UBS GROUP AG UBS Group
First quarter 2024 report
Corporate calendar UBS Group AG
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2. UBS business divisions and Group Items
- Global Wealth Management
- Personal & Corporate Banking
- Asset Management
- Investment Bank
- Non-coreand Legacy
- Group Items
3. Risk, capital, liquidity and funding, and balance sheet
- Risk management and control
- Capital management
- Liquidity and funding management
- Balance sheet and off-balance sheet
- Share information and earnings per share
4. Consolidated financial statements
54 UBS Group AG interim consolidated financial statements (unaudited)
5. Significant regulated subsidiary and sub-group information
93 Financial and regulatory key figures for our significant regulated subsidiaries and sub-groups
Appendix
96 | Alternative performance measures |
101 | Abbreviations frequently used in |
our financial reports |
Publisher: UBS Group AG, Zurich, Switzerland | ubs.com
Language: English
© UBS 2024. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved.
103 | Information sources |
104 | Cautionary statement |
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 |
"Capital Release Unit (Credit Suisse)" | The Capital Release Unit division of Credit Suisse AG and its |
consolidated subsidiaries | |
"Corporate Center (Credit Suisse)" | The Corporate Center division of Credit Suisse AG and its |
consolidated subsidiaries | |
"Investment Bank (Credit Suisse)" | The Investment Bank division of Credit Suisse AG and its |
consolidated subsidiaries | |
"Swiss Bank (Credit Suisse)" | The Swiss Bank division of Credit Suisse AG 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 first quarter of 2024 and the fourth quarter of 2023 is presented on a consolidated basis, each including Credit Suisse data for three months. Information for the first quarter of 2023 includes pre-acquisition UBS data only.
Balance sheet information as at 31 March 2024 and 31 December 2023 includes UBS and Credit Suisse consolidated information, prior balance sheet dates reflect pre-acquisition UBS information only.
UBS Group first quarter 2024 report | 2 |
Our key figures
As of or for the quarter ended | ||||
USD m, except where indicated | 31.3.24 | 31.12.231 | 31.3.23 | |
Group results | ||||
Total revenues | 12,739 | 10,855 | 8,744 | |
Credit loss expense / (release) | 106 | 136 | 38 | |
Operating expenses | 10,257 | 11,470 | 7,210 | |
Operating profit / (loss) before tax | 2,376 | (751) | 1,495 | |
Net profit / (loss) attributable to shareholders | 1,755 | (279) | 1,029 | |
Diluted earnings per share (USD)2 | 0.52 | (0.09) | 0.32 | |
Profitability and growth3,4,5 | ||||
Return on equity (%) | 8.2 | (1.3) | 7.2 | |
Return on tangible equity (%) | 9.0 | (1.4) | 8.1 | |
Underlying return on tangible equity (%)6 | 9.6 | 4.8 | 8.7 | |
Return on common equity tier 1 capital (%) | 9.0 | (1.4) | 9.1 | |
Underlying return on common equity tier 1 capital (%)6 | 9.6 | 4.7 | 9.8 | |
Return on leverage ratio denominator, gross (%) | 3.1 | 2.6 | 3.4 | |
Cost / income ratio (%) | 80.5 | 105.7 | 82.5 | |
Underlying cost / income ratio (%)6 | 77.2 | 93.0 | 81.7 | |
Effective tax rate (%) | 25.8 | n.m.7 | 30.7 | |
Net profit growth (%) | 70.6 | n.m. | (51.8) | |
Resources3 | ||||
Total assets | 1,607,120 | 1,717,246 | 1,053,134 | |
Equity attributable to shareholders | 85,260 | 86,108 | 56,754 | |
Common equity tier 1 capital8 | 78,147 | 78,485 | 44,590 | |
Risk-weighted assets8 | 526,437 | 546,505 | 321,660 | |
Common equity tier 1 capital ratio (%)8 | 14.8 | 14.4 | 13.9 | |
Going concern capital ratio (%)8 | 17.8 | 16.9 | 17.9 | |
Total loss-absorbing capacity ratio (%)8 | 37.5 | 36.5 | 34.3 | |
Leverage ratio denominator8 | 1,599,646 | 1,695,403 | 1,014,446 | |
Common equity tier 1 leverage ratio (%)8 | 4.9 | 4.6 | 4.4 | |
Liquidity coverage ratio (%)9 | 220.2 | 215.7 | 161.9 | |
Net stable funding ratio (%) | 126.4 | 124.7 | 117.7 | |
Other | ||||
Invested assets (USD bn)4,10,11 | 5,848 | 5,714 | 4,184 | |
Personnel (full-time equivalents) | 111,549 | 112,842 | 73,814 | |
Market capitalization2,12 | 106,440 | 107,355 | 74,276 | |
Total book value per share (USD)2 | 26.59 | 26.83 | 18.59 | |
Tangible book value per share (USD)2 | 24.29 | 24.49 | 16.54 |
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 the UBS Group Annual Report 2023, available under "Annual reporting" at ubs.com/investors, 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, capital guidance and ambitions" section of the UBS Group Annual Report 2023, available under "Annual reporting" at ubs.com/investors, 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 each of the first quarter of 2024 and the fourth quarter of 2023 is presented on a consolidated basis, including for each quarter Credit Suisse data for three months and for the purpose of the calculation of return measures has been annualized multiplying such by four. Profit or loss information for the first quarter of 2023 includes pre-acquisition UBS data for three months and for the purpose of the calculation of return measures has been annualized multiplying such by four. 6 Refer to the "Group performance" section of this report for more information about underlying results. 7 The effective tax rate for the fourth 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 61 data points in the first quarter of 2024, 63 data points in the fourth quarter of 2023 and 64 data points in the first quarter of 2023. 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 32 Invested assets and net new money" in the "Consolidated financial statements" section of the UBS Group Annual Report 2023, available under "Annual reporting" at ubs.com/investors, 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 was increased by USD 10.0bn as of 31 March 2023 as a result.
UBS Group first quarter 2024 report | 3 |
UBS Group
Management report
Recent developments
Integration of Credit Suisse
In the first quarter of 2024, we made substantial progress related to the integration of Credit Suisse. We expect to complete the merger of UBS AG and Credit Suisse AG on 31 May 2024, following operational testing and subject to remaining regulatory approvals. The transition to a single US intermediate holding company is also planned for the second quarter of 2024 and the merger of Credit Suisse (Schweiz) AG and UBS Switzerland AG continues to be planned for the third quarter of 2024. Completing the mergers of our significant legal entities is a critical step in enabling us to unlock the next phase of the cost, capital, funding and tax benefits we expect to realize in the second half of 2024 and by the end of 2025 and into 2026. These mergers will also facilitate Credit Suisse Wealth Management client migrations to UBS infrastructure across our businesses, which we expect to commence in the second half of 2024.
We have achieved USD 5bn of exit rate gross cost savings, compared with the 2022 combined cost base of Credit Suisse and UBS, out of the USD 13bn of exit rate gross cost savings that we aim to achieve by the end of 2026. Cost savings are likely to decrease from the per quarter rate of around USD 1bn and we aim to achieve USD 1.5bn of additional exit rate gross cost savings in the remainder of 2024.
During the first quarter of 2024, Non-core and Legacy continued to exit positions and reduced risk-weighted assets by USD 16bn and the leverage ratio denominator by USD 49bn. UBS and entities associated with Apollo Global Management (Apollo) and Atlas SP Partners (Atlas) entered into agreements to conclude an investment management agreement and a transition services agreement with Atlas SP. As part of these agreements, Apollo has also purchased USD 8bn of senior secured financing facilities. We recognized a net gain of USD 272m from these transactions. Credit Suisse AG recognized a net loss of USD 0.9bn. The difference primarily reflects adjustments that UBS Group made under IFRS Accounting Standards as part of the purchase price allocation at the closing of the acquisition of the Credit Suisse Group.
On 6 May 2024, Credit Suisse (Schweiz) AG repaid further funding drawn under the Emergency Liquidity Assistance (ELA) facility, reducing the amount of funding outstanding under the ELA from CHF 19bn to CHF 9bn as of that date. The remaining CHF 9bn are expected to be repaid in the coming months.
Regulatory and legal developments
Swiss Federal Council releases its report on systemically important banks
In April 2024, the Swiss Federal Council released its report on banking stability that evaluates the regulation of systemically important banks. The report includes a comprehensive review of the acquisition of the Credit Suisse Group and concludes that the existing Swiss too-big-to-fail (TBTF) regime must be further developed and strengthened. The Swiss Federal Council proposes to introduce a broad package of measures, focused on three areas: strengthening prevention, strengthening liquidity and expanding the crisis toolkit.
Preventive measures include proposals to strengthen the capital base, to improve resolvability and tighten capital requirements for global systemically important banks (G-SIBs), including the introduction of forward-looking elements for institution-specific Pillar 2 capital surcharges and increased capital adequacy requirements for foreign participations. The Swiss Federal Council also recommended preventive measures related to corporate governance, such as a senior management regime and stricter regulations regarding bonuses. To strengthen liquidity, the Swiss Federal Council intends to significantly expand the potential for the Swiss National Bank to provide more liquidity in a crisis. Furthermore, the Swiss Federal Council reiterated its support for the introduction of a public liquidity backstop. To expand the crisis toolkit, the Swiss Federal Council proposed measures that aim to minimize legal risks associated with the execution of resolution measures.
UBS Group first quarter 2024 report | UBS Group | Recent developments | 4 |
In the first half of 2025, the Swiss Federal Council is expected to present two packages to implement the proposed measures: one with changes at the ordinance level, which can be adopted by the Swiss Federal Council, and another, which will be submitted to the Parliament, with proposed legislative amendments. The Swiss Federal Council has stated that when drafting these two packages it will take into account the findings of the Parliamentary Investigation Committee concerning the role of the Swiss authorities in the rescue of the Credit Suisse Group. Due to the broad range of possible outcomes, the impact of the proposals on UBS can be fully assessed only when the implementation details become clearer.
FINMA publishes ordinances with implementing provisions for the revised Swiss Capital Adequacy Ordinance
In March 2024, the Swiss Financial Market Supervisory Authority (FINMA) published five new ordinances to implement the final Basel III standards in Switzerland, replacing various existing FINMA circulars, including ordinances on operational risks and market risks. The ordinances contain the implementing provisions for the Swiss Federal Council's revised Capital Adequacy Ordinance for banks (the CAO) and they will enter into force on 1 January 2025.
Shortening the securities settlement cycle to T+1
In the US, a shortened T+1 settlement cycle will apply to securities transactions beginning on 28 May 2024. In April 2024, the UK Accelerated Settlement Taskforce issued a report proposing a phased approach to the adoption of T+1 settlement and the establishing of a technical working group to review the operational and behavioral changes required for a T+1 settlement cycle. Recommendations for changes are planned to be made by the end of 2025 to enable the market to prepare, with the move to T+1 expected to take place before the end of 2027. The UK government has accepted the recommendations and confirmed it will work with the EU and Switzerland to see if similar timeframes will be pursued and, therefore, if alignment is possible.
New Retirement Security Rule adopted for US retirement and pension accounts
In April 2024, the US Department of Labor (the DOL) adopted a new Retirement Security Rule, related amendments to existing rules governing transactions between covered plans and parties in interest, and amendments to the "qualified professional asset manager" transaction exemption. The Retirement Security Rule expands the scope of transactions subject to requirements of the Employment Retirement Income Security Act by expanding the relationships and advice that create a fiduciary relationship between an investment professional and a plan or beneficiary, particularly in relation to individual retirement accounts (IRAs). The amendments to existing transaction exemptions generally limit or prohibit the use of those exemptions for transactions involving IRAs, with the intention of requiring transactions involving IRAs to rely upon an exemption (PTE 2020-2) imposing specific impartiality, conflict-of-interest and compliance requirements. Global Wealth Management US treats established IRA accounts as fiduciary relationships in accordance with PTE 2020-2. We are assessing the effect of the changes on our business with IRA accounts.
In connection with the adoption of the Retirement Security Rule, the DOL also amended PTE 2020-2 to expand the scope of affiliated persons for which a criminal conviction or determinations of misconduct disqualify an investment professional from using the exemption and to add a one-year transition period for a newly disqualified investment professional to transition the related business. The amendments to the qualified professional asset manager exemption also expand the scope of events that may trigger disqualification and add a similar one-year transition provision. In each case, the DOL retains the ability to grant an individual exemption from the disqualification.
The Swiss National Bank will raise the minimum reserve requirement for banks
In April 2024, the Swiss National Bank (the SNB) announced that it will raise the minimum reserve requirement for domestic banks from 2.5% to 4%, and it will therefore amend the National Bank Ordinance as of 1 July 2024. The SNB further announced that liabilities arising from cancelable customer deposits (excluding tied pension provisions) will be included in full in the calculation of the minimum reserve requirement, as is the case with the other relevant liabilities. This revokes the previous exception under which only 20% of these liabilities counted toward the calculation. Based on preliminary internal assessments, UBS expects a negative impact of USD 70m to USD 80m per annum on net interest income to result from these changes.
UBS Group first quarter 2024 report | UBS Group | Recent developments | 5 |
Other developments
Capital returns
On 24 April 2024, the shareholders approved a dividend of USD 0.70 per share at the Annual General Meeting. The dividend was paid on 3 May 2024 to shareholders of record on 2 May 2024.
Our 2022 share repurchase program was concluded on 28 March 2024. A total of 298,537,950 UBS Group AG shares were acquired under that program, at an aggregate purchase price of CHF 5,010m, of which CHF 1,202m were acquired in 2023 prior to the announcement of the acquisition of the Credit Suisse Group. On 12 April 2023, the Swiss Takeover Board approved the use of up to 178,031,942 shares repurchased under the 2022 program, and originally intended for cancellation, for the acquisition of the Credit Suisse Group.
On 3 April 2024, we launched a new 2024 share repurchase program of up to USD 2bn over two years. We expect to execute up to USD 1bn of repurchases in 2024, commencing after the completion of the merger of UBS AG and Credit Suisse AG.
- Refer to the "Share information and earnings per share" section of this report for more information
Credit Suisse's wealth management business in Japan
In April 2024, UBS and Sumitomo Mitsui Trust Holdings, Inc. (SuMi TRUST Holdings) announced that their wealth management entity, UBS SuMi TRUST Wealth Management Co., Ltd. (UBS SuMi), will acquire Credit Suisse's wealth management business in Japan, including all of Credit Suisse's client advisors and the assets they manage in Japan. Following completion, UBS and SuMi TRUST Holdings will rebalance their investments in UBS SuMi to maintain the current ownership structure (UBS 51% / SuMi TRUST Holdings 49%). UBS will continue to consolidate the entity. The transaction is expected to close in the fourth quarter of 2024 and is not expected to have a material effect on the common equity tier 1 capital of the Group.
UBS Group first quarter 2024 report | UBS Group | Recent developments | 6 |
Group performance
Income statement
For the quarter ended | % change from | ||||||
USD m | 31.3.24 | 31.12.23 | 31.3.23 | 4Q23 | 1Q23 | ||
Net interest income | 1,940 | 2,095 | 1,388 | (7) | 40 | ||
Other net income from financial instruments measured at fair value through profit or loss | 4,182 | 3,158 | 2,681 | 32 | 56 | ||
Net fee and commission income | 6,492 | 5,780 | 4,606 | 12 | 41 | ||
Other income | 124 | (179) | 69 | 79 | |||
Total revenues | 12,739 | 10,855 | 8,744 | 17 | 46 | ||
Credit loss expense / (release) | 106 | 136 | 38 | (22) | 177 | ||
Personnel expenses | 6,949 | 7,061 | 4,620 | (2) | 50 | ||
General and administrative expenses | 2,413 | 2,999 | 2,065 | (20) | 17 | ||
Depreciation, amortization and impairment of non-financial assets | 895 | 1,409 | 525 | (37) | 70 | ||
Operating expenses | 10,257 | 11,470 | 7,210 | (11) | 42 | ||
Operating profit / (loss) before tax | 2,376 | (751) | 1,495 | 59 | |||
Tax expense / (benefit) | 612 | (473) | 459 | 33 | |||
Net profit / (loss) | 1,764 | (278) | 1,037 | 70 | |||
Net profit / (loss) attributable to non-controlling interests | 9 | 1 | 8 | 7 | |||
Net profit / (loss) attributable to shareholders | 1,755 | (279) | 1,029 | 71 | |||
Comprehensive income | |||||||
Total comprehensive income | (245) | 2,695 | 1,833 | ||||
Total comprehensive income attributable to non-controlling interests | (5) | 18 | 13 | ||||
Total comprehensive income attributable to shareholders | (240) | 2,677 | 1,820 | ||||
UBS Group first quarter 2024 report | UBS Group | Group performance | 7 |
Selected financial information of our business divisions and Group Items
For the quarter ended 31.3.24 | |||||||
Personal & | |||||||
Global Wealth | Corporate | Asset | Investment | Non-core and | |||
USD m | Management | Banking | Management | Bank | Legacy | Group Items | Total |
Total revenues as reported | 6,143 | 2,423 | 776 | 2,751 | 1,001 | (355) | 12,739 |
of which: PPA effects and other integration items 1 | 234 | 256 | 293 | (4) | 779 | ||
Total revenues (underlying) | 5,909 | 2,166 | 776 | 2,458 | 1,001 | (351) | 11,960 |
Credit loss expense / (release) | (3) | 44 | 0 | 32 | 36 | (2) | 106 |
Operating expenses as reported | 5,044 | 1,404 | 665 | 2,164 | 1,011 | (33) | 10,257 |
of which: integration-related expenses and PPA effects 2 | 404 | 160 | 71 | 143 | 242 | 1 | 1,021 |
Operating expenses (underlying) | 4,640 | 1,245 | 594 | 2,022 | 769 | (34) | 9,236 |
Operating profit / (loss) before tax as reported | 1,102 | 975 | 111 | 555 | (46) | (320) | 2,376 |
Operating profit / (loss) before tax (underlying) | 1,272 | 878 | 182 | 404 | 197 | (315) | 2,617 |
For the quarter ended 31.12.233 | |||||||
Personal & | |||||||
Global Wealth | Corporate | Asset | Investment | Non-core and | |||
USD m | Management | Banking | Management | Bank | Legacy | Group Items | Total |
Total revenues as reported | 5,554 | 2,083 | 825 | 2,141 | 145 | 107 | 10,855 |
of which: PPA effects and other integration items 1 | 349 | 306 | 277 | 12 | 944 | ||
of which: losses related to investment in SIX Group | (190) | (317) | (508) | ||||
Total revenues (underlying) | 5,395 | 2,094 | 825 | 1,864 | 145 | 95 | 10,419 |
Credit loss expense / (release) | (8) | 85 | (1) | 48 | 15 | (2) | 136 |
Operating expenses as reported | 5,282 | 1,398 | 704 | 2,283 | 1,787 | 16 | 11,470 |
of which: integration-related expenses and PPA effects 2 | 502 | 187 | 64 | 167 | 750 | 109 | 1,780 |
of which: acquisition-related costs | (1) | (1) | |||||
Operating expenses (underlying) | 4,780 | 1,210 | 639 | 2,116 | 1,037 | (92) | 9,690 |
Operating profit / (loss) before tax as reported | 280 | 601 | 122 | (190) | (1,657) | 93 | (751) |
Operating profit / (loss) before tax (underlying) | 624 | 800 | 186 | (300) | (907) | 189 | 592 |
For the quarter ended 31.3.234 | |||||||
Personal & | |||||||
Global Wealth | Corporate | Asset | Investment | Non-core and | |||
USD m | Management | Banking | Management | Bank | Legacy | Group Items | Total |
Total revenues as reported | 4,788 | 1,277 | 503 | 2,365 | 23 | (211) | 8,744 |
Total revenues (underlying) | 4,788 | 1,277 | 503 | 2,365 | 23 | (211) | 8,744 |
Credit loss expense / (release) | 15 | 16 | 0 | 7 | 0 | 0 | 38 |
Operating expenses as reported | 3,561 | 663 | 408 | 1,866 | 699 | 14 | 7,210 |
of which: acquisition-related costs | 70 | 70 | |||||
Operating expenses (underlying) | 3,561 | 663 | 408 | 1,866 | 699 | (57) | 7,140 |
Operating profit / (loss) before tax as reported | 1,212 | 598 | 95 | 492 | (676) | (225) | 1,495 |
Operating profit / (loss) before tax (underlying) | 1,212 | 598 | 95 | 492 | (676) | (155) | 1,566 |
1 Includes accretion of PPA adjustments on financial instruments and other PPA effects, as well as temporary and incremental items directly related to the integration. 2 Includes temporary, incremental operating expenses directly related to the integration, as well as amortization of newly recognized intangibles resulting from the acquisition of the Credit Suisse Group. 3 Comparative-period information has been restated for changes in business division perimeters, Group Treasury allocations and Non-core and Legacy cost allocations. Refer to "Changes to segment reporting in 2024" in the "UBS business divisions and Group Items" section below and "Note 3 Segment reporting" in the "Consolidated financial statements" section of this report for more information. 4 Comparative-period information has been restated for changes in Group Treasury allocations. Refer to "Changes to segment reporting in 2024" in the "UBS business divisions and Group Items" section below and "Note 3 Segment reporting" in the "Consolidated financial statements" section of this report for more information.
Integration-related expenses, by business division and Group Items
For the quarter ended | |||
USD m | 31.3.24 | 31.12.23 | |
Global Wealth Management | 432 | 500 | |
Personal & Corporate Banking | 140 | 161 | |
Asset Management | 71 | 64 | |
Investment Bank | 143 | 167 | |
Non-core and Legacy | 242 | 750 | |
Group Items | 1 | 109 | |
Total integration-related expenses | 1,029 | 1,751 | |
of which: total revenues | 37 | 0 | |
of which: operating expenses | 992 | 1,751 | |
of which: personnel expenses | 555 | 794 | |
of which: general and administrative expenses | 355 | 455 | |
of which: depreciation, amortization and impairment of non-financial assets | 82 | 503 |
UBS Group first quarter 2024 report | UBS Group | Group performance | 8 |
Introduction to underlying results
In addition to reporting our results in accordance with IFRS Accounting Standards, we report underlying results that exclude items of profit or loss that management believes are not representative of the underlying performance.
In the first quarter of 2024, underlying revenues exclude purchase price allocation (PPA) effects and other integration items. PPA effects mainly consist of PPA adjustments on financial instruments measured at amortized cost, including off-balance sheet positions, arising from the acquisition of the Credit Suisse Group. Accretion of PPA adjustments on financial instruments is accelerated when the related financial instrument is derecognized before its contractual maturity. No adjustment is made for accretion of PPA adjustments on financial instruments within the Non-core and Legacy business division, due to the nature of its business model. In 2023, underlying revenues also exclude losses relating to our investment in SIX Group.
Underlying expenses exclude integration-related expenses that are temporary, incremental and directly related to the integration of Credit Suisse into UBS, including 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.
Results: 1Q24 vs 1Q23
Reported operating profit before tax increased by USD 881m, or 59%, to USD 2,376m, reflecting an increase in total revenues, partly offset by higher operating expenses and net credit loss expenses. Total revenues increased by USD 3,995m, or 46%, to USD 12,739m, largely due to the consolidation of Credit Suisse revenues of USD 3,829m, and included accretion impacts resulting from PPA adjustments on financial instruments and other PPA effects of USD 815m. This increase was mainly driven by a USD 2,054m increase in total combined net interest income and other net income from financial instruments measured at fair value through profit or loss and a USD 1,886m increase in net fee and commission income. Other income also increased by USD 55m. Operating expenses increased by USD 3,047m, or 42%, to USD 10,257m, largely due to the consolidation of Credit Suisse expenses of USD 2,903m, and included integration-related expenses of USD 992m. This increase was mainly driven by a USD 2,329m increase in personnel expenses. Depreciation, amortization and impairment of non-financial assets also increased by USD 370m, and general and administrative expenses increased by USD 348m, with those increases partly offset by the prior-year quarter including a USD 665m increase in provisions related to the US residential mortgage-backed securities (RMBS) litigation matter.
Underlying results 1Q24 vs 1Q23
For the purpose of determining underlying results for the first quarter of 2024, we excluded PPA effects and other integration items of USD 779m from total revenues and integration-related expenses and PPA effects of USD 1,021m from operating expenses.
On an underlying basis, profit before tax increased by USD 1,051m, or 67%, to USD 2,617m, reflecting a USD 3,216m increase in underlying total revenues, partly offset by a USD 2,096m increase in underlying operating expenses and net credit loss expenses of USD 106m, compared with net credit loss expenses of USD 38m in the first quarter of 2023.
Total revenues: 1Q24 vs 1Q23
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 2,054m to USD 6,123m, mainly driven by the consolidation of USD 2,965m of Credit Suisse revenues, and included USD 517m of accretion impacts resulting from PPA adjustments on financial instruments and other PPA effects.
Personal & Corporate Banking increased by USD 871m to USD 1,704m, largely attributable to the consolidation of USD 814m of Credit Suisse revenues, and included USD 240m of accretion of PPA adjustments on financial instruments and other PPA effects. The remaining increase was mainly driven by higher deposit margins, resulting from higher interest rates, partly offset by shifts to lower-margin deposit products. Excluding the aforementioned accretion effects, underlying net interest income was USD 1,268m.
UBS Group first quarter 2024 report | UBS Group | Group performance | 9 |
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UBS Group AG published this content on 06 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 May 2024 06:16:07 UTC.
