UBS UBS Group AG

Net profit attributable to shareholders CHF 2.1bn; diluted earnings per share CHF 0.54Adjusted1 profit before tax CHF 1.0bnFully applied Swiss SRB Basel III CET1 capital ratio of 14.3%Fully applied Swiss SRB leverage ratio up 30 bps to 5.0%, of which CET1 3.3%14.5% adjusted RoTE year-to-date, expect to outperform full-year target2UBS named industry group leader in the Dow Jones Sustainability Indices

Regulatory News:

UBS (NYSE:UBS)(SWX:UBSN) delivered a solid third-quarter adjusted1 profit before tax of CHF 979 million in a very challenging economic environment. Net profit attributable to UBS Group AG shareholders was CHF 2,068 million, with diluted earnings per share of CHF 0.54. The third quarter included a net tax benefit of CHF 1,295 million, mainly related to a net upward revaluation of deferred tax assets, CHF 592 million of net charges for provisions for litigation, regulatory and similar matters and CHF 298 million of net restructuring charges.

“I’m pleased with the quarter. We stayed close to our clients in a very challenging environment. Disciplined execution and our diversified business model allowed us to deliver strong returns for our shareholders while continuing to invest in our future.”

Sergio P. Ermotti, Group Chief Executive Officer

Business division highlights

• Wealth Management delivered an adjusted1 profit before tax of CHF 698 million and adjusted net new money of CHF 3.5 billion, excluding the effects of UBS’s balance sheet and capital optimization program. Recurring income benefitted from increased mandate penetration and the continued effects of pricing initiatives.
• Wealth Management Americas posted an adjusted1 profit before tax of USD 287 million, with recurring net fee income and net interest income at record levels. Productivity per advisor for revenue and invested assets was industry-leading. Net new money was positive at USD 0.5 billion.
• Retail & Corporate had its best result for the first nine months of the year since 2010, with an adjusted1 third-quarter profit before tax of CHF 428 million, good net new business volume growth for retail clients, and net new client accounts hitting a new record.
• Asset Management reported an adjusted1 profit before tax of CHF 137 million. Excluding money market flows, net new money outflows were CHF 7.6 billion, driven by client liquidity needs.
• The Investment Bank achieved an adjusted1 profit before tax of CHF 614 million with a strong performance in both Equities and FX, Rates and Credit compared to the prior year quarter. The business maintained its strict risk profile and resource limit discipline.

Information in this release is presented for UBS Group AG on a consolidated basis unless otherwise specified. UBS AG will publish its third quarter 2015 report in electronic form on 6 November 2015 at www.ubs.com/quarterlyreporting.

Results by business division and Corporate Center

                CHF million Total operating income Total operating expenses

Operating profit / (loss) before tax

For the quarter ended 30.9.15     30.6.15     % change 30.9.15     30.6.15     % change 30.9.15     30.6.15     % change Wealth Management 1,958 2,080 (6) 1,319 1,324 0 639 756 (15) Wealth Management Americas 1,871 1,823 3 1,612 1,631 (1) 259 191 36 Retail & Corporate 1,030 952 8 564 555 2 466 397 17 Asset Management 502 476 5 388 346 12 114 130 (12) Investment Bank 2,088 2,355 (11) 1,592 1,804 (12) 496 551 (10) Corporate Center (280) 131 906 399 127 (1,186) (267) 344 of which: Services (38) (41) (7) 219 212 3 (257) (253) 2 of which: Group ALM (116) 138 (5) 7 (111) 132 of which: Non-core and Legacy Portfolio (126) 35 692 180 284 (818) (145) 464 UBS 7,170 7,818 (8) 6,382 6,059 5 788 1,759 (55)  

Third quarter 2015: Divisional and Corporate Center performance overview

Wealth Management delivered a resilient adjusted1 profit before tax of CHF 698 million against a backdrop of high market volatility, pronounced deleveraging in Asia and very low client activity levels. Net interest income rose on higher lending and deposit revenues. Despite lower average invested assets, recurring net fee income fell only slightly, as it was partly offset by increased mandate penetration, up 70 basis points to 27% of invested assets, and the continued effect of pricing initiatives. Transaction-based income declined primarily in Asia Pacific and Europe, mainly reflecting reduced client activity in response to market volatility. Net new money adjusted for the outflows from the balance sheet and capital optimization program was CHF 3.5 billion, driven by inflows from all regions.

Wealth Management Americas delivered a solid adjusted1 profit before tax of USD 287 million, up 24% on the previous quarter. Overall operating income was broadly unchanged and productivity per advisor for revenue and invested assets was industry-leading. Recurring income reached a new record as net fee income rose on higher managed account fees and net interest income increased mainly from loan and deposit growth. Costs fell primarily on lower net charges for provisions for litigation, regulatory and similar matters and other provisions. Net new money was USD 0.5 billion.

Retail & Corporate had its best result for the first nine months of the year since 2010 with an adjusted1 third-quarter profit before tax of CHF 428 million. Net interest income from lending and deposits increased slightly as did recurring net fee income, while credit loss expenses were negligible in the quarter. Annualized net new business volume growth for retail clients was good at 2.5%, mainly driven by net new client assets and, to a lesser extent, net new loans, in line with its strategy to grow its high-quality retail loan business moderately and selectively. Year-to-date net new client accounts for retail customers hit a new record level, up 35% year-on-year, solidifying UBS’s position as the leading bank in its home market.

Asset Management recorded an adjusted1 profit before tax of CHF 137 million. Management fees increased primarily in Traditional Investments and Global Real Estate. Performance fees also rose, predominantly in Global Real Estate. Excluding money market flows, net new money outflows were CHF 7.6 billion, largely from lower margin passive products, driven by client liquidity needs.

The Investment Bank delivered a very strong performance with an adjusted1 profit before tax of CHF 614 million. Despite the challenging market conditions, revenues were up 6% year-on-year. Compared to the prior year, Investor Client Services performed well with increased revenues in both Equities and FX, Rates and Credit. Costs were well controlled, with expenses falling compared to both the prior quarter and the prior year. The adjusted1 return on attributed equity for the third quarter was 33.6%.

Corporate Center – Services recorded a loss before tax of CHF 257 million. Corporate Center – Group Asset and Liability Management reported a loss before tax of CHF 111 million. Corporate Center – Non-core and Legacy Portfolio recorded a loss before tax of CHF 818 million, driven by additional net charges for provisions for litigation, regulatory and similar matters, while achieving further progress in reducing the Swiss SRB leverage ratio denominator by CHF 12 billion to CHF 59 billion.

Capital and costs

UBS remains the best-capitalized large global bank, with a fully applied Swiss SRB Basel III CET1 capital ratio of 14.3% as of 30 September 2015, above the bank’s target of at least 13%. UBS’s fully applied Swiss SRB leverage ratio increased to 5.0%. The bank issued CHF 1.5 billion of high-trigger additional tier 1 (AT1) perpetual capital notes in the third quarter. Also during the quarter, UBS completed its inaugural issuance of senior unsecured debt which will contribute to its total loss-absorbing capacity (TLAC), successfully placing CHF 4.2 billion of senior unsecured notes in anticipation of international regulatory developments, including revisions in the Swiss too big to fail framework.

The bank remains fully committed to its cost reduction target of CHF 2.1 billion and made good progress in the third quarter, while continuing to carry significant regulatory costs. Improved efficiency allows UBS to continue its investments in technology, compliance and risk control, while creating the right cost structure to support long-term growth, particularly in Asia and the Americas.

Changes to UBS annual performance targets and key expectations

In light of actual and forecasted changes in macroeconomic conditions and the announcement of a newly proposed too big to fail regulation, UBS has amended certain external performance targets and expectations for the Group and the business divisions for 2016 and future years. An overview of amended annual performance targets and expectations is provided below. These performance targets exclude, where applicable, items that management believes are not representative of the underlying performance of UBS’s businesses, such as restructuring charges and gains and losses on sales of businesses and real estate. The performance targets assume constant foreign currency translation rates unless otherwise indicated. The following performance targets and expectations have been amended:

• Adjusted cost/income ratio target remains 60–70%, with a short- to medium-term expectation of 65–75%.
• UBS expects to achieve an adjusted return on tangible equity (RoTE) in 2016 at approximately the same level as 2015, an adjusted RoTE of approximately 15% in 2017 and targets an adjusted RoTE of above 15% from 2018 onwards.
• Group risk-weighted assets (RWA) are expected to trend around CHF 250 billion in the short to medium term mainly due to regulatory inflation.
• Group BIS Basel III leverage ratio denominator (LRD) is expected to trend around CHF 950 billion in the short to medium term.
• The RWA limit for the Investment Bank has been replaced with an RWA expectation of around CHF 85 billion in the short to medium term.
• The funded assets limit for the Investment Bank has been replaced with a BIS Basel III LRD expectation of around CHF 325 billion in the short to medium term.
• The Investment Bank will continue to represent no more than 30–35% of the Group’s total LRD and RWA.
• The separate aggregate net cost reduction targets for Corporate Center – Services and Corporate Center – Non-core and Legacy Portfolio have been replaced with an equal Corporate Center aggregate net cost reduction target of CHF 2.1 billion by year-end 2017, of which CHF 1.4 billion by year-end 2015.

Awards and achievements

UBS was honored to be named "Outstanding Global Private Bank – Overall" as well as "Outstanding Global Private Bank – Asia Pacific" by Private Banker International. Additionally, UBS was awarded Private Banker International’s Most Innovative Digital Offering award. UBS was also named "Most Innovative Investment Bank for Financial Institutions" by The Banker in the Investment Banking Awards 2015. Staying at the forefront of innovation and providing best-in-class digital solutions for clients is a key priority for UBS. As part of this effort, the bank launched The UBS Future of Finance Challenge, a competition for entrepreneurs and technology startups seeking ideas and solutions that will support the transformation of the industry. Over 600 entries were received from startups in over 50 countries. Regional finals are taking place in Singapore, London, New York and Zurich and three winners from each region will be invited to the Global Final in Zurich in December.

Sustainable performance is one of UBS’s key principles. During the quarter, the bank was named the industry group leader in the Dow Jones Sustainability Indices (DJSI), which acknowledged the bank’s support for clients and communities and the integration of societal and financial performance. UBS also joined the RE100 initiative, which urges the world’s most influential companies to use only renewable power. UBS has committed to source 100% of its electricity from renewable sources by 2020. This will lead to a 75% reduction of its greenhouse gas footprint by 2020 compared with 2004 levels. In Switzerland, Germany and the UK, 100% of the electricity UBS uses is already from renewable sources. In its home market, UBS has increased energy efficiency by more than 30% since 2000.

During the third quarter, UBS launched its first global brand campaign in five years. The campaign illustrates how UBS works with clients to achieve their goals and ambitions. The campaign’s tagline "For some of life’s questions you’re not alone. Together, we can find an answer," reflects UBS’s promise to embrace client goals as its own and work together to help find the best answers. UBS will also support an international exhibition of portraits by Annie Leibovitz entitled "Women". The tour will launch in London in January 2016 and travel to 10 global cities over 12 months. The photographs from the exhibition will form part of the UBS Art Collection.

Outlook

Many of the underlying macroeconomic challenges and geopolitical issues that we have highlighted in previous quarters remain and are unlikely to be resolved in the foreseeable future. In addition, recently proposed changes to the too big to fail regulatory framework in Switzerland will cause substantial ongoing interest costs for the firm. We also continue to see headwinds from interest rates which have not increased in line with market expectations, negative market performance in certain asset classes and the weak performance of the euro versus the Swiss franc during the year. We are executing the measures already announced to mitigate these effects as we progress towards our targeted return on tangible equity in the short to medium term.

Our strategy has proven successful in a variety of market conditions. We remain committed to our strategy and its disciplined execution in order to ensure the firm’s long-term success and deliver sustainable returns for our shareholders.

Additional information

In the fourth quarter of 2015, UBS expects to recognize net additional deferred tax assets (DTA) of approximately CHF 500 million, following the third quarter DTA net upward movement of CHF 1,513 million mainly related to the US, reflecting updated profit forecasts and an extension of the relevant taxable profit forecast period used in valuing its DTA.

As a result of ongoing efforts to optimize our legal entity structure, we anticipate that some foreign currency translation gains and losses previously booked directly into equity through other comprehensive income will be released into profit and loss due to the sale or closure of UBS AG branches and subsidiaries. As a result, we currently expect to record net foreign currency translation losses of around CHF 30 million in the fourth quarter of 2015 and of around CHF 180 million in 2016, although gains and losses could be recognized in different periods. Consistent with past practice, these gains and losses will be treated as adjusting items and recorded in Corporate Center – Group Asset and Liability Management (Group ALM). The release of foreign currency translation losses to profit and loss will not affect shareholders’ equity or regulatory capital.

UBS Group AG key figures (as reported)

            As of or for the quarter ended As of or year-to-date CHF million, except where indicated 30.9.15     30.6.15     31.12.14     30.9.14 30.9.15     30.9.14 Group results Operating income 7,170 7,818 6,746 6,876 23,829 21,281 Operating expenses 6,382 6,059 6,342 7,430 18,575 19,224 Operating profit / (loss) before tax 788 1,759 404 (554) 5,254 2,057 Net profit / (loss) attributable to UBS Group AG shareholders 2,068 1,209 858 762 5,255 2,609 Diluted earnings per share (CHF)1 0.54 0.32 0.23 0.20 1.40 0.68 Key performance indicators2 Profitability Return on tangible equity (%) 18.3 11.0 8.0 7.1 15.7 8.3 Return on assets, gross (%) 3.0 3.1 2.6 2.7 3.2 2.8 Cost / income ratio (%) 88.7 77.4 93.2 107.5 77.8 90.3 Growth Net profit growth (%) 71.1 (38.8) 12.6 (3.8) 101.4 15.7 Net new money growth for combined wealth management businesses (%)3 0.8 1.5 1.7 3.1 2.0 2.7 Resources Common equity tier 1 capital ratio (fully applied, %)4 14.3 14.4 13.4 13.7 14.3 13.7 Leverage ratio (phase-in, %)5 5.8 5.4 5.4 5.4 5.8 5.4 Additional information Profitability Return on equity (RoE) (%) 15.9 9.4 6.8 6.1 13.6 7.1 Return on risk-weighted assets, gross (%)6 13.3 14.5 12.3 12.2 14.6 12.4 Resources Total assets 979,746 950,168 1,062,478 1,044,899 979,746 1,044,899 Equity attributable to UBS Group AG shareholders 54,077 50,211 50,608 50,824 54,077 50,824 Common equity tier 1 capital (fully applied)4 30,948 30,265 28,941 30,047 30,948 30,047 Common equity tier 1 capital (phase-in)4 40,488 38,706 42,863 42,464 40,488 42,464 Risk-weighted assets (fully applied)4 216,314 209,777 216,462 219,296 216,314 219,296 Risk-weighted assets (phase-in)4 220,755 212,088 220,877 222,648 220,755 222,648 Common equity tier 1 capital ratio (phase-in, %)4 18.3 18.2 19.4 19.1 18.3 19.1 Total capital ratio (fully applied, %)4 22.0 21.2 18.9 18.7 22.0 18.7 Total capital ratio (phase-in, %)4 25.8 25.0 25.5 24.9 25.8 24.9 Leverage ratio (fully applied, %)5 5.0 4.7 4.1 4.2 5.0 4.2 Leverage ratio denominator (fully applied)5 946,476 944,422 997,822 980,669 946,476 980,669 Leverage ratio denominator (phase-in)5 952,156 949,134 1,004,869 987,327 952,156 987,327 Liquidity coverage ratio (%)7 127 121 123 128 127 128 Other Invested assets (CHF billion)8 2,577 2,628 2,734 2,640 2,577 2,640 Personnel (full-time equivalents) 60,088 59,648 60,155 60,292 60,088 60,292 Market capitalization9 69,324 74,547 63,526 64,047 69,324 64,047 Total book value per share (CHF)9 14.41 13.71 13.94 13.54 14.41 13.54 Tangible book value per share (CHF)9 12.69 12.04 12.14 11.78 12.69 11.78  

1 Refer to “Note 9 Earnings per share (EPS) and shares outstanding” in the “UBS Group financial statements”

section of the third quarter 2015 report for more information.

2 Refer to the “Measurement of performance” section of our Annual Report 2014 for the definitions of our key

performance indicators.

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 (SRB). Refer to the

“Capital management” section of the third quarter 2015 report for more information.

5 In accordance with Swiss SRB rules. Refer to the “Capital management” section of the third quarter 2015

report for more information.

6 Based on phase-in Basel III risk-weighted assets.

7 Refer to the “Liquidity and funding management” section of the third quarter 2015 report for more

information. Data for periods prior to 31 March 2015 are on a pro-forma basis.

8 Includes invested assets for Retail & Corporate.

9 Refer to the “UBS shares” section of the third quarter 2015 report for more information.

 

Income statement

                For the quarter ended % change from Year-to-date CHF million, except per share data 30.9.15     30.6.15     30.9.14 2Q15     3Q14 30.9.15     30.9.14 Interest income 3,233 3,409 3,352 (5) (4) 9,814 9,880 Interest expense (1,387) (1,918) (1,478) (28) (6) (4,841) (5,192) Net interest income 1,846 1,490 1,874 24 (1) 4,973 4,688 Credit loss (expense) / recovery (28) (13) (32) 115 (13) (58) (18) Net interest income after credit loss expense 1,817 1,478 1,842 23 (1) 4,915 4,670 Net fee and commission income 4,111 4,409 4,273 (7) (4) 12,921 12,680 Net trading income 1,063 1,647 700 (35) 52 4,844 3,404 Other income 179 285 61 (37) 193 1,148 526 Total operating income 7,170 7,818 6,876 (8) 4 23,829 21,281 Personnel expenses 3,841 4,124 3,739 (7) 3 12,138 11,548 General and administrative expenses 2,285 1,695 3,468 35 (34) 5,694 7,018 Depreciation and impairment of property, equipment and software 230 209 203 10 13 660 598 Amortization and impairment of intangible assets 25 30 20 (17) 25 84 60 Total operating expenses 6,382 6,059 7,430 5 (14) 18,575 19,224 Operating profit / (loss) before tax 788 1,759 (554) (55) 5,254 2,057 Tax expense / (benefit) (1,295) 443 (1,317) (2) (182) (665) Net profit / (loss) 2,083 1,316 763 58 173 5,437 2,722 Net profit / (loss) attributable to preferred noteholders 0 111 Net profit / (loss) attributable to non-controlling interests 14 106 1 (87) 182 2 Net profit / (loss) attributable to UBS Group AG shareholders 2,068 1,209 762 71 171 5,255 2,609   Earnings per share (CHF) Basic 0.56 0.33 0.20 70 180 1.43 0.69 Diluted 0.54 0.32 0.20 69 170 1.40 0.68  

Comparison UBS Group AG (consolidated) versus UBS AG (consolidated)

        As of or for the quarter ended 30.9.15     As of or for the quarter ended 30.6.15     As of or for the quarter ended 31.12.14 CHF million, except where indicated UBS Group AG (consolidated)     UBS AG

(consolidated)

    Difference

(absolute)

    Difference

(%)

UBS Group AG

(consolidated)

    UBS AG

(consolidated)

    Difference

(absolute)

    Difference

(%)

UBS Group AG

(consolidated)

    UBS AG

(consolidated)

    Difference

(absolute)

    Difference

(%)

Income statement Operating income 7,170 7,189 (19) 0 7,818 7,784 34 0 6,746 6,745 1 0 Operating expenses 6,382 6,401 (19) 0 6,059 6,087 (28) 0 6,342 6,333 9 0 Operating profit / (loss)before tax 788 788 0 0 1,759 1,698 61 4 404 412 (8) (2) of which: Wealth Management 639 636 3 0 756 752 4 1 646 646 0 0 of which: Wealth Management Americas 259 252 7 3 191 185 6 3 211 211 0 0 of which: Retail & Corporate 466 466 0 0 397 397 0 0 340 340 0 0 of which: Asset Management 114 114 0 0 130 129 1 1 85 85 0 0 of which: Investment Bank 496 485 11 2 551 538 13 2 217 217 0 0 of which: Corporate Center (1,186) (1,165) (21) 2 (267) (303) 36 (12) (1,096) (1,087) (9) 1 of which: Services (257) (259) 2 (1) (253) (247) (6) 2 (249) (241) (8) 3 of which: Group ALM (111) (90) (21) 23 132 89 43 48 (106) (106) 0 0 of which: Non-core and Legacy Portfolio (818) (817) (1) 0 (145) (145) 0 0 (741) (741) 0 0 Net profit / (loss) 2,083 2,085 (2) 0 1,316 1,255 61 5 919 927 (8) (1) of which: attributable to shareholders 2,068 2,083 (15) (1) 1,209 1,178 31 3 858 893 (35) (4) of which: attributable to preferred noteholders 1 (1) 0 76 (76) 31 31 0 0 of which: attributable to non-controlling interests 14 1 13 106 1 105 29 2 27 Statement of comprehensive income Other comprehensive income 1,393 1,393 0 0 (1,900) (1,900) 0 0 424 424 0 0 of which: attributable to shareholders 1,291 1,314 (23) (2) (1,805) (1,849) 44 (2) 368 374 (6) (2) of which: attributable to preferred noteholders 79 (79) (49) 49 11 50 (39) (78) of which: attributable to non-controlling interests 102 0 102 (96) (2) (94) 45 0 45 Total comprehensive income 3,475 3,478 (3) 0 (584) (645) 61 (9) 1,343 1,352 (9) (1) of which: attributable to shareholders 3,360 3,397 (37) (1) (595) (671) 76 (11) 1,226 1,268 (42) (3) of which: attributable to preferred noteholders 80 (80) 26 (26) 42 81 (39) (48) of which: attributable to non-controlling interests 116 0 116 11 (1) 12 74 3 71 Balance sheet Total assets 979,746 981,891 (2,145) 0 950,168 951,528 (1,360) 0 1,062,478 1,062,327 151 0 Total liabilities 923,712 925,808 (2,096) 0 896,915 897,966 (1,051) 0 1,008,110 1,008,162 (52) 0 Total equity 56,034 56,083 (49) 0 53,253 53,562 (309) (1) 54,368 54,165 203 0 of which: attributable to shareholders 54,077 54,126 (49) 0 50,211 51,685 (1,474) (3) 50,608 52,108 (1,500) (3) of which: attributable to preferred noteholders 1,919 (1,919) 1,840 (1,840) 2,013 (2,013) of which: attributable to non-controlling interests 1,957 38 1,919 3,042 38 3,004 3,760 45 3,715 Capital information (fully applied) Common equity tier 1 capital 30,948 33,183 (2,235) (7) 30,265 32,834 (2,569) (8) 28,941 30,805 (1,864) (6) Additional tier 1 capital 5,578 0 5,578 3,777 0 3,777 467 0 467 Tier 2 capital 11,114 10,198 916 9 10,531 9,613 918 10 11,398 10,451 947 9 Total capital 47,640 43,381 4,259 10 44,573 42,447 2,126 5 40,806 41,257 (451) (1) Risk-weighted assets 216,314 217,472 (1,158) (1) 209,777 210,400 (623) 0 216,462 217,158 (696) 0

Common equity tier 1 capital ratio (%)

14.3 15.3 (1.0) 14.4 15.6 (1.2) 13.4 14.2 (0.8) Total capital ratio (%) 22.0 19.9 2.1 21.2 20.2 1.0 18.9 19.0 (0.1) Leverage ratio denominator 946,476 949,548 (3,072) 0 944,422 946,457 (2,035) 0 997,822 999,124 (1,302) 0 Leverage ratio (%) 5.0 4.6 0.4 4.7 4.5 0.2 4.1 4.1 0.0

UBS’s Third Quarter 2015 Report, letter to shareholders and slide presentation will be available from 06:45 CEST on Tuesday, 3 November 2015 at www.ubs.com/quarterlyreporting.

UBS will hold a presentation of its third quarter 2015 results on Tuesday, 3 November 2015. The results will be presented by Sergio P. Ermotti, Group Chief Executive Officer, Tom Naratil, Group Chief Financial Officer and Group Chief Operating Officer, Caroline Stewart, Global Head of Investor Relations, and Hubertus Kuelps, Group Head of Communications & Branding.

Time

• 09:00–11.00 (CET)

• 08:00–10.00 (GMT)

• 03:00–05.00 (US EST)

Audio webcast

The presentation for analysts can be followed live on www.ubs.com/quarterlyreporting with a simultaneous slide show.

Webcast playback

An audio playback of the results presentation will be made available at www.ubs.com/investors later in the day.

Cautionary statement regarding forward-looking statements

This release 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 planned further reduction in its Basel III risk-weighted assets (RWA) and leverage ratio denominator (LRD), and the degree to which UBS is successful in implementing changes to its business to meet changing market, regulatory and other conditions; (ii) developments in the markets in which UBS operates or to which it is exposed, including movements in securities prices or liquidity, credit spreads, currency exchange rates and interest rates and the effect of economic conditions and market developments on the financial position or creditworthiness of UBS’s clients and counterparties; (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 bail-in debt or loss-absorbing capital; (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 (including leverage ratio), liquidity and funding requirements, incremental tax requirements, additional levies, limitations on permitted activities, constraints on remuneration or other measures; (v) uncertainty as to when and to what degree the Swiss Financial Market Supervisory Authority (FINMA) will approve reductions to the incremental RWA resulting from the supplemental operational risk capital analysis mutually agreed to by UBS and FINMA, or will approve a limited reduction of capital requirements due to measures to reduce resolvability risk; (vi) the degree to which UBS is successful in implementing 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, 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 countries for mandatory structural reform of banks; (vii) 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; (viii) changes in the standards of conduct applicable to our businesses that may result from new regulation or new enforcement of existing standards, including measures to impose new or enhanced duties when interacting with customers or in the execution and handling of customer transactions; (ix) 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; (x) 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; (xi) 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; (xii) 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; (xiii) limitations on the effectiveness of UBS’s internal processes for risk management, risk control, measurement and modeling, and of financial models generally; (xiv) whether UBS will be successful in keeping pace with competitors in updating its technology, particularly in trading businesses; (xv) the occurrence of operational failures, such as fraud, misconduct, unauthorized trading and systems failures; (xvi) restrictions to the ability of subsidiaries of the Group to make loans or distributions of any kind, directly or indirectly, to UBS Group AG; (xvii) 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; and (xviii) the degree to which changes in regulation, capital or legal structure, financial results or other factors may affect UBS’s ability to maintain its stated capital return objective. 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 2014. 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.

Adjusted results

Unless otherwise indicated, third-quarter 2015 "adjusted" figures exclude each of the following items, to the extent applicable, on a Group and business division level: a gain of CHF 81 million related to our investment in the SIX Group, an own credit gain of CHF 32 million, foreign currency translation losses of CHF 27 million from the disposal of a subsidiary, as well as net restructuring charges of CHF 298 million and a credit related to a change to retiree benefit plans in the US of CHF 21 million. For the second quarter of 2015, the items we excluded were an own credit gain of CHF 259 million, a gain of CHF 56 million on the sale of the Belgian domestic Wealth Management business, a gain from a further partial sale of our investment in Markit of CHF 11 million, as well as net restructuring charges of CHF 191 million and an impairment of an intangible asset of CHF 11 million. Adjusted results are non-GAAP financial measures as defined by SEC regulations. Please refer to the "Group performance" section of the Third Quarter 2015 Report for more information on adjusted results.

Rounding

Numbers presented throughout this release may not add up precisely to the totals provided in the tables and text. Percentages, percent changes and absolute variances are calculated based on rounded figures displayed in the tables and text and may not precisely reflect the percentages, percent changes and absolute variances that would be derived based on 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.

1 Please refer to the "Adjusted results" section at the end of this news release for information.

2 Full-year adjusted RoTE target of around 10%.

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