Fourth-quarter net profit CHF 949 million; quarterly
diluted earnings per share CHF 0.25; full-year diluted
earnings per share CHF 1.64
Ordinary dividend CHF 0.60 per share and special dividend
CHF 0.25 per share for 2015 to be proposed to
shareholders
Full-year adjusted1 return on tangible equity
13.7%, above FY15 target of around 10%
Strong capital position with fully applied Swiss SRB Basel
III CET1 capital ratio 14.5% and fully applied Swiss SRB leverage
ratio2 at 5.3%
UBS strengthens climate change commitment in fourth
quarter
Regulatory News:
UBS Group (NYSE:UBS) (SWX:UBSN) net profit for 2015 increased
79% year on year to CHF 6.2 billion.3 Adjusted1 Group
profit before tax for the year was CHF 5.6 billion (reported CHF
5.5 billion). Despite very challenging market conditions, UBS’s
business divisions delivered strong results in 2015, while
prudently managing resources and risk.
Wealth Management’s adjusted1 profit before tax increased 13% to
CHF 2.8 billion (reported CHF 2.7 billion), its best annual pre-tax
profit since 2008. Wealth Management Americas’ adjusted1 profit
before tax was USD 874 million (reported USD 754 million), with
record operating income and solid net new money of USD 21.4
billion. Personal & Corporate Banking posted its best adjusted1
profit before tax since 2010 with CHF 1.7 billion (reported CHF 1.6
billion) and attracted a record number of new clients. Asset
Management’s adjusted1 profit before tax of CHF 610 million
(reported CHF 584 million) was up 20% year on year, making progress
towards its medium-term profit target. The Investment Bank
delivered a strong performance, with an adjusted1 profit before tax
of CHF 2.3 billion (reported CHF 1.9 billion), and achieved an
adjusted1 return on attributed equity of 31% for the full year.
”Despite a very challenging environment, we had an excellent
year, both in terms of shareholder returns and strengthened client
relationships. Going forward, we will continue with the disciplined
execution of our strategy while investing for profitable and
sustainable growth.” Sergio P. Ermotti, Group Chief
Executive Officer
In 2015, UBS continued to improve its Swiss SRB leverage ratio
and strengthen its fully applied Swiss SRB Basel III CET1 ratio.
These achievements, along with the 79% rise in net profit, allow
UBS to deliver on its shareholder return commitment and to offer
attractive capital returns. UBS’s Board of Directors intends to
propose a total dividend of CHF 0.85 to shareholders at the AGM
2016. It consists of an ordinary dividend of CHF 0.60 per share,
reflecting profit for the financial year 2015, and a special
dividend of CHF 0.25 per share, reflecting a significant net upward
revaluation of deferred tax assets in 2015. The total dividend will
be paid out of capital contribution reserves and, subject to
shareholder approval, will be payable on 17 May 2016 to
shareholders of record on 13 May 2016.4
The fourth quarter was characterized by very low levels of
client activity and pronounced risk aversion. UBS’s fourth-quarter
net profit attributable to shareholders was CHF 949 million. It
included a net tax benefit of CHF 715 million, mainly relating to a
net upward revaluation of deferred tax assets, and provisions for
litigation, regulatory and similar matters totaling CHF 365
million. As previously announced, the quarter also included a
charge of CHF 257 million for a debt buyback. Adjusted1 return on
tangible equity was 11.4% for the quarter.
Wealth Management delivered adjusted1 profit before tax of CHF
505 million (reported CHF 344 million) amid very low levels of
client activity. Net new money outflows amounted to CHF 3.4 billion
for the quarter, reflecting significant client deleveraging,
cross-border outflows and disciplined balance sheet management.
Wealth Management Americas’ operating performance was strong.
Reported results, however, were affected by substantial charges for
litigation, regulatory and similar matters. Adjusted1 profit before
tax was USD 63 million (reported USD 13 million). Net new money was
very strong at USD 16.8 billion, with significant inflows from
newly recruited advisors, as well as USD 4.9 billion from advisors
who have been with the firm for more than one year. Personal &
Corporate Banking posted an adjusted1 profit before tax of CHF 396
million (reported CHF 355 million), its best fourth quarter since
2011, despite continued negative interest rates. Asset Management’s
adjusted1 profit before tax of CHF 153 million (reported CHF 171
million) increased by 12%. The Investment Bank posted adjusted1
profit before tax of CHF 223 million (reported CHF 80 million), as
revenue declines in Equities and Corporate Client Solutions were
partly offset by strong year-on-year performance in Foreign
Exchange, Rates and Credit.
“The fourth quarter is a good demonstration of our discipline.
We were not tempted to take more risks or buy unprofitable net new
money to offset seasonal effects and challenging market
conditions.” Sergio P. Ermotti, Group Chief Executive
Officer
Full-year business division and Corporate Center
highlights
- Wealth Management delivered
adjusted1 profit before tax of CHF 2.8 billion (reported CHF 2.7
billion) the best since 2008; adjusted net new money at CHF 22.8
billion. The business achieved solid mandate growth, with
penetration up 200 bps year on year to 26.4% of invested
assets.
- Wealth Management Americas
recorded adjusted1 profit before tax of USD 874 million (reported
USD 754 million) and record operating income, with industry-leading
productivity per advisor for revenue and invested assets. Net new
money was USD 21.4 billion.
- Personal & Corporate Banking
posted its best adjusted1 profit before tax since 2010 at CHF 1.7
billion (reported CHF 1.6 billion), and attracted a record number
of net new clients, solidifying its position as the number one
universal bank in Switzerland.
- Asset Management delivered
adjusted1 profit before tax of CHF 610 million (reported CHF 584
million), up 20% year on year.
- Investment Bank posted adjusted1
profit before tax of CHF 2.3 billion (reported CHF 1.9 billion) and
adjusted1 return on attributed equity of 31.3%, substantially above
the target of greater than 15%. Resource utilization continued to
be efficient and disciplined.
- Corporate Center achieved a net
cost reduction of CHF 1.1 billion based on the December 2015
annualized exit rate versus full year 2013, and a further
substantial reduction in the Non-core and Legacy Portfolio leverage
ratio denominator.
Fourth-quarter business division highlights
- Wealth Management delivered
adjusted1 profit before tax of CHF 505 million (reported CHF 344
million). Net new money outflows were CHF 3.4 billion, with inflows
from Asia Pacific and Switzerland being more than offset by
outflows in emerging markets and Europe.
- Wealth Management Americas
posted adjusted1 profit before tax of USD 63 million(reported USD
13 million). Net new money was very strong at USD 16.8
billion.
- Personal & Corporate Banking
delivered adjusted1 profit before tax of CHF 396 million(reported
CHF 355 million), its best fourth-quarter profit before tax since
2011. Net new client assets were positive while net new loans were
slightly negative, in line with UBS’s strategy to grow high-quality
loans moderately and selectively.
- Asset Management recorded
adjusted1 profit before tax of CHF 153 million up 12%(reported
CHF 171 million). Net new money outflows excluding money
markets were CHF 8.9 billion. Outflows were largely from
lower-margin passive products, driven by client liquidity
needs.
- Investment Bank posted adjusted1
profit before tax of CHF 223 million (reported CHF 80 million),
including the annual UK bank levy of CHF 98 million, as revenue
declines in Equities and Corporate Client Solutions were partly
offset by strong year-on-year performance in Foreign Exchange,
Rates and Credit.
Awards and achievements
UBS was honored with several international industry awards in
the fourth quarter, including “Best Global Private Bank” by The
Banker/PWM for the third year running as well as “Best Private Bank
in Asia” for the fourth year in a row, reflecting UBS's
market-leading franchise and position as the world's leading wealth
manager. UBS Investment Bank was awarded “2015 Bank of the Year” by
the International Financing Review for the first time, underlining
the success of its client-centric model. UBS Asset Management beat
all major index players to claim top spot for the 2015 “Index
Manager of the Year Award” at the Professional Pensions Investment
Awards. UBS Switzerland consolidated its position as the country’s
premier universal bank winning the 2015 Euromoney prize for “Best
Bank in Switzerland” for the fourth year running.
In the fourth quarter, UBS strengthened its commitment to limit
the effects of climate change and enable the transition to a
low-carbon economy. UBS supports its clients in preparing for
success in an increasingly carbon-constrained world. Its climate
change strategy is focused on risk management, investments,
financing, research and its own operations. Its key commitments
include: supporting renewable energy and clean-tech transactions;
only supporting transactions by companies operating coal-fired
power plants if they have a strategy to reduce dependence on coal,
or if they adhere strictly to greenhouse gas emission standards, as
recommended by leading international agencies. In addition, UBS
does not support certain coal-mining companies and limits its
lending and capital raising to the sector. UBS is committed to
securing 100% of its electricity from renewable sources by 2020,
reducing its own greenhouse gas footprint by 75% compared to 2004
levels.
Outlook
Many of the underlying macroeconomic challenges and geopolitical
risks that have been highlighted in previous reporting remain and
are unlikely to be resolved in the foreseeable future. Negative
market performance and substantial market volatility since the
start of 2016, low interest rates, and the relative strength of the
Swiss franc, particularly against the euro, continue to present
headwinds. In addition, the proposed changes to the Swiss too big
to fail framework will cause substantial ongoing interest costs.
Further changes to the international regulatory framework for banks
will likely impose additional costs. We will continue to execute
the measures we announced to mitigate these effects as we work
toward our financial targets. We remain committed to our strategy
and its disciplined execution in order to deliver sustainable
returns to our shareholders.
Fourth quarter results summary
UBS Group key figures
As
of or for the quarter ended As of or for the
year ended CHF million, except where indicated
31.12.15 30.9.15 31.12.14
31.12.15 31.12.14
Group results
Operating income
6,775
7,170 6,746 30,605 28,027
Operating expenses
6,541 6,382 6,342
25,116 25,567 Operating profit / (loss)
before tax
234 788 404
5,489 2,461 Net profit / (loss) attributable to UBS
Group AG shareholders
949 2,068 858
6,203 3,466 Diluted earnings per share
(CHF)¹
0.25 0.54 0.23
1.64 0.91
Key performance indicators²
Profitability
Return on tangible equity (%)
8.1 18.3
8.0 13.7 8.2 Return on assets, gross
(%)
2.8 3.0 2.6
3.1 2.8 Cost / income ratio (%)
95.7
88.7 93.2 81.8 91.0
Growth
Net profit growth (%)
(54.1) 71.1 12.6 79.0
9.3 Net new money growth for combined wealth management
businesses (%)³
2.9 0.8 1.7
2.2 2.5
Resources
Common equity tier 1 capital ratio (fully applied, %)⁴
14.5 14.3 13.4 14.5
13.4 Leverage ratio (phase-in, %)⁵
6.2
5.8 5.4 6.2 5.4
Additional information
Profitability
Return on equity (RoE)
(%)
6.9 15.9 6.8
11.8 7.0 Return on risk-weighted assets, gross (%)�
12.6 13.3 12.3 14.1
12.4
Resources
Total assets
942,819 979,746 1,062,478
942,819 1,062,478 Equity attributable to UBS Group AG
shareholders
55,313 54,077 50,608
55,313 50,608 Common equity tier 1
capital (fully applied)⁴
30,044 30,948
28,941 30,044 28,941 Common equity tier
1 capital (phase-in)⁴
40,378 40,488
42,863 40,378 42,863 Risk-weighted
assets (fully applied)⁴
207,530 216,314
216,462 207,530 216,462 Risk-weighted
assets (phase-in)⁴
212,302 220,755
220,877 212,302 220,877 Common equity
tier 1 capital ratio (phase-in, %)⁴
19.0 18.3
19.4 19.0 19.4 Total capital
ratio (fully applied, %)⁴
22.9 22.0
18.9 22.9 18.9 Total capital ratio
(phase-in, %)⁴
26.8 25.8 25.5
26.8 25.5 Leverage ratio (fully applied, %)⁵
5.3 5.0 4.1 5.3
4.1 Leverage ratio denominator (fully applied)⁵
897,607 946,476 997,822
897,607 997,822 Leverage ratio denominator (phase-in)⁵
904,014 952,156 1,004,869
904,014 1,004,869 Liquidity coverage ratio (%)⁷
128 127 123 128
123
Other
Invested assets (CHF
billion)⁸
2,689 2,577 2,734
2,689 2,734 Personnel (full-time equivalents)
60,099 60,088 60,155
60,099 60,155 Market capitalization¹
75,147 69,324 63,526
75,147 63,526 Total book value per share (CHF)¹
14.75 14.41 13.94 14.75
13.94 Tangible book value per share (CHF)¹
13.00 12.69 12.14 13.00
12.14
1 Refer to the "UBS Shares" section of our
fourth quarter 2015 financial supplement which is available in the
section "Quarterly reporting" at www.ubs.com/investors 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) from our balance
sheet and capital optimization program.4 Based on the Basel III
framework as applicable for Swiss systemically relevant banks
(SRB).5 Calculated in accordance with Swiss SRB rules. From 31
December 2015 onwards, the Swiss SRB leverage ratio denominator
calculation is fully aligned with the BIS Basel III rules.
Prior-periodfigures are calculated in accordance with former Swiss
SRB rules and are therefore not fully comparable. Refer to the
"Capital management" section of this earnings release for more
information.6 Based on phase-in Basel III risk-weighted assets.7
Figures reported for 31 December 2015 and 30 September 2015
represent a 3-month average. The figure reported for 31 December
2014 was calculated on a pro-forma basis and represents a spot
number.8 Includes invested assets for Personal & Corporate
Banking.
Performance by business division and Corporate Center unit -
reported and adjusted1,2 For the
quarter ended 31.12.15 CHF million
Wealth Management
Wealth Management
Americas
Personal & Corporate
Banking
Asset Management
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: 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 foreign currency translation
gain from the disposal of subsidiaries
115
115
of which: net losses related to the
buyback of debt in a tender offer
(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 charges
3 0 0 3 12 144
0 1 164 of which: non-personnel-related
restructuring charges
14 0 0 8
2 252 0 0 276
of which: restructuring charges allocated
from CC Services to business divisions and other CC units
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 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 For the quarter
ended 30.9.15 Operating income as reported 1,958 1,871 1,030
502 2,088 (38) (116) (126) 7,170
of which: own credit on financial
liabilities designated at fair value
32 32 of
which: gain related to our investment in the SIX Group 15
66 81
of which: foreign currency translation
loss from the disposal of a subsidiary
(27) (27)
Operating income (adjusted) 1,943 1,871 964 502 2,088 (38)
(121) (126) 7,084 Operating expenses as reported
1,319 1,612 564 388 1,592 219 (5) 692 6,382 of which:
personnel-related restructuring charges (5) 0 1 1 0 116 0 4
118 of which: non-personnel-related restructuring charges 10
0 0 2 1 167 0 0 181
of which: restructuring charges allocated
from CC Services to business divisions and other CC units
69 39 26 20 116 (281) 0 11 0
of which: credit related to a change to
retiree benefit plans in the US
(21) (21)
Operating expenses (adjusted) 1,245 1,594 536 365 1,474 217
(5) 677 6,105
Operating profit / (loss) before tax as
reported 639 259 466 114
496 (257) (111) (818) 788
Operating profit / (loss) before tax (adjusted)
698 277 428 137 614 (255)
(116) (803) 979 For the quarter
ended 31.12.14 Operating income as reported 2,004 1,874 913
497 1,919 14 (100) (376) 6,746
of which: own credit on financial
liabilities designated at fair value
70 70 of
which: gains on sales of real estate
20 20 Operating income (adjusted)
2,004 1,874 913 497 1,919 (6) (170) (376) 6,656
Operating expenses as reported 1,359 1,663 573 412 1,702 263
6 364 6,342 of which: personnel-related restructuring charges
2 0 0 19 (5) 76 0 1 93 of which: non-personnel-related
restructuring charges 6 0 0 2 3 104 0 0 115
of which: restructuring charges allocated
from CC Services to business divisions and other CC units
40 22 15 18 62 (172) 0 13 0
of which: credit related to changes to a
retiree benefit plan in the US
0 (7) 0 0 (1) 0 0 0 (8) Operating expenses (adjusted)
1,311 1,647 557 373 1,643 255 6 350 6,142
Operating
profit / (loss) before tax as reported 646
211 340 85 217 (249)
(106) (741) 404 Operating profit / (loss)
before tax (adjusted) 694 227 356
124 276 (261) (176) (727)
514
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, and restatements due to the retrospective adoption of new
accounting standards or changes in accounting policies.3 Corporate
Center Services operating expenses presented in this table are
after service allocations to business divisions and other Corporate
Center units.
Performance by business division and Corporate Center unit -
reported and adjusted1,2 Year ended
31.12.15 CHF million
Wealth Management
Wealth Management
Americas
Personal & Corporate
Banking
Asset Management
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/(losses) on sale of
subsidiaries and businesses
169 56
225 of which: gain related to our investment in the
SIX Group
15 66
81
of which: gain from a further partial sale
of our investment in Markit
11
11
of which: net foreign currency translation
gain from the disposal of subsidiaries
88
88
of which: net losses related to the
buyback of debt in a tender offer
(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 charges
20 0 2 4
14 406 0 14 460 of which:
non-personnel-related restructuring charges
38
0 0 11 7 719 0 0
775
of which: restructuring charges allocated
from CC Services to business divisions and other CC units
265 137 99 68 376
(986) 0 43 0
of which: credit 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 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 Year ended 31.12.14 Operating income as
reported 7,901 6,998 3,741 1,902 8,308 37 2 (862) 28,027
of which: own credit on financial
liabilities designated at fair value
292 292 of
which: gains on sales of real estate
44 44
of which: gain from the partial sale of
our investment in Markit
43 43
of which: impairment of a financial
investment available-for-sale
(48) (48)
Operating income (adjusted) 7,901 6,998 3,741 1,902 8,313
(7) (290) (862) 27,696 Operating expenses as reported
5,574 6,099 2,235 1,435 8,392 688 0 1,144 25,567 of which:
personnel-related restructuring charges 18 0 4 19 64 221 0 1
327 of which: non-personnel-related restructuring charges 49
0 0 2 36 263 0 0 350
of which: restructuring charges allocated
from CC Services to business divisions and other CC units
119 55 60 30 161 (454) 0 29 0
of which: credit related to changes to
retiree benefit plans in the US
0 (9) 0 (8) (20) 0 0 (3) (41) Operating expenses (adjusted)
5,389 6,053 2,171 1,393 8,151 658 0 1,116 24,931
Operating profit / (loss) before tax as reported
2,326 900 1,506 467 (84)
(652) 2 (2,005) 2,461 Operating
profit / (loss) before tax (adjusted) 2,511
946 1,570 509 162 (666)
(290) (1,977) 2,766
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, and restatements due to the retrospective adoption of new
accounting standards or changes in accounting policies.3 Corporate
Center Services operating expenses presented in this table are
after service allocations to business divisions and other Corporate
Center units.
Group performance: 4Q15 vs 3Q15
Results
Net profit attributable to UBS Group AG shareholders for the
fourth quarter of 2015 was CHF 949 million compared with CHF 2,068
million in the third quarter of 2015. Operating profit before tax
was CHF 234 million compared with CHF 788 million, mainly
driven by CHF 395 million lower operating income due to decreased
net interest and trading income, as well as lower other income,
partly offset by higher net fee and commission income. Moreover,
operating expenses increased by CHF 159 million, primarily
reflecting a charge of CHF 166 million for the annual UK bank levy,
CHF 143 million higher restructuring charges, as well as increased
occupancy costs and professional fees, partly offset by CHF 227
million lower net charges for provisions for litigation, regulatory
and similar matters. We recorded a net tax benefit of CHF 715
million compared with CHF 1,295 million in the prior quarter, both
mainly related to the annual reassessment of our deferred tax
assets, which resulted in a net upward revaluation, as well as
recording part of the net deferred tax benefit associated with the
establishment of the US intermediate holding company in the prior
quarter, partly offset by current tax 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 fourth quarter of 2015, we excluded net
losses of CHF 257 million related to the buyback of debt in a
tender offer, a net foreign currency translation gain of CHF 115
million from the disposal of subsidiaries, 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 restructuring charges
of CHF 441 million. For the third quarter of 2015, we excluded a
gain of CHF 81 million related to our investment in the SIX Group,
an own credit gain of CHF 32 million, a foreign currency
translation loss 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. On an adjusted basis, operating profit before
tax was CHF 754 million in the fourth quarter compared with CHF 979
million in the prior quarter.
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 reclassified to the income
statement in future periods 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 250 million in the first half of 2016, although some of
these losses could be recognized in a later period. These gains and
losses will be treated as adjusting items and recorded in Corporate
Center – Group Asset and Liability Management (Group ALM). The
reclassification of foreign currency translation losses to the
income statement will not affect shareholders’ equity or regulatory
capital.
Operating income
Total operating income was CHF 6,775 million compared with CHF
7,170 million. On an adjusted basis, total operating income
decreased by CHF 230 million to CHF 6,854 million.
Total combined net interest and trading income decreased by CHF
252 million to CHF 2,657 million. Own credit on financial
liabilities designated at fair value was a gain of CHF 35 million
compared with CHF 32 million. In the fourth quarter of
2015, we made further enhancements to our valuation methodology for
the own credit component of fair value of financial liabilities
designated at fair value. This change in accounting estimate
resulted in a gain of CHF 260 million, which was largely offset by
losses recognized due to a tightening of credit spreads in the
fourth quarter. Excluding own credit, adjusted net interest and
trading income was CHF 255 million lower, primarily due to
decreases in the Investment Bank.
Net fee and commission income was CHF 4,218 million
compared with CHF 4,111 million, mainly reflecting CHF 98
million higher M&A and corporate finance fees.
Other income was negative CHF 41 million compared with positive
CHF 179 million. On an adjusted basis, other income decreased by
CHF 52 million, mainly due to lower gains from the disposal of
financial investments classified as available-for-sale.
Net credit loss expense was CHF 59 million compared with CHF 28
million, driven by an increase in the Investment Bank, mainly
related to the energy sector. Refer to the “Risk management and
control” section of this earnings release for more information.
We will adopt the IFRS 9 own credit presentation requirements in
the first quarter of 2016. Under IFRS 9, changes in the fair value
of financial liabilities designated at fair value through profit
and loss related to own credit will be recognized in Other
comprehensive income (OCI) and will not be reclassified to the
Income statement. We will adopt the other requirements of IFRS 9 as
of the mandatory effective date of 1 January 2018.
Operating expenses
Total operating expenses increased by CHF 159 million to CHF
6,541 million. Personnel-related restructuring charges increased by
CHF 46 million to CHF 164 million, and non-personnel-related
restructuring charges increased by CHF 95 million to CHF 276
million, largely related to our transitioning activities to
nearshore and offshore locations. Excluding restructuring charges,
adjusted total operating expenses were broadly unchanged at CHF
6,100 million.
Personnel expenses increased by CHF 2 million to CHF 3,843
million, but decreased by CHF 65 million on an adjusted basis.
Adjusted salaries and variable compensation decreased by CHF 153
million, mainly reflecting lower expenses for variable
compensation, partly offset by an expense for untaken vacation
accruals compared with a release of accruals in the prior quarter.
Financial advisor compensation in Wealth Management Americas
increased by CHF 31 million to CHF 917 million, primarily due to
unfavorable foreign currency translation effects. Adjusted other
personnel expenses increased by CHF 53 million to
CHF 670 million, mainly due to higher social security
charges, as well as increased costs for training and
contractors.
General and administrative expenses increased by CHF 128 million
to CHF 2,413 million. On an adjusted basis, excluding restructuring
charges of CHF 276 million compared with CHF 178 million, general
and administrative expenses increased by CHF 30 million. The fourth
quarter included a charge of CHF 166 million for the annual UK bank
levy, as well as CHF 45 million higher occupancy costs and CHF 40
million higher professional fees. These increases were largely
offset as net charges for provisions for litigation, regulatory and
similar matters decreased by CHF 227 million to CHF 365 million. At
this point in time, we believe that the industry continues to
operate in an environment in which charges 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. Refer to the “Provisions
and litigation, regulatory and similar matters” section of our
fourth quarter 2015 financial supplement, which is available in the
section “Quarterly reporting” at www.ubs.com/investors, for more
information.
Depreciation and impairment of property, equipment and software
was CHF 260 million compared with CHF 230 million,
largely driven by higher depreciation expenses related to
internally generated capitalized software.
Cost/income ratio
The cost/income ratio was 95.7% compared with 88.7%. On an
adjusted basis, the cost/income ratio was 88.2% compared with 85.8%
and was above our short- to medium-term expectation of 65% to
75%.
Tax
We recognized a net income tax benefit of CHF 715 million in the
fourth quarter of 2015, compared with a net tax benefit of CHF
1,295 million in the third quarter. The fourth quarter net tax
benefit included 25% of the upward revaluation of our deferred
assets that resulted from the prior quarter’s annual deferred tax
asset reassessment, as well as 25% of the deferred tax effects
associated with the establishment of the US intermediate holding
company in the prior quarter, both adjusted as the Group’s business
planning process was completed in the fourth quarter. These
deferred tax movements were partly offset by other net tax expenses
of CHF 79 million, mainly related to branches and subsidiaries that
incur current tax expenses, and decreases in provisions for
uncertain tax positions.
The third-quarter net tax benefit included recognition of
additional net deferred tax assets of CHF 1,513 million
resulting from the aforementioned assessments, and taking into
account 75% of the full-year effects. These deferred tax movements
were partly offset by net tax expenses of CHF 218 million, mainly
related to branches and subsidiaries that incur current tax
expenses.
For 2016, we currently forecast a full-year tax rate in the
range of 22% to 25%, excluding the effects on the tax rate from the
reassessment of deferred tax assets that accompanies the Group’s
annual business planning process, which is generally undertaken in
the second half of the year.
Total comprehensive income attributable to UBS Group AG
shareholders
Total comprehensive income attributable to UBS Group AG
shareholders was CHF 1,126 million compared with CHF 3,360 million.
Net profit attributable to UBS Group AG shareholders was CHF 949
million compared with CHF 2,068 million. OCI attributable to UBS
Group AG shareholders was CHF 177 million compared with CHF 1,291
million.
In the fourth quarter of 2015, OCI related to foreign currency
translation was CHF 452 million, primarily related to the continued
strengthening of the US dollar against the Swiss franc, partly
offset by the reclassification to the income statement of gains of
CHF 115 million. OCI related to foreign currency translation in the
prior quarter was CHF 844 million.
OCI related to cash flow hedges was negative CHF 419 million
compared with positive CHF 427 million, primarily due to increases
in long-term interest rates in the US dollar and other major
currencies.
OCI associated with financial investments classified as
available-for-sale was negative CHF 59 million compared with
positive CHF 61 million, and mainly related to CHF 215 million in
unrealized net pre-tax losses on debt instruments following
increases in relevant long-term interest rates, partly offset by
CHF 129 million in unrealized net pre-tax gains on equity
investments. We currently expect to recognize in the income
statement gains of approximately CHF 100 million, deferred in OCI,
during the first half of 2016, as transactions involving certain
equity investments classified as available-for-sale are closed.
These expected gains will be recorded in Personal & Corporate
Banking and Wealth Management and, consistent with past practice,
treated as adjusting items. The reclassification of gains from OCI
to the income statement will not affect shareholders’ equity, but
will increase CET1 capital.
OCI from defined benefit plans was CHF 202 million compared with
negative CHF 41 million. We recorded net pre-tax OCI gains of CHF
182 million on our non-Swiss pension plans, primarily reflecting
net reductions in defined benefit obligations, driven by lower than
expected inflation. Net pre-tax OCI related to the Swiss pension
plan was a gain of CHF 21 million.
Net profit attributable to non-controlling interests
Net profit attributable to non-controlling interests was CHF 1
million compared with CHF 14 million. We currently expect to
attribute net profit to non-controlling interests related to
preferred notes issued by UBS AG of approximately CHF 80 million in
2016, all in the second quarter, approximately CHF 70 million in
2017 and less than CHF 10 million per year from 2018.
Sensitivity to interest rate movements
As of 31 December 2015, 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 0.8 billion in
Wealth Management, Wealth Management Americas and Personal &
Corporate Banking. Of this increase, approximately CHF 0.5 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 an estimated decrease of at least approximately CHF
2.4 billion recognized in other comprehensive income (OCI), of
which approximately CHF 1.9 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, and
these are not recognized for the purposes of calculating regulatory
capital, the immediate impact on regulatory capital would not be
significant. The above 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. The estimates further assume a
static balance sheet and constant foreign exchange rates.
Business division and Corporate Center performance
Wealth Management
Wealth Management¹
As of or for the quarter ended
% change from Year ended
CHF million, except where indicated
31.12.15
30.9.15 31.12.14 3Q15 4Q14
31.12.15 31.12.14 Net interest income
598 600 583 0
3 2,326 2,165 Recurring net fee
income
935 960 986
(3) (5) 3,820 3,783
Transaction-based income
364 366 436
(1) (17) 1,778
1,928 Other income
(28) 32 4
231
25 Income
1,869 1,959 2,008
(5) (7) 8,155
7,902 Credit loss (expense) / recovery
0
0 (4) (100)
0 (1)
Total operating income
1,869 1,958 2,004 (5)
(7) 8,155 7,901 Personnel
expenses
609 607 607
0 0 2,532 2,467 General
and administrative expenses
263 129 153
104 72 637
918
Services (to) / from other business
divisions and CorporateCenter
652 582 597 12
9 2,289 2,180 of which: services
from CC – Services
627 555 584
13 7 2,209 2,122
Depreciation and impairment of property, equipment and software
1 1 1 0 0
5 4 Amortization and impairment of
intangible assets
1 1 1
0 0 3 5
Total
operating expenses 1,526 1,319
1,359 16 12 5,465
5,574
Business division operating profit / (loss) before
tax 344 639 646
(46) (47) 2,689 2,326
Key performance indicators²
Pre-tax profit growth (%)
(46.2) (15.5)
(8.6)
15.6 3.5 Cost / income ratio (%)
81.6
67.3 67.7
67.0 70.5 Net new money growth (%)³
(1.5) 1.5 1.2
2.3 3.9 Gross
margin on invested assets (bps)
80 84
82 (5) (2) 86
85 Net margin on invested assets (bps)
15
27 26 (44) (42)
28 25
Additional information
Recurring income⁴
1,533 1,560 1,569
(2) (2) 6,146
5,949 Recurring income as a percentage of income (%)
82.0 79.6 78.1
75.4 75.3 Average
attributed equity (CHF billion)⁵
3.4 3.5
3.5 (3) (3)
3.5 3.4 Return on attributed equity (%)
40.5
73.0 73.8
77.4 67.9 Risk-weighted assets (fully
applied, CHF billion)�
25.3 26.1 25.4
(3) 0 25.3
25.4 Risk-weighted assets (phase-in, CHF billion)�
25.3 26.1 25.8 (3)
(2) 25.3 25.8 Return on risk-weighted
assets, gross (%)⁷
29.1 30.2 31.3
31.5
33.8 Leverage ratio denominator (fully applied, CHF
billion)⁸
119.0 130.5 138.3
(9) (14) 119.0
138.3 Goodwill and intangible assets (CHF billion)
1.3 1.3 1.4 0 (7)
1.3 1.4 Net new money (CHF billion)
(3.4) 0.2 3.0
12.9 34.4 Net new
money adjusted (CHF billion)⁹
(3.4) 3.5
3.0
22.8 34.4 Invested assets (CHF billion)
947
919 987 3 (4)
947 987 Client assets (CHF billion)
1,122 1,084 1,160 4
(3) 1,122 1,160 Loans, gross
(CHF billion)
105.2 109.0 112.7
(3) (7) 105.2
112.7 Due to customers (CHF billion)
172.3
176.8 191.3 (3) (10)
172.3 191.3 Personnel (full-time equivalents)
10,239 10,185 10,337
1 (1) 10,239 10,337
Client advisors (full-time equivalents)
4,019
3,995 4,250 1 (5)
4,019 4,250
1 Comparative figures in this table may
differ from those originally published in quarterly and annual
reports due to adjustments following organizational changes, and
restatements due to the retrospective adoption of new accounting
standards or changes in accounting policies.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.4 Recurring income consists of net interest
income and recurring net fee income.5 Refer to the "Capital
management" section of our Annual Report 2014 for more information
on the equity attribution framework.6 Based on the Basel III
framework as applicable for Swiss systemically relevant banks
(SRB).7 Based on phase-in Basel III risk-weighted assets.8
Calculated in accordance with Swiss SRB rules. From 31 December
2015 onwards, the Swiss SRB leverage ratio denominator calculation
is fully aligned with the BIS Basel III rules. Prior-period figures
are calculated in accordance with former Swiss SRB rules and are
therefore not fully comparable. Refer to the "Capital management"
section of this earnings release for more information.9 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 31.12.15 Europe
Asia Pacific Switzerland
Emergingmarkets
of which: ultra high net worth
of which: Global Family Office³
Net new money (CHF billion)
(2.0) 1.8
0.2 (3.5) 2.2 0.8 Net new
money growth (%)
(2.4) 2.8
0.5 (9.0) 1.8 4.4 Invested
assets (CHF billion)
343 272
174 156 505 76 Gross margin on
invested assets (bps)
74 69
92 96 52 49⁴ Client advisors
(full-time equivalents)
1,367 1,092
771 705 728⁵
1 Refer to the "Measurement of
performance” section of our Annual Report 2014 for the definitions
of our key performance indicators.2 Based on the Wealth Management
business area structure, and excluding minor functions with 84
client advisors, CHF 2 billion of invested assets, and CHF 0.1
billion of net new money inflows in the fourth quarter 2015.3 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 26 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: 4Q15 vs 3Q15
Profit before tax was CHF 344 million in the fourth quarter of
2015, a decrease of CHF 295 million compared with the prior
quarter. Adjusted profit before tax decreased by CHF 193 million to
CHF 505 million, mainly reflecting CHF 148 million higher adjusted
operating expenses, partly as the fourth quarter included
CHF 78 million higher net charges for provisions for
litigation, regulatory and similar matters. Adjusted operating
income decreased by CHF 46 million, mainly due to reduced client
activity and the ongoing effects of cross-border outflows, partly
offset by a fee of CHF 45 million received from Personal &
Corporate Banking for the shift of certain clients from Wealth
Management to Personal & Corporate Banking as a result of a
detailed client segmentation review. Net new money outflows were
CHF 3.4 billion.
Operating income
Total operating income decreased by CHF 89 million to CHF 1,869
million. Excluding losses on the sale of subsidiaries and
businesses of CHF 28 million in the fourth quarter and a CHF 15
million gain related to our investment in the SIX Group in the
third quarter, adjusted operating income decreased by CHF 46
million to CHF 1,897 million. Net interest income decreased by CHF
2 million to CHF 598 million, mainly due to lower lending revenues,
largely offset by higher deposit revenues. Recurring net fee income
decreased by CHF 25 million to CHF 935 million, mainly
reflecting lower income due to the ongoing effects of cross-border
outflows. Transaction-based income decreased by CHF 2 million to
CHF 364 million, mainly due to reduced client activity, primarily
in Asia Pacific and emerging markets. This was largely offset by
the aforementioned fee of CHF 45 million received from Personal
& Corporate Banking.
Operating expenses
Total operating expenses increased by CHF 207 million to CHF
1,526 million. Excluding restructuring charges of CHF 133 million
compared with CHF 74 million, adjusted operating expenses increased
by CHF 148 million to CHF 1,393 million. Personnel expenses
increased by CHF 2 million to CHF 609 million. Excluding net
restructuring charges of CHF 3 million compared with a net credit
of CHF 5 million, adjusted personnel expenses decreased by CHF 6
million to CHF 606 million, mainly due to lower expenses for
variable compensation, partly offset by an expense for untaken
vacation accruals compared with a release of accruals in the prior
quarter. General and administrative expenses increased by CHF 134
million to CHF 263 million. Excluding restructuring charges of CHF
14 million compared with CHF 10 million, adjusted general and
administrative expenses increased by CHF 130 million to CHF 249
million, mainly as net charges for provisions for litigation,
regulatory and similar matters increased by CHF 78 million to CHF
79 million. In addition, the fourth quarter included a charge of
CHF 13 million for the annual UK bank levy as well as charges of
CHF 10 million related to the European Union's Single
Resolution Fund. Net charges for services from other business
divisions and Corporate Center increased by CHF 70 million to CHF
652 million. Excluding restructuring charges of CHF 116 million
compared with CHF 69 million, adjusted net charges increased by CHF
23 million to CHF 536 million, mainly due to higher charges from
Group Technology.
Cost/income ratio
The cost/income ratio was 81.6% compared with 67.3%. On an
adjusted basis, the cost/income ratio was 73.4% compared with
64.0%, above our target range of 55% to 65%.
Net new money
Net new money outflows were CHF 3.4 billion, which resulted in a
negative annualized net new money growth rate of 1.5% compared with
a positive growth rate of 1.5% on an adjusted basis in the prior
quarter, both below our target range of 3% to 5%. Net new money in
the fourth quarter was driven by outflows in emerging markets and
Europe, partly offset by inflows in Asia Pacific and Switzerland.
On a global basis, net new money from ultra high net worth clients
was CHF 2.2 billion compared with CHF 4.0 billion on an adjusted
basis in the prior quarter. Net new money was negatively impacted
by continued client deleveraging, cross-border outflows and from
balance sheet management, as well as by seasonal effects.
Invested assets
Invested assets increased by CHF 28 billion to CHF 947 billion
as of 31 December 2015, due to positive market performance of CHF
21 billion and positive currency translation effects of CHF 14
billion. This was partly offset by net new money outflows of CHF 3
billion, a CHF 2 billion reduction related to our exit from the
Australian domestic business that did not affect net new money, as
well as a CHF 1 billion reduction related to the aforementioned
shift of certain clients from Wealth Management to Personal &
Corporate Banking. We currently expect a further reduction in
invested assets of approximately CHF 12 billion in the first half
of 2016 related to our exit from the Australian domestic business.
Mandate penetration decreased to 26.4% of invested assets as of 31
December 2015 compared with 27% in the prior quarter, but increased
200 basis points year on year.
Margins on invested assets
The net margin on invested assets decreased 12 basis points to
15 basis points. On an adjusted basis, the net margin on invested
assets decreased 8 basis points to 22 basis points. The gross
margin on invested assets decreased 4 basis points to 80 basis
points, and decreased 2 basis points to 81 basis points on an
adjusted basis.
Wealth Management Americas
Wealth Management Americas – in US dollars¹
As
of or for the quarter ended % change from
Year ended USD million, except where indicated
31.12.15 30.9.15 31.12.14
3Q15 4Q14 31.12.15
31.12.14 Net interest income
326 311
280 5 16 1,215
1,067 Recurring net fee income
1,160
1,231 1,187 (6) (2)
4,795 4,666 Transaction-based income
376 381 448 (1)
(16) 1,614 1,825 Other income
12 11 9 9 33
32 33 Income
1,874
1,935 1,924 (3) (3)
7,657 7,590 Credit loss (expense) / recovery
0 (3) 0 (100)
(4) 16
Total operating
income 1,874 1,931 1,924
(3) (3) 7,653
7,606 Personnel expenses
1,185 1,178
1,212 1 (2) 4,746
4,741 Financial advisor compensation²
713
726 757 (2) (6)
2,921 2,944
Compensation commitments with recruited
financialadvisors³
198 189 187 5
6 761 733 Salaries and other
personnel costs
274 263 268
4 2 1,064 1,063
General and administrative expenses
348 158
153 120 127
845 597 Services (to) / from other business divisions and
Corporate Center
313 313 328
0 (5) 1,252 1,234
of which: services from CC – Services
309 308
324 0 (5)
1,236 1,217
Depreciation and impairment of property,
equipment andsoftware
0 1 0 (100)
3 0 Amortization and impairment
of intangible assets
13 13 13
0 0 53 52
Total
operating expenses 1,860 1,663
1,707 12 9 6,899
6,625
Business division operating profit / (loss) before
tax 13 268 217
(95) (94) 754 981
Key performance indicators⁴
Pre-tax profit
growth (%)
(95.1) 30.7 (14.6)
(23.1)
5.8 Cost / income ratio (%)
99.3 85.9
88.7
90.1 87.3 Net new money growth (%)
6.8
0.2 2.2
2.1 1.0 Gross margin on invested assets
(bps)
74 76 75 (3)
(1) 74 76 Net margin on invested
assets (bps)
1 11 8
(91) (88) 7 10
Additional information
Recurring income⁵
1,486
1,542 1,467 (4) 1
6,010 5,733 Recurring income as a percentage
of income (%)
79.3 79.7 76.2
78.5
75.5 Average attributed equity (USD billion)�
2.5
2.7 2.8 (7) (11)
2.6 2.9 Return on attributed equity (%)
2.1 39.7 31.0
29.3 33.8 Risk-weighted
assets (fully applied, USD billion)⁷
21.9 22.9
21.8 (4) 0
21.9 21.8 Risk-weighted assets (phase-in, USD billion)⁷
21.9 22.9 22.0 (4)
0 21.9 22.0 Return on
risk-weighted assets, gross (%)⁸
33.5 33.7
34.1
33.9 29.2 Leverage ratio denominator (fully applied,
USD billion) ⁹
62.8 61.1 63.7
3 (1) 62.8 63.7
Goodwill and intangible assets (USD billion)
3.7
3.7 3.8 0 (3)
3.7 3.8 Net new money (USD billion)
16.8 0.5 5.5
21.4 10.0
Net new money including interest and
dividend income (USDbillion)¹⁰
26.2 6.2 15.9
47.8 37.2 Invested
assets (USD billion)
1,033 992 1,032
4 0 1,033
1,032 Client assets (USD billion)
1,084 1,042
1,087 4 0
1,084 1,087 Loans, gross (USD billion)
48.7
47.5 44.6 3 9
48.7 44.6 Due to customers (USD billion)
83.1 75.7 73.5 10
13 83.1 73.5 Recruitment loans
to financial advisors
3,179 2,890 2,925
10 9 3,179
2,925 Other loans to financial advisors
418
439 374 (5) 12
418 374 Personnel (full-time equivalents)
13,611 13,329 13,322 2
2 13,611 13,322 Financial
advisors (full-time equivalents)
7,140 6,989
6,997 2 2
7,140 6,997
1 Comparative figures in this table may
differ from those originally published in quarterly and annual
reports due to adjustments following organizational changes, and
restatements due to the retrospective adoption of new accounting
standards or changes in accounting policies.2 Financial advisor
compensation consists of grid-based compensation based directly on
compensable revenues generated by financial advisors and
supplemental compensationcalculated based on financial advisor
productivity, firm tenure, assets and other variables.3
Compensation commitments with recruited financial advisors
represents charges related to compensation commitments granted to
financial advisors at the time of recruitment which are subject to
vesting requirements.4 Refer to the "Measurement of performance"
section of our Annual Report 2014 for the definitions of our key
performance indicators.5 Recurring income consists of net interest
income and recurring net fee income.6 Refer to the "Capital
management" section of our Annual Report 2014 for more information
on the equity attribution framework.7 Based on the Basel III
framework as applicable for Swiss systemically relevant banks
(SRB).8 Based on phase-in Basel III risk-weighted assets.9
Calculated in accordance with Swiss SRB rules. From 31 December
2015 onwards, the Swiss SRB leverage ratio denominator calculation
is fully aligned with the BIS Basel III rules. Prior-period figures
are calculated in accordance with former Swiss SRB rules and are
therefore not fully comparable. Refer to the "Capital management"
section of this earnings release for more information.10 Presented
in line with historical reporting practice in the US market.
Wealth Management Americas – in Swiss francs¹
As
of or for the quarter ended % change from
Year ended CHF million, except where indicated
31.12.15 30.9.15 31.12.14
3Q15 4Q14 31.12.15
31.12.14 Net interest income
328 301
273 9 20 1,174
983 Recurring net fee income
1,167
1,193 1,156 (2) 1
4,623 4,294 Transaction-based income
379 369 437 3 (13)
1,555 1,678 Other income
12 11 9 9 33
31 30 Income
1,885
1,875 1,874 1 1
7,384 6,984 Credit loss (expense) / recovery
0 (3) 0 (100)
(4) 15
Total operating
income 1,885 1,871 1,874
1 1 7,381 6,998
Personnel expenses
1,192 1,142 1,181
4 1 4,579
4,363 Financial advisor compensation²
718 703
738 2 (3)
2,817 2,710 Compensation commitments with recruited
financial advisors³
199 183 182
9 9 735 675
Salaries and other personnel costs
275 255
261 8 5
1,027 979 General and administrative expenses
350 153 149 129
135 822 550 Services (to) / from other
business divisions and Corporate Center
316
304 320 4 (1)
1,209 1,137 of which: services from CC – Services
311 299 316 4
(2) 1,193 1,121 Depreciation and
impairment of property, equipment and software
0
1 0 (100)
3 0 Amortization and impairment of intangible
assets
13 13 13 0
0 51 48
Total operating
expenses 1,871 1,612 1,663
16 13 6,663 6,099
Business division operating profit / (loss) before tax
14 259 211 (95)
(93) 718 900
Key performance indicators⁴
Pre-tax profit
growth (%)
(94.6) 35.6 (10.6)
(20.2)
4.9 Cost / income ratio (%)
99.3 86.0
88.7
90.2 87.3 Net new money growth (%)
7.0
0.2 2.2
2.1 1.1 Gross margin on invested assets
(bps)
75 77 75 (3)
0 74 76 Net margin on invested
assets (bps)
1 11 8
(91) (88) 7 10
Additional information
Recurring income⁵
1,495
1,495 1,429 0 5
5,798 5,276 Recurring income as a percentage
of income (%)
79.3 79.7 76.3
78.5
75.5 Average attributed equity (CHF billion)�
2.5
2.6 2.7 (4) (7)
2.5 2.7 Return on attributed equity (%)
2.2 39.8 31.3
29.0 33.6 Risk-weighted
assets (fully applied, CHF billion)⁷
21.9 22.3
21.7 (2) 1
21.9 21.7 Risk-weighted assets (phase-in, CHF billion)⁷
21.9 22.3 21.9 (2)
0 21.9 21.9 Return on
risk-weighted assets, gross (%)⁸
34.1 34.2
34.1
33.7 29.4 Leverage ratio denominator (fully applied,
CHF billion)⁹
62.9 59.5 63.3
6 (1) 62.9 63.3
Goodwill and intangible assets (CHF billion)
3.7
3.6 3.7 3 0
3.7 3.7 Net new money (CHF billion)
16.9 0.5 5.3
21.3 9.6
Net new money including interest and
dividend income (CHFbillion)¹⁰
26.3 6.0 15.6
46.9 35.0 Invested
assets (CHF billion)
1,035 967 1,027
7 1 1,035
1,027 Client assets (CHF billion)
1,085 1,016
1,081 7 0
1,085 1,081 Loans, gross (CHF billion)
48.8
46.3 44.4 5 10
48.8 44.4 Due to customers (CHF billion)
83.2 73.8 73.1 13
14 83.2 73.1 Recruitment loans
to financial advisors
3,184 2,817 2,909
13 9 3,184
2,909 Other loans to financial advisors
418
428 372 (2) 12
418 372 Personnel (full-time equivalents)
13,611 13,329 13,322 2
2 13,611 13,322 Financial
advisors (full-time equivalents)
7,140 6,989
6,997 2 2
7,140 6,997
1 Comparative figures in this table may
differ from those originally published in quarterly and annual
reports due to adjustments following organizational changes, and
restatements due to the retrospective adoption of new accounting
standards or changes in accounting policies.2 Financial advisor
compensation consists of grid-based compensation based directly on
compensable revenues generated by financial advisors and
supplemental compensation calculated based on financial advisor
productivity, firm tenure, assets and other variables.3
Compensation commitments with recruited financial advisors
represents charges related to compensation commitments granted to
financial advisors at the time of recruitment which are subject to
vesting requirements.4 Refer to the "Measurement of performance"
section of our Annual Report 2014 for the definitions of our key
performance indicators.5 Recurring income consists of net interest
income and recurring net fee income.6 Refer to the "Capital
management" section of our Annual Report 2014 for more information
on the equity attribution framework.7 Based on the Basel III
framework as applicable for Swiss systemically relevant banks
(SRB).8 Based on phase-in Basel III risk-weighted assets.9
Calculated in accordance with Swiss SRB rules. From 31 December
2015 onwards, the Swiss SRB leverage ratio denominator calculation
is fully aligned with the BIS Basel III rules. Prior-period figures
are calculated in accordance with former Swiss SRB rules and are
therefore not fully comparable. Refer to the "Capital management"
section of this earnings release for more information.10 Presented
in line with historical reporting practice in the US market.
Results: 4Q15 vs 3Q15
Profit before tax was USD 13 million in the fourth quarter of
2015 compared with USD 268 million in the third quarter, mainly
reflecting USD 180 million higher net charges for provisions for
litigation, regulatory and similar matters. Adjusted profit before
tax decreased to USD 63 million from USD 287 million. Net new money
inflows were USD 16.8 billion and mainly reflected significant
inflows from recruited financial advisors.
Operating income
Total operating income decreased by USD 57 million to USD 1,874
million, primarily reflecting lower recurring net fee income. Net
interest income increased by USD 15 million to USD 326 million,
mainly due to higher interest rates and continued growth in loan
and deposit balances. The average securities-backed lending
portfolio balance increased 2% and the average mortgage portfolio
balance decreased 1%. Recurring net fee income decreased by USD 71
million to USD 1,160 million, mainly due to lower managed account
fees, which were calculated on decreased invested asset levels at
the end of the prior quarter. Transaction-based income decreased by
USD 5 million to USD 376 million.
Operating expenses
Total operating expenses increased by USD 197 million to USD
1,860 million. Excluding restructuring charges of USD 50 million
compared with USD 40 million and a credit of USD 21 million related
to a change to retiree benefit plans in the US in the third
quarter, adjusted operating expenses increased by USD 166 million
to USD 1,810 million, primarily as net charges for provisions
for litigation, regulatory and similar matters increased by USD 180
million to USD 233 million. Personnel expenses increased by USD 7
million to USD 1,185 million. Excluding a credit of USD 20
million related to a change to retiree benefit plans in the third
quarter, adjusted personnel expenses decreased by USD 13 million to
USD 1,185 million. This decline was mainly due to lower financial
advisor compensation, primarily reflecting lower compensable
revenues, and lower performance-based and variable compensation
expenses. General and administrative expenses increased by USD 190
million to USD 348 million, mainly due to the aforementioned
increase in net charges for provisions for litigation, regulatory
and similar matters and higher legal fees. Excluding restructuring
charges of USD 50 million compared with USD 40 million, and a
credit of USD 2 million related to a change to retiree benefit
plans in the third quarter, adjusted net charges for services from
other business divisions and Corporate Center declined by USD 12
million, reflecting lower charges from Corporate Center –
Services.
Cost/income ratio
The cost/income ratio was 99.3% compared with 85.9%. On an
adjusted basis, the cost/income ratio was 96.6% compared with 85.0%
and was above our target range of 75% to 85%.
Net new money
Net new money was very strong at USD 16.8 billion, with
significant inflows from newly recruited advisors, as well as USD
4.9 billion from advisors who have been with the firm for more than
one year. Annualized net new money growth was 6.8% compared with
0.2%, above our target range of 2% to 4%. In the fourth quarter,
financial advisor headcount increased by 151 to 7,140, driven by
the hiring of experienced financial advisors. Including interest
and dividend income, net new money was USD 26.2 billion compared
with USD 6.2 billion in the prior quarter and included seasonally
higher dividend payments.
Invested assets
Invested assets increased by USD 41 billion to USD 1,033
billion, reflecting positive market performance of USD 24 billion
as well as net new money inflows of USD 17 billion. Managed account
assets increased by USD 10 billion to USD 351 billion and
comprised 34% of total invested assets as of 31 December 2015,
unchanged from 30 September 2015.
Margins on invested assets
The net margin on invested assets was 1 basis point compared
with 11 basis points and the adjusted net margin on invested assets
decreased 9 basis points to 2 basis points. The gross margin on
invested assets decreased 2 basis points to 74 basis points.
Personal & Corporate Banking
Personal & Corporate Banking¹
As of or
for the quarter ended % change from
Year ended CHF million, except where indicated
31.12.15 30.9.15 31.12.14
3Q15 4Q14 31.12.15 31.12.14 Net
interest income
576 566 557
2 3 2,270 2,184
Recurring net fee income
139 136 133
2 5 544 556
Transaction-based income
196 238 273
(18) (28) 959
1,022 Other income
15 90 16
(83) (6) 140
75 Income
926 1,031 979
(10) (5) 3,913
3,836 Credit loss (expense) / recovery
(11) 0
(66) (83)
(37) (95)
Total operating income
915 1,030 913 (11)
0 3,877 3,741 Personnel expenses
211 214 190 (1) 11
873 850 General and administrative
expenses
71 76 86
(7) (17) 264 293 Services (to) /
from other business divisions and Corporate Center
275 269 292 2 (6)
1,077 1,074 of which: services from CC
– Services
298 298 325
0 (8) 1,180 1,196
Depreciation and impairment of property, equipment and software
3 5 5 (40)
(40) 17 17 Amortization and impairment
of intangible assets
0 0 0
0 0
Total operating expenses 560 564
573 (1) (2) 2,231
2,235
Business division operating profit / (loss) before
tax 355 466 340
(24) 4 1,646 1,506
Key performance indicators²
Pre-tax
profit growth (%)
(23.8) 17.4 (20.2)
9.3
3.3 Cost / income ratio (%)
60.5 54.7
58.5
57.0 58.3 Net interest margin (bps)
170
167 162 2 5
167 159 Net new business volume growth for personal
banking (%)
0.6 2.5 0.6
2.4 2.3
Additional information
Average attributed equity (CHF
billion)³
3.9 3.9 4.0
0 (3) 3.9 4.1 Return on
attributed equity (%)
36.4 47.8 34.0
41.9
36.7 Risk-weighted assets (fully applied, CHF billion)⁴
34.6 34.9 33.1 (1)
5 34.6 33.1 Risk-weighted assets
(phase-in, CHF billion)⁴
34.6 34.9 34.4
(1) 1 34.6
34.4 Return on risk-weighted assets, gross (%)⁵
10.7
11.9 11.1
11.2 11.3 Leverage ratio denominator
(fully applied, CHF billion)�
153.8 162.5
165.9 (5) (7)
153.8 165.9 Goodwill and intangible assets (CHF
billion)
0.0 0.0 0.0
0.0 0.0
Business volume for personal banking (CHF billion)
148 144 143 3 3
148 143 Net new business volume for
personal banking (CHF billion)
0.2 0.9
0.2
3.4 3.2 Client assets (CHF billion)
444
437 434 2 2
444 434 Due to customers (CHF billion)
132.4
131.9 137.3 0 (4)
132.4 137.3 Loans, gross (CHF billion)
135.6 135.1 137.4 0
(1) 135.6 137.4
Secured loan portfolio as a percentage of
total loan portfolio, gross(%)
93.9 93.6 93.1
93.9 93.1
Impaired loan portfolio as a percentage of
total loan portfolio,gross (%)
0.6 0.7 0.8
0.6 0.8 Personnel
(full-time equivalents)
5,058 5,123
5,206 (1) (3)
5,058 5,206
1 Comparative figures in this table may
differ from those originally published in quarterly and annual
reports due to adjustments following organizational changes, and
restatements due to the retrospective adoption of new accounting
standards or changes in accounting policies.2 Refer to the
"Measurement of performance" section of our Annual Report 2014 for
the definitions of our key performance indicators.3 Refer to the
"Capital management" section of our Annual Report 2014 for more
information on the equity attribution framework.4 Based on the
Basel III framework as applicable for Swiss systemically relevant
banks (SRB).5 Based on phase-in Basel III risk-weighted assets.6
Calculated in accordance with Swiss SRB rules. From 31 December
2015 onwards, the Swiss SRB leverage ratio denominator calculation
is fully aligned with the BIS Basel III rules. Prior-period figures
are calculated in accordance with former Swiss SRB rules and are
therefore not fully comparable. Refer to the "Capital management"
section of this earnings release for more information.
Results: 4Q15 vs 3Q15
Profit before tax was CHF 355 million in the fourth quarter of
2015 compared with CHF 466 million in the third quarter, which
included a gain of CHF 66 million related to our investment in the
SIX Group. Adjusted profit before tax decreased by CHF 32 million
to CHF 396 million, mainly driven by a fee of CHF 45 million paid
to Wealth Management in the fourth quarter for the shift of certain
clients from Wealth Management to Personal & Corporate Banking
as a result of a detailed client segmentation review. The
annualized net new business volume growth rate for our personal
banking business was 0.6% compared with 2.5% in the prior
quarter.
Operating income
Total operating income decreased by CHF 115 million to CHF 915
million. Excluding a gain of CHF 66 million related to our
investment in the SIX Group in the third quarter, adjusted
operating income decreased by CHF 49 million, mainly driven by
the aforementioned CHF 45 million fee paid to Wealth Management.
Net interest income increased by CHF 10 million to CHF 576 million,
reflecting higher allocated income from Corporate Center – Group
Asset and Liability Management (Group ALM). Transaction-based
income decreased by CHF 42 million to CHF 196 million,
primarily due to the aforementioned fee paid to Wealth Management,
partly offset by higher allocated revenues from Group ALM. Net
credit loss expense was CHF 11 million compared with negligible
expense in the prior quarter, predominantly due to higher expenses
for newly impaired positions.
Operating expenses
Total operating expenses decreased by CHF 4 million to CHF 560
million. Excluding restructuring charges of CHF 41 million compared
with CHF 28 million, adjusted operating expenses decreased by CHF
17 million to CHF 519 million, reflecting decreases across all
expense lines. Personnel expenses decreased by CHF 3 million to CHF
211 million, mainly reflecting lower expenses for variable
compensation, partly offset by an expense for untaken vacation
accruals compared with a release of accruals in the prior quarter.
General and administrative expenses decreased by CHF 5 million to
CHF 71 million, primarily due to charitable donations in the prior
quarter. Adjusted net charges for services from other business
divisions and Corporate Center, excluding restructuring charges of
CHF 41 million compared with CHF 26 million, decreased by CHF 9
million to CHF 234 million.
Cost/income ratio
The cost/income ratio was 60.5% compared with 54.7%. On an
adjusted basis, the cost/income ratio was 56.0% compared with 55.5%
and remained within our target range of 50% to 60%.
Net interest margin
The net interest margin increased 3 basis points to 170 basis
points and remained within our target range of 140 to 180 basis
points.
Net new business volume growth for personal banking
The annualized net new business volume growth rate for our
personal banking business was 0.6% compared with 2.5% following the
typical seasonal pattern, and was below our target range of 1% to
4%. Net new client assets were positive while net new loans were
slightly negative. It is our strategy to grow our business in
high-quality loans moderately and selectively.
Asset Management
Asset Management¹
As of or for the quarter ended
% change from Year ended
CHF million, except where indicated
31.12.15
30.9.15 31.12.14 3Q15 4Q14
31.12.15 31.12.14 Net management fees²
524 479 463 9
13 1,903 1,756 Performance fees
44 23 34 91
29 154 146
Total operating
income 568 502 497
13 14 2,057 1,902
Personnel expenses
199 189 179
5 11 729 643
General and administrative expenses
66 56
87 18 (24)
232 305 Services (to) / from other business divisions and
Corporate Center
131 139 141
(6) (7) 502 478 of
which: services from CC – Services
139 143
147 (3) (5)
523 495 Depreciation and impairment of property, equipment
and software
1 1 1
0 0 2 2 Amortization and
impairment of intangible assets
1 4 3
(75) (67) 8
9
Total operating expenses 397 388
412 2 (4)
1,474 1,435
Business division operating profit / (loss)
before tax 171 114 85
50 101 584 467
Key performance indicators³
Pre-tax
profit growth (%)
50.0 (12.3) (44.8)
25.1
(18.9) Cost / income ratio (%)
69.9
77.3 82.9
71.7 75.4 Net new money growth excluding money
market flows (%)
(6.2) (5.1) (3.9)
(0.1) 4.4 Gross margin on invested assets (bps)
35 31 30 13 17
32 31 Net margin on invested assets
(bps)
11 7 5 57
120 9 8
Information by
business line
Operating income
Traditional Investments
297 292 294 2 1
1,143 1,118 O'Connor and Hedge Fund
Solutions
38 41 41
(7) (7) 198 210 Global Real
Estate
115 102 102
13 13 403 353 Infrastructure and
Private Equity
13 14 13
(7) 0 57 42 Fund Services
105 53 48 98
119 257 178
Total operating
income 568 502 497
13 14 2,057 1,902
Asset Management¹ (continued)
As of or for the
quarter ended % change from
Year ended CHF million, except where indicated
31.12.15 30.9.15 31.12.14
3Q15 4Q14 31.12.15 31.12.14
Gross margin on invested assets (bps)
Traditional
Investments
22 21 21
5 5 21 21 O'Connor and
Hedge Fund Solutions
39 43 47
(9) (17) 53 66
Global Real Estate
90 84 91
7 (1) 84 84
Infrastructure and Private Equity
55 62
58 (11) (5) 62
49
Total gross margin 35 31
30 13 17 32
31
Net new money (CHF
billion)
Traditional Investments
(12.1)
(9.6) (3.6)
(13.0) 10.7 O'Connor and Hedge Fund Solutions
0.1 0.7 (0.6)
4.3 3.3 Global
Real Estate
1.0 0.6 0.7
3.4 2.3
Infrastructure and Private Equity
0.0 (0.3)
(0.4)
(0.2) (0.5)
Total net new money
(11.0) (8.5) (3.8)
(5.4) 15.9 Net new money
excluding money market flows
(8.9) (7.6)
(5.8)
(0.7) 22.6 of which: from third parties
(7.6) (7.9) (6.4)
(7.7) 11.3 of which: from
UBS's wealth management businesses
(1.3) 0.3
0.6
7.0 11.3 Money market flows
(2.1)
(0.9) 2.0
(4.7) (6.7) of which: from third
parties
(1.8) (2.1) 1.6
(3.4) 0.0
of which: from UBS's wealth management businesses
(0.3) 1.2 0.3
(1.3) (6.7)
Invested assets (CHF billion)
Traditional Investments
550 537 574 2 (4)
550 574 O'Connor and Hedge Fund
Solutions
39 39 35
0 11 39 35 Global Real Estate
52 50 46 4
13 52 46 Infrastructure and Private
Equity
10 9 9 11
11 10 9
Total invested
assets 650 635 664
2 (2) 650 664 of which:
excluding money market funds
592 576
600 3 (1) 592
600 of which: money market funds
58 59
64 (2) (9)
58 64
Assets under administration by Fund
Services
Assets under administration (CHF billion)⁴
407 524 520 (22)
(22) 407 520 Net new assets under
administration (CHF billion)⁵
(0.1) 6.8
13.4
24.0 43.9 Gross margin on assets under administration (bps)
9 4 4 125
125 5 4
Additional
information
Average attributed equity (CHF billion)�
1.5 1.6 1.7 (6)
(12) 1.6 1.7 Return on attributed
equity (%)
45.6 28.5 20.0
36.5 27.5
Risk-weighted assets (fully applied, CHF billion)⁷
2.6 3.1 3.8 (16)
(32) 2.6 3.8 Risk-weighted assets
(phase-in, CHF billion)⁷
2.6 3.1 3.9
(16) (33) 2.6
3.9 Return on risk-weighted assets, gross (%)⁸
79.7 61.8 51.6
62.1 51.2 Leverage ratio
denominator (fully applied, CHF billion)⁹
2.7
15.4 14.9 (82) (82)
2.7 14.9 Goodwill and intangible assets (CHF
billion)
1.4 1.4 1.5
0 (7) 1.4 1.5 Personnel
(full-time equivalents)
2,277 2,532
2,323 (10) (2)
2,277 2,323
1 Comparative figures in this table may
differ from those originally published in quarterly and annual
reports due to adjustments following organizational changes, and
restatements due to the retrospective adoption of new accounting
standards or changes in accounting policies.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 Refer to the "Measurement of
performance" section of our Annual Report 2014 for the definitions
of our key performance indicators.4 This includes UBS and
third-party fund assets, for which the fund services unit provides
professional services, including fund set-up, accounting and
reporting for traditional investment funds and alternative funds.5
Inflows of assets under administration from new and existing funds
less outflows from existing funds or fund exits.6 Refer to the
"Capital management" section of our Annual Report 2014 for more
information on the equity attribution framework.7 Based on the
Basel III framework as applicable for Swiss systemically relevant
banks (SRB).8 Based on phase-in Basel III risk-weighted assets.9
Calculated in accordance with Swiss SRB rules. From 31 December
2015 onwards, the Swiss SRB leverage ratio denominator calculation
is fully aligned with the BIS Basel III rules. Prior-period figures
are calculated in accordance with former Swiss SRB rules and are
therefore not fully comparable. Refer to the "Capital management"
section of this earnings release for more information.
Results: 4Q15 vs 3Q15
Profit before tax was CHF 171 million in the fourth quarter of
2015 compared with CHF 114 million in the third quarter, mainly as
the fourth quarter included a gain of CHF 56 million on the sale of
our Alternative Fund Services (AFS) business. Adjusted profit
before tax was CHF 153 million compared with CHF 137 million, due
to higher performance fees, as well as lower operating expenses.
Excluding money market flows, net new money outflows were CHF 8.9
billion compared with CHF 7.6 billion. Both quarters included CHF
15 billion of outflows, largely from lower-margin passive products,
driven by client liquidity needs.
Operating income
Total operating income was CHF 568 million compared with CHF 502
million. Excluding the aforementioned gain on sale of our AFS
business, adjusted operating income increased by CHF 10 million to
CHF 512 million. Adjusted net management fees, excluding the
aforementioned gain, decreased by CHF 11 million to
CHF 468 million due to lower fees in Traditional
Investments, O’Connor and Hedge Fund Solutions (HFS) and Fund
Services, partly offset by increased fees in Global Real Estate.
Performance fees increased by CHF 21 million to CHF 44
million, mainly driven by European equity mandates in Traditional
Investments, as well as in Global Real Estate.
Approximately 25% of O’Connor and HFS performance fee-eligible
assets exceeded high-water marks as of 31 December 2015, an
improvement from 21% as of 30 September 2015, continuing to reflect
challenging market conditions in the fourth quarter.
Operating expenses
Total operating expenses were CHF 397 million compared with CHF
388 million. Excluding restructuring charges of CHF 38 million
compared with CHF 23 million, adjusted operating expenses decreased
by CHF 6 million to CHF 359 million. Personnel expenses
increased by CHF 10 million to CHF 199 million, mainly driven by
higher salary-related costs as a result of increased staffing
levels excluding the effect of the aforementioned sale of AFS, as
well as an expense for untaken vacation accruals compared with a
release of accruals in the prior quarter. This was partly offset by
a decrease in expenses for variable compensation. Excluding
restructuring charges of CHF 8 million, adjusted general and
administrative expenses increased by CHF 2 million to CHF 58
million. Excluding restructuring charges of CHF 27 million compared
with CHF 20 million, adjusted net charges for services
from other business divisions and Corporate Center decreased by CHF
15 million to CHF 104 million, mainly due to lower charges from
Group Technology and Group Operations.
Cost/income ratio
The cost/income ratio was 69.9% compared with 77.3%. On an
adjusted basis, the cost/income ratio was 70.1% compared with
72.7%, above our target range of 60% to 70%.
Net new money
Excluding money market flows, net new money outflows were CHF
8.9 billion compared with CHF 7.6 billion, which resulted in a
negative annualized net new money growth rate of 6.2% compared with
a negative growth rate of 5.1% in the prior quarter, both below our
target range of 3% to 5%. By client segment, net outflows from
third parties were CHF 7.6 billion compared with CHF 7.9 billion.
Both quarters included CHF 15 billion of outflows, largely
from lower-margin passive products, driven by client liquidity
needs. In the fourth quarter, this was partly offset by net inflows
into real estate and multi-asset, predominantly from clients
serviced from Switzerland. Net outflows from clients of UBS’s
wealth management businesses were CHF 1.3 billion compared with net
new money inflows of CHF 0.3 billion. Money market net outflows
were CHF 2.1 billion compared with CHF 0.9 billion.
Invested assets
Invested assets increased to CHF 650 billion as of 31 December
2015 from CHF 635 billion as of 30 September 2015 due to
positive market performance of CHF 15 billion and positive currency
translation effects of CHF 12 billion, partly offset by net new
money outflows of CHF 11 billion. As of 31 December 2015, CHF 195
billion, or 30%, of invested assets were managed in indexed
strategies and CHF 58 billion, or 9%, were money market assets. The
remaining 61% of invested assets were managed in active, non-money
market strategies. On a regional basis, 34% of invested assets
related to clients serviced from Switzerland, 23% from the
Americas, 22% from Europe, Middle East and Africa, and 21% from
Asia Pacific.
Margins on invested assets
The net margin on invested assets was 11 basis points compared
with 7 basis points. On an adjusted basis, the net margin was 10
basis points compared with 9 basis points. The gross margin was 35
basis points compared with 31 basis points and the adjusted gross
margin was 32 basis points compared with 31 basis points.
Investment Bank
Investment Bank¹
As of or for the quarter ended
% change from Year ended
CHF million, except where indicated
31.12.15
30.9.15 31.12.14 3Q15 4Q14
31.12.15 31.12.14
Corporate Client
Solutions 650 710 704
(8) (8) 2,960 3,189
Advisory
227 126 242
80 (6) 709 708 Equity
Capital Markets
197 206 278
(4) (29) 1,047
1,021 Debt Capital Markets
114 254 115
(55) (1) 691
1,005 Financing Solutions
109 106
117 3 (7)
441 497 Risk Management
2 17
(47) (88)
73 (42)
Investor Client Services 1,121
1,391 1,206 (19) (7)
5,929 5,118 Equities
733
944 908 (22) (19)
3,962 3,659 Foreign Exchange, Rates and Credit
388 446 298 (13)
30 1,967 1,459 Income
1,771 2,100 1,911 (16)
(7) 8,889 8,306 Credit loss
(expense) / recovery
(50) (12) 9
317 (68) 2
Total operating income 1,721 2,088
1,919 (18) (10)
8,821 8,308 Personnel expenses
574
699 489 (18) 17
3,220 2,964 General and administrative
expenses
318 172 462
85 (31) 841 2,671
Services (to) / from other business
divisions and CorporateCenter
740 711 741 4
0 2,817 2,711 of which: services
from CC – Services
715 680 727
5 (2) 2,731 2,658
Depreciation and impairment of property, equipment and software
7 7 6 0 17
26 32 Amortization and impairment of
intangible assets
3 3 4
0 (25) 24 15
Total
operating expenses 1,641 1,592
1,702 3 (4) 6,929
8,392
Business division operating profit / (loss) before
tax 80 496 217
(84) (63) 1,892 (84)
Key performance indicators²
Pre-tax
profit growth (%)
(83.9) (10.0)
Cost / income ratio (%)
92.7
75.8 89.1
78.0 101.0 Return on attributed equity
(%)
4.4 27.2 11.6
25.9 (1.1) Return
on assets, gross (%)
2.7 3.1 2.7
3.2
3.2 Average VaR (1-day, 95% confidence, 5 years of historical data)
12 14 13 (14)
(8) 12 12
Additional
information
Total assets (CHF billion)³
253.5
276.1 292.3 (8) (13)
253.5 292.3 Funded assets (CHF
billion)⁴
159.9 173.3 170.7
(8) (6) 159.9
170.7 Average attributed equity (CHF billion)⁵
7.3
7.3 7.5 0 (3)
7.3 7.6 Risk-weighted assets (fully applied,
CHF billion)�
62.9 68.2 66.7
(8) (6) 62.9 66.7
Risk-weighted assets (phase-in, CHF billion)�
62.9
68.2 67.0 (8) (6)
62.9 67.0 Return on risk-weighted assets,
gross (%)⁷
10.8 12.8 11.8
13.6 12.9
Leverage ratio denominator (fully applied, CHF billion)⁸
268.0 289.1 288.3 (7)
(7) 268.0 288.3 Goodwill and
intangible assets (CHF billion)
0.1 0.1
0.1 0 0 0.1
0.1 Compensation ratio (%)
32.4 33.3
25.6
36.2 35.7
Impaired loan portfolio as a percentage of
total loan portfolio,gross (%)
1.5 0.4 0.3
1.5 0.3 Personnel
(full-time equivalents)
5,243 5,301
5,194 (1) 1 5,243
5,194
1 Comparative figures in this table may
differ from those originally published in quarterly and annual
reports due to adjustments following organizational changes, and
restatements due to retrospective adoption of new accounting
standards or changes in accounting policies.2 Refer to the
"Measurement of performance" section of our Annual Report 2014 for
the definitions of our key performance indicators.3 Based on
third-party view, i.e., without intercompany balances.4 Funded
assets are defined as total IFRS balance sheet assets less positive
replacement values (PRV) and collateral delivered against
over-the-counter (OTC) derivatives.5 Refer to the "Capital
management" section of our Annual Report 2014 for more information
on the equity attribution framework.6 Based on the Basel III
framework as applicable for Swiss systemically relevant banks
(SRB).7 Based on phase-in Basel III risk-weighted assets.8
Calculated in accordance with Swiss SRB rules. From 31 December
2015 onwards, the Swiss SRB leverage ratio denominator calculation
is fully aligned with the BIS Basel III rules. Prior-period figures
are calculated in accordance with former Swiss SRB rules and are
therefore not fully comparable. Refer to the "Capital management"
section of this earnings release for more information.
Results: 4Q15 vs 3Q15
Profit before tax was CHF 80 million in the fourth quarter of
2015 compared with CHF 496 million in the third quarter. Adjusted
profit before tax was CHF 223 million compared with CHF 614
million, mainly reflecting lower revenues in Investor Client
Services and Corporate Client Solutions, and higher credit loss
expense.
Operating income
Total operating income decreased 18% to CHF 1,721 million from
CHF 2,088 million in the prior quarter. Investor Client Services
revenues were CHF 270 million lower, reflecting lower revenues in
both our Equities and Foreign Exchange, Rates and Credit
businesses. Corporate Client Solutions revenues were CHF 60 million
lower, mainly reflecting reduced capital market activity levels. In
US dollar terms, operating income decreased 21%. Net credit loss
expense increased to CHF 50 million from CHF 12 million in the
prior quarter, mainly related to the energy sector. Refer to the
“Risk management and control” section of this earnings release for
more information.
Operating expenses
Total operating expenses increased 3% to CHF 1,641 million from
CHF 1,592 million. Excluding restructuring charges of CHF 143
million compared with CHF 118 million, adjusted operating expenses
increased to CHF 1,498 million from CHF 1,474 million, mainly
due to a charge of CHF 98 million for the annual UK bank levy,
largely offset by lower performance-related variable compensation
expenses.
Personnel expenses decreased to CHF 574 million from CHF 699
million. Excluding restructuring charges of CHF 12 million in the
fourth quarter, adjusted personnel expenses decreased to CHF 562
million from CHF 699 million, mainly due to a decrease in
performance-related variable compensation expenses.
General and administrative expenses increased to CHF 318 million
from CHF 172 million. Excluding restructuring charges of CHF 2
million compared with CHF 1 million, adjusted general and
administrative expenses increased to CHF 316 million from CHF 171
million, mainly as the fourth quarter included the aforementioned
charge for the annual UK bank levy, as well as increases in
marketing and travel and entertainment expenses.
Net charges for services from other business divisions and
Corporate Center increased to CHF 740 million from CHF 711 million.
On an adjusted basis, excluding restructuring charges of CHF 129
million compared with CHF 116 million, net charges increased to CHF
611 million from CHF 595 million.
Cost / income ratio
The cost / income ratio was 92.7% compared with 75.8%. On an
adjusted basis, the cost / income ratio was 84.6% compared with
70.2%, above our target range of 70% to 80%.
Funded assets
Funded assets decreased by CHF 13 billion to CHF 160 billion as
of 31 December 2015. The decrease was mainly due to lower
collateral trading assets, reflecting reduced need for externally
sourced collateral, and client-driven reductions.
Risk-weighted assets
Fully applied risk-weighted assets (RWA) decreased by CHF 5
billion to CHF 63 billion as of 31 December 2015 and remained below
our short- to medium-term expectation of CHF 85 billion. The
decrease was mainly due to CHF 4 billion lower market risk RWA.
Refer to the “Capital Management” section of this earnings release
for more information.
Leverage ratio denominator
The fully applied Swiss systemically relevant banks (SRB)
leverage ratio denominator (LRD) was CHF 268 billion as of 31
December 2015, below our short- to medium-term expectation of CHF
325 billion. From 31 December 2015 onwards, the Swiss SRB LRD
calculation is fully aligned with the BIS Basel III rules.
Prior-period figures are calculated in accordance with the former
Swiss SRB rules and are therefore not fully comparable. Refer to
the “Capital management” section of this earnings release for more
information.
Return on attributed equity
The annualized return on attributed equity (RoAE) for the fourth
quarter was 4.4%, and 12.2% on an adjusted basis. RoAE for the full
year 2015 was 25.9%, and 31.3% on an adjusted basis, above our
target of over 15%.
Operating income by business unit
Corporate Client Solutions
Corporate Client Solutions revenues decreased 8% to CHF 650
million from CHF 710 million, primarily due to lower revenues in
Debt Capital Markets, partly offset by higher Advisory revenues. In
US dollar terms, revenues decreased 12%.
Advisory revenues increased to CHF 227 million from CHF 126
million, primarily resulting from increased participation in merger
and acquisition transactions and higher revenues from private
transactions.
Equity Capital Markets revenues decreased to CHF 197 million
from CHF 206 million due to lower revenues from private
transactions, offset by higher revenues from public offerings as
the fee pool increased 28%.
Debt Capital Markets revenues decreased to CHF 114 million from
CHF 254 million, mainly reflecting lower leveraged finance revenues
as the fee pool declined 22% and due to markdowns in our lending
book, as well as lower investment grade revenues, driven by an 8%
decline in the global fee pool.
Investor Client Services
Investor Client Services revenues decreased 19% to CHF 1,121
million from CHF 1,391 million, mainly reflecting lower revenues in
our Equities business. In US dollar terms, revenues decreased
22%.
Equities revenues decreased to CHF 733 million from CHF 944
million, primarily due to lower revenues in Derivatives, as well as
in Cash. Cash revenues decreased to CHF 281 million from CHF 362
million, mainly due to lower commission income as a result of lower
client activity levels. Derivatives revenues decreased to CHF 95
million from CHF 247 million, mainly driven by weaker trading
revenues and lower client activity, primarily in Europe, Middle
East and Africa and Asia Pacific. Financing Services revenues
increased to CHF 359 million from CHF 351 million.
Foreign Exchange, Rates and Credit revenues decreased to CHF 388
million from CHF 446 million, mainly reflecting higher client
activity levels in the prior quarter as volatility increased
following the actions of the People’s Bank of China in August
2015.
Corporate Center
Corporate Center¹
As of or for the quarter ended
% change from Year ended
CHF million, except where indicated
31.12.15
30.9.15 31.12.14 3Q15 4Q14
31.12.15 31.12.14
Total operating
income (183) (280) (462)
(35) (60) 315
(823) Personnel expenses
1,059 991
1,085 7 (2) 4,049
3,993 General and administrative expenses
1,346 1,699 1,432 (21)
(6) 5,311 4,650 Services (to) /
from business divisions
(2,113) (2,004)
(2,091) 5 1
(7,894) (7,580)
Depreciation and impairment of property,
equipment andsoftware
248 216 206 15
20 868 762 Amortization and
impairment of intangible assets
5 5 2
0 150 21 6
Total operating expenses 546 906
634 (40) (14)
2,354 1,832
Operating profit / (loss) before tax
(729) (1,186) (1,096)
(39) (33) (2,040) (2,655)
Additional information
Average
attributed equity (CHF billion)²
24.7 26.4
19.8 (6) 25
25.8 20.5 Total assets (CHF billion)³
354.5
366.0 427.6 (3) (17)
354.5 427.6 Risk-weighted assets (fully
applied, CHF billion)⁴
60.2 61.7 65.8
(2) (9) 60.2
65.8 Risk-weighted assets (phase-in, CHF billion)⁴
65.0 66.1 67.9 (2)
(4) 65.0 67.9 Leverage ratio
denominator (fully applied, CHF billion)⁵
291.2
289.4 327.2 1 (11)
291.2 327.2 Personnel (full-time equivalents)
23,671 23,618 23,773
0 0 23,671 23,773
1 Comparative figures in this table may
differ from those originally published in quarterly and annual
reports due to adjustments following organizational changes, and
restatements due to the retrospective adoption of new accounting
standards or changes in accounting policies.2 Refer to the "Capital
management" section of our Annual Report 2014 for more information
on the equity attribution framework.3 Based on third-party view,
i.e., without intercompany balances.4 Based on the Basel III
framework as applicable for Swiss systemically relevant banks
(SRB).5 Calculated in accordance with Swiss SRB rules. From 31
December 2015 onwards, the Swiss SRB leverage ratio denominator
calculation is fully aligned with the BIS Basel III rules.
Prior-period figures are calculated in accordance with former Swiss
SRB rules and are therefore not fully comparable. Refer to the
"Capital management" section of this earnings release for more
information.
Corporate Center – Services
Corporate Center – Services¹
As of or for the
quarter ended % change from
Year ended CHF million, except where indicated
31.12.15 30.9.15 31.12.14
3Q15 4Q14 31.12.15 31.12.14
Total operating income (54) (38)
14 42 241
37 Personnel expenses
1,033 955
1,050 8 (2) 3,903
3,843 General and administrative expenses
1,195 1,122 1,224 7
(2) 4,483 4,123 Depreciation and
impairment of property, equipment and software
248
216 206 15 20
868 762 Amortization and impairment of
intangible assets
5 5 2
0 150 21 6
Total operating expenses before
allocations to business divisions and other CC units
2,481 2,298 2,482
8 0 9,274 8,734 Services (to) /
from business divisions and other CC units
(2,191)
(2,079) (2,219) 5 (1)
(8,215) (8,046) of which: services to
Wealth Management
(627) (555) (584)
13 7 (2,209)
(2,122) of which: services to Wealth Management Americas
(311) (299) (316)
4 (2) (1,193) (1,121) of which:
services to Personal & Corporate Banking
(298)
(298) (325) 0 (8)
(1,180) (1,196) of which: services to Asset
Management
(139) (143) (147)
(3) (5) (523)
(495) of which: services to Investment Bank
(715)
(680) (727) 5 (2)
(2,731) (2,658) of which: services to CC –
Group ALM
(23) (38) (21)
(39) 10 (95) (82) of
which: services to CC – Non-core and Legacy Portfolio
(81) (74) (112) 9
(28) (314) (411)
Total operating
expenses 291 219 263
33 11 1,059 688
Operating profit / (loss) before tax (345)
(257) (249) 34 39
(818) (652)
Additional information
Average attributed equity (CHF
billion)²
18.8 20.4 12.5
(8) 50 19.6 12.3 Total
assets (CHF billion)³
22.6 21.1 19.9
7 14 22.6
19.9 Risk-weighted assets (fully applied, CHF billion)⁴
23.6 22.3 23.0 6 3
23.6 23.0 Risk-weighted assets
(phase-in, CHF billion)⁴
28.3 26.8 25.1
6 13 28.3
25.1 Leverage ratio denominator (fully applied, CHF billion)⁵
4.8 3.7 (2.6) 30
4.8 (2.6) Personnel
(full-time equivalents)
23,470 23,412
23,517 0 0 23,470
23,517
1 Comparative figures in this table may
differ from those originally published in quarterly and annual
reports due to adjustments following organizational changes, and
restatements due to retrospective adoption of new accounting
standards or changes in accounting policies.2 Beginning in the
third quarter of 2015, Group items are shown within Corporate
Center – Services. Prior periods have been restated. Refer to the
"Capital management" section of our Annual Report 2014 for more
information on the equity attribution framework.3 Based on
third-party view, i.e., without intercompany balances.4 Based on
the Basel III framework as applicable for Swiss systemically
relevant banks (SRB).5 Calculated in accordance with Swiss SRB
rules. From 31 December 2015 onwards, the Swiss SRB leverage ratio
denominator calculation is fully aligned with the BIS Basel III
rules. Prior-period figures are calculated in accordance with
former Swiss SRB rules and are therefore not fully comparable.
Refer to the "Capital management" section of this earnings release
for more information.
Results: 4Q15 vs 3Q15
Corporate Center – Services recorded a loss before tax of CHF
345 million in the fourth quarter of 2015 compared with a loss
before tax of CHF 257 million in the prior quarter. The fourth
quarter included total operating expenses remaining in Corporate
Center – Services after allocations of CHF 291 million compared
with CHF 219 million.
Operating income
Operating income was negative CHF 54 million compared with
negative CHF 38 million and mainly related to funding costs.
Operating expenses
On a gross basis before allocations to the business divisions
and other Corporate Center units, total operating expenses
increased by CHF 183 million to CHF 2,481 million. Restructuring
charges were CHF 396 million compared with CHF 283 million, largely
related to our transitioning activities to nearshore and offshore
locations. Excluding restructuring charges and a credit of CHF 2
million related to a change to retiree benefit plans in the US in
the third quarter, adjusted operating expenses before allocations
increased by CHF 68 million to CHF 2,085 million.
Personnel expenses before allocations increased by CHF 78
million to CHF 1,033 million. On an adjusted basis, excluding net
restructuring charges of CHF 144 million compared with CHF 116
million, as well as the aforementioned credit of CHF 2 million in
the third quarter, personnel expenses increased by CHF 48 million,
mainly due to an expense for untaken vacation accruals compared
with a release of accruals in the prior quarter. General and
administrative expenses increased by CHF 73 million to CHF 1,195
million. Excluding net restructuring charges of CHF 252 million
compared with CHF 167 million, adjusted general and administrative
expenses decreased by CHF 12 million, mainly as the prior quarter
included higher costs related to our new brand campaign and our
education initiative. Depreciation and impairment of property,
equipment and software increased to CHF 248 million from CHF 216
million, mainly reflecting an increase in the depreciation of
internally generated capitalized software.
Net charges for services to business divisions and other
Corporate Center units were CHF 2,191 million compared with CHF
2,079 million. Excluding restructuring charges of CHF 377 million
compared with CHF 281 million and a credit of CHF 2 million related
to a change to retiree benefit plans in the US in the third
quarter, net charges for services to business divisions and other
Corporate Center units were CHF 1,814 million compared
with CHF 1,800 million.
Total operating expenses remaining in Corporate Center –
Services after allocations increased to CHF 291 million
from CHF 219 million, largely as the full-year costs incurred by
Corporate Center – Services exceeded the cost allocations to the
business divisions and Non-core and Legacy Portfolio which were
agreed as part of the annual business planning cycle. Furthermore,
the fourth quarter included the aforementioned expense for untaken
vacation accruals compared with a release of accruals in the prior
quarter.
Corporate Center – Group ALM
Corporate Center – Group ALM¹
As of or for the
quarter ended % change from
Year ended CHF million, except where indicated
31.12.15 30.9.15 31.12.14
3Q15 4Q14 31.12.15 31.12.14
Gross income excluding own credit
95 59
161 61 (41) 600
831 Allocations to business divisions and other CC units
(189) (207) (330)
(9) (43) (876) (1,120) of which:
Wealth Management
(118) (117) (138)
1 (14) (471)
(481) of which: Wealth Management Americas
(27) (25) (28) 8
(4) (104) (116) of which: Personal
& Corporate Banking
(111) (100)
(130) 11 (15)
(421) (461) of which: Asset Management
(3)
(4) (7) (25) (57)
(15) (27) of which: Investment Bank
69 55 19 25 263
211 100 of which: CC – Services
(22) (37) (55) (41)
(60) (145) (217) of which: CC –
Non-core and Legacy Portfolio
23 21 8
10 188 71
82 Own credit²
35 32 70
9 (50) 553 292
Total
operating income (59) (116) (100)
(49) (41) 277
2 Personnel expenses
7 8 8
(13) (13) 30
26 General and administrative expenses
9
4 9 125 0
21 21 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
(20) (17) (10)
18 100 (56)
(47) of which: Wealth Management
(10) (13)
(4) (23) 150
(37) (17) of which: Wealth Management Americas
(2) (2) (1) 0 100
(6) (6) of which: Personal &
Corporate Banking
(5) (7) (2)
(29) 150 (19) (8)
of which: Asset Management
0 0 (1)
(100) 0
(3) of which: Investment Bank
(17) (22)
(12) (23) 42
(59) (54) of which: CC – Services
23
38 21 (39) 10
95 82 of which: CC – Non-core and Legacy
Portfolio
(8) (10) (10)
(20) (20) (29) (40)
Total operating expenses (3) (5)
6 (40) (5)
0
Operating profit / (loss) before tax
(56) (111) (106) (50)
(47) 282 2
Additional information
Average attributed equity (CHF
billion)³
3.2 3.2 3.3
0 (3) 3.3 3.2 Total
assets (CHF billion)⁴
237.5 236.9 237.9
0 0 237.5
237.9 Risk-weighted assets (fully applied, CHF billion)⁵
6.0 7.3 7.1 (18)
(15) 6.0 7.1 Risk-weighted assets
(phase-in, CHF billion)⁵
6.0 7.3 7.1
(18) (15) 6.0
7.1 Leverage ratio denominator (fully applied, CHF billion)�
240.2 227.0 236.3
6 2 240.2 236.3 Personnel
(full-time equivalents)
125 125 120
0 4 125 120
1 Comparative figures in this table may
differ from those originally published in quarterly and annual
reports due to adjustments following organizational changes, and
restatements due to retrospective adoption of new accounting
standards or changes in accounting policies.2 Represents own credit
changes on financial liabilities designated at fair value through
profit or loss. The cumulative own credit gain for such debt held
on 31 December 2015 amounts to CHF 0.3 billion. This gain has
reduced the fair value of financial liabilities designated at fair
value recognized on our balance sheet.3 Refer to the "Capital
management" section of our Annual Report 2014 for more information
on the equity attribution framework.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
(SRB).6 Calculated in accordance with Swiss SRB rules. From 31
December 2015 onwards, the Swiss SRB leverage ratio denominator
calculation is fully aligned with the BIS Basel III rules.
Prior-period figures are calculated in accordance with former Swiss
SRB rules and are therefore not fully comparable. Refer to the
"Capital management" section of this earnings release for more
information.
Results: 4Q15 vs 3Q15
Corporate Center – Group Asset and Liability Management recorded
a loss before tax of CHF 56 million in the fourth quarter of 2015
compared with a loss before tax of CHF 111 million in the prior
quarter.
Operating income
Gross income excluding own credit was CHF 95 million in the
fourth quarter and included a loss of CHF 257 million related
to the buyback of debt in a tender offer, as well as a net foreign
currency translation gain of CHF 115 million related to the
disposal of subsidiaries compared with a loss of CHF 27 million.
Adjusted for these items, gross income excluding own credit was CHF
237 million compared with CHF 86 million.
Gross revenues from balance sheet risk management activities
were CHF 432 million compared with CHF 406 million,
mainly as revenues from banking book interest rate risk management
performed on behalf of Wealth Management and Personal &
Corporate Banking increased by CHF 21 million to CHF 207 million.
Moreover, revenues related to high-quality liquid assets increased
by CHF 11 million to CHF 95 million.
Hedging activities resulted in a gain of CHF 98 million compared
with a loss of CHF 118 million. The fourth quarter included a gain
of CHF 81 million on interest rate derivatives held to economically
hedge high-quality liquid assets, driven by an increase in US
dollar interest rates, compared with a loss of CHF 201 million in
the prior quarter. Unlike fair value changes in hedging interest
rate derivatives, which are recognized immediately through the
income statement, the high-quality liquid assets that are hedged
are held as financial investments classified as available-for-sale
with unrealized fair value changes recorded in other comprehensive
income within equity. Moreover, the fourth quarter included gains
of CHF 42 million on cross-currency basis swaps held as economic
hedges, compared with gains of CHF 29 million. These gains were
offset by a loss of CHF 44 million related to our cash flow hedges
compared with a gain of CHF 8 million.
Group ALM incurred funding costs of CHF 292 million in the
fourth quarter compared with CHF 201 million in the prior quarter,
mainly as the fourth quarter included a fair value gain of CHF 7
million on certain internal funding transactions compared with a
gain of CHF 60 million in the prior quarter. Furthermore, funding
costs increased due to the full-quarter effect of recent issuances
of additional tier 1 capital and senior unsecured debt.
Allocations to the business divisions and other Corporate Center
units mainly consist of income generated from interest-rate risk
management activities and the investment of the Group’s equity,
offset by charges for liquidity and funding, various collateral
management activities and costs of issuance of capital
instruments.
In the fourth quarter of 2015, Group ALM allocated revenues of
CHF 189 million compared with CHF 207 million. This
decline was mainly due to fees paid related to the issuance during
the fourth quarter of senior unsecured debt contributing to our
total loss-absorbing capacity, and increased funding costs, partly
offset by higher income generated from interest rate risk
management activities.
Own credit on financial liabilities designated at fair value was
a gain of CHF 35 million compared with CHF 32 million. In
the fourth quarter of 2015, we made further enhancements to our
valuation methodology for the own credit component of the fair
value of financial liabilities designated at fair value. This
accounting change in estimate resulted in a gain of CHF 260
million, which was largely offset by losses recognized due to a
tightening of credit spreads in the fourth quarter. Additionally,
we will adopt the IFRS 9 own credit presentation requirements in
the first quarter of 2016. Under IFRS 9, changes in the fair value
of financial liabilities designated at fair value through profit
and loss related to own credit will be recognized in Other
comprehensive income and will not be reclassified to the Income
statement.
Group ALM retains central funding costs, certain income from
hedging activities, own credit on financial liabilities designated
at fair value, as well as the aforementioned loss related to the
buyback of debt and foreign currency translation gains and losses
related to the disposal of subsidiaries. Net operating income
remaining in Group ALM was negative CHF 59 million compared with
negative CHF 116 million.
Corporate Center – Non-core and Legacy Portfolio
Corporate Center – Non-core and Legacy Portfolio¹
As of or for the quarter ended % change
from Year ended CHF million, except where
indicated
31.12.15 30.9.15 31.12.14
3Q15 4Q14 31.12.15
31.12.14 Income
(72) (114) (378)
(37) (81) (195)
(863) Credit loss (expense) / recovery²
2
(12) 1 100
(8) 2
Total operating income
(71) (126) (376) (44)
(81) (203) (862) Personnel
expenses
19 28 27
(32) (30) 116 124 General and
administrative expenses
142 573 199
(75) (29) 807
507 Services (to) / from business divisions and other CC
units
97 91 138 7
(30) 378 513 of which: services
from CC – Services
81 74 112
9 (28) 314 411
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 258
692 364 (63) (29)
1,301 1,144
Operating profit / (loss) before
tax (329) (818) (741)
(60) (56) (1,503) (2,005)
Additional information
Average
attributed equity (CHF billion)³
2.7 2.8
4.0 (4) (33)
2.9 4.9 Total assets (CHF billion)⁴
94.4 108.0 169.8 (13)
(44) 94.4 169.8 Risk-weighted
assets (fully applied, CHF billion)⁵
30.7 32.1
35.7 (4) (14)
30.7 35.7 Risk-weighted assets (phase-in, CHF
billion)⁵
30.7 32.1 35.7
(4) (14) 30.7 35.7
Leverage ratio denominator (fully applied, CHF billion)�
46.2 58.8 93.4 (21)
(51) 46.2 93.4 Personnel
(full-time equivalents)
77 82 137
(6) (44) 77
137
1 Comparative figures in this table may
differ from those originally published in quarterly and annual
reports due to adjustments following organizational changes, and
restatements due to retrospective adoption of new accounting
standards or changes in accounting policies.2 Includes credit loss
(expense) / recovery on reclassified and acquired securities.3
Refer to the "Capital management" section of our Annual Report 2014
for more information on the equity attribution framework.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 (SRB).6 Calculated in accordance with Swiss SRB
rules. From 31 December 2015 onwards, the Swiss SRB leverage ratio
denominator calculation is fully aligned with the BIS Basel III
rules. Prior-period figures are calculated in accordance with
former Swiss SRB rules and are therefore not fully comparable.
Refer to the "Capital management" section of this earnings release
for more information.
Results: 4Q15 vs 3Q15
Corporate Center – Non-core and Legacy Portfolio recorded a loss
before tax of CHF 329 million in the fourth quarter compared with a
loss before tax of CHF 818 million, mainly due to a CHF 483 million
decrease in net charges for provisions for litigation, regulatory
and similar matters.
Operating income
Income was negative CHF 72 million compared with negative CHF
114 million and mainly related to losses from novation and unwind
activities, and to valuation losses on financial assets designated
at fair value. The improved result in the fourth quarter was mainly
due to gains from certain equity positions and from the settlement
of litigation claims.
Operating expenses
Total operating expenses decreased to CHF 258 million from CHF
692 million, predominantly as net charges for provisions for
litigation, regulatory and similar matters decreased by CHF 483
million to CHF 51 million. This decrease was partly offset by a
charge of CHF 50 million for the annual UK bank levy.
Balance sheet assets
Balance sheet assets decreased to CHF 94 billion as of 31
December 2015 from CHF 108 billion. Positive replacement values
(PRV) decreased by CHF 10 billion, mainly related to our
over-the-counter (OTC) rates derivative exposures, where the
movement was driven by our ongoing reduction activity. Within our
credit portfolio, PRV were largely unchanged at approximately CHF 1
billion. Collateral delivered against OTC derivatives decreased by
CHF 3 billion. Funded assets and PRV classified as Level 3 in the
fair value hierarchy totaled CHF 2 billion as of 31 December
2015.
Risk-weighted assets
Fully applied risk-weighted assets decreased by CHF 1 billion to
CHF 31 billion as of 31 December 2015, mainly driven by lower
credit risk RWA resulting from a reduction in our derivatives
exposure and lower market risk RWA, partly offset by increased
operational risk RWA. Refer to the “Capital Management” section of
this earnings release for more information.
Risk management and control
Credit risk exposures for the Group were overall broadly
unchanged in the fourth quarter of 2015. Within the Investment
Bank, we saw a strong flow of loan underwriting activity during the
quarter, which gave rise to concentrated credit risk exposure,
albeit of a temporary nature. This activity was predominantly
investment grade, driven by strategic mergers and acquisitions.
Within our wealth management businesses, margin calls related to
security-backed lending decreased from the higher levels observed
during the third quarter, as the global market sell-off eased in
the fourth quarter.
Net credit loss expense for the quarter was CHF 59 million and,
while remaining low in the context of the overall size of our
lending portfolios, mainly reflected new and increased allowances
for energy-related exposures in the Investment Bank.
Due to the current low price environment in commodities,
exposures to certain counterparties in the energy sector currently
carry more risk than in prior periods. As of 31 December 2015 our
total net lending exposure to the oil and gas sector, predominantly
recorded within the Investment Bank, was CHF 6.1 billion, mainly in
North America. About half of this exposure was to the integrated
and mid-stream segments that we expect to be less affected by the
currently low energy price levels. Exposures potentially vulnerable
to low energy prices are closely monitored and macro hedges are in
place. Nevertheless, a sustained period of depressed energy prices
could result in increased credit loss expense for this sub-segment
of our portfolio.
Net credit loss expense in our personal and corporate banking
business remained at low levels. Nevertheless, we remain mindful
that the continued strength of the Swiss franc could have a
negative effect on the economy and for exporters in particular, and
we continue to closely monitor developments in the Swiss economy.
Were these negative effects to materialize, they could adversely
affect some of our counterparties and cause an increase in credit
loss expense in future periods.
We continue to manage market risks at low levels, with
volatility in our risk profile and value at risk largely driven by
positions arising from client facilitation, as well as option
expiries.
Although we have no significant concerns regarding our direct
exposures to China, uncertainties regarding macroeconomic
developments in the country, and emerging markets more broadly, as
well as weakening of commodity prices, particularly oil, have given
rise to increased market volatility, which could well persist
throughout 2016.
The potential effects of a China-led global economic slowdown
have been captured in the calculation of our post-stress fully
applied common equity tier 1 (CET1) capital ratio following the
replacement of the Eurozone Crisis scenario with a new Global
Recession scenario as the binding scenario in our combined stress
testing framework during the fourth quarter. Our objective to
maintain a post-stress fully applied CET1 capital ratio of at least
10%, as well as maintaining a fully applied CET1 capital ratio of
at least 13%, are conditions to return at least 50% of net profit
attributable to our shareholders. As of 31 December 2015, and
applying the new Global Recession scenario, our post-stress fully
applied CET1 capital ratio exceeded the 10% objective.
The Global Recession scenario assumes that a hard landing in
China would lead to severe contagion of Asian and emerging markets
economies, while multiple debt restructurings in Europe, related
direct losses for European banks and fear of a eurozone breakup
would severely affect developed markets such as Switzerland, the UK
and the US.
Balance sheet: 31.12.15 vs 30.9.15
As of 31 December 2015, our balance sheet assets stood at CHF
943 billion, a decrease of CHF 37 billion from 30 September 2015,
mainly due to a reduction in positive replacement values (PRV) in
both Corporate Center – Non-core and Legacy Portfolio and the
Investment Bank. Funded assets, which represent total assets
excluding positive replacement values and collateral delivered
against over-the-counter derivatives, decreased by CHF 14 billion
to CHF 756 billion. Excluding currency effects, funded assets
decreased by approximately CHF 24 billion, primarily reflecting
reductions in collateral trading, lower cash and balances with
central banks and decreased trading portfolio assets.
Assets
PRV decreased by CHF 19 billion, primarily reflecting a CHF 10
billion reduction in Corporate Center – Non-core and Legacy
Portfolio, mainly due to our ongoing reduction activity, and an CHF
8 billion decrease in the Investment Bank, mainly in our Equities
business, reflecting a client-driven reduction in notional volumes,
as well as fair value decreases. Collateral trading assets, which
consist of reverse repurchase agreements and cash collateral on
securities borrowed, decreased by CHF 8 billion, mainly in the
Investment Bank, reflecting reduced need for externally sourced
collateral and client-driven reductions. Cash and balances with
central banks decreased by CHF 5 billion, primarily due to
repurchases of long-term debt, as well as a rebalancing of our
high-quality liquid assets. Trading portfolio assets were reduced
by CHF 3 billion. Lending assets were broadly unchanged, but
decreased by approximately CHF 4 billion excluding currency
effects, primarily reflecting reduced Lombard lending in Wealth
Management.
Liabilities
Total liabilities decreased by CHF 38 billion to CHF 886 billion
as of 31 December 2015. Negative replacement values decreased by
CHF 17 billion, broadly in line with the aforementioned decreases
in PRV. Collateral trading liabilities declined by CHF 7 billion,
primarily in Corporate Center – Group ALM. Trading portfolio
liabilities decreased by CHF 6 billion, mainly due to client-driven
reductions in the Investment Bank. Short-term borrowings, which
include short-term debt issued and interbank borrowing, decreased
by CHF 5 billion, mainly due to net maturities of certificates of
deposit. Long-term debt outstanding, which consists of financial
liabilities designated at fair value and long-term debt issued,
decreased by CHF 3 billion. This decrease primarily resulted from
the repurchase of certain senior and subordinated debt and covered
bonds with an aggregate principal amount equivalent to CHF 6.1
billion through a tender offer, partly offset by the issuance of
euro-denominated senior unsecured debt in an amount equivalent to
CHF 1.4 billion, which will contribute to our total loss-absorbing
capacity (TLAC). Customer deposits increased by CHF 4 billion,
reflecting net inflows in Wealth Management Americas, partly offset
by net outflows in Wealth Management.
Equity
Equity attributable to UBS Group AG shareholders increased by
CHF 1,236 million to CHF 55,313 million. Total comprehensive income
attributable to UBS Group AG shareholders was CHF 1,126 million,
reflecting the net profit of CHF 949 million and other
comprehensive income (OCI) of CHF 177 million. Fourth quarter OCI
included foreign currency translation gains of CHF 452 million and
net gains on defined benefit plans of CHF 202 million, partly
offset by negative OCI related to cash flow hedges and financial
investments classified as available-for-sale of CHF 419 million and
CHF 59 million, respectively. Share premium increased by CHF 160
million mainly due to an increase in employee share-based
compensation which primarily related to the amortization of
deferred equity compensation awards. Net treasury share activity
reduced equity attributable to UBS Group AG shareholders by CHF 50
million.
Refer to “Total comprehensive income attributable to UBS Group
AG shareholders: 4Q15 vs 3Q15” in the “Group performance” section
of this earnings release and to the “Statement of changes in
equity” in our fourth quarter 2015 financial supplement which is
available in the section “Quarterly reporting” at
www.ubs.com/investors for more information.
Intra-quarter balances
Balance sheet positions disclosed in this section represent
quarter-end positions. Intra-quarter balance sheet positions
fluctuate in the ordinary course of business and may differ from
quarter-end positions.
Liquidity and funding management
Our liquidity and funding position remained strong during the
fourth quarter of 2015. Our three-month average liquidity coverage
ratio was 128% compared with 127% in the prior quarter, while our
pro-forma net stable funding ratio was 106% compared with 107%.
Capital management1
Capital ratios: 31.12.15 vs 30.9.15
Our fully applied common equity tier 1 (CET1) capital ratio
increased 0.2 percentage points to 14.5%, due to a CHF 9 billion
decrease in risk-weighted assets (RWA), partly offset by a CHF 0.9
billion decrease in CET1 capital. On a phase-in basis, our CET1
capital ratio increased 0.7 percentage points to 19.0%, resulting
from a CHF 8 billion decrease in RWA, partly offset by a decrease
of CHF 0.1 billion in CET1 capital.
Our tier 1 capital ratio increased 0.5 percentage points to
17.4% on a fully applied basis and 1.0 percentage points to 21.0%
on a phase-in basis. Both increases resulted from the
aforementioned changes in RWA and CET1 capital, as well as from an
increase in additional tier 1 (AT1) capital.
Our total capital ratio increased 0.9 percentage points to 22.9%
on a fully applied basis and 1.0 percentage points to 26.8% on a
phase-in basis.
Post-stress CET1 capital ratio
Our capital returns policy targets a pay-out ratio of at least
50% of net profit attributable to our shareholders, subject to
maintaining a fully applied CET1 capital ratio of at least 13% and
a post-stress fully applied CET1 capital ratio of at least 10%. As
of 31 December 2015, our post-stress CET1 capital ratio exceeded
the 10% objective. Refer to the “Risk management and control”
section of this earnings release for more information.
Eligible capital: 31.12.15 vs 30.9.15
Tier 1 capital
Our fully applied CET1 capital decreased by CHF 0.9 billion to
CHF 30.0 billion, mainly reflecting accruals for dividends to
shareholders for the financial year 2015 and tax effects, partly
offset by the operating profit before tax and the effects of
defined benefit plans. Our phase-in CET1 capital decreased slightly
by CHF 0.1 billion to CHF 40.4 billion, primarily due to
the same factors that contributed to the decrease in our fully
applied CET1 capital, largely offset by deferred tax assets
recognized for tax loss carry-forwards.
1 Unless otherwise indicated, all information in this section is
based on the Basel III framework as applicable for Swiss
systemically relevant banks (SRB).
Our AT1 capital increased by CHF 0.6 billion to CHF 6.2 billion
on a fully applied basis and to CHF 4.2 billion on a phase-in
basis. Both increases were mainly due to high-trigger
loss-absorbing deferred contingent capital plan (DCCP) awards to be
granted to employees for the performance year 2015.
Tier 2 capital
Our tier 2 capital increased slightly to CHF 11.2 billion on a
fully applied basis. On a phase-in basis, our tier 2 capital
decreased by CHF 0.6 billion to CHF 12.2 billion, mainly due to the
repurchase of certain subordinated debt as part of the
aforementioned tender offer.
Risk-weighted assets: 31.12.15 vs 30.9.15
RWA decreased by CHF 9 billion to CHF 208 billion on a fully
applied basis and by CHF 8 billion to CHF 212 billion on
a phase-in basis. Fully applied RWA were below our short- to
medium-term expectation of around CHF 250 billion. The decrease in
the fourth quarter mainly reflected book size reductions of
CHF 11 billion, partly offset by currency effects of CHF
2 billion and a CHF 1 billion net effect from methodology changes
and regulatory add-ons mandated by our regulator.
The decrease in RWA of CHF 11 billion related to book size was
driven by CHF 7 billion lower credit risk RWA related to derivative
exposures, primarily reflecting the ongoing reduction activity in
Corporate Center – Non-core and Legacy Portfolio, as well as
client-driven reductions in notional volumes and fair value
decreases, both in the Investment Bank. Furthermore, market risk
RWA decreased by CHF 4 billion, primarily due to a reduction in our
structural position in the Chinese onshore currency, as well as
risk reductions due to market movements, primarily in the
Investment Bank.
The net increase in RWA of CHF 1 billion due to methodology
changes and regulatory add-ons was driven by an increase in the
internal ratings-based multiplier on Investment Bank exposure to
corporates and income-producing real estate, as well as an increase
related to a change in the treatment of cash held at central banks
and highly-rated securities held for liquidity purposes. These
increases were partly offset by a decrease in market risk RWA
following a reduction in backtesting exceptions occurring within a
250-day window, resulting in a lower value at risk (VaR) multiplier
used to convert regulatory VaR and stressed VaR to a capital
charge. Refer to the “Capital management" section of our fourth
quarter 2015 financial supplement, which is available in the
section “Quarterly reporting” at www.ubs.com/investors, for more
information.
Sensitivity to currency movements
A significant portion of our Basel III capital and RWA is
denominated in US dollars, euros, British pounds and other foreign
currencies. Limits are in place for the sensitivity of both CET1
capital and the capital ratio to a ±10% change in value of the
Swiss franc against other currencies. We estimate that a 10%
depreciation of the Swiss franc against other currencies would have
increased fully applied CET1 capital by CHF 933 million as of 31
December 2015 (30 September 2015: CHF 903 million) and reduced the
fully applied CET1 capital ratio by 17 basis points (30 September
2015: 23 basis points). Conversely, we estimate that a 10%
appreciation of the Swiss franc against other currencies would have
reduced fully applied CET1 capital by CHF 844 million
(30 September 2015: CHF 817 million) and increased the fully
applied CET1 capital ratio by 17 basis points (30 September 2015:
23 basis points). This sensitivity does 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. As of 31 December 2015, a 1% appreciation of
the US dollar against the Swiss franc would cause an increase of
approximately CHF 4 billion in the leverage ratio denominator.
Incorporation of BIS LRD into the Swiss SRB leverage ratio
In November 2014, the Swiss Federal Market Supervisory Authority
(FINMA) published the circular “Leverage ratio – banks.” This
circular aligned the calculation of the leverage ratio denominator
(LRD) with the rules issued by the Bank for International
Settlements (BIS) in the “Basel III leverage ratio framework and
disclosure requirements” document issued in January 2014. Effective
31 December 2015, we implemented the guidance of this FINMA
circular, ahead of its mandatory effective date of 1 January
2016.
The Swiss SRB leverage ratio and Swiss SRB LRD for periods prior
to 31 December 2015 are calculated in accordance with the former
Swiss SRB denominator definition and are therefore not fully
comparable with 31 December 2015 figures. However, comparable
figures as of 30 September 2015 are provided on a pro-forma basis
at the Group level.
The transition to the new Swiss SRB LRD rules resulted in an
overall reduction of our LRD calculated on a spot basis, mainly due
to positive effects from off-balance sheet items, as well as from
changes in the scope of consolidation. These positive effects were
partly offset by the effect of more stringent requirements on the
treatment of securities financing transactions and derivative
exposures. There is no change to the calculation of the leverage
ratio numerator under the new Swiss SRB rules.
Leverage ratio: 31.12.15 vs 30.9.15
As of 31 December 2015, our Swiss SRB leverage ratio was 5.3% on
a fully applied basis and 6.2% on a phase-in basis. The
fully-applied LRD decreased by CHF 38 billion to CHF 898 billion
from the pro-forma comparative number of CHF 936 billion and was
below our short- to medium-term expectation of
CHF 950 billion. The decrease in the fourth quarter
mainly reflected book size reductions of CHF 37 billion and a
decrease of CHF 14 billion related to methodology changes, partly
offset by currency effects of CHF 13 billion.
The decrease in LRD related to book size was driven by a CHF 15
billion decline in on-balance sheet assets excluding derivatives
and securities financing transactions, mainly due to lower cash and
balances with central banks, resulting from the aforementioned
repurchase of certain senior and subordinated debt and covered
bonds as well as net maturities of short-term debt, partly offset
by the issuance of long-term unsecured debt. Moreover, derivative
exposures decreased by CHF 10 billion, mainly due to the ongoing
reduction activity in Corporate Center – Non-core and Legacy
Portfolio, as well as client-driven reductions in notional volumes
and fair value decreases, both in the Investment Bank. In addition,
exposures from securities financing transactions (SFT) decreased by
CHF 6 billion, reflecting a reduced need for externally sourced
collateral and client-driven reductions. Off-balance sheet items
decreased by CHF 6 billion, mainly reflecting active portfolio
management.
The decrease in LRD related to methodology changes was primarily
driven by a decrease in SFT counterparty credit risk due to the
consideration of incremental collateral and netting benefits, as
well as a reassessment of the treatment of forward starting
transactions.
Refer to the “Capital management” section of our fourth quarter
2015 financial supplement which is available in the section
“Quarterly reporting” at www.ubs.com/investors for more
information.
Regulatory and legal developments
Swiss Federal Department of Finance issues draft revision of
Swiss too big to fail regulation
In December 2015, the Federal Department of Finance published
for consultation a draft revised too big to fail (TBTF) ordinance
based on the cornerstones announced by the Swiss Federal Council in
October 2015. In line with the announced cornerstones, the proposal
would revise the capital and leverage ratio requirements for Swiss
systemically relevant banks and includes new gone concern
requirements. The draft ordinance and the related explanatory
report, would also, among other things, decrease the maximum
capital requirement reduction for improved resolvability (from 2022
onwards) and set minimum requirements for eligibility of debt
instruments as loss-absorbing capital. The consultation period runs
until 15 February 2016 and the new capital rules are expected to
come into force as of 1 July 2016.
Basel Committee on Banking Supervision proposes changes to the
standardized approach for credit risk
The Basel Committee on Banking Supervision (BCBS) has continued
its review of the capital framework to balance simplicity and risk
sensitivity, and to promote comparability. The BCBS released a
second consultative document on revisions to the standardized
approach for credit risk in December 2015. The proposal would
reintroduce the use of external credit ratings for exposures to
banks and corporates and adopt a loan-to-value approach to risk
weighting of real estate loans. The consultation runs until 11
March 2016 and the BCBS intends to finalize the revisions by the
end of 2016.
Basel Committee on Banking Supervision issues revised market
risk framework
In January 2016, the BCBS published a revised market risk
framework, which defines minimum capital requirements for market
risk exposures. The market risk framework includes stricter rules
on the designation of instruments as either trading or banking
book, a more prescriptive internal-model approach aimed at
increasing consistency across banks, as well as a revised and more
risk-sensitive standardized approach, which may also be used as a
fall back to the internal-model approach. The BCBS will conduct
further quantitative impact studies in order to monitor the effect
of the capital requirements and to ensure consistency in the
application of the framework. We expect Switzerland to finalize
these changes in the domestic regulations no later than 1 January
2019, the deadline set by the BCBS.
UBS’s fourth quarter 2015 earnings release, financial supplement
and slide presentation will be available from 06:45 CET on Tuesday,
2 February 2016 at www.ubs.com/quarterlyreporting.
UBS will hold a presentation of its fourth quarter 2015 results
on Tuesday, 2 February 2016. The results will be presented by
Sergio P. Ermotti, Group Chief Executive Officer, Kirt Gardner,
Group Chief Financial Officer, Caroline Stewart, Global Head of
Investor Relations, and Hubertus Kuelps, Group Head of
Communications & Branding.
Time
• 09:00 (CET)
• 08:00 (GMT)
• 04:00 (US EDT)
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 earnings 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, and the extent
to which such changes have the intended effects; (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.
Basis of presentation
Information in this earnings release is presented for UBS Group
AG on a consolidated basis unless otherwise specified. In preparing
the financial information included in this earnings release, the
same accounting policies and methods of computation have been
applied as described in the UBS Group AG consolidated financial
statements within UBS’s Annual Report 2014, except for the changes
described in this earnings release and in the “Recent developments”
and “Note 1 Basis of accounting” sections of the first, second and
third quarter 2015 reports. UBS Group has not finalized its Annual
Report 2015 and our independent registered public accounting firm
has not completed its audit of the consolidated financial
statements for the period. Accordingly, the financial information
contained in this earnings release is subject to completion of
year-end procedures, which may result in changes to that
information. This document should be read in conjunction with UBS’s
Annual Report 2014 and our 2015 quarterly reports. Supplementary
financial information is provided in our fourth quarter 2015
financial supplement. These documents are available at
www.ubs.com/investors.
Effective January 2016, the business division Retail &
Corporate has been renamed Personal & Corporate Banking
(P&C). This change is reflected throughout our fourth quarter
2015 reporting. Refer to the fourth quarter 2015 financial
supplement for UBS AG (consolidated) information. Information for
UBS AG (consolidated) does not differ materially from UBS Group AG
on a consolidated basis.
Rounding
Numbers presented throughout this earnings 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 Refer to the “Group performance” section of this earnings
release for more information on adjusted results.
2 From 31 December 2015 onwards, the Swiss SRB leverage ratio
denominator calculation is fully aligned with the BIS Basel III
rules. Prior-period figures are calculated in accordance with
former Swiss SRB rules and are therefore not fully comparable.
Refer to the “Capital management” section of this earnings release
for more information.
3 Refer to the “Basis of presentation” section on page 43 of
this earnings release.
4 UBS expects that dividends will be paid out of capital
contribution reserves for the foreseeable future. Dividends paid
out of capital contribution reserves are not subject to the
deduction of Swiss withholding tax. For US federal income tax
purposes, we expect that the dividend will be paid out of current
or accumulated profits.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160201006483/en/
Investors:Switzerland: +41-44-234 41 00orMedia:Switzerland:
+41-44-234 85 00orUK: +44-207-567 47 14orAmericas: +1-212-882 58
57orAPAC: +852-297-1 82 00www.ubs.com
UBS (NYSE:UBS)
Historical Stock Chart
From Mar 2024 to Apr 2024
UBS (NYSE:UBS)
Historical Stock Chart
From Apr 2023 to Apr 2024