UBS AG: UBS: 1Q23 net profit of USD 1.0bn, with strong client inflows (Ad hoc announcement pursuant to Article 53 of the SIX Exchange Regulation Listing Rules)

TIDM0R3T 
 
 

UBS's 1Q23 results materials are available at ubs.com/investors -- The audio webcast of the earnings call starts at 09:00 CEST, 25 April 2023.

A definition of each alternative performance measure, the method used to calculate it and the information content are presented under "Alternative performance measures" in the appendix to our 1Q23 report.

The reconciliation of reported and underlying performance is presented in the appendix of our 1Q23 results presentation.

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

Group highlights

   --  Solid underlying results and strong liquidity and capital amid 
      uncertain market conditions On a reported basis, and including an 
      increase in provisions of USD 665m related to the US residential 
      mortgage-backed securities (RMBS) litigation matter, 1Q23 PBT was USD 
      1,495m (-45% YoY). Net credit loss expenses were USD 38m, compared with 
      net expenses of USD 18m in 1Q22. Total revenues decreased 7% YoY, while 
      operating expenses increased 9%, driven by the aforementioned provision. 
      The cost/income ratio was 82.5%. Net profit attributable to shareholders 
      was USD 1,029m (-52% YoY), with diluted earnings per share of USD 0.32. 
      The return on CET1 capital was 9.1%.  On an underlying basis, 1Q23 PBT 
      was USD 2,354m, (-22% YoY). Underlying revenues decreased 8% YoY, while 
      operating expenses decreased 2%, or 1% when excluding FX. The cost/income 
      ratio was 72.8% and the return on CET1 capital was 16.5%.  In the 
      quarter, we repurchased USD 1.3bn of shares under our share repurchase 
      program. We have temporarily suspended share repurchases following the 
      announcement of the anticipated acquisition of Credit Suisse, and we 
      intend to resume them as soon as possible.  Our capital position 
      remained strong. The quarter-end CET1 capital ratio was 13.9% and the 
      CET1 leverage ratio was 4.40%, both in excess of our guidance of 13% and 
      >3.7%, respectively. We also maintained healthy liquidity buffers with an 
      LCR of 162% and an NSFR of 118%. 
   --  Continued client momentum with inflows in all regions In the first 
      quarter, we maintained positive momentum across the firm and attracted 
      USD 28bn of net new money in GWM, of which USD 7bn came in the last ten 
      days of March, after the announcement of our acquisition of Credit 
      Suisse. We also saw USD 20bn in net new fee-generating assets1 in GWM, 
      USD 14bn of net new money in AM (of which USD 18bn in money market), and 
      CHF 0.9bn of net new investment products for Personal Banking. Overall, 
      we saw broadly stable loan balances2 as loan growth in Switzerland offset 
      deleveraging in other regions. As clients repositioned their investments 
      in response to interest rate increases, we captured demand for higher 
      yield into money market funds and US-government securities.  We 
      delivered these results during a quarter characterized by persistent 
      concerns about interest rates and economic growth exacerbated by 
      questions about the stability of the banking system, especially in the 
      US. Against this backdrop, private and institutional investors' activity 
      remained muted.  In Americas, GWM attracted net new fee-generating 
      assets1 of USD 4bn, with continued positive momentum in our SMA3 offering, 
      which contributed USD 4.5bn of net new money in AM. In the quarter we 
      also saw USD 8bn net new money in GWM, and continued momentum in advisor 
      recruiting.  In Switzerland, we saw USD 8bn net new fee-generating 
      assets,1 USD 2bn net new loans in GWM and P&C combined and USD 0.9bn net 
      new investment products for Personal Banking (16% annualized growth). 
      In EMEA, we generated USD 3bn of net new fee-generating assets1 and net 
      interest income rose by nearly 60% as we started to benefit from higher 
      euro rates. We were also named best equities bank in EMEA4 and Europe 
      financial bond house for the year.5  In APAC, we attracted USD 5bn of 
      net new fee-generating assets1 contributing to a 17% net new 
      fee-generating asset growth over the past 12 months, and we were recently 
      named the best equity house in Asia and ANZ6 and best M&A bank in APAC by 
      Global Finance. 
 
1 In GWM; net new fee-generating assets exclude the effects on fee-generating 
assets of strategic decisions by UBS to exit markets or services. 2 Loans and 
advances to customers in GWM and P&C, as well as customer brokerage 
receivables, which are presented in a separate reporting line on the balance 
sheet. 3 Separately managed accounts. 4 Global Finance, 2023. 5 International 
Financing Review, February 2023. 6 Australia and New Zealand. 
 
   --  Enhancing client franchises through the announced acquisition of Credit 
      Suisse  We expect the combination with Credit Suisse to strengthen our 
      position as a leading and truly global wealth manager, with around USD 
      5trn in invested assets. We also expect to reinforce our position as a 
      leading universal bank in Switzerland, and to enhance our complementary 
      investment banking and asset management capabilities, while adding 
      strategic scale in the most attractive growth markets.  We intend to 
      actively reduce the risk and resource consumption of Credit Suisse's 
      investment banking business. We plan for the combined Investment Bank 
      (excluding assets and liabilities that we define as non-core) to account 
      for around 25% of Group RWAs and to remain focused and strategically 
      aligned to the products and capabilities that are most relevant to our 
      wealth management clients.  While acknowledging the magnitude of, and 
      complexity associated with, the integration and restructuring of Credit 
      Suisse, we believe that this combination presents a unique opportunity to 
      bring significant, long-term value to all of our stakeholders. 
 

Sergio P. Ermotti, UBS's Group CEO

"During the first quarter we saw strong net new fee generating asset and net new money inflows in Global Wealth Management and Asset Management. This was possible thanks to the disciplined execution and dedication of all our employees. We helped clients navigate a challenging environment marked by the ongoing uncertainty around inflation, central bank policy, and economic growth. Our results also included an increase in litigation provisions relating to RMBS. We are in advanced discussions with the US Department of Justice, and I am pleased that we are making progress toward resolving this legacy matter which dates back 15 years.

With the planned acquisition of Credit Suisse, we are taking another transformational step in UBS's journey, while remaining committed to our culture, strategy and disciplined risk management. With this transaction, we expect to reinforce our position as a leading and truly global wealth manager with strategic scale and complementary capabilities in the most attractive growth markets.

I am convinced that this transaction will help to reinforce the leading position of the Swiss financial center and will be of benefit to the entire economy. The combined firm presents a unique opportunity to generate significant, long-term value to all of our stakeholders."

Outlook

Persistently high inflation and tight labor markets in many countries in the first quarter of 2023 caused central banks to continue to raise interest rates. The recent liquidity concerns in the banking sector and geopolitical tensions, particularly between the US and China and with regard to the Russia-Ukraine war, led to significant uncertainty in asset valuations and the outlook for economic growth. Against this backdrop, clients continued to diversify cash holdings by investing their deposits into money market instruments, while sentiment and activity levels remained muted in the first quarter of 2023.

The macroeconomic situation going forward remains uncertain, and while concerns about the stability of banks have abated, they have not gone away. As a result, client activity levels could remain subdued in the second quarter of 2023. Weak client sentiment may affect net new assets in our asset-gathering businesses; however, we expect net interest income will remain at higher levels, compared with last year, in the current interest rate environment.

We are focused on completing the acquisition of Credit Suisse, most likely in the second quarter of 2023 which will advance our strategy, particularly in Global Wealth Management and Switzerland. The complexity of the integration will require sustained diligent effort. While we execute these changes, we will not be distracted from our primary focus: supporting our clients with advice and solutions.

First quarter 2023 performance overview -- Group

 
Group                                     1Q23       Targets/guidance 
Return on CET1 capital                    9.1%       15--18% 
Return on tangible equity                 8.1% 
Cost/income ratio                         82.5%      70--73% 
Net profit attributable to shareholders   USD 1.0bn 
CET1 capital ratio                        13.9%      13% 
CET1 leverage ratio                       4.40%      >3.7% 
Tangible book value per share             USD 16.54 
Buybacks                                  USD 1.3bn  Temporarily suspended 
 

Group PBT USD 1,495m, -45% YoY

PBT was USD 1,495m, including net credit loss expenses of USD 38m. The cost/income ratio was 82.5%, 11.7 percentage points higher YoY. Total revenues decreased 7% YoY, while operating expenses increased 9%, driven by an increase in provisions of USD 665m related to the US RMBS litigation matter in Group Functions. Excluding this litigation provision, operating expenses would have decreased 1% and PBT would have decreased 21%. Net profit attributable to shareholders was USD 1,029m, (-52% YoY), with diluted earnings per share of USD 0.32. Return on CET1 capital was 9.1%.

First quarter 2023 performance overview -- Business Divisions and Group Functions

 
Global Wealth Management                1Q23        Targets/guidance 
Profit before tax                       USD 1.2bn 
PBT growth                              -7% YoY     10--15% over the cycle 
Invested assets                         USD 3.0trn 
Net new fee-generating assets(1)        USD 19.7bn 
 
Personal & Corporate Banking 
Profit before tax                       CHF 0.6bn 
Return on attributed equity (CHF)       25% 
Net new investment products for 
Personal Banking                        CHF 0.9bn 
 
Asset Management 
Profit before tax                       USD 0.1bn 
Invested assets                         USD 1.1trn 
Net new money excl. money markets       USD -3.6bn 
 
Investment Bank 
Profit before tax                       USD 0.5bn 
Return on attributed equity             15% 
RWA and LRD vs. Group                   29% / 32%   Up to 1/3 
 

Global Wealth Management (GWM)

PBT USD 1,215m, -7% YoY

Total revenues decreased 2% YoY to USD 4,792m. Net interest income increased 31%, mainly due to an increase in deposit revenues, reflecting the benefits from higher interest rates, partly offset by shifts to lower-margin deposit products. Clients also continued to reallocate deposits into money market funds and US-government securities, leading to lower average deposit volumes. Loan revenues decreased, driven by lower average loan volumes and margins. Recurring net fee income decreased 13%, primarily driven by negative market performance and foreign currency effects. Transaction-based income decreased 12%, mainly driven by lower levels of client activity across all regions. Net credit loss expenses were USD 15m, compared with net releases of USD 7m in 1Q22. Operating expenses were down 1%, mainly driven by a decrease in personnel expenses, primarily as a result of lower financial advisor variable compensation, and a decrease in provisions for litigation, regulatory and similar matters. This was partly offset by higher technology expenses, tax and regulatory expenses, expenses for travel and entertainment, and outsourcing expenses. The cost/income ratio was 74.3%, up 0.9 percentage points YoY. Fee-generating assets were up 5% sequentially to USD 1,335bn. Net new fee-generating assets(1) were USD 19.7bn.

 
1 Net new fee-generating assets exclude the effects on fee-generating assets 
of strategic decisions by UBS to exit markets or services. 
 

Personal & Corporate Banking (P&C)

PBT CHF 553m, +40% YoY

Total revenues increased 18% YoY. Net interest income increased 32%, mainly driven by higher deposit margins, as a result of rising interest rates, and higher loan revenues, partly offset by lower deposit fees. The first quarter of 2022 included a benefit from the Swiss National Bank deposit exemption. Transaction-based income increased 3%, mainly driven by higher corporate client and credit card fees, partly offset by lower net brokerage fees. Recurring net fee income was unchanged. Net credit loss expenses were CHF 14m, compared with net expenses of CHF 21m in 1Q22. Operating expenses increased 5%, mainly driven by higher technology expenses. The cost/income ratio was 51.9%, 6.6 percentage points lower YoY.

Asset Management (AM) PBT USD 94m, -46% YoY

Total revenues were down 13% YoY. Net management fees decreased 15%, primarily reflecting negative market performance and foreign currency effects, negative pass-through fees with the corresponding offset in performance fees, and continued pressure on margins. Performance fees increased by USD 6m, reflecting the effect of the aforementioned pass-through fees, partly offset by minor decreases across all asset classes. Operating expenses increased 1%, reflecting increases in general and administrative expenses including technology costs, partly offset by lower personnel expenses and foreign currency effects. The cost/income ratio was 81.2%, 11.4 percentage points higher YoY. Invested assets increased by 5% sequentially to USD 1,117bn. Net new money was USD 14.4bn (negative USD 3.6bn excluding money market flows).

 
1 2Q22 included an USD 848m pre-tax gain from Mitsubishi real estate JV 
disposal. 
 

Investment Bank (IB) PBT USD 477m, -49% YoY

Total revenues decreased 19%. Global Markets revenues decreased USD 391m, or 17%, with lower Derivatives & Solutions and Execution Services revenues partly offset by an increase in Financing revenues. Global Banking revenues decreased by USD 167m, or 30%, mainly driven by lower Capital Markets revenues. Net credit loss expenses were USD 7m, compared with net expenses of USD 4m in 1Q22. Operating expenses decreased 6%, mainly driven by lower variable compensation, partly offset by higher technology expenses and provisions for litigation, regulatory and similar matters. The cost/income ratio was 79.4%, 11.5 percentage points higher YoY. Return on attributed equity was 14.6%.

Group Functions PBT USD -890m, compared with USD -112m in 1Q22

Extending UBS's leadership in sustainability

Sustainable finance is crucial when it comes to helping our clients achieve their diverse sustainability objectives. We want to be the provider of choice for clients who wish to mobilize capital toward the achievement of the United Nations 17 Sustainable Development Goals and the orderly transition to a low-carbon economy.

Shareholders support UBS's sustainability approach

At the recent Annual General Meeting, shareholders ratified the UBS Sustainability Report in an advisory vote by 81.3%. The report details how we serve clients' sustainable finance and investing needs and support them in the transition to a low-carbon economy. This year, we introduced a new decarbonization target covering lending to the cement sector, as well as an estimate of our overall financed emissions. The report also provides details on our sustainability strategy, environmental activities and efforts to address societal challenges within the organization and beyond.

In the first quarter, we were once again recognized by CDP as a Supplier Engagement Leader for our work engaging with our suppliers to tackle climate change.

Diversity, equity and inclusion are key to sustainability

In April, we published our first global Diversity, Equity and Inclusion Report, detailing our DE&I areas of focus, our strategic goals and our approach to achieving them.

According to the Global Gender Equality Report 2023 published by Equileap, UBS is ranked #1 in Switzerland and 5(th) globally for gender equality. Today, 41% of our workforce are women and they fill almost 28% of our director-level and above posts. On our Group Executive Board we have a female representation of 42%. According to the Executive Committee Study 2023 published by recruiter Russell Reynolds Associates, UBS is at the top of the blue chips listed in the Swiss Market Index.

In the US, we recently announced our USD 3m commitment to the Black Innovation Alliance to help build a more inclusive entrepreneurial ecosystem.

 
Our key figures 
                                      As of or for the quarter ended 
USD m, except where indicated         31.3.23      31.12.22    31.3.22 
Group results 
Total revenues                        8,744        8,029       9,382 
Credit loss expense / (release)       38           7           18 
Operating expenses                    7,210        6,085       6,634 
Operating profit / (loss) before tax  1,495        1,937       2,729 
Net profit / (loss) attributable to 
 shareholders                         1,029        1,653       2,136 
Diluted earnings per share (USD)(1)   0.32         0.50        0.61 
Profitability and growth(2) 
Return on equity (%)                  7.2          11.7        14.3 
Return on tangible equity (%)         8.1          13.2        16.0 
Return on common equity tier 1 
 capital (%)                          9.1          14.7        19.0 
Return on leverage ratio 
 denominator, gross (%)               3.4          3.2         3.5 
Cost / income ratio (%)               82.5         75.8        70.7 
Effective tax rate (%)                30.7         14.5        21.4 
Net profit growth (%)                 (51.8)       22.6        17.1 
Resources(2) 
Total assets                          1,053,134    1,104,364   1,139,922 
Equity attributable to shareholders   56,754       56,876      58,855 
Common equity tier 1 capital(3)       44,590       45,457      44,593 
Risk-weighted assets(3)               321,660      319,585     312,037 
Common equity tier 1 capital ratio 
 (%)(3)                               13.9         14.2        14.3 
Going concern capital ratio (%)(3)    17.9         18.2        19.2 
Total loss-absorbing capacity ratio 
 (%)(3)                               34.3         33.0        34.2 
Leverage ratio denominator(3)         1,014,446    1,028,461   1,072,953 
Common equity tier 1 leverage ratio 
 (%)(3)                               4.40         4.42        4.16 
Liquidity coverage ratio (%)(4)       161.9        163.7       159.6 
Net stable funding ratio (%)          117.7        119.8       121.7 
Other 
Invested assets (USD bn)(5)           4,160        3,957       4,380 
Personnel (full-time equivalents)     73,814       72,597      71,697 
Market capitalization(1)              64,322       57,848      65,775 
Total book value per share (USD)(1)   18.59        18.30       17.57 
Tangible book value per share 
 (USD)(1)                             16.54        16.28       15.67 

1 Refer to the "Share information and earnings per share" section of the 
UBS Group first quarter 2023 report for more information. 2 Refer to the 
"Targets, aspirations and capital guidance" section of our Annual Report 
2022 for more information about our performance targets. 3 Based on the 
Swiss systemically relevant bank framework as of 1 January 2020. Refer 
to the "Capital management" section of the UBS Group first quarter 2023 
report for more information. 4 The disclosed ratios represent quarterly 
averages for the quarters presented and are calculated based on an 
average of 64 data points in the first quarter of 2023, 63 data points 
in the fourth quarter of 2022 and 64 data points in the first quarter of 
2022. Refer to the "Liquidity and funding management" section of the UBS 
Group first quarter 2023 report for more information. 5 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 our 
Annual Report 2022 for more information. 
 
 
Income statement 
                         For the quarter ended       % change from 
USD m                    31.3.23  31.12.22  31.3.22  4Q22     1Q22 
Net interest income      1,388    1,589     1,771    (13)     (22) 
Other net income from 
 financial instruments 
 measured at fair value 
 through profit or 
 loss                    2,681    1,876     2,226    43       20 
Net fee and commission 
 income                  4,606    4,359     5,353    6        (14) 
Other income             69       206       32       (66)     119 
Total revenues           8,744    8,029     9,382    9        (7) 
 
Credit loss expense / 
 (release)               38       7         18       430      108 
 
Personnel expenses       4,620    4,122     4,920    12       (6) 
General and 
 administrative 
 expenses                2,065    1,420     1,208    45       71 
Depreciation, 
 amortization and 
 impairment of 
 non-financial assets    525      543       506      (3)      4 
Operating expenses       7,210    6,085     6,634    18       9 
Operating profit / 
 (loss) before tax       1,495    1,937     2,729    (23)     (45) 
Tax expense / (benefit)  459      280       585      64       (22) 
Net profit / (loss)      1,037    1,657     2,144    (37)     (52) 
Net profit / (loss) 
 attributable to 
 non-controlling 
 interests               8        4         8        116      1 
Net profit / (loss) 
 attributable to 
 shareholders            1,029    1,653     2,136    (38)     (52) 
 
Comprehensive income 
Total comprehensive 
 income                  1,833    2,208     (72)     (17) 
Total comprehensive 
 income attributable to 
 non-controlling 
 interests               13       17        26       (24)     (50) 
Total comprehensive 
 income attributable to 
 shareholders            1,820    2,190     (98)     (17) 
 
 
Comparison between UBS Group AG consolidated and UBS AG 
consolidated 
                                                            As of or for the quarter ended 
                   As of or for the quarter ended 31.3.23   31.12.22 
USD m, except      UBS Group AG  UBS AG        Difference   UBS Group AG  UBS AG        Difference 
where indicated    consolidated  consolidated   (absolute)  consolidated  consolidated  (absolute) 
 
Income statement 
Total revenues     8,744         8,844         (101)        8,029         8,078         (49) 
Credit loss 
 expense / 
 (release)         38            38            0            7             7             0 
Operating 
 expenses          7,210         7,350         (140)        6,085         6,282         (198) 
Operating profit 
 / (loss) before 
 tax               1,495         1,456         39           1,937         1,788         148 
of which: Global 
 Wealth 
 Management        1,215         1,199         17           1,058         1,047         11 
of which: 
 Personal & 
 Corporate 
 Banking           599           597           2            529           525           4 
of which: Asset 
 Management        94            94            0            124           122           2 
of which: 
 Investment Bank   477           455           21           112           108           4 
of which: Group 
 Functions         (890)         (889)         (1)          114           (13)          127 
Net profit / 
 (loss)            1,037         1,012         25           1,657         1,522         135 
of which: net 
 profit / (loss) 
 attributable to 
 shareholders      1,029         1,004         25           1,653         1,518         135 
of which: net 
 profit / (loss) 
 attributable to 
 non-controlling 
 interests         8             8             0            4             4             0 
 
Statement of 
comprehensive 
income 
Other 
 comprehensive 
 income            796           792           4            551           499           52 
of which: 
 attributable to 
 shareholders      791           787           4            538           485           52 
of which: 
 attributable to 
 non-controlling 
 interests         5             5             0            13            13            0 
Total 
 comprehensive 
 income            1,833         1,804         29           2,208         2,020         187 
of which: 
 attributable to 
 shareholders      1,820         1,791         29           2,190         2,003         187 
of which: 
 attributable to 
 non-controlling 
 interests         13            13            0            17            17            0 
 
Balance sheet 
Total assets       1,053,134     1,056,758     (3,625)      1,104,364     1,105,436     (1,072) 
Total liabilities  996,028       998,021       (1,993)      1,047,146     1,048,496     (1,349) 
Total equity       57,106        58,738        (1,632)      57,218        56,940        278 
of which: equity 
 attributable to 
 shareholders      56,754        58,386        (1,632)      56,876        56,598        278 
of which: equity 
 attributable to 
 non-controlling 
 interests         352           352           0            342           342           0 
 
Capital 
information 
Common equity 
 tier 1 capital    44,590        42,801        1,789        45,457        42,929        2,528 
Going concern 
 capital           57,694        55,116        2,578        58,321        54,770        3,551 
Risk-weighted 
 assets            321,660       321,224       436          319,585       317,823       1,762 
Common equity 
 tier 1 capital 
 ratio (%)         13.9          13.3          0.5          14.2          13.5          0.7 
Going concern 
 capital ratio 
 (%)               17.9          17.2          0.8          18.2          17.2          1.0 
Total 
 loss-absorbing 
 capacity ratio 
 (%)               34.3          33.5          0.8          33.0          32.0          0.9 
Leverage ratio 
 denominator       1,014,446     1,018,023     (3,577)      1,028,461     1,029,561     (1,100) 
Common equity 
 tier 1 leverage 
 ratio (%)         4.40          4.20          0.19         4.42          4.17          0.25 
 
 

Information about results materials and the earnings call

UBS's first quarter 2023 report, news release and slide presentation are available from 06:45 CEST on Tuesday, 25 April 2023, at ubs.com/quarterlyreporting.

UBS will hold a presentation of its first quarter 2023 results on Tuesday, 25 April 2023. The results will be presented by Sergio P. Ermotti (Group Chief Executive Officer), Sarah Youngwood (Group Chief Financial Officer), Sarah Mackey (Head of Investor Relations), and Marsha Askins (Group Head Communications & Branding).

Time

09:00 CEST

08:00 BST

03:00 US EDT

Audio webcast

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

Webcast playback

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

Cautionary Statement Regarding Forward-Looking Statements

This news release contains statements that constitute "forward-looking statements," including but not limited to management's outlook for UBS's financial performance, 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. The Russia--Ukraine war has led to heightened volatility across global markets, exacerbated global inflation, and slowed global growth. In addition, the war has caused significant population displacement, and if the conflict continues or escalates, the scale of disruption will increase and continue to cause shortages of vital commodities, including energy shortages and food insecurity, and may lead to recessions in OECD economies. The coordinated sanctions on Russia and Belarus, and Russian and Belarusian entities and nationals, and the uncertainty as to whether the war will widen and intensify, may have significant adverse effects on the market and macroeconomic conditions, including in ways that cannot be anticipated. This creates significantly greater uncertainty about forward-looking statements. In addition, turmoil in the banking industry has increased and, at the urging of Swiss authorities, UBS has announced historic plans to merge with another global systemically important bank in Switzerland. The transaction creates considerable integration risk. 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 ongoing execution of its strategic plans, including its cost reduction and efficiency initiatives and its ability to manage its levels of

risk-weighted assets (RWA) and leverage ratio denominator (LRD), liquidity coverage ratio and other financial resources, including changes in RWA assets and liabilities arising from higher market volatility; (ii) the degree to which UBS is successful in implementing changes to its businesses to meet changing market, regulatory and other conditions; (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); (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, 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, 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 nation states; (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 (which is expected to become part of UBS), 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 UBS's 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

Numbers presented throughout this news release may not add up precisely to the totals provided in the tables and text. Percentages and percent changes 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

Within tables, blank fields generally indicate non-applicability or that presentation of any content would not be meaningful, or that information is not available as of the relevant date or for the relevant period. Zero values generally indicate that the respective figure is zero on an actual or rounded basis. Values that are zero on a rounded basis can be either negative or positive on an actual basis.

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(END) Dow Jones Newswires

April 25, 2023 02:00 ET (06:00 GMT)