UBS: 2Q18 PBT +12% YoY to CHF 1.7bn

1H18 net profit1 +15% YoY to CHF 2.8bn; adjusted2 RoTE excluding DTAs3 17.3%; strong PBT growth in Global Wealth Management (+19%) and the Investment Bank (+24%)

2Q18 net profit1 +9% YoY to CHF 1.3bn; diluted EPS CHF 0.33

2Q18 PBT in Global Wealth Management +18% and Investment Bank +26% YoY

Repurchased CHF 550m of own shares while maintaining strong CET1 capital ratio 13.4% and CET1 leverage ratio 3.75%

UBS one of the best rated large global banks, confirmed by recent Moody's upgrade

ZURICH--()--Regulatory News:

UBS delivered strong second-quarter results with reported profit before tax (PBT) up 12% year over year to CHF 1,679m and adjusted2 PBT up 8% to CHF 1,808m. Net profit attributable to shareholders was CHF 1,284m, up 9% from the second quarter of 2017. Adjusted2 return on tangible equity (RoTE) excluding DTAs3 was 16.7% for the quarter.

Global Wealth Management’s PBT rose 18% YoY to CHF 1,037m, driven by double-digit PBT growth in the Americas and the ultra-high net worth segment, and ten-year records in recurring net fee, net interest income, lending and mandate penetration. Personal & Corporate Banking PBT was CHF 368m, as growth in recurring net fee and transaction-based income offset the ongoing pressure from the negative interest rate environment; net new business volume growth remained strong. Asset Management reported PBT of CHF 101m, as the positive impact from higher invested assets mostly offset the effect of a prior-period business sale and pressure on margins, and invested assets rose to CHF 810bn, the highest in a decade. The Investment Bank delivered PBT of CHF 569m, up 26% YoY, and an adjusted2 return on attributed equity of 23%, on strong revenue growth in Equities and Foreign Exchange, Rates and Credit (FRC) and continued resource discipline.

During the second quarter, UBS repurchased CHF 550m of its own shares, meeting its target for 2018 under its 3-year share repurchase program of up to CHF 2bn. UBS’s capital position remains very strong, with a CET1 capital ratio of 13.4%, a CET1 leverage ratio of 3.75% and total loss-absorbing capacity of over CHF 81bn.

I'm pleased with the second quarter, which contributed to a strong first half, with particularly good capital generation. We'll keep our focus on growth and efficiency, and continue to build on the strengths of our global franchise.”
Sergio P. Ermotti, Group Chief Executive Officer

Outlook

Global economic growth prospects continue to provide a supportive backdrop to markets, although ongoing geopolitical tensions and rising protectionism have dampened investor confidence and remain a threat. We continue to expect US dollar interest rates to rise gradually, which, despite margin pressure, is likely to support net interest income in Global Wealth Management.

In addition to typical seasonality factors in the third quarter, market volatility remains muted overall which is usually less conducive to client activity. Funding costs related to long-term debt and capital instruments issued to comply with regulatory funding and liquidity requirements will be higher than in the previous year, but should be broadly stable compared with the second quarter.

As in the first half of the year, our diversified business model should help us make continued progress towards achieving our strategic and financial targets.

Second quarter 2018 performance overview

UBS’s second quarter adjusted2 PBT was CHF 1,808m, and reported PBT was CHF 1,679m. Total adjusting2 items were CHF 129m, including CHF 114m of restructuring expenses. The adjusted2 cost/income ratio was 76%. Net profit attributable to shareholders was CHF 1,284m, with diluted earnings per share of CHF 0.33. Annualized adjusted2 return on tangible equity excluding DTAs3 was 16.7%.

Global Wealth Management (GWM) adjusted2 PBT CHF 1,084m, +7% YoY

Recurring net fee income and net interest income both increased on a new high for invested assets, further progress on mandate penetration, as well as increased net interest margin on deposits and higher lending revenues, while transaction-based revenues declined on lower client activity in the US and Asia. Mandate penetration increased to a new high of 33.3% of invested assets, and loans increased by 11%, driven by a 28% increase in APAC. Adjusted2 costs increased on additional investments in technology and higher variable compensation, partly offset by lower compensation commitments with recruited financial advisors in the US. The adjusted2 cost/income ratio was 74%. Net new money outflows of CHF 1.2bn for the quarter included higher seasonal tax-related outflows in the US of approximately CHF 4.6bn and a single outflow of around CHF 4.4bn in the Americas from a corporate employee share program. Adjusted2 net margin was 19bps.

Personal & Corporate Banking (P&C) adjusted2 PBT CHF 378m, (0%) YoY

Strong business momentum and management actions offset interest rate pressure, with higher recurring net fee and transaction-based income, while expenses remained at the same level despite investments in technology. Credit loss expenses were CHF 22m, compared with CHF 28m in the second quarter of 2017. The adjusted2 cost/income ratio was 58%. Annualized net new business volume growth for personal banking remained strong at 3.9%.

Asset Management (AM) adjusted2 PBT CHF 126m, (5%) YoY

Net management fees remained broadly unchanged, despite a business sale in the fourth quarter of 2017 and continued pressure on margins. Performance fees decreased in both alternatives and equities. Adjusted2 expenses decreased as lower personnel costs, driven by management actions, were partly offset by higher investments in technology. The adjusted2 cost/income ratio was 72%. Net new money excluding money market flows was CHF 0.9bn, and invested assets reached CHF 810bn, the highest in a decade.

Investment Bank (IB) adjusted2 PBT CHF 605m, +44% YoY

Equities adjusted2 revenues increased by 17%, with growth in all regions and product lines. FRC adjusted2 revenues were up 72%, partly due to net income of around CHF 100m mainly related to the recognition of previously deferred day-1 profits; or up by more than a third excluding this income, with increases in all products and regions. Corporate Client Solutions revenues were CHF 624m, down 15% from a strong second quarter of 2017, mainly reflecting lower equity capital markets revenues. Costs increased, partly reflecting higher investments in technology. The adjusted2 cost/income ratio improved to 72%. Adjusted2 return on attributed equity was 23%.

Corporate Center adjusted2 loss before tax was CHF 385m. Corporate Center – Services recorded an adjusted2 loss before tax of CHF 178m. Group Asset and Liability Management adjusted2 loss before tax was CHF 190m. Non-core and Legacy Portfolio posted an adjusted2 loss before tax of CHF 17m.

First half 2018 performance overview

UBS’s first half adjusted2 PBT was CHF 3,684m, and reported PBT was CHF 3,652m. The first half of 2018 included a gain of CHF 225m related to changes to the pension fund of UBS in Switzerland, which is treated as an adjusting2 item and had no impact on CET1 capital. Other adjusting2 items of CHF 257m included CHF 242m of restructuring expenses. The adjusted2 cost/income ratio was 76%. Net profit attributable to shareholders was CHF 2,798m, up 15% from the prior year, with diluted earnings per share of CHF 0.73. Annualized adjusted2 return on tangible equity excluding DTAs3 was 17.3%.

Global Wealth Management (GWM) adjusted2 PBT CHF 2,210m, +7% YoY (+9% in USD)

Recurring net fee income and net interest income both increased on higher invested asset levels, further progress on mandate penetration, as well as increased net interest margin and loan growth, while transaction-based revenues declined as a result of lower client activity in the US and Asia in the second quarter. Costs increased mainly due to investments in technology. The adjusted2 cost/income ratio was 74%. Mandate penetration increased to a new high of 33.3% of invested assets, and loans increased by 11%, driven by a 28% increase in APAC. Net new money was CHF 17.7bn for the half-year, with positive contributions from all regions. Adjusted2 net margin was 19bps. Reported PBT increased by 19% to CHF 2,165m.

Personal & Corporate Banking (P&C) adjusted2 PBT CHF 771m, (5%) YoY

Transaction-based and recurring net fee income increased, offset by funding cost and interest rate headwinds, as well as higher expenses. Additionally, the first quarter of 2017 included a CHF 20m one-time gain on the sale of a real estate loan portfolio. Credit loss expenses were CHF 35m, compared with CHF 21m in the first half of 2017. The adjusted2 cost/income ratio was 58%. Annualized net new business volume growth for personal banking was 5.1%. Reported PBT increased by 2% to CHF 787m.

Asset Management (AM) adjusted2 PBT CHF 234m, (9%) YoY

Net management fees were broadly unchanged, despite a business sale in the fourth quarter of 2017 and continued pressure on margins. Performance fees decreased, primarily in alternatives. Adjusted2 expenses decreased as lower personnel costs, driven by management actions, were partly offset by higher investments in technology. The adjusted2 cost/income ratio was 74%. Net new money excluding money market flows was CHF 27.6bn, and invested assets reached CHF 810bn, the highest in a decade. Reported PBT decreased by 3% to CHF 207m.

Investment Bank (IB) adjusted2 PBT CHF 1,234m, +26% YoY (+30% in USD)

Equities revenues were up 17% (+20% in USD), with all regions and product lines improving, and FX, Rates and Credit revenues improved by 21% (+24% in USD). Corporate Client Solutions revenues were broadly unchanged (+2% in USD), as higher Advisory and Debt Capital Markets revenues offset a reduction in Equity Capital Markets. Adjusted2 costs increased, reflecting higher personnel expenses as a result of improved performance, and higher investments in technology. The adjusted2 cost/income ratio improved to 72%. Adjusted2 return on attributed equity was 24%. Reported PBT increased by 24% to CHF 1,158m.

Corporate Center adjusted2 loss before tax was CHF 765m. Corporate Center – Services recorded an adjusted2 loss before tax of CHF 326m. Group Asset and Liability Management adjusted2 loss before tax was CHF 412m. Non-core and Legacy Portfolio posted an adjusted2 loss before tax of CHF 28m.

Commitment to sustainable performance

UBS is committed to creating long-term positive value for its clients, employees, investors and society. This is illustrated by the ongoing recognition UBS has received for its activities and capabilities related to sustainable investing, philanthropy, environmental and human rights policies governing client and supplier relationships, the firm's environmental footprint and community investment.

Credit ratings

Moody's Investors Service upgraded UBS’s ratings on 18 June 2018. UBS AG's and its rated operating subsidiaries’ long-term issuer and senior unsecured debt ratings were upgraded to Aa3 (stable outlook) from A1. These rating actions were driven by an improvement of Moody's measure of UBS's standalone credit strength, and follow multiple upgrades by major credit rating agencies in recent years. UBS is one of the best rated large global banks.

Sustainable and impact investing

According to a report by Swiss Sustainable Finance, an association that aims to strengthen Switzerland's position in the global marketplace for sustainable finance, UBS is the #1 market player for sustainable investments in Switzerland with 23% of the market share in sustainable funds and mandates. The results highlighted Switzerland's growing focus on sustainability with over CHF 390bn of sustainable investments by asset managers and asset owners, an 82% increase from the previous year.

The UBS Optimus Foundation helped close the world’s first ever Development Impact Bond (DIB) in education. Indian NGO Educate Girls was able to improve education across 166 schools in the Indian state of Rajasthan, significantly exceeding the set enrolment and learning targets. As a result of the over-achievement, the UBS Optimus Foundation recouped its initial funding plus a 15% internal rate of return from the outcome payer Children's Investment Fund Foundation. The total payout will be reinvested into further impactful development programs. The DIB was intended to be a proof of concept using a relatively small selection of beneficiaries. Based on its success, the UBS Optimus Foundation is working on a new education DIB, which will be announced later this year.

Climate change

UBS along with 15 other leading banks from four continents, convened by the UN Environment Finance Initiative, published a jointly developed methodology to increase banks’ understanding of how climate change and climate action could impact their business. This underscores the commitment of UBS to support the transition to a low-carbon economy.

Information in this news release is presented for UBS Group AG on a consolidated basis unless otherwise specified. Financial information for UBS AG (consolidated) does not differ materially from UBS Group AG (consolidated) and a comparison between UBS Group AG (consolidated) and UBS AG (consolidated) is provided at the end of this news release.

1 Net profit attributable to shareholders.
2 Refer to the “Performance by business division and Corporate Center unit – reported and adjusted“ table in this news release.
3 Adjusted return on tangible equity excluding deferred tax expense/benefit and DTAs; calculated as adjusted net profit/loss attributable to shareholders excluding amortization and impairment of goodwill and intangible assets and deferred tax expense/benefit (annualized as applicable), divided by average tangible equity attributable to shareholders excluding any DTAs that do not qualify as CET1 capital.

 
Performance by business division and Corporate Center unit – reported and adjusted1,2
    For the quarter ended 30.6.18
CHF million  

Global
Wealth
Management

 

Personal &
Corporate
Banking

 

Asset
Manage-
ment

 

Investment
Bank

 

CC –
Services3

 

CC –
Group
ALM

 

CC –
Non-
core and
Legacy
Portfolio

  UBS
Operating income as reported   4,157   933   458   2,171   (78)   (185)   98   7,554
of which: net foreign currency translation losses4                       (15)       (15)
Operating income (adjusted)   4,157   933   458   2,171   (78)   (169)   98   7,569
             
Operating expenses as reported   3,120   566   357   1,602   94   21   116   5,875
of which: personnel-related restructuring expenses5   3   1   15   2   43   0   0   63
of which: non-personnel-related restructuring expenses5   5   0   3   3   39   0   0   51
of which: restructuring expenses allocated from CC ­ Services5   39   9   8   32   (88)   0   1   0
Operating expenses (adjusted)   3,073   556   331   1,566   100   20   115   5,761

of which: net expenses for litigation, regulatory and similar
matters6

  52   0   0   2   0   0   76   131
 
Operating profit / (loss) before tax as reported   1,037   368   101   569   (172)   (206)   (18)   1,679
Operating profit / (loss) before tax (adjusted)   1,084   378   126   605   (178)   (190)   (17)   1,808
 
  For the quarter ended 30.6.17
CHF million  

Global
Wealth
Management

 

Personal &
Corporate
Banking

 

Asset
Manage-
ment

 

Investment
Bank

 

CC –
Services3

 

CC –
Group
ALM

 

CC –
Non-
core and
Legacy
Portfolio

  UBS
Operating income as reported   3,959   935   479   2,026   (20)   (94)   (16)   7,269
of which: gains on sale of financial assets at fair value through OCI7               107               107
of which: net foreign currency translation losses4                       (22)       (22)
Operating income (adjusted)   3,959   935   479   1,919   (20)   (72)   (16)   7,184
 
Operating expenses as reported   3,080   579   369   1,575   117   10   37   5,767
of which: personnel-related restructuring expenses5   14   2   3   4   93   1   0   117
of which: non-personnel-related restructuring expenses5   16   0   6   3   115   0   0   141
of which: restructuring expenses allocated from CC ­ Services5   104   21   15   67   (209)   0   2   0
Operating expenses (adjusted)   2,946   556   346   1,500   117   9   35   5,509

of which: net expenses for litigation, regulatory and similar
matters6

  42   0   1   0   0   0   (34)   9
 
Operating profit / (loss) before tax as reported   879   356   110   451   (137)   (104)   (53)   1,502
Operating profit / (loss) before tax (adjusted)   1,013   379   133   419   (137)   (81)   (51)   1,675

1 Adjusted results are non-GAAP financial measures as defined by SEC regulations. 2 Comparative figures in this table may differ from those originally published in quarterly and annual
reports due to adjustments following organizational changes, restatements due to the retrospective adoption of new accounting standards or changes in accounting policies, and events after
the reporting period. 3 Corporate Center ­ Services operating expenses presented in this table are after service allocations to business divisions and other Corporate Center units. 4 Related
to the disposal of foreign subsidiaries and branches. 5 Reflects restructuring expenses related to legacy cost programs as well as expenses for new restructuring initiatives in 2018 for Global
Wealth Management and Asset Management. 6 Includes recoveries from third parties (second quarter of 2018: CHF 10 million, second quarter of 2017: CHF 1 million). 7 Reflects a gain on
sale of our remaining investment in IHS Markit in the Investment Bank. Figures presented for periods prior to the first quarter of 2018 relate to financial assets available for sale. With the
adoption of IFRS 9, certain financial assets were reclassified from available for sale under IAS 39 to measured at fair value through OCI under IFRS 9. Refer to “Note 1 Basis of accounting” and
Note 19 Transition to IFRS 9 as of 1 January 2018” in the “Consolidated financial statements” section of the UBS Group second quarter 2018 report for more information.

 
 
Performance by business division and Corporate Center unit – reported and adjusted1,2
    Year-to-date 30.6.18
CHF million  

Global
Wealth
Management

 

Personal &
Corporate
Banking

 

Asset
Manage-
ment

 

Investment
Bank

 

CC –
Services3

 

CC –
Group
ALM

 

CC –
Non-
core and
Legacy
Portfolio

  UBS
Operating income as reported   8,352   1,880   899   4,478   (116)   (389)   147   15,252
of which: net foreign currency translation losses4                       (15)       (15)
Operating income (adjusted)   8,352   1,880   899   4,478   (116)   (373)   147   15,267
             
Operating expenses as reported   6,187   1,093   692   3,320   92   39   177   11,600
of which: personnel-related restructuring expenses5   6   2   16   13   90   0   0   127
of which: non-personnel-related restructuring expenses5   14   0   6   5   89   0   0   115
of which: restructuring expenses allocated from CC ­ Services5   86   17   14   63   (184)   1   2   0
of which: gain related to changes to the Swiss pension plan6   (61)   (35)   (10)   (5)   (114)           (225)
Operating expenses (adjusted)   6,142   1,109   665   3,244   210   38   175   11,583

of which: net expenses for litigation, regulatory and similar
matters7

  83   0   0   0   (24)   0   61   120
 
Operating profit / (loss) before tax as reported   2,165   787   207   1,158   (207)   (428)   (30)   3,652
Operating profit / (loss) before tax (adjusted)   2,210   771   234   1,234   (326)   (412)   (28)   3,684
 
  Year-to-date 30.6.17
CHF million  

Global
Wealth
Management

 

Personal &
Corporate
Banking

 

Asset
Manage-
ment

 

Investment
Bank

 

CC –
Services3

 

CC –
Group
ALM

 

CC –
Non-
core and
Legacy
Portfolio

  UBS
Operating income as reported   7,938   1,893   929   4,124   (37)   (30)   (16)   14,801
of which: gains on sale of financial assets at fair value through OCI8               107               107
of which: net foreign currency translation losses4                       (22)       (22)
Operating income (adjusted)   7,938   1,893   929   4,017   (37)   (8)   (16)   14,716
 
Operating expenses as reported   6,119   1,119   716   3,194   321   12   129   11,609
of which: personnel-related restructuring expenses5   15   4   5   22   186   1   0   233
of which: non-personnel-related restructuring expenses5   27   0   11   6   225   0   0   269
of which: restructuring expenses allocated from CC ­ Services5   202   38   28   124   (396)   1   4   0
Operating expenses (adjusted)   5,875   1,077   673   3,042   307   11   125   11,107

of which: net expenses for litigation, regulatory and similar
matters7

  78   0   1   0   (3)   0   (33)   42
 
Operating profit / (loss) before tax as reported   1,819   774   213   931   (358)   (41)   (146)   3,192
Operating profit / (loss) before tax (adjusted)   2,063   816   256   976   (344)   (18)   (142)   3,609

1 Adjusted results are non-GAAP financial measures as defined by SEC regulations. 2 Comparative figures in this table may differ from those originally published in quarterly and annual
reports due to adjustments following organizational changes, restatements due to the retrospective adoption of new accounting standards or changes in accounting policies, and events after
the reporting period. 3 Corporate Center ­ Services operating expenses presented in this table are after service allocations to business divisions and other Corporate Center units. 4 Related
to the disposal of foreign subsidiaries and branches. 5 Reflects restructuring expenses related to legacy cost programs as well as expenses for new restructuring initiatives in 2018 for Global
Wealth Management and Asset Management. 6 Refer to “Note 5 Personnel expenses” in the “Consolidated financial statements” section of the UBS Group second quarter 2018 report for
more information. 7 Includes recoveries from third parties of CHF 27 million and CHF 1 million for the first six months of 2018 and 2017, respectively. 8 Reflects a gain on sale of our
remaining investment in IHS Markit in the Investment Bank. Figures presented for periods prior to 2018 relate to financial assets available for sale. With the adoption of IFRS 9, certain
financial assets were reclassified from available for sale under IAS 39 to measured at fair value through OCI under IFRS 9. Refer to “Note 1 Basis of accounting” and “Note 19 Transition to IFRS
9 as of 1 January 2018” in the “Consolidated financial statements” section of the UBS Group second quarter 2018 report for more information.

 
           
Our key figures                        
  As of or for the quarter ended As of or year-to-date
CHF million, except where indicated   30.6.18   31.3.18   31.12.17   30.6.17   30.6.18   30.6.17
 
Group results                        
Operating income   7,554   7,698   7,122   7,269   15,252   14,801
Operating expenses   5,875   5,725   6,266   5,767   11,600   11,609
Operating profit / (loss) before tax   1,679   1,973   855   1,502   3,652   3,192
Net profit / (loss) attributable to shareholders   1,284   1,514   (2,336)   1,174   2,798   2,443
Diluted earnings per share (CHF)1   0.33   0.39   (0.63)   0.31   0.73   0.64
 
Key performance indicators2                        
Profitability and growth                        
Return on tangible equity (%)   11.6   13.6   (20.2)   10.3   12.6   10.6

Adjusted return on tangible equity excluding deferred tax expense / benefit and deferred tax
assets (%)

  16.7   17.8   8.6   15.9   17.3   16.6
Cost / income ratio (%)   77.5   74.1   86.9   78.8   75.8   78.2
Adjusted cost / income ratio (%)3   75.8   75.4   83.4   76.2   75.6   75.2
Net profit growth (%)   9.3   19.4       13.5   14.5   40.3
Resources                        
Common equity tier 1 capital ratio (%)4   13.4   13.1   13.8   13.5   13.4   13.5
Common equity tier 1 leverage ratio (%)4   3.75   3.76   3.69   3.70   3.75   3.70
Going concern leverage ratio (%)4   5.0   5.0   4.7   4.7   5.0   4.7
 
Additional information                        
Profitability                        
Return on equity (%)   10.1   11.8   (17.8)   8.9   10.9   9.2
Return on risk-weighted assets, gross (%)5   12.0   12.6   12.1   12.8   12.3   13.2
Return on leverage ratio denominator, gross (%)5   3.4   3.5   3.3   3.4   3.4   3.4
Resources                        
Total assets   944,482   919,361   915,642   890,831   944,482   890,831
Equity attributable to shareholders   50,774   51,243   51,214   51,744   50,774   51,744
Common equity tier 1 capital4   33,817   33,151   32,671   31,887   33,817   31,887
Risk-weighted assets4   252,373   253,753   237,494   236,697   252,373   236,697
Going concern capital ratio (%)4   17.8   17.3   17.6   17.2   17.8   17.2
Total loss-absorbing capacity ratio (%)4   32.3   31.2   33.0   31.2   32.3   31.2
Leverage ratio denominator4   902,408   882,469   886,116   860,879   902,408   860,879
Total loss-absorbing capacity leverage ratio (%)4   9.0   9.0   8.8   8.6   9.0   8.6
Liquidity coverage ratio (%)6   144   136   143   131   144   131
Other                        
Invested assets (CHF billion)7   3,242   3,155   3,179   2,911   3,242   2,911
Personnel (full-time equivalents)   63,684   62,537   61,253   59,470   63,684   59,470
Market capitalization8   59,072   64,752   69,125   62,553   59,072   62,553
Total book value per share (CHF)8   13.62   13.62   13.76   13.92   13.62   13.92
Tangible book value per share (CHF)8   11.90   11.97   12.04   12.25   11.90   12.25

1 Refer to “Note 8 Earnings per share (EPS) and shares outstanding” in the “Consolidated financial statements” section of the UBS Group second quarter 2018 report for more information. 2
Refer to the “Measurement of performance” section of our Annual Report 2017 for the definitions of our key performance indicators. 3 Calculated as adjusted operating expenses / adjusted
operating income before credit loss (expense) or recovery. 4 Based on the Swiss systemically relevant bank framework as of 1 January 2020. Refer to the “Capital management” section of
the UBS Group second quarter 2018 report for more information. 5 Calculated as operating income before credit loss (annualized as applicable) / average risk-weighted assets and average
leverage ratio denominator, respectively. 6 Refer to the “Balance sheet, liquidity and funding management” section of the UBS Group second quarter 2018 report for more information. 7
Includes invested assets for Personal & Corporate Banking. 8 Refer to “UBS shares” in the “Capital management” section of the UBS Group second quarter 2018 report for more
information.

 
             
Income statement                            
  For the quarter ended % change from Year-to-date
CHF million   30.6.18   31.3.18   30.6.17   1Q18   2Q17   30.6.18   30.6.17
Net interest income   985   1,743   1,417   (44)   (30)   2,729   3,113
Other net income from fair value changes on financial instruments   2,187   1,466   1,456   49   50   3,653   2,896
Credit loss (expense) / recovery   (28)   (25)   (46)   14   (38)   (53)   (46)
Fee and commission income   4,793   4,882   4,744   (2)   1   9,675   9,533
Fee and commission expense   (417)   (409)   (449)   2   (7)   (826)   (885)
Net fee and commission income   4,377   4,473   4,295   (2)   2   8,850   8,648
Other income   34   40   147   (16)   (77)   74   190
Total operating income   7,554   7,698   7,269   (2)   4   15,252   14,801

of which: net interest income and other net income from fair value changes on
financial instruments

  3,172   3,210   2,873   (1)   10   6,382   6,009
Personnel expenses   4,059   4,014   4,014   1   1   8,073   8,074
General and administrative expenses   1,516   1,424   1,488   6   2   2,940   2,994
Depreciation and impairment of property, equipment and software   284   272   249   4   14   556   505
Amortization and impairment of intangible assets   16   16   16   3   1   32   37
Total operating expenses   5,875   5,725   5,767   3   2   11,600   11,609
Operating profit / (loss) before tax   1,679   1,973   1,502   (15)   12   3,652   3,192
Tax expense / (benefit)   394   457   327   (14)   20   851   701
Net profit / (loss)   1,285   1,516   1,175   (15)   9   2,801   2,490
Net profit / (loss) attributable to non-controlling interests   1   1   1   (7)   65   3   47
Net profit / (loss) attributable to shareholders   1,284   1,514   1,174   (15)   9   2,798   2,443
 
Comprehensive income                            
Total comprehensive income   2,342   696   103   237       3,039   769
Total comprehensive income attributable to non-controlling interests   (1)   1   14           1   61
Total comprehensive income attributable to shareholders   2,343   695   89   237       3,038   708
 
         
Comparison UBS Group AG consolidated versus UBS AG consolidated                    
    As of or for the quarter ended 30.6.18   As of or for the quarter ended 31.3.18 As of or for the quarter ended 31.12.17
CHF million, except where indicated   UBS Group AG

(consolidated)

  UBS AG

(consolidated)

  Difference

(absolute)

 

UBS Group
AG
(consolidated)

  UBS AG

(consolidated)

  Difference

(absolute)

 

UBS Group
AG
(consolidated)

 

UBS AG

(consolidated)

  Difference

(absolute)

   
Income statement                                    
Operating income   7,554   7,641   (88)   7,698   7,823   (125)   7,122   7,242   (120)
Operating expenses   5,875   6,089   (213)   5,725   6,040   (315)   6,266   6,487   (221)
Operating profit / (loss) before tax   1,679   1,553   126   1,973   1,783   190   855   755   100
of which: Global Wealth Management   1,037   1,027   9   1,129   1,117   12   782   778   4
of which: Personal & Corporate Banking   368   368   0   419   420   (1)   392   393   (1)
of which: Asset Management   101   101   0   106   106   0   238   238   0
of which: Investment Bank   569   549   20   589   577   12   49   50   (1)
of which: Corporate Center   (396)   (492)   96   (270)   (437)   167   (605)   (704)   99
of which: Services   (172)   (260)   88   (35)   (210)   175   (155)   (252)   97
of which: Group ALM   (206)   (214)   8   (222)   (214)   (8)   (214)   (217)   3
of which: Non-core and Legacy Portfolio   (18)   (18)   0   (12)   (13)   1   (236)   (236)   0
Net profit / (loss)   1,285   1,184   101   1,516   1,371   144   (2,310)   (2,385)   75

of which: net profit / (loss) attributable to
shareholders

  1,284   1,183   101   1,514   1,370   144   (2,336)   (2,412)   76

of which: net profit / (loss) attributable to
preferred noteholders

                              26   (26)

of which: net profit / (loss) attributable to non-
controlling interests

  1   1   0   1   1   0   27   0   27
 
Statement of comprehensive income                                    
Other comprehensive income   1,057   1,066   (8)   (819)   (732)   (87)   184   187   (3)
of which: attributable to shareholders   1,060   1,068   (8)   (820)   (732)   (88)   (124)   (122)   (2)
of which: attributable to preferred noteholders                               307   (307)
of which: attributable to non-controlling interests   (2)   (2)   0   0   0   0   309   2   307
Total comprehensive income   2,342   2,250   92   696   639   57   (2,125)   (2,198)   73
of which: attributable to shareholders   2,343   2,251   92   695   638   57   (2,461)   (2,534)   73
of which: attributable to preferred noteholders                               333   (333)

of which: attributable to non-controlling
interests

  (1)   (1)   0   1   1   0   336   3   333
 
Balance sheet                                    
Total assets   944,482   945,296   (813)   919,361   920,280   (919)   915,642   916,363   (721)
Total liabilities   893,649   895,275   (1,626)   868,056   869,430   (1,374)   864,371   865,588   (1,217)
Total equity   50,834   50,021   813   51,305   50,850   455   51,271   50,775   496
of which: equity attributable to shareholders   50,774   49,961   813   51,243   50,788   455   51,214   50,718   496

of which: equity attributable to non-controlling
interests

  60   60   0   62   62   0   57   57   0
 
Capital information                                    
Common equity tier 1 capital   33,817   33,686   132   33,151   33,424   (273)   32,671   33,240   (569)
Going concern capital   44,956   40,823   4,133   44,026   40,335   3,691   41,911   36,906   5,005
Risk-weighted assets   252,373   251,648   724   253,753   253,784   (32)   237,494   236,606   888
Common equity tier 1 capital ratio (%)   13.4   13.4   0.0   13.1   13.2   (0.1)   13.8   14.0   (0.2)
Going concern capital ratio (%)   17.8   16.2   1.6   17.3   15.9   1.5   17.6   15.6   2.0
Total loss-absorbing capacity ratio (%)   32.3   31.7   0.6   31.2   30.7   0.5   33.0   31.4   1.6
Leverage ratio denominator   902,408   903,467   (1,058)   882,469   883,676   (1,207)   886,116   887,189   (1,073)
Common equity tier 1 leverage ratio (%)   3.75   3.73   0.02   3.76   3.78   (0.03)   3.69   3.75   (0.06)
Going concern leverage ratio (%)   5.0   4.5   0.5   5.0   4.6   0.4   4.7   4.2   0.5
Total loss-absorbing capacity leverage ratio (%)   9.0   8.8   0.2   9.0   8.8   0.2   8.8   8.4   0.4
 

UBS’s second quarter 2018 report, news release and slide presentation will be available from 06:45 CEST on Tuesday, 24 July 2018, at www.ubs.com/quarterlyreporting.

UBS will hold a presentation of its second quarter 2018 results on Tuesday, 24 July 2018. The results will be presented by Sergio P. Ermotti, Group Chief Executive Officer, Kirt Gardner, Group Chief Financial Officer, Caroline Stewart, Global Head Investor Relations, and Hubertus Kuelps, Group Head Communications & Branding.

Time

• 09:00–11:00 CEST

• 08:00–10:00 BST

• 03:00–05:00 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.

Conference call for media Q&A session

Immediately following the presentation and analyst Q&A, there will be a separate media Q&A session.

Please note: This session will be held via conference call only.

     
Switzerland/Europe: +41-58-310 50 07
UK: +44-121-281 80 12
Americas: +1-213-799 17 25
Other locations: +41-58-310 50 07
 

Cautionary Statement Regarding Forward-Looking Statements

This news 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 the ongoing execution of its strategic plans, including its cost reduction and efficiency initiatives and its ability to manage its levels of risk-weighted assets (RWA), including to counteract regulatory-driven increases, leverage ratio denominator, liquidity coverage ratio and other financial resources, and the degree to which UBS is successful in implementing changes to its businesses to meet changing market, regulatory and other conditions; (ii) continuing low or negative interest rate environment, developments in the macroeconomic climate and in the markets in which UBS operates or to which it is exposed, including movements in securities prices or liquidity, credit spreads, and currency exchange rates, and the effects of economic conditions, market developments, and geopolitical tensions on the financial position or creditworthiness of UBS’s clients and counterparties as well as on client sentiment and levels of activity; (iii) changes in the availability of capital and funding, including any changes in UBS’s credit spreads and ratings, as well as availability and cost of funding to meet requirements for debt eligible for total loss-absorbing capacity (TLAC); (iv) changes in or the implementation of financial legislation and regulation in Switzerland, the US, the UK and other financial centers that have imposed, or resulted in, or may do so in the future, more stringent or entity-specific capital, TLAC, leverage ratio, liquidity and funding requirements, incremental tax requirements, additional levies, limitations on permitted activities, constraints on remuneration, constraints on transfers of capital and liquidity and sharing of operational costs across the Group or other measures, and the effect these will or would have on UBS’s business activities; (v) the degree to which UBS is successful in implementing further changes to its legal structure to improve its resolvability and meet related regulatory requirements 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, to proposals in Switzerland and other jurisdictions for mandatory structural reform of banks or systemically important institutions or to other external developments, and the extent to which such changes will have the intended effects; (vi) uncertainty as to the extent to which the Swiss Financial Market Supervisory Authority (FINMA) will confirm limited reductions of gone concern requirements due to measures to reduce resolvability risk; (vii) the uncertainty arising from the timing and nature of the UK exit from the EU and the potential need to make changes in UBS’s legal structure and operations as a result of it; (viii) changes in UBS’s competitive position, including whether differences in regulatory capital and other requirements among the major financial centers will adversely affect UBS’s ability to compete in certain lines of business; (ix) changes in the standards of conduct applicable to our businesses that may result from new regulation or new enforcement of existing standards, including recently enacted and proposed measures to impose new and enhanced duties when interacting with customers and in the execution and handling of customer transactions; (x) the liability to which UBS may be exposed, or possible constraints or sanctions that regulatory authorities might impose on UBS, due to litigation, contractual claims and regulatory investigations, including the potential for disqualification from certain businesses or loss of licenses or privileges as a result of regulatory or other governmental sanctions, as well as the effect that litigation, regulatory and similar matters have on the operational risk component of our RWA; (xi) the effects on UBS’s cross-border banking business of tax or regulatory developments and of possible changes in UBS’s policies and practices relating to this business; (xii) UBS’s ability to retain and attract the employees necessary to generate revenues and to manage, support and control its businesses, which may be affected by competitive factors including differences in compensation practices; (xiii) changes in accounting or tax standards or policies, and determinations or interpretations affecting the recognition of gain or loss, the valuation of goodwill, the recognition of deferred tax assets and other matters, including from changes to US taxation under the Tax Cuts and Jobs Act; (xiv) UBS’s ability to implement new technologies and business methods, including digital services and technologies and ability to successfully compete with both existing and new financial service providers, some of which may not be regulated to the same extent; (xv) limitations on the effectiveness of UBS’s internal processes for risk management, risk control, measurement and modeling, and of financial models generally; (xvi) the occurrence of operational failures, such as fraud, misconduct, unauthorized trading, financial crime, cyberattacks, and systems failures; (xvii) restrictions on the ability of UBS Group AG to make payments or distributions, including due to restrictions on the ability of its subsidiaries to make loans or distributions, directly or indirectly, or, in the case of financial difficulties, due to the exercise by FINMA or the regulators of UBS’s operations in other countries of their broad statutory powers in relation to protective measures, restructuring and liquidation proceedings; (xviii) the degree to which changes in regulation, capital or legal structure, financial results or other factors may affect UBS’s ability to maintain its stated capital return objective; and (xix) the effect that these or other factors or unanticipated events may have on our reputation and the additional consequences that this may have on our business and performance. The sequence in which the factors above are presented is not indicative of their likelihood of occurrence or the potential magnitude of their consequences. Our business and financial performance could be affected by other factors identified in our past and future filings and reports, including those filed with the SEC. More detailed information about those factors is set forth in documents furnished by UBS and filings made by UBS with the SEC, including UBS’s Annual Report on Form 20-F for the year ended 31 December 2017. UBS is not under any obligation to (and expressly disclaims any obligation to) update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.

Rounding

Numbers presented throughout this news release may not add up precisely to the totals provided in the tables and text. Starting in 2018, percentages, absolute and percent changes, and adjusted results are calculated on the basis of unrounded figures, with the exception of movement information provided in text that can be derived from figures displayed in the tables, which is calculated on a rounded basis. For prior periods, these values are calculated on the basis of rounded figures displayed in the tables and text.

Tables

Within tables, blank fields generally indicate that the field is not applicable or not meaningful, or that information is not available as of the relevant date or for the relevant period. Zero values generally indicate that the respective figure is zero on an actual or rounded basis. Percentage changes are presented as a mathematical calculation of the change between periods.

Contacts

UBS Group AG and UBS AG
Investor contact
Switzerland: +41-44-234 41 00
or
Media contact
Switzerland: +41-44-234 85 00
UK: +44-207-567 47 14
Americas: +1-212-882 58 57
APAC: +852-297-1 82 00
www.ubs.com

Contacts

UBS Group AG and UBS AG
Investor contact
Switzerland: +41-44-234 41 00
or
Media contact
Switzerland: +41-44-234 85 00
UK: +44-207-567 47 14
Americas: +1-212-882 58 57
APAC: +852-297-1 82 00
www.ubs.com