ZURICH & BASEL, Switzerland--()--
“Recent developments and financial reporting structure changes”
In 2012, UBS’s industry-leading capital position allowed it to continue to execute its strategy and restore client confidence while addressing the challenges of the past.
UBS (NYSE:UBS) (SWX:UBSN) made significant progress building its capital ratios, reducing risk-weighted assets and deleveraging its balance sheet. As also announced today, this progress allows UBS to launch tender offers to repurchase debt of up to approximately CHF 5 billion, helping to lower UBS’s future funding costs. The firm is making progress on its announced efficiency programs and continues to strengthen its risk control framework.
UBS’s wealth management businesses attracted strong net new money and Retail & Corporate recorded strong net new business volume as clients continued to demonstrate their trust in the firm. The Investment Bank reduced its Basel III pro-forma risk-weighted assets by CHF 81 billion in 2012 and operated at the end of the year with risk-weighted assets of CHF 131 billion. As announced in October, UBS is exiting certain businesses which are being transferred to the Corporate Center. As of 1 January 2013, the core Investment Bank is operating with Basel III pro-forma risk-weighted assets of CHF 64 billion, below its CHF 70 billion target for the year.
UBS remains on track with its accelerated strategic plans designed to make it more stable and capable of delivering higher quality and sustainable performance while being more focused on serving its clients. As a sign of strength and continued confidence, UBS is recommending a 50% increase in its dividend for shareholders for 2012 to CHF 0.15 per share.
- Fully applied Basel III common equity tier 1 ratio2 up 310 basis points to 9.8%; very close to regulator’s minimum 2019 requirement of 10%; UBS is well positioned to achieve its 2013 11.5% capital ratio target
- Phase-in Basel III common equity tier 1 ratio2 up 460 basis points to 15.3%
- Significant Basel III fully applied RWA reductions of CHF 122 billion, down 32% from CHF 380 billion at the end of 2011; sales and reduced exposures contributed approximately 84% of RWA reduction in the Investment Bank and the Legacy Portfolio since end of September 2011; balance sheet reduced by CHF 158 billion; UBS Basel III estimated pro-forma liquidity coverage ratio 113% and estimated pro-forma net stable funding ratio 108% at year-end. Both above regulatory requirements of 100%
- UBS delivered CHF 1.4 billion of net cost savings since mid-2011; strengthened its operational risk control framework significantly
- Combined wealth management businesses’ adjusted pre-tax profit1 was CHF 2.9 billion
- Wealth Management net new money inflows CHF 26.3 billion, exceeding significant 2011 inflows; strong inflows continued from Asia Pacific, emerging markets and ultra-high net worth clients globally; Wealth Management Switzerland reported net new money inflows of CHF 4.2 billion, up CHF 1.8 billion
- Wealth Management Americas achieved record pre-tax profit of USD 873 million, up 40%, and attracted net new money inflows of USD 22.1 billion, up by USD 8.0 billion
- Retail & Corporate results resilient; net new business volume growth of 5%; deposit inflows CHF 14 billion; highest net new client assets for retail clients in Switzerland since 2001
- Global Asset Management adjusted pre-tax profit1 up 19% to CHF 544 million on increased performance fees as it delivered stronger investment performance to its clients, especially in alternatives and real estate; 62% of collective funds showed first or second quartile performance versus peers over one year3
- Investment Bank balance sheet reduced by CHF 224 billion; investment banking revenues up 16% with increased market share in equity as well as debt capital markets and global syndicated finance; cash equities business market share increased in EMEA and APAC, FX business continued to benefit from investments in cutting edge e-trading systems, enabling it to grow volumes significantly
- Adjusted Group pre-tax profit1 CHF 3.0 billion
- Net loss attributable to UBS shareholders CHF 2.5 billion mostly reflecting goodwill impairments and restructuring costs as UBS executes its strategy, as well as own credit losses and provisions for litigation, regulatory and similar matters; diluted earnings per share of negative CHF 0.67
- Adjusted group operating income1 CHF 27.6 billion
- Adjusted pre-tax profit1 CHF 2.1 billion in Wealth Management; CHF 813 million in Wealth Management Americas; CHF 507 million in Investment Bank; CHF 544 million in Global Asset Management and CHF 1.5 billion in Retail & Corporate
UBS announces new compensation model:
UBS’s performance award pool for 2012 was reduced by 7% to CHF 2.5 billion compared with 2011, the lowest level since the beginning of the financial crisis and 42% below the 2010 level. For 2012, UBS implemented significant changes to its compensation framework to better align employee and shareholder interests. The changes focus UBS’s employees on medium- and longer-term performance, provide them with the opportunity to benefit from the firms longer term success, and simplify UBS’s compensation framework, making it more transparent. These changes include:
- longer deferral periods,
- multi-year performance conditions on equity-based deferred compensation,
- a new loss-absorbing high-trigger deferred capital instrument, under which employees would forfeit deferred compensation balances if a 7% Basel III CET1 ratio level is breached or if a non-viability event occurs,
- a reduction in the maximum initial cash payment that an employee may receive as part of a performance award.
More information on the new compensation model can be found at: www.ubs.com/compensation
Commenting on UBS’s full-year and fourth-quarter results, Group CEO Sergio P. Ermotti said: «We made decisive progress in executing our strategy last year and started 2013 in a strong position. Our financial strength, our attractive and unique business mix and our enviable global client franchise give us a competitive advantage. This allows us to restore client confidence while we execute our strategy and address challenges of the past. At the same time, it allows us to increase returns to our shareholders. I am determined to continue to execute our strategy successfully in 2013 for the benefit of our clients and shareholders.»
- Adjusted pre-tax loss1 CHF 1.2 billion
- Net loss attributable to UBS shareholders of CHF 1.9 billion, primarily due to net charges for provisions for litigation, regulatory and similar matters as well as net restructuring charges and an own credit loss
- Phase-in Basel III common equity tier 1 ratio² increased to 15.3% from 13.6%
- Fully applied Basel III common equity tier 1 ratio² increased to 9.8% from 9.3%
- Fully applied Basel III risk-weighted assets reduced by CHF 43 billion to CHF 258 billion
- Wealth Management Americas adjusted pre-tax profit1 of USD 219 million; net new money inflows of USD 8.8 billion, the highest fourth-quarter inflows since 2007; net new money target exceeded; cost/income ratio and gross margin on invested assets both within target ranges
- Wealth Management adjusted pre-tax profit1 CHF 415 million; net new money inflows of CHF 2.4 billion with healthy inflows from Asia Pacific, emerging markets and ultra high net worth clients globally
- Retail & Corporate adjusted pre-tax profit1 CHF 362 million; strong net new business volume growth of 4.4%, above target range; within target ranges for cost/income ratio and net interest margin
- Global Asset Management adjusted pre-tax profit1 CHF 164 million; higher net management fees and higher performance fees in alternative and quantitative investments and global real estate business; gross margin and cost/income ratio within target ranges
- Investment Bank adjusted pre-tax loss1 of CHF 333 million; Basel III risk-weighted assets reduced by 19%; good performance in investment banking; advisory revenues up 8% and capital markets revenues up 14%, outweighed by restructuring costs
Fourth-quarter net loss attributable to UBS shareholders CHF 1,890 million
Fourth-quarter net loss attributable to UBS shareholders was CHF 1,890 million compared with a loss of CHF 2,137 million in the third quarter. The pre-tax loss was CHF 1,823 million compared with a loss of CHF 2,529 million in the prior quarter. The fourth quarter loss was primarily due to net charges for provisions for litigation, regulatory and similar matters of CHF 2,081 million as well as net restructuring charges of CHF 258 million and an own credit loss on financial liabilities designated at fair value of CHF 414 million. The third-quarter result was mainly due to impairment losses of CHF 3,064 million on goodwill and other non-financial assets as well as an own credit loss of CHF 863 million. In the fourth quarter, we recorded a tax expense of CHF 66 million compared with a tax benefit of CHF 394 million in the prior quarter. Total operating income was CHF 6,222 million compared with CHF 6,287 million. Excluding the impact of own credit, operating income decreased by CHF 514 million to CHF 6,636 million. Total operating expenses decreased by CHF 772 million to CHF 8,044 million.
Wealth Management’s pre-tax profit was CHF 398 million compared with CHF 582 million in the previous quarter. The gross margin on invested assets declined by 4 basis points to 85 basis points, mainly reflecting lower interest income resulting from the continuing low interest rate environment and lower transactional revenues due to reduced client activity. Net new money was CHF 2.4 billion compared with CHF 7.7 billion in the previous quarter. Net inflows in Asia Pacific and emerging markets further increased, while Europe saw net outflows mainly from clients domiciled in Western Europe accelerating towards the end of the quarter. Ultra high net worth clients reported strong net new money inflows on a global basis of CHF 5.6 billion compared with CHF 4.8 billion in the previous quarter. Invested assets increased by CHF 5 billion to CHF 821 billion, primarily due to positive market performance and net new money inflows, partly offset by negative currency effects. Total operating income decreased by CHF 41 million to CHF 1,748 million from CHF 1,789 million, mainly reflecting lower interest income and transaction-based revenues. Total operating expenses increased to CHF 1,350 million from CHF 1,207 million and included restructuring costs of CHF 17 million.
Wealth Management Americas’ pre-tax profit in the fourth quarter of 2012 was USD 216 million compared with a record pre-tax profit of USD 232 million in the prior quarter. Total operating income was USD 1,746 million, an increase of USD 115 million from USD 1,631 million, due to growth in managed account fees, higher mutual fund and annuities fees resulting from changes in accounting estimates as well as higher net interest income. This increase was partly offset by a loan loss allowance and lower realized gains on sales of financial investments held in the available-for-sale portfolio. Total operating expenses increased by USD 129 million to USD 1,529 million, primarily due to a USD 87 million increase in charges for provisions for litigation, regulatory and similar matters. Net new money totaled USD 8.8 billion in the fourth quarter compared with USD 4.8 billion in the prior quarter, mainly due to stronger inflows from financial advisors employed with UBS for more than one year. Including interest and dividend income, net new money increased to USD 16.7 billion, which included seasonally higher dividend payments in the quarter. In US dollar terms, the gross margin on invested assets increased 4 basis points to 84 basis points and remained within the target range of 75 to 85 basis points.
The Investment Bank recorded a pre-tax loss of CHF 557 million in the fourth quarter of 2012 compared with a pre-tax loss of CHF 2,856 million in the third quarter of 2012. The third quarter included impairment losses of CHF 3,064 million on goodwill and other non-financial assets. Adjusted for impairment losses and the effects of restructuring, the Investment Bank recorded a pre-tax loss of CHF 333 million compared with a pre-tax profit of CHF 192 million in the prior quarter. The decrease was due to lower revenues in our securities business, partly as a result of the accelerated implementation of our strategy announced in October 2012. Total operating income declined 26% to CHF 1,682 million from CHF 2,277 million in the prior quarter. Total operating expenses decreased 56% to CHF 2,239 million compared with CHF 5,132 million, mainly due to impairment losses of CHF 3,064 million on goodwill and other non-financial assets in the third quarter. On an adjusted basis, excluding the impairment losses and restructuring releases in the third quarter and restructuring charges in the fourth quarter, operating expenses decreased 3% to CHF 2,015 million from CHF 2,084 million. Risk-weighted assets measured on a Basel 2.5 basis decreased by CHF 13 billion to CHF 89 billion at the end of the fourth quarter.
Global Asset Management’s pre-tax profit in the fourth quarter of 2012 was CHF 149 million compared with CHF 126 million in the third quarter, primarily due to higher net management and performance fees. Total operating income was CHF 492 million compared with CHF 468 million in the third quarter. Net management fees were higher, especially in global real estate. Performance fees were also higher, reflecting increases in alternative and quantitative investments and global real estate. Total operating expenses were CHF 343 million compared with CHF 342 million in the third quarter. Excluding money market flows, net new money outflows from third parties were CHF 1.4 billion in the fourth quarter compared with net inflows of CHF 0.3 billion in the third quarter. Net inflows, notably from sovereign clients, were largely offset by net outflows, particularly from clients in the Americas. The total gross margin was 34 basis points compared with 32 basis points in the third quarter, taking it further within our target range of 32 to 38 basis points.
Retail & Corporate’s pre-tax profit was CHF 361 million in the fourth quarter of 2012 compared with CHF 395 million in the prior quarter. Net new business volume growth remained above our target range. Total operating income increased by CHF 1 million to CHF 933 million, as higher income was almost offset by higher credit loss expenses. Total operating expenses increased to CHF 572 million from CHF 537 million in the previous quarter, mainly due to higher general and administrative expenses.
The Corporate Center – Core Functions’ pre-tax result in the fourth quarter of 2012 was a loss of CHF 1,874 million compared with a loss of CHF 936 million in the previous quarter. The fourth quarter included charges for provisions for litigation, regulatory and similar matters of CHF 1,470 million, mainly arising from fines and disgorgement resulting from regulatory investigations concerning LIBOR and other benchmark rates, and an own credit loss of CHF 414 million compared with a loss of CHF 863 million in the prior quarter. Treasury income remaining in Corporate Center – Core Functions after allocations to the business divisions was CHF 63 million compared with CHF 125 million in the prior quarter.
The Legacy Portfolio’s pre-tax result was a loss of CHF 501 million in the fourth quarter of 2012 compared with a pre-tax loss of CHF 62 million in the previous quarter. This was primarily due to higher charges for provisions for litigation, regulatory and similar matters as well as a smaller gain from the revaluation of our option to acquire the SNB StabFund’s equity in the fourth quarter, partly offset by a credit loss recovery recorded in the fourth quarter compared with a credit loss expense incurred in the third quarter.
|Results by business division and Corporate Center|
|CHF million||Total operating income||Total operating expenses||Operating profit before tax|
|For the quarter ended||31.12.12||30.9.12||% change||31.12.12||30.9.12||% change||31.12.12||30.9.12||% change|
|Wealth Management Americas||1,614||1,561||3||1,414||1,340||6||201||221||(9||)|
|Global Asset Management||492||468||5||343||342||0||149||126||18|
|Retail & Corporate||933||932||0||572||537||7||361||395||(9||)|
Capital position and balance sheet
Our Basel 2.5 tier 1 capital ratio continued to improve and stood at 21.3% on 31 December 2012, up 1.1 percentage point from 30 September 2012. Basel 2.5 tier 1 capital declined by CHF 1.4 billion due to our quarterly net loss and negative foreign currency effects. Basel 2.5 risk-weighted assets (RWA) were CHF 17.8 billion lower at CHF 192.5 billion at the end of the fourth quarter compared with the third quarter mainly due to declines in credit-risk RWA of CHF 16.1 billion and market risk RWA of CHF 1.5 billion. As of 31 December 2012, our balance sheet stood at CHF 1,259 billion, a decrease of CHF 107 billion from 30 September 2012. For 2012, UBS introduced a new compensation plan, the Deferred Contingent Capital Plan (DCCP). The DCCP strengthens UBS’s capital position, as UBS’s regulator (FINMA) recognizes DCCP awards as high-trigger loss-absorbing capital. Over the next five years, UBS could build approximately 100 basis points of high-trigger loss-absorbing capital due to awards under the DCCP.
Invested assets were CHF 2,230 billion as of 31 December 2012 compared with CHF 2,242 billion as of 30 September 2012. Of the invested assets, CHF 821 billion were attributable to Wealth Management; CHF 772 billion were attributable to Wealth Management Americas; and CHF 581 billion were attributable to Global Asset Management.
While progress was made on many issues during 2012, many of the underlying challenges remain at the start of the new year. Failure to achieve further sustained and credible improvements to the eurozone sovereign debt situation, European banking system issues, unresolved US fiscal issues, ongoing geopolitical risks and the outlook for growth in the global economy would continue to exert a strong influence on client confidence and, thus, activity levels in the first quarter of 2013. It would make further improvements in prevailing market conditions unlikely and would consequently generate headwinds for revenue growth, net interest margins and net new money. Nevertheless, and despite the lack of progress on certain bilateral tax treaties, we remain confident that our asset-gathering businesses as a whole will continue to attract net new money, reflecting our clients’ steadfast trust in the firm. We are confident that the actions we have taken will ensure the firm’s long-term success and will deliver sustainable returns for our shareholders going forward.
¹Unless otherwise indicated, “adjusted” figures exclude each of the following items, to the extent applicable, on a Group and business division level: Own credit loss on financial liabilities designated at fair value for the Group CHF 414 million in 4Q12 (CHF 863 million loss in 3Q12, CHF 239 million gain in 2Q12, CHF 1,164 million loss 1Q12); Net restructuring provision charges CHF 258 million for the Group in 4Q12 (net release CHF 22 million in 3Q12, net charge of CHF 9 million in 2Q12, net charge of CHF 126 million in 1Q12); CHF 3,064 million charge related to impairment testing of goodwill and other non-financial assets in 3Q12 in the Investment Bank; Credit to personnel expenses related to changes to a US retiree medical life-insurance benefit plan (CHF 116 million restated for IAS19R for the Group in 2Q12) and changes to UBS’s Swiss pension plan (CHF 730 million restated for IAS19R for the Group in 1Q12).
²The pro-forma Basel III information is not required to be presented because Basel III requirements were not in effect on 31 December 2012. Such measures are non-GAAP financial measures as defined by SEC regulations. We nevertheless include information on the basis of Basel III requirements because they are effective as of 1 January 2013 and significantly impact our RWA and eligible capital. The calculation of our pro-forma Basel III RWA combines existing Basel 2.5 RWA, a revised treatment for low-rated securitization exposures that are no longer deducted from capital but are risk-weighted at 1250%, and new model-based capital charges. Some of these new models require final regulatory approval and therefore our pro-forma calculations include estimates (discussed with our primary regulator) of the effect of these new capital charges which will be refined as models and the associated systems are enhanced.
³Swiss-, Lux-, German- and Irish-domiciled wholesale funds versus Lipper peer rankings.
|UBS key figures|
|For the quarter ended||Year ended|
|CHF million, except where indicated||31.12.12||30.9.12||31.12.11||31.12.12||31.12.11|
|Operating profit before tax||(1,823||)||(2,529||)||481||(1,774||)||5,307|
|Net profit attributable to UBS shareholders||(1,890||)||(2,137||)||323||(2,511||)||4,138|
|Diluted earnings per share (CHF) 1||(0.50||)||(0.57||)||0.08||(0.67||)||1.08|
|Key performance indicators 2, balance sheet and capital management, and additional information|
|Return on equity (RoE) (%)||(5.2||)||9.1|
|Return on tangible equity (%) 3||1.6||11.9|
|Return on risk-weighted assets, gross (%) 4||12.0||13.7|
|Return on assets, gross (%)||1.9||2.1|
|Net profit growth (%) 5||N/A||N/A||(68.0||)||N/A||(44.5||)|
|Net new money growth (%) 6||1.2||2.5||1.1||1.6||1.9|
|Cost / income ratio (%)||128.8||137.4||91.6||106.5||80.7|
|CHF million, except where indicated||31.12.12||30.9.12||31.12.11|
|BIS tier 1 capital ratio (%) 7||21.3||20.2||15.9|
|FINMA leverage ratio (%) 7||6.3||6.1||5.4|
|Balance sheet and capital management|
|Equity attributable to UBS shareholders||45,895||48,065||48,530|
|Total book value per share (CHF) 8||12.25||12.83||12.95|
|Tangible book value per share (CHF) 8||10.52||11.06||10.36|
|BIS core tier 1 capital ratio (%) 7||19.0||18.1||14.1|
|BIS total capital ratio (%) 7||25.2||23.6||17.2|
|BIS risk-weighted assets 7||192,505||210,278||240,962|
|BIS tier 1 capital 7||40,982||42,396||38,370|
|Invested assets (CHF billion) 9||2,230||2,242||2,088|
|Personnel (full-time equivalents)||62,628||63,745||64,820|
|Market capitalization 10||54,729||43,894||42,843|
1 Refer to “Note 9 Earnings per share (EPS) and shares outstanding” in the “Financial information” section of our fourth quarter 2012 report for more information. 2 For the definitions of our key performance indicators, refer to the “Measurement of performance” section of our Annual Report 2011. 3 Net profit attributable to UBS shareholders on a year-to-date basis before amortization and impairment of goodwill and intangible assets / average equity attributable to UBS shareholders less average goodwill and intangible assets on a year-to-date basis. 4 Based on Basel 2.5 risk-weighted assets for 2012. Based on Basel II risk-weighted assets for 2011. 5 Not meaningful and not included if either the reporting period or the comparison period is a loss period. 6 Group net new money includes net new money for Retail & Corporate and excludes interest and dividend income. 7 Capital management data is disclosed in accordance with the Basel 2.5 framework. Refer to the “Capital management” section of our fourth quarter 2012 report for more information. 8 Refer to the “Capital management” section of our fourth quarter 2012 report for more information. 9 In the first quarter of 2012, we have refined our definition of invested assets. Refer to the “Recent developments and financial reporting structure changes” section of our first quarter 2012 report for more information. Group invested assets includes invested assets for Retail & Corporate. 10 Refer to the appendix “UBS shares” of our fourth quarter 2012 report for more information.
|For the quarter ended||% change from||Year ended|
|CHF million, except per share data||31.12.12||30.9.12||31.12.11||3Q12||4Q11||31.12.12||31.12.11|
|Net interest income||1,478||1,531||1,745||(3||)||(15||)||5,994||6,826|
|Credit loss (expense) / recovery||(24||)||(129||)||(14||)||(81||)||71||(118||)||(84||)|
|Net interest income after credit loss expense||1,454||1,401||1,731||4||(16||)||5,875||6,742|
|Net fee and commission income||3,994||3,919||3,560||2||12||15,405||15,236|
|Net trading income||371||779||443||(52||)||(16||)||3,480||4,343|
|Total operating income||6,222||6,287||5,862||(1||)||6||25,443||27,788|
|General and administrative expenses||3,843||1,761||1,652||118||133||8,653||5,959|
|Depreciation and impairment of property and equipment||169||184||198||(8||)||(15||)||689||761|
|Impairment of goodwill||0||3,030||0||(100||)||3,030||0|
|Amortization and impairment of intangible assets||19||39||29||(51||)||(34||)||106||127|
|Total operating expenses||8,044||8,816||5,381||(9||)||49||27,216||22,482|
|Operating profit before tax||(1,823||)||(2,529||)||481||(28||)||(1,774||)||5,307|
|Tax expense / (benefit)||66||(394||)||156||(58||)||461||901|
|Net profit attributable to non-controlling interests||1||1||2||0||(50||)||276||268|
|Net profit attributable to UBS shareholders||(1,890||)||(2,137||)||323||(12||)||(2,511||)||4,138|
|Earnings per share (CHF)|
|Basic earnings per share||(0.50||)||(0.57||)||0.09||(12||)||(0.67||)||1.10|
|Diluted earnings per share||(0.50||)||(0.57||)||0.08||(12||)||(0.67||)||1.08|
Further information on UBS’s quarterly results is available at www.ubs.com/investors:
- Fourth-quarter 2012 financial report
- Fourth-quarter 2012 results slide presentation
- Letter to shareholders (English, German, French and Italian)
The results presentation, with Sergio P. Ermotti, Group Chief Executive Officer, Tom Naratil, Group Chief Financial Officer, and Caroline Stewart, Global Head of Investor Relations, will be webcast live on www.ubs.com/media at the following time on 5 February 2013:
- 0900 CET
- 0800 GMT
- 0300 US EST
A playback of the webcast will be available from 1400 CET on 5 February 2013.
Switzerland: +41-44-234 41 00
Switzerland: +41-44-234 85 00
UK: +44-207-567 47 14
Americas: +1-212-882 58 57
APAC: +852-297-1 82 00
Cautionary Statement Regarding Forward-Looking Statements
This report contains statements that constitute “forward-looking statements”, including but not limited to management’s outlook for UBS’s financial performance and statements relating to the anticipated effect of transactions and strategic initiatives on UBS’s business and future development. While these forward-looking statements represent UBS’s judgments and expectations concerning the matters described, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from UBS’s expectations. These factors include, but are not limited to: (1) the degree to which UBS is successful in effecting its announced strategic plans and related organizational changes, in particular its plans to transform its Investment Bank, its efficiency initiatives and its planned reduction in Basel III risk-weighted assets, and whether in each case those plans and changes will, when implemented, have the effects intended; (2) 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; (3) changes in the availability of capital and funding, including any changes in UBS’s credit spreads and ratings; (4) changes in financial legislation and regulation in Switzerland, the US, the UK and other major financial centers which may impose constraints on or necessitate changes in the scope and location of UBS’s business activities and in its legal and booking structures, including the imposition of more stringent capital and liquidity requirements, incremental tax requirements and constraints on remuneration; (5) 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; (6) 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 those that may arise from the ongoing investigations relating to the setting of LIBOR and other reference rates, from market events and losses incurred by clients and counterparties during the financial crisis of 2007 to 2009, and from the unauthorized trading incident announced in September 2011; (7) the effects on UBS’s cross-border banking business of tax treaties negotiated or under discussion between Switzerland and other countries and future tax or regulatory developments; (8) 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 compensation practices; (9) changes in accounting standards or policies, and accounting determinations or interpretations affecting the recognition of gain or loss, the valuation of goodwill and other matters; (10) limitations on the effectiveness of UBS’s internal processes for risk management, risk control, measurement and modeling, and of financial models generally; (11) whether UBS will be successful in keeping pace with competitors in updating its technology, particularly in trading businesses; (12) the occurrence of operational failures, such as fraud, unauthorized trading and systems failures; and (13) 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. 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 2011. 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.
Numbers presented throughout this report may not add up precisely to the totals provided in the tables and text. Percentages and percent changes are calculated based on rounded figures displayed in the tables and text and may not precisely reflect the percentages and percent changes that would be derived based on figures that are not rounded.