” section of our Annual Report 2015 for the
definitions of our key performance indicators. 7 Recurring income consists
of net interest income and recurring net fee income. 8 Refer to the
“Capital management” section of this report for more information. 9 Based
on the Basel III framework as applicable for Swiss systemically relevant
banks (SRBs). Refer to the “Capital management” section of this report for
more information. 10 Based on fully applied RWA. 11 Calculated in
accordance with Swiss SRB rules. Refer to the “Capital management” section of
this report for more information. 12 Presented in line with historical
reporting practice in the US market.
|
Results: 4Q16 vs 4Q15
Profit before tax increased by USD
324 million to USD 337 million and adjusted profit before tax increased by
USD 295 million to USD 358 million due to higher operating income and
lower operating expenses.
Operating income
Total operating income increased by
USD 185 million or 10% to USD 2,059 million, and adjusted operating income
increased by USD 175 million or 9% to USD 2,049 million mainly due to higher
recurring net fee income and higher net interest income.
Net interest income increased by USD 79
million to USD 405 million due to higher short-term interest rates and growth
in loan and deposit balances. The average mortgage portfolio balance increased
20% and the average securities-backed lending portfolio balance increased 5%.
Recurring net fee income increased by USD 107
million to USD 1,267 million, mainly due to higher managed account fees
following an increase in invested assets.
Transaction-based income decreased by USD 4
million to USD 372 million.
Operating
expenses
Total operating expenses decreased by
USD 137 million or 7% to USD 1,723 million and adjusted operating expenses
decreased by USD 118 million or 7% to USD 1,692 million, mainly due to
USD 181 million lower net expenses for provisions for litigation,
regulatory and similar matters. This was partly offset by USD 51 million higher
adjusted personnel expenses, mainly due to higher financial advisor
compensation reflecting higher compensable revenue, and USD 17 million higher
adjusted expenses from Corporate Center and other business divisions.
Net new money
Net new money outflows were USD 1.3
billion compared with net inflows of USD 16.8 billion in the same quarter of
the prior year, primarily due to net outflows from net recruiting as well as
lower net inflows from financial advisors employed with UBS for more than one
year. The annualized net new money growth rate was negative 0.5% compared with
positive 6.8%.
In the third quarter of 2016, net new money
was USD 0.8 billion, predominantly related to inflows
from financial advisors employed with UBS for more than one year.
Invested assets:
4Q16 vs 3Q16
Invested assets increased by USD 5
billion to USD 1,111 billion, reflecting positive market performance of USD 7
billion, partly offset by net new money outflows of USD 1 billion. Managed
account assets increased by USD 1 billion to USD 386 billion and comprised
34.7% of total invested assets, compared with 34.8% in the prior quarter.
Wealth Management Americas – in
Swiss francs¹
|
|
|
|
|
|
|
As of or for the quarter ended
|
|
% change from
|
|
For the year ended
|
CHF million, except where
indicated
|
|
31.12.16
|
30.9.16
|
31.12.15
|
|
3Q16
|
4Q15
|
|
31.12.16
|
31.12.15
|
|
|
|
|
|
|
|
|
|
|
|
Results
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
409
|
361
|
328
|
|
13
|
25
|
|
1,467
|
1,174
|
Recurring net fee income²
|
|
1,277
|
1,209
|
1,167
|
|
6
|
9
|
|
4,825
|
4,623
|
Transaction-based income²
|
|
375
|
363
|
379
|
|
3
|
(1)
|
|
1,458
|
1,555
|
Other income
|
|
16
|
5
|
12
|
|
220
|
33
|
|
35
|
31
|
Income
|
|
2,076
|
1,938
|
1,885
|
|
7
|
10
|
|
7,785
|
7,384
|
Credit loss (expense) / recovery
|
|
0
|
0
|
0
|
|
|
|
|
(3)
|
(4)
|
Total operating income
|
|
2,076
|
1,938
|
1,885
|
|
7
|
10
|
|
7,782
|
7,381
|
Personnel expenses
|
|
1,247
|
1,174
|
1,192
|
|
6
|
5
|
|
4,819
|
4,579
|
Financial advisor compensation³
|
|
763
|
717
|
718
|
|
6
|
6
|
|
2,898
|
2,817
|
Compensation commitments with recruited financial
advisors⁴
|
|
201
|
196
|
199
|
|
3
|
1
|
|
799
|
735
|
Salaries and other personnel costs
|
|
283
|
262
|
275
|
|
8
|
3
|
|
1,122
|
1,027
|
General and administrative expenses
|
|
168
|
125
|
350
|
|
34
|
(52)
|
|
570
|
822
|
Services (to) / from Corporate Center and other business
divisions
|
|
312
|
305
|
316
|
|
2
|
(1)
|
|
1,235
|
1,209
|
of which: services from CC –
Services
|
|
308
|
302
|
311
|
|
2
|
(1)
|
|
1,221
|
1,193
|
Depreciation and impairment of property, equipment and software
|
|
0
|
0
|
0
|
|
|
|
|
2
|
3
|
Amortization and impairment of intangible assets
|
|
10
|
13
|
13
|
|
(23)
|
(23)
|
|
50
|
51
|
Total operating expenses
|
|
1,737
|
1,618
|
1,871
|
|
7
|
(7)
|
|
6,675
|
6,663
|
Business division operating
profit / (loss) before tax
|
|
339
|
320
|
14
|
|
6
|
|
|
1,107
|
718
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted results⁵
|
|
|
|
|
|
|
|
|
|
|
Total operating income as
reported
|
|
2,076
|
1,938
|
1,885
|
|
7
|
10
|
|
7,782
|
7,381
|
of which: gains on sale of
financial assets available for sale
|
|
10
|
|
|
|
|
|
|
10
|
|
Total operating income
(adjusted)
|
|
2,066
|
1,938
|
1,885
|
|
7
|
10
|
|
7,772
|
7,381
|
Total operating expenses as
reported
|
|
1,737
|
1,618
|
1,871
|
|
7
|
(7)
|
|
6,675
|
6,663
|
of which: personnel-related
restructuring expenses
|
|
1
|
1
|
0
|
|
|
|
|
7
|
0
|
of which:
non-personnel-related restructuring expenses
|
|
0
|
0
|
0
|
|
|
|
|
0
|
0
|
of which: restructuring
expenses allocated from CC – Services
|
|
30
|
37
|
50
|
|
|
|
|
132
|
137
|
of which: gain related to a
change to retiree benefit plans in the US
|
|
|
|
|
|
|
|
|
|
(21)
|
Total operating expenses
(adjusted)
|
|
1,706
|
1,580
|
1,821
|
|
8
|
(6)
|
|
6,536
|
6,547
|
Business division operating
profit / (loss) before tax as reported
|
|
339
|
320
|
14
|
|
6
|
|
|
1,107
|
718
|
Business division operating
profit / (loss) before tax (adjusted)
|
|
360
|
358
|
64
|
|
1
|
463
|
|
1,236
|
834
|
|
|
|
|
|
|
|
|
|
|
|
Key performance
indicators⁶
|
|
|
|
|
|
|
|
|
|
|
Pre-tax profit growth (%)
|
|
|
23.6
|
(93.4)
|
|
|
|
|
54.2
|
(20.2)
|
Cost / income ratio (%)
|
|
83.7
|
83.5
|
99.3
|
|
|
|
|
85.7
|
90.2
|
Net new money growth (%)
|
|
(0.5)
|
0.3
|
7.0
|
|
|
|
|
1.5
|
2.1
|
Gross margin on invested assets (bps)
|
|
75
|
73
|
75
|
|
3
|
0
|
|
74
|
74
|
Net margin on invested assets (bps)
|
|
12
|
12
|
1
|
|
0
|
|
|
10
|
7
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted key performance
indicators⁶
|
|
|
|
|
|
|
|
|
|
|
Pre-tax profit growth (%)
|
|
462.5
|
29.2
|
(71.8)
|
|
|
|
|
48.2
|
(11.8)
|
Cost / income ratio (%)
|
|
82.6
|
81.5
|
96.6
|
|
|
|
|
84.1
|
88.7
|
Net new money growth (%)
|
|
(0.5)
|
0.3
|
7.0
|
|
|
|
|
1.5
|
2.1
|
Gross margin on invested assets (bps)
|
|
75
|
73
|
75
|
|
3
|
0
|
|
74
|
74
|
Net margin on invested assets (bps)
|
|
13
|
13
|
3
|
|
0
|
333
|
|
12
|
8
|
Wealth Management Americas
Wealth Management Americas – in Swiss francs¹ (continued)
|
|
|
|
|
|
|
As of or for the quarter ended
|
|
% change from
|
|
For the year ended
|
CHF million, except where
indicated
|
|
31.12.16
|
30.9.16
|
31.12.15
|
|
3Q16
|
4Q15
|
|
31.12.16
|
31.12.15
|
|
|
|
|
|
|
|
|
|
|
|
Additional information
|
|
|
|
|
|
|
|
|
|
|
Recurring income⁷
|
|
1,685
|
1,570
|
1,495
|
|
7
|
13
|
|
6,292
|
5,798
|
Recurring income as a percentage of income (%)
|
|
81.2
|
81.0
|
79.3
|
|
|
|
|
80.8
|
78.5
|
Average attributed equity (CHF billion)⁸
|
|
2.6
|
2.6
|
2.5
|
|
0
|
4
|
|
2.6
|
2.5
|
Return on attributed equity (%)
|
|
52.2
|
49.2
|
2.2
|
|
|
|
|
43.4
|
29.0
|
Risk-weighted assets (fully applied, CHF billion)⁹
|
|
23.8
|
23.3
|
21.9
|
|
2
|
9
|
|
23.8
|
21.9
|
Return on risk-weighted assets, gross (%)¹⁰
|
|
35.3
|
33.8
|
34.1
|
|
|
|
|
34.3
|
33.8
|
Leverage ratio denominator (fully applied, CHF billion)¹¹
|
|
68.1
|
64.4
|
62.9
|
|
6
|
8
|
|
68.1
|
62.9
|
Goodwill and intangible assets (CHF billion)
|
|
3.7
|
3.6
|
3.7
|
|
3
|
0
|
|
3.7
|
3.7
|
Net new money (CHF billion)
|
|
(1.3)
|
0.8
|
16.9
|
|
|
|
|
15.4
|
21.3
|
Net new money including interest and dividend income (CHF
billion)¹²
|
|
6.7
|
6.5
|
26.3
|
|
|
|
|
40.5
|
46.9
|
Invested assets (CHF billion)
|
|
1,131
|
1,074
|
1,035
|
|
5
|
9
|
|
1,131
|
1,035
|
Client assets (CHF billion)
|
|
1,181
|
1,121
|
1,085
|
|
5
|
9
|
|
1,181
|
1,085
|
Loans, gross (CHF billion)
|
|
52.5
|
49.5
|
48.8
|
|
6
|
8
|
|
52.5
|
48.8
|
Due to customers (CHF billion)
|
|
90.8
|
84.1
|
83.2
|
|
8
|
9
|
|
90.8
|
83.2
|
Recruitment loans to financial advisors
|
|
3,087
|
3,092
|
3,184
|
|
0
|
(3)
|
|
3,087
|
3,184
|
Other loans to financial advisors
|
|
471
|
469
|
418
|
|
0
|
13
|
|
471
|
418
|
Personnel (full-time equivalents)
|
|
13,526
|
13,574
|
13,611
|
|
0
|
(1)
|
|
13,526
|
13,611
|
Financial advisors (full-time equivalents)
|
|
7,025
|
7,087
|
7,140
|
|
(1)
|
(2)
|
|
7,025
|
7,140
|
1 Comparative figures in this table may differ from those
originally published in quarterly and annual reports due to adjustments
following organizational changes, restatements due to the retrospective
adoption of new accounting standards or changes in accounting policies, and
events after the reporting period. 2 Refer to “Operating income” in the
“Group performance” section of our Annual Report 2015 for the definitions of
recurring net fee income and transaction-based income. 3 Financial advisor
compensation consists of grid-based compensation based directly on
compensable revenues generated by financial advisors and supplemental
compensation calculated on the basis of financial advisor productivity, firm
tenure, assets and other variables. 4 Compensation commitments with
recruited financial advisors represents expenses related to compensation commitments
granted to financial advisors at the time of recruitment which are subject to
vesting requirements. 5 Adjusted results are non-GAAP financial measures
as defined by SEC regulations. 6 Refer to the “Measurement of performance”
section of our Annual Report 2015 for the definitions of our key performance
indicators. 7 Recurring income consists of net interest income and
recurring net fee income. 8 Refer to the “Capital management” section of
this report for more information. 9 Based on the Basel III framework as
applicable for Swiss systemically relevant banks (SRBs). Refer to the
“Capital management” section of this report for more information. 10 Based
on fully applied RWA. 11 Calculated in accordance with Swiss SRB rules.
Refer to the “Capital management” section of this report for more
information. 12 Presented in line with historical reporting practice in
the US market.
|
Personal &
Corporate Banking
Personal & Corporate
Banking¹
|
|
|
|
|
|
|
|
|
|
|
|
|
As of or for the quarter ended
|
|
% change from
|
|
For the year ended
|
CHF million, except where
indicated
|
|
31.12.16
|
30.9.16
|
31.12.15
|
|
3Q16
|
4Q15
|
|
31.12.16
|
31.12.15
|
|
|
|
|
|
|
|
|
|
|
|
Results
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
540
|
541
|
576
|
|
0
|
(6)
|
|
2,199
|
2,270
|
Recurring net fee income²
|
|
130
|
144
|
139
|
|
(10)
|
(6)
|
|
553
|
544
|
Transaction-based income²
|
|
256
|
274
|
196
|
|
(7)
|
31
|
|
1,028
|
959
|
Other income
|
|
23
|
38
|
15
|
|
(39)
|
53
|
|
211
|
140
|
Income
|
|
949
|
996
|
926
|
|
(5)
|
2
|
|
3,990
|
3,913
|
Credit loss (expense) / recovery
|
|
(8)
|
0
|
(11)
|
|
|
(27)
|
|
(6)
|
(37)
|
Total operating income
|
|
941
|
995
|
915
|
|
(5)
|
3
|
|
3,984
|
3,877
|
Personnel expenses
|
|
208
|
211
|
211
|
|
(1)
|
(1)
|
|
845
|
873
|
General and administrative expenses
|
|
100
|
63
|
71
|
|
59
|
41
|
|
285
|
264
|
Services (to) / from Corporate Center and other business
divisions
|
|
255
|
264
|
275
|
|
(3)
|
(7)
|
|
1,080
|
1,077
|
of which: services from CC –
Services
|
|
284
|
294
|
298
|
|
(3)
|
(5)
|
|
1,186
|
1,180
|
Depreciation and impairment of property, equipment and software
|
|
4
|
3
|
3
|
|
33
|
33
|
|
15
|
17
|
Amortization and impairment of intangible assets
|
|
0
|
0
|
0
|
|
|
|
|
0
|
0
|
Total operating expenses
|
|
567
|
542
|
560
|
|
5
|
1
|
|
2,224
|
2,231
|
Business division operating
profit / (loss) before tax
|
|
374
|
453
|
355
|
|
(17)
|
5
|
|
1,760
|
1,646
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted results³
|
|
|
|
|
|
|
|
|
|
|
Total operating income as
reported
|
|
941
|
995
|
915
|
|
(5)
|
3
|
|
3,984
|
3,877
|
of which: gains related to
investments in associates
|
|
|
21
|
|
|
|
|
|
21
|
66
|
of which: gains on sale of financial
assets available for sale⁴
|
|
|
|
|
|
|
|
|
102
|
|
Total operating income
(adjusted)
|
|
941
|
974
|
915
|
|
(3)
|
3
|
|
3,861
|
3,811
|
Total operating expenses as
reported
|
|
567
|
542
|
560
|
|
5
|
1
|
|
2,224
|
2,231
|
of which: personnel-related
restructuring expenses
|
|
2
|
0
|
0
|
|
|
|
|
4
|
2
|
of which:
non-personnel-related restructuring expenses
|
|
0
|
0
|
0
|
|
|
|
|
0
|
0
|
of which: restructuring
expenses allocated from CC – Services
|
|
19
|
40
|
41
|
|
|
|
|
113
|
99
|
Total operating expenses
(adjusted)
|
|
546
|
501
|
519
|
|
9
|
5
|
|
2,107
|
2,130
|
Business division operating profit
/ (loss) before tax as reported
|
|
374
|
453
|
355
|
|
(17)
|
5
|
|
1,760
|
1,646
|
Business division operating
profit / (loss) before tax (adjusted)
|
|
395
|
473
|
396
|
|
(16)
|
0
|
|
1,754
|
1,681
|
|
|
|
|
|
|
|
|
|
|
|
Key performance
indicators⁵
|
|
|
|
|
|
|
|
|
|
|
Pre-tax profit growth (%)
|
|
5.4
|
(2.8)
|
4.4
|
|
|
|
|
6.9
|
9.3
|
Cost / income ratio (%)
|
|
59.7
|
54.4
|
60.5
|
|
|
|
|
55.7
|
57.0
|
Net interest margin (bps)
|
|
161
|
161
|
170
|
|
0
|
(5)
|
|
163
|
167
|
Net new business volume growth for personal banking (%)
|
|
1.1
|
3.5
|
0.6
|
|
|
|
|
3.1
|
2.4
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted key performance indicators⁵
|
|
|
|
|
|
|
|
|
|
|
Pre-tax profit growth (%)
|
|
(0.3)
|
10.5
|
11.2
|
|
|
|
|
4.3
|
7.1
|
Cost / income ratio (%)
|
|
57.5
|
51.4
|
56.0
|
|
|
|
|
54.5
|
55.4
|
Net interest margin (bps)
|
|
161
|
161
|
170
|
|
0
|
(5)
|
|
163
|
167
|
Net new business volume growth for personal banking (%)
|
|
1.1
|
3.5
|
0.6
|
|
|
|
|
3.1
|
2.4
|
Personal & Corporate Banking
Personal & Corporate Banking¹ (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
As of or for the quarter ended
|
|
% change from
|
|
For the year ended
|
CHF million, except where
indicated
|
|
31.12.16
|
30.9.16
|
31.12.15
|
|
3Q16
|
4Q15
|
|
31.12.16
|
31.12.15
|
|
|
|
|
|
|
|
|
|
|
|
Additional information
|
|
|
|
|
|
|
|
|
|
|
Average attributed equity (CHF billion)⁶
|
|
4.1
|
4.1
|
3.9
|
|
0
|
5
|
|
4.1
|
3.9
|
Return on attributed equity (%)
|
|
36.5
|
44.2
|
36.4
|
|
|
|
|
43.2
|
41.9
|
Risk-weighted assets (fully applied, CHF billion)⁷
|
|
41.6
|
41.3
|
34.6
|
|
1
|
20
|
|
41.6
|
34.6
|
Return on risk-weighted assets, gross (%)⁸
|
|
9.2
|
10.2
|
10.7
|
|
|
|
|
10.4
|
11.3
|
Leverage ratio denominator (fully applied, CHF billion)⁹
|
|
152.2
|
151.0
|
153.8
|
|
1
|
(1)
|
|
152.2
|
153.8
|
Goodwill and intangible assets (CHF billion)
|
|
0.0
|
0.0
|
0.0
|
|
|
|
|
0.0
|
0.0
|
Business volume for personal banking (CHF billion)
|
|
149
|
149
|
148
|
|
0
|
1
|
|
149
|
148
|
Net new business volume for personal banking (CHF billion)
|
|
0.4
|
1.3
|
0.2
|
|
|
|
|
4.6
|
3.4
|
Client assets (CHF billion)
|
|
466
|
449
|
444
|
|
4
|
5
|
|
466
|
444
|
Due to customers (CHF billion)
|
|
135.9
|
133.2
|
132.4
|
|
2
|
3
|
|
135.9
|
132.4
|
Loans, gross (CHF billion)
|
|
133.9
|
134.4
|
135.6
|
|
0
|
(1)
|
|
133.9
|
135.6
|
Secured loan portfolio as a percentage of total loan portfolio,
gross (%)
|
|
92.9
|
92.6
|
93.9
|
|
|
|
|
92.9
|
93.9
|
Impaired loan portfolio as a percentage of total loan portfolio,
gross (%)¹⁰
|
|
0.6
|
0.6
|
0.6
|
|
|
|
|
0.6
|
0.6
|
Personnel (full-time equivalents)
|
|
5,143
|
5,152
|
5,058
|
|
0
|
2
|
|
5,143
|
5,058
|
1 Comparative figures in this table may differ from those
originally published in quarterly and annual reports due to adjustments
following organizational changes, restatements due to the retrospective
adoption of new accounting standards or changes in accounting policies, and
events after the reporting period. 2 Refer to “Operating income” in the
“Group performance” section of our Annual Report 2015 for the definitions of
recurring net fee income and transaction-based income. 3 Adjusted results
are non-GAAP financial measures as defined by SEC regulations. 4 Reflects
a gain on the sale of our investment in Visa Europe. 5 Refer to the
“Measurement of performance” section of our Annual Report 2015 for the
definitions of our key performance indicators. 6 Refer to the “Capital
management” section of this report for more information. 7 Based on the
Basel III framework as applicable for Swiss systemically relevant banks (SRBs).
Refer to the “Capital management” section of this report for more
information. 8 Based on fully applied RWA. 9 Calculated in accordance
with Swiss SRB rules. Refer to the “Capital management” section of this
report for more information. 10 Refer to the “Risk management and control”
section of this report for more information on impaired loan exposures.
|
Results: 4Q16 vs 4Q15
Profit before tax increased by CHF 19
million or 5% to CHF 374 million. Adjusted profit before tax decreased by CHF 1
million to CHF 395 million, as higher operating expenses were largely offset by
higher operating income.
Operating income
Total operating income increased by
CHF 26 million or 3% to CHF 941 million, mainly due to higher transaction-based
income, partly offset by lower net interest income.
Net interest income decreased by CHF 36
million to CHF 540 million, primarily due to lower treasury-related income from
Corporate Center – Group Asset and Liability Management (Group ALM).
®
Refer to the “Corporate Center – Group Asset and Liability
Management” section of this report for more information
Recurring net fee income decreased by CHF 9
million to CHF 130 million.
Transaction-based income increased by CHF 60
million to CHF 256 million, mainly as the fourth quarter of 2015 included
a fee of CHF 45 million paid to Wealth Management for the shift of clients, as
a result of a detailed client segmentation review.
The net credit loss expense decreased by CHF
3 million to CHF 8 million, mainly due to higher net recoveries on existing
impaired positions.
Operating expenses
Total operating expenses increased by
CHF 7 million or 1% to CHF 567 million and adjusted operating expenses
increased by CHF 27 million or 5%
to CHF 546 million. The increase in adjusted operating expenses was mainly due
to CHF 29 million higher general and administrative expenses, driven by higher
capital-related levies in Switzerland, CHF 6 million higher net expenses for provisions for litigation,
regulatory and similar matters, and higher marketing costs.
Net new business volume growth for
personal banking:
4Q16 vs 4Q15
The annualized net new business
volume growth rate for our personal banking business was 1.1% compared with 0.6%. Net new client assets were
positive while net new loans were slightly negative, consistent with historic
seasonal patterns.
Asset Management
Asset Management¹
|
|
|
|
|
|
|
As of or for the quarter ended
|
|
% change from
|
|
For the year ended
|
CHF million, except where
indicated
|
|
31.12.16
|
30.9.16
|
31.12.15
|
|
3Q16
|
4Q15
|
|
31.12.16
|
31.12.15
|
|
|
|
|
|
|
|
|
|
|
|
Results
|
|
|
|
|
|
|
|
|
|
|
Net management fees²
|
|
468
|
437
|
524
|
|
7
|
(11)
|
|
1,810
|
1,903
|
Performance fees
|
|
31
|
44
|
44
|
|
(30)
|
(30)
|
|
122
|
154
|
Total operating income
|
|
499
|
481
|
568
|
|
4
|
(12)
|
|
1,931
|
2,057
|
Personnel expenses
|
|
164
|
196
|
199
|
|
(16)
|
(18)
|
|
727
|
729
|
General and administrative expenses
|
|
71
|
56
|
66
|
|
27
|
8
|
|
241
|
232
|
Services (to) / from Corporate Center and other business
divisions
|
|
120
|
124
|
131
|
|
(3)
|
(8)
|
|
506
|
502
|
of which: services from CC –
Services
|
|
126
|
130
|
139
|
|
(3)
|
(9)
|
|
530
|
523
|
Depreciation and impairment of property, equipment and software
|
|
0
|
0
|
1
|
|
|
(100)
|
|
1
|
2
|
Amortization and impairment of intangible assets
|
|
1
|
1
|
1
|
|
0
|
0
|
|
4
|
8
|
Total operating expenses
|
|
356
|
377
|
397
|
|
(6)
|
(10)
|
|
1,479
|
1,474
|
Business division operating
profit / (loss) before tax
|
|
144
|
104
|
171
|
|
38
|
(16)
|
|
452
|
584
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted results³
|
|
|
|
|
|
|
|
|
|
|
Total operating income as
reported
|
|
499
|
481
|
568
|
|
4
|
(12)
|
|
1,931
|
2,057
|
of which: gains / (losses)
on sales of subsidiaries and businesses
|
|
|
|
56
|
|
|
|
|
|
56
|
Total operating income
(adjusted)
|
|
499
|
481
|
512
|
|
4
|
(3)
|
|
1,931
|
2,001
|
Total operating expenses as
reported
|
|
356
|
377
|
397
|
|
(6)
|
(10)
|
|
1,479
|
1,474
|
of which: personnel-related
restructuring expenses
|
|
1
|
9
|
3
|
|
|
|
|
15
|
4
|
of which:
non-personnel-related restructuring expenses
|
|
5
|
2
|
8
|
|
|
|
|
15
|
11
|
of which: restructuring
expenses allocated from CC – Services
|
|
5
|
24
|
27
|
|
|
|
|
70
|
68
|
Total operating expenses
(adjusted)
|
|
344
|
343
|
359
|
|
0
|
(4)
|
|
1,379
|
1,392
|
Business division operating
profit / (loss) before tax as reported
|
|
144
|
104
|
171
|
|
38
|
(16)
|
|
452
|
584
|
Business division operating
profit / (loss) before tax (adjusted)
|
|
156
|
138
|
153
|
|
13
|
2
|
|
552
|
610
|
|
|
|
|
|
|
|
|
|
|
|
Key performance
indicators⁴
|
|
|
|
|
|
|
|
|
|
|
Pre-tax profit growth (%)
|
|
(15.8)
|
(8.8)
|
101.2
|
|
|
|
|
(22.6)
|
25.1
|
Cost / income ratio (%)
|
|
71.3
|
78.4
|
69.9
|
|
|
|
|
76.6
|
71.7
|
Net new money growth excluding money market flows (%)
|
|
(6.7)
|
1.4
|
(6.2)
|
|
|
|
|
(3.8)
|
(0.1)
|
Gross margin on invested assets (bps)
|
|
31
|
30
|
35
|
|
3
|
(11)
|
|
30
|
32
|
Net margin on invested assets (bps)
|
|
9
|
6
|
11
|
|
50
|
(18)
|
|
7
|
9
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted key performance
indicators⁴
|
|
|
|
|
|
|
|
|
|
|
Pre-tax profit growth (%)
|
|
2.0
|
0.7
|
23.4
|
|
|
|
|
(9.5)
|
19.8
|
Cost / income ratio (%)
|
|
68.9
|
71.3
|
70.1
|
|
|
|
|
71.4
|
69.6
|
Net new money growth excluding money market flows (%)
|
|
(6.7)
|
1.4
|
(6.2)
|
|
|
|
|
(3.8)
|
(0.1)
|
Gross margin on invested assets (bps)
|
|
31
|
30
|
32
|
|
3
|
(3)
|
|
30
|
31
|
Net margin on invested assets (bps)
|
|
10
|
9
|
10
|
|
11
|
0
|
|
9
|
9
|
|
|
|
|
|
|
|
|
|
|
|
Information by business line
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
|
|
|
|
|
|
|
Equities, Multi Asset & O’Connor
|
|
222
|
225
|
232
|
|
(1)
|
(4)
|
|
888
|
921
|
Fixed Income
|
|
75
|
76
|
73
|
|
(1)
|
3
|
|
297
|
292
|
Global Real Estate
|
|
116
|
106
|
115
|
|
9
|
1
|
|
444
|
403
|
Infrastructure and Private Equity
|
|
20
|
16
|
13
|
|
25
|
54
|
|
66
|
57
|
Solutions
|
|
33
|
27
|
30
|
|
22
|
10
|
|
109
|
128
|
Fund Services
|
|
34
|
32
|
105
|
|
6
|
(68)
|
|
127
|
257
|
Total operating income
|
|
499
|
481
|
568
|
|
4
|
(12)
|
|
1,931
|
2,057
|
Asset Management¹ (continued)
|
|
|
|
|
|
|
As of or for the quarter ended
|
|
% change from
|
|
For the year ended
|
CHF million, except where
indicated
|
|
31.12.16
|
30.9.16
|
31.12.15
|
|
3Q16
|
4Q15
|
|
31.12.16
|
31.12.15
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin on invested
assets (bps)
|
|
|
|
|
|
|
|
|
|
|
Equities, Multi Asset & O’Connor
|
|
27
|
28
|
29
|
|
(4)
|
(7)
|
|
28
|
28
|
Fixed Income
|
|
14
|
15
|
14
|
|
(7)
|
0
|
|
14
|
14
|
Global Real Estate
|
|
83
|
78
|
90
|
|
6
|
(8)
|
|
82
|
84
|
Infrastructure and Private Equity
|
|
89
|
71
|
55
|
|
25
|
62
|
|
72
|
62
|
Solutions
|
|
25
|
21
|
23
|
|
19
|
9
|
|
21
|
26
|
Total gross margin
|
|
31
|
30
|
35
|
|
3
|
(11)
|
|
30
|
32
|
|
|
|
|
|
|
|
|
|
|
|
Net new money (CHF billion)
|
|
|
|
|
|
|
|
|
|
|
Equities, Multi Asset & O’Connor
|
|
(6.7)
|
(3.5)
|
(9.1)
|
|
|
|
|
(13.7)
|
(11.9)
|
Fixed Income
|
|
(0.5)
|
5.6
|
(2.4)
|
|
|
|
|
(3.1)
|
(3.2)
|
Global Real Estate
|
|
0.6
|
0.6
|
1.0
|
|
|
|
|
2.4
|
3.4
|
Infrastructure and Private Equity
|
|
(0.1)
|
0.0
|
0.0
|
|
|
|
|
(0.6)
|
(0.2)
|
Solutions
|
|
(0.6)
|
(0.2)
|
(0.6)
|
|
|
|
|
(0.5)
|
6.4
|
Total net new money
|
|
(7.4)
|
2.5
|
(11.0)
|
|
|
|
|
(15.5)
|
(5.4)
|
Net new money excluding money market flows
|
|
(9.8)
|
2.0
|
(8.9)
|
|
|
|
|
(22.5)
|
(0.7)
|
of which: from third parties
|
|
(3.9)
|
1.9
|
(7.6)
|
|
|
|
|
(12.5)
|
(7.7)
|
of which: from UBS’s wealth
management businesses
|
|
(5.9)
|
0.2
|
(1.3)
|
|
|
|
|
(10.0)
|
7.0
|
Money market flows
|
|
2.4
|
0.4
|
(2.1)
|
|
|
|
|
7.0
|
(4.7)
|
of which: from third parties
|
|
0.9
|
(1.5)
|
(1.8)
|
|
|
|
|
3.4
|
(3.4)
|
of which: from UBS’s wealth
management businesses
|
|
1.5
|
2.0
|
(0.3)
|
|
|
|
|
3.5
|
(1.3)
|
|
|
|
|
|
|
|
|
|
|
|
Invested assets (CHF
billion)
|
|
|
|
|
|
|
|
|
|
|
Equities, Multi Asset & O’Connor
|
|
326
|
323
|
327
|
|
1
|
0
|
|
326
|
327
|
Fixed Income
|
|
210
|
211
|
208
|
|
0
|
1
|
|
210
|
208
|
Global Real Estate
|
|
57
|
55
|
52
|
|
4
|
10
|
|
57
|
52
|
Infrastructure and Private Equity
|
|
9
|
9
|
10
|
|
0
|
(10)
|
|
9
|
10
|
Solutions
|
|
54
|
53
|
53
|
|
2
|
2
|
|
54
|
53
|
Total invested assets
|
|
656
|
650
|
650
|
|
1
|
1
|
|
656
|
650
|
of which: excluding money
market funds
|
|
591
|
588
|
592
|
|
1
|
0
|
|
591
|
592
|
of which: money market funds
|
|
66
|
62
|
58
|
|
6
|
14
|
|
66
|
58
|
|
|
|
|
|
|
|
|
|
|
|
Assets under administration
by Fund Services
|
|
|
|
|
|
|
|
|
|
|
Assets under administration (CHF billion)⁵
|
|
420
|
424
|
407
|
|
(1)
|
3
|
|
420
|
407
|
Net new assets under administration (CHF billion)⁶
|
|
(7.6)
|
(2.4)
|
(0.1)
|
|
|
|
|
0.3
|
24.0
|
Gross margin on assets under administration (bps)
|
|
3
|
3
|
9
|
|
0
|
(67)
|
|
3
|
5
|
|
|
|
|
|
|
|
|
|
|
|
Additional information
|
|
|
|
|
|
|
|
|
|
|
Average attributed equity (CHF billion)⁷
|
|
1.4
|
1.4
|
1.5
|
|
0
|
(7)
|
|
1.4
|
1.6
|
Return on attributed equity (%)
|
|
41.1
|
29.7
|
45.6
|
|
|
|
|
32.3
|
36.5
|
Risk-weighted assets (fully applied, CHF billion)⁸
|
|
3.9
|
3.7
|
2.6
|
|
5
|
50
|
|
3.9
|
2.6
|
Return on risk-weighted assets, gross (%)⁹
|
|
52.5
|
63.1
|
79.7
|
|
|
|
|
65.7
|
62.3
|
Leverage ratio denominator (fully applied, CHF billion)¹⁰
|
|
2.7
|
2.5
|
2.7
|
|
8
|
0
|
|
2.7
|
2.7
|
Goodwill and intangible assets (CHF billion)
|
|
1.4
|
1.4
|
1.4
|
|
0
|
0
|
|
1.4
|
1.4
|
Personnel (full-time equivalents)
|
|
2,308
|
2,326
|
2,277
|
|
(1)
|
1
|
|
2,308
|
2,277
|
1 Comparative figures in this table may differ from those
originally published in quarterly and annual reports due to adjustments
following organizational changes, restatements due to the retrospective
adoption of new accounting standards or changes in accounting policies, and
events after the reporting period. 2 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), gains or losses from seed money and
co-investments, funding costs, gains and losses on the sale of subsidiaries
and businesses and other items that are not performance fees. 3 Adjusted
results are non-GAAP financial measures as defined by SEC regulations. 4
Refer to the “Measurement of performance” section of our Annual Report 2015
for the definitions of our key performance indicators. 5 Includes UBS and
third-party fund assets, for which the fund services unit provides
professional services, including fund setup, accounting and reporting for
traditional investment funds and alternative funds. 6 Inflows of assets
under administration from new and existing funds less outflows from existing
funds or fund exits. 7 Refer to the “Capital management” section of this
report for more information. 8 Based on the Basel III framework as
applicable for Swiss systemically relevant banks (SRBs). Refer to the
“Capital management” section of this report for more information. 9 Based
on fully applied RWA. 10 Calculated in accordance with Swiss SRB rules.
Refer to the “Capital management” section of this report for more
information.
|
Results:
4Q16
vs
4Q15
Profit before tax decreased by CHF 27
million or 16% to CHF 144 million, mainly as the fourth quarter of 2015
included a gain of CHF 56 million on the sale of our Alternative Fund Services
(AFS) business. Adjusted profit before tax increased by CHF 3 million or 2% to
CHF 156 million.
Operating income
Total operating income decreased by
CHF 69 million or 12% to CHF 499 million. Excluding the aforementioned gain on
sale of our AFS business, adjusted operating income decreased by CHF 13 million
or 3%. Adjusted net management fees were unchanged at CHF 468 million. The
positive effects of fee true-ups of CHF 17 million as well as favorable market
and currency movements were largely offset by lower revenues following the sale
of AFS and a decrease in fees related to net new money outflows. Performance
fees decreased by CHF 13 million, mainly in Equities, Multi Asset &
O’Connor.
As of 31 December 2016,
approximately
43% of performance
fee-eligible assets within our hedge fund businesses exceeded high-water marks
compared with 38% in the prior quarter. These assets are reported within
Equities, Multi Asset & O’Connor and Solutions.
Operating expenses
Total operating expenses decreased by
CHF 41 million or 10% to CHF 356 million. Adjusted operating expenses decreased
by CHF 15 million or 4% to CHF 344 million, mainly as a result of lower
expenses for variable compensation, as well as lower salary expenses primarily
due to the aforementioned sale of our AFS business. These decreases were partly
offset by higher expenses for services from Corporate Center and other business
divisions.
Net new money
Excluding money market flows, net new
money outflows were CHF 9.8 billion compared with CHF 8.9 billion in the same
quarter of the prior year, and the annualized net new money growth rate was
negative 6.7% compared with negative 6.2%. By client segment, net outflows from
third parties were CHF 3.9 billion compared with CHF 7.6 billion. Net outflows
from clients of UBS’s wealth management businesses were CHF 5.9 billion
compared with CHF 1.3 billion, largely driven by changes in asset allocation.
Money market net inflows were CHF 2.4 billion
compared with net outflows of CHF 2.1 billion in the same quarter of the prior
year.
In the third
quarter
of 2016, net new money was CHF 2.0 billion excluding
money
market flows and included a single
inflow of CHF 3.9 billion into a fixed income short-duration segregated
mandate.
Invested assets:
4Q16
vs
3Q16
Invested assets increased to CHF 656
billion from CHF 650 billion due to positive foreign currency translation
effects of CHF 9 billion and positive market performance of CHF 5 billion,
partly offset by net new money outflows of CHF 7 billion.
As of 31 December 2016, CHF 385 billion or
59% of invested assets were
managed
in active, non-money market strategies. CHF 206 billion or 31% of
invested assets were managed in indexed strategies, and CHF 66 billion or 10%
were managed in money market assets. On a regional
basis
, 34% of invested assets related to clients serviced from
Switzerland, 24% from the Americas, 22% from Europe, Middle East and Africa,
and 20% from Asia Pacific.
Assets under administration:
4Q16
vs
3Q16
Total assets under administration
decreased to CHF 420 billion from CHF 424 billion, reflecting net new assets
under administration outflows of CHF 8 billion, partly offset by positive
foreign currency translation effects of CHF 3 billion and positive market
performance of CHF 2 billion.
Investment Bank
Investment Bank¹
|
|
|
|
|
|
|
|
|
|
|
|
|
As of or for the quarter ended
|
|
% change from
|
|
For the year ended
|
CHF million, except where
indicated
|
|
31.12.16
|
30.9.16
|
31.12.15
|
|
3Q16
|
4Q15
|
|
31.12.16
|
31.12.15
|
|
|
|
|
|
|
|
|
|
|
|
Results
|
|
|
|
|
|
|
|
|
|
|
Corporate Client Solutions
|
|
708
|
532
|
650
|
|
33
|
9
|
|
2,382
|
2,960
|
Advisory
|
|
244
|
149
|
227
|
|
64
|
7
|
|
691
|
709
|
Equity Capital Markets
|
|
204
|
122
|
197
|
|
67
|
4
|
|
674
|
1,047
|
Debt Capital Markets
|
|
171
|
188
|
114
|
|
(9)
|
50
|
|
740
|
691
|
Financing Solutions
|
|
103
|
98
|
109
|
|
5
|
(6)
|
|
360
|
441
|
Risk Management
|
|
(14)
|
(25)
|
2
|
|
(44)
|
|
|
(84)
|
73
|
Investor Client Services
|
|
1,311
|
1,265
|
1,121
|
|
4
|
17
|
|
5,318
|
5,929
|
Equities
|
|
891
|
797
|
733
|
|
12
|
22
|
|
3,486
|
3,962
|
Foreign Exchange, Rates and Credit
|
|
419
|
469
|
388
|
|
(11)
|
8
|
|
1,831
|
1,967
|
Income
|
|
2,019
|
1,797
|
1,771
|
|
12
|
14
|
|
7,699
|
8,889
|
Credit loss (expense) / recovery
|
|
(5)
|
(1)
|
(50)
|
|
400
|
(90)
|
|
(11)
|
(68)
|
Total operating income
|
|
2,014
|
1,796
|
1,721
|
|
12
|
17
|
|
7,688
|
8,821
|
Personnel expenses
|
|
742
|
784
|
574
|
|
(5)
|
29
|
|
3,082
|
3,220
|
General and administrative expenses
|
|
272
|
170
|
318
|
|
60
|
(14)
|
|
805
|
841
|
Services (to) / from Corporate Center and other business
divisions
|
|
687
|
672
|
740
|
|
2
|
(7)
|
|
2,765
|
2,817
|
of which: services from CC –
Services
|
|
661
|
662
|
715
|
|
0
|
(8)
|
|
2,675
|
2,731
|
Depreciation and impairment of property, equipment and software
|
|
3
|
6
|
7
|
|
(50)
|
(57)
|
|
21
|
26
|
Amortization and impairment of intangible assets
|
|
3
|
3
|
3
|
|
0
|
0
|
|
12
|
24
|
Total operating expenses
|
|
1,708
|
1,635
|
1,641
|
|
4
|
4
|
|
6,684
|
6,929
|
Business division operating
profit / (loss) before tax
|
|
306
|
161
|
80
|
|
90
|
283
|
|
1,004
|
1,892
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted results²
|
|
|
|
|
|
|
|
|
|
|
Total operating income as
reported
|
|
2,014
|
1,796
|
1,721
|
|
12
|
17
|
|
7,688
|
8,821
|
of which: gains on sale of
financial assets available for sale³
|
|
78
|
|
|
|
|
|
|
78
|
11
|
Total operating income
(adjusted)
|
|
1,936
|
1,796
|
1,721
|
|
8
|
12
|
|
7,610
|
8,810
|
Total operating expenses as
reported
|
|
1,708
|
1,635
|
1,641
|
|
4
|
4
|
|
6,684
|
6,929
|
of which: personnel-related
restructuring expenses
|
|
40
|
60
|
12
|
|
|
|
|
154
|
14
|
of which:
non-personnel-related restructuring expenses
|
|
5
|
3
|
2
|
|
|
|
|
14
|
7
|
of which: restructuring
expenses allocated from CC – Services
|
|
72
|
118
|
129
|
|
|
|
|
410
|
376
|
of which: impairment of an
intangible asset
|
|
|
|
|
|
|
|
|
|
11
|
Total operating expenses
(adjusted)
|
|
1,592
|
1,454
|
1,498
|
|
9
|
6
|
|
6,107
|
6,522
|
Business division operating
profit / (loss) before tax as reported
|
|
306
|
161
|
80
|
|
90
|
283
|
|
1,004
|
1,892
|
Business division operating
profit / (loss) before tax (adjusted)
|
|
344
|
342
|
223
|
|
1
|
54
|
|
1,503
|
2,288
|
|
|
|
|
|
|
|
|
|
|
|
Key performance
indicators⁴
|
|
|
|
|
|
|
|
|
|
|
Pre-tax profit growth (%)
|
|
282.5
|
(67.5)
|
(63.1)
|
|
|
|
|
(46.9)
|
|
Cost / income ratio (%)
|
|
84.6
|
91.0
|
92.7
|
|
|
|
|
86.8
|
78.0
|
Return on attributed equity (%)⁵
|
|
16.1
|
8.5
|
4.4
|
|
|
|
|
13.1
|
25.9
|
Return on assets, gross (%)
|
|
3.4
|
2.8
|
2.7
|
|
|
|
|
3.0
|
3.2
|
Average VaR (1-day, 95% confidence, 5 years of historical data)
|
|
10
|
8
|
12
|
|
25
|
(17)
|
|
9
|
12
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted key performance indicators⁴
|
|
|
|
|
|
|
|
|
|
|
Pre-tax profit growth (%)
|
|
54.3
|
(44.3)
|
(19.2)
|
|
|
|
|
(34.3)
|
|
Cost / income ratio (%)
|
|
82.0
|
80.9
|
84.6
|
|
|
|
|
80.1
|
73.5
|
Return on attributed equity (%)⁵
|
|
18.1
|
18.0
|
12.2
|
|
|
|
|
19.6
|
31.3
|
Return on assets, gross (%)
|
|
3.2
|
2.8
|
2.7
|
|
|
|
|
3.0
|
3.2
|
Average VaR (1-day, 95% confidence, 5 years of historical data)
|
|
10
|
8
|
12
|
|
25
|
(17)
|
|
9
|
12
|
Investment Bank¹ (continued)
|
|
|
|
|
|
|
As of or for the quarter ended
|
|
% change from
|
|
For the year ended
|
CHF million, except where
indicated
|
|
31.12.16
|
30.9.16
|
31.12.15
|
|
3Q16
|
4Q15
|
|
31.12.16
|
31.12.15
|
|
|
|
|
|
|
|
|
|
|
|
Additional information
|
|
|
|
|
|
|
|
|
|
|
Total assets (CHF billion)⁶
|
|
242.3
|
237.8
|
253.5
|
|
2
|
(4)
|
|
242.3
|
253.5
|
Average attributed equity (CHF billion)⁵
|
|
7.6
|
7.6
|
7.3
|
|
0
|
4
|
|
7.7
|
7.3
|
Risk-weighted assets (fully applied, CHF billion)⁷
|
|
70.4
|
64.9
|
62.9
|
|
8
|
12
|
|
70.4
|
62.9
|
Return on risk-weighted assets, gross (%)⁸
|
|
11.9
|
11.2
|
10.8
|
|
|
|
|
11.9
|
13.7
|
Leverage ratio denominator (fully applied, CHF billion)⁹
|
|
231.2
|
246.4
|
268.0
|
|
(6)
|
(14)
|
|
231.2
|
268.0
|
Goodwill and intangible assets (CHF billion)
|
|
0.1
|
0.1
|
0.1
|
|
0
|
0
|
|
0.1
|
0.1
|
Compensation ratio (%)
|
|
36.8
|
43.6
|
32.4
|
|
|
|
|
40.0
|
36.2
|
Impaired loan portfolio as a percentage of total loan portfolio,
gross (%)¹⁰
|
|
0.9
|
0.8
|
1.5
|
|
|
|
|
0.9
|
1.5
|
Personnel (full-time equivalents)
|
|
4,734
|
4,917
|
5,243
|
|
(4)
|
(10)
|
|
4,734
|
5,243
|
1 Comparative figures in this table may differ from those
originally published in quarterly and annual reports due to adjustments
following organizational changes, restatements due to retrospective adoption
of new accounting standards or changes in accounting policies, and events
after the reporting period. 2 Adjusted results are non-GAAP financial
measures as defined by SEC regulations. 3 Reflects gains on partial sales of
our investment in Markit. 4 Refer to the “Measurement of performance”
section of our Annual Report 2015 for the definitions of our key performance
indicators. 5 Refer to the “Capital management” section of this report for
more information. 6 Based on third-party view, i.e., without intercompany
balances. 7 Based on the Basel III framework as applicable for Swiss
systemically relevant banks (SRBs). Refer to the “Capital management” section
of this report for more information. 8 Based on fully applied RWA. 9
Calculated in accordance with Swiss SRB rules. Refer to the “Capital
management” section of this report for more information. 10 Refer to the
“Risk management and control” section of this report for more information on
impaired loan exposures.
|
Results: 4Q16 vs 4Q15
Profit before tax increased by CHF 226
million to CHF 306 million and adjusted profit before tax increased by CHF 121
million or 54% to CHF 344 million.
Operating income
Total operating income increased by
CHF 293 million or 17% to CHF 2,014 million. Excluding a gain of CHF 78 million
from a further partial sale of our investment in Markit, adjusted operating
income increased by CHF 215 million or 12% to CHF 1,936 million, mainly as a
result of higher revenues in our Equities business and in our Debt Capital
Markets business. Furthermore, net credit loss expenses were CHF 5 million
compared with CHF 50 million, reflecting lower expenses related to the energy
sector. In US dollar terms, adjusted operating income increased 13%.
Operating income by business unit:
Corporate Client Solutions
Corporate Client Solutions revenues
increased by CHF 58 million or 9% to CHF 708 million, mainly due to CHF 57
million higher revenues in Debt Capital Markets. In US dollar terms, revenues
also increased 9%.
Advisory revenues increased by CHF 17 million
to CHF 244 million, reflecting higher revenues from merger and acquisition
transactions despite a broadly unchanged fee pool, partly offset by lower
revenues from private transactions.
Equity Capital Markets revenues increased to
CHF 204 million from CHF 197 million, driven by higher revenues from private
transactions.
Debt Capital Markets revenues increased to
CHF 171 million from CHF 114 million, due to higher leveraged finance revenues
compared with a weak prior-year quarter.
Financing Solutions revenues decreased by CHF
6 million to CHF 103 million, primarily reflecting lower client activity in
structured financing, largely offset by increases in the real estate finance
business.
Risk Management revenues were negative CHF 14
million compared with positive CHF 2 million, reflecting tightening credit
spreads on portfolio hedges.
Investor Client Services
Investor Client Services revenues
increased by CHF 190 million or 17% to CHF 1,311 million. Excluding the
aforementioned gain of CHF 78 million, Investor Client Services revenues
increased by CHF 112 million or 10% to CHF 1,233 million due to CHF 158 million
higher revenues in Equities, partly offset by CHF 47 million lower revenues in
Foreign Exchange, Rates and Credit. In US dollar terms, adjusted revenues also increased
10%.
Equities
Equities revenues increased to CHF
891 million from CHF 733 million with higher revenues across all products.
Cash revenues increased to CHF 294 million
from CHF 281 million, mainly due to higher client activity.
Derivatives revenues increased to CHF 196 million
from CHF 95 million, reflecting improved trading performance.
Financing Services revenues increased to CHF
397 million from CHF 359 million, driven by higher prime brokerage revenues, as
a result of increased client activity.
Foreign Exchange, Rates and Credit
Foreign Exchange, Rates and Credit
revenues increased to CHF 419 million from CHF 388 million. Excluding the
aforementioned gain of CHF 78 million, adjusted revenues decreased to CHF 341
million from CHF 388 million, primarily in emerging markets products and in
foreign exchange and interest rate options amid a period of higher market
volatility. The decrease was partly offset by continued growth in client
activity across all the product sectors.
Operating expenses
Total operating expenses increased by
CHF 67 million or 4% to CHF 1,708 million, and adjusted operating expenses
increased by CHF 94 million or 6% to CHF 1,592 million.
Personnel expenses increased to CHF 742
million from CHF 574 million and adjusted personnel expenses increased to CHF 702
million from CHF 562 million, largely as expenses for accruals for variable
compensation in 2016 were more evenly spread across the year than in 2015. The
increase in variable compensation in the fourth quarter of 2016 was partly
offset by lower salary expenses, primarily as a result of our cost reduction
programs.
General and administrative expenses decreased
by CHF 46 million to CHF 272 million and on an adjusted basis decreased by CHF
49 million to CHF 267 million, mainly as the expense for the UK bank levy
decreased from CHF 98 million to CHF 85 million as well as due to reduced
travel and entertainment expenses.
Net expenses for services from Corporate
Center and other business divisions decreased to CHF 687 million from CHF 740
million and adjusted net expenses increased to CHF 615 million from CHF 611
million.
Risk-weighted assets and leverage ratio denominator:
4Q16 vs 3Q16
Risk-weighted assets
Fully applied risk-weighted assets
increased by CHF 5 billion to CHF 70 billion as of 31 December 2016, mainly due
to an increase in market risk RWA.
®
Refer to the “Capital management” section of this report for more
information
Leverage ratio denominator
The fully applied leverage ratio
denominator decreased by CHF 15 billion to CHF 231 billion as of 31 December
2016, primarily in our Equities and Foreign Exchange, Rates and Credit
businesses, mainly reflecting effective resource management.
®
Refer to the “Capital management” and “Balance sheet, liquidity and
funding management” sections of this report for more information
Corporate
Center
Corporate Center¹
|
|
|
|
|
|
|
|
|
|
|
|
|
As of or for the quarter ended
|
|
% change from
|
|
For the year ended
|
CHF million, except where
indicated
|
|
31.12.16
|
30.9.16
|
31.12.15
|
|
3Q16
|
4Q15
|
|
31.12.16
|
31.12.15
|
|
|
|
|
|
|
|
|
|
|
|
Results
|
|
|
|
|
|
|
|
|
|
|
Total operating income
|
|
(256)
|
10
|
(183)
|
|
|
40
|
|
(357)
|
315
|
Personnel expenses
|
|
964
|
976
|
1,059
|
|
(1)
|
(9)
|
|
3,899
|
4,049
|
General and administrative expenses
|
|
1,204
|
1,400
|
1,346
|
|
(14)
|
(11)
|
|
4,791
|
5,311
|
Services (to) / from business divisions
|
|
(1,994)
|
(1,943)
|
(2,113)
|
|
3
|
(6)
|
|
(7,933)
|
(7,894)
|
Depreciation and impairment of property, equipment and software
|
|
247
|
237
|
248
|
|
4
|
0
|
|
944
|
868
|
Amortization and impairment of intangible assets
|
|
5
|
5
|
5
|
|
0
|
0
|
|
21
|
21
|
Total operating expenses
|
|
426
|
675
|
546
|
|
(37)
|
(22)
|
|
1,722
|
2,354
|
Operating profit / (loss)
before tax
|
|
(682)
|
(665)
|
(729)
|
|
3
|
(6)
|
|
(2,079)
|
(2,040)
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted results²
|
|
|
|
|
|
|
|
|
|
|
Total operating income as
reported
|
|
(256)
|
10
|
(183)
|
|
|
40
|
|
(357)
|
315
|
of which: own credit on
financial liabilities designated at fair value
|
|
|
|
35
|
|
|
|
|
|
553
|
of which: gains on sales of
real estate
|
|
|
|
|
|
|
|
|
120
|
378
|
of which: net gains /
(losses) related to the buyback of debt
|
|
|
|
(257)
|
|
|
|
|
|
(257)
|
of which: net foreign
currency translation gains / (losses)³
|
|
27
|
|
115
|
|
|
|
|
(122)
|
88
|
Total operating income
(adjusted)
|
|
(283)
|
10
|
(76)
|
|
|
272
|
|
(355)
|
(447)
|
Total operating expenses as
reported
|
|
426
|
675
|
546
|
|
(37)
|
(22)
|
|
1,722
|
2,354
|
of which: personnel-related
restructuring expenses
|
|
114
|
159
|
146
|
|
|
|
|
519
|
420
|
of which:
non-personnel-related restructuring expenses
|
|
163
|
173
|
252
|
|
|
|
|
623
|
719
|
of which: restructuring
expenses allocated from CC – Services
|
|
(230)
|
(320)
|
(362)
|
|
|
|
|
(1,064)
|
(943)
|
Total operating expenses
(adjusted)
|
|
379
|
664
|
510
|
|
(43)
|
(26)
|
|
1,644
|
2,158
|
Operating profit / (loss)
before tax as reported
|
|
(682)
|
(665)
|
(729)
|
|
3
|
(6)
|
|
(2,079)
|
(2,040)
|
Operating profit / (loss)
before tax (adjusted)
|
|
(662)
|
(654)
|
(586)
|
|
1
|
13
|
|
(1,999)
|
(2,606)
|
|
|
|
|
|
|
|
|
|
|
|
Additional information
|
|
|
|
|
|
|
|
|
|
|
Average attributed equity (CHF billion)⁴
|
|
29.0
|
28.9
|
24.7
|
|
0
|
17
|
|
29.1
|
25.8
|
Total assets (CHF billion)⁵
|
|
359.4
|
365.8
|
354.5
|
|
(2)
|
1
|
|
359.4
|
354.5
|
Risk-weighted assets (fully applied, CHF billion)⁶
|
|
57.1
|
57.5
|
60.2
|
|
(1)
|
(5)
|
|
57.1
|
60.2
|
Leverage ratio denominator (fully applied, CHF billion)⁷
|
|
300.7
|
295.2
|
291.2
|
|
2
|
3
|
|
300.7
|
291.2
|
Personnel (full-time equivalents)
|
|
23,955
|
24,059
|
23,671
|
|
0
|
1
|
|
23,955
|
23,671
|
1 Comparative figures in this table may differ from those
originally published in quarterly and annual reports due to adjustments
following organizational changes, restatements due to the retrospective
adoption of new accounting standards or changes in accounting policies, and
events after the reporting period. 2 Adjusted results are non-GAAP
financial measures as defined by SEC regulations. 3 Related to the
disposal of foreign subsidiaries and branches. 4 Refer to the “Capital
management” section of this report for more information. 5 Based on
third-party view, i.e., without intercompany balances. 6 Based on the
Basel III framework as applicable for Swiss systemically relevant banks
(SRBs). Refer to the “Capital management” section of this report for more
information. 7 Calculated in accordance with Swiss SRB rules. Refer to the
“Capital management” section of this report for more information.
|
Corporate Center – Services
Corporate Center – Services¹
|
|
|
|
|
|
|
|
|
|
|
|
|
As of or for the quarter ended
|
|
% change from
|
|
For the year ended
|
CHF million, except where
indicated
|
|
31.12.16
|
30.9.16
|
31.12.15
|
|
3Q16
|
4Q15
|
|
31.12.16
|
31.12.15
|
|
|
|
|
|
|
|
|
|
|
|
Results
|
|
|
|
|
|
|
|
|
|
|
Total operating income
|
|
(59)
|
(66)
|
(54)
|
|
(11)
|
9
|
|
(102)
|
241
|
Personnel expenses
|
|
940
|
946
|
1,033
|
|
(1)
|
(9)
|
|
3,801
|
3,903
|
General and administrative expenses
|
|
1,114
|
974
|
1,195
|
|
14
|
(7)
|
|
4,145
|
4,483
|
Depreciation and impairment of property, equipment and software
|
|
247
|
237
|
248
|
|
4
|
0
|
|
944
|
868
|
Amortization and impairment of intangible assets
|
|
5
|
5
|
5
|
|
0
|
0
|
|
21
|
21
|
Total operating expenses
before allocations to BDs and other CC units
|
|
2,305
|
2,162
|
2,481
|
|
7
|
(7)
|
|
8,911
|
9,274
|
Services (to) / from business divisions and other CC units
|
|
(2,049)
|
(2,010)
|
(2,191)
|
|
2
|
(6)
|
|
(8,164)
|
(8,215)
|
of which: services to Wealth
Management
|
|
(592)
|
(557)
|
(627)
|
|
6
|
(6)
|
|
(2,256)
|
(2,209)
|
of which: services to Wealth
Management Americas
|
|
(308)
|
(302)
|
(311)
|
|
2
|
(1)
|
|
(1,221)
|
(1,193)
|
of which: services to
Personal & Corporate Banking
|
|
(284)
|
(294)
|
(298)
|
|
(3)
|
(5)
|
|
(1,186)
|
(1,180)
|
of which: services to Asset
Management
|
|
(126)
|
(130)
|
(139)
|
|
(3)
|
(9)
|
|
(530)
|
(523)
|
of which: services to
Investment Bank
|
|
(661)
|
(662)
|
(715)
|
|
0
|
(8)
|
|
(2,675)
|
(2,731)
|
of which: services to CC –
Group ALM
|
|
(31)
|
(25)
|
(23)
|
|
24
|
35
|
|
(110)
|
(96)
|
of which: services to CC –
Non-core and Legacy Portfolio
|
|
(58)
|
(57)
|
(81)
|
|
2
|
(28)
|
|
(225)
|
(313)
|
Total operating expenses
|
|
256
|
152
|
291
|
|
68
|
(12)
|
|
747
|
1,059
|
Operating profit / (loss)
before tax
|
|
(315)
|
(218)
|
(345)
|
|
44
|
(9)
|
|
(849)
|
(818)
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted results²
|
|
|
|
|
|
|
|
|
|
|
Total operating income as
reported
|
|
(59)
|
(66)
|
(54)
|
|
(11)
|
9
|
|
(102)
|
241
|
of which: gains on sales of
real estate
|
|
|
|
|
|
|
|
|
120
|
378
|
Total operating income
(adjusted)
|
|
(59)
|
(66)
|
(54)
|
|
(11)
|
9
|
|
(222)
|
(137)
|
Total operating expenses as
reported before allocations
|
|
2,305
|
2,162
|
2,481
|
|
7
|
(7)
|
|
8,911
|
9,274
|
of which: personnel-related
restructuring expenses
|
|
114
|
159
|
144
|
|
|
|
|
518
|
406
|
of which:
non-personnel-related restructuring expenses
|
|
163
|
173
|
252
|
|
|
|
|
623
|
719
|
Total operating expenses
(adjusted) before allocations
|
|
2,028
|
1,830
|
2,085
|
|
11
|
(3)
|
|
7,770
|
8,151
|
Services (to) / from BDs and other CC units
|
|
(2,049)
|
(2,010)
|
(2,191)
|
|
2
|
(6)
|
|
(8,164)
|
(8,215)
|
of which: restructuring
expenses allocated to BDs and other CC units
|
|
(237)
|
(327)
|
(377)
|
|
|
|
|
(1,084)
|
(986)
|
Total operating expenses as
reported after allocations
|
|
256
|
152
|
291
|
|
68
|
(12)
|
|
747
|
1,059
|
Total operating expenses
(adjusted) after allocations
|
|
216
|
148
|
272
|
|
46
|
(21)
|
|
690
|
919
|
Operating profit / (loss)
before tax as reported
|
|
(315)
|
(218)
|
(345)
|
|
44
|
(9)
|
|
(849)
|
(818)
|
Operating profit / (loss)
before tax (adjusted)
|
|
(275)
|
(214)
|
(326)
|
|
29
|
(16)
|
|
(912)
|
(1,056)
|
|
|
|
|
|
|
|
|
|
|
|
Additional information
|
|
|
|
|
|
|
|
|
|
|
Average attributed equity (CHF billion)³
|
|
22.8
|
22.8
|
18.8
|
|
0
|
21
|
|
22.8
|
19.6
|
Total assets (CHF billion)⁴
|
|
23.7
|
24.0
|
22.6
|
|
(1)
|
5
|
|
23.7
|
22.6
|
Risk-weighted assets (fully applied, CHF billion)⁵
|
|
27.6
|
27.6
|
23.6
|
|
0
|
17
|
|
27.6
|
23.6
|
Leverage ratio denominator (fully applied, CHF billion)⁶
|
|
5.8
|
6.5
|
4.8
|
|
(11)
|
21
|
|
5.8
|
4.8
|
Personnel (full-time equivalents)
|
|
23,750
|
23,857
|
23,470
|
|
0
|
1
|
|
23,750
|
23,470
|
1 Comparative figures in this table may differ from those
originally published in quarterly and annual reports due to adjustments
following organizational changes, restatements due to retrospective adoption
of new accounting standards or changes in accounting policies, and events
after the reporting period. 2 Adjusted results are non-GAAP financial
measures as defined by SEC regulations. 3 Refer to the “Capital management”
section of this report for more information. 4 Based on third-party view,
i.e., without intercompany balances. 5 Based on the Basel III framework as
applicable for Swiss systemically relevant banks (SRBs). Refer to the
“Capital management” section of this report for more information. 6
Calculated in accordance with Swiss SRB rules. Refer to the “Capital
management” section of this report for more information.
|
Results: 4Q16 vs 4Q15
Corporate Center – Services recorded
a loss before tax of CHF 315 million compared with CHF 345 million, and CHF
275 million on an adjusted basis compared with CHF 326 million.
Operating income
Operating income was negative CHF 59
million compared with negative CHF 54 million, mainly due to lower income from
the investment of the Group’s equity allocated from Corporate Center – Group
Asset and Liability Management.
Operating expenses
Operating expenses before service
allocations to business divisions and other Corporate Center units
Before allocations to business
divisions and other Corporate Center units, total operating expenses decreased
by CHF 176 million or 7% to CHF 2,305 million and adjusted operating expenses
before allocations decreased by CHF 57 million or 3% to CHF 2,028 million.
Personnel expenses decreased by CHF 93
million to CHF 940 million and by CHF 63 million to CHF 826 million on an
adjusted basis. The decrease in adjusted personnel expenses was mainly a result
of lower pension costs for our Swiss pension plan, reflecting the effect of
changes to demographic and financial assumptions, decreased expenses for variable compensation, as well
as a release of accruals for untaken vacation compared with an expense.
General and administrative expenses decreased
by CHF 81 million to CHF 1,114 million and adjusted general and administrative
expenses increased by CHF 19 million, mainly reflecting higher expenses for
occupancy and marketing.
Depreciation expenses decreased to CHF 247
million from CHF 248 million, and by CHF 11 million to CHF 237 million on an
adjusted basis.
®
Refer to the “Group performance
” section of this report for more information on the estimated
useful life of certain software
Services to / from business divisions
and other Corporate Center units
Corporate Center – Services allocated
expenses of CHF 2,049 million to the business divisions and other Corporate
Center units compared with CHF 2,191 million. Adjusted net allocated expenses for services to
business divisions and other Corporate Center units
were CHF 1,812 million compared
with CHF 1,814 million.
Operating
expenses after service allocations to
/
from business divisions and other Corporate Center units
Corporate Center – Services retains
costs related to Group governance functions and other corporate activities,
certain strategic and regulatory projects and certain restructuring expenses. Total operating expenses
remaining in Corporate Center – Services after allocations decreased to CHF 256 million from CHF 291 million and to
CHF 216 million from CHF 272 million on an adjusted basis.
Corporate Center – Group Asset and Liability Management
Corporate Center – Group ALM¹
|
|
|
|
|
|
|
|
|
|
|
|
|
As of or for the quarter ended
|
|
% change from
|
|
For the year ended
|
CHF million, except where
indicated
|
|
31.12.16
|
30.9.16
|
31.12.15
|
|
3Q16
|
4Q15
|
|
31.12.16
|
31.12.15
|
|
|
|
|
|
|
|
|
|
|
|
Results
|
|
|
|
|
|
|
|
|
|
|
Business division-aligned risk management net income
|
|
210
|
202
|
239
|
|
4
|
(12)
|
|
847
|
878
|
Capital investment and issuance net income
|
|
(6)
|
(5)
|
39
|
|
20
|
|
|
45
|
272
|
Group structural risk management net income
|
|
(163)
|
(141)
|
(174)
|
|
16
|
(6)
|
|
(547)
|
(647)
|
Total risk management net
income before allocations
|
|
41
|
56
|
103
|
|
(27)
|
(60)
|
|
345
|
503
|
Allocations to business divisions and other CC units
|
|
(98)
|
(95)
|
(180)
|
|
3
|
(46)
|
|
(512)
|
(832)
|
of which: Wealth Management
|
|
(87)
|
(95)
|
(118)
|
|
(8)
|
(26)
|
|
(389)
|
(471)
|
of which: Wealth Management
Americas
|
|
(48)
|
(26)
|
(27)
|
|
85
|
78
|
|
(118)
|
(104)
|
of which: Personal &
Corporate Banking
|
|
(71)
|
(81)
|
(111)
|
|
(12)
|
(36)
|
|
(332)
|
(421)
|
of which: Asset Management
|
|
(1)
|
(1)
|
(3)
|
|
0
|
(67)
|
|
(7)
|
(15)
|
of which: Investment Bank
|
|
78
|
66
|
69
|
|
18
|
13
|
|
260
|
211
|
of which: CC – Services
|
|
0
|
0
|
(24)
|
|
|
(100)
|
|
(36)
|
(145)
|
of which: CC – Non-core and
Legacy Portfolio
|
|
31
|
42
|
34
|
|
(26)
|
(9)
|
|
110
|
114
|
Total risk management net
income after allocations
|
|
(57)
|
(39)
|
(75)
|
|
46
|
(24)
|
|
(167)
|
(329)
|
Accounting asymmetries related to economic hedges
|
|
(40)
|
95
|
102
|
|
|
|
|
27
|
(66)
|
Hedge accounting ineffectiveness²
|
|
(20)
|
(23)
|
(21)
|
|
(13)
|
(5)
|
|
7
|
156
|
Net foreign currency translation gains / (losses)³
|
|
27
|
|
115
|
|
|
|
|
(122)
|
88
|
Net gains / (losses) related to the buyback of debt
|
|
|
|
(257)
|
|
|
|
|
|
(257)
|
Own credit on financial liabilities designated at fair value
|
|
|
|
35
|
|
|
|
|
|
553
|
Other
|
|
(53)
|
(3)
|
45
|
|
|
|
|
37
|
133
|
Total operating income as reported
|
|
(144)
|
30
|
(59)
|
|
|
144
|
|
(219)
|
277
|
Total operating income
(adjusted)⁴˒⁵
|
|
(171)
|
30
|
48
|
|
|
|
|
(97)
|
(107)
|
Personnel expenses
|
|
8
|
8
|
7
|
|
0
|
14
|
|
31
|
30
|
General and administrative expenses
|
|
7
|
2
|
9
|
|
250
|
(22)
|
|
17
|
22
|
Depreciation and impairment of property, equipment and software
|
|
0
|
0
|
0
|
|
|
|
|
0
|
0
|
Amortization and impairment of intangible assets
|
|
0
|
0
|
0
|
|
|
|
|
0
|
0
|
Services (to) / from business divisions and other CC units
|
|
(16)
|
(9)
|
(20)
|
|
78
|
(20)
|
|
(49)
|
(57)
|
Total operating expenses
|
|
0
|
0
|
(3)
|
|
|
(100)
|
|
(1)
|
(5)
|
Operating profit / (loss)
before tax as reported
|
|
(144)
|
30
|
(56)
|
|
|
157
|
|
(218)
|
282
|
Operating profit / (loss)
before tax (adjusted)⁴
|
|
(171)
|
30
|
51
|
|
|
|
|
(96)
|
(102)
|
|
|
|
|
|
|
|
|
|
|
|
Additional information
|
|
|
|
|
|
|
|
|
|
|
Average attributed equity (CHF billion)⁶
|
|
4.4
|
4.3
|
3.2
|
|
2
|
38
|
|
4.3
|
3.3
|
Total assets (CHF billion)⁷
|
|
267.2
|
258.3
|
237.5
|
|
3
|
13
|
|
267.2
|
237.5
|
Risk-weighted assets (fully applied, CHF billion)⁸
|
|
10.6
|
11.1
|
6.0
|
|
(5)
|
77
|
|
10.6
|
6.0
|
Leverage ratio denominator (fully applied, CHF billion)⁹
|
|
272.4
|
263.4
|
247.9
|
|
3
|
10
|
|
272.4
|
247.9
|
Personnel (full-time equivalents)
|
|
142
|
137
|
125
|
|
4
|
14
|
|
142
|
125
|
1 Comparative figures in this table may differ from those
originally published in quarterly and annual reports due to adjustments following
organizational changes, restatements due to retrospective adoption of new
accounting standards or changes in accounting policies, and events after the
reporting period. 2 Does not include ineffectiveness of hedges of net
investments in foreign operations. 3 Related to the disposal of foreign
subsidiaries and branches. 4 Adjusted results are non-GAAP financial
measures as defined by SEC regulations. 5 Adjusted total operating income
excludes foreign currency translation gains or losses, net gains or losses
related to the buyback of debt and own credit on financial liabilities
designated at fair value. 6 Refer to the “Capital management” section of
this report for more information. 7 Based on third-party view, i.e.,
without intercompany balances. 8 Based on the Basel III framework as
applicable for Swiss systemically relevant banks (SRBs). Refer to the
“Capital management” section of this report for more information. 9
Calculated in accordance with Swiss SRB rules. Refer to the “Capital
management” section of this report for more information.
|
Results: 4Q16 vs 4Q15
Corporate Center – Group Asset and
Liability Management (Group ALM) recorded a loss before tax of CHF 144 million
compared with CHF 56 million and an adjusted loss before tax of CHF 171 million
compared with an adjusted profit before tax of CHF 51 million, driven by
accounting asymmetries related to economic hedges and negative other net
income.
Operating
income
Total operating income was negative CHF
144 million compared with negative CHF 59 million. On an adjusted basis, total
operating income was negative CHF 171 million compared with positive CHF 48
million.
Business division-aligned risk management
net income
Net income from business
division-aligned risk management activities was CHF 210 million compared with
CHF 239 million, mainly reflecting reduced interest rate risk management
revenues in the banking book for Wealth Management and Personal & Corporate
Banking. This decrease was mainly due to lower penalty fees received from
clients from the early termination of loans and lower interest income from
managing euro-denominated deposits in the current negative interest rate
environment.
Capital
investment and issuance net income
Net income from capital investment
and issuance activities was negative CHF 6 million compared with positive CHF
39 million. This was mainly due to higher net interest expenses as a result of
an increase in total outstanding long-term debt that is eligible for total
loss-absorbing capital. Additionally, interest income from the investment of
the Group’s equity decreased due to lower interest rates.
Group
structural risk management net income
Net income from Group structural risk
management activities was negative CHF 163 million compared with negative CHF
174 million. An increase in income of CHF 178 million from the management of the Group’s high-quality liquid assets
(HQLA), mainly due to wider spreads between certain HQLA and internal funding
liabilities, was largely offset by an increase in net interest expense of CHF
167 million due to issuances of long-term debt during 2016.
Allocations to business divisions and
other Corporate Center units
Combined
net income allocations from risk management activities to business divisions
and other Corporate Center units were CHF 98 million compared with CHF 180
million. This decrease primarily reflects the aforementioned lower net income
from business division-aligned risk management and capital investment and
issuance activities, which are fully allocated to the business divisions and
other Corporate Center units.
Total risk management net income after allocations
Group ALM retained negative CHF 57
million from its risk management activities after allocations compared with
negative CHF 75 million.
Retained income from risk management
activities is entirely related to Group structural risk management and is
mainly the net result of costs from buffers that are maintained by Group ALM at
levels above the total consumption of the business divisions and the revenues
generated by Group ALM from the management of the Group’s HQLA portfolio
relative to the benchmark rates used to allocate the costs. Retained income
from risk management activities can vary significantly quarter on quarter. However,
under current market conditions, we expect it to average around negative CHF 50
million per quarter.
Accounting asymmetries related to
economic hedges
Net income retained by Group ALM due
to accounting asymmetries related to economic hedges was negative CHF 40
million compared with positive CHF 102 million, primarily as gains related to
HQLA classified as available for sale decreased to CHF 19 million from CHF 173
million. The lower magnitude of this asymmetrical result reflects the change
applied since the first quarter of 2016 to classify the majority of newly
purchased HQLA debt securities as financial assets designated at fair value
through profit or loss, instead of classifying them as financial assets
available for sale. In addition, Group ALM retained a loss of CHF 105 million compared
with CHF 20 million on derivatives that economically hedge the currency and
interest rate risk in its long-term debt portfolio.
Hedge
accounting ineffectiveness
Net income related to hedge
accounting ineffectiveness was largely unchanged at negative CHF 20 million
compared with negative CHF 21 million. This ineffectiveness primarily arises
from changes in the spread between LIBOR and the overnight index swap rate due
to differences in the way these impact the valuation of the hedged items and
hedging instruments through either the benchmark rate determining cash flows or
the discount rate.
Other
Other net income was negative CHF 53
million compared with positive CHF 45 million, reflecting negative income
related to own-bond market-making activity in the Investment Bank, lower interest income retained by Group ALM
on behalf of non-controlling interests and losses recorded in the fourth
quarter of 2016 from the Group ALM-managed monthly conversion of non-Swiss
franc profit.
Balance sheet, risk-weighted assets, leverage ratio denominator:
4Q16 vs 3Q16
Balance sheet assets
Balance sheet assets increased by CHF
9 billion to CHF 267 billion, mainly reflecting an increase in the net funds
transferred to Group ALM by the business divisions.
®
Refer to the “Balance sheet, liquidity and funding management”
section of this report for more information
Risk-weighted
assets
Fully applied risk-weighted assets
were stable at CHF 11 billion as of 31 December 2016.
®
Refer to the “Capital management” section of this report for more
information
Leverage ratio denominator
The
fully applied leverage ratio denominator increased to CHF 272 billion from CHF
263 billion, consistent with the increase in balance sheet assets.
®
Refer to the “Capital management” section of this report for more
information
Corporate Center – Non-core and Legacy Portfolio
Corporate Center – Non-core and
Legacy Portfolio¹
|
|
|
|
|
|
|
|
|
|
|
|
|
As of or for the quarter ended
|
|
% change from
|
|
For the year ended
|
CHF million, except where
indicated
|
|
31.12.16
|
30.9.16
|
31.12.15
|
|
3Q16
|
4Q15
|
|
31.12.16
|
31.12.15
|
|
|
|
|
|
|
|
|
|
|
|
Results
|
|
|
|
|
|
|
|
|
|
|
Income
|
|
(43)
|
45
|
(72)
|
|
|
(40)
|
|
(23)
|
(195)
|
Credit loss (expense) / recovery
|
|
(10)
|
1
|
2
|
|
|
|
|
(13)
|
(8)
|
Total operating income
|
|
(53)
|
46
|
(71)
|
|
|
(25)
|
|
(36)
|
(203)
|
Personnel expenses
|
|
16
|
23
|
19
|
|
(30)
|
(16)
|
|
66
|
116
|
General and administrative expenses
|
|
84
|
425
|
142
|
|
(80)
|
(41)
|
|
630
|
806
|
Services (to) / from business divisions and other CC units
|
|
70
|
76
|
97
|
|
(8)
|
(28)
|
|
280
|
379
|
of which: services from CC –
Services
|
|
58
|
57
|
81
|
|
2
|
(28)
|
|
225
|
313
|
Depreciation and impairment of property, equipment and software
|
|
0
|
0
|
0
|
|
|
|
|
0
|
0
|
Amortization and impairment of intangible assets
|
|
0
|
0
|
0
|
|
|
|
|
0
|
0
|
Total operating expenses
|
|
170
|
523
|
258
|
|
(67)
|
(34)
|
|
976
|
1,301
|
Operating profit / (loss)
before tax
|
|
(223)
|
(477)
|
(329)
|
|
(53)
|
(32)
|
|
(1,012)
|
(1,503)
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted results²
|
|
|
|
|
|
|
|
|
|
|
Total operating income as
reported
|
|
(53)
|
46
|
(71)
|
|
|
(25)
|
|
(36)
|
(203)
|
Total operating income
(adjusted)
|
|
(53)
|
46
|
(71)
|
|
|
(25)
|
|
(36)
|
(203)
|
Total operating expenses as
reported
|
|
170
|
523
|
258
|
|
(67)
|
(34)
|
|
976
|
1,301
|
of which: personnel-related
restructuring expenses
|
|
0
|
0
|
1
|
|
|
|
|
1
|
14
|
of which:
non-personnel-related restructuring expenses
|
|
0
|
0
|
0
|
|
|
|
|
0
|
0
|
of which: restructuring
expenses allocated from CC – Services
|
|
8
|
7
|
15
|
|
|
|
|
21
|
43
|
Total operating expenses
(adjusted)
|
|
162
|
516
|
241
|
|
(69)
|
(33)
|
|
955
|
1,245
|
Operating profit / (loss)
before tax as reported
|
|
(223)
|
(477)
|
(329)
|
|
(53)
|
(32)
|
|
(1,012)
|
(1,503)
|
Operating profit / (loss)
before tax (adjusted)
|
|
(215)
|
(470)
|
(312)
|
|
(54)
|
(31)
|
|
(991)
|
(1,447)
|
|
|
|
|
|
|
|
|
|
|
|
Additional information
|
|
|
|
|
|
|
|
|
|
|
Average attributed equity (CHF billion)³
|
|
1.8
|
1.8
|
2.7
|
|
0
|
(33)
|
|
2.1
|
2.9
|
Total assets (CHF billion)⁴
|
|
68.5
|
83.5
|
94.4
|
|
(18)
|
(27)
|
|
68.5
|
94.4
|
Risk-weighted assets (fully applied, CHF billion)⁵
|
|
18.9
|
18.8
|
30.7
|
|
1
|
(38)
|
|
18.9
|
30.7
|
Leverage ratio denominator (fully applied, CHF billion)⁶
|
|
22.4
|
25.2
|
38.5
|
|
(11)
|
(42)
|
|
22.4
|
38.5
|
Personnel (full-time equivalents)
|
|
63
|
65
|
77
|
|
(3)
|
(18)
|
|
63
|
77
|
1 Comparative figures in this table may differ from those originally
published in quarterly and annual reports due to adjustments following
organizational changes, restatements due to retrospective adoption of new
accounting standards or changes in accounting policies, and events after the
reporting period. 2 Adjusted results are non-GAAP financial measures as
defined by SEC regulations. 3 Refer to the “Capital management” section of
this report for more information. 4 Based on third-party view, i.e.,
without intercompany balances. 5 Based on the Basel III framework as
applicable for Swiss systemically relevant banks (SRBs). Refer to the
“Capital management” section of this report for more information. 6
Calculated in accordance with Swiss SRB rules. Refer to the “Capital
management” section of this report for more information.
|
Results:
4Q16 vs 4Q15
Corporate Center – Non-core and
Legacy Portfolio recorded a loss before tax of CHF 223 million compared with
CHF 329 million.
Operating income
Total operating income was negative
CHF 53 million compared with negative CHF 71 million and mainly related to
valuation losses on financial assets designated at fair value. The improved
result was mainly due to lower
losses related to unwind and novation activities. Credit loss was a net expense
of CHF 10 million compared with a net recovery of CHF 2 million.
®
Refer to the
“Risk management and control”
section of this report for more information
Operating expenses
Total operating expenses decreased by
CHF 88 million or 34% to CHF 170 million. Net expenses for provisions for
litigation, regulatory and similar matters decreased by CHF 24 million. In
addition, net expenses for services from other Corporate Center units and
business divisions decreased by CHF 27 million and professional fees were CHF
16 million lower. Furthermore, expenses for the annual UK bank levy decreased
by CHF 17 million to CHF 33 million.
Balance
sheet, risk-weighted assets and leverage ratio denominator:
4Q16 vs 3Q16
Balance sheet assets
Balance sheet assets decreased by CHF
15 billion to CHF 68 billion. Positive replacement values decreased by CHF 14
billion, mainly in interest rate contracts, reflecting increases in interest
rates, maturities and trade terminations. Assets classified as Level 3 in the fair value hierarchy totaled CHF 2.0
billion as of 31 December
2016.
Risk-weighted assets
Fully applied risk-weighted assets
remained stable at CHF 19 billion.
®
Refer to the “Capital management” section of this report for more information
Leverage ratio denominator
The fully applied leverage ratio
denominator decreased to CHF 22 billion from CHF 25 billion, consistent
with the decrease in balance sheet assets.
®
Refer to the “Capital management” and “Balance sheet, liquidity and funding
management” sections of this report for more information
Risk, treasury and capital management
Management report
Risk management and control
Risk management and control
This section provides information on
key developments during the reporting period and should be read in conjunction
with the “Risk management and control” section of our Annual Report 2015.
Credit
risk
Overall credit risk exposures were
broadly unchanged during the fourth quarter of 2016. Net credit loss expenses
were CHF 24 million, which included CHF 13 million related to a closed-out
derivative position in Corporate Center – Non-core and Legacy Portfolio.
Our Swiss lending portfolios continued to perform well, although we
remain watchful for any signs of deterioration in the Swiss economy that could
impact some of our counterparties and lead to an increase in credit loss
expenses from the low levels recently observed.
Oil prices remained around USD 50 during the
fourth quarter, offering some relief to oil producers through improved cash
flows. Nevertheless, we continue to monitor exposures to counterparties in the
oil and gas sector. As of 31 December 2016, our total funded and unfunded net
banking products exposure to this sector, recorded within the Investment Bank,
was CHF 5.1 billion, unchanged from 30 September 2016. As of 31 December 2016,
total specific and collective allowances and provisions against these oil and
gas exposures were CHF 24 million.
Within the Investment Bank, the strong flow
of leveraged loan underwriting activity continued into the fourth quarter,
giving rise to temporary concentrated credit risk exposure. Distribution
of exposures
remained satisfactory,
although delayed regulatory
approvals for some investment grade merger and acquisition transactions
continued to delay distribution of the associated financings beyond original targeted
dates. While
such
delays led to
longer risk periods than originally anticipated, we remain comfortable with our
exposures, considering the investment grade quality. Loan underwriting
exposures are classified as held for trading, with fair values reflecting the
market conditions at the end of the quarter.
Market risk
Our average 1-day, 95% confidence
level, management value-at-risk (VaR) increased slightly to CHF 11 million
during the fourth quarter of 2016. Our regulatory VaR and stressed VaR measures
are more sensitive to changes in our risk profile due to the 10-day holding
periods and higher confidence levels used, and these measures increased more
significantly within the quarter. The increases were driven by various factors
across our Equities and Foreign Exchange, Rates and Credit businesses,
including option expiries and strong client flows. While these measures
returned to lower levels at the end of the quarter, the higher average levels
over the quarter resulted in a significant increase in market risk-related
risk-weighted assets (RWA).
®
Refer to “Risk-weighted assets” in the “Capital management” section
of this report for more information on market risk RWA
We reported two new Group VaR negative
backtesting exceptions in the fourth quarter. One of these was driven by large
market movements at the end of the quarter, particularly in EUR and CHF
interest rate curves. The other was attributable to several factors, including
non-daily marking and valuation processes, profit and loss on risks accounted
for in the capital underpinning of risks-not-in-VaR, and market moves in equity
volatilities. With market risk being managed at such low levels of VaR, the
impact of these factors on the backtesting results is relatively more
significant, contributing to the higher frequency of exceptions. The total
number of negative backtesting exceptions within a 250-business-day window was
seven, which led to an increase in the FINMA VaR multiplier for market risk RWA
from 3.5 to 3.65.
®
Refer to “Market risk” in the “Risk, treasury and capital
management” section of our first, second and third quarter 2016 reports for
more information on our backtesting exceptions
As of 31 December 2016, the interest rate
sensitivity of our banking book to a +1 basis point parallel shift in yield
curves was negative CHF 3.1 million compared with negative CHF 2.3 million as
of 30 September 2016. This fair value change was mainly driven by Wealth
Management Americas, whose modeled client rate duration for non-maturity deposits
decreased in response to higher market rates, and by a reduction in net
interest rate sensitivity within Corporate Center – Group Asset and Liability
Management (Group ALM).
Part of the aforementioned fair value changes
would impact other comprehensive income (OCI). The interest rate sensitivity to
a +1 basis point parallel shift in yield curves of financial assets and
derivatives in the banking book valued through OCI was negative CHF 23 million
as of 31 December 2016. This OCI sensitivity was predominantly attributable to
cash flow hedges denominated in US dollars and, to a lesser extent, in euros
and Swiss francs. These cash flow hedges are not recognized for the purposes of
calculating regulatory capital.
®
Refer to “Sensitivity to interest rate movements” in the “Group
performance” section of this report for more information on the impact of
rising interest rates on equity, capital and net interest income
Country risk
We
remain watchful of developments in Europe, particularly with respect to peripheral
European countries. Our direct
exposure to peripheral European countries remained limited, although we have significant country risk exposure to major
EU economies, including the UK.
Our binding stress scenario within our
combined stress test framework has a eurozone crisis at its core, so that
potential effects are captured in the calculation of our post-stress fully
applied common equity tier 1 (CET1) capital ratio.
We remain comfortable with our direct
exposure to China, and our exposure to other emerging market countries is
generally well diversified.
®
Refer to the “Risk management and control” section of our Annual
Report 2015 for more information
Binding
stress scenario
At least once a year, the Risk
Committee approves the most relevant scenario as the binding scenario to be
used for our regular combined stress test reporting. The binding scenario is
also used for monitoring risk exposure against our minimum capital, earnings
and leverage ratio objectives in our risk appetite framework. In the fourth
quarter of 2016, the Global Deflation scenario was approved as our new binding
scenario, replacing the Global Recession scenario. The new binding scenario is
based on its predecessor, but incorporates the risks that may arise from severe negative rates in major
developed countries.
®
Refer to the “Capital management” section of this report for
information on our post-stress fully applied CET1 capital ratio
Operational risk
We and the industry are experiencing
elevated levels of operational risk in a number of areas, most notably,
operational resilience, conduct, and financial crime.
Operational resilience remains critical,
especially in cyber security, as threats continue to evolve and attacks become
more powerful. We continue to focus on preventive measures and on improving our
ability to recover quickly should a successful attack occur. Conduct risks are
inherent in our businesses and remain a significant focus of regulators and
enforcement authorities. We continue to focus on our programs to strengthen our
culture and controls to mitigate conduct risk with the objective of ensuring
that our business activities impact clients and counterparties fairly and
uphold the integrity of the financial system. Financial crime, including money
laundering, terrorist financing, sanctions violation, fraud, bribery and
corruption, continues to present risks, as emerging technologies and changing
geopolitical risks increase complexity and continued heightened regulatory
attention and expectations result in increased overall risk.
Risk management and control
K
ey risk metrics
Banking and traded products
exposure by business division and Corporate Center unit
|
|
|
31.12.16
|
CHF million
|
|
Wealth
Management
|
Wealth
Management
Americas
|
Personal &
Corporate
Banking
|
Asset
Management
|
Investment
Bank
|
CC –
Services
|
CC –
Group
ALM
|
CC –
Non-core
and Legacy
Portfolio
|
Group
|
Banking products
|
|
|
|
|
|
|
|
|
|
|
Gross exposure¹˒²˒³˒⁴
|
|
107,608
|
56,054
|
153,900
|
545
|
63,553
|
610
|
114,301
|
614
|
497,186
|
of which: loans (on-balance
sheet)
|
|
101,876
|
52,486
|
133,861
|
1
|
12,022
|
43
|
5,962
|
129
|
306,379
|
of which: guarantees and
loan commitments (off-balance sheet)
|
|
3,916
|
933
|
17,883
|
0
|
41,832
|
111
|
2
|
486
|
65,163
|
Total impaired exposure, gross
|
|
77
|
27
|
995
|
|
118
|
0
|
0
|
17
|
1,235
|
of which: impaired loan
exposure, gross
|
|
77
|
27
|
757
|
|
95
|
|
|
17
|
973
|
Total allowances and provisions for credit losses
|
|
62
|
29
|
486
|
0
|
61
|
0
|
0
|
15
|
653
|
Traded
products¹˒⁵
|
|
|
|
|
|
|
|
|
|
|
Gross exposure
|
|
6,285
|
1,661
|
1,544
|
0
|
41,985
|
51,476
|
of which: over-the-counter
derivatives
|
|
5,359
|
35
|
1,420
|
0
|
17,540
|
24,353
|
of which: securities
financing transactions
|
|
0
|
255
|
0
|
0
|
17,414
|
17,669
|
of which: exchange-traded derivatives
|
|
926
|
1,371
|
125
|
0
|
7,031
|
9,454
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30.9.16
|
CHF million
|
|
Wealth
Management
|
Wealth
Management
Americas
|
Personal &
Corporate
Banking
|
Asset
Management
|
Investment
Bank
|
CC –
Services
|
CC –
Group
ALM
|
CC –
Non-core
and Legacy
Portfolio
|
Group
|
Banking products
|
|
|
|
|
|
|
|
|
|
|
Gross exposure¹˒²˒³˒⁴
|
|
109,798
|
52,890
|
151,887
|
445
|
66,770
|
1,186
|
101,438
|
777
|
485,189
|
of which: loans (on-balance
sheet)
|
|
102,556
|
49,460
|
134,439
|
5
|
15,214
|
36
|
6,261
|
127
|
308,098
|
of which: guarantees and
loan commitments (off-balance sheet)
|
|
3,553
|
906
|
15,925
|
0
|
41,222
|
107
|
1
|
649
|
62,363
|
Total impaired exposure, gross
|
|
81
|
26
|
1,095
|
|
107
|
|
|
24
|
1,333
|
of which: impaired loan
exposure, gross
|
|
81
|
26
|
856
|
|
78
|
|
|
24
|
1,065
|
Total allowances and provisions for credit losses
|
|
65
|
28
|
484
|
0
|
56
|
0
|
0
|
16
|
649
|
Traded
products¹˒⁵
|
|
|
|
|
|
|
|
|
|
|
Gross exposure
|
|
6,703
|
1,671
|
1,705
|
0
|
36,290
|
46,369
|
of which: over-the-counter
derivatives
|
|
5,487
|
27
|
1,615
|
0
|
13,680
|
20,809
|
of which: securities
financing transactions
|
|
0
|
257
|
0
|
0
|
17,200
|
17,458
|
of which: exchange-traded
derivatives
|
|
1,216
|
1,387
|
90
|
0
|
5,410
|
8,103
|
1 Internal management view of credit risk, which differs in
certain respects from IFRS. 2 Does not include reclassified securities and
similar acquired securities held by CC – Non-core and Legacy Portfolio. 3
Excludes loans designated at fair value. 4 As of 31 December 2016, IFRS
loans exposure for the Investment Bank and CC – Non-core and Legacy Portfolio
was CHF 10,086 million (30 September 2016: CHF 10,209 million) and CHF 2,606
million (30 September 2016: CHF 2,664 million), respectively. For all other
business divisions and Corporate Center units, IFRS loans exposure was the
same as the internal management view. 5 As counterparty risk for traded
products is managed at counterparty level, no further split between exposures
in the Investment Bank, CC – Non-core and Legacy Portfolio and CC – Group ALM
is provided.
|
Wealth Management, Wealth Management Americas and Personal &
Corporate Banking loan portfolios, gross
|
|
|
Wealth Management
|
|
Wealth Management Americas
|
|
Personal & Corporate Banking
|
CHF million
|
|
31.12.16
|
30.9.16
|
|
31.12.16
|
30.9.16
|
|
31.12.16
|
30.9.16
|
Secured by residential property
|
|
32,208
|
32,341
|
|
10,239
|
9,432
|
|
95,966
|
96,624
|
Secured by commercial / industrial property
|
|
1,974
|
2,082
|
|
0
|
0
|
|
17,819
|
18,117
|
Secured by cash
|
|
14,436
|
15,016
|
|
1,042
|
1,004
|
|
1,884
|
1,837
|
Secured by securities
|
|
46,194
|
46,315
|
|
40,182
|
37,964
|
|
1,990
|
1,653
|
Secured by guarantees and other collateral
|
|
6,697
|
6,464
|
|
716
|
783
|
|
6,707
|
6,261
|
Unsecured loans
|
|
366
|
339
|
|
307
|
276
|
|
9,496
|
9,948
|
Total loans, gross
|
|
101,876
|
102,556
|
|
52,486
|
49,460
|
|
133,861
|
134,439
|
Total loans, net of
allowances
|
|
101,814
|
102,492
|
|
52,455
|
49,430
|
|
133,419
|
133,983
|
Management value-at-risk
(1-day, 95% confidence, 5 years of historical data) by business division and
Corporate Center unit and general market risk type¹
|
|
|
|
|
|
|
Average by risk type
|
CHF million
|
|
Min.
|
Max.
|
Period end
|
Average
|
Equity
|
Interest rates
|
Credit spreads
|
Foreign
exchange
|
Commodities
|
Wealth Management
|
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Wealth Management Americas
|
|
0
|
1
|
1
|
1
|
0
|
1
|
1
|
0
|
0
|
Personal & Corporate Banking
|
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Asset Management
|
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Investment Bank
|
|
6
|
18
|
8
|
10
|
6
|
9
|
4
|
3
|
1
|
CC – Services
|
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
CC – Group ALM
|
|
6
|
8
|
6
|
7
|
0
|
6
|
2
|
1
|
0
|
CC – Non-core and Legacy Portfolio
|
|
4
|
5
|
4
|
4
|
0
|
3
|
2
|
0
|
0
|
Diversification effect²˒³
|
|
|
|
(8)
|
(10)
|
0
|
(8)
|
(5)
|
(1)
|
0
|
Total 31.12.16
|
|
8
|
17
|
11
|
11
|
6
|
11
|
5
|
3
|
1
|
Total 30.9.16
|
|
8
|
14
|
8
|
10
|
5
|
11
|
4
|
2
|
1
|
1 Statistics at individual levels may not be summed to deduce
the corresponding aggregate figures. The minima and maxima for each level may
occur on different days, and likewise, the 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
Difference between the sum of the standalone VaR for the business divisions
and Corporate Center units and the VaR for the Group as a whole. 3 As the
minimum and maximum occur on different days for different business divisions
and Corporate Center units, it is not meaningful to calculate a portfolio
diversification effect.
|
Interest rate sensitivity –
banking book¹˒²
|
CHF million
|
|
–200 bps
|
–100 bps
|
+1 bp
|
+100 bps
|
+200 bps
|
CHF
|
|
(13.0)
|
(13.0)
|
0.5
|
44.8
|
89.3
|
EUR
|
|
(109.0)
|
(91.9)
|
0.0
|
(2.5)
|
(2.6)
|
GBP
|
|
(184.5)
|
(103.0)
|
(0.1)
|
(9.9)
|
(27.7)
|
USD
|
|
823.2
|
358.9
|
(3.4)
|
(347.2)
|
(704.3)
|
Other
|
|
0.5
|
(1.7)
|
0.0
|
(3.3)
|
(6.3)
|
Total effect on fair value
of interest rate-sensitive banking book positions 31.12.16
|
|
517.1
|
149.4
|
(3.1)
|
(318.1)
|
(651.6)
|
Total effect on fair value of interest rate-sensitive banking
book positions 30.9.16
|
|
399.8
|
209.5
|
(2.3)
|
(238.7)
|
(512.9)
|
1 Does not include interest rate sensitivities for credit
valuation adjustments on monoline credit protection, US and non-US
reference-linked notes. 2 In the prevailing negative interest rate
environment for the Swiss franc in particular, and to a lesser extent for the
euro, interest rates for Wealth Management and Personal & Corporate
Banking client transactions are generally being floored at non-negative
levels. Accordingly, for the purposes of this disclosure table, downward
moves of 100 / 200 basis points are floored to ensure that the resulting
shocked interest rates do not turn negative. The flooring results in
non-linear sensitivity behavior.
|
Exposures to eurozone countries
rated lower than AAA / Aaa by at least one major rating agency
|
|
CHF million
|
|
31.12.16
|
|
30.9.16
|
|
|
Banking products
|
|
Traded products
|
|
Trading inventory
|
|
Total
|
|
Total
|
|
|
Before
hedges
|
Net of
hedges¹
|
|
Before
hedges
|
Net of
hedges
|
|
Net long per issuer
|
|
|
Net of
hedges
|
|
|
Net of
hedges¹
|
Austria
|
|
28
|
28
|
|
189
|
87
|
|
1,579
|
|
1,796
|
1,694
|
|
1,323
|
1,196
|
Belgium
|
|
84
|
84
|
|
54
|
54
|
|
11
|
|
149
|
149
|
|
673
|
673
|
Finland
|
|
74
|
42
|
|
23
|
23
|
|
790
|
|
887
|
854
|
|
767
|
734
|
France
|
|
1,533
|
1,364
|
|
1,377
|
1,245
|
|
3,711
|
|
6,620
|
6,320
|
|
6,652
|
6,185
|
Greece
|
|
16
|
16
|
|
0
|
0
|
|
1
|
|
18
|
18
|
|
17
|
17
|
Ireland²
|
|
89
|
89
|
|
977
|
977
|
|
53
|
|
1,120
|
1,120
|
|
1,143
|
1,143
|
Italy
|
|
1,242
|
821
|
|
435
|
342
|
|
1,426
|
|
3,104
|
2,589
|
|
3,138
|
2,709
|
Portugal
|
|
14
|
14
|
|
18
|
18
|
|
6
|
|
39
|
39
|
|
140
|
75
|
Spain
|
|
694
|
444
|
|
86
|
86
|
|
289
|
|
1,069
|
820
|
|
1,493
|
1,299
|
Other³
|
|
441
|
441
|
|
2
|
2
|
|
11
|
|
454
|
454
|
|
94
|
94
|
1 Not deducted from the “Net of hedges” exposures are total
allowances and provisions for credit losses of CHF 50 million (of which:
Malta CHF 37 million, Ireland CHF 6 million and France CHF 5 million). 2
The majority of the Ireland exposure relates to funds and foreign bank
subsidiaries. 3 Represents aggregate exposures to Andorra, Cyprus,
Estonia, Latvia, Lithuania, Malta, Monaco, Montenegro, San Marino, Slovakia
and Slovenia.
|
Balance sheet, liquidity and funding management
Balance sheet, liquidity and funding
management
Strategy, objectives and governance
This
section provides balance sheet, liquidity and funding management information
and should be read in conjunction with the “Treasury management” section of our
Annual Report 2015, which provides more information about the Group’s strategy,
objectives and governance for liquidity and funding management.
Balances
disclosed in this section represent quarter-end positions, unless indicated otherwise. Intra-quarter balances
fluctuate in the ordinary course of business and
may differ from quarter-end positions.
Assets
and
liquidity management
Balance sheet assets
As of 31
December 2016, balance sheet assets totaled CHF 935 billion, unchanged from 30
September 2016, as various asset reductions were offset by currency effects
resulting from the strengthening of the US dollar versus the Swiss franc. Total
assets excluding positive replacement values (PRVs) totaled CHF 777 billion as
of 31 December 2016, a decrease of CHF 14 billion when excluding currency
effects. This decline was mainly due to lower trading portfolio and collateral
trading assets in the Investment Bank, partly offset by an increase in cash and
balances with central banks, primarily in Corporate Center – Group Asset and
Liability Management (Group ALM).
Trading
portfolio assets decreased by CHF 9 billion, primarily in our Equities and Foreign Exchange, Rates and
Credit businesses, mainly reflecting effective resource
management. Collateral
trading assets decreased
by CHF 7 billion, reflecting reduced client activity as well as effective
resource management.
These decreases
were mostly offset by a CHF 13 billion increase in cash and balances with
central banks, mainly reflecting an increase in net funds transferred to Group
ALM by the business divisions.
PRVs increased
by CHF 4 billion, reflecting a CHF 17 billion increase in the Investment Bank,
mainly due to fair value changes in foreign exchange contracts primarily driven
by US dollar appreciation partly offset by lower volumes, mostly offset by a
CHF 14 billion reduction in Corporate Center – Non-core and Legacy Portfolio,
mainly in interest rate contracts, reflecting increases in interest rates,
maturities and trade terminations.
Financial assets
designated at fair value, available for sale and held to maturity were broadly unchanged
as a CHF 4 billion reduction in financial assets designated at fair value was
offset by CHF 2 billion increases in both financial assets available for sale
and financial assets held to maturity. Other assets were broadly unchanged as
an increase in cash collateral receivables on derivative instruments was offset
by a reduction in prime brokerage receivables. Lending assets were also broadly
unchanged.
High-quality
liquid assets
The
total weighted liquidity value of high-quality liquid assets was broadly unchanged
at CHF 196 billion in the fourth quarter of 2016 as an increase in balances
with central banks, which primarily occurred toward the end of the quarter, and
an increase in off-balance sheet securities was offset by reductions in other
eligible cash balances and on-balance sheet securities.
®
Refer to the
“Treasury management” section of our Annual Report 2015 for more information on
high-quality liquid assets
Liquidity
coverage ratio
In the
fourth quarter of 2016, our three-month average total liquidity coverage ratio
(LCR) increased 8 percentage points to 132%, remaining above the 110% Group LCR
minimum communicated by FINMA. The increase was mainly due to a CHF 10 billion
reduction in net cash outflows, largely driven by a decrease in outflows from
securities financing transactions and an increase in inflows reflecting a
higher amount of maturing performing loan positions within the relevant 30-day
window during the quarter.
®
Refer to the
“Treasury management” section of our Annual Report 2015 for more information on
liquidity management and the liquidity coverage ratio
Effective 1
January 2017, we calculate and monitor our LCR on a daily basis and our
reported quarterly average LCR will be the average of daily values during the
quarter instead of the average of three month-end values.
Liabilities and funding
management
Liabilities
Total liabilities were unchanged at
CHF 881 billion as of 31 December 2016. Trading portfolio liabilities
decreased by CHF 9 billion, primarily in our Equities and Foreign Exchange,
Rates and Credit businesses, mainly reflecting reduced client activity. Short-term
borrowings decreased by CHF 6 billion, primarily reflecting net maturities of
certificates of deposit. Collateral trading liabilities were reduced by CHF 4
billion, primarily in Group ALM. These decreases were offset by a CHF 12
billion increase in customer deposits, which mainly resulted from currency effects
and client inflows across our business divisions. Negative replacement values
increased by CHF 3 billion, in line with the aforementioned increases in
PRVs. Long-term debt increased by CHF 2 billion, mainly reflecting the issuance
of CHF 1.3 billion equivalent of euro-denominated senior unsecured debt that
contributes to our total loss-absorbing capacity (TLAC). Other liabilities were
broadly unchanged as an increase in cash collateral payables on derivative
instruments was offset by lower prime brokerage payables.
Equity
Equity attributable to shareholders
increased by CHF 423 million to CHF 53,723 million.
Total comprehensive income attributable to
shareholders was CHF 185 million, reflecting net profit of CHF 738 million and
negative other comprehensive income (OCI) of CHF 553 million. Fourth quarter
OCI included net losses on cash flow hedges of CHF 1,033 million, net losses on
defined benefit plans of CHF 234 million and negative OCI related to financial
assets available for sale of CHF 145 million, partly offset by foreign currency
translation gains of CHF 845 million and own credit gains of CHF 15 million.
Share premium increased by CHF 196 million,
mainly due to the amortization of deferred equity compensation awards.
Net treasury share activity increased equity
attributable to shareholders by CHF 41 million, mainly reflecting the net
disposal of treasury shares related to employee share-based compensation
awards.
Net stable funding ratio
As of 31 December 2016, our estimated
pro forma net stable funding ratio (NSFR) was 116%, an increase of 1 percentage
point from 30 September 2016, primarily reflecting a CHF 2 billion increase in
available stable funding, mainly driven by deposit inflows, partly offset by a
decrease in unsecured funding. The calculation of our pro forma NSFR includes
interpretation and estimates of the effect of the rules, and will be refined as
regulatory interpretations evolve and as new models and associated systems are
enhanced.
®
Refer to the “Treasury management” section of our Annual Report 2015
for more information on the net stable funding ratio
Liquidity coverage ratio
|
|
|
|
|
|
|
|
Average 4Q16
|
|
|
Average 3Q16
|
CHF billion, except where
indicated
|
|
|
Total adjusted value¹
|
|
|
Total adjusted value¹
|
High-quality liquid assets
|
|
|
196
|
|
|
197
|
Net cash outflows
|
|
|
148
|
|
|
158
|
Liquidity coverage ratio (%)
|
|
|
132
|
|
|
124
|
1 Calculated after the application of haircuts and inflow and
outflow rates as well as, where applicable, caps on Level 2 assets and cash
inflows.
|
Pro forma net stable funding
ratio
|
|
|
CHF billion, except where
indicated
|
31.12.16
|
30.9.16
|
Available stable funding
|
442
|
440
|
Required stable funding
|
381
|
381
|
Pro forma net stable funding
ratio (%)
|
116
|
115
|
Capital
management
This section should be read in
conjunction with the “Capital management” section of our Annual Report 2015,
which provides more information about our strategy, objectives and governance
for capital management. Disclosures in this section are provided on a
consolidated UBS Group basis and focus on information in accordance with the
regulatory framework for Swiss systemically relevant banks (SRBs).
Information on our
Swiss SRB going and gone concern requirements that are being phased in between
2016 and 2019 is available in our second quarter 2016 report. Details on our
Swiss SRB going and gone concern requirements and additional information as of 31 December 2016 will be disclosed in our Annual
Report 2016, which will be published on 10 March 2017.
UBS Group AG is a holding company and
conducts substantially all of its operations through UBS AG and its subsidiaries.
UBS Group AG and UBS AG have contributed a significant portion of their
respective capital, and provide substantial liquidity to subsidiaries, many of
which are subject to regulations requiring compliance with minimum capital,
liquidity and similar requirements.
Swiss SRB
loss-absorbing capacity
During the fourth quarter of 2016,
our fully applied common equity tier 1 (CET1) capital ratio decreased 0.2
percentage points to 13.8% as of 31 December 2016, mainly resulting from a CHF 6
billion increase in RWA. On a phase-in basis, our CET1 capital ratio decreased
0.1 percentage points to 16.8%.
As of 31 December 2016, our total
loss-absorbing capacity (TLAC) ratio was 31.1% on a fully applied basis, compared
with 31.0% as of 30 September 2016. On a phase-in basis, the TLAC ratio stood
at 32.7%, an increase of 0.1 percentage points from 30 September 2016.
Our going concern leverage ratio was 4.6% on
a fully applied basis compared with 4.4% as of 30 September 2016. On a phase-in
basis, the going concern leverage ratio increased by 0.2 percentage points to
6.4%.
Swiss SRB going and gone
concern information
|
|
|
Swiss SRB including transitional arrangements (phase-in)
|
|
Swiss SRB as of 1.1.20
(fully applied)
|
CHF million, except where
indicated
|
|
31.12.16
|
30.9.16
|
|
31.12.16
|
30.9.16
|
|
|
|
|
|
|
|
Going concern capital
|
|
|
|
|
|
|
Common equity tier 1 capital
|
|
37,788
|
37,207
|
|
30,693
|
30,254
|
High-trigger loss-absorbing additional tier 1 capital
|
|
6,512¹
|
6,200¹
|
|
6,809
|
6,356
|
Low-trigger loss-absorbing additional tier 1 capital
|
|
0¹
|
0¹
|
|
2,342
|
2,392
|
Total loss-absorbing
additional tier 1 capital
|
|
6,512
|
6,200
|
|
9,151
|
8,749
|
Total tier 1 capital
|
|
44,299
|
43,407
|
|
39,844
|
39,003
|
High-trigger loss-absorbing tier 2 capital
|
|
891
|
884
|
|
|
|
Low-trigger loss-absorbing tier 2 capital
|
|
10,402
|
10,332
|
|
|
|
Total tier 2 capital
|
|
11,293
|
11,216
|
|
|
|
Total going concern capital
|
|
55,593
|
54,623
|
|
39,844
|
39,003
|
|
|
|
|
|
|
|
Gone concern loss-absorbing
capacity
|
|
|
|
|
|
|
Non-Basel III-compliant tier 1 capital²
|
|
642
|
654
|
|
642
|
654
|
Total tier 1 capital
|
|
642
|
654
|
|
642
|
654
|
High-trigger loss-absorbing tier 2 capital
|
|
|
|
|
679
|
674
|
Low-trigger loss-absorbing tier 2 capital
|
|
|
|
|
10,402
|
10,332
|
Non-Basel III-compliant tier 2 capital²
|
|
698
|
772
|
|
698
|
772
|
Total tier 2 capital
|
|
698
|
772
|
|
11,779
|
11,777
|
TLAC-eligible senior
unsecured debt
|
|
16,890
|
15,698
|
|
16,890
|
15,698
|
Total gone concern
loss-absorbing capacity
|
|
18,229
|
17,124
|
|
29,311
|
28,129
|
|
|
|
|
|
|
|
Total loss-absorbing capacity
|
|
|
|
|
|
|
Total loss-absorbing
capacity
|
|
73,822
|
71,747
|
|
69,154
|
67,132
|
|
|
|
|
|
|
|
Risk-weighted assets /
leverage ratio denominator
|
|
|
|
|
|
|
Risk-weighted assets
|
|
225,412
|
219,876
|
|
222,677
|
216,830
|
Leverage ratio denominator
|
|
874,925
|
881,717
|
|
870,470
|
877,313
|
Swiss SRB going and gone concern information (continued)
|
|
|
Swiss SRB including transitional arrangements (phase-in)
|
|
Swiss SRB as of 1.1.20
(fully applied)
|
CHF million, except where
indicated
|
|
31.12.16
|
30.9.16
|
|
31.12.16
|
30.9.16
|
|
|
|
|
|
|
|
Capital and loss-absorbing
capacity ratios (%)
|
|
|
|
|
|
|
Going concern capital ratio
|
|
24.7
|
24.8
|
|
17.9
|
18.0
|
of which: common equity tier
1 capital ratio
|
|
16.8
|
16.9
|
|
13.8
|
14.0
|
Gone concern loss-absorbing capacity ratio
|
|
8.1
|
7.8
|
|
13.2
|
13.0
|
Total loss-absorbing capacity ratio
|
|
32.7
|
32.6
|
|
31.1
|
31.0
|
|
|
|
|
|
|
|
Leverage ratios (%)
|
|
|
|
|
|
|
Going concern leverage ratio
|
|
6.4
|
6.2
|
|
4.6
|
4.4
|
of which: common equity tier
1 leverage ratio
|
|
4.3
|
4.2
|
|
3.5
|
3.4
|
Gone concern leverage ratio
|
|
2.1
|
1.9
|
|
3.4
|
3.2
|
Total loss-absorbing capacity leverage ratio
|
|
8.4
|
8.1
|
|
7.9
|
7.7
|
1 High-trigger loss-absorbing additional tier 1 (AT1) capital of
CHF 6,809 million (30 September 2016: CHF 6,356 million) and low-trigger
loss-absorbing AT1 capital of CHF 2,342 million (30 September 2016:
CHF 2,392 million) were partly offset by required deductions for
goodwill of CHF 2,639 million (30 September 2016: CHF 2,548 million). 2
Non-Basel III-compliant tier 1 and tier 2 capital instruments qualify as gone
concern instruments. Under the Swiss SRB rules, these instruments are no
longer subject to phase-out. Instruments with a maturity date are eligible to
meet the gone concern requirements until one year prior to maturity, with a
haircut of 50% applied in the last year of eligibility.
|
Post-stress CET1 capital ratio
We are committed to total capital
returns to shareholders of at least 50% of net profit attributable to
shareholders, provided that we maintain a fully applied common equity tier 1
(CET1) capital ratio of at least 13% and consistent with our objective of
maintaining a post-stress fully applied CET1 capital ratio of at least 10%. Our
post-stress CET1 capital ratio exceeded the 10% objective as of 31 December
2016.
®
Refer to the “Risk management and control” section of this report
for more information on our binding stress scenario
Going concern capital
Our CET1 capital increased by CHF 0.4
billion to CHF 30.7 billion on a fully applied basis as of 31 December 2016,
mainly as a result of operating profit before tax, foreign currency translation
effects and defined benefit plans, partly offset by effects from current tax
expenses and accruals for capital returns to shareholders.
®
Refer to the “Group performance” section of this report for
information on other comprehensive income attributable to shareholders related
to defined benefit plans
Our loss-absorbing additional tier 1 (AT1)
capital increased by CHF 0.4 billion to CHF 9.2 billion on a fully applied
basis as of 31 December 2016, due to Deferred Contingent Capital Plan
(DCCP) awards to be granted for the performance year 2016.
Reconciliation IFRS equity to
Swiss SRB common equity tier 1 capital
|
|
|
Swiss SRB including transitional arrangements (phase-in)
|
|
Swiss SRB as of 1.1.20 (fully applied)
|
CHF million
|
|
31.12.16
|
30.9.16
|
|
31.12.16
|
30.9.16
|
Total IFRS equity
|
|
54,404
|
53,993
|
|
54,404
|
53,993
|
Equity attributable to non-controlling interests
|
|
(682)
|
(693)
|
|
(682)
|
(693)
|
Defined benefit plans
|
|
0
|
(215)
|
|
0
|
(359)
|
Deferred tax assets recognized for tax loss carry-forwards
|
|
(5,042)
|
(4,650)
|
|
(8,403)
|
(7,750)
|
Deferred tax assets on temporary differences, excess over
threshold
|
|
(741)
|
(872)
|
|
(1,835)
|
(2,033)
|
Goodwill, net of tax¹
|
|
(3,959)
|
(3,823)
|
|
(6,599)
|
(6,371)
|
Intangible assets, net of tax
|
|
(241)
|
(253)
|
|
(241)
|
(253)
|
Unrealized (gains) / losses from cash flow hedges, net of
tax
|
|
(972)
|
(2,005)
|
|
(972)
|
(2,005)
|
Compensation- and own shares-related components
|
|
(1,691)
|
(1,404)
|
|
(1,691)
|
(1,404)
|
Unrealized own credit related to financial liabilities
designated at fair value, net of tax, and replacement values
|
|
(294)
|
(333)
|
|
(294)
|
(333)
|
Unrealized gains related to financial assets available for sale,
net of tax
|
|
(262)
|
(351)
|
|
(262)
|
(351)
|
Prudential valuation
adjustments
|
|
(68)
|
(89)
|
|
(68)
|
(89)
|
Consolidation scope
|
|
(129)
|
(127)
|
|
(129)
|
(127)
|
Other²
|
|
(2,536)
|
(1,969)
|
|
(2,536)
|
(1,969)
|
Total common equity tier 1
capital
|
|
37,788
|
37,207
|
|
30,693
|
30,254
|
1 Includes goodwill related to significant investments in
financial institutions of CHF 342 million (30 September 2016: CHF 340
million). 2 Includes accruals for dividends to shareholders and other
items.
|
Gone concern loss-absorbing capacity
During the fourth quarter of 2016,
our gone concern loss-absorbing capacity increased by CHF 1.2 billion to CHF
29.3 billion on a fully applied basis, driven by the issuance of the equivalent
of CHF 1.4 billion in TLAC-eligible senior unsecured debt.
®
Refer to “Bondholder information” at
www.ubs.com/investors
for more
information on the eligibility of capital or senior debt instruments and on key
features and terms and conditions of capital instruments
Swiss SRB total loss-absorbing
capacity movement
|
CHF million
|
Swiss SRB including transitional arrangements (phase-in)
|
Swiss SRB as of 1.1.20 (fully applied)
|
|
|
|
Going concern capital
|
|
|
Common equity tier 1 capital
as of 30.9.16
|
37,207
|
30,254
|
Operating profit before tax
|
848
|
848
|
Current tax (expense) / benefit
|
(203)
|
(203)
|
Defined benefit plans
|
(19)
|
125
|
Foreign currency translation effects
|
568
|
337
|
Other movements (includes accruals for capital returns to
shareholders)
|
(614)
|
(669)
|
Common equity tier 1 capital
as of 31.12.16
|
37,788
|
30,693
|
Loss-absorbing additional
tier 1 capital as of 30.9.16
|
6,200
|
8,749
|
Issuance of high-trigger loss-absorbing additional tier 1
capital
|
399
|
399
|
Foreign currency translation effects and other movements
|
(88)
|
3
|
Loss-absorbing additional
tier 1 capital as of 31.12.16
|
6,512
|
9,151
|
Loss-absorbing tier 2
capital as of 30.9.16
|
11,216
|
|
Foreign currency translation effects and other movements
|
77
|
|
Loss-absorbing tier 2
capital as of 31.12.16
|
11,293
|
|
Total going concern capital
as of 30.9.16
|
54,623
|
39,003
|
Total going concern capital
as of 31.12.16
|
55,593
|
39,844
|
|
|
|
Gone concern loss-absorbing
capacity
|
|
|
Tier 1 capital as of 30.9.16
|
654
|
654
|
Foreign currency translation effects and other movements
|
(11)
|
(11)
|
Tier 1 capital as of 31.12.16
|
642
|
642
|
Tier 2 capital as of 30.9.16
|
772
|
11,777
|
Decrease in eligibility due to shortening residual tenor
|
(97)
|
(97)
|
Foreign currency translation effects and other movements
|
23
|
99
|
Tier 2 capital as of
31.12.16
|
698
|
11,779
|
TLAC-eligible senior unsecured
debt as of 30.9.16
|
15,698
|
15,698
|
Issuance of TLAC-eligible senior unsecured debt instruments
|
1,358
|
1,358
|
Foreign currency translation effects and other movements
|
(166)
|
(166)
|
TLAC-eligible senior
unsecured debt as of 31.12.16
|
16,890
|
16,890
|
Total gone concern
loss-absorbing capacity as of 30.9.16
|
17,124
|
28,129
|
Total gone concern
loss-absorbing capacity as of 31.12.16
|
18,229
|
29,311
|
|
|
|
Total loss-absorbing capacity
|
|
|
Total loss-absorbing
capacity as of 30.9.16
|
71,747
|
67,132
|
Total loss-absorbing
capacity as of 31.12.16
|
73,822
|
69,154
|
Additional
information
Sensitivity to currency movements
We estimate that a 10% depreciation
of the Swiss franc against other currencies would have increased our fully
applied RWA by CHF 10 billion and our fully applied CET1 capital by CHF 1.2
billion as of 31 December 2016 (30 September 2016: CHF 9 billion and CHF 1.0
billion, respectively) and reduced our fully applied CET1 capital ratio by 7
basis points (30 September 2016: 14 basis points). Conversely, we estimate that
a 10% appreciation of the Swiss franc against other currencies would have
reduced our fully applied RWA by CHF 9 billion and our fully applied CET1
capital by CHF 1.1 billion (30 September 2016: CHF 9 billion and CHF 0.9
billion, respectively) and increased our fully applied CET1 capital ratio by 7
basis points (30 September 2016: 14 basis points).
Our leverage ratio is also sensitive to
foreign exchange movements due to the currency mix of our capital and LRD. When
adjusting the currency mix in capital, potential effects on the leverage ratios
are taken into account and the sensitivity of the leverage ratio to an
appreciation or depreciation of 10% in the value of the Swiss franc against
other currencies is actively monitored.
We estimate that a 10% depreciation of the
Swiss franc against other currencies would have increased our fully applied LRD
by CHF 64 billion (30 September 2016: CHF 66 billion) and reduced our fully
applied Swiss SRB going concern leverage ratio by 9 basis points (30 September
2016: 11 basis points). Conversely, we estimate that a 10% appreciation of the
Swiss franc against other currencies would have reduced our fully applied LRD
by CHF 58 billion (30 September 2016: CHF 59 billion) and increased our fully
applied Swiss SRB going concern leverage ratio by 10 basis points (30 September
2016: 12 basis points).
These 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.
Estimated effect on capital from litigation, regulatory and similar
matters subject to provisions and contingent liabilities
We have estimated the loss in capital
that we could incur as a result of the risks associated with the matters
described in “Provisions and contingent liabilities” in the “Consolidated
financial information” section of this report. This is an estimated amount and
is not related and should not be considered in addition to these provisions and
contingent liabilities. We have utilized for this purpose the advanced
measurement approach (AMA) methodology that we use when determining the capital
requirements associated with operational risks, based on a 99.9% confidence
level over a 12-month horizon. The methodology takes into consideration UBS and
industry experience for the AMA operational risk categories to which those
matters correspond, as well as the external environment affecting risks of
these types, in isolation from other areas. On this standalone basis, we
estimate the loss in capital that we could incur over a 12-month period as a
result of our risks associated with these operational risk categories at CHF 4.8
billion as of 31 December 2016. This estimate does not take into account any
provisions recognized for any of these matters and does not constitute a
subjective assessment of UBS’s actual exposure in any of these matters.
®
Refer to “Provisions and contingent liabilities” in the
“Consolidated financial information” section of this report for more
information
Risk-weighted
assets
During the fourth quarter of 2016,
fully applied RWA increased by CHF 5.9 billion to CHF 222.7 billion, mainly
driven by asset size and other movements of CHF 2.7 billion, currency effects
of CHF 1.9 billion and regulatory add-ons of CHF 1.5 billion.
Risk-weighted assets movement
by key driver – fully applied
|
CHF billion
|
|
RWA as of 30.9.16
|
Currency
effects
|
Methodology changes and model updates
|
Regulatory add-ons
|
Asset size and other
|
RWA as of 31.12.16
|
Credit risk
|
|
114.0
|
1.6
|
|
1.0
|
(3.8)
|
112.8
|
Non-counterparty-related risk
|
|
16.3
|
0.3
|
|
|
0.0
|
16.6
|
Market risk
|
|
8.7
|
|
(0.2)
|
0.5
|
6.5
|
15.5
|
Operational risk
|
|
77.8
|
|
|
|
0.0
|
77.8
|
Total
|
|
216.8
|
1.9
|
(0.2)
|
1.5
|
2.7
|
222.7
|
Credit risk
Credit risk
RWA decreased by CHF 1.2 billion to CHF 112.8 billion as of 31 December 2016,
driven by asset size and other decreases of CHF 3.8 billion, partly offset by
increases in RWA related to currency effects of CHF 1.6 billion and regulatory
add-ons of CHF 1.0 billion.
The decrease
in asset size and other movements of CHF 3.8 billion was mainly due to a CHF 2.4 billion reduction in derivatives RWA, largely driven by the update of the
stress period used for the Basel III exposure-at-default calculation in the
fourth quarter of 2016, implying lower equity volatility for the stress period
to be applied. Following the quarterly review, the change in the portfolio
composition resulted in the application of an updated stress period. Furthermore, a decrease of CHF 1.4 billion largely
resulted from exposure reductions in other assets, primarily in settlement and
clearing accounts.
Regulatory
add-ons increased RWA by CHF 1.0 billion, due to an increase of CHF 0.7 billion
in the internal ratings-based (IRB) multiplier
for Investment Bank exposures to corporates and an increase of CHF 0.2 billion
in the IRB multiplier for income-producing real estate in Personal &
Corporate Banking and Wealth Management. The multipliers that FINMA requires
banks that use the IRB approach to apply will continue to increase over time
until implementation is complete by the end of the first quarter of 2019. We
expect that this will add approximately CHF 6 billion to our RWA in 2017, CHF 5
billion in 2018 and less than CHF 2 billion in 2019. This excludes the effect
of any methodology changes.
Market risk
Asset size and other increases of CHF 6.5
billion in market risk RWA were mainly due to higher average stressed and
regulatory value-at-risk (VaR) levels during the quarter, resulting in CHF 6.8
billion higher RWA in the Investment Bank. The increase in VaR levels was
primarily driven by various factors across our Equities and Foreign Exchange,
Rates and Credit businesses, including option expiries and stronger client
flows.
Furthermore, RWA
increased by CHF 0.5 billion in relation to regulatory add-ons, largely due to
a higher value-at-risk (VaR) multiplier, resulting from a net increase of one
additional backtesting exception.
®
Refer to “Market risk” in the “Risk management and control” section
of this report for more information
Operational risk
Operational risk RWA remained stable
at CHF 77.8 billion.
We expect to complete the semiannual
calibration of our advanced measurement approach model in the first quarter of
2017 and anticipate that our operational risk RWA may increase as a result.
Risk-weighted assets by business division and Corporate Center
unit
|
CHF billion
|
|
Wealth Management
|
Wealth Management Americas
|
Personal & Corporate Banking
|
Asset Manage- ment
|
Investment Bank
|
CC – Services
|
CC – Group ALM
|
CC – Non- core and Legacy Portfolio
|
Total RWA
|
Total capital requirement¹
|
|
|
31.12.16
|
Credit risk
|
|
12.5
|
9.1
|
37.7
|
1.6
|
37.0
|
1.4
|
7.3
|
6.2
|
112.8
|
16.3
|
Advanced IRB approach²
|
|
9.0
|
3.7
|
36.1
|
0.9
|
33.7
|
0.2
|
4.8
|
5.0
|
93.4
|
13.5
|
Standardized approach³
|
|
3.5
|
5.4
|
1.6
|
0.6
|
3.3
|
1.2
|
2.6
|
1.2
|
19.4
|
2.8
|
Non-counterparty-related
risk⁴
|
|
0.1
|
0.0
|
0.1
|
0.0
|
0.0
|
19.1
|
0.0
|
0.0
|
19.3
|
2.8
|
Market risk
|
|
0.0
|
1.4
|
0.0
|
0.0
|
14.0
|
(3.2)⁵
|
0.7
|
2.6
|
15.5
|
2.2
|
Operational risk
|
|
13.2
|
13.2
|
3.9
|
2.3
|
19.5
|
13.1
|
2.5
|
10.1
|
77.8
|
11.2
|
Total RWA, phase-in
|
|
25.8
|
23.8
|
41.6
|
3.9
|
70.4
|
30.3
|
10.6
|
18.9
|
225.4
|
32.5
|
Phase-out items⁶
|
|
0.0
|
0.0
|
0.0
|
0.0
|
0.0
|
2.7
|
0.0
|
0.0
|
2.7
|
|
Total RWA, fully applied
|
|
25.8
|
23.8
|
41.6
|
3.9
|
70.4
|
27.6
|
10.6
|
18.9
|
222.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30.9.16
|
Credit risk
|
|
12.7
|
8.9
|
37.4
|
1.4
|
38.2
|
1.9
|
7.2
|
6.3
|
114.0
|
16.5
|
Advanced IRB approach²
|
|
8.9
|
3.3
|
35.1
|
0.8
|
34.8
|
0.3
|
5.2
|
4.9
|
93.3
|
13.5
|
Standardized approach³
|
|
3.9
|
5.5
|
2.3
|
0.6
|
3.5
|
1.7
|
2.1
|
1.3
|
20.7
|
3.0
|
Non-counterparty-related
risk⁴
|
|
0.2
|
0.0
|
0.1
|
0.0
|
0.0
|
19.1
|
0.0
|
0.0
|
19.4
|
2.8
|
Market risk
|
|
0.0
|
1.1
|
0.0
|
0.0
|
7.2
|
(3.5)⁵
|
1.4
|
2.5
|
8.7
|
1.3
|
Operational risk
|
|
13.2
|
13.2
|
3.9
|
2.3
|
19.5
|
13.1
|
2.5
|
10.1
|
77.8
|
11.2
|
Total RWA, phase-in
|
|
26.1
|
23.3
|
41.4
|
3.7
|
64.9
|
30.6
|
11.1
|
18.8
|
219.9
|
31.8
|
Phase-out items⁶
|
|
0.0
|
0.0
|
0.0
|
0.0
|
0.0
|
3.0
|
0.0
|
0.0
|
3.0
|
|
Total RWA, fully applied
|
|
26.1
|
23.3
|
41.3
|
3.7
|
64.9
|
27.6
|
11.1
|
18.8
|
216.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.12.16 vs 30.9.16
|
Credit risk
|
|
(0.2)
|
0.2
|
0.3
|
0.2
|
(1.2)
|
(0.5)
|
0.1
|
(0.1)
|
(1.2)
|
|
Advanced IRB approach²
|
|
0.1
|
0.4
|
1.0
|
0.1
|
(1.1)
|
(0.1)
|
(0.4)
|
0.1
|
0.1
|
|
Standardized approach³
|
|
(0.4)
|
(0.1)
|
(0.7)
|
0.0
|
(0.2)
|
(0.5)
|
0.5
|
(0.1)
|
(1.3)
|
|
Non-counterparty-related
risk⁴
|
|
(0.1)
|
0.0
|
0.0
|
0.0
|
0.0
|
0.0
|
0.0
|
0.0
|
(0.1)
|
|
Market risk
|
|
0.0
|
0.3
|
0.0
|
0.0
|
6.8
|
0.3
|
(0.7)
|
0.1
|
6.8
|
|
Operational risk
|
|
0.0
|
0.0
|
0.0
|
0.0
|
0.0
|
0.0
|
0.0
|
0.0
|
0.0
|
|
Total RWA, phase-in
|
|
(0.3)
|
0.5
|
0.2
|
0.2
|
5.5
|
(0.3)
|
(0.5)
|
0.1
|
5.5
|
|
Phase-out items⁶
|
|
0.0
|
0.0
|
0.0
|
0.0
|
0.0
|
(0.3)
|
0.0
|
0.0
|
(0.3)
|
|
Total RWA, fully applied
|
|
(0.3)
|
0.5
|
0.3
|
0.2
|
5.5
|
0.0
|
(0.5)
|
0.1
|
5.9
|
|
1 Calculated on the basis of our Swiss SRB total going and gone
concern capital requirement of 14.4% of RWA on a phase-in basis (30 September
2016: 14.4%). 2 Includes equity exposures in the banking book according
to the simple risk weight method. 3 Includes settlement risk and business
transfers. 4 Non-counterparty-related risk includes deferred tax assets
recognized for temporary differences (31 December 2016: CHF 10.9 billion, 30
September 2016: CHF 11.0 billion), property, equipment and software (31
December 2016: CHF 8.3 billion, 30 September 2016: CHF 8.0 billion) and other
items (31 December 2016: CHF 0.2 billion, 30 September 2016: CHF 0.3
billion). 5 Corporate Center – Services market risk RWA were negative, as
they included the effect of portfolio diversification across businesses. 6
Phase-out items are entirely related to non-counterparty-related risk RWA.
|
Leverage
rati
o denominator
During the fourth
quarter of 2016, the fully applied leverage ratio denominator (LRD) decreased
by CHF 7 billion to CHF 870 billion. This decrease was driven by a reduction due
to asset size and other movements of CHF 13 billion, mainly in securities
financing transactions and on-balance sheet exposures (excluding derivative
exposures and securities financing transactions), and incremental netting,
collateral and methodology changes of CHF 6 billion. This movement was partly
offset by currency effects of CHF 12 billion.
Leverage ratio denominator
movement by key driver – fully applied
|
CHF billion
|
|
LRD as of
30.9.16
|
Currency
effects
|
Incremental
netting,
collateral and methodology changes
|
Asset size
and other
|
LRD as of
31.12.16
|
On-balance sheet exposures (excluding derivative exposures and
SFTs)¹
|
|
637.2
|
8.2
|
|
(7.2)
|
638.1
|
Derivative exposures
|
|
109.4
|
1.1
|
(3.5)
|
0.6
|
107.6
|
Securities financing transactions
|
|
112.2
|
2.2
|
(2.2)
|
(7.5)
|
104.7
|
Off-balance sheet items
|
|
36.0
|
1.0
|
|
0.7
|
37.7
|
Deduction items
|
|
(17.5)
|
(0.7)
|
|
0.4
|
(17.7)
|
Total
|
|
877.3
|
11.8
|
(5.7)
|
(13.0)
|
870.5
|
1 Excludes positive replacement values, cash collateral receivables
on derivative instruments, cash collateral on securities borrowed, reverse
repurchase agreements, margin loans and prime brokerage receivables related
to securities financing transactions, which are presented separately under
Derivative exposures and Securities financing transactions in this table.
|
The LRD movements described below
exclude currency effects.
On-balance sheet
exposures (excluding derivative exposures and securities financing
transactions) decreased by CHF 7 billion, largely driven by a CHF 14 billion
reduction in the Investment Bank, primarily in our Equities and Foreign
Exchange, Rates and Credit businesses, mainly reflecting effective resource
management. Exposures in Wealth Management decreased by CHF 3 billion,
primarily as high-quality liquid assets (HQLA) were transferred to Group ALM to
meet liquidity requirements related to the establishment of our new European
legal entity, UBS Europe SE. These decreases were offset by CHF 10 billion
higher on-balance sheet exposures in Group ALM, mainly reflecting an increase
in the net funds transferred to Group ALM by the business divisions and the
aforementioned transfer of HQLA.
Securities financing transactions decreased
by CHF 8 billion, due to asset size and other movements, primarily in the
Investment Bank and Group ALM. This decrease resulted mainly from reduced
client activity as well as effective resource management.
®
Refer to the “Balance sheet, liquidity and funding management”
section of this report for more information on balance sheet movements
®
Refer to the “Recent developments” section of this report for more
information on UBS Europe SE
Leverage ratio denominator by business division and Corporate
Center unit
|
CHF billion
|
|
Wealth
Management
|
Wealth
Management
Americas
|
Personal &
Corporate
Banking
|
Asset
Management
|
Investment
Bank
|
CC –
Services
|
CC –
Group
ALM
|
CC – Non-
core and
Legacy
Portfolio
|
Total
|
|
|
31.12.16
|
Total IFRS assets
|
|
115.5
|
65.9
|
139.9
|
12.0
|
242.3
|
23.7
|
267.2
|
68.5
|
935.0
|
Difference in scope of consolidation¹
|
|
(5.1)
|
(0.2)
|
0.0
|
(9.3)
|
(0.7)
|
(0.2)
|
0.2
|
0.0
|
(15.5)
|
Less derivative exposures and SFTs²
|
|
(2.0)
|
(2.0)
|
(2.2)
|
0.0
|
(151.4)
|
0.0
|
(60.6)
|
(63.3)
|
(281.4)
|
On-balance sheet exposures
(excluding derivative exposures and SFTs)
|
|
108.4
|
63.7
|
137.7
|
2.7
|
90.2
|
23.4
|
206.7
|
5.2
|
638.1
|
Derivative exposures
|
|
3.5
|
2.5
|
2.7
|
0.0
|
77.5
|
0.0
|
6.3
|
15.2
|
107.6
|
Securities financing transactions
|
|
0.0
|
1.0
|
0.0
|
0.0
|
42.9
|
0.0
|
59.1
|
1.8
|
104.7
|
Off-balance sheet items
|
|
3.6
|
0.9
|
11.9
|
0.0
|
20.6
|
0.1
|
0.3
|
0.3
|
37.7
|
Items deducted from Swiss SRB tier 1 capital
|
|
|
|
|
|
|
(13.2)
|
|
|
(13.2)
|
Total exposures (leverage
ratio denominator), phase-in
|
|
115.5
|
68.1
|
152.2
|
2.7
|
231.2
|
10.3
|
272.4
|
22.4
|
874.9
|
Additional items deducted from Swiss SRB tier 1 capital
|
|
|
|
|
|
|
(4.5)
|
|
|
(4.5)
|
Total exposures (leverage
ratio denominator), fully applied
|
|
115.5
|
68.1
|
152.2
|
2.7
|
231.2
|
5.8
|
272.4
|
22.4
|
870.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30.9.16
|
Total IFRS assets
|
|
118.2
|
62.2
|
139.3
|
11.9
|
237.8
|
24.0
|
258.3
|
83.5
|
935.2
|
Difference in scope of consolidation¹
|
|
(5.4)
|
(0.2)
|
0.0
|
(9.4)
|
(0.5)
|
(0.1)
|
0.2
|
0.0
|
(15.5)
|
Less derivative exposures and SFTs²
|
|
(1.8)
|
(1.8)
|
(1.9)
|
0.0
|
(134.7)
|
0.0
|
(63.9)
|
(78.4)
|
(282.5)
|
On-balance sheet exposures
(excluding derivative exposures and SFTs)
|
|
110.9
|
60.2
|
137.5
|
2.5
|
102.5
|
23.8
|
194.6
|
5.2
|
637.2
|
Derivative exposures
|
|
3.5
|
2.4
|
2.5
|
0.0
|
76.6
|
0.0
|
7.0
|
17.4
|
109.4
|
Securities financing transactions
|
|
0.0
|
0.9
|
0.0
|
0.0
|
47.9
|
0.0
|
61.0
|
2.3
|
112.2
|
Off-balance sheet items
|
|
3.4
|
0.9
|
11.0
|
0.0
|
19.4
|
0.1
|
0.8
|
0.4
|
36.0
|
Items deducted from Swiss SRB tier 1 capital
|
|
|
|
|
|
|
(13.1)
|
|
|
(13.1)
|
Total exposures (leverage
ratio denominator), phase-in
|
|
117.9
|
64.4
|
151.0
|
2.5
|
246.4
|
10.9
|
263.4
|
25.2
|
881.7
|
Additional items deducted from Swiss SRB tier 1 capital
|
|
|
|
|
|
|
(4.4)
|
|
|
(4.4)
|
Total exposures (leverage
ratio denominator), fully applied
|
|
117.9
|
64.4
|
151.0
|
2.5
|
246.4
|
6.5
|
263.4
|
25.2
|
877.3
|
|
|
|
31.12.16 vs 30.9.16
|
Total IFRS assets
|
|
(2.7)
|
3.7
|
0.6
|
0.1
|
4.5
|
(0.3)
|
8.9
|
(15.0)
|
(0.2)
|
Difference in scope of consolidation¹
|
|
0.3
|
0.0
|
0.0
|
0.1
|
(0.2)
|
(0.1)
|
0.0
|
0.0
|
0.0
|
Less derivative exposures and SFTs²
|
|
(0.2)
|
(0.2)
|
(0.3)
|
0.0
|
(16.7)
|
0.0
|
3.3
|
15.1
|
1.1
|
On-balance sheet exposures
(excluding derivative exposures and SFTs)
|
|
(2.5)
|
3.5
|
0.2
|
0.2
|
(12.3)
|
(0.4)
|
12.1
|
0.0
|
0.9
|
Derivative exposures
|
|
0.0
|
0.1
|
0.2
|
0.0
|
0.9
|
0.0
|
(0.7)
|
(2.2)
|
(1.8)
|
Securities financing transactions
|
|
0.0
|
0.1
|
0.0
|
0.0
|
(5.0)
|
0.0
|
(1.9)
|
(0.5)
|
(7.5)
|
Off-balance sheet items
|
|
0.2
|
0.0
|
0.9
|
0.0
|
1.2
|
0.0
|
(0.5)
|
(0.1)
|
1.7
|
Items deducted from Swiss SRB tier 1 capital
|
|
|
|
|
|
|
(0.1)
|
|
|
(0.1)
|
Total exposures (leverage
ratio denominator), phase-in
|
|
(2.4)
|
3.7
|
1.2
|
0.2
|
(15.2)
|
(0.6)
|
9.0
|
(2.8)
|
(6.8)
|
Additional items deducted from Swiss SRB tier 1 capital
|
|
|
|
|
|
|
(0.1)
|
|
|
(0.1)
|
Total exposures (leverage
ratio denominator), fully applied
|
|
(2.4)
|
3.7
|
1.2
|
0.2
|
(15.2)
|
(0.7)
|
9.0
|
(2.8)
|
(6.8)
|
1 Represents the difference between the IFRS and the regulatory
scope of consolidation, which is the applicable scope for the LRD
calculation. 2 Consists of positive replacement values, cash collateral
receivables on derivative instruments, cash collateral on securities
borrowed, reverse repurchase agreements, margin loans and prime brokerage
receivables related to securities financing transactions in accordance with
the regulatory scope of consolidation, which are presented separately under
Derivative exposures and Securities financing transactions in this table.
|
Equity attribution and return on attributed
equity
Average total equity attributed to
the business divisions and Corporate Center was unchanged at CHF 48.1 billion
during the fourth quarter of 2016.
Average equity attributable to shareholders increased
to CHF 53.5 billion in the fourth quarter of 2016 from CHF 53.1 billion in
the prior quarter. The difference between average equity attributable to
shareholders and average equity attributed to the business divisions and
Corporate Center increased to CHF 5.4 billion from CHF 5.0 billion.
®
Refer to the “Capital management” section of our Annual Report 2015
for more information on the equity attribution framework
As of 1 January 2017, we calculate attributed
equity under our revised equity attribution framework. Pro forma information
for the quarter ended 31 December 2016 is shown in the table below.
®
Refer to the “Recent developments” section of this report for
information on revisions to our equity attribution framework in 2017
Average attributed equity
|
|
|
|
|
|
|
|
|
|
|
For the quarter ended
|
|
For the year ended
|
CHF billion
|
|
31.12.16
|
Pro forma 31.12.16
|
30.9.16
|
31.12.15
|
|
31.12.16
|
31.12.15
|
Wealth Management
|
|
3.4
|
6.0
|
3.5
|
3.4
|
|
3.5
|
3.5
|
Wealth Management Americas
|
|
2.6
|
6.7
|
2.6
|
2.5
|
|
2.6
|
2.5
|
Personal & Corporate Banking
|
|
4.1
|
5.9
|
4.1
|
3.9
|
|
4.1
|
3.9
|
Asset Management
|
|
1.4
|
1.7
|
1.4
|
1.5
|
|
1.4
|
1.6
|
Investment Bank
|
|
7.6
|
9.5
|
7.6
|
7.3
|
|
7.7
|
7.3
|
Corporate Center
|
|
29.0
|
23.8
|
28.9
|
24.7
|
|
29.1
|
25.8
|
of which: Services
|
|
22.8
|
19.9
|
22.8
|
18.8
|
|
22.8
|
19.6
|
of which: Group items
|
|
21.3
|
18.3
|
21.3
|
17.3
|
|
21.4
|
18.2
|
of which: Group ALM
|
|
4.4
|
2.3
|
4.3
|
3.2
|
|
4.3
|
3.3
|
of which: Non-core and
Legacy Portfolio
|
|
1.8
|
1.6
|
1.8
|
2.7
|
|
2.1
|
2.9
|
Average equity attributed to
the business divisions and Corporate Center
|
|
48.1
|
53.5
|
48.1
|
43.3
|
|
48.2
|
44.6
|
Difference
|
|
5.4
|
|
5.0
|
11.4
|
|
5.7
|
7.8
|
Average equity attributable
to shareholders
|
|
53.5
|
53.5
|
53.1
|
54.7
|
|
53.9
|
52.4
|
Return on attributed equity and
return on equity¹
|
|
|
|
|
|
|
|
|
|
|
For the quarter ended
|
|
For the year ended
|
In %
|
|
31.12.16
|
Pro forma 31.12.16
|
30.9.16
|
31.12.15
|
|
31.12.16
|
31.12.15
|
Wealth Management
|
|
43.3
|
24.5
|
57.6
|
40.5
|
|
56.1
|
77.4
|
Wealth Management Americas
|
|
52.2
|
20.2
|
49.2
|
2.2
|
|
43.4
|
29.0
|
Personal & Corporate Banking
|
|
36.5
|
25.4
|
44.2
|
36.4
|
|
43.2
|
41.9
|
Asset Management
|
|
41.1
|
33.9
|
29.7
|
45.6
|
|
32.3
|
36.5
|
Investment Bank
|
|
16.1
|
12.9
|
8.5
|
4.4
|
|
13.1
|
25.9
|
UBS Group
|
|
5.5
|
5.5
|
6.2
|
6.9
|
|
6.1
|
11.8
|
1 Return on attributed equity shown for the business divisions
and return on equity attributable to shareholders shown for UBS Group. Return
on attributed equity for Corporate Center is not shown, as it is not
meaningful.
|
Return on attributed equity
(adjusted)¹˒²
|
|
|
|
|
|
|
|
|
|
|
For the quarter ended
|
|
For the year ended
|
In %
|
|
31.12.16
|
Pro forma 31.12.16
|
30.9.16
|
31.12.15
|
|
31.12.16
|
31.12.15
|
Wealth Management
|
|
60.1
|
34.1
|
73.5
|
59.4
|
|
69.0
|
81.4
|
Wealth Management Americas
|
|
55.4
|
21.5
|
55.1
|
10.2
|
|
48.5
|
33.7
|
Personal & Corporate Banking
|
|
38.5
|
26.8
|
46.1
|
40.6
|
|
43.0
|
42.8
|
Asset Management
|
|
44.6
|
36.7
|
39.4
|
40.8
|
|
39.4
|
38.1
|
Investment Bank
|
|
18.1
|
14.5
|
18.0
|
12.2
|
|
19.6
|
31.3
|
1 Return on attributed equity for Corporate Center is not shown,
as it is not meaningful. 2 Adjusted results are non-GAAP financial
measures as defined by SEC regulations. Refer to the “Group performance”
section of this report for more information on adjusted results.
|
Consolidated financial information
Unaudited
Information
in this section is presented for UBS Group AG on a consolidated basis unless
otherwise specified. In preparing this financial information, the same
accounting policies and methods of computation have been applied as in the
UBS Group AG consolidated annual Financial Statements for the period ended 31
December 2015, except for the changes described in
“Note 1 Basis of accounting” in the “Consolidated financial statements”
section of the first, second and third quarter 2016 reports. The financial
information presented is unaudited and does not constitute financial
statements prepared in accordance with International Financial Reporting
Standards (IFRS).
|
UBS Group AG interim consolidated financial statements (unaudited)
UBS Group AG interim consolidated financial information (unaudited)
Income statement
|
|
|
|
|
|
|
|
|
|
|
|
|
For the quarter ended
|
|
% change from
|
|
For the year ended
|
CHF million, except per
share data
|
|
31.12.16
|
30.9.16
|
31.12.15
|
|
3Q16
|
4Q15
|
|
31.12.16
|
31.12.15
|
Interest income
|
|
3,523
|
3,305
|
3,363
|
|
7
|
5
|
|
13,787
|
13,177
|
Interest expense
|
|
(1,761)
|
(1,530)
|
(1,604)
|
|
15
|
10
|
|
(7,373)
|
(6,445)
|
Net interest income
|
|
1,762
|
1,775
|
1,759
|
|
(1)
|
0
|
|
6,413
|
6,732
|
Credit loss (expense) / recovery
|
|
(24)
|
(4)
|
(59)
|
|
500
|
(59)
|
|
(37)
|
(117)
|
Net interest income after credit loss expense
|
|
1,738
|
1,771
|
1,700
|
|
(2)
|
2
|
|
6,376
|
6,615
|
Net fee and commission income
|
|
4,161
|
4,056
|
4,218
|
|
3
|
(1)
|
|
16,397
|
17,140
|
Net trading income
|
|
946
|
1,098
|
898
|
|
(14)
|
5
|
|
4,948
|
5,742
|
Other income
|
|
209
|
104
|
(41)
|
|
101
|
|
|
599
|
1,107
|
Total operating income
|
|
7,055
|
7,029
|
6,775
|
|
0
|
4
|
|
28,320
|
30,605
|
Personnel expenses
|
|
3,868
|
3,942
|
3,843
|
|
(2)
|
1
|
|
15,720
|
15,981
|
General and administrative expenses
|
|
2,063
|
1,939
|
2,413
|
|
6
|
(15)
|
|
7,332
|
8,107
|
Depreciation and impairment of property, equipment and software
|
|
255
|
248
|
260
|
|
3
|
(2)
|
|
985
|
920
|
Amortization and impairment of intangible assets
|
|
21
|
23
|
24
|
|
(9)
|
(13)
|
|
91
|
107
|
Total operating expenses
|
|
6,206
|
6,152
|
6,541
|
|
1
|
(5)
|
|
24,128
|
25,116
|
Operating profit / (loss) before tax
|
|
848
|
877
|
234
|
|
(3)
|
262
|
|
4,192
|
5,489
|
Tax expense / (benefit)
|
|
109
|
49
|
(715)
|
|
122
|
|
|
805
|
(898)
|
Net profit / (loss)
|
|
739
|
829
|
950
|
|
(11)
|
(22)
|
|
3,388
|
6,386
|
Net profit / (loss) attributable to non-controlling interests
|
|
1
|
1
|
1
|
|
0
|
0
|
|
82
|
183
|
Net profit / (loss)
attributable to shareholders
|
|
738
|
827
|
949
|
|
(11)
|
(22)
|
|
3,306
|
6,203
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share (CHF)
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
0.20
|
0.22
|
0.25
|
|
(9)
|
(20)
|
|
0.89
|
1.68
|
Diluted
|
|
0.19
|
0.22
|
0.25
|
|
(14)
|
(24)
|
|
0.86
|
1.64
|
Statement of comprehensive income
|
|
|
|
|
|
|
|
|
|
For the quarter ended
|
|
For the year ended
|
CHF million
|
|
31.12.16
|
30.9.16
|
31.12.15
|
|
31.12.16
|
31.12.15
|
|
|
|
|
|
|
|
|
Comprehensive income
attributable to shareholders
|
|
|
|
|
|
|
|
Net profit / (loss)
|
|
738
|
827
|
949
|
|
3,306
|
6,203
|
|
|
|
|
|
|
|
|
Other comprehensive income
that may be reclassified to the income statement
|
|
|
|
|
|
|
|
Foreign currency translation
|
|
|
|
|
|
|
|
Foreign currency translation movements, before tax
|
|
1,066
|
(172)
|
571
|
|
251
|
(140)
|
Foreign exchange amounts reclassified to the income statement
from equity
|
|
(27)
|
4
|
(115)
|
|
126
|
(90)
|
Income tax relating to foreign currency translation movements
|
|
(194)
|
107
|
(3)
|
|
(84)
|
(2)
|
Subtotal foreign currency translation, net of tax
|
|
845
|
(61)
|
452
|
|
292
|
(231)
|
Financial assets available
for sale
|
|
|
|
|
|
|
|
Net unrealized gains / (losses) on financial assets available
for sale, before tax
|
|
(135)
|
6
|
(74)
|
|
240
|
175
|
Impairment charges reclassified to the income statement from
equity
|
|
0
|
1
|
1
|
|
5
|
1
|
Realized gains reclassified to the income statement from equity
|
|
(98)
|
(18)
|
(23)
|
|
(372)
|
(292)
|
Realized losses reclassified to the income statement from equity
|
|
7
|
0
|
12
|
|
25
|
44
|
Income tax relating to net unrealized gains / (losses) on
financial assets available for sale
|
|
81
|
(9)
|
26
|
|
28
|
8
|
Subtotal financial assets available for sale, net of tax
|
|
(145)
|
(21)
|
(59)
|
|
(73)
|
(63)
|
Cash flow hedges
|
|
|
|
|
|
|
|
Effective portion of changes in fair value of derivative instruments
designated as cash flow hedges, before tax
|
|
(1,024)
|
(175)
|
(160)
|
|
246
|
544
|
Net (gains) / losses reclassified to the income statement from
equity
|
|
(270)
|
(235)
|
(362)
|
|
(1,082)
|
(1,182)
|
Income tax relating to cash flow hedges
|
|
261
|
84
|
104
|
|
170
|
128
|
Subtotal cash flow hedges, net of tax
|
|
(1,033)
|
(326)
|
(419)
|
|
(666)
|
(509)
|
Total other comprehensive
income that may be reclassified to the income statement, net of tax
|
|
(334)
|
(408)
|
(25)
|
|
(447)
|
(804)
|
|
|
|
|
|
|
|
|
Other comprehensive income
that will not be reclassified to the income statement
|
|
|
|
|
|
|
|
Defined benefit plans
|
|
|
|
|
|
|
|
Gains / (losses) on defined benefit plans, before tax
|
|
(301)
|
(186)
|
203
|
|
(876)
|
316
|
Income tax relating to defined benefit plans
|
|
68
|
(23)
|
(1)
|
|
52
|
(18)
|
Subtotal defined benefit plans, net of tax
|
|
(234)
|
(209)
|
202
|
|
(824)
|
298
|
Own credit on financial
liabilities designated at fair value
|
|
|
|
|
|
|
|
Gains / (losses) from own credit on financial liabilities
designated at fair value, before tax
|
|
15
|
(30)
|
0
|
|
(120)
|
0
|
Income tax relating to own credit on financial liabilities
designated at fair value
|
|
0
|
4
|
0
|
|
5
|
0
|
Subtotal own credit on financial liabilities designated at fair
value, net of tax
|
|
15
|
(25)
|
0
|
|
(115)
|
0
|
Total other comprehensive
income that will not be reclassified to the income statement, net of tax
|
|
(219)
|
(235)
|
202
|
|
(939)
|
298
|
|
|
|
|
|
|
|
|
Total other comprehensive
income
|
|
(553)
|
(643)
|
177
|
|
(1,386)
|
(506)
|
Total comprehensive income
attributable to shareholders
|
|
185
|
184
|
1,126
|
|
1,919
|
5,698
|
UBS Group AG interim consolidated financial statements (unaudited)
Statement of comprehensive income (continued)
|
|
|
|
|
|
|
|
|
|
For the quarter ended
|
|
For the year ended
|
CHF million
|
|
31.12.16
|
30.9.16
|
31.12.15
|
|
31.12.16
|
31.12.15
|
|
|
|
|
|
|
|
|
Comprehensive income
attributable to non-controlling interests
|
|
|
|
|
|
|
|
Net profit / (loss)
|
|
1
|
1
|
1
|
|
82
|
183
|
|
|
|
|
|
|
|
|
Other comprehensive income
that may be reclassified to the income statement
|
|
|
|
|
|
|
|
Other comprehensive income that may be reclassified to the income
statement, before tax
|
|
0
|
0
|
0
|
|
0
|
(12)
|
Income tax relating to other comprehensive income that may be
reclassified to the income statement
|
|
0
|
0
|
0
|
|
0
|
2
|
Total other comprehensive
income that may be reclassified to the income statement, net of tax
|
|
0
|
0
|
0
|
|
0
|
(10)
|
|
|
|
|
|
|
|
|
Other comprehensive income
that will not be reclassified to the income statement
|
|
|
|
|
|
|
|
Foreign currency translation movements, before tax
|
|
(13)
|
5
|
37
|
|
271
|
(95)
|
Income tax relating to foreign currency translation movements
|
|
0
|
0
|
0
|
|
0
|
0
|
Subtotal foreign currency translation, net of tax
|
|
(13)
|
5
|
37
|
|
271
|
(95)
|
Gains / (losses) on defined benefit plans, before tax
|
|
0
|
0
|
0
|
|
0
|
6
|
Income tax relating to defined benefit plans
|
|
0
|
0
|
0
|
|
0
|
(1)
|
Subtotal defined benefit plans, net of tax
|
|
0
|
0
|
0
|
|
0
|
5
|
Total other comprehensive
income that will not be reclassified to the income statement, net of tax
|
|
(13)
|
5
|
37
|
|
271
|
(90)
|
|
|
|
|
|
|
|
|
Total other comprehensive
income
|
|
(13)
|
5
|
37
|
|
271
|
(99)
|
Total comprehensive income
attributable to non-controlling interests
|
|
(12)
|
7
|
38
|
|
352
|
83
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
Net profit / (loss)
|
|
739
|
829
|
950
|
|
3,388
|
6,386
|
Other comprehensive income
|
|
(566)
|
(637)
|
214
|
|
(1,116)
|
(605)
|
of which: other
comprehensive income that may be reclassified to the income statement
|
|
(334)
|
(408)
|
(25)
|
|
(447)
|
(814)
|
of which: other
comprehensive income that will not be reclassified to the income statement
|
|
(232)
|
(229)
|
239
|
|
(669)
|
208
|
Total comprehensive income
|
|
173
|
191
|
1,164
|
|
2,272
|
5,781
|
Balance sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% change from
|
CHF million
|
|
31.12.16
|
30.9.16
|
31.12.15
|
|
30.9.16
|
31.12.15
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Cash and balances with central banks
|
|
107,767
|
94,680
|
91,306
|
|
14
|
18
|
Due from banks
|
|
13,156
|
15,120
|
11,948
|
|
(13)
|
10
|
Loans
|
|
306,325
|
305,021
|
311,954
|
|
0
|
(2)
|
Cash collateral on securities borrowed
|
|
15,111
|
18,277
|
25,584
|
|
(17)
|
(41)
|
Reverse repurchase agreements
|
|
66,246
|
69,999
|
67,893
|
|
(5)
|
(2)
|
Trading portfolio assets
|
|
96,575
|
105,437
|
124,035
|
|
(8)
|
(22)
|
of which: assets pledged as
collateral which may be sold or repledged by counterparties
|
|
30,260
|
33,441
|
51,943
|
|
(10)
|
(42)
|
Positive replacement values
|
|
158,411
|
154,383
|
167,435
|
|
3
|
(5)
|
Cash collateral receivables on derivative instruments
|
|
26,664
|
24,644
|
23,763
|
|
8
|
12
|
Financial assets designated at fair value
|
|
65,353
|
69,832
|
6,146
|
|
(6)
|
963
|
Financial assets available for sale
|
|
15,676
|
13,554
|
62,543
|
|
16
|
(75)
|
Financial assets held to maturity
|
|
9,289
|
7,005
|
|
|
33
|
|
Investments in associates
|
|
963
|
947
|
954
|
|
2
|
1
|
Property, equipment and software
|
|
8,331
|
8,113
|
7,695
|
|
3
|
8
|
Goodwill and intangible assets
|
|
6,556
|
6,345
|
6,568
|
|
3
|
0
|
Deferred tax assets
|
|
13,155
|
12,396
|
12,835
|
|
6
|
2
|
Other assets
|
|
25,436
|
29,454
|
22,160
|
|
(14)
|
15
|
Total assets
|
|
935,016
|
935,206
|
942,819
|
|
0
|
(1)
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Due to banks
|
|
10,645
|
11,227
|
11,836
|
|
(5)
|
(10)
|
Due to customers
|
|
423,672
|
411,840
|
390,185
|
|
3
|
9
|
Cash collateral on securities lent
|
|
2,818
|
3,726
|
8,029
|
|
(24)
|
(65)
|
Repurchase agreements
|
|
6,612
|
9,342
|
9,653
|
|
(29)
|
(32)
|
Trading portfolio liabilities
|
|
22,824
|
32,069
|
29,137
|
|
(29)
|
(22)
|
Negative replacement values
|
|
153,810
|
151,031
|
162,430
|
|
2
|
(5)
|
Cash collateral payables on derivative instruments
|
|
35,472
|
33,641
|
38,282
|
|
5
|
(7)
|
Financial liabilities designated at fair value
|
|
55,017
|
54,229
|
62,995
|
|
1
|
(13)
|
Debt issued
|
|
103,649
|
106,940
|
93,147
|
|
(3)
|
11
|
Provisions
|
|
4,072
|
3,954
|
4,164
|
|
3
|
(2)
|
Other liabilities
|
|
62,020
|
63,216
|
75,652
|
|
(2)
|
(18)
|
Total liabilities
|
|
880,612
|
881,213
|
885,511
|
|
0
|
(1)
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
Share capital
|
|
385
|
385
|
385
|
|
0
|
0
|
Share premium
|
|
28,254
|
28,058
|
31,164
|
|
1
|
(9)
|
Treasury shares
|
|
(2,249)
|
(2,291)
|
(1,693)
|
|
(2)
|
33
|
Retained earnings
|
|
31,827
|
31,308
|
29,504
|
|
2
|
8
|
Other comprehensive income recognized directly in equity, net of
tax
|
|
(4,494)
|
(4,160)
|
(4,047)
|
|
8
|
11
|
Equity attributable to
shareholders
|
|
53,723
|
53,300
|
55,313
|
|
1
|
(3)
|
Equity attributable to non-controlling interests
|
|
682
|
693
|
1,995
|
|
(2)
|
(66)
|
Total equity
|
|
54,404
|
53,993
|
57,308
|
|
1
|
(5)
|
Total liabilities and equity
|
|
935,016
|
935,206
|
942,819
|
|
0
|
(1)
|
UBS Group AG interim consolidated financial statements (unaudited)
Provisions and contingent liabilities
CHF million
|
Operational
risks¹
|
Litigation,
regulatory and
similar matters²
|
Restructuring
|
Loan commit-
ments and
guarantees
|
Real estate
|
Employee
benefits⁵
|
Other
|
Total
provisions
|
Balance as of 31 December
2015
|
47
|
2,983
|
624
|
35
|
157
|
198
|
120
|
4,164
|
Balance as of 30 September
2016
|
43
|
2,976
|
545
|
38
|
130
|
92
|
130
|
3,954
|
Increase in provisions recognized in the income statement
|
15
|
183
|
121
|
2
|
14
|
3
|
8
|
346
|
Release of provisions recognized in the income statement
|
(1)
|
(11)
|
(34)
|
(2)
|
(5)
|
(18)
|
(27)
|
(97)
|
Provisions used in conformity with designated purpose
|
(7)
|
(96)
|
(146)
|
0
|
(5)
|
0
|
(22)
|
(277)
|
Capitalized reinstatement costs
|
0
|
0
|
0
|
0
|
4
|
0
|
0
|
4
|
Reclassifications
|
0
|
0
|
0
|
15
|
0
|
0
|
0
|
15
|
Foreign currency translation / unwind of discount
|
0
|
108
|
14
|
1
|
4
|
0
|
1
|
128
|
Balance as of 31 December
2016
|
50
|
3,159
|
498³
|
54
|
142⁴
|
77
|
91
|
4,072
|
1 Comprises provisions for losses resulting from security risks
and transaction processing risks. 2 Comprises provisions for losses
resulting from legal, liability and compliance risks. 3 Includes
personnel-related restructuring provisions of CHF 150 million as of 31
December 2016 (30 September 2016: CHF 151 million; 31 December 2015: CHF 110
million) and provisions for onerous lease contracts of CHF 348 million as of
31 December 2016 (30 September 2016: CHF 394 million; 31 December 2015: CHF
514 million). 4 Includes reinstatement costs for leasehold improvements of
CHF 87 million as of 31 December 2016 (30 September 2016: CHF 87 million; 31
December 2015: CHF 95 million) and provisions for onerous lease contracts of
CHF 55 million as of 31 December 2016 (30 September 2016: CHF 43 million; 31
December 2015: CHF 62 million). 5 Includes provisions for sabbatical and
anniversary awards as well as provisions for severance that are not part of
restructuring provisions.
|
Restructuring provisions primarily
relate to onerous lease contracts and severance payments. The use of onerous
lease provisions is driven by the maturities of the underlying lease contracts.
Severance-related provisions are used within a short time period, usually
within six months, but potential changes in amount may be triggered when
natural staff attrition reduces the number of people affected by a
restructuring and therefore the estimated costs.
Information on provisions and contingent
liabilities in respect of litigation, regulatory and similar matters as a
class, is included in part b) of this disclosure. There are no material
contingent liabilities associated with the other classes of provisions.
b) Litigation, regulatory and
similar matters
The Group operates in a legal and
regulatory environment that exposes it to significant litigation and similar
risks arising from disputes and regulatory proceedings. As a result, UBS (which
for purposes of this disclosure may refer to UBS Group AG and / or one or more
of its subsidiaries, as applicable) is involved in various disputes and legal
proceedings, including litigation, arbitration, and regulatory and criminal
investigations.
Such matters are subject to many
uncertainties and the outcome and the timing of resolution are often difficult
to predict, particularly in the earlier stages of a case. There are also
situations where the Group may enter into a settlement agreement. This may
occur in order to avoid the expense, management distraction or reputational
implications of continuing to contest liability, even for those matters for
which the Group believes it should be exonerated. The uncertainties inherent in
all such matters affect the amount and timing of any potential outflows for
both matters with respect to which provisions have been established and other
contingent liabilities. The Group makes provisions for such matters brought
against it when, in the opinion of management after seeking legal advice, it is
more likely than not that the Group has a present legal or constructive
obligation as a result of past events, it is probable that an outflow of
resources will be required, and the amount can be reliably estimated. Where
these factors are otherwise satisfied, a provision may be established for
claims that have not yet been asserted against the Group, but are nevertheless
expected to be, based on the Group’s experience with similar asserted claims.
If any of those conditions is not met, such matters result in contingent
liabilities. If the amount of an obligation cannot be reliably estimated, a
liability exists that is not recognized even if an outflow of resources is
probable. Accordingly, no provision is established even if the potential outflow
of resources with respect to select matters could be significant.
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
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.
Provisions and contingent liabilities
(continued)
In the case of certain matters below, we
state that we have established a provision, and for the other matters we make
no such statement. When we make this statement and we expect disclosure of the
amount of a provision to prejudice seriously our position with other parties in
the matter, because it would reveal what UBS believes to be the probable and
reliably estimable outflow, we do not disclose that amount. In some cases we
are subject to confidentiality obligations that preclude such disclosure. With
respect to the matters for which we do not state whether we have established a
provision, either (a) we have not established a provision, 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 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 us to provide speculative legal
assessments as to claims and proceedings that involve unique fact patterns or
novel legal theories, which 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 we therefore cannot provide a numerical estimate of the
future losses that could arise from litigation, regulatory and similar matters,
we believe that the aggregate amount of possible future losses from this class
that are more than remote substantially exceeds the level of current
provisions. Litigation, regulatory and similar matters may also result in
non-monetary penalties and consequences. For example, the Non-Prosecution
Agreement (NPA) described in item 5 of this disclosure, which we entered into
with the US Department of Justice (DOJ), Criminal Division, Fraud Section in
connection with our submissions of benchmark interest rates, including, among
others, the British Bankers’ Association London Interbank Offered Rate (LIBOR),
was terminated by the DOJ based on its determination that we had committed a US
crime in relation to foreign exchange matters. As a consequence, UBS AG pleaded
guilty to one count of wire fraud for conduct in the LIBOR matter, paid a USD
203 million fine and is subject to a three-year term of probation. A guilty
plea to, or conviction of, a crime (including as a result of termination of the
NPA) could have material consequences for UBS. Resolution of regulatory
proceedings may require us 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 our 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 our 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 Corporate Center unit¹
|
CHF million
|
Wealth Manage-
ment
|
Wealth Manage-
ment Americas
|
Personal &
Corporate
Banking
|
Asset
Manage-
ment
|
Investment Bank
|
CC –
Services
|
CC –
Group ALM
|
CC – Non-
core and
Legacy
Portfolio
|
UBS
|
Balance as of 31 December
2015
|
245
|
459
|
83
|
16
|
585
|
310
|
0
|
1,284
|
2,983
|
Balance as of 30 September
2016
|
234
|
386
|
72
|
9
|
584
|
261
|
0
|
1,429
|
2,976
|
Increase in provisions recognized in the income statement
|
62
|
56
|
7
|
1
|
14
|
0
|
0
|
42
|
183
|
Release of provisions recognized in the income statement
|
0
|
(2)
|
0
|
0
|
0
|
(2)
|
0
|
(7)
|
(11)
|
Provisions used in conformity with designated purpose
|
(3)
|
(35)
|
(1)
|
(6)
|
(6)
|
(1)
|
0
|
(45)
|
(96)
|
Foreign currency translation / unwind of discount
|
(2)
|
20
|
0
|
1
|
24
|
1
|
0
|
65
|
108
|
Balance as of 31 December
2016
|
292
|
425
|
78
|
5
|
616
|
259
|
0
|
1,483
|
3,159
|
1 Provisions, if any, for the matters described in this
disclosure are recorded in Wealth Management (item 3), Wealth Management
Americas (item 4), the Investment Bank (item 8), CC – Services (item 7) and
CC – Non-core and Legacy Portfolio (item 2). Provisions, if any, for the
matters described in this disclosure in items 1 and 6 are allocated between
Wealth Management and Personal & Corporate Banking, and provisions, if
any, for the matters described in this disclosure in item 5 are allocated
between the Investment Bank, CC – Services and CC – Non-core and Legacy
Portfolio.
|
UBS Group AG interim consolidated financial statements (unaudited)
Provisions and contingent liabilities
(continued)
1. Inquiries regarding cross-border wealth management businesses
Tax and
regulatory authorities in a number of countries have made inquiries, served
requests for information or examined employees located in their respective
jurisdictions relating to the cross-border wealth management services provided
by UBS and other financial institutions. It is possible that implementation of
automatic tax information exchange and other measures relating to cross-border
provision of financial services could give rise to further inquiries in the
future. UBS has received disclosure orders from the Swiss Federal Tax
Administration (FTA) to transfer information based on requests for
international administrative assistance in tax matters. The requests concern a
number of UBS account numbers pertaining to current and former clients and are based
on data from 2006 and 2008. UBS has taken steps to inform affected clients
about the administrative assistance proceedings and their procedural rights,
including the right to appeal. The requests are based on data received from the
German authorities, who seized certain data related to UBS clients booked in
Switzerland during their investigations and have apparently shared this data
with other European countries. UBS expects additional countries to file similar
requests. In addition, the Swiss Federal Supreme Court ruled in September 2016
that the double taxation agreement between the Netherlands and Switzerland
provides a sufficient legal basis for an administrative assistance group
request without specifying the names of the targeted taxpayers, which makes it
more likely that similar requests for administrative assistance will be granted
by the FTA.
As a result of
investigations in France, in 2013, UBS (France) S.A. and UBS AG were put under
formal examination (“mise en examen”) for complicity in having illicitly
solicited clients on French territory, and were declared witness with legal
assistance (“témoin assisté”) regarding the laundering of proceeds of tax fraud
and of banking and financial solicitation by unauthorized persons. In 2014, UBS
AG was placed under formal examination with respect to the potential charges of
laundering of proceeds of tax fraud, and the investigating judges ordered UBS
AG to provide bail (“caution”) of EUR 1.1 billion. UBS AG appealed the
determination of the bail amount, but both the appeal court (“Cour d’Appel”)
and the French Supreme Court (“Cour de Cassation”) upheld the bail amount and
rejected the appeal in full in late 2014. UBS AG filed an application to the
European Court of Human Rights (ECHR) to challenge various aspects of the
French court’s decision. In January 2017, the ECHR denied UBS’s application.
The Swiss Federal Administrative Court ruled in October 2016 that in the
administrative assistance proceedings related to the French bulk request, UBS
has the right to appeal all final FTA client data disclosure orders. In
September 2015, the former CEO of UBS Wealth Management was placed under formal
examination in connection with these proceedings. In addition, the
investigating judges have sought to issue arrest warrants against three
Swiss-based former employees of UBS AG who did not appear when summoned by the
investigating judge.
In 2015, UBS
(France) S.A. was placed under formal examination for complicity regarding the
laundering of proceeds of tax fraud and of banking and financial solicitation
by unauthorized persons for the years 2004 until 2008 and declared witness with
legal assistance for the years 2009 to 2012. A bail of EUR 40 million was
imposed, and was subsequently reduced by the Court of Appeals to EUR 10
million.
In February
2016, the investigating judge notified UBS AG and UBS (France) S.A. that he has
closed his investigation. In July 2016, UBS AG and UBS (France) S.A. received
the National Financial Prosecutor’s recommendation (“réquisitoire”). As
permitted, the parties have commented on the recommendation. The next
procedural step will be for the judge to issue his final decree (“ordonnance de
renvoi en correctionnelle”) which would set out any charges for which UBS AG
and UBS (France) S.A. will be tried, both legally and factually, and transfer
the case to court.
UBS has been
notified by the Belgian investigating judge that it is under formal
investigation (“inculpé”) regarding the laundering of proceeds of tax fraud and
of banking, financial solicitation by unauthorized persons and serious tax
fraud.
In 2015, UBS
received inquiries from the US Attorney’s Office for the Eastern District of
New York and from the US Securities and Exchange Commission (SEC), which are
investigating potential sales to US persons of bearer bonds and other
unregistered securities in possible violation of the Tax Equity and Fiscal
Responsibility Act of 1982 (TEFRA) and the registration requirements of the US
securities laws. UBS is cooperating with the authorities in these
investigations.
UBS has, and
reportedly numerous other financial institutions have, received inquiries from
authorities concerning accounts relating to the Fédération Internationale de
Football Association (FIFA) and other constituent soccer associations and
related persons and entities. UBS is cooperating with authorities in these
inquiries.
Our balance
sheet at 31 December 2016 reflected provisions with respect to matters
described in this item 1 in an amount that UBS believes to be appropriate under
the applicable accounting standard. As in the case of other matters for which
we have established provisions, the future outflow of resources in respect of
such matters cannot be determined with certainty based on currently available
information, and accordingly may ultimately prove to be substantially greater
(or may be less) than the provision that we have recognized.
2. 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. A
subsidiary of UBS, UBS Real Estate Securities Inc. (UBS RESI), acquired pools
of residential mortgage loans from originators and (through an affiliate)
deposited them into securitization trusts. In this manner, from 2004 through
2007, UBS RESI sponsored approximately USD 80 billion in RMBS, based on
the original principal balances of the securities issued.
Provisions and contingent liabilities
(continued)
UBS RESI also sold pools of loans acquired from
originators to third-party purchasers. These whole loan sales during the period
2004 through 2007 totaled approximately USD 19 billion in original principal
balance.
We were not a significant originator of US
residential loans. A subsidiary of UBS originated approximately USD 1.5 billion
in US residential mortgage loans during the period in which it was active from
2006 to 2008, and securitized less than half of these loans.
RMBS-related lawsuits
concerning disclosures:
UBS is named as a
defendant relating to its role as underwriter and issuer of RMBS in lawsuits
related to approximately USD 2.5 billion in original face amount of RMBS
underwritten or issued by UBS. Of the USD 2.5 billion in original face amount
of RMBS that remains at issue in these cases, approximately USD 1.2 billion was
issued in offerings in which a UBS subsidiary transferred underlying loans (the
majority of which were purchased from third-party originators) into a
securitization trust and made representations and warranties about those loans
(UBS-sponsored RMBS). The remaining USD 1.3 billion of RMBS to which these
cases relate was issued by third parties in securitizations in which UBS acted
as underwriter (third-party RMBS).
In connection with certain of these lawsuits,
UBS has indemnification rights against surviving third-party issuers or
originators for losses or liabilities incurred by UBS, but UBS cannot predict
the extent to which it will succeed in enforcing those rights.
UBS is a defendant in a lawsuit brought by
the National Credit Union Administration (NCUA), as conservator for certain
failed credit unions, asserting misstatements and omissions in the offering
documents for RMBS purchased by the credit unions. The lawsuit was filed in the
US District Court for the District of Kansas. The original principal balance at
issue in the case is approximately USD 1.15 billion. Motions for summary
judgment were fully submitted in December 2016. In the second quarter of 2016,
UBS resolved a similar case brought by the NCUA in the US District Court for
the Southern District of New York (SDNY) relating to RMBS with an original
principal balance of approximately USD 400 million, for a total of
approximately USD 69.8 million, in addition to reasonable attorneys’ fees
incurred by NCUA.
Lawsuits related to
contractual representations and warranties concerning mortgages and RMBS:
When UBS acted as an RMBS sponsor or mortgage seller, we generally
made certain representations relating to the characteristics of the underlying
loans. In the event of a material breach of these representations, we were in
certain circumstances contractually obligated to repurchase the loans to which
the representations related or to indemnify certain parties against losses. UBS
has received demands to repurchase US residential mortgage loans as to which
UBS made certain representations at the time the loans were transferred to the
securitization trust aggregating approximately USD 4.1 billion in original
principal balance. Of this amount, UBS considers claims relating to
approximately USD 2 billion in original principal balance to be resolved,
including claims barred by the statute of limitations. Substantially all of the
remaining claims are in litigation, including the matters described in the next
paragraph. UBS believes that new demands to repurchase US residential mortgage
loans are time-barred under a decision rendered by the New York Court of
Appeals.
In 2012, certain RMBS trusts filed an action
(Trustee Suit) in the SDNY seeking to enforce UBS RESI’s obligation to
repurchase loans in the collateral pools for three RMBS securitizations with an
original principal balance of approximately USD 2 billion, for which Assured
Guaranty Municipal Corp., a financial guaranty insurance company, had
previously demanded repurchase. A bench trial in the SDNY adjourned in May
2016. Approximately 9,000 loans were at issue in the trial. In September 2016,
the court issued an order ruling on numerous legal and factual issues and
applying those rulings to 20 exemplar loans. The court further ordered that a
lead master be appointed to apply the court’s rulings to the loans that remain
at issue following the trial. With respect to the loans subject to the Trustee
Suit that were originated by institutions still in existence, UBS intends to
enforce its indemnity rights against those institutions.
We also have tolling agreements with certain
institutional purchasers of RMBS concerning their potential claims related to
substantial purchases of UBS-sponsored or third-party RMBS.
Mortgage-related
regulatory matters:
In 2014, UBS received a
subpoena from the US Attorney’s Office for the Eastern District of New York
issued pursuant to the Financial Institutions Reform, Recovery and Enforcement
Act of 1989 (FIRREA), which seeks documents and information related to UBS’s
RMBS business from 2005 through 2007. In 2015, the Eastern District of New York
identified a number of transactions that are the focus of their inquiry, and
has subsequently provided a revised list of transactions. We have provided and
continue to provide information. UBS continues to respond to the FIRREA
subpoena and to subpoenas from the New York State Attorney General and other
state attorneys general relating to its RMBS business. In addition, UBS has
also been responding to inquiries from both the Special Inspector General for
the Troubled Asset Relief Program (SIGTARP) (who is working in conjunction with
the US Attorney’s Office for Connecticut and the DOJ) and the SEC relating to
trading practices in connection with purchases and sales of mortgage-backed
securities in the secondary market from 2009 through 2014. We are cooperating
with the authorities in these matters.
UBS Group AG interim consolidated financial statements (unaudited)
Provisions and contingent liabilities
(continued)
Provision for claims related
to sales of residential mortgage-backed securities and mortgages
|
USD million
|
Total
|
Balance as of 31 December
2015
|
1,218
|
Balance as of 30 September
2016
|
1,405
|
Increase in provision recognized in the income statement
|
40
|
Release of provision recognized in the income statement
|
0
|
Provision used in conformity with designated purpose
|
(44)
|
Balance as of 31 December
2016
|
1,400
|
As reflected in the table “Provision for
claims related to sales of residential mortgage-backed securities and
mortgages,” our balance sheet at 31 December 2016 reflected a provision of USD 1,400
million with respect to matters described in this item 2. As in the case of
other matters for which we have established provisions, the future outflow of
resources in respect of this matter 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.
3. Madoff
In relation to the Bernard L. Madoff
Investment Securities LLC (BMIS) investment fraud, UBS AG, UBS (Luxembourg) SA
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
(CSSF). 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 now face severe losses, and the
Luxembourg funds are in liquidation. The last reported net asset value of the
two Luxembourg funds before revelation of the Madoff scheme was approximately
USD 1.7 billion in the aggregate, although that figure likely includes fictitious
profit reported by BMIS. The documentation establishing both funds identifies
UBS entities in various roles, including custodian, administrator, manager,
distributor and promoter, and indicates that UBS employees serve as board
members. UBS (Luxembourg) SA and certain other UBS subsidiaries are responding
to inquiries by Luxembourg investigating authorities, without, however, being
named as parties in those investigations. In 2009 and 2010, the liquidators of
the two Luxembourg funds filed claims on behalf of the funds against UBS
entities, non-UBS entities and certain individuals, including current and
former UBS employees. The amounts claimed are approximately EUR 890 million and
EUR 305 million, respectively. The liquidators have filed supplementary claims
for amounts that the funds may possibly be held liable to pay the BMIS Trustee.
These amounts claimed by the liquidator are approximately EUR 564 million and
EUR 370 million, respectively. In addition, a large number of alleged
beneficiaries have filed claims against UBS entities (and non-UBS entities) for
purported losses relating to the Madoff scheme. The majority of these cases are
pending in Luxembourg, where appeals were filed by the claimants against the
2010 decisions of the court in which the claims in a number of test cases were
held to be inadmissible. In 2014, the Luxembourg Court of Appeal dismissed one
test case appeal in its entirety, which decision was appealed by the investor.
In 2015, the Luxembourg Supreme Court found in favor of UBS and dismissed the
investor’s appeal. In June 2016, the Luxembourg Court of Appeal dismissed the
remaining test cases in their entirety. In the US, the BMIS Trustee filed
claims in 2010 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 2 billion.
Following a motion by UBS, in 2011, the SDNY dismissed all of the BMIS
Trustee’s claims other than claims for recovery of fraudulent conveyances and
preference payments that were allegedly transferred to UBS on the ground that
the BMIS Trustee lacks standing to bring such claims. In 2013, the Second
Circuit affirmed the District Court’s decision and, in 2014, the US Supreme
Court denied the BMIS Trustee’s petition seeking review of the Second Circuit
ruling. In November 2016, the bankruptcy court issued an opinion dismissing the
remaining claims for recovery of subsequent transfers of fraudulent conveyances
and preference payments on the ground that the US Bankruptcy Code does not
apply to transfers that occurred outside the US. The BMIS Trustee has indicated
that he will appeal. In 2014, several claims, including a purported class
action, were filed in the US by BMIS customers against UBS entities, asserting
claims similar to the ones made by the BMIS Trustee, seeking unspecified
damages. One claim was voluntarily withdrawn by the plaintiff. In 2015,
following a motion by UBS, the SDNY dismissed the two remaining claims on the
basis that the New York courts did not have jurisdiction to hear the claims
against the UBS entities. The plaintiff in one of those claims has appealed the
dismissal. In Germany, certain clients of UBS are exposed to Madoff-managed
positions through third-party funds and funds administered by UBS entities in
Germany. A small number of claims have been filed with respect to such funds.
In 2015, a court of appeal ordered UBS to pay EUR 49 million, plus interest of
approximately EUR 15.3 million.
Provisions and contingent liabilities
(continued)
4. Puerto Rico
Declines since August 2013 in the
market prices of Puerto Rico municipal bonds and of closed-end funds (the
funds) that are sole-managed and co-managed by UBS Trust Company of Puerto Rico
and distributed by UBS Financial Services Incorporated of Puerto Rico (UBS PR)
have led to multiple regulatory inquiries, as well as customer complaints and
arbitrations with aggregate claimed damages of approximately USD 2.0 billion,
of which claims with aggregate claimed damages of approximately USD 861 million
have been resolved through settlements, arbitration or withdrawal of the claim.
The claims are filed by clients in Puerto Rico who own the funds or Puerto Rico
municipal bonds and / or who used their UBS account assets as collateral for
UBS non-purpose loans; customer complaint and arbitration allegations include
fraud, misrepresentation and unsuitability of the funds and of the loans. A
shareholder derivative action was filed in 2014 against various UBS entities
and current and certain former directors of the funds, alleging hundreds of
millions of US dollars in losses in the funds. In 2015, defendants’ motion to
dismiss was denied. Defendants’ requests for permission to appeal that ruling
were denied by the Puerto Rico Court of Appeals and the Puerto Rico Supreme Court.
In 2014, a federal class action complaint also was filed against various UBS
entities, certain members of UBS PR senior management, and the co-manager of
certain of the funds seeking damages for investor losses in the funds during
the period from May 2008 through May 2014. Defendants had moved to dismiss that
complaint, and in December 2016, defendants’ motion to dismiss was granted in
part and denied in part. In 2015, a class action was filed in Puerto Rico state
court against UBS PR seeking equitable relief in the form of a stay of any
effort by UBS PR to collect on non-purpose loans it acquired from UBS Bank USA
in December 2013 based on plaintiffs’ allegation that the loans are not valid.
The trial court denied defendants’ motion to dismiss the action based on a
forum selection clause in the loan agreements; the Puerto Rico Supreme Court
has stayed the action pending its review of defendants’ appeal from that
ruling.
In 2014, UBS reached a settlement with the
Office of the Commissioner of Financial Institutions for the Commonwealth of
Puerto Rico (OCFI) in connection with OCFI’s examination of UBS’s operations
from January 2006 through September 2013, pursuant to which UBS is paying up to
an aggregate of USD 7.7 million in investor education contributions and
restitution.
In 2015, the SEC and the Financial Industry
Regulatory Authority (FINRA) announced settlements with UBS PR of their
separate investigations stemming from the 2013 market events. Without admitting
or denying the findings in either matter, UBS PR agreed in the SEC settlement
to pay USD 15 million and USD 18.5 million in the FINRA matter. We also
understand that
the DOJ is conducting a criminal inquiry into the impermissible reinvestment of
non-purpose loan proceeds. We are cooperating with the authorities in this
inquiry.
In 2011, a purported derivative action was
filed on behalf of the Employee Retirement System of the Commonwealth of Puerto
Rico (System) against over 40 defendants, including UBS PR, which was named in
connection with its underwriting and consulting services. Plaintiffs alleged
that defendants violated their purported fiduciary duties and contractual
obligations in connection with the issuance and underwriting of approximately
USD 3 billion of bonds by the System in 2008 and sought damages of
over USD 800 million. Defendants’ motion to dismiss is pending. In September
2016, the System announced its intention to join the action as a plaintiff, and
the court has since ordered that plaintiffs must file an amended complaint.
Also, in 2013, an SEC Administrative Law
Judge dismissed a case brought by the SEC against two UBS executives, finding
no violations. The charges had stemmed from the SEC’s investigation of UBS’s
sale of closed-end funds in 2008 and 2009, which UBS settled in 2012. Beginning
in 2012, two federal class action complaints, which were subsequently
consolidated, were filed against various UBS entities, certain of the funds,
and certain members of UBS PR senior management, seeking damages for investor
losses in the funds during the period from January 2008 through May 2012 based
on allegations similar to those in the SEC action. In September 2016, the court
denied plaintiffs’ motion for class certification. In October 2016, plaintiffs
filed a petition with the US Court of Appeals for the First Circuit seeking
permission to bring an interlocutory appeal challenging the denial of their
motion for class certification. Defendants have filed an opposition to
plaintiffs’ petition.
Beginning in 2015, agencies and public
corporations of the Commonwealth have defaulted on certain interest payments, and
in July 2016, the Commonwealth defaulted on payments on its general obligation
debt. Executive orders of the Governor that have diverted funds to pay for
essential services instead of debt payments and stayed any action to enforce
creditors’ rights on the Puerto Rico bonds continue to be in effect. In June
2016, US federal legislation created an oversight board with power to oversee
Puerto Rico’s finances and to restructure its debt. The oversight board is
authorized to impose, and has imposed, a stay on exercise of creditors’ rights.
These events, further defaults, any further legislative action to create a
legal means of restructuring Commonwealth obligations or to impose additional
oversight on the Commonwealth’s finances, or any restructuring of the
Commonwealth’s obligations, may increase the number of claims against UBS
concerning Puerto Rico securities, as well as potential damages sought.
UBS Group AG interim consolidated financial statements (unaudited)
Provisions and contingent liabilities
(continued)
Our balance sheet at 31 December 2016
reflected provisions with respect to matters described in this item 4 in
amounts 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 provisions that we have recognized.
5. Foreign exchange, LIBOR, and
benchmark rates, and other trading practices
Foreign
exchange-related regulatory matters:
Following
an initial media report in 2013 of widespread irregularities in the foreign
exchange markets, UBS immediately commenced an internal review of its foreign
exchange business, which includes our precious metals and related structured
products businesses. Since then, various authorities have commenced
investigations concerning possible manipulation of foreign exchange markets,
including FINMA, the Swiss Competition Commission (WEKO), the DOJ, the SEC, the
US Commodity Futures Trading Commission (CFTC), the Board of Governors of the
Federal Reserve System (Federal Reserve Board), the California State Attorney
General, the UK Financial Conduct Authority (FCA) (to which certain responsibilities
of the UK Financial Services Authority (FSA) have passed), the UK Serious Fraud
Office (SFO), the Australian Securities and Investments Commission (ASIC), the
Hong Kong Monetary Authority (HKMA), the Korea Fair Trade Commission (KFTC) and
the Brazil Competition Authority (CADE). In addition, WEKO is, and a number of
other authorities reportedly are, investigating potential manipulation of
precious metals prices. UBS has taken and will continue to take appropriate
action with respect to certain personnel as a result of its ongoing review.
In 2014, UBS reached settlements with the FCA
and the CFTC in connection with their foreign exchange investigations, and
FINMA issued an order concluding its formal proceedings with respect to UBS
relating to its foreign exchange and precious metals businesses. UBS has paid a
total of approximately CHF 774 million to these authorities, including GBP 234
million in fines to the FCA, USD 290 million in fines to the CFTC, and CHF 134
million to FINMA representing confiscation of costs avoided and profits. In
2015, the Federal Reserve Board and the Connecticut Department of Banking
issued an Order to Cease and Desist and Order of Assessment of a Civil Monetary
Penalty Issued upon Consent (Federal Reserve Order) to UBS AG. As part of the
Federal Reserve Order, UBS AG paid a USD 342 million civil monetary penalty.
In 2015, the DOJ’s Criminal Division
(Criminal Division) terminated the December 2012 Non-Prosecution Agreement
(NPA) with UBS AG related to UBS’s submissions of benchmark interest rates. As
a result, UBS AG entered into a plea agreement with the Criminal Division
pursuant to which UBS AG pleaded guilty to a one-count criminal information
filed in the US District Court for the District of Connecticut charging UBS AG
with one count of wire fraud in violation of 18 USC Sections 1343 and 2.
Sentencing occurred on 5 January 2017. Under the plea agreement, UBS AG has
paid a USD 203 million fine and is subject to a three-year term of probation
starting on the sentencing date. The criminal information charges that, between
approximately 2001 and 2010, UBS AG engaged in a scheme to defraud
counterparties to interest rate derivatives transactions by manipulating
benchmark interest rates, including Yen LIBOR. The Criminal Division terminated
the NPA based on its determination, in its sole discretion, that certain UBS AG
employees committed criminal conduct that violated the NPA, including
fraudulent and deceptive currency trading and sales practices in conducting
certain foreign exchange market transactions with clients and collusion with
other participants in certain foreign exchange markets.
We have ongoing obligations to cooperate with
these authorities and to undertake certain remediation, including actions to
improve UBS’s processes and controls.
UBS has been granted conditional leniency or
conditional immunity by the Antitrust Division of the DOJ (Antitrust Division)
from prosecution for EUR / USD collusion and entered into a
non-prosecution agreement covering other currency pairs. As a result, UBS AG
will not be subject to prosecutions, fines or other sanctions for antitrust law
violations by the Antitrust Division, subject to UBS AG’s continuing
cooperation. However, the conditional leniency and conditional immunity grant
does not bar government agencies from asserting other claims and imposing
sanctions against UBS AG, as evidenced by the settlements and ongoing
investigations referred to above. UBS has also been granted conditional
immunity by authorities in certain jurisdictions, including WEKO, in connection
with potential competition law violations relating to foreign exchange business
and precious metals, and as a result, will not be subject to prosecutions,
fines or other sanctions for antitrust or competition law violations in those
jurisdictions, subject to UBS AG’s continuing cooperation as the leniency
applicant.
Investigations relating to foreign exchange
and precious metals matters by numerous authorities, including the CFTC, remain
ongoing notwithstanding these resolutions.
Provisions and contingent liabilities
(continued)
Foreign exchange-related
civil litigation:
Putative class actions have
been filed since November 2013 in US federal courts and in other jurisdictions
against UBS and other banks on behalf of putative classes of persons who
engaged in foreign currency transactions with any of the defendant banks. They
allege collusion by the defendants and assert claims under the antitrust laws
and for unjust enrichment. In 2015, additional putative class actions were
filed in federal court in New York against UBS and other banks on behalf of a
putative class of persons who entered into or held any foreign exchange futures
contracts and options on foreign exchange futures contracts since 1 January
2003. The complaints assert claims under the Commodity Exchange Act (CEA) and
the US antitrust laws. In 2015, a consolidated complaint was filed on behalf of
both putative classes of persons covered by the US federal court class actions
described above. UBS has entered into a settlement agreement that would resolve
all of these US federal court class actions. The agreement, which has been
preliminarily approved by the court and is subject to final court approval,
requires, among other things, that UBS pay an aggregate of USD 141 million and
provide cooperation to the settlement classes.
A putative class action has been filed in
federal court in New York against UBS and other banks on behalf of
participants, beneficiaries, and named fiduciaries of plans qualified under the
Employee Retirement Income Security Act of 1974 (ERISA) for whom a defendant
bank provided foreign currency exchange transactional services, exercised
discretionary authority or discretionary control over management of such ERISA
plan, or authorized or permitted the execution of any foreign currency exchange
transactional services involving such plan’s assets. The complaint asserts
claims under ERISA. The parties filed a stipulation to dismiss the case with
prejudice. The plaintiffs have appealed the dismissal.
In 2015, a putative class action was filed in
federal court against UBS and numerous other banks on behalf of a putative
class of persons and businesses in the US who directly purchased foreign
currency from the defendants and their co-conspirators for their own end use.
That action has been transferred to federal court in New York. Motions to
dismiss are pending.
In 2016, a putative class action was filed in
federal court in New York against UBS and numerous other banks on behalf of a
putative class of persons and entities who had indirectly purchased FX
instruments from a defendant or co-conspirator in the US. The complaint asserts
claims under federal and state antitrust laws. Motions to dismiss will be
filed.
In 2015, UBS was added to putative class
actions pending against other banks in federal court in New York and other
jurisdictions on behalf of putative classes of persons who had bought or sold
physical precious metals and various precious metal products and derivatives.
The complaints in these lawsuits assert claims under the antitrust laws and the
CEA, and other claims. In October 2016, the court in New York granted UBS’s
motions to dismiss the putative class actions relating to gold and silver.
Plaintiffs in those cases are seeking to amend their complaints to add new
allegations about UBS. UBS’s motion to dismiss the putative class action relating
to platinum and palladium remains pending.
LIBOR and other
benchmark-related regulatory matters:
Numerous
government agencies, including the SEC, the CFTC, the DOJ, the FCA, the SFO,
the Monetary Authority of Singapore (MAS), the HKMA, FINMA, the various state
attorneys general in the US, and competition authorities in various
jurisdictions have conducted or are continuing to conduct investigations
regarding submissions with respect to LIBOR and other benchmark rates. These
investigations focus on whether there were improper attempts by UBS, among
others, either acting on our own or together with others, to manipulate LIBOR
and other benchmark rates at certain times.
In 2012, UBS reached settlements with the
FSA, the CFTC and the Criminal Division of the DOJ in connection with their
investigations of benchmark interest rates. At the same time, FINMA issued an
order concluding its formal proceedings with respect to UBS relating to
benchmark interest rates. UBS has paid a total of approximately CHF 1.4 billion
in fines and disgorgement, including GBP 160 million in fines to the FSA, USD
700 million in fines to the CFTC, USD 500 million in fines to the DOJ, and CHF
59 million in disgorgement to FINMA. UBS Securities Japan Co. Ltd. (UBSSJ)
entered into a plea agreement with the DOJ under which it entered a plea to one
count of wire fraud relating to the manipulation of certain benchmark interest
rates, including Yen LIBOR. UBS entered into an NPA with the DOJ, which (along
with the plea agreement) covered conduct beyond the scope of the conditional
leniency / immunity grants described below, required UBS to pay the USD 500
million fine to the DOJ after the sentencing of UBSSJ, and provided that any
criminal penalties imposed on UBSSJ at sentencing be deducted from the USD 500
million fine. Under the NPA, we agreed, among other things, that for two years
from 18 December 2012 UBS would not commit any US crime, and we would advise
DOJ of any potentially criminal conduct by UBS or any of its employees relating
to violations of US laws concerning fraud or securities and commodities
markets. The term of the NPA was extended by one year to 18 December 2015. In
2015, the Criminal Division terminated the NPA based on its determination, in
its sole discretion, that certain UBS AG employees committed criminal conduct
that violated the NPA.
UBS Group AG interim consolidated financial statements (unaudited)
Provisions and contingent liabilities
(continued)
In 2014, UBS reached a settlement with the
European Commission (EC) regarding its investigation of bid-ask spreads in
connection with Swiss franc interest rate derivatives and paid a EUR 12.7
million fine, which was reduced to this level based in part on UBS’s
cooperation with the EC. In December 2016, UBS reached a settlement with WEKO
regarding its investigation of bid-ask spreads in connection with Swiss franc
interest rate derivatives and received full immunity from fines. The MAS, HKMA
and the Japan Financial Services Agency have also resolved investigations of
UBS (and in some cases, other banks). We have ongoing obligations to cooperate
with the authorities with whom we have reached resolutions and to undertake
certain remediation with respect to benchmark interest rate submissions.
Investigations by the CFTC, ASIC and other
governmental authorities remain ongoing notwithstanding these resolutions.
UBS has been granted conditional leniency or
immunity from authorities in certain jurisdictions, including the Antitrust
Division of the DOJ and WEKO, in connection with potential antitrust or
competition law violations related to submissions for Yen LIBOR and Euroyen
TIBOR. As a result of these conditional grants, UBS will not be subject to
prosecutions, fines or other sanctions for antitrust or competition law
violations in the jurisdictions where we have conditional immunity in
connection with the matters covered by the conditional grants, subject to our
continuing cooperation as leniency applicant. However, since the Secretariat of
WEKO has asserted that UBS does not qualify for full immunity, UBS has been
unable to reach a settlement with WEKO and therefore the investigation will
continue. Furthermore, the conditional leniency and conditional immunity grants
we have received do not bar government agencies from asserting other claims and
imposing sanctions against us, as evidenced by the settlements and ongoing
investigations referred to above. In addition, as a result of the conditional
leniency agreement with the DOJ, we are eligible for a limit on liability to
actual rather than treble damages were damages to be awarded in any civil
antitrust action under US law based on conduct covered by the agreement and for
relief from potential joint and several liability in connection with such civil
antitrust action, subject to our satisfying the DOJ and the court presiding
over the civil litigation of our cooperation. The conditional leniency and conditional
immunity grants do not otherwise affect the ability of private parties to
assert civil claims against us.
LIBOR and other
benchmark-related civil litigation:
A number of
putative class actions and other actions are pending in the federal courts in
New York against UBS and numerous other banks on behalf of parties who
transacted in certain interest rate benchmark-based derivatives. Also pending
in the US and in other jurisdictions are 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. All of the complaints allege manipulation,
through various means, of various benchmark interest rates, including USD
LIBOR, Euroyen TIBOR, Yen LIBOR, EURIBOR, CHF LIBOR, GBP LIBOR, USD ISDAFIX
rates and other benchmark rates, and seek unspecified compensatory and other
damages under varying legal theories.
In 2013, the US district court in the USD
LIBOR action dismissed the federal antitrust and racketeering claims of certain
USD LIBOR plaintiffs and a portion of their claims brought under the CEA and
state common law. Certain plaintiffs appealed the decision to the Second
Circuit, which, in May 2016, vacated the district court’s ruling finding no
antitrust injury and remanded the case back to the district court for a further
determination on whether plaintiffs have antitrust standing. In December 2016,
the district court again dismissed plaintiffs’ antitrust claims, this time for
lack of personal jurisdiction over UBS and other foreign banks. In 2014, the
court in one of the Euroyen TIBOR lawsuits dismissed certain of the plaintiff’s
claims, including federal antitrust claims. In 2015, the same court dismissed
plaintiff’s federal racketeering claims and affirmed its previous dismissal of
plaintiff’s antitrust claims. UBS and other defendants in other lawsuits, including
those related to EURIBOR, CHF LIBOR, GBP LIBOR, and SIBOR have filed motions to
dismiss. UBS has entered into an agreement with representatives of a class of
bondholders to settle their USD LIBOR class action. The agreement is subject to
court approval.
Since September 2014, putative class actions
have been filed in federal court in New York and New Jersey against UBS and
other financial institutions, among others, on behalf of parties who entered
into interest rate derivative transactions linked to ISDAFIX. The complaints,
which have since been consolidated into an amended complaint, allege that the
defendants conspired to manipulate ISDAFIX rates from 1 January 2006 through
January 2014, in violation of US antitrust laws and certain state laws, and
seek unspecified compensatory damages, including treble damages. In March 2016,
the court in the ISDAFIX action denied in substantial part defendants’ motion
to dismiss, holding that plaintiffs have stated Sherman Act,
breach-of-contract, and unjust-enrichment claims against defendants, including
UBS AG.
Provisions and contingent liabilities
(continued)
Government bonds:
Putative class actions have been filed in US federal courts against
UBS and other banks on behalf of persons who participated in markets for US
Treasury securities since 2007. The complaints generally allege that the banks
colluded with respect to, and manipulated prices of, US Treasury securities
sold at auction. They assert claims under the antitrust laws and the CEA and
for unjust enrichment. The cases have been consolidated in the SDNY. Following
filing of these complaints, UBS and reportedly other banks are responding to
investigations and requests for information from various authorities regarding
US Treasury securities and other government bond trading practices. As a result
of its review to date, UBS has taken appropriate action.
With respect to additional matters and
jurisdictions not encompassed by the settlements and order referred to above,
our balance sheet at 31 December 2016 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.
6. 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 has 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
may continue 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 others, the existence of a discretionary mandate and
whether or not the client documentation contained a valid waiver with respect
to distribution fees.
Our balance sheet at 31 December 2016
reflected a provision with respect to matters described in this item 6 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.
7. Banco UBS Pactual tax indemnity
Pursuant to the 2009 sale of Banco
UBS Pactual S.A. (Pactual) by UBS to BTG Investments, LP (BTG), BTG has
submitted contractual indemnification claims that UBS estimates amount to
approximately BRL 2.6 billion, including interest and penalties, which is net
of liabilities retained by BTG. The claims pertain principally to several tax
assessments issued by the Brazilian tax authorities against Pactual relating to
the period from December 2006 through March 2009, when UBS owned Pactual. These
assessments are being challenged in administrative and judicial proceedings.
The majority of these assessments relate to the deductibility of goodwill
amortization in connection with UBS’s 2006 acquisition of Pactual and payments
made to Pactual employees through various profit-sharing plans. In 2015, an intermediate
administrative court issued a decision that was largely in favor of the tax
authority with respect to the goodwill amortization assessment. In May 2016,
the highest level of the administrative court agreed to review this decision on
a number of the significant issues.
8. Investigation of UBS’s role in
initial public offerings in Hong Kong
The Hong Kong Securities and Futures
Commission (SFC) has been conducting investigations into UBS’s role as a
sponsor of certain initial public offerings listed on the Hong Kong Stock
Exchange. In October 2016, the SFC informed UBS that it intends to commence
action against UBS and certain UBS employees with respect to sponsorship work
in those offerings. If such action is taken, there may be financial ramifications
for UBS, including fines, obligations to pay investor compensation and
suspension of UBS’s ability to provide corporate finance advisory services in
Hong Kong for a period of time. On 16 January 2017, a writ was filed by
the SFC with Hong Kong’s High Court in which UBS is named as one of six
defendants from whom the SFC is seeking compensation in an unspecified amount
for losses incurred by certain shareholders of China Forestry Holding Company
Limited, for whom UBS acted as a sponsor in connection with their 2009 listing
application.
UBS AG interim consolidated financial information (unaudited)
UBS AG interim consolidated financial
information (unaudited)
This section contains key figures for UBS AG (consolidated), as well
a comparison of selected financial and capital information between UBS Group AG
(consolidated) and UBS AG (consolidated). Information for UBS AG (consolidated)
does not differ materially from UBS Group AG on a consolidated basis.
Comparison UBS Group AG (consolidated)
versus UBS AG (consolidated)
The accounting policies applied under
International Financial Reporting Standards (IFRS) to both UBS Group AG and UBS
AG consolidated financial statements are identical. However, there are certain
scope and presentation differences which relate to:
–
Assets, liabilities, operating income, operating
expenses and operating profit before tax relating to UBS Group AG and its
directly held subsidiaries, including UBS Business Solutions AG, are reflected
in the consolidated financial statements of UBS Group AG but not of UBS AG. UBS
AG’s assets, liabilities, operating income, and operating expenses related to
transactions with UBS Group AG and its directly held subsidiaries are not
subject to elimination in the UBS AG consolidated financial statements, but are
eliminated in the UBS Group AG consolidated financial statements.
–
Preferred notes issued by UBS AG are presented
in the consolidated UBS Group AG balance sheet as equity attributable to NCI,
while in the consolidated UBS AG balance sheet, these preferred notes are
required to be presented as equity attributable to preferred noteholders.
–
Fully applied going concern capital of UBS AG
(consolidated) was lower than fully applied going concern capital of UBS Group
AG (consolidated) as of 31 December 2016, reflecting lower AT1 capital, partly
offset by higher CET1 capital. The difference in CET1 capital was primarily due
to compensation-related regulatory capital accruals, liabilities and capital
instruments which are reflected on the level of UBS Group AG. The difference in
AT1 capital relates to the issuances of AT1 capital notes by UBS Group AG, as
well as Deferred Contingent Capital Plan (DCCP) awards granted for the
performance years 2014 and 2015 and to be granted for the performance year
2016.
UBS AG (consolidated) key figures
|
|
|
|
|
|
|
|
|
|
As of or for the quarter ended
|
|
As of or for the year ended
|
CHF million, except where
indicated
|
|
31.12.16
|
30.9.16
|
31.12.15
|
|
31.12.16
|
31.12.15
|
|
|
|
|
|
|
|
|
Results
|
|
|
|
|
|
|
|
Operating income
|
|
7,118
|
7,049
|
6,771
|
|
28,421
|
30,605
|
Operating expenses
|
|
6,271
|
6,161
|
6,543
|
|
24,250
|
25,198
|
Operating profit / (loss) before tax
|
|
847
|
888
|
228
|
|
4,171
|
5,407
|
Net profit / (loss) attributable to shareholders
|
|
740
|
846
|
950
|
|
3,309
|
6,235
|
|
|
|
|
|
|
|
|
Key performance indicators¹
|
|
|
|
|
|
|
|
Profitability
|
|
|
|
|
|
|
|
Return on tangible equity (%)
|
|
6.4
|
7.4
|
8.1
|
|
7.1
|
13.5
|
Return on assets, gross (%)
|
|
3.1
|
2.9
|
2.8
|
|
3.0
|
3.1
|
Cost / income ratio (%)
|
|
87.8
|
87.3
|
95.8
|
|
85.2
|
82.0
|
Growth
|
|
|
|
|
|
|
|
Net profit growth (%)
|
|
(22.1)
|
(59.4)
|
6.4
|
|
(46.9)
|
78.0
|
Net new money growth for combined wealth management businesses
(%)²
|
|
(1.1)
|
2.1
|
2.9
|
|
2.1
|
2.2
|
Resources
|
|
|
|
|
|
|
|
Common equity tier 1 capital ratio (fully applied, %)³
|
|
14.8
|
14.8
|
15.4
|
|
14.8
|
15.4
|
Going concern leverage ratio (phase-in, %)⁴
|
|
5.9
|
5.7
|
|
|
5.9
|
|
|
|
|
|
|
|
|
|
Additional information
|
|
|
|
|
|
|
|
Profitability
|
|
|
|
|
|
|
|
Return on equity (RoE) (%)
|
|
5.5
|
6.3
|
6.9
|
|
6.1
|
11.7
|
Return on risk-weighted assets, gross (%)⁵
|
|
13.0
|
13.1
|
12.8
|
|
13.2
|
14.3
|
Resources
|
|
|
|
|
|
|
|
Total assets
|
|
935,353
|
935,683
|
943,256
|
|
935,353
|
943,256
|
Equity attributable to shareholders
|
|
53,764
|
53,556
|
55,248
|
|
53,764
|
55,248
|
Common equity tier 1 capital (fully applied)³
|
|
33,054
|
32,110
|
32,042
|
|
33,054
|
32,042
|
Common equity tier 1 capital (phase-in)³
|
|
40,059
|
38,994
|
41,516
|
|
40,059
|
41,516
|
Risk-weighted assets (fully applied)³
|
|
223,232
|
217,297
|
208,186
|
|
223,232
|
208,186
|
Common equity tier 1 capital ratio (phase-in, %)³
|
|
17.7
|
17.7
|
19.5
|
|
17.7
|
19.5
|
Going concern capital ratio (fully applied, %)⁴
|
|
16.5
|
16.5
|
|
|
16.5
|
|
Going concern capital ratio (phase-in, %)⁴
|
|
22.9
|
23.0
|
|
|
22.9
|
|
Common equity tier 1 leverage ratio (fully applied, %)⁶
|
|
3.8
|
3.7
|
3.6
|
|
3.8
|
3.6
|
Going concern leverage ratio (fully applied, %)⁴
|
|
4.2
|
4.1
|
|
|
4.2
|
|
Leverage ratio denominator (fully applied)⁶
|
|
870,987
|
877,926
|
898,251
|
|
870,987
|
898,251
|
Other
|
|
|
|
|
|
|
|
Invested assets (CHF billion)⁷
|
|
2,821
|
2,747
|
2,689
|
|
2,821
|
2,689
|
Personnel (full-time equivalents)⁸
|
|
56,208
|
57,012
|
58,131
|
|
56,208
|
58,131
|
1 Refer to the “Measurement of performance” section of our Annual
Report 2015. 2 Based on adjusted net new money, which excludes the
negative effect on net new money (third quarter of 2015: CHF 3.3 billion,
second quarter of 2015: CHF 6.6 billion) in Wealth Management from our
balance sheet and capital optimization program. 3 Based on the Basel III
framework as applicable for Swiss systemically relevant banks (SRBs). 4
Based on the revised Swiss SRB framework that became effective on 1 July
2016. 5 Based on fully applied risk-weighted assets. 6 Calculated in
accordance with Swiss SRB rules. 7 Includes invested assets for Personal
& Corporate Banking. 8 As of 31 December 2016, the breakdown of
personnel by business division and Corporate Center unit was: Wealth
Management: 9,717; Wealth Management Americas: 13,512; Personal &
Corporate Banking: 5,100; Asset Management: 2,308; Investment Bank: 4,734; CC
– Services: 20,632; CC – Group ALM: 142; CC – Non-core and Legacy Portfolio:
63.
|
UBS AG interim consolidated financial information (unaudited)
Comparison UBS Group AG (consolidated) versus UBS AG (consolidated)
|
|
|
|
As of or for the quarter ended 31.12.16
|
|
CHF million, except where
indicated
|
|
UBS Group AG
(consolidated)
|
UBS AG
(consolidated)
|
Difference
(absolute)
|
|
|
|
|
|
|
|
Income statement
|
|
|
|
|
|
Operating income
|
|
7,055
|
7,118
|
(63)
|
|
Operating expenses
|
|
6,206
|
6,271
|
(65)
|
|
Operating profit / (loss) before tax
|
|
848
|
847
|
1
|
|
of which: Wealth Management
|
|
368
|
368
|
0
|
|
of which: Wealth Management
Americas
|
|
339
|
338
|
1
|
|
of which: Personal &
Corporate Banking
|
|
374
|
375
|
(1)
|
|
of which: Asset Management
|
|
144
|
144
|
0
|
|
of which: Investment Bank
|
|
306
|
304
|
2
|
|
of which: Corporate Center
|
|
(682)
|
(681)
|
(1)
|
|
of which: Services
|
|
(315)
|
(307)
|
(8)
|
|
of which: Group ALM
|
|
(144)
|
(150)
|
6
|
|
of which: Non-core and
Legacy Portfolio
|
|
(223)
|
(224)
|
1
|
|
Net profit / (loss)
|
|
739
|
741
|
(2)
|
|
of which: net profit /
(loss) attributable to shareholders
|
|
738
|
740
|
(2)
|
|
of which: net profit /
(loss) attributable to preferred noteholders
|
|
|
0
|
0
|
|
of which: net profit /
(loss) attributable to non-controlling interests
|
|
1
|
1
|
0
|
|
|
|
|
|
|
|
Statement of comprehensive
income
|
|
|
|
|
|
Other comprehensive income
|
|
(566)
|
(566)
|
0
|
|
of which: attributable to
shareholders
|
|
(553)
|
(553)
|
0
|
|
of which: attributable to
preferred noteholders
|
|
|
(12)
|
12
|
|
of which: attributable to
non-controlling interests
|
|
(13)
|
(1)
|
(12)
|
|
Total comprehensive income
|
|
173
|
175
|
(2)
|
|
of which: attributable to
shareholders
|
|
185
|
187
|
(2)
|
|
of which: attributable to
preferred noteholders
|
|
|
(12)
|
12
|
|
of which: attributable to
non-controlling interests
|
|
(12)
|
0
|
(12)
|
|
|
|
|
|
|
|
Balance sheet
|
|
|
|
|
|
Total assets
|
|
935,016
|
935,353
|
(337)
|
|
Total liabilities
|
|
880,612
|
880,907
|
(295)
|
|
Total equity
|
|
54,404
|
54,445
|
(41)
|
|
of which: equity
attributable to shareholders
|
|
53,723
|
53,764
|
(41)
|
|
of which: equity
attributable to preferred noteholders
|
|
|
642
|
(642)
|
|
of which: equity
attributable to non-controlling interests
|
|
682
|
40
|
642
|
|
|
|
|
|
|
|
Capital information
|
|
|
|
|
|
Common equity tier 1 capital (fully applied)
|
|
30,693
|
33,054
|
(2,361)
|
|
Common equity tier 1 capital (phase-in)
|
|
37,788
|
40,059
|
(2,271)
|
|
Going concern capital (fully applied)¹
|
|
39,844
|
36,901
|
2,943
|
|
Going concern capital (phase-in)¹
|
|
55,593
|
51,669
|
3,924
|
|
Risk-weighted assets (fully applied)
|
|
222,677
|
223,232
|
(555)
|
|
Common equity tier 1 capital ratio (fully applied, %)
|
|
13.8
|
14.8
|
(1.0)
|
|
Common equity tier 1 capital ratio (phase-in, %)
|
|
16.8
|
17.7
|
(0.9)
|
|
Going concern capital ratio (fully applied, %)¹
|
|
17.9
|
16.5
|
1.4
|
|
Going concern capital ratio (phase-in, %)¹
|
|
24.7
|
22.9
|
1.8
|
|
Leverage ratio denominator (fully applied)
|
|
870,470
|
870,987
|
(517)
|
|
Common equity tier 1 leverage ratio (fully applied)
|
|
3.5
|
3.8
|
(0.3)
|
|
Going concern leverage ratio (fully applied, %)¹
|
|
4.6
|
4.2
|
0.4
|
|
Going concern leverage ratio (phase-in, %)¹
|
|
6.4
|
5.9
|
0.5
|
|
1 Based on the revised Swiss SRB framework that became effective
on 1 July 2016.
|
As of or for the quarter ended 30.9.16
|
|
As of or for the quarter ended 31.12.15
|
UBS Group AG
(consolidated)
|
UBS AG
(consolidated)
|
Difference
(absolute)
|
|
UBS Group AG
(consolidated)
|
UBS AG
(consolidated)
|
Difference
(absolute)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,029
|
7,049
|
(20)
|
|
6,775
|
6,771
|
4
|
6,152
|
6,161
|
(9)
|
|
6,541
|
6,543
|
(2)
|
877
|
888
|
(11)
|
|
234
|
228
|
6
|
504
|
502
|
2
|
|
344
|
342
|
2
|
320
|
313
|
7
|
|
14
|
8
|
6
|
453
|
454
|
(1)
|
|
355
|
356
|
(1)
|
104
|
104
|
0
|
|
171
|
171
|
0
|
161
|
155
|
6
|
|
80
|
83
|
(3)
|
(665)
|
(640)
|
(25)
|
|
(729)
|
(732)
|
3
|
(218)
|
(216)
|
(2)
|
|
(345)
|
(349)
|
4
|
30
|
53
|
(23)
|
|
(56)
|
(54)
|
(2)
|
(477)
|
(476)
|
(1)
|
|
(329)
|
(329)
|
0
|
829
|
847
|
(18)
|
|
950
|
951
|
(1)
|
827
|
846
|
(19)
|
|
949
|
950
|
(1)
|
|
0
|
0
|
|
|
0
|
0
|
1
|
1
|
0
|
|
1
|
1
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(637)
|
(638)
|
1
|
|
214
|
214
|
0
|
(643)
|
(643)
|
0
|
|
177
|
177
|
0
|
|
4
|
(4)
|
|
|
35
|
(35)
|
5
|
1
|
4
|
|
37
|
2
|
35
|
191
|
210
|
(19)
|
|
1,164
|
1,165
|
(1)
|
184
|
203
|
(19)
|
|
1,126
|
1,126
|
0
|
|
4
|
(4)
|
|
|
35
|
(35)
|
7
|
3
|
4
|
|
38
|
3
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
935,206
|
935,683
|
(477)
|
|
942,819
|
943,256
|
(437)
|
881,213
|
881,433
|
(220)
|
|
885,511
|
886,013
|
(502)
|
53,993
|
54,250
|
(257)
|
|
57,308
|
57,243
|
65
|
53,300
|
53,556
|
(256)
|
|
55,313
|
55,248
|
65
|
|
654
|
(654)
|
|
|
1,954
|
(1,954)
|
693
|
40
|
653
|
|
1,995
|
41
|
1,954
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,254
|
32,110
|
(1,856)
|
|
30,044
|
32,042
|
(1,998)
|
37,207
|
38,994
|
(1,787)
|
|
40,378
|
41,516
|
(1,138)
|
39,003
|
35,885
|
3,118
|
|
|
|
|
54,623
|
50,522
|
4,101
|
|
|
|
|
216,830
|
217,297
|
(467)
|
|
207,530
|
208,186
|
(656)
|
14.0
|
14.8
|
(0.8)
|
|
14.5
|
15.4
|
(0.9)
|
16.9
|
17.7
|
(0.8)
|
|
19.0
|
19.5
|
(0.5)
|
18.0
|
16.5
|
1.5
|
|
|
|
|
24.8
|
23.0
|
1.8
|
|
|
|
|
877,313
|
877,926
|
(613)
|
|
897,607
|
898,251
|
(644)
|
3.4
|
3.7
|
(0.3)
|
|
3.3
|
3.6
|
(0.3)
|
4.4
|
4.1
|
0.3
|
|
|
|
|
6.2
|
5.7
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation rates
|
|
Spot rate
|
|
Average rate¹
|
|
|
As of
|
|
For the quarter ended
|
|
For the year ended
|
|
|
31.12.16
|
30.9.16
|
31.12.15
|
|
31.12.16
|
30.9.16
|
31.12.15
|
|
31.12.16
|
31.12.15
|
1 USD
|
|
1.02
|
0.97
|
1.00
|
|
1.01
|
0.97
|
1.01
|
|
0.99
|
0.97
|
1 EUR
|
|
1.07
|
1.09
|
1.09
|
|
1.08
|
1.09
|
1.09
|
|
1.09
|
1.06
|
1 GBP
|
|
1.26
|
1.26
|
1.48
|
|
1.25
|
1.27
|
1.52
|
|
1.32
|
1.47
|
100 JPY
|
|
0.87
|
0.96
|
0.83
|
|
0.90
|
0.95
|
0.83
|
|
0.91
|
0.80
|
1 Monthly income statement items of foreign operations with a
functional currency other than Swiss franc are translated with month-end
rates into Swiss francs. Disclosed average rates for a quarter represent an
average of three month-end rates, weighted according to the income and
expense volumes of all foreign operations of the Group with the same
functional currency for each month. Weighted average rates for individual
business divisions may deviate from the weighted average rates for the Group.
|
Abbreviations frequently used in our
financial reports
A
ABS asset-backed
security
AGM annual general
meeting of shareholders
AIV alternative
investment vehicle
AMA advanced
measurement approach
AT1 additional tier 1
B
BCBS Basel Committee on
Banking Supervision
BD business
division
BIS Bank for International
Settlements
BoD Board of
Directors
BVG Swiss occupational
pension plan
C
CC Corporate Center
CCAR Comprehensive
Capital Analysis and Review
CCF credit conversion
factor
CCP central
counterparty
CDO collateralized
debt
obligation
CDR constant default
rate
CDS credit default
swap
CEA Commodity
Exchange Act
CEO Chief Executive
Officer
CET1 common equity tier
1
CFO Chief Financial
Officer
CHF Swiss franc
CLN credit-linked
note
CLO collateralized
loan obligation
CMBS commercial mortgage-
backed security
CVA credit valuation
adjustment
D
DBO defined benefit
obligation
DCCP Deferred Contingent
Capital Plan
DOJ Department of
Justice
DTA deferred tax
asset
DVA debit valuation
adjustment
E
EAD exposure at
default
EC European
Commission
ECB European Central
Bank
EIR effective
interest rate
EMEA Europe, Middle East
and Africa
EOP Equity Ownership
Plan
EPS earnings per
share
ETD exchange-traded
derivatives
ETF exchange-traded
fund
EU European Union
EUR euro
EURIBOR Euro Interbank Offered
Rate
F
FCA UK Financial
Conduct
Authority
FCT foreign currency
translation
FDIC
US Federal Deposit Insurance
Corporation
FINMA Swiss Financial
Market Supervisory Authority
FRA forward rate
agreement
FSA UK Financial
Services Authority
FSB Financial
Stability Board
FTD first to default
FTP funds transfer
price
FVA funding valuation
adjustment
FX foreign
exchange
G
GAAP generally accepted
accounting principles
GBP British pound
GEB Group Executive
Board
GIIPS Greece, Italy,
Ireland,
Portugal and Spain
Group ALM Group Asset and Liability
Management
H
HQLA high-quality liquid
assets
I
IAS International
Accounting Standards
IASB International
Accounting Standards Board
IFRS International
Financial Reporting Standards
IRB internal
ratings-based
IRC incremental risk
charge
ISDA International
Swaps and Derivatives Association
K
KPI key performance
indicator
L
LAC loss-absorbing
capital
LAS liquidity-adjusted
stress
LCR liquidity
coverage ratio
LGD loss given
default
LIBOR London Interbank
Offered Rate
LRD leverage ratio
denominator
LTV loan-to-value
M
MTN medium-term note
Abbreviations frequently used in our
financial reports (continued)
N
NAV net asset value
NPA non-prosecution
agreement
NRV negative
replacement value
NSFR net stable funding
ratio
O
OCI other
comprehensive income
OTC over-the-counter
P
PRA UK Prudential
Regulation Authority
PRV positive
replacement value
R
RLN reference-linked
note
RMBS residential
mortgage-backed security
RoAE return on
attributed equity
RoE return on equity
RoTE return on tangible
equity
RV replacement
value
RWA risk-weighted
assets
S
SE structured
entity
SEC US Securities and
Exchange Commission
SEEOP Senior Executive
Equity Ownership Plan
SFT securities
financing transaction
SNB Swiss National
Bank
SRB systemically
relevant bank
SRM Single Resolution
Mechanism
SVaR stressed
value-at-risk
T
TBTF too big to fail
TLAC total
loss-absorbing capacity
TRS total return
swap
U
USD US dollar
V
VaR value-at-risk
Cautionary
Statement Regarding Forward-Looking Statements
|
This report contains statements that constitute “forward-looking
statements,” including but not limited to management’s outlook for UBS’s
financial performance and statements relating to the anticipated effect of
transactions and strategic initiatives on UBS’s business and future
development. While these forward-looking statements represent UBS’s judgments
and expectations 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. These factors include,
but are not limited to: (i) the degree to which UBS is successful in executing
its announced strategic plans, including its cost reduction and efficiency
initiatives and its targets for risk-weighted assets (RWA) and leverage ratio
denominator (LRD), and the degree to which UBS is successful in implementing
changes to its wealth management businesses to meet changing market, regulatory
and other conditions; (ii) continuing low or negative interest rate
environment, 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, and currency exchange rates, and the
effects of economic conditions, market developments, and geopolitical tensions
on the financial position or creditworthiness of UBS’s clients and
counterparties as well as on client sentiment and levels of activity; (iii)
changes in the availability of capital and funding, including any changes in
UBS’s credit spreads and ratings, as well as availability and cost of funding
to meet requirements for debt eligible for total loss-absorbing capacity
(TLAC); (iv) changes in or the implementation of financial legislation and
regulation in Switzerland, the US, the UK and other financial centers that may
impose, or result in, more stringent capital, TLAC, leverage ratio, liquidity
and funding 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 would have on UBS’s business
activities; (v) uncertainty as to when and to what degree the Swiss Financial
Market Supervisory Authority (FINMA) will approve, or confirm, limited
reductions of gone concern requirements due to measures to reduce resolvability
risk; (vi) the degree to which UBS is successful in implementing further
changes to its legal structure to improve its resolvability and meet related
regulatory requirements, including changes in legal structure and reporting
required to implement US enhanced prudential standards, implementing a service
company model, completing the transfer of the Asset Management business to a
holding company, and the potential need to make further changes to the legal
structure or booking model of UBS Group in response to legal and regulatory
requirements relating to capital requirements, resolvability requirements and
proposals in Switzerland and other jurisdictions for mandatory structural
reform of banks or systemically important institutions and the extent to which
such changes have the intended effects; (vii) the uncertainty arising from the
timing and nature of the UK exit from the EU and the potential need to make
changes in UBS’s legal structure and operations as a result of it; (viii)
changes in UBS’s competitive position, including whether differences in
regulatory capital and other requirements among the major financial centers
will adversely affect UBS’s ability to compete in certain lines of business;
(ix) changes in the standards of conduct applicable to our businesses that may
result from new regulation or new enforcement of existing standards, including
recently enacted and proposed measures to impose new and enhanced duties when
interacting with customers and in the execution and handling of customer
transactions; (x) 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 or 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; (xi) the effects on UBS’s cross-border
banking business of tax or regulatory developments and of possible changes in
UBS’s policies and practices relating to this business; (xii) 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 including differences in compensation practices; (xiii) 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; (xiv) limitations on the
effectiveness of UBS’s internal processes for risk management, risk control,
measurement and modeling, and of financial models generally; (xv) whether UBS
will be successful in keeping pace with competitors in updating its technology,
including development of digital channels and tools, and in our trading
businesses; (xvi) the occurrence of operational failures, such as fraud,
misconduct, unauthorized trading, financial crime, cyber-attacks, and systems
failures; (xvii) 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;
(xviii) the degree to which changes in regulation, capital or legal structure,
financial results or other factors, including methodology, assumptions and stress
scenarios, may affect UBS’s ability to maintain its stated capital return
objective; and (xix) the effect that these or other factors or unanticipated
events 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 SEC. More detailed
information about those factors is set forth in documents furnished by UBS and
filings made by UBS with the SEC, including UBS’s Annual Report on Form 20-F
for the year ended 31 December 2015. UBS is not under any obligation to
(and expressly disclaims any obligation to) update or alter its forward-looking
statements, whether as a result of new information, future events, or
otherwise.
Rounding |
Numbers
presented throughout this report may not add up precisely to the totals
provided in the tables and text. Percentages, percent changes and absolute
variances are calculated on the basis of rounded figures displayed in the
tables and text and may not precisely reflect the percentages, percent changes
and absolute variances that would be calculated on the basis of figures that
are not rounded.
Tables |
Within tables, blank fields
generally indicate that the field is not applicable or not meaningful, or that
information is not available as of the relevant date or for the relevant
period. Zero values generally indicate that the respective figure is zero on an
actual or rounded basis. Percentage changes are presented as a mathematical
calculation of the change between periods.
UBS Group AG
P.O. Box
CH-8098
Zurich
ubs.com
This Form 6-K is hereby incorporated by reference into (1) each
of the registration statements of UBS AG on Form F-3 (Registration
Number 333-204908) and of UBS Group AG on Form S-8 (Registration Numbers
333-200634; 333-200635; 333-200641; 333-200665; 333-215254; and 333-215255),
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
Form 6-K’s 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 registrants have duly caused this
report to be signed on their behalf by the undersigned, thereunto duly
authorized.
UBS GROUP AG
By:
_/s/ Sergio Ermotti______________
Name: Sergio Ermotti
Title: Group Chief
Executive Officer
By:
_/s/ Kirt Gardner__________________
Name: Kirt Gardner
Title: Group Chief
Financial Officer
By:
_/s/ Todd Tuckner
_________
__
_
Name: Todd Tuckner
Title: Group Controller and
Chief Accounting Officer
UBS AG
By:
_/s/ Sergio Ermotti______________
Name: Sergio Ermotti
Title: Group Chief
Executive Officer
By:
_/s/ Kirt Gardner__________________
Name: Kirt Gardner
Title: Group Chief
Financial Officer
By:
_/s/ Todd Tuckner
_________
__
_
Name: Todd Tuckner
Title: Group Controller and
Chief Accounting Officer
Date: January 27, 2017
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