UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
Date: November 7, 2023
UBS Group AG
(Registrant's Name)
Bahnhofstrasse 45, 8001 Zurich, Switzerland
(Address of principal executive office)
Commission File Number: 1-36764
UBS AG
(Registrant's Name)
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Aeschenvorstadt 1, 4051 Basel, Switzerland
(Address of principal executive offices)
Commission File Number: 1-15060
Credit Suisse AG
(Registrant's Name)
Paradeplatz 8, 8001 Zurich, Switzerland
(Address of principal executive office)
Commission File Number: 1-33434
Indicate by check mark whether the registrants file or will file annual reports under cover of Form 20-F or Form
40-
F.
Form 20-F
☒
☐
This Form 6-K consists of the Third Quarter 2023 Report of UBS Group AG, which appears immediately following
this page.
Third
quarter
2023
report
Corporate calendar UBS Group AG
Publication of the fourth quarter 2023 report: Tuesday, 6 February 2024
Publication of the Annual Report 2023: Thursday, 28 March 2024
Publication of the Sustainability Report 2023: Thursday, 28 March 2024
Annual General Meeting 2024: Wednesday, 24 April 2024
Publication of the first quarter 2024 report: Tuesday, 7 May 2024
Publication dates of future quarterly and annual reports and results are made available as
part of the corporate calendar of UBS Group AG at
ubs.com/investors
.
Contacts
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relationships with institutional investors,
research analysts and credit rating agencies.
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ubs.com/media
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mediarelations@ubs.com
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sh-mediarelations-ap@ubs.com
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UBS Group AG, Office of the Group
Company Secretary
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sh-company-secretary@ubs.com
Zurich +41-44-235 6652
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of the Group Company Secretary’s office,
manages relationships with shareholders
and the registration of UBS Group AG
registered shares.
UBS Group AG, Shareholder Services
P.O. Box, CH-8098 Zurich, Switzerland
sh-shareholder-services@ubs.com
Zurich +41-44-235 6652
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For global registered share-related
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Imprint
Publisher: UBS Group AG, Zurich, Switzerland | ubs.com
Language: English
© UBS 2023. The key symbol and UBS are among the registered and unregistered
trademarks of UBS. All rights reserved.
1.
UBS
Group
4
7
2.
UBS business divisions
and Group Items
19
23
26
29
32
34
3.
Risk, capital, liquidity and funding,
and balance sheet
36
42
50
52
55
4.
Consolidated
financial statements
57
5.
Significant regulated subsidiary and
sub-group information
108
Appendix
111
115
117
118
UBS Group third quarter 2023 report
Terms used in this report, unless the context requires otherwise
“UBS,” “UBS Group,” “UBS Group AG consolidated,” “Group,” “the Group,” “we,” “us” and “our”
UBS Group AG and its consolidated subsidiaries
“UBS AG” and “UBS AG consolidated”
UBS AG and its consolidated subsidiaries
“Credit Suisse AG” and “Credit Suisse AG consolidated”
Credit Suisse AG and its consolidated subsidiaries
“Credit Suisse Group“ and “Credit Suisse Group AG consolidated”
Pre-acquisition Credit Suisse Group
”Credit Suisse”
Credit Suisse AG and its consolidated subsidiaries, Credit Suisse
Services AG, and other small former Credit Suisse Group entities
now directly held by UBS Group AG
“UBS Group AG” and “UBS Group AG standalone”
UBS Group AG on a standalone basis
“Credit Suisse Group AG” and “Credit Suisse Group AG standalone”
Credit Suisse Group AG on a standalone basis
“UBS AG standalone”
UBS AG on a standalone basis
“Credit Suisse AG standalone”
Credit Suisse AG on a standalone basis
“UBS Switzerland AG” and “UBS Switzerland AG standalone”
UBS Switzerland AG on a standalone basis
“UBS Europe SE consolidated”
UBS Europe SE and its consolidated subsidiaries
“UBS Americas Holding LLC” and “UBS Americas Holding LLC consolidated”
UBS Americas Holding LLC and its consolidated subsidiaries
“1m”
One million, i.e., 1,000,000
“1bn”
One billion, i.e., 1,000,000,000
“1trn”
One trillion, i.e., 1,000,000,000,000
In this report, unless the context requires otherwise, references to any gender shall apply to all genders.
Alternative performance measures
An alternative performance measure (an APM) is a financial measure of historical or future financial performance,
financial position or cash flows other than a financial measure defined or specified in the applicable recognized
accounting standards or in other applicable regulations. We report a number of APMs in the discussion of the
financial and operating performance of the Group, our business divisions and Group Items. We use APMs to provide
a more complete picture of our operating performance and to reflect management’s view of the fundamental
drivers of our business results. A definition of each APM, the method used to calculate it and the information
content are presented under “Alternative performance measures” in the appendix to this report. Our APMs may
qualify as non-GAAP measures as defined by US Securities and Exchange Commission (SEC) regulations. Our
underlying results are APMs and are non-GAAP financial measures.
›
Refer to the ”Group performance” section of this report and to “Alternative performance measures” in the
appendix to this report for additional information about underlying results
Comparability
Comparative information in this report is presented as follows:
Profit and loss information for the third quarter of 2023 is presented on a consolidated basis, including Credit Suisse
data for three months. The second quarter of 2023 comparative consolidated profit or loss information includes
three months of data for UBS and one month (June 2023) for Credit Suisse. Information for the prior-year quarters
includes legacy UBS data only. 2023 year-to-date information includes nine months of data for UBS and four months
for Credit Suisse. Comparative year-to-date information for 2022 includes UBS only.
Balance sheet information as at 30 September 2023 and 30 June 2023 includes UBS and Credit Suisse consolidated
information, prior balance sheet dates reflect legacy UBS information only.
UBS Group third quarter 2023 report
Our key figures
As of or for the quarter ended
As of or year-to-date
USD m, except where indicated
30.9.23
30.6.23
1
31.12.22
30.9.22
30.9.23
30.9.22
Group results
Total revenues
Negative goodwill
Credit loss expense / (release)
Operating expenses
Operating profit / (loss) before tax
Net profit / (loss) attributable to shareholders
Diluted earnings per share (USD)
2
Profitability and growth
3,4,5
Return on equity (%)
Return on tangible equity (%)
Underlying return on tangible equity (%)
Return on common equity tier 1 capital (%)
Underlying return on common equity tier 1 capital (%)
Return on leverage ratio denominator, gross (%)
Cost / income ratio (%)
6
Underlying cost / income ratio (%)
6
Effective tax rate (%)
n.m.
7
Net profit growth (%)
n.m.
n.m.
Resources
3
Total assets
Equity attributable to shareholders
Common equity tier 1 capital
8
Risk-weighted assets
8
Common equity tier 1 capital ratio (%)
8
Going concern capital ratio (%)
8
Total loss-absorbing capacity ratio (%)
8
Leverage ratio denominator
8
Common equity tier 1 leverage ratio (%)
8
Liquidity coverage ratio (%)
9
Net stable funding ratio (%)
Other
Invested assets (USD bn)
4,10,11
Personnel (full-time equivalents)
Market capitalization
2,12
Total book value per share (USD)
2
Tangible book value per share (USD)
2
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
2 Refer to the “Share information and earnings per share” section of this report for more information. 3 Refer to the “Targets, aspirations and capital guidance” section of the Annual Report 2022 for more
information about our performance targets. 4 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method. 5 Profit or loss information for the third quarter
of 2023 includes three months of information for UBS and three months of information for Credit Suisse and, for the purpose of the calculation of return measures, has been annualized multiplying such by four. Profit
or loss information for the second quarter of 2023 includes three months of information for UBS and one month (June 2023) of information for Credit Suisse and, for the purpose of the calculation of return measures,
has been annualized multiplying such by four. Profit or loss information for the first nine months of 2023 includes nine months of information for UBS and four months (June–September 2023) of information for Credit
Suisse and, for the purpose of the calculation of return measures, has been annualized by dividing such by three and then multiplying by four for the year-to-date measure. 6 Negative goodwill is not used in the
calculation as it is presented in a separate reporting line and is not part of total revenues. 7 The effective tax rate for the third quarter of 2023 is not a meaningful measure, due to the distortive effect of current
unbenefited tax losses at the former Credit Suisse entities. 8 Based on the Swiss systemically relevant bank framework as of 1 January 2020. Refer to the “Capital management” section of this report for more
information. 9 The disclosed ratios represent quarterly averages for the quarters presented and are calculated based on an average of 63 data points in the third quarter of 2023, 64 data points in the second quarter
of 2023, 63 data points in the fourth quarter of 2022 and 66 data points in the third quarter of 2022. Refer to the “Liquidity and funding management” section of this report for more information. 10 Consists of
invested assets for Global Wealth Management, Asset Management and Personal & Corporate Banking. Refer to “Note 31 Invested assets and net new money” in the “Consolidated financial statements” section of
the Annual Report 2022 for more information. 11 Starting with the second quarter of 2023, invested assets include invested assets from associates in the Asset Management business division, to better reflect the
business strategy. Comparative figures have been restated to reflect this change. 12 In the second quarter of 2023, the calculation of market capitalization was amended to reflect total shares issued multiplied by
the share price at the end of the period. The calculation was previously based on total shares outstanding multiplied by the share price at the end of the period. Market capitalization has been increased by USD 7.8bn
as of 31 December 2022 and by USD 5.0bn as of 30 September 2022 as a result.
UBS Group third quarter 2023 report |
UBS Group | Recent developments 4
UBS Group
Management report
Recent developments
Integration of Credit Suisse
We are executing on our integration plans at pace and we made further progress regarding Non-core and Legacy
risk reduction and cost savings.
We aim to substantially complete the integration for the Group by the end of 2026 and to achieve gross cost
reductions of over USD 10bn by that time compared with the pre-acquisition 2022 combined cost base of UBS and
Credit Suisse. We plan to merge UBS AG with Credit Suisse AG and Credit Suisse (Schweiz) AG with UBS Switzerland
AG in 2024 and to transition to a single US intermediate holding company in the first half of 2024. The client
migration to a combined platform for UBS Switzerland AG and Credit Suisse (Schweiz) AG is targeted for 2025.
Starting with the third quarter of 2023, we report five business divisions in line with International Financial Reporting
Standards (IFRS), reflecting the way we are managing our businesses and engaging with clients: Global Wealth
Management, Personal & Corporate Banking, Asset Management, the Investment Bank, and Non-core and Legacy.
We separately report Group Items.
The Non-core and Legacy business division includes positions and businesses not aligned with our strategy and
policies. Those consist of the assets and liabilities reported as part of the former Credit Suisse Capital Release Unit
in the second quarter of 2023 and certain assets and liabilities of the former Credit Suisse Investment Bank, Wealth
Management and Asset Management divisions, as well as of the former Credit Suisse Corporate Center. Also
included are the remaining assets and liabilities of UBS’s Non-core and Legacy Portfolio, previously reported in
Group Functions, and smaller amounts of assets and liabilities of our UBS’s business divisions that we have assessed
as not strategic in light of the acquisition of the Credit Suisse Group.
Information for the business divisions and Group Items for the second quarter of 2023 has been restated to reflect
the effect of the integration of the UBS and Credit Suisse divisions on an IFRS basis from June 2023 onward, as well
as the establishment of the Non-core and Legacy business division, and a related reclassification of certain Non-
Core and Legacy positions to a fair value accounting basis. Prior-year quarter information reflects the results of UBS
Group operations prior to the acquisition of the Credit Suisse Group, presented in line with the new business division
structure. As we execute our integration plans, it is expected that allocation methodologies for profit and loss and
balance sheet to the business divisions and into Group Items will continue to be reviewed and refined.
As disclosed in the UBS Group second quarter 2023 report, UBS accounted for the acquisition as a business
combination under IFRS 3,
Business Combinations
, applying the acquisition method of accounting. After
establishing the initial purchase price allocation (PPA) published as in the UBS Group second quarter 2023 report,
we are required for the subsequent 12-month period to monitor developments that may suggest that the fair value
valuations established as of the acquisition balance sheet date (31 May 2023) could be different.
›
Refer to the “UBS business divisions and Group Items” section of this report for more information
›
Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial
statements” section of this report for more information
Underlying results
In the context of the integration of Credit Suisse, we recognize the importance of describing the performance of
our business divisions excluding items of profit or loss that management believes are not representative of the
underlying performance. Therefore, in addition to reporting our results in accordance with IFRS, we have added
underlying results to our reporting. Underlying results are non-GAAP financial measures as defined by US Securities
and Exchange Commission (SEC) regulations and as alternative performance measures in Switzerland and the EU.
UBS Group third quarter 2023 report |
UBS Group | Recent developments 5
Items related to the integration of Credit Suisse that management believes are not representative of our underlying
performance include accretion impacts resulting from PPA adjustments related to financial instruments measured
at amortized cost, including off-balance sheet positions. They also include integration-related expenses and
acquisition-related costs.
›
Refer to “Selected financial information of our business divisions and Group Items” in the “Group performance”
section of this report for more information about underlying results
›
Refer to “Alternative performance measures” in the appendix to this report for more information
Update to the operational risk risk-weighted asset allocation methodology
In the third quarter of 2023, we updated the methodology that we use to allocate operational risk risk-weighted
assets (RWA) to business divisions and Group Items. The revised allocation methodology takes into account the
integration of Credit Suisse into the revised business division structure and the establishment and perimeter of Non-
core and Legacy, as well as both current operational risk calculation methodologies and anticipated changes to the
methodology under Basel III that are expected to become effective in 2025. As some of these drivers remain subject
to uncertainty, the methodology and divisional operational risk RWA allocation may undergo further refinement in
subsequent financial reporting periods.
›
Refer to “Risk-weighted assets” in the “Capital management” section of this report for more information about
operational risk RWA
Material weaknesses in the Credit Suisse Group’s internal control over financial reporting as of 31 December
2022 and 31 December 2021
As registrants with the SEC, the UBS Group, UBS AG and Credit Suisse AG are subject to requirements under the
Sarbanes–Oxley Act of 2002 with respect to financial reporting. This requires us to perform system and process
evaluation and testing of internal controls over financial reporting to enable management to assess the effectiveness
of our internal controls. A material weakness is a deficiency or a combination of deficiencies in internal controls
over financial reporting such that there is a reasonable possibility that a material misstatement of a registrant’s
financial statements will not be prevented or detected on a timely basis. Evaluation of the impacts of the material
weaknesses identified in Credit Suisse’s internal control over financial reporting will form part of our annual
assessment, which will be disclosed as part of our Annual Report 2023.
Regulatory and legal developments
Introduction of a public liquidity backstop in Switzerland
In September 2023, the Swiss Federal Council adopted a dispatch and draft legislation on the introduction of a
public liquidity backstop (a PLB) for systemically important banks (SIBs). The proposed legislative changes aim to
establish the PLB as part of ordinary law in order to enable the Swiss government and the Swiss National Bank (the
SNB) to support an SIB domiciled in Switzerland with liquidity in the process of resolution, in line with other financial
centers. The introduction of the PLB is intended to increase the confidence of market participants in the ability of
SIBs to be successfully recapitalized and remain solvent in a crisis. Furthermore, the draft legislation provides that
SIBs will pay the Swiss Confederation an annual fee to mitigate a potential impact on competition and to
compensate the Swiss Confederation for its guarantee to the SNB of the PLB, if required.
In addition to the PLB, the proposed legislative changes would enact into ordinary law additional provisions
contained in the emergency ordinance of March 2023, including mandated clawback of variable compensation in
the event that government support is provided to an SIB.
In a next step, the Swiss Parliament will assess the proposed legislation, and if adopted, legislative changes are
expected to come into force by January 2025, at the earliest.
Findings of the group of experts on banking stability
In September 2023, a group of experts on banking stability, mandated by the Swiss Federal Department of Finance,
published a report considering the role of banks and the legal and regulatory framework related to the stability of
the Swiss financial center. The report concludes that the Swiss capital regulation is working as intended and that
there is no need for a major revision. However, the report sees a need for reforms with regard to banking supervision
and proposes that the relevant authorities be granted broader powers. Furthermore, the report suggests
improvements regarding liquidity regulations, including a proposal to extend the supply of liquidity in the case of a
crisis. The report also suggests that Swiss authorities should make improvements with regard to crisis preparation
and management. The Swiss Federal Council will consider the findings of the group of experts in its too-big-to-fail
(TBTF) review report to be presented by April 2024.
UBS Group third quarter 2023 report |
UBS Group | Recent developments 6
Revisions to the Swiss Liquidity Ordinance
In the third quarter of 2023, the Swiss Financial Market Supervisory Authority (FINMA) communicated the liquidity
requirements arising from the revisions to the Swiss Liquidity Ordinance, with the aim of strengthening the resilience
of SIBs in Switzerland. The impacted legal entities of the UBS Group expect to be compliant with these requirements
when they become effective on 1 January 2024.
Swiss Federal Council consultation to strengthen the Swiss anti-money-laundering framework
In August 2023, the Swiss Federal Council launched a consultation on a bill to strengthen the Swiss anti-money-
laundering framework, with the aim of reinforcing the integrity and competitiveness of Switzerland as a financial
and business location. The measures aim to comply with the international standards of the Financial Action Task
Force (the FATF). Among other matters, key elements of the proposal include the introduction of a non-public
register managed by the Federal Department of Justice and Police containing information about the beneficial
owners of companies and other legal entities in Switzerland, as well as due diligence requirements for activities
with an increased risk of money laundering. The consultation ends in November 2023, and we expect to implement
operational controls if the bill is implemented as proposed.
US banking regulators’ changes to the resolution framework and long-term debt requirements
In August 2023, the Federal Reserve Board and the Federal Deposit Insurance Corporation issued joint proposals
on long-term debt requirements and resolution planning guidance for large banks. The long-term debt proposal
would require certain large bank-holding companies, intermediate holding companies and insured depositories
with USD 100bn or more in total assets to maintain a minimum amount of long-term debt, intended to enhance
the resilience and resolvability of such organizations. Large banking organizations would also be prohibited from
certain activities that could complicate the resolution or would lead to contagion risks. If the proposals are
implemented, UBS Bank USA would be subject to the long-term debt requirement, which would be incremental to
the requirements already imposed upon its parent organization, UBS Americas Holding LLC. The resolution planning
guidance proposed by US banking regulators would cover our US-based entities and calls for certain enhancements
in the requirements of the submitted resolution plans.
Disclosures on cybersecurity incidents and cybersecurity risk management, strategy and governance
In September 2023, the new rules from the SEC to enhance and standardize disclosure requirements related to
cybersecurity incidents and cybersecurity risk management, strategy and governance became effective. Among
other changes, the rules require foreign private issuers, including UBS Group AG, UBS AG and Credit Suisse AG, to
annually report material information regarding their cybersecurity risk management, strategy and governance on
Form 20-F. The Form 20-F disclosures will become applicable with annual reports for fiscal years ending on or after
15 December 2023.
Other developments
Sale of UBS Hana Asset Management Co., Ltd. in the fourth quarter of 2023
In October 2023, we completed the sale of our 51% stake in UBS Hana Asset Management Co., Ltd. to Hana
Securities. We expect to record a pre-tax gain on sale of approximately USD 20m (net of a foreign currency
translation loss) in Asset Management in the fourth quarter of 2023.
UBS Group third quarter 2023 report |
UBS Group | Group performance 7
Group performance
Income statement
For the quarter ended
% change from
Year-to-date
USD m
30.9.23
30.6.23
1
30.9.22
2Q23
3Q22
30.9.23
30.9.22
Net interest income
Other net income from financial instruments measured at fair value through profit or loss
Net fee and commission income
Other income
Total revenues
Negative goodwill
Credit loss expense / (release)
Personnel expenses
General and administrative expenses
Depreciation, amortization and impairment of non-financial assets
Operating expenses
Operating profit / (loss) before tax
Tax expense / (benefit)
Net profit / (loss)
Net profit / (loss) attributable to non-controlling interests
Net profit / (loss) attributable to shareholders
Comprehensive income
Total comprehensive income
Total comprehensive income attributable to non-controlling interests
Total comprehensive income attributable to shareholders
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
UBS Group third quarter 2023 report |
UBS Group | Group performance 8
Selected financial information of our business divisions and Group Items
For the quarter ended 30.9.23
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
1
Group Items
1
Total
Total revenues as reported
of which: accretion of PPA adjustments on financial
instruments and other effects
Total revenues (underlying)
Credit loss expense / (release)
Operating expenses as reported
of which: integration-related expenses
of which: acquisition-related costs
of which: amortization from newly recognized intangibles
resulting from the acquisition of the Credit Suisse Group
Operating expenses (underlying)
Operating profit / (loss) before tax as reported
Operating profit / (loss) before tax (underlying)
For the quarter ended 30.6.23 restated
2
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
1
Group Items
1
Negative
goodwill
Total
Total revenues as reported
of which: accretion of PPA adjustments on financial
instruments and other effects
Total revenues (underlying)
Negative goodwill
Credit loss expense / (release)
Operating expenses as reported
of which: integration-related expenses
of which: acquisition-related costs
of which: amortization from newly recognized intangibles
resulting from the acquisition of the Credit Suisse Group
Operating expenses (underlying)
Operating profit / (loss) before tax as reported
Operating profit / (loss) before tax (underlying)
For the quarter ended 30.9.22
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
1
Group Items
1
Total
Total revenues as reported
of which: gains from sales of subsidiary and business
of which: litigation settlement
Total revenues (underlying)
Credit loss expense / (release)
Operating expenses as reported
Operating profit / (loss) before tax as reported
Operating profit / (loss) before tax (underlying)
1 Starting with the third quarter of 2023, Non-core and Legacy (previously reported within Group Functions) represents a separate reportable segment and Group Functions has been renamed Group Items. Prior
periods have been restated to reflect these changes. 2 Comparative-period information has been restated. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial
statements” section of this report for more information.
UBS Group third quarter 2023 report |
UBS Group | Group performance 9
Selected financial information of our business divisions and Group Items
Year-to-date 30.9.23
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
1
Group Items
1
Negative
goodwill
Total
Total revenues as reported
of which: accretion of PPA adjustments on financial
instruments and other effects
Total revenues (underlying)
Negative goodwill
Credit loss expense / (release)
Operating expenses as reported
of which: integration-related expenses
of which: acquisition-related costs
of which: amortization from newly recognized intangibles
resulting from the acquisition of the Credit Suisse Group
Operating expenses (underlying)
Operating profit / (loss) before tax as reported
Operating profit / (loss) before tax (underlying)
Year-to-date 30.9.22
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
1
Group Items
1
Total
Total revenues as reported
of which: net gain from disposal of a joint venture
of which: gains from sales of subsidiary and business
of which: losses in the first quarter of 2022 from
transactions with Russian counterparties
of which: litigation settlement
Total revenues (underlying)
Credit loss expense / (release)
Operating expenses as reported
Operating profit / (loss) before tax as reported
Operating profit / (loss) before tax (underlying)
1 Starting with the third quarter of 2023, Non-core and Legacy represents a separate reportable segment and Group Functions has been renamed Group Items. Prior periods have been restated to reflect these changes.
Integration-related expenses by business division and Group Items
For the quarter ended
Year-to-date
USD m
30.9.23
30.6.23
30.9.23
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Non-core and Legacy
1
Group Items
1
Total net integration-related expenses
of which: personnel expenses
of which: general and administrative expenses
of which: depreciation, amortization and impairment of non-financial assets
1 Starting with the third quarter of 2023, Non-core and Legacy (previously reported within Group Functions) represents a separate reportable segment and Group Functions has been renamed Group Items. Prior
periods have been restated to reflect these changes.
UBS Group third quarter 2023 report |
UBS Group | Group performance 10
Introduction to underlying results
In addition to reporting our results in accordance with International Financial Reporting Standards (IFRS), we report
underlying results that exclude items of profit or loss that are not representative of the underlying performance.
These items include accretion impacts resulting from purchase price allocation (PPA) adjustments on financial
instruments measured at amortized cost, including off-balance sheet positions, and other related effects, arising
from the acquisition of Credit Suisse. Underlying revenues exclude these aforementioned impacts. Accretion impacts
resulting from PPA adjustments on financial instruments include accelerated accretion when the related financial
instrument is terminated before its contractual maturity.
Integration-related expenses are defined as expenses that are temporary, incremental and directly related to the
integration of Credit Suisse into UBS. They generally include costs of internal staff and contractors substantially
dedicated to integration activities, retention awards, redundancy costs, incremental expenses from the shortening
of useful lives of property, equipment and software, and impairment charges relating to these assets. Classification
as integration-related expenses does not affect the timing of recognition and measurement of those expenses or
the presentation thereof in the income statement. Integration-related expenses incurred by Credit Suisse also
included expenses associated with restructuring programs that existed prior to the acquisition.
Acquisition costs consist of costs directly attributable to the acquisition of Credit Suisse and mainly include
consulting and legal fees.
Results: 3Q23 vs 3Q22
Operating loss before tax was USD 255m, compared with an operating profit before tax of USD 2,323m, primarily
reflecting higher operating expenses and net credit losses of USD 306m, compared with a net credit loss release of
USD 3m in the third quarter of 2022, partly offset by an increase in total revenues. Operating expenses increased
by USD 5,728m, or 97%, to USD 11,644m, largely due to the consolidation of Credit Suisse expenses of
USD 4,861m. The third quarter of 2023 included total integration-related expenses of USD 2,003m. Personnel
expenses increased by USD 3,355m, mainly reflecting higher expenses for salaries and variable compensation.
General and administrative expenses increased by USD 1,932m, across most categories. Depreciation, amortization
and impairment of non-financial assets increased by USD 442m, mainly driven by higher depreciation of internally
developed software and leasehold improvements. Total revenues increased by USD 3,459m, or 42%, to
USD 11,695m, largely due to the consolidation of Credit Suisse revenues of USD 3,468m, which included accretion
impacts resulting from PPA adjustments on financial instruments and other effects of USD 958m. Total combined
net interest income and other net income from financial instruments measured at fair value through profit or loss
increased by USD 1,928m, mainly attributable to the consolidation of the Credit Suisse Group, which accounted
for USD 1,861m of the increase. Net fee and commission income increased by USD 1,590m, mainly attributable to
a larger invested assets base, following the acquisition of the Credit Suisse Group, which contributed USD 1,416m
of this increase. This was partly offset by a USD 58m decrease in other income.
Underlying results 3Q23 vs 3Q22
For the purpose of determining underlying results for the third quarter of 2023, we excluded accretion impacts
resulting from PPA adjustments on financial instruments and other effects of USD 958m from total revenues, and
integration-related expenses of USD 2,003m, amortization from newly recognized intangibles resulting from the
acquisition of Credit Suisse of USD 28m and acquisition-related costs of USD 26m from operating expenses.
On an underlying basis, profit before tax decreased by USD 1,198m, or 59%, to USD 844m, reflecting a
USD 3,672m increase in underlying operating expenses and net credit losses of USD 306m, compared with a net
credit loss release of USD 3m in the third quarter of 2022, partly offset by a USD 2,782m increase in underlying
total revenues.
Total revenues: 3Q23 vs 3Q22
Net interest income and other net income from financial instruments measured at fair value through profit or loss
Total combined net interest income and other net income from financial instruments measured at fair value through
profit or loss increased by USD 1,928m to USD 5,320m, mainly driven by the consolidation of USD 1,861m of Credit
Suisse revenues, which included USD 655m of accretion impacts resulting from PPA adjustments on financial
instruments and other effects. Excluding Credit Suisse, there were higher revenues in Personal & Corporate Banking,
partly offset by the Investment Bank.
UBS Group third quarter 2023 report |
UBS Group | Group performance 11
Excluding the contribution of Credit Suisse entities, Personal & Corporate Banking increased by USD 294m to
USD 923m, largely due to higher net interest income, mainly driven by higher deposit margins, which resulted from
rising interest rates, and higher loan revenues, partly offset by lower deposit fees. The prior-year quarter also
included a benefit from the Swiss National Bank (SNB) deposit exemption.
Excluding the contribution of Credit Suisse entities, the Investment Bank decreased by USD 217m to USD 1,143m.
Derivatives & Solutions decreased by USD 301m, driven by Foreign Exchange, Rates and Equity Derivatives, due to
lower levels of both volatility and client activity. This was partly offset by an USD 82m increase in Global Banking,
mainly reflecting an improvement in mark-to-market and from higher revenues in Public Capital Markets.
›
Refer to the relevant business division commentary in the “UBS business divisions and Group Items” section of this
report for more information about business-division-specific revenues
›
Refer to “Note 4 Net interest income” in the “Consolidated financial statements” section of this report for more
information about net interest income
Net interest income and other net income from financial instruments measured at fair value through profit or loss
For the quarter ended
% change from
Year-to-date
USD m
30.9.23
30.6.23
1
30.9.22
2Q23
3Q22
30.9.23
30.9.22
Net interest income from financial instruments measured at amortized cost and fair value
through other comprehensive income
Net interest income from financial instruments measured at fair value through profit or loss
and other
Other net income from financial instruments measured at fair value through profit or loss
Total
Global Wealth Management
of which: net interest income
of which: transaction-based income from foreign exchange and other intermediary
activity
2
Personal & Corporate Banking
of which: net interest income
of which: transaction-based income from foreign exchange and other intermediary
activity
2
Asset Management
Investment Bank
Non-core and Legacy
3
Group Items
3
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
2 Mainly includes spread-related income in connection with client-driven transactions, foreign currency translation effects and income and expenses from precious metals, which are included in the income statement
line Other net income from financial instruments measured at fair value through profit or loss. The amounts reported on this line are one component of Transaction-based income in the management discussion and
analysis in the “Global Wealth Management” and “Personal & Corporate Banking” sections of this report. 3 Starting with the third quarter of 2023, Non-core and Legacy represents a separate reportable segment
and Group Functions has been renamed Group Items. Prior periods have been restated to reflect these changes.
Net fee and commission income
Net fee and commission income increased by USD 1,590m to USD 6,071m.
Fees for portfolio management and related services increased by USD 833m to USD 3,011m, largely attributable to
the acquisition of the Credit Suisse Group, which contributed USD 689m of revenues and drove an increase in
invested assets across the UBS Group, as well as gains reflecting positive market performance.
Other fee and commission income increased by USD 588m to USD 1,088m, largely due to the consolidation of
Credit Suisse, mainly related to accretion impacts resulting from PPA adjustments on financial instruments and other
effects of USD 303m.
Net brokerage fees increased by USD 192m to USD 925m, mainly related to the consolidation of USD 187m
attributable to Credit Suisse revenues.
›
Refer to “Note 5 Net fee and commission income” in the “Consolidated financial statements” section of this report
for more information
UBS Group third quarter 2023 report |
UBS Group | Group performance 12
Other income
Other income was USD 305m, compared with USD 363m in the prior-year quarter. The decrease was largely due
to the prior-year quarter including gains in Global Wealth Management of USD 133m and USD 86m, respectively,
on the sales of our domestic wealth management business in Spain and our wholly owned subsidiary UBS Swiss
Financial Advisers AG, as well as a USD 70m gain related to a legacy litigation settlement. This was partly offset by
other income from Credit Suisse for the third quarter of 2023 of USD 191m, which included USD 99m relating to
income earned from mortgage-servicing rights. The third quarter of 2023 also included a USD 62m increase in
income from associates and joint ventures, which included a gain that resulted from a change to the equity method
measurement basis for a portion of our investment in SIX Group . UBS Group has a 36% economic equity interest
in SIX Group and accounts for its proportionate share of SIX Group’s profit or loss.
›
Refer to the “Recent developments” section of the UBS Group third quarter 2022 report for more information about the
sale of our domestic wealth management business in Spain and the sale of UBS Swiss Financial Advisers AG
Credit loss expense / release: 3Q23 vs 3Q22
Total net credit loss expenses in the third quarter of 2023 were USD 306m, compared with net credit loss releases
of USD 3m in the prior-year quarter.
›
Refer to “Note 8 Expected credit loss measurement” in the “Consolidated financial statements” section of this
report for more information
Credit loss expense / (release)
Performing positions
Credit-impaired positions
USD m
Stages 1 and 2
Stage 3
Purchased
Total
For the quarter ended 30.9.23
Global Wealth Management
2
Personal & Corporate Banking
Asset Management
Investment Bank
Non-core and Legacy
Group Items
1
5
6
Total
For the quarter ended 30.6.23
2
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Non-core and Legacy
Group Items
1
Total
For the quarter ended 30.9.22
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Group Items
1
Total
1 Starting with the third quarter of 2023, Non-core and Legacy represents a separate reportable segment and Group Functions has been renamed Group Items. Prior periods have been restated to reflect these changes.
2 Certain prior-period figures as of or for the quarter ended 30 June 2023 have been restated due to effects of measurement period adjustments in relation to the acquisition of the Credit Suisse Group. Refer to
“Note
2
Accounting for the acquisition of the Credit Suisse Group” for more information.
Operating expenses: 3Q23 vs 3Q22
Operating expenses
For the quarter ended
% change from
Year-to-date
USD m
30.9.23
30.6.23
30.9.22
2Q23
3Q22
30.9.23
30.9.22
Personnel expenses
of which: salaries and variable compensation
of which: variable compensation – financial advisors
1
General and administrative expenses
of which: net expenses for litigation, regulatory and similar matters
of which: other general and administrative expenses
Depreciation, amortization and impairment of non-financial assets
Total operating expenses
1 Consists of cash and deferred compensation awards and is based on compensable revenues and firm tenure using a formulaic approach. It also includes expenses related to compensation commitments with financial
advisors entered into at the time of recruitment that are subject to vesting requirements.
UBS Group third quarter 2023 report |
UBS Group | Group performance 13
Personnel expenses
Personnel expenses increased by USD 3,355m to USD 7,571m, mainly reflecting higher salaries and variable
compensation, which increased overall by USD 2,862m. This increase was largely due to the consolidation of Credit
Suisse expenses of USD 2,897m and included integration-related expenses of USD 1,039m relating to awards
granted to employees to support retention and operational stability, severance expenses, and the alignment of
Credit Suisse processes to the UBS variable compensation framework. Excluding the aforementioned effects,
salaries and variable compensation increased due to salary adjustments, higher variable compensation, and foreign
currency effects.
›
Refer to “Note 6 Personnel expenses” in the “Consolidated financial statements” section of this report for more
information
General and administrative expenses
General and administrative expenses increased by USD 1,932m to USD 3,124m, largely due to the consolidation of
Credit Suisse expenses of USD 1,586m and higher technology costs. The third quarter of 2023 included total
integration-related expenses of USD 860m, largely from higher real estate costs and higher consulting fees.
We believe that the industry continues to operate in an environment in which expenses associated with litigation,
regulatory and similar matters will remain elevated for the foreseeable future, and we continue to be exposed to a
number of significant claims and regulatory matters. The outcome of many of these matters, the timing of a
resolution, and the potential effects of resolutions on our future business, financial results or financial condition are
extremely difficult to predict.
›
Refer to “Note 7 General and administrative expenses” in the “Consolidated financial statements” section of this
report for more information
›
Refer to “Note 15 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this
report for more information about litigation, regulatory and similar matters
›
Refer to “Regulatory and legal developments” in the Annual Report 2022 and “Risks relating to UBS” filed on Form
6-K together with the UBS Group second quarter 2023 report for more information
Depreciation, amortization and impairment of non-financial assets
Depreciation, amortization and impairment of non-financial assets increased by USD 442m to USD 950m, largely
due to the consolidation of Credit Suisse expenses of USD 378m, and included total integration-related expenses
of USD 104m. Excluding Credit Suisse, depreciation increased, due to higher depreciation of internally developed
software, reflecting a higher level of capitalized costs, as well as higher costs in respect of leasehold improvements.
Tax: 3Q23 vs 3Q22
Income tax expenses were USD 526m for the third quarter of 2023, compared with USD 580m for the prior-year
quarter. Current tax expenses were USD 643m, compared with USD 368m, and related to the taxable profits of
UBS Switzerland AG and other entities. There was a net deferred tax benefit of USD 116m, compared with an
expense of USD 213m in the prior-year quarter. This included a benefit of USD 133m that resulted from the
recognition of deferred tax assets (DTAs) for tax credits carried forward in relation to US corporate alternative
minimum tax and a benefit of USD 89m in respect of an increase in the expected value of future tax deductions for
deferred compensation awards, due to an increase in the Group’s share price during the quarter. These benefits
were partly offset by expenses of USD 106m that primarily relate to the amortization of DTAs previously recognized
in relation to tax losses carried forward and deductible temporary differences of UBS Americas Inc.
Although the Group had a net pre-tax loss for the quarter, it has a tax expense because that loss included operating
losses of certain entities, reflecting integration-related expenses and restructuring costs, that did not result in any
tax benefits because they cannot be offset with profits of other entities in the Group, and they did not result in any
DTA recognition. The Group’s tax expense for the fourth quarter of 2023 may be similarly impacted if further such
operating losses are incurred, and it may also be affected by remeasurements of DTAs connected with business
planning or that result from material changes to jurisdictional statutory tax rates.
UBS Group third quarter 2023 report |
UBS Group | Group performance 14
Total comprehensive income attributable to shareholders
In the third quarter of 2023, total comprehensive income attributable to shareholders was negative USD 2,684m,
reflecting a net loss of USD 785m and other comprehensive income (OCI), net of tax, of negative USD 1,899m.
OCI related to own credit on financial liabilities designated at fair value was negative USD 686m, primarily due to
a tightening of our own credit spreads.
Foreign currency translation OCI was negative USD 615m, mainly resulting from a weakening of the Swiss franc
and the euro against the US dollar.
OCI related to cash flow hedges was negative USD 526m, mainly reflecting net unrealized losses on US dollar
hedging derivatives resulting from increases in the relevant US dollar long-term interest rates.
›
Refer to “Statement of comprehensive income” in the “Consolidated financial statements” section of this report for
more information
›
Refer to “Reconciliation of IFRS equity to Swiss SRB common equity tier 1 capital” in the “Capital management”
section of this report for more information about the effects of OCI on common equity tier 1 capital
›
Refer to “Note 20 Fair value measurement” in the “Consolidated financial statements” section of the Annual Report
2022 for more information about own credit on financial liabilities designated at fair value
Sensitivity to interest rate movements
As of 30 September 2023, it is estimated that a parallel shift in yield curves by +100 basis points could lead to a
combined increase in annual net interest income from our banking book of approximately USD 1.6bn in the first
year after such a shift. Of this increase, approximately USD 0.8bn, USD 0.4bn and USD 0.1bn would result from
changes in Swiss franc, US dollar and euro interest rates, respectively. A parallel shift in yield curves by –100 basis
points could lead to a combined decrease in annual net interest income of approximately USD 1.5bn in the first
year after such a shift, showing similar currency contributions as for the aforementioned increase in rates.
These estimates are based on a hypothetical scenario of an immediate change in interest rates, equal across all
currencies and relative to implied forward rates as of 30 September 2023 applied to our banking book. These
estimates further assume no change to balance sheet size and product mix, stable foreign exchange rates, and no
specific management action. These estimates do not represent a forecast of net interest income variability.
›
Refer to the “Risk management and control” section of this report for information about interest rate risk in the
banking book
Key figures and personnel
Below is an overview of selected key figures of the Group. For further information about key figures related to
capital management, refer to the “Capital management” section of this report.
Cost / income ratio: 3Q23 vs 3Q22
The cost / income ratio was 99.6%, compared with 71.8%, mainly reflecting an increase in operating expenses,
partly offset by an increase in total revenues. The operating loss incurred by Credit Suisse entities is reflected in the
overall increase of the ratio for the UBS Group. On an underlying basis, the cost / income ratio was 89.3%,
compared with 74.4%, mainly reflecting an increase in operating expenses on an underlying basis, partly offset by
an increase in total revenues on an underlying basis.
Personnel: 3Q23 vs 2Q23
The number of personnel employed as of 30 September 2023 was 115,981 (full-time equivalents), a net decrease
of 3,119 compared with 30 June 2023.
UBS Group third quarter 2023 report |
UBS Group | Group performance 15
Equity, CET1 capital and returns
As of or for the quarter ended
Year-to-date
USD m, except where indicated
30.9.23
30.6.23
1
30.9.22
30.9.23
30.9.22
Net profit
Net profit / (loss) attributable to shareholders
Equity
Equity attributable to shareholders
Less: goodwill and intangible assets
Tangible equity attributable to shareholders
Less: other CET1 deductions
CET1 capital
Returns
Return on equity (%)
Return on tangible equity (%)
Underlying return on tangible equity (%)
Return on CET1 capital (%)
Underlying return on CET1 capital (%)
1 Comparative-period information has been restated. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
Common equity tier 1 capital: 3Q23 vs 2Q23
During the third quarter of 2023, our common equity tier 1 (CET1) capital decreased by USD 1.7bn to USD 78.6bn,
mainly reflecting an operating loss before tax of USD 0.3bn, current tax expenses of USD 0.6bn, negative effects
from foreign currency translation of USD 0.6bn, dividend accruals of USD 0.5bn and amortization of transitional
CET1 PPA adjustments (interest rate and own credit) of USD 0.3bn (net of tax).
Return on CET1 capital: 3Q23 vs 3Q22
The annualized return on CET1 capital was negative 4.0%, compared with positive 15.5%, driven by a loss
attributable to shareholders compared with a profit in the prior-year quarter and the impacts of an increase in
average CET1 capital. On an underlying basis, the return on CET1 capital was 1.1%.
Risk-weighted assets: 3Q23 vs 2Q23
Risk-weighted assets (RWA) decreased by USD 10.1bn to USD 546.5bn, primarily driven by decreases of USD 5.5bn
due to currency effects and USD 5.3bn due to asset size and other movements, partly offset by an increase of
USD 0.6bn due to model updates
.
Common equity tier 1 capital ratio: 3Q23 vs 2Q23
Our CET1 capital ratio was broadly unchanged at 14.4%, reflecting the aforementioned decrease in CET1 capital,
offset by the decrease in RWA.
Leverage ratio denominator: 3Q23 vs 2Q23
During the third quarter of 2023, the leverage ratio denominator (the LRD) decreased by USD 62.1bn to
USD 1,615.8bn, primarily driven by decreases from asset size and other movements of USD 37.1bn and currency
effects of USD 24.9bn.
Common equity tier 1 leverage ratio: 3Q23 vs 2Q23
Our CET1 leverage ratio increased to 4.9% from 4.8%, due to the aforementioned decrease in the LRD, partly
offset by the decrease in CET1 capital.
Going concern leverage ratio: 3Q23 vs 2Q23
Our going concern leverage ratio increased to 5.7% from 5.6%, reflecting the aforementioned decrease in the
LRD, partly offset by the decrease in CET1 capital.
Results 9M23 vs 9M22
Operating profit before tax increased by USD 22,930m to USD 30,597m, primarily reflecting negative goodwill of
USD 28,925m, partly offset by an operating loss incurred by Credit Suisse entities of USD 2,765m, and lower
operating profit earned excluding Credit Suisse.
Total revenues increased by USD 3,445m, or 13%, to USD 29,979m, including the consolidation of Credit Suisse
revenues of USD 4,624m, partly offset by lower year-on-year revenues in non-Credit Suisse entities, across the
respective reporting lines discussed below. Total revenues include accretion impacts resulting from PPA adjustments
on financial instruments and other effects of USD 1,336m.
UBS Group third quarter 2023 report |
UBS Group | Group performance 16
Total combined net interest income and other net income from financial instruments measured at fair value through
profit or loss increased by USD 2,939m, mainly due to the consolidation of USD 2,410m of Credit Suisse revenues.
Excluding Credit Suisse, there were increases of USD 764m in Personal & Corporate Banking and USD 493m in
Global Wealth Management, partly offset by a USD 721m decrease in the Investment Bank. The increase in Personal
& Corporate Banking primarily reflected the impacts of rising interest rates, and higher loan revenues, partly offset
by lower deposit fees and the prior-year period including benefits from the SNB deposit exemption. In addition,
revenues were higher in Global Wealth Management, reflecting an increase in deposit margins, driven by higher
rates. The decrease in the Investment Bank was due to lower levels of both volatility and client activity,
predominantly in Derivatives & Solutions. This decrease was partly offset by an increase in Financing, reflecting
increases across all products.
Net fee and commission income increased by USD 1,196m, largely due to higher portfolio management and related
services fees, due to the consolidation of USD 1,955m of Credit Suisse revenues, partly offset by the impact of
negative market performance on Global Wealth Management and Asset Management revenues, which also had
lower investment fund fees due to negative market performance.
Other income decreased by USD 691m and included higher gains recognized on repurchases of UBS’s own debt
instruments and a higher share of net profits from associates and joint ventures, mainly due to our share of the net
profit from the equity ownership of SIX Group. These increases were more than offset by an USD 848m gain in
Asset Management from the sale of a joint venture in the prior-year period. In addition, the prior-year period
included gains in Global Wealth Management of USD 133m on the sale of our domestic wealth management
business in Spain and USD 86m on the sale of UBS Swiss Financial Advisers AG.
Expected credit loss expenses were USD 967m, largely due to the consolidation of Credit Suisse expected credit loss
expenses of USD 888m, compared with expenses of USD 22m in the prior-year period.
Operating expenses increased by USD 8,495m, or 45%, to USD 27,340m, largely due to the consolidation of Credit
Suisse expenses of USD 6,501m. Included in the overall increase were integration-related expenses of USD 2,727m
and acquisition-related costs of USD 202m.
Personnel expenses increased by USD 4,283m, largely due to the consolidation of Credit Suisse expenses of
USD 3,985m, and included USD 1,399m of integration-related expenses. On an underlying basis, salaries and
variable compensation increased due to salary adjustments, partly offset by lower variable compensation.
General and administrative expenses increased by USD 3,388m, largely due to the consolidation of Credit Suisse
expenses of USD 2,037m, and included USD 979m of integration-related expenses and USD 202m in acquisition-
related costs. In addition, expenses for litigation, regulatory and similar matters increased, driven by the USD 665m
increase in provisions recognized in the first quarter of 2023 related to the US residential mortgage-backed securities
litigation matter.
Depreciation, amortization and impairment of non-financial assets increased by USD 824m, primarily due to the
consolidation of Credit Suisse expenses of USD 480m, and included USD 349m of integration-related expenses,
mainly reflected in an impairment of software projects in progress of USD 206m resulting from a reprioritization of
software development activity in the context of the acquisition.
Underlying results 9M23 vs 9M22
Underlying results for the nine-month period ended 30 September 2023 excluded negative goodwill of
USD 28,925m, and accretion impacts resulting from PPA adjustments on financial instruments and other effects of
USD 1,336m from total revenues. Integration-related expenses of USD 2,727m, acquisition-related costs of
USD 202m and amortization from newly recognized intangibles resulting from the acquisition of Credit Suisse of
USD 36m were excluded from operating expenses.
On an underlying basis, profit before tax decreased by USD 3,330m, or 50%, to USD 3,301m, reflecting a
USD 5,530m increase in underlying operating expenses and net credit loss expenses of USD 967m, compared with
USD 22m in the prior-year period, partly offset by a USD 3,145m increase in underlying total revenues.
›
Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial
statements” section of this report for more information about the negative goodwill recognized
UBS Group third quarter 2023 report |
UBS Group | Group performance 17
Outlook
Central banks have paused interest rate increases, but uncertainties remain in terms of the appropriate level of
interest rates that will allow inflation to converge to their targets. As a result, the outlook for economic growth,
asset valuations and market volatility remains difficult to predict. In addition, the ongoing geopolitical tensions
including the conflicts in the Middle East and Ukraine continue to cloud the macroeconomic outlook.
This, in addition to normal seasonality, may affect wealth management and institutional clients’ transactional activity
in the fourth quarter of 2023. We also expect clients to continue to shift cash holdings from deposits into higher-
yielding products, resulting in similar sequential net interest income performance.
As we continue to execute on our strategy, growth and integration plans, our focus remains on offsetting some of
these ongoing challenges by helping clients to manage the inherent risks and opportunities, gaining share of wallet
and actively winding down our non-core assets and costs.
UBS Group third quarter 2023 report |
UBS business divisions and Group Items | Global Wealth Management 18
UBS business divisions and
Group Items
Management report
Starting with the third quarter of 2023, we report five business divisions in line with International Financial Reporting
Standard (IFRS): Global Wealth Management, Personal & Corporate Banking, Asset Management, the Investment
Bank, and Non-core and Legacy. Group Functions has been renamed Group Items and excludes UBS’s former Non-
core and Legacy Portfolio and includes certain of the assets and liabilities of the former Credit Suisse Corporate
Center.
The Non-core and Legacy business division includes positions and businesses not aligned with our strategy and
policies. Those consist of the assets and liabilities reported as part of the former Credit Suisse Capital Release Unit
in the second quarter of 2023 and certain assets and liabilities of the former Credit Suisse Investment Bank, Wealth
Management and Asset Management divisions, as well as of the former Credit Suisse Corporate Center. Also
included are the remaining assets and liabilities of UBS’s Non-core and Legacy Portfolio, previously reported in
Group Functions, and smaller amounts of assets and liabilities of UBS’s business divisions that we have assessed as
not strategic in light of the acquisition of the Credit Suisse Group.
Information for the business divisions and Group Items for the second quarter of 2023 has been restated to reflect
the effect of the integration of the UBS and Credit Suisse divisions on an IFRS basis from June 2023 onward, as well
as the establishment of the Non-core and Legacy business division. The aforementioned transfer of a small amount
of assets and liabilities from legacy UBS business divisions into Non-core and Legacy has been applied prospectively,
starting with the third quarter of 2023. Information for the third quarter of 2022 represents the results of UBS
Group operations prior to the acquisition of the Credit Suisse Group, but is presented in line with the new business
division structure. As we execute our integration plans, it is expected that allocation methodologies for profit and
loss and balance sheet to the business divisions and into Group Items will continue to be reviewed and refined.
UBS Group third quarter 2023 report |
UBS business divisions and Group Items | Global Wealth Management 19
Global Wealth Management
Global Wealth Management
As of or for the quarter ended
% change from
Year-to-date
USD m, except where indicated
30.9.23
30.6.23
1
30.9.22
2
2Q23
3Q22
30.9.23
30.9.22
2
Results
Net interest income
Recurring net fee income
3
Transaction-based income
3
Other income
Total revenues
Credit loss expense / (release)
Operating expenses
Business division operating profit / (loss) before tax
Underlying results
Total revenues as reported
of which: gains from sales of subsidiary and business
of which: accretion of PPA adjustments on financial instruments
Total revenues (underlying)
3
Credit loss expense / (release)
Operating expenses as reported
of which: integration-related expenses
3
Operating expenses (underlying)
3
of which: expenses for litigation, regulatory and similar matters
Business division operating profit / (loss) before tax as reported
Business division operating profit / (loss) before tax (underlying)
3
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
3
Cost / income ratio (%)
3
Average attributed equity (USD bn)
4
Return on attributed equity (%)
3,4
Financial advisor compensation
5
Net new money (USD bn)
3
Invested assets (USD bn)
3
Loans, gross (USD bn)
6
Customer deposits (USD bn)
6
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
3,7
Advisors (full-time equivalents)
Underlying performance measures
Pre-tax profit growth (year-on-year, %)
3
Cost / income ratio (%)
3
1 Information has been restated to reflect the effects of the integration of the Wealth Management (Credit Suisse) division on an IFRS basis. In addition, certain information has been revised. Refer to “Note 2
Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information. 2 Information reflects Global Wealth Management as reported in
the third quarter of 2022 and the first nine months of 2022, respectively. 3 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method. 4 Refer to “Capital
management” in the “Capital, liquidity and funding, and balance sheet” section of the Annual Report 2022 for more information about the equity attribution framework. 5 Relates to licensed professionals with the
ability to provide investment advice to clients in the Americas. Consists of cash and deferred compensation awards and is based on compensable revenues and firm tenure using a formulaic approach. It also includes
expenses related to compensation commitments with financial advisors entered into at the time of recruitment that are subject to vesting requirements. Recruitment loans to financial advisors were USD 1,764m as of
30 September 2023. 6 Loans and Customer deposits in this table include customer brokerage receivables and payables, respectively, which are presented in a separate reporting line on the balance sheet. 7 Refer
to the “Risk management and control” section of this report for more information about (credit-)impaired exposures. Excludes loans to financial advisors.
Results: 3Q23 vs 3Q22
Profit before tax decreased by USD 446m, or 31%, to USD 1,007m, mainly driven by higher operating expenses
and due to the third quarter of 2022 including a USD 133m gain from the sale of our domestic wealth management
business in Spain and an USD 86m gain from the sale of UBS Swiss Financial Advisers AG. The decrease was also
due to the acquisition of the Credit Suisse Group. Excluding USD 318m of accretion of purchase price allocation
(PPA) adjustments on financial instruments and integration-related expenses of USD 431m, underlying profit before
tax was USD 1,119m.
Total revenues
Total revenues increased by USD 1,024m, or 21%, to USD 5,810m, mainly due to the consolidation of Credit Suisse
revenues, which included USD 318m of accretion of PPA adjustments on financial instruments. The increase was
partly offset by lower other income. Excluding accretion effects, underlying total revenues were USD 5,492m.
UBS Group third quarter 2023 report |
UBS business divisions and Group Items | Global Wealth Management 20
Net interest income increased by USD 580m, or 43%, to USD 1,946m, largely attributable to the consolidation of
Credit Suisse net interest income, which included USD 298m of accretion of PPA adjustments on financial
instruments, and the effects of higher deposit margins, resulting from rising interest rates, partly offset by shifts to
lower-margin deposit products and lower loan revenues, reflecting lower average loan volumes and margins.
Excluding accretion effects, underlying net interest income was USD 1,648m.
Recurring net fee income increased by USD 422m, or 17%, to USD 2,886m, attributable to the consolidation of
Credit Suisse recurring net fee income, as well as reflecting positive market performance.
Transaction-based income increased by USD 227m, or 31%, to USD 959m, largely attributable to the consolidation
of Credit Suisse transaction-based income, which included USD 20m of accretion of PPA adjustments on financial
instruments, as well as higher levels of client activity, particularly in Asia Pacific, Switzerland and EMEA. Excluding
accretion effects, underlying transaction-based income was USD 939m.
Other income decreased by USD 205m, or 91%, to USD 19m, largely due to the third quarter of 2022 including
the aforementioned gains from the sales of our domestic wealth management business in Spain and UBS Swiss
Financial Advisers AG.
Credit loss expense / release
Net credit loss expenses were USD 2m, compared with net expenses of USD 7m in the third quarter of 2022.
Operating expenses
Operating expenses increased by USD 1,475m, or 44%, to USD 4,801m, largely due to the consolidation of Credit
Suisse expenses, integration-related expenses, unfavorable foreign currency effects, higher financial advisor variable
compensation and an increase in technology expenses. Excluding integration-related expenses of USD 431m,
underlying operating expenses were USD 4,370m.
Invested assets: 3Q23 vs 2Q23
Invested assets decreased by USD 100bn, or 3%, to USD 3,617bn, mainly driven by negative market performance
of USD 53bn, a reclassification of USD 30bn related to non-strategic relationships, a transfer of USD 5bn to Non-
core and Legacy, and unfavorable foreign currency effects of USD 30bn, partly offset by net new money inflows of
USD 22bn.
Loans: 3Q23 vs 2Q23
Loans decreased by USD 7.5bn to USD 282.9bn, mainly driven by negative net new loans of USD 7.1bn and
negative foreign currency effects.
Customer deposits: 3Q23 vs 2Q23
Customer deposits increased by USD 20.4bn to USD 439.9bn, mainly driven by net inflows into fixed-term and
savings deposit products, partly offset by continued shifts into money market funds and US-government securities,
as well as unfavorable foreign currency effects.
Results: 9M23 vs 9M22
Profit before tax decreased by USD 711m, or 18%, to USD 3,208m, mainly due to higher operating expenses and
the first nine months of 2022 including a USD 133m gain from the sale of our domestic wealth management
business in Spain and an USD 86m gain from the sale of UBS Swiss Financial Advisers AG. The decrease was also
due to the acquisition of the Credit Suisse Group. Excluding USD 436m of accretion of PPA adjustments on financial
instruments and integration-related expenses of USD 498m, underlying profit before tax was USD 3,270m.
UBS Group third quarter 2023 report |
UBS business divisions and Group Items | Global Wealth Management 21
Total revenues increased by USD 1,379m, or 10%, to USD 15,746m, largely driven by the consolidation of Credit
Suisse revenues, which included the aforementioned USD 436m of accretion of PPA adjustments on financial
instruments, and higher net interest income. The increase was partly offset by a decrease in lower recurring net fee,
other and transaction-based income. Excluding the aforementioned accretion effects, underlying total revenues
were USD 15,310m.
Net interest income increased by USD 1,319m, or 35%, to USD 5,094m, largely attributable to the consolidation
of Credit Suisse net interest income, which included USD 412m of accretion of PPA adjustments on financial
instruments, with the remaining increase mainly driven by higher deposit margins, resulting from rising interest
rates, partly offset by the effects of shifts to lower-margin deposit products, lower average deposit volumes and
lower loan revenues, reflecting lower average volumes and margins. Excluding accretion effects, underlying net
interest income was USD 4,682m.
Recurring net fee income increased by USD 92m, or 1%, to USD 7,975m, mainly driven by the consolidation of
Credit Suisse recurring net fee income, partly offset by negative market performance.
Transaction-based income increased by USD 163m, or 7%, to USD 2,642m, mainly driven by the consolidation of
Credit Suisse transaction-based income, which included USD 24m of accretion of PPA adjustments on financial
instruments, partly offset by lower levels of client activity, particularly in the Americas and Asia Pacific. Excluding
accretion effects, underlying transaction-based income was USD 2,618m.
Other income decreased by USD 195m, or 85%, to USD 34m, largely due to the first nine months of 2022 including
the aforementioned gains from the sales of our domestic wealth management business in Spain and of UBS Swiss
Financial Advisers AG.
Net credit loss expenses were USD 154m, mainly driven by the consolidation of Credit Suisse net credit loss
expenses, compared with net releases of USD 3m in the first nine months of 2022.
Operating expenses increased by USD 1,934m, or 19%, to USD 12,384m, largely due to the consolidation of Credit
Suisse expenses, higher technology expenses, integration-related expenses, and unfavorable foreign currency
effects. These were partly offset by lower provisions for litigation, regulatory and similar matters, as well as lower
financial advisor variable compensation. Excluding integration-related expenses of USD 498m, underlying operating
expenses were USD 11,886m.
Regional breakdown of performance measures
As of or for the quarter ended 30.9.23
USD bn, except where indicated
Americas
1
Switzerland
2
EMEA
2
Asia Pacific
2
Global
3
Global Wealth
Management
Total revenues (USD m)
Operating profit / (loss) before tax (USD m)
Operating profit / (loss) before tax (underlying) (USD m)
4
Cost / income ratio (%)
4
–
Cost / income ratio (underlying) (%)
4
–
Loans, gross
5
Net new loans
Net new money
4
Net new money growth rate (%)
4
–
Invested assets
4
Advisors (full-time equivalents)
1 Including the following business units: United States and Canada; and Latin America. 2 In the third quarter of 2023, the invested assets of Global Financial Intermediaries were transferred from EMEA and Asia
Pacific to the Switzerland region, to better align it to the management structure. These changes were applied prospectively and had no impact on previous quarters. 3 Includes minor functions, which are not included
in the four regions individually presented in this table, and also includes impacts from accretion of purchase price allocation adjustments on financial instruments and integration-related expenses. 4 Refer to
“Alternative performance measures” in the appendix to this report for the definition and calculation method. 5 Loans include customer brokerage receivables, which are presented in a separate reporting line on the
balance sheet.
UBS Group third quarter 2023 report |
UBS business divisions and Group Items | Global Wealth Management 22
Regional comments 3Q23 vs 3Q22, except where indicated
Americas
Profit before tax decreased by USD 231m to USD 307m. Total revenues decreased by USD 53m, or 2%, to
USD 2,607m, driven by lower net interest and transaction-based income, partly offset by higher recurring net fee
income and the consolidation of Credit Suisse revenues in the third quarter of 2023. The cost / income ratio
increased to 88.8% from 79.8%. Loans decreased 2% compared with the second quarter of 2023, to USD 99.6bn,
mainly reflecting USD 1.7bn of negative net new loans. Net new money inflows were USD 0.3bn.
Switzerland
Profit before tax increased by USD 195m to USD 374m. Total revenues increased by USD 445m, or 104%, to
USD 873m, driven by the transfer of the Global Financial Intermediaries business to the Switzerland region, as well
as the consolidation of Credit Suisse revenues in the third quarter of 2023. The cost / income ratio decreased to
55.6% from 56.6%. Loans increased 10% compared with the second quarter of 2023, to USD 71.8bn, as
USD 1.0bn of negative net new loans were offset by the transfer of the Global Financial Intermediaries business to
the Switzerland region. Net new money inflows were USD 0.9bn.
EMEA
Profit before tax decreased by USD 226m to USD 272m. Total revenues increased by USD 94m, or 9%, to
USD 1,166m, largely driven by the consolidation of Credit Suisse revenues, partly offset by the aforementioned
gains from the sales in the third quarter of 2022 and by the transfer of the Global Financial Intermediaries business
to the Switzerland region. The cost / income ratio increased to 76.1% from 53.2%. Loans decreased 13%
compared with the second quarter of 2023, to USD 63.2bn, driven by the transfer of the Global Financial
Intermediaries business to the Switzerland region, as well as USD 1.8bn of negative net new loans. Net new money
inflows were USD 7.9bn.
Asia Pacific
Profit before tax decreased by USD 77m to USD 160m. Total revenues increased by USD 213m, or 34%, to
USD 833m, mainly driven by the consolidation of Credit Suisse revenues and increases in transaction-based income.
The cost / income ratio increased to 81.2% from 62.0%. Loans decreased 7% compared with the second quarter
of 2023, to USD 47.4bn, mostly reflecting USD 2.6bn of negative net new loans. Net new money inflows were
USD 13.1bn.
Global
Operating loss before tax was USD 106m, mainly including USD 431m of integration-related expenses, partly offset
by USD 318m of accretion of PPA adjustments on financial instruments.
UBS Group third quarter 2023 report |
UBS business divisions and Group Items | Personal & Corporate Banking 23
Personal & Corporate Banking
Personal & Corporate Banking – in Swiss francs
As of or for the quarter ended
% change from
Year-to-date
CHF m, except where indicated
30.9.23
30.6.23
1
30.9.22
2
2Q23
3Q22
30.9.23
30.9.22
2
Results
Net interest income
Recurring net fee income
3
Transaction-based income
3
Other income
Total revenues
Credit loss expense / (release)
Operating expenses
Business division operating profit / (loss) before tax
Underlying results
Total revenues as reported
of which: accretion of PPA adjustments on financial instruments
Total revenues (underlying)
3
Credit loss expense / (release)
Operating expenses as reported
of which: integration-related expenses
3
of which: amortization from newly recognized intangibles resulting from the acquisition of
the Credit Suisse Group
Operating expenses (underlying)
3
of which: expenses for litigation, regulatory and similar matters
Business division operating profit / (loss) before tax as reported
Business division operating profit / (loss) before tax (underlying)
3
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
3
Cost / income ratio (%)
3
Average attributed equity (CHF bn)
4
Return on attributed equity (%)
3,4
Loans, gross (CHF bn)
Customer deposits (CHF bn)
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
3,5
Underlying performance measures
Pre-tax profit growth (year-on-year, %)
3
Cost / income ratio (%)
3
1 Information has been restated to reflect the effects of the integration of the Swiss Bank (Credit Suisse) division on an IFRS basis. In addition, certain information has been revised. Refer to “Note 2 Accounting for
the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information. 2 Information reflects Personal & Corporate Banking as reported in the third quarter
of 2022 and the first nine months of 2022, respectively. 3 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method. 4 Refer to “Capital management”
in the “Capital, liquidity and funding, and balance sheet” section of the Annual Report 2022 for more information about the equity attribution framework. 5 Refer to the “Risk management and control” section of
this report for more information about (credit-)impaired exposures.
Results
:
3Q23 vs 3Q22
Profit before tax increased by CHF 567m, or 132%, to CHF 997m, mainly due to the acquisition of the Credit Suisse
Group. Excluding CHF 397m of accretion of purchase price allocation (PPA) adjustments on financial instruments,
integration-related expenses of CHF 148m and CHF 25m of amortization from newly recognized intangibles
resulting from the acquisition of the Credit Suisse Group, underlying profit before tax was CHF 773m.
Total revenues
Total revenues increased by CHF 1,556m, or 156%, to CHF 2,556m, mainly due to the consolidation of Credit
Suisse revenues, which included CHF 397m of accretion of PPA adjustments on financial instruments, with the
remaining increase largely reflecting increases across all income lines, predominantly in net interest income.
Excluding the aforementioned accretion effects, underlying total revenues were CHF 2,159m.
Net interest income increased by CHF 1,061m, or 217%, to CHF 1,550m, largely attributable to the consolidation
of Credit Suisse net interest income, which included CHF 361m of accretion of PPA adjustments on financial
instruments, with the remaining increase mainly driven by higher deposit margins, which resulted from rising
interest rates, and higher loan revenues, partly offset by lower deposit fees. The third quarter of 2022 included a
benefit from the Swiss National Bank deposit exemption. Excluding accretion effects, underlying net interest income
was CHF 1,189m.
UBS Group third quarter 2023 report |
UBS business divisions and Group Items | Personal & Corporate Banking 24
Recurring net fee income increased by CHF 225m, or 109%, to CHF 431m, mainly attributable to the consolidation
of Credit Suisse recurring net fee income, with the remaining increase mostly driven by the higher revenues related
to custody assets and mandates, reflecting higher average volumes of underlying assets.
Transaction-based income increased by CHF 258m, or 90%, to CHF 543m, largely attributable to the consolidation
of Credit Suisse transaction-based income, which included CHF 36m of accretion of PPA adjustments on financial
instruments, with the remaining increase mainly driven by higher income from Corporate & Institutional Clients.
Excluding accretion effects, underlying transaction-based income was CHF 507m.
Other income increased by CHF 11m, or 56%, to CHF 31m, mostly reflecting a one-time effect of CHF 23m that
resulted from a change to the equity method measurement basis for our investment in SIX Group. The increase was
partly offset by a decrease attributable to the consolidation of Credit Suisse other income.
Credit loss expense / release
Net credit loss expenses were CHF 154m, primarily related to stage 3 positions, compared with net releases of
CHF 15m in the third quarter of 2022.
Operating expenses
Operating expenses increased by CHF 820m, or 140%, to CHF 1,405m, largely due to the consolidation of Credit
Suisse expenses, with the remaining increase mostly reflecting integration-related expenses. Excluding integration-
related expenses of CHF 148m and CHF 25m of amortization from newly recognized intangibles resulting from the
acquisition of the Credit Suisse Group, underlying operating expenses were CHF 1,232m.
Results: 9M23 vs 9M22
Profit before tax increased by CHF 901m, or 74%, to CHF 2,123m, mainly due to the acquisition of the Credit
Suisse Group. Excluding CHF 534m of accretion of PPA adjustments on financial instruments, integration-related
expenses of CHF 174m and CHF 33m of amortization from newly recognized intangibles resulting from the
acquisition of the Credit Suisse Group, underlying profit before tax was CHF 1,797m.
Total revenues increased by CHF 2,384m, or 79%, to CHF 5,404m, mainly due to the consolidation of Credit Suisse
revenues, which included CHF 534m of accretion of PPA adjustments on financial instruments, with the remaining
increase reflecting increases across all income lines, predominantly in net interest income. Excluding the
aforementioned accretion effects, underlying total revenues were CHF 4,871m.
Net interest income increased by CHF 1,738m, or 117%, to CHF 3,222m, largely attributable to the consolidation
of Credit Suisse net interest income, which included CHF 484m of accretion of PPA adjustments on financial
instruments, with the remaining increase mainly driven by higher deposit margins, which resulted from rising
interest rates, and higher loan revenues, partly offset by lower deposit fees. The first nine months of 2022 included
a benefit from the Swiss National Bank deposit exemption. Excluding accretion effects, underlying net interest
income was CHF 2,738m.
Recurring net fee income increased by CHF 310m, or 50%, to CHF 928m, mainly attributable to the consolidation
of Credit Suisse recurring net fee income, with the remaining increase mostly driven by higher revenues from
account fees.
Transaction-based income increased by CHF 351m, or 40%, to CHF 1,236m, largely attributable to the
consolidation of Credit Suisse transaction-based income, which included CHF 50m of accretion of PPA adjustments
on financial instruments, with the remaining increase mainly driven by higher income from Corporate & Institutional
Clients. Excluding accretion effects, underlying transaction-based income was CHF 1,186m.
Other income decreased by CHF 13m, or 41%, to CHF 19m, mainly due to a decrease attributable to the
consolidation of Credit Suisse other income, partly offset by a one-time effect of CHF 23m that resulted from a
change to the equity method measurement basis for our investment in SIX Group.
Net credit loss expenses were CHF 378m, primarily related to first-time adoption of IFRS 9 in Swiss Bank (Credit
Suisse), compared with net expenses of CHF 39m in the first nine months of 2022.
UBS Group third quarter 2023 report |
UBS business divisions and Group Items | Personal & Corporate Banking 25
Operating expenses increased by CHF 1,145m, or 65%, to CHF 2,903m, largely due to the consolidation of Credit
Suisse expenses, with the remaining increase mostly reflecting integration-related expenses, technology expenses
and accruals for variable compensation. Excluding integration-related expenses of CHF 174m and CHF 33m of
amortization from newly recognized intangibles resulting from the acquisition of the Credit Suisse Group,
underlying operating expenses were CHF 2,696m.
Personal & Corporate Banking – in US dollars
As of or for the quarter ended
% change from
Year-to-date
USD m, except where indicated
30.9.23
30.6.23
1
30.9.22
2
2Q23
3Q22
30.9.23
30.9.22
2
Results
Net interest income
Recurring net fee income
3
Transaction-based income
3
Other income
Total revenues
Credit loss expense / (release)
Operating expenses
Business division operating profit / (loss) before tax
Underlying results
Total revenues as reported
of which: accretion of PPA adjustments on financial instruments
Total revenues (underlying)
3
Credit loss expense / (release)
Operating expenses as reported
of which: integration-related expenses
3
of which: amortization from newly recognized intangibles resulting from the acquisition of
the Credit Suisse Group
Operating expenses (underlying)
3
of which: expenses for litigation, regulatory and similar matters
Business division operating profit / (loss) before tax as reported
Business division operating profit / (loss) before tax (underlying)
3
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
3
Cost / income ratio (%)
3
Average attributed equity (USD bn)
4
Return on attributed equity (%)
3,4
Loans, gross (USD bn)
Customer deposits (USD bn)
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
3,5
Underlying performance measures
Pre-tax profit growth (year-on-year, %)
3
Cost / income ratio (%)
3
1 Information has been restated to reflect the effects of the integration of the Swiss Bank (Credit Suisse) division on an IFRS basis. In addition, certain information has been revised. Refer to “Note 2 Accounting for
the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information. 2 Information reflects Personal & Corporate Banking as reported in the third quarter
of 2022 and the first nine months of 2022, respectively. 3 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method. 4 Refer to “Capital management”
in the “Capital, liquidity and funding, and balance sheet” section of the Annual Report 2022 for more information about the equity attribution framework. 5 Refer to the “Risk management and control” section of
this report for more information about (credit-)impaired exposures.
UBS Group third quarter 2023 report |
UBS business divisions and Group Items | Asset Management 26
Asset Management
Asset Management
As of or for the quarter ended
% change from
Year-to-date
USD m, except where indicated
30.9.23
30.6.23
1
30.9.22
2
2Q23
3Q22
30.9.23
30.9.22
2
Results
Net management fees
3
Performance fees
Net gain from disposal of a joint venture
Total revenues
Credit loss expense / (release)
Operating expenses
Business division operating profit / (loss) before tax
Underlying results
Total revenues as reported
of which: net gain from disposal of a joint venture
Total revenues (underlying)
4
Credit loss expense / (release)
Operating expenses as reported
of which: integration-related expenses
4
Operating expenses (underlying)
4
of which: expenses for litigation, regulatory and similar matters
Business division operating profit / (loss) before tax as reported
Business division operating profit / (loss) before tax (underlying)
4
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
4
Cost / income ratio (%)
4
Average attributed equity (USD bn)
5
Return on attributed equity (%)
4,5
Gross margin on invested assets (bps)
4,6
Underlying performance measures
Pre-tax profit growth (year-on-year, %)
4
Cost / income ratio (%)
4
Information by business line / asset class
Net new money (USD bn)
4
Equities
Fixed Income
of which: money market
Multi-asset & Solutions
Hedge Fund Businesses
Real Estate & Private Markets
Total net new money excluding associates
of which: net new money excluding money market
Associates
7
Total net new money
6
Invested assets (USD bn)
4
Equities
Fixed Income
of which: money market
Multi-asset & Solutions
Hedge Fund Businesses
Real Estate & Private Markets
Total invested assets excluding associates
of which: passive strategies
Associates
7
Total invested assets
6,8
UBS Group third quarter 2023 report |
UBS business divisions and Group Items | Asset Management 27
Asset Management (continued)
As of or for the quarter ended
% change from
Year-to-date
USD m, except where indicated
30.9.23
30.6.23
1
30.9.22
2
2Q23
3Q22
30.9.23
30.9.22
2
Information by region
Invested assets (USD bn)
4
Americas
Asia Pacific
6
Europe, Middle East and Africa (excluding Switzerland)
Switzerland
Total invested assets
6,8
Information by channel
Invested assets (USD bn)
4
Third-party institutional
Third-party wholesale
UBS’s wealth management businesses
Associates
7
Total invested assets
6,8
1 Information has been restated to reflect the effects of the integration of the Asset Management (Credit Suisse) division on an IFRS basis. In addition, certain information has been revised. Refer to “Note 2 Accounting
for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information. 2 Information reflects Asset Management as reported in the third quarter of
2022 and the first nine months of 2022, respectively. 3 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), distribution fees, incremental fund-related expenses, gains or losses from seed money and co-investments, funding costs, the negative pass-through impact of
third-party performance fees, and other items that are not Asset Management’s performance fees. 4 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation
method. 5 Refer to “Capital management” in the “Capital, liquidity and funding, and balance sheet” section of the Annual Report 2022 for more information about the equity attribution fram ework. 6 Starting
with the second quarter of 2023, net new money and invested assets include net new money and invested assets from associates, to better reflect the business strategy. Comparative figures have been restated to
reflect this change. 7 The invested assets and net new money amounts reported for associates are prepared in accordance with their local regulatory requirements and practices. 8 Invested assets as of 30 June
2023 have not been restated for the cross-investments of Asset Management (Credit Suisse) and legacy UBS Asset Management.
Results: 3Q23 vs 3Q22
Profit before tax decreased by USD 109m, or 78%, to USD 31m, mainly due to the acquisition of the Credit Suisse
Group. Excluding integration-related expenses of USD 125m, underlying profit before tax was USD 156m.
Total revenues
Total revenues increased by USD 239m, or 46%, to USD 755m, reflecting the consolidation of Credit Suisse
revenues.
Net management fees increased by USD 235m, or 47%, to USD 737m, largely attributable to the consolidation of
Credit Suisse net management fees and due to positive market performance and foreign currency effects, partly
offset by continued margin compression.
Performance fees increased by USD 4m, or 29%, to USD 18m, mainly attributable to the consolidation of Credit
Suisse performance fees and due to an increase in Hedge Fund Businesses, partly offset by a decrease in Real Estate
& Private Markets.
Operating expenses
Operating expenses increased by USD 348m, or 93%, to USD 724m, mainly reflecting the consolidation of Credit
Suisse expenses. The increase was also due to integration-related expenses, adverse foreign currency effects, and
increases in technology and personnel expenses. Excluding integration-related expenses of USD 125m, underlying
operating expenses were USD 599m.
Invested assets: 3Q23 vs 2Q23
Invested assets decreased by USD 50bn to USD 1,559bn, reflecting negative foreign currency effects of USD 23bn,
negative market performance of USD 21bn, negative net new money of USD 1bn and a net-new-money-neutral
reduction of USD 4bn due to the elimination of the cross-investments of Asset Management (Credit Suisse) and
legacy UBS Asset Management, as UBS policy does not allow for double counting of assets within the same
reporting segment.
1
UBS Group third quarter 2023 report |
UBS business divisions and Group Items | Asset Management 28
Results: 9M23 vs 9M22
Profit before tax decreased by USD 1,070m, or 84%, to USD 203m, primarily due to the first nine months of 2022
including a gain of USD 848m from the sale of our shareholding in the Mitsubishi Corp.-UBS Realty Inc. joint
venture. Excluding that gain and integration-related expenses of USD 139m, underlying profit before tax was
USD 342m.
Total revenues decreased by USD 632m, or 26%, to USD 1,834m, primarily due to the first nine months of 2022
including the aforementioned gain of USD 848m. The decrease was partly offset by higher revenues due to the
consolidation of Credit Suisse revenues.
Net management fees increased by USD 203m, or 13%, to USD 1,782m, largely attributable to the consolidation
of Credit Suisse net management fees, partly offset by negative market performance and continued margin
compression.
Performance fees increased by USD 12m, or 30%, to USD 52m, mainly attributable to the consolidation of Credit
Suisse performance fees and due to an increase in Real Estate & Private Markets, partly offset by decreases in Hedge
Fund Businesses and Equities.
Operating expenses increased by USD 437m, or 37%, to USD 1,630m, mainly reflecting the consolidation of Credit
Suisse expenses. The increase was also due to integration-related expenses, adverse foreign currency effects, and
increases in technology expenses, general and administrative expenses, and control functions expenses, partly offset
by lower personnel expenses. Excluding integration-related expenses of USD 139m, underlying operating expenses
were USD 1,491m.
1
UBS Group third quarter 2023 report |
UBS business divisions and Group Items | Investment Bank 29
Investment Bank
Investment Bank
As of or for the quarter ended
% change from
Year-to-date
USD m, except where indicated
30.9.23
30.6.23
1
30.9.22
2
2Q23
3Q22
30.9.23
30.9.22
2
Results
Advisory
Capital Markets
Global Banking
Execution Services
Derivatives & Solutions
Financing
Global Markets
of which: Equities
of which: Foreign Exchange, Rates and Credit
Total revenues
Credit loss expense / (release)
Operating expenses
Business division operating profit / (loss) before tax
Underlying results
Total revenues as reported
of which: accretion of PPA adjustments on financial instruments
of which: losses in the first quarter of 2022 from transactions with Russian counterparties
Total revenues (underlying)
3
Credit loss expense / (release)
Operating expenses as reported
of which: integration-related expenses
3
Operating expenses (underlying)
3
of which: expenses for litigation, regulatory and similar matters
Business division operating profit / (loss) before tax as reported
Business division operating profit / (loss) before tax (underlying)
3
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
3
Cost / income ratio (%)
3
Average attributed equity (USD bn)
4
Return on attributed equity (%)
3,4
Underlying performance measures
Pre-tax profit growth (year-on-year, %)
3
Cost / income ratio (%)
3
1 Information has been restated to reflect the effects of the integration of the Investment Bank (Credit Suisse) division on an IFRS basis. In addition, certain information has been revised. Refer to “Note 2 Accounting
for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information. 2 Information reflects the Investment Bank as reported in the third quarter of
2022 and the first nine months of 2022, respectively. 3 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method. 4 Refer to “Capital management” in
the “Capital, liquidity and funding, and balance sheet” section of the Annual Report 2022 for more information about the equity attribution framework.
UBS Group third quarter 2023 report |
UBS business divisions and Group Items | Investment Bank 30
Results: 3Q23 vs 3Q22
Loss before tax was USD 230m, compared with profit before tax of USD 447m, mainly due to higher operating
expenses associated with the acquisition of the Credit Suisse Group, which included integration-related expenses,
and due to lower underlying revenues. Excluding USD 251m of accretion of purchase price allocation (PPA)
adjustments on financial instruments and integration-related expenses of USD 365m, underlying loss before tax
was USD 116m.
Total revenues
Total revenues increased by USD 119m, or 6%, to USD 2,151m, mainly due to the consolidation of Credit Suisse
revenues, which included USD 251m of accretion of PPA adjustments on financial instruments. Underlying total
revenues decreased, largely driven by lower Global Markets revenues, partly offset by higher Global Banking
revenues. Excluding the aforementioned accretion effects, underlying total revenues were USD 1,900m.
Global Banking
Global Banking revenues increased by USD 369m, or 112%, to USD 698m, largely attributable to the consolidation
of Credit Suisse revenues, which included USD 251m of accretion of PPA adjustments on financial instruments.
Excluding accretion effects, underlying Global Banking revenues increased by USD 118m, or 36%. The relevant
market fee pool
1,2
decreased 19%.
Advisory revenues increased by USD 55m, or 40%, to USD 191m, mainly due to higher merger and acquisition
transaction revenues, which increased by USD 50m, or 41%. The relevant global fee pool
2
decreased 33%.
Capital Markets revenues increased by USD 314m, or 163%, to USD 507m, largely attributable to the consolidation
of Credit Suisse revenues, which included USD 251m of accretion of PPA adjustments on financial instruments.
Excluding accretion effects, underlying Capital Markets revenues increased by USD 63m, or 33%, mainly due to
higher Leveraged Capital Markets revenues, with a USD 45m, or 95%, increase in fees, and prior-year mark-to-
market losses of USD 28m, which did not recur. The Leveraged Capital Markets global fee pool
2
Global Markets
Global Markets revenues decreased by USD 250m, or 15%, to USD 1,452m, primarily driven by lower Derivatives
& Solutions revenues.
Execution Services revenues increased by USD 3m, or 1%, to USD 379m.
Derivatives & Solutions revenues decreased by USD 261m, or 30%, to USD 605m, mostly driven by Foreign
Exchange, Rates and Equity Derivatives, due to lower levels of both volatility and client activity.
Financing revenues increased by USD 8m, or 2%, to USD 468m, supported by increased client balances.
Equities
Global Markets Equities revenues decreased by USD 28m, or 3%, to USD 1,080m, mainly driven by lower Equity
Derivatives revenues.
Foreign Exchange, Rates and Credit
Global Markets Foreign Exchange, Rates and Credit revenues decreased by USD 222m, or 37%, to USD 373m,
primarily driven by lower Foreign Exchange and Rates revenues.
Credit loss expense / release
Net credit loss expenses were largely unchanged.
Operating expenses
Operating expenses increased by USD 796m, or 50%, to USD 2,377m, largely due to integration-related expenses,
the consolidation of Credit Suisse expenses, and higher technology expenses. Excluding integration-related
expenses of USD 365m, underlying operating expenses were USD 2,012m.
UBS Group third quarter 2023 report |
UBS business divisions and Group Items | Investment Bank 31
Results: 9M23 vs 9M22
Profit before tax decreased by USD 1,661m, or 93%, to USD 124m, mainly due to higher operating expenses
associated with the acquisition of the Credit Suisse Group, which included integration-related expenses, and due
to lower total revenues. Excluding USD 306m of accretion of PPA adjustments on financial instruments and
integration-related expenses of USD 526m, underlying profit before tax was USD 345m.
Total revenues
Total revenues decreased by USD 512m, or 7%, to USD 6,522m, mainly due to lower Global Markets revenues,
partly offset by the consolidation of Credit Suisse revenues, which included USD 306m of accretion of PPA
adjustments on financial instruments. Excluding the aforementioned accretion effects, underlying total revenues
were USD 6,216m.
Global Banking
Global Banking revenues increased by USD 302m, or 24%, to USD 1,558m, largely attributable to USD 306m of
accretion of PPA adjustments on financial instruments. Excluding accretion effects, underlying revenues were stable.
Advisory revenues decreased by USD 5m, or 1%, to USD 556m.
Capital Markets revenues increased by USD 307m, or 44%, to USD 1,002m, including USD 306m of accretion of
PPA adjustments on financial instruments. Underlying revenues were stable.
Global Markets
Global Markets revenues decreased by USD 814m, or 14%, to USD 4,964m, primarily driven by lower Derivatives
& Solutions revenues.
Execution Services revenues decreased by USD 106m, or 8%, to USD 1,165m.
Derivatives & Solutions revenues decreased by USD 863m, or 28%, to USD 2,261m, mostly driven by Equity
Derivatives, Foreign Exchange and Rates, due to lower levels of both volatility and client activity.
Financing revenues increased by USD 154m, or 11%, to USD 1,538m, with increases across all products.
Equities
Global Markets Equities revenues decreased by USD 546m, or 13%, to USD 3,541m, mainly driven by lower Equity
Derivatives revenues.
Foreign Exchange, Rates and Credit
Global Markets Foreign Exchange, Rates and Credit revenues decreased by USD 269m, or 16%, to USD 1,423m,
primarily driven by lower Foreign Exchange and Rates revenues.
Credit loss expense / release
Net credit loss expenses were USD 142m, compared with net releases of USD 20m in the first nine months of 2022.
Operating expenses
Operating expenses increased by USD 986m, or 19%, to USD 6,255m, largely due to integration-related expenses,
the consolidation of Credit Suisse expenses and higher technology expenses. Excluding integration-related expenses
of USD 526m, underlying operating expenses were USD 5,729m.
1
market movements on loan portfolios; and Debt Capital Markets, excluding revenues related to debt underwriting of UBS instruments.
2
UBS Group third quarter 2023 report |
UBS business divisions and Group Items | Non-core and Legacy 32
Non-core and Legacy
Non-core and Legacy
1
As of or for the quarter ended
% change from
Year-to-date
USD m
30.9.23
30.6.23
2
30.9.22
3
2Q23
3Q22
30.9.23
30.9.22
3
Results
Total revenues
Credit loss expense / (release)
Operating expenses
Operating profit / (loss) before tax
Underlying results
Total revenues as reported
of which: litigation settlement
Total revenues (underlying)
4
Credit loss expense / (release)
Operating expenses as reported
of which: integration-related expenses
4
Operating expenses (underlying)
4
of which: litigation expenses
Operating profit / (loss) before tax as reported
Operating profit / (loss) before tax (underlying)
4
Performance measures and other information
Average attributed equity
5
Risk-weighted assets (USD bn)
Leverage ratio denominator (USD bn)
1 Starting with the third quarter of 2023, Non-core and Legacy represents a separate reportable segment and includes positions and businesses not aligned with our strategy and policies. Refer to the “Recent
developments” section of this report for more information about the composition of the Non-core and Legacy division. 2 Information has been restated to reflect the establishing of the Non-core and Legacy business
division. In addition, certain information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more
information. 3 Information reflects Non-core and Legacy Portfolio as reported in Group Functions in the third quarter of 2022 and the first nine months of 2022, respectively. 4 Refer to “Alternative performance
measures” in the appendix to this report for the definition and calculation method. 5 Refer to “Capital management” in the “Capital, liquidity and funding, and balance sheet” section of the Annual Report 2022
for more information about the equity attribution framework.
Composition of Non-core and Legacy
USD bn
RWA
Total assets
LRD
30.9.23
30.6.23
30.9.23
30.6.23
30.9.23
30.6.23
Exposure category
Equities
Macro
Loans
Securitized products
Credit
High-quality liquid assets
Operational risk
Other
Total
Results: 3Q23 vs 3Q22
Loss before tax was USD 1,932m, compared with profit before tax of USD 52m. Excluding integration-related
expenses of USD 918m, underlying loss before tax was USD 1,014m.
Total revenues
Total revenues increased by USD 273m to USD 350m, mainly due to the transfer of assets and liabilities into Non-
core and Legacy following the acquisition of the Credit Suisse Group, and included USD 242m releases of
markdowns on exited commitments and loans, and mark-to-market gains. In addition, positive carry in our
securitized products and credit portfolios was reduced by higher funding costs.
UBS Group third quarter 2023 report |
UBS business divisions and Group Items | Non-core and Legacy 33
Credit loss expense / release
Net credit loss expenses were USD 125m, mainly related to incremental provisions that reflected a deterioration in
credit risk across the lending book of Non-core and Legacy, compared with net expenses of USD 0m in the third
quarter of 2022.
Operating expenses
Operating expenses were USD 2,156m, compared with USD 25m, mainly due to the acquisition of the Credit Suisse
Group, and included integration-related expenses of USD 918m, of which a one-time fee of USD 289m related to
an onerous contract provision, and also included real estate impairments and personnel costs. Excluding integration-
related expenses, underlying operating expenses were USD 1,238m.
Risk-weighted assets and leverage ratio denominator: 3Q23 vs 2Q23
Risk-weighted assets decreased by USD 6.4bn, or 8%, to USD 77.5bn, mainly driven by an accelerated roll-off
caused by our actions to actively unwind the portfolio, in addition to the natural roll-off. The leverage ratio
denominator decreased by USD 52.2bn, or 25%, to USD 156.4bn, driven by business reductions across all asset
classes, lower high-quality liquid assets and USD 12bn of reductions due to an accounting update that was
implemented prospectively for the leverage ratio denominator.
Results: 9M23 vs 9M22
Loss before tax was USD 3,085m, compared with profit before tax of USD 98m. Excluding integration-related
expenses of USD 1,023m, underlying loss before tax was USD 2,063m.
Total revenues
Total revenues increased by USD 395m to USD 579m, mainly due to the transfer of assets and liabilities into Non-
core and Legacy following the acquisition of the Credit Suisse Group, and included USD 248m releases of
markdowns on exited commitments and loans, and mark-to-market gains. In addition, positive carry in our
securitized products and credit portfolios was reduced by higher funding costs.
Credit loss expense / release
Net credit loss expenses were USD 244m, mainly related to incremental provisions that reflect a deterioration in
credit risk across the lending book of Non-core and Legacy, compared with net expenses of USD 2m in the first
nine months of 2022.
Operating expenses
Operating expenses were USD 3,421m, compared with USD 84m, and included integration-related expenses of
USD 1,023m, of which a one-time fee of USD 289m related to an onerous contract provision , and also included
real estate impairments and personnel costs. Excluding integration-related expenses, underlying operating expenses
were USD 2,398m.
UBS Group third quarter 2023 report |
UBS business divisions and Group Items | Group Items 34
Group Items
Group Items
1
As of or for the quarter ended
% change from
Year-to-date
USD m
30.9.23
30.6.23
2
30.9.22
3
2Q23
3Q22
30.9.23
30.9.22
3
Results
Total revenues
Credit loss expense / (release)
Operating expenses
Operating profit / (loss) before tax
Underlying results
Total revenues as reported
of which: accretion of PPA adjustments on financial instruments
Total revenues (underlying)
4
Credit loss expense / (release)
Operating expenses as reported
of which: integration-related expenses
4
of which: acquisition-related costs
Operating expenses (underlying)
4
of which: expenses for litigation, regulatory and similar matters
Operating profit / (loss) before tax as reported
Operating profit / (loss) before tax (underlying)
4
1 Starting with the third quarter of 2023, Group Items reflects the integration of Group Functions and the Corporate Center (Credit Suisse), and excludes UBS’s Non-core and Legacy Portfolio, which was previously
reported within Group Functions. 2 Information has been restated to reflect the effects of the integration of the Corporate Center (Credit Suisse) on an IFRS basis and the exclusion of UBS’s Non-core and Legacy
Portfolio. In addition, certain information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more
information. 3 Information reflects Group Functions as reported in the third quarter of 2022 and the first nine months of 2022, respectively, excluding Non-core and Legacy Portfolio. 4 Refer to “Alternative
performance measures” in the appendix to this report for the definition and calculation method.
Results: 3Q23 vs 3Q22
Loss before tax was USD 255m, compared with a loss of USD 210m, mainly due to the acquisition of the Credit
Suisse Group. Excluding USD 57m of accretion of purchase price allocation (PPA) adjustments on financial
instruments and acquisition-related costs of USD 26m, underlying loss before tax was USD 174m.
Income from accounting asymmetries, including hedge accounting ineffectiveness, was net positive USD 132m,
resulting from the acquisition of the Credit Suisse Group, compared with net negative income of USD 153m. The
impacts in the prior-year quarter were driven by mark-to-market effects on portfolio-level economic hedges due to
rising interest rates and cross-currency-basis widening.
Income related to centralized Group Treasury risk management was negative USD 107m, compared with positive
USD 29m, driven by a combination of increased funding costs of negative USD 82m and a negative impact of
USD 53m from the acquisition of the Credit Suisse Group.
In addition, the third quarter of 2023 included a USD 61m increase in funding costs related to deferred tax assets
(DTAs).
Results: 9M23 vs 9M22
Loss before tax was USD 1,138m, compared with a loss of USD 692m, mainly due to the acquisition of the Credit
Suisse Group. Excluding USD 3m of accretion of PPA adjustments on financial instruments, integration-related
expenses of USD 346m and acquisition-related costs of USD 202m, underlying loss before tax was USD 586m.
This included income from accounting asymmetries, including hedge accounting ineffectiveness, of net positive
USD 65m, compared with net negative income of USD 504m. The impacts in the prior-year period were driven by
mark-to-market effects on portfolio-level economic hedges due to rising interest rates and cross-currency-basis
widening. Income related to centralized Group Treasury risk management was negative USD 204m, compared with
negative USD 7m in the first nine months of 2022.
Furthermore, the first nine months of 2023 also included a USD 240m increase in funding costs related to DTAs,
partly offset by remeasurement losses in the first nine months of 2022 of USD 46m on properties held for sale.
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet 35
Risk, capital, liquidity and
funding, and balance sheet
Management report
Table of contents
36
36
38
39
40
42
44
47
49
50
50
50
51
52
52
52
53
54
55
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 36
Risk management and control
This section provides information about key developments during the reporting period and should be read in
conjunction with the “Risk management and control” section of the Annual Report 2022 and the “Recent
developments” section of this report for more information about the integration of Credit Suisse.
Credit risk
Overall banking products exposure
Overall banking products exposure decreased by USD 25bn to USD 1,107bn as of 30 September 2023, driven by a
USD 21bn decrease in loans and advances to customers.
Total net credit loss expenses in the third quarter of 2023 were USD 306m, reflecting USD 137m net credit loss
expenses related to performing positions and USD 168m related to credit-impaired positions.
›
Refer to the “Balance sheet and off-balance sheet” section of this report for more information about balance sheet
movements
›
Refer to the “Group performance” section and “Note 8 Expected credit loss measurement” in the “Consolidated
financial statements” section of this report for more information about credit loss expense / release
Loan underwriting
In the Investment Bank, mandated loan underwriting commitments on a notional basis increased by USD 0.9bn to
USD 2.8bn as of 30 September 2023, driven by new deals. In Non-core and Legacy, exposure decreased by
USD 2.5bn to USD 1.4bn, mainly due to de-risking via commitment reductions and syndication of remaining legacy
positions. As of 30 September 2023, USD 0.1bn and USD 0.9bn of commitments had not yet been distributed as
originally planned in the Investment Bank and in Non-core and Legacy, respectively.
Loan underwriting exposures are classified as held for trading, with fair values reflecting the market conditions at
the end of the quarter. Credit hedges are in place to help protect against fair value movements in the portfolio.
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 37
Banking and traded products exposure in our business divisions and Group Items
30.9.23
USD m
Global
Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core
and Legacy
1
Group
Items
1
Total
Banking products
2,3
Gross exposure
of which: loans and advances to customers (on-balance sheet)
of which: guarantees and loan commitments (off-balance sheet)
Traded products
4,5,6
Gross exposure
of which: over-the-counter derivatives
of which: securities financing transactions
of which: exchange-traded derivatives
Other credit lines, gross
7
Total credit-impaired exposure, gross
of which: stage 3
of which: PCI
Total allowances and provisions for expected credit losses
of which: stage 1
of which: stage 2
of which: stage 3
of which: PCI
30.6.23
8
USD m
Global
Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core
and Legacy
1
Group
Items
1
Total
Banking products
3
Gross exposure
of which: loans and advances to customers (on-balance sheet)
of which: guarantees and loan commitments (off-balance sheet)
Traded products
4,5,6
Gross exposure
of which: over-the-counter derivatives
of which: securities financing transactions
of which: exchange-traded derivatives
Other credit lines, gross
7
Total credit-impaired exposure, gross
of which: stage 3
of which: PCI
Total allowances and provisions for expected credit losses
of which: stage 1
of which: stage 2
of which: stage 3
of which: PCI
1 Starting with the third quarter of 2023, Non-core and Legacy represents a separate reportable segment and Group Functions has been renamed Group Items. Prior periods have been revised to reflect these changes.
2 In the third quarter of 2023, a small amount of exposure of pre-integration UBS business divisions was included in Non-core and Legacy, as it was assessed as not strategic in light of the acquisition of the Credit
Suisse Group. 3 IFRS 9 gross exposure including other financial assets at amortized cost, but excluding cash, receivables from securities financing transactions, cash collateral receivables on derivative instruments,
financial assets at fair value through other comprehensive income, irrevocable committed prolongation of existing loans and unconditionally revocable committed credit lines, and forward starting reverse repurchase
and securities borrowing agreements. 4 Internal management view of credit risk, which differs in certain respects from IFRS. 5 As counterparty risk for traded products is managed at counterparty level, no further
split between exposures in the Investment Bank, Non -core and Legacy and Group Items is provided. 6 Credit Suisse traded products are presented before reflection of the impact of the purchase price allocation
performed under IFRS 3, Business Combinations, following the acquisition of the Credit Suisse Group by UBS. The acquisition date adjustment is less than USD 1bn and, if applied, would lead to a reduction in our
reported traded products exposure. 7 Unconditionally revocable committed credit lines. 8 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse
Group” in the “Consolidated financial statements” section of this report for more information.
Collateralization of Loans and advances to customers
1
Global Wealth Management
Personal & Corporate Banking
USD m, except where indicated
30.9.23
30.6.23
2
30.9.23
30.6.23
2
Secured by collateral
Residential real estate
Commercial / industrial real estate
Cash
Equity and debt instruments
Other collateral
Subject to guarantees
Uncollateralized and not subject to guarantees
Total loans and advances to customers, gross
Allowances
Total loans and advances to customers, net of allowances
Collateralized loans and advances to customers in % of total loans and advances to customers, gross (%)
1 Collateral arrangements generally incorporate a range of collateral, including cash, securities, real estate and other collateral. UBS applies a risk-based approach that generally prioritizes collateral according to its
liquidity profile. In the case of loan facilities with funded and unfunded elements, the collateral is first allocated to the funded element. Credit Suisse applies a risk-based approach that generally prioritizes real estate
collateral and prioritizes other collateral according to its liquidity profile. In the case of loan facilities with funded and unfunded elements, the collateral is proportionately allocated. 2 Comparative-period information
has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 38
Market risk
The UBS Group excluding Credit Suisse continued to maintain generally low levels of management value-at-risk
(VaR). Average management VaR (1-day, 95% confidence level) increased from USD 13m to USD 17m at the end
of the third quarter of 2023, mainly driven by Global Markets in the Investment Bank. There were no new VaR
negative backtesting exceptions in the third quarter of 2023. The number of negative backtesting exceptions within
the most recent 250-business-day window decreased from one to zero.
Credit Suisse’s average management VaR (1-day, 98% confidence level) decreased from USD 32m to USD 27m at
the end of the third quarter of 2023 due to continued de-risking and an improved equity risk profile. In the third
quarter of 2023, Credit Suisse had one backtesting exception, driven by fair value adjustments to certain positions
in the trading inventory as a result of the acquisition by UBS, reflecting purchase price allocation, which does not
count against the total exceptions relevant for the capital multiplier.
The FINMA VaR multiplier derived from backtesting exceptions for market risk risk-weighted assets was unchanged
compared with the prior quarter, at 3.0, for both the UBS Group excluding Credit Suisse and Credit Suisse.
Management value-at-risk (1-day, 95% confidence, 5 years of historical data) of UBS Group business divisions and
Group Items excluding Credit Suisse components by general market risk type
1
Average by risk type
USD m
Min.
Max.
Period end
Average
Equity
Interest
rates
Credit
spreads
Foreign
exchange
Commodities
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Non-core and Legacy
Group Items
Diversification effect
2,3
Total as of 30.9.23
Total as of 30.6.23
Management value-at-risk (1-day, 98% confidence, 2 years of historical data) of the Credit Suisse components of the
UBS Group business divisions and Group Items by general market risk type
1,4
Average by risk type
USD m
Min.
Max.
Period end
Average
Equity
Interest
rates
Credit
spreads
Foreign
exchange
Commodities
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Non-core and Legacy
5
Group Items
Diversification effect
2,3
Total as of 30.9.23
Total as of 30.6.23
1 Statistics at individual levels may not be summed to deduce the corresponding aggregate figures. The minima and maxima for each level may occur on different days, and, likewise, the value-at-risk (VaR) for each
business line or risk type, being driven by the extreme loss tail of the corresponding distribution of simulated profits and losses for that business line or risk type, may well be driven by different days in the historical
time series, rendering invalid the simple summation of figures to arrive at the aggregate total. 2 The difference between the sum of the standalone VaR for the business divisions and Group Items and the total VaR.
3 As the minima and maxima for different business divisions and Group Items occur on different days, it is not meaningful to calculate a portfolio diversification effect. 4 In the second quarter of 2023, Credit Suisse
AG consolidated introduced an enhanced approach to measure management value-at-risk for individual risk types. The enhanced approach is applied to each risk type using a collection of risk factors included within
the respective risk type only, ignoring the cross-risk effects. This change in the measurement approach for individual risk types particularly affected standalone management VaR for equity risk and foreign exchange
risk, with no impact on the total management VaR. 5 Non-core and Legacy management VaR consists of exposures of the previously reported Capital Release Unit (Credit Suisse) and Investment Bank (Credit Suisse).
Economic value of equity and net interest income sensitivity
The economic value of equity (EVE) sensitivity in the UBS Group banking book to a parallel shift in yield curves of
+1 basis point was negative USD 27.8m as of 30 September 2023, compared with negative USD 28.7m as of
30 June 2023. This excludes the sensitivity of USD 2.5m from additional tier 1 (AT1) capital instruments (as per
specific FINMA requirements) in contrast to general Basel Committee on Banking Supervision (BCBS) guidance. The
exposure in the banking book of the UBS Group decreased during the third quarter of 2023, due to lower demand
for long-term loans and mortgages, partially offset by a longer modeled duration assigned to own equity.
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 39
The majority of our interest rate risk in the banking book is a reflection of the net asset duration that we run to
offset our modeled sensitivity of net USD 23.4m (30 June 2023: USD 23m) assigned to our equity, goodwill and
real estate, with the aim of generating a stable net interest income contribution. Of this, USD 17.5m and USD 4.9m
are attributable to the US dollar and the Swiss franc portfolios, respectively, (30 June 2023: USD 17m and
USD 5.1m, respectively).
In addition to the sensitivity mentioned above, we calculate the six interest rate shock scenarios prescribed by
FINMA. The “Parallel up” scenario, assuming all positions were fair valued, was the most severe and would have
resulted in a change in EVE of negative USD 5.2bn, or 5.6%, of our tier 1 capital (30 June 2023: negative
USD 5.4bn, or 5.8%), which is well below the 15% threshold as per the BCBS supervisory outlier test for high levels
of interest rate risk in the banking book.
The immediate effect on our tier 1 capital in the “Parallel up” scenario as of 30 September 2023 would have been
a decrease of approximately USD 0.9bn, or 0.9% (30 June 2023: USD 0.6bn, or 0.7%), reflecting the fact that the
vast majority of our banking book is accrual accounted or subject to hedge accounting. The “Parallel up” scenario
would subsequently have a positive effect on net interest income, assuming a constant balance sheet.
›
Refer to “Interest rate risk in the banking book” in the “Risk management and control” section of the Annual
Report 2022 for more information about the management of interest rate risk in the banking book
›
Refer to “Sensitivity to interest rate movements” in the “Group performance” section of this report for more
information about the effects of increases in interest rates on the net interest income of our banking book
Interest rate risk – banking book
30.9.23
USD m
Effect on EVE
1
Effect on EVE
1
Scenarios
CHF
EUR
GBP
USD
Other
Total
Additional tier 1 (AT1) capital
instruments
Total
+1 bp
Parallel up
2
Parallel down
2
Steepener
3
Flattener
4
Short-term up
5
Short-term down
6
30.6.23
USD m
Effect on EVE
1
Effect on EVE
1
Scenarios
CHF
EUR
GBP
USD
Other
Total
Additional tier 1 (AT1) capital
instruments
Total
+1 bp
Parallel up
2
Parallel down
2
Steepener
3
Flattener
4
Short-term up
5
Short-term down
6
1 Economic value of equity. 2 Rates across all tenors move by ±150 bps for Swiss franc, ±200 bps for euro and US dollar, and ±250 bps for pound sterling. 3 Short-term rates decrease and long-term rates increase.
4 Short-term rates increase and long-term rates decrease. 5 Short-term rates increase more than long-term rates. 6 Short-term rates decrease more than long-term rates.
Country risk
We remain watchful of a range of geopolitical developments and political changes in a number of countries, as
well as international tensions arising from the Russia–Ukraine war, the escalating conflict in the Middle East and
US–China trade relations. Our direct exposure to Israel is less than USD 0.5bn and our direct exposure to Gulf
Cooperation Council countries is less than USD 5bn. We have limited direct exposure to Egypt, Jordan and Lebanon,
and we have no direct exposure to Iran, Iraq or Syria. Our direct exposure to Russia, Belarus and Ukraine is
immaterial, and potential second-order impacts, such as European energy security, continue to be monitored. We
have significant country risk exposure to major European economies, including France, Germany and the UK.
Inflation has abated to some extent in major Western economies, though there are still concerns regarding future
developments, and central banks’ monetary policy is in the spotlight. The potential for “higher-for-longer” interest
rates raises the prospect of a global recession, particularly as the growth of China’s economy has been muted. This
combination of factors translates into a more uncertain and volatile environment, which increases the risk of
financial market disruptions.
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 40
We continue to monitor potential trade policy disputes, as well as economic and political developments in addition
to those mentioned above. In 2023, several emerging markets have faced economic, political and market pressures,
particularly in light of interest rate hikes and a stronger US dollar. Our exposure to emerging market countries is
less than 10% of our total country exposure, mainly in Asia.
›
Refer to the “Risk management and control” section of the Annual Report 2022 for more information
Non-financial risk
UBS is actively managing the non-financial risks emerging from the acquisition of the Credit Suisse Group, including
the current operation of dual corporate structures, and the scale, pace and complexity of the required integration
activities. These activities continue to be managed by our program run by the Group Integration Office. We place
an increased focus on maintaining and enhancing our control environment and continue to cooperate with
regulators to submit and execute implementation plans to meet regulatory requirements, including regulatory
remediation requirements applicable to Credit Suisse AG. In addition, the Group is closely monitoring operational
risk indicators, including attrition, to detect any potential for adverse impacts on the control environment.
There is an increased risk of cyber-related operational disruption to business activities at our locations and / or those
of third parties due to operating an enlarged group of entities. This is combined with the increasingly dynamic
threat environment, which is intensified by current geopolitical factors and evidenced by the increased volumes and
sophistication of cyberattacks against financial institutions globally.
UBS was not affected by significant cyber events in the third quarter of 2023 but, due to the high threat level
observed, remains on heightened alert to respond to and mitigate new threats. Given this backdrop, we are
continuing to invest in improving our technology infrastructure to enhance our information security and data
protection and improve our defense, detection and response capabilities against cyberattacks, including addressing
regulatory expectations and advancing overall organizational development. In addition, the Group faces multiple
related regulatory deadlines to enhance operational resilience between 2023 and 2026. To that end, a global
framework designed to drive enhancements in operational resilience continues to be implemented across all
business divisions and jurisdictions, as well as being provided to third parties, including third-party vendors, that are
of critical importance to us.
Following a post-incident review of the ION XTP ransomware attack, we are proceeding with improvements to our
frameworks for managing third parties that support our important business services and continue with actions to
enhance our cyber-risk assessments and controls over third-party vendors.
The increasing interest in data-driven advisory processes, and use of artificial intelligence (AI) and machine learning,
is opening up new questions related to the fairness of AI algorithms, data life cycle management, data ethics, data
privacy and security, and records management. We seek to enhance our frameworks to implement controls for
these risks and to meet regulatory expectations. In addition, new risks continue to emerge, such as those which
result from the demand from our clients for distributed ledger technology, blockchain-based assets and
cryptocurrencies; although we currently have limited exposure to such risks, and relevant control frameworks for
them are implemented and reviewed on a regular basis as they evolve.
Competition to find new business opportunities across the financial services sector, both for firms and for customers,
is increasing, particularly during periods of market volatility and rising interest rates. Thus, suitability risk, product
selection, cross-divisional service offerings, quality of advice and price transparency also remain areas of heightened
focus for UBS and for the industry as a whole.
Sustainable investing, and major legislation, such as the Consumer Duty Regulation in the United Kingdom, the
Swiss Financial Services Act (FIDLEG) in Switzerland, Regulation Best Interest (Reg BI) in the US and the Markets in
Financial Instruments Directive II (MiFID II) in the EU, all significantly affect the industry and have required
adjustments to control processes.
Cross-border risk remains an area of regulatory attention for global financial institutions, including a focus on
market access, such as third-country market access into the European Economic Area, and taxation of US persons.
Unintended permanent establishment remains an area of ongoing attention and the risk that tax authorities may,
on the basis of new interpretations of existing law, seek to impose taxation. We maintain a series of controls
designed to address these risks, and we are increasing the number of controls that are automated.
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 41
Financial crime, including money laundering, terrorist financing, sanctions violations, fraud, bribery and corruption,
continues to present a major risk, as technological innovation and geopolitical developments increase the
complexity of doing business and heightened regulatory attention continues. An effective financial crime prevention
program therefore remains essential for UBS. Money laundering and financial fraud techniques are becoming
increasingly sophisticated, and geopolitical volatility makes the sanctions landscape more complex, such as the
extensive and continuously evolving sanctions arising from the Russia–Ukraine war, which also requires constant
attention to prevent circumvention risks.
In the US, the Office of the Comptroller of the Currency (the OCC) issued a Cease and Desist Order against us in
May 2018 relating to our US branch anti-money-laundering (AML) and know-your-client (KYC) programs. In
response, we initiated an extensive program for the purpose of ensuring sustainable remediation of US-relevant
Bank Secrecy Act / AML issues across all our US legal entities. We have introduced significant improvements to the
framework and continue to evolve it in response to new and emerging risks.
We continue to focus on strategic enhancements to our global AML, KYC and sanctions programs.
In September 2022, the Securities and Exchange Commission (the SEC) and the Commodity Futures Trading
Commission (the CFTC) issued settlement orders relating to communications recordkeeping requirements in our US
broker-dealers and our registered swap dealers. In response, we continue to focus on a program to remediate
identified shortcomings.
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Capital management 42
Capital management
The disclosures in this section are provided for UBS Group AG on a consolidated basis and focus on key
developments during the reporting period and information in accordance with the Basel III framework, as applicable
to Swiss systemically relevant banks (SRBs). They should be read in conjunction with “Capital management” in the
“Capital, liquidity and funding, and balance sheet” section of the Annual Report 2022, which provides more
information about our capital management objectives, planning and activities, as well as the Swiss SRB total loss-
absorbing capacity (TLAC) framework.
UBS Group AG is a holding company and conducts substantially all of its operations through UBS AG and Credit
Suisse AG, and subsidiaries thereof. UBS Group AG, UBS AG and Credit Suisse AG have contributed a significant
portion of their respective capital to, and provide substantial liquidity to, such subsidiaries. Many of these
subsidiaries are subject to regulations requiring compliance with minimum capital, liquidity and similar
requirements.
›
Refer to the 30 September 2023 Pillar 3 Report, available under “Pillar 3 disclosures” at
ubs.com/investors
, for more
information relating to additional regulatory disclosures for UBS Group AG on a consolidated basis, as well as our
significant regulated subsidiaries and sub-groups
›
Refer to the UBS AG third quarter 2023 report, available under “Quarterly reporting” at
ubs.com/investors
, for more
information about capital and other regulatory information for UBS AG consolidated, in accordance with the Basel III
framework, as applicable to Swiss SRBs
Swiss SRB going and gone concern requirements and information
As of 30.9.23
RWA
LRD
USD m, except where indicated
in %
in %
Required going concern capital
Total going concern capital
1
1
Common equity tier 1 capital
2
of which: minimum capital
of which: buffer capital
of which: countercyclical buffer
Maximum additional tier 1 capital
of which: additional tier 1 capital
of which: additional tier 1 buffer capital
Eligible going concern capital
Total going concern capital
Common equity tier 1 capital
Total loss-absorbing additional tier 1 capital
3
of which: high-trigger loss-absorbing additional tier 1 capital
of which: low-trigger loss-absorbing additional tier 1 capital
Required gone concern capital
Total gone concern loss-absorbing capacity
4,5,6
of which: base requirement including add-ons for market share and LRD
7
7
Eligible gone concern capital
Total gone concern loss-absorbing capacity
Total tier 2 capital
of which: non-Basel III-compliant tier 2 capital
TLAC-eligible senior unsecured debt
Total loss-absorbing capacity
Required total loss-absorbing capacity
Eligible total loss-absorbing capacity
Risk-weighted assets / leverage ratio denominator
Risk-weighted assets
Leverage ratio denominator
1 Includes applicable add-ons of 1.59% for risk-weighted assets (RWA) and 0.55% for leverage ratio denominator (LRD), of which 15 basis points for RWA and 5 basis points for LRD reflect the FINMA Pillar 2 capital
add-on of USD 800m related to the supply chain finance funds matter at Credit Suisse. 2 Our minimum CET1 leverage ratio requirement of 3.55% consists of a 1.5% base requirement, a 1.5% base buffer capital
requirement, a 0.25% LRD add-on requirement, a 0.25% market share add-on requirement based on our Swiss credit business and a 0.05% Pillar 2 capital add-on related to the supply chain finance funds matter at
Credit Suisse. 3 Includes outstanding low-trigger loss-absorbing additional tier 1 capital instruments, which are available under the Swiss systemically relevant bank framework to meet the going concern requirements
until their first call date. As of their first call date, these instruments are eligible to meet the gone concern requirements. 4 A maximum of 25% of the gone concern requirements can be met with instruments that
have a remaining maturity of between one and two years. Once at least 75% of the minimum gone concern requirement has been met with instruments that have a remaining maturity of greater than two years, all
instruments that have a remaining maturity of between one and two years remain eligible to be included in the total gone concern capital. 5 From 1 January 2023, the resolvability discount on the gone concern
capital requirements for systemically important banks (SIBs) has been replaced with reduced base gone concern capital requirements equivalent to 75% of the total going concern requirements (excluding countercyclical
buffer requirements and the Pillar 2 add-on). 6 As of July 2024, the Swiss Financial Market Supervisory Authority (FINMA) will have the authority to impose a surcharge of up to 25% of the total going concern capital
requirements should obstacles to an SIB’s resolvability be identified in future resolvability assessments. 7 Includes applicable add-ons of 1.08% for RWA and 0.38% for LRD.
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Capital management 43
We are subject to the going and gone concern requirements of the Swiss Capital Adequacy Ordinance that include
the too-big-to-fail (TBTF) provisions applicable to Swiss SRBs. The table above provides the risk-weighted asset
(RWA)- and leverage ratio denominator (LRD)-based requirements and information as of 30 September 2023.
In November 2022, the Swiss Federal Council adopted amendments to the Banking Act and the Banking Ordinance,
which entered into force as of 1 January 2023. The amendments replaced the resolvability discount on the gone
concern capital requirements for systemically important banks (SIBs), including UBS, with reduced base gone
concern capital requirements equivalent to 75% of the total going concern requirements (excluding countercyclical
buffer requirements and the Pillar 2 add-on). In addition, as of July 2024, the Swiss Financial Market Supervisory
Authority (FINMA) will have the authority to impose a surcharge of up to 25% of the total going concern
requirements based on obstacles to an SIB’s resolvability identified in future resolvability assessments. Our total
gone concern requirements remained substantially unchanged in the third quarter of 2023 as a result of these
changes.
Transitional purchase price allocation adjustments for regulatory capital
As part of the acquisition of the Credit Suisse Group, the assets acquired and liabilities assumed, including
contingent liabilities, were recognized at fair value as of the acquisition date in accordance with IFRS 3,
Business
Combinations
. The purchase price allocation (PPA) fair value adjustments required under IFRS 3 are recognized as
part of negative goodwill and include effects on financial instruments measured at amortized cost, such as fair
value impacts from interest rates and own credit, that are expected to accrete back to par through the income
statement as the instruments are held to maturity. Similar own-credit-related effects have also been recognized as
part of the PPA adjustments on financial liabilities measured at fair value. As agreed with FINMA, a transitional
common equity tier 1 (CET1) capital treatment has been applied for certain of these fair value adjustments, given
the substantially temporary nature of the IFRS-3-accounting-driven effects. As such, IFRS equity reductions of
USD 5.9bn (before tax) and USD 5.0bn (net of tax) as of the acquisition date have been neutralized for CET1 capital
calculation purposes, of which USD 1.0bn (net of tax) relates to own-credit-related fair value adjustments. The
transitional treatment is subject to linear amortization and will reduce to nil by 30 June 2027. In the third quarter
of 2023, the amortization of transitional CET1 PPA adjustments (interest rate and own credit) was USD 0.3bn (net
of tax).
IFRS 3 measurement period adjustments in the third quarter of 2023 for the acquisition of the Credit
Suisse Group
UBS has reclassified certain loans and off-balance sheet loan commitments held by the newly established Non-core
and Legacy business division to “measured at fair value through profit or loss”. Refer to “Note 2 Accounting for
the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for
details on the accounting treatment, and respective adjustments to the comparative second quarter 2023
information. We have applied the amended classification and measurement for LRD and RWA calculation purposes
prospectively from the third quarter of 2023.
Updates to the segment reporting for RWA and LRD
Starting with the third quarter of 2023, we report five business divisions in line with International Financial Reporting
Standards (IFRS), reflecting the way we are managing our businesses and engaging with clients: Global Wealth
Management, Personal & Corporate Banking, Asset Management, the Investment Bank, and Non-core and Legacy.
We separately report Group Items. As UBS executes its integration plans, it is expected that allocation
methodologies for RWA and LRD to the business divisions and into Group Items will continue to be reviewed and
refined.
›
Refer to the “Management report” sections of this report, including the disclosures under “Integration of Credit
Suisse” in the “Recent developments” section
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Capital management 44
Total loss-absorbing capacity
The table below provides Swiss SRB going and gone concern information based on the Swiss SRB framework and
requirements that are discussed under “Capital management” in the “Capital, liquidity and funding, and balance
sheet” section of the Annual Report 2022. Changes to the Swiss SRB framework and requirements after the
publication of the Annual Report 2022 are described above.
Swiss SRB going and gone concern information
USD m, except where indicated
30.9.23
30.6.23
31.12.22
Eligible going concern capital
Total going concern capital
Total tier 1 capital
Common equity tier 1 capital
Total loss-absorbing additional tier 1 capital
of which: high-trigger loss-absorbing additional tier 1 capital
of which: low-trigger loss-absorbing additional tier 1 capital
Eligible gone concern capital
Total gone concern loss-absorbing capacity
Total tier 2 capital
of which: low-trigger loss-absorbing tier 2 capital
of which: non-Basel III-compliant tier 2 capital
TLAC-eligible senior unsecured debt
Total loss-absorbing capacity
Total loss-absorbing capacity
Risk-weighted assets / leverage ratio denominator
Risk-weighted assets
Leverage ratio denominator
Capital and loss-absorbing capacity ratios (%)
Going concern capital ratio
of which: common equity tier 1 capital ratio
Gone concern loss-absorbing capacity ratio
Total loss-absorbing capacity ratio
Leverage ratios (%)
Going concern leverage ratio
of which: common equity tier 1 leverage ratio
Gone concern leverage ratio
Total loss-absorbing capacity leverage ratio
Total loss-absorbing capacity and movement
Our total loss-absorbing capacity (TLAC) decreased by USD 1.1bn to USD 194.9bn in the third quarter of 2023.
Going concern capital and movement
Our going concern capital decreased by USD 1.7bn to USD 91.5bn. Our CET1 capital decreased by USD 1.7bn to
USD 78.6bn, mainly reflecting an operating loss before tax of USD 0.3bn, current tax expenses of USD 0.6bn,
negative effects from foreign currency translation of USD 0.6bn, dividend accruals of USD 0.5bn and amortization
of transitional CET1 PPA adjustments (interest rate and own credit) of USD 0.3bn (net of tax). These effects were
partly offset by a USD 0.2bn decrease in the shortfall in expected credit loss allowances and provisions over Basel III
expected losses and a USD 0.1bn increase in eligible deferred tax assets on temporary differences.
Our additional tier 1 (AT1) capital decreased by USD 0.1bn to USD 13.0bn, reflecting interest rate risk hedge,
foreign currency translation and other effects. On 20 October 2023, we announced that we would redeem an AT1
capital instrument on 28 November 2023 (ISIN CH0447353704 with a nominal amount of SGD 700bn, issued on
28 November 2018). This instrument remained eligible as AT1 capital as of 30 September 2023.
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Capital management 45
Gone concern loss-absorbing capacity and movement
Our total gone concern loss-absorbing capacity increased by USD 0.6bn to USD 103.4bn, mainly due to three new
issuances of TLAC-eligible senior unsecured debt denominated in US dollars of USD 4.5bn, largely offset by a call
of one TLAC-eligible unsecured debt instrument denominated in US dollars of USD 1.3bn, and interest rate risk
hedge, foreign currency translation and other effects. On 18 October 2023, we announced that we would redeem
TLAC-eligible senior unsecured debt on 8 November 2023 (ISIN CH0445624981 with a nominal amount of
JPY 130bn, issued on 9 November 2018). This instrument remained eligible as gone concern capital as of
30 September 2023.
›
Refer to “Bondholder information” at
for more information about the eligibility of capital and
senior unsecured debt instruments and about key features and terms and conditions of capital instruments
Loss-absorbing capacity and leverage ratios
Our CET1 capital ratio was broadly unchanged at 14.4%, reflecting a decrease in CET1 capital of USD 1.7bn, offset
by a USD 10.1bn decrease in RWA.
Our CET1 leverage ratio increased to 4.9% from 4.8%, reflecting a USD 62.1bn decrease in the LRD, partly offset
by a decrease in CET1 capital of USD 1.7bn.
Our gone concern loss-absorbing capacity ratio increased to 18.9% from 18.5%, due to the aforementioned
decrease in RWA and an increase in gone concern loss-absorbing capacity of USD 0.6bn.
Our gone concern leverage ratio increased to 6.4% from 6.1%, due to the aforementioned decrease in the LRD
and an increase in gone concern loss-absorbing capacity of USD 0.6bn.
Swiss SRB total loss-absorbing capacity movement
USD m
Going concern capital
Swiss SRB
Common equity tier 1 capital as of 30.6.23
Operating profit before tax
Current tax (expense) / benefit
Foreign currency translation effects, before tax
Amortization of transitional CET1 purchase price allocation adjustments, net of tax
Other
1
Common equity tier 1 capital as of 30.9.23
Loss-absorbing additional tier 1 capital as of 30.6.23
Interest rate risk hedge, foreign currency translation and other effects
Loss-absorbing additional tier 1 capital as of 30.9.23
Total going concern capital as of 30.6.23
Total going concern capital as of 30.9.23
Gone concern loss-absorbing capacity
Tier 2 capital as of 30.6.23
Interest rate risk hedge, foreign currency translation and other effects
Tier 2 capital as of 30.9.23
TLAC-eligible senior unsecured debt as of 30.6.23
Issuance of TLAC-eligible senior unsecured debt
Call of TLAC-eligible senior unsecured debt
Interest rate risk hedge, foreign currency translation and other effects
TLAC-eligible senior unsecured debt as of 30.9.23
Total gone concern loss-absorbing capacity as of 30.6.23
Total gone concern loss-absorbing capacity as of 30.9.23
Total loss-absorbing capacity
Total loss-absorbing capacity as of 30.6.23
Total loss-absorbing capacity as of 30.9.23
1 Includes dividend accruals for the current year (negative USD 0.5bn) and movements related to other items.
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Capital management 46
Reconciliation of IFRS equity to Swiss SRB common equity tier 1 capital
USD m
30.9.23
30.6.23
1
31.12.22
Total IFRS equity
Equity attributable to non-controlling interests
Defined benefit plans, net of tax
Deferred tax assets recognized for tax loss carry-forwards
Deferred tax assets for unused tax credits
Deferred tax assets on temporary differences, excess over threshold
Goodwill, net of tax
2
Intangible assets, net of tax
Compensation-related components (not recognized in net profit)
Expected losses on advanced internal ratings-based portfolio less provisions
Unrealized (gains) / losses from cash flow hedges, net of tax
Own credit related to (gains) / losses on financial liabilities measured at fair value that existed at the balance sheet date, net of tax
Own credit related to (gains) / losses on derivative financial instruments that existed at the balance sheet date
Prudential valuation adjustments
Accruals for dividends to shareholders for 2022
Transitional CET1 purchase price allocation adjustments
Other
3
Total common equity tier 1 capital
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
2 Includes goodwill related to significant investments in financial institutions of USD 19m as of 30 September 2023 (USD 19m as of 30 June 2023; USD 20m as of 31 December 2022) presented on the balance sheet
line Investments in associates. 3 Includes dividend accruals for the current year and other items.
Additional information
Sensitivity to currency movements
Risk-weighted assets
We estimate that a 10% depreciation of the US dollar against other currencies would have increased our RWA by
USD 23bn and our CET1 capital by USD 2.6bn as of 30 September 2023 (30 June 2023: USD 23bn and USD 3.0bn,
respectively) and decreased our CET1 capital ratio by 11 basis points (30 June 2023: 6 basis points). Conversely, a
10% appreciation of the US dollar against other currencies would have decreased our RWA by USD 21bn and our
CET1 capital by USD 2.4bn (30 June 2023: USD 21bn and USD 2.7bn, respectively) and increased our CET1 capital
ratio by 11 basis points (30 June 2023: 6 basis points).
Leverage ratio denominator
We estimate that a 10% depreciation of the US dollar against other currencies would have increased our LRD by
USD 103bn as of 30 September 2023 (30 June 2023: USD 109bn) and decreased our CET1 leverage ratio by
14 basis points (30 June 2023: 12 basis points). Conversely, a 10% appreciation of the US dollar against other
currencies would have decreased our LRD by USD 94bn (30 June 2023: USD 99bn) and increased our CET1 leverage
ratio by 14 basis points (30 June 2023: 13 basis points).
The aforementioned sensitivities do not consider foreign currency translation effects related to defined benefit plans
other than those related to the currency translation of the net equity of foreign operations.
›
Refer to “Active management of sensitivity to currency movements” under “Capital management” in the “Capital,
liquidity and funding, and balance sheet” section of the Annual Report 2022 for more information
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Capital management 47
Estimated effect on capital from litigation, regulatory and similar matters subject to provisions and contingent
liabilities
We have estimated the loss in capital that we could incur as a result of the risks associated with the matters related
to UBS AG and subsidiaries described in “Note 15 Provisions and contingent liabilities” in the “Consolidated
financial statements” section of this report. We have employed for this purpose the advanced measurement
approach (AMA) methodology that we use when determining the capital requirements associated with operational
risks, based on a 99.9% confidence level over a 12-month horizon. The methodology takes into consideration UBS
and industry experience for the AMA operational risk categories to which those matters correspond, as well as the
external environment affecting risks of these types, in isolation from other areas. On this basis, with respect to the
litigation, regulatory and similar matters related to UBS AG and subsidiaries, we estimate the maximum loss in
capital that we could incur over a 12-month period as a result of our risks associated with these operational risk
categories at USD 4.0bn as of 30 September 2023. This estimate is not related to and does not take into account
any provisions recognized for any of these matters and does not constitute a subjective assessment of our actual
exposure in any of these matters.
›
Refer to “Non-financial risk” in the “Risk management and control” section of the Annual Report 2022 for more
information
›
Refer to “Note 15 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this
report for more information
Risk-weighted assets
During the third quarter of 2023, RWA decreased by USD 10.1bn to USD 546.5bn, primarily driven by decreases of
USD 5.5bn due to currency effects and USD 5.3bn due to asset size and other movements, partly offset by an
increase of USD 0.6bn due to model updates.
Movement in risk-weighted assets by key driver
USD bn
RWA as of
30.6.23
Currency
effects
Methodology
and policy
changes
Model
updates /
changes
Regulatory
add-ons
Asset size
and other
1
RWA as of
30.9.23
Credit and counterparty credit risk
2
Non-counterparty-related risk
3
Market risk
Operational risk
Total
1 Includes the Pillar 3 categories “Asset size,” “Credit quality of counterparties,” “Acquisitions and disposals” and “Other.” For more information, refer to our 30 September 2023 Pillar 3 report, available under
“Pillar 3 disclosures” at ubs.com/investors. 2 Includes settlement risk, credit valuation adjustments, equity and investments in funds exposures in the banking book, and securitization exposures in the banking book.
3 Non-counterparty-related risk includes deferred tax assets recognized for temporary differences, property, equipment, software and other items.
Credit and counterparty credit risk
Credit and counterparty credit risk RWA were USD 346.3bn as of 30 September 2023. The decrease of USD 10.1bn
included currency effects of USD 5.2bn.
Asset size and other movements resulted in a USD 5.5bn decrease in RWA.
–
Non-core and Legacy decreased by USD 6.0bn, mainly due to lower RWA from loans as a result of strategic de-
risking.
–
Personal & Corporate Banking RWA decreased by USD 0.3bn, primarily driven by lower RWA from loans.
–
Investment Bank RWA decreased by USD 0.2bn, mainly due to lower RWA from securities financing transactions.
–
Global Wealth Management RWA decreased by USD 0.1bn, with lower RWA from derivatives, securitization
exposures, and equity positions almost entirely offset by higher RWA from loans.
–
Group Items RWA increased by USD 1.0bn, mainly driven by higher RWA from nostro accounts.
–
Asset Management RWA increased by USD 0.1bn.
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Capital management 48
Model updates resulted in an RWA increase of USD 0.6bn. RWA increases of USD 1.0bn related to the phase-in of
model updates for hedge funds, USD 0.5bn related to updates to the Lombard model, USD 0.3bn related to a
model update for income-producing real estate and USD 0.3bn related to the Swiss corporate model were partly
offset by an RWA decrease of USD 1.5bn related to the recalibration of certain multipliers as a result of
improvements to models.
›
Refer to the “Recent developments” section of this report for more information about the realignment of business
divisions
›
Refer to the 30 September 2023 Pillar 3 report, available under “Pillar 3 disclosures” at
ubs.com/investors
, for more
information
›
Refer to “Credit risk models” in the “Risk management and control” section of the Annual Report 2022 for more
information
Outlook
We expect that regulatory-driven updates to credit and counterparty credit risk models will result in an RWA increase
of around USD 2bn in the fourth quarter of 2023. The extent and timing of RWA changes may vary as model
updates are completed and receive regulatory approval, along with changes in the composition of the relevant
portfolios. Furthermore, we expect exposures in Non-core and Legacy to reduce as a result of maturities and active
unwinding of positions.
›
Refer to the “Recent developments” section of this report for more information about the integration of Credit
Suisse
Market risk
Market risk RWA increased by USD 0.5bn to USD 24.1bn in the third quarter of 2023, primarily driven by an increase
of USD 0.3bn from asset size and other movements and an increase of USD 0.1bn related to ongoing parameter
updates of the value-at-risk (VaR) models. UBS is in discussions with FINMA regarding the integration of time decay
into the regulatory VaR, which would replace the current add-on
.
›
Refer to the 30 September 2023 Pillar 3 report, available under “Pillar 3 disclosures” at
information
›
Refer to ”Market risk” in the “Risk management and control” section of the Annual Report 2022 for more
information
Operational risk
Operational risk RWA were unchanged at USD 145.4bn. In the third quarter of 2023, we updated our methodology
that we use to allocate operational risk RWA to the business divisions and Group Items. The updated methodology
was retrospectively applied for the second quarter of 2023.
›
Refer to the “Recent developments” section and “Note 15 Provisions and contingent liabilities” in the “Consolidated
financial statements” section of this report for more information
›
Refer to “Non-financial risk” in the “Risk management and control” section of the Annual Report 2022 for
information about the advanced measurement approach model
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Capital management 49
Risk-weighted assets by business division and Group Items
USD bn
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Manage-
ment
Investment
Bank
Non-core and
Legacy
1
Group
Items
1
Total
RWA
30.9.23
Credit and counterparty credit risk
2
Non-counterparty-related risk
3
Market risk
Operational risk
Total
30.6.23
Credit and counterparty credit risk
2
Non-counterparty-related risk
3
Market risk
Operational risk
Total
30.9.23 vs 30.6.23
Credit and counterparty credit risk
2
Non-counterparty-related risk
3
Market risk
Operational risk
Total
1 Starting with the third quarter of 2023, Non-core and Legacy represents a separate reportable segment and Group Functions has been renamed Group Items. Prior periods have been revised to reflect these changes.
2 Includes settlement risk, credit valuation adjustments, equity and investments in funds exposures in the banking book and securitization exposures in the banking book. 3 Non-counterparty-related risk includes
deferred tax assets recognized for temporary differences (30 September 2023: USD 12.6bn; 30 June 2023: USD 12.4bn), as well as property, equipment, software and other items (30 September 2023: USD 18.1bn;
30 June 2023: USD 18.7bn).
Leverage ratio denominator
During the third quarter of 2023, the LRD decreased by USD 62.1bn to USD 1,615.8bn, primarily driven by
decreases from asset size and other movements of USD 37.1bn and currency effects of USD 24.9bn.
Movement in leverage ratio denominator by key driver
USD bn
LRD as of
30.6.23
Currency
effects
Asset size and
other
LRD as of
30.9.23
On-balance sheet exposures (excluding derivatives and securities financing transactions)
Derivatives
Securities financing transactions
Off-balance sheet items
Deduction items
Total
The LRD movements described below exclude currency effects.
On-balance sheet exposures (excluding derivatives and securities financing transactions) decreased by USD 20.9bn,
mainly reflecting lower lending balances and trading assets.
Derivative exposures increased by USD 4.2bn, mainly due to market-driven movements on foreign currency
contracts and higher trading volumes in equity contracts in the Investment Bank.
Securities financing transactions decreased by USD 3.1bn, mainly due to reduced volumes in Non-core and Legacy,
partly offset by client-driven increases in brokerage receivables in the Investment Bank.
Off-balance sheet items decreased by USD 17.2bn, mainly due to a decrease in loan commitments in Non-core and
Legacy, following the accounting reclassification of loan commitments from accrual to fair value, implemented
prospectively in the LRD framework during the third quarter of 2023.
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Capital management 50
The application of measurement period adjustments to the accounting for the acquisition of the Credit Suisse Group
included the reclassification of loan commitments not measured at fair value in Non-core and Legacy to derivative
loan commitments measured at fair value through profit or loss. This resulted in a USD 14bn decrease in LRD from
off-balance sheet items and a USD 2bn increase in LRD from derivative exposures in the third quarter of 2023.
›
Refer to the “Balance sheet and off-balance sheet” section of this report for more information about balance sheet
movements
Leverage ratio denominator by business division and Group Items
USD bn
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
1
Group Items
1
Total
30.9.23
On-balance sheet exposures
Derivatives
Securities financing transactions
Off-balance sheet items
Items deducted from Swiss SRB tier 1 capital
Total
30.6.23
On-balance sheet exposures
Derivatives
Securities financing transactions
Off-balance sheet items
Items deducted from Swiss SRB tier 1 capital
Total
30.9.23 vs 30.6.23
On-balance sheet exposures
Derivatives
Securities financing transactions
Off-balance sheet items
Items deducted from Swiss SRB tier 1 capital
Total
1 Starting with the third quarter of 2023, Non-core and Legacy represents a separate reportable segment and Group Functions has been renamed Group Items. Prior periods have been revised to reflect these changes.
Liquidity and funding management
Strategy, objectives and governance
This section provides liquidity and funding management information and should be read in conjunction with
“Liquidity and funding management” in the “Capital, liquidity and funding, and balance sheet” section of the
Annual Report 2022, which provides more information about the Group’s strategy, objectives and governance in
connection with liquidity and funding management.
Liquidity coverage ratio
The quarterly average liquidity coverage ratio (the LCR) of the UBS Group increased 21.3 percentage points to
196.5%, remaining above the prudential requirement communicated by the Swiss Financial Market Supervisory
Authority (FINMA).
The movement in the average LCR was primarily driven by an increase in high-quality liquidity assets (HQLA) of
USD 110.4bn to USD 367.5bn. This increase was substantially attributable to the effect of the acquisition of the
Credit Suisse Group on 12 June 2023, with only 15 days of post-acquisition effect included in the average LCR for
the second quarter of 2023. Comparing the average for the 15 business days in the second quarter of 2023
following the acquisition of the Credit Suisse Group with the average for the full third quarter, the HQLA for the
UBS Group decreased from USD 372.1bn to USD 367.5bn. The effect of higher customer deposit balances was
offset by the repayment of an Emergency Liquidity Assistance Plus loan drawn by Credit Suisse.
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Liquidity and funding management 51
The increase in HQLA was partly offset by a USD 42.3bn increase in net cash outflows to USD 187.3bn, substantially
attributable to the effect of the acquisition of the Credit Suisse Group on 12 June 2023, as only 15 days of post-
acquisition effect were included in the average LCR for the second quarter of 2023. Comparing the average for the
15 business days in the second quarter of 2023 with the average for the full third quarter, net cash outflows of the
UBS Group were largely unchanged, at USD 187.3bn.
›
Refer to “Liquidity coverage ratio” in the “Liquidity and funding management” section of our second quarter 2023
report, available under “Quarterly reporting” at
ubs.com/investors
, for more information about the basis of
calculation for the average LCR for the second quarter of 2023
›
Refer to the
30 September 2023 Pillar 3 report, available under “Pillar 3 disclosures” at
ubs.com/investors
, for more
information about the LCR
Liquidity coverage ratio
USD bn, except where indicated
Average 3Q23
1
Average 2Q23
1
High-quality liquid assets
Net cash outflows
2
Liquidity coverage ratio (%)
3
1 Calculated based on an average of 63 data points in the third quarter of 2023 and 64 data points in the second quarter of 2023. 2 Represents the net cash outflows expected over a stress period of 30 calendar
days. 3 Calculated after the application of haircuts and inflow and outflow rates, as well as, where applicable, caps on Level 2 assets and cash inflows.
Net stable funding ratio
As of 30 September 2023, the net stable funding ratio (the NSFR) of the UBS Group increased 3.1 percentage points
to 120.7%, remaining above the prudential requirement communicated by FINMA.
Available stable funding decreased slightly by USD 0.4bn to USD 872.7bn, reflecting higher customer deposits,
substantially offset by a decrease in debt issued, lower payables from securities financing transactions, and lower
capital. Required stable funding decreased by USD 19.2bn to USD 722.9bn, predominantly reflecting lower lending
assets and, to a lesser extent, lower trading assets, partly offset by higher derivative balances.
›
Refer to the 30 September 2023 Pillar 3 report, available under “Pillar 3 disclosures” at
ubs.com/investors
, for more
information about the NSFR
Net stable funding ratio
USD bn, except where indicated
30.9.23
30.6.23
Available stable funding
Required stable funding
Net stable funding ratio (%)
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Balance sheet and off-balance sheet 52
Balance sheet and off-balance sheet
This section provides balance sheet and off-balance sheet information and should be read in conjunction with
“Balance sheet and off-balance sheet” in the “Capital, liquidity and funding, and balance sheet” section of the
Annual Report 2022, which provides more information about the balance sheet and off-balance sheet positions.
For more information about the balance sheet effects of the acquisition of the Credit Suisse Group, refer to “Note 2
Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section.
Balances disclosed in this report represent quarter-end positions, unless indicated otherwise. Intra-quarter balances
fluctuate in the ordinary course of business and may differ from quarter-end positions.
Balance sheet assets (30 September 2023 vs 30 June 2023)
Total assets were USD 1,644.5bn as of 30 September 2023. The decrease of USD 34.4bn included currency effects
of approximately USD 21.1bn.
Lending assets decreased by USD 24.0bn, mainly reflecting negative net new loans, mainly in Global Wealth
Management, and negative currency effects of approximately USD 10.9bn. Trading assets decreased by
USD 14.3bn, mainly driven by a decrease in positions held in the Investment Bank to hedge client positions. Other
financial assets measured at fair value decreased by USD 6.3bn, mainly reflecting a decrease in securities financing
transactions measured at fair value in the Investment Bank.
These decreases were partly offset by an increase in Derivatives and cash collateral receivables on derivative
instruments of USD 10.0bn, mainly in Derivatives & Solutions in the Investment Bank, primarily reflecting market-
driven movements on foreign-currency contracts amid volatility in exchange rates.
Assets
As of
% change from
USD bn
30.9.23
30.6.23
1
30.6.23
Cash and balances at central banks
Lending
2
Securities financing transactions at amortized cost
Trading assets
Derivatives and cash collateral receivables on derivative instruments
Brokerage receivables
Other financial assets measured at amortized cost
Other financial assets measured at fair value
3
Non-financial assets
Total assets
of which: Credit Suisse
4
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
2 Consists of Loans and advances to customers and Amounts due from banks. 3 Consists of Financial assets at fair value not held for trading and Financial assets measured at fair value through other comprehensive
income. 4 Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
Balance sheet liabilities (30 September 2023 vs 30 June 2023)
Total liabilities were USD 1,559.0bn as of 30 September 2023. The decrease of USD 32.1bn included currency
effects of USD 18.6bn.
Short-term borrowings decreased by USD 33.2bn, mainly related to the reduction of funding from the Swiss
National Bank. Securities financing transactions at amortized cost decreased by USD 7.3bn, predominantly
reflecting roll-offs. Trading liabilities decreased by USD 5.4bn, mainly due to a decrease in positions held in the
Investment Bank to hedge client positions.
These decreases were partly offset by an increase in Customer deposits of USD 20.6bn, including negative currency
effects of USD 10.4bn, mainly in Global Wealth Management and primarily driven by net inflows into time deposits,
partly offset by continued shifts into money market funds and US-government securities.
The “Liabilities by product and currency” table in this section provides more information about our funding sources.
›
Refer to “Bondholder information” at
for more information about capital and senior debt
instruments
›
Refer to the “Consolidated financial statements” section of this report for more information
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Balance sheet and off-balance sheet 53
Liabilities and equity
As of
% change from
USD bn
30.9.23
30.6.23
1
30.6.23
Short-term borrowings
2,3
Securities financing transactions at amortized cost
Customer deposits
Debt issued designated at fair value and long-term debt issued measured at amortized cost
3
Trading liabilities
Derivatives and cash collateral payables on derivative instruments
Brokerage payables
Other financial liabilities measured at amortized cost
Other financial liabilities designated at fair value
Non-financial liabilities
Total liabilities
of which: Credit Suisse
4
Share capital
Share premium
Treasury shares
Retained earnings
Other comprehensive income
5
Total equity attributable to shareholders
Equity attributable to non-controlling interests
Total equity
Total liabilities and equity
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
2 Consists of short-term debt issued measured at amortized cost and amounts due to banks, which includes amounts due to central banks. 3 The classification of debt issued measured at amortized cost into short-
term and long-term is based on original contractual maturity and therefore long-term debt also includes debt with a remaining time to maturity of less than one year. This classification does not consider any early
redemption features. 4 Excludes USD 55.7bn (30 June 2023: USD 52.9bn) of debt instruments previously issued by Credit Suisse Group AG and transferred to UBS Group AG as part of the acquisition. Refer to
“Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information. 5 Excludes other comprehensive income related to defined
benefit plans and own credit, which is recorded directly in Retained earnings.
Equity (30 September 2023 vs 30 June 2023)
Equity attributable to shareholders decreased by USD 2,260m to USD 84,856m as of 30 September 2023.
The decrease of USD 2,260m was mainly driven by negative total comprehensive income attributable to
shareholders of USD 2,684m, reflecting a net loss of USD 785m and negative other comprehensive income (OCI)
of USD 1,899m, partly offset by deferred share-based compensation awards expensed in the income statement of
USD 346m. OCI mainly included negative OCI related to own credit on financial liabilities designated at fair value
of USD 686m, negative OCI related to foreign currency translation of USD 615m and negative cash flow hedge OCI
of USD 526m.
›
Refer to the “Group performance” and “Consolidated financial statements” sections of this report for more
information
›
Refer to “Reconciliation of IFRS equity to Swiss SRB common equity tier 1 capital” in the “Capital management”
section of this report for more information about the effects of OCI on common equity tier 1 capital
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Balance sheet and off-balance sheet 54
Liabilities by product and currency
USD equivalent
All currencies
of which: USD
of which: CHF
of which: EUR
USD bn
30.9.23
30.6.23
1
30.9.23
30.6.23
1
30.9.23
30.6.23
30.9.23
30.6.23
Short-term borrowings
106.5
139.7
49.6
49.7
39.2
69.6
7.8
9.3
of which: amounts due to banks
68.5
99.2
20.7
20.3
39.0
69.5
3.2
3.8
of which: short-term debt issued
2,3
38.0
40.5
28.9
29.4
0.1
0.1
4.6
5.5
Securities financing transactions at amortized cost
15.0
22.3
8.2
15.4
2.2
2.2
3.0
2.8
Customer deposits
733.1
712.5
299.7
280.9
293.0
296.0
73.2
72.3
of which: demand deposits
233.8
250.1
61.9
66.2
103.6
109.2
38.2
42.7
of which: retail savings / deposits
180.1
189.0
31.2
31.0
144.4
153.0
4.4
4.9
of which: sweep deposits
40.2
45.5
40.2
45.5
0.0
0.0
0.0
0.0
of which: time deposits
279.0
227.9
166.3
138.2
45.0
33.8
30.6
24.7
Debt issued designated at fair value and long-term debt issued measured at
amortized cost
3
312.1
315.4
177.1
176.3
40.1
40.1
67.1
70.1
Trading liabilities
35.0
40.4
12.0
13.3
1.3
1.6
9.3
13.0
Derivatives and cash collateral payables on derivative instruments
239.6
236.6
189.9
184.1
6.8
5.5
26.3
27.8
Brokerage payables
41.3
43.9
30.9
32.7
0.6
0.7
2.2
2.6
Other financial liabilities measured at amortized cost
19.2
19.4
9.4
7.7
5.6
4.9
0.8
2.3
Other financial liabilities designated at fair value
33.3
36.1
9.3
9.5
0.0
0.1
4.3
4.8
Non-financial liabilities
24.1
24.8
13.3
14.5
3.2
3.0
3.1
3.3
Total liabilities
1,559.1
1,591.1
799.5
784.0
391.9
423.8
197.2
208.2
of which: Credit Suisse
4
462.5
502.7
190.8
197.8
163.3
189.8
61.4
67.3
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
2 Short-term debt issued consists of certificates of deposit, commercial paper, acceptances and promissory notes, and other money market paper. 3 The classification of debt issued measured at amortized cost into
short-term and long-term is based on original contractual maturity and therefore long-term debt also includes debt with a remaining time to maturity of less than one year. This classification does not consider any early
redemption features. 4 Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
Off-balance sheet (30 September 2023 vs 30 June 2023)
Committed unconditionally revocable credit lines decreased by USD 9.6bn, mainly driven by a decrease in facilities
provided to corporate and institutional clients. Forward starting reverse repurchase agreements increased by
USD 5.4bn, mainly in Group Treasury, reflecting fluctuations in levels of business division activity in short-dated
securities financing transactions.
Off-balance sheet
As of
% change from
USD bn
30.9.23
30.6.23
1
30.6.23
Guarantees
2,3
Loan commitments
2
Committed unconditionally revocable credit lines
Forward starting reverse repurchase agreements
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
2 Guarantees and loan commitments are shown net of sub-participations. 3 Includes guarantees measured at fair value through profit or loss.
UBS Group third quarter 2023 report |
Risk, capital, liquidity and funding, and balance sheet | Share information and earnings per share 55
Share information and earnings per share
UBS Group AG shares are listed on the SIX Swiss Exchange (SIX). They are also listed on the New York Stock
Exchange (the NYSE) as global registered shares. Each share has a nominal value of USD 0.10 following a change
of the share capital currency of UBS Group AG from the Swiss franc to the US dollar in the second quarter of 2023.
Shares issued were unchanged in the third quarter of 2023 compared with the second quarter of 2023.
We held 229m shares as of 30 September 2023, of which 121m shares had been acquired under our 2022 share
repurchase program for cancellation purposes. The remaining 108m shares are primarily held to hedge our share
delivery obligations related to employee share-based compensation and participation plans.
Treasury shares held decreased by 5m shares in the third quarter of 2023. This mainly reflected the delivery of
treasury shares under our share-based compensation plans.
Shares acquired under our 2022 program totaled 121m as of 30 September 2023 for a total acquisition cost of
USD 2,277m (CHF 2,138m). A new, two-year share repurchase program of up to USD 6bn was approved by
shareholders at the 2023 AGM. However, we have temporarily suspended repurchases under the share repurchase
programs due to the acquisition of the Credit Suisse Group.
›
Refer to the “Recent developments” section of this report for more information about the integration of Credit
Suisse
›
Refer to the “Equity, CET1 capital and returns” table in the “Group performance” section of this report for more
information about equity attributable to shareholders and tangible equity attributable to shareholders
As of or for the quarter ended
As of or year-to-date
30.9.23
30.6.23
1
30.9.22
30.9.23
30.9.22
Basic and diluted earnings (USD m)
Net profit / (loss) attributable to shareholders for basic EPS
Less: (profit) / loss on own equity derivative contracts
Net profit / (loss) attributable to shareholders for diluted EPS
Weighted average shares outstanding
Weighted average shares outstanding for basic EPS
2
Effect of dilutive potential shares resulting from notional employee shares, in-the-money
options and warrants outstanding
3
4
Weighted average shares outstanding for diluted EPS
Earnings per share (USD)
Basic
Diluted
Shares outstanding and potentially dilutive instruments
Shares issued
Treasury shares
5
of which: related to the 2021 share repurchase program
of which: related to the 2022 share repurchase program
Shares outstanding
Potentially dilutive instruments
6
4
Other key figures
Total book value per share (USD)
Tangible book value per share (USD)
Share price (USD)
7
Market capitalization (USD m)
8
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
2 The weighted average shares outstanding for basic earnings per share (EPS) are calculated by taking the number of shares at the beginning of the period, adjusted by the number of shares acquired or issued during
the period, multiplied by a time-weighted factor for the period outstanding. As a result, balances are affected by the timing of acquisitions and issuances during the period. 3 The weighted average number of shares
for notional employee awards with performance conditions reflects all potentially dilutive shares that are expected to vest under the terms of the awards. 4 Due to the net loss in the third quarter of 2023,
148,423,317 weighted average potential shares from unvested notional share awards were not included in the calculation of diluted EPS as they were not dilutive for the quarter ended 30 September 2023. Such
shares are only taken into account for the diluted EPS calculation when their conversion to ordinary shares would decrease earnings per share or increase the loss per share, in accordance with IAS 33, Earnings per
Share. 5 Based on a settlement date view. 6 Reflects potential shares that could dilute basic EPS in the future, but were not dilutive for any of the periods presented. It mainly includes equity-based awards subject
to absolute and relative performance conditions and equity derivative contracts. For the quarter ended 30 September 2023 it also includes 148,423,317 weighted average potential shares from unvested notional
share awards that were not included in the calculation of diluted EPS as they were not dilutive. 7 Represents the share price as listed on the SIX Swiss Exchange, translated to US dollars using the closing exchange
rate as of the respective date. 8 The calculation of market capitalization has been amended in the second quarter of 2023 to reflect total shares issued multiplied by the share price at the end of the period. The
calculation was previously based on total shares outstanding multiplied by the share price at the end of the period. Market capitalization has been increased by USD 5.0bn as of 30 September 2022 as a result.
Ticker symbols UBS Group AG
Security identification codes
Trading exchange
SIX / NYSE
Bloomberg
Reuters
ISIN
CH0244767585
SIX Swiss Exchange
UBSG
UBSG SW
UBSG.S
Valoren
24 476 758
New York Stock Exchange
UBS
UBS UN
UBS.N
CUSIP
CINS H42097 10 7
UBS Group third quarter 2023 report |
Consolidated financial statements 56
Consolidated financial
statements
Unaudited
Table of contents
57
58
59
60
61
62
1
64
2
72
3
73
4
74
5
74
6
74
7
75
8
83
9
90
10
91
11
92
12
92
13
93
14
93
15
UBS Group third quarter 2023 report |
Consolidated financial statements | UBS Group AG interim consolidated financial statements (unaudited) 57
UBS Group AG interim consolidated financial
statements (unaudited)
Income statement
For the quarter ended
Year-to-date
USD m
Note
30.9.23
30.6.23
1
30.9.22
30.9.23
30.9.22
Interest income from financial instruments measured at amortized cost and fair value through
other comprehensive income
4
Interest expense from financial instruments measured at amortized cost
4
Net interest income from financial instruments measured at fair value through profit or loss
and other
4
Net interest income
4
Other net income from financial instruments measured at fair value through profit or loss
Fee and commission income
5
Fee and commission expense
5
Net fee and commission income
5
Other income
Total revenues
Negative goodwill
2
Credit loss expense / (release)
8
Personnel expenses
6
General and administrative expenses
7
Depreciation, amortization and impairment of non-financial assets
Operating expenses
Operating profit / (loss) before tax
Tax expense / (benefit)
Net profit / (loss)
Net profit / (loss) attributable to non-controlling interests
Net profit / (loss) attributable to shareholders
Earnings per share (USD)
Basic
Diluted
1 Comparative-period information has been revised. Refer to Note 2 for more information.
UBS Group third quarter 2023 report |
Consolidated financial statements | UBS Group AG interim consolidated financial statements (unaudited) 58
Statement of comprehensive income
For the quarter ended
Year-to-date
USD m
30.9.23
30.6.23
1
30.9.22
30.9.23
30.9.22
Comprehensive income attributable to shareholders
2
Net profit / (loss)
Other comprehensive income that may be reclassified to the income statement
Foreign currency translation
Foreign currency translation movements related to net assets of foreign operations, before tax
Effective portion of changes in fair value of hedging instruments designated as net investment hedges, before tax
Foreign currency translation differences on foreign operations reclassified to the income statement
Effective portion of changes in fair value of hedging instruments designated as net investment hedges reclassified to
the income statement
Income tax relating to foreign currency translations, including the effect of net investment hedges
Subtotal foreign currency translation, net of tax
Financial assets measured at fair value through other comprehensive income
Net unrealized gains / (losses), before tax
Net realized (gains) / losses reclassified to the income statement from equity
Reclassification of financial assets to Other financial assets measured at amortized cost
3
Income tax relating to net unrealized gains / (losses)
Subtotal financial assets measured at fair value through other comprehensive income, net of tax
Cash flow hedges of interest rate risk
Effective portion of changes in fair value of derivative instruments designated as cash flow hedges, before tax
Net (gains) / losses reclassified to the income statement from equity
Income tax relating to cash flow hedges
Subtotal cash flow hedges, net of tax
Cost of hedging
Cost of hedging, before tax
Income tax relating to cost of hedging
Subtotal cost of hedging, net of tax
Total other comprehensive income that may be reclassified to the income statement, net of tax
Other comprehensive income that will not be reclassified to the income statement
Defined benefit plans
Gains / (losses) on defined benefit plans, before tax
Income tax relating to defined benefit plans
Subtotal defined benefit plans, net of tax
Own credit on financial liabilities designated at fair value
Gains / (losses) from own credit on financial liabilities designated at fair value, before tax
Income tax relating to own credit on financial liabilities designated at fair value
Subtotal own credit on financial liabilities designated at fair value, net of tax
Total other comprehensive income that will not be reclassified to the income statement, net of tax
Total other comprehensive income
Total comprehensive income attributable to shareholders
Comprehensive income attributable to non-controlling interests
Net profit / (loss)
Total other comprehensive income that will not be reclassified to the income statement, net of tax
Total comprehensive income attributable to non-controlling interests
Total comprehensive income
Net profit / (loss)
Other comprehensive income
of which: other comprehensive income that may be reclassified to the income statement
of which: other comprehensive income that will not be reclassified to the income statement
Total comprehensive income
1 Comparative-period information has been revised. Refer to Note 2 for more information. 2 Refer to the “Group performance” section of this report for more information. 3 Effective 1 April 2022, a portfolio
of assets previously classified as Financial assets measured at fair value through other comprehensive income was reclassified to Other financial assets measured at amortized cost. As a result, the related cumulative
fair value losses of USD 449m before tax and USD 333m after tax, previously recognized in Other comprehensive income, have been removed from equity and adjusted against the value of the assets at the
reclassification date.
UBS Group third quarter 2023 report |
Consolidated financial statements | UBS Group AG interim consolidated financial statements (unaudited) 59
Balance sheet
USD m
Note
30.9.23
30.6.23
1
31.12.22
Assets
Cash and balances at central banks
Amounts due from banks
Receivables from securities financing transactions measured at amortized cost
Cash collateral receivables on derivative instruments
Loans and advances to customers
Other financial assets measured at amortized cost
Total financial assets measured at amortized cost
Financial assets at fair value held for trading
of which: assets pledged as collateral that may be sold or repledged by counterparties
Derivative financial instruments
9, 10
Brokerage receivables
Financial assets at fair value not held for trading
Total financial assets measured at fair value through profit or loss
Financial assets measured at fair value through other comprehensive income
Investments in associates
Property, equipment and software
Goodwill and intangible assets
Deferred tax assets
Other non-financial assets
Total assets
of which: Credit Suisse
2
Liabilities
Amounts due to banks
Payables from securities financing transactions measured at amortized cost
Cash collateral payables on derivative instruments
Customer deposits
Debt issued measured at amortized cost
Other financial liabilities measured at amortized cost
Total financial liabilities measured at amortized cost
Financial liabilities at fair value held for trading
Derivative financial instruments
9, 10
Brokerage payables designated at fair value
Debt issued designated at fair value
9, 12
Other financial liabilities designated at fair value
9, 11
Total financial liabilities measured at fair value through profit or loss
Provisions and contingent liabilities
Other non-financial liabilities
Total liabilities
of which: Credit Suisse
2
2
Equity
Share capital
Share premium
Treasury shares
Retained earnings
Other comprehensive income recognized directly in equity, net of tax
Equity attributable to shareholders
Equity attributable to non-controlling interests
Total equity
Total liabilities and equity
1 Comparative-period information has been revised. Refer to Note 2 for more information. 2 Excludes USD 55.7bn (30 June 2023: USD 52.9bn) of debt instruments previously issued by Credit Suisse Group AG and
transferred to UBS Group AG as part of the acquisition of the Credit Suisse Group.
UBS Group third quarter 2023 report |
Consolidated financial statements | UBS Group AG interim consolidated financial statements (unaudited) 60
Statement of changes in equity
USD m
Share
capital and
share
premium
Treasury
shares
Retained
earnings
OCI
recognized
directly in
equity,
net of tax
1
of which:
foreign
currency
translation
of which:
cash flow
hedges
Total equity
attributable to
shareholders
Balance as of 1 January 2023
2
Purchase price consideration, before consideration of share-based compensation awards
3
Impact of share-based compensation awards
3
Impact of the settlement of pre-existing relationships
3
Acquisition of treasury shares
4
Delivery of treasury shares under share-based compensation plans
Other disposal of treasury shares
4
Cancellation of treasury shares related to the 2021 share repurchase program
5
Share-based compensation expensed in the income statement
Tax (expense) / benefit
Dividends
6
6
Equity classified as obligation to purchase own shares
Translation effects recognized directly in retained earnings
Share of changes in retained earnings of associates and joint ventures
New consolidations / (deconsolidations) and other increases / (decreases)
Total comprehensive income for the period
of which: net profit / (loss)
of which: OCI, net of tax
Balance as of 30 September 2023
2
Non-controlling interests as of 30 September 2023
7
Total equity as of 30 September 2023
Balance as of 1 January 2022
2
Acquisition of treasury shares
4
Delivery of treasury shares under share-based compensation plans
Other disposal of treasury shares
4
Cancellation of treasury shares related to the 2021 share repurchase program
Share-based compensation expensed in the income statement
Tax (expense) / benefit
Dividends
6
6
Equity classified as obligation to purchase own shares
Translation effects recognized directly in retained earnings
Share of changes in retained earnings of associates and joint ventures
New consolidations / (deconsolidations) and other increases / (decreases)
Total comprehensive income for the period
of which: net profit / (loss)
of which: OCI, net of tax
Balance as of 30 September 2022
2
Non-controlling interests as of 30 September 2022
Total equity as of 30 September 2022
1 Excludes other comprehensive income related to defined benefit plans and own credit that is recorded directly in Retained earnings. 2 Excludes non-controlling interests. 3 Refer to Note 2 for more information.
4 Includes treasury shares acquired and disposed of by the Investment Bank in its capacity as a market maker with regard to UBS shares and related derivatives, and to hedge certain issued structured debt instruments.
These acquisitions and disposals are reported based on the sum of the net monthly movements. 5 Reflects the cancellation of 62,548,000 shares purchased under UBS’s 2021 share repurchase program as approved
by shareholders at the 2023 Annual General Meeting. Swiss tax law requires Switzerland-domiciled companies with shares listed on a Swiss stock exchange to reduce capital contribution reserves by at least 50% of
the total capital reduction amount exceeding the nominal value upon cancellation of the shares. 6 Reflects the payment of an ordinary cash dividend of USD 0.55 per dividend-bearing share in April 2023 (2022:
USD 0.50 per dividend-bearing share paid in April 2022). Swiss tax law requires Switzerland-domiciled companies with shares listed on a Swiss stock exchange to pay no more than 50% of dividends from capital
contribution reserves, with the remainder required to be paid from retained earnings. 7 Includes an increase of USD 285m in the second quarter of 2023 due to the acquisition of the Credit Suisse Group.
UBS Group third quarter 2023 report |
Consolidated financial statements | UBS Group AG interim consolidated financial statements (unaudited) 61
Statement of cash flows
Year-to-date
USD m
30.9.23
30.9.22
Cash flow from / (used in) operating activities
Net profit / (loss)
Non-cash items included in net profit and other adjustments:
Depreciation, amortization and impairment of non-financial assets
Credit loss expense / (release)
Share of net (profit) / loss of associates and joint ventures and impairment related to associates
Deferred tax expense / (benefit)
Net loss / (gain) from investing activities
Net loss / (gain) from financing activities
Negative goodwill
1
Other net adjustments
Net change in operating assets and liabilities:
2
Amounts due from banks and amounts due to banks
Securities financing transactions measured at amortized cost
Cash collateral on derivative instruments
Loans and advances to customers and customer deposits
Financial assets and liabilities at fair value held for trading and derivative financial instruments
Brokerage receivables and payables
Financial assets at fair value not held for trading and other financial assets and liabilities
Provisions and other non-financial assets and liabilities
Income taxes paid, net of refunds
Net cash flow from / (used in) operating activities
Cash flow from / (used in) investing activities
Cash and cash equivalents acquired on acquisition of Credit Suisse
1
Purchase of subsidiaries, associates and intangible assets
Disposal of subsidiaries, associates and intangible assets
Purchase of property, equipment and software
Disposal of property, equipment and software
Net (purchase) / redemption of financial assets measured at fair value through other comprehensive income
Purchase of debt securities measured at amortized cost
Disposal and redemption of debt securities measured at amortized cost
Net cash flow from / (used in) investing activities
Cash flow from / (used in) financing activities
Repayment of Swiss National Bank funding
Net issuance (repayment) of short-term debt measured at amortized cost
Net movements in treasury shares and own equity derivative activity
Distributions paid on UBS shares
Issuance of debt designated at fair value and long-term debt measured at amortized cost
Repayment of debt designated at fair value and long-term debt measured at amortized cost
Net cash flows from other financing activities
Net cash flow from / (used in) financing activities
Total cash flow
Cash and cash equivalents at the beginning of the period
Net cash flow from / (used in) operating, investing and financing activities
Effects of exchange rate differences on cash and cash equivalents
Cash and cash equivalents at the end of the period
3
of which: cash and balances at central banks
4
of which: amounts due from banks
4
of which: money market paper
4,5
Additional information
Net cash flow from / (used in) operating activities includes:
Interest received in cash
Interest paid in cash
Dividends on equity investments, investment funds and associates received in cash
6
1 Refer to Note 2 for more information about the acquisition of the Credit Suisse Group. 2 Movements in this section exclude foreign currency translation and foreign exchange effects, which are presented within
the Other net adjustments line. 3 USD 6,194m and USD 3,855m of cash and cash equivalents (mainly reflected in Amounts due from banks) were restricted as of 30 September 2023 and 30 September 2022,
respectively. Refer to “Note 22 Restricted and transferred financial assets” in the “Consolidated financial statements” section of the Annual Report 2022 for more information. Cash and cash equivalents as of 30
September 2023 includes USD 109,098m related to Credit Suisse. 4 Includes only balances with an original maturity of three months or less. 5 Money market paper is included on the balance sheet under Financial
assets at fair value not held for trading (30 September 2023: USD 10,158m; 30 September 2022: USD 3,898m), Other financial assets measured at amortized cost (30 September 2023: USD 393m; 30 September
2022: USD 5,943m), and Financial assets at fair value held for trading (30 September 2023: USD 583m; 30 September 2022: USD 91m). 6 Includes dividends received from associates reported within Net cash flow
from / (used in) investing activities.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 62
Notes to the UBS Group AG interim consolidated
financial statements (unaudited)
Note 1 Basis of accounting
Basis of preparation
The consolidated financial statements (the financial statements) of UBS Group AG and its subsidiaries (together,
UBS or the Group) are prepared in accordance with International Financial Reporting Standards (IFRS), as issued by
the International Accounting Standards Board (the IASB), and are presented in US dollars. These interim financial
statements are prepared in accordance with IAS 34,
Interim Financial Reporting
.
In preparing these interim financial statements, the same accounting policies and methods of computation have
been applied as in the UBS Group AG consolidated annual financial statements for the period ended 31 December
2022, except for the changes described in this Note and Note 2, which set out the accounting for the acquisition
of the Credit Suisse Group. These interim financial statements are unaudited and should be read in conjunction
with UBS Group AG’s audited consolidated financial statements in the Annual Report 2022 and the “Management
report” sections of this report, including the disclosures in under “Integration of Credit Suisse” in the “Recent
developments” section of this report. In the opinion of management, all necessary adjustments have been made
for a fair presentation of the Group’s financial position, results of operations and cash flows.
Preparation of these interim financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, income, expenses and disclosures of contingent assets and
liabilities. These estimates and assumptions are based on the best available information. Actual results in the future
could differ from such estimates and differences may be material to the financial statements. Revisions to estimates,
based on regular reviews, are recognized in the period in which they occur. For more information about areas of
estimation uncertainty that are considered to require critical judgment, refer to this Note and Note 2 in this report,
as well as “Note 1a Material accounting policies” in the “Consolidated financial statements” section of the Annual
Report 2022.
IFRS 17,
Insurance Contracts
Effective from 1 January 2023, UBS has adopted IFRS 17,
Insurance Contracts
, which sets out the accounting
requirements for contractual rights and obligations that arise from insurance contracts issued and reinsurance
contracts held. The adoption has had no material effect on the Group’s financial statements.
Amendments to IAS 12
, Income Taxes
In May 2023, the IASB issued amendments to IAS 12,
Income Taxes
, whereby, under an exception, deferred tax
assets (DTAs) and deferred tax liabilities (DTLs) will not be recognized in respect of top-up tax on income under
Global Anti-Base Erosion Rules that is imposed under tax law that is enacted or substantively enacted to implement
the Pillar Two model rules published by the Organisation for Economic Co-operation and Development. This
exception applies immediately upon the issuance of the amendments and it is, therefore, potentially relevant to
these financial statements and subsequent financial statements. Although countries are starting to implement the
rules, the Group did not have any DTAs or DTLs on 30 September 2023 that had not been recognized as a result
of the application of this exception. The exception is expected to be removed by the IASB in due course, although
the timing of that has not been specified. The amendments also introduced new disclosure requirements in relation
to top-up tax, which will first apply to the Group’s financial statements for the year ended 31 December 2023.
Other amendments to IFRS
Effective from 1 January 2023, UBS has adopted a number of minor amendments to IFRS, which have had no
significant effect on the Group.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 63
Note 1 Basis of accounting (continued)
Incremental accounting policies related to the transactions and activities associated with the
acquisition of the Credit Suisse Group
Business combinations
UBS has determined that the acquisition of the Credit Suisse Group constitutes a business combination under IFRS.
As per “Note 1a Material accounting policies, item 1 Consolidation” in the “Consolidated financial statements”
section of the Annual Report 2022, business combinations are accounted for using the acquisition method. Under
this method, any excess of the acquisition-date amounts of the identifiable net assets acquired over the fair value
of the consideration transferred results in a negative goodwill that is recognized in the income statement on the
date of the acquisition, with transaction costs expensed as incurred. As required by IFRS 3,
Business Combinations
,
provisional amounts of identifiable assets acquired, liabilities assumed and purchase consideration determined as
of the acquisition date may be subject to adjustments within a maximum of one year from the acquisition date
(referred to in this report as measurement period adjustments).
Allowances and provisions for expected credit losses
The Group’s material accounting policies in respect of allowances and provisions for expected credit losses are set
out in “Note 1a Material accounting policies, item 2g Allowances and provisions for expected credit losses” in the
“Consolidated financial statements” section of the Annual Report 2022. Financial instruments acquired through a
business combination that are not classified by the Group at fair value through profit or loss are subject to the
IFRS 9 expected credit loss (ECL) requirements. At the date of acquisition, financial instruments within the scope of
the ECL requirements that are determined to be credit impaired are treated as purchased credit-impaired financial
instruments, with all other financial instruments that are not credit impaired treated as stage 1 financial instruments
on the basis that there has not been a significant increase in credit risk (an SICR) since their initial recognition.
Consistent with the requirements of IFRS 3 and IFRS 9, immediately after the application of the acquisition method
to the business combination, financial instruments that are not credit impaired are classified as stage 1 financial
instruments and a maximum 12-month ECL is recognized, resulting in a carrying amount below their acquisition-
date fair value.
Significant increase in credit risk
For the purpose of the 30-days-past-due backstop applied for the determination of an SICR for loans that were not
30 days past due on the date of acquisition, days past due are determined by counting the number of days for
which the contractual payments have not been received since the acquisition date.
Financial instruments with counterparties on a watch list as of the date of a business combination are treated as
stage 1, on the basis that there has not been an SICR since their initial recognition. However, remaining on a watch
list for more than 90 days since the first reporting period following the date of a business combination is treated as
an indication of a prolonged deterioration of credit quality and therefore considered to be an SICR trigger.
Default and credit impairment
For the purpose of the 90-days-past-due backstop applied for the determination of whether default has occurred,
days past due are determined by counting the number of days since the earliest elapsed due date in respect of
which material payments of interest, principal or fees have not been received, even if that date was prior to the
acquisition date.
Goodwill and other separately identifiable intangible assets
The Group’s material accounting policies in respect of the accounting of goodwill are set out in “Note 1a Material
accounting policies, item 8 Goodwill” in the “Consolidated financial statements” section of the Annual Report
2022.
Separately from goodwill, UBS recognizes identifiable intangible assets acquired in a business combination that
were not previously recognized in the financial statements of the acquiree. Amortization of these intangible assets
is recognized on a straight-line basis over their estimated useful life. These assets are tested for impairment at the
appropriate cash-generating unit level.
Negative goodwill, generally determined based on the difference between the provisional fair values for the
identifiable assets acquired and liabilities assumed and consideration transferred, is recognized in the income
statement on the acquisition date.
›
Refer to Note 2 for more information
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 64
Note 1 Basis of accounting (continued)
Contingent liabilities recognized in a business combination
Contingent liabilities recognized in a business combination are initially measured at fair value. Subsequently, they
are measured at the amount that would be recognized in accordance with the requirements for provisions as set
out in IAS 37,
Provisions, Contingent Liabilities and Contingent Assets
, floored at the amount attributed on initial
recognition, until the contingency is resolved.
Currency translation rates
The table below shows the rates of the main currencies used to translate the financial information of UBS’s
operations with a functional currency other than the US dollar into US dollars.
Closing exchange rate
Average rate
1
As of
For the quarter ended
Year-to-date
30.9.23
30.6.23
31.12.22
30.9.22
30.9.23
30.6.23
30.9.22
30.9.23
30.9.22
1 CHF
1 EUR
1 GBP
100 JPY
1 Monthly income statement items of operations with a functional currency other than the US dollar are translated into US dollars using month-end rates. Disclosed average rates for a quarter represent an average of
three month-end rates, weighted according to the income and expense volumes of all operations of the Group with the same functional currency for each month. Accordingly, the weighted average rates for the second
and third quarter of 2023 and first nine months of 2023 consider income and expenses from Credit Suisse’s operations generated since its acquisition by UBS. Weighted average rates for individual business divisions
may deviate from the weighted average rates for the Group.
Note 2 Accounting for the acquisition of the Credit Suisse Group
The transaction
On 12 June 2023, UBS Group AG acquired Credit Suisse Group AG, succeeding by operation of Swiss law to all
assets and liabilities of Credit Suisse Group AG, and became the direct or indirect shareholder of all of the former
direct and indirect subsidiaries of Credit Suisse Group AG (the Transaction).
The acquisition followed a request from the Swiss Federal Department of Finance, the Swiss National Bank and the
Swiss Financial Market Supervisory Authority (FINMA) to both firms to duly consider the Transaction in order to
restore necessary confidence in the stability of the Swiss economy and banking system and to serve the best interests
of the shareholders and stakeholders of UBS and Credit Suisse. The firms subsequently entered into a merger
agreement on 19 March 2023.
Upon the completion of the Transaction, each outstanding, registered Credit Suisse Group AG share converted to
the right to receive, subject to the payment of certain fees to the Credit Suisse Depositary in the case of Credit
Suisse American depositary shares (ADS), a merger consideration consisting of 1/22.48 UBS Group AG shares. In
aggregate, Credit Suisse Group AG shareholders received 5.1% of the outstanding UBS Group AG shares on the
acquisition date, with a purchase price of USD 3.7bn.
For further information about the acquisition of the Credit Suisse Group, refer to the “Management report” sections
of this report, including the disclosures in under “Integration of Credit Suisse” in the “Recent developments”
section.
The accounting principles – conversion from US GAAP to IFRS of Credit Suisse Group and IFRS 3
purchase price allocation
As set out in Note 1, the acquisition of the Credit Suisse Group constitutes a business combination under IFRS 3,
Business Combinations
, and is required to be accounted for by applying the acquisition method of accounting.
As part of the acquisition method of accounting, the assets and liabilities of the Credit Suisse Group have been
converted from US generally accepted accounting principles (GAAP) to IFRS. The most material conversion impact
arose from the different derivative netting rules, resulting in an increase in
Total assets
on
Equity
. Other conversion adjustments arose from the removal of the Swiss pension surplus and the different
methods used to calculate expected credit losses.
›
Refer to Note 8 for more information about the expected credit losses recognized as an additional measurement
adjustment following the acquisition date
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 65
Note 2 Accounting for the acquisition of the Credit Suisse Group (continued)
Remeasurement of assets, liabilities and off-balance sheet arrangements at acquisition date as part of
the IFRS 3 purchase price allocation
Financial instruments
In addition, the financial assets and liabilities of the Credit Suisse Group have been remeasured to fair value as of
the acquisition date, resulting in the provisional fair values disclosed below, with negative fair value adjustments of
USD 14.7bn, including USD 4.3bn (USD 2.3bn provisionally reported in the second quarter of 2023) recognized on
financial instruments that are classified at fair value through profit or loss and fair value adjustments of USD 10.4bn
(USD 12.4bn provisionally reported in the second quarter of 2023) recognized on financial instruments at amortized
cost and off-balance sheet commitments and guarantees.
In particular, material fair value adjustments have been made regarding the Credit Suisse Group lending portfolio,
including mortgages and corporate lending, to bring the financial instruments from amortized cost to fair value.
Fair value adjustments applied to amortized-cost financial instruments and lending arrangements that are fair valued
through profit or loss will generally accrete to par over their expected lives through
Interest income from financial
instruments measured at amortized cost and fair value through other comprehensive income
,
Fee and commission
income
Other net income from financial instruments measured at fair value through profit or loss
statement if the instruments continue to be held.
›
Refer to Note 9 for more information
Adjustments have also been made to other asset and liability categories, with new intangible assets of USD 0.9bn
and additional litigation provisions and contingent liabilities of USD 4.5bn recognized as detailed below.
Furthermore, Credit Suisse Group goodwill has been derecognized, the fair value of internally generated software
has been marked down considering how other market participants would value acquired software, and real estate
held and leased has been revalued.
With the acquisition date of 12 June 2023, for convenience the Credit Suisse Group was consolidated from 31 May
2023, as the impact of transactions and activities in the period from 31 May 2023 to 12 June 2023 on the
consolidated financial statements was not material.
Intangible assets
Included in
Intangible assets
which were recognized as part of the acquisition of the Credit Suisse Group. These assets were not previously
recognized in the financial statements of the Credit Suisse Group. The fair value of the core deposits intangible
asset was determined using the after-tax cost savings method under the income approach. After-tax cost savings
were estimated by comparing the cost of the existing deposits (including the cost of maintaining them) to the cost
of obtaining alternative funds from a mix of diversified funding sources available to market participants. The core
deposits intangible asset represents the present value of the after-tax cost savings expected to be realized over the
remaining useful life of the deposits. The fair value of the customer relationship intangible asset was determined
using the multi-period excess earnings method (an income-based valuation methodology), by discounting estimated
after-tax excess earnings attributable to existing customer relationships over their remaining useful lives. Both
intangible asset valuations include assumptions consistent with how a market participant would estimate fair values,
such as growth and attrition rates and projected fee and interest income, as well as related costs to service the
relationships and deposits, and discount rates.
Also included in
Intangible assets
perform specified mortgage-servicing activities on behalf of third parties, generating income through servicing fees.
The MSRs were valued using a discounted cash flow model.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 66
Note 2 Accounting for the acquisition of the Credit Suisse Group (continued)
Additional provisions and contingent liabilities
Included in
Provisions and contingent liabilities
liabilities, which includes USD 1.5bn for litigation provisions, in addition to the existing USD 1.3bn provision
previously recorded by the Credit Suisse Group, and USD 3bn contingent liabilities for certain obligations in respect
of litigation, regulatory and similar matters identified in the purchase price allocation. The timing and actual amount
of outflows associated with litigation matters are uncertain. UBS continues to assess the development of these
obligations and the amount and timing of potential outflows. In addition, UBS has also recognized USD 4.5bn for
fair value adjustments on acquired loan commitments and guarantees recognized under IFRS as a consequence of
the acquisition, of which USD 2.3bn (USD 4.3bn provisionally reported in the second quarter of 2023) is included
in
Provisions and contingent liabilities
2023) is included as fair value loan commitments within
Derivative financial instruments
›
Refer to “IFRS 3 measurement period adjustments for the acquisition of the Credit Suisse Group” in this Note
›
Refer to Note 15 for more information
Determination of the purchase price consideration
Measure
Credit Suisse Group ordinary shares outstanding, 12 June 2023
Number of shares (m)
Exchange ratio (1 to 22.48)
Ratio
0.04
UBS ordinary shares
Number of shares (m)
UBS ordinary share price
CHF
18.35
Purchase price consideration, before consideration of share-based compensation awards
CHF m
Purchase price consideration, before consideration of share-based compensation awards using exchange rate of 1.10
1
USD m
Impact of share-based compensation awards
2
USD m
Purchase price consideration, after consideration of share-based compensation awards
USD m
Settlement of pre-existing relationships
USD m
Provisional purchase price consideration, after consideration of pre-existing relationships
USD m
Net cash and cash equivalents acquired with the Credit Suisse Group (included in cash flows from investing activities)
USD m
of which: cash and balances at central banks
USD m
of which: amounts due from banks
USD m
of which: money market paper
USD m
1 The purchase price consideration is reflected as a reduction to treasury shares of the Group at their weighted average cost, with the difference between the fair value of UBS shares on the closing date and the
weighted average cost of treasury shares in the UBS Group balance sheet on closing date taken as an adjustment to share premium. As of 12 June 2023, this resulted in a total purchase price of approximately
USD 3.7bn, based on the UBS Group AG share price on 12 June 2023 and before considering the effect of pre-existing relationships. 2 Represents the value of share-based compensation awards outstanding to
Credit Suisse employees attributable to the service period completed on the date of acquisition.
Determination of negative goodwill
The acquisition of the Credit Suisse Group on 12 June 2023 resulted in provisional negative goodwill of
USD 28.9bn. The negative goodwill represents the difference between the fair values for the identifiable assets
acquired and liabilities assumed, except for amounts related to leases and employee benefits, which have been
determined by applying the requirements in IFRS 16 and IAS 19, respectively, and consideration transferred. The
negative goodwill has been recognized as of the acquisition date in the income statement on a separate line,
Negative goodwill, following the requirements in IFRS 3. The pre-tax gain arising from negative goodwill on the
acquisition of the Credit Suisse Group did not result in any tax expense.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 67
Note 2 Accounting for the acquisition of the Credit Suisse Group (continued)
IFRS 3 measurement period adjustments in the third quarter of 2023 for the acquisition of the Credit
Suisse Group
The acquisition of Credit Suisse AG was made without the ordinary due diligence procedures and outside the
conventional time frame for an acquisition of this scale and nature. As such, complete information about all relevant
facts and circumstances of the acquisition date were not practically available to UBS at the time when the initial
acquisition accounting was applied for the purpose of the UBS Group second quarter 2023 report, with the amounts
that form part of the business combination accounting therefore considered provisional and subject to further
measurement period adjustments if new information about facts and circumstances existing on the date of the
acquisition is obtained within one year from the acquisition date.
IFRS 9 reclassification of certain loans and off-balance sheet loan commitments held by the newly established Non-
core and Legacy business division to measured at fair value through profit or loss
In the third quarter of 2023, the management of UBS determined that it intended to sell certain loans and off-
balance sheet loan commitments held by the newly created Non-core and Legacy business division. Decisions about
whether to hold loans to collect contractual cash flows or to sell them affect the business model for managing
certain financial assets and, consequently, their classification and measurement in accordance with IFRS 9. These
measurement period adjustments reflect facts and circumstances as of the acquisition date that have been
determined subsequently, considering the time needed to assess the risks, valuations and ability to sell certain
financial assets. As a consequence, the classification and measurement adjustments are accounted for under IFRS 3,
with previously reported financial information revised as of the acquisition date.
The application of measurement period adjustments to the accounting for the acquisition of the Credit Suisse Group
resulted in USD 6bn of loans and advances to customers previously reported in the UBS Group second quarter 2023
report as accounted for on an amortized-cost basis to be reclassified to financial assets measured at fair value held
for trading, and loan commitments with a notional value of USD 27.5bn and a corresponding fair value of USD 2bn,
not measured at fair value, to be reclassified to derivative loan commitments measured at fair value through profit
or loss. As a consequence of the classification and measurement adjustments, USD 117m stage 1 and 2 expected
credit losses have been reversed from the income statement and, accordingly, a USD 117m increase in net profit
has been recognized in the second quarter of 2023. The measurement period adjustments had no further effect on
the net assets as of the acquisition date and no impact on provisional negative goodwill.
Effect of measurement period adjustments on the acquisition date balance sheet made in the third quarter of 2023
The table below sets out the identifiable net assets attributable to the acquisition of the Credit Suisse Group as of
the acquisition date and includes the effects of measurement period adjustments on the acquisition date balance
sheet, made in the third quarter 2023, detailed above.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 68
Note 2 Accounting for the acquisition of the Credit Suisse Group (continued)
USD m
Purchase price consideration, after consideration of share-based compensation awards
Credit Suisse Group net identifiable assets on the acquisition date
Assets
As previously
reported
Measurement period
adjustment
Revised
Cash and balances at central banks
Amounts due from banks
Receivables from securities financing transactions measured at amortized cost
Cash collateral receivables on derivative instruments
Loans and advances to customers
Other financial assets measured at amortized cost
Total financial assets measured at amortized cost
1
Financial assets at fair value held for trading
Derivative financial instruments
Brokerage receivables
Financial assets at fair value not held for trading
Total financial assets measured at fair value through profit or loss
Financial assets measured at fair value through other comprehensive income
1
Investments in associates
Property, equipment and software
Intangible assets
Deferred tax assets
Other non-financial assets
Total assets
Liabilities
Amounts due to banks
Payables from securities financing transactions measured at amortized cost
Cash collateral payables on derivative instruments
Customer deposits
Debt issued measured at amortized cost
Other financial liabilities measured at amortized cost
Total financial liabilities measured at amortized cost
Financial liabilities at fair value held for trading
Derivative financial instruments
Brokerage payables designated at fair value
Debt issued designated at fair value
Other financial liabilities designated at fair value
Total financial liabilities measured at fair value through profit or loss
Provisions and contingent liabilities
Other non-financial liabilities
Total liabilities
Non-controlling interests
Fair value of net assets acquired
Settlement of pre-existing relationships
Provisional negative goodwill resulting from the acquisition
1 Refer to Note 8 for information about credit quality of financial assets, including purchased credit-impaired positions.
The tables below set out the consequential impact of the measurement period adjustments detailed above on the
previously reported income statement for the quarter ended 30 June 2023, the balance sheet as of 30 June 2023
and the statement of cash flows for the six months ended 30 June 2023, as well as the off-balance sheet effects as
of 30 June 2023.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 69
Note 2 Accounting for the acquisition of the Credit Suisse Group (continued)
Effect of the measurement period adjustments on the income statement for the quarter ended 30 June 2023
For the quarter ended 30 June 2023
USD m
As previously
reported
Measurement
period adjustment
Revised
Net interest income
Other net income from financial instruments measured at fair value through profit or loss
Net fee and commission income
Other income
Total revenues
Negative goodwill
Credit loss expense / (release)
Operating expenses
Operating profit / (loss) before tax
Tax expense / (benefit)
Net profit / (loss)
Net profit / (loss) attributable to non-controlling interests
Net profit / (loss) attributable to shareholders
Effect of the measurement period adjustments on the balance sheet as of 30 June 2023
USD m
As of 30 June 2023
Assets
As previously
reported
Measurement
period adjustment
Revised
Total financial assets measured at amortized cost
of which: Loans and advances to customers
of which: Other financial assets measured at amortized cost
Total financial assets measured at fair value through profit or loss
of which: Financial assets at fair value held for trading
Financial assets measured at fair value through other comprehensive income
Non-financial assets
Total assets
Liabilities
Total financial liabilities measured at amortized cost
Total financial liabilities measured at fair value through profit or loss
of which: Derivative financial instruments
1
Provisions and contingent liabilities
Other non-financial liabilities
Total liabilities
Equity
Equity attributable to shareholders
of which: Retained earnings
Total equity
Total liabilities and equity
1 Represents the fair value of loan commitments with a notional amount of USD 27.5bn reclassified from loan commitments not measured at fair value to derivative loan commitments.
Off-balance sheet effect of the measurement period adjustments as of 30 June 2023
As of 30 June 2023
USD bn
As previously
reported
Measurement
period adjustment
Revised
Guarantees
Loan commitments
1
Committed unconditionally revocable credit lines
Forward starting reverse repurchase agreements
1 Represents the notional amount of loan commitments reclassified from loan commitments not measured at fair value to derivative loan commitments, with a fair value as of 30 June 2023 of USD 2.0bn.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 70
Note 2 Accounting for the acquisition of the Credit Suisse Group (continued)
Effect of the measurement period adjustments on the statement of cash flows for the six months ended 30 June 2023
For the six months ended 30 June 2023
USD m
As previously
reported
Measurement
period adjustment
Revised
Cash flow from / (used in) operating activities
Net profit / (loss)
Non-cash items included in net profit and other adjustments:
of which: Credit loss expense / (release)
778
661
Net cash flow from / (used in) operating activities
of which: Loans and advances to customers and customer deposits
(230)
of which: Financial assets and liabilities at fair value held for trading and derivative
financial instruments
228
of which: Provisions and other non-financial assets and liabilities
3
Net cash flow from / (used in) investing activities
Net cash flow from / (used in) financing activities
Total cash flow
Cash and cash equivalents at the beginning of the period
Net cash flow from / (used in) operating, investing and financing activities
Effects of exchange rate differences on cash and cash equivalents
Cash and cash equivalents at the end of the period
Acquisition-related costs to effect the acquisition
UBS incurred certain acquisition-related costs to effect the acquisition. These consisted primarily of advisory, legal
and consulting fees. These costs were expensed as incurred. In the first nine months of 2023, a total of USD 0.2bn
(first six months of 2023: USD 0.2bn) has been included in
General and administrative expenses
statement.
Early termination of loans and loan commitments
During the third quarter of 2023, the Group recognized gains on early termination of loans and loan commitments
of USD 0.1bn and USD 0.3bn, respectively, mainly driven by natural roll-off, accelerated by actions to actively
unwind the portfolio in the Non-core and Legacy business division.
Pro forma financial information
From the date of acquisition until 30 September 2023, the Credit Suisse Group contributed USD 4.6bn (until
30 June 2023: USD 1.2bn) of net revenues and an overall net loss of USD 2.9bn (until 30 June 2023: USD 1.1bn
1
)
to the net profit of the UBS Group. For illustration purposes, the pro forma net revenues and net loss for the UBS
Group in the first nine months of 2023 if the business combination had taken place on 1 January 2023 are estimated
as USD 35.7bn and USD 1.6bn, respectively; for the comparative six months ended 30 June 2023, the respective
amounts were estimated at USD 24.0bn and USD 0.8bn.
2
This pro forma information is based on the actual nine-month and six-month results of the consolidated UBS Group,
as reported (including the Credit Suisse US GAAP results for the first five months of 2023, adjusted for the estimated
effect of conversion to IFRS and effects from purchase price allocation adjustments under IFRS 3,
Business
Combinations
, plus the Credit Suisse IFRS results for the four months and one month since the acquisition).
The pro forma net revenues and net loss exclude the impact from negative goodwill recognized from the acquisition
of the Credit Suisse Group of USD 28.9bn, and certain items recognized by the Credit Suisse Group in 2023 prior
to the acquisition date, including a gain from the write-down of additional tier 1 (AT1) capital notes of USD 16.4bn,
a goodwill impairment charge, mostly related to Wealth Management (Credit Suisse), of USD 1.4bn and a gain
from the reversal of contingent compensation award accruals of USD 0.4bn. These items are considered non-
recurring and therefore not representative of the normal course of business.
The pro forma net revenues and net loss do not purport to represent what UBS’s actual results of operations would
have been had the transaction occurred on the date indicated, nor are they necessarily indicative of future results
of operations. The pro forma net revenues and net loss also do not consider any potential impacts of current market
conditions on revenues, assets or liabilities. Nor do they reflect expense efficiencies, asset dispositions or business
reorganizations that are or may be contemplated, or any cost or revenue synergies, including further potential
restructuring actions, associated with the acquisition of the Credit Suisse Group.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 71
Note 2 Accounting for the acquisition of the Credit Suisse Group (continued)
Segment reporting – Integration of UBS’s and Credit Suisse’s businesses in the third quarter of 2023
and establishment of Non-core and Legacy
Prior to the third quarter of 2023, UBS’s businesses were organized globally into four business divisions (Global
Wealth Management, Personal & Corporate Banking, Asset Management and the Investment Bank), each qualifying
as a reportable segment, and Group Functions. Credit Suisse’s businesses were organized globally into five
reportable segments (Wealth Management (Credit Suisse), Swiss Bank (Credit Suisse), Asset Management (Credit
Suisse), the Investment Bank (Credit Suisse) and the Capital Release Unit (Credit Suisse)), and the Corporate Center
(Credit Suisse).
As the integration of the UBS and Credit Suisse businesses continues, beginning with the third quarter of 2023, the
Group reports five business divisions, which each qualify as a reportable segment: Global Wealth Management,
Personal & Corporate Banking, Asset Management, the Investment Bank, and Non-core and Legacy.
The Non-core and Legacy business division includes positions and businesses not aligned with our strategy and
policies. Those consist of the assets and liabilities reported as part of the former Capital Release Unit (Credit Suisse)
and certain assets and liabilities of the former Investment Bank (Credit Suisse), Wealth Management (Credit Suisse),
and Asset Management (Credit Suisse) divisions, as well as of the former Corporate Center (Credit Suisse). Also
included are the remaining assets and liabilities of UBS’s Non-core and Legacy Portfolio, previously reported in
Group Functions, and smaller amounts of assets and liabilities of UBS’s business divisions that have been assessed
as not strategic in light of the acquisition of the Credit Suisse Group.
Group Functions has been renamed Group Items and excludes UBS’s former Non-core and Legacy Portfolio and
includes certain of the assets and liabilities of the former Corporate Center (Credit Suisse).
The above reflects how financial information is presented effective from the third quarter of 2023 in the internal
management reports to the Group Executive Board, which is considered the “chief operating decision-maker”
pursuant to IFRS 8,
Operating Segments
.
Information for the second quarter of 2023 for the reportable segments and Group Items has been restated to
reflect the effect of the integration of the UBS and Credit Suisse business divisions on an IFRS basis, as well as the
establishment of the Non-core and Legacy reportable segment. Third quarter 2022 information has been revised
and presents the Non-core and Legacy business division separately from Group Items.
As UBS executes its integration plans, it is expected that allocation methodologies for profit and loss and balance
sheet to the business divisions and into Group Items will continue to be reviewed and refined.
›
Refer to Note 3 for more information
›
Refer to the “Management report” sections of this report, including the disclosures in the “Integration of Credit
Suisse” section, for more information about the Non-core and Legacy business division and other changes in the
composition of reportable segments in the third quarter of 2023
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 72
Note 2 Accounting for the acquisition of the Credit Suisse Group (continued)
Pre-existing relationships
As of 12 June 2023, UBS had the following pre-existing relationships with the Credit Suisse Group.
USD m
Cash collateral receivables on derivative instruments
Derivative financial instruments
Debt instruments issued by the Credit Suisse Group and held by UBS
Total assets
Cash collateral payables on derivative instruments
Derivative financial instruments
Total liabilities
Treasury shares
Total equity
Total net pre-existing relationships
Such balances are eliminated in the consolidated financial statements.
Retention awards of approximately USD 0.5bn were offered to selected employees of the Credit Suisse Group prior
to the acquisition date to support the completion of the transaction and the early phase of integration. These
awards were contingent on the completion of the acquisition and are delivered 50% in cash (in general vesting
60 days from the completion of the acquisition) and 50% in shares (in general vesting on the first anniversary of
the completion of the acquisition). Vesting periods are longer for certain regulated employees. Expenses associated
with these awards are recognized between the date of acquisition and the applicable vesting dates and were
USD 219m in the third quarter of 2023 (second quarter of 2023: USD 84m).
1
2
Note 3 Segment reporting
Beginning with the third quarter of 2023, the Group reports five business divisions, which each qualify as a
reportable segment: Global Wealth Management, Personal & Corporate Banking, Asset Management, the
Investment Bank, and Non-core and Legacy. Group Items is presented separately.
Profit and loss information for the business divisions and Group Items for the nine-month period ended 30
September 2023 reflects the effect of the integration of the UBS and Credit Suisse divisions on an IFRS basis from
June 2023 onward, as well as the establishment of the Non-core and Legacy business division. Profit and loss
information for the nine-month period ended 30 September 2022 reflects the results of UBS Group operations prior
to the acquisition of the Credit Suisse Group, presented in line with the new business division structure. Balance
sheet information as of 30 September 2023 includes UBS and Credit Suisse consolidated information and balance
sheet information as of 31 December 2022 reflects UBS Group positions prior to the acquisition of the Credit Suisse
Group.
As UBS executes its integration plans, it is expected that allocation methodologies for profit and loss and balance
sheet to the business divisions and into Group Items will continue to be reviewed and refined.
›
Refer to the “Management report” sections of this report, including the disclosures under “Integration of Credit
Suisse” in the “Recent developments” section, and the “Consolidated financial statements” section of the Annual
Report 2022 for more information about the Group’s business divisions
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 73
Note 3 Segment reporting (continued)
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Manage-
ment
Investment
Bank
Non-core and
Legacy
1
Group Items
1
Negative
goodwill
2
UBS
For the nine months ended 30 September 2023
3
Total revenues
Negative goodwill
Credit loss expense / (release)
Operating expenses
Operating profit / (loss) before tax
Tax expense / (benefit)
Net profit / (loss)
As of 30 September 2023
3
Total assets
1 Starting with the third quarter of 2023, Non-core and Legacy (previously reported within Group Functions) represents a separate reportable segment and Group Functions has been renamed Group Items. Prior
periods have been revised to reflect these changes. 2 Negative goodwill arising from the acquisition of the Credit Suisse Group is not allocated to the business divisions, as it relates to the Group. For further details,
refer to Note 2. 3 Refer to Note 2 for more information about the Group’s reporting segments.
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
1
Group
Items
1
UBS
For the nine months ended 30 September 2022
2
Total revenues
Credit loss expense / (release)
Operating expenses
Operating profit / (loss) before tax
Tax expense / (benefit)
Net profit / (loss)
As of 31 December 2022
2
Total assets
1 Starting with the third quarter of 2023, Non-core and Legacy (previously reported within Group Functions) represents a separate reportable segment and Group Functions has been renamed Group Items. Prior
periods have been restated to reflect these changes. 2 Refer to Note 2 for more information about the Group’s reporting segments.
Note 4 Net interest income
For the quarter ended
Year-to-date
USD m
30.9.23
30.6.23
1
30.9.22
30.9.23
30.9.22
Interest income from loans and deposits
2
Interest income from securities financing transactions measured at amortized cost
3
Interest income from other financial instruments measured at amortized cost
Interest income from debt instruments measured at fair value through other comprehensive income
Interest income from derivative instruments designated as cash flow hedges
Total interest income from financial instruments measured at amortized cost and fair value through other comprehensive
income
Interest expense on loans and deposits
4
Interest expense on securities financing transactions measured at amortized cost
5
Interest expense on debt issued
Interest expense on lease liabilities
Total interest expense from financial instruments measured at amortized cost
Total net interest income from financial instruments measured at amortized cost and fair value through other comprehensive
income
Net interest income from financial instruments measured at fair value through profit or loss and other
Total net interest income
1 Comparative-period information has been revised. Refer to Note 2 for more information. 2 Consists of interest income from cash and balances at central banks, loans and advances to banks and customers, and
cash collateral receivables on derivative instruments, as well as negative interest on amounts due to banks, customer deposits, and cash collateral payables on derivative instruments. 3 Includes interest income on
receivables from securities financing transactions and negative interest, including fees, on payables from securities financing transactions. 4 Consists of interest expense on amounts due to banks, cash collateral
payables on derivative instruments, and customer deposits, as well as negative interest on cash and balances at central banks, loans and advances to banks, and cash collateral receivables on derivative instruments.
5 Includes interest expense on payables from securities financing transactions and negative interest, including fees, on receivables from securities financing transactions.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 74
Note 5 Net fee and commission income
For the quarter ended
Year-to-date
USD m
30.9.23
30.6.23
1
30.9.22
30.9.23
30.9.22
Underwriting fees
M&A and corporate finance fees
Brokerage fees
Investment fund fees
Portfolio management and related services
Other
Total fee and commission income
2
of which: recurring
of which: transaction-based
of which: performance-based
Fee and commission expense
Net fee and commission income
1 Comparative-period information has been revised. Refer to Note 2 for more information. 2 Includes third-party fee and commission income for the third quarter of 2023 of USD 3,669m for Global Wealth
Management (second quarter of 2023: USD 3,322m; third quarter of 2022: USD 3,106m), USD 931m for Personal & Corporate Banking (second quarter of 2023: USD 615m; third quarter of 2022: USD 398m),
USD 943m for Asset Management (second quarter of 2023: USD 756m; third quarter of 2022: USD 682m), USD 1,135m for the Investment Bank (second quarter of 2023: USD 796m; third quarter of 2022: USD 769m),
negative USD 22m for Group Items (second quarter of 2023: USD 45m; third quarter of 2022: USD 2m) and USD 27m for Non-core and Legacy (second quarter of 2023: USD 101m; third quarter of 2022: USD 0m).
Note 6 Personnel expenses
For the quarter ended
Year-to-date
USD m
30.9.23
30.6.23
30.9.22
30.9.23
30.9.22
Salaries and variable compensation
1
of which: variable compensation – financial advisors
2
Contractors
Social security
Post-employment benefit plans
Other personnel expenses
Total personnel expenses
1 Includes role-based allowances. 2 Consists of cash and deferred compensation awards and is based on compensable revenues and firm tenure using a formulaic approach. Also includes expenses related to
compensation commitments with financial advisors entered into at the time of recruitment that are subject to vesting requirements.
Note 7 General and administrative expenses
For the quarter ended
Year-to-date
USD m
30.9.23
30.6.23
30.9.22
30.9.23
30.9.22
Outsourcing costs
Technology costs
Consulting, legal and audit fees
Real estate and logistics costs
Market data services
Marketing and communication
Travel and entertainment
Litigation, regulatory and similar matters
1
Other
Total general and administrative expenses
1 Reflects the net increase in provisions for litigation, regulatory and similar matters recognized in the income statement. Refer to Note 15b for more information.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 75
Note 8 Expected credit loss measurement
a) Credit loss expense / release
Total net credit loss expenses in the third quarter of 2023 were USD 306m, reflecting USD 137m net expenses
related to performing positions and USD 168m on credit-impaired positions.
Personal & Corporate Banking credit loss expenses of USD 168m included USD 85m net expenses on performing
loans with USD 69m from performing Credit Suisse loans following a number of corporate loan credit reviews and
transfers to stage 2. In addition, USD 83m of provisions were recognized in the third quarter of 2023 for credit-
impaired loans, mainly for a number of Credit Suisse corporate loans, including newly defaulted positions, and, to
a lesser extent, previously defaulted positions.
Non-core and Legacy credit loss expenses for the third quarter of 2023 were USD 125m, including expenses of
USD 71m on performing loans, mainly for securitizations and for stage 2 transfers following credit reviews, as well
as net expenses for credit-impaired positions of USD 54m, including stage 3 net expenses of USD 20m and net
expenses on purchased credit-impaired positions of USD 34m.
›
Refer to Note 2 for more information about accounting under IFRS 3,
Business Combinations
›
Refer to Note 2 for more information about the acquisition of the Credit Suisse Group and measurement period
adjustments
Credit loss expense / (release)
Performing positions
Credit-impaired positions
USD m
Stages 1 and 2
Stage 3
Purchased
Total
For the quarter ended 30.9.23
Global Wealth Management
2
Personal & Corporate Banking
Asset Management
Investment Bank
Non-core and Legacy
Group Items
1
5
6
Total
For the quarter ended 30.6.23
2
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Non-core and Legacy
Group Items
1
Total
For the quarter ended 30.9.22
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Group Items
1
Total
1 Starting with the third quarter of 2023, Non-core and Legacy represents a separate reportable segment and Group Functions has been renamed Group Items. Prior periods have been restated to reflect these changes.
2 Certain prior-period figures as of or for the quarter ended 30 June 2023 have been restated due to effects of measurement period adjustments in relation to the acquisition of the Credit Suisse Group. Refer to
“Note
2
Accounting for the acquisition of the Credit Suisse Group” for more information.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 76
Note 8 Expected credit loss measurement (continued)
b) Changes to ECL models, scenarios, scenario weights and post-model adjustments
Scenarios and scenario weights
The expected credit loss (ECL) scenarios, along with their related macroeconomic factors and market data, were
reviewed in light of the economic and political conditions prevailing in the third quarter of 2023 through a series
of governance meetings, with input and feedback from UBS Risk and Finance experts across the business divisions
and regions. ECLs for Credit Suisse AG positions were calculated based on Credit Suisse AG’s models, including the
same scenarios and scenario weight inputs as for UBS’s existing business activity.
The baseline scenario was updated with the latest macroeconomic forecasts as of 30 September 2023. The
assumptions on a calendar-year basis are included in the table below and imply a more optimistic outlook for the
US for the remainder of 2023 and 2024, while projections have become slightly more pessimistic for the Eurozone
and Switzerland.
The mild debt crisis scenario, the stagflationary geopolitical crisis scenario and the asset price inflation scenario were
updated based on the latest market data, but the assumptions remain broadly unchanged. UBS kept scenarios and
scenario weights in line with those applied in the second quarter of 2023. Refer to the table below.
At the beginning of the second quarter of 2023, UBS replaced the global crisis scenario applied at year-end 2022
and at the end of the first quarter of 2023 with the mild debt crisis scenario.
Post-model adjustments
Total stage 1 and 2 allowances and provisions were USD 1,216m as of 30 September 2023 and included post-
model adjustments of USD 439m (30 June 2023: USD 233m). Overlays are to cover for uncertainty levels, including
the geopolitical situation, for Credit Suisse models which may not comprehensively reflect market events, and to
align model outputs for Credit Suisse with those of UBS for dedicated segments.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 77
Note 8 Expected credit loss measurement (continued)
Comparison of shock factors
Baseline
Key parameters
2022
2023
2024
Real GDP growth (annual percentage change)
US
Eurozone
Switzerland
Unemployment rate (%, annual average)
US
Eurozone
Switzerland
Fixed income: 10-year government bonds (%, Q4)
USD
EUR
CHF
Real estate (annual percentage change, Q4)
US
Eurozone
Switzerland
Economic scenarios and weights applied
Assigned weights in %
ECL scenario
30.9.23
30.6.23
30.9.22
Asset price inflation
Baseline
Severe Russia–Ukraine conflict scenario
–
–
Mild debt crisis
–
Stagflationary geopolitical crisis
–
Global crisis
–
–
c) ECL-relevant balance sheet and off-balance sheet positions including ECL allowances and provisions
The following tables provide information about financial instruments and certain non-financial instruments that are
subject to ECL requirements. For amortized-cost instruments, the carrying amount represents the maximum
exposure to credit risk, taking into account the allowance for credit losses. Financial assets measured at fair value
through other comprehensive income (FVOCI) are also subject to ECL; however, unlike amortized-cost instruments,
the allowance for credit losses for FVOCI instruments does not reduce the carrying amount of these financial assets.
Instead, the carrying amount of financial assets measured at FVOCI represents the maximum exposure to credit risk.
In addition to recognized financial assets, certain off-balance sheet financial instruments and other credit lines are
also subject to ECL. The maximum exposure to credit risk for off-balance sheet financial instruments is calculated
based on the maximum contractual amounts.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 78
Note 8 Expected credit loss measurement (continued)
USD m
30.9.23
Carrying amount
1
ECL allowances
Financial instruments measured at amortized cost
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Cash and balances at central banks
Loans and advances to banks
Receivables from securities financing transactions measured at
amortized cost
Cash collateral receivables on derivative instruments
Loans and advances to customers
of which: Private clients with mortgages
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Lombard
of which: Credit cards
of which: Commodity trade finance
of which: Ship / aircraft financing
of which: Consumer financing
Other financial assets measured at amortized cost
of which: Loans to financial advisors
Total financial assets measured at amortized cost
Financial assets measured at fair value through other comprehensive
income
Total on-balance sheet financial assets in scope of ECL requirements
of which: Credit Suisse
2
Total exposure
ECL provisions
Off-balance sheet (in scope of ECL)
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Guarantees
of which: Large corporate clients
of which: SME clients
of which: Financial intermediaries and hedge funds
of which: Lombard
of which: Commodity trade finance
Irrevocable loan commitments
of which: Large corporate clients
Forward starting reverse repurchase and securities borrowing
agreements
Unconditionally revocable loan commitments
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Lombard
of which: Credit cards
Irrevocable committed prolongation of existing loans
Total off-balance sheet financial instruments and other credit lines
Total allowances and provisions
of which: Credit Suisse
2
1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective ECL allowances. 2 Refer to Note 2 for more information about the acquisition of the
Credit Suisse Group.
Loans and advances to customers of USD 624,885m included USD 241,773m from Credit Suisse AG.
Breakout: Loans and advances to customers of Credit Suisse AG
USD m
30.9.23
Carrying amount
1
ECL allowances
Loans and advances to customers
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Loans and advances to customers
of which: Private clients with mortgages
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Lombard
of which: Commodity trade finance
of which: Ship / aircraft financing
of which: Consumer financing
1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective ECL allowances.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 79
Note 8 Expected credit loss measurement (continued)
Credit Suisse AG had allowances and provisions for defaulted positions of USD 1.1bn immediately prior to the
acquisition date. UBS recognized these purchased credit-impaired (PCI) positions on its balance sheet at their fair
value as at the acquisition date, and, as required by IFRS, no additional expected credit loss allowances or provisions
were recognized for them on that date.
›
Refer to Note 2 for more information about accounting under IFRS 3,
Business Combinations
,
and
measurement
period adjustments
USD m
30.6.23
1
Carrying amount
2
ECL allowances
Financial instruments measured at amortized cost
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Cash and balances at central banks
Loans and advances to banks
Receivables from securities financing transactions measured at
amortized cost
Cash collateral receivables on derivative instruments
Loans and advances to customers
of which: Private clients with mortgages
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Lombard
of which: Credit cards
of which: Commodity trade finance
of which: Ship / aircraft financing
of which: Consumer financing
Other financial assets measured at amortized cost
of which: Loans to financial advisors
Total financial assets measured at amortized cost
Financial assets measured at fair value through other comprehensive
income
Total on-balance sheet financial assets in scope of ECL requirements
of which: Credit Suisse
3
Total exposure
ECL provisions
Off-balance sheet (in scope of ECL)
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Guarantees
of which: Large corporate clients
of which: SME clients
of which: Financial intermediaries and hedge funds
of which: Lombard
of which: Commodity trade finance
Irrevocable loan commitments
of which: Large corporate clients
Forward starting reverse repurchase and securities borrowing
agreements
Unconditionally revocable loan commitments
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Lombard
of which: Credit cards
Irrevocable committed prolongation of existing loans
Total off-balance sheet financial instruments and other credit lines
Total allowances and provisions
of which: Credit Suisse
3
1 Certain prior-period figures as of 30 June 2023 have been revised due to effects of measurement period adjustments in relation to the acquisition of the Credit Suisse Group. Refer to Note 2 for more information.
2 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective ECL allowances. 3 Refer to Note 2 for more information about the acquisition of the
Credit Suisse Group.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 80
Note 8 Expected credit loss measurement (continued)
USD m
31.12.22
Carrying amount
1
ECL allowances
Financial instruments measured at amortized cost
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Cash and balances at central banks
Loans and advances to banks
Receivables from securities financing transactions
Cash collateral receivables on derivative instruments
Loans and advances to customers
of which: Private clients with mortgages
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Lombard
of which: Credit cards
of which: Commodity trade finance
Other financial assets measured at amortized cost
of which: Loans to financial advisors
Total financial assets measured at amortized cost
Financial assets measured at fair value through other comprehensive income
Total on-balance sheet financial assets in scope of ECL requirements
Total exposure
ECL provisions
Off-balance sheet (in scope of ECL)
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Guarantees
of which: Large corporate clients
of which: SME clients
of which: Financial intermediaries and hedge funds
of which: Lombard
of which: Commodity trade finance
Irrevocable loan commitments
of which: Large corporate clients
Forward starting reverse repurchase and securities borrowing agreements
Unconditionally revocable loan commitments
of which: Real estate financing
of which: Large corporate clients
of which: SME clients
of which: Lombard
of which: Credit cards
of which: Commodity trade finance
Irrevocable committed prolongation of existing loans
Total off-balance sheet financial instruments and other credit lines
Total allowances and provisions
1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective ECL allowances.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 81
Note 8 Expected credit loss measurement (continued)
The table below provides information about the gross carrying amount of exposures subject to ECL and the ECL
coverage ratio for UBS’s core loan portfolios (i.e.,
Loans and advances to customers
and
)
and relevant off-balance sheet exposures.
Cash and balances at central banks
,
Loans and advances to banks
,
Receivables from securities financing transactions
,
Cash collateral receivables on derivative instruments
Financial
assets measured at fair value through other comprehensive income
lower sensitivity to ECL.
ECL coverage ratios are calculated by dividing ECL allowances and provisions by the gross carrying amount of the
related exposures.
Coverage ratios for core loan portfolio
30.9.23
Gross carrying amount (USD m)
ECL coverage (bps)
On-balance sheet
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
PCI
Private clients with mortgages
Real estate financing
Total real estate lending
Large corporate clients
SME clients
Total corporate lending
Lombard
Credit cards
Commodity trade finance
Ship / aircraft financing
Consumer financing
Other loans and advances to customers
Loans to financial advisors
Total other lending
Total
1
Gross exposure (USD m)
ECL coverage (bps)
Off-balance sheet
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
PCI
Private clients with mortgages
Real estate financing
Total real estate lending
Large corporate clients
SME clients
Total corporate lending
Lombard
Credit cards
Commodity trade finance
Ship / aircraft financing
Consumer financing
Financial intermediaries and hedge funds
Other off-balance sheet commitments
Total other lending
Total
2
Total on- and off-balance sheet
3
1 Includes Loans and advances to customers and Loans to financial advisors, which are presented on the balance sheet line Other financial assets measured at amortized cost. 2 Excludes Forward starting reverse
repurchase and securities borrowing agreements. 3 Includes on-balance-sheet exposure, gross and off-balance-sheet exposure (notional) and the related ECL coverage ratio (bps).
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 82
Note 8 Expected credit loss measurement (continued)
Coverage ratios for core loan portfolio
30.6.23
1
Gross carrying amount (USD m)
ECL coverage (bps)
On-balance sheet
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
PCI
Private clients with mortgages
Real estate financing
Total real estate lending
Large corporate clients
SME clients
Total corporate lending
Lombard
Credit cards
Commodity trade finance
Ship / aircraft financing
Consumer financing
Other loans and advances to customers
Loans to financial advisors
Total other lending
Total
2
Gross exposure (USD m)
ECL coverage (bps)
Off-balance sheet
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
PCI
Private clients with mortgages
Real estate financing
Total real estate lending
Large corporate clients
SME clients
Total corporate lending
Lombard
Credit cards
Commodity trade finance
Ship / aircraft financing
Consumer financing
Financial intermediaries and hedge funds
Other off-balance sheet commitments
Total other lending
Total
3
Total on- and off-balance sheet
4
1 Certain prior period figures as of 30 June 2023 have been revised due to effects of measurement period adjustments in relation to the acquisition of the Credit Suisse Group. Refer to Note 2 for more information.
2 Includes Loans and advances to customers and Loans to financial advisors, which are presented on the balance sheet line Other financial assets measured at amortized cost. 3 Excludes Forward starting reverse
repurchase and securities borrowing agreements. 4 Includes on-balance-sheet exposure, gross and off-balance-sheet exposure (notional) and the related ECL coverage ratio (bps).
Coverage ratios for core loan portfolio
31.12.22
Gross carrying amount (USD m)
ECL coverage (bps)
On-balance sheet
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
Private clients with mortgages
Real estate financing
Total real estate lending
Large corporate clients
SME clients
Total corporate lending
Lombard
Credit cards
Commodity trade finance
Other loans and advances to customers
Loans to financial advisors
Total other lending
Total
1
Gross exposure (USD m)
ECL coverage (bps)
Off-balance sheet
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
Private clients with mortgages
Real estate financing
Total real estate lending
Large corporate clients
SME clients
Total corporate lending
Lombard
Credit cards
Commodity trade finance
Financial intermediaries and hedge funds
Other off-balance sheet commitments
Total other lending
Total
2
Total on- and off-balance sheet
3
1 Includes Loans and advances to customers and Loans to financial advisors, which are presented on the balance sheet line Other financial assets measured at amortized cost. 2 Excludes Forward starting reverse
repurchase and securities borrowing agreements. 3 Includes on-balance-sheet exposure, gross and off-balance-sheet exposure (notional) and the related ECL coverage ratio (bps).
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 83
Note 9 Fair value measurement
a) Fair value hierarchy
The fair value hierarchy classification of financial and non-financial assets and liabilities measured at fair value is
summarized in the table below.
During the first nine months of 2023, and for Credit Suisse for the period between the acquisition date and
30 September 2023 on a revised basis, assets and liabilities that were transferred from Level 2 to Level 1, or from
Level 1 to Level 2, and were held for the entire reporting period were not material.
Determination of fair values from quoted market prices or valuation techniques
1
30.9.23
30.6.23
2
31.12.22
USD m
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial assets measured at fair value on a recurring basis
Financial assets at fair value held for trading
106,872
27,578
8,437
142,888
117,863
30,710
8,598
157,171
96,241
10,138
1,488
107,866
of which: Equity instruments
of which: Government bills / bonds
of which: Investment fund units
of which: Corporate and municipal bonds
of which: Loans
of which: Asset-backed securities
Derivative financial instruments
1,140
190,457
3,064
194,661
1,072
181,900
2,978
185,949
769
147,875
1,464
150,108
of which: Foreign exchange
of which: Interest rate
of which: Equity / index
of which: Credit
of which: Commodities
Brokerage receivables
Financial assets at fair value not held for trading
of which: Financial assets for unit-linked
investment contracts
of which: Corporate and municipal bonds
of which: Government bills / bonds
of which: Loans
of which: Securities financing transactions
of which: Auction rate securities
of which: Investment fund units
of which: Equity instruments
Financial assets measured at fair value through other comprehensive income on a recurring basis
Financial assets measured at fair value through
other comprehensive income
of which: Commercial paper and certificates
of deposit
of which: Corporate and municipal bonds
Non-financial assets measured at fair value on a recurring basis
Precious metals and other physical commodities
Non-financial assets measured at fair value on a non-recurring basis
Other non-financial assets
3
Total assets measured at fair value
145,350
310,082
26,971
482,402
156,152
308,188
27,023
491,364
128,110
207,269
6,788
342,166
of which: Credit Suisse
4
9,280
110,130
19,543
138,953
15,168
121,951
20,254
157,374
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 84
Note 9 Fair value measurement (continued)
Determination of fair values from quoted market prices or valuation techniques (continued)
1
30.9.23
30.6.23
2
31.12.22
USD m
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial liabilities measured at fair value on a recurring basis
Financial liabilities at fair value held for trading
of which: Equity instruments
of which: Corporate and municipal bonds
of which: Government bills / bonds
of which: Investment fund units
Derivative financial instruments
1,249
191,182
5,589
198,019
1,007
187,375
6,800
195,182
640
152,582
1,684
154,906
of which: Foreign exchange
of which: Interest rate
of which: Equity / index
of which: Credit
of which: Commodities
of which: Loan commitments measured at
FVTPL
Financial liabilities designated at fair value on a recurring basis
Brokerage payables designated at fair value
Debt issued designated at fair value
Other financial liabilities designated at fair value
of which: Financial liabilities related to unit-
linked investment contracts
of which: Securities financing transactions
of which: Over-the-counter debt instruments
and others
Total liabilities measured at fair value
30,068
377,642
26,030
433,739
34,238
377,258
29,073
440,569
24,219
296,148
13,015
333,381
of which: Credit Suisse
4
2,912
98,797
12,280
113,989
4,442
104,499
14,741
123,681
1 Bifurcated embedded derivatives are presented on the same balance sheet lines as their host contracts and are not included in this table. The fair value of these derivatives was not material for the periods presented.
2 Comparative-period information has been revised. Refer to Note 2 for more information. 3 Other non-financial assets primarily consist of properties and other non-current assets held for sale, which are measured
at the lower of their net carrying amount or fair value less costs to sell. 4 Refer to Note 2 for more information about the acquisition of the Credit Suisse Group.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 85
Note 9 Fair value measurement (continued)
b) Valuation adjustments
The table below summarizes the changes in deferred day-1 profit or loss reserves during the relevant period.
Deferred day-1 profit or loss is generally released into
Other net income from financial instruments measured at fair
value through profit or loss
when the pricing of equivalent products or the underlying parameters become
observable or when the transaction is closed out. In accordance with IFRS, no day-1 profit or loss reserves were
recognized on positions acquired with the Credit Suisse Group and no significant new positions were originated
between the acquisition date and 30 September 2023.
Deferred day-1 profit or loss reserves
For the quarter ended
Year-to-date
USD m
30.9.23
30.6.23
30.9.22
30.9.23
30.9.22
Reserve balance at the beginning of the period
Profit / (loss) deferred on new transactions
(Profit) / loss recognized in the income statement
Foreign currency translation
Reserve balance at the end of the period
The table below summarizes other valuation adjustment reserves recognized on the balance sheet.
Other valuation adjustment reserves on the balance sheet
As of
USD m
30.9.23
30.6.23
31.12.22
Own credit adjustments on financial liabilities designated at fair value
1
of which: debt issued designated at fair value
of which: other financial liabilities designated at fair value
Credit valuation adjustments
2
Funding and debit valuation adjustments
Other valuation adjustments
of which: liquidity
of which: model uncertainty
1 Own credit adjustments on financial liabilities designated at fair value includes amounts for TLAC notes. 2 Amount does not include reserves against defaulted counterparties.
Own credit adjustments on financial liabilities designated at fair value
attributable to Credit Suisse.
Credit valuation adjustments
Funding and debit valuation adjustments
uncertainty adjustments in Credit Suisse amount to USD 1,549m and USD 527m, respectively.
c) Level 3 instruments: valuation techniques and inputs
The table below presents material Level 3 assets and liabilities, together with the valuation techniques used to
measure fair value, as well as the inputs used in a given valuation technique that are considered significant as of
30 September 2023 and unobservable, and a range of values for those unobservable inputs.
The range of values represents the highest- and lowest-level inputs used in the valuation techniques. Therefore, the
range does not reflect the level of uncertainty regarding a particular input or an assessment of the reasonableness of
the Group’s estimates and assumptions, but rather the different underlying characteristics of the relevant assets and
liabilities held by the Group.
The significant unobservable inputs disclosed in the table below are consistent with those included in “Note 20 Fair
value measurement” in the “Consolidated financial statements” section of the Annual Report 2022.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 86
Note 9 Fair value measurement (continued)
Valuation techniques and inputs used in the fair value measurement of Level 3 assets and liabilities
Fair value
Significant unobservable
input(s)
1
Range of inputs
Assets
Liabilities
Valuation technique(s)
30.9.23
31.12.22
USD bn
30.9.23
31.12.22
30.9.23
31.12.22
low
high
weighted
average
2
low
high
weighted
average
2
unit
1
Financial assets and liabilities at fair value held for trading and Financial assets at fair value not held for trading
Corporate and municipal
bonds
Relative value to
market comparable
Bond price equivalent
points
Discounted expected
cash flows
Discount margin
basis
points
Traded loans, loans
measured at fair value,
loan commitments and
guarantees
Relative value to
market comparable
Loan price equivalent
points
Discounted expected
cash flows
Credit spread
basis
points
Market comparable
and securitization
model
Credit spread
basis
points
Option model
Gap risk
5
%
Auction rate securities
Discounted expected
cash flows
Credit spread
basis
points
Investment fund units
3
Relative value to
market comparable
Net asset value
Equity instruments
3
Relative value to
market comparable
Price
Debt issued designated at
fair value
4
Other financial liabilities
designated at fair value
Discounted expected
cash flows
Funding spread
basis
points
Derivative financial instruments
Interest rate
Option model
Volatility of interest rates
basis
points
Volatility of inflation
%
IR-to-IR correlation
%
Credit
Discounted expected
cash flows
Credit spreads
basis
points
Bond price equivalent
points
Recovery rates
6
%
Option model
Credit spreads
basis
points
Equity / index
Option model
Equity dividend yields
%
Volatility of equity stocks,
equity and other indices
%
Equity-to-FX correlation
%
Equity-to-equity correlation
%
Loan commitments
measured at FVTPL
Relative value to
market comparable
Loan price equivalent
points
1 The ranges of significant unobservable inputs are represented in points, percentages and basis points. Points are a percentage of par (e.g., 100 points would be 100% of par). 2 Weighted averages are provided for
most non-derivative financial instruments and were calculated by weighting inputs based on the fair values of the respective instruments. Weighted averages are not provided for inputs related to Other financial liabilities
designated at fair value and Derivative financial instruments, as this would not be meaningful. 3 The range of inputs is not disclosed, as there is a dispersion of values given the diverse nature of the investments.
4 Debt issued designated at fair value primarily consists of UBS structured notes, which include variable maturity notes with various equity and foreign exchange underlying risks, as well as rates-linked and credit-linked
notes, all of which have embedded derivative parameters that are considered to be unobservable. The equivalent derivative instrument parameters for debt issued or embedded derivatives for over-the-counter debt
instruments are presented in the respective derivative financial instruments lines in this table. 5 Gap risk is risk of unexpected large declines in the underlying values occurring between collateral settlement dates.
6 Recovery rates reflect the estimated recovery that will be realized given expected defaults, they may vary significantly depending upon the specific assets and terms of each transaction.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 87
Note 9 Fair value measurement (continued)
d) Level 3 instruments: sensitivity to changes in unobservable input assumptions
The table below summarizes those financial assets and liabilities classified as Level 3 for which a change in one or
more of the unobservable inputs to reflect reasonably possible alternative assumptions would change fair value
significantly, and the estimated effect thereof.
The sensitivity data shown below presents an estimation of valuation uncertainty based on reasonably possible
alternative values for Level 3 inputs at the balance sheet date and does not represent the estimated effect of stress
scenarios. Typically, these financial assets and liabilities are sensitive to a combination of inputs from Levels 1–3.
Although well-defined interdependencies may exist between Level 1 / 2 parameters and Level 3 parameters (e.g.,
between interest rates, which are generally Level 1 or Level 2, and prepayments, which are generally Level 3), these
have not been incorporated in the table. Furthermore, direct interrelationships between the Level 3 parameters are
not a significant element of the valuation uncertainty.
Sensitivity of fair value measurements to changes in unobservable input assumptions
1
30.9.23
30.6.23
2
31.12.22
USD m
Favorable
changes
Unfavorable
changes
Favorable
changes
Unfavorable
changes
Favorable
changes
Unfavorable
changes
Traded loans, loans measured at fair value and guarantees
Securities financing transactions
Auction rate securities
Asset-backed securities
Equity instruments
Investment fund units
Loan commitments measured at FVTPL
Interest rate derivatives, net
Credit derivatives, net
Foreign exchange derivatives, net
Equity / index derivatives, net
Other
Total
of which: Credit Suisse
3
1 Sensitivity of issued and over-the-counter debt instruments is reported with the equivalent derivative or Other. 2 Comparative-period information has been revised. Refer to Note 2 for more information. 3 Refer
to Note 2 for more information about the acquisition of the Credit Suisse Group.
e) Level 3 instruments: movements during the period
The table below presents additional information about material Level 3 assets and liabilities measured at fair value
on a recurring basis. Level 3 assets and liabilities may be hedged with instruments classified as Level 1 or Level 2 in
the fair value hierarchy and, as a result, realized and unrealized gains and losses included in the table may not
include the effect of related hedging activity. Furthermore, the realized and unrealized gains and losses presented
in the table are not limited solely to those arising from Level 3 inputs, as valuations are generally derived from both
observable and unobservable parameters.
Assets and liabilities transferred into or out of Level 3 are presented as if those assets or liabilities had been
transferred at the beginning of the year.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 88
Note 9 Fair value measurement (continued)
Movements of Level 3 instruments
USD bn
Balance
at the
beginning
of the
period
Credit
Suisse
Level 3
assets and
liabilities
acquired
1
Net gains /
losses
included in
compre-
hensive
income
2
of which:
related to
instruments
held at the
end of the
period
Purchases
Sales
Issuances
Settlements
Transfers
into
Level 3
Transfers
out of
Level 3
Foreign
currency
translation
Balance
at the
end
of the
period
For the nine months ended 30 September 2023
3
Financial assets at fair value held for
trading
of which: Investment fund units
0.0
of which: Corporate and municipal
bonds
0.0
0.0
of which: Loans
Derivative financial instruments –
assets
of which: Interest rate
0.0
of which: Equity / index
of which: Credit
Financial assets at fair value not held
for trading
of which: Loans
of which: Auction rate securities
0.0
0.0
0.0
0.0
0.0
0.0
0.0
of which: Equity instruments
0.0
Derivative financial instruments –
liabilities
of which: Interest rate
0.0
of which: Equity / index
of which: Credit
of which: Loan commitments
measured at FVTPL
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Debt issued designated at fair value
0.0
0.0
Other financial liabilities designated at
fair value
For the nine months ended 30 September 2022
Financial assets at fair value held for
trading
0.0
of which: Investment fund units
0.0
0.0
of which: Corporate and municipal
bonds
0.0
0.0
of which: Loans
0.0
0.0
Derivative financial instruments –
assets
0.0
0.0
of which: Interest rate
0.0
0.0
of which: Equity / index
0.0
0.0
of which: Credit
0.0
0.0
Financial assets at fair value not held
for trading
of which: Loans
0.0
of which: Auction rate securities
0.0
0.0
0.0
0.0
0.0
0.0
of which: Equity instruments
0.0
0.0
0.0
Derivative financial instruments –
liabilities
0.0
0.0
of which: Interest rate
0.0
0.0
of which: Equity / index
0.0
0.0
of which: Credit
0.0
0.0
Debt issued designated at fair value
0.0
0.0
Other financial liabilities designated at
fair value
0.0
0.0
1 Information has been revised. Refer to Note 2 for more information. 2 Net gains / losses included in comprehensive income are recognized in Net interest income and Other net income from financial instruments
measured at fair value through profit or loss in the Income statement, and also in Gains / (losses) from own credit on financial liabilities designated at fair value, before tax in the Statement of comprehensive income.
3 Total Level 3 assets as of 30 September 2023 were USD 27.0bn (31 December 2022: USD 6.8bn). Total Level 3 liabilities as of 30 September 2023 were USD 26.0bn (31 December 2022: USD 13.0bn).
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 89
Note 9 Fair value measurement (continued)
f) Financial instruments not measured at fair value
The table below reflects the estimated fair values of financial instruments not measured at fair value. Valuation
principles applied when determining fair value estimates for financial instruments not measured at fair value are
consistent with those described in “Note 20 Fair value measurement” in the “Consolidated financial statements”
section of the Annual Report 2022.
Financial instruments not measured at fair value
30.9.23
30.6.23
1
31.12.22
USD bn
Carrying
amount
Fair value
Carrying
amount
Fair value
Carrying
amount
Fair value
Assets
Cash and balances at central banks
Amounts due from banks
Receivables from securities financing transactions measured at amortized cost
Cash collateral receivables on derivative instruments
Loans and advances to customers
Other financial assets measured at amortized cost
Liabilities
Amounts due to banks
Payables from securities financing transactions measured at amortized cost
Cash collateral payables on derivative instruments
Customer deposits
Debt issued measured at amortized cost
Other financial liabilities measured at amortized cost
2
1 Comparative-period information has been revised. Refer to Note 2 for more information. 2 Excludes lease liabilities.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 90
Note 10
Derivative instruments
a) Derivative instruments
As of 30.9.23, USD bn
Derivative
financial
assets
Derivative
financial
liabilities
Notional values
related to derivative
financial assets and
liabilities
1
Other
notional
values
2
Derivative financial instruments
Interest rate
3
Credit derivatives
Foreign exchange
Equity / index
Commodities
Other
4
Total derivative financial instruments, based on IFRS netting
5
of which: Credit Suisse
6
Further netting potential not recognized on the balance sheet
7
of which: netting of recognized financial liabilities / assets
of which: netting with collateral received / pledged
Total derivative financial instruments, after consideration of further netting potential
As of 30.6.23, USD bn
8
Derivative financial instruments
Interest rate
Credit derivatives
Foreign exchange
Equity / index
Commodities
Other
4
Total derivative financial instruments, based on IFRS netting
5
of which: Credit Suisse
6
Further netting potential not recognized on the balance sheet
7
of which: netting of recognized financial liabilities / assets
of which: netting with collateral received / pledged
Total derivative financial instruments, after consideration of further netting potential
As of 31.12.22, USD bn
Derivative financial instruments
Interest rate
Credit derivatives
Foreign exchange
Equity / index
Commodities
Other
4
Total derivative financial instruments, based on IFRS netting
5
Further netting potential not recognized on the balance sheet
7
of which: netting of recognized financial liabilities / assets
of which: netting with collateral received / pledged
Total derivative financial instruments, after consideration of further netting potential
1 In cases where derivative financial instruments are presented on a net basis on the balance sheet, the respective notional values of the netted derivative financial instruments are still presented on a gross basis.
Notional amounts of client-cleared ETD and OTC transactions through central clearing counterparties are not disclosed, as they have a significantly different risk profile. 2 Other notional values relate to derivatives
that are cleared through either a central counterparty or an exchange and settled on a daily basis (except for OTC derivatives settled through collateralized-to-market arrangements, which are presented under Derivative
financial assets and Derivative financial liabilities). The fair value of these derivatives is presented on the balance sheet net of the corresponding cash margin under Cash collateral receivables on derivative instruments
and Cash collateral payables on derivative instruments and was not material for all periods presented. 3 Includes USD 246bn (30 June 2023: USD 225bn) related to OTC derivatives settled through collateralized-
to-market arrangements. 4 Includes mainly Loan commitments measured at FVTPL, as well as unsettled purchases and sales of non-derivative financial instruments for which the changes in the fair value between
trade date and settlement date are recognized as derivative financial instruments. 5 Financial assets and liabilities are presented net on the balance sheet if UBS has the unconditional and legally enforceable right
to offset the recognized amounts, both in the normal course of business and in the event of default, bankruptcy or insolvency of UBS or its counterparties, and intends either to settle on a net basis or to realize the
asset and settle the liability simultaneously. 6 Refer to Note 2 for more information about the acquisition of the Credit Suisse Group. 7 Reflects the netting potential in accordance with enforceable master netting
and similar arrangements where not all criteria for a net presentation on the balance sheet have been met. Refer to “Note 21 Offsetting financial assets and financial liabilities” in the “Consolidated financial
statements” section of the Annual Report 2022 for more information. 8 Comparative-period information has been revised. Refer to Note 2 for more information.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 91
Note 10
Derivative instruments (continued)
b) Cash collateral on derivative instruments
USD bn
Receivables
30.9.23
Payables
30.9.23
Receivables
30.6.23
Payables
30.6.23
Receivables
31.12.22
Payables
31.12.22
Cash collateral on derivative instruments, based on IFRS netting
1
of which: Credit Suisse
2
Further netting potential not recognized on the balance sheet
3
of which: netting of recognized financial liabilities / assets
of which: netting with collateral received / pledged
Cash collateral on derivative instruments, after consideration of further netting potential
1 Financial assets and liabilities are presented net on the balance sheet if UBS has the unconditional and legally enforceable right to offset the recognized amounts, both in the normal course of business and in the
event of default, bankruptcy or insolvency of UBS or its counterparties, and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. 2 Refer to Note 2 for more information
about the acquisition of the Credit Suisse Group. 3 Reflects the netting potential in accordance with enforceable master netting and similar arrangements where not all criteria for a net presentation on the balance
sheet have been met. Refer to “Note 21 Offsetting financial assets and financial liabilities” in the “Consolidated financial statements” section of the Annual Report 2022 for more information.
Note
11
Other assets and liabilities
a) Other financial assets measured at amortized cost
USD m
30.9.23
30.6.23
1
31.12.22
Debt securities
Loans to financial advisors
Fee- and commission-related receivables
Finance lease receivables
Settlement and clearing accounts
Accrued interest income
Other
Total other financial assets measured at amortized cost
2
1 Comparative-period information has been revised. Refer to Note 2 for more information. 2 Refer to Note 2 for more information about the acquisition of the Credit Suisse Group.
b) Other non-financial assets
USD m
30.9.23
30.6.23
31.12.22
Precious metals and other physical commodities
Deposits and collateral provided in connection with litigation, regulatory and similar matters
1
Prepaid expenses
Current tax assets
VAT, withholding tax and other tax receivables
Properties and other non-current assets held for sale
Other
Total other non-financial assets
of which: Credit Suisse
2
1 Refer to Note 15 for more information. 2 Refer to Note 2 for more information about the acquisition of the Credit Suisse Group.
c) Other financial liabilities measured at amortized cost
USD m
30.9.23
30.6.23
31.12.22
Other accrued expenses
Accrued interest expenses
Settlement and clearing accounts
Lease liabilities
Other
Total other financial liabilities measured at amortized cost
of which: Credit Suisse
1
1 Refer to Note 2 for more information about the acquisition of the Credit Suisse Group.
d) Other financial liabilities designated at fair value
USD m
30.9.23
30.6.23
31.12.22
Financial liabilities related to unit-linked investment contracts
Securities financing transactions
Over-the-counter debt instruments and other
Total other financial liabilities designated at fair value
of which: Credit Suisse
1
1 Refer to Note 2 for more information about the acquisition of the Credit Suisse Group.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 92
Note 11 Other assets and liabilities (continued)
e) Other non-financial liabilities
USD m
30.9.23
30.6.23
1
31.12.22
Compensation-related liabilities
of which: net defined benefit liability
Current tax liabilities
Deferred tax liabilities
VAT, withholding tax and other tax payables
Deferred income
Other
Total other non-financial liabilities
of which: Credit Suisse
2
1 Comparative-period information has been revised. Refer to Note 2 for more information. 2 Refer to Note 2 for more information about the acquisition of the Credit Suisse Group.
Note
12
Debt issued designated at fair value
USD m
30.9.23
30.6.23
31.12.22
Issued debt instruments
Equity-linked
1
Rates-linked and fixed-rate
Credit-linked
Commodity-linked
Other
of which: debt that contributes to total loss-absorbing capacity
Total debt issued designated at fair value
of which: Credit Suisse
2
1 Includes investment fund unit-linked instruments issued. 2 Refer to Note 2 for more information about the acquisition of the Credit Suisse Group.
Note
13
Debt issued measured at amortized cost
USD m
30.9.23
30.6.23
31.12.22
Short-term debt
1
of which: Credit Suisse
Senior unsecured debt that contributes to total loss-absorbing capacity (TLAC)
Senior unsecured debt other than TLAC
Covered bonds
Subordinated debt
of which: eligible as high-trigger loss-absorbing additional tier 1 capital instruments
of which: eligible as low-trigger loss-absorbing additional tier 1 capital instruments
of which: eligible as low-trigger loss-absorbing tier 2 capital instruments
of which: eligible as non-Basel III-compliant tier 2 capital instruments
Debt issued through the Swiss central mortgage institutions
Other long-term debt
Long-term debt
2
of which: Credit Suisse
3
Total debt issued measured at amortized cost
4
1 Debt with an original contractual maturity of less than one year, includes mainly certificates of deposit and commercial paper. 2 Debt with an original contractual maturity greater than or equal to one year. The
classification of debt issued into short-term and long-term does not consider any early redemption features. 3 Refer to Note 2 for more information about the acquisition of the Credit Suisse Group. 4 Net of
bifurcated embedded derivatives, the fair value of which was not material for the periods presented.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 93
Note 14 Interest rate benchmark reform
During 2023, the Group has largely completed the transition of the remaining USD London Interbank Offered Rate
(LIBOR) contracts, with corporate loans of approximately USD 1bn (predominantly attributable to positions acquired
through the acquisition of the Credit Suisse Group) as of 30 September 2023 relying on synthetic LIBOR rates.
The Group has approximately USD 6bn equivalent of yen-, pounds sterling- and US dollar-denominated publicly
issued benchmark bonds (including approximately USD 3bn of benchmark notes assumed by UBS Group AG as a
result of the acquisition of the Credit Suisse Group) that, per current contractual terms, if not called on their
respective call dates, would reset based directly on JPY LIBOR, GBP LIBOR and USD LIBOR, respectively. In October
2023, it was announced that approximately USD 1bn of these instruments would be redeemed in November 2023
(on their first call date). In addition, certain benchmark bonds publicly issued by the Group reference rates indirectly
derived from IBORs, if they are not called on their respective call dates. These bonds have robust fallback language
and the confirmation of interest rate calculation mechanics will be communicated in advance of any rate resets.
Note 15 Provisions and contingent liabilities
a) Provisions and contingent liabilities
The table below presents an overview of total provisions and contingent liabilities.
USD m
30.9.23
30.6.23
1
31.12.22
Provisions related to expected credit losses (IFRS 9,
Financial Instruments
)
2
Provisions related to Credit Suisse loan commitments (IFRS 3,
Business Combinations
)
3
Provisions related to litigation, regulatory and similar matters (IAS 37,
Provisions, Contingent Liabilities and Contingent Assets
)
Acquisition-related contingent liabilities (IFRS 3,
Business Combinations
)
3
Other provisions
Total provisions and contingent liabilities
of which: Credit Suisse
3
1 Comparative-period information has been revised. Refer to Note 2 for more information. 2 Refer to Note 8c for more information. 3 Refer to Note 2 for more information about the acquisition of the Credit Suisse
Group.
The table below presents additional information for provisions related to litigation, regulatory and similar matters
and other provisions.
USD m
Litigation,
regulatory and
similar matters
1
Other
2
Total
Balance as of 31 December 2022
Balance as of 30 June 2023
Increase in provisions recognized in the income statement
Release of provisions recognized in the income statement
Provisions used in conformity with designated purpose
Foreign currency translation and other movements
Balance as of 30 September 2023
of which: Credit Suisse
3
1 Consists of provisions for losses resulting from legal, liability and compliance risks. 2 Mainly includes provisions in connection with the ongoing integration activities and related to onerous contracts, real estate
and employee benefits. 3 Refer to Note 2 for more information about the acquisition of the Credit Suisse Group.
Information about provisions and contingent liabilities in respect of litigation, regulatory and similar matters, as a
class, is included in Note 15b. There are no material contingent liabilities associated with the other classes of
provisions.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 94
Note 15 Provisions and contingent liabilities (continued)
b) Litigation, regulatory and similar matters
The Group operates in a legal and regulatory environment that exposes it to significant litigation and similar risks
arising from disputes and regulatory proceedings. As a result, UBS (which for purposes of this Note may refer to
UBS Group AG and/or one or more of its subsidiaries, as applicable) is involved in various disputes and legal
proceedings, including litigation, arbitration, and regulatory and criminal investigations.
Such matters are subject to many uncertainties, and the outcome and the timing of resolution are often difficult to
predict, particularly in the earlier stages of a case. There are also situations where the Group may enter into a
settlement agreement. This may occur in order to avoid the expense, management distraction or reputational
implications of continuing to contest liability, even for those matters for which the Group believes it should be
exonerated. The uncertainties inherent in all such matters affect the amount and timing of any potential outflows
for both matters with respect to which provisions have been established and other contingent liabilities. The Group
makes provisions for such matters brought against it when, in the opinion of management after seeking legal
advice, it is more likely than not that the Group has a present legal or constructive obligation as a result of past
events, it is probable that an outflow of resources will be required, and the amount can be reliably estimated. Where
these factors are otherwise satisfied, a provision may be established for claims that have not yet been asserted
against the Group, but are nevertheless expected to be, based on the Group’s experience with similar asserted
claims. If any of those conditions is not met, such matters result in contingent liabilities. If the amount of an
obligation cannot be reliably estimated, a liability exists that is not recognized even if an outflow of resources is
probable. Accordingly, no provision is established even if the potential outflow of resources with respect to such
matters could be significant. Developments relating to a matter that occur after the relevant reporting period, but
prior to the issuance of financial statements, which affect management’s assessment of the provision for such
matter (because, for example, the developments provide evidence of conditions that existed at the end of the
reporting period), are adjusting events after the reporting period under IAS 10 and must be recognized in the
financial statements for the reporting period.
Specific litigation, regulatory and other matters are described below, including all such matters that management
considers to be material and others that management believes to be of significance to the Group due to potential
financial, reputational and other effects. The amount of damages claimed, the size of a transaction or other
information is provided where available and appropriate in order to assist users in considering the magnitude of
potential exposures.
In the case of certain matters below, we state that we have established a provision, and for the other matters, we
make no such statement. When we make this statement and we expect disclosure of the amount of a provision to
prejudice seriously our position with other parties in the matter because it would reveal what UBS believes to be
the probable and reliably estimable outflow, we do not disclose that amount. In some cases we are subject to
confidentiality obligations that preclude such disclosure. With respect to the matters for which we do not state
whether we have established a provision, either: (a) we have not established a provision; or (b) we have established
a provision but expect disclosure of that fact to prejudice seriously our position with other parties in the matter
because it would reveal the fact that UBS believes an outflow of resources to be probable and reliably estimable.
With respect to certain litigation, regulatory and similar matters for which we have established provisions, we are
able to estimate the expected timing of outflows. However, the aggregate amount of the expected outflows for
those matters for which we are able to estimate expected timing is immaterial relative to our current and expected
levels of liquidity over the relevant time periods.
The aggregate amount provisioned for litigation, regulatory and similar matters as a class is disclosed in the
“Provisions” table in Note 15a above. It is not practicable to provide an aggregate estimate of liability for our
litigation, regulatory and similar matters as a class of contingent liabilities beyond what has been identified as a
consequence of the acquisition of Credit Suisse as set out below. Doing so would require UBS to provide speculative
legal assessments as to claims and proceedings that involve unique fact patterns or novel legal theories, that have
not yet been initiated or are at early stages of adjudication, or as to which alleged damages have not been quantified
by the claimants. Although UBS therefore cannot provide a numerical estimate of the future losses that could arise
from litigation, regulatory and similar matters, UBS believes that the aggregate amount of possible future losses
from this class that are more than remote substantially exceeds the level of current provisions.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 95
Note 15 Provisions and contingent liabilities (continued)
Litigation, regulatory and similar matters may also result in non-monetary penalties and consequences. A guilty plea
to, or conviction of, a crime could have material consequences for UBS. Resolution of regulatory proceedings may
require UBS to obtain waivers of regulatory disqualifications to maintain certain operations, may entitle regulatory
authorities to limit, suspend or terminate licenses and regulatory authorizations, and may permit financial market
utilities to limit, suspend or terminate UBS’s participation in such utilities. Failure to obtain such waivers, or any
limitation, suspension or termination of licenses, authorizations or participations, could have material consequences
for UBS.
The risk of loss associated with litigation, regulatory and similar matters is a component of operational risk for
purposes of determining capital requirements. Information concerning our capital requirements and the calculation
of operational risk for this purpose is included in the “Capital management” section of this report.
Matters related to Credit Suisse entities are separately described herein. The amounts shown in the table below
reflect the provisions recorded under IFRS accounting principles. In connection with the acquisition of Credit Suisse,
UBS Group AG additionally has reflected in its purchase accounting under IFRS 3 a further valuation adjustment of
USD 3bn reflecting an estimate of outflows relating to contingent liabilities for all present obligations included in
the scope of the acquisition at fair value upon closing, even if it is not probable that they will result in an outflow
of resources, significantly increasing the recognition threshold for litigation liabilities beyond those that generally
apply under IFRS and US GAAP.
Provisions for litigation, regulatory and similar matters by business division and in Group Items
1
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core
and Legacy
2
Group Items
2
Total
Balance as of 31 December 2022
Balance as of 30 June 2023
Increase in provisions recognized in the income statement
Release of provisions recognized in the income statement
Provisions used in conformity with designated purpose
Foreign currency translation and other movements
Balance as of 30 September 2023
of which: Credit Suisse
3
1 Provisions, if any, for the matters described in items A3, B8 and B10 of this Note are recorded in Global Wealth Management ; provisions, if any, for the matters described in items A2, B1, B2, B3, B4, B5, B6, B7,
B9, B11 and B12 of this Note are recorded in Non-core and Legacy; provisions, if any, for the matters described in items B13 and B14 of this Note are recorded in Group Items. Provisions, if any, for the matters
described in items A1 and A5 of this Note are allocated between Global Wealth Management and Personal & Corporate Banking; and provisions, if any, for the matters described in item A4 are allocated between the
Investment Bank and Group Items. 2 Starting with the third quarter of 2023, Non-core and Legacy represents a separate reportable segment and Group Functions has been renamed Group Items. Prior periods have
been revised to reflect these changes. 3 Refer to Note 2 for more information about the acquisition of the Credit Suisse Group.
A. Litigation, regulatory and similar matters involving UBS AG and subsidiaries
1. Inquiries regarding cross-border wealth management businesses
Tax and regulatory authorities in a number of countries have made inquiries, served requests for information or
examined employees located in their respective jurisdictions relating to the cross-border wealth management
services provided by UBS and other financial institutions.
Since 2013, UBS (France) S.A., UBS AG and certain former employees have been under investigation in France in
relation to UBS’s cross-border business with French clients. In connection with this investigation, the investigating
judges ordered UBS AG to provide bail (“
caution
”) of EUR 1.1bn.
In 2019, the court of first instance returned a verdict finding UBS AG guilty of unlawful solicitation of clients on
French territory and aggravated laundering of the proceeds of tax fraud, and UBS (France) S.A. guilty of aiding and
abetting unlawful solicitation and of laundering the proceeds of tax fraud. The court imposed fines aggregating
EUR 3.7bn on UBS AG and UBS (France) S.A. and awarded EUR 800m of civil damages to the French state. A trial
in the French Court of Appeal took place in March 2021. In December 2021, the Court of Appeal found UBS AG
guilty of unlawful solicitation and aggravated laundering of the proceeds of tax fraud. The court ordered a fine of
EUR 3.75m, the confiscation of EUR 1bn, and awarded civil damages to the French state of EUR 800m. UBS
appealed the decision to the French Supreme Court. On 27 September 2023, the Supreme Court held a hearing
on UBS’s appeal. At the conclusion of the hearing the court stated that it will communicate its decision on 15
November 2023. The fine and confiscation imposed by the Court of Appeal are suspended during the appeal. The
civil damages award has been paid to the French state (EUR 99m of which was deducted from the bail), subject to
the result of UBS’s appeal.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 96
Note 15 Provisions and contingent liabilities (continued)
Our balance sheet at 30 September 2023 reflected provisions with respect to this matter in an amount of EUR
1.1bn (USD 1.2bn). The wide range of possible outcomes in this case contributes to a high degree of estimation
uncertainty and the provision reflects our best estimate of possible financial implications, although actual penalties
and civil damages could exceed (or may be less than) the provision amount.
2. Claims related to sales of residential mortgage-backed securities and mortgages
From 2002 through 2007, prior to the crisis in the US residential loan market, UBS was a substantial issuer and
underwriter of US residential mortgage-backed securities (RMBS) and was a purchaser and seller of US residential
mortgages.
In 2018, the DOJ filed a civil complaint in the District Court for the Eastern District of New York. The complaint
seeks unspecified civil monetary penalties under the Financial Institutions Reform, Recovery and Enforcement Act
of 1989 related to UBS’s issuance, underwriting and sale of 40 RMBS transactions in 2006 and 2007. UBS moved
to dismiss the civil complaint in 2019. Later in 2019, the district court denied UBS’s motion to dismiss. In August
2023, UBS reached a settlement with the DOJ, under which UBS paid USD 1.435bn to resolve all civil claims by the
DOJ.
3. Madoff
In relation to the Bernard L. Madoff Investment Securities LLC (BMIS) investment fraud, UBS AG, UBS (Luxembourg)
S.A. (now UBS Europe SE, Luxembourg branch) and certain other UBS subsidiaries have been subject to inquiries
by a number of regulators, including the Swiss Financial Market Supervisory Authority (FINMA) and the Luxembourg
Commission de Surveillance du Secteur Financier. Those inquiries concerned two third-party funds established
under Luxembourg law, substantially all assets of which were with BMIS, as well as certain funds established in
offshore jurisdictions with either direct or indirect exposure to BMIS. These funds faced severe losses, and the
Luxembourg funds are in liquidation. The documentation establishing both funds identifies UBS entities in various
roles, including custodian, administrator, manager, distributor and promoter, and indicates that UBS employees
serve as board members.
In 2009 and 2010, the liquidators of the two Luxembourg funds filed claims against UBS entities, non-UBS entities
and certain individuals, including current and former UBS employees, seeking amounts totaling approximately EUR
2.1bn, which includes amounts that the funds may be held liable to pay the trustee for the liquidation of BMIS
(BMIS Trustee).
A large number of alleged beneficiaries have filed claims against UBS entities (and non-UBS entities) for purported
losses relating to the Madoff fraud. The majority of these cases have been filed in Luxembourg, where decisions
that the claims in eight test cases were inadmissible have been affirmed by the Luxembourg Court of Appeal, and
the Luxembourg Supreme Court has dismissed a further appeal in one of the test cases.
In the US, the BMIS Trustee filed claims against UBS entities, among others, in relation to the two Luxembourg
funds and one of the offshore funds. The total amount claimed against all defendants in these actions was not less
than USD 2bn. In 2014, the US Supreme Court rejected the BMIS Trustee’s motion for leave to appeal decisions
dismissing all claims except those for the recovery of approximately USD 125m of payments alleged to be fraudulent
conveyances and preference payments. In 2016, the bankruptcy court dismissed these claims against the UBS
entities. In 2019, the Court of Appeals reversed the dismissal of the BMIS Trustee’s remaining claims, and the US
Supreme Court subsequently denied a petition seeking review of the Court of Appeals’ decision. The case has been
remanded to the Bankruptcy Court for further proceedings.
4. Foreign exchange, LIBOR and benchmark rates, and other trading practices
Foreign exchange-related regulatory matters:
concerning possible manipulation of foreign exchange markets and precious metals prices. As a result of these
investigations, UBS entered into resolutions with Swiss, US and United Kingdom regulators and the European
Commission. UBS was granted conditional immunity by the Antitrust Division of the DOJ and by authorities in other
jurisdictions in connection with potential competition law violations relating to foreign exchange and precious
metals businesses.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 97
Note 15 Provisions and contingent liabilities (continued)
Foreign exchange-related civil litigation:
in other jurisdictions against UBS and other banks on behalf of putative classes of persons who engaged in foreign
currency transactions with any of the defendant banks. UBS has resolved US federal court class actions relating to
foreign currency transactions with the defendant banks and persons who transacted in foreign exchange futures
contracts and options on such futures under a settlement agreement that provides for UBS to pay an aggregate of
USD 141m and provide cooperation to the settlement classes. Certain class members have excluded themselves
from that settlement and have filed individual actions in US and English courts against UBS and other banks, alleging
violations of US and European competition laws and unjust enrichment. UBS and the other banks have resolved
those individual matters.
In 2015, a putative class action was filed in federal court against UBS and numerous other banks on behalf of
persons and businesses in the US who directly purchased foreign currency from the defendants and alleged co-
conspirators for their own end use. In 2022, the court denied plaintiffs’ motion for class certification. In March
2023, the court granted defendants’ summary judgment motion, dismissing the case. Plaintiffs have appealed.
LIBOR and other benchmark-related regulatory matters:
regarding potential improper attempts by UBS, among others, to manipulate LIBOR and other benchmark rates at
certain times. UBS reached settlements or otherwise concluded investigations relating to benchmark interest rates
with the investigating authorities. UBS was granted conditional leniency or conditional immunity from authorities
in certain jurisdictions, including the Antitrust Division of the DOJ and the Swiss Competition Commission (WEKO),
in connection with potential antitrust or competition law violations related to certain rates. However, UBS has not
reached a final settlement with WEKO, as the Secretariat of WEKO has asserted that UBS does not qualify for full
immunity.
LIBOR and other benchmark-related civil litigation:
in the federal courts in New York against UBS and numerous other banks on behalf of parties who transacted in
certain interest rate benchmark-based derivatives. Also pending in the US and in other jurisdictions are a number
of other actions asserting losses related to various products whose interest rates were linked to LIBOR and other
benchmarks, including adjustable rate mortgages, preferred and debt securities, bonds pledged as collateral, loans,
depository accounts, investments and other interest-bearing instruments. The complaints allege manipulation,
through various means, of certain benchmark interest rates, including USD LIBOR, Euroyen TIBOR, Yen LIBOR,
EURIBOR, CHF LIBOR, GBP LIBOR and seek unspecified compensatory and other damages under varying legal
theories.
USD LIBOR class and individual actions in the US:
In 2013 and 2015, the district court in the USD LIBOR actions
dismissed, in whole or in part, certain plaintiffs’ antitrust claims, federal racketeering claims, Commodity Exchange
Act claims, and state common law claims, and again dismissed the antitrust claims in 2016 following an appeal. In
2021, the Second Circuit affirmed the district court’s dismissal in part and reversed in part and remanded to the
district court for further proceedings. The Second Circuit, among other things, held that there was personal
jurisdiction over UBS and other foreign defendants. Separately, in 2018, the Second Circuit reversed in part the
district court’s 2015 decision dismissing certain individual plaintiffs’ claims and certain of these actions are now
proceeding. In 2018, the district court denied plaintiffs’ motions for class certification in the USD class actions for
claims pending against UBS, and plaintiffs sought permission to appeal that ruling to the Second Circuit. The Second
Circuit denied the petition to appeal. In 2020, an individual action was filed in the Northern District of California
against UBS and numerous other banks alleging that the defendants conspired to fix the interest rate used as the
basis for loans to consumers by jointly setting the USD LIBOR rate and monopolized the market for LIBOR-based
consumer loans and credit cards. In September 2022, the court granted defendants’ motion to dismiss the
complaint in its entirety, while allowing plaintiffs the opportunity to file an amended complaint. Plaintiffs filed an
amended complaint in October 2022, and defendants have moved to dismiss the amended complaint. In October
2023, the court dismissed the amended complaint with prejudice.
Other benchmark class actions in the US:
Yen LIBOR / Euroyen TIBOR
– In 2017, the court dismissed one Yen LIBOR / Euroyen TIBOR action in its entirety on
standing grounds. In 2020, the appeals court reversed the dismissal and, subsequently, plaintiffs in that action filed
an amended complaint focused on Yen LIBOR. In 2022, the court granted UBS’s motion for reconsideration and
dismissed the case against UBS. The dismissal of the case against UBS could be appealed following the disposition
of the case against the remaining defendant in the district court.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 98
Note 15 Provisions and contingent liabilities (continued)
CHF LIBOR
Plaintiffs filed an amended complaint, and the court granted a renewed motion to dismiss in 2019. Plaintiffs
appealed. In 2021, the Second Circuit granted the parties’ joint motion to vacate the dismissal and remand the case
for further proceedings. Plaintiffs filed a third amended complaint in November 2022 and defendants moved to
dismiss the amended complaint in January 2023.
EURIBOR
defendants for lack of personal jurisdiction. Plaintiffs have appealed.
GBP LIBOR
Government bonds:
banks on behalf of persons who participated in markets for US Treasury securities since 2007. A consolidated
complaint was filed in 2017 in the US District Court for the Southern District of New York alleging that the banks
colluded with respect to, and manipulated prices of, US Treasury securities sold at auction and in the secondary
market and asserting claims under the antitrust laws and for unjust enrichment. Defendants’ motions to dismiss
the consolidated complaint were granted in 2021. Plaintiffs filed an amended complaint, which defendants moved
to dismiss later in 2021. In March 2022, the court granted defendants’ motion to dismiss that complaint. Plaintiffs
have appealed the dismissal. Similar class actions have been filed concerning European government bonds and
other government bonds.
In 2021, the European Commission issued a decision finding that UBS and six other banks breached European
Union antitrust rules in 2007–2011 relating to European government bonds. The European Commission fined UBS
EUR 172m. UBS is appealing the amount of the fine.
With respect to additional matters and jurisdictions not encompassed by the settlements and orders referred to
above, our balance sheet at 30 September 2023 reflected a provision in an amount that UBS believes to be
appropriate under the applicable accounting standard. As in the case of other matters for which we have established
provisions, the future outflow of resources in respect of such matters cannot be determined with certainty based
on currently available information and accordingly may ultimately prove to be substantially greater (or may be less)
than the provision that we have recognized.
5. Swiss retrocessions
The Federal Supreme Court of Switzerland ruled in 2012, in a test case against UBS, that distribution fees paid to
a firm for distributing third-party and intra-group investment funds and structured products must be disclosed and
surrendered to clients who have entered into a discretionary mandate agreement with the firm, absent a valid
waiver. FINMA issued a supervisory note to all Swiss banks in response to the Supreme Court decision. UBS has met
the FINMA requirements and has notified all potentially affected clients.
The Supreme Court decision has resulted, and continues to result, in a number of client requests for UBS to disclose
and potentially surrender retrocessions. Client requests are assessed on a case-by-case basis. Considerations taken
into account when assessing these cases include, among other things, the existence of a discretionary mandate and
whether or not the client documentation contained a valid waiver with respect to distribution fees.
Our balance sheet at 30 September 2023 reflected a provision with respect to matters described in this item 5 in
an amount that UBS believes to be appropriate under the applicable accounting standard. The ultimate exposure
will depend on client requests and the resolution thereof, factors that are difficult to predict and assess. Hence, as
in the case of other matters for which we have established provisions, the future outflow of resources in respect of
such matters cannot be determined with certainty based on currently available information and accordingly may
ultimately prove to be substantially greater (or may be less) than the provision that we have recognized.
UBS Group third quarter 2023 report |
Consolidated financial statements | Notes to the UBS Group AG interim consolidated financial statements (unaudited) 99
Note 15 Provisions and contingent liabilities (continued)
B. Litigation regulatory and similar matters involving Credit Suisse entities
1. Mortgage-related matters
Government and regulatory related matters
:
DOJ RMBS settlement
LLC (CSS LLC) and its current and former US subsidiaries and US affiliates reached a settlement with the US
Department of Justice (DOJ) related to its legacy Residential Mortgage-Backed Securities (RMBS) business, a business
conducted through 2007. The settlement resolved potential civil claims by the DOJ related to certain of those Credit
Suisse entities’ packaging, marketing, structuring, arrangement, underwriting, issuance and sale of RMBS. Pursuant
to the terms of the settlement a civil monetary penalty was paid to the DOJ in January 2017. The settlement also
required the Credit Suisse entities to provide certain levels of consumer relief measures, including affordable
housing payments and loan forgiveness, and the DOJ and Credit Suisse agreed to the appointment of an
independent monitor to oversee the completion of the consumer relief requirements of the settlement. Credit
Suisse continues to evaluate its approach toward satisfying its remaining consumer relief obligations, and Credit
Suisse currently anticipates that it will take much longer than the five-year period provided in the settlement to
satisfy in full its obligations in respect of these consumer relief measures, subject to risk appetite and market
conditions. Credit Suisse expects to incur costs in relation to satisfying those obligations. The amount of consumer
relief Credit Suisse must provide also increases after 2021 pursuant to the original settlement by 5% per annum of
the outstanding amount due until these obligations are settled. The monitor publishes reports periodically on these
consumer relief matters.
Civil litigation: Repurchase litigations
in various civil litigation matters related to their roles as issuer, sponsor, depositor, underwriter and/or servicer of
RMBS transactions. These cases currently include repurchase actions by RMBS trusts and/or trustees, in which
plaintiffs generally allege breached representations and warranties in respect of mortgage loans and failure to
repurchase such mortgage loans as required under the applicable agreements. The amounts disclosed below do
not reflect actual realized plaintiff losses to date or anticipated future litigation exposure. Unless otherwise stated,
these amounts reflect the original unpaid principal balance amounts as alleged in these actions and do not include
any reduction in principal amounts since issuance.
DLJ Mortgage Capital, Inc. (DLJ) is a defendant in New York state court in: (i) one action brought by Asset Backed
Securities Corporation Home Equity Loan Trust, Series 2006-HE7, in which plaintiff alleges damages of not less than
USD 374m in an amended complaint filed in August 2019; in January 2020, DLJ filed a motion to dismiss; (ii) one
action brought by Home Equity Asset Trust, Series 2006-8, in which plaintiff alleges damages of not less than USD
436m; (iii) one action brought by Home Equity Asset Trust 2007-1, in which plaintiff alleges damages of not less
than USD 420m; in December 2018, the court denied DLJ’s motion for partial summary judgment in this action,
which was affirmed on appeal; in March 2022, the New York State Court of Appeals reversed the decision and
ordered that DLJ’s motion for partial summary judgment be granted; a non-jury trial in the action was held between
January and February 2023, and a decision is pending; (iv) one action brought by Home Equity Asset Trust 2007-2,
in which plaintiff alleges damages of not less than USD 495m; and (v) one action brought by CSMC Asset-Backed
Trust 2007-NC1, in which no damages amount is alleged. These actions are at various procedural stages.
DLJ is also a defendant in one action brought by Home Equity Asset Trust Series 2007-3, in which plaintiff alleges
damages of not less than USD 206m. In March 2022, DLJ and the plaintiffs executed an agreement to settle this
action. The settlement remains subject to approval through a trust instruction proceeding brought in Minnesota
state court by the trustee of the plaintiff trust.
DLJ and its affiliate, Select Portfolio Servicing, Inc. (SPS), were defendants in two consolidated actions in New York
state court: one action brought by Home Equity Mortgage Trust Series 2006-1, Home Equity Mortgage Trust Series
2006-3 and Home Equity Mortgage Trust Series 2006-4, in which plaintiffs allege damages of not less than USD
730m; and one action brought by Home Equity Mortgage Trust Series 2006-5, in which plaintiff alleges damages
of not less than USD 500m. In April 2021, DLJ, SPS and the plaintiffs executed an agreement to settle both actions
for the aggregate amount of USD 500m, for which Credit Suisse was fully reserved. In May 2023, the Minnesota
state court approved the settlement through a trust instruction proceeding brought by the trustee of the plaintiff
trusts. The New York state court dismissed the underlying actions with prejudice in July 2023.
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2. Tax and securities law matters
In May 2014, Credit Suisse AG entered into settlement agreements with several US regulators regarding its US
cross-border matters. As part of the agreements, Credit Suisse AG, among other things, engaged an independent
corporate monitor that reports to the New York State Department of Financial Services. As of July 2018, the monitor
concluded both his review and his assignment. Credit Suisse AG continues to report to and cooperate with US
authorities in accordance with Credit Suisse AG’s obligations under the agreements, including by conducting a
review of cross-border services provided by Credit Suisse’s Switzerland-based Israel Desk. Most recently, Credit
Suisse AG has provided information to US authorities regarding potentially undeclared US assets held by clients at
Credit Suisse AG since the May 2014 plea. Credit Suisse AG continues to cooperate with the authorities. In March
2023, the US Senate Finance Committee issued a report criticizing Credit Suisse AG’s history regarding US tax
compliance. The report called on the DOJ to investigate Credit Suisse AG’s compliance with the 2014 plea.
In February 2021, a qui tam complaint was filed in the Eastern District of Virginia, alleging that Credit Suisse AG
had violated the False Claims Act by failing to disclose all US accounts at the time of the 2014 plea, which allegedly
allowed Credit Suisse AG to pay a criminal fine in 2014 that was purportedly lower than it should have been. The
DOJ moved to dismiss the case, and the Court summarily dismissed the suit. The case is now on appeal with the
US Federal Court of Appeals for the Fourth Circuit.
3. Rates-related matters
Regulatory matters
: Regulatory authorities in a number of jurisdictions, including the US, UK, EU and Switzerland,
have for an extended period of time been conducting investigations into the setting of LIBOR and other reference
rates with respect to a number of currencies, as well as the pricing of certain related derivatives. These ongoing
investigations have included information requests from regulators regarding LIBOR-setting practices and reviews of
the activities of various financial institutions, including Credit Suisse Group AG, which was a member of three LIBOR
rate-setting panels (US Dollar LIBOR, Swiss Franc LIBOR and Euro LIBOR). Credit Suisse is cooperating fully with
these investigations.
Regulatory authorities in a number of jurisdictions, including WEKO, the European Commission (Commission), the
South African Competition Commission and the Brazilian Competition Authority have been conducting
investigations into the trading activities, information sharing and the setting of benchmark rates in the foreign
exchange (including electronic trading) markets. Credit Suisse continues to cooperate with ongoing investigations.
Credit Suisse Group AG, Credit Suisse AG and Credit Suisse Securities (Europe) Limited (CSSEL) received a Statement
of Objections and a Supplemental Statement of Objections from the Commission in July 2018 and March 2021,
respectively, alleging that Credit Suisse entities engaged in anticompetitive practices in connection with their foreign
exchange trading business. In December 2021, the Commission issued a formal decision imposing a fine of EUR
83.3m. In February 2022, Credit Suisse appealed this decision to the EU General Court.
The reference rates investigations have also included information requests from regulators concerning
supranational, sub-sovereign and agency (SSA) bonds and commodities markets. Credit Suisse Group AG and CSSEL
received a Statement of Objections from the Commission in December 2018, alleging that Credit Suisse entities
engaged in anticompetitive practices in connection with their SSA bonds trading business. In April 2021, the
Commission issued a formal decision imposing a fine of EUR 11.9m. In July 2021, Credit Suisse appealed this
decision to the EU General Court.
Civil litigation:
USD LIBOR litigation –
Beginning in 2011, certain Credit Suisse entities were named in various putative class and
individual lawsuits filed in the US, alleging banks on the US dollar LIBOR panel manipulated US dollar LIBOR to
benefit their reputation and increase profits. All remaining matters have been consolidated for pre-trial purposes
into a multi-district litigation in the US District Court for the Southern District of New York (SDNY).
In a series of rulings between 2013 and 2019 on motions to dismiss, the SDNY (i) narrowed the claims against the
Credit Suisse entities and the other defendants (dismissing antitrust, Racketeer Influenced and Corrupt
Organizations Act (RICO), Commodity Exchange Act, and state law claims), (ii) narrowed the set of plaintiffs who
may bring claims, and (iii) narrowed the set of defendants in the LIBOR actions (including the dismissal of several
Credit Suisse entities from various cases on personal jurisdiction and statute of limitation grounds). After a number
of putative class and individual plaintiffs appealed the dismissal of their antitrust claims to the United States Court
of Appeals for the Second Circuit (Second Circuit), in December 2021, the Second Circuit affirmed in part and
reversed in part the district court’s decision and remanded the case to the SDNY.
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Separately, in May 2017, the plaintiffs in three putative class actions moved for class certification. In February 2018,
the SDNY denied certification in two of the actions and granted certification over a single antitrust claim in an
action brought by over-the-counter purchasers of LIBOR-linked derivatives.
USD ICE LIBOR litigation
certain of its affiliates, were named in a civil action in the US District Court for the Northern District of California,
alleging that panel banks manipulated ICE LIBOR to profit from variable interest loans and credit cards. In December
2021, the court denied plaintiffs’ motion for preliminary and permanent injunctions to enjoin panel banks from
continuing to set LIBOR or automatically setting the benchmark to zero each day, and in September 2022, the court
granted defendants’ motions to dismiss. In October 2022, plaintiffs filed an amended complaint. In November
2022, defendants filed a motion to dismiss the amended complaint. In October 2023, the court dismissed the
amended complaint with prejudice.
CHF LIBOR litigation
Suisse Group AG, were named in a civil putative class action lawsuit filed in the SDNY, alleging manipulation of
Swiss franc LIBOR to benefit defendants’ trading positions. After defendants’ motion to dismiss for lack of subject
matter jurisdiction was granted and plaintiffs successfully appealed, in July 2022, Credit Suisse entered into an
agreement to settle all claims. In February and September 2023, respectively, the court entered orders granting
preliminary and final approval to the agreement to settle all claims.
Foreign exchange litigation –
named in civil lawsuits relating to the alleged manipulation of foreign exchange rates.
Credit Suisse AG, together with other financial institutions, was named in a consolidated putative class action in
Israel, which made allegations similar to the consolidated class action. In April 2022, Credit Suisse entered into an
agreement to settle all claims. The settlement remains subject to court approval.
Treasury markets litigation
in a number of putative civil class action complaints in the US relating to the US treasury markets. These complaints
generally alleged that the defendants colluded to manipulate US treasury auctions, as well as the pricing of US
treasury securities in the when-issued market, with impacts upon related futures and options, and that certain of
the defendants participated in a group boycott to prevent the emergence of anonymous all-to-all trading in the
secondary market for treasury securities. In March 2022, the SDNY granted defendants’ motion to dismiss and
dismissed with prejudice all claims against the defendants. Plaintiffs have appealed.
SSA bonds litigation
were named in two Canadian putative class actions, which allege that defendants conspired to fix the prices of SSA
bonds sold to and purchased from investors in the secondary market. One putative class action was dismissed
against Credit Suisse in February 2020. In October 2022, in the second action, Credit Suisse entered into an
agreement to settle all claims. The settlement remains subject to court approval.
Credit default swap auction litigation –
In June 2021, Credit Suisse Group AG and affiliates, along with other banks
and entities, were named in a putative class action complaint filed in the US District Court for the District of New
Mexico alleging manipulation of credit default swap (CDS) final auction prices. In April 2022, defendants filed a
motion to dismiss. In June 2023, the court granted in part and denied in part defendants’ motion to dismiss.
4. OTC trading cases
Interest rate swaps litigation:
been named in a consolidated putative civil class action complaint and complaints filed by individual plaintiffs
relating to interest rate swaps, alleging that dealer defendants conspired with trading platforms to prevent the
development of interest rate swap exchanges. The individual lawsuits were brought by TeraExchange LLC, a swap
execution facility, and affiliates; Javelin Capital Markets LLC, a swap execution facility, and an affiliate; and trueEX
LLC, a swap execution facility, which claim to have suffered lost profits as a result of defendants’ alleged conspiracy.
All interest rate swap actions have been consolidated in a multi-district litigation in the SDNY.
Defendants moved to dismiss the putative class and individual actions, and the SDNY granted in part and denied
in part these motions.
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In February 2019, class plaintiffs in the consolidated multi-district litigation filed a motion for class certification. In
March 2019, class plaintiffs filed a fourth amended consolidated class action complaint. In January 2022, Credit
Suisse entered into an agreement to settle all class action claims. The settlement remains subject to court approval.
The individual lawsuits are stayed pending a decision on plaintiffs’ motion for class certification.
Credit default swaps litigation
: In June 2017, Credit Suisse Group AG and affiliates, along with other financial
institutions, were named in a civil action filed in the SDNY by Tera Group, Inc. and related entities (Tera), alleging
violations of antitrust law in connection with the allegation that CDS dealers conspired to block Tera’s electronic
CDS trading platform from successfully entering the market. In July 2019, the SDNY granted in part and denied in
part defendants’ motion to dismiss. In January 2020, plaintiffs filed an amended complaint. In April 2020,
defendants filed a motion to dismiss. In August 2023, the court granted the motion, dismissing all claims with
prejudice.
Stock loan litigation
: Credit Suisse Group AG and certain of its affiliates, as well as other financial institutions, were
originally named in a number of civil lawsuits in the SDNY, certain of which are brought by class action plaintiffs
alleging that the defendants conspired to keep stock-loan trading in an over-the-counter market and collectively
boycotted certain trading platforms that sought to enter the market, and certain of which are brought by trading
platforms that sought to enter the market alleging that the defendants collectively boycotted the platforms. In
January 2022, Credit Suisse entered into an agreement to settle all class action claims. In February 2022, the court
entered an order granting preliminary approval to the agreement to settle all class action claims. The settlement
remains subject to final court approval.
In October 2021, in a consolidated civil litigation brought in the SDNY by entities that developed a trading platform
for stock loans that sought to enter the market, alleging that the defendants collectively boycotted the platform,
the court granted defendants’ motion to dismiss. In October 2021, plaintiffs filed a notice of appeal. In March 2023,
the Second Circuit affirmed the decision granting defendants’ motion to dismiss.
Odd-lot corporate bond litigation:
In April 2020, CSS LLC and other financial institutions were named in a putative
class action complaint filed in the SDNY, alleging a conspiracy among the financial institutions to boycott electronic
trading platforms and fix prices in the secondary market for odd-lot corporate bonds. In October 2021, the SDNY
granted defendants’ motion to dismiss. Plaintiffs have appealed.
5. ATA litigation
Since November 2014, a series of lawsuits have been filed against a number of banks, including Credit Suisse AG
and, in two instances, Credit Suisse AG, New York Branch, in the US District Court for the Eastern District of New
York (EDNY) and the SDNY alleging claims under the United States Anti-Terrorism Act (ATA) and the Justice Against
Sponsors of Terrorism Act. The plaintiffs in each of these lawsuits are, or are relatives of, victims of various terrorist
attacks in Iraq and allege a conspiracy and/or aiding and abetting based on allegations that various international
financial institutions, including the defendants, agreed to alter, falsify or omit information from payment messages
that involved Iranian parties for the express purpose of concealing the Iranian parties’ financial activities and
transactions from detection by US authorities. The lawsuits allege that this conduct has made it possible for Iran to
transfer funds to Hezbollah and other terrorist organizations actively engaged in harming US military personnel and
civilians. In January 2023, the United States Court of Appeals for the Second Circuit affirmed a September 2019
ruling by the EDNY granting defendants’ motion to dismiss the first filed lawsuit. In October 2023, the United States
Supreme Court denied plaintiffs’ petition for a writ of certiorari. Of the other seven cases, four are stayed, including
one that was dismissed as to Credit Suisse and most of the bank defendants prior to entry of the stay, and in three
the court has set a schedule for plaintiffs to file amended complaints, including two that were dismissed prior to
the court setting a schedule for plaintiffs to replead.
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6. Customer account matters
Several clients have claimed that a former relationship manager in Switzerland had exceeded his investment
authority in the management of their portfolios, resulting in excessive concentrations of certain exposures and
investment losses. Credit Suisse AG is investigating the claims, as well as transactions among the clients. Credit
Suisse AG filed a criminal complaint against the former relationship manager with the Geneva Prosecutor’s Office
upon which the prosecutor initiated a criminal investigation. Several clients of the former relationship manager also
filed criminal complaints with the Geneva Prosecutor’s Office. In February 2018, the former relationship manager
was sentenced to five years in prison by the Geneva criminal court for fraud, forgery and criminal mismanagement
and ordered to pay damages of approximately USD 130m. Several parties appealed the judgment. In June 2019,
the Criminal Court of Appeals of Geneva ruled in the appeal of the judgment against the former relationship
manager, upholding the main findings of the Geneva criminal court. Several parties appealed the decision to the
Swiss Federal Supreme Court. In February 2020, the Swiss Federal Supreme Court rendered its judgment on the
appeals, substantially confirming the findings of the Criminal Court of Appeals of Geneva.
Civil lawsuits have been initiated against Credit Suisse AG and/or certain affiliates in various jurisdictions, based on
the findings established in the criminal proceedings against the former relationship manager.
In Singapore, in the civil lawsuit brought against Credit Suisse Trust Limited, a Credit Suisse AG affiliate, in
May 2023, the Singapore International Commercial Court issued a first instance judgment finding for the plaintiffs
and directing the parties’ experts to agree on the amount of the damages award according to the calculation
method and parameters adopted by the court. As the parties’ experts were unable to agree on the amount of the
damages, following court directions, the parties filed their proposed draft orders with supporting documents in
August 2023. In September 2023, the court ruled that the damages under its May 2023 judgment are
USD 742.73m, excluding post-judgment interest. This figure does not exclude potential overlap with the Bermuda
proceedings against Credit Suisse Life (Bermuda) Ltd., which are currently being appealed. The court ordered the
parties to ensure that there shall be no double recovery in relation to this award and any sum recovered in the
Bermuda proceedings. Credit Suisse Trust Limited has appealed the judgment and has applied for a stay of execution
pending that appeal. On 2 November 2023, the court granted a stay of execution of its May 2023 judgment
pending appeal on the condition that damages awarded are paid into court deposit within 21 days.
In Bermuda, in the civil lawsuit brought against Credit Suisse Life (Bermuda) Ltd., a Credit Suisse AG affiliate, trial
took place in the Supreme Court of Bermuda in November and December 2021. The Supreme Court of Bermuda
issued a first instance judgment in March 2022, finding for the plaintiff. In May 2022, the Supreme Court of
Bermuda issued an order awarding damages of USD 607.35m to the plaintiff. In May 2022, Credit Suisse Life
(Bermuda) Ltd. appealed the decision to the Bermuda Court of Appeal. In July 2022, the Supreme Court of Bermuda
granted a stay of execution of its judgment pending appeal on the condition that damages awarded were paid into
an escrow account within 42 days, which condition was satisfied. In June 2023, the Bermuda Court of Appeal
issued its judgment confirming the award issued by the Supreme Court of Bermuda and upholding the Supreme
Court of Bermuda’s finding that Credit Suisse Life (Bermuda) Ltd. had breached its contractual and fiduciary duties,
but overturning the Supreme Court of Bermuda’s finding that Credit Suisse Life (Bermuda) Ltd. had made fraudulent
misrepresentations. In July 2023, Credit Suisse Life (Bermuda) Ltd. filed its notice of motion for leave to appeal to
the Judicial Committee of the Privy Council. In July 2023 Credit Suisse Life (Bermuda) Ltd. applied for a stay of
execution of the Bermuda Court of Appeal’s judgment pending the outcome of the appeal to the Judicial
Committee of the Privy Council on the condition that the damages awarded remain within the escrow account and
that interest be added to the escrow account calculated at the Bermuda statutory rate of 3.5%.
In Switzerland, civil lawsuits have commenced against Credit Suisse AG in the Court of First Instance of Geneva,
with statements of claim served in March 2023.
7. Mozambique matter
Credit Suisse has been subject to investigations by regulatory and enforcement authorities, as well as civil litigation,
regarding certain Credit Suisse entities’ arrangement of loan financing to Mozambique state enterprises, Proindicus
S.A. and Empresa Mocambiacana de Atum S.A. (EMATUM), a distribution to private investors of loan participation
notes (LPN) related to the EMATUM financing in September 2013, and certain Credit Suisse entities’ subsequent
role in arranging the exchange of those LPNs for Eurobonds issued by the Republic of Mozambique. In 2019, three
former Credit Suisse employees pleaded guilty in the EDNY to accepting improper personal benefits in connection
with financing transactions carried out with two Mozambique state enterprises.
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In October 2021, Credit Suisse reached settlements with the DOJ, the US Securities Exchange Commission (SEC),
the UK Financial Conduct Authority (FCA) and FINMA to resolve inquiries by these agencies. Credit Suisse Group
AG entered into a three-year Deferred Prosecution Agreement (DPA) with the DOJ in connection with the criminal
information charging Credit Suisse Group AG with conspiracy to commit wire fraud and consented to the entry of
a Cease and Desist Order by the SEC. Under the terms of the DPA, Credit Suisse Group AG will continue its
compliance enhancement and remediation efforts, report to the DOJ on those efforts for three years and undertake
additional measures as outlined in the DPA. If Credit Suisse Group AG adheres to the DPA’s conditions, the charges
will be dismissed at the end of the DPA’s three-year term. In addition, CSSEL entered into a Plea Agreement and
pleaded guilty to one count of conspiracy to violate the US federal wire fraud statute. CSSEL is bound by the same
compliance, remediation and reporting obligations as Credit Suisse Group AG under the DPA. Under the terms of
the SEC Cease and Desist Order, Credit Suisse paid a civil penalty, disgorgement and pre-judgment interest in
connection with violations of antifraud and other provisions of the US Securities Exchange Act of 1934 and the US
Securities Act of 1933. The total monetary sanctions paid to the DOJ and SEC, taking into account various credits
and offsets, was approximately USD 275m. Under the terms of the resolution with the DOJ, Credit Suisse was
required to pay restitution to any eligible investors in the 2016 Eurobonds issued by the Republic of Mozambique.
At a July 2022 hearing, the EDNY approved the joint restitution proposal of the DOJ and Credit Suisse, under which
Credit Suisse paid USD 22.6m in restitution to eligible investors.
In the resolution with the FCA, CSSEL, Credit Suisse International (CSI) and Credit Suisse AG, London Branch agreed
that, in respect of these transactions with Mozambique, its UK operations had failed to conduct business with due
skill, care and diligence and to take reasonable care to organize and control its affairs responsibly and effectively,
with adequate risk management systems. Credit Suisse paid a penalty of approximately USD 200m and has also
agreed with the FCA to forgive USD 200m of debt owed to Credit Suisse by Mozambique.
FINMA also entered a decree announcing the conclusion of its enforcement proceeding, finding that Credit Suisse
AG and Credit Suisse (Schweiz) AG violated the duty to file a suspicious activity report in Switzerland, and Credit
Suisse Group AG did not adequately manage and address the risks arising from specific sovereign lending and
related securities transactions, and ordering the bank to remediate certain deficiencies. FINMA also arranged for
certain existing transactions to be reviewed by the same independent third party on the basis of specific risk criteria,
and required enhanced disclosure of certain sovereign transactions until all remedial measures have been
satisfactorily implemented. Credit Suisse has completed implementation of the measures required under the FINMA
decree. An independent third party appointed by FINMA is reviewing the implementation and effectiveness of these
measures.
In February 2019, certain Credit Suisse entities, three former employees, and several other unrelated entities were
sued in the English High Court by the Republic of Mozambique. In January 2020, the Credit Suisse entities filed
their defense and subsequently filed cross claims against several entities controlled by Privinvest Holding SAL
(Privinvest) that acted as the project contractor, Iskander Safa, the owner of Privinvest, and several Mozambique
officials. The Republic of Mozambique seeks (i) a declaration that the sovereign guarantee issued in connection
with the ProIndicus loan syndication arranged and funded, in part, by a Credit Suisse subsidiary is void and (ii)
damages alleged to have arisen in connection with the transactions involving ProIndicus and EMATUM, and a
transaction in which Credit Suisse had no involvement with Mozambique Asset Management S.A.
In addition, several of the banks that participated in the ProIndicus loan syndicate have brought claims against
Credit Suisse entities seeking a declaration that Credit Suisse is liable to compensate them for alleged losses suffered
as a result of any invalidity of the sovereign guarantee or damages stemming from the alleged loss suffered due to
their reliance on representations made by Credit Suisse to the syndicate lenders.
In January 2021, Privinvest entities filed a cross claim against the Credit Suisse entities (as well as the three former
Credit Suisse employees and various Mozambican officials) seeking an indemnity and/or contribution in the event
that the contractor is found liable to the Republic of Mozambique.
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In February 2022, Privinvest and Iskandar Safa brought a defamation claim in a Lebanese court against CSSEL and
Credit Suisse Group AG. The lawsuit alleges damage to the claimants’ professional reputation in Lebanon due to
statements that were allegedly made by Credit Suisse in documents relating to the October 2021 settlements with
global regulators. In November 2022, a Privinvest employee who was the lead negotiator on behalf of Privinvest
entities in relation to the Mozambique transactions, also brought a defamation claim in a Lebanese court against
Credit Suisse Group AG and CSSEL.
In September 2023, Credit Suisse, the Republic of Mozambique, and certain of the lenders in the ProIndicus
syndicate entered into a settlement agreement. In November 2023, Credit Suisse, Privinvest and Iskander Safa
entered into an agreement to settle all claims among them in the English High Court and in Lebanon.
8. Cross-border private banking matters
Credit Suisse offices in various locations, including the UK, the Netherlands, France and Belgium, have been
contacted by regulatory and law enforcement authorities that are seeking records and information concerning
investigations into Credit Suisse’s historical private banking services on a cross-border basis and in part through its
local branches and banks. Credit Suisse has conducted a review of these issues, the UK and French aspects of which
have been closed, and is continuing to cooperate with the authorities.
9. ETN-related litigation
XIV litigation:
Since March 2018, three class action complaints were filed in the SDNY on behalf of a putative class
of purchasers of VelocityShares Daily Inverse VIX Short Term Exchange Traded Notes linked to the S&P 500 VIX
Short-Term Futures Index due December 4, 2030 (XIV ETNs). In August 2018, plaintiffs filed a consolidated amended
class action complaint, naming Credit Suisse Group AG and certain affiliates and executives, which asserts claims
for violations of Sections 9(a)(4), 9(f), 10(b) and 20(a) of the Exchange Act and Rule 10b-5 thereunder and Sections
11 and 15 of the US Securities Act of 1933 and alleges that the defendants are responsible for losses to investors
following a decline in the value of XIV ETNs in February 2018. Defendants moved to dismiss the amended complaint
in November 2018. In September 2019, the SDNY granted defendants’ motion to dismiss and dismissed with
prejudice all claims against the defendants. In October 2019, plaintiffs filed a notice of appeal. In April 2021, the
Second Circuit issued an order affirming in part and vacating in part the SDNY’s September 2019 decision granting
defendants’ motion to dismiss with prejudice. In July 2022, plaintiffs filed a motion for class certification. In March
2023, the court denied plaintiffs’ motion to certify two of their three alleged classes and granted plaintiffs’ motion
to certify their third alleged class. On 30 March 2023, defendants moved for reconsideration and filed a petition
for permission to appeal the court’s class certification decision to the Second Circuit. In April 2023, plaintiffs filed
a motion seeking leave to amend their complaint. In May 2023, plaintiffs filed a renewed motion for class
certification.
DGAZ litigation:
In January 2022, Credit Suisse AG was named in a class action complaint filed in the SDNY brought
on behalf of a putative class of short sellers of VelocityShares 3x Inverse Natural Gas Exchange Traded Notes linked
to the S&P GSCI Natural Gas Index ER due February 9, 2032 (DGAZ ETNs). The complaint asserts claims for violations
of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and alleges that Credit Suisse is responsible for
losses suffered by short sellers following a June 2020 announcement that Credit Suisse would delist and suspend
further issuances of the DGAZ ETNs. In July 2022, Credit Suisse AG filed a motion to dismiss. In March 2023, the
court granted Credit Suisse AG’s motion to dismiss. In May 2023, the court entered an order dismissing the case
with prejudice. In June 2023, plaintiff filed a notice of appeal.
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10. Bulgarian former clients matter
Credit Suisse AG has been responding to an investigation by the Swiss Office of the Attorney General (SOAG)
concerning the diligence and controls applied to a historical relationship with Bulgarian former clients who are
alleged to have laundered funds through Credit Suisse AG accounts. In December 2020, the SOAG brought charges
against Credit Suisse AG and other parties. Credit Suisse AG believes its diligence and controls complied with
applicable legal requirements and intends to defend itself vigorously. The trial in the Swiss Federal Criminal Court
took place in the first quarter of 2022. In June 2022, Credit Suisse AG was convicted in the Swiss Federal Criminal
Court of certain historical organizational inadequacies in its anti-money laundering framework and ordered to pay
a fine of CHF 2m. In addition, the court seized certain client assets in the amount of approximately CHF 12m and
ordered Credit Suisse AG to pay a compensatory claim in the amount of approximately CHF 19m. In July 2022,
Credit Suisse AG appealed the decision to the Swiss Federal Court of Appeals.
11. SCFF
Credit Suisse has received requests for documents and information in connection with inquiries, investigations,
enforcement and other actions relating to the supply chain finance funds (SCFF) matter by FINMA, the FCA and
other regulatory and governmental agencies. The Luxembourg Commission de Surveillance du Secteur Financier is
reviewing the matter through a third party. Credit Suisse is cooperating with these authorities.
In February 2023, FINMA announced the conclusion of its enforcement proceedings against Credit Suisse in
connection with the SCFF matter. In its order, FINMA reported that Credit Suisse had seriously breached applicable
Swiss supervisory laws in this context with regard to risk management and appropriate operational structures. While
FINMA recognized that Credit Suisse has already taken extensive organizational measures based on its own
investigation into the SCFF matter, particularly to strengthen its governance and control processes, and FINMA is
supportive of these measures, the regulator has ordered certain additional remedial measures. These include a
requirement that the most important (approximately 500) business relationships must be reviewed periodically and
holistically at the Executive Board level, in particular for counterparty risks, and that Credit Suisse must set up a
document defining the responsibilities of approximately 600 of its highest-ranking managers. FINMA will appoint
an audit officer to assess compliance with these supervisory measures. Separate from the enforcement proceeding
regarding Credit Suisse, FINMA has opened four enforcement proceedings against former managers of Credit
Suisse.
In May 2023, FINMA opened an enforcement proceeding against Credit Suisse in order to confirm compliance with
supervisory requirements in response to inquiries from FINMA’s enforcement division in the SCFF matter.
The Attorney General of the Canton of Zürich has initiated a criminal procedure in connection with the SCFF matter.
In such procedure, while certain former and active Credit Suisse employees, among others, have been named as
accused persons, Credit Suisse itself is not a party to the procedure.
Certain civil actions have been filed by fund investors and other parties against Credit Suisse and/or certain officers
and directors in various jurisdictions, which make allegations including mis-selling and breaches of duties of care,
diligence and other fiduciary duties. Certain investors and other private parties have also filed criminal complaints
against Credit Suisse and other parties in connection with this matter.
12. Archegos
Credit Suisse has received requests for documents and information in connection with inquiries, investigations
and/or actions relating to Credit Suisse’s relationship with Archegos Capital Management (Archegos), including
from FINMA (assisted by a third party appointed by FINMA), the DOJ, the SEC, the US Federal Reserve, the US
Commodity Futures Trading Commission (CFTC), the US Senate Banking Committee, the Prudential Regulation
Authority (PRA), the FCA, COMCO, the Hong Kong Competition Commission and other regulatory and
governmental agencies. Credit Suisse is cooperating with the authorities in these matters.
In July 2023, the US Federal Reserve and the PRA announced resolutions of their investigations of Credit Suisse’s
relationship with Archegos.
UBS Group AG, Credit Suisse AG, Credit Suisse Holdings (USA) Inc., and Credit Suisse AG, New York Branch entered
into an Order to Cease and Desist with the Board of Governors of the Federal Reserve System. Under the terms of
the order, Credit Suisse paid a civil money penalty of USD 269m and agreed to undertake certain remedial measures
relating to counterparty credit risk management, liquidity risk management and non-financial risk management, as
well as enhancements to board oversight and governance.
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CSI and CSSEL entered into a settlement agreement with the PRA providing for the resolution of the PRA’s
investigation, following which the PRA published a Final Notice imposing a financial penalty of GBP 87m on CSI
and CSSEL for breaches of various of the PRA’s Fundamental Rules.
FINMA also entered a decree dated 14 July 2023 announcing the conclusion of its enforcement proceeding, finding
that Credit Suisse had seriously violated financial market law in connection with its business relationship with
Archegos and ordering remedial measures directed at Credit Suisse AG and UBS Group AG, as the legal successor
to Credit Suisse Group AG. These include a requirement that UBS Group AG apply its restrictions on its own
positions relating to individual clients throughout the financial group, as well as adjustments to the compensation
system of the entire financial group to provide for bonus allocation criteria that take into account risk appetite.
FINMA also announced it has opened enforcement proceedings against a former Credit Suisse manager in
connection with this matter.
In April 2021, Credit Suisse Group AG and certain current and former executives were named in a putative class
action complaint filed in the SDNY by a holder of Credit Suisse American Depositary Receipts, asserting claims for
violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 thereunder, alleging that defendants
violated US securities laws by making material misrepresentations and omissions regarding Credit Suisse’s risk
management practices, including with respect to the Archegos matter. In September 2022, the parties reached an
agreement to settle all claims. In December 2022 and May 2023, respectively, the court entered an order granting
preliminary and final approval to the parties’ agreement to settle all claims.
Additional civil actions relating to Credit Suisse’s relationship with Archegos have been filed against Credit Suisse
and/or certain officers and directors, including claims for breaches of fiduciary duties.
13. Credit Suisse financial disclosures
Three putative securities class action complaints were filed in the US District Court for the District of New Jersey
(DNJ) against Credit Suisse Group AG and current and former directors, officers, and executives. In July 2023, the
DNJ transferred the cases to the SDNY, and a consolidated amended complaint was filed in September 2023. The
amended complaint alleges that defendants made misleading statements regarding: (i) customer outflows in late
2022; (ii) the adequacy of Credit Suisse’s financial reporting controls; and (iii) the adequacy of Credit Suisse’s risk
management processes, and includes allegations relating to Credit Suisse Group AG’s merger with UBS Group AG.
In October 2023, an additional securities class action complaint was filed in the SDNY against Credit Suisse Group
AG and certain individuals who served as Credit Suisse Group directors, officers, and executives, making similar
allegations, on behalf of United States purchasers of Credit Suisse additional tier 1 bonds between 18 February
2021 and 20 March 2023.
Credit Suisse has received requests for documents and information from regulatory and governmental agencies in
connection with inquiries, investigations and/or actions relating to these matters, as well as for other statements
regarding Credit Suisse’s financial condition, including from the SEC, the DOJ and FINMA. Credit Suisse is
cooperating with the authorities in these matters.
14. Merger-related litigation
In May and June 2023, certain Credit Suisse AG affiliates, as well as current and former directors, officers, and
executives were named in two putative class action complaints in the SDNY alleging that a series of scandals and
misconduct led to a loss of shareholder value and, eventually, Credit Suisse Group AG’s merger with UBS Group
AG. KPMG and KPMG employees are also named as defendants. The cases have been consolidated, and an
amended complaint was filed in September 2023. The complaints allege breaches of fiduciary duty under Swiss
law, and civil RICO claims under United States federal law.
In June 2023, a putative class action complaint was filed in the EDNY against various former Credit Suisse directors,
officers, and executives on behalf of a purported class of those who held Credit Suisse additional tier 1 capital notes
between 12 January 2023 and 19 March 2023. In August 2023, the case was transferred to the SDNY, and an
amended complaint was filed later in the month. The complaint asserts direct claims under Swiss law.
UBS Group third quarter 2023 report |
Significant regulated subsidiary and sub-group information 108
Significant regulated subsidiary
and sub-group information
Unaudited
Financial and regulatory key figures for our significant regulated
subsidiaries and sub-groups
UBS AG
(consolidated)
UBS AG
(standalone)
UBS Switzerland AG
(standalone)
UBS Europe SE
(consolidated)
UBS Americas Holding
LLC
(consolidated)
All values in million, except where indicated
USD
USD
CHF
EUR
USD
Financial and regulatory requirements
IFRS
Swiss SRB rules
Swiss GAAP
Swiss SRB rules
(phase-in)
Swiss GAAP
Swiss SRB rules
IFRS
EU regulatory rules
US GAAP
US Basel III rules
As of or for the quarter ended
30.9.23
30.6.23
30.9.23
30.6.23
30.9.23
30.6.23
30.9.23
30.6.23
30.9.23
30.6.23
Financial information
1
Income statement
Total operating income
2
8,322
8,453
1,898
7,118
2,419
2,524
323
264
3,298
3,136
Total operating expenses
7,047
6,997
2,299
5,664
1,481
1,434
217
189
3,138
3,287
Operating profit / (loss) before tax
1,275
1,456
(400)
1,454
938
1,090
106
75
160
(151)
Net profit / (loss)
936
1,124
(500)
1,270
763
891
77
58
50
(174)
Balance sheet
Total assets
1,097,536
1,096,318
534,100
530,893
316,715
313,565
49,893
49,389
196,497
195,827
Total liabilities
1,044,355
1,043,044
481,243
477,536
301,375
298,987
45,844
45,892
172,158
171,539
Total equity
53,181
53,274
52,857
53,357
15,340
14,578
4,049
3,497
24,339
24,288
Capital
3
Common equity tier 1 capital
2,651
2,438
10,348
10,275
Additional tier 1 capital
600
600
5,085
5,085
Total going concern capital / Tier 1 capital
3,251
3,038
15,433
15,361
Tier 2 capital
214
220
Total capital
3,251
3,038
15,647
15,581
Total gone concern loss-absorbing capacity
4
2,525
4
7,400
5
7,400
5
Total loss-absorbing capacity
5,785
5,563
22,833
5
22,761
5
Risk-weighted assets and leverage
ratio denominator
3
Risk-weighted assets
12,374
11,118
72,002
70,135
Leverage ratio denominator
47,330
49,351
185,049
186,340
Supplementary leverage ratio denominator
206,753
207,357
Capital and leverage ratios (%)
3
Common equity tier 1 capital ratio
Going concern capital ratio / Tier 1 capital ratio
Total capital ratio
Total loss-absorbing capacity ratio
Tier 1 leverage ratio
Supplementary tier 1 leverage ratio
Going concern leverage ratio
Total loss-absorbing capacity leverage ratio
Gone concern capital coverage ratio
Liquidity coverage ratio
3
High-quality liquid assets (bn)
230.9
224.8
109.2
97.7
75.1
77.6
19.4
20.0
28.8
29.2
Net cash outflows (bn)
131.0
131.5
48.8
47.1
52.8
54.5
13.1
13.2
18.5
19.5
Liquidity coverage ratio (%)
176.6
170.9
225.9
6
208.0
142.2
7
142.4
148.1
152.4
155.8
150.0
Net stable funding ratio
3
Total available stable funding (bn)
568.5
564.5
263.7
253.9
221.9
219.7
14.4
13.1
101.8
100.7
Total required stable funding (bn)
467.1
477.6
279.2
283.9
165.5
163.0
10.9
9.1
78.8
79.6
Net stable funding ratio (%)
121.7
118.2
94.5
8
89.4
134.0
8
134.8
132.3
144.9
129.1
126.5
Other
Joint and several liability between UBS AG and
UBS Switzerland AG (bn)
9
3
3
1 The financial information disclosed does not represent financial statements under the respective GAAP / IFRS. 2 The total operating income includes credit loss expense or release. 3 Refer to the 30 September
2023 Pillar 3 Report, available under “Pillar 3 disclosures” at ubs.com/investors, for more information. 4 Consists of positions that meet the conditions laid down in Art. 72a–b of the Capital Requirements Regulation
(CRR) II with regard to contractual, structural or legal subordination. 5 Consists of eligible long-term debt that meets the conditions specified in 12 CFR 252.162 of the final TLAC rules. Total loss-absorbing capacity
is the sum of tier 1 capital and eligible long-term debt. 6 In the third quarter of 2023, the liquidity coverage ratio (the LCR) of UBS AG was 225.9%, remaining above the prudential requirements communicated by
FINMA. 7 In the third quarter of 2023, the LCR of UBS Switzerland AG, which is a Swiss SRB, was 142.2%, remaining above the prudential requirement communicated by FINMA in connection with the Swiss
Emergency Plan. 8 In accordance with Art. 17h para. 3 and 4 of the Liquidity Ordinance, UBS AG standalone is required to maintain a minimum NSFR of at least 80% without taking into account excess funding of
UBS Switzerland AG and 100% after taking into account such excess funding. 9 Refer to the “Capital, liquidity and funding, and balance sheet” section of our Annual Report 2022 for more information about the
joint and several liability. Under certain circumstances, the Swiss Banking Act and FINMA’s Banking Insolvency Ordinance authorize FINMA to modify, extinguish or convert to common equity liabilities of a bank in
connection with a resolution or insolvency of such bank.
UBS Group third quarter 2023 report |
Significant regulated subsidiary and sub-group information 109
Credit Suisse AG
(consolidated)
Credit Suisse AG
(standalone)
Credit Suisse
(Schweiz) AG
(consolidated)
Credit Suisse
(Schweiz) AG
(standalone)
Credit Suisse
International
(standalone)
Credit Suisse
Holdings (USA), Inc.
(consolidated)
All values in million, except where
indicated
CHF
CHF
CHF
CHF
USD
USD
Financial and regulatory requirements
US GAAP
Swiss SRB rules
Swiss GAAP
Swiss SRB rules
(phase-in)
1
US GAAP
Swiss SRB rules
Swiss GAAP
Swiss SRB rules
1
IFRS
UK regulatory rules
US GAAP
US Basel III rules
As of or for the quarter ended
30.9.23
30.6.23
30.9.23
30.6.23
30.9.23
30.6.23
30.9.23
30.6.23
30.9.23
30.6.23
30.9.23
30.6.23
2
Financial information
3
Income statement
Total operating income
4
708
(663)
538
88
Total operating expenses
4,171
8,211
1,418
1,459
Operating profit / (loss) before tax
(3,463)
(8,874)
3,019
(3,833)
Net profit / (loss)
5
(3,539)
(9,329)
2,717
(3,948)
Balance sheet
Total assets
460,623
483,735
279,791
315,509
Total liabilities
417,948
437,602
255,752
294,186
Total equity
42,674
46,133
24,040
21,322
Capital
6
Common equity tier 1 capital
42,793
45,542
30,935
28,394
13,015
12,958
11,918
11,884
13,244
14,589
9,756
10,758
Additional tier 1 capital
469
463
469
463
3,100
3,100
3,100
3,100
1,200
1,200
523
523
Total going concern capital / Tier 1 capital
43,263
46,004
31,405
28,856
16,115
16,058
15,018
14,984
14,444
15,789
10,279
11,281
Tier 2 capital
3
3
67
67
Total capital
43,263
46,004
31,405
28,856
16,115
16,058
15,018
14,984
14,447
15,792
10,346
11,348
Total gone concern loss-absorbing
capacity
39,230
39,375
39,177
39,325
9,025
9,300
9,025
9,300
4,586
4,586
3,000
3,000
Total loss-absorbing capacity
82,492
85,379
70,581
68,182
25,140
25,358
24,043
24,284
19,033
20,378
13,279
14,281
Risk-weighted assets and
leverage ratio denominator
6
Risk-weighted assets
205,052
217,102
198,944
199,504
87,838
88,130
86,893
87,414
42,012
48,633
16,841
20,480
Leverage ratio denominator
555,398
585,681
317,772
362,074
257,419
256,015
255,147
253,987
89,344
98,366
33,906
42,802
Supplementary leverage ratio denominator
40,848
51,433
Capital and leverage ratios (%)
6
Common equity tier 1 capital ratio
20.9
21.0
15.6
14.2
14.8
14.7
13.7
13.6
31.5
30.0
57.9
52.5
Going concern capital ratio / Tier 1 capital
ratio
21.1
21.2
15.8
14.5
18.3
18.2
17.3
17.1
34.4
32.5
61.0
55.1
Total capital ratio
21.1
21.2
15.8
14.5
18.3
18.2
17.3
17.1
34.4
32.5
61.4
55.4
Total loss-absorbing capacity ratio
40.2
39.3
28.6
28.8
27.7
27.8
45.3
41.9
78.8
69.7
Tier 1 leverage ratio
7.7
7.8
9.7
7.8
5.1
5.1
4.7
4.7
16.2
16.1
30.3
26.4
Supplementary tier 1 leverage ratio
16.2
16.1
25.2
21.9
Going concern leverage ratio
7.8
7.9
9.9
8.0
6.3
6.3
5.9
5.9
16.2
16.1
Total loss-absorbing capacity leverage
ratio
14.9
14.6
9.8
9.9
9.4
9.6
21.3
20.7
39.0
33.4
Gone concern capital coverage ratio
187.8
178.1
141.7
134.5
122.0
125.3
123.4
126.4
566.3
523.8
Liquidity coverage ratio
6
High-quality liquid assets (bn)
122.3
131.7
50.7
63.2
49.9
42.9
49.9
42.9
15.4
20.1
16.4
17.0
Net cash outflows (bn)
53.8
51.3
14.4
16.2
35.8
30.6
36.2
31.0
8.1
11.5
5.0
6.3
Liquidity coverage ratio (%)
227.2
7
256.7
352.5
8
390.9
139.2
9
140.2
137.6
10
138.2
221.0
197.0
331.3
293.0
Net stable funding ratio
6
Total available stable funding (bn)
292.5
295.7
171.1
168.3
133.3
135.1
131.4
133.5
34.6
39.8
20.8
25.0
Total required stable funding (bn)
235.7
246.2
154.5
168.1
122.3
123.9
120.1
121.7
27.4
31.1
9.0
11.4
Net stable funding ratio (%)
124.1
120.1
110.8
11
100.1
11
109.0
109.0
109.4
11
109.7
11
126.1
128.1
232.2
219.6
Other
Joint and several liability between Credit
Suisse AG standalone and Credit Suisse
(Schweiz) AG standalone (bn)
0.6
0.6
1 Swiss GAAP statutory accounting rules for banks allow the use of certain US GAAP accounting rules, such as current expected credit loss (the CECL) requirements. 2 Comparative information has been aligned
with Credit Suisse Holdings (USA), Inc. standalone’s final second quarter of 2023 financial statements. 3 The financial information disclosed does not represent financial statements under the respective GAAP /
IFRS. 4 The total operating income includes credit loss expense or release. 5 The net profit / (loss) excludes net income / (loss) attributable to non-controlling interests. 6 Refer to the 30 September 2023 Pillar 3
Report, available under “Pillar 3 disclosures” at ubs.com/investors, for more information. 7 In the third quarter of 2023, the liquidity coverage ratio (the LCR) of Credit Suisse AG consolidated was 227.2%, remaining
above the prudential requirements communicated by FINMA. 8 In the third quarter of 2023, the LCR of Credit Suisse AG standalone was 352.5%, remaining above the prudential requirements communicated by
FINMA. 9 In the third quarter of 2023, the LCR of Credit Suisse (Schweiz) AG consolidated was 139.2%, remaining above the prudential requirements communicated by FINMA. 10 In the third quarter of 2023,
the LCR of Credit Suisse (Schweiz) AG standalone was 137.6%, remaining above the prudential requirements communicated by FINMA. 11 Based on the Liquidity Ordinance, Credit Suisse AG standalone is allowed
to fulfill the minimum NSFR of 100% by taking into consideration any excess funding of Credit Suisse (Schweiz) AG standalone, and Credit Suisse AG standalone has an NSFR requirement of at least 80% without
taking into consideration any such excess funding. Credit Suisse (Schweiz) AG must always fulfill the NSFR of at least 100% on a standalone basis.
UBS Group third quarter 2023 report |
Significant regulated subsidiary and sub-group information 110
UBS Group AG is a holding company and conducts substantially all of its operations through UBS AG, Credit Suisse
AG and subsidiaries thereof. UBS Group AG, UBS AG and Credit Suisse AG have contributed a significant portion
of their respective capital to, and provide substantial liquidity to, such subsidiaries. Many of these subsidiaries are
subject to regulations requiring compliance with minimum capital, liquidity and similar requirements. The tables in
this section summarize the regulatory capital components and capital ratios of our significant regulated subsidiaries
and sub-groups determined under the regulatory framework of each subsidiary’s or sub-group’s home jurisdiction.
Supervisory authorities generally have discretion to impose higher requirements or to otherwise limit the activities
of subsidiaries. Supervisory authorities also may require entities to measure capital and leverage ratios on a stressed
basis and may limit the ability of an entity to engage in new activities or take capital actions based on the results of
those tests.
In June 2023, the Federal Reserve Board released the results of its 2023 Dodd–Frank Act Stress Test (DFAST). UBS’s
US intermediate holding company, UBS Americas Holding LLC, and Credit Suisse’s intermediate holding, Credit
Suisse Holdings (USA), Inc., exceeded the minimum capital requirements under the severely adverse scenario.
Following the completion of the annual DFAST and the Comprehensive Capital Analysis and Review (CCAR), UBS
Americas Holding LLC was assigned a stress capital buffer (an SCB) of 9.1% (previously 4.8%) under the SCB rule
as of 1 October 2023, resulting in a total common equity tier 1 (CET1) capital requirement of 13.6%. Credit Suisse
Holdings (USA), Inc. was assigned an SCB of 7.2% (previously 9.0%), resulting in a total CET1 capital requirement
of 11.7%.
Additional information on the above entities is provided in the 30 September 2023 Pillar 3 report, which is available
under “Pillar 3 disclosures” at
ubs.com/investors
.
UBS Group third quarter 2023 report |
Appendix 111
Appendix
Alternative performance measures
Alternative performance measures
An alternative performance measure (an APM) is a financial measure of historical or future financial performance,
financial position or cash flows other than a financial measure defined or specified in the applicable recognized
accounting standards or in other applicable regulations. A number of APMs are reported in the discussion of the
financial and operating performance of the external reports (annual, quarterly and other reports). APMs are used
to provide a more complete picture of operating performance and to reflect management’s view of the fundamental
drivers of the business results. A definition of each APM, the method used to calculate it and the information
content are presented in alphabetical order in the table below. These APMs may qualify as non-GAAP measures as
defined by US Securities and Exchange Commission (SEC) regulations.
APM label
Calculation
Information content
Active Digital Banking clients in
Corporate & Institutional Clients (%)
– Personal & Corporate Banking
Calculated as the average number of active clients for
each month in the relevant period divided by the
average number of total clients. “Clients” refers to
the number of unique business relationships or legal
entities operated by Corporate & Institutional Clients,
excluding clients that do not have an account, mono-
product clients and clients that have defaulted on
loans or credit facilities. At the end of each month,
any client that has logged on at least once in that
month is determined to be “active” (a log-in time
stamp is allocated to all business relationship numbers
or per legal entity in a digital banking contract).
This measure provides information about the
proportion of active Digital Banking clients in the total
number of UBS clients (within the aforementioned
meaning) which are serviced by Corporate &
Institutional Clients.
Active Digital Banking clients in
Personal Banking (%)
– Personal & Corporate Banking
Calculated as the average number of active clients for
each month in the relevant period divided by the
average number of total clients. “Clients” refers to
the number of unique business relationships operated
by Personal Banking, excluding persons under the age
of 15, clients who do not have a private account,
clients domiciled outside Switzerland and clients who
have defaulted on loans or credit facilities. At the end
of each month, any client that has logged on at least
once in that month is determined to be “active” (a
log-in time stamp is allocated to all business
relationship numbers in a digital banking contract).
This measure provides information about the
proportion of active Digital Banking clients in the total
number of UBS clients (within the aforementioned
meaning) who are serviced by Personal Banking.
Active Mobile Banking clients in
Personal Banking (%)
– Personal & Corporate Banking
Calculated as the average number of active clients for
each month in the relevant period divided by the
average number of total clients. “Clients” refers to
the number of unique business relationships operated
by Personal Banking, excluding persons under the age
of 15, clients who do not have a private account,
clients domiciled outside Switzerland and clients who
have defaulted on loans or credit facilities. At the end
of each month, any client that has logged on via the
mobile app at least once in that month is determined
to be “active” (a log-in time stamp is allocated to all
business relationship numbers in a digital banking
contract).
This measure provides information about the
proportion of active Mobile Banking clients in the
total number of UBS clients (within the
aforementioned meaning) who are serviced by
Personal Banking.
Cost / income ratio (%)
Calculated as operating expenses divided by total
revenues.
This measure provides information about the
efficiency of the business by comparing operating
expenses with gross income.
Fee and trading income for Corporate &
Institutional Clients (USD and CHF)
– Personal & Corporate Banking
Calculated as the total of recurring net fee and
transaction-based income for Corporate &
Institutional Clients.
This measure provides information about the amount
of fee and trading income for Corporate &
Institutional Clients.
UBS Group third quarter 2023 report |
Appendix 112
APM label
Calculation
Information content
Fee-pool-comparable revenues (USD)
– the Investment Bank
Calculated as the total of revenues from: merger-and-
acquisition-related transactions; Equity Capital
Markets, excluding derivatives; Leveraged Capital
Markets, excluding the impact of mark-to-market
movements on loan portfolios; and Debt Capital
Markets, excluding revenues related to debt
underwriting of UBS instruments.
This measure provides information about the amount
of revenues in the Investment Bank that are
comparable with the relevant global fee pools.
Gross margin on invested assets (bps)
– Asset Management
Calculated as total revenues (annualized as applicable)
divided by average invested assets.
This measure provides information about the total
revenues of the business in relation to invested assets.
Impaired loan portfolio as a percentage
of total loan portfolio, gross (%)
– Global Wealth Management,
Personal & Corporate Banking
Calculated as impaired loan portfolio divided by total
gross loan portfolio.
This measure provides information about the
proportion of impaired loan portfolio in the total gross
loan portfolio.
Integration-related expenses (USD)
Generally include costs of internal staff and
contractors substantially dedicated to integration
activities, retention awards, redundancy costs,
incremental expenses from the shortening of useful
lives of property, equipment and software, and
impairment charges relating to these assets.
Classification as integration-related expenses does not
affect the timing of recognition and measurement of
those expenses or the presentation thereof in the
income statement. Integration-related expenses
incurred by Credit Suisse also included expenses
associated with restructuring programs that existed
prior to the acquisition.
This measure provides information about expenses
that are temporary, incremental and directly related to
the integration of Credit Suisse into UBS.
Invested assets (USD and CHF)
– Global Wealth Management,
Personal & Corporate Banking,
Asset Management
Calculated as the sum of managed fund assets,
managed institutional assets, discretionary and
advisory wealth management portfolios, fiduciary
deposits, time deposits, savings accounts, and wealth
management securities or brokerage accounts.
This measure provides information about the volume
of client assets managed by or deposited with UBS for
investment purposes.
Investment products for Personal
Banking (USD and CHF)
– Personal & Corporate Banking
Calculated as the sum of investment funds (including
UBS Vitainvest third-pillar pension funds, as well as
money market funds), mandates and third-party life
insurance operated in Personal Banking.
This measure provides information about the volume
of investment funds (including UBS Vitainvest third-
pillar pension funds, as well as money market funds),
mandates and third-party life insurance operated in
Personal Banking.
Net interest margin (bps)
– Personal & Corporate Banking
Calculated as net interest income (annualized as
applicable) divided by average loans.
This measure provides information about the
profitability of the business by calculating the
difference between the price charged for lending and
the cost of funding, relative to loan value.
Net new investment products for
Personal Banking (USD and CHF)
– Personal & Corporate Banking
Calculated as the net amount of inflows and outflows
of investment products during a specific period.
This measure provides information about the
development of investment products during a specific
period as a result of net new investment product
flows.
Net new money (USD)
– Global Wealth Management,
Asset Management
Calculated as the net amount of inflows and outflows
of invested assets (as defined in UBS policy) recorded
during a specific period. Excluded from the calculation
are movements due to market performance, foreign
exchange translation, dividends, interest and fees, as
well as the effects on invested assets of strategic
decisions by UBS to exit markets or services. Net new
money is not measured for Personal & Corporate
Banking.
This measure provides information about the
development of invested assets during a specific
period as a result of net new money flows.
Net new money growth rate (%)
– Global Wealth Management
Calculated as the net amount of inflows and outflows
of invested assets (as defined in UBS policy) recorded
during a specific period (annualized as applicable)
divided by total invested assets at the beginning of
the period.
This measure provides information about the growth
of invested assets during a specific period as a result
of net new money flows.
Net profit growth (%)
Calculated as the change in net profit attributable to
shareholders from continuing operations between
current and comparison periods divided by net profit
attributable to shareholders from continuing
operations of the comparison period.
This measure provides information about profit
growth since the comparison period.
Operating expenses (underlying)
(USD)
Calculated by adjusting operating expenses as
reported in accordance with International Financial
Reporting Standards (IFRS) for items that
management believes are not representative of the
underlying performance of the businesses.
›
Refer to the “Group performance” section of this
report for more information
This measure provides information about the amount
of operating expenses, while excluding items that
management believes are not representative of the
underlying performance of the businesses.
UBS Group third quarter 2023 report |
Appendix 113
APM label
Calculation
Information content
Operating profit / (loss) before tax
(underlying) (USD)
Calculated by adjusting operating profit / (loss) before
tax as reported in accordance with International
Financial Reporting Standards (IFRS) for items that
management believes are not representative of the
underlying performance of the businesses.
›
Refer to the “Group performance” section of this
report for more information
This measure provides information about the amount
of operating profit / (loss) before tax, while excluding
items that management believes are not
representative of the underlying performance of the
businesses.
Pre-tax profit growth (%)
– Global Wealth Management,
Personal & Corporate Banking,
Asset Management,
the Investment Bank
Calculated as the change in net profit before tax
attributable to shareholders from continuing
operations between current and comparison periods
divided by net profit before tax attributable to
shareholders from continuing operations of the
comparison period.
This measure provides information about pre-tax
profit growth since the comparison period.
Pre-tax profit growth (underlying)(%)
– Global Wealth Management,
Personal & Corporate Banking,
Asset Management,
the Investment Bank
Calculated as the change in net profit before tax
attributable to shareholders from continuing
operations between current and comparison periods
divided by net profit before tax attributable to
shareholders from continuing operations of the
comparison period. Net profit before tax attributable
to shareholders from continuing operations excludes
items that management believes are not
representative of the underlying performance of the
businesses and also excludes related tax impact.
This measure provides information about pre-tax
profit growth since the comparison period, while
excluding items that management believes are not
representative of the underlying performance of the
businesses.
Recurring net fee income
(USD and CHF)
– Global Wealth Management,
Personal & Corporate Banking
Calculated as the total of fees for services provided on
an ongoing basis, such as portfolio management fees,
asset-based investment fund fees and custody fees,
which are generated on client assets, and
administrative fees for accounts.
This measure provides information about the amount
of recurring net fee income.
Return on attributed equity
1
Calculated as annualized business division operating
profit before tax divided by average attributed equity.
This measure provides information about the
profitability of the business divisions in relation to
attributed equity.
Return on common equity tier 1
capital
1
Calculated as annualized net profit attributable to
shareholders divided by average common equity tier 1
capital.
This measure provides information about the
profitability of the business in relation to common
equity tier 1 capital.
Return on equity
1
Calculated as annualized net profit attributable to
shareholders divided by average equity attributable to
shareholders.
This measure provides information about the
profitability of the business in relation to equity.
Return on leverage ratio denominator,
gross
1
Calculated as annualized total revenues divided by
average leverage ratio denominator.
This measure provides information about the revenues
of the business in relation to the leverage ratio
denominator.
Return on tangible equity
1
Calculated as annualized net profit attributable to
shareholders divided by average equity attributable to
shareholders less average goodwill and intangible
assets.
This measure provides information about the
profitability of the business in relation to tangible
equity.
Tangible book value per share
(USD)
Calculated as equity attributable to shareholders less
goodwill and intangible assets divided by the number
of shares outstanding.
This measure provides information about tangible net
assets on a per-share basis.
Total book value per share
(USD)
Calculated as equity attributable to shareholders
divided by the number of shares outstanding.
This measure provides information about net assets
on a per-share basis.
Total revenues (underlying)
(USD)
Calculated by adjusting total revenues as reported in
accordance with International Financial Reporting
Standards (IFRS) for items that management believes
are not representative of the underlying performance
of the businesses.
›
Refer to the “Group performance” section of this
report for more information
This measure provides information about the amount
of total revenues, while excluding items that
management believes are not representative of the
underlying performance of the businesses.
Transaction-based income
(USD and CHF)
– Global Wealth Management,
Personal & Corporate Banking
Calculated as the total of the non-recurring portion of
net fee and commission income, mainly composed of
brokerage and transaction-based investment fund
fees, and credit card fees, as well as fees for payment
and foreign-exchange transactions, together with
other net income from financial instruments
measured at fair value through profit or loss.
This measure provides information about the amount
of the non-recurring portion of net fee and
commission income, together with other net income
from financial instruments measured at fair value
through profit or loss.
Underlying cost / income ratio (%)
Calculated as underlying operating expenses (as
defined above) divided by underlying total revenues
(as defined above).
This measure provides information about the
efficiency of the business by comparing operating
expenses with total revenues, while excluding items
that management believes are not representative of
the underlying performance of the businesses.
UBS Group third quarter 2023 report |
Appendix 114
APM label
Calculation
Information content
Underlying net profit growth (%)
Calculated as the change in net profit attributable to
shareholders from continuing operations between
current and comparison periods divided by net profit
attributable to shareholders from continuing
operations of the comparison period. Net profit
attributable to shareholders from continuing
operations excludes items that management believes
are not representative of the underlying performance
of the businesses and also excludes related tax
impact.
This measure provides information about profit
growth since the comparison period, while excluding
items that management believes are not
representative of the underlying performance of the
businesses.
Underlying return on common equity
tier 1 capital
1
Calculated as annualized net profit attributable to
shareholders divided by average common equity tier 1
capital. Net profit attributable to shareholders
excludes items that management believes are not
representative of the underlying performance of the
businesses and also excludes related tax impact.
This measure provides information about the
profitability of the business in relation to common
equity tier 1 capital, while excluding items that
management believes are not representative of the
underlying performance of the businesses.
Underlying return on tangible equity
1
(%)
Calculated as annualized net profit attributable to
shareholders divided by average equity attributable to
shareholders less average goodwill and intangible
assets. Net profit attributable to shareholders excludes
items that management believes are not
representative of the underlying performance of the
businesses and also excludes related tax impact.
This measure provides information about the
profitability of the business in relation to tangible
equity, while excluding items that management
believes are not representative of the underlying
performance of the businesses.
1
Profit or loss information for the third quarter of 2023 includes three months of information for UBS and three months of information for Credit Suisse and, for the purpose of the calculation of return measures, has
been annualized multiplying such by four. Profit or loss information for the second quarter of 2023 includes three months of information for UBS and one month (June 2023) of information for Credit Suisse and, for the
purpose of the calculation of return measures, has been annualized multiplying such by four. Profit or loss information for the first nine months of 2023 includes nine months of information for UBS and four months
(June–September 2023) of information for Credit Suisse and, for the purpose of the calculation of return measures, has been annualized by dividing such by three and then multiplying by four for the year-to-date
measure.
This is a general list of the APMs used in our financial reporting. Not all of the APMs listed above may appear in
this particular report.
Information related to underlying return on common equity tier 1 (CET1) capital and underlying return on tangible
equity (%)
As of or for the quarter ended
As of or year-to-date
USD m
30.9.23
30.6.23
31.12.22
30.9.22
30.9.23
30.9.22
Underlying operating profit / (loss) before tax
844
891
1,869
2,042
3,301
6,631
Underlying tax expense / (benefit)
623
441
280
524
1,523
1,629
NCI
4
3
4
9
15
28
Underlying net profit / (loss)
216
447
1,585
1,508
1,762
4,974
Underlying net profit / (loss), annualized
866
1,786
6,339
6,033
2,349
6,633
Tangible equity
77,394
79,547
50,609
49,546
77,394
49,546
Average tangible equity
78,471
65,014
50,078
50,040
64,677
51,640
CET1 capital
78,587
80,258
45,457
44,664
78,587
44,664
Average CET1 capital
79,422
62,424
45,061
44,731
62,290
44,788
Underlying return on tangible equity (%)
1.1
2.7
12.7
12.1
3.6
12.8
Underlying return on common equity tier 1 capital
1.1
2.9
14.1
13.5
3.8
14.8
UBS Group third quarter 2023 report |
Appendix 115
Abbreviations frequently used in our financial reports
A
ABS asset-backed securities
AG Aktiengesellschaft
AGM Annual General Meeting of
shareholders
A-IRB advanced internal ratings-
based
AIV alternative investment
vehicle
ALCO Asset and Liability
Committee
AMA advanced measurement
approach
AML anti-money laundering
AoA Articles of Association
APM alternative performance
measure
ARR alternative reference rate
ARS auction rate securities
ASF available stable funding
AT1 additional tier 1
AuM assets under management
B
BCBS Basel Committee on
Banking Supervision
BIS Bank for International
Settlements
BoD Board of Directors
C
CAO Capital Adequacy
Ordinance
CCAR Comprehensive Capital
Analysis and Review
CCF credit conversion factor
CCP central counterparty
CCR counterparty credit risk
CCRC Corporate Culture and
Responsibility Committee
CDS credit default swap
CEA Commodity Exchange Act
CEO Chief Executive Officer
CET1 common equity tier 1
CFO Chief Financial Officer
CGU cash-generating unit
CHF Swiss franc
CIO Chief Investment Office
C&ORC Compliance & Operational
Risk Control
CRM credit risk mitigation (credit
risk) or comprehensive risk
measure (market risk)
CST combined stress test
CUSIP Committee on Uniform
Security Identification
Procedures
CVA credit valuation adjustment
D
DBO defined benefit obligation
DCCP Deferred Contingent
Capital Plan
DE&I diversity, equity and
inclusion
DFAST Dodd–Frank Act Stress Test
DM discount margin
DOJ US Department of Justice
DTA deferred tax asset
DVA debit valuation adjustment
E
EAD exposure at default
EB Executive Board
EC European Commission
ECB European Central Bank
ECL expected credit loss
EGM Extraordinary General
Meeting of shareholders
EIR effective interest rate
EL expected loss
EMEA Europe, Middle East and
Africa
EOP Equity Ownership Plan
EPS earnings per share
ESG environmental, social and
governance
ESR environmental and social
risk
ETD exchange-traded derivatives
ETF exchange-traded fund
EU European Union
EUR euro
EURIBOR Euro Interbank Offered Rate
EVE economic value of equity
EY Ernst & Young Ltd
F
FA financial advisor
FCA UK Financial Conduct
Authority
FDIC Federal Deposit Insurance
Corporation
FINMA Swiss Financial Market
Supervisory Authority
FMIA Swiss Financial Market
Infrastructure Act
FSB Financial Stability Board
FTA Swiss Federal Tax
Administration
FVA funding valuation
adjustment
FVOCI fair value through other
comprehensive income
FVTPL fair value through profit or
loss
FX foreign exchange
G
GAAP generally accepted
accounting principles
GBP pound sterling
GCRG Group Compliance,
Regulatory & Governance
GDP gross domestic product
GEB Group Executive Board
GHG greenhouse gas
GIA Group Internal Audit
GRI Global Reporting Initiative
G-SIB global systemically
important bank
H
HQLA
high-quality liquid assets
I
IAS International Accounting
Standards
IASB International Accounting
Standards Board
IBOR interbank offered rate
IFRIC International Financial
Reporting Interpretations
Committee
IFRS International Financial
Reporting Standards
IRB internal ratings-based
IRRBB interest rate risk in the
banking book
ISDA International Swaps and
Derivatives Association
ISIN International Securities
Identification Number
UBS Group third quarter 2023 report |
Appendix 116
Abbreviations frequently used in our financial reports (continued)
K
KRT Key Risk Taker
L
LAS liquidity-adjusted stress
LCR liquidity coverage ratio
LGD loss given default
LIBOR London Interbank Offered
Rate
LLC limited liability company
LoD lines of defense
LRD leverage ratio denominator
LTIP Long-Term Incentive Plan
LTV loan-to-value
M
M&A mergers and acquisitions
MRT Material Risk Taker
N
NII net interest income
NSFR net stable funding ratio
NYSE New York Stock Exchange
O
OCA own credit adjustment
OCI other comprehensive
income
OECD Organisation for Economic
Co-operation and
Development
OTC over-the-counter
P
PCI purchased credit impaired
PD probability of default
PIT point in time
PPA purchase price allocation
P&L profit or loss
Q
QCCP Qualifying central
counterparty
R
RBC risk-based capital
RbM risk-based monitoring
REIT real estate investment trust
RMBS residential mortgage-
backed securities
RniV risks not in VaR
RoCET1 return on CET1 capital
RoU right-of-use
rTSR relative total shareholder
return
RWA risk-weighted assets
S
SA standardized approach or
société anonyme
SA-CCR standardized approach for
counterparty credit risk
SAR Special Administrative
Region of the People’s
Republic of China
SDG Sustainable Development
Goal
SEC US Securities and Exchange
Commission
SFT securities financing
transaction
SI sustainable investing or
sustainable investment
SIBOR Singapore Interbank
Offered Rate
SICR significant increase in credit
risk
SIX SIX Swiss Exchange
SME small and medium-sized
entities
SMF Senior Management
Function
SNB Swiss National Bank
SOR Singapore Swap Offer Rate
SPPI solely payments of principal
and interest
SRB systemically relevant bank
SRM specific risk measure
SVaR stressed value-at-risk
T
TBTF too big to fail
TCFD Task Force on Climate-
related Financial Disclosures
TIBOR Tokyo Interbank Offered
Rate
TLAC total loss-absorbing capacity
TTC through the cycle
U
USD US dollar
V
VaR value-at-risk
VAT
value added tax
This is a general list of the abbreviations frequently used in our financial reporting. Not all of the listed abbreviations
may appear in this particular report.
UBS Group third quarter 2023 report |
Appendix 117
Information sources
Reporting publications
Annual publications
Annual Report
: Published in English, this single-volume report provides descriptions of: the Group strategy and
performance; the strategy and performance of the business divisions and Group Items; risk, treasury and capital
management; corporate governance, corporate responsibility and the compensation framework, including
information about compensation for the Board of Directors and the Group Executive Board members; and financial
information, including the financial statements.
“Auszug aus dem Geschäftsbericht
”: This publication provides a German translation of selected sections of the
Annual Report.
Compensation Report
: This report discusses the compensation framework and provides information about
compensation for the Board of Directors and the Group Executive Board members. It is available in English and
German (
“Vergütungsbericht
”) and represents a component of the Annual Report.
Sustainability Report
: Published in English, the Sustainability Report provides disclosures on environmental, social
and governance topics related to the UBS Group.
Diversity, Equity and Inclusion Report
: This report details UBS’s diversity, equity and inclusion priority areas of focus,
strategic goals and approach to achieving them.
Quarterly publications
Quarterly financial report
: This report provides an update on performance and strategy (where applicable) for the
respective quarter. It is available in English.
The annual and quarterly publications are available in .pdf and online formats at
ubs.com/investors
, under “Financial
information.” Starting with the Annual Report 2022, printed copies, in any language, of the aforementioned annual
publications are no longer provided.
Other information
Website
The “Investor Relations” website at
ubs.com/investors
news releases; financial information, including results-related filings with the US Securities and Exchange
Commission (the SEC); information for shareholders, including UBS share price charts, as well as data and dividend
information, and for bondholders; the corporate calendar; and presentations by management for investors and
financial analysts. Information is available online in English, with some information also available in German.
Results presentations
Quarterly results presentations are webcast live. Recordings of most presentations can be downloaded from
ubs.com/presentations
.
Messaging service
Email alerts to news about UBS can be subscribed for under “UBS News Alert” at
ubs.com/global/en/investor-
relations/contact/investor-services.html
. Messages are sent in English, German, French or Italian, with an option to
select theme preferences for such alerts.
Form 20-F and other submissions to the US Securities and Exchange Commission
UBS files periodic reports with and submits other information to the SEC. Principal among these filings is the annual
report on Form 20-F, filed pursuant to the US Securities Exchange Act of 1934. The filing of Form 20-F is structured
as a wraparound document. Most sections of the filing can be satisfied by referring to the combined UBS Group AG
and UBS AG Annual Report. However, there is a small amount of additional information in Form 20-F that is not
presented elsewhere and is particularly targeted at readers in the US. Readers are encouraged to refer to this
additional disclosure. Any document that filed with the SEC is available on the SEC’s website:
sec.gov
. Refer to
ubs.com/investors
UBS Group third quarter 2023 report |
Appendix 118
Cautionary Statement Regarding Forward-Looking Statements |
but not limited to management’s outlook for UBS’s financial performance, statements relating to the anticipated effect of transactions and strategic initiatives
on UBS’s business and future development and goals or intentions to achieve climate, sustainability and other social objectives. While these forward-looking
statements represent UBS’s judgments, expectations and objectives 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. In particular, recent terrorist activity and escalating armed
conflict in the middle east, as well as the continuing Russia–Ukraine war, may have significant impacts on global markets, exacerbate global inflationary pressures,
and slow global growth. In addition, the ongoing conflicts may continue to cause significant population displacement, and lead to shortages of vital commodities,
including energy shortages and food insecurity outside the areas immediately involved in armed conflict. Governmental responses to the armed conflicts,
including, with respect to the Russia–Ukraine war, coordinated successive sets of sanctions on Russia and Belarus, and Russian and Belarusian entities and
nationals, and the uncertainty as to whether the ongoing conflicts will widen and intensify, may continue to have significant adverse effects on the market and
macroeconomic conditions, including in ways that cannot be anticipated. UBS’s acquisition of Credit Suisse has materially changed our outlook and strategic
direction and introduced new operational challenges. The integration of the Credit Suisse entities into the UBS structure is expected to take between three and
five years and presents significant risks, including the risks that UBS Group AG may be unable to achieve the cost reductions and other benefits contemplated by
the transaction. This creates significantly greater uncertainty about forward-looking statements. Other factors that may affect our performance and ability to
achieve our plans, outlook and other objectives also include, but are not limited to: (i) the degree to which UBS is successful in the execution of its strategic plans,
including its cost reduction and efficiency initiatives and its ability to manage its levels of risk-weighted assets (RWA) and leverage ratio denominator (LRD),
liquidity coverage ratio and other financial resources, including changes in RWA assets and liabilities arising from higher market volatility and the size of the
combined bank; (ii) the degree to which UBS is successful in implementing changes to its businesses to meet changing market, regulatory and other conditions,
including as a result of the acquisition of Credit Suisse; (iii) increased inflation and interest rate volatility in major markets; (iv) 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, currency exchange
rates, deterioration or slow recovery in residential and commercial real estate markets, the effects of economic conditions, including increasing inflationary
pressures, market developments, increasing geopolitical tensions, and changes to national trade policies on the financial position or creditworthiness of UBS’s
clients and counterparties, as well as on client sentiment and levels of activity, including the COVID-19 pandemic and the measures taken to manage it, which
have had and may also continue to have a significant adverse effect on global and regional economic activity, including disruptions to global supply chains and
labor market displacements; (v) changes in the availability of capital and funding, including any adverse changes in UBS’s credit spreads and credit ratings of UBS,
Credit Suisse, sovereign issuers, structured credit products or credit-related exposures, as well as availability and cost of funding to meet requirements for debt
eligible for total loss-absorbing capacity (TLAC), in particular in light of the acquisition of Credit Suisse; (vi) changes in central bank policies or the implementation
of financial legislation and regulation in Switzerland, the US, the UK, the European Union 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, net stable funding ratio, liquidity and funding requirements, heightened
operational resilience 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; (vii) UBS’s ability to successfully implement resolvability and related regulatory requirements and the potential need to make further changes
to the legal structure or booking model of UBS in response to legal and regulatory requirements and any additional requirements due to its acquisition of Credit
Suisse, or other developments; (viii) UBS’s ability to maintain and improve its systems and controls for complying with sanctions in a timely manner and for the
detection and prevention of money laundering to meet evolving regulatory requirements and expectations, in particular in current geopolitical turmoil; (ix) the
uncertainty arising from domestic stresses in certain major economies; (x) changes in UBS’s competitive position, including whether differences in regulatory
capital and other requirements among the major financial centers adversely affect UBS’s ability to compete in certain lines of business; (xi) changes in the standards
of conduct applicable to our businesses that may result from new regulations or new enforcement of existing standards, including measures to impose new and
enhanced duties when interacting with customers and in the execution and handling of customer transactions; (xii) 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, potentially large fines or monetary penalties, or the 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, including
as a result of its acquisition of Credit Suisse, as well as the amount of capital available for return to shareholders; (xiii) the effects on UBS’s business, in particular
cross-border banking, of sanctions, tax or regulatory developments and of possible changes in UBS’s policies and practices; (xiv) 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; (xv) 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; (xvi) 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; (xvii) limitations
on the effectiveness of UBS’s internal processes for risk management, risk control, measurement and modeling, and of financial models generally; (xviii) the
occurrence of operational failures, such as fraud, misconduct, unauthorized trading, financial crime, cyberattacks, data leakage and systems failures, the risk of
which is increased with cyberattack threats from both nation states and non-nation-state actors targeting financial institutions; (xix) 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; (xx) 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; (xxi) uncertainty over the scope of actions that may be required by
UBS, governments and others for UBS to achieve goals relating to climate, environmental and social matters, as well as the evolving nature of underlying science
and industry and the possibility of conflict between different governmental standards and regulatory regimes; (xxii) the ability of UBS to access capital markets;
(xxiii) the ability of UBS to successfully recover from a disaster or other business continuity problem due to a hurricane, flood, earthquake, terrorist attack, war,
conflict (e.g., the Russia–Ukraine war), pandemic, security breach, cyberattack, power loss, telecommunications failure or other natural or man-made event,
including the ability to function remotely during long-term disruptions such as the COVID-19 (coronavirus) pandemic; (xxiv) the level of success in the absorption
of Credit Suisse, in the integration of the two groups and their businesses, and in the execution of the planned strategy regarding cost reduction and divestment
of any non-core assets, the existing assets and liabilities currently existing in the Credit Suisse Group, the level of resulting impairments and write-downs, the
effect of the consummation of the integration on the operational results, share price and credit rating of UBS – delays, difficulties, or failure in closing the
transaction may cause market disruption and challenges for UBS to maintain business, contractual and operational relationships; and (xxv) the effect that these
or other factors or unanticipated events, including media reports and speculations, 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 US Securities and Exchange Commission (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 the Annual Report on Form 20-F for the year ended 31 December 2022. 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 |
disclosed in text and tables are calculated on the basis of unrounded figures. Absolute changes between reporting periods disclosed in the text, which can be
derived from numbers presented in related tables, are calculated on a rounded basis.
Tables |
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. Values
that are zero on a rounded basis can be either negative or positive on an actual basis.
UBS Group AG
P.O. Box
CH-8098 Zurich
ubs.com
This Form 6-K is hereby incorporated by reference into (1) each of the registration statements on Form F-3
(Registration Numbers 333-263376, 333-272539 and 333-272452), and on Form S-8 (Registration Numbers 333-
200634; 333-200635; 333-200641; 333-200665; 333-215254; 333-215255; 333-228653; 333-230312; 333-249143
and 333-272975), and into each prospectus outstanding under any of the foregoing registration statements, (2) any
outstanding offering circular or similar document issued or authorized by UBS AG and Credit Suisse AG that
incorporates by reference any Forms 6-K of UBS AG and Credit Suisse AG (respectively) that are incorporated into
its registration statements filed with the SEC, and (3) the base prospectus of Corporate Asset Backed Corporation
(“CABCO”) dated June 23, 2004 (Registration Number 333-111572), the Form 8-K of CABCO filed and dated June
23, 2004 (SEC File Number 001-13444), and the Prospectus Supplements relating to the CABCO Series 2004-101
Trust dated May 10, 2004 and May 17, 2004 (Registration Number 033-91744 and 033-91744-05).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this
report to be signed on their behalf by the undersigned, thereunto duly authorized.
UBS Group AG
By: /s/ Sergio Ermotti
___
Name: Sergio Ermotti
Title: Group Chief Executive Officer
By: /s/ Todd Tuckner
_
Name: Todd Tuckner
Title: Group Chief Financial Officer
By: /s/ Steffen Henrich
____________
Name: Steffen Henrich
Title: Group Controller
UBS AG
By: /s/ Sergio Ermotti
_
Name: Sergio Ermotti
Title: President of the Executive Board
By: /s/ Todd Tuckner
_
Name: Todd Tuckner
Title: Chief Financial Officer
By: /s/ Steffen Henrich
_____________
Name: Steffen Henrich
Title: Controller
Credit Suisse AG
By: /s/ Ulrich Körner
______________
Name: Ulrich Körner
Title: Chief Executive Officer
By: /s/ Simon Grimwood
_
Name: Simon Grimwood
Title: Chief Financial Officer
Date: November 7, 2023