Adjusted1 profit before tax CHF 6.3bn, +19%
YoY; adjusted1 return on tangible equity excluding
DTAs2 14.1%
Net profit attributable to shareholders CHF 1.2bn, CHF 2.9bn
net write-down of DTAs related to US tax law changes
CHF 4.1bn adjusted1 profit before tax in Global
Wealth Management, +14% YoY
CHF 103bn net new money and CHF 366bn increase in invested
assets in our wealth and asset management businesses
Fully applied CET1 capital ratio 13.8% and CET1 leverage
ratio 3.7%
2017 ordinary dividend CHF 0.65 per share proposed, +8% YoY;
initiating 3-year share buyback program of up to CHF 2 billion,
including up to CHF 550m in 2018
Financial targets and flexible capital returns policy set for
2018-2020
Creates unified Global Wealth Management division
Regulatory News:
UBS (NYSE:UBS) (SWX:UBSN) delivered excellent full-year 2017
results with adjusted1 profit before tax up 19% year over year to
CHF 6,335m and reported profit before tax up 32% to
CHF 5,409m. Net profit attributable to shareholders was
CHF 1,165m and included a CHF 2,865m net write-down of
deferred tax assets (DTAs) following the enactment of the US Tax
Cuts and Jobs Act (TCJA) in the fourth quarter of 2017, which had a
negligible impact on UBS's fully applied CET1 capital. Excluding
this net DTA write-down, net profit would have increased by 26%
year over year. The Group achieved its CHF 2.1bn annualized
net cost reduction target.
UBS’s capital position is very strong, with a fully applied CET1
capital ratio of 13.8%, a CET1 leverage ratio of 3.7% and total
loss-absorbing capacity of CHF 78bn.
"2017 was an excellent year for us. We delivered stronger
financial results and met our net cost reduction target. Greater
regulatory clarity means we can open a new chapter for UBS,
allowing us to sharpen our focus on growth across our businesses,
make further investments in technology and deliver attractive
returns to shareholders."Sergio P. Ermotti, Group Chief
Executive Officer
Global Wealth Management adjusted1 profit before tax rose 14%
year over year to CHF 4,128m, with growth in all revenue
lines, reflecting higher invested asset levels, increased client
transaction activity, higher short-term US dollar interest rates,
and further progress on mandate penetration and loan growth.
Personal & Corporate Banking delivered adjusted1 profit before
tax of CHF 1,681m, as management actions partly offset
interest rate and funding cost headwinds and higher expenses. Asset
Management had strong net new money of CHF 59bn, helping build
its invested assets to a nine-year high of over CHF 770bn;
adjusted1 profit before tax was CHF 525m. The Investment Bank
delivered an adjusted1 return on attributed equity of 16% with
adjusted1 profit before tax of CHF 1,497m. Corporate Center
losses reduced on lower litigation provisions and improved results
in Non-core and Legacy Portfolio.
OutlookWe expect the improved investor confidence and the
macroeconomic developments we observed in 2017, as well as typical
seasonality, to continue to benefit our global wealth management
businesses. However, low market volatility is likely to persist in
the short term, affecting institutional client activity levels in
particular. The positive effect of rising US dollar interest rates
on net interest margins will be limited by the continuing low and
negative interest rates in Switzerland and the eurozone.
Geopolitical factors continue to remain a risk. Implementing the
recently agreed upon changes to the Basel III capital standards
will result in increasing capital requirements and costs. UBS is
well positioned to deal with these challenges and to mitigate their
impact on overall performance and profitability by staying
disciplined on cost whilst investing in our businesses and
infrastructure. By continuing to execute our strategy with
discipline, UBS stands to benefit from any further improvement in
market conditions.
2017 performance overview
UBS’s 2017 adjusted1 profit before tax was CHF 6,335m, and
reported profit before tax was CHF 5,409m. Net profit
attributable to shareholders was CHF 1,165m, including a
CHF 2,865m net DTA write-down in the fourth quarter as a
result of US tax law changes, with diluted earnings per share of
CHF 0.30. Excluding this net DTA write-down, net profit would
have been CHF 4,030m, up 26% YoY. Adjusted1 return on tangible
equity was 4.2%, or 14.1% excluding deferred tax expense/benefit
and DTAs2.
Global Wealth Management adjusted1 PBT
CHF 4,128m, +14% YoYHigher invested asset levels,
increased transaction activity and higher short-term US dollar
interest rates, together with further progress on mandate
penetration and loan growth, led to an increase in all revenue
lines, while costs increased at a lower rate. Mandate and managed
account penetration increased to 33.0% of invested assets, and
loans increased by 9%. Net new money was CHF 44.3bn. Adjusted1
net margin improved by 1bp to 19bps.
Wealth Management adjusted1 PBT
CHF 2,758m, +15% YoYIncreases in all revenue lines, as
well as good cost control drove strong profit growth. Net new money
was excellent at CHF 51.1bn, despite CHF 20bn of outflows
related to cross-border and the introduction of fees on euro
deposit concentrations. Mandate penetration increased to 28.9% of
invested assets, and loans increased by 13%. Adjusted1 net margin
improved by 1bp to 26bps.
Wealth Management Americas adjusted1 PBT
USD 1,395m, +12% YoYRecord operating income was driven by
increases in all key revenue lines. Costs increased, mainly on
higher financial advisor compensation and investments for future
growth. Managed account penetration grew to 36.8% of invested
assets, and loans increased by 5%. Strong inflows from same store
advisors were more than offset by lower net recruiting, consistent
with changes in the operating model, resulting in net new money
outflows of USD 7.2bn. Adjusted1 net margin was unchanged at
12bps.
Personal & Corporate Banking
adjusted1 PBT CHF 1,681m, (4%)
YoYManagement actions drove higher transaction-based and
recurring net fee income, which partly offset interest rate and
funding cost headwinds, as well as higher expenses related to
regulatory initiatives. Annualized net new business volume growth
for personal banking was a record 4.0%, with record net new client
acquisition.
Asset Management adjusted1 PBT CHF 525m,
(5%) YoYThe positive impact of market performance and higher
net new run rate fees, together with continued cost discipline, was
more than offset by positive one-off items in the prior year and
the reduction in profit related to the sale of fund administration
servicing units in Luxembourg and Switzerland during 2017. Invested
assets reached a nine-year high of CHF 776bn. Net new money
was CHF 48.1bn excluding money market flows.
Investment Bank adjusted1 PBT CHF 1,497m,
(0%) YoYRevenues increased in Equity Capital Markets and in
Equity Derivatives, partly offsetting lower revenues in Foreign
Exchange, Rates and Credit due to very low market volatility, which
impacted client activity. The annualized adjusted1 return on
attributed equity was 16.0%.
Corporate Center – Services recorded an adjusted1 loss
before tax of CHF 895m. Group Asset and Liability
Management adjusted1 loss before tax was CHF 296m.
Non-core and Legacy Portfolio posted an adjusted1 loss
before tax of CHF 305m.
Fourth quarter 2017 performance overview
UBS’s fourth quarter adjusted1 profit before tax was
CHF 1,221m, and reported profit before tax was CHF 997m.
Net loss attributable to shareholders was CHF 2,224m,
including the CHF 2,865m net DTA write-down as a result of US
tax law changes, with diluted earnings per share of
CHF (0.60). Excluding this net write-down, net profit would
have been CHF 641m. Annualized adjusted1 return on tangible
equity was (17.7%), or 10.1% excluding DTAs and the 4Q17 impact of
the TCJA2.
Global Wealth Management adjusted1 PBT
CHF 1,025m, +18% YoYHigher invested asset levels and
higher short-term US dollar interest rates, together with further
progress on mandate penetration and loan growth led to an increase
in all revenue lines. Costs increased at a lower rate, despite
continued investments in the business. Mandate and managed account
penetration increased to 33.0% of invested assets, and loans
increased by 9%. Net new money was CHF 13.8bn for the quarter.
Adjusted1 net margin improved by 1bp to 18bps.
Wealth Management adjusted1 PBT
CHF 640m, +25% YoYResults reflect increases in all revenue
lines, as well as good cost control following the management
actions taken in 2016, and lower litigation provisions. Net new
money was very strong at CHF 14.2bn, despite CHF 6bn of
cross-border outflows. Mandate penetration increased to 28.9% of
invested assets, and loans increased by 13%. Adjusted1 net margin
improved by 2bps to 23bps.
Wealth Management Americas adjusted1 PBT
USD 390m, +9% YoYTotal operating income increased on
record recurring net fee income and higher net interest income.
Costs increased, mainly driven by financial advisor compensation.
Managed account penetration increased to 36.8% of invested assets,
and loans increased by 5%. Net new money outflows were
USD 0.5bn, as strong net inflows from same store advisors were
more than offset by net outflows related to financial advisor
attrition. Adjusted1 net margin was unchanged at 13bps.
Personal & Corporate Banking
adjusted1 PBT CHF 428m, +8% YoYManagement
actions drove higher transaction-based and recurring net fee
income, which more than offset funding cost and interest rate
headwinds, as well as higher expenses. Annualized net new business
volume growth for personal banking was 1.0%.
Asset Management adjusted1 PBT CHF 116m,
(26%) YoYLower operating income mainly reflected the loss of
revenue relative to the prior-year quarter due to the sale of fund
administration servicing units in Luxembourg and Switzerland.
Invested assets reached a nine-year high of CHF 776bn. Net new
money was CHF 9.8bn, excluding money market flows, and net new
run rate fees were positive for the second consecutive quarter.
Investment Bank adjusted1 PBT CHF 168m,
(51%) YoYContinued strong results in cash equities and
derivatives were more than offset by reductions in both Foreign
Exchange, Rates and Credit and in Advisory revenues, as a result of
low market volatility and a lower fee pool in mergers and
acquisitions, respectively. Credit loss expenses were CHF 79m
compared with CHF 5m in the prior-year quarter.
Corporate Center – Services recorded an adjusted1 loss
before tax of CHF 159m. Group Asset and Liability
Management adjusted1 loss before tax was CHF 213m.
Non-core and Legacy Portfolio posted an adjusted1 loss
before tax of CHF 142m.
Delivering attractive capital returns
For 2017, the Board of Directors intends to propose a dividend
to UBS Group AG shareholders of CHF 0.653 per share, an 8%
increase on the prior year. The bank will also initiate a share
repurchase program of up to CHF 2bn over three years, including up
to CHF 550m in 2018, commencing in March.
Following the announcements by the Basel Committee in December
2017 with regards to the finalization of Basel III capital rules,
UBS has greater clarity on its future capital requirements.
The firm plans to operate with a fully applied CET1 capital
ratio of around 13% and a fully applied CET1 leverage ratio of
around 3.7% from 2018 to 2020.
Over the next three years, as a result of known regulatory
changes and estimated business growth, UBS estimates its RWA may
increase by around CHF 40bn and anticipates its LRD may rise
by around CHF 85bn. Actual increases may vary depending on
growth opportunities, market conditions and mitigation actions.
These indicative estimates do not constitute financial targets. As
a consequence, and based on the estimates above, the bank
anticipates it may build approximately CHF 4bn of additional
fully applied CET1 capital over the next three years, subject to
market conditions as well as RWA and LRD development.
UBS currently estimates that the introduction of the revised
Basel III framework on 1 January 2022 will lead to a further net
increase in RWA of around CHF 35bn, before taking into account
any mitigation actions, and based on the bank's assumptions
regarding the implementation of final standards. UBS will update
its guidance on CET1 ratios when further details on the
implementation of the final standards are available.
The greater visibility on future capital requirements allows the
bank to update the capital returns policy for the next three years,
with the aim to increase returns to shareholders while continuing
to build on an already strong capital position. The previous
guidance for returning at least 50% of net profit attributable to
shareholders, subject to the fully applied CET1 capital ratio
remaining above 13% and 10% post-stress, will no longer apply.
Going forward:
- The bank will target to grow its
ordinary dividend per share at mid-to-high single digit percent per
annum.
- The bank expects to return excess
capital, after dividend accruals, likely in the form of share
repurchases after considering its outlook and subject to regulatory
approval.
Capital strength remains a key pillar of the bank's strategy.
Since 2012, UBS has increased its total loss-absorbing capacity by
around CHF 50bn to almost CHF 80bn as of year-end 2017.
At the same time, exposure to level 3 assets has been reduced by
more than 70%, Non-core and Legacy Portfolio leverage ratio
denominator (LRD) is down 95%, litigation exposures are materially
lower and resilience to stress scenarios has significantly
improved.
Global Wealth Management – the largest and only truly global
wealth manager
Effective 1 February 2018, UBS is creating a unified Wealth
Management (WM) and Wealth Management Americas (WMA) business
division, called Global Wealth Management (GWM). Two years ago, the
bank began to more closely align Wealth Management and Wealth
Management Americas and together they have made good progress
converging the Chief Investment Office (CIO) as well as the UHNW
and Global Family Office (GFO) segments into global organizations.
The decision to combine WM and WMA is the natural next step in the
evolution of the wealth management franchise.
Martin Blessing, President Wealth Management, and Tom Naratil,
President UBS Americas and Wealth Management Americas, have been
appointed co-Presidents of Global Wealth Management. GWM aims to
further enhance its superior client experience and product offering
in line with the needs of an increasingly global client base. UBS
believes the combined business division will enable the bank to
more effectively leverage the purchasing power of its
CHF 2.3trn invested asset base and realize greater synergies
across technology, innovation and other areas of investment.
Regional variations in the client service model will be maintained,
while middle- and back-office functions will be more closely
aligned and integrated. The bank will report the results for GWM
for the first quarter of 2018 and provide an updated timeseries
around the end of March 2018.
Sergio P. Ermotti said, "In the last few years, we transformed
our wealth management businesses, adapting to a new paradigm while
adding CHF 1.0bn in adjusted1 profits since 2011. Two years
ago, we began to more closely align the divisions, and today's
announcement reflects our continued evolution. It will mean
improved efficiency, more sharing of best practices, greater
returns on our investments and enhanced client service."
Financial targets 2018-2020 and commitment to technology
investment
With greater clarity on Basel III capital rules, UBS has set its
performance targets for the Group and at business division level
for the 2018-2020 period, which the bank aims to achieve in normal
market conditions.
For its newly created Global Wealth Management (GWM) business
division, UBS is targeting 10-15% adjusted PBT growth per annum
over the cycle, and around 10% for Asset Management (AM). GWM aims
to achieve 2-4% net new money growth per annum, and AM 3-5% net new
money growth, excluding money market flows, per annum. The
Investment Bank will continue to target an adjusted return on
attributed equity of at least 15% and operate at around one third
of the Group’s LRD and RWA, consistent with the existing
guidance.
Driving further efficiency remains critical to the bank's future
success, and programs exist within all of our business divisions
and Corporate Center to drive further positive operating leverage.
Each business division has an objective to reduce its cost/income
ratio, which is expected to lower the Group's cost/income ratio
during this period. At the same time, the bank intends to secure
its position as a leader in the digital age by maintaining
expenditure on technology of at least 10% of the Group's revenues,
which is expected to result in around CHF 1bn in additional
expenses cumulatively over the next three years, compared with
2017. These investments are designed to enhance and differentiate
the client experience and product excellence the firm offers, while
accelerating effectiveness and efficiency.
Performance targets and capital guidance 2018–2020
Cost / income ratio1
Profitability & growth1 Capital &
resource guidance Group
<75% ~15% RoTE excluding DTAs2 ~13% CET1 capital
ratio (fully applied)
~3.7% CET1 leverage ratio (fully
applied)
Global Wealth Management 65–75%
10–15% pre-tax profit growth3
2–4% net new money growth
Personal & Corporate
Banking
50–60%
1–4% net new business volume
(personal banking)
150–165bps net interest margin
Asset Management 60–70%
~10% pre-tax profit growth3
3–5% net new money growth,
excluding money market flows
Investment Bank 70–80%
>15% RoAE4
RWA and LRD ~1/3 of the Group5
1 Annual targets; cost / income ratio, pre-tax profit growth and
return targets are on an adjusted basis. 2 Return on tangible
equity excluding deferred tax expense/benefit and DTAs; calculated
as adjusted net profit / loss attributable to shareholders
excluding deferred tax expense / benefit, such as the net
write-down due to the Tax Cuts and Jobs Act enacted in the fourth
quarter of 2017, divided by tangible equity attributable to
shareholders excluding any DTAs that do not qualify as fully
applied CET1 capital. 3 Over the cycle. 4 Return on attributed
equity. 5 Including RWA and LRD directly associated with activity
that Corporate Center – Group ALM manages centrally on the
Investment Bank’s behalf; proportion may fluctuate around this
level due to factors such as equity market levels and FX rates.
Changes to the Pension Fund of UBS in Switzerland
As a result of the effects of continuing low and in some cases
negative interest rates, diminished investment return expectations
and increasing life expectancy, the Pension Fund of UBS in
Switzerland and UBS have agreed measures that will take effect from
the start of 2019 to support the long-term financial stability of
the pension fund. As a result, the conversion rate will be
lowered, the regular retirement age and employee contributions will
be increased, and savings contributions will start earlier. These
measures will have no effect on current pensioners of UBS.
To mitigate the effects of the reduction of the conversion rate
on future pensions, UBS will make a payment of up to CHF 720m
in three installments in 2020, 2021 and 2022. The annual payments
are expected to reduce UBS's fully applied CET1 capital by
approximately CHF 200m per year over the installment period, with
no effect on the income statement.
In accordance with International Financial Reporting Standards,
these measures, including the payment made by UBS, will lead to a
reduction in the pension obligation recognized by UBS, resulting in
a pre-tax gain of CHF 225m in the first quarter of 2018, which
will be booked in personnel expenses across the business divisions
and Corporate Center and treated as an adjusting item. This will
not affect total equity or CET1 capital.
UBS commitment to sustainable performance
UBS is committed to creating long-term positive impact for its
clients, employees, investors and society, and the firm made
substantial progress on this commitment in 2017. This is
illustrated by the recognition UBS received throughout the year for
its activities and capabilities related to sustainable investing,
philanthropy, environmental and human rights policies governing
client and supplier relationships, the firm's environmental
footprint and community investment.
Recognized leader in sustainabilityThe Dow Jones
Sustainability Index, the most widely recognized of its kind,
confirmed UBS as Diversified Financial Services and Capital Markets
industry group leader for the third year running. MSCI ESG Research
upgraded UBS to ‘A’ in its latest sustainability ratings, placing
it in the top three of its primary peer group. Sustainalytics, the
ESG ratings and research analysts, ranked UBS as an industry
leader.
In addition, UBS was identified as a global leader in its
response to climate change for the second year running and was
awarded a position on the Climate A List by CDP, the non-profit
global environmental disclosure platform. This is in recognition of
the firm’s actions to cut emissions, mitigate climate risks and
develop the low-carbon economy.
Sustainable and impact investingIn 2017, UBS
significantly strengthened its focus on sustainable and impact
investing. The firm expanded its capabilities and dedicated
additional resources to this field in Asset Management, its wealth
management businesses and the Investment Bank. More than a dozen
new client offerings were rolled out. Examples include the Rise
Fund, a unique private equity impact investment to which UBS
clients contributed USD 325m, the Climate Aware World Equity Fund
from Asset Management designed to address carbon risk in
portfolios, and three new indices (LGBT Career Equality, Military
Veterans, Global Sustainability Leaders ETFs) created by the
Investment Bank.
During 2017, invested assets with an ESG component, including
through exclusion, exceeded CHF 1trn for the first time, about one
third of total invested assets at UBS.
Information in this news release is presented for UBS Group AG
on a consolidated basis unless otherwise specified. Financial
information for UBS AG (consolidated) does not differ materially
from UBS Group AG (consolidated) and a comparison between UBS Group
AG (consolidated) and UBS AG (consolidated) is provided at the end
of this news release.
1 Refer to the “Performance by business division and Corporate
Center unit – reported and adjusted“ table in this news release.2
Return on tangible equity excluding deferred tax expense/benefit
and DTAs; calculated as adjusted net profit / loss attributable to
shareholders excluding deferred tax expense/benefit, such as the
net write-down due to the Tax Cuts and Jobs Act enacted in the
fourth quarter of 2017, divided by tangible equity attributable to
shareholders excluding any DTAs that do not qualify as fully
applied CET1 capital.3 Subject to shareholder approval, the
dividend will be paid out of capital contribution reserves on 10
May 2018 to shareholders of record as of 9 May 2018. The
ex-dividend date will be 8 May 2018. UBS expects that dividends
will be paid out of capital contribution reserves for the
foreseeable future. Dividends paid out of capital contribution
reserves are not subject to the deduction of Swiss withholding tax.
For US federal income tax purposes, we expect that the dividend
will be paid out of current or accumulated earnings and
profits.
Performance by business division and Corporate Center unit –
reported and adjusted¹,²
For the quarter ended 31.12.17 CHF
million
Wealth Manage-
ment
Wealth Manage-
ment Americas
Personal &
Corporate
Banking
Asset
Manage-
ment
Investment Bank
CC –
Services³
CC –
Group ALM
CC – Non-
core and
Legacy
Portfolio
UBS Operating income as reported
1,899 2,169
986 622 1,726
(46) (197)
(38) 7,122 of which: gains on sale of
subsidiaries and businesses
153
153 of which: gain on sale of financial assets
available for sale⁴
29
29 Operating income (adjusted) 1,899
2,169 986
469 1,697 (46)
(197) (38)
6,940
Operating
expenses as reported 1,412
1,826 593 384
1,678 110
17 105 6,125 of
which: personnel-related restructuring expenses
10 0 2
5 12 132
0 0
160 of which: non-personnel-related restructuring expenses
24 0 0
6 6
185 0 0
221 of which: restructuring expenses allocated from CC
Services 117 42
34 19 106
(321) 1
1 0 of which: expenses from
modification of terms for certain DCCP awards⁵
25
25 Operating expenses (adjusted)
1,260 1,784
557 353 1,530
114 16 104
5,719 of which: net expenses for provisions
for litigation, regulatory and similar matters�
3 14 2
1 5 (1)
0 16
39
Operating profit / (loss) before tax as reported
488 343
392 238
49 (155)
(214) (143)
997 Operating profit / (loss) before
tax (adjusted) 640
385 428
116 168
(159) (213)
(142) 1,221
For the quarter ended 31.12.16 CHF million
Wealth Manage-
ment
Wealth Manage-
ment Americas
Personal &
Corporate
Banking
Asset
Manage-
ment
Investment Bank CC –
Services³
CC –
Group ALM
CC – Non-
core and
Legacy
Portfolio
UBS Operating income as reported
1,782 2,076 941
499 2,014
(59) (144) (53)
7,055 of which: gains on sale of financial
assets available for sale⁴
10
78
88 of which: net foreign currency translation gains⁷
27
27 Operating income
(adjusted) 1,782 2,066
941 499
1,936 (59) (171)
(53) 6,940
Operating expenses as reported 1,413
1,737 567
356 1,708 256
0 272 6,308
of which: personnel-related restructuring expenses
15 1 2
1 40 114
0 0
174 of which: non-personnel-related restructuring expenses
25 0 0
5 5
163 0 0
197 of which: restructuring expenses allocated from CC
Services 103 30
19 5 72
(237) 0
8 0 Operating expenses (adjusted)
1,270 1,706
546 344 1,592
216 0
264 5,936 of which: net expenses for
provisions for litigation, regulatory and similar matters�
62 53 7
1 14
(2) 0 129
264
Operating profit / (loss) before tax as
reported 368
339 374
144 306
(315) (144)
(325) 746 Operating profit /
(loss) before tax (adjusted) 511
360 395
156 344
(275) (171)
(317) 1,003
1 Adjusted results are non-GAAP financial measures as defined by
SEC regulations. 2 Comparative figures in this table may differ
from those originally published in quarterly and annual reports due
to adjustments following organizational changes, restatements due
to the retrospective adoption of new accounting standards or
changes in accounting policies, and events after the reporting
period. 3 Corporate Center Services operating expenses presented
in this table are after service allocations to business divisions
and other Corporate Center units. 4 Includes a gain on the sale of
our investment in the London Clearing House in the fourth quarter
of 2017 and a gain on the partial sale of our investment in IHS
Markit in the fourth quarter of 2016, both in the Investment Bank.
5 Relates to the removal of the service period requirement for DCCP
awards granted for the performance years 2012 and 2013. 6 Includes
recoveries from third parties of CHF 2 million and CHF 10 million
for the quarters ended 31 December 2017 and 31 December 2016,
respectively. 7 Related to the disposal of foreign subsidiaries and
branches.
Performance by business division and Corporate
Center unit – reported and adjusted¹,²
For the year ended
31.12.17 CHF million
Wealth Manage-
ment
Wealth Manage-
ment Americas
Personal &
Corporate
Banking
Asset
Manage-
ment
Investment Bank
CC –
Services³
CC –
Group ALM
CC – Non-
core and
Legacy
Portfolio
UBS Operating income as reported
7,625 8,349
3,850 2,044 7,651
(153) (276)
(22) 29,067 of which: gains on sale of
subsidiaries and businesses
153
153 of which: gains on sale of financial assets
available for sale⁴
136
136 of which: net foreign currency translation losses⁵
(22)
(22) Operating
income (adjusted) 7,625
8,349 3,850 1,891
7,515 (153)
(254) (22) 28,800
Operating expenses as reported
5,330 7,092
2,272 1,466 6,402
762 47
288 23,658 of which: personnel-related
restructuring expenses 38
1 7 16
38 433 1
0 534 of which:
non-personnel-related restructuring expenses
73 0 0
22 18 522
0 0 634 of
which: restructuring expenses allocated from CC Services
353 113 96
62 303
(935) 3 6
0 of which: expenses from modification of terms for
certain DCCP awards�
25
25 Operating expenses (adjusted) 4,867
6,979 2,169
1,366 6,018 743
43 282
22,465 of which: net expenses for provisions for litigation,
regulatory and similar matters⁷ 26
95 2 (3)
(41) 242
0 (42) 279
Operating profit / (loss) before tax as reported
2,295 1,256
1,578 578
1,249 (914)
(322) (311)
5,409 Operating profit / (loss) before tax
(adjusted) 2,758
1,369 1,681
525 1,497
(895) (296)
(305) 6,335
For the year ended 31.12.16 CHF million Wealth
Manage-
ment
Wealth Manage-
ment Americas
Personal &
Corporate
Banking
Asset
Manage-
ment
Investment Bank CC –
Services³
CC –
Group ALM
CC – Non-
core and
Legacy
Portfolio
UBS Operating income as reported
7,291 7,782 3,984
1,931 7,688
(102) (219) (36)
28,320 of which: gains on sale of financial
assets available for sale⁴ 21
10 102
78
211
of which: gains on sales of real estate
120
120 of which: gains related to investments in
associates
21
21 of
which: net foreign currency translation losses⁵
(122)
(122) of which: losses on
sales of subsidiaries and businesses (23)
(23) Operating income (adjusted)
7,293 7,772
3,861 1,931 7,610
(222) (97)
(36) 28,113 Operating expenses as
reported 5,343 6,675
2,224 1,479
6,684 747 (1)
1,078 24,230 of which:
personnel-related restructuring expenses 53
7 4
15 154 518
0 1 751 of which:
non-personnel-related restructuring expenses
55 0 0
15 14 623
0 0 706 of
which: restructuring expenses allocated from CC Services
339 132 113
70 410
(1,084) 0 21
0 Operating expenses (adjusted)
4,896 6,536 2,107
1,379 6,107
690 (1) 1,057
22,772 of which: expenses for provisions for
litigation, regulatory and similar matters⁷ 69
96 3
(2) 42 2
0 584 795
Operating profit / (loss) before tax as reported
1,948 1,107
1,760 452
1,004 (849)
(218) (1,114)
4,090 Operating profit / (loss)
before tax (adjusted) 2,397
1,236 1,754
552 1,503
(912) (96)
(1,093) 5,341 1
Adjusted results are non-GAAP financial measures as defined by SEC
regulations. 2 Comparative figures in this table may differ from
those originally published in quarterly and annual reports due to
adjustments following organizational changes, restatements due to
the retrospective adoption of new accounting standards or changes
in accounting policies, and events after the reporting period. 3
Corporate Center Services operating expenses presented in this
table are after service allocations to business divisions and other
Corporate Center units. 4 Includes a gain on the sale of our
investment in the London Clearing House in the Investment Bank in
2017, gains on sales of our investment in IHS Markit in the
Investment Bank in 2017 and 2016 as well as a gain on sale of our
investment in Visa Europe in Wealth Management and Personal &
Corporate Banking in 2016. 5 Related to the disposal of foreign
subsidiaries and branches. 6 Relates to the removal of the service
period requirement for DCCP awards granted for the performance
years 2012 and 2013. 7 Includes recoveries from third parties of
CHF 53 million and CHF 13 million for the years ended 31 December
2017 and 31 December 2016, respectively.
UBS Group key
figures
As of or for the quarter ended As of or for the year
ended CHF million, except where indicated
31.12.17
30.9.17 31.12.16 31.12.17 31.12.16
Group
results
Operating income
7,122 7,145 7,055 29,067
28,320 Operating expenses
6,125 5,924 6,308
23,658 24,230 Operating profit / (loss) before tax
997 1,221 746 5,409 4,090 Net profit / (loss)
attributable to shareholders
(2,224) 946 636
1,165 3,204 Diluted earnings per share (CHF)¹
(0.60)
0.25 0.17 0.30 0.84
Key performance
indicators²
Profitability
Return on tangible equity (%)
(19.2) 8.3 5.6
2.7 6.9 Cost / income ratio (%)
85.0 83.0 89.1
81.0 85.4
Growth
Net profit growth (%) 14.4 (33.0)
(63.6) (48.3) Net new money growth for combined wealth
management businesses (%)
2.5 0.4 (1.1) 2.1
2.1
Resources
Common equity tier 1 capital ratio (fully applied, %)³
13.8 13.7 13.8 13.8 13.8 Common equity tier 1
leverage ratio (fully applied, %)³
3.7 3.7 3.5
3.7 3.5 Going concern leverage ratio (fully applied, %)³
4.7 4.7 4.6 4.7 4.6
Additional
information
Profitability
Return on equity (%)
(17.0) 7.2 4.8 2.2
5.9 Return on risk-weighted assets, gross (%)⁴
12.1
12.0 12.9 12.6 13.2 Return on leverage ratio denominator,
gross (%)⁴
3.3 3.3 3.2 3.3 3.2
Resources
Total assets
915,613 913,599 935,016 915,613
935,016 Equity attributable to shareholders
51,326
53,493 53,621 51,326 53,621 Common equity tier 1 capital
(fully applied)³
32,823 32,621 30,693 32,823
30,693 Common equity tier 1 capital (phase-in)³
35,638 36,045 37,788 35,638 37,788 Risk-weighted
assets (fully applied)³
237,494 237,963 222,677
237,494 222,677 Common equity tier 1 capital ratio
(phase-in, %)³
14.9 15.1 16.8 14.9 16.8 Going
concern capital ratio (fully applied, %)³
17.7 17.4
17.9 17.7 17.9 Going concern capital ratio (phase-in, %)³
21.8 21.9 24.7 21.8 24.7 Gone concern
loss-absorbing capacity ratio (fully applied, %)³
15.3 15.5 13.2 15.3 13.2 Leverage ratio denominator
(fully applied)³
886,116 884,834 870,470
886,116 870,470 Going concern leverage ratio (phase-in, %)³
5.8 5.9 6.4 5.8 6.4 Gone concern leverage ratio
(fully applied, %)³
4.1 4.2 3.4 4.1 3.4
Liquidity coverage ratio (%)⁵
143 142 132 143
132
Other
Invested assets (CHF billion)�˒⁷
3,179 3,054 2,810
3,179 2,810 Personnel (full-time equivalents)
61,253 60,796 59,387 61,253 59,387 Market
capitalization
69,125 63,757 61,420 69,125
61,420 Total book value per share (CHF)
13.79 14.39
14.44 13.79 14.44 Tangible book value per share (CHF)
12.07 12.67 12.68 12.07 12.68 1 Refer to “Earnings
per share (EPS) and shares outstanding” in the “Consolidated
financial information” section of the UBS Group fourth quarter 2017
report for more information. 2 Refer to the “Measurement of
performance” section of our Annual Report 2016 for the definitions
of our key performance indicators. 3 Based on the Swiss SRB
framework. Refer to the “Capital management” section of the UBS
Group fourth quarter 2017 report for more information. 4 Calculated
as operating income before credit loss (annualized as applicable) /
average fully applied risk-weighted assets and average fully
applied leverage ratio denominator, respectively. 5 Refer to the
“Balance sheet, liquidity and funding management” section of the
UBS Group fourth quarter 2017 report for more information. 6
Includes invested assets for Personal & Corporate Banking. 7
Reflects a correction of CHF 13 billion as of 30 September 2017 and
of CHF 12 billion as of 31 December 2016.
Income statement
For the quarter ended
% change from For the
year ended CHF million
31.12.17 30.9.17
31.12.16 3Q17 4Q16
31.12.17 31.12.16 Net interest income
1,672 1,743 1,762 (4)
(5) 6,528 6,413 Credit loss
(expense) / recovery
(89) 7 (24)
271 (128)
(37) Net interest income after credit loss expense
1,584 1,750 1,738
(9) (9) 6,400 6,376 Net fee and
commission income
4,294 4,244
4,161 1 3 17,186
16,397 Net trading income
987
1,089 946 (9) 4
4,972 4,948 Other income
257
62 209 315 23
509 599 Total operating income
7,122 7,145 7,055 0
1 29,067 28,320 of which: net
interest and trading income
2,659 2,832
2,708 (6) (2)
11,499 11,361 Personnel expenses
3,923 3,893 3,868 1
1 15,889 15,720 General and
administrative expenses
1,913 1,760
2,165 9 (12)
6,666 7,434 Depreciation and impairment of property,
equipment and software
272 256
255 6 7 1,033
985 Amortization and impairment of intangible assets
17 16 21 6
(19) 70 91 Total operating expenses
6,125 5,924 6,308
3 (3) 23,658 24,230
Operating profit / (loss) before tax
997
1,221 746 (18) 34
5,409 4,090 Tax expense / (benefit)
3,194 272 109
4,168 805 Net
profit / (loss)
(2,198) 948 637
1,241 3,286 Net profit / (loss) attributable to
non-controlling interests
27 2 1
76
82
Net profit / (loss) attributable to shareholders
(2,224) 946 636
1,165 3,204
Comprehensive income
Total comprehensive
income
(2,013) 1,574 71
330
2,170 Total comprehensive income attributable to non-controlling
interests
336 31 (12)
984 428 352
Total comprehensive income attributable to shareholders
(2,349) 1,543 83
(98) 1,817
Comparison UBS Group
AG (consolidated) versus UBS AG (consolidated)
As of or for the
quarter ended 31.12.17
As of or for the quarter ended 30.9.17
As of or for the quarter ended
31.12.16 CHF million, except where indicated
UBS Group AG
(consolidated)
UBS AG
(consolidated)
Difference
(absolute)
UBS Group AG
(consolidated)
UBS AG
(consolidated)
Difference
(absolute)
UBS Group AG
(consolidated)
UBS AG
(consolidated)
Difference
(absolute)
Income statement
Operating
income
7,122
7,242 (120)
7,145 7,279
(134) 7,055
7,118 (63) Operating
expenses
6,125
6,346 (221)
5,924 6,117
(193) 6,308
6,373 (65) Operating
profit / (loss) before tax
997
896 101
1,221 1,161
60
746 745 1 of
which: Wealth Management
488
489 (1)
587 585
2
368 368 0 of
which: Wealth Management Americas
343
338 5
315
307 8
339 338 1
of which: Personal & Corporate Banking
392 393 (1)
411
412 (1)
374 375
(1) of which: Asset Management
238 238 0
127
127 0
144 144
0 of which: Investment Bank
49
50 (1)
269
264 5
306 304 2
of which: Corporate Center
(513)
(612) 99
(490) (534)
44
(784) (783) (1) of
which: Services
(155)
(252) 97
(401) (457)
56
(315) (307) (8) of which:
Group ALM
(214)
(217) 3
(67) (56)
(11) (144)
(150) 6 of which:
Non-core and Legacy Portfolio
(143)
(143) 0
(22)
(21) (1)
(325) (326)
1 Net profit / (loss)
(2,198)
(2,273) 75
948 905
43
637 639 (2) of
which: net profit / (loss) attributable to shareholders
(2,224) (2,300)
76
946 904 42
636
638 (2) of which: net profit / (loss)
attributable to preferred noteholders
26 (26)
0 0
0 0
of which: net profit / (loss) attributable to non-controlling
interests
27
0 27
2 2 0
1
1 0
Statement of
comprehensive income
Other comprehensive income
184 187 (3)
626
630 (4)
(566) (566)
0 of which: attributable to shareholders
(124) (122)
(2) 596
600 (4)
(553) (553)
0 of which: attributable to preferred
noteholders
307 (307)
30
(30)
(12) 12 of which:
attributable to non-controlling interests
309 2 307
29
0 29
(13) (1)
(12) Total comprehensive income
(2,013)
(2,086) 73
1,574
1,535 39
71 73
(2) of which: attributable to shareholders
(2,349) (2,421)
72
1,543 1,504 39
83
85 (2) of which: attributable to preferred
noteholders
333 (333)
30
(30)
(12) 12 of which:
attributable to non-controlling interests
336 3 333
31
1 30
(12) 0 (12)
Balance sheet
Total assets
915,613 916,334
(721)
913,599 914,551 (952)
935,016
935,353 (337) Total liabilities
864,230
865,447 (1,217)
859,364 860,562
(1,198)
880,714 881,009
(295) Total equity
51,383
50,887 496
54,236
53,989 247
54,302 54,343
(41) of which: equity attributable to shareholders
51,326 50,830
496
53,493 53,246 247
53,621
53,662 (41) of which: equity
attributable to preferred noteholders
0 0
687
(687)
642
(642) of which: equity attributable to non-controlling interests
57 57
0
743 56 687
682
40 642
Capital information
Common
equity tier 1 capital (fully applied)
32,823 33,393
(570)
32,621 33,337 (716)
30,693
32,447 (1,754) Common equity
tier 1 capital (phase-in)
35,638
36,186 (548)
36,045
36,736 (691)
37,788 39,474
(1,686) Going concern capital (fully applied)
42,063
37,059 5,004
41,493 37,007
4,486
39,844 36,294
3,550 Going concern capital (phase-in)
51,892 46,431
5,461
52,318 46,961 5,357
55,593
51,084 4,509 Risk-weighted
assets (fully applied)
237,494
236,606 888
237,963
237,322 641
222,677 223,232
(555) Common equity tier 1 capital ratio (fully applied, %)
13.8 14.1
(0.3)
13.7 14.0
(0.3) 13.8
14.5 (0.7) Common equity tier 1
capital ratio (phase-in, %)
14.9
15.2 (0.3)
15.1 15.4
(0.3)
16.8 17.5
(0.7) Going concern capital ratio (fully applied, %)
17.7 15.7
2.0 17.4
15.6 1.8
17.9 16.3
1.6 Going concern capital ratio (phase-in, %)
21.8 19.6
2.2
21.9 19.7 2.2
24.7
22.6 2.1 Gone concern loss-absorbing
capacity ratio (fully applied, %)
15.3
15.8 (0.5)
15.5
15.9 (0.4)
13.2 13.3
(0.1) Leverage ratio denominator (fully applied)
886,116 887,189
(1,073)
884,834 885,896
(1,062) 870,470
870,942 (472) Common
equity tier 1 leverage ratio (fully applied, %)
3.7 3.8
(0.1) 3.7
3.8 (0.1)
3.5 3.7
(0.2) Going concern leverage ratio (fully
applied, %)
4.7
4.2 0.5
4.7 4.2
0.5 4.6
4.2 0.4 Going concern
leverage ratio (phase-in, %)
5.8
5.2 0.6
5.9 5.3
0.6
6.4 5.8 0.6 Gone
concern leverage ratio (fully applied, %)
4.1 4.2
(0.1) 4.2
4.3 (0.1)
3.4 3.4
0.0
UBS’s fourth quarter 2017 report, news release and slide
presentation will be available from 06:45 CET on Monday, 22 January
2018, at www.ubs.com/quarterlyreporting.
UBS will hold a presentation of its fourth quarter 2017 results
on Monday, 22 January 2018. The results will be presented by Sergio
P. Ermotti, Group Chief Executive Officer, Kirt Gardner, Group
Chief Financial Officer, Caroline Stewart, Global Head of Investor
Relations, and Hubertus Kuelps, Group Head of Communications &
Branding.
Time• 09:00–11:00 CET• 08:00–10:00 GMT• 03:00–05:00 US
EST
Audio webcastThe presentation for analysts can be
followed live on www.ubs.com/quarterlyreporting with a simultaneous
slide show.
Webcast playbackAn audio playback of the results
presentation will be made available at www.ubs.com/investors later
in the day.
Cautionary Statement Regarding Forward-Looking
StatementsThis news release contains statements that constitute
“forward-looking statements,” including but not limited to
management’s outlook for UBS’s financial performance and statements
relating to the anticipated effect of transactions and strategic
initiatives on UBS’s business and future development. While these
forward-looking statements represent UBS’s judgments and
expectations concerning the matters described, a number of risks,
uncertainties and other important factors could cause actual
developments and results to differ materially from UBS’s
expectations. These factors include, but are not limited to: (i)
the degree to which UBS is successful in the ongoing execution of
its strategic plans, including its cost reduction and efficiency
initiatives and its ability to manage its levels of risk-weighted
assets (RWA), including to counteract regulatory-driven increases,
leverage ratio denominator, liquidity coverage ratio and other
financial resources, and the degree to which UBS is successful in
implementing changes to its wealth management businesses to meet
changing market, regulatory and other conditions; (ii) continuing
low or negative interest rate environment, developments in the
macroeconomic climate and in the markets in which UBS operates or
to which it is exposed, including movements in securities prices or
liquidity, credit spreads, and currency exchange rates, and the
effects of economic conditions, market developments, and
geopolitical tensions on the financial position or creditworthiness
of UBS’s clients and counterparties as well as on client sentiment
and levels of activity; (iii) changes in the availability of
capital and funding, including any changes in UBS’s credit spreads
and ratings, as well as availability and cost of funding to meet
requirements for debt eligible for total loss-absorbing capacity
(TLAC); (iv) changes in or the implementation of financial
legislation and regulation in Switzerland, the US, the UK and other
financial centers that may impose, or result in, more stringent
capital, TLAC, leverage ratio, liquidity and funding requirements,
incremental tax requirements, additional levies, limitations on
permitted activities, constraints on remuneration, constraints on
transfers of capital and liquidity and sharing of operational costs
across the Group or other measures, and the effect these would have
on UBS’s business activities; (v) uncertainty as to the extent to
which the Swiss Financial Market Supervisory Authority (FINMA) will
confirm limited reductions of gone concern requirements due to
measures to reduce resolvability risk; (vi) the degree to which UBS
is successful in implementing further changes to its legal
structure to improve its resolvability and meet related regulatory
requirements, including changes in legal structure and reporting
required to implement US enhanced prudential standards, and the
potential need to make further changes to the legal structure or
booking model of UBS Group in response to legal and regulatory
requirements, to proposals in Switzerland and other jurisdictions
for mandatory structural reform of banks or systemically important
institutions or to other external developments, and the extent to
which such changes will have the intended effects; (vii) the
uncertainty arising from the timing and nature of the UK exit from
the EU and the potential need to make changes in UBS’s legal
structure and operations as a result of it; (viii) changes in UBS’s
competitive position, including whether differences in regulatory
capital and other requirements among the major financial centers
will adversely affect UBS’s ability to compete in certain lines of
business; (ix) changes in the standards of conduct applicable to
our businesses that may result from new regulation or new
enforcement of existing standards, including recently enacted and
proposed measures to impose new and enhanced duties when
interacting with customers and in the execution and handling of
customer transactions; (x) the liability to which UBS may be
exposed, or possible constraints or sanctions that regulatory
authorities might impose on UBS, due to litigation, contractual
claims and regulatory investigations, including the potential for
disqualification from certain businesses or loss of licenses or
privileges as a result of regulatory or other governmental
sanctions, as well as the effect that litigation, regulatory and
similar matters have on the operational risk component of our RWA;
(xi) the effects on UBS’s cross-border banking business of tax or
regulatory developments and of possible changes in UBS’s policies
and practices relating to this business; (xii) UBS’s ability to
retain and attract the employees necessary to generate revenues and
to manage, support and control its businesses, which may be
affected by competitive factors including differences in
compensation practices; (xiii) changes in accounting or tax
standards or policies, and determinations or interpretations
affecting the recognition of gain or loss, the valuation of
goodwill, the recognition of deferred tax assets and other matters,
including from changes to US taxation under the Tax Cuts and Jobs
Act; (xiv) UBS’s ability to implement new technologies and business
methods, including digital services and technologies and ability to
successfully compete with both existing and new financial service
providers, some of which may not be regulated to the same extent;
(xv) limitations on the effectiveness of UBS’s internal processes
for risk management, risk control, measurement and modeling, and of
financial models generally; (xvi) the occurrence of operational
failures, such as fraud, misconduct, unauthorized trading,
financial crime, cyberattacks, and systems failures; (xvii)
restrictions on the ability of UBS Group AG to make payments or
distributions, including due to restrictions on the ability of its
subsidiaries to make loans or distributions, directly or
indirectly, or, in the case of financial difficulties, due to the
exercise by FINMA or the regulators of UBS’s operations in other
countries of their broad statutory powers in relation to protective
measures, restructuring and liquidation proceedings; (xviii) the
degree to which changes in regulation, capital or legal structure,
financial results or other factors, including methodology,
assumptions and stress scenarios, may affect UBS’s ability to
maintain its stated capital return objective; and (xix) the effect
that these or other factors or unanticipated events may have on our
reputation and the additional consequences that this may have on
our business and performance. The sequence in which the factors
above are presented is not indicative of their likelihood of
occurrence or the potential magnitude of their consequences. Our
business and financial performance could be affected by other
factors identified in our past and future filings and reports,
including those filed with the SEC. More detailed information about
those factors is set forth in documents furnished by UBS and
filings made by UBS with the SEC, including UBS’s Annual Report on
Form 20-F for the year ended 31 December 2016. 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.
RoundingNumbers presented throughout this news release
may not add up precisely to the totals provided in the tables and
text. Percentages, percent changes and absolute variances are
calculated on the basis of rounded figures displayed in the tables
and text and may not precisely reflect the percentages, percent
changes and absolute variances that would be calculated on the
basis of figures that are not rounded.
TablesWithin tables, blank fields generally indicate that
the field is not applicable or not meaningful, or that information
is not available as of the relevant date or for the relevant
period. Zero values generally indicate that the respective figure
is zero on an actual or rounded basis. Percentage changes are
presented as a mathematical calculation of the change between
periods.
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