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UBS
UBS
#147
Rank
A$203.41 B
Marketcap
๐Ÿ‡จ๐Ÿ‡ญ Switzerland
Country
A$64.38
Share price
-5.92%
Change (1 day)
28.20%
Change (1 year)
๐Ÿฆ Banks๐Ÿ’ณ Financial services
Categories
  1. UBS
  2. Annual Reports (20-F)
  3. Financial Year 2024

UBS - 20-F annual report 2024


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Annual Report 2024
 
1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
FORM
20-F
 
(Mark One)
 
 
 
 
☐
 
REGISTRATION
 
STATEMENT
 
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
OR
 
 
 
 
☑
 
ANNUAL REPORT
 
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended
December 31, 2024
OR
 
 
 
 
☐
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
OR
 
 
 
 
☐
 
SHELL COMPANY REPORT
 
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
UBS Group AG
Commission file number:
1-36764
 
(Exact name of registrant as specified in its charter)
Switzerland
(Jurisdiction of incorporation or organization)
Bahnhofstrasse 45
,
CH-8001
Zurich
,
Switzerland
 
(Address of principal executive office)
Patrick T. Shilling, Esq.
11 Madison Ave.
 
New York
, New York
10010
Telephone:
212
-
713-3685
(Name, Telephone,
 
E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered
 
pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol(s)
Name of each exchange on
which registered
Ordinary Shares (par value of USD 0.10 each)
UBS
New York
 
Stock Exchange
Securities registered or to be registered
 
pursuant to Section 12(g) of the Act:
None.
 
Securities for which there is a reporting obligation
 
pursuant to Section 15(d) of the Act:
None.
 
Annual Report 2024
 
2
Indicate the number of outstanding shares of each of the issuer’s classes of capital
 
or common stock as of 31 December 2024:
 
UBS Group AG
Ordinary shares, par value USD 0.10 per share:
 
3,462,087,722
 
ordinary shares
(including 287,262,471 treasury shares)
Indicate by check mark if the registrant is a well-known seasoned issuer,
 
as defined in Rule 405 of the Securities Act.
 
Yes
☐
 
No
☑
If this report is an annual or transition report, indicate by check mark if the registrant is not required
 
to file reports pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934.
 
Yes
☐
 
 
No
☑
Note — Checking the box above will not relieve any registrant required to
 
file reports pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 from their obligations under those
 
Sections.
 
Indicate by check mark whether the registrant (1) has filed all reports required
 
to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
 
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the
 
past 90 days.
 
Yes
☑
 
 
No
☐
Indicate by check mark whether the registrant has submitted electronically
 
every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during
 
the preceding 12 months (or for such shorter period
that the registrant was required to submit such files).
Yes
☑
 
 
No
☐
Indicate by check mark whether the registrant is a large accelerated filer,
 
an accelerated filer, a non-accelerated filer
 
or an
emerging growth company.
 
See the definitions of “large accelerated filer”, “accelerated filer” and
 
“emerging growth company”
in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
☑
 
Accelerated filer
☐
 
Non-accelerated filer
☐
 
Emerging growth company
☐
If an emerging growth company that prepares its financial statements
 
in accordance with U.S. GAAP,
 
indicate by check mark
if the registrant has elected not to use the extended transition period for
 
complying with any new or revised financial
accounting standards† provided pursuant to Section 13(a) of the Exchange
 
Act.
☐
† The term “new or revised financial accounting standard” refers to any update
 
issued by the Financial Accounting Standards
Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and
 
attestation to its management’s assessment of
 
the
effectiveness of its internal control over financial reporting under
 
Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.
7262(b)) by the registered public accounting firm that prepared
 
or issued its audit report.
☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check
 
mark whether the financial statements of the
 
registrant included in the filing reflect the correction of an error to previously
 
issued financial statements.
☐
Indicate by check mark whether any of those error corrections are restatements
 
that required a recovery analysis of incentive-
based compensation received by any of the registrant’s
 
executive officers during the relevant recovery period pursuant
 
to
§240.10D-1(b).
☐
Indicate by check mark which basis of accounting the registrant has used
 
to prepare the financial statements included in this
filing:
U.S. GAAP
☐
 
 
International Financial Reporting Standards
 
as issued by the International Accounting
Standards Board
 
☑
 
Other
☐
 
Annual Report 2024
 
3
If “Other” has been checked in response to the previous question, indicate by
 
check mark which financial statement item the
registrant has elected to follow.
 
Item 17
☐
 
 
Item 18
☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined
 
in Rule 12b-2 of the
Exchange Act)
 
Yes
☐
 
 
No
☑
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024
 
4
Cautionary Statement:
Refer to the
Cautionary statement regarding
 
forward-looking statements
 
section in the Annual Report
2024
 
(page 387).
Cross-reference table
Set forth below are the respective items of SEC Form 20-F,
 
and the locations in this document where the corresponding
information can be found.
 
●
Annual Report
 
refers to the Annual Report 2024 of UBS Group AG annexed hereto, which
 
forms an integral part
hereof.
 
●
Supplement
refers to certain supplemental information contained in this forepart of
 
the Form 20-F,
 
starting on page
11 following the cross-reference table.
 
●
Financial Statements
refers to the consolidated financial statements of UBS Group AG, contained in the Annual
Report.
In the cross-reference table below,
 
page numbers refer either to the Annual Report or the Supplement, as noted.
Please see page 9 of the Annual Report for definitions of terms used in this Form
 
20-F relating to UBS.
Form 20-F item
 
Response or location in this filing
Item 1
.
 
Identity of Directors,
Senior Management and
Advisors.
Not applicable.
Item 2
.
 
Offer Statistics and
Expected Timetable.
Not applicable.
Item 3.
 
Key Information
B – Capitalization and
Indebtedness.
Not applicable.
C – Reasons for the Offer and
Use of Proceeds.
Not applicable.
D – Risk Factors.
Annual Report,
 
Risk factors
(50-63).
Item 4
.
 
Information on the Company.
A
– History and Development of
the Company
1-3: Annual Report,
Corporate information
and
Contacts
(6). The registrants' agent is
Patrick T. Shilling,
 
11 Madison Avenue,
 
New York,
 
New York
 
10010.
4: Annual Report,
Our evolution
(14);
Integration of Credit Suisse
 
(15-16);
Our strategy
(17-18);
Our businesses
(20-29); Note 29 to the Financial Statements (
Changes in
organization and acquisitions and disposals of
 
subsidiaries and businesses
) (362-363).
5-6: Annual Report,
Our businesses
(20-29), as applicable,
 
Note 2 to the Financial
Statements (
Accounting for the acquisition of the Credit Suisse
 
Group
) (280-284), Note
12 to the Financial Statements (
Property,
 
equipment and software)
 
(300), and
Note 29 to
the Financial Statements (
Changes in organization and acquisitions and
 
disposals of
subsidiaries and businesses
) (362-363).
7: Annual Report,
Integration of Credit Suisse
 
(15-16). Below item 10.C.
8: Annual Report,
Information sources
 
(386).
B – Business Overview.
1, 2 and 5: Annual Report,
Our strategy, business model and environment
 
(15-63), and
Note 3a to the Financial Statements (
Segment reporting)
(284-286)
and Note 3b to the
Financial Statements (
Segment reporting by geographic location)
(287). See also
Supplement (11).
3: Annual Report,
Seasonal characteristics
(71).
4: Not applicable.
6: None.
7: Information as to the basis for these statements normally accompanies the
 
statements,
except where marked in the report as a statement based upon publicly
 
available
information or internal estimates, as applicable. Annual Report,
Our businesses
(20-29),
as applicable.
8: Annual Report,
Regulation and supervision
(41-46)
and
 
Regulatory and legal
developments
 
(46-49).
Supplement (12).
C – Organizational Structure.
Annual Report,
Our evolution
(14) and Note 28 to the Financial Statements (
Interests in
subsidiaries and other entities
) (359-362).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024
 
5
D – Property, Plant and
Equipment.
Annual Report,
Property, plant and
 
equipment
(373)
,
Note 1a, 8) to the Financial
Statements (
Summary of material accounting policies: Property,
 
equipment and
software
) (277), Note 12 to the Financial Statements (
Property,
 
equipment and software)
(300).
Information required by SEC
Regulation S-K Part 1400
Annual Report,
Information required
 
by Subpart 1400 of Regulation S-K
(374-379),
Loss
history statistics
(111-112),
 
and Note 10 to the Financial Statements (
Financial assets at
amortized cost and other positions in scope of expected credit
 
loss measurement)
 
(294-
298).
Item 4A
.
 
Unresolved Staff
Comments.
None.
Item 5
.
 
Operating and Financial Review and Prospects.
A
– Operating Results.
1: Annual Report,
Our key figures
(8),
 
Targets,
 
capital guidance and ambitions
(19),
Our
businesses
(20-29),
Financial and operating performance
 
(64-86),
Income statement
(254), Note 1b to the Financial Statements (
Changes in accounting policies,
comparability and other adjustments
) (279), Note 3a to the Financial Statements
(
Segment reporting)
(284-286), and
 
Selected financial data
(272-273). The supporting
disclosure notes to the Financial Statements provide further details around
 
the
components of revenue and expenses.
2: Not applicable
3: Annual Report,
Risk factors
(50-63),
Capital management
(137-146),
Currency
Management
(157)
 
and Note 25 to the Financial Statements (
Hedge Accounting)
 
(347-
349).
4:
Annual Report,
Our environment
(29-33),
Regulation and supervision
(41-46)
and
Regulatory and legal developments
 
(46-49),
Accounting and financial reporting
 
(64),
Note 1b to the Financial Statements (
Changes in accounting policies, comparability and
other adjustments
) (279).
A discussion on the results for the year 2023
 
compared with 2022
 
can be found on UBS
annual report 2023
 
filed with the SEC in Form 20-F on March 28, 2024, under
Financial
and operating performance
and under
Financial statements
 
of UBS Group AG.
 
B – Liquidity and Capital
Resources.
1: Annual Report,
Risk factors
(50-63)
,
Financial and operating performance
 
(64-86),
Seasonal characteristics
 
(71),
Interest rate risk in the banking book
 
(117-119),
Capital,
liquidity and funding, and balance sheet
(136-159)
, Asset encumbrance
(152),
Note 23 to
the Financial Statements (
Restricted and transferred financial assets)
(341-344), Note 24
to the Financial Statements (
Maturity analysis of assets and liabilities
) (344-346)
 
and
Note 28 to the Financial Statements (
Interests in subsidiaries and other entities
) (359-
362).
Liquidity and capital management is undertaken at UBS as an integrated asset and
liability management function. While we believe our 'working capital' is sufficient
 
for the
company's present requirements, it is our opinion that, as a bank, our liquidity
 
coverage
ratio (LCR) is the more relevant measure. For more information see,
 
Annual Report,
Liquidity coverage ratio
 
(150).
2: Annual Report,
Capital,
liquidity and funding, and balance sheet
(136-159),
 
Currency
Management
(157), Note 11 to the Financial Statements (
Derivative instruments)
(298-
300), Note 16 to the Financial Statements (
Debt issued designated at fair value)
(303),
Note 17 to the Financial Statements (
Debt issued measured at amortized cost
) (304),
Note 19 to the Financial Statements (
Other liabilities
) (313), and Note 25 to the Financial
Statements (
Hedge Accounting
) (347-349).
3:
 
Annual Report,
Material cash requirements
 
(156),
Liquidity and funding management
(148-151), Note 24 to the Financial Statements (
Maturity analysis of assets and
liabilities
) (344-346), and Note 12 to the Financial Statements (
Property,
 
equipment and
software)
 
(300).
C—Research and Development,
Patents and Licenses, etc.
Not applicable.
D—Trend Information.
 
Annual Report,
Our businesses
 
(20-29),
Our environment
 
(29-33),
Regulatory and legal
developments
 
(46-49),
Risk factors
 
(50-63),
Financial and operating performance
 
(64-
86),
Top and emerging
 
risks
 
(89-90) and Note 2 to the Financial Statements (
Accounting
for the acquisition of the Credit Suisse Group
) (280-284).
E—Critical Accounting
Estimates
Not applicable.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024
 
6
Item 6.
 
Directors, Senior Management and Employees.
A
– Directors and Senior
Management.
1, 2 and 3: Annual Report,
Board of Directors
(170-185) and
Group Executive Board
(186-194).
4, 5: None.
B – Compensation.
1: Annual Report,
Compensation
(199-242), Note 1a, 4) to the Financial Statements
(
Share-based and other deferred
 
compensation plans
) (275-276), Note 27 to the Financial
Statements (
Employee benefits: variable compensation)
 
(355-358) and Note 30 to the
Financial Statements (
Related parties)
(363-364).
2: Annual Report,
Compensation
(199-242), Note 26 to the Financial Statements (
Post-
employment benefit plans)
(349-354).
C – Board practices.
1: Annual Report,
Board of Directors
(170-185). The term of office for members of the
Board of Directors and its Chairman expires after completion of the next Annual
 
General
Meeting. The next UBS Group AG Annual General Meeting is scheduled
 
on 10 April
2025.
2: Annual Report,
Board of Directors
(170-185),
Compensation
(199-242),
Clauses on
change of control
 
(195), and Note 30 to the Financial Statements (
Related parties
) (363-
364).
3: Annual Report,
Audit Committee
 
(179),
Compensation Committee
(180) and
Auditors
(195-197).
D—Employees.
 
Annual Report,
 
Employees
(36-38).
 
In addition to seeking out employee feedback, we maintain an open dialogue
 
with our
formal employee representation groups. Our Human Rights Statement and
 
our Code of
Conduct and Ethics (the Code) outline our responsibility to respect the rights
 
of our
workers. The UBS European Employee Forum and the European
 
Works Council,
 
Credit
Suisse Group AG include representatives from all European Union
 
Member States where
the UBS Group has a presence. They consider topics related to our performance
 
and
operations. Local works councils consider benefits, workplace conditions
 
and
redundancies, among other topics. Collectively,
 
these groups represent approximately
52.0% (2023: 51.5%) of our global workforce.
Where applicable, our operations are subject to collective bargaining
 
agreements.
Benefits are aligned with local markets and often go beyond legal requirements
 
or market
practice.
UBS Group AG (consolidated) personnel by business division and Group
 
functions:
As of
Full-time equivalents
31.12.24
31.12.23
31.12.22
Personnel (full-time equivalents)
108,648
112,842
72,597
Global Wealth Management
30,093
31,367
24,351
Personal & Corporate Banking
10,709
10,385
5,725
Asset Management
3,412
3,753
2,848
Investment Bank
11,235
11,305
9,177
Non-Core and Legacy
2,470
3,684
-
Group functions
50,728
52,348
30,497
Business divisions and Group functions information as of 31.12.23 has
 
been restated to
reflect changes in business division perimeters undertaken
 
in the first quarter 2024.
Non-core and Legacy includes positions and businesses not aligned with our
 
long-term
strategy and risk appetite. It consists of selected assets and liabilities from the
 
former
Credit Suisse business divisions, as well as residual assets and liabilities from
 
UBS’s
former Non-core and Legacy Portfolio that preceded the acquisition of
 
the Credit Suisse
Group and smaller amounts of assets and liabilities of UBS’s
 
business divisions that have
been assessed as not strategic in light of the acquisition.
E—Share Ownership.
1 and 2: Annual Report,
Compensation
(199-242), Note 27 to the Financial Statements
(
Employee benefits: variable compensation
) (355-358) and Note 30b to the Financial
Statements (
Equity holdings of key management personnel
)
(364).
F—Disclosure of a registrant’s
action to recover erroneously
awarded compensation.
Not applicable.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024
 
7
Item 7.
 
Major Shareholders and Related Party Transactions.
A—Major Shareholders.
 
Annual Report,
Group structure and shareholders
(163),
 
Share capital structure
 
(164-
168)
 
and
 
Voting
 
rights, restrictions and representation
(168).
According to the mandatory FMIA disclosure notifications filed with UBS Group
 
AG and
SIX, the following entities held more than 3% of the total voting rights
 
of UBS Group
AG, with the following number of shares:
Shareholder,
 
date of last notification
Number of shares disclosed
Norges Bank, Oslo, on 12 December 2025
169,620,293
BlackRock Inc., New York,
 
on 30 November 2023
173,509,685
Shareholder
Percentage of shares held (according to last
notification received up to end of given year)
2024
2023
2022
Norges Bank, Oslo
5.00
4.79
3.01
BlackRock Inc., New York
5.01
5.01
5.23
B—Related Party Transactions.
 
Annual Report,
Loans granted to GEB members
(237)
, Loans granted to BoD members
(238)
and
Note 30 to the Financial Statements (
Related parties
)
(363-364).
C—Interests of Experts and
Counsel.
 
Not applicable.
Item 8
.
 
Financial Information.
A—Consolidated Statements
and Other Financial
Information.
 
1, 2, 3, 4: Please see Item 18 of this Form 20-F.
 
5: Not applicable.
6: Annual Report,
Our businesses
 
(20-29),
Financial and operating performance
 
(64-86)
and Note 3b to the Financial Statements (
Segment reporting by geographic location
)
(287)
7: Information on material legal and regulatory proceedings is in Note 18
 
to the Financial
Statements (
Provisions and contingent liabilities
) (304-312).
 
For developments during the year, please see also the
 
note
Provisions and contingent
liabilities
 
in the Consolidated Financial Statements section in our respective
 
quarterly
reports for the First, Second and Third Quarters 2024, filed on Forms 6-K
 
dated May 7,
2024 , August 14, 2024 and October 30, 2024 (, respectively; as well as the
Provisions
and contingent liabilities
 
section in the Fourth Quarter 2024 Report, filed on Form 6-K
dated February 4, 2025. The disclosures in each such Quarterly Report speak
 
only as of
their respective dates.
8: Annual Report,
 
Investors
 
(35-36),
Dividend distribution
(157)
, Distributions to
shareholders
(167).
B—Significant Changes.
 
None.
Item 9
.
 
The Offer and Listing.
A
– Offer and Listing Details.
1, 2, 3, 5, 6, 7: Not applicable.
4: Annual Report,
Listing of UBS Group AG shares
(159).
 
B—Plan of Distribution.
Not applicable.
C—Markets.
 
Cover page (3).
Annual Report,
Listing of UBS Group AG shares
 
(159)
D—Selling Shareholders.
Not applicable.
E—Dilution.
 
Not applicable.
F—Expenses of the Issue.
 
Not applicable.
 
 
 
 
 
 
 
 
 
Annual Report 2024
 
8
Item 10
.
 
Additional Information.
A—Share Capital.
 
Not applicable.
B—Memorandum and Articles
of Association.
1: Supplement (13-16).
2: Annual Report,
Compensation governance
(208-209),
Compensation for the
Board of
Directors
(227-229). Supplement (13-17).
3: Annual Report,
Share
capital structure
(164-168),
Shareholders' participation rights
(168-169),
Elections and terms of office
 
(201),
Change of control and defense measures
(195). Supplement (13-16).
4: Supplement (13-16).
5: Annual Report,
Shareholders' participation rights
 
(168-169). Supplement (13-16).
6: Annual Report,
Transferability,
 
voting rights and nominee registration
 
(167),
Shareholders' participation rights
 
(168-169). Supplement (13-16).
7: Annual Report,
Change of control and defense measures
 
(195).
8: Annual Report,
Significant Shareholders
(163).
9: Supplement (13-16) and Annual Report, D
ifferences from corporate
 
governance
standards relevant
 
to US-listed companies
(162),
Compensation governance
(208-209),
Compensation for the
Board of Directors
(227-229),
Share
capital structure
(164-168),
Shareholders' participation rights
 
(168-169),
Elections and terms of office
 
(201),
Transferability,
 
voting rights and nominee registration
 
(167),
Change of control and
defense measures
 
(195),
Significant Shareholders
(163).
10:
Supplement (13-16).
C—Material Contracts.
 
The Terms & Conditions
 
of the several series of capital instruments issued to date, and to
be issued pursuant to Deferred Capital Contingent Plans, are exhibits 4.1 through
 
4.23 to
this Form 20-F.
 
These notes are described under
Swiss SRB total loss-absorbing capacity
framework
 
on pages 138-140 of the Annual Report and
Our deferred compensation plans
on pages 220-221 of the Annual Report.
 
The Asset Transfer Agreement by which
 
certain assets and liabilities of UBS AG were
transferred to UBS Switzerland AG is filed as Exhibit 4.24, and is described
 
under
Joint
liability of UBS AG and UBS Switzerland AG
on page 143 of the Annual Report.
On 12 June 2023, UBS Group AG acquired Credit Suisse Group AG, succeeding
 
by
operation of Swiss law to all assets and liabilities of Credit Suisse Group AG, and
became the direct or indirect shareholder of all of the former direct and indirect
subsidiaries of Credit Suisse Group AG. The acquisition followed a request
 
from the
Swiss Federal Department of Finance, the Swiss National Bank and the
 
Swiss Financial
Market Supervisory Authority (FINMA) to both firms to duly consider this transaction
 
in
order to restore necessary confidence in the stability of the Swiss economy and
 
banking
system and to serve the best interests of the shareholders and stakeholders of
 
UBS and
Credit Suisse. As a result of further negotiations and supported by distinct government
guarantees and measures, the firms subsequently entered into a merger
 
agreement on 19
March 2023. Upon the completion of the acquisition, each outstanding
 
registered Credit
Suisse Group AG share converted to the right to receive, subject to the
 
payment of certain
fees to the Credit Suisse Depositary in the case of Credit Suisse American depositary
shares (ADS), a merger consideration consisting of 1/22.48 UBS Group
 
AG shares. In
aggregate, Credit Suisse Group AG shareholders received 5.1% of the
 
outstanding UBS
Group AG shares on the acquisition date, with a purchase price of USD 3.7bn.
UBS AG entered into a definitive merger agreement with Credit Suisse AG on
 
7
December 2023, which was filed as Exhibit 4.22 to UBS's Annual Report on
 
Form 20-F
for the fiscal year ended December 31, 2023. Also, UBS Switzerland AG and
 
Credit
Suisse (Schweiz) AG entered into a merger agreement
 
on 9 February 2024, which was
filed as Exhibit 4.23 to UBS's Annual Report on Form 20-F for the fiscal year
 
ended
December 31, 2023. The mergers described in these agreements were
 
carried out with
some procedural simplifications and without any consideration given that
 
both companies
were, at the time of merger, wholly-owned
 
by the same parent entity. Upon completion
on 31 May 2024 for UBS AG and on 1 July 2024 for UBS Switzerland AG, all assets and
liabilities of Credit Suisse AG and Credit Suisse (Schweiz) AG, respectively,
 
were
transferred automatically to UBS AG and UBS Switzerland AG, respectively.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024
 
9
D—Exchange Controls.
 
Other than in relation to economic sanctions, there are no restrictions under
 
the Articles
of Association of UBS Group AG, nor under Swiss law,
 
as presently in force, that limit
the right of non-resident or foreign owners to hold UBS’s
 
securities freely. There
 
are
currently no Swiss foreign exchange controls or other Swiss laws restricting the import
 
or
export of capital by UBS or its subsidiaries, nor restrictions affecting
 
the remittance of
dividends, interest or other payments to non-resident holders of UBS securities.
 
The
Swiss federal government may impose sanctions on particular countries, regimes,
organizations or persons which may create restrictions
 
on exchange of control. A current
list, in German, French and Italian, of such sanctions can be found at www.seco-
admin.ch. UBS may also be subject to sanctions regulations from other
 
jurisdictions
where it operates imposing further restrictions.
E—Taxation.
 
Supplement (17-19).
F—Dividends and Paying
Agents.
 
Not applicable.
G—Statement by Experts.
 
Not applicable.
H—Documents on Display.
 
UBS files periodic reports and other information with the Securities and Exchange
Commission. You
 
may read and copy any document that we file with the SEC on the
SEC’s website,
www.sec.gov
. Much of this information may also be found on the UBS
website at
www.ubs.com/investors
.
I—Subsidiary Information.
 
Not applicable.
J—Annual Report to Security
Holders
Not applicable
Item 11
.
 
Quantitative and Qualitative Disclosures About Market Risk.
(a) Quantitative Information
About Market Risk.
 
Annual Report,
Market risk
(112-121),
Total loss-absorbing
 
capacity
(140-143), and
Currency management
(157).
(b) Qualitative Information
About Market Risk.
 
Annual Report,
Market risk
(112-121),
Total loss-absorbing
 
capacity
(140-143), and
Currency management
(157).
(c) Interim Periods.
 
Not applicable.
 
Item 12.
 
Description of Securities Other than Equity Securities.
A
– Debt Securities
Not applicable.
 
B – Warrants and
 
Rights
Not applicable.
 
C – Other Securities
Not applicable.
 
D – American Depositary Shares
Not applicable.
 
Item 13
.
 
Defaults, Dividend
Arrearages and Delinquencies.
There has been no material default in respect of any indebtedness of UBS or any of
 
its
significant subsidiaries or any arrearages of dividends or any other material delinquency
not cured within 30 days relating to any preferred stock of UBS Group AG or any of its
significant subsidiaries.
Item 14.
 
Material Modifications
to the Rights of Security Holders
and Use of Proceeds.
None.
Item 15.
 
Controls and Procedures.
 
(a)
Disclosure Controls and
Procedures
Annual Report,
US disclosure requirements
(198), and
Exhibit 12 to this Form 20-
F.
(b) Management’s Annual
Report on Internal Control over
Financial Reporting
Annual Report,
Management’s
 
report on internal control
 
over financial reporting
 
(244).
(c) Attestation Report of the
Registered Public Accounting
Firm
Annual Report,
Reports of Independent Registered Public Accounting
 
Firm
(245-253).
(d) Changes in Internal Control
over Financial Reporting
None.
Item 16A.
 
Audit Committee
Financial Expert.
Annual Report,
Audit Committee
(179) and
Differences from corporate
 
governance
standards relevant
 
to US-listed companies
(162).
All Audit Committee members have accounting or related financial management
expertise and, in compliance with the rules established pursuant to the US Sarbanes-
Oxley Act of 2002, at least one member, the Chairperson
 
Jeremy Anderson, qualifies as a
financial
 
expert.
Item 16B.
 
Code of Ethics.
Annual Report,
Our Code of Conduct and Ethics
(41) UBS's Code of Conduct and Ethics
(the Code) is published on our website under https://www.ubs.com/code.The
 
Code does
not include a waiver option, and no waiver from any provision of the Code
 
was granted to
any employee in 2024.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024
 
10
Item 16C.
 
Principal Accountant
Fees and Services.
Annual Report,
Auditors
 
(195-197).
None of the non-audit services so disclosed were approved by the Audit Committee
pursuant to paragraph (c) (7)(i)(C) of Rule 2-01 of Regulation S-X.
Item 16D.
 
Exemptions from the
Listing Standards for Audit
Committees.
Not applicable.
Item 16E.
 
Purchases of Equity
Securities by the Issuer and
Affiliated Purchasers.
Annual Report,
Holding of UBS Group AG shares
 
(158-159),
Letter to Shareholders
 
(2-
5).
Item 16F.
 
Changes in
Registrant’s Certifying
Accountant.
Not applicable.
Item 16G.
 
Corporate
Governance.
Annual Report,
 
Differences from corporate
 
governance standards relevant
 
to US-listed
companies
 
(162),
Governance and Nominating Committee
 
(181).
Item 16H.
Mine Safety
Disclosure.
Not applicable.
Item 16I.
Disclosure Regarding
Foreign Jurisdictions that
Prevent Inspections
Not applicable.
Item 16J.
Insider trading
policies.
UBS has
adopted
 
the following policies governing the purchase, sale and other
dispositions of its securities by its employees and senior management,
 
implementing
procedures designed to promote compliance with relevant insider trading
 
rules and
regulations:
UBS Group Global Policy on Personal Investment
,
UBS Group Pre-
Clearance and Disclosure Requirements
 
for Group Senior Management
, and
UBS Group
Dealing in UBS Shares and UBS Long Term
 
Debt Securities by UBS
. These are filed as
Exhibits 11.1, 11.2
 
and 11.3 hereto.
Item 16K.
 
Cybersecurity.
Annual Report,
Operational risks affect our business
 
(53-54),
Risk management and
control
 
(89-135),
Board of Directors
 
(170-185),
Cybersecurity governance
 
(183), and
Group Executive Board
 
(186-194).
Item 17.
 
Financial Statements.
Not applicable.
Item 18.
 
Financial Statements.
Annual Report,
Financial statements
(243-368),
Significant regulated subsidiary and
sub-group information
(369-370) and
Additional regulatory information
 
(371-379).
Item 19.
 
Exhibits
Supplement (20-21).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024
 
11
Supplemental information
Item 4. Information on the Company
B – Business Overview
Item 4.B.2.
 
Geographic breakdown of total revenues of UBS Group
 
AG consolidated
UBS
 
Group
 
AG’s
 
Financial
 
Statements
 
are
 
prepared
 
in
 
accordance
 
with
 
IFRS
 
Accounting
 
Standards,
 
as
 
issued
 
by
 
the
International Accounting Standards Board and are stated in USD. The operating regions shown in the table below correspond to
the regional management structure
 
of UBS. The allocation of total revenues
 
to these regions reflects, and is
 
consistent with, the
basis on which the business is managed and its performance is evaluated. These allocations
 
involve assumptions and judgments
that management
 
considers to
 
be reasonable
 
and may
 
be refined
 
to reflect
 
changes in
 
estimates or
 
management structure.
 
The
main
 
principles
 
of
 
the
 
allocation
 
methodology
 
are that
 
client revenues
 
are
 
attributed
 
to
 
the domicile
 
of the
 
given
 
client, and
trading and portfolio
 
management revenues
 
are attributed to
 
the country where
 
the risk is managed.
 
This revenue attribution
 
is
consistent
 
with
 
the
 
mandate
 
of
 
the
 
regional
 
Presidents.
 
Certain
 
revenues,
 
such
 
as those
 
related
 
to
 
Non-core
 
and
 
Legacy
 
and
Group Items, are included in the
Global
 
column.
For 2023, the allocation
 
of total revenues by
 
geographical region for Credit
 
Suisse is not available on
 
the same allocation basis
as for the UBS Group
 
and the cost to develop
 
this information would have
 
been excessive. Therefore, as
 
permitted under IFRS
8, the respective information is not disclosed. UBS AG and Credit Suisse AG disclosed total revenues by geographical region in
their 2023 annual reports according to their respective allocation methodologies
 
.
 
USD billion
Business Division
FY
Americas
1
Asia Pacific
EMEA
Switzerland
Global
2
Total
Global Wealth
Management
2024
11.3
 
3.6
 
4.7
 
4.1
 
0.9
 
24.5
 
2023
3
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
2022
10.6
 
2.6
 
3.9
 
1.9
 
0.0
 
19.0
 
Personal &
Corporate Banking
2024
0.0
 
0.0
 
0.0
 
9.3
 
0.0
 
9.3
 
2023
3
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
2022
0.0
 
0.0
 
0.0
 
4.3
 
0.0
 
4.3
 
Asset Management
2024
0.8
 
0.4
 
0.4
 
0.9
 
0.7
 
3.2
 
2023
3
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
2022
0.5
 
0.4
 
0.4
 
0.7
 
0.8
 
3.0
 
Investment Bank
2024
4.8
 
2.9
 
2.6
 
0.7
 
0.0
 
10.9
 
2023
3
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
2022
2.7
 
2.7
 
2.6
 
0.7
 
0.0
 
8.7
 
Non-core and
Legacy
2024
0.0
 
0.0
 
0.0
 
0.0
 
1.6
 
1.6
 
2023
3
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
2022
0.0
 
0.0
 
0.0
 
0.0
 
0.2
 
0.2
 
Group Items
2024
0.0
 
0.0
 
0.0
 
0.0
 
(1.0)
(1.0)
2023
3
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
2022
0.0
 
0.0
 
0.0
 
0.0
 
(0.6)
(0.6)
Group
2024
16.8
 
6.8
 
7.7
 
15.1
 
2.2
 
48.6
 
2023
3
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
2022
13.8
 
5.6
 
7.0
 
7.7
 
0.5
 
34.6
 
1
 
Predominantly related to the US.
2
 
Includes certain revenues in Asset Management and Global Wealth
 
Management, that were
not allocated to geographical regions.
3
 
For 2023, the allocation of total revenues by geographical region for Credit Suisse is not
available on the same allocation basis as
 
for the UBS Group and the cost
 
to develop this information would have been excessive.
Therefore, as permitted under IFRS 8, the respective information is not disclosed.
 
Annual Report 2024
 
12
Disclosure Pursuant To
 
Section 219 of the Iran Threat Reduction And Syrian
 
Human Rights Act
Section 219 of the US Iran Threat Reduction and Syria Human Rights Act of
 
2012 (“ITRA”) added Section 13(r) to the US
Securities Exchange Act of 1934, as amended (the “Exchange Act”) requiring
 
each SEC reporting issuer to disclose in its
annual and, if applicable, quarterly reports whether it or any of its affiliates
 
have knowingly engaged in certain activities,
transactions or dealings relating to Iran or with the Government of
 
Iran or certain designated natural persons or entities
involved in terrorism or the proliferation of weapons of mass destruction during
 
the period covered by the report. The required
disclosure may include reporting of activities not prohibited by US or other
 
law, even if conducted outside the
 
US by non-US
affiliates in compliance with local law.
 
Pursuant to Section 13(r) of the Exchange Act, we note the following for
 
the period
covered by this annual report:
UBS has a Group Sanctions Policy that prohibits transactions involving
 
sanctioned countries, including Iran, and sanctioned
individuals and entities. However, UBS
 
Switzerland AG maintains one account involving the Iranian government
 
under the
auspices of the United Nations in Geneva after agreeing with the Swiss government
 
that it would do so only under certain
conditions. These conditions include that payments involving the account
 
must: (1) be made within Switzerland; (2) be
consistent with paying rent, salaries, telephone and other expenses necessary for
 
its operations in Geneva; and (3) not involve
any Specially Designated Nationals (SDNs) blocked or otherwise restricted under
 
US or Swiss law. The corrected gross
revenues for this UN-related account in 2023 were approximately USD 79,646
 
(CHF 67,022) and in 2022 approximately USD
24,540 (CHF 22,702).
 
In 2024, the gross revenues for this UN-related account were approximately USD
 
87,553 (CHF 79,481).
We do not
 
allocate expenses to specific client accounts in a way that enables us to calculate net profits with
 
respect to any
individual account. UBS AG intends to continue maintaining this account pursuant
 
to the conditions it has established with the
Swiss Government and consistent with its Group Sanctions Policy.
As previously reported, UBS had certain outstanding legacy trade finance
 
arrangements issued on behalf of Swiss client
exporters in favor of their Iranian counterparties. In February 2012 UBS ceased accepting
 
payments on these outstanding
export trade finance arrangements and worked with the Swiss government
 
who insured these contracts (Swiss Export Risk
Insurance "SERV").
 
On December 21, 2012, UBS and the SERV
 
entered into certain Transfer and Assignment
 
Agreements
under which SERV
 
purchased all of UBS's remaining receivables under
 
or in connection with Iran-related export finance
transactions. Hence, the SERV
 
is the sole beneficiary of said receivables. There was no financial activity
 
involving Iran in
connection with these trade finance arrangements in 2024, and no gross revenue
 
or net profit.
In connection with these trade finance arrangements, UBS Switzerland AG has maintained
 
one existing account relationship
with an Iranian bank.
This account was established prior to the US designation of this bank and maintained due
 
to the existing
trade finance arrangements.
 
In 2007, following the designation of the bank pursuant to sanctions issued by the US,
 
UN and
Switzerland, the account was blocked under Swiss law and remained
 
subject to blocking requirements until January 2016.
Client assets as of 31 December 2024
 
were CHF 3,097.40. Gross revenues were USD 15 equivalent (CHF 14)
 
.
In addition to the above, during 2024, up until the merger with UBS AG, Credit Suisse
 
AG processed a small number of de
minimis payments related to the operation of Iranian diplomatic missions in Switzerland
 
and related to fees for ministerial
government functions such as issuing passports and visas. After the
 
merger, UBS continued to process these payments
originally associated with Credit Suisse. Processing these payments
 
is permitted under Swiss law. Revenues and
 
profits from
these activities are not calculated but would be negligible.
 
 
Annual Report 2024
 
13
Item 10.
 
Additional Information.
B—Memorandum and Articles of Association.
 
Please see the Articles of Association of UBS Group AG (Exhibit 1.1 to this Form
 
20-F) and the Organization Regulations of
UBS Group AG (Exhibit 1.2 to this Form 20-F).
 
Set forth below is a summary of the material provisions of the Articles of Association
 
of UBS Group AG (the “Articles”),
Organization Regulations of UBS Group AG (the “Organization
 
Regulations”) and relevant Swiss laws, in particular the Swiss
Code of Obligations, relating to the ordinary shares of UBS Group AG (the “shares”).
 
This description does not purport to be
complete and is qualified in its entirety by references to Swiss law,
 
including Swiss company law,
 
and to the Articles and
Organization Regulations.
 
The principal legislation under which UBS Group AG operates, and under which
 
the shares are issued, is the Swiss Code of
Obligations.
Shares and Shareholders
Shares
The shares are registered shares
(Namenaktien)
 
with a nominal value of USD 0.10 per share and are issued as uncertificated
securities (
einfache Wertrechte
) (in the sense of the Swiss Code of Obligations).
 
The shares are fully paid up, and there is no
liability of shareholders to further capital calls by UBS Group AG. The shares rank
pari passu
 
in all respects with each other,
including voting rights, entitlement to dividends, share of the liquidation
 
proceeds in case of the liquidation of UBS Group AG,
preemptive rights in the event of a share issue (
Bezugsrechte
) and advance subscription rights in the event of the issuance of
equity-linked securities (
Vorwegzeichnungsrechte
).
The Articles provide that we may elect to print and deliver certificates for shares
 
at any time. However, shareholders have no
right to request the printing and delivery of certificates for shares or the conversion of the shares into
 
another form.
 
Share Register
Swiss law distinguishes between registration with and without voting rights.
 
Shareholders must be registered in our share
register as shareholders with voting rights in order to vote (and assert or exercise
 
other rights relating to voting rights) and
participate in shareholders’ meetings.
 
Swiss law and the Articles require UBS Group AG to keep a share register in which the name,
 
address and nationality (or
registered office in the case of legal entities) of the owners of the
 
shares are recorded. The main function of the share register is
to register shareholders entitled to vote (and assert or exercise other rights relating
 
to voting rights) and participate in
shareholders’ meetings.
A shareholder will be registered in our share register with voting rights upon disclosure
 
of its name, address and nationality (or
registered office in the case of legal entities). However,
 
we may decline a registration with voting rights if the shareholder does
not declare that it has acquired the shares in its own name and for its own account. If the shareholder
 
refuses to make such
declaration, it will be registered in our share register as a shareholder without
 
voting rights.
 
In order to register shares in our share register,
 
a shareholder must file a share registration form with the share register.
 
Failing
such registration, a shareholder may not vote at or participate in shareholders’
 
meetings, but will be entitled to receive
dividends and other rights with financial value, such as preemptive rights in the event of
 
a share issue (
Bezugsrechte
) and
advance subscription rights in the event of the issuance of equity-linked
 
securities (
Vorwegzeichnungsrechte
), and its share of
liquidation proceeds. Shareholders registered in our share register may at
 
any time request from us a confirmation of the shares
that they hold according to our share register.
UBS Group AG’s share register is kept
 
by UBS Shareholder Services, P.O.
 
Box, 8098 Zurich, Switzerland. UBS Shareholder
Services is responsible for the registration of the shares. The share register
 
is split into two parts – a Swiss register, which is
maintained by UBS Group AG, acting as Swiss share registrar,
 
and a US register, which is maintained by Computershare
 
Trust
Company NA, c/o Computershare Investor Services, P.O.
 
Box 505000, Louisville, KY 40233-5000, United States, acting as
US transfer agent.
 
Transfer of Shares
 
The transfer of shares constituting intermediated securities (
Bucheffekten
) (within the meaning of the Swiss Federal
Intermediated Securities Act) is effected by entries in securities accounts
 
in accordance with applicable law.
 
The transfer of
shares that do not constitute intermediated securities is effected
 
by way of a written declaration of assignment and may require
notice to UBS Group AG.
 
Annual Report 2024
 
14
Shareholders’ Meetings
A shareholders’ meeting is convened by the Board of Directors (the “BoD”) or,
 
if necessary, by the company’s
 
statutory
auditors upon notification of the shareholders at least 20 days prior to such meeting.
 
An invitation to any shareholders’ meeting
will be published in the Swiss Official Gazette of Commerce.
 
The Articles do not require a minimum number of shareholders
to be present in order to hold a shareholders’ meeting.
Unless otherwise provided by Swiss law or the Articles (as indicated below),
 
resolutions require the approval of a majority of
the votes represented, excluding blank and invalid ballots, at a shareholders’
 
meeting in order to be passed.
Under Swiss corporate law (or Swiss banking law,
 
as the case may be), a resolution passed at a shareholders’ meeting with the
approval of at least two-thirds of the votes, and a majority of the aggregate
 
nominal value of shares, in each case represented at
such meeting is required in order to approve:
●
A change in the corporation’s stated purpose
 
in its articles of association;
●
The consolidation of shares, unless the consent of all the shareholders concerned
 
is required;
●
The restriction or exclusion of preemptive rights in the event of a share
 
issue (
Bezugsrechte
);
●
The conversion of participation certificates into shares;
●
The introduction of shares with preferential voting rights;
●
Any restriction on the transferability of registered shares;
●
Any change in the currency of the share capital;
●
The introduction of a casting vote for the person chairing the shareholders’
 
meeting;
●
A provision of the articles of association on holding the shareholders’ meeting abroad;
●
The delisting of the equity securities of the corporation;
●
The creation of conditional capital, the introduction of a capital band or,
 
in accordance with Swiss banking law,
 
the
introduction of reserve capital;
●
An increase in share capital in consideration of contributions in kind,
 
or by off-set of a claim, or involving the
granting of special privileges, or from the transformation of reserves into share
 
capital;
●
A change of domicile of the corporation;
 
●
The introduction of an arbitration clause in the articles of association;
 
●
Dissolution of the corporation.
Under the Articles, a resolution passed at a shareholders’ meeting with the
 
approval of at least two-thirds of the votes
represented at such meeting is required in order to approve:
●
A change to the provisions in the Articles regarding the number of members of
 
the BoD;
●
Removal of one-quarter or more of the members of the BoD; or
●
The deletion or modification of the provision of the Articles establishing these supermajority
 
requirements.
At shareholders’ meetings, a shareholder can be represented by a legal
 
representative or under a written power of attorney by a
proxy who does not need to be a shareholder or,
 
under a written or electronic power of attorney,
 
by the independent proxy.
Votes
 
and elections are generally conducted electronically to ascertain the exact
 
number of votes cast. Voting
 
by a show of
hands is possible if a clear majority is predictable. Shareholders representing
 
at least 3% of the votes represented may always
request that a vote or election take place electronically or by a written ballot.
 
Net Profits and Dividends
 
Swiss law requires that at least 5% of the annual net profits of a corporation must
 
be retained and booked as statutory retained
earnings until these retained earnings equal, together with the corporation’s
 
statutory capital reserve, no less than 50% of the
corporation’s share capital registered
 
in the commercial register. Holding
 
companies, such as UBS Group AG, must increase
their statutory retained earnings until these equal, together with their statutory
 
capital reserve, no less than 20% of the holding
company’s share capital registered
 
in the commercial register. Any
 
remaining net profit of the corporation may be allocated,
subject to the provisions of the Swiss Code of Obligations and of the Swiss Banking Act,
 
by the shareholders represented at the
applicable shareholders’ meeting.
Under Swiss law, dividends
 
may be paid by a corporation only if, based on its audited standalone statements prepared
 
in
accordance with Swiss law, the
 
corporation has sufficient distributable profits from the previous
 
financial years or if the
reserves of the corporation are sufficient to allow distribution
 
of a dividend. In either event, dividends may be paid by the
corporation only after approval by the shareholders’ meeting. The BoD may
 
propose to the shareholders that a dividend be
paid, but cannot itself set the dividend. The corporation’s
 
statutory auditors must confirm that any dividend proposal of the
BoD is in accordance with Swiss law and the corporation’s
 
articles of association.
Dividends are usually due and payable after the shareholders’ resolution relating
 
to the allocation of profits has been passed.
Under Swiss law, the statute of
 
limitations in respect of dividend payments is five years.
 
 
 
 
Annual Report 2024
 
15
Preemptive and Advance Subscription Rights
 
Under Swiss law, any share
 
issue, whether for cash or non-cash consideration or for no consideration,
 
is subject to the prior
approval of the shareholders’ meeting. Existing shareholders of a Swiss corporation
 
have certain preemptive rights in the event
of a share issue (
Bezugsrechte
) and advance subscription rights in the event of the issuance of equity-linked
 
securities
(
Vorwegzeichnungsrechte
) to subscribe for the new shares or equity-linked securities, as the case may be, in
 
proportion to the
nominal amount of shares held. However,
 
the articles of association of the corporation or a resolution approved at a
shareholders’ meeting by at least two-thirds of the votes and a majority
 
of the aggregate nominal value of the shares, in each
case represented at the meeting, may limit or exclude such preemptive or advance
 
subscription rights in certain limited
circumstances.
Notices
 
Notices to shareholders are made by publication in the Swiss Official
 
Gazette of Commerce. The BoD may designate further
means of communication for publishing notices to shareholders.
Mandatory Tender
 
Offer
 
Under the applicable provisions of the Swiss Financial Market Infrastructure
 
Act, anyone who directly or indirectly or acting in
concert with third parties acquires more than 33 1/3% of the voting rights (whether
 
exercisable or not) of a Swiss-listed
company will have to submit a takeover bid to acquire all other listed equity
 
securities of such company. A waiver
 
from the
mandatory bid rule may be granted by the Swiss Takeover
 
Board or the Swiss Financial Market Supervisory Authority
FINMA. If no waiver is granted, the mandatory takeover bid must be made pursuant
 
to the procedural rules set forth in the
Swiss Financial Market Infrastructure Act and its implementing ordinances
 
.
Board of Directors
 
Borrowing Power
 
Neither Swiss law nor the Articles restrict in any way our power to borrow and raise funds, provided
 
that any such borrowing
is entered into on arms’ length terms.
UBS Group AG, as a listed company,
 
may grant loans to members of its BoD based on the Articles. The Articles restrict UBS
Group AG’s ability to grant
 
loans to BoD members as follows: First, loans to the independent members of the
 
BoD shall be
made in accordance with the customary business and market conditions.
 
Second, loans to the non-independent members of the
BoD shall be made in the ordinary course of business on substantially the same terms
 
as those granted to UBS employees.
Third, the total amount of such loans shall not exceed CHF 20m per member.
Conflicts of Interests
 
Swiss law requires directors and members of senior management to inform the BoD immediately
 
and comprehensively of any
conflicts of interest affecting them. The BoD then has to take the measures
 
required to safeguard the interests of the
corporation. Directors and officers are personally liable
 
to the corporation for any breach of these provisions. In addition,
Swiss law contains a provision under which payments made to a shareholder,
 
a director, a person involved in the corporation's
management activities and a member of the advisory board or any person associated
 
therewith, other than at arm’s length, must
be repaid to the corporation if they were unduly taken.
 
In addition, the Organization Regulations provide that
 
the member of the BoD or senior management with a conflict of interest
shall participate in discussions and a double vote (meaning a vote with and a vote without
 
the conflicted individual) shall take
place. A binding decision on the matter requires the same outcome in both
 
votes. This is subject to exceptional circumstances
in which the best interests of UBS dictate that the member of the BoD or senior
 
management with a conflict of interest shall
not participate in the discussions and decision-making involving the
 
interest at stake.
 
Retirement of Board Members
There is no age-limit requirement for retirement of the members of the BoD. The term
 
of office for each BoD member is until
the next annual general meeting of shareholders, and no BoD member may serve
 
for more than 10 consecutive terms of office.
In exceptional circumstances the BoD can extend this limit.
 
 
 
Annual Report 2024
 
16
The Company
Repurchase of Shares
Swiss law limits a corporation’s ability
 
to hold or repurchase its own shares. We
 
and our subsidiaries may repurchase shares
only if and to the extent that (i) we have freely distributable reserves in the amount of the purchase
 
price and (ii) the aggregate
nominal value of all shares held by us and our subsidiaries does not exceed
 
10% of our nominal share capital (or 20% of our
nominal share capital in specific circumstances). Repurchases for cancellation
 
purposes approved by the shareholders’ meeting
are not subject to the 10% threshold for own shares within the meaning of article
 
659 paragraph 2 of the Swiss Code of
Obligations. We
 
must create a special reserve in our standalone financial statements prepared
 
in accordance with Swiss law in
the amount of the purchase price of any repurchased shares. Furthermore,
 
in our consolidated financial statements, own shares
are recorded at cost and reported as treasury shares, resulting in a reduction
 
in total shareholders’ equity.
 
Shares held by us or
any of our subsidiaries do not carry any rights to vote at shareholders’ meetings.
Sinking Fund Provisions
There are no provisions in Swiss law or in the Articles requiring us to put resources aside for
 
the exclusive purpose of
redeeming bonds or repurchasing shares.
Registration and Business Purpose
 
UBS Group AG was incorporated and registered as a corporation limited by
 
shares (
Aktiengesellschaft
) under the laws of
Switzerland. UBS Group AG was entered into the commercial register of
 
Canton Zurich on June 10, 2014 under the
registration number CHE-395.345.924 and has its registered domicile
 
in Zurich, Switzerland. The business purpose of UBS
Group AG, as set forth in article 2 of the Articles, is the acquisition, holding, management
 
and sale of direct and indirect
participations in enterprises of any kind, in particular in the area of banking,
 
financial, advisory, trading
 
and service activities
in Switzerland and abroad. UBS Group AG may establish enterprises of any kind
 
in Switzerland and abroad, hold equity
interests in these companies, and conduct their management. UBS Group AG is authorized
 
to acquire, mortgage and sell real
estate and building rights in Switzerland and abroad. UBS Group AG may provide
 
loans, guarantees and other types of
financing and security for group companies and borrow and invest capital on
 
the money and capital markets.
Duration and Liquidation
UBS Group AG has an unlimited duration.
 
Under Swiss law, we may be dissolved
 
at any time by way of liquidation or in the case of a merger in accordance
 
with the
Swiss Federal Act on Merger, Demerger,
 
Transformation of Assets of October 3, 2003, as amended,
 
based on a resolution
passed at a shareholders’ meeting with the approval of at least two-thirds
 
of the votes, and a majority of the aggregate nominal
value of shares, in each case represented at such meeting. As UBS Group AG is the Swiss
 
parent of a financial group, the
Swiss Financial Market Supervisory Authority FINMA is the only competent
 
authority to open restructuring or liquidation
(bankruptcy) proceedings with respect to UBS Group AG.
Under Swiss law, any surplus arising
 
out of a liquidation (after the settlement of all claims of all creditors) must be used
 
first to
repay the nominal share capital of UBS Group AG. Thereafter,
 
any balance must be distributed to shareholders in proportion to
the paid-up nominal value of shares held.
 
Other
Ernst & Young Ltd
, Aeschengraben 27, 4051
Basel, Switzerland
, PCAOB number
1460
, have been appointed as statutory
auditors and as auditors of the consolidated accounts of UBS Group
 
AG. The auditors are subject to election each year by the
shareholders at the annual general meeting.
 
Annual Report 2024
 
17
E—Taxation.
 
This section outlines the material Swiss tax and US federal income tax consequences
 
of the ownership of UBS Group AG's
ordinary shares (defined as "UBS ordinary shares " in this section) by a US holder (as defined
 
below) who holds UBS ordinary
shares as capital assets. This discussion addresses only US federal income
 
taxation and Swiss income and capital taxation and
does not discuss all of the tax consequences that may be relevant to holders
 
in light of their individual circumstances, including
other foreign tax consequences, state or local tax consequences, estate and gift
 
tax consequences, and tax consequences arising
under the Medicare contribution tax on net investment income or the
 
alternative minimum tax.
 
It is designed to explain the
major interactions between Swiss and US taxation for US persons who hold
 
UBS ordinary shares.
 
The discussion does not address the tax consequences to persons who hold
 
UBS ordinary shares in particular circumstances,
such as tax-exempt entities, banks, financial institutions, life insurance
 
companies, broker-dealers, traders in securities that
elect to use a mark-to-market method of accounting for securities holdings, holders
 
that actually or constructively own 10% or
more of the total combined voting power of the voting stock of UBS Group
 
AG or of the total value of stock of UBS Group
AG, holders that hold UBS ordinary shares as part of a straddle or a hedging
 
or conversion transaction, holders that purchase or
sell UBS ordinary shares as part of a wash sale for tax purposes or holders whose functional
 
currency for US tax purposes is
not the US dollar. This discussion also
 
does not apply to holders who acquired their UBS ordinary shares through a tax-
qualified retirement plan, nor generally to unvested UBS ordinary shares
 
held under deferred compensation arrangements.
 
If a partnership (or other entity treated as a partnership for US federal income
 
tax purposes) holds UBS ordinary shares, the US
federal income tax treatment of a partner will generally depend on the status of
 
the partner and the tax treatment of the
partnership. A partner in a partnership holding the UBS ordinary shares
 
should consult its tax advisor with regard to the US
federal income tax treatment of an investment in the ordinary shares.
The discussion is based on the tax laws of Switzerland and the United States, including
 
the US Internal Revenue Code of 1986,
as amended, its legislative history,
 
existing and proposed regulations under the Internal Revenue Code, published rulings
 
and
court decisions, as in effect on the date of this document, as well as the Convention
 
between the United States of America and
the Swiss Confederation for the Avoidance
 
of Double Taxation with
 
Respect to Taxes on Income
 
(the “Treaty”), all of which
may be subject to change or change in interpretation, possibly with retroactive
 
effect.
 
For purposes of this discussion, a “US holder” is any beneficial owner of UBS ordinary
 
shares that is for US federal income
tax purposes:
 
●
A citizen or resident of the United States;
●
A domestic corporation or other entity taxable as a corporation;
●
An estate, the income of which is subject to US federal income tax without regard to its source;
 
or
●
A trust, if a court within the United States is able to exercise primary supervision over
 
the administration of the trust
and one or more US persons have the authority to control all substantial decisions of
 
the trust.
Holders of UBS ordinary shares are urged to consult their tax advisors
 
regarding the US federal, state and local and the Swiss
and other tax consequences of owning and disposing of these shares in their particular
 
circumstances.
 
(a) Ownership of UBS Ordinary Shares - Swiss Taxation
 
Dividends and Distributions
 
Dividends paid by UBS Group AG to a holder of UBS ordinary shares (including dividends on
 
liquidation proceeds and stock
dividends) are in principle subject to a Swiss federal withholding tax
 
at a rate of 35%.
 
Under the Capital Contribution Principle, the repayment of capital contributions,
 
including share premiums made by the
shareholders after December 31, 1996 is in principle not subject to Swiss withholding
 
tax if certain requirements regarding the
booking of these capital contributions are met.
 
Swiss companies listed on a Swiss stock exchange such as UBS Group AG can repay
 
reserves from capital contributions to
their shareholders without deduction of Swiss withholding tax only
 
if they distribute at least the same amount of taxable
dividends. For this reason UBS Group AG pays half of the dividend from
 
capital contribution reserves and half of the dividend
from taxable dividends which is subject to 35% Swiss withholding
 
tax.
 
 
Annual Report 2024
 
18
A US holder resident in the US that qualifies for Treaty
 
benefits may apply for a refund of the withholding tax withheld in
excess of the 15% Treaty rate (or for a full refund
 
in case of qualifying retirement arrangements). The claim for refund must be
filed with the Swiss Federal Tax
 
Administration, Eigerstrasse 65, CH-3003 Berne, Switzerland no later than
 
December 31 of
the third year following the end of the calendar year in which the income subject to withholding
 
was due. The form used for
obtaining a refund is one of the Swiss Tax
 
Forms 82 (82 C for US companies; 82 E for other US entities; 82 I for individuals;
82 R for regulated investment companies), which may be obtained
 
from the Swiss Federal Tax
 
Administration at the address
above or downloaded from the web page of the Swiss Federal tax Administration.
 
The form must be filled out in triplicate with
each copy duly completed and signed before a notary public in the United
 
States. The form must be accompanied by evidence
of the deduction of withholding tax withheld at the source.
 
A US holder resident outside the US may be eligible for a withholding tax
 
reclaim. If the US holder is resident in Switzerland,
a full reclaim based on the Swiss withholding tax Act is possible provided all necessary
 
conditions are met. A US holder
resident neither in the US nor in Switzerland may be eligible for a partial reclaim provided
 
that a Treaty between Switzerland
and the country of residence is applicable and that all necessary conditions
 
are met.
Transfers of UBS Ordinary
 
Shares
 
The purchase or sale of UBS ordinary shares, whether by Swiss resident or non-resident
 
holders (including US holders), may
be subject to a Swiss securities transfer stamp duty of up to 0.15%
 
calculated on the purchase price or sale proceeds if it occurs
through or with a bank or other securities dealer as defined in the Swiss Federal Stamp
 
Tax Act in Switzerland
 
or the
Principality of Liechtenstein. In addition to the stamp duty,
 
the sale of UBS ordinary shares by or through a member of a
recognized stock exchange may be subject to a stock exchange levy.
 
Capital gains realized by a US holder upon the sale of UBS ordinary shares are not subject to Swiss income
 
or gains taxes,
unless such US holder holds such shares as business assets of a Swiss business operation
 
qualifying as a permanent
establishment. In the latter case, gains are taxed at ordinary Swiss individual or corporate
 
income tax rates, as the case may be,
and losses are deductible for purposes of Swiss income taxes. Furthermore,
 
a US holder who is an individual resident in
Switzerland and holds such shares as business assets (as he qualifies as a professional
 
trader of securities as per Swiss tax law)
may be liable to Swiss income taxes on gains.
(b) Ownership of UBS Ordinary Shares - US Federal Income
 
Taxation
The tax treatment of the UBS ordinary shares will depend in part on whether or not UBS Group
 
AG is classified as a passive
foreign investment company,
 
or PFIC, for US federal income tax purposes. Except as discussed below under
 
“—Passive
Foreign Investment Company (PFIC) Rules”, this discussion assumes that UBS Group
 
AG is not classified as a PFIC for
United States federal income tax purposes.
Dividends and Distributions
A US holder will include in gross income and treat as a dividend the gross amount
 
of any distribution paid, before reduction
for Swiss withholding taxes, by UBS Group AG out of its current or accumulated
 
earnings and profits (as determined for US
federal income tax purposes), other than certain pro-rata distributions
 
of UBS ordinary shares, when the distribution is actually
or constructively received by the US holder.
 
Distributions in excess of current and accumulated earnings and profits (as
determined for US federal income tax purposes) will be treated as a return of
 
capital to the extent of the US holder’s basis in its
UBS ordinary shares and thereafter as capital gain. However,
 
UBS Group AG does not expect to calculate earnings and profits
in accordance with US federal income tax principles. Accordingly,
 
a US holder should expect to generally treat distributions
made on UBS ordinary shares as dividends.
Dividends paid to a noncorporate US holder that constitute qualified dividend
 
income will be taxable to the holder at
preferential rates, provided that the holder has a holding period in the shares of
 
more than 60 days during the 121-day period
beginning 60 days before the ex-dividend date and meets other holding period
 
requirements. Dividends paid by UBS Group
AG with respect to the ordinary shares will generally be qualified dividend income
 
provided that, in the year that the US holder
receives the dividend, the UBS ordinary shares are readily tradable on an established
 
securities market in the United States.
The UBS ordinary shares are listed on the New York
 
Stock Exchange, and UBS Group AG therefore expects that dividends
will be qualified dividend income.
For US federal income tax purposes, a dividend will include a distribution
 
characterized under Swiss law as a repayment of
capital contributions if the distribution is made out of current or accumulated
 
earnings and profits, as described above.
Dividends will generally be income from sources outside the United States for foreign
 
tax credit limitation purposes, and will
generally be "passive" income for purposes of computing the foreign tax credit allowable
 
to the holder. However,
 
if (a) we are
50% or more owned, by vote or value, by US persons and (b) at least 10% of our
 
earnings and profits are attributable to
sources within the United States, then for foreign tax credit purposes, a portion
 
of our dividends would be treated as derived
from sources within the United States. With respect to any
 
dividend paid for any taxable year, the US source
 
ratio of our
dividends for foreign tax credit purposes would be equal to the portion of our earnings
 
and profits from sources within the
United States for such taxable year,
 
divided by the total amount of our earnings and profits for such taxable year.
 
Special rules
apply in determining the foreign tax credit limitation with respect to dividends that
 
are subject to preferential rates. The
dividend will not be eligible for the dividends-received deduction generally
 
allowed to US corporations in respect of dividends
received from other US corporations.
 
Annual Report 2024
 
19
Dividends on the UBS ordinary shares are taxable to a US holder when the US holder
 
receives the dividends, actually or
constructively.
 
In the case of dividends that are paid in Swiss francs, the amount of the dividend distribution
 
included in
income of a US holder will be the US dollar value of the Swiss franc payments made,
 
determined at the spot Swiss franc/US
dollar rate on the date such dividend distribution is includible in the income of
 
the US holder, regardless of whether the
payment is in fact converted into US dollars. Generally,
 
any gain or loss resulting from currency exchange fluctuations during
the period from the date the dividend payment is included in income to
 
the date such dividend payment is converted into US
dollars will be treated as ordinary income or loss and will not be eligible for the special tax rate
 
applicable to qualified
dividend income. Such gain or loss will generally be income or loss from
 
sources within the United States for foreign tax credit
limitation purposes.
Subject to US foreign tax credit limitations, the nonrefundable Swiss tax withheld and
 
paid over to Switzerland will generally
be creditable or deductible against the US holder’s US federal income
 
tax liability. Special rules apply
 
in determining the
foreign tax credit limitation with respect to dividends that are subject to the
 
preferential tax rates. To
 
the extent a reduction or
refund of the tax withheld is available to a US holder under the laws of Switzerland
 
or under the Treaty,
 
the amount of tax
withheld that is refundable will not be eligible for credit against the US holder’s
 
US federal income tax liability,
 
whether or not
the refund is actually obtained. See “(a) Ownership of UBS Ordinary
 
Shares – Swiss Taxation” above,
 
for the procedures for
obtaining a tax refund.
Transfers of UBS Ordinary
 
Shares
A US holder that sells or otherwise disposes of UBS ordinary shares generally will recognize
 
capital gain or loss for US federal
income tax purposes equal to the difference between
 
the US dollar value of the amount realized and its tax basis, determined in
US dollars, in such UBS ordinary shares. Capital gain of a non-corporate
 
US holder is generally taxed at preferential rates if
the UBS ordinary shares were held for more than one year.
 
The gain or loss will generally be income or loss from sources
within the United States for foreign tax credit limitation purposes. A US holder will not
 
be allowed a foreign tax credit in
respect of any stamp duty or stock exchange levy that is imposed upon a transfer of
 
UBS ordinary shares.
Passive Foreign Investment Company (PFIC)
 
Rules
UBS Group AG believes that it should not currently be classified as a PFIC for US federal
 
income tax purposes, and it does not
expect to become a PFIC in the foreseeable future.
 
However, this conclusion is a factual determination made annually
 
and
thus may be subject to change. In addition, UBS Group AG’s
 
current position that it is not currently,
 
and it does not expect to
become, a PFIC is based on the position that UBS Group AG qualifies for a
 
special rule that treats income recognized by a
bank in the active conduct of a banking business as active income for PFIC purposes
 
(the “active bank exception”). It is
possible, however, that UBS Group AG may not
 
satisfy the requirements of the active bank exception in the current or a future
taxable year, or that the U.S. Internal Revenue
 
Service may issue guidance in the future under which UBS Group AG would
not satisfy the requirements of the active bank exception. It is therefore possible
 
that UBS Group AG could become a PFIC in
a future taxable year.
 
In general, UBS Group AG will be a PFIC with respect to a US holder if, for any taxable year in which
the US holder held UBS ordinary shares, either (i) at least 75% of the gross income
 
of UBS Group AG for the taxable year is
passive income or (ii) at least 50% of the value, determined on the basis of
 
a quarterly average, of UBS Group AG’s
 
assets is
attributable to assets that produce or are held for the production of passive income
 
(including cash). “Passive income”
generally includes dividends, interest, gains from the sale or exchange of
 
investment property rents and royalties and certain
other specified categories of income. If a foreign corporation owns at least 25%
 
by value of the stock of another corporation,
the foreign corporation is treated for purposes of the PFIC tests as owning
 
its proportionate share of the assets of the other
corporation, and as receiving directly its proportionate share of the other
 
corporation's income.
 
If UBS Group AG were to be treated as a PFIC, special rules apply with respect to (i)
 
any gain a US holder realizes on the sale
or other disposition of UBS ordinary shares, and (ii) any excess distribution that UBS Group
 
AG makes to a US holder
(generally, any distributions
 
to the US holder during a single taxable year, other
 
than the taxable year in which the US holder’s
holding period in the UBS ordinary shares begins, that are greater than 125%
 
of the average annual distributions received by
the US holder in respect of the UBS ordinary shares during the three preceding taxable
 
years or, if shorter,
 
the US holder’s
holding period for the UBS ordinary shares that preceded the taxable year
 
in which the US holder receives the distribution).
 
Under these rules: (i) the gain or excess distribution will be allocated ratably
 
over the US holder’s holding period for the UBS
ordinary shares, (ii) the amount allocated to the taxable year in which the US holder
 
realized the gain or excess distribution or
to prior years before the first year in which UBS Group AG is a PFIC with respect to the US holder
 
will be taxed as ordinary
income, (iii) the amount allocated to each other prior year will be taxed at the highest
 
tax rate in effect for that year, and (iv)
the interest charge generally applicable to underpayments
 
of tax will be imposed in respect of the tax attributable to each such
year.
Special rules apply for calculating the amount of the foreign tax credit with respect
 
to excess distributions by a PFIC. With
certain exceptions, a US holder’s UBS ordinary shares will be treated
 
as stock in a PFIC if UBS Group AG was a PFIC at any
time during the holder’s holding period in the UBS ordinary shares.
 
In addition, dividends received from UBS Group AG
would not be eligible for the preferential tax rate applicable to qualified dividend
 
income if UBS Group AG were to be treated
as a PFIC either in the taxable year of the distribution or the preceding taxable year,
 
but would instead be taxable at rates
applicable to ordinary income. If a US holder owns UBS ordinary shares during
 
any year that UBS Group AG is PFIC with
respect to the US holder, the US holder
 
may be required to file Internal Revenue Service Form 8621.
 
Annual Report 2024
 
20
Item 19.
 
Exhibits.
 
Exhibit
number
Description
1.1
. (Incorporated by reference to Form 6-K of UBS
Group AG filed on May 13, 2024)
1.2
 
2(b)
Instruments defining the rights of the holders of long-term debt issued by
 
UBS Group AG and its subsidiaries.
We agree to furnish
 
to the SEC upon request, copies of the instruments, including indentures, defining
 
the rights of
the holders of our long-term debt and of our subsidiaries’ long-term debt.
2(d)
(Incorporated by
reference to Exhibit 2(d) to UBS's Annual Report on Form 20-F for the
 
fiscal year ended December 31, 2023)
4.1
.
(Incorporated
by reference to Exhibit 4.4 to UBS's Annual Report on Form 20-F for the fiscal year
ended December 31, 2014)
4.2
(Incorporated by reference to Exhibit 4.8 to UBS's Annual Report on Form 20-F
 
for the fiscal year ended
December 31, 2015)
4.3
 
(Incorporated by reference to Exhibit 4.17 to UBS's Annual Report on Form 20-F for the fiscal
 
year
ended December 31, 2019)
4.4
(Incorporated by reference to Exhibit 4.18 to UBS's Annual Report on
 
Form 20-F for the fiscal
year ended December 31, 2019)
 
4.5
(Incorporated by reference to Exhibit 4.19 to UBS's Annual Report on Form 20-F for the fiscal
 
year
ended December 31, 2019)
4.6
(Incorporated by reference to Exhibit 4.20 to UBS's Annual Report on Form 20-F for
 
the fiscal year
ended December 31, 2020)
 
4.7
.
(Incorporated by reference to Exhibit 4.21 to UBS's Annual Report on Form 20-F for the fiscal
 
year
ended December 31, 2020)
4.8
(Incorporated by reference to Exhibit 4.22 to UBS's Annual Report on Form 20-F for
 
the fiscal year
ended December 31, 2020)
4.9
(Incorporated by reference to Exhibit 4.18 to UBS's Annual Report on Form 20-F for
 
the fiscal year
ended December 31, 2021)
4.10
(Incorporated by reference to Exhibit 4.19 to UBS's Annual Report on Form 20-F for
 
the fiscal year
ended December 31, 2021)
4.11
(Incorporated by reference to Exhibit 4.20 to UBS's Annual Report on Form 20-F for
 
the fiscal year
ended December 31, 2021)
4.12
 
(Incorporated by reference to Exhibit 4.21 to UBS's Annual Report on Form 20-F for
 
the fiscal year
ended December 31, 2021)
4.13
 
(Incorporated by reference to Exhibit 4.19 to UBS's Annual Report on Form 20-F for
 
the fiscal year
ended December 31, 2022)
 
Annual Report 2024
 
21
4.14
 
(Incorporated by reference to Exhibit 4.16 to UBS's Annual
Report on Form 20-F for the fiscal year ended December 31, 2023)
 
4.15
 
(Incorporated by reference to Exhibit 4.17 to UBS's Annual
Report on Form 20-F for the fiscal year ended December 31, 2023)
4.16
. (Incorporated by reference to Exhibit 4.18 to UBS's Annual Report on Form 20-F
 
for the fiscal year
ended December 31, 2023)
4.17
. (Incorporated by reference to Exhibit 4.19 to UBS's Annual Report on
Form 20-F for the fiscal year ended December 31, 2023)
4.18
. (Incorporated by reference to Exhibit 4.20 to UBS's Annual Report on
Form 20-F for the fiscal year ended December 31, 2023)
4.19
4.20
4.21
4.22
4.23
4.24
(Incorporated by
reference to Form 6-K of UBS AG filed on June 17, 2015)
8
Significant Subsidiaries of UBS Group AG.
Please see Note 28 to the Financial Statements (
Interests in subsidiaries and other entities),
 
on pages 359-362 of
the Annual Report.
11.1
11.2
11.3
12
13
15
17
97
(Incorporated by reference to Exhibit 97 to UBS's Annual
Report on Form 20-F for the fiscal year ended December 31, 2023)
101
Interactive Data Files (sections of the Annual Report formatted in inline XBRL (Extensible
 
Business Reporting
Language)). Furnished electronically herewith.
 
 
 
 
Annual Report 2024
 
22
SIGNATURES
The registrant hereby certifies that it meets
 
all of the requirements for filing on Form 20-F and that
 
it has duly
caused the undersigned to sign this annual report
 
on its behalf.
UBS Group AG
_/s/
 
Sergio Ermotti ____________
Name:
 
Sergio Ermotti
Title:
 
Group Chief Executive Officer
 
_/s/ Todd Tuckner ______________
Name:
 
Todd Tuckner
Title:
 
Group Chief Financial Officer
_/s/ Steffen Henrich_____________
Name:
 
Steffen Henrich
Title:
 
Group Controller
 
 
 
Date: March 17, 2025
 
ubs-20241231p23i0
 
Annual Report
 
2024
 
UBS Group
ubs-20241231p24i0
Our external reporting approach
The scope
 
and content
 
of our
 
external reports
 
are determined
 
by Swiss
 
legal and
 
regulatory requirements,
 
accounting
standards,
 
relevant
 
stock
 
and
 
debt
 
listing
 
rules,
 
including
 
regulations
 
promulgated
 
by
 
the
 
Swiss
 
Financial
 
Market
Supervisory Authority (FINMA), the SIX Swiss Exchange, the US Securities and Exchange Commission (the SEC) and other
regulatory requirements, as
 
well as by our financial reporting policies.
At the center of our external reporting approach is the annual report of the UBS Group, which consists of disclosures for
UBS
 
Group AG
 
and
 
its
 
consolidated
 
subsidiaries.
 
We
 
also
 
provide
 
a
 
separate
 
annual
 
report
 
for
 
UBS AG
 
on
 
a
 
sub-
consolidated basis. Both of the
 
aforementioned annual reports are
 
the basis for the corresponding 2024
 
SEC Form 20-F
filings for
 
UBS Group AG
 
and UBS AG.
 
For filing
 
purposes in
 
the European
 
Union, the
 
UBS AG Annual
 
Report also
 
includes
disclosures required by the EU Non-financial Reporting Directive
 
(the NFRD) and the EU Taxonomy Regulation.
Annual Reports
The UBS Group Annual Report 2024 and the UBS AG Annual Report 2024 include the consolidated
 
financial statements
of UBS Group
 
AG and UBS
 
AG, respectively, and
 
together provide comprehensive information
 
about our Group,
 
including
strategy, businesses, financial and operating performance,
 
and other key information.
 
The
 
consolidated
 
financial
 
statements
 
of
 
UBS
 
Group
 
AG
 
and
 
UBS
 
AG
 
have
 
been
 
prepared
 
in
 
accordance
 
with
 
IFRS
Accounting
 
Standards.
 
The
 
sections
 
within
 
“Risk,
 
capital,
 
liquidity
 
and
 
funding,
 
and
 
balance
 
sheet“
 
include
 
certain
audited financial
 
information, which
 
forms part
 
of the
 
consolidated financial
 
statements.
 
The UBS
 
Group and
 
UBS AG
reports are presented in US dollars.
 
The UBS Group Annual Report 2024 is partly translated
 
into German.
Sustainability Report
The UBS Group Sustainability Report 2024 provides disclosures on environmental, social and governance (ESG) topics for
the UBS Group, UBS AG and UBS Switzerland
 
AG. Selected ESG information is also included in the annual reports.
Standalone reports of UBS Group AG and significant regulated
 
entities
We publish separate 2024 statutory financial statements for UBS Group AG, which are the basis for our appropriation of
profit and
 
the proposed
 
distribution of
 
dividends, subject
 
to shareholder
 
approval at
 
the Annual
 
General Meeting.
 
We
also publish
 
standalone reports
 
for UBS AG
 
and UBS
 
Switzerland AG.
 
Selected financial
 
and regulatory
 
key figures
 
for
our significant regulated subsidiaries and sub-groups are
 
included in the UBS Group Annual Report.
 
Pillar 3 Report of UBS Group AG including significant
 
regulated entities and sub-groups
The Pillar 3 Report as of 31 December 2024 provides
 
detailed quantitative and qualitative information about risk, capital,
leverage,
 
and liquidity
 
and funding
 
for
 
the
 
UBS Group
 
and prudential
 
key
 
figures
 
and regulatory
 
information
 
for
 
our
significant regulated subsidiaries and sub-groups.
 
Scopes subject to disclosure are
 
UBS Group AG consolidated, UBS AG
consolidated and standalone,
 
UBS Switzerland AG standalone,
 
UBS Europe SE
 
consolidated, UBS Americas
 
Holding LLC
consolidated and Credit Suisse International standalone.
 
Annual Report 2024 |
Letter to shareholders
 
2
Dear shareholders,
The year
 
2024 marked
 
another 12
 
months of
 
change for
 
UBS and
 
the world
 
we live
 
in. In
 
the first
 
full year
 
since our
acquisition of
 
Credit Suisse,
 
we transitioned
 
from stabilizing
 
a precarious
 
situation to
 
making significant
 
strides toward
integration. We achieved
 
all our key
 
acquisition-related milestones on or
 
ahead of schedule
 
and accelerated the transition
to growth. UBS
 
is now stronger,
 
more diversified and
 
better positioned
 
strategically to benefit
 
both our clients
 
and our
shareholders in a rapidly changing world.
 
Our tested Group strategy,
 
with around 60% of our revenues derived from asset-gathering
 
activities,
 
and our diversified
balance sheet
 
make UBS
 
unique among
 
the world’s
 
systemically important
 
banks. At
 
its core,
 
our strategy
 
focuses on
delivering outstanding client services,
 
sustainable profitability, financial strength,
 
innovation and sound
 
risk management.
Our priority
 
continues to
 
be serving
 
our growing
 
base of
 
clients. Last
 
year, despite
 
the substantial
 
cost of
 
restructuring
Credit Suisse, our shareholders
 
benefitted from nearly USD
 
4 billion in total
 
capital returns in the
 
form of dividends and
share repurchases. We
 
did this while
 
maintaining our balance
 
sheet for all
 
seasons with a
 
common equity tier
 
1 (CET1)
capital ratio of 14.3% and a going concern capital ratio of 17.6%, making us one of the best-capitalized major banks in
the world.
Reaching key milestones in our integration
Through the integration of
 
Credit Suisse, we have strengthened
 
our position as the
 
largest truly global wealth
 
manager
and the leading
 
bank in Switzerland.
 
We have broadened
 
our geographical footprint
 
and enhanced our
 
range of products
and services
 
including in
 
our Asset
 
Management and
 
Investment
 
Bank divisions.
 
This diversification
 
has made
 
us even
stronger than before the acquisition.
 
Our strength and stability
 
set us apart in times
 
of uncertainty
 
around global trade,
geopolitics, inflation and central bank policies.
 
The integration
 
has progressed
 
well, and
 
even picked
 
up speed
 
in many areas,
 
significantly reducing
 
the execution
 
risk
of the acquisition and
 
making us confident that
 
we will accomplish its
 
most significant aspects
 
by the end of 2026.
 
We
delivered on
 
all our
 
key milestones
 
in 2024,
 
including
 
all major
 
legal entity
 
mergers
 
and the
 
successful completion
 
of
client account migrations in Luxembourg, Hong Kong, Singapore
 
and Japan.
 
In Switzerland, the migration of former Credit Suisse client
 
accounts to the UBS platform will start in the second quarter
of
 
2025,
 
marking
 
the
 
most
 
complex
 
part
 
of
 
the
 
entire
 
integration.
 
Preparations
 
are
 
well
 
under
 
way,
 
and
 
we
 
remain
focused on ensuring the client experience is as smooth as possible
 
throughout the integration.
Our Non-core
 
and Legacy
 
division, charged
 
with winding
 
down non-essential
 
and non-strategic
 
assets stemming
 
from
the acquisition,
 
has cut
 
risk-weighted
 
assets by
 
more than
 
half compared
 
with the
 
post-acquisition starting
 
point and
released over USD 6 billion of capital to the Group.
 
Delivering on our capital return commitments
We achieved these integration objectives while delivering a strong financial performance in 2024. Our
 
full-year net profit
reached USD 5.1 billion,
 
with an underlying
 
return on CET
 
1
 
capital of 8.7%,
 
ahead of our
 
plan but still
 
below our pre-
acquisition levels of profitability.
 
We also delivered
 
on our efficiency
 
ambitions by achieving
 
a cumulative 58%
 
of our total
 
gross cost-save target of
 
around
USD 13
 
billion.
 
These
 
savings
 
enable
 
us
 
to
 
drive
 
growth
 
by
 
continuing
 
to
 
invest
 
in
 
talent,
 
technology,
 
products
 
and
services.
Our financial
 
performance, coupled
 
with our
 
progress on
 
the integration,
 
enables us
 
to fulfill
 
our commitment
 
to you,
our shareholders, to provide
 
sustainably higher returns. For
 
2024, in addition to
 
the repurchase of
 
USD 1 billion of shares,
we have proposed a dividend of USD 0.90 per share, an
 
increase of 29% year-over-year.
 
In 2025, we plan to accrue for
 
an increase in our per-share dividend
 
of around 10%. In addition, we
 
plan to repurchase
USD 1 billion of shares
 
in the first half
 
of 2025 and aim
 
to repurchase up to
 
an additional USD 2
 
billion of shares in
 
the
second half of the
 
year. We also
 
maintain our ambition for
 
2026 share repurchases
 
to exceed full-year
 
2022 levels. Our
share repurchases
 
will be
 
consistent with
 
delivering on our
 
financial plans,
 
maintaining our
 
CET1 capital
 
ratio target
 
of
around 14% and the absence of material, immediate changes
 
to the current capital regime.
Switzerland and UBS: strong partners
Even as our global reach expands, we remain steadfast in our commitment to act as
 
an engine of growth and prosperity
in Switzerland, our home market.
 
As a leading provider of credit to Swiss
 
households and corporate clients, we
 
granted
or renewed over
 
CHF 70 billion of
 
loans in Switzerland
 
last year
 
out of a
 
total book of
 
around CHF 350 billion,
 
helping
our communities to prosper in ways that benefit both households
 
and businesses and our shareholders.
 
Annual Report 2024 |
Letter to shareholders
 
3
In
 
2024,
 
we
 
took
 
note
 
of
 
the
 
Swiss
 
Federal
 
Council
 
report
 
on
 
banking
 
stability
 
as
 
well
 
as
 
the
 
report
 
of
 
the
 
Swiss
Parliamentary Investigation Committee (the PUK). Both confirmed that the collapse of Credit Suisse was primarily caused
by years of strategic errors,
 
mismanagement and a reliance
 
on substantial regulatory concessions.
 
These problems were
unique to Credit Suisse.
 
UBS was asked
 
to be a
 
part of the
 
solution: our strength
 
enabled us to
 
answer an emergency call
 
in March 2023
 
to rescue
Credit Suisse with the backing of the Swiss government, regulatory authorities and the Swiss National Bank. Both before
and after,
 
we have
 
consistently implemented
 
measures with
 
no undue
 
regulatory concessions
 
and in
 
ways that
 
ensure
our firm poses no risk to Switzerland but instead benefits
 
the country and our collective prosperity.
 
We support most of
 
the recommendations made by the
 
Swiss Federal Council to strengthen
 
the resilience of the
 
financial
center, including
 
the
 
introduction
 
of a
 
Senior
 
Manager
 
Regime and
 
a Public
 
Liquidity
 
Backstop.
 
We
 
share the
 
Federal
Council’s strong commitment to a global Swiss financial
 
center. We also take note of the Federal Council’s
 
commitment
to
 
reflect
 
the
 
lessons
 
learned
 
from
 
the
 
Credit
 
Suisse
 
collapse
 
with
 
measures
 
that
 
are
 
targeted,
 
proportionate
 
and
internationally
 
aligned.
 
As
 
Switzerland’s
 
leading
 
financial
 
institution,
 
the
 
continued
 
success
 
of
 
UBS
 
and
 
Switzerland’s
position as a
 
global financial center
 
are inextricably linked
 
for mutual prosperity.
 
Balance sheet
 
strength is at
 
the center
of our strategy,
 
and we are already providing for
 
almost USD 20 billion of additional capital resulting from the
 
acquisition
of Credit Suisse. Of
 
that, around USD 9
 
billion stems from the
 
removal of regulatory concessions granted
 
to Credit Suisse.
Around USD
 
10 billion
 
arises from
 
the existing
 
too-big-to-fail
 
capital rules,
 
which require
 
more capital
 
to be
 
held as
 
a
result of the larger size of our balance sheet
 
and greater market share. That means
 
that UBS is already subject to, and is
fulfilling, risk-weighted capital requirements that are among the
 
highest for any global systemically important bank.
 
At the same
 
time, the often
 
ill-informed public debate
 
in Switzerland about
 
potential risks emerging
 
from our business
activities or our size in relation
 
to the Swiss economy, coupled
 
with intensified demands for future
 
capital requirements,
has created
 
uncertainties as
 
we enter
 
2025. Yet
 
the current
 
discussion often
 
overlooks important
 
differences between
today’s UBS
 
and the
 
former Credit
 
Suisse, namely
 
that our
 
low-risk business
 
model and
 
high asset
 
quality make
 
UBS a
far safer and more secure financial firm than Credit Suisse
 
ever was.
 
It is important
 
to remember that
 
UBS has consistently
 
implemented the too-big-to-fail
 
framework since
 
its introduction
and has taken significant measures to ensure the
 
resolvability of the firm. Our balance sheet
 
today amounts to less than
half the size of the combined UBS and
 
Credit Suisse before the Global Financial Crisis
 
of 2008, with total loss absorbing
capacity of USD 185 billion at the end of
 
2024, or almost four times the write-downs UBS
 
incurred in the years following
the crisis.
 
Indeed, it
 
was the
 
safe, sustainable
 
and successful
 
business model
 
we have
 
pursued since
 
then, based
 
on a
strong capital position and disciplined risk
 
management, that enabled us to respond
 
to the Swiss authorities’ request and
restore financial stability in a matter of days following the
 
rescue weekend.
 
Despite the
 
challenges, we
 
remain committed
 
to a
 
constructive dialogue
 
and will
 
continue to
 
contribute our
 
facts and
arguments so that a
 
reasonable solution can
 
be found, aligned
 
with the Federal
 
Council’s commitment to a
 
strong and
internationally competitive
 
financial center.
 
We are
 
advocating for
 
a vibrant
 
Swiss financial
 
center –
 
with a
 
competitive
UBS at its center – that supports our clients, communities
 
and the wider economy.
 
Excessive capital
 
requirements
 
or other
 
undue
 
limitations
 
on
 
our international
 
business
 
would
 
penalize
 
our diversified
global
 
presence,
 
run
 
counter
 
to
 
the
 
government’s
 
financial
 
sector
 
strategy
 
and
 
damage
 
the
 
competitiveness
 
of
Switzerland’s economy,
raising the cost of capital for homeowners and businesses.
 
Any such requirements would also be
out
 
of
 
step
 
with
 
the
 
many
 
measures
 
to
 
strengthen
 
the
 
competitive
 
environment
 
adopted
 
by
 
other
 
leading
 
financial
centers. All this
 
would hamper our ability
 
to contribute to our
 
national economy, where we are
 
Switzerland’s third-largest
private employer. Our 34,000 colleagues,
 
together with UBS, pay more than CHF 2 billion in taxes
 
annually.
Our commitment made to
 
the Swiss public at
 
the legal close of
 
the acquisition on 12 June 2023
 
remains unchanged “We
will stay
 
focused
 
on what
 
really matters:
 
the
 
safety
 
and security
 
of our
 
clients’
 
assets
 
and helping
 
them
 
achieve
 
their
goals. We will work
 
together as we
 
combine our strengths
 
and capabilities. We
 
will make decisions
 
based on facts
 
and
with the
 
bigger picture
 
top of
 
mind. We
 
will never
 
compromise on
 
UBS’s strong
 
culture, conservative
 
risk approach
 
or
quality service.”
Positioned for growth
As we advance
 
toward our long-term
 
ambitions, we are
 
focused on sustainable
 
and strategic
 
growth, with a
 
particular
focus on the Americas and Asia Pacific regions in our core asset-gathering
 
activities, while maintaining capital discipline.
In the region Europe, Middle East and Africa (EMEA), we plan to maintain our leading positions
 
while expanding market
share in areas of strategic focus, seizing opportunities through
 
systematic cross-collaboration.
 
In our wealth management business
 
in the Americas, we
 
are making targeted investments
 
to deepen relationships with
our ultra-high net worth clients,
 
to accelerate growth in
 
the high net worth and
 
core affluent segments, and
 
to expand
our loan and deposit offering.
 
We are also investing in our
 
technology and banking capabilities to
 
enhance our offering
while working toward obtaining
 
a national bank charter
 
in a region that represents
 
the world’s largest wealth
 
pool and
is where we already have USD 2.1 trillion in invested assets served by
 
nearly 6,000 financial advisors. These initiatives will
also help to enhance our profitability in this important business.
 
ubs-20241231p28i1ubs-20241231p28i0
Annual Report 2024 |
Letter to shareholders
 
4
Colm Kelleher
Chairman of the Board of Directors
Sergio P.
 
Ermotti
 
Group Chief Executive Officer
Similarly,
 
in
 
our wealth
 
management
 
businesses
 
in Switzerland
 
and EMEA,
 
we
 
are
 
the
 
number
 
one player,
 
each
 
with
around USD 0.7 trillion of invested assets.
 
With the client account migrations finalized in the
 
Asia Pacific region, we are even better placed
 
to leverage our number-
one position
 
in the
 
region to
 
drive market
 
-leading growth.
 
In Asia
 
Pacific, where
 
we have
 
USD 0.7 trillion
 
of invested
assets in Global Wealth Management, we
 
are twice as large as our nearest competitor.
 
Integration there has progressed
well, setting us up for success in the world’s fastest-growing wealth
 
market.
In Personal
 
& Corporate
 
Banking in
 
Switzerland, we
 
are uniquely
 
positioned to
 
offer exceptional
 
value throughout
 
the
client lifecycle
 
by delivering
 
a
 
comprehensive
 
suite
 
of services
 
spanning
 
wealth
 
management,
 
asset
 
management
 
and
investment banking.
We are
 
committed to
 
investing in
 
and remaining
 
a pillar
 
of the
 
Swiss economy
 
while continuing
 
to offer
 
the highest-
quality services
 
and capabilities
 
available in
 
our home
 
market. Our
 
primary focus
 
will be
 
on reinforcing
 
our standing
 
as
the go-to bank for
 
large corporates, entrepreneurs
 
and emerging affluent
 
clients with leading
 
financing, asset servicing
and wealth advice capabilities.
In Asset Management,
 
we remain
 
focused on
 
continuing to
 
capture opportunities
 
where we
 
have a
 
differentiated and
scalable offering. And in the Investment Bank, we are encouraged by the progress our fully integrated teams are making
to deliver for our clients
 
as we seize market
 
share gains in our areas
 
of strategic importance. All
 
our businesses are fully
aligned with our asset-gathering-focused strategy and our
 
risk-aware culture.
In terms of profitability and efficiency,
 
we remain well positioned to
 
build toward our 2026 exit rate
 
targets of around a
15% underlying return
 
on CET1 capital
 
and an underlying cost / income
 
ratio of less
 
than 70% as
 
we continue to execute
our integration plans and capture the benefits of enhanced
 
scale across our core businesses.
Harnessing the power of AI
UBS has long
 
been a pioneer
 
in adopting new technology, including artificial intelligence, to better serve our
 
clients and
promote
 
business
 
efficiency.
 
In
 
2024,
 
we
 
continued
 
making
 
targeted
 
investments
 
and
 
expect
 
AI
 
adoption
 
to
 
drive
transformation
 
where our
 
clients, employees,
 
and shareholders
 
all benefit
 
from the latest
 
innovations.
 
We are,
 
for example,
on track
 
to roll out
 
some 50,000
 
Microsoft 365
 
Copilot licenses
 
to our employees,
 
the largest
 
deployment
 
within the
 
global
financial services
 
sector to date.
We have also rolled out
 
Red, our cutting-edge internal
 
chatbot that builds on
 
state-of-the-art generative AI capabilities,
to around
 
30,000 of
 
our employees.
 
By granting
 
them intelligent
 
access to
 
insights, UBS
 
products, research
 
and Chief
Investment Officer reports,
 
it saves time
 
and helps us deliver
 
even more value
 
for our clients.
 
It makes interactions
 
with
clients more efficient and more personal.
Supporting the transition to a low-carbon world
 
and positive social outcomes
We support our clients
 
in the transition to
 
a low-carbon world and
 
consider climate change risks and
 
opportunities across
our bank
 
for the
 
benefit of
 
our clients,
 
our shareholders
 
and all
 
our stakeholders.
 
In
 
2024, we
 
set a
 
revised target
 
to
reduce the firm’s net greenhouse emissions (scope 1
 
and 2 emissions) to net zero
 
by 2035, reflecting both the integrated
organization and the latest regulatory guidance. We made progress
 
on these key components of our climate action
 
plan,
reducing our net
 
greenhouse gas
 
scope 1 and 2
 
emissions and energy
 
consumption. For
 
scope 3 emissions,
 
we remain
committed to our lending sector decarbonization targets to address our financed emissions in specified sectors and have
made progress on these.
 
In our first fully
 
consolidated ESG ratings
 
following the acquisition
 
of Credit Suisse,
 
MSCI reaffirmed our
 
AA ESG rating
in 2024, and we increased our S&P Global Corporate Sustainability
 
Assessment score.
 
 
ubs-20241231p29i2ubs-20241231p29i0
Annual Report 2024 |
Letter to shareholders
 
5
We also
 
celebrated
 
25 years
 
of the
 
UBS Optimus
 
Foundation,
 
the
 
grant-making
 
organization
 
that offers
 
our clients
 
a
platform
 
to
 
drive
 
positive
 
social
 
and
 
environmental
 
outcomes.
 
Optimus
 
has
 
grown
 
into
 
an
 
influential
 
network
 
of
foundations
 
in
 
nine
 
locations
 
working
 
at
 
a
 
global
 
and
 
local
 
level
 
to
 
drive
 
transformative
 
change
 
for
 
marginalized
communities.
 
In
 
the
 
past
 
10
 
years
 
alone,
 
together
 
with
 
our
 
clients
 
and
 
employees,
 
Optimus
 
has
 
raised
 
over
 
USD 1.5
billion in donations, and our programs have helped nearly
 
35 million people.
The 2025 Annual General Meeting
At the upcoming AGM, we are proposing Renata Jungo Brüngger and Lila Tretikov for election to the Board
 
of Directors.
Claudia Böckstiegel and
 
Nathalie Rachou
 
will not stand
 
for re-election.
 
We thank them
 
both for their
 
dedicated service
and significant
 
contributions over
 
the last
 
years. Renata
 
is a
 
highly respected
 
professional with
 
extensive experience
 
in
legal affairs, governance, and sustainability, serving as a member of the Board of Management of Mercedes-Benz Group
AG since 2016. Lila
 
is a well-known expert
 
in AI and technology-driven
 
business transformation. Currently,
 
she leads AI
strategy
 
at New
 
Enterprise Associates,
 
a Silicon
 
Valley-based
 
venture capital
 
firm. Most
 
recently, she
 
served as
 
Deputy
Chief Technology Officer at Microsoft, where
 
she led substantial transformation initiatives. Also
 
at the AGM, you will be
asked
 
to
 
vote
 
on
 
the
 
proposed
 
increase
 
in
 
dividends,
 
the
 
2025
 
share
 
repurchase
 
program
 
and
 
the
 
UBS
 
Group
Sustainability Report.
We are confident about the future and the value we deliver. With our clear strategy and progress on our integration, we
are well
 
positioned to offer
 
outstanding client experiences
 
and to
 
grow sustainably, enabling
 
us to
 
generate higher returns
on capital and provide you, our valued shareholders, with attractive
 
returns.
Thank you
 
for your
 
ongoing support.
 
We look
 
forward to
 
welcoming you
 
to the
 
2025 AGM,
 
which will
 
take place
 
on
10 April in Lucerne, Switzerland.
Yours sincerely,
 
Colm Kelleher
 
Sergio P. Ermotti
Chairman of the Board of Directors
 
Group Chief Executive Officer
 
 
 
 
 
Annual Report 2024 |
Letter to shareholders
 
6
Corporate information
UBS Group AG
 
is incorporated and domiciled in Switzerland
 
and operates
under Art. 620ff. of the Swiss Code of Obligations
 
as an Aktiengesellschaft, a
corporation limited by shares. Its registered office is at Bahnhofstrasse
 
45,
CH-8001 Zurich, Switzerland, telephone +41-44-234
 
11 11, and its corporate
identification number is CHE-395.345.924.
 
UBS Group AG was incorporated
on 10 June 2014 and was established in 2014
 
as the holding company of the
UBS Group. UBS Group AG shares are listed on the SIX Swiss
 
Exchange and
on the New York Stock Exchange (ISIN CH0244767585; CUSIP H42097107).
UBS Group AG owns 100% of the outstanding shares in
 
UBS AG and Credit
Suisse AG.
Contacts
Switchboards
For all general inquiries
ubs.com/contact
 
Zurich +41-44-234 1111
London +44-207-567 8000
New York +1-212-821 3000
Hong Kong SAR +852-2971 8888
Singapore +65-6495 8000
Investor Relations
UBS’s Investor Relations team manages
relationships with institutional investors,
research analysts and credit rating agencies.
ubs.com/investors
Zurich +41-44-234 4100
New York +1-212-882 5734
Media Relations
UBS’s Media Relations team manages
relationships with global media and
journalists.
ubs.com/media
Zurich +41-44-234 8500
mediarelations@ubs.com
London +44-20-7567 4714
 
ubs-media-relations@ubs.com
New York +1-212-882 5858
 
mediarelations@ubs.com
Hong Kong SAR +852-2971 8200
sh-mediarelations-ap@ubs.com
Office of the Group Company Secretary
The Group Company Secretary handles
inquiries directed to the Chairman or to other
members of the Board of Directors.
UBS Group AG, Office of the
 
Group Company Secretary
PO Box, CH-8098 Zurich, Switzerland
sh-company-secretary@ubs.com
Zurich +41-44-235 6652
Shareholder Services
UBS’s Shareholder Services team, a unit
 
of the Group Company Secretary’s office,
manages relationships with shareholders
and the registration of UBS Group AG
registered shares.
UBS Group AG, Shareholder Services
PO Box, CH-8098 Zurich, Switzerland
sh-shareholder-services@ubs.com
Zurich +41-44-235 6652
US Transfer Agent
For global registered share-related
 
inquiries in the US.
Computershare Trust Company NA
 
PO Box 43006
Providence, RI, 02940-3006, USA
Shareholder online inquiries:
www.computershare.com/us/
investor-inquiries
Shareholder website:
computershare.com/investor
Calls from the US
 
+1-866-305-9566
Calls from outside the US
 
+1-781-575-2623
TDD for hearing impaired
+1-800-231-5469
TDD for foreign shareholders
+1-201-680-6610
Corporate calendar UBS Group AG
Information about future publication dates is available
 
at
ubs.com/global/en/investor-relations/events/calendar.html
Imprint
Publisher: UBS Group AG, Zurich, Switzerland | ubs.com
Language: English
 
 
© UBS 2025. The key symbol and UBS are among
 
the registered and
unregistered trademarks of UBS. All rights reserved.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024
 
8
Our key figures
As of or for the year ended
USD m, except where indicated
31.12.24
31.12.23
1
31.12.22
Group results
Total revenues
 
48,611
 
40,834
 
34,563
Negative goodwill
 
27,264
Credit loss expense / (release)
 
551
 
1,037
 
29
Operating expenses
 
41,239
 
38,806
 
24,930
Operating profit / (loss) before tax
 
6,821
 
28,255
 
9,604
Net profit / (loss) attributable to shareholders
 
5,085
 
27,366
 
7,630
Diluted earnings per share (USD)
2
 
1.52
 
8.30
 
2.25
Profitability and growth
3,4
Return on equity (%)
 
6.0
 
36.9
 
13.3
Return on tangible equity (%)
 
6.5
 
40.8
 
14.9
Underlying return on tangible equity (%)
5
 
8.5
 
4.1
 
12.8
Return on common equity tier 1 capital (%)
 
6.7
 
41.8
 
17.0
Underlying return on common equity tier 1 capital (%)
5
 
8.7
 
4.2
 
14.6
Return on leverage ratio denominator, gross (%)
 
3.0
 
2.9
 
3.3
Cost / income ratio (%)
6
 
84.8
 
95.0
 
72.1
Underlying cost / income ratio (%)
5,6
 
79.5
 
87.2
 
74.5
Effective tax rate (%)
 
24.6
 
3.1
 
20.2
Net profit growth (%)
 
(81.4)
 
258.7
 
2.3
Resources
3
Total assets
 
1,565,028
 
1,716,924
 
1,104,364
Equity attributable to shareholders
 
85,079
 
85,624
 
56,876
Common equity tier 1 capital
7
 
71,367
 
78,002
 
45,457
Risk-weighted assets
7
 
498,538
 
546,505
 
319,585
Common equity tier 1 capital ratio (%)
7
 
14.3
 
14.3
 
14.2
Going concern capital ratio (%)
7
 
17.6
 
16.8
 
18.2
Total loss-absorbing capacity ratio (%)
7
 
37.2
 
36.4
 
33.0
Leverage ratio denominator
7
 
1,519,477
 
1,695,403
 
1,028,461
Common equity tier 1 leverage ratio (%)
7
 
4.7
 
4.6
 
4.4
Liquidity coverage ratio (%)
8
 
188.4
 
215.7
 
163.7
Net stable funding ratio (%)
 
125.5
 
124.7
 
119.8
Other
Invested assets (USD bn)
4,9
 
6,087
 
5,714
 
3,981
Personnel (full-time equivalents)
 
108,648
 
112,842
 
72,597
Market capitalization
10,11
 
105,719
 
107,355
 
65,608
Total book value per share (USD)
10
 
26.80
 
26.68
 
18.30
Tangible book value per share (USD)
10
 
24.63
 
24.34
 
16.28
Credit-impaired lending assets as a percentage of total lending
 
assets, gross (%)
4,12
 
1.0
 
0.8
Cost of credit risk (bps)
4,12
 
9
 
19
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this
 
report for more information
about the relevant adjustments.
 
2 Refer to the “Share information and earnings per share” in
 
the “Consolidated financial statements” section of this report for
 
more information.
 
3 Refer to the “Targets,
 
capital
guidance and ambitions” section of this report 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 Refer to the “Group performance” section of
 
this report for more information about underlying
 
results.
 
6 Negative goodwill is not used in the
 
calculation as it is presented in a separate
 
reporting line
and is not part of total
 
revenues.
 
7 Based on the Swiss systemically
 
relevant bank framework as of
 
1 January 2020. Refer to the “Capital,
 
liquidity and funding, and balance
 
sheet” section of this report
 
for more
information.
 
8 The disclosed ratios represent
 
averages for the fourth quarter of
 
each year presented, which were calculated
 
based on an average of
 
64 data points in the fourth quarter
 
of 2024, 63 data points in
the fourth quarter of 2023 and 63 data points in the fourth quarter of 2022. Refer to the “Capital, liquidity and funding, and balance sheet” section of this report for more information.
 
9 Consists of invested assets
for Global Wealth
 
Management, Asset Management
 
(including invested assets
 
from associates)
 
and Personal
 
& Corporate
 
Banking. Refer
 
to “Note 31
 
Invested assets and
 
net new money”
 
in the “Consolidated
financial statements” section of this report for more information.
 
10 Refer to “UBS shares” in the “Capital, liquidity and funding, and balance sheet” section of this report for more information.
 
11 The calculation
of market capitalization
 
reflects total shares issued
 
multiplied by the share
 
price at the end
 
of the period.
 
12 We started to
 
report these metrics
 
from the fourth quarter
 
of 2024 onward,
 
presenting comparative
information in line with the UBS Group fourth quarter 2024 report, available under “Quarterly reporting” at ubs.com/investors.
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024
 
9
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 sub-group”
All UBS Group entities, excluding 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 AG” and “UBS AG consolidated“
 
UBS AG and its consolidated subsidiaries
 
“Pre-acquisition UBS”
UBS before the acquisition of the Credit
 
Suisse Group
 
“Credit Suisse AG”
Credit Suisse AG and its consolidated subsidiaries before
the merger with UBS AG
“Credit Suisse Group” and “Credit
 
Suisse Group AG
consolidated”
Credit Suisse Group AG and its consolidated
 
subsidiaries,
before the acquisition by UBS
 
“Credit Suisse”
Credit Suisse AG and its consolidated subsidiaries before
the merger with UBS AG, 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”
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”
UBS Switzerland AG on a standalone basis
 
“UBS Europe SE consolidated”
UBS Europe SE and its consolidated subsidiaries
 
“UBS Americas Holding LLC”
UBS Americas Holding LLC and its consolidated
subsidiaries
 
“Swiss Bank (Credit Suisse)”
The Swiss Bank business 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.
Comparability
Profit and loss and other flow-based information
 
for the year ended 31 December 2024 is
 
based entirely on consolidated
data
 
following the
 
acquisition
 
of the
 
Credit Suisse
 
Group.
 
Comparative
 
information
 
for
 
the
 
year
 
ended
 
31 December
2023
 
includes
 
seven
 
months
 
(June
 
to
 
December
 
2023)
 
of
 
post-acquisition
 
consolidated
 
data
 
and
 
five
 
months
 
of
UBS Group data
 
only (January
 
to May 2023).
 
Comparative information
 
for the year
 
ended 31 December
 
2022 includes
pre-acquisition UBS Group data only.
Balance sheet information as at 31 December
 
2024 and as at 31 December 2023 includes
 
post-acquisition consolidated
information. Balance sheet information as at 31 December
 
2022 includes pre-acquisition UBS Group information only.
ubs-20241231p34i0
Our Board of Directors
ubs-20241231p35i0
The Board
 
of Directors
 
of UBS
 
Group AG
 
(the BoD),
 
led by the
 
Chairman, consists of between 6 and 12
 
members, as per our
Articles
 
of Association.
 
The BoD
 
decides on
 
the strategy
 
of the
 
Group, upon
 
recommendation
 
by the
 
Group Chief
 
Executive
 
Officer
(the Group CEO), and is responsible
 
for the overall direction,
 
supervision and control
 
of the Group and its management.
 
It is also
responsible for supervising compliance with applicable laws, rules and regulations. The BoD exercises oversight over UBS Group
AG and its subsidiaries and is responsible
 
for establishing a clear Group governance
 
framework to provide effective steering
 
and
supervision of
 
the
 
Group, taking
 
into
 
account the
 
material risks,
 
opportunities and
 
impacts to
 
which UBS
 
Group
 
AG
 
and
 
its
subsidiaries
 
are exposed
and may
 
affect its
 
performance,
 
value creation
 
and reputation.
 
The BoD
 
has ultimate
 
responsibility
 
for the
success of the
 
Group and
 
for delivering sustainable shareholder value within
 
a framework of
 
prudent and effective
 
controls. It
approves all financial
 
statements
 
and appoints
 
and removes all
 
Group Executive
 
Board (GEB) members.
 
ubs-20241231p36i0
Our Group Executive Board
UBS Group AG
 
operates under a
 
strict dual-board structure,
 
as mandated
 
by Swiss
 
banking law, and
 
therefore the BoD
 
delegates
the
 
management
 
of
 
the
 
business
 
to
 
the
 
GEB.
 
As of
 
31 December
 
2024,
 
the
 
GEB,
 
under
 
the
 
leadership
 
of
 
the
 
Group
 
CEO,
consisted of 15 members.
 
It has executive
 
management responsibility
 
for the steering
 
of the Group
 
and its business,
 
develops
the strategies of the Group, business divisions and
 
Group functions, and implements the BoD-approved
 
strategies.
›
Refer to “Board of Directors” and “Group Executive Board” in the
 
“Corporate governance” section of this report
 
or to
ubs.com/bod
 
and
ubs.com/geb
 
for the full biographies of the members
 
of the BoD and the GEB
 
ubs-20241231p37i0
 
 
ubs-20241231p38i0
Annual Report 2024
 
14
Our evolution
Since our origins in the mid-19th century, more than 500 different firms have become part of the history of our firm and
helped shape
 
our development.
 
1998 was
 
a major
 
turning point:
 
two of
 
the three
 
largest Swiss
 
banks, Union
 
Bank of
Switzerland and Swiss Bank Corporation (SBC), merged to form UBS. Both banks were well established and successful in
their own
 
right. Union
 
Bank of
 
Switzerland had
 
grown
 
organically to
 
become the
 
largest Swiss
 
bank. In
 
contrast, SBC
had grown mainly through strategic
 
partnerships and acquisitions, including S.G. Warburg
 
in 1995.
In
 
2000,
 
we
 
acquired
 
PaineWebber,
 
a
 
US
 
brokerage
 
and
 
asset
 
management
 
firm
 
with
 
roots
 
going
 
back
 
to
 
1879,
establishing us as a
 
significant player in the
 
US. Since 1964, we
 
have been building our strong
 
presence in the Asia Pacific
region, where we are by far the largest wealth manager,
1
 
with asset management and investment banking capabilities.
After incurring significant losses
 
in the 2008
 
financial crisis, we sought to
 
return to our roots,
 
emphasizing a client-centric
model that requires less risk-taking
 
and capital. In 2011,
 
we started a strategic transformation
 
of our business model to
focus on our traditional businesses: wealth management
 
globally, and personal and corporate banking in Switzerland.
In
 
2014,
 
we
 
began
 
adapting
 
our
 
legal
 
entity
 
structure
 
in
 
response
 
to
 
too-big-to-fail
 
requirements
 
(TBTF)
 
and
 
other
regulatory initiatives. First,
 
we established UBS
 
Group AG as
 
the ultimate parent
 
holding company for
 
the Group. In
 
2015,
we transferred personal and
 
corporate banking and Swiss
 
-booked wealth management
 
businesses from UBS AG
 
to the
newly
 
established
 
UBS Switzerland
 
AG.
 
That
 
same
 
year,
 
we
 
set
 
up UBS
 
Business
 
Solutions
 
AG
 
as the
 
Group’s
 
service
company. In 2016, UBS Americas Holding
 
LLC became the intermediate holding company for
 
our US subsidiaries and our
wealth management subsidiaries across
 
Europe were merged into
 
UBS Europe SE, our
 
Germany-headquartered European
subsidiary.
 
In 2019, we merged UBS Limited, our UK-headquartered
 
subsidiary, into UBS Europe SE.
2023 was another defining
 
moment in our 162-year
 
history, as we
 
acquired the Credit Suisse
 
Group, a global systemically
important financial institution and a
 
major wealth manager headquartered in
 
Switzerland that was founded in
 
1856. The
acquisition followed
 
a request
 
from the
 
Swiss Federal
 
Department
 
of Finance,
 
the
 
Swiss National
 
Bank and
 
the
 
Swiss
Financial Market Supervisory Authority (FINMA),
 
with support from other
 
supervisors, to UBS Group AG
 
and Credit Suisse
Group AG to duly consider the acquisition
 
in order to restore necessary confidence
 
in the stability of the Swiss economy
and banking system
 
and to serve
 
the best interests
 
of the shareholders
 
and stakeholders
 
of UBS and
 
Credit Suisse.
 
The
acquisition strengthened our position today as the
 
largest truly global wealth manager, the leading
 
bank in Switzerland,
a global, large-scale and diversified asset manager, and a
 
focused investment bank.
In
 
2024,
 
several
 
legal
 
entity
 
mergers
 
took
 
place
 
as
 
the
 
process
 
of
 
integrating
 
Credit
 
Suisse
 
progressed.
 
The
 
mergers
included those of
 
UBS AG and
 
Credit Suisse AG,
 
and UBS Switzerland
 
AG and Credit
 
Suisse (Schweiz)
 
AG. In addition,
the transition
 
to a
 
single US
 
intermediate holding
 
company was
 
completed. The
 
chart below
 
gives an
 
overview of
 
our
principal legal entities and our legal entity structure as of
 
31 December 2024.
›
Refer to
ubs.com/history
 
for more information
›
Refer to the “Integration of Credit Suisse” section of this
 
report for more information
The legal structure of the UBS Group
1
 
Asian Private Banker, 23 January
 
2024.
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Integration of Credit Suisse
 
15
Our strategy, business model and
environment
Management report
Integration of Credit Suisse
On 12 June 2023,
 
UBS Group AG acquired
 
Credit Suisse
 
Group AG, succeeding
 
by operation
 
of Swiss law to
 
all assets and
liabilities
 
of Credit
 
Suisse Group
 
AG. Since
 
the acquisition,
 
we have
 
successfully
 
executed
 
our integration
 
plans,
 
and we
 
have
won back, retained
 
and grown client assets.
 
Throughout 2024,
 
we continued to make significant
 
progress with respect
 
to
the integration
 
of Credit Suisse,
 
and we are on
 
track to substantially
 
complete the
 
integration by
 
the end of 2026.
 
The
 
merger
 
of
 
UBS AG
 
and
 
Credit
 
Suisse AG
 
was
 
completed
 
on
 
31 May
 
2024.
 
UBS AG
 
succeeded
 
to
 
all
 
rights
 
and
obligations
 
of
 
Credit
 
Suisse AG,
 
including
 
all
 
outstanding
 
Credit
 
Suisse AG
 
debt
 
instruments.
 
On
 
7 June
 
2024,
 
we
completed the transition
 
to a single
 
US intermediate
 
holding company,
 
and,
 
on 1 July 2024,
 
we completed the
 
merger
of UBS Switzerland
 
AG and
 
Credit Suisse
 
(Schweiz) AG.
 
UBS Switzerland AG
 
succeeded to
 
all rights
 
and obligations
 
of
Credit Suisse (Schweiz) AG.
The
 
significant-legal-entity
 
mergers
 
were
 
key
 
for
 
the
 
start
 
of
 
large-scale
 
client
 
account
 
migrations
 
and
 
facilitated
 
the
ongoing decommissioning
 
of legacy
 
Credit Suisse
 
platforms in
 
the second
 
half of
 
2024. In
 
the fourth
 
quarter of
 
2024,
we completed the migration of our
 
Global Wealth Management client accounts
 
in Luxembourg,
 
Hong Kong, Singapore
and Japan to
 
UBS platforms. We
 
remain focused on
 
client account
 
migrations and infrastructure
 
decommissioning. We
expect the first wave of Swiss business migrations to commence
 
in the second quarter of 2025.
 
In
 
2024,
 
we
 
realized
 
a
 
total
 
of
 
USD 3.4bn
 
in
 
gross
 
cost
 
savings.
 
Cumulative
 
gross
 
cost
 
savings
 
at
 
the
 
end
 
of
 
2024
amounted to USD 7.5bn compared with the 2022
 
combined cost base of UBS and Credit Suisse. This
 
represents around
58% of our ambition of around USD 13bn in annualized
 
exit rate gross cost savings by the end of 2026.
 
Our Non-core and Legacy business division continued
 
to actively exit positions and reduce its
 
exposures.
 
At 31 December
2024, it
 
had achieved
 
a 52%
 
reduction in
 
risk-weighted
 
assets (RWA)
 
since the
 
end of
 
the second
 
quarter 2023,
 
well
ahead of our original plan.
 
As a result, we have updated
 
our ambition and now aim to
 
reduce Non-core and Legacy RWA
to around USD 29bn by the end of 2025 and around
 
USD 22bn by the end of 2026.
 
We reduced
 
to zero
 
the amount
 
of funding
 
outstanding under
 
the Emergency
 
Liquidity Assistance
 
(ELA) facility
 
in the
second quarter of 2024, with Credit Suisse (Schweiz) AG
 
fully repaying the remainder of the funding.
 
We completed the accounting for the acquisition of the Credit Suisse Group under IFRS 3,
Business Combinations
, in the
second quarter
 
of 2024
 
with the
 
measurement
 
period adjustments
 
and the
 
finalization
 
of the
 
amount of
 
negative goodwill.
›
Refer to “Note 2 Accounting for the acquisition
 
of the Credit Suisse Group” in the “Consolidated financial
 
statements” section of
this report for more information about the accounting for
 
the acquisition of the Credit Suisse Group and the finalization
 
of the
purchase price allocation
Other developments
 
During
 
the
 
first
 
quarter
 
of
 
2024,
 
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
 
also
 
purchased
 
USD 8bn
 
of
 
senior
 
secured
 
financing
facilities. We recognized
 
a net gain of
 
USD 0.3bn from these
 
transactions. 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.
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Integration of Credit Suisse
 
16
In June 2024, the Credit
 
Suisse supply chain finance
 
funds (the SCFFs) made
 
a voluntary offer to the
 
SCFFs’ investors to
redeem all
 
outstanding fund
 
units. The offer
 
expired on
 
31 July 2024,
 
and fund units
 
representing around
 
92% of
 
the
SCFFs’ net asset value were tendered in the offer and accepted. Fund units accepted in the offer were redeemed at
 
90%
of the
 
net asset
 
value determined
 
on 25
 
February 2021,
 
net of
 
any payments
 
made by
 
the relevant
 
fund to
 
the fund
investors since that time. Investors
 
whose units were redeemed released
 
any claims they may have
 
had against the SCFFs,
Credit Suisse or UBS.
 
The offer aimed
 
to provide fund investors
 
with an accelerated exit
 
from their positions and
 
a high
level of financial recovery and was funded by the acquisition
 
of a new class of fund units by UBS. The offer did not have
a material effect on
 
the financial results or common
 
equity tier 1 capital
 
of UBS Group AG, given
 
provisions recorded in
connection
 
with
 
the
 
acquisition
 
of
 
the
 
Credit
 
Suisse
 
Group.
 
On
 
a
 
subsidiary
 
level,
 
UBS AG
 
on
 
a
 
consolidated
 
basis
recorded in the second quarter of 2024 a
 
provision of around USD 0.9bn in connection
 
with the offer. The offer did not
have a material
 
effect on
 
UBS AG on
 
a standalone
 
basis. The
 
investment in the
 
SCFFs is managed
 
in the Non-core
 
and
Legacy division.
On 13 August 2024, UBS entered
 
into an agreement to
 
sell Select Portfolio Servicing, the
 
US mortgage servicing business
of
 
Credit
 
Suisse,
 
managed
 
in
 
the
 
Non-core
 
and
 
Legacy
 
business
 
division.
 
Completion
 
of
 
the
 
transaction
 
is
 
subject
 
to
regulatory approvals and
 
other customary closing
 
conditions. UBS Group
 
does not expect
 
to recognize a
 
material profit
or loss
 
upon completion
 
of the
 
transaction. Based
 
on balances as
 
of 31 December
 
2024, the
 
completion of
 
the transaction
would reduce
 
the Group’s
 
risk-weighted
 
assets
 
by around
 
USD 1.3bn and
 
the Group’s
 
leverage
 
ratio denominator
 
by
around USD 1.7bn.
In October 2024, UBS entered
 
into an agreement to sell to American
 
Express Swiss Holdings
 
GmbH (American Express) its
50% interest
 
in Swisscard
 
AECS GmbH
 
(Swisscard), a joint
 
venture in
 
Switzerland between UBS
 
and American
 
Express,
subject to
 
certain closing
 
conditions.
 
Also in
 
October 2024,
 
UBS entered
 
into an agreement
 
with Swisscard
 
to transition
 
the
Credit Suisse-branded
 
card portfolios
 
to UBS. In
 
January 2025,
 
UBS completed
 
the purchase
 
of the card
 
portfolios,
 
with the
actual client migration
 
expected to take place over the following quarters.
 
The two transactions will result in similar
 
profit
and loss effects
 
over the course
 
of 2025 and,
 
therefore, on
 
a net basis are
 
not expected
 
to have a material
 
impact for UBS.
In 2024, UBS
 
recorded an
 
expense of USD
 
41m in connection
 
with the termination
 
of the Swisscard
 
joint venture.
Material weakness in internal control over financial reporting
As a registrant
 
with the
 
US Security
 
and Exchange
 
Commission (the
 
SEC), UBS
 
Group is
 
subject to
 
requirements under
the
 
Sarbanes–Oxley
 
Act
 
of
 
2002
 
with
 
respect
 
to
 
financial
 
reporting.
 
This
 
requires
 
us
 
to
 
perform
 
system
 
and
 
process
evaluation and
 
testing of
 
internal control
 
over financial
 
reporting to
 
enable management
 
to assess the
 
effectiveness of
our internal controls. A
 
material weakness is a
 
deficiency or a
 
combination of deficiencies in
 
internal control over financial
reporting such that there is a
 
reasonable possibility that a material misstatement of
 
a registrant’s financial statements will
not be prevented or detected on a timely basis.
Following the
 
acquisition
 
and merger
 
of Credit
 
Suisse
 
Group
 
AG into
 
UBS Group
 
AG in
 
June 2023,
 
Credit Suisse
 
AG
concluded
 
that
 
as
 
of
 
31 December
 
2023
 
its
 
internal
 
control
 
over
 
financial
 
reporting
 
continued
 
to
 
be
 
ineffective.
 
As
permitted by SEC guidance
 
in the year
 
of an acquisition, UBS
 
Group AG excluded
 
Credit Suisse AG from
 
its assessment
of internal control over financial reporting for the year ended 31
 
December 2023 and concluded that its internal control
over financial reporting was effective as of such date.
In 2024, in
 
light of the
 
increased complexity of the
 
internal accounting and control
 
environment, the remaining migration
efforts
 
still
 
underway
 
and
 
limited
 
time
 
to
 
demonstrate
 
operating
 
effectiveness
 
and
 
sustainability
 
of
 
the
 
post-merger
integrated
 
control
 
environment,
 
management
 
has
 
concluded
 
that
 
additional
 
evidence
 
of
 
effective
 
operation
 
of
 
the
remediated controls is required to
 
conclude that the risk assessment
 
processes are operating effectively
 
on a sustainable
basis. In light
 
of the above,
 
management has concluded that
 
there is a
 
material weakness in internal
 
control over financial
reporting at 31 December 2024.
›
 
Refer to the “Risk factors” section and to
 
“Management’s report on internal control over financial reporting” in the
“Consolidated financial statements” section of this
 
report for more information about management’s assessment of internal
control over financial reporting as of 31 December 2024 and
 
the remediation of Credit Suisse material weaknesses
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Our strategy
 
17
Our strategy
UBS – who we are
UBS is the largest truly global wealth
 
manager and the leading bank in Switzerland.
 
These key pillars of our strategy are
enhanced by focused and competitive
 
investment bank and asset management
 
capabilities.
 
Staying close to our clients,
whether
 
they
 
are
 
individuals,
 
institutions
 
or
 
businesses,
 
and
 
providing
 
financial
 
advice
 
and
 
solutions
 
to
 
help
 
them
 
to
achieve their goals is of
 
the upmost importance to
 
us.
 
We have a capital-generative
 
and well-diversified business
 
model
with strong competitive positions
 
in our target markets.
 
Our business model, our
 
strong and risk-aware culture
 
and our
superior client service, as
 
well as our respected brand
 
with over 160 years
 
of history and our
 
capital prudence, have made
it possible to consistently
 
and sustainably both
 
grow profits and
 
deliver a high return
 
on equity over the
 
long term. The
acquisition of the Credit Suisse Group has further accelerated our
 
growth strategy by providing our client franchises with
additional scale,
 
complementary capabilities
 
and talent
 
in line
 
with our
 
ambition to
 
position UBS
 
for sustainable,
 
high-
quality returns and long-term growth.
 
We are focused on driving sustainable long-term growth
 
while maintaining risk and cost discipline
Our objective is to generate value for
 
our shareholders and clients by driving sustainable
 
long-term structural growth and
attractive
 
capital
 
returns.
 
To
 
accomplish
 
this,
 
we
 
are
 
building
 
on
 
our
 
scale,
 
content
 
and
 
solutions,
 
while
 
remaining
disciplined on capital, risk and costs.
 
Maintaining a balance sheet
 
for all seasons remains the foundation
 
of our success.
This gives us the capacity
 
to invest strategically and
 
will enable us to deliver
 
against our financial targets
 
and ambitions,
which are outlined in the “Targets, capital guidance and
 
ambitions” section of this report.
Our growth
 
plans are
 
rooted in
 
an attractive
 
business mix
 
that is
 
also a
 
source of
 
our competitive
 
strength. Our
 
asset-
gathering
 
businesses
 
are
 
characterized
 
by
 
being
 
structurally
 
attractive
 
from
 
a
 
capital
 
consumption
 
perspective
 
and
generate more than half of
 
our revenues
1
, while representing around
 
40% of our risk-weighted
 
assets (RWA)
1
. Roughly
another third of our
 
RWA
1
 
are in Personal &
 
Corporate Banking in Switzerland,
 
our home market and
 
an attractive, stable
and well-diversified
 
economy,
 
with low
 
historic credit
 
losses. Furthermore,
 
we operate
 
a capital-light
 
Investment Bank,
which is limited to 25% of Group RWA.
1
Moreover, our aim is to maximize our impact and that of
 
our clients to create long-term sustainable value. We also
 
have
a responsibility
 
toward the
 
communities we
 
serve and
 
our employees. We
 
have outlined
 
selected environmental,
 
social
and governance (ESG) aspirations, which we expect to
 
support our financial targets and ambitions.
We have a global, diversified business model
Our invested
 
assets of
 
more
 
than USD 6trn
 
are regionally
 
diversified across
 
the globe.
 
We give
 
our clients
 
access
 
to a
broad,
 
relevant
 
and
 
customizable
 
range
 
of
 
solutions,
 
which,
 
together
 
with
 
our
 
thought
 
leadership
 
and
 
capabilities,
position us well to
 
become their partner of choice.
 
Our strategic ambitions reflect the
 
long-term outlook on demographic
and social trends affecting wealth distribution, product demand
 
and client experience.
Half of our wealth management clients’ invested
 
assets are in the Americas, where we
 
are among the top players in the
world’s largest
 
wealth
 
pool, with
 
solid wealth
 
generation
 
prospects.
 
The Investment
 
Bank has
 
invested
 
in growing
 
its
Global Banking,
 
Global Markets
 
and Research
 
capabilities
 
in the
 
region, and
 
it is
 
focused on
 
cross-regional
 
and cross-
divisional collaboration to drive growth.
In Asia
 
Pacific, which is
 
the fastest-growing wealth
 
market, we are
 
by far
 
the largest
 
wealth manager,
2
 
and we
 
are building
on that scale to drive growth.
 
We are further developing
 
our businesses in the region
 
to deliver our leading capabilities,
leveraging our expanded and diversified footprint, strengths
 
in cross-divisional collaboration and global connectivity.
 
In EMEA we are focused on improving profitability and driving focused growth by optimizing our domestic footprint and
providing a comprehensive offering for entrepreneurs.
Finally, in Switzerland we have a highly
 
integrated business and aim to reinforce our position
 
as the leading bank. We are
driving our digital transformation, enhancing the client experience and improving efficiency, while focusing on capturing
selected
 
growth
 
opportunities.
 
We
 
are
 
also
 
delivering
 
on
 
our
 
commitments
 
to
 
our
 
home
 
market,
 
as
 
we
 
continue
 
to
provide around CHF 350bn of credit to Swiss companies
 
and the economy.
We collaborate as one UBS to deliver integrated coverage
 
for clients
 
We strive
 
to serve
 
our clients
 
as one
 
firm, with
 
collaboration
 
across our
 
business divisions
 
being a
 
cornerstone
 
of our
strategy
 
and
 
a
 
key
 
differentiator,
 
as
 
we
 
deliver
 
the
 
best
 
of
 
UBS.
 
For
 
example,
 
our
 
asset-gathering
 
franchises
 
work
 
in
synergy
 
to
 
offer
 
clients
 
a
 
comprehensive
 
product
 
suite
 
paired
 
with
 
exclusive,
 
premium
 
personalized
 
services.
 
The
Investment Bank complements these by delivering
 
insights, execution capabilities and risk management expertise
 
to both
our
 
wealth
 
and
 
Swiss
 
corporate
 
clients.
 
We
 
regularly
 
enhance
 
this
 
integrated
 
approach
 
to
 
support
 
our
 
growth,
 
as
demonstrated by
 
recent initiatives,
 
such as the
 
establishing of
 
the division-agnostic
 
Unified Global
 
Alternatives and
 
the
creation of Global Wealth Management Solutions.
 
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Our strategy
 
18
Supporting sustainability
 
We help our clients achieve
 
their sustainability and impact
 
objectives while navigating the
 
evolving macroeconomic and
complex regulatory
 
landscape. To
 
help us realize
 
this ambition,
 
our sustainability
 
and impact
 
strategy is
 
based on
 
three
strategic
 
pillars:
 
(i) Protect
 
–
 
manage
 
our
 
business
 
in
 
alignment
 
with
 
our
 
sustainable,
 
long-term
 
Group
 
strategy
 
and
evolving standards;
 
(ii) Grow –
 
embed an
 
innovative sustainability
 
and impact
 
offering across
 
all our
 
business divisions;
and (iii)
 
Attract
 
–
 
be the
 
bank of
 
choice for
 
clients and
 
employees.
 
We
 
support
 
our
 
clients in
 
the
 
transition
 
to
 
a
 
low-
carbon
 
world
 
and
 
consider
 
climate
 
change
 
risks
 
and
 
opportunities
 
across
 
our
 
bank
 
for
 
the
 
benefit
 
of
 
our
 
clients,
shareholders and all our stakeholders.
 
We are investing in our technology to drive business
 
outcomes
 
We have a proven technology strategy in place
 
to focus on delivery and experience for
 
our clients and employees, while
we are preparing for the future.
 
We are constantly modernizing our technology to support
 
an already strong foundation;
we
 
have
 
a
 
robust
 
infrastructure,
 
70%
 
of
 
which
 
is
 
in
 
the
 
public
 
and
 
private
 
Cloud,
 
that
 
maintained
 
over
 
99.999%
availability over the last year and maintains high security
 
standards.
 
This
 
foundation
 
facilitates
 
our
 
integration
 
and
 
enables
 
us
 
to
 
embrace
 
and
 
implement
 
innovation,
 
such
 
as
 
generative
artificial intelligence (AI), to bring technology products and
 
solutions to the next level.
 
We are
 
evolving into
 
an AI-driven
 
institution, using
 
generative
 
AI to
 
drive growth,
 
improve client
 
service, and
 
increase
productivity.
 
In the
 
fourth
 
quarter
 
of 2024,
 
we
 
announced
 
the
 
deployment
 
of 50,000
 
Microsoft
 
Copilot
 
licenses,
 
the
largest in the global financial services industry at
 
the time. This initiative is
 
already showing increased usage of generative
AI tools, with
 
1.75 million prompts
 
across all tools
 
in 2024,
 
and it is
 
expected to
 
substantially expand
 
in 2025.
 
We will
continue delivering AI initiatives across our businesses, including
 
re-inventing how we do software engineering.
We
 
invest in
 
partnerships
 
with
 
leading
 
academic
 
institutions
 
worldwide
 
and
 
other
 
key
 
players
 
to develop
 
ideas,
 
drive
outcomes across the firm and foster pioneering AI research.
 
We
 
are
 
committed
 
to
 
driving
 
innovation
 
and
 
excellence,
 
ensuring
 
that
 
our
 
technology
 
advancements
 
meet
 
the
expectations of our clients, employees, and stakeholders.
Our efforts
 
are supported
 
by our
 
governance and
 
controls that
 
are designed
 
to safeguard
 
the interests
 
of our
 
clients,
employees and other stakeholders.
›
Refer to the “Risk management and control” section of this
 
report for more information
 
›
Refer to the UBS Group Sustainability Report 2024,
 
available under “Annual reporting” at
ubs.com/investors
 
for more information
1
Excluding Non-core and Legacy.
2
Asian Private Banker, 23 January
 
2024.
 
ubs-20241231p43i0
Annual Report 2024 |
Our strategy, business model and environment
 
| Targets, capital guidance and ambitions
 
19
Targets, capital guidance and ambitions
We reiterate
 
the financial
 
targets and
 
long-term ambitions
 
that we
 
announced in
 
2024. We
 
remain well
 
positioned to
deliver on
 
those targets
 
and
 
ambitions,
 
and we
 
believe
 
that our
 
scale
 
and client
 
franchises,
 
as well
 
as the
 
completed
integration, will position us to sustainably drive higher returns.
 
The graphic below shows our financial targets, capital guidance
 
and long-term ambitions.
 
Our targets and ambitions are
 
based on the Group’s target
 
of a common equity
 
tier 1 (CET1) capital ratio of
 
around 14%
and the existing Swiss capital regime.
After reaching 58% of our planned cumulative gross cost savings at the
 
end of 2024, we maintain our aim of delivering
exit rate gross cost savings of around USD 13bn by the end of 2026, compared
 
with the full year 2022 cost base for the
combined
 
organizations.
 
Gross
 
cost
 
savings
 
will
 
provide
 
necessary
 
capacity
 
for
 
reinvestment
 
to
 
further
 
reinforce
 
the
resilience of our infrastructure and to drive sustainable growth
 
by investing in talent, products and services.
 
In the Non-core
 
and Legacy
 
business division,
 
as at
 
31 December 2024
 
we had
 
reduced risk-weighted
 
assets (RWA)
 
by
52% since the second quarter
 
of 2023, well ahead of
 
our original plan. As a
 
result, we have updated our
 
ambition and
now aim to
 
reduce Non-core
 
and Legacy
 
RWA to around
 
USD 29bn by
 
the end
 
of 2025
 
and around
 
USD 22bn by
 
the
end of 2026.
 
Additionally, we expect up to USD 1bn of funding cost savings
 
by 2026 compared with 2023 levels.
Our business division ambitions are the following.
–
Global Wealth Management: surpass USD 5trn of invested assets by 2028, with around USD 100bn of net new assets
in 2025, building to around USD 200bn annually
 
by 2028, and an underlying cost / income ratio
 
of less than 70% by
the end of 2026 (exit rate).
–
Personal & Corporate Banking: an
 
underlying cost / income ratio
 
of less than 50% by
 
the end of 2026 (exit rate)
 
and
an underlying return on attributed equity of around 19%
 
in the medium term.
–
Asset Management: an underlying cost / income ratio of
 
less than 70% by the end of 2026 (exit rate).
–
The Investment
 
Bank: an
 
underlying return
 
on attributed
 
equity of
 
around 15%
 
through the
 
cycle, while
 
operating
with no more than 25% of the Group’s RWA (excluding
 
Non-core and Legacy).
–
Non-core and Legacy:
 
an underlying loss
 
before tax of
 
less than USD 1bn
 
and underlying operating expenses
 
of around
USD 0.8bn,
 
both excluding
 
litigation and
 
by the
 
end of
 
2026 (exit
 
rate),
 
and around
 
USD 22bn RWA
 
by the
 
end of
2026.
Our aspirations on
 
environmental, social and governance (ESG)
 
matters are set
 
out in the
 
UBS Group Sustainability Report
2024,
available under “Annual reporting” at
ubs.com/investors
.
Performance
 
against
 
targets,
 
capital
 
guidance
 
and
 
ambitions
 
is
 
taken
 
into
 
account
 
when
 
determining
 
variable
compensation.
›
Refer to “Society” and “Our focus on sustainability”
 
in the “How we create value for our stakeholders”
 
section and to the
“Corporate governance” section of this report for
 
more information about ESG
›
Refer to the “Compensation” section of this
 
report for more information about variable compensation
›
Refer to “Alternative performance measures” in the
 
appendix to this report for definitions of and
 
further information about our
performance measures
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Our businesses
 
20
Our businesses
We
 
operate
 
through
 
five
 
business
 
divisions:
 
Global
 
Wealth
 
Management,
 
Personal
 
&
 
Corporate
 
Banking,
 
Asset
Management, the
 
Investment Bank and
 
Non-core and Legacy.
 
Our global reach and the breadth of our
 
expertise are the
major assets setting us apart from our competitors. Our Group functions are
 
support and
 
control functions
 
that provide
services to the Group. Virtually all costs incurred by the Group functions are allocated to the
 
business divisions, leaving a
residual
 
amount
 
that
 
we
 
refer
 
to
 
as
 
Group
 
Items
 
in
 
our
 
segment
 
reporting.
 
We
 
see
 
collaboration,
 
both
 
within
 
and
between business divisions,
 
as key to our growth.
 
›
Refer to the “Our strategy” section of this report for
 
more information about the collaboration between our
 
business divisions
Global Wealth Management
 
We are the largest
 
truly global wealth
 
manager and are
 
focused on serving
 
the needs of
 
ultra high and
 
high net worth
individuals
 
through
 
trusted
 
relationships
 
with
 
our
 
advisors.
 
Our
 
global
 
reach,
 
our
 
advisory
 
approach
 
led
 
by
 
the
 
Chief
Investment Office (the CIO) and
 
access to our comprehensive platform with
 
its broad array of solutions,
 
supported by our
premium brand,
 
are key differentiators.
 
Global Wealth
 
Management is organized
 
into five
 
regional business units
 
covering the US,
 
Switzerland, Asia Pacific,
 
EMEA
and Latin America,
 
as well as capability-related and support units. Capability business units,
 
such as the Chief Investment
Office and the
 
newly created GWM
 
Solutions,
 
help to efficiently
 
deliver integrated
 
solutions tied into
 
the CIO-led
 
value
proposition.
 
For
 
regional
 
reporting
 
purposes,
 
we
 
disclose
 
selected
 
information
 
about
 
the
 
Americas,
 
Switzerland,
 
Asia
Pacific, EMEA and Global regions.
Integration of Credit Suisse and organizational changes
The acquisition
 
of the
 
Credit Suisse
 
Group in
 
2023 enhanced
 
our leading
 
global position,
 
increased our
 
scale and
 
has
expanded our
 
capabilities. Since then,
 
we have
 
made substantial progress
 
with the
 
integration of
 
our wealth
 
management
businesses. Our
 
client migration
 
is underway,
 
with more
 
than 90%
 
of all
 
assets outside
 
of Switzerland
 
migrated onto
UBS
 
platforms
 
by
 
year-end
 
2024.
 
In
 
the
 
fourth
 
quarter
 
of
 
2024,
 
we
 
completed
 
the
 
migration
 
of
 
our
 
Global
 
Wealth
Management client accounts in Luxembourg, Hong Kong, Singapore and Japan
 
,
 
followed by accounts in Italy in January
2025, and are currently focused on Swiss client account
 
and platform migrations.
›
Refer to the “Integration of Credit Suisse” section of this
 
report for more information
Since 1 July 2024, Global
 
Wealth Management has been jointly
 
managed by two Co-Presidents. On
 
that date, Iqbal Khan
became
 
Co-President
 
Global
 
Wealth
 
Management
 
and
 
Robert
 
Karofsky
 
became
 
Co-President
 
Global
 
Wealth
Management and President UBS Americas. On 1 September
 
2024, Mr. Khan also became President UBS Asia Pacific
 
.
In recognition
 
of the
 
increased
 
size and
 
potential of
 
our wealth
 
management
 
business
 
in Latin
 
America following
 
the
acquisition of the Credit Suisse Group, Global
 
Wealth Management Latin America became a
 
new business unit in 2024.
Also in
 
2024, we
 
introduced GWM
 
Solutions,
 
which is
 
aimed at
 
combining all
 
client solutions
 
across UBS
 
into a
 
single
unit in order to more effectively, efficiently and consistently deliver
 
products and capabilities to our clients.
 
An
 
integral
 
part
 
of our
 
growth
 
plans
 
is
 
to
 
improve
 
profitability
 
across
 
our
 
Americas
 
wealth
 
business,
 
which
 
manages
USD 2.1trn in invested assets and is a key pillar of our strategy and value proposition to clients. We are executing on our
targeted investments to
 
enhance and build
 
out our multi-disciplinary
 
coverage model
 
of the ultra
 
high net worth
 
client
segment and increase penetration of the high net worth and core affluent segments to further drive scale. These growth
initiatives will be
 
supported by investments in
 
our banking capabilities and
 
technology,
 
as well as
 
increased cost discipline.
How we do business
With our
 
distinctive approach to wealth
 
management,
 
and by offering advice,
 
expertise and solutions,
 
we help our clients
pursue what
 
matters most
 
to them.
 
Our alignment
 
of our
 
core offering
 
across UBS
 
and Credit
 
Suisse platforms
 
is near
completion, and clients across our entire
 
franchise can benefit from the best UBS has
 
to offer regardless of the platform
they are on.
Our investment
 
advice to
 
clients is
 
led by
 
our global
 
CIO, which
 
produces the
UBS House
 
View
, identifying
 
investment
opportunities
 
designed
 
to
 
protect
 
and
 
increase
 
our
 
clients’
 
wealth
 
over
 
the
 
long
 
term.
 
CIO
 
views
 
drive
 
investment
recommendations for advisory
 
clients and investment
 
decisions for discretionary
 
clients,
 
representing USD 1.8trn in
 
fee-
generating assets globally.
 
Through
 
our
 
platforms,
 
we
 
offer
 
to
 
our
 
clients
 
a
 
broad
 
range
 
of
 
securities
 
and
 
investment
 
products.
 
In
 
addition
 
to
traditional equity and fixed-income securities, our investment specialists
 
source and craft a range of
 
investment products,
including
 
separately
 
managed
 
accounts
 
(SMAs),
 
structured
 
products,
 
sustainable-
 
and
 
impact-investing
 
products,
 
and
alternative investments. Our alternatives offering gives clients access to private markets, hedge
 
funds and real assets. We
offer our own private equity multi-manager investments and
 
enable clients to access selected single-manager funds and
open-ended programs.
 
 
ubs-20241231p45i0
Annual Report 2024 |
Our strategy, business model and environment
 
| Our businesses
 
21
To
 
complement
 
this
 
offering,
 
we
 
provide
 
clients
 
with
 
advice
 
on
 
wealth
 
planning,
 
sustainability-focused
 
and
 
impact
investing, and corporate and banking services. Our specialist teams also advise
 
on art and collecting, family strategy and
governance, philanthropy, next generation, and wealth transition
 
.
›
Refer to the UBS Group Sustainability Report 2024, available
 
under “Annual reporting” at
ubs.com/investors
, for more
information about sustainability matters
In addition
 
to our
 
investment management
 
products and
 
solutions, we
 
also offer
 
extensive mortgage,
 
securities-based
and structured lending expertise, catering to clients’ sophisticated
 
lending needs.
The newly created GWM Solutions brings
 
all client solutions into a
 
single unit in order to
 
more efficiently and consistently
deliver integrated solutions tied
 
into the CIO-led value
 
proposition. GWM Solutions presents
 
an opportunity to leverage
cross-divisional capabilities
 
to serve every
 
aspect of our
 
clients’ financial needs.
 
We are now
 
extending the breadth
 
and
depth of our offering into
 
the areas of alternative investment and
 
corporate finance solutions. In 2024, we
 
combined our
private market and hedge fund manager selection
 
franchises from Global Wealth Management
 
and Asset Management
to create a new business
 
unit,
 
called Unified Global Alternatives
 
,
 
which sits operationally within
 
the Asset Management
business
 
division
 
and
 
additionally
 
reports
 
to
 
Global
 
Wealth
 
Management.
 
We
 
also
 
formed
 
Unified
 
Global
 
Banking,
combining
 
Global Wealth
 
Management’s
 
corporate
 
finance
 
capabilities
 
with
 
Global
 
Banking
 
to
 
service
 
the
 
traditional
corporate finance needs of our Global Wealth Management
 
clients and their companies.
We are
 
investing in
 
our operating
 
platforms and
 
tools to
 
better serve our
 
clients’ needs,
 
improve their
 
experience, enhance
overall
 
advisor
 
productivity
 
and
 
improve
 
operational
 
resilience.
 
We
 
aim
 
to
 
make
 
our
 
service
 
delivery
 
faster,
 
more
responsive, and
 
more convenient
 
for our
 
clients. Our
 
platform for
 
discretionary mandates
 
provides significant
 
flexibility
and solutions.
 
For example,
UBS My Way
, which
 
is now
 
also available
 
on the
 
Credit Suisse
 
platform, enables
 
clients to
personalize
 
their
 
portfolios
 
beyond
 
traditional
 
mandates,
 
providing
 
transparency
 
and
 
performance
 
insights.
 
As
 
of
31 December 2024, it has reached over USD 15bn in invested
 
assets.
In Asia Pacific and Switzerland, the Direct Investment Insights function on our online banking platform enables clients to
trade directly based
 
on CIO insights
 
via their smartphones
 
and other digital
 
devices.
UBS Advice Compass
 
enables advisors
in one-to-one
 
meetings with
 
their clients
 
to review
 
in depth
 
all important
 
portfolio aspects
 
enhanced with
 
actionable
next steps and investment
 
opportunities. Clients are
 
thus offered an
 
enhanced ability to
 
monitor their portfolios
 
and to
put their investment strategy
 
into action in line with CIO research.
 
For the
 
benefit of
 
our clients
 
and to
 
further empower
 
our advisors,
 
we are
 
also leveraging
 
investments in
 
the artificial
intelligence (AI) space.
 
We are
 
using AI-powered tools
 
to enhance our
 
capabilities and
 
platforms, for example
 
Red, our
internal chatbot that builds on generative AI
 
capabilities,
 
was rolled out to around
 
7,000 employees in the fourth quarter
of 2024.
 
In the
 
US, 13
 
million AI-generated insights
 
were delivered
 
to US
 
advisors in
 
2024. Additionally, we
 
are connecting
our clients with leaders in the
 
AI space and providing them with
 
thought leadership, content and solutions
 
regarding AI
investment opportunities.
In addition, we
 
are continuing to
 
broaden our offering
 
across asset classes
 
and themes, collaborating
 
with best-in-class
managers across the most relevant strategies.
 
ubs-20241231p46i0
Annual Report 2024 |
Our strategy, business model and environment
 
| Our businesses
 
22
Competition
 
Our main competitors fall into two categories: competitors with
 
a strong position in the Americas but with more
 
limited
global footprints,
 
such as
 
Morgan
 
Stanley, JPMorgan
 
Chase, Wells
 
Fargo
 
and Bank
 
of America;
 
and competitors
 
with
international footprints but with a smaller presence
 
than UBS in the US, such as Julius Baer, BNP
 
Paribas, Deutsche Bank
and HSBC.
 
We also
 
compete with
 
fintech firms
 
in some
 
regions and
 
products. We
 
have strong
 
positions in
 
the largest
wealth region (the US)
 
and the fastest-growing
 
wealth regions (Asia
 
Pacific and the
 
Middle East). The size
 
of our global
franchise,
 
our
 
bespoke
 
cross-divisional
 
solutions
 
and
 
our
 
premium
 
brand
 
and
 
reputation
 
differentiate
 
us
 
from
 
our
competitors and would be difficult to replicate.
 
Personal & Corporate Banking
As the
 
leading bank
 
in Switzerland,
 
our home
 
market, we
 
provide a
 
comprehensive
 
range of
 
financial products
 
and services
to private, corporate
 
and institutional
 
clients. With
 
Personal & Corporate
 
Banking at its core,
 
Switzerland is
 
the only region
where we operate in all of our business
 
areas. We are fully committed to maintaining
 
our leadership in our home
 
market.
Swiss clients
 
and the
 
Swiss economy
 
benefit from
 
UBS’s unparallelled
 
global reach
 
and capabilities.
 
We are a
 
go-to bank
 
for
entrepreneurs in Switzerland,
 
providing comprehensive
 
support at every stage of the entrepreneurial
 
journey. Drawing on
an extensive branch network and
 
highly qualified client advisors, complemented by modern digital banking services and
customer service
 
centers, we
 
are able to
 
serve more than
 
one-third of
 
Swiss households
 
and more than
 
90% of large
 
Swiss
companies.
 
In 2024,
 
UBS was named
 
“Best Bank in
 
Switzerland”
 
by Euromoney for
 
the tenth time
 
since 2012.
Personal & Corporate Banking is organized into
 
10 regions, covering distinct Swiss economic areas.
 
We operate a multi-
channel approach, and we are constantly developing our digital
 
and remote channels.
Integration of Credit Suisse and organizational changes
We continue to make progress related
 
to the integration of Credit Suisse,
 
and we are on track to substantially
 
complete
the
 
integration
 
by
 
the
 
end
 
of
 
2026.
 
We
 
are
 
currently
 
focused
 
on
 
client
 
account
 
and
 
platform
 
migrations
 
and
decommissioning applications
 
and infrastructure.
 
We expect the first wave of Swiss business migrations to commence in
the second quarter of 2025.
On 1 July 2024, the
 
merger of UBS Switzerland AG and
 
Credit Suisse (Schweiz) AG was completed
 
and was a critical
 
step
on our integration journey.
 
For the time being,
 
the Credit Suisse brand
 
will remain in
 
use in Switzerland,
 
and consumer
finance services will continue to be provided through the
 
BANK-now subsidiary.
›
Refer to the “Integration of Credit Suisse” section of this
 
report for more information
 
How we do business
We provide our personal banking clients with access to a comprehensive, life-cycle-based
 
offering. This includes a broad
range of basic
 
banking products,
 
from payments
 
to deposits,
 
cards and
 
convenient online
 
and mobile banking,
 
as well
as
 
lending
 
(predominantly
 
mortgages),
 
investments
 
and
 
retirement
 
planning
 
services.
 
Personal
 
&
 
Corporate
 
Banking
works closely
 
with Global
 
Wealth Management to
 
provide our clients
 
with access to
 
leading wealth
 
management services.
Our corporate and institutional clients benefit from our banking, financing and investment
 
solutions, in particular access
to
 
equity
 
and
 
debt
 
capital
 
markets,
 
syndicated
 
and
 
structured
 
credit,
 
private
 
placements,
 
leasing,
 
and
 
traditional
financing. We offer transaction banking solutions for payment and
 
cash management services, trade and export finance,
and global custody solutions for institutional clients.
 
ubs-20241231p47i0
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| Our businesses
 
23
We work
 
closely with
 
the Investment
 
Bank to
 
offer capital
 
market and
 
foreign exchange
 
products, hedging
 
strategies,
and trading
 
capabilities, as
 
well as
 
corporate
 
finance advice.
 
In cooperation
 
with Asset
 
Management, we
 
also provide
fund and portfolio management solutions.
 
In our corporate business, we take a holistic approach
 
to client dialogue. We seek to provide practical,
 
tailored solutions
with a
 
deep understanding
 
of our
 
clients’ business
 
operations and
 
collaborate with
 
partners to
 
offer a
 
comprehensive
range of products and services. We
 
also launched sustainability-linked loans for
 
commodity trade finance and corporate
clients.
In 2024, we continued to focus on
 
helping our clients to achieve
 
their sustainability goals, as companies
 
and individuals
consider the best ways to transition to a lower-carbon economy
 
.
›
Refer to the UBS Group Sustainability Report 2024, available
 
under “Annual reporting” at
ubs.com/investors
, for more
information about sustainability matters
We see
 
a strong
 
partner network
 
as essential
 
for UBS’s
 
success in
 
Switzerland. To
 
meet the
 
increasing expectations
 
of
our clients, we
 
have established
 
strong partnerships
 
that create
 
significant value,
 
for example,
 
for homeowners,
 
where
protecting property
 
value is
 
crucial. Through
 
our new
 
partnership with
 
NORM, we
 
offer a
 
digital, user-friendly
 
energy
analysis and a specific roadmap
 
for sustainable renovations. Additionally, we have
 
introduced
UBS Loan Green
 
to support
sustainability in investment and commercial properties.
Through
 
our
 
collaboration
 
with
 
Fasoon
 
and
 
Startups.ch
 
we
 
actively
 
support
 
clients
 
in
 
founding
 
their
 
businesses
 
and
getting started
 
financially
 
from
 
the
 
very
 
beginning.
 
Our
UBS Marketplace
 
offers
 
relevant
 
partner
 
solutions to
 
support
corporate clients throughout their life cycle.
We are building stronger relationships with our mortgage clients throughout the entire property ownership lifecycle
 
with
comprehensive services, including
 
property acquisition, renovation,
 
maintenance, and sale.
 
Our exclusive partnership
 
with
SMG Swiss Marketplace
 
Group enables us
 
to expand our
 
ecosystem to Switzerland’s
 
largest real estate
 
portals, such as
Homegate
 
and
 
Immoscout24.
 
Through
 
our
 
partner
Brixel
 
we
 
provide
 
services
 
related
 
to
 
property
 
transactions
 
and
promotion
 
financing.
 
Our
 
collaboration
 
with
Houzy
,
 
Switzerland’s
 
leading
 
homeowner
 
platform,
 
connects
 
our
 
clients
with a nationwide network of qualified craftsmen.
Competition
In Personal Banking,
 
our main competitors
 
are the cantonal
 
banks, Raiffeisen, PostFinance
 
and other regional
 
and local
Swiss banks; we also face competition from international neobanks and other national digital market participants. Areas
of competition are basic banking services, mortgages and
 
foreign exchange, as well as investment mandates and
 
funds.
In the corporate and institutional
 
business, the cantonal banks and foreign
 
banks are our main competitors. We
 
compete
in basic banking services, cash management, trade and
 
export finance, asset servicing, investment advice for institutional
clients, corporate finance and lending, and cash
 
and securities transactions for banks. We
 
also support the international
business
 
activities
 
of our
 
Swiss
 
corporate
 
clients
 
through
 
local
 
hubs
 
in
 
New
 
York,
 
Frankfurt,
 
Singapore and
 
the
 
Hong
Kong
 
SAR,
 
where
 
we
 
compete
 
with
 
other
 
foreign
 
banks
 
that
 
have
 
global
 
operations.
 
No
 
other
 
Swiss
 
bank
 
offers
 
its
corporate clients local banking capabilities abroad.
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Our businesses
 
24
Asset Management
We are a global, large-scale and
 
diversified asset manager offering investment capabilities and strategies,
 
across all major
traditional and alternative asset classes, to institutions,
 
wholesale intermediaries and Global Wealth Management clients.
Following the acquisition of the Credit Suisse Group,
 
we have become one of the leading Europe-based asset managers,
with total invested assets of USD 1.8trn. We are focused
 
on meeting the evolving needs of our clients by capitalizing
 
on
the products and areas
 
where we have
 
a differentiated and
 
scalable offering and
 
by expanding our
 
strong partnerships
with the other business divisions across the Group.
Asset
 
Management
 
is
 
organized
 
into
 
five
 
areas:
 
Client
 
Coverage;
 
Global
 
Real
 
Assets;
 
Investments;
 
Unified
 
Global
Alternatives; and
 
the Chief
 
Operating Officer
 
(COO) area.
 
We cover
 
the main
 
asset management
 
markets globally
 
and
have a
 
local presence
 
in 24
 
locations across
 
four regions:
 
the Americas;
 
Asia Pacific;
 
EMEA; and
 
Switzerland. We
 
have
nine main hubs: Chicago; the Hong Kong SAR; London;
 
New York; Shanghai; Singapore; Sydney; Tokyo; and
 
Zurich.
Integration of Credit Suisse and organizational changes
We continued to move
 
at pace with the
 
integration of Credit Suisse.
 
This included the completion
 
of a number of
 
legal
entity transactions that enabled us to combine
 
our core operating entities and teams in each region.
 
Alongside that, we
made significant
 
strides toward
 
bringing together
 
our fund
 
offerings and
 
also
 
commenced
 
the technical
 
migration
 
of
clients’ investment portfolios onto the UBS platform.
 
During
 
2024,
 
we
 
completed
 
a
 
number
 
of
 
non-core
 
divestments,
 
including
 
the
 
sales
 
of
 
our
 
Brazilian
 
real
 
estate
 
fund
management business
 
(Credit Suisse
 
Hedging-Griffo Real
 
Estate), Credit
 
Suisse Insurance
 
Linked Strategies
 
Ltd and
 
our
62%
 
majority
 
stake
 
in
 
Credit
 
Suisse
 
Investment
 
Partners.
 
We
 
also
 
transferred
 
the
 
management
 
of
 
our
 
Quantitative
Investment Strategies business to a systematic investment
 
manager.
 
›
Refer to the “Integration of Credit Suisse” section of this
 
report for more information
On 1 March 2024, Aleksandar Ivanovic became President
 
Asset Management.
We also
 
took a
 
number of
 
steps to
 
increase our
 
operational efficiency
 
and simplify
 
our organization.
 
This included
 
the
reorganization and integration of our former Products functions
 
into the Client Coverage and COO areas.
 
To capture the
 
growing client demand
 
for alternatives, at the
 
end of 2024
 
we combined our manager
 
selection franchises
from Global
 
Wealth Management and
 
Asset Management to
 
create a new
 
business unit
 
called Unified
 
Global Alternatives
(UGA). UGA sits operationally within the Asset Management business division, and additionally reports to Global Wealth
Management.
 
With a combined USD 286bn in invested assets across Asset Management and Global Wealth Management, UGA is one
of the leading global alternative players. By bringing together the breadth
 
of our capabilities, we can better leverage and
scale our deep expertise in sourcing,
 
monitoring and managing investments. Given
 
our ability to work flexibly alongside
third-party alternatives managers across products,
 
we believe we can strengthen our strategic
 
partnerships with best-in-
class general partners, and together deliver new and
 
innovative solutions for clients.
 
Following the shift of our Real Estate
 
& Private Markets (REPM) multi-manager capabilities
 
to UGA, the remaining REPM
business area has been renamed as Global Real Assets.
 
How we do business
 
We are committed to
 
delivering investment excellence and to
 
creating value for our clients that
 
endures through cycles.
We
 
offer
 
a
 
range
 
of
 
investment
 
products
 
and
 
services
 
across
 
all
 
major
 
traditional
 
and
 
alternative
 
asset
 
classes
 
and
investing styles,
 
and we
 
also draw
 
on the
 
breadth of
 
our capabilities
 
to offer
 
asset allocation
 
and currency
 
investment
strategies across the risk–return spectrum, customized multi-asset
 
solutions, and advisory and fiduciary services. In order
to
 
support
 
our
 
clients’
 
sustainability
 
objectives,
 
we
 
offer
 
a
 
comprehensive
 
range
 
of
 
products
 
and
 
solutions
 
which
incorporates a variety of approaches, including active
 
ownership,
 
as well as impact-
 
and transition-focused strategies.
›
Refer to the UBS Group Sustainability Report 2024,
 
available under “Annual reporting” at
ubs.com/investors
, for more
information about sustainability matters
To serve our clients’ alternative investment needs, our UGA business maintains,
 
manages and curates one of the world’s
premier
 
open
 
architecture
 
platforms
 
across
 
hedge
 
funds,
 
private
 
equity,
 
private
 
credit,
 
real
 
estate,
 
infrastructure
 
and
multi-alternative
 
investment
 
products.
 
We
 
are
 
also
 
able
 
to
 
provide
 
access
 
to
 
exclusive
 
co-investments
 
and
 
secondary
market opportunities for our
 
more sophisticated clients. In
 
addition, we offer access
 
to a comprehensive range
 
of direct
investment capabilities
 
across hedge
 
funds and
 
real assets,
 
as well
 
as our
 
leading
 
non-investment-grade
 
fixed-income
capabilities managed through our Credit Investment Group.
 
We
continue to expand our index
 
and exchange-traded funds capabilities, building on our
 
position as the largest Europe-
based manager of
 
indexed investments.
 
We are
 
able to
 
leverage our
 
specialist teams,
 
proprietary technology and
 
expertise
in customization to provide our clients with a compelling range
 
of solutions across asset classes.
 
ubs-20241231p49i0
Annual Report 2024 |
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| Our businesses
 
25
We also
 
collaborate across
 
business divisions
 
to deliver
 
our best
 
capabilities to
 
clients. For
 
example, our
 
SMA initiative
with Global Wealth Management
 
in the US continues
 
to gain momentum,
 
with USD 195bn in
 
invested assets. Building
on the success
 
of this platform,
 
we are also
 
extending our offering
 
to meet the
 
needs of wholesale
 
clients in this
 
attractive
market.
Our
 
Partnerships
 
Solutions
 
business
 
draws
 
on
 
our
 
value
 
chain
 
across
 
the
 
Group
 
to
 
provide
 
customized
 
full-service
fiduciary,
 
investments
 
and
 
technology
 
solutions
 
for
 
clients.
 
Those
 
include
 
curated
 
access
 
to
 
best-in-class
 
third-party
traditional and
 
alternative
 
investment
 
managers, as
 
well
 
as a
 
comprehensive
 
suite of
 
proprietary
 
technology solutions
and research services.
 
We are building on
 
our extensive and long-standing
 
presence in the
 
Asia Pacific region, particularly
 
in China, where we
have enhanced our onshore presence through our joint ventures.
To better serve our clients’ needs,
 
enable further scalability and growth
 
across our business, and
 
position us to seize the
opportunities
 
presented
 
by
 
generative
 
artificial
 
intelligence,
 
we
 
are
 
transforming
 
our
 
front-to-back
 
business,
 
our
operating
 
model
 
and
 
our
 
technology
 
platform.
 
This
 
includes
 
our
UBS Advantage
 
initiative,
 
which
 
will
 
enable
 
us
 
to
streamline trading
 
and portfolio
 
implementation across
 
our active
 
and index
 
capabilities through an
 
integrated technology
architecture. We also remain
 
focused on capturing structural
 
efficiencies to support our profitable
 
growth. This includes
refining our strategic product offering, further streamlining our organization,
 
and realizing integration-related synergies.
 
Competition
Our main
 
competitors are global
 
firms with wide-ranging
 
capabilities and distribution
 
channels, such as
 
AllianceBernstein,
Allianz
 
Asset
 
Management,
 
Amundi,
 
BlackRock,
 
DWS,
 
Franklin
 
Templeton,
 
Invesco,
 
J.P. Morgan
 
Asset
 
Management,
Morgan Stanley Investment
 
Management, Schroders, State Street Global
 
Advisors and T. Rowe Price,
 
as well as
 
firms with
a specific market or asset-class focus.
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Our businesses
 
26
Investment Bank
The
 
Investment
 
Bank
 
provides
 
services
 
to institutional,
 
corporate
 
and wealth
 
management
 
clients, helping
 
them
 
raise
capital,
 
invest
 
and
 
manage
 
risks,
 
while
 
targeting
 
attractive
 
and
 
sustainable
 
risk-adjusted
 
returns
 
for
 
the
 
Group’s
shareholders. Our traditional strengths are in
 
equities, foreign exchange, research, advisory
 
services and capital markets,
complemented by
 
a focused
 
rates and
 
credit platform.
 
We use
 
our data-driven
 
research and
 
technology capabilities
 
to
help
 
clients
 
adapt
 
to
 
evolving
 
market
 
structures
 
and
 
changes
 
in
 
regulatory,
 
technological,
 
economic
 
and
 
competitive
landscapes.
Aiming to deliver market-leading
 
solutions by using our
 
intellectual capital and electronic
 
platforms, we work closely
 
with
Global Wealth
 
Management,
 
Personal &
 
Corporate Banking
 
and Asset
 
Management
 
to bring
 
the best
 
of the
 
Group’s
capabilities to our clients. We do so while being disciplined
 
about balance sheet deployment and costs.
Our two business
 
areas, Global Banking and
 
Global Markets, are organized
 
globally by product. Our
 
business is regionally
diversified, with a presence in more than
 
30 countries. We cover the main
 
investment banking markets globally and have
major financial hubs across four regions:
 
the Americas; Asia Pacific; EMEA; and Switzerland.
 
Our priority is
 
providing high-quality execution
 
and seamless client
 
service, through an
 
integrated, solutions-led approach,
with disciplined growth in the advisory and execution businesses, while accelerating our digital transformation. In Global
Banking, we position ourselves as trusted advisors via our
 
client coverage and ability to provide access to the wider suite
of UBS’s capabilities. In Global
 
Markets, we enable clients to
 
buy, sell and finance
 
securities on capital markets worldwide
and to manage their risks and liquidity.
Integration of Credit Suisse and organizational changes
The acquisition of
 
the Credit Suisse
 
Group in 2023
 
accelerated the Investment Bank’s
 
existing growth strategy,
 
reinforcing
and strengthening
 
our coverage
 
and presenting
 
a powerful
 
opportunity to
 
enhance capabilities
 
and client
 
relevance in
key products and regions.
 
The
 
Investment
 
Bank
 
has
 
benefited
 
significantly
 
from
 
the
 
integration
 
of
 
Credit
 
Suisse,
 
in
 
terms
 
of
 
clients,
 
talent
 
and
capabilities.
 
And the integration has also helped
 
us to build a more sustainable market
 
share in a range of products and
markets. The
 
transfer of
 
Credit Suisse
 
positions onto
 
UBS infrastructure
 
is now
 
complete, and
 
all in-scope
 
clients have
been onboarded.
›
Refer to the “Integration of Credit Suisse” section of this
 
report for more information
On 1 July 2024, George Athanasopoulos and Marco Valla joined the Group Executive Board as Co-Presidents Investment
Bank. They replaced Robert Karofsky, who on that date became Co-President Global Wealth Management and President
UBS Americas.
In 2024, GWM Solutions was introduced and is aimed at combining all client solutions across UBS into a single construct
so as
 
to
 
more
 
effectively,
 
efficiently
 
and
 
consistently
 
deliver
 
products
 
and
 
capabilities
 
to our
 
clients.
 
As part
 
of GWM
Solutions, we announced
 
the formation of
 
Unified Global Banking,
 
combining Global Wealth
 
Management’s corporate
finance
 
capabilities
 
with
 
Global
 
Banking
 
to
 
service
 
the
 
traditional
 
corporate
 
finance
 
needs
 
of
 
our
 
Global
 
Wealth
Management clients and their companies.
How we do business
The Investment Bank consists of
 
two areas: Global Markets, which is
 
supported by Investment Bank Research;
 
and Global
Banking. Our global coverage model utilizes our international industry expertise and product capabilities to meet clients’
emerging needs.
Our Global Banking business
 
offers a broad range
 
of investment banking products
 
and services to our
 
clients. We work
with our clients to
 
understand their business
 
needs and provide
 
ideas that support
 
growth and help
 
them achieve their
objectives. Global
 
Banking advises
 
clients on strategic
 
business opportunities,
 
such as
 
mergers, acquisitions
 
and related
strategic matters,
 
and helps
 
them raise
 
capital, in
 
both public
 
and private
 
markets, to
 
fund their
 
activities. With
 
teams
located across
 
the Americas,
 
EMEA and
 
Asia Pacific
 
regions, our
 
banking coverage
 
offers clients
 
local market
 
expertise
coupled with access to a global network.
Our Global Markets business helps clients engage
 
with local markets globally, providing nimble,
 
innovative and bespoke
access to
 
solutions, from
 
market and
 
insight tools
 
to trade
 
strategies and
 
execution. Global
 
Markets enables
 
clients to
buy, sell and finance securities on
 
capital markets worldwide and to manage their
 
risks and liquidity. We distribute, trade,
finance and clear cash equities and equity-linked products, as well as structuring, originating and
 
distributing new equity
and equity-linked issues. From origination
 
and distribution to managing risk and
 
providing liquidity in foreign exchange,
rates,
 
credit
 
and
 
precious
 
metals,
 
we
 
help
 
clients
 
to
 
realize
 
their
 
financial
 
goals.
 
We
 
provide
 
flexible,
 
innovative
 
and
bespoke access to solutions, from market and insight tools to trading
 
strategies and execution.
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Our businesses
 
27
Our Investment
 
Bank Research
 
business continues
 
to publish
 
research based
 
on primary
 
data to
 
concentrate
 
on data-
driven outcomes and offers clients differentiated content about major financial markets and securities around the globe,
with analysts
 
based in
 
more than
 
20 countries
 
and with
 
coverage of
 
more than
 
3,700 stocks
 
in 49
 
different countries.
HOLT
, a framework that helps investors to make better
 
decisions,
 
was successfully transferred from Credit Suisse
 
to UBS
in October 2024 and is an
 
addition to our data capabilities
 
,
 
which include
Quant Research
 
and
UBS Evidence Lab
.
HOLT
provides investors with a robust framework to analyze,
 
value and compare 20,000 companies globally.
Our capabilities, core products
 
and services have
 
been enhanced by
 
the integration, which has
 
enabled us to
 
deliver these
products and services to
 
an expanded institutional
 
and corporate client
 
base. In addition, we
 
are now better
 
positioned
to serve Global Wealth Management,
 
offering investment banking capabilities,
 
and to further enhance our
 
connections
with
 
wealth
 
management
 
clients.
 
The
 
integration
 
of
 
Credit
 
Suisse
 
is
 
expected
 
to
 
drive
 
further
 
changes
 
in
 
our
 
future
revenue footprint. Our increased
 
scale will enhance our competitive
 
positioning within each region
 
and product set and
rebalance our footprint.
 
We seek to develop new
 
products and solutions consistent
 
with our capital-efficient business
 
model, typically related
 
to
new technologies or changing market standards.
The Investment Bank offers
 
clients global advice and
 
access to the world’s
 
primary,
 
secondary and private capital markets,
including through an
 
array of sustainability-focused
 
advice, products, research
 
and events. We
 
help meet clients’
 
needs
with respect to
 
environmental, social
 
and governance
 
(ESG) considerations
 
and sustainable
 
finance, helping
 
to reshape
business models and investment opportunities and to develop
 
sustainable finance products and solutions.
 
In Global
 
Markets, we
 
develop products
 
and solutions
 
designed to
 
meet clients’
 
specific and
 
increasingly detailed
 
ESG
objectives. In
 
Global Banking,
 
the ESG
 
Advisory Group
 
supports UBS’s
 
clients globally in
 
assessing their
 
ESG / sustainability
profile and linking
 
such profiles to
 
investor demand
 
and valuation.
 
The ESG research
 
team delivers thematic
 
reports on
ESG
 
and
 
sustainability-related
 
topics.
 
More
 
generally,
 
through
 
our
 
research,
 
we
 
address
 
ways
 
in
 
which
 
ESG
 
factors
connect to individual markets, sectors and companies in
 
our coverage.
›
Refer to the UBS Group Sustainability Report 2024,
 
available under “Annual reporting” at
ubs.com/investors
, for more
information about sustainability matters
The Investment Bank
 
strives to
 
be the digital
 
investment bank of
 
the future,
 
focused on delivering
 
innovation-led solutions
and efficiencies for
 
our clients. Our
 
digital strategy harnesses
 
technology to provide
 
access to sources
 
of unique, global
liquidity, personalized advice and differentiated content. As the world around us changes, our digital capabilities harness
emerging
 
technologies
 
and
 
create
 
new
 
products
 
and
 
solutions,
 
which
 
help
 
our
 
clients
 
to
 
adapt
 
to
 
evolving
 
market
structures and achieve their investment goals.
 
Our
 
ambition
 
to
 
be
 
the
 
most
 
client-focused,
 
efficient
 
and
 
data-driven
 
investment
 
bank
 
is
 
being
 
realized
 
through
 
the
simplification of technology architecture, increased
 
speed and quality of
 
delivery and the attraction
 
of best-in-class talent.
As we look forward to the continued
 
evolution
of our digital capabilities, we will see increased adoption of
 
technologies,
such as generative
 
artificial intelligence, the consistent
 
re-use of platforms
 
and products, and
 
the continued drive to
 
make
progress in our overall strategic imperatives, with regard
 
to a new, combined Investment Bank.
Joint efforts between
 
the Investment Bank
 
and the other
 
business divisions (for
 
example, our work
 
with Global
 
Wealth
Management through GWM Solutions coverage) and, externally, strategic partnerships (for example, UBS BB jointly with
Banco
 
do
 
Brasil,
 
focused
 
on
 
Latin
 
America)
 
continue
 
to
 
be
 
key
 
strategic
 
priorities.
 
Partnerships
 
with
 
Global
 
Wealth
Management and Asset Management enable us to provide clients with broad access to financing, global capital markets
and portfolio solutions.
 
We expect
 
these initiatives to
 
continue to lead
 
to growth by
 
delivering global products
 
to each
region, leveraging our global connectivity across borders and
 
sharing and strengthening our best client relationships.
Competition
Our global
 
reach presents attractive options
 
for growth. In
 
the Americas, the
 
largest investment banking
 
fee pool globally,
we
 
continue
 
to focus
 
on
 
increasing
 
market
 
share
 
in our
 
core
 
Global
 
Banking
 
and
 
Global Markets
 
businesses.
 
In
 
Asia
Pacific,
 
we
 
plan
 
to
 
capture
 
opportunities
 
arising
 
from
 
expected
 
market
 
internationalization and
 
growth
 
in
 
China
 
and
other markets,
 
and to strengthen
 
our presence
 
in the region.
 
In EMEA, we
 
plan to leverage
 
our strong base
 
and brand
recognition to further gain market share
 
.
Competing firms operate
 
in many
 
of our markets,
 
but our strategy
 
differentiates us, with our
 
focus on selective
 
leadership
in the areas
 
where we have
 
chosen to compete
 
and a business
 
model that leverages
 
talent and technology
 
rather than
balance sheet. Our
 
main competitors are
 
the major global
 
investment banks (e.g.
 
Morgan Stanley and
 
Goldman Sachs)
and corporate investment
 
banks (e.g. Bank
 
of America, Barclays,
 
Citigroup, BNP Paribas,
 
Deutsche Bank and
 
JPMorgan
Chase). In certain products and regions,
 
we also compete with boutique investment banks and fintech
 
firms.
 
ubs-20241231p52i0
Annual Report 2024 |
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| Our businesses
 
28
Non-core and Legacy
Non-core
 
and
 
Legacy
 
includes
 
positions
 
and
 
businesses
 
not
 
aligned
 
with
 
our
 
long-term
 
strategy
 
and
 
risk
 
appetite.
 
It
consists of
 
selected assets
 
and liabilities
 
from the
 
former Credit
 
Suisse business
 
divisions, as
 
well as
 
residual assets
 
and
liabilities from
 
UBS’s former Non-core and Legacy Portfolio that preceded
 
the acquisition of the Credit Suisse Group and
smaller amounts
 
of assets
 
and liabilities
 
of UBS’s
 
business divisions
 
that have
 
been assessed
 
as not
 
strategic in
 
light of
the acquisition.
We have made
 
strong progress in actively
 
reducing Non-core
 
and Legacy’s assets
 
and liabilities. Most
 
notably, as of
 
the
end
 
of
 
2024,
 
we
 
reported
 
risk-weighted
 
assets
 
(RWA)
 
of
 
USD 41.4bn
 
and
 
leverage
 
ratio
 
denominator
 
(LRD)
 
of
USD 53.5bn,
 
which
 
equates
 
to
 
a
 
year-on-year
 
RWA
 
reduction
 
of
 
USD 32.6bn,
 
or
 
44%,
 
and
 
an
 
LRD
 
reduction
 
of
USD 115.0bn, or 68%.
›
Refer to the “Integration of Credit Suisse” section of this
 
report for more information
Our key priorities and operations
We will continue to actively wind down Non-core and Legacy’s positions in order to reduce operating costs and financial
resource
 
consumption,
 
with a
 
focus on
 
economic profitability,
 
and to
 
enable us
 
to simplify
 
infrastructure.
 
Incremental
costs or losses may arise in connection with the reduction
 
of such assets and liabilities.
 
Our key priorities continue to be as follows.
–
Reduce RWA and LRD, freeing up
 
capital for the UBS Group. We
 
aim to achieve a share
 
of below 5% of Group RWA
by the end of
 
2026. We will continue to
 
actively pursue the acceleration of
 
the natural roll-off through active
 
unwinds.
–
Reduce
 
operating
 
costs
 
and
 
financial
 
resource
 
consumption
 
by integrating
 
onto the
 
core platform,
 
simplifying
 
and
decommissioning
 
infrastructure,
 
and
 
minimize
 
the
 
number
 
of
 
legal
 
entities.
 
We
 
aim
 
to
 
exit
 
2026
 
with
 
around
USD 0.8bn in underlying operating expenses (excluding
 
litigation).
 
–
Execute the de-risking strategy in an orderly manner to protect the client franchise, working in partnership
 
with other
business divisions.
 
Non-core and
 
Legacy includes
 
financial and
 
non-financial
 
assets, operating
 
expenses
 
and funding
 
costs
 
related
 
to the
following legacy Credit Suisse businesses: loans primarily related to corporate clients and emerging markets, the residual
securitized products businesses, the macro
 
trading business, including rates and foreign
 
exchange, the legacy life-finance
business, the equities portfolio, including
 
the remaining equity swaps, share
 
back-lending positions and legacy structured
renewables-linked
 
positions, and
 
the residual
 
credit business.
 
It also
 
includes residual
 
trades from
 
businesses exited
 
by
the pre-integration
 
UBS Investment
 
Bank, mainly
 
in 2012.
 
The portfolio
 
additionally encompasses
 
positions relating
 
to
legal matters transferred to it at the time of its formation
 
in 2023.
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Our businesses
 
29
Group functions
Our Group functions are support and control functions that provide services to
 
the Group, focusing on effectiveness, risk
mitigation and efficiency.
 
How we are organized
Our Group
 
functions
 
include
 
the
 
following major
 
areas:
 
Group
 
Services
 
(which consists
 
of
 
the
 
Group
 
Operations
 
and
Technology
 
Office,
 
Group
 
Compliance,
 
Regulatory
 
& Governance,
 
Group
 
Finance, Group
 
Risk Control
 
,
 
Group
 
Human
Resources
 
and
 
Corporate
 
Services,
 
Communications
 
&
 
Branding,
 
Group
 
Legal,
 
the
 
Group
 
Integration
 
Office,
 
Group
Sustainability and Impact and the Chief Strategy
 
Office)
 
and Group Treasury.
 
Virtually all
 
costs incurred
 
by the Group functions
 
are allocated
 
to the business
 
divisions, leaving
 
a residual amount
 
that we
refer to
 
as
 
Group Items
 
in
 
our
 
segment reporting
 
in
 
accordance with
 
IFRS Accounting
 
Standards. Certain
 
activities are
retained centrally, where not directly related to
 
the businesses, such as
 
group hedging and own
 
debt activities
 
in Group
Treasury
 
and
 
certain
 
other
 
costs
 
that
 
are
 
mainly
 
related
 
to
 
deferred
 
tax
 
assets
 
and
 
costs
 
relating
 
to
 
our
 
legal
 
entity
transformation program.
Most of
 
our employees
 
in
 
the
 
Group functions
 
are
 
employed by
 
UBS
 
Business Solutions
 
AG
 
or
 
another of
 
our
 
service
company subsidiaries of UBS
 
Group AG. The
 
costs of
 
the Group
 
functions employees in UBS
 
Business Solutions AG are
reflected as
 
compensation expense
 
in
 
UBS
 
Group AG
 
reporting and
 
as
 
general and
 
administrative expense in
 
UBS
 
AG
reporting.
Group Services
The
 
vast
 
majority
 
of
 
the
 
support
 
and
 
control
 
functions
 
are
 
fully
 
aligned
 
or
 
shared
 
among
 
the
 
business
 
divisions.
 
The
activities
 
of
 
the
 
businesses
 
and
 
support
 
and
 
control
 
functions
 
are
 
closely
 
aligned
 
to
 
improve
 
efficiency
 
and
 
create
 
a
working environment built on accountability and collaboration.
 
Group Treasury
Group Treasury
 
manages balance sheet structural risk (e.g. interest rate, structural foreign exchange and collateral risks),
as well
 
as the
 
risks associated
 
with our
 
liquidity,
 
capital and
 
funding portfolios.
 
Group Treasury
 
serves all
 
five business
divisions, and its risk management is integrated into the
 
Group risk governance framework.
Our environment
Market environment
Global economic developments in 2024
1
Although global
 
economic growth
 
slowed slightly
 
in 2024,
 
to 3.2%
 
from 3.4%
 
in 2023,
 
there was
 
more growth
 
than
had been expected, helped by the strength of the US economy,
 
slowing inflation, and central bank rate cuts.
 
The
 
resilience
 
of
 
the
 
US
 
economy
 
was
 
the
 
main
 
surprise
 
relative
 
to
 
projections
 
coming
 
into
 
2024.
 
Robust
 
consumer
spending and greater business
 
investment in artificial
 
intelligence (AI) helped
 
US GDP to
 
grow by 2.8%,
 
close to the
 
2.9%
increase registered in 2023.
 
Growth in other developed economies was more muted. The Eurozone’s GDP expanded by 0.7%, which was marginally
better than the
 
0.5% registered in
 
2023. Germany was
 
the main drag, with
 
the region’s largest
 
economy held back
 
by
weak consumer demand, high energy
 
prices and challenges in major export
 
markets, including intensifying competition
to its important
 
automotive industry.
 
In contrast, Swiss
 
GDP growth accelerated
 
to 1.4%, up
 
from 0.7%
 
in 2023, with
improving consumer demand offsetting weakness in the manufacturing
 
sector.
 
China’s
 
post-pandemic
 
rebound
 
continued
 
to
 
be
 
disappointing,
 
with
 
GDP
 
growth
 
at
 
4.8%,
 
compared
 
with
 
5.2%
 
in
2023. Consumers were cautious
 
about spending against a
 
backdrop of job
 
insecurity and falling property prices.
 
Stimulus
from the government came late in the year and has yet
 
to revive consumer confidence.
 
Inflation continued its
 
trend toward normalization
 
after the multi-decade
 
highs experienced in
 
the wake of
 
the COVID-
19 pandemic. Lower inflation in the Eurozone
 
and the UK led the European Central
 
Bank and the Bank of England to cut
rates by
 
100 basis points
 
and 50 basis
 
points, respectively.
 
Meanwhile, low
 
inflation in
 
Switzerland (1.1%
 
in 2024)
 
led
the Swiss National
 
Bank (the
 
SNB) to cut
 
interest rates by
 
125 basis points. The
 
US Federal Reserve
 
cut interest rates
 
by
100 basis points, less than had been expected earlier in 2024. The consumer price index
 
in the US rose 2.9% in the year
to December 2024, compared with 3.4% in 2023.
 
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Our environment
 
30
Strong
 
US
 
earnings
 
growth,
 
lower
 
interest
 
rates,
 
and
 
optimism
 
about
 
AI
 
helped
 
the
 
S&P
 
500
 
deliver
 
a
 
25%
 
return,
contributing to a 20.7%
 
return for the
 
MSCI All Country
 
World Index. The MSCI
 
Europe index gained
 
10.3%, with the
MSCI Switzerland
 
returning
 
6.6%. Emerging
 
market
 
equities returned
 
8.1% in
 
US dollar
 
terms, with
 
the MSCI
 
China
returning 19.8%, helped by government pledges of more
 
forceful stimulus.
It was a volatile
 
year for bond markets,
 
amid shifting expectations over
 
the timing, pace and
 
magnitude of interest rate
cuts from
 
central banks.
 
The yield
 
on 10-year
 
US Treasuries
 
rose from
 
3.9% at
 
the start
 
of 2024
 
to 4.6%,
 
boosted by
stronger US
 
economic
 
data and
 
the anticipation
 
of higher
 
inflation under
 
the new
 
US administration.
 
The yield
 
on 10-
year German bunds also rose, despite concerns over weak
 
growth in Germany and the Eurozone.
Economic and market outlook for 2025
1
We expect economic uncertainty to remain high in 2025, with the potential for significant policy developments from the
new US administration and with
 
geopolitical risks still elevated. However, our
 
base case is for 2025
 
to be another resilient
year for the global economy, and our projections show only
 
a slight slowing of global GDP growth, to 3.0% in 2025.
In the US, we expect healthy consumption, further easing of fiscal policy and interest rate cuts from the Federal Reserve.
This should
 
help mitigate
 
the potential
 
drag from
 
higher trade
 
tariffs. Our
 
base case
 
is for
 
US GDP
 
to grow
 
by around
2%. The prospect of higher tariffs on exports to
 
the US could prove a headwind to growth in Europe
 
and Asia. Although
China could
 
counter with
 
further stimulus,
 
we expect growth
 
there to
 
slow further,
 
to 4.0%
 
in 2025,
 
due to
 
the continued
weakness
 
in the
 
property
 
market and
 
consumer demand.
 
For the
 
Eurozone, we
 
expect
 
growth to
 
stabilize,
 
with GDP
increasing by
 
0.9% in
 
2025, as
 
falling interest
 
rates and
 
higher levels
 
of savings
 
support both
 
consumer spending
 
and
corporate investments. For
 
Switzerland, we expect
 
GDP growth of
 
1.3%, supported by
 
stronger external demand
 
from
the Eurozone.
 
Regarding
 
interest
 
rates, we
 
still see
 
Federal Reserve
 
rates as
 
restrictive
 
and expect
 
further
 
cuts in
 
2025, despite
 
the resilience
of the
 
US economy.
 
Our view
 
is that
 
subdued growth
 
and slowing
 
inflation in
 
the Eurozone
 
will prompt
 
the European
Central Bank
 
to continue cutting
 
interest rates
 
in 2025. We also
 
expect the SNB
 
to further cut
 
rates amid low
 
inflation.
 
We expect a combination of continued economic growth, monetary easing, and advances in AI to contribute to another
positive
 
year
 
for
 
the
 
S&P
 
500.
 
Although
 
a
 
relaxation
 
of
 
regulations
 
on
 
businesses
 
by
 
the
 
incoming
 
US administration
could further support stocks, international markets could face
 
pressure from US tariffs.
 
We see only a
 
modest downside to government
 
bond yields, as resilient
 
US growth and above-target US
 
inflation partially
offset
 
the
 
likely
 
impact
 
of
 
lower
 
central
 
bank
 
interest
 
rates.
 
We
 
believe
 
that
 
the
 
threat
 
of
 
tariffs
 
and
 
geopolitical
uncertainty are likely to maintain the strength of the
 
US dollar for at least the first half of 2025.
1
 
Based on the following sources: Haver Analytics, CEIC, National Statistics and UBS.
Industry trends
Although our industry
 
has been significantly
 
affected by various
 
regulatory developments
 
in recent years
 
,
 
technological
transformation and changing
 
client expectations continue
 
to emerge
 
as key
 
drivers of change
 
today, increasingly affecting
the competitive landscape, as
 
well as our products,
 
service models and operations.
 
In parallel, our industry
 
continues to
be materially driven by changes in financial markets,
 
macroeconomic conditions and geopolitical conditions.
Emerging Technologies
The pace of innovation and
 
emerging technology adoption continues
 
to accelerate in our
 
industry. Artificial intelligence
(AI) in particular is creating an
 
opportunity to significantly enhance
 
client service and employee efficiency and
 
transform
business
 
operations.
 
Financial
 
institutions
 
are
 
finding
 
ways
 
to accelerate
 
the
 
adoption
 
of AI
 
in
 
a
 
risk-
 
and
 
regulatory-
compliant manner and with ethical
 
and sustainability considerations in place.
 
Meanwhile, the shift from digitalizing
 
and
automating existing processes to digital-as-default solutions
 
is already well underway.
Staying abreast
 
with emerging
 
technologies is
 
key, while
 
also taking
 
into consideration
 
the need
 
for continued
 
human
interaction, a component that continues to be an important competitive factor.
 
Generative AI has enabled organizations
to utilize AI well beyond
 
data scientists, broadening
 
the scope for its application
 
and its associated benefits.
 
Agentic AI,
now in
 
its infancy,
 
offers potential
 
to significantly
 
enhance both
 
quality and
 
productivity across
 
sectors. As
 
technology
evolves, so does the associated risk landscape, but
 
the focus remains on safeguarding our clients and their
 
data, with the
evolution of AI governance
 
as an area of
 
strategic importance. The widespread implementation of
 
AI introduces the need
for
 
evolutionary
 
change
 
relating
 
to
 
the
 
workforce.
 
Organizations
 
must
 
invest
 
in
 
their
 
people
 
and
 
upskilling
 
and / or
reskilling employees in
 
the field of
 
AI will be
 
key for all
 
aspects of this journey
 
from ideation through
 
development and
then adoption.
Digital communication, with clients
 
and employees alike, has
 
established new remote ways
 
of working, enabling
 
financial
services providers
 
to attract
 
an even
 
wider array
 
of talent than
 
before. The
 
digitalization of the
 
financial services
 
sector
has led to a structural shift in the workforce as more and better engineers are
 
required to keep banks at the forefront of
technology.
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Our environment
 
31
Continuous
 
investment
 
in
 
technology
 
is
 
driving
 
automation
 
and
 
simplification
 
of
 
labor-intensive
 
processes,
 
improving
banks’ operational efficiency, and
 
freeing up resources
 
to focus on
 
client needs. Decision-making is
 
becoming increasingly
data-driven, with advanced analytics and AI enabling banks to address client needs in an even
 
more targeted manner. In
a consistently connected, open, and location-independent financial services ecosystem, the focus lies on adopting open-
source technology, including cloud-native and modular architecture,
 
to drive innovation and open exchange.
Distributed
 
ledger
 
technology
 
(DLT),
 
such
 
as
 
blockchain,
 
is
 
reshaping
 
finance
 
by
 
improving
 
efficiency,
 
security
 
and
accessibility.
 
As
 
both
 
regulation
 
and
 
technology
 
evolve,
 
the
 
banking
 
industry
 
is
 
gradually
 
embracing
 
DLT
 
and
 
its
applications, e.g.
 
tokenized assets
 
and digital
 
currencies. This
 
shift will
 
not only
 
enhance efficiency
 
but also
 
open new
opportunities,
 
such
 
as
 
broader
 
market
 
access
 
for
 
alternative
 
and
 
private
 
equity
 
investments,
 
instant
 
24/7
 
settlement,
improved traceability, and real-time data. Moreover, DLT is paving the way for innovation within such
 
concepts as privacy
and identity management and could unlock new business
 
models and products which offer a seamless user experience.
Generative AI in wealth management
 
Generative AI has a transformative impact on the entire wealth management value chain
 
and is already starting to shape
the
 
future
 
of
 
our
 
industry.
 
The
 
most
 
promising
 
opportunities
 
are
 
expected
 
from
 
innovation
 
in
 
client
 
acquisition,
onboarding and servicing, as well as internal support.
1
For the benefit
 
of our clients
 
and to further
 
empower our advisors
 
,
 
we are also
 
leveraging investments
 
in the AI
 
space.
We are
 
using AI-powered
 
tools to
 
enhance our
 
capabilities
 
and platforms,
 
for example
 
Red, our
 
internal chatbot
 
that
builds on generative AI capabilities,
 
was rolled out to around
 
7,000 employees in the fourth
 
quarter of 2024. In the
 
US,
13 million AI-generated
 
insights were delivered
 
to US advisors
 
in 2024. We
 
are also connecting
 
our clients with
 
leaders
in
 
the
 
AI
 
space
 
and
 
providing
 
them
 
with
 
thought
 
leadership,
 
content
 
and
 
solutions
 
regarding
 
AI
 
investment
opportunities.
2
Sustainability
Sustainable
 
finance
 
continued
 
to
 
be
 
high
 
on
 
the
 
policy
 
agenda
 
but
 
with
 
implementation
 
of
 
prescriptive
 
legislation
diverging across jurisdictions.
 
›
Refer to “Regulatory trends” in the “Regulation and
 
supervision”
 
section of this report for more information about regulatory
policy trends in sustainable finance
›
Refer to the “Regulatory and legal developments”
 
section of this report for more information about developments
 
related to
environmental,
 
social and governance matters
In 2024, sustainability-oriented
 
public market investment
 
funds recorded a
 
new high of
 
USD 3.2trn.
3
 
While the level
 
of
inflows decreased
 
compared with previous
 
years, investors continued
 
to allocate to
 
sustainability-oriented funds and
 
ETFs.
Investments into
 
alternative
 
asset classes,
 
including hedge
 
funds, real
 
estate and
 
infrastructure,
 
continued throughout
2024.
 
The
 
share
 
of
 
sustainable-investing
 
private-market
 
fundraising
 
in
 
total
 
reached
 
an
 
all-time
 
high.
4
 
In
 
sustainable
financing markets, global
 
thematic sustainable bond
 
markets (including green,
 
social, sustainable and
 
sustainability-linked
bonds,
 
referred
 
to
 
as
 
labeled
 
bonds)
 
saw
 
issuance
 
increase
 
16%
 
year
 
on
 
year,
5
 
nearly
 
reaching
 
the
 
record
 
issuance
achieved in 2021, which benefited significantly from COVID-19-related
 
supply factors.
Finance has an important role to play as companies and individuals consider how best to approach the global
 
economy’s
transition
 
to
 
a
 
more
 
sustainable,
 
lower-carbon
 
world.
 
Banks
 
and
 
investment
 
managers
 
can
 
support
 
this
 
transition
 
by
effectively
 
and
 
efficiently
 
allocating
 
capital
 
and
 
helping
 
to
 
mobilize
 
the
 
vast
 
amounts
 
of
 
investment
 
and
 
financing
required. We continue
 
to build on
 
our offering and
 
develop the innovative
 
products and solutions
 
that our institutional
and private
 
clients need
 
both to
 
manage the
 
risks and
 
capture the
 
opportunities presented
 
by the
 
transition to
 
a low-
carbon economy.
›
Refer to the UBS Group Sustainability Report 2024,
 
available under “Annual reporting” at
ubs.com/investors
, for more
information about sustainability matters
Client expectations
As technology
 
progresses, so
 
do clients’
 
ways
 
of living,
 
working and
 
interacting with
 
others. This
 
is reshaping
 
clients’
expectations
 
toward
 
financial
 
services
 
firms,
 
as
 
their
 
reference
 
points
 
are
 
increasingly
 
influenced
 
by
 
experiences
 
with
companies
 
outside
 
the
 
sector,
 
where
 
technology-supported
 
and
 
data-driven
 
solutions
 
progressively
 
facilitate
 
a
 
more
tailored client experience, which
 
is delivered on
 
time and seamlessly.
 
These services often focus
 
on convenience, flexibility,
transparency
 
and
 
personalization,
 
and
 
drive
 
toward
 
holistically
 
addressing
 
clients’
 
needs
 
and
 
facilitating
 
community
building.
 
We
 
expect
 
the
 
adoption
 
of
 
generative
 
AI
 
to
 
accelerate
 
these
 
expectations.
 
Our
 
industry
 
needs
 
to
 
continue
evolving, as clients measure us against new standards.
 
Recent geopolitical, macroeconomic and societal
 
shifts, including the focus on digitalization,
 
have re-emphasized values
such as security, trust and stability,
 
as well as the need to have a credible plan toward a
 
sustainable future, leading to an
increased focus on
 
investment, financing and
 
advisory products and
 
services that fit
 
clients’ own sustainability
 
preferences
and ambitions.
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Our environment
 
32
Consolidation
Many regions and businesses in the financial services sector are still highly fragmented. We expect further consolidation,
with the key drivers
 
being ongoing margin pressure, a push
 
for cost efficiencies and increasing scale
 
advantages resulting
from fixed technology costs
 
and regulatory requirements.
 
Many stakeholders in the
 
financial services sector continue
 
to
seek increased exposure and access to regions with attractive growth profiles, such as Asia and other emerging markets,
through local acquisitions
 
or partnerships, as
 
well as acquiring
 
new capabilities addressing
 
changes in market
 
dynamics
and overall client demands.
 
The increased focus
 
on core capabilities
 
and geographical footprint,
 
as well as the
 
ongoing
simplification of
 
business models
 
to reduce
 
operational and
 
compliance risks,
 
is likely
 
to drive
 
further disposals
 
of non-
core
 
businesses
 
and
 
assets.
 
While
 
banks
 
already
 
face
 
increasing
 
challenges
 
from
 
digitalization
 
needs
 
and
 
intensified
competition,
 
uncertain
 
macroeconomic
 
and
 
geopolitical
 
conditions
 
across
 
major
 
economies
 
might
 
create
 
further
pressure.
New competitors
Our competitive
 
environment
 
is evolving.
 
In addition
 
to traditional
 
competitors in
 
the asset-gathering
 
businesses, new
entrants are targeting selected parts of the
 
value chain. We continue to observe
 
a growing supply of private credit
 
from
private-debt funds,
 
facilitating an
 
industry shift
 
in lending
 
volumes for
 
high-yield lending
 
products. However,
 
we have
not yet seen a
 
fundamental unbundling
 
of the value chain
 
and client relationships,
 
which might ultimately
 
result in the
further disintermediation
 
of banks
 
by new
 
competitors. Over
 
the long
 
term, we
 
believe large
 
platform companies
 
also
pose a threat
 
to incumbent financial
 
services firms, given
 
their strong client
 
franchises and
 
access to client
 
data, if they
decide
 
to
 
broaden
 
the
 
scope
 
of
 
their
 
services.
 
While
 
fintech
 
firms
 
continue
 
to
 
gain
 
momentum,
 
we
 
do
 
not
 
expect
 
a
material disruption to our asset-gathering businesses, as their long-term
 
success will inevitably depend on their ability to
navigate
 
our
 
regulatory
 
landscape,
 
build
 
customer
 
trust
 
and
 
maintain
 
innovation.
 
The
 
trend
 
for
 
forging
 
partnerships
between new entrants and incumbent
 
banks will therefore continue, as technology and innovation
 
help banks overcome
new challenges and create new opportunities.
Wealth development
General overview of wealth development
After a
 
decline in
 
2022, global
 
financial wealth
 
grew by
 
around 7%
 
in 2023
 
to an
 
estimated USD 275trn
 
at year-end.
The recovery was mainly
 
driven by the
 
robust performance of public
 
equity markets. Gains were
 
especially strong in North
America,
 
where
 
financial
 
assets
 
grew
 
by
 
USD 10trn
 
(9%
 
growth),
 
accounting
 
for
 
more
 
than
 
half
 
of
 
the
 
new
 
global
financial wealth in 2023. The recovery was less strong in Western Europe and Asia Pacific, where financial assets in
 
2023
grew
 
by
 
USD 2trn
 
(4%
 
growth)
 
and
 
USD 3trn
 
(5%
 
growth),
 
respectively.
 
China
 
recently
 
experienced
 
a
 
slowdown
 
in
wealth creation, but together with India, is expected
 
to see further increases in wealth in the coming years. On average,
global financial wealth is expected to grow at 6% per
 
year until 2028.
1
Almost half
 
of the
 
world’s
 
financial
 
wealth was
 
concentrated
 
in the
 
Americas (49%),
 
followed
 
by Asia
 
Pacific
 
(27%),
Europe (21%) and the Middle East and Africa (3%).
1
 
Looking at our
 
invested assets, half
 
were concentrated in
 
the Americas (50%),
 
while the remaining
 
half was split
 
between
Europe, the Middle East and Africa (34%) and Asia Pacific
 
(16%).
 
Wealth segment view
6
While growth in 2023 was
 
seen across all high
 
net worth individual (HNWI) wealth
 
bands, the segment with individuals
holding
 
wealth
 
between
 
USD 1m
 
and
 
USD 5m
 
experienced
 
the
 
strongest
 
percentage
 
increase,
 
both
 
in
 
terms
 
of
population
 
and
 
wealth
 
(i.e.
 
both
 
growing
 
by
 
5.2%,
 
respectively).
 
This
 
segment
 
(with
 
USD 1m
 
to
 
USD 5m
 
in
 
wealth)
represents 90% of all HNWIs
 
and accounts for 43% of total HNWI wealth.
 
Individuals holding wealth between USD
 
5m
and USD 30m currently represent
 
9% of the HNWI population and hold 23% of HNWI wealth.
The ultra
 
high net
 
worth individual
 
(UHNWI) segment
 
(individuals with
 
wealth in
 
excess of
 
USD 30m) experienced
 
the
highest absolute growth in wealth, while remaining
 
the most concentrated wealth band accounting for
 
1% of the HNWI
population and representing 34% of total HNWI wealth.
Wealth transfer
About USD 84trn of collective wealth
 
is expected to be transferred in the
 
next 20 to 25 years, and
 
the majority of these
asset transfers are
 
likely to occur
 
within the next
 
10 years. An aggregate
 
of more than
 
USD 50trn in wealth
 
transfers is
expected to occur in the Americas,
 
followed by roughly USD 20trn in EMEA,
 
and USD 10trn in Asia Pacific.
7
 
As over 70%
of heirs are
 
inclined to change
 
financial advisors upon
 
inheriting, it is
 
crucial for wealth
 
managers to introduce
 
advisors
early to
 
the next
 
generation
 
and start
 
working to
 
meet
 
evolving clients’
 
needs on
 
both sides
 
of the
 
intergenerational
transfer.
8
 
UBS has a
 
comprehensive global offering from
 
family advisory through business
 
succession and wealth planning
to philanthropy,
 
addressing all
 
aspects of
 
the client
 
situation and
 
catering for
 
a wide
 
range of
 
client and
 
family needs
related
 
to
 
succession.
 
Moreover,
 
our
 
global
 
flagship
 
programs
 
provide
 
a
 
great
 
opportunity
 
to
 
engage
 
with
 
the
 
next
generation early
 
on, and
 
also
 
give them
 
exclusive
 
access
 
to the
 
Young
 
Investors
 
Organization, the
 
industry’s first
 
and
largest community of UHNW peers (1,800+ members).
 
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Our environment
 
33
Female investors
It is predicted that by 2025 35%
 
of total private investible wealth will be in
 
women’s hands.
9
 
The share has been steadily
increasing due
 
to factors such
 
as higher workforce
 
participation, a rise
 
in the number
 
of businesses owned
 
by women,
cultural
 
attitudes
 
and
 
intergenerational
 
wealth
 
transfers.
 
Between
 
2015 and
 
2024,
 
the
 
number
 
of
 
female
 
billionaires
grew
 
to
 
344
 
from
 
190,
 
a
 
rise
 
of
 
81%,
 
mainly
 
driven
 
by
 
self-made
 
billionaires.
 
From
 
a
 
wealth
 
perspective,
 
female
billionaires’ assets have increased 153% to
 
USD 1.7trn.
10
 
UBS has had
 
a dedicated advisory
 
approach tailored to
 
the needs and
 
goals of
 
female investors since
 
2017. For the
 
second
year
 
running,
 
UBS
 
was
 
highly
 
commended
 
in
 
the
 
Best
 
Private
 
Bank
 
for
 
Wealthy
 
Women
 
category
 
at
 
the
PWM
 
/
The
Banker
 
awards in 2024.
 
Entrepreneurs
 
There is a significant shift
 
in the composition of the wealthy
 
population,
 
as self-made UHNWIs are
 
outpacing those that
inherit their wealth. The proportion of self-made UHNWIs has risen in the last six years to over 70%, driven in part by an
increasing number of younger entrepreneurs.
6
 
We offer access to community platforms tailored to
 
entrepreneurial needs
and, through
 
strategic collaborations,
 
we have
 
created
 
an entrepreneurial
 
ecosystem that
 
provides access
 
to the
 
right
partners
 
and
 
resources.
 
Starting
 
in
 
2025,
 
we
 
are
 
further
 
empowering
 
entrepreneurs
 
with
 
flagship
 
reports
 
for
 
better-
informed business decision-making.
 
Diverging regional and industry trends present investment
 
opportunities
In 2024, US
 
stocks outperformed other regional
 
markets by a
 
significant margin, and
 
the topic of
 
AI still dominated
 
sector
returns. US
 
economic growth
 
held up
 
well, and
 
investor expectations
 
were further
 
boosted by
 
the outcome
 
of the
 
US
elections, while growth in Europe and China was constrained
 
by domestic and geopolitical headwinds. Inflation slowed,
enabling
 
central
 
banks
 
around
 
the
 
world
 
to
 
start
 
easing
 
monetary
 
policy.
 
The
 
correlation
 
between
 
equities
 
and
government bonds returned to negative territory for the first time since 2022, which contributed
 
to investor appetite for
fixed income.
 
Credit spreads
 
tightened to
 
the lowest
 
level since
 
2007, also
 
supporting fixed-income
 
portfolio returns.
Alongside
 
this,
 
the
 
long-term
 
trend
 
of
 
investors
 
shifting
 
toward
 
low-cost
 
indexed
 
capabilities
 
and
 
diversification
 
into
alternatives continued to play out.
 
While the sharp rise
 
in global bond yields
 
in recent months has
 
created volatility across
 
various asset classes, we
 
believe
fixed-income
 
valuations
 
have
 
improved
 
significantly.
 
Returns
 
on equities
 
and fixed
 
income
 
should
 
be closer
 
than
 
they
have been
 
in the
 
last two
 
years, with
 
higher valuations
 
in equities
 
contributing to
 
lower but
 
still positive
 
returns, with
fixed income
 
offering more
 
attractive yields.
 
Regional disparities
 
will depend
 
greatly on
 
the degree
 
of severity
 
of tariffs
imposed by the new US administration.
 
The breadth of our investment expertise and capabilities across asset classes and investment styles enables us to find the
right solutions for clients as the environment evolves.
1
BCG’s Global Wealth Report 2024, which refers to the 2023 financial year; wealth concentration
 
is based on financial assets by region and excludes real assets and liabilities.
2
Better, faster,
 
and more efficient: welcome to AI@GWM, Internal communication by Global Wealth Management Co-Presidents.
3
Morningstar, end of December 2024.
4
Preqin, end of April 2024.
5
Bloomberg, end of December 2024.
6
World Report Series
 
2024, Intelligent strategies
 
for winning with the
 
ultra-wealthy, Capgemini,
 
considering HNWI financial
 
wealth and population
 
in Europe, Asia
 
Pacific and North
 
America; the HNWI
 
population
defined as individuals with investable assets greater than USD 1m, excluding primary residence, collectibles,
 
consumables and consumer durables.
7
 
UBS Global Wealth Report 2024, September 2024.
8
Wealth Management Top Trends 2024, Capgemini.
9
 
BCG’s Global Wealth Report 2021; BCG and GWM Strategy team market
 
sizing for total global investable wealth.
10
UBS Billionaire Ambitions Report 2024.
 
Annual Report 2024 |
Our strategy, business model and environment
 
| How we create value for our stakeholders
 
34
How we create value for our stakeholders
Clients
Our clients are at the heart
 
of our business. We are
 
committed to building and sustaining long-term
 
relationships based
on mutual trust,
 
integrity and respect.
 
Understanding our clients’
 
needs and expectations
 
enables us to
 
best serve their
interests and to create value for them.
 
A combined firm with expanded reach and capabilities for
 
clients
The
 
combination
 
of
 
the
 
wealth
 
management
 
businesses
 
of
 
UBS AG
 
and
 
Credit
 
Suisse AG,
 
with
 
their
 
complementary
footprints across locations and client
 
segments,
 
supports one of the core
 
pillars of our client value
 
proposition in Global
Wealth
 
Management:
 
with
 
our
 
distinctive
 
approach
 
to
 
wealth
 
management
 
and
 
by
 
offering
 
advice,
 
expertise
 
and
solutions, we help our clients
 
pursue what matters most
 
to them. All our Global
 
Wealth Management clients
 
now have
access to
 
the
UBS House View
 
by our Chief
 
Investment Office, and
 
we continue to
 
align our wealth
 
management product,
service and solution offerings, helping clients to grow, protect
 
and transfer their wealth.
We are the
 
leading bank in
 
Switzerland, leveraging
 
the strength
 
of the newly
 
merged Swiss
 
businesses to broaden
 
our
services and to
 
promote innovation to our
 
clients. The legal merger
 
of two entities, UBS Switzerland AG
 
and Credit Suisse
(Schweiz) AG, was completed on
 
1 July 2024. We are
 
taking on the
 
integration with the utmost
 
care and intend to
 
spend
the time needed to achieve the best possible outcome
 
for our clients, our employees and the Swiss financial center
 
.
 
The acquisition
 
of the
 
Credit Suisse
 
Group brought
 
together
 
our highly
 
complementary
 
asset management
 
businesses
and enhanced
 
the value
 
that we
 
provide to
 
clients through
 
expanded capabilities
 
across key
 
asset classes
 
and growth
markets.
 
This included
 
greater
 
scale in
 
customized
 
indexing, an
 
enhanced
 
offering
 
in alternatives
 
(including a
 
leading
credit franchise) and an increased presence in the US and
 
Asia.
The acquisition of the Credit Suisse Group strengthened the Investment Bank’s
 
competitive positioning. It deepened our
capabilities in
 
core products
 
and services,
 
enabling us
 
to deliver
 
services to
 
a broader
 
institutional and
 
corporate
 
client
base, while bringing us critical mass in
 
key markets. The Investment Bank is also better positioned to
 
serve Global Wealth
Management
 
clients,
 
offering
 
investment
 
banking
 
capabilities
 
and
 
further
 
enhancing
 
connectivity
 
with
 
our
 
wealth
management clients.
Engaging with our clients
Our clients’ needs and their preferred communication
 
channels continually evolve. Our objective is
 
to engage with clients
in
 
the
 
ways
 
most
 
convenient
 
for
 
them.
 
We
 
use
 
a
 
variety
 
of
 
channels,
 
in
 
particular
 
digital
 
channels
 
and
 
regular
 
client
relationship and service meetings, as
 
well as various corporate roadshows and
 
dedicated events, with a mix of
 
hybrid and
in-person events.
Global
 
Wealth
 
Management
 
interacted
 
with its
 
clients through
 
a
 
broad range
 
of forums
 
and channels
 
in 2024,
 
from
personalized private briefings with
 
subject matter experts to
 
segment-specific virtual and in-person
 
events and large-scale
initiatives.
 
Through
 
marketing
 
and
 
media
 
campaigns,
 
events,
 
advertising,
 
publications
 
and
 
digital-only
 
solutions,
 
we
helped
 
drive
 
greater
 
awareness
 
of
 
UBS
 
among
 
prospective
 
clients
 
and
 
reinforced
 
trust-based
 
relationships
 
between
advisors
 
and clients.
 
We
 
proactively
 
engaged
 
with
 
clients
 
to reassure
 
them
 
about
 
the
 
acquisition
 
of the
 
Credit
 
Suisse
Group and highlighted the benefits
 
of the combined organization for
 
them. This was done through
 
individual meetings
and calls and by
 
opening up certain flagship events
 
and conferences to clients of
 
the combined firm. Our global footprint
means that we were
 
well positioned to
 
take advantage of the opportunities
 
in every region.
 
We have continued to
 
deliver
capabilities to clients,
 
for example
 
through digitally enabled
 
e-banking and sales
 
tools, while also
 
setting up new
 
units,
such
 
as
 
Global
 
Wealth
 
Management
 
Solutions,
 
Unified
 
Global
 
Banking
 
and
 
Unified
 
Global
 
Alternatives,
 
adding
 
even
greater connectivity
 
across all
 
our businesses.
 
We have
 
also continued
 
to roll
 
out artificial
 
intelligence (AI)
 
to positively
impact
 
our
 
business
 
and
 
serve
 
our
 
clients
 
better.
 
We
 
expect
 
generative
 
AI
 
will
 
continue
 
to
 
help
 
us
 
generate
 
more
personalized
 
advice
 
and
 
solutions
 
more
 
quickly
 
and
 
in
 
a
 
sustainable
 
and
 
responsible
 
way,
 
ensuring
 
a
 
more
 
efficient
experience for our clients around the globe.
Personal
 
&
 
Corporate
 
Banking holds
 
regular
 
client
 
events
 
(leveraging
 
a
 
number
 
of
 
formats,
 
such
 
as webcasts
 
and
 
in-
person, virtual or hybrid events), covering a wide range
 
of topics. In 2024, we further enhanced our digital engagement
strategies to
 
reach more
 
clients and
 
strengthen relationships
 
with existing
 
ones. We
 
utilize various
 
channels, including
social media, online displays, search engines and helplines,
 
as well as our branch network.
 
Annual Report 2024 |
Our strategy, business model and environment
 
| How we create value for our stakeholders
 
35
In Asset Management, we continue to
 
host our global program of client
 
events and engagement activities. These include
our annual
The Red
 
Thread
 
market outlook
 
roadshow,
 
which we
 
host in key
 
locations across
 
the world,
 
as well
 
as our
flagship
UBS Reserve Management Seminar
, which marked its 30th year of
 
operation in 2024. The event brings together
institutional investors to
 
debate relevant
 
topics and share
 
best practices, and
 
the accompanying
 
survey provides
 
one of
the most authoritative depictions of central
 
banks’ investment views. Alongside this,
 
our teams continued the high level
of interaction
 
with clients
 
globally,
 
supported by
 
digital tools
 
and our
 
publication of
 
macro and
 
thematic insights.
 
We
also hosted a broad range of hybrid events, including our investment series,
 
to help our clients better understand market
challenges and opportunities, and we continued to engage
 
with clients through our social media and online channels.
The Investment
 
Bank hosted
 
more than
 
240 conferences
 
and educational
 
seminars
 
globally in
 
2024,
 
providing
 
clients
with access
 
to corporations,
 
experts, research
 
and capital
 
introductions. The
 
events covered
 
a diverse
 
range of
 
topics,
including
 
macroeconomic,
 
geopolitical
 
and
 
sector-
 
and
 
region-specific
 
themes,
 
in
 
addition
 
to
 
regulatory,
 
product
 
and
market trends. More than 50,000 clients
 
took part in such events over
 
the year. We leverage our intellectual
 
capital and
relationships and use
 
our execution capabilities,
 
differentiated research content, bespoke
 
solutions, client franchise
 
model
and global platform to expand coverage
 
across a broad set of clients.
UBS Live Desk
,
 
built within the
UBS Neo
 
platform,
provides
 
clients
 
with
 
a
 
stream
 
of
 
fast-paced
 
commentary
 
from
 
UBS
 
traders.
 
The
UBS Analytical
 
Research
 
Community
(UBS-ARC)
 
is a
 
proprietary,
 
interconnected
 
research
 
network
 
of industry
 
leaders, subject
 
matter
 
specialists, executives,
academics and analysts in the Americas region.
Investors
We aim
 
to drive
 
sustainable,
 
long-term
 
value
 
creation
 
for our
 
investors
 
by executing
 
our strategy
 
and growth
 
and integration
plans,
 
while maintaining
 
risk and cost
 
discipline,
 
and delivering
 
attractive shareholder
 
returns through
 
the cycle.
Investor base
Our investor
 
base is
 
well diversified.
 
A substantial
 
proportion of
 
our institutional
 
shareholders are
 
based in
 
the US,
 
the
UK and Switzerland.
›
Refer to the “Corporate governance” section
 
of this report for more information about disclosed shareholdings
Alignment of interests
Our compensation philosophy and practices
 
are aimed at aligning the
 
interests of our employees with
 
those of our equity
and debt investors.
›
Refer to “Our compensation philosophy” in the
 
“Compensation” section of this report for more information
We are focused on driving sustainable long-term growth
 
while maintaining risk and cost discipline
Our objective is generating value
 
for all of our stakeholders
 
by delivering sustainable growth
 
over the cycle. In the
 
short
term,
 
our
 
main
 
priorities
 
are
 
making
 
further
 
progress
 
with
 
the
 
integration
 
of
 
Credit
 
Suisse,
 
rightsizing
 
the
 
cost
 
base,
optimizing the balance
 
sheet and continuing to
 
invest strategically in
 
our people, technology,
 
products and capabilities,
as we
 
position the
 
firm for
 
long-term growth.
 
We expect
 
that by
 
the end
 
of 2026
 
and beyond,
 
this will
 
enable us
 
to
deliver significant
 
value for
 
all our
 
stakeholders and
 
remain a
 
reliable economic
 
partner, employer
 
and taxpayer
 
in the
communities where we operate. Moreover,
 
we are aiming to maximize our social and
 
environmental impact and that of
our clients to create long-term sustainable value.
Our primary measurement of the Group’s financial performance is underlying return on common equity tier 1 (CET1), as
regulatory capital is our binding constraint and drives our
 
ability to return capital to shareholders.
›
Refer to the “Targets, capital guidance and ambitions” section of this report for more information
›
Refer to “Our focus on sustainability” in this section
 
for more information about our sustainability and impact
 
strategy
Balancing resilience, growth and attractive capital returns
Capital strength is a key pillar of our strategy, and we are committed to maintaining a
 
balance sheet for all seasons. This
is
 
also
 
reflected
 
in
 
our
 
intention
 
to
 
maintain
 
a
 
Group
 
consolidated
 
CET1
 
capital
 
ratio
 
of
 
around
 
14%,
 
a
 
Group
consolidated CET1 leverage ratio above 4.0% and a UBS AG standalone CET1 capital ratio between 12.5% and
 
13.0%.
At the same time, we remain committed to investing in organic growth opportunities and delivering attractive returns to
investors.
We remain committed to distributing excess capital to shareholders, in the form of dividend and share buybacks. For the
2024 financial year, the
 
Board of Directors plans
 
to propose a
 
dividend to UBS Group
 
AG shareholders of
 
USD 0.90 per
share, a 29%
 
increase year on
 
year. We remain
 
committed to progressive
 
dividends and are
 
accruing for an
 
increase of
around 10% in the ordinary dividend per share for the 2025 financial
 
year.
 
 
ubs-20241231p60i0
Annual Report 2024 |
Our strategy, business model and environment
 
| How we create value for our stakeholders
 
36
We plan to
 
repurchase USD 1bn
 
of shares in
 
the first half
 
of 2025. We
 
aim to repurchase
 
up to an
 
additional USD 2bn
of shares in the second half of 2025, and we are maintaining
 
our ambition for share repurchases in 2026 to exceed full-
year 2022 levels
 
of USD 5.6bn. Our
 
share repurchases
 
will be consistent
 
with maintaining
 
our CET1
 
capital ratio target
of around 14%,
 
achieving our financial targets
 
and the absence of
 
material and immediate changes
 
to the current capital
regime in Switzerland.
 
›
Refer to “UBS shares” in the “Risk, capital, liquidity
 
and funding, and balance sheet” section of this
 
report for more information
Communications
Our
 
Investor
 
Relations
 
(IR)
 
function
 
is
 
the
 
primary
 
point
 
of
 
contact
 
between
 
UBS
 
and
 
our
 
shareholders.
 
Our
 
senior
management and IR regularly
 
interact with institutional
 
investors, financial analysts
 
and other market
 
participants, such
as credit
 
rating agencies.
 
Clear,
 
transparent
 
and relevant
 
disclosures,
 
and regular
 
direct
 
interactions with
 
existing
 
and
prospective
 
shareholders,
 
form
 
the basis
 
for
 
our communications.
 
The
 
IR team
 
relays
 
the views
 
and feedback
 
on UBS
from institutional investors and other market participants
 
to our senior management.
IR and our Corporate Responsibility
 
function work together and
 
interact with investors interested
 
in sustainability topics
relevant to UBS and the wider society.
›
Refer to the first part of the “Corporate
 
governance” section of this report and
 
“Information policy” in that section for more
information
 
›
Refer to the UBS Group Sustainability Report 2024, available
 
under “Annual reporting” at
ubs.com/investors
, for more
information
 
Employees
Our
 
employees
 
drive
 
our
 
success.
 
We
 
therefore
 
invest
 
in
 
measures
 
to
 
attract,
 
develop
 
and
 
retain
 
a
 
highly
 
skilled
 
and
diverse range of
 
talent, and we
 
aim to ensure
 
a workplace culture
 
that engages and
 
supports our employees,
 
enabling
them to unlock their full potential.
The three keys and our corporate culture
Our culture is grounded in
 
our three keys to
 
success: our
Pillars, Principles and Behaviors
. These keys support
 
our business
decisions
 
and
 
our
 
approach
 
to
 
people
 
management.
 
Bringing
 
together
 
two
 
global
 
systemically
 
important
 
banks
 
and
building
 
a
 
unified
 
culture
 
across
 
our
 
combined
 
organization
 
continued
 
to
 
be
 
top
 
priorities
 
in
 
2024,
 
overseen
 
by
 
a
dedicated culture
 
integration forum.
 
In addition,
 
the Corporate
 
Culture and
 
Responsibility Committee
 
of the
 
Board of
Directors monitors and reviews the activities related to the
 
development of the Group’s corporate culture.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Our strategy, business model and environment
 
| How we create value for our stakeholders
 
37
We
 
support
 
culture
 
building
 
through
 
a
 
number
 
of
 
Group-wide,
 
divisional
 
and
 
regional
 
initiatives.
 
Examples
 
include
 
a
global
 
initiative
 
called
Crafting
 
our
 
future
, which
 
uses
 
interactive
 
in-person
 
sessions
 
to ensure
 
leaders
 
at
 
all
 
levels are
aligned
 
with
 
our
 
strategic
 
priorities
 
and
 
our
 
culture.
 
The
Group
 
Franchise
 
Awards
 
program
 
recognizes
 
employees
 
for
cross-divisional collaboration
 
and for
 
suggesting innovation
 
or simplification
 
ideas. Similarly,
 
our global
Kudos
peer-to-
peer appreciation program encourages employees
 
to recognize their colleagues’ exemplary
 
behavior. All these initiatives
serve to promote excellence, foster belonging and increase
 
engagement and employee satisfaction.
›
Refer to
ubs.com/global/en/our-firm/our-culture.html
 
for details about our three keys to success
›
Refer to the UBS Group Sustainability Report 2024, available
 
under “Annual reporting” at
ubs.com/investors
, for more
information
Hiring, developing and retaining talent
We
 
hired
 
a
 
total
 
of
 
8,525
 
external
 
candidates
 
across
 
the
 
Group
 
in
 
2024
 
and
 
developed
 
2,168
 
graduates
 
and
 
other
trainees,
 
apprentices
 
and
 
interns
 
through
 
our
 
junior
 
talent
 
programs.
 
We
 
actively
 
promote
 
multi-year
 
apprenticeship
programs
 
in
 
Switzerland
 
and
 
the
 
UK,
 
along
 
with
 
summer
 
internship
 
programs
 
in
 
the
 
US,
 
EMEA,
 
Asia
 
Pacific
 
and
Switzerland.
 
In 2024, most employees were
 
eligible to work partially from home,
 
depending on their role, regulatory
 
restrictions and
location,
 
as
 
well
 
as
 
divisional
 
or
 
functional
 
requirements.
 
Such
 
arrangements,
 
along
 
with
 
options
 
including
 
part-time
working, job
 
sharing and
 
partial retirement,
 
support employee
 
engagement and
 
retention and
 
help us
 
attract a
 
wider
range of candidates.
 
›
Refer to
ubs.com/global/en/careers/awards.html
 
for employer ratings and recognitions
Personnel by region
1
As of
% change from
Full-time equivalents
31.12.24
31.12.23
31.12.22
31.12.23
Americas
26,360
27,638
21,819
(5)
of which: US
24,651
26,024
21,032
(5)
Asia Pacific
26,179
27,638
16,489
(5)
Europe, Middle East and Africa (excluding Switzerland)
21,927
22,686
14,342
(3)
of which: UK
8,685
8,970
6,234
(3)
of which: rest of Europe (excluding Switzerland)
12,656
13,085
7,823
(3)
of which: Middle East and Africa
586
631
285
(7)
Switzerland
34,182
34,880
19,947
(2)
Total
108,648
112,842
72,597
(4)
1 Personnel information as of 31 December 2024 and as of 31 December 2023 includes post-acquisition consolidated information. Personnel information as of 31 December 2022 includes pre-acquisition UBS Group
information only.
Talent management and development
We
 
want
 
our
 
employees
 
to
 
be
 
able
 
to
 
build
 
long
 
and
 
successful
 
careers
 
with
 
us.
 
Our
 
talent
 
management
 
approach
includes
 
structured
 
talent
 
and
 
succession
 
reviews
 
to
 
help
 
us
 
identify
 
future
 
leaders,
 
ensure
 
business
 
continuity
 
and
proactively manage employee development. Our Group-wide talent offering is supplemented by specific programs in
 
the
business
 
divisions,
 
functions
 
and
 
regions.
 
These
 
programs
 
cater
 
to
 
a
 
broad
 
audience,
 
ranging
 
from
 
senior
 
leaders
 
to
emerging junior talent.
 
Internal mobility is
 
a key
 
component of
 
our approach,
 
with line
 
managers expected
 
to support
 
individual development
and job
 
mobility.
 
In 2024,
 
52.6% of
 
all roles
 
were
 
filled by
 
internal candidates.
 
Employees are
 
encouraged to
 
explore
career paths, search for jobs and short-term
 
rotations, and connect with mentors on our
Career Navigator
 
platform.
Internal
 
training
 
is
 
delivered
 
via
 
our
UBS
 
University
 
platform.
 
Our
 
offering
 
includes
 
client
 
advisor
 
certification
 
and
regulatory, business, and line manager training,
 
along with modules on culture, sustainable
 
finance, artificial intelligence,
data
 
literacy,
 
well-being and
 
other
 
topics.
 
We
 
invested
 
approximately
 
USD 0.1bn
 
in
 
training
 
in
 
2024, with
 
employees
completing more than 3.0 million learning activities (including mandatory training) for an average of 24.8 training
 
hours
per employee. In addition to internal training,
 
we partnered with a leading external
 
provider in 2024 to offer thousands
of additional learning opportunities to all staff.
Performance management
 
Our performance
 
management approach
 
(
MyImpact
) reflects
 
our strategy
 
and supports
 
our high-performance
 
culture.
Performance and behavior objectives
 
help the firm assess both
 
what an employee accomplishes
 
and how our
Behaviors
(accountability
 
with
 
integrity,
 
collaboration
 
and
 
innovation)
 
are
 
demonstrated.
 
Regular
 
check-ins,
 
along
 
with
 
an
embedded feedback
 
app, enable
 
employees to
 
give and
 
receive feedback
 
throughout the
 
year,
 
supporting continuous
improvement.
Fair and equitable pay
 
Fair and consistent pay practices
 
are designed to ensure employees are appropriately rewarded for their contribution.
 
We
pay for
 
performance,
 
and we
 
take pay
 
equity seriously.
 
We
 
have embedded
 
clear commitments
 
in our
 
compensation
policies and practices and
 
apply the same standards
 
across all locations.
 
We annually review
 
our approach and
 
policies,
in line with established equal pay methodologies, to support
 
our continuous improvement.
 
 
Annual Report 2024 |
Our strategy, business model and environment
 
| How we create value for our stakeholders
 
38
As part of our commitment to equal pay, we regularly conduct internal reviews on
 
pay equity, and our statistical analyses
show a differential
 
between male and
 
female employees in
 
similar roles across
 
our core financial
 
hubs of less than
 
1%.
If we find any gaps not explained by business or
 
by appropriate employee factors,
 
such as role, responsibility, experience,
performance or location, we look at the root causes and
 
address them.
We also aim to ensure that
 
all employees are paid at least a living wage.
 
We regularly assess employees’
 
salaries against
local living wages,
 
using benchmarks defined
 
by the Fair
 
Wage Network.
 
Our analysis in
 
2024 showed that
 
employees’
salaries were at or above the respective
 
benchmarks.
›
Refer to the “Compensation” section of this
 
report
for more information
Workforce inclusion
We are
 
committed to
 
being a
 
diverse and
 
inclusive workplace
 
based on
 
meritocracy,
 
and we
 
aim to
 
build a
 
culture
 
of
belonging, where all employees are recognized and valued, and where everyone can be successful and thrive. We aim to
hire
 
and retain
 
the best
 
people for
 
the right
 
roles,
 
to deliver
 
for our
 
clients, our
 
businesses,
 
our shareholders
 
and the
communities
 
we
 
serve.
 
In order
 
to achieve
 
this, we
 
have
 
a
 
diverse
 
workforce
 
with a
 
variety
 
of skills,
 
experiences
 
and
backgrounds that reflects the diversity of our clients to serve
 
them at our best. It is also critically important to us that we
respect an environment
 
where all our
 
employees are treated
 
fairly and able to
 
reach their potential.
 
In every location
 
in
which we operate, we continue to act in accordance with the
 
current law and regulations and will monitor any
 
changes
to ensure we remain consistent.
Our
 
workforce
 
inclusion
 
strategy
 
is
 
built
 
on
 
four
 
pillars:
 
transparency,
 
hiring,
 
developing
 
and
 
belonging.
 
We
 
leverage
these
 
four
 
pillars
 
to
 
help
 
support
 
our
 
entire
 
workforce
 
across
 
a
 
variety
 
of
 
personal
 
characteristics,
 
including,
 
but
 
not
limited
 
to,
 
gender,
 
culture,
 
race,
 
ethnicity,
 
sexual
 
orientation
 
and
 
identity,
 
disability,
 
family,
 
veteran
 
status,
 
and
generations, to create an inclusive culture for everyone.
 
Transparency is the foundation framework through which we enable leaders to deliver the strategy, and everyone is held
responsible.
 
We
 
leverage
 
various
 
communications
 
channels
 
and
 
line
 
manager
 
objectives
 
to
 
drive
 
awareness,
benchmarking,
 
thought
 
leadership
 
and
 
feedback
 
to
 
inform
 
the
 
strategy,
 
and
 
data
 
monitoring
 
with
 
respective
characteristics, including management dashboards and toolkits,
 
to support our entire workforce.
 
Furthermore, our strategy
 
is reinforced
 
by our public
 
commitments to
 
support all employees,
 
including, but
 
not limited
to, the UN
 
Women’s Empowerment Principles,
 
the Valuable 500
 
and the Race
 
at Work
 
Charter (UK). A
 
sense of belonging
helps drive engagement and is important for overall
 
well-being. Inclusive leadership and fair and transparent policies and
practices
 
provide
 
organizational
 
support
 
for
 
belonging,
 
and
 
vital
 
to
 
these
 
efforts
 
are
 
our
 
various
 
employee
 
network
chapters across the
 
firm that connect
 
employees on a
 
variety of employee-led
 
topics. Our networks,
 
which are open
 
to
all employees, also supplement members’ awareness,
 
development, and support through mentoring,
 
reverse mentoring
and allyship programs.
›
Refer to the UBS Group Sustainability Report 2024,
 
available under “Annual reporting” at
ubs.com/investors
, and to
ubs.com/inclusion
 
for more information about workforce inclusion at UBS
Employee engagement and support
Our multi-faceted listening strategy is adaptable and
 
captures feedback in a timely way.
 
We conduct employee life-cycle
surveys, short “pulse”
 
surveys to understand
 
what is on top
 
of employees’ minds and
 
in-depth analyses, such as
 
virtual
focus
 
group
 
sessions.
 
In
 
2024,
 
those
 
conversations
 
allowed
 
participants
 
from
 
every
 
business
 
division
 
and
 
function
 
to
share their perspectives and insights
 
on the integration and provided
 
employee sentiment data points
 
to track progress.
Group-wide surveys measure cultural
 
indicators such as
 
line manager effectiveness
 
and employee engagement. Our
 
2024
Group-wide
 
survey,
 
which
 
featured
 
a
 
77%
 
employee
 
response
 
rate,
 
assessed
 
indicators
 
such
 
as
 
line
 
manager
effectiveness,
 
engagement,
 
culture and
 
pride.
 
An engagement
 
score of
 
83%
 
in that
 
same
 
survey
 
confirmed that
 
our
employees recommend us as an
 
employer. All of these scores
 
were above the financial services benchmark.
1
 
We continue
to strive to be an employer of choice in the financial sector.
 
We are committed to being a responsible employer and that includes supporting our employees’ overall health and well-
being. Social, physical, mental and financial well-being elements are
 
woven into our HR policies and practices, as well as
into employee education initiatives. Employee
 
support includes a dedicated
 
well-being portal that consolidates our
 
global
offering
 
and
 
promotes
 
regional
 
networks,
 
initiatives
 
and
 
resources.
 
Furthermore,
 
employee
 
assistance
 
programs
 
and
internal teams
 
help employees
 
and their
 
family members
 
manage personal
 
or work-related
 
issues that may
 
affect their
well-being. Our
#WorkingWithCancer
 
commitment includes a mentorship program and informational sessions.
 
›
Refer to the UBS Group Sustainability Report 2024, available
 
under “Annual reporting” at
ubs.com/investors
, for more
information about our workforce, our people management
 
approach and relevant data
1
 
Benchmarks provided by Ipsos Karian and Box as of the third quarter of 2024.
 
Annual Report 2024 |
Our strategy, business model and environment
 
| How we create value for our stakeholders
 
39
Society
We aim
 
to support
 
the transition to
 
an economy
 
that considers
 
the well-being
 
of people
 
and planet.
 
Through the
 
UBS
Optimus network
 
of foundations
 
(the UBS
 
Optimus Foundation),
 
which is an
 
independent network,
 
and in
 
partnership
with
 
philanthropists,
 
employees,
 
implementation
 
organizations
 
and
 
institutional
 
partners,
 
we
 
want
 
to
 
find
 
innovative
ways to drive systemic and catalytic impact
 
for marginalized communities at scale, both globally and
 
locally, especially for
children and young people. In 2021, we set a goal of mobilizing USD 1bn in
 
philanthropic capital (which was reached in
2024) and reaching more than 26.5 million people by the
 
end of 2025 (cumulative total since 2021).
We know
 
working together
 
is key
 
to achieving
 
this impact
 
and systemic
 
change.
 
That is
 
why, in
 
addition to
 
providing
insights, advice
 
and execution
 
services to
 
clients and
 
prospective clients
 
,
 
we have
 
increased our
 
efforts in
 
the areas
 
of
blended
 
finance,
 
collaborative
 
philanthropy
 
and
 
impact
 
transparency.
1
 
In
 
blended
 
finance,
 
we
 
have
 
facilitated
opportunities and
 
partnerships
 
in innovative
 
financing structures
 
leveraging public
 
and private
 
capital. In
 
collaborative
philanthropy, we
 
have brought
 
together clients
 
and partners
 
on joint
 
initiatives addressing global
 
issues, such
 
as improving
the quality of primary school education
 
in Ghana and Colombia. Additionally,
 
our new impact rating tool,
 
introduced in
2024, simplifies
 
assessment
 
of impact
 
across projects,
 
sectors
 
and solutions,
 
aligning
 
with established
 
methodologies,
such as the Impact Management Project’s dimensions of
 
impact.
Our clients and partners are invited to be part of our impact ecosystem by supporting various initiatives and approaches.
Blended finance
The
 
UBS
 
Optimus
 
Foundation
 
partners
 
with
 
clients,
 
governments,
 
development
 
finance
 
institutions
 
and
 
our
 
business
divisions to promote
 
and launch blended
 
finance initiatives that use
 
catalytic capital from
 
public and philanthropic
 
sources
to increase private-sector investment in sustainable development.
 
UBS Collectives
Our
 
three
UBS
 
Collectives
 
bring
 
philanthropists
 
together
 
to
 
co-fund
 
programs,
 
share
 
knowledge
 
and
 
join
 
a
 
unique
learning journey.
 
This includes insight
 
trips, where the
 
philanthropists work
 
and exchange knowledge
 
with experts and
experience the impact on the ground.
The
UBS Collectives
 
were launched in 2020 and focus on issues
 
central to our strategy:
 
innovative financing of education
and health outcomes (the
UBS Accelerate Collective
), catalyzing the
 
blue-carbon market (the
UBS Climate Collective
), and
promoting and implementing family-based care (the
UBS Transform Collective
). The first cohorts concluded their journey
at the end of 2024, contributing their time and expertise
 
to support 23 UBS partners across eight countries.
›
Refer to the UBS Optimus Foundation Annual
 
Review 2023, available at
ubs.com/optimus-foundation/annual-review
, for more
information
UBS Global Visionaries
Through
 
our UBS
 
Global Visionaries
 
program,
 
we aim
 
to accelerate
 
the impact
 
of social
 
entrepreneurs
 
by:
 
(i) creating
opportunities
 
for
 
the
 
entrepreneurs
 
to
 
connect
 
with
 
our
 
clients,
 
prospective
 
clients
 
and
 
employees;
 
(ii) increasing
 
the
entrepreneurs’
 
abilities
 
through
 
learning
 
and
 
coaching
 
programs;
 
and
 
(iii) raising
 
awareness
 
of
 
the
 
entrepreneurs’
endeavors by leveraging our
 
brand and platforms. Since
 
the program started in
 
2016, we have onboarded
 
and supported
90 entrepreneurs to accelerate
 
their impact.
Helping our clients structure their philanthropy:
 
donor-advised funds
Donor-advised funds offer clients
 
an alternative charitable-giving vehicle
 
to set up
 
their own foundations, offering
 
greater
choice and personalization,
 
and are managed
 
in line with
 
their usual investment
 
approach. UBS
 
offers these
 
services in
Switzerland, Singapore, the UK and,
 
since 2023, the Hong Kong
 
SAR. In 2024, USD 329m in
 
donations was received into
these UBS charitable entities.
2
The UBS Optimus Foundation
In
 
2024,
 
the
 
UBS
 
Optimus
 
Foundation
 
raised
 
USD 366m
 
in
 
donations,
 
including
 
UBS
 
matching
 
contributions,
 
and
committed USD 310m in grants from the foundations.
2,3
In
 
2024,
 
the
 
UBS
 
Optimus
 
Foundation
 
celebrated
 
its
 
25th
 
anniversary
 
by
 
launching
 
four
 
initiatives
4
that
 
build
 
on
 
our
achieved impact and
 
strategic partnerships. These
 
initiatives will be
 
supported by a
 
USD 25m gift from
 
UBS that will
 
be
used to provide matching contributions of up to 100%
5
and seed capital to launch them.
In addition to
 
mobilizing our clients’
 
resources to advance
 
the missions of
 
our portfolio of
 
partners, we also
 
seek to ensure
both
 
the
 
firm
 
and
 
employees
 
are
 
engaged
 
in
 
our
 
Social
 
Impact
 
strategy.
 
We
 
do
 
this
 
mainly
 
through
 
charitable
contributions and employee volunteering.
 
 
 
 
 
 
 
 
Annual Report 2024 |
Our strategy, business model and environment
 
| How we create value for our stakeholders
 
40
Charitable contributions
We have
 
provided direct
 
cash contributions
 
through
 
our affiliated
 
foundations
 
in Switzerland,
 
through partnerships
 
in
the communities where we
 
operate and through contributions
 
to the UBS Optimus
 
Foundation. The combined value
 
of
these contributions in 2024 was USD 74m.
Employee volunteering
We have global
 
targets for employee
 
engagement through
 
volunteering, which are
 
built from the
 
bottom up and
 
on a
best-efforts
 
basis.
 
In
 
2024,
 
we
 
successfully
 
engaged
 
32%
 
of
 
our
 
global
 
workforce
 
in
 
volunteering,
 
and
 
39%
 
of
 
the
230,258 volunteer hours were skills based.
1
Currently, our impact transparency focus is on ensuring that all grants and investments supported by the UBS Optimus Foundation
 
undergo consistent and transparent diligence, approval, management and reporting
processes, in line with industry standards.
2
Figures provided for
 
the UBS Optimus
 
Foundation and
 
donor-advised funds
 
are based on
 
unaudited management accounts
 
and information available
 
as of January
 
2025.
 
Audited financial statements
 
for the UBS
Optimus Foundation and donor-advised foundation entities are produced and available
 
per local market regulatory guideline.
3
 
The UBS Optimus Foundation receives donations from all of the business divisions,
 
with the majority coming from Global Wealth Management.
4
 
Blue economy, innovative financing in tertiary education, scaling primary education and reaching the last mile for quality health
 
care.
5
 
100% up to USD 10,000 and 25% thereafter.
Our focus on sustainability
We are guided by
 
our ambition to be a
 
leader in sustainability.
 
This is reflected in
 
our vision to be the
 
bank for the next
generation. To
 
help us realize
 
that vision, our
 
sustainability and
 
impact strategy
 
is based on
 
three overarching
 
strategic
pillars: Protect, Grow and Attract.
 
Sustainability and impact vision: the
 
bank for the next generation
Protect
Manage our business in alignment with our
sustainable, long-term Group strategy and
evolving standards
Grow
Embed an innovative sustainability and impact
offering across all our business divisions
Attract
Be the bank of choice for clients and employees
Our sustainability and impact strategy
Protect
 
As part of our continued commitment
 
to protect our clients’ assets
 
and those of our firm, we
 
are focused on managing
our
 
business
 
by
 
aligning
 
to
 
the
 
sustainable
 
long-term
 
Group
 
strategy
 
and
 
evolving
 
standards.
 
We
 
maintain
 
a
 
strong
control and risk
 
framework, as well
 
as a robust
 
sustainability data strategy,
 
to support our
 
risk management processes,
regulatory requirements and
 
product offerings.
 
Grow
 
We continue to
 
expand our sustainability
 
and impact offerings
 
across all business
 
divisions to meet our
 
clients’ evolving
needs. For
 
example,
 
we
 
identify and
 
offer
 
innovative sustainable
 
financing
 
and investment
 
solutions, with
 
the
 
aim
 
to
support our clients through the world’s
 
transition to a low-carbon economy. To facilitate this, we established a dedicated
Group Sustainability and Impact Business Development &
 
Client Forum under the authority
 
of the Group Executive Board
(the GEB) Lead for Sustainability and Impact, focused on
 
client, product and impact approaches.
 
Attract
 
We aspire
 
to be
 
the bank
 
of choice
 
for clients
 
and employees
 
alike, maintaining
 
top quartile
 
sustainability ratings
 
and
positioning UBS as the go-to employer through our engagement
 
and education programs. In 2024, our MSCI
 
AA rating
was reaffirmed,
1
 
and we
 
increased
 
our S&P
 
Global Corporate
 
Sustainability Assessment
 
(CSA) score
 
to 72,
2
 
compared
with 69 in 2023.
 
›
Refer to the UBS Group Sustainability Report 2024,
 
available under “Annual reporting” at
ubs.com/investors
, for detailed
information about UBS’s sustainability strategy and activities
Our sustainability and impact governance
Sustainability activities are overseen at the highest level of UBS,
 
by the Board of Directors (the BoD) and the GEB,
 
and are
grounded in our Code of Conduct and Ethics (the
 
Code).
›
Refer to the UBS Group Sustainability Report 2024,
 
available under “Annual reporting” at
ubs.com/investors
, for more
information about UBS’s sustainability and impact governance
 
 
Annual Report 2024 |
Our strategy, business model and environment
 
| How we create value for our stakeholders
 
41
Our Code of Conduct and Ethics
In our Code, the BoD and the GEB set out the principles and practices that define our ethical standards, and the way we
do business, which apply to
 
all aspects of our business.
 
All employees must affirm annually
 
that they have read
 
and will
adhere
 
to the
 
Code and
 
other key
 
policies, supporting
 
a culture
 
where ethical
 
and responsible
 
behavior is
 
part of
 
our
everyday operations. In
 
our Code, we
 
make a commitment
 
to acting with the
 
long term in
 
mind and creating
 
value for
clients, employees, communities
 
and investors.
 
We aspire to
 
play our
 
part in
 
creating a fairer
 
and more prosperous
 
society,
championing a healthier environment
 
and addressing inequalities. Every year,
 
the BoD and the GEB conduct a review
 
of
our Code to ensure
 
that developments key
 
to our clients, employees
 
and other stakeholders
 
are reflected.
 
Adjustments
made
 
in our
 
2024 review
 
mainly
 
focused
 
on
 
strengthening
 
the
 
language
 
on accountabili
 
ty.
 
As we
 
continue
 
to
 
make
progress
 
with the
 
integration of
 
Credit Suisse,
 
we will
 
continue to
 
carefully
 
review
 
our Code
 
to ensure
 
that it
 
reflects
matters of key relevance to the culture
 
of the combined firm.
›
Refer to the Code of Conduct and Ethics of
 
UBS, available at
ubs.com/code
, for more information
Reporting to our stakeholders on our sustainability
 
strategy and activities
Further information about our sustainability efforts and commitments is provided in the UBS Group Sustainability Report
2024. The content of that report has
 
been prepared in accordance with the Swiss Code of
 
Obligations (Art. 964a et seq).
 
›
Refer to the UBS Group Sustainability Report 2024,
 
available under “Annual reporting” at
ubs.com/investors
, for an overview of
non-financial disclosures in accordance with the Swiss Code of Obligations
 
(Art. 964a et seq)
›
Refer to “Sustainability and climate risk” in
 
the “Risk management and control” section of this
 
report, for UBS’s sustainability and
climate risk metrics disclosures as required by Annex 5 to FINMA
 
Circular 2016/1 “Disclosure – banks”
1
 
Source: MSCI ESG Ratings & Climate Search Tool, UBS Group AG ESG Rating 2024
.
2
 
Source: S&P Global, UBS Group AG 2024 CSA Score, as of March 2025, out of a maximum of 100.
Regulation and supervision
As a financial
 
services provider
 
based in Switzerland,
 
the UBS Group
 
is subject to
 
consolidated supervision
 
by the Swiss
Financial
 
Market
 
Supervisory
 
Authority
 
(FINMA).
 
Our
 
entities
 
are
 
also
 
regulated
 
and
 
supervised
 
by
 
authorities
 
in
 
each
country
 
where
 
we
 
conduct
 
business.
 
Through
 
UBS AG
 
and
UBS
 
Switzerland AG,
 
which
 
are
 
licensed
 
as
 
banks
 
in
Switzerland, UBS may engage in a full range of financial services activities
 
in Switzerland and abroad, including personal
banking, commercial banking, investment banking and asset
 
management.
As a global systemically
 
important bank, as
 
designated by the Financial
 
Stability Board, and a
 
systemically relevant bank
(an SRB) in Switzerland, we are subject to stricter regulatory
 
requirements and supervision than most other Swiss
 
banks.
 
›
Refer to the “Our evolution” section of this report for
 
more information
›
Refer to the “Integration of Credit Suisse”
 
section of this report for more information
›
Refer to the “Regulatory and legal developments”
 
and “Risk factors” sections of this report for
 
more information
Regulation and supervision in Switzerland
Supervision
UBS Group AG
 
and its
 
subsidiaries are
 
subject to
 
consolidated supervision
 
by FINMA
 
under the
 
Swiss Banking
 
Act and
related ordinances,
 
which impose standards
 
for matters such
 
as capital adequacy
 
and risk diversification
 
rules, liquidity,
internal
 
control
 
systems,
 
business
 
conduct,
 
and
 
corporate
 
governance.
 
FINMA
 
meets
 
its
 
statutory
 
supervisory
responsibilities
 
through
 
licensing,
 
regulation,
 
supervision,
 
and enforcement.
 
It is
 
responsible
 
for prudential
 
supervision
and mandates audit firms to perform regulatory audits
 
and other supervisory tasks on its behalf.
Capital adequacy and liquidity regulation
As an internationally active Swiss systemically important bank
 
(an SIB), we are subject to capital and total
 
loss-absorbing
capacity (TLAC) requirements
 
that are
 
based on both
 
risk-weighted assets
 
and the leverage
 
ratio denominator,
 
and are
among the most stringent in
 
the world. We are also subject to
 
liquidity requirements and to minimum long-term funding
requirements for Swiss SIBs.
›
Refer to the “Risk, capital, liquidity and funding,
 
and balance sheet” section of this report for
 
more information about the Swiss
SRB framework and the Swiss too-big-to-fail (TBTF)
 
requirements
›
Refer to “Liquidity and funding management” in
 
the “Risk, capital, liquidity and funding, and balance
 
sheet” section of this report
for more information about liquidity coverage ratio and net
 
stable funding ratio requirements
 
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Regulation and supervision
 
42
Regulation and supervision outside Switzerland
Regulation and supervision in the US
In the
 
US, UBS
 
is subject
 
to regulation
 
and supervision
 
by the
 
Board
 
of Governors
 
of the
 
Federal Reserve
 
System (the
Federal Reserve Board)
 
under a number of laws.
 
UBS Group AG and
 
UBS AG are subject
 
to the Bank Holding
 
Company
Act, pursuant to which the Federal Reserve Board
 
has supervisory authority over our US operations.
 
In addition to being
 
a financial holding company under the
 
Bank Holding Company Act, UBS AG has
 
US branches, which
are authorized
 
and supervised
 
by the
 
Office of
 
the Comptroller
 
of the
 
Currency (the
 
OCC). UBS AG
 
and Credit
 
Suisse
International are registered as swap dealers
 
with the Commodity Futures Trading Commission
 
(the CFTC) and registered
as securities-based swap dealers
 
with the Securities and Exchange Commission (the SEC).
 
UBS Americas
 
Holding LLC
 
is the
 
intermediate
 
holding
 
company for
 
our operations
 
in the
 
US outside
 
of the
 
UBS AG
branch network, as
 
required under the Dodd–Frank
 
Act, and is
 
subject to requirements established
 
by the Federal
 
Reserve
Board related
 
to risk-based
 
capital, liquidity,
 
the Comprehensive
 
Capital Analysis
 
and Review
 
(CCAR) stress
 
testing and
capital planning process, and resolution planning and governance.
UBS Bank USA,
 
a Federal Deposit
 
Insurance Corporation
 
(FDIC)-insured depository
 
institution subsidiary,
 
is licensed and
regulated by state regulators in Utah and is also supervised
 
by the FDIC.
UBS Financial Services Inc., UBS Securities LLC,
 
Credit Suisse Securities (USA) LLC and
 
several other US subsidiaries of UBS
are subject to regulation by a
 
number of different government agencies and
 
self-regulatory organizations, including the
SEC,
 
the
 
Financial
 
Industry
 
Regulatory
 
Authority,
 
the
 
CFTC,
 
the
 
Municipal
 
Securities
 
Rulemaking
 
Board
 
and
 
national
securities exchanges,
 
depending on
 
the nature
 
of their
 
business. Certain
 
of our
 
activities in
 
the US
 
are subject
 
to regulation
by the Consumer Financial Protection Bureau.
Regulation and supervision in the UK
Our regulated UK operations are mainly
 
subject to the authority of the Prudential Regulation
 
Authority (the PRA), which
is part of the Bank of England (the BoE), and the Financial Conduct Authority
 
(the FCA). We are also subject to the rules
of the London Stock Exchange and other securities and commodities
 
exchanges of which UBS AG is a member.
UBS AG has a UK-registered branch, UBS AG
 
London Branch, which serves as a
 
global booking center for our Investment
Bank,
 
with
 
regulated
 
subsidiaries
 
that
 
provide
 
asset
 
management
 
services.
 
Credit
 
Suisse
 
International,
 
Credit
 
Suisse
Securities (Europe)
 
Limited and
 
Credit Suisse
 
(UK) Limited
 
are authorized
 
and regulated
 
by the
 
FCA and
 
subject to
 
the
authority of the PRA.
Regulation and supervision in Europe
 
UBS Europe SE, headquartered
 
in Germany,
 
is subject to the direct
 
supervision of the European
 
Central Bank (the ECB),
as well
 
as
 
to continued
 
conduct,
 
consumer
 
protection
 
and anti-money
 
-laundering-related
 
supervision
 
by
 
the
 
German
Federal Financial Supervisory Authority (BaFin) and supervisory support
 
by the German Bundesbank. The entity is subject
to
 
EU
 
and
 
German
 
laws
 
and
 
regulations.
 
UBS
 
Europe
 
SE
 
maintains
 
branches
 
in
 
Denmark,
 
France,
 
Ireland,
 
Italy,
Luxembourg, the
 
Netherlands, Poland,
 
Portugal, Spain,
 
Sweden and
 
Switzerland, and
 
is subject
 
to conduct supervision
by authorities in all those countries.
In Italy, Credit
 
Suisse (Italy) SpA
 
is supervised by
 
the Bank of
 
Italy and the
 
Commissione Nazionale per le
 
Società e la Borsa.
In
 
Spain,
 
Credit
 
Suisse
 
Bank
 
(Europe)
 
SA
 
is
 
supervised
 
by
 
the
 
Bank
 
of
 
Spain,
 
the
 
Comisión
 
Nacional
 
del
 
Mercado
 
de
Valores and
 
the Servicio
 
Ejecutivo
 
de la
 
Comisión de
 
Prevención del
 
Blanqueo
 
de Capitales
 
e Infracciones
 
Monetarias.
Credit Suisse Bank (Europe)
 
SA operates a branch
 
in the Netherlands, which
 
is subject to conduct supervision
 
by the De
Nederlandsche Bank
 
and De Autoriteit
 
Financiële Markten. We
 
expect to wind
 
down or consolidate
 
Credit Suisse (Italy)
SpA and Credit Suisse Bank (Europe) SA into UBS Europe
 
SE in accordance with the intermediate EU parent undertaking
requirement, which in agreement with the ECB is to be implemented
 
by June 2025.
Regulation and supervision in Asia Pacific
We operate
 
in numerous
 
locations in Asia
 
Pacific, including
 
Singapore, the
 
Hong Kong SAR,
 
mainland China,
 
Australia
and Japan. The
 
operations in these
 
locations are subject
 
to regulation and
 
supervision by local
 
financial regulators.
 
Our
Asia Pacific regional hubs are in Singapore
 
and the Hong Kong SAR.
In Singapore,
 
UBS AG Singapore Branch,
 
UBS Securities Pte
 
Ltd, UBS
 
Asset Management (Singapore)
 
Ltd and Credit
 
Suisse
Securities (Singapore)
 
Pte Limited are
 
supervised by the
 
Monetary Authority
 
of Singapore
 
and the Singapore
 
Exchange.
Credit Suisse (Singapore) Limited is supervised by the Monetary
 
Authority of Singapore.
 
In the Hong Kong SAR, UBS
 
AG Hong Kong Branch is supervised
 
by the Hong Kong Monetary
 
Authority. UBS Securities
Hong Kong
 
Limited, UBS Securities
 
Asia Limited, UBS
 
Asset Management (Hong
 
Kong) Limited, Credit
 
Suisse (Hong Kong)
Limited
 
and
 
Credit
 
Suisse
 
Securities
 
(Hong
 
Kong)
 
Limited
 
are
 
supervised
 
by
 
the
 
Hong
 
Kong
 
Securities
 
and
 
Futures
Commission. In
 
addition, UBS
 
Securities Hong
 
Kong Limited
 
and Credit
 
Suisse (Hong
 
Kong) Limited
 
are supervised
 
by
Hong Kong Exchanges and Clearing Limited.
 
In mainland China,
 
we have
 
multiple licenses
 
to operate the
 
respective business
 
lines of UBS
 
AG and Credit
 
Suisse AG,
and the
 
various entities
 
are subject
 
to regulation
 
by a
 
number of
 
different government
 
agencies. The
 
People’s Bank
 
of
China oversees China’s
 
macro capital markets
 
policies and ensures
 
coordinated supervisory
 
approaches by the
 
National
Administration of
 
Financial Regulation
 
(the China
 
Banking and
 
Insurance Regulatory
 
Commission until
 
May 2023),
 
the
China Securities Regulatory Commission and a number
 
of exchanges.
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Regulation and supervision
 
43
In
 
Australia,
 
UBS AG
 
Australia
 
Branch
 
is
 
supervised
 
by
 
the
 
Australian
 
Prudential
 
Regulation
 
Authority,
 
the
 
Australian
Securities
 
and
 
Investments
 
Commission,
 
the
 
Australian
 
Transaction
 
Reports
 
and
 
Analysis
 
Centre,
 
the
 
Reserve
 
Bank
 
of
Australia, and the
 
Australian Securities Exchange.
 
UBS Securities Australia
 
Ltd, UBS Asset
 
Management Limited and
 
Credit
Suisse Equities (Australia) Limited are supervised by
 
the Australian Securities and Investments Commission, the Australian
Transaction Reports and Analysis Centre and the Australian
 
Securities Exchange.
In Japan,
 
UBS Securities Japan
 
Co., Ltd.
 
and Credit Suisse
 
Securities (Japan) Limited
 
are supervised by
 
the Financial
 
Services
Agency and
 
the Japan
 
Exchange Group.
 
UBS AG Tokyo
 
Branch is
 
supervised by
 
the Financial
 
Services
 
Agency and
 
the
Bank of
 
Japan. UBS
 
SuMi TRUST
 
Wealth Management
 
Co., Ltd.
 
is supervised
 
by the
 
Financial Services
 
Agency and
 
the
Japanese
 
Ministry
 
of Finance.
 
UBS Asset
 
Management
 
(Japan)
 
Ltd and
 
UBS Japan
 
Advisors
 
Inc.
 
are
 
supervised
 
by the
Financial Services Agency.
Financial crime prevention
Combating money laundering and terrorist financing has been a major
 
focus of many governments in recent years. Laws
and regulations, including the Swiss Banking Act and the US Bank Secrecy Act, require effective policies, procedures and
controls to detect,
 
prevent and report
 
money laundering and
 
terrorist financing, and
 
the verification of
 
client identities.
Failure to introduce
 
and maintain adequate
 
programs to prevent
 
money laundering and
 
terrorist financing can
 
result in
significant legal and reputational
 
risk and fines.
We are
 
also subject
 
to laws
 
and regulations
 
prohibiting
 
corrupt or
 
illegal payments
 
to government
 
officials and
 
other
persons, including
 
the US
 
Foreign Corrupt
 
Practices Act
 
and the
 
UK Bribery
 
Act. We
 
maintain policies,
 
procedures and
internal controls intended to comply with those regulations.
›
Refer to “Non-financial risk” in the “Risk
 
management and control” section of this report for more information
Data protection
We
 
are
 
subject
 
to
 
regulations
 
concerning
 
the
 
use
 
and
 
protection
 
of
 
customer,
 
employee
 
and
 
other
 
personal
 
and
confidential information. This includes provisions under Swiss law,
 
the EU General Data Protection Regulation (the GDPR)
and laws of other jurisdictions.
›
Refer to the “Risk factors” section of this report for
 
more information about regulatory change
Recovery and resolution
Swiss TBTF legislation
 
requires each Swiss
 
SRB to establish
 
an emergency plan
 
to maintain systemic
 
functions in case
 
of
impending insolvency. In response to these Swiss requirements and similar ones in other jurisdictions, UBS has developed
recovery plans and
 
resolution strategies, as
 
well as plans
 
for restructuring or
 
winding down businesses
 
if the firm could
not otherwise be stabilized.
 
In 2013, FINMA
 
stated its
 
preference for
 
a single point
 
of entry
 
(an SPE)
 
strategy for globally
 
active SRBs,
 
such as
 
UBS,
with a bail
 
in at the
 
group holding company level.
 
UBS has made
 
structural, financial and operational
 
changes to facilitate
an SPE strategy and
 
is confident that
 
a resolution of
 
the bank is
 
operationally executable and legally
 
enforceable. In 2023,
UBS acquired
 
the Credit
 
Suisse Group
 
and merged Credit
 
Suisse Group AG into
 
UBS Group AG. UBS Group AG
 
subsumed
all
 
the
 
capital
 
and
 
loss-absorbing
 
instruments
 
of
 
Credit
 
Suisse
 
Group AG
 
with
 
the
 
acquisition.
 
A
 
bail
 
in
 
remains
operationally executable for
 
the combined UBS Group and
 
an SPE resolution strategy
 
remains the preferred strategy
 
for
UBS.
FINMA evaluates the recovery and resolution plans of Swiss SRBs on a regular basis. In October 2024, FINMA announced
that it had suspended
 
the annual approval of
 
UBS’s recovery and emergency
 
plans and determined that
 
the integration
of Credit Suisse
 
required adjustments by UBS
 
to ensure continued resolvability.
 
While FINMA recognized that
 
UBS remains
resolvable
 
under
 
its
 
existing
 
preferred
 
resolution
 
strategy,
 
it
 
noted
 
that
 
UBS’s
 
resolution
 
planning
 
must
 
be
 
further
developed to increase the available options
 
for FINMA in case of
 
resolution. The preferred resolution strategy involves the
recapitalization via a bail in at the group holding company level and a restructuring of the business into a viable business
model. As additional optionality, an alternative resolution
 
strategy based on an orderly market exit (either via disposal
 
or
wind-down or a combination of both) is expected by FINMA,
 
and initial concepts are under discussion. This is in line
 
with
the TBTF report
 
of the Swiss
 
Federal Council, issued
 
in April 2024, which
 
will also require
 
amendments to legislation
 
to
provide authorities
 
with more
 
options to
 
increase flexibility
 
in case
 
of a
 
crisis and
 
increase legal
 
certainty for
 
executing
these alternative resolution options.
 
Crisis management framework
The UBS Group’s crisis management framework
 
assigns responsibility and actions depending on the
 
nature of the stress
incident and the scale of the response needed.
–
For incident,
 
risk and
 
crisis
 
management,
 
the Group
 
Crisis Task
 
Force
 
works with
 
incident management
 
teams that
provide monitoring and early
 
warning indicators at the
 
local / regional level, without
 
needing to activate protocols
 
at
the Group
 
level. If
 
a local
 
response is
 
insufficient, global
 
task forces
 
and crisis
 
management teams
 
provide decision-
making
 
guidance
 
and
 
coordination,
 
including
 
crisis
 
management
 
plans,
 
protocols
 
and
 
playbooks,
 
and
 
contingency
funding plans.
–
The Group Executive Board (the GEB) and the Board of Directors
 
(the BoD) would evaluate and decide upon the need
to activate
 
the Global
 
Recovery
 
Plan (the
 
GRP) if
 
a stress
 
event reached
 
a severity
 
requiring activation
 
based on
 
the
GRP’s recovery risk indicators.
 
ubs-20241231p68i0
Annual Report 2024 |
Our strategy, business model and environment
 
| Regulation and supervision
 
44
–
FINMA has the
 
authority to determine
 
whether the
 
point of non-viability,
 
as defined
 
by Swiss law,
 
has been reached
and, as
 
part
 
of the
 
resolution
 
plan,
 
has the
 
power
 
to
 
order
 
the
 
bail
 
in
 
of creditors
 
to recapitalize
 
and stabilize
 
the
Group, limit
 
payments
 
of dividends
 
and interest,
 
alter
 
our legal
 
structure,
 
take
 
actions to
 
reduce business
 
risk, and
order a restructuring of the bank.
Global Recovery Plan
The GRP
 
provides a
 
tool to
 
restore
 
financial strength
 
if UBS
 
comes under
 
severe capital
 
or liquidity
 
stress. Quantitative
and qualitative triggers are monitored daily and are subject to
 
predefined governance and escalation processes. Recovery
options
 
are
 
linked
 
to
 
owners
 
and
 
checklists,
 
with
 
the
 
objectives
 
of
 
preserving
 
capital,
 
raising
 
capital
 
or
 
liquidity,
 
or
disposing of or winding down businesses.
Global Resolution Strategy
FINMA is required
 
to produce
 
a global resolution
 
plan for UBS.
 
The plan includes
 
setting out measures
 
that FINMA can
take to
 
resolve UBS
 
in an orderly
 
manner if
 
the Group
 
enters resolution.
 
The SPE
 
bail-in strategy
 
would involve
 
writing
down the
 
Group’s re
 
maining equity
 
and additional
 
tier 1 and
 
tier 2 instruments,
 
as well
 
as the
 
bailing in
 
of the
 
TLAC-
eligible senior unsecured
 
bonds at the
 
UBS Group AG
 
level. An internal
 
recapitalization of
 
undercapitalized subsidiaries
would be
 
executed simultaneously
 
with losses
 
transmitted
 
to UBS AG
 
and, ultimately,
 
UBS Group
 
AG. Post-resolution
restructuring measures could include
 
disposals or wind-down of businesses and assets.
Local recovery and resolution plans
The Swiss
 
emergency plan
 
demonstrates how UBS’s
 
systemically important
 
functions and
 
critical operations in
 
Switzerland
can continue if
 
the UBS Group
 
cannot be restructured.
 
This is achieved
 
mainly by operating
 
the Swiss-booked
 
business
in a separate legal entity,
 
UBS Switzerland AG, and by ensuring its financial and operational
 
self-sufficiency to enable its
continued operation throughout a crisis.
 
The
 
US
 
resolution
 
plan
 
sets
 
out
 
the
 
steps
 
that
 
could
 
be
 
taken
 
to
 
resolve
 
the
 
US
 
intermediate
 
holding
 
company,
 
UBS
Americas Holding LLC, and its subsidiaries if
 
it suffered material financial distress and UBS
 
Group was unable or unwilling
to provide
 
financial support.
 
As required
 
by US
 
regulations, our
 
US plan
 
contemplates that
 
UBS Americas
 
Holding LLC
will commence US bankruptcy
 
proceedings. Prior to this,
 
the plan envisages UBS
 
Americas Holding LLC downstreaming
financial
 
resources
 
to
 
its respective
 
subsidiaries
 
to facilitate
 
an orderly
 
wind-down
 
or
 
disposal
 
of businesses.
 
The
 
next
updated plan has to be submitted by October 2025.
 
UBS Europe SE
 
updates a
 
local recovery
 
plan annually
 
based on
 
ECB requirements
 
and resolution
 
planning information
and capabilities based on
 
Single Resolution Board requirements. On the
 
basis of such information,
 
the Internal Resolution
Team, composed of members of the Single Resolution Board,
 
produces a resolution plan for UBS Europe SE.
 
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Regulation and supervision
 
45
UBS operates a UK banking subsidiary
 
with Credit Suisse International, which
 
is in the process of being wound down
 
as
part of Non-core and Legacy. Credit Suisse International is subject to the
 
UK Resolvability Assessment Framework, under
which it is required to assess its recovery planning and resolvability planning capabilities
 
against the standards defined in
the UK Resolvability Assessment Framework
 
on an annual basis and confirm its compliance
 
to the BoE and PRA. The UK
authorities have
 
confirmed that
 
as of
 
January
 
2025 Credit
 
Suisse International
 
is no
 
longer subject
 
to the
 
UK internal
minimum requirements for own funds and eligible liabilities.
Other local recovery and resolution plans exist for various
 
Group entities and jurisdictions.
Regulatory trends
Regulatory
 
policy
 
discussions
 
resulting
 
from
 
the
 
March
 
2023
 
banking
 
turmoil
 
continued
 
throughout
 
2024.
 
At
 
the
supranational level, the focus
 
was on liquidity and
 
interest rate risks, supervision, and
 
the impact of technology
 
and social
media on depositor behavior, but
 
there have been no
 
specific policy proposals to date.
 
Discussions in Switzerland focused
on a
 
thorough analysis
 
of the
 
Credit Suisse
 
crisis and
 
proposals aimed
 
at strengthening
 
the financial
 
stability of
 
Swiss
financial
 
institutions
 
and
 
the
 
financial
 
sector
 
going
 
forward.
 
Now
 
that
 
the
 
parliamentary
 
investigation
 
committee
 
has
released its report, the official analysis of the Credit Suisse
 
crisis has been concluded.
The final Basel III implementation was a key theme across jurisdictions
 
with further divergence emerging. While the final
Basel III
 
regulations
 
have
 
been
 
implemented
 
in
 
Switzerland
 
as
 
of
 
1 January
 
2025,
 
implementation
 
timelines
 
are
increasingly varying across other major jurisdictions.
 
The trend
 
of further
 
digitalization in the
 
banking industry
 
has triggered
 
regulatory policy
 
responses across
 
jurisdictions.
In particular, the field of artificial intelligence (AI) has seen rapid technical
 
and market developments. In response to this,
various international organizations
 
have advanced work
 
to define global
 
high-level principles, applicable
 
across industries.
At the same time, and in parallel with global efforts,
 
jurisdictional approaches differ. Notably, the EU
 
is implementing an
expansive AI
 
Act, which
 
came into
 
force on
 
1 August
 
2024. Other
 
jurisdictions, including
 
the US
 
and Switzerland,
 
are
taking a more measured approach,
 
emphasizing and clarifying the applicability of existing
 
laws and building capacity and
understanding of the technology, before taking
 
targeted regulatory action. Separately, applications
 
of distributed ledger
technology and market
 
adoption of digital
 
assets continue
 
to grow, while
 
the maturity
 
of the regulatory
 
landscape has
increased. 2024 saw the introduction
 
of the EU Markets in Crypto
 
-Assets Act, which seeks to
 
harmonize stablecoin and
crypto asset
 
regulation in
 
the EU.
 
In the
 
US, the
 
change in
 
administration has
 
resulted in
 
a more
 
accommodative regulatory
sentiment toward digital
 
assets, driving a
 
shift in
 
the regulatory approach
 
across responsible agencies.
 
Meanwhile, various
central banks
 
are experimenting
 
with central
 
bank digital
 
currencies to
 
understand the
 
benefits and
 
risk, but
 
often without
any commitment toward implementation.
 
Operational resilience and
 
banks’ management of
 
third-party risk has
 
continued to receive
 
a heightened regulatory and
supervisory
 
focus,
 
including
 
the
 
management
 
of
 
cyber
 
risks
 
related
 
to
 
third-party
 
vendors
 
and
 
how
 
banks
 
ensure
compliance
 
with
 
minimum
 
standards.
 
This
 
has
 
been
 
caused,
 
in
 
part,
 
by
 
high-profile
 
incidents.
 
Many
 
jurisdictions
 
are
working on expanding incident reporting, including
 
for cybersecurity incidents. Separately, the interconnectedness
 
with,
and dependence on, third-party
 
providers has been in focus,
 
including via the Basel
 
Committee on Banking Supervision
reviewing principles
 
for the
 
sound management
 
of third-party
 
risk in the
 
banking industry
 
and the
 
UK implementing
 
a
critical third-party
 
regime. Finally, regulators
 
such as the
 
Monetary Authority in
 
Singapore have started
 
to consider risks
to banks related to quantum computing.
 
Sustainable finance stayed high on the policy
 
agenda but with implementation of prescriptive legislation diverging across
jurisdictions,
 
and the EU
 
proposing recently to
 
simplify its sustainability
 
reporting and due
 
diligence requirements.
 
Notable
activity was observed related to sustainability reporting disclosures, with ongoing implementation and alignment efforts.
In addition,
 
there was
 
increased
 
policy attention
 
regarding
 
transition plans
 
as a
 
strategic tool
 
for decarboni
 
zation and
adaptation to a low-carbon
 
future and, in some
 
jurisdictions, also as a
 
climate risk management
 
tool. Policymakers also
advanced developments
 
on prudential
 
disclosure standards
 
for the
 
supervision of
 
climate-related financial
 
risks. Finally,
additional regulation was focused on voluntary carbon markets,
 
including on market integrity and credit quality.
Policymakers maintained
 
focus on
 
financial stability
 
risks in
 
the non-bank
 
financial intermediation
 
(the NBFI)
 
sector. At
the global
 
level, work
 
focused on
 
banks’ counterparty
 
credit risk
 
management,
 
as well
 
as risks
 
within the
 
NBFI sector,
including preparedness for margin
 
and collateral calls, liquidity
 
management in funds,
 
and proposals to
 
manage excessive
leverage. The EU reviewed
 
the adequacy of macroprudential
 
tools for NBFI firm
 
s, and the Bank
 
of England completed
 
a
first-of-its-kind, system-wide stress test to understand the
 
role that NBFI firms play during an economic shock.
 
Anti-money-laundering
 
was
 
prominent
 
on
 
policymakers’
 
agendas,
 
with
 
increased
 
due
 
diligence
 
requirements
 
for
 
the
financial
 
industry
 
in
 
Switzerland,
 
while
 
sanctions
 
remained
 
a
 
crucial
 
component
 
of
 
western
 
countries’
 
strategies
 
to
counter Russian aggression in Ukraine.
 
Finally, while market structure
 
reforms have been
 
largely implemented in the
 
US, similar issues
 
are under discussion across
jurisdictions in Europe, notably the element of the reforms related to the shortening
 
of the standard settlement cycle for
security transactions from two business days to one business
 
day.
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Regulation and supervision
 
46
In 2025,
 
various jurisdictions,
 
including the
 
EU, UK,
 
and US,
 
are shifting
 
their stated
 
policy and
 
regulatory approaches
toward
 
promoting
 
a
 
growth-
 
and
 
competitiveness-focused
 
agenda,
 
with
 
related
 
measures
 
to
 
simplify
 
and
 
boost
 
the
framework conditions, while other jurisdictions, including Switzerland, remain focused on strengthening their regulatory
environment as a consequence of
 
the events in March
 
2023. This adds to
 
the ongoing trend of
 
regulatory fragmentation.
However, we believe
 
the continued
 
adaptations made to
 
our business
 
model and
 
our proactive management
 
of regulatory
change
 
put
 
us
 
in
 
a
 
strong
 
position
 
to
 
absorb
 
upcoming
 
challenges
 
in
 
the
 
regulatory
 
environment.
 
We
 
trust
 
that
 
our
strengthened standing as a combined organization with a strong capital position
 
and a balance sheet for all seasons will
enable us to cope with any potential challenges.
›
Refer to the “Regulatory and legal developments”
 
and the “Risk, capital, liquidity and funding,
 
and balance sheet” sections of this
report for more information
Regulatory and legal developments
Developments related to the acquisition of the Credit Suisse
 
Group
In April
 
2024, the
 
Swiss Federal
 
Council released
 
its report
 
on banking
 
stability that
 
evaluates the
 
regulation of
 
systemically
important banks
 
(SIBs). 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 measures
 
focused on three
 
areas: strengthening prevention,
 
strengthening liquidity
and expanding the crisis toolkit.
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 more
 
stringent capital adequacy
 
requirements for
 
the parent
 
bank regarding
 
foreign
participations. The Swiss Federal Council also recommended measures related to corporate governance, such as a senior
management regime and regulations
 
regarding variable compensation. To strengthen liquidity, the Swiss Federal Council
intends to significantly expand the potential for the Swiss National Bank
 
(the SNB) to provide more liquidity in a crisis, as
well as an obligation for SIBs to prepare collateral
 
for that purpose. 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.
In October
 
2024, the
 
Swiss Financial
 
Market Supervisory
 
Authority (FINMA)
 
published its
 
2024 resolution
 
reporting for
UBS.
 
›
Refer to “Recovery and resolution” in the “Regulation
 
and supervision” section of this report for more information
In December
 
2024, the
 
Swiss parliamentary
 
investigation committee
 
(
Parlamentarische Untersuchungskommission
, the
PUK) published
 
its report
 
that examined
 
the authorities’
 
role and
 
actions in
 
the context
 
of the
 
Credit Suisse
 
crisis. The
PUK
 
identified
 
a
 
need
 
for
 
improvement
 
and
 
action
 
at
 
both
 
the
 
enforcement
 
and
 
legislative
 
levels
 
and
 
made
recommendations regarding potential improvements to the crisis toolkit.
The Swiss Federal Council stated that the PUK’s
proposals will be covered in the implementation of the Federal
 
Council’s proposed measures.
In February 2025, the Economic Affairs and
 
Taxation Committee agreed to extend the suspension of its
 
discussion on the
introduction
 
of
 
a
 
public
 
liquidity
 
backstop
 
until
 
the
 
end
 
of
 
2026.
 
The
 
Committee
 
stated
 
that
 
the
 
design
 
of
 
a
 
public
liquidity backstop can only be defined in the overall context of Switzerland’s TBTF
 
regulation. The discussion was initially
suspended in August 2024 in order to take into account
 
the PUK’s report.
Based
 
on
 
its
 
report
 
on
 
banking
 
stability
 
from
 
April
 
2024,
 
the
 
Swiss
 
Federal
 
Council
 
is
 
expected
 
to
 
launch
 
a
 
public
consultation in
 
May 2025
 
on the
 
implementation of
 
the proposed
 
measures. The
 
measures will
 
include changes
 
at the
ordinance level, which
 
can be adopted
 
by the Swiss
 
Federal Council, and
 
legislative amendments, which
 
will be submitted
to
 
the
 
Parliament.
 
In
 
February
 
2025,
 
the
 
Swiss
 
Federal
 
Department
 
of
 
Finance
 
indicated
 
that
 
the
 
capital
 
adequacy
requirements for foreign participations will be regulated at the legislative level, rather than at the ordinance level. Due to
the broad
 
range of
 
possible outcomes,
 
the impact of
 
the proposals on
 
UBS can
 
be assessed
 
only when the
 
implementation
details become clearer.
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Regulatory and legal developments
 
47
Developments related to the implementation of the final
 
Basel III standards
In
 
Switzerland,
 
the
 
amendments
 
to
 
the
 
Capital
 
Adequacy
 
Ordinance
 
(the
 
CAO)
 
that
 
incorporate
 
the
 
final
 
Basel III
standards
 
into
 
Swiss
 
law,
 
including
 
the
 
five
 
new
 
ordinances
 
that
 
contain
 
the
 
implementing
 
provisions
 
for
 
the
 
revised
CAO, entered into force on 1 January 2025. The adoption of the
 
final Basel III standards led to a USD 1bn increase in the
UBS Group’s RWA, resulting in a minimal impact on
 
the CET1 capital ratio. The USD 1bn increase was primarily driven by
a USD 7bn
 
increase in
 
market
 
risk RWA
 
and a
 
USD 3bn increase
 
in credit
 
valuation
 
adjustment-related
 
RWA resulting
from
 
the
 
implementation
 
of
 
the
 
Fundamental
 
Review
 
of
 
the
 
Trading
 
Book
 
(the
 
FRTB)
 
framework,
 
largely
 
offset
 
by
 
a
USD 7bn
 
reduction
 
in
 
operational
 
risk
 
RWA
 
and
 
a
 
USD 1bn
 
reduction
 
in
 
credit
 
risk
 
RWA.
 
We
 
will provide
 
in
 
our
 
first
quarter 2025 report an update on
 
further improvements from mitigating actions and
 
our dialogue with FINMA regarding
various aspects
 
of the
 
final Basel
 
III rules.
 
These changes
 
do not
 
take into
 
account the
 
impact of
 
the output
 
floor. The
output floor, which is being phased in until 2028, is currently
 
not binding for the UBS Group.
In
 
the
 
EU,
 
the
 
final
 
Basel III
 
requirements
 
became
 
applicable
 
as
 
of
 
1 January
 
2025,
 
except
 
for
 
the
 
market
 
risk
 
capital
requirements, the implementation
 
of which has
 
been delayed until
 
at least 1 January
 
2026, as confirmed
 
by the European
Commission in June 2024. The overall impact on UBS is limited.
 
In September
 
2024, the
 
UK Prudential
 
Regulatory Authority
 
(the PRA)
 
published its
 
final rules
 
covering the
 
implementation
of the final Basel III standards.
 
As part of the
 
package, the PRA announced the pushing
 
back of the implementation date,
from 1 July 2025 to 1 January
 
2026, with full phase-in of the
 
output floor by 1 January 2030. In
 
January 2025, the PRA
announced that it has
 
further postponed the
 
implementation of the
 
final Basel III standards
 
until 1 January 2027,
 
citing
the need for greater clarity on US plans. In its announcement, the PRA left open the possibility of further postponement.
The date for the full phase-in of the output floor continues to be 1 January 2030. The overall
 
impact on UBS is expected
to be limited.
In the US, the banking agencies, including the
 
Federal Reserve Board, have been discussing amendments to their original
proposals regarding
 
the implementation
 
of the
 
final Basel III
 
standards. The
 
timing and
 
the content
 
of a
 
re-proposal of
the July 2023 version
 
of the final
 
Basel III rules remain
 
uncertain
as the change
 
in principals at
 
the US banking
 
agencies
has yet to be completed.
 
Other developments related to prudential regulation
In April 2024, 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 also 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 the latest internal assessments,
 
UBS
expects a negative impact of around USD 35m per annum
 
on net interest income to result from these changes.
In
 
June
 
2024,
 
EU
 
legislators
 
published
 
the
 
final
 
banking
 
rules
 
that
 
include
 
amendments
 
to
 
the
 
Capital
 
Requirements
Regulation and the
 
Capital Requirements Directive. The
 
rules entered into
 
force on 9 July
 
2024. The amendments
 
include,
alongside measures to
 
implement the final
 
elements of the Basel III
 
standards, a requirement for
 
non-EU firms to
 
establish
a
 
physical
 
presence
 
within
 
the
 
EU
 
when
 
providing
 
certain
 
banking
 
services,
 
including
 
deposit-taking
 
and
 
commercial
lending, to EU-domiciled clients
 
and counterparties, unless
 
an exemption is
 
obtained. The changes
 
will affect the
 
cross-
border provision of lending services and will require UBS to adapt its approaches to providing such services to clients and
counterparties
 
in
 
the
 
EU.
 
The
 
requirement
 
will
 
become
 
effective
 
in
 
January
 
2027,
 
with
 
grandfathering
 
provisions
 
for
contracts entered into before 11 July 2026.
In August 2024, the Federal
 
Reserve Board assigned UBS
 
Americas Holding LLC a stress
 
capital buffer (an SCB)
 
of 9.3%
as of
 
1 October
 
2024
 
(previously
 
9.1%)
 
under
 
the
 
Federal
 
Reserve
 
Board’s
 
SCB
 
rule,
 
resulting
 
in a
 
total
 
CET1
 
capital
requirement
 
of 13.8%.
 
The
 
SCB for
 
our
 
US-based
 
intermediate
 
holding company
 
is based
 
on
 
the
 
previously
 
released
results
 
of
 
the
 
Federal
 
Reserve
 
Board’s
 
2024
 
Dodd–Frank
 
Act
 
Stress
 
Test
 
(DFAST),
 
where
 
UBS
 
Americas
 
Holding
 
LLC
exceeded the minimum capital requirements under the sev
 
erely adverse scenario.
Developments in the regulation of financial markets
In September 2024, the Swiss Federal Council submitted for parliamentary approval a mutual recognition agreement (an
MRA) with the UK regarding financial services. The agreement
 
facilitates cross-border financial activities based on
 
a new
model
 
for
 
regulatory
 
cooperation
 
and
 
an
 
outcomes-based
 
mutual
 
recognition
 
of
 
domestic
 
rules.
 
The
 
MRA
 
is
supplemented
 
by
 
an
 
enhanced
 
and
 
closer
 
supervisory
 
process
 
and
 
additional
 
supervisory
 
arrangements
 
where
 
new
market access is granted.
 
It is expected
 
that the Parliaments
 
in Switzerland and the
 
UK will grant approval
 
for the MRA
in 2025.
In November 2024, the EU finalized
 
changes to the existing European
 
Market Infrastructure Regulation (the EMIR),
 
with
the changes entering into
 
force in December 2024.
 
The revised EMIR rules
 
require relevant EU market participants
 
to hold
active accounts at EU
 
Central Counterparties and
 
to clear a
 
representative portion of
 
certain derivative contracts
 
within
the EU, effective
 
June 2025. Other
 
changes include enhanced
 
transparency on clearing
 
services to clients,
 
new clearing
threshold calculation methodology, and new rules
 
on initial margin model validation. The impact
 
of the revised EMIR on
UBS and
 
its in-scope
 
clients will depend
 
on the
 
final design
 
of the
 
technical implementation standards,
 
which are
 
expected
to be published later in 2025.
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Regulatory and legal developments
 
48
In January 2025,
 
the Swiss Securities Post-Trade
 
Council recommended that the
 
transition to a
 
shortened settlement cycle
for securities transactions for the
 
domestic markets in Switzerland and Liechtenstein from
 
two business days (T+2) to one
business day (T+1) should occur in October 2027, in alignment
 
with the EU and the UK.
 
In February 2025, the European Commission published a legislative proposal to shorten the settlement cycle in the EU to
T+1,
 
setting
 
11 October
 
2027
 
as
 
the
 
appropriate
 
date
 
for
 
the
 
transition.
 
The
 
proposal
 
is
 
in
 
alignment
 
with
 
the
recommendations from the European Securities and Markets
 
Authority from November 2024.
 
In February 2025, the UK announced that the transition to a T+1 settlement cycle will occur on 11 October 2027, in line
with
 
the
 
recommendations
 
included
 
in
 
the
 
UK
 
Accelerated
 
Settlement
 
Taskforce’s
 
report
 
from
 
March
 
2024
 
and
 
its
implementation plan from February 2025.
 
In the US, a shortened T+1 settlement cycle has applied to
 
securities transactions since May 2024.
 
UBS
 
implemented
 
the
 
required
 
enhancements
 
based
 
on
 
the
 
US
 
rules
 
and
 
will
 
prepare
 
for
 
further
 
implementation
according to the evolving rules and market practice
 
in other jurisdictions.
Developments related to environmental,
 
social and governance matters
In June 2024,
 
the Swiss Federal
 
Council launched a
 
consultation on a
 
proposed extension of
 
the application scope
 
and
substance of the existing sustainability reporting requirements under the Swiss Code of Obligations. Under the proposed
rules,
 
a
 
wider
 
scope
 
of
 
companies
 
would
 
have
 
to
 
report
 
on
 
the
 
risks
 
of
 
their
 
business
 
activities
 
in
 
the
 
areas
 
of
 
the
environment, human rights and
 
corruption, as well as on
 
measures taken against such
 
risks. Affected companies would
have
 
the
 
choice
 
of
 
reporting
 
according
 
to
 
either
 
the
 
EU
 
sustainability
 
reporting
 
requirements
 
or
 
another
 
equivalent
standard for sustainability
 
reporting. The consultation
 
closed in October
 
2024. The impact
 
of the proposals
 
on UBS can
be assessed only when the
 
implementation details become
 
clearer.
 
If the changes are
 
adopted as proposed, UBS
 
will be
subject to the extended requirements.
In November 2024, the
 
Swiss Federal Council
 
adopted the Climate
 
Protection Ordinance to
 
the Climate and Innovation
Act. The ordinance entered
 
into force on 1 January
 
2025, and it introduces,
 
among other matters,
 
measures to support
financial flows
 
contributing
 
to achieving
 
the Swiss
 
climate targets.
 
The main
 
instrument to
 
measure progress
 
made by
the financial sector toward this goal will continue to be the voluntary climate tests conducted
 
by the Swiss Federal Office
for the Environment. UBS participates in the bi-annual climate
 
tests conducted by the Swiss authorities.
In December 2024,
 
the Swiss Federal
 
Council launched a
 
consultation on amending
 
the Ordinance on
 
Climate Disclosures
to
 
adapt
 
it
 
to
 
the
 
latest
 
international
 
developments.
 
As
 
the
 
recommendations
 
of
 
the
 
Task
 
Force
 
on
 
Climate-related
Financial Disclosures (the
 
TCFD) have been
 
incorporated into international
 
standards, the Federal
 
Council proposes that
companies meet the
 
obligation to report
 
on climate-related
 
matters by applying
 
an internationally recognized
 
standard
or the
 
sustainability reporting
 
standard used
 
in the
 
EU. The
 
draft proposal
 
also establishes
 
minimum requirements
 
for
transition plans for financial flows that describe the planned path to a net-zero target by 2050. The consultation will last
until March 2025, and the
 
amended Ordinance on Climate Disclosures is
 
expected to enter into force on
 
1 January 2026.
UBS is within the scope of the new requirements, with the
 
impact on UBS dependent on the final ordinance.
 
In December
 
2024, FINMA
 
published a
 
new circular,
 
applicable to
 
banks and
 
insurers, on
 
the management
 
of climate-
and
 
other
 
nature-related
 
financial
 
risks.
 
The
 
circular
 
sets
 
out
 
provisions
 
for
 
governance
 
and
 
institution-wide
 
risk
management, as well as provisions for risk identification, materiality
 
assessment and scenario analysis regarding climate-
and nature-related
 
financial risks.
 
Implementation will
 
be guided
 
by international
 
frameworks and
 
standards, including
the Basel Committee on Banking Supervision Principles
 
for the effective management and supervision
 
of climate-related
financial risks.
 
The circular
 
will enter
 
into force
 
on 1 January
 
2026 and
 
will initially
 
apply exclusively
 
to climate-related
financial risks. From 1 January 2028, the
 
circular will apply to all nature-related financial
 
risks. UBS is assessing the impact
of the requirements,
 
which will be addressed in a multi-year implementation
 
plan.
In May
 
2024, the
 
European
 
Council
 
approved the
 
new
 
Corporate Sustainability
 
Due Diligence
 
Directive (the
 
CSDDD),
which entered into force on 25 July 2024. The CSDDD requires in-scope
 
companies to identify and address potential and
actual adverse human rights and environmental impacts in their own operations, their subsidiaries and, where related
 
to
their value
 
chain(s), those
 
of their
 
business partners.
 
In addition,
 
the CSDDD
 
requires large companies
 
to adopt
 
a transition
plan for climate change mitigation
 
aligned with the 2050
 
climate neutrality objective of
 
the Paris Agreement, as
 
well as
intermediate
 
targets
 
under
 
the
 
European
 
Climate
 
Law.
 
The
 
July
 
2026
 
deadline
 
provided
 
for
 
the
 
transposition
 
of
 
the
CSDDD into Member States’ national laws and the July
 
2027 start date of the first phase of the CSDDD application
 
may
be postponed by one
 
year in light of
 
the changes to the
 
CSDDD proposed by the
 
European Commission in February 2025
as part of
 
its recent initiative
 
to simplify sustainability
 
regulations. UBS expects its
 
EU entities will
 
be required to
 
implement
the CSDDD rules. The full scope
 
of application will depend on the
 
implementation guidelines, which are
 
expected to be
developed by the
 
European Commission
 
by July 2026
 
(instead of July
 
2027) according to
 
the newly
 
proposed timeline,
and
 
on
 
the
 
changes
 
to
 
the
 
CSDDD
 
to
 
be
 
agreed
 
by
 
EU
 
legislators
 
in
 
light
 
of
 
the
 
European
 
Commission’s
 
legislative
proposal from February 2025.
In
 
November
 
2024,
 
the
 
European
 
Commission
 
announced
 
an
 
intention
 
to
 
streamline
 
and
 
simplify
 
sustainability
regulations,
 
including
 
the
 
Taxonomy
 
Regulation,
 
the
 
Corporate
 
Sustainability
 
Reporting
 
Directive
 
and
 
the
 
CSDDD.
Concrete proposals to
 
that effect
 
were
 
unveiled in February
 
2025 and will
 
now be
 
subject to the
 
EU legislative
 
process
involving the
 
European Parliament
 
and Council.
 
The impact
 
on UBS
 
can be
 
assessed only
 
when the
 
proposed changes
and their details have been agreed by EU legislators later in 2025.
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Regulatory and legal developments
 
49
In February 2025,
 
the US Securities
 
and Exchange
 
Commission (the SEC
 
)
 
stated its
 
intention to withdraw
 
its regulation
mandating
 
climate
 
disclosures
 
by
 
SEC
 
reporting
 
companies,
 
which
 
would
 
have
 
included
 
UBS.
 
Effectiveness
 
of
 
the
regulation had previously been stayed by the SEC pending resolution
 
of litigation challenging it.
Developments related to tax matters
 
In August 2024, the
 
Swiss Federal Council launched a
 
consultation related to the
 
existing withholding tax exemption that
applies
 
to
 
TBTF
 
instruments
 
issued
 
by
 
no
 
later
 
than
 
31 December
 
2026.
 
The
 
Federal
 
Council
 
had
 
recommended
 
an
unlimited extension of
 
the exemption as
 
part of a
 
broader reform
 
package in its
 
April 2024 report
 
on banking stability.
As these
 
reforms are
 
not expected
 
to enter
 
into force
 
before the
 
expiry of
 
the existing
 
special rules,
 
the Swiss
 
Federal
Council proposes to extend the current
 
exemption, from 31 December 2026 to 31 December 2031,
 
to ensure that banks
can continue to issue capital instruments on competitive
 
terms.
In September 2024, the Swiss
 
Federal Council introduced the Income Inclusion
 
Rule (the IIR), a measure
 
developed by the
Organisation for Economic Co-operation and
 
Development (the OECD) as part
 
of the minimum corporate taxation rules
applicable to
 
corporate
 
groups with
 
a worldwide
 
turnover
 
of at
 
least EUR 750m.
 
Under the
 
IIR, the
 
profits of
 
foreign
subsidiaries
 
and
 
branches
 
of
 
Swiss
 
corporate
 
groups
 
will
 
be
 
taxed
 
at
 
a
 
minimum
 
rate
 
of
 
15%
 
on
 
the
 
OECD
 
global
minimum tax
 
base
 
with respect
 
to each
 
jurisdiction
 
in
 
which the
 
corporate
 
groups
 
operate.
 
The
 
IIR complements
 
the
Swiss supplementary tax that was introduced in January 2024. The IIR
 
became effective on 1 January 2025. UBS’s overall
tax
 
impact from
 
the
 
IIR is
 
limited, given
 
that
 
UBS is
 
subject
 
to a
 
corporate
 
tax burden
 
of more
 
than
 
15%
 
in the
 
vast
majority of countries in which it operates.
Other regulatory and legal developments
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
 
effective date of
 
the Retirement Security
 
Rule, and the
 
related
amendments to
 
PTE 2020-02
 
have been
 
stayed by
 
a court
 
pending resolution
 
of litigation
 
challenging the
 
regulations.
The Retirement Security Rule, if it becomes effective,
 
would expand 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.
In connection with the adoption of
 
the Retirement Security Rule, the DOL
 
also amended PTE 2020-2. These amendments
would, if they become effective, expand the scope of affiliated persons
 
for which a criminal conviction or determinations
of misconduct disqualify
 
an investment professional
 
from using the exemption
 
and 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
 
would also expand the
 
scope of events that
 
may trigger disqualification and
 
add
a similar
 
one-year transition
 
provision. In
 
each case,
 
the DOL
 
would retain
 
the ability
 
to grant
 
an individual
 
exemption
from the disqualification.
In May 2024, the Swiss Federal Council adopted a dispatch on strengthening
 
its anti-money-laundering framework. Key
elements
 
include
 
a
 
non-publicly
 
accessible
 
federal
 
register
 
of
 
beneficial
 
owners,
 
due
 
diligence
 
for
 
particularly
 
risky
activities in legal professions, measures to prevent
 
the circumvention of applicable sanctions under the
 
Embargo Act, and
due diligence obligations for cash payments in the real estate
 
business and in precious metals trading. The measures
 
are
subject
 
to
 
parliamentary
 
approval
 
and,
 
therefore,
 
entry
 
into
 
force
 
is
 
not
 
expected
 
before
 
2026.
 
Although
 
the
 
final
assessment will only
 
be concluded once
 
the final law
 
has been published,
 
UBS expects that
 
additional operational controls
will be required to implement the amended framework.
In July 2024, the
 
EU published the Artificial Intelligence Act
 
(the EU AI Act). Among
 
other matters, the EU AI
 
Act classifies
AI according to its risk, with the majority of obligations being placed on providers
 
of high-risk AI systems and with some
obligations for users
 
who deploy an AI
 
system in a
 
professional capacity. The EU
 
AI Act entered
 
into force in
 
August 2024,
and it will be
 
phased in over
 
the next 36 months.
 
UBS is assessing the
 
potential impact of
 
the uses of
 
AI and the
 
EU AI
Act.
In November 2024, the
 
PRA and the
 
Financial Conduct Authority
 
published a consultation
 
on changes to remuneration
rules for senior management functions
 
and material risk takers. The consultation
 
covers changes to several aspects of
 
the
PRA remuneration rulebook,
 
including the reduction
 
of the seven
 
-year minimum deferral
 
period to five
 
years for senior
managers and
 
allowing deferred remuneration
 
awards to vest
 
on a
 
pro rata basis
 
from the time
 
of award.
 
UBS is
 
reviewing
the proposals.
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Risk factors
 
50
Risk factors
Certain risks,
 
including those
 
described below,
 
may affect
 
our ability
 
to execute
 
our strategy
 
or our
 
business activities,
financial condition, results of operations and prospects. We
 
are inherently exposed to multiple risks, many of which may
become apparent only with the benefit of hindsight.
 
As a result, risks that we do
 
not consider to be material, or
 
of which
we are
 
not currently
 
aware, could also
 
adversely affect
 
us. Within each category,
 
the risks that
 
we consider to
 
be most
material are presented first.
Strategy, management and operational risks
UBS’s acquisition of Credit Suisse Group AG exposes UBS to
 
heightened litigation risk and regulatory scrutiny and
entails significant additional costs, liabilities and business
 
integration risks
UBS acquired
 
Credit Suisse
 
Group
 
AG under
 
exceptional circumstances
 
and the
 
continued outflows
 
and deteriorating
overall financial position
 
of Credit Suisse,
 
in order to
 
avert a failure
 
of Credit Suisse
 
and thus damage
 
to the Swiss
 
financial
center and
 
to global
 
financial stability.
 
The acquisition
 
was effected
 
through a
 
merger of
 
Credit Suisse
 
Group AG
 
with
and
 
into
 
UBS
 
Group
 
AG,
 
with
 
UBS
 
Group
 
AG
 
succeeding
 
to
 
all
 
assets
 
and
 
all
 
liabilities
 
of
 
Credit
 
Suisse
 
Group
 
AG,
becoming
 
the
 
direct
 
or
 
indirect
 
shareholder
 
of
 
the
 
former
 
Credit
 
Suisse
 
Group
 
AG’s
 
direct
 
and
 
indirect
 
subsidiaries.
Therefore,
 
on a consolidated
 
basis, all assets,
 
risks and liabilities
 
of the Credit
 
Suisse Group
 
became a part
 
of UBS. This
includes all ongoing and
 
future litigation,
 
regulatory and similar
 
matters arising out
 
of the business
 
of the Credit
 
Suisse
Group, thereby materially increasing
 
UBS’s exposure to litigation and investigation risks
 
.
We have incurred and
 
will continue to incur,
 
substantial integration and restructuring costs
 
as we combine the
 
operations
of UBS and
 
Credit Suisse.
 
In addition,
 
we may
 
not realize
 
all of the
 
expected cost
 
reductions and
 
other benefits
 
of the
transaction. We
 
may not
 
be able
 
to successfully
 
execute our
 
strategic plans
 
or to
 
achieve the
 
expected benefits
 
of the
acquisition of
 
the Credit
 
Suisse Group.
 
The success
 
of the
 
transaction, including
 
anticipated benefits
 
and cost
 
savings,
will depend,
 
in part,
 
on the
 
ability to
 
successfully complete
 
the integration
 
of the
 
operations of
 
both firms
 
rapidly and
effectively, while maintaining stability of operations and
 
high levels of service to customers of the combined franchise.
 
Our ability to
 
complete the integration
 
of Credit Suisse
 
will depend on
 
a number of
 
factors, some of
 
which are outside
of our control, including our ability to:
–
combine the operations of the two firms in a
 
manner that preserves client service, simplifies infrastructure
 
and results
in
 
operating
 
cost
 
savings,
 
including
 
the
 
successful
 
transfer
 
of
 
clients
 
from
 
legacy
 
Credit
 
Suisse
 
platforms
 
to
 
UBS
platforms in Switzerland,
 
our largest booking center;
–
maintain deposits
 
and client
 
invested assets
 
in our
 
Global Wealth
 
Management
 
division and
 
in Switzerland,
 
and to
attract additional deposits and invested assets to the combined
 
firm;
–
achieve cost reductions at the levels and in the timeframe
 
we plan;
–
enhance, integrate
 
and, where
 
necessary, remediate
 
risk management
 
and financial
 
control
 
and other
 
systems
 
and
frameworks,
 
including to remediate the material weakness in Credit Suisse’s internal controls over financial reporting;
 
–
complete the
 
simplification of
 
the legal
 
structure of
 
the combined
 
firm in
 
an expedited
 
manner, including
 
obtaining
regulatory approvals and licenses required to implement the
 
changes;
–
retain staff and reverse attrition of staff in certain of Credit
 
Suisse’s business areas;
–
successfully execute the wind-down of the assets and
 
liabilities in our Non-core and Legacy division and
 
release capital
and resources for other purposes;
 
–
decommission
 
the
 
information
 
technology
 
and
 
other
 
legacy
 
Credit
 
Suisse
 
operational
 
infrastructure
 
to
 
simplify
 
our
infrastructure,
 
reduce operational complexity and lower our operating expenses;
 
and
–
resolve outstanding litigation, regulatory and similar matters, including matters relating to Credit
 
Suisse, on terms that
are not significantly adverse to us, as well as to successfully remediate outstanding regulatory and supervisory matters
and meet other regulatory commitments.
The
 
level
 
of
 
success
 
in
 
the
 
absorption
 
of
 
Credit
 
Suisse,
 
in
 
the
 
integration
 
of
 
the
 
two
 
groups
 
and
 
their
 
businesses,
particularly
 
in
 
the
 
area
 
of
 
the
 
Swiss
 
domestic
 
bank,
 
as
 
well
 
as
 
the
 
domestic
 
and
 
international
 
wealth
 
management
businesses, the execution of the
 
planned strategy regarding cost reductions
 
and divestment of any non-core
 
assets, and
the level of resulting impairments and write-downs, may impact the operational results,
 
share price and the credit rating
of UBS entities. In addition, the financial effects of management decisions and
 
transactions will likely differ between UBS
Group and
 
UBS AG
 
as a
 
result of
 
the application
 
of the
 
acquisition method
 
of accounting
 
under the
 
IFRS Accounting
Standards by UBS Group, including valuation adjustments recorded by UBS Group. The combined Group will be required
to devote
 
significant management
 
attention and
 
resources to
 
integrating its
 
business practices
 
and support
 
functions.
The diversion of
 
management’s attention
 
and any
 
delays or difficulties
 
encountered in
 
connection with
 
the transaction
and the
 
coordination of the
 
two companies’
 
operations could
 
have an
 
adverse effect
 
on the business,
 
financial results,
financial condition
 
or the
 
share price
 
of the
 
combined Group
 
following the
 
transaction. The
 
coordination process
 
may
also result in additional and unforeseen expenses.
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Risk factors
 
51
Substantial changes in regulation may adversely affect our
 
businesses and our ability to execute our strategic plans
Since the
 
financial crisis
 
of 2008,
 
we have
 
been subject
 
to significant
 
regulatory
 
requirements,
 
including recovery
 
and
resolution planning,
 
changes in
 
capital and
 
prudential standards,
 
changes in
 
taxation regimes
 
as a
 
result of
 
changes in
governmental administrations,
 
new and
 
revised market
 
standards and
 
fiduciary duties,
 
as well
 
as new
 
and developing
environmental,
 
social
 
and
 
governance
 
(ESG)
 
standards
 
and
 
requirements.
 
Notwithstanding
 
attempts
 
by
 
regulators
 
to
align
 
their
 
efforts,
 
the
 
measures
 
adopted
 
or
 
proposed
 
for
 
banking
 
regulation
 
differ
 
significantly
 
across
 
the
 
major
jurisdictions, making
 
it increasingly
 
difficult to
 
manage a
 
global institution.
 
Regulatory reviews
 
of the events
 
leading to
the failures
 
of US
 
banks and
 
our acquisition
 
of Credit
 
Suisse in
 
2023, as
 
well as
 
regulatory
 
measures
 
to complete
 
the
implementation
 
of
 
the
 
Basel
 
3
 
standards,
 
may
 
increase
 
capital,
 
liquidity
 
and
 
other
 
requirements
 
applicable
 
to
 
banks,
including UBS. Swiss regulatory changes with regard
 
to such matters as capital and liquidity have often proceeded
 
more
quickly than those in other major
 
jurisdictions, and Switzerland’s requirements
 
for major international banks are
 
among
the strictest
 
of the major
 
financial centers. Switzerland has
 
implemented the final
 
Basel 3 requirements effective
 
1 January
2025,
 
at
 
least
 
a
 
year
 
ahead
 
of
 
the
 
EU
 
and
 
the
 
UK
 
and
 
likely
 
several
 
years
 
ahead
 
of
 
the
 
United
 
States.
 
In
 
addition,
Switzerland is
 
expected to
 
introduce in
 
2025 proposals
 
for changes
 
in regulation
 
following the
 
failure of
 
Credit Suisse
that will
 
likely include changes
 
to capital
 
and liquidity requirements
 
for UBS, the
 
remaining Swiss G-SIB,
 
as well
 
as changes
to the
 
supervisory regime.
 
Increased capital
 
or liquidity
 
requirements
 
would put
 
us at
 
a disadvantage
 
when competing
with peer financial institutions
 
subject to lower capital
 
or liquidity requirements
 
or more lenient
 
regulation and increase
our competitive disadvantage in some areas
 
with unregulated non-bank competitors.
Our
 
implementation
 
of
 
additional
 
regulatory
 
requirements
 
and
 
changes
 
in
 
supervisory
 
standards,
 
as
 
well
 
as
 
our
compliance with
 
existing laws
 
and regulations,
 
continue
 
to receive
 
heightened scrutiny
 
from supervisors.
 
If we
 
do not
meet supervisory expectations in relation to these or other
 
matters, or if additional supervisory or regulatory issues arise,
we would
 
likely be
 
subject to
 
further
 
regulatory scrutiny,
 
as well
 
as measures
 
that may
 
further
 
constrain our
 
strategic
flexibility.
 
Resolvability and
 
resolution
 
and recovery
 
planning:
We have
 
moved significant
 
operations into
 
subsidiaries to
 
improve
resolvability and meet other regulatory requirements, and this
 
has resulted in substantial implementation costs, increased
our
 
capital
 
and
 
funding
 
costs
 
and
 
reduced
 
operational
 
flexibility.
 
For
 
example,
 
we
 
have
 
transferred
 
all
 
of
 
our
 
US
subsidiaries
 
under
 
a
 
US
 
intermediate
 
holding
 
company
 
to
 
meet
 
US
 
regulatory
 
requirements
 
and
 
have
 
transferred
substantially all the operations of Personal & Corporate Banking and Global Wealth Management booked in Switzerland
to UBS Switzerland AG to improve resolvability.
 
These
 
changes
 
create
 
operational,
 
capital,
 
liquidity,
 
funding
 
and
 
tax
 
inefficiencies.
 
Our
 
operations
 
in
 
subsidiaries
 
are
subject
 
to
 
local
 
capital,
 
liquidity,
 
stable
 
funding,
 
capital
 
planning
 
and
 
stress
 
testing
 
requirements.
 
These
 
requirements
have resulted in increased capital and liquidity requirements in
 
affected subsidiaries, which limit our operational flexibility
and negatively affect our
 
ability to benefit
 
from synergies between business
 
units and to
 
distribute earnings to
 
the Group.
Under the Swiss too-big-to-fail (TBTF) framework, we are required to put in place viable emergency plans to
 
preserve the
operation
 
of
 
systemically
 
important
 
functions
 
in
 
the
 
event
 
of
 
a
 
failure.
 
Moreover,
 
under
 
this
 
framework
 
and
 
similar
regulations in
 
the US,
 
the UK,
 
the EU
 
and other
 
jurisdictions in
 
which we
 
operate, we
 
are required
 
to prepare
 
credible
recovery and resolution
 
plans detailing the
 
measures that would
 
be taken to recover
 
in a significant adverse
 
event or in
the event of winding down the Group or the operations
 
in a host country through resolution or insolvency
 
proceedings.
If a recovery or resolution plan that we produce is determined by the relevant authority to be inadequate or not credible,
relevant regulation may permit the authority
 
to place limitations on the scope or
 
size of our business in that jurisdiction,
or oblige us to hold higher amounts of capital or liquidity or to change our legal structure or business in order to remove
the relevant impediments to resolution.
The
 
authorities
 
in
 
Switzerland
 
and
 
internationally
 
have
 
published
 
lessons
 
learned
 
from
 
the
 
Credit
 
Suisse
 
and
 
the
 
US
regional bank
 
failures, which
 
are expected
 
to result
 
in additional
 
requirements regarding
 
resolution planning
 
and early
intervention tools for authorities.
 
In connection with these
 
reviews, FINMA has announced
 
that it would not provide
 
an
assessment of the UBS resolution plans in 2024 as it expects to make adjustments to resolution plan requirements based
on lessons learned reviews
 
as well as potential
 
changes in its recovery
 
and resolution authority
 
under amendments that
are expected
 
to be proposed
 
to Swiss law.
 
We expect to
 
make adjustments to
 
our resolution
 
plans to reflect
 
additional
guidance from FINMA and may be required to make
 
further adjustment to reflect any changes to law that are
 
enacted.
Capital and prudential
 
standards:
As an internationally
 
active Swiss systemically
 
relevant bank, we
 
are subject to
 
capital
and total loss-absorbing capacity
 
(TLAC) requirements that are
 
among the most stringent in
 
the world. Moreover, many
of our subsidiaries must comply with minimum capital, liquidity and similar requirements and, as a result, UBS Group AG
and UBS AG have contributed a
 
significant portion of their capital and
 
provide substantial liquidity to these
 
subsidiaries.
These
 
funds
 
are
 
available
 
to
 
meet
 
funding
 
and
 
collateral
 
needs
 
in
 
the
 
relevant
 
entities,
 
but
 
are
 
generally
 
not
 
readily
available for use by the Group as a whole.
 
Our risk-weighted assets
 
(RWA) and leverage
 
ratio denominator (LRD)
 
are affected as
 
Switzerland has implemented
 
the
final standards promulgated by the
 
Basel Committee on Banking Supervision
 
(the BCBS) and may be further
 
affected as
provisions
 
of
 
the
 
standards
 
are
 
phased
 
in.
 
Although
 
these
 
final
 
Basel
 
3
 
standards
 
have
 
now
 
been
 
implemented
 
in
Switzerland, other major banking centers
 
have delayed implementation or have
 
not yet enacted the final standards
 
into
regulation.
 
Extended
 
delay
 
in
 
implementation
 
by
 
other
 
jurisdictions
 
may
 
lead
 
to
 
higher
 
capital
 
requirements
 
for
 
UBS
relative to peers.
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Risk factors
 
52
In connection with the acquisition of the Credit
 
Suisse Group, FINMA has permitted Credit Suisse
 
entities to continue to
apply certain
 
prior
 
interpretations
 
and
 
has provided
 
supervisory
 
rulings
 
on
 
the
 
treatment
 
of certain
 
items for
 
RWA or
capital purposes. In general,
 
these interpretations require
 
that UBS phase out
 
the treatment over
 
the next several years.
In addition,
 
FINMA has
 
agreed
 
that the
 
additional capital
 
requirement applicable
 
to Swiss
 
systemically relevant
 
banks,
which is based on market
 
share in Switzerland and
 
leverage ratio denominator (LRD),
 
will not increase as a
 
result of the
acquisition of the Credit Suisse Group before the end
 
of 2025. The phase-out or end of these periods will
 
likely increase
our overall capital requirements.
The report of
 
the Swiss Federal
 
Council on the
 
failure of Credit
 
Suisse recommends
 
changes to Swiss
 
capital regulation
that, if
 
adopted, may
 
have the
 
effect of
 
substantially increasing
 
UBS’s capital
 
requirements. The
 
Swiss Federal
 
Council
has indicated
 
that it
 
will publish
 
proposed amendments
 
to law
 
and revisions
 
to banking
 
ordinances to
 
implement the
recommendations for public comment in
 
May 2025. Certain of
 
the measures recommended in the
 
Federal Council report
could require additional capital at UBS AG and have the
 
effect of requiring a higher capital ratio at UBS Group.
Increases in capital and
 
changes in liquidity requirements may, in
 
the aggregate require us to
 
maintain significantly higher
levels
 
of capital,
 
which
 
may
 
have
 
an affect
 
on
 
our
 
ability
 
to meet
 
our
 
ambitions
 
for
 
return
 
on capital
 
and
 
for
 
capital
returns to shareholders. Higher capital or liquidity requirements applied to UBS Group
 
or UBS AG relative to competitors
in Switzerland or abroad may affect UBS’s ability
 
to compete with firms subject to less stringent capital
 
requirements and
increase UBS’s costs to serve customers.
Market regulation and fiduciary standards:
Our wealth and asset management
 
businesses operate in an environment
 
of
increasing regulatory scrutiny and changing standards
 
with respect to fiduciary and
 
other standards of care and
 
the focus
on mitigating
 
or eliminating
 
conflicts of
 
interest between
 
a manager
 
or advisor
 
and the
 
client, which
 
require effective
implementation
 
across
 
the
 
global systems
 
and
 
processes
 
of investment
 
managers
 
and
 
other
 
industry
 
participants.
 
For
example, we
 
have made
 
material changes
 
to our
 
business processes,
 
policies and
 
the terms
 
on which we
 
interact with
these clients
 
in order
 
to comply
 
with US
 
Securities and
 
Exchange Commission
 
(SEC) Regulation
 
Best Interest,
 
which is
intended to enhance and clarify
 
the duties of brokers and investment
 
advisers to retail customers, and
 
the Volcker Rule,
which
 
limits
 
our
 
ability
 
to
 
engage
 
in
 
proprietary
 
trading,
 
as
 
well
 
as
 
changes
 
in
 
European
 
and
 
Swiss
 
market
 
conduct
regulation. Future changes
 
in the regulation
 
of our duties
 
to customers may
 
require us to
 
make further
 
changes to our
businesses, which would result
 
in additional expense and may
 
adversely affect our business.
 
We may also
 
become subject
to other similar regulations substantively
 
limiting the types of activities in which
 
we may engage or the
 
way we conduct
our operations.
In many
 
instances, we provide
 
services on
 
a cross-border basis,
 
and we
 
are therefore sensitive
 
to barriers restricting
 
market
access for
 
third-country firms.
 
In particular,
 
efforts in
 
the EU
 
to harmonize
 
the regime
 
for third-country
 
firms to
 
access
the European market may have the effect of creating new barriers that adversely affect our ability to conduct business in
these
 
jurisdictions
 
from
 
Switzerland.
 
In
 
addition,
 
a
 
number
 
of
 
jurisdictions
 
are
 
increasingly
 
regulating
 
cross-border
activities based on
 
determinations of equivalence of
 
home country regulation,
 
substituted compliance or
 
similar principles
of
 
comity.
 
A
 
negative
 
determination
 
with
 
respect
 
to
 
Swiss
 
equivalence
 
could
 
limit
 
our
 
access
 
to
 
the
 
market
 
in
 
those
jurisdictions and
 
may negatively
 
influence our
 
ability to
 
act as a
 
global firm. For
 
example, the
 
EU declined to
 
extend its
equivalence determination for Swiss exchanges, which lapsed as
 
of 30 June 2019.
 
UBS has experienced
 
cross-border outflows
 
over a number
 
of years as
 
a result of
 
heightened focus
 
by fiscal authorities
on cross-border
 
investment
 
and fiscal
 
amnesty
 
programs,
 
in
 
anticipation
 
of the
 
implementation
 
in Switzerland
 
of the
global automatic exchange of tax
 
information, and as a
 
result of the
 
measures UBS has implemented in
 
response to these
changes. Further changes in local tax laws or regulations
 
and their enforcement, additional cross-border tax
 
information
exchange
 
regimes,
 
national
 
tax
 
amnesty
 
or
 
enforcement
 
programs
 
or
 
similar
 
actions
 
may
 
affect
 
our
 
clients’
 
ability
 
or
willingness to do business with us and could result in additional
 
cross-border outflows.
Our reputation is critical to our success
Our reputation is critical to the success of our strategic plans, business and prospects. Reputational damage is difficult to
reverse,
 
and
 
improvements
 
tend
 
to
 
be
 
slow
 
and
 
difficult
 
to
 
measure.
 
In
 
the
 
past,
 
our
 
reputation
 
has
 
been
 
adversely
affected
 
by
 
our
 
losses
 
during
 
the
 
2008
 
financial
 
crisis,
 
investigations
 
into
 
our
 
cross-border
 
private
 
banking
 
services,
criminal resolutions
 
of London
 
Interbank Offered
 
Rates (LIBOR)-related
 
and foreign
 
exchange matters,
 
as well
 
as other
matters. We
 
believe that
 
reputational damage
 
as a
 
result of
 
these events
 
was an
 
important factor
 
in our loss
 
of clients
and client assets across our asset-gathering businesses. The
 
Credit Suisse Group was more recently
 
subject to significant
litigation and
 
regulatory matters and
 
to financial
 
losses that adversely
 
affected its
 
reputation and the
 
confidence of
 
clients,
which played a significant role
 
in the events leading to the
 
acquisition of the Credit
 
Suisse Group in March
 
2023. These
events, or new events
 
that cause reputational damage,
 
could have a material
 
adverse effect on
 
our results of operation
and financial condition, as well as our ability to achieve
 
our strategic goals and financial targets.
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Risk factors
 
53
Operational risks affect our business
Our
 
businesses
 
depend
 
on
 
our
 
ability
 
to
 
process
 
a
 
large
 
number
 
of
 
transactions,
 
many
 
of
 
which
 
are
 
complex,
 
across
multiple and diverse markets in different currencies,
 
to comply with requirements of many different
 
legal and regulatory
regimes
 
to
 
which
 
we
 
are
 
subject
 
and
 
to
 
prevent,
 
or
 
promptly
 
detect
 
and
 
stop,
 
unauthorized,
 
fictitious
 
or
 
fraudulent
transactions. We also rely on access to, and
 
on the functioning of, systems maintained by
 
third parties, including clearing
systems, exchanges,
 
information processors
 
and central
 
counterparties. Any
 
failure of
 
our or
 
third-party
 
systems could
have
 
an
 
adverse
 
effect
 
on
 
us.
 
These
 
risks
 
may
 
be
 
greater
 
as
 
we
 
deploy
 
newer
 
technologies,
 
such
 
as
 
blockchain,
 
or
processes, platforms or products
 
that rely on these technologies.
 
Our operational risk management
 
and control systems
and processes
 
are
 
designed
 
to help
 
ensure
 
that
 
the
 
risks
 
associated
 
with
 
our
 
activities
 
–
 
including
 
those
 
arising
 
from
process error,
 
failed execution,
 
misconduct, unauthorized
 
trading, fraud,
 
system failures,
 
financial crime,
 
cyberattacks,
breaches of information security,
 
inadequate or ineffective access controls and failure of security and physical protection
– are
 
appropriately controlled.
 
If our
 
internal controls
 
fail or
 
prove ineffective
 
in identifying
 
and remedying
 
these risks,
we could suffer
 
operational failures
 
that might result
 
in material losses.
 
The acquisition of
 
the Credit Suisse
 
Group may
elevate these risks,
 
particularly during
 
the first
 
phases of
 
integration, as
 
the firms
 
have historically
 
operated under different
procedures, IT systems, risk policies and structures
 
of governance.
As a
 
meaningful proportion
 
of our
 
staff have
 
been and
 
will continue
 
working from
 
outside the
 
office, we
 
have faced,
and will
 
continue to
 
face, new
 
challenges and
 
operational risks,
 
including maintenance
 
of supervisory
 
and surveillance
controls, as well as
 
increased fraud and
 
data security risks. While
 
we have taken
 
measures to manage
 
these risks, these
measures could prove not to be effective.
We use automation
 
as part of
 
our efforts to
 
improve efficiency, reduce the risk of error
 
and improve our
 
client experience.
We intend to expand the use
 
of robotic processing, machine learning and artificial
 
intelligence (AI) to further these goals.
Use of these
 
tools presents
 
their own
 
risks, including
 
the need
 
for effective
 
design and
 
testing; the
 
quality of
 
the data
used for development and
 
operation of machine
 
learning and AI tools
 
may adversely affect
 
their functioning and result
in errors and other operational risks.
Financial services
 
firms have
 
increasingly been
 
subject to
 
breaches of
 
security and
 
to cyber-
 
and other
 
forms of
 
attack,
some of
 
which are
 
sophisticated
 
and targeted
 
attacks intended
 
to gain
 
access to
 
confidential information
 
or systems,
disrupt service or steal or destroy data, which may result in business
 
disruption or the corruption or loss of data at UBS’s
locations or those of
 
third parties. Cyberattacks by hackers, terrorists,
 
criminal organizations, nation states and extremists
have
 
also
 
increased
 
in
 
frequency
 
and
 
sophistication.
 
Current
 
geopolitical
 
tensions
 
have
 
also
 
led
 
to
 
increased
 
risk
 
of
cyberattack from foreign state actors. In particular, the Russia–Ukraine war and
 
the imposition of significant sanctions on
Russia by Switzerland,
 
the US,
 
the EU, the
 
UK and others
 
has resulted
 
and may continue
 
to result
 
in an increase
 
in the
risk of cyberattacks. Such attacks may occur on our own systems or on the systems that
 
are operated by external service
providers, may be attempted
 
through the introduction of
 
ransomware, viruses or malware,
 
phishing and other forms of
social engineering,
 
distributed
 
denial
 
of
 
service
 
attacks
 
and other
 
means. These
 
attempts
 
may
 
occur
 
directly
 
or
 
using
equipment or security
 
passwords of
 
our employees, third
 
-party service
 
providers or
 
other users. Cybersecurity
 
risks also
have
 
increased
 
due
 
to
 
the
 
widespread
 
use
 
of
 
digital
 
technologies,
 
cloud
 
computing
 
and
 
mobile
 
devices
 
to
 
conduct
financial
 
business
 
and
 
transactions,
 
as well
 
as
 
due
 
to
 
generative
 
AI, which
 
increases
 
the
 
capabilities
 
of adversaries
 
to
mount
 
sophisticated
 
phishing
 
attacks,
 
for
 
example,
 
through
 
the
 
use
 
of
 
deepfake
 
technologies,
 
and
 
presents
 
new
challenges to
 
the protection
 
of our systems
 
and networks
 
and the
 
confidentiality and
 
integrity of
 
our data.
 
During the
first quarter of 2023, a third-party
 
vendor, ION XTP, suffered a ransomware
 
attack, which resulted in some disruption
 
to
our exchange-traded derivatives clearing activities, although we restored our services within 36 hours, using an available
alternative solution.
 
In addition
 
to external
 
attacks, we
 
have experienced
 
loss of
 
client data
 
from failure
 
by employees
and others to follow internal policies and procedures and
 
from misappropriation of our data by employees and others.
 
We may not be able to anticipate, detect or recognize threats to our systems
 
or data and our preventative measures may
not
 
be
 
effective
 
to
 
prevent
 
an
 
attack
 
or
 
a
 
security
 
breach.
 
In
 
the
 
event
 
of
 
a
 
security
 
breach,
 
notwithstanding
 
our
preventative measures, we may not immediately detect a particular breach or attack. The acquisition of the Credit Suisse
Group may elevate
 
and intensify these risks,
 
as would-be attackers
 
have a larger potential
 
target in the combined
 
bank
and
 
differences
 
in
 
systems,
 
policies,
 
and
 
platforms
 
could
 
make
 
threat
 
detection
 
more
 
difficult.
 
In
 
addition,
 
the
implementation
 
of
 
the
 
large-scale
 
technological
 
change
 
program
 
that
 
is
 
necessary
 
to
 
integrate
 
the
 
combined
 
bank’s
systems at pace
 
may also result
 
in increased risks.
 
Once a particular
 
attack is detected, time
 
may be required
 
to investigate
and assess the nature and extent of the attack,
 
and to restore and test systems and data.
 
If a successful attack occurs at
a service provider, as we have
 
recently experienced, we may be
 
dependent on the service provider’s
 
ability to detect the
attack, investigate
 
and assess
 
the attack
 
and successfully
 
restore the
 
relevant systems
 
and data.
 
A successful
 
breach or
circumvention of security of our or a service provider’s systems
 
or data could have significant negative consequences
 
for
us,
 
including
 
disruption
 
of
 
our
 
operations,
 
misappropriation
 
of
 
confidential
 
information
 
concerning
 
us
 
or
 
our
 
clients,
damage to
 
our systems, financial
 
losses for
 
us or
 
our clients, violations
 
of data
 
privacy and similar
 
laws, litigation exposure,
and damage to our reputation. We may be subject to enforcement actions as regulatory focus on
 
cybersecurity increases
and regulators
 
have announced new
 
rules, guidance and
 
initiatives on
 
ransomware and other
 
cybersecurity-related issues.
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Risk factors
 
54
We are subject to complex and frequently changing laws
 
and regulations governing the protection of client
 
and personal
data, such as the EU General Data
 
Protection Regulation. Ensuring that
 
we comply with applicable laws and regulations
when we collect, use and transfer personal information
 
requires substantial resources
 
and may affect the ways in which
we conduct our business. In
 
the event that we fail
 
to comply with applicable laws,
 
we may be exposed to
 
regulatory fines
and penalties and
 
other sanctions.
 
We may also
 
incur such penalties
 
if our vendors
 
or other service
 
providers or
 
clients
or counterparties fail to comply with these laws or to maintain appropriate controls over protected data. In addition, any
loss or exposure of client or other data may adversely
 
damage our reputation and adversely affect
 
our business.
A major focus of US and other countries’ governmental policies
 
relating to financial institutions in recent
 
years has been
on fighting
 
money
 
laundering
 
and
 
terrorist
 
financing.
 
We
 
are
 
required
 
to
 
maintain
 
effective
 
policies,
 
procedures
 
and
controls to detect,
 
prevent and report
 
money laundering and
 
terrorist financing, and
 
to verify the identity
 
of our clients
under the
 
laws of
 
many of
 
the countries
 
in which
 
we operate.
 
We are
 
also subject
 
to laws
 
and regulations
 
related
 
to
corrupt and illegal payments to government officials by others, such as the
 
US Foreign Corrupt Practices Act and the UK
Bribery Act. We have implemented policies, procedures and internal controls that are designed to comply with such laws
and regulations.
 
Notwithstanding
 
this, regulators
 
have
 
found deficiencies
 
in the
 
design and
 
operation of
 
anti-money-
laundering
 
programs
 
in
 
our
 
US
 
operations.
 
We
 
have
 
undertaken
 
a
 
significant
 
program
 
to
 
address
 
these
 
regulatory
findings with the objective of fully meeting regulatory expectations for our programs. Failure to maintain and implement
adequate
 
programs
 
to
 
combat
 
money
 
laundering,
 
terrorist
 
financing
 
or corruption,
 
or any
 
failure
 
of our
 
programs
 
in
these areas, could have
 
serious consequences both from
 
legal enforcement action
 
and from damage to
 
our reputation.
Frequent changes in
 
sanctions imposed and
 
increasingly complex sanctions
 
imposed on countries,
 
entities and individuals,
as exemplified by the breadth and scope
 
of the sanctions imposed in relation to
 
the war in Ukraine, increase our
 
cost of
monitoring and complying with sanctions requirements and increase the risk that we will not identify in a timely manner
client activity that is subject to a sanction.
As a
 
result
 
of
 
new
 
and
 
changed
 
regulatory
 
requirements
 
and
 
the
 
changes
 
we
 
have
 
made
 
in
 
our
 
legal
 
structure,
 
the
volume, frequency
 
and complexity
 
of our
 
regulatory
 
and other
 
reporting
 
has remained
 
elevated. Regulators
 
have also
significantly
 
increased
 
expectations
 
regarding
 
our
 
internal
 
reporting
 
and
 
data
 
aggregation,
 
as
 
well
 
as
 
management
reporting.
 
We
 
have
 
incurred,
 
and
 
continue
 
to
 
incur,
 
significant
 
costs
 
to
 
implement
 
infrastructure
 
to
 
meet
 
these
requirements.
 
Failure
 
to
 
meet
 
external
 
reporting
 
requirements
 
accurately
 
and
 
in
 
a
 
timely
 
manner
 
or
 
failure
 
to
 
meet
regulatory expectations of
 
internal reporting, data aggregation
 
and management reporting
 
could result in enforcement
action or other adverse consequences for us.
In addition, despite
 
the contingency plans
 
that we have
 
in place, our
 
ability to conduct
 
business may be
 
adversely affected
by a
 
disruption in
 
the infrastructure
 
that supports
 
our businesses
 
and the
 
communities in
 
which we
 
operate. This
 
may
include
 
a
 
disruption
 
due
 
to
 
natural
 
disasters,
 
pandemics,
 
civil
 
unrest,
 
war
 
or
 
terrorism
 
and
 
involve
 
electrical,
communications, transportation
 
or other services
 
that we
 
use or that
 
are used
 
by third
 
parties with whom
 
we conduct
business.
We depend on our risk management and control processes to avoid
 
or limit potential losses in our businesses
 
Controlled risk-taking
 
is a
 
major part
 
of the
 
business of
 
a financial
 
services firm.
 
Some losses
 
from risk-taking
 
activities
are inevitable, but,
 
to be
 
successful over
 
time, we
 
must balance
 
the risks
 
we take
 
against the
 
returns generated. Therefore,
we must diligently identify,
 
assess, manage and control
 
our risks, not only
 
in normal market
 
conditions but also as
 
they
might develop under more extreme,
 
stressed conditions, when concentrations of exposures
 
can lead to severe losses.
 
We have
 
not always
 
been able
 
to prevent
 
serious losses
 
arising from
 
risk management
 
failures and
 
extreme or
 
sudden
market
 
events.
 
We
 
recorded
 
substantial
 
losses
 
on
 
fixed-income
 
trading
 
positions
 
in
 
the
 
2008
 
financial
 
crisis,
 
in
 
the
unauthorized trading incident in
 
2011 and, more recently,
 
positions resulting from
 
the default of a US
 
prime brokerage
client. Credit
 
Suisse has
 
suffered
 
very significant
 
losses from
 
the default
 
of the US
 
prime brokerage
 
client and
 
losses in
supply
 
chain
 
finance
 
funds
 
managed
 
by
 
it,
 
as
 
well
 
as
 
other
 
matters.
 
As
 
a
 
result
 
of
 
these,
 
Credit
 
Suisse
 
is
 
subject
 
to
significant regulatory
 
remediation obligations
 
to address
 
deficiencies in
 
its risk
 
management
 
and control
 
systems, that
continue following the merger.
We
 
regularly
 
revise
 
and
 
strengthen
 
our
 
risk
 
management
 
and
 
control
 
frameworks
 
to
 
seek
 
to
 
address
 
identified
shortcomings. Nonetheless, we could suffer further
 
losses in the future if, for example:
–
we do not fully identify the risks in our portfolio, in particular
 
risk concentrations and correlated risks;
–
our
 
assessment
 
of
 
the
 
risks
 
identified,
 
or
 
our
 
response
 
to
 
negative
 
trends,
 
proves
 
to
 
be
 
untimely,
 
inadequate,
insufficient or incorrect;
 
–
our risk models prove insufficient to predict the scale of financial
 
risks the bank faces;
 
–
markets
 
move in
 
ways that
 
we do
 
not expect
 
– in
 
terms of
 
their speed,
 
direction,
 
severity
 
or correlation
 
– and
 
our
ability to manage risks in the resulting environment is, therefore,
 
affected;
–
third parties
 
to whom
 
we have
 
credit exposure
 
or whose
 
securities we
 
hold are
 
severely affected
 
by events
 
and we
suffer defaults and impairments beyond the level implied
 
by our risk assessment; or
 
–
collateral or other
 
security provided by
 
our counterparties
 
and clients proves
 
inadequate to
 
cover their obligations
 
at
the time of default.
 
We also hold legacy risk positions, primarily in Non-core and Legacy, that, in many cases, are illiquid and may deteriorate
in value. The acquisition
 
of the Credit Suisse
 
Group has increased,
 
materially, the portfolio of
 
business that is outside
 
of
our risk appetite and subject to exit that will be managed
 
in the Non-core and Legacy segment.
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Risk factors
 
55
We also manage
 
risk on behalf
 
of our clients.
 
The performance of assets
 
we hold for
 
our clients may
 
be adversely affected
by the same aforementioned
 
factors. If clients suffer
 
losses or the performance
 
of their assets held
 
with us is not
 
in line
with relevant benchmarks against
 
which clients assess investment
 
performance, we may suffer
 
reduced fee income and
a decline in assets under management, or withdrawal of mandates.
Investment positions, such
 
as equity investments
 
made as part
 
of strategic initiatives
 
and seed investments
 
made at the
inception of funds that we
 
manage, may also be affected
 
by market risk factors. These
 
investments are often not
 
liquid
and generally
 
are intended
 
or required
 
to be
 
held beyond
 
a normal
 
trading horizon.
 
Deteriorations in
 
the fair
 
value of
these positions would have a negative effect on our earnings.
We may be unable to identify or capture revenue or competitive
 
opportunities, or retain and attract qualified
employees
The financial
 
services
 
industry
 
is characterized
 
by intense
 
competition,
 
continuous
 
innovation, restrictive,
 
detailed
 
and
sometimes
 
fragmented
 
regulation
 
and
 
ongoing
 
consolidation.
 
We
 
face
 
competition
 
at
 
the
 
level
 
of
 
local
 
markets
 
and
individual business lines and from global financial institutions that are comparable to us in their size and breadth, as well
as competition from
 
new technology-based market
 
entrants, which may not
 
be subject to the
 
same level of regulation.
Barriers to entry in individual markets and pricing levels are being eroded
 
by new technology. We
 
expect these trends to
continue and competition
 
to increase.
 
Our competitive
 
strength and
 
market position
 
could be eroded
 
if we are
 
unable
to
 
identify
 
market
 
trends
 
and
 
developments,
 
do
 
not
 
respond
 
to
 
such
 
trends
 
and
 
developments
 
by
 
devising
 
and
implementing adequate
 
business strategies,
 
do not adequately
 
develop or update
 
our technology,
 
including our
 
digital
channels and tools, or are unable to attract
 
or retain the qualified people needed.
The
 
amount
 
and
 
structure
 
of
 
our
 
employee
 
compensation
 
is
 
affected
 
not
 
only
 
by
 
our
 
business
 
results
 
but
 
also
 
by
competitive factors and regulatory considerations.
 
In response
 
to the
 
demands of
 
various stakeholders,
 
including regulatory
 
authorities and
 
shareholders, and
 
in order
 
to
better
 
align
 
the
 
interests
 
of
 
our
 
staff
 
with
 
other
 
stakeholders,
 
we
 
have
 
increased
 
average
 
deferral
 
periods
 
for
 
stock
awards, expanded forfeiture provisions and, to a more limited extent, introduced clawback
 
provisions for certain awards
linked to business
 
performance. We
 
have also
 
introduced individual
 
caps on the
 
proportion of
 
fixed to variable
 
pay for
the members of
 
the Group
 
Executive Board
 
(GEB), as well
 
as certain
 
other employees.
 
UBS is also
 
required to
 
maintain
and
 
enforce
 
provisions
 
requiring
 
UBS
 
to
 
recover
 
from
 
GEB
 
members
 
and
 
certain
 
other
 
executives
 
a
 
portion
 
of
performance-based incentive
 
compensation in the
 
event that the
 
UBS Group,
 
or another entity
 
with securities listed
 
on
a US national securities exchange, is required
 
to restate its financial statements as a result
 
of a material error.
Constraints on the
 
amount or structure of
 
employee compensation, higher levels of
 
deferral, performance conditions and
other circumstances triggering the forfeiture of unvested awards may adversely
 
affect our ability to retain and attract key
employees, particularly where we compete with companies that are not subject to
 
these constraints. The loss of key staff
and the inability to
 
attract qualified replacements
 
could seriously compromise
 
our ability to execute
 
our strategy and
 
to
successfully
 
improve
 
our
 
operating
 
and
 
control
 
environment,
 
and
 
could
 
affect
 
our
 
business
 
performance.
 
This
 
risk
 
is
intensified by
 
elevated levels
 
of attrition
 
among Credit
 
Suisse employees.
 
Swiss law
 
requires that
 
shareholders approve
the
 
compensation
 
of the
 
Board
 
of Directors
 
(the
 
BoD) and
 
the
 
GEB
 
each
 
year.
 
If our
 
shareholders
 
fail to
 
approve
 
the
compensation for the GEB or the BoD,
 
this could have an adverse effect on
 
our ability to retain experienced directors and
our senior management.
As UBS Group AG is a holding company, its operating results,
 
financial condition and ability to pay dividends and other
distributions or to pay its obligations in the future depend on funding,
 
dividends and other distributions received
directly or indirectly from its subsidiaries, which may be subject to
 
restrictions
UBS Group
 
AG’s ability to
 
pay dividends and
 
other distributions
 
and to pay
 
its obligations in
 
the future
 
will depend
 
on
the level of funding, dividends and other distributions, if any, received from UBS AG and other subsidiaries. The ability of
such subsidiaries to
 
make loans or
 
distributions, directly
 
or indirectly,
 
to UBS Group
 
AG may be
 
restricted as
 
a result of
several
 
factors,
 
including restrictions
 
in financing
 
agreements
 
and the
 
requirements
 
of applicable
 
law
 
and regulatory,
fiscal
 
or
 
other
 
restrictions.
 
In
 
particular,
 
UBS
 
Group
 
AG’s
 
direct
 
and
 
indirect
 
subsidiaries,
 
including
 
UBS
 
AG,
 
UBS
Switzerland
 
AG,
 
UBS
 
Americas
 
Holding
 
LLC,
 
Credit
 
Suisse
 
Holdings
 
(USA)
 
Inc.,
 
UBS
 
Europe
 
SE
 
and
 
Credit
 
Suisse
International, are
 
subject
 
to
 
laws
 
and
 
regulations
 
that
 
require
 
the
 
entities
 
to
 
maintain
 
minimum
 
levels
 
of
 
capital
 
and
liquidity,
 
that
 
restrict
 
dividend
 
payments,
 
that
 
authorize
 
regulatory
 
bodies
 
to block
 
or reduce
 
the
 
flow
 
of funds
 
from
those subsidiaries to UBS Group AG or that could affect their ability to repay any loans made to, or other investments in,
such subsidiary
 
by UBS Group
 
AG or another
 
member of
 
the Group.
 
For example,
 
in the early
 
stages of the
 
COVID-19
pandemic, the
 
European
 
Central Bank
 
ordered
 
all banks
 
under its
 
supervision to
 
cease dividend
 
distributions, and
 
the
Board
 
of
 
Governors
 
of
 
the
 
Federal
 
Reserve
 
System
 
limited
 
capital
 
distributions
 
by
 
bank
 
holding
 
companies
 
and
intermediate holding
 
companies. Restrictions
 
and regulatory
 
actions could
 
impede access to
 
funds that
 
UBS Group
 
AG
may need to meet its obligations or to pay dividends to shareholders. In addition, UBS Group AG’s right to participate in
a distribution
 
of assets
 
upon a
 
subsidiary’s liquidation
 
or reorganization
 
is subject
 
to all
 
prior claims
 
of the
 
subsidiary’s
creditors.
Our capital instruments may contractually prevent us from proposing the distribution of dividends to shareholders, other
than in the form of shares, and from engaging in repurchases
 
of shares, if we do not pay interest on these instruments.
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Risk factors
 
56
Furthermore, UBS Group AG may guarantee some of
 
the payment obligations of certain of the Group’s subsidiaries from
time to time. These guarantees
 
may require UBS Group AG to provide
 
substantial funds or assets to subsidiaries
 
or their
creditors or counterparties at a time when UBS Group AG
 
is in need of liquidity to fund its own obligations.
The credit ratings of UBS
 
Group AG or its subsidiaries
 
used for funding purposes could
 
be lower than the ratings
 
of the
Group’s operating
 
subsidiaries,
 
which may
 
adversely affect
 
the market
 
value of
 
the securities
 
and other
 
obligations of
UBS Group AG or those subsidiaries on a standalone basis.
Market, credit and macroeconomic risks
Performance in the financial services industry is affected
 
by market conditions and the macroeconomic climate
 
Our
 
businesses
 
are
 
materially
 
affected
 
by
 
market
 
and
 
macroeconomic
 
conditions.
 
A
 
market
 
downturn
 
and
 
weak
macroeconomic conditions can be
 
precipitated by a
 
number of
 
factors, including geopolitical
 
events, such as
 
international
armed conflicts,
 
war,
 
or acts
 
of terrorism,
 
the imposition
 
of sanctions,
 
global trade
 
or global
 
supply chain
 
disruptions,
including
 
energy
 
shortages
 
and
 
food
 
insecurity,
 
changes
 
in
 
monetary
 
or
 
fiscal
 
policy,
 
changes
 
in
 
trade
 
policies
 
or
international trade
 
disputes, significant
 
inflationary or deflationary
 
price changes,
 
disruptions in
 
one or
 
more concentrated
economic
 
sectors,
 
natural
 
disasters,
 
pandemics
 
or
 
local
 
and
 
regional
 
civil
 
unrest.
 
Such
 
developments
 
can
 
have
unpredictable and destabilizing effects.
 
Adverse changes in interest rates,
 
credit spreads, securities prices, market
 
volatility and liquidity, foreign exchange
 
rates,
commodity prices, and
 
other market fluctuations,
 
as well as changes
 
in investor sentiment,
 
can affect our earnings
 
and
ultimately our financial
 
and capital positions. As
 
financial markets are global
 
and highly interconnected, local
 
and regional
events
 
can
 
have
 
widespread
 
effects
 
well
 
beyond
 
the
 
countries
 
in
 
which
 
they
 
occur.
 
Any
 
of
 
these
 
developments
 
may
adversely affect our business or financial results.
As a
 
result of
 
significant volatility
 
in the
 
market, our
 
businesses
 
may experience
 
a decrease
 
in client
 
activity levels
 
and
market
 
volumes,
 
which
 
would
 
adversely
 
affect
 
our
 
ability
 
to
 
generate
 
transaction
 
fees,
 
commissions
 
and
 
margins,
particularly in Global Wealth Management and
 
the Investment Bank. A market downturn
 
would likely reduce the volume
and valuation of
 
assets that
 
we manage on
 
behalf of clients,
 
which would reduce
 
recurring fee
 
income that is
 
charged
based on invested assets, primarily in Global Wealth Management and Asset Management, and performance-based fees
in Asset Management.
 
Such a downturn
 
could also cause
 
a decline in the
 
value of assets that
 
we own and account
 
for
as investments or trading positions. In addition, reduced market
 
liquidity or volatility may limit trading opportunities and
therefore may reduce transaction-based income and may also
 
impede our ability to manage risks.
Health emergencies, including
 
pandemics and measures
 
taken by governmental authorities
 
to manage them,
 
may have
effects
 
such
 
as
 
labor
 
market
 
displacements,
 
supply
 
chain
 
disruptions,
 
and
 
inflationary
 
pressures,
 
and
 
adversely
 
affect
global
 
and
 
regional
 
economic
 
conditions,
 
resulting
 
in
 
contraction
 
in
 
the
 
global
 
economy,
 
substantial
 
volatility
 
in
 
the
financial markets, crises
 
in markets for
 
goods and services, disruptions
 
in real estate
 
markets, increased unemployment,
increased
 
credit
 
and
 
counterparty
 
risk,
 
and
 
operational
 
challenges,
 
as
 
we
 
saw
 
with
 
the
 
COVID-19
 
pandemic.
 
Such
economic or market disruptions,
 
including inflationary pressures, may lead
 
to reduced levels of
 
client activity and demand
for
 
our
 
products
 
and
 
services,
 
increased
 
utilization
 
of
 
lending
 
commitments,
 
significantly
 
increased
 
client
 
defaults,
continued
 
and
 
increasing
 
credit
 
and
 
valuation
 
losses
 
in
 
our
 
loan
 
portfolios,
 
loan
 
commitments
 
and
 
other
 
assets,
 
and
impairments of
 
other financial
 
assets.
 
A fall
 
in equity
 
markets
 
and a
 
consequent decline
 
in invested
 
assets would
 
also
reduce recurring
 
fee income in our Global
 
Wealth Management and
 
Asset Management businesses,
 
as we experienced
in the second
 
quarter of 2022. These
 
factors and other
 
consequences of a
 
health emergency may
 
negatively affect
 
our
financial condition, including
 
possible constraints on capital
 
and liquidity,
 
as well as resulting
 
in a higher cost
 
of capital,
and possible downgrades to our credit ratings.
Geopolitical events:
 
Terrorist activity and armed conflict in the Middle East, as well as the continuing Russia–Ukraine war,
may
 
have
 
significant
 
impacts
 
on
 
global
 
markets,
 
exacerbate
 
global
 
inflationary
 
pressures
 
and
 
slow
 
global
 
growth.
 
In
addition, the ongoing conflicts may continue to cause significant population displacement, and lead to shortages of vital
commodities, including
 
energy shortages
 
and food
 
insecurity outside
 
the areas
 
immediately involved
 
in armed
 
conflict.
Governmental responses to
 
the armed conflicts,
 
including, with respect
 
to the Russia–Ukraine
 
war, coordinated successive
sets of
 
sanctions
 
on
 
Russia
 
and Belarus,
 
and
 
Russian
 
and
 
Belarusian
 
entities
 
and
 
nationals,
 
and
 
the
 
uncertainty
 
as to
whether the
 
ongoing conflicts will
 
widen and intensify,
 
may continue to
 
have significant
 
adverse effects
 
on the market
and macroeconomic conditions,
 
including in ways
 
that cannot be
 
anticipated.
 
If individual countries
 
impose restrictions
on cross-border payments
 
or trade,
 
or other exchange
 
or capital controls,
 
or change their
 
currency (for example,
 
if one
or more
 
countries should leave
 
the Eurozone,
 
as a
 
result of the
 
imposition of sanctions
 
on individuals,
 
entities or
 
countries,
or escalation
 
of trade
 
restrictions and
 
other
 
actions
 
between
 
the
 
US, or
 
other
 
countries,
 
and
 
China), we
 
could
 
suffer
adverse effects
 
on our business,
 
losses from enforced
 
default by counterparties,
 
be unable to
 
access our
 
own assets
 
or
be unable to effectively manage our risks.
We could
 
be materially
 
affected
 
if a
 
crisis develops,
 
regionally or
 
globally, as
 
a result
 
of disruptions
 
in markets
 
due to
macroeconomic or political developments, trade
 
restrictions, or the failure of a major
 
market participant. Over time, our
strategic plans have
 
become more heavily
 
dependent on our
 
ability to generate
 
growth and
 
revenue in emerging
 
markets,
including China, causing us to be more exposed to the risks
 
associated with such markets.
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Risk factors
 
57
Global Wealth Management derives
 
revenues from all the principal regions
 
but has a greater concentration
 
in Asia than
many peers and a
 
substantial presence in
 
the US, unlike
 
many European peers.
 
The Investment Bank’s
 
business is more
heavily weighted to Europe and Asia than our peers, while its derivatives business is more heavily weighted to structured
products
 
for
 
wealth
 
management
 
clients,
 
in
 
particular
 
with
 
European
 
and
 
Asian
 
underlyings.
 
Our
 
performance
 
may
therefore be more affected
 
by political, economic and
 
market developments in these
 
regions and businesses than
 
some
other financial service providers.
The extent to which ongoing conflicts, current inflationary pressures
 
and related adverse economic conditions affect our
businesses, results of operations and financial condition, as well as our regulatory capital and liquidity ratios, will depend
on future
 
developments,
 
including the
 
effects
 
of the
 
current
 
conditions on
 
our clients,
 
counterparties, employees
 
and
third-party service providers.
Our credit risk exposure to clients, trading counterparties
 
and other financial institutions would increase under adverse
or other economic conditions
Credit risk is an integral part of many of our activities,
 
including lending, underwriting and derivatives activities. Adverse
economic or market conditions, or the imposition of sanctions or other
 
restrictions on clients, counterparties or financial
institutions, may lead
 
to impairments and
 
defaults on these
 
credit exposures.
 
Losses may be
 
exacerbated by declines
 
in
the value
 
of collateral
 
securing loans and
 
other exposures. In
 
our prime
 
brokerage, securities finance
 
and Lombard lending
businesses, we
 
extend substantial amounts
 
of credit against
 
securities collateral the
 
value or
 
liquidity of
 
which may decline
rapidly.
 
Market
 
closures and
 
the imposition
 
of exchange
 
controls, sanctions
 
or other
 
measures
 
may limit
 
our ability
 
to
settle existing transactions
 
or to realize
 
on collateral, which
 
may result in
 
unexpected increases
 
in exposures. Our
 
Swiss
mortgage and corporate lending portfolios,
 
which have increased substantially as
 
a result of the Credit
 
Suisse acquisition,
are
 
a
 
large
 
part
 
of
 
our
 
overall
 
lending.
 
We
 
are
 
therefore
 
exposed
 
to
 
the
 
risk
 
of
 
adverse
 
economic
 
developments
 
in
Switzerland, including property valuations
 
in the housing market, the strength
 
of the Swiss franc and its effect
 
on Swiss
exports, a return to negative interest rates applied by the Swiss National Bank, economic conditions within the Eurozone
or
 
the
 
EU,
 
and
 
the
 
evolution
 
of
 
agreements
 
between
 
Switzerland
 
and
 
the
 
EU
 
or
 
European
 
Economic
 
Area,
 
which
represent Switzerland’s largest
 
export market. We have
 
exposures related to real
 
estate in various countries, including
 
a
substantial Swiss mortgage portfolio. Although we believe this portfolio is prudently managed,
 
we could nevertheless be
exposed to losses if a substantial deterioration in the Swiss real
 
estate market were to occur.
 
As we experienced in 2020, under the IFRS 9 expected credit loss (ECL) regime, credit
 
loss expenses may increase rapidly
at the onset of
 
an economic downturn as
 
a result of higher
 
levels of credit impairments
 
(stage 3), as well as
 
higher ECL
from stages 1 and
 
2. Substantial increases
 
in ECL
 
could exceed expected loss
 
for regulatory capital
 
purposes and adversely
affect our common equity tier 1 (CET1) capital and regulatory
 
capital ratios.
Interest rate trends and changes could negatively affect our
 
financial results
UBS’s businesses
 
are sensitive
 
to changes
 
in interest
 
rate trends.
 
A prolonged
 
period of
 
low or
 
negative interest
 
rates,
particularly in Switzerland
 
and the Eurozone,
 
adversely affected
 
the net interest
 
income generated by
 
UBS’s Personal &
Corporate Banking and Global Wealth Management businesses prior to 2022. Actions that UBS
 
took to mitigate adverse
effects on income, such as
 
the introduction of
 
selective deposit fees or minimum
 
lending rates, contributed to
 
outflows
of customer
 
deposits (a
 
key source
 
of funding
 
for
 
UBS), net
 
new money
 
outflows and
 
a declining
 
market
 
share
 
in its
Swiss lending business.
During 2022, interest
 
rates increased sharply in
 
the US and most
 
other markets, including a
 
shift from negative
 
to positive
central bank policy rates in the Eurozone and Switzerland, as central
 
banks responded to higher inflation. Higher interest
rates
 
generally
 
benefit
 
UBS’s
 
net
 
interest
 
income.
 
However,
 
as returns
 
on
 
alternatives
 
to deposits
 
increase
 
with
 
rising
interest rates, such
 
as returns on
 
money market
 
funds, UBS experienced
 
outflows from customer
 
deposits and shifts
 
of
deposits from lower
 
-interest account types
 
to accounts
 
bearing higher interest
 
rates, such as
 
savings and certificates
 
of
deposit, starting
 
with effects
 
in the
 
US, where
 
rates had
 
rapidly increased.
 
In addition,
 
higher-for-longer
 
interest rates,
such as those experienced
 
in 2023, have
 
led to similar
 
shifts in euro
 
and Swiss franc
 
deposits. Sustained higher
 
interest
rates
 
also
 
may
 
adversely
 
affect
 
our
 
credit
 
counterparties.
 
Customer
 
deposit
 
outflows
 
could
 
require
 
UBS
 
to
 
obtain
alternative funding, which would likely be more costly than
 
customer deposits.
 
Our shareholders’ equity and capital are also affected by
 
changes in interest rates.
Currency
fluctuation may have an adverse effect
 
on our profits, balance sheet and regulatory capital
We
 
are
 
subject
 
to
 
currency
 
fluctuation
 
risks
 
as
 
a
 
substantial
 
portion
 
of
 
our
 
assets
 
and
 
liabilities
 
are
 
denominated
 
in
currencies other than our Group presentation currency,
 
the US dollar. In order to hedge our CET1 capital ratio, our CET1
capital must have
 
foreign currency
 
exposure, which leads
 
to currency sensitivity.
 
As a consequence,
 
it is not possible
 
to
simultaneously fully hedge both CET1 capital and the CET1 capital ratio. Accordingly,
 
changes in foreign exchange rates
may adversely affect our profits, balance
 
sheet, and capital, leverage and liquidity coverag
 
e
 
ratios.
 
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Risk factors
 
58
Regulatory and legal risks
Material legal and regulatory risks arise in the conduct of
 
our business
As a global
 
financial services
 
firm operating
 
in more
 
than 50 countries,
 
we are
 
subject to many
 
different legal,
 
tax and
regulatory regimes,
 
including extensive regulatory
 
oversight, and are
 
exposed to significant
 
liability risk. We
 
are subject
to a large number of claims,
 
disputes, legal proceedings and government investigations, and
 
we expect that our ongoing
business activities will continue to give rise to such matters in the future. In addition,
 
UBS inherited claims against Credit
Suisse entities as part of the acquisition, including matters that may be material to the operating results of
 
the combined
Group. The
 
extent of
 
our financial
 
exposure
 
to these
 
and other
 
matters is
 
material and
 
could substantially
 
exceed the
level of
 
provisions
 
that we
 
have established.
 
We
 
are
 
not able
 
to predict
 
the financial
 
and non-financial
 
consequences
these matters may have when resolved.
 
We may be subject to adverse preliminary determinations or court decisions that may negatively affect public perception
and our
 
reputation,
 
result
 
in prudential
 
actions from
 
regulators, and
 
cause us
 
to record
 
additional
 
provisions
 
for
 
such
matters even when we believe we have substantial
 
defenses and expect to ultimately achieve a more
 
favorable outcome.
This risk
 
is illustrated
 
by the
 
award of
 
aggregate penalties
 
and damages
 
of EUR 4.5bn
 
by the
 
court of
 
first instance
 
in
France. This award was reduced to an aggregate
 
of EUR 1.8bn against by the Court of Appeal,
 
and, in a further appeal,
the French Supreme Court referred the case back
 
to the Paris Court of
 
Appeal to reconsider the amount after a
 
new trial.
 
Litigation,
 
regulatory
 
and
 
similar
 
matters
 
may
 
also
 
result
 
in
 
non-monetary
 
penalties
 
and consequences.
 
Among
 
other
things,
 
a
 
guilty
 
plea
 
to,
 
or
 
conviction
 
of,
 
a
 
crime
 
(including
 
as
 
a
 
result
 
of
 
termination
 
of
 
the
 
Deferred
 
Prosecution
Agreement Credit Suisse
 
entered into with
 
the US Department
 
of Justice in
 
2021 to resolve
 
its Mozambique matter)
 
could
have material consequences for UBS.
Resolution of regulatory proceedings has required us to obtain waivers of regulatory disqualifications to maintain certain
operations, may entitle
 
regulatory authorities
 
to limit, suspend
 
or terminate licenses
 
and regulatory authorizations,
 
and
may permit financial market utilities to limit, suspend or terminate our participation in them. UBS and Credit Suisse have
each required waivers or exemptions
 
in order to continue to act
 
as investment manager to pension plans and
 
registered
investment companies
 
in the
 
US, among
 
other things;
 
failure to
 
obtain such
 
waivers, or
 
any limitation,
 
suspension
 
or
termination of
 
licenses, authorizations
 
or participations
 
arising from
 
a disqualifying
 
event, could
 
have material
 
adverse
consequences for us.
Our settlements with
 
governmental authorities in
 
connection with foreign
 
exchange, LIBOR and
 
other benchmark interest
rates starkly
 
illustrate the
 
significantly increased
 
level of
 
financial and
 
reputational risk
 
now associated
 
with regulatory
matters
 
in
 
major
 
jurisdictions.
 
In
 
connection
 
with
 
investigations
 
related
 
to
 
LIBOR
 
and
 
other
 
benchmark
 
rates,
 
and
 
to
foreign exchange
 
and precious
 
metals, very
 
large fines
 
and disgorgement
 
amounts
 
were assessed
 
against us,
 
and we
were required to enter guilty pleas despite our full cooperation
 
with the authorities in the investigations and despite
 
our
receipt of conditional leniency
 
or conditional immunity from anti
 
-trust authorities in a number
 
of jurisdictions, including
the US and Switzerland.
For a number
 
of years, we
 
have been, and
 
we continue to
 
be, subject to
 
a very high
 
level of regulatory
 
scrutiny and to
certain regulatory
 
measures that
 
constrain our
 
strategic flexibility.
 
We believe we
 
have remediated
 
the deficiencies
 
that
led to significant losses in the past
 
and made substantial changes in our controls and
 
conduct risk frameworks to address
the
 
issues
 
highlighted
 
by
 
past
 
regulatory
 
resolutions.
 
We
 
have
 
also
 
undertaken
 
extensive
 
efforts
 
to
 
implement
 
new
regulatory requirements and meet heightened supervisory expectations. Prior to its acquisition by UBS, Credit Suisse was
also
 
subject
 
to
 
a
 
high
 
level
 
of
 
regulatory
 
scrutiny
 
and
 
had
 
significant
 
regulatory
 
and
 
other
 
remediation
 
programs
 
to
address identified issues,
 
including as a result
 
of the Archegos, Mozambique,
 
supply chain finance
 
and cross-border tax
matters. As part
 
of the integration
 
of Credit Suisse,
 
UBS is addressing
 
these matters and
 
will likely remain
 
under additional
regulatory scrutiny until the integration is substantially comp
 
leted.
Credit Suisse and UBS
 
have become the target of
 
lawsuits, and may become
 
the target of further
 
litigation, in connection
with the merger transaction
 
or the regulatory and
 
other actions taken
 
in connection with
 
the merger transaction,
 
all of
which
 
could
 
result
 
in
 
substantial
 
costs.
 
Since
 
the
 
close
 
of
 
the
 
acquisition,
 
various
 
litigation
 
claims
 
have
 
been
 
lodged
against UBS under
 
Swiss merger law
 
alleging that Credit
 
Suisse Group AG
 
shareholders received disadvantaged treatment
in the acquisition.
 
In addition, numerous
 
cases have been
 
lodged against the
 
Swiss Financial Market Supervisory
 
Authority
(FINMA) in respect of the
 
write-down of the Credit
 
Suisse Group’s additional
 
tier 1 (AT1) bonds ordered
 
by FINMA. UBS
Group
 
AG,
 
as
 
the
 
successor
 
to
 
Credit
 
Suisse
 
Group
 
AG,
 
is
 
participating
 
in
 
proceedings
 
as
 
an
 
aggrieved
 
party.
 
The
cumulative
 
effects
 
of
 
the
 
litigations
 
to
 
which
 
UBS
 
has
 
succeeded
 
and
 
the
 
claims
 
related
 
to
 
the
 
acquisition
 
and
 
the
circumstances surrounding it, may have material adverse
 
consequences for the combined Group.
We continue
 
to be
 
in active
 
dialogue with
 
regulators concerning
 
the actions
 
we are
 
taking to
 
improve our
 
operational
risk management, risk control, anti-money-laundering, data
 
management and other frameworks, and otherwise seek to
meet supervisory expectations, but there can be no assurance that our efforts will have the desired effects. As a result of
this history, our level of risk with respect to regulatory enforcement
 
may be greater than that of some of our peers.
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Risk factors
 
59
If we experience financial difficulties, FINMA has the power
 
to open restructuring or liquidation proceedings or impose
protective measures in relation to UBS Group AG, UBS AG
 
or UBS Switzerland AG, and such proceedings or measures
may have a material adverse effect on our shareholders
 
and creditors
Under the
 
Swiss Banking
 
Act, FINMA
 
is able
 
to exercise
 
broad statutory
 
powers with
 
respect to
 
Swiss banks
 
and Swiss
parent
 
companies
 
of
 
financial
 
groups,
 
such
 
as
 
UBS
 
Group
 
AG,
 
UBS
 
AG
 
and
 
UBS Switzerland AG,
 
if
 
there
 
is
 
justified
concern that an
 
entity is over
 
-indebted, has
 
serious liquidity
 
problems or,
 
after the
 
expiration of
 
any relevant
 
deadline,
no
 
longer
 
fulfills
 
capital
 
adequacy
 
requirements.
 
Such
 
powers
 
include
 
ordering
 
protective
 
measures,
 
instituting
restructuring
 
proceedings
 
(and
 
exercising
 
any
 
Swiss
 
resolution
 
powers
 
in
 
connection
 
therewith),
 
and
 
instituting
liquidation proceedings,
 
all of
 
which may
 
have a
 
material adverse
 
effect on
 
shareholders and
 
creditors or
 
may prevent
UBS Group AG, UBS AG or UBS Switzerland
 
AG from paying dividends or making payments on debt obligations.
UBS would
 
have limited
 
ability
 
to challenge
 
any such
 
protective
 
measures,
 
and creditors
 
and shareholders
 
would
 
also
have limited ability under Swiss
 
law or in Swiss courts
 
to reject them, seek their suspension,
 
or challenge their imposition,
including measures that require
 
or result in the deferment of payments.
If restructuring
 
proceedings are
 
opened with
 
respect to
 
UBS Group AG,
 
UBS AG
 
or UBS Switzerland
 
AG the
 
resolution
powers that FINMA may exercise include the
 
power to: (i) transfer all or some
 
of the assets, debt and other
 
liabilities, and
contracts
 
of the
 
entity
 
subject
 
to proceedings
 
to another
 
entity;
 
(ii) stay
 
for
 
a
 
maximum
 
of two
 
business
 
days
 
(a) the
termination of,
 
or the
 
exercise of
 
rights to
 
terminate, netting
 
rights, (b)
 
rights to
 
enforce or
 
dispose of
 
certain types
 
of
collateral
 
or
 
(c)
 
rights
 
to
 
transfer
 
claims,
 
liabilities
 
or
 
certain
 
collateral,
 
under
 
contracts
 
to
 
which
 
the
 
entity
 
subject
 
to
proceedings is a
 
party; and (iii)
 
partially or fully
 
write down
 
the equity capital
 
and regulatory capital
 
instruments and,
 
if
such regulatory capital is fully
 
written down, write down
 
or convert into equity the
 
other debt instruments of
 
the entity
subject
 
to
 
proceedings.
 
Shareholders
 
and
 
creditors
 
would
 
have
 
no
 
right
 
to
 
reject,
 
or
 
to
 
seek
 
the
 
suspension
 
of,
 
any
restructuring
 
plan
 
pursuant
 
to
 
which
 
such
 
resolution
 
powers
 
are
 
exercised.
 
They
 
would
 
have
 
only
 
limited
 
rights
 
to
challenge
 
any
 
decision
 
to
 
exercise
 
resolution
 
powers
 
or to
 
have
 
that
 
decision
 
reviewed
 
by
 
a
 
judicial
 
or
 
administrative
process or otherwise.
Upon full
 
or partial
 
write-down
 
of the
 
equity and
 
regulatory
 
capital
 
instruments
 
of the
 
entity
 
subject to
 
restructuring
proceedings, the relevant shareholders
 
and creditors would receive
 
no payment in respect of the equity
 
and debt that is
written
 
down,
 
the
 
write-down
 
would
 
be
 
permanent,
 
and
 
the
 
investors
 
would
 
likely
 
not,
 
at
 
such
 
time
 
or
 
at
 
any
 
time
thereafter,
 
receive any
 
shares or other
 
participation rights,
 
or be entitled
 
to any write-up
 
or any other
 
compensation in
the event of a potential subsequent
 
recovery of the debtor.
 
If FINMA orders the conversion
 
of debt of the entity subject
to restructuring proceedings
 
into equity,
 
the securities received by
 
the investors may be worth significantly
 
less than the
original debt and may have a
 
significantly different risk profile. In addition, creditors receiving equity would be effectively
subordinated to all creditors of the restructured entity in the event
 
of a subsequent winding up, liquidation
 
or dissolution
of the restructured entity,
 
which would increase the risk that investors would
 
lose all or some of their investment.
 
FINMA has significant discretion in the exercise of its powers in connection with restructuring proceedings. Furthermore,
certain categories of debt obligations, such as certain types of
 
deposits, are subject to preferential treatment. As a result,
holders of obligations
 
of an entity
 
subject to a
 
Swiss restructuring
 
proceeding may
 
have their obligations
 
written down
or converted
 
into equity even
 
though obligations ranking
 
on par
 
with such obligations
 
are not written
 
down or
 
converted.
 
Developments in sustainability, climate, environmental and social
 
standards and regulations may affect our business and
impact our ability to fully realize our goals
We
 
are
 
subject
 
to
 
separate,
 
and
 
sometimes
 
conflicting,
 
ESG
 
regulations
 
and
 
regulator
 
expectations
 
in
 
the
 
various
jurisdictions in which UBS operates. For example,
 
in certain jurisdictions, we are required
 
to set diversity targets or other
ESG-related goals that are considered illegal or contrary
 
to regulatory expectations in other jurisdictions. In addition,
 
with
respect to decarbonization mandates,
 
there is substantial uncertainty as
 
to the scope of actions that may
 
be required of
us, governments and others to achieve the
 
goals we have set, and many of our
 
goals and objectives are only achievable
with a
 
combination of
 
government and
 
private action.
 
National and
 
international standards
 
and expectations,
 
industry
and
 
scientific
 
practices,
 
regulatory
 
taxonomies,
 
and
 
disclosure
 
obligations
 
addressing
 
these
 
matters
 
are
 
relatively
immature
 
and
 
are
 
rapidly
 
evolving.
 
In
 
addition,
 
there
 
are
 
significant
 
limitations
 
in
 
the
 
data
 
available
 
to
 
measure
 
our
climate and other goals. Although
 
we have defined and disclosed
 
our goals based on the
 
standards existing at the
 
time
of
 
disclosure,
 
there
 
can
 
be
 
no
 
assurance
 
(i) that
 
the
 
various
 
ESG
 
regulatory
 
and
 
disclosure
 
regimes
 
under
 
which
 
we
operate
 
will
 
not
 
come
 
into
 
further
 
conflict
 
with
 
one
 
another,
 
(ii) that
 
the
 
current
 
standards
 
will
 
not
 
be
 
interpreted
differently than our understanding or change in a manner
 
that substantially increases the cost or effort for us to achieve
such goals or (iii) that additional data or
 
methods, whether voluntary or required by regulation, may substantially change
our calculation of
 
our goals
 
and ambitions. It
 
is possible that
 
such goals may
 
prove to
 
be considerably more
 
difficult or
even
 
impossible
 
to
 
achieve.
 
The
 
evolving
 
standards
 
may
 
also
 
require
 
us
 
to
 
substantially
 
change
 
the
 
stated
 
goals
 
and
ambitions. If we are
 
not able to achieve the goals
 
we have set, or can
 
only do so at significant
 
expense to our business,
we
 
may
 
fail
 
to
 
meet
 
regulatory
 
expectations,
 
incur
 
damage
 
to
 
our
 
reputation
 
or
 
be
 
exposed
 
to
 
an
 
increased
 
risk
 
of
litigation or other adverse action.
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Risk factors
 
60
While ESG regulatory regimes and
 
international standards are being developed, including
 
to require consideration of ESG
risks in investment decisions,
 
some jurisdictions, notably in
 
the US, have developed rules
 
restricting the consideration
 
of
ESG factors in investment
 
and business decisions. Under
 
these anti-ESG rules, companies
 
that are perceived
 
as boycotting
or discriminating against certain industries may be
 
restricted from doing business with certain governmental
 
entities. Our
businesses
 
may
 
be
 
adversely
 
affected
 
if
 
we
 
are
 
considered
 
as
 
discriminating
 
against
 
companies
 
based
 
on
 
ESG
considerations, or if further anti-ESG rules are developed
 
or broadened.
Material weaknesses of Credit Suisse controls over financial
 
reporting
In March 2023,
 
prior to the
 
acquisition by UBS
 
Group AG, the
 
Credit Suisse Group
 
and Credit Suisse
 
AG disclosed that
their management had identified material weaknesses in
 
internal control over financial reporting as
 
a result of which, the
Credit
 
Suisse
 
Group
 
and
 
Credit
 
Suisse
 
AG
 
had
 
concluded
 
that,
 
as
 
of
 
31
 
December
 
2022, their
 
internal controls
 
over
financial reporting
 
were not
 
effective, and
 
for the same
 
reasons, reached
 
the same conclusion
 
regarding 31
 
December
2021. A
 
material weakness
 
is a
 
deficiency or
 
a combination
 
of deficiencies
 
in internal
 
controls over
 
financial reporting
such that there
 
is a reasonable
 
possibility that
 
a material misstatement
 
of a registrant’s
 
financial statements
 
will not be
prevented or detected on
 
a timely basis.
 
The material weaknesses result
 
in a risk
 
that a material
 
error may not
 
be detected
by internal
 
controls that
 
could result
 
in a
 
material misstatement
 
to the
 
company’s reported
 
financial results.
 
Following
the acquisition
 
and merger
 
of Credit
 
Suisse Group
 
AG into
 
UBS Group
 
AG in
 
June 2023,
 
Credit Suisse
 
AG concluded
that as
 
of 31
 
December 2023
 
its internal
 
control
 
over financial
 
reporting continued
 
to be
 
ineffective.
 
As permitted
 
by
SEC guidance
 
in the
 
year of
 
an acquisition,
 
UBS Group
 
AG excluded
 
Credit Suisse
 
AG from
 
its assessment
 
of internal
control
 
over
 
financial
 
reporting
 
for
 
the
 
year
 
ended
 
31
 
December
 
2023
 
and
 
concluded
 
that
 
its
 
internal
 
control
 
over
financial reporting was effective as of such
 
date.
In June
 
2024 Credit
 
Suisse AG
 
and UBS
 
AG merged
 
with UBS
 
AG as
 
the surviving
 
entity. Although
 
Credit Suisse
 
is no
longer
 
a
 
separate
 
legal
 
entity,
 
numerous
 
of
 
its
 
booking,
 
accounting
 
and
 
risk
 
management
 
systems
 
remain
 
in
 
use
 
for
activities that have not yet been exited or migrated to
 
UBS systems.
 
The material weaknesses
 
that were identified
 
by Credit Suisse
 
related to the
 
failure to design
 
and maintain an
 
effective
risk
 
assessment
 
process
 
to
 
identify
 
and
 
analyze
 
the
 
risk
 
of
 
material
 
misstatements
 
in
 
its
 
financial
 
statements
 
and
 
the
failure to
 
design
 
and maintain
 
effective
 
monitoring activities
 
relating
 
to (i)
 
providing
 
sufficient
 
management
 
oversight
over the internal control evaluation
 
process to support Credit Suisse
 
internal control objectives; (ii)
 
involving appropriate
and sufficient
 
management resources
 
to support
 
the risk
 
assessment and
 
monitoring objectives;
 
and (iii)
 
assessing and
communicating the
 
severity of
 
deficiencies in
 
a timely
 
manner to
 
those parties
 
responsible for
 
taking corrective
 
action.
These material weaknesses contributed to an additional material weakness, as the Credit Suisse Group management did
not design and maintain effective controls over the classification and presentation of the consolidated statement of cash
flows under US GAAP.
Since
 
the
 
Credit
 
Suisse
 
acquisition,
 
we
 
have
 
executed
 
a
 
remediation
 
program
 
to
 
address
 
the
 
identified
 
material
weaknesses
 
and
 
have
 
implemented
 
additional
 
controls
 
and
 
procedures.
 
As
 
of
 
31
 
December
 
2024,
 
management
 
has
assessed that the
 
changes to
 
internal controls
 
made to
 
address the
 
material weakness
 
relating to
 
the classification
 
and
presentation of
 
the consolidated
 
statement of
 
cash flows
 
as well
 
as assessment
 
and communication
 
of the
 
severity of
deficiencies are designed and operating effectively.
 
The remaining material weakness relates to the risk assessment of internal controls. We have implemented an enhanced
severity assessment
 
framework and
 
additional management
 
oversight of
 
severity assessments
 
and have
 
integrated the
Credit Suisse control frameworks into the
 
UBS internal control framework and
 
risk assessment and evaluation processes
in
 
2024.
 
In
 
addition,
 
UBS
 
has
 
reviewed
 
the
 
processes,
 
systems
 
and
 
internal
 
control
 
processes
 
in
 
connection
 
with
 
the
integration
 
of
 
the
 
financial
 
accounting
 
and
 
controls
 
environment
 
of
 
Credit
 
Suisse
 
into
 
UBS,
 
and
 
implementation
 
of
updated or additional processes and controls to reflect the increase in complexity of the accounting and financial control
environment following the acquisition.
 
Management has assessed
 
that the risk
 
assessment process was
 
designed effectively. However,
 
in light of
 
the increased
complexity of the
 
internal accounting and
 
control environment, the
 
remaining migration efforts
 
still underway and
 
limited
time
 
to
 
demonstrate
 
operating
 
effectiveness
 
and
 
sustainability
 
of
 
the
 
post-merger
 
integrated
 
control
 
environment,
management
 
has
 
concluded
 
that
 
additional
 
evidence
 
of
 
effective
 
operation
 
of
 
the
 
remediated
 
controls
 
is required
 
to
conclude
 
that
 
the
 
risk
 
assessment
 
processes
 
is
 
operating
 
effectively
 
on
 
a
 
sustainable
 
basis.
 
In
 
light
 
of
 
the
 
above,
management has concluded that there is a material
 
weakness in internal control over financial reporting at 31
 
December
2024 and as a result, that our disclosure controls and procedures
 
were also not effective as of that date.
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Risk factors
 
61
Our financial results may be negatively affected by changes
 
to assumptions and valuations, as well as changes to
accounting standards
We
 
prepare
 
our
 
consolidated
 
financial
 
statements
 
in
 
accordance
 
with
 
IFRS
 
Accounting
 
Standards.
 
The
 
application
 
of
these accounting
 
standards requires the use
 
of judgment
 
based on
 
estimates and
 
assumptions that may
 
involve significant
uncertainty at
 
the time
 
they are
 
made. This
 
is the
 
case, for
 
example, with
 
respect to
 
the measurement
 
of fair
 
value of
financial
 
instruments,
 
the
 
recognition
 
of
 
deferred
 
tax
 
assets
 
(DTAs),
 
the
 
assessment
 
of
 
the
 
impairment
 
of
 
goodwill,
expected
 
credit
 
losses
 
and
 
estimation
 
of
 
provisions
 
for
 
litigation,
 
regulatory
 
and
 
similar
 
matters.
 
Such
 
judgments,
including the underlying
 
estimates and assumptions,
 
which encompass historical
 
experience, expectations of
 
the future
and other
 
factors, are
 
regularly
 
evaluated
 
to determine
 
their continuing
 
relevance
 
based on
 
current
 
conditions.
 
Using
different assumptions could cause the reported results to differ.
 
Changes in assumptions, or failure to make the changes
necessary to reflect
 
evolving market conditions,
 
may have a
 
significant effect
 
on the financial
 
statements in the
 
periods
when
 
changes
 
occur.
 
Estimates
 
of
 
provisions
 
may
 
be
 
subject
 
to
 
a
 
wide
 
range
 
of
 
potential
 
outcomes
 
and
 
significant
uncertainty.
 
For example, the broad
 
range of potential outcomes
 
in our legal proceedings
 
in France and in a
 
number of
Credit
 
Suisse’s
 
legal
 
proceedings
 
increase
 
the
 
uncertainty
 
associated
 
with
 
assessing
 
the
 
appropriate
 
provision.
 
If
 
the
estimates and assumptions in
 
future periods deviate from the
 
current outlook, our financial
 
results may also be
 
negatively
affected.
 
Changes to IFRS
 
Accounting Standards or
 
interpretations thereof may
 
cause future reported
 
results and
 
financial positions
to differ
 
from current
 
expectations, or
 
historical results
 
to differ
 
from those
 
previously reported
 
due to the
 
adoption of
accounting
 
standards
 
on
 
a
 
retrospective
 
basis.
 
Such
 
changes
 
may
 
also
 
affect
 
our
 
regulatory
 
capital
 
and
 
ratios.
 
For
example, the
 
introduction of
 
the ECL regime
 
under IFRS 9
 
in 2018 fundamentally
 
changed how
 
credit risk arising
 
from
loans, loan commitments, guarantees
 
and certain revocable facilities
 
is accounted for. Under
 
the ECL regime, credit
 
loss
expenses may
 
increase rapidly
 
at the
 
onset of an
 
economic downturn
 
as a
 
result of
 
higher levels
 
of credit
 
impairments
(stage 3), as well as higher ECL from stages 1 and 2, only gradually diminishing once the economic outlook improves. As
we observed
 
in 2020,
 
this effect may
 
be more
 
pronounced in a
 
deteriorating economic environment.
 
Substantial increases
in ECL could
 
exceed expected
 
loss for regulatory
 
capital purposes
 
and adversely
 
affect our
 
CET1 capital
 
and regulatory
capital ratios.
 
We may be unable to maintain our capital strength
Capital
 
strength
 
enables
 
us
 
to grow
 
our
 
businesses
 
and
 
absorb
 
increases
 
in
 
regulatory
 
and
 
capital
 
requirements.
 
Our
ability to
 
maintain our
 
capital
 
ratios is
 
subject to
 
numerous risks,
 
including the
 
financial results
 
of our
 
businesses,
 
the
effect of changes to
 
capital standards,
 
methodologies and interpretations that may
 
adversely affect the calculation of our
capital
 
ratios, the
 
imposition
 
of risk
 
add-ons
 
or capital
 
buffers,
 
and the
 
application
 
of additional
 
capital,
 
liquidity
 
and
similar requirements to subsidiaries. Our capital and leverage ratios are driven primarily by RWA, LRD and eligible capital,
all of which
 
may fluctuate
 
based on
 
a number
 
of factors,
 
some of
 
which are
 
outside of
 
our control.
 
The results
 
of our
businesses may
 
be adversely
 
affected by
 
events arising from
 
other risk
 
factors described
 
herein. In
 
some cases, such
 
as
litigation and regulatory
 
risk and
 
operational risk
 
events, losses
 
may be sudden
 
and large.
 
These risks could
 
reduce the
amount of
 
capital available
 
for return
 
to shareholders
 
and hinder
 
our ability
 
to achieve
 
our capital
 
returns target
 
of a
progressive cash dividend coupled with
 
a share repurchase
 
program.
Our eligible capital may be
 
reduced by losses recognized within net
 
profit or other comprehensive income.
 
Eligible capital
may also
 
be reduced
 
for other
 
reasons, including
 
acquisitions that
 
change the
 
level of
 
goodwill, changes
 
in temporary
differences
 
related
 
to
 
DTAs
 
included
 
in
 
capital,
 
adverse
 
currency
 
movements
 
affecting
 
the
 
value
 
of
 
equity,
 
prudential
adjustments that may be required due to the valuation uncertainty associated with certain types of positions, changes in
regulatory
 
interpretations
 
on the
 
inclusion
 
or exclusion
 
of items
 
contributing
 
to our
 
shareholders
’
 
equity in
 
regulatory
capital, and changes
 
in the value
 
of certain pension
 
fund assets and
 
liabilities or in
 
the interest rate and
 
other assumptions
used to calculate the changes in our net defined benefit
 
obligation recognized in other comprehensive income.
RWA
 
are
 
driven
 
by
 
our
 
business
 
activities,
 
by
 
changes
 
in
 
the
 
risk
 
profile
 
of
 
our
 
exposures,
 
by
 
changes
 
in
 
our
 
foreign
currency exposures and foreign exchange rates, and by regulation.
 
For instance, substantial market volatility, a widening
of credit spreads,
 
adverse currency movements,
 
increased counterparty
 
risk, deterioration in the
 
economic environment
or increased
 
operational risk
 
could result
 
in an
 
increase in
 
RWA. Changes
 
in the
 
calculation of
 
RWA, the
 
imposition of
additional
 
supplemental RWA
 
charges or
 
multipliers applied
 
to certain
 
exposures and
 
other methodology
 
changes,
 
as
well as the
 
finalization of the
 
Basel III framework and
 
Fundamental Review of the
 
Trading Book promulgated by
 
the BCBS,
which are expected to affect our RWA.
The
 
leverage
 
ratio
 
is
 
a
 
balance
 
sheet-driven
 
measure
 
and
 
therefore
 
limits
 
balance
 
sheet-intensive
 
activities,
 
such
 
as
lending, more
 
than activities
 
that are
 
less balance
 
sheet intensive,
 
and it
 
may constrain
 
our business
 
even if
 
we satisfy
other
 
risk-based
 
capital
 
requirements.
 
Our
 
LRD
 
is
 
driven
 
by,
 
among
 
other
 
things,
 
the
 
level
 
of
 
client
 
activity,
 
including
deposits and loans,
 
foreign exchange
 
rates, interest rates,
 
other market
 
factors and changes
 
in required liquidity.
 
Many
of these factors are wholly or partly outside of our control.
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Risk factors
 
62
The effect of taxes on our financial results is significantly
 
influenced by tax law changes and reassessments of our
deferred tax assets and, also, operating losses of certain entities with
 
no associated tax benefit
Our
 
effective
 
tax
 
rate
 
is highly
 
sensitive
 
to
 
our
 
performance,
 
our
 
expectation
 
of
 
future
 
profitability
 
and
 
any
 
potential
increases or
 
decreases in
 
statutory tax
 
rates, such as
 
any potential
 
increase or
 
decrease in
 
the US
 
federal corporate
 
tax
rate.
 
Furthermore,
 
based
 
on
 
prior
 
years’
 
tax
 
losses
 
and
 
deductible
 
temporary
 
differences,
 
we
 
have
 
recognized
 
DTAs
reflecting
 
the
 
probable
 
recoverable
 
level
 
based
 
on
 
future
 
taxable
 
profit
 
as
 
informed
 
by
 
our
 
business
 
plans.
 
If
 
our
performance is expected to produce diminished taxable
 
profit in future years, particularly in the US, we
 
may be required
to write down
 
all or a
 
portion of the
 
currently recognized
 
DTAs
 
through the
 
income statement
 
in excess of
 
anticipated
amortization. This
 
would have
 
the effect
 
of increasing
 
our
 
effective
 
tax rate
 
in the
 
year in
 
which any
 
write-downs are
taken.
 
Conversely,
 
if
 
we
 
expect
 
the
 
performance
 
of
 
entities
 
in
 
which
 
we
 
have
 
unrecognized
 
tax
 
losses
 
to
 
improve,
particularly
 
in
 
the
 
US or
 
the
 
UK, we
 
could potentially
 
recognize
 
additional
 
DTAs.
 
The
 
effect
 
of doing
 
so
 
would
 
be to
reduce our
 
effective tax
 
rate in
 
years in
 
which additional
 
DTAs
 
are recognized
 
and to
 
increase our
 
effective
 
tax rate
 
in
future years. Our
 
effective tax rate
 
is also sensitive to
 
any future reductions
 
in statutory tax
 
rates, particularly in
 
the US,
which would cause
 
the expected
 
future tax
 
benefit from
 
items such as
 
tax loss carry
 
-forwards in
 
the affected
 
locations
to
 
diminish
 
in
 
value.
 
This,
 
in
 
turn,
 
would
 
cause
 
a
 
write-down
 
of
 
the
 
associated
 
DTAs.
 
Conversely,
 
an
 
increase
 
in
 
US
corporate tax rates would result in an increase
 
in the Group’s DTAs.
We generally revalue our
 
DTAs in the
 
fourth quarter of the financial year
 
based on a reassessment of future
 
profitability
taking into
 
account our
 
updated
 
business plans.
 
We
 
consider
 
the performance
 
of our
 
businesses and
 
the accuracy
 
of
historical forecasts,
 
tax rates and
 
other factors in
 
evaluating the recoverability
 
of our DTAs,
 
including the remaining
 
tax
loss carry-forward
 
period and our assessment
 
of expected future
 
taxable profits over
 
the life of DTAs.
 
Estimating future
profitability is
 
inherently subjective
 
and is particularly
 
sensitive to future
 
economic, market
 
and other conditions,
 
which
are difficult to predict.
 
Our results
 
in past
 
years have
 
demonstrated that
 
changes in
 
the recognition
 
of DTAs
 
can have
 
a very
 
significant effect
on our reported results. Any future change in the manner in
 
which UBS remeasures DTAs could affect UBS’s effective tax
rate, particularly in the year in which the change is made.
Our
 
full-year
 
effective
 
tax
 
rate
 
would
 
be
 
impacted
 
if
 
aggregate
 
tax
 
expenses
 
in
 
respect
 
of
 
profits
 
from
 
branches
 
and
subsidiaries without
 
loss coverage
 
differ from
 
what is
 
expected or
 
if certain
 
branches and
 
subsidiaries
 
incur operating
losses that we cannot benefit
 
from through the income
 
statement. In particular, operating
 
losses at entities or branches
that cannot
 
offset
 
for tax
 
purposes
 
taxable
 
profits
 
in other
 
Group entities,
 
and which
 
do not
 
result in
 
additional
 
DTA
recognition, would increase our effective tax rate. In addition, tax laws or the tax
 
authorities in countries where we have
undertaken
 
legal structure
 
changes
 
may cause
 
entities to
 
be subject
 
to taxation
 
as
 
permanent
 
establishments
 
or may
prevent the transfer of tax
 
losses incurred in one legal entity
 
to newly organized or reorganized
 
subsidiaries or affiliates,
or may impose limitations
 
on the utilization
 
of tax losses that
 
relate to businesses formerly
 
conducted by the transferor.
Were
 
this
 
to
 
occur
 
in
 
situations
 
where
 
there
 
were
 
also
 
limited
 
planning
 
opportunities
 
to
 
utilize
 
the
 
tax
 
losses
 
in
 
the
originating entity,
 
the
 
DTAs
 
associated with
 
such tax
 
losses
 
may be
 
required to
 
be written
 
down through
 
the
 
income
statement.
Changes in tax
 
law may materially
 
affect our effective
 
tax rate and,
 
in some cases,
 
may substantially affect the
 
profitability
of certain activities. In addition, statutory and regulatory changes, as well as changes
 
to the way in which courts and tax
authorities interpret tax laws, including
 
assertions that we are required
 
to pay taxes in
 
a jurisdiction as a
 
result of activities
connected to that
 
jurisdiction constituting a
 
permanent establishment
 
or similar theory,
 
and changes in
 
our assessment
of
 
uncertain
 
tax
 
positions,
 
could
 
cause
 
the
 
amount
 
of
 
taxes
 
we
 
ultimately
 
pay
 
to
 
materially
 
differ
 
from
 
the
 
amount
accrued.
We may incur material future tax liabilities in connection
 
with the acquisition of the Credit Suisse Group
In
 
the
 
past,
 
the
 
Credit
 
Suisse
 
Group
 
has
 
recorded
 
significant
 
impairments
 
of
 
the
 
tax
 
value
 
of
 
its
 
participations
 
in
subsidiaries below
 
their tax
 
acquisition costs.
 
As a
 
result
 
of the
 
acquisition
 
of the
 
Credit
 
Suisse Group,
 
tax acquisition
costs of participations held by Credit Suisse Group
 
AG and its subsidiaries have been transferred
 
to the UBS Group. UBS
Group AG
 
and its
 
subsidiaries may
 
become subject
 
to additional
 
Swiss tax
 
on future
 
reversals of
 
such impairments
 
for
Swiss tax
 
purposes.
 
Reversals
 
of prior
 
impairments
 
may
 
occur to
 
the extent
 
that the
 
net asset
 
value
 
of the
 
previously
impaired subsidiary increases,
 
e.g., as a result
 
of an increase in retained
 
earnings. Although it is difficult
 
to quantify this
additional future
 
tax exposure,
 
as various
 
potential mitigants
 
(e.g., transfers
 
of assets
 
and liabilities,
 
business activities,
subsidiary
 
investments,
 
as
 
well
 
as
 
other
 
restructuring
 
measures
 
within
 
the
 
combined
 
Group
 
in
 
the
 
course
 
of
 
the
integration) exist, it may be material.
Liquidity and funding risk
Liquidity and funding management are critical to UBS’s
 
ongoing performance
 
The viability
 
of our
 
business depends
 
on the
 
availability of
 
funding sources,
 
and our
 
success depends
 
on our
 
ability to
obtain funding
 
at times,
 
in amounts,
 
for tenors
 
and at
 
rates that
 
enable us
 
to efficiently
 
support our
 
asset base
 
in all
market conditions. Our
 
funding sources
 
have generally been
 
stable, but could
 
change in the
 
future because
 
of, among
other things,
 
general market
 
disruptions or
 
widening credit
 
spreads, which
 
could also
 
influence the
 
cost of
 
funding. A
substantial part of our liquidity
 
and funding requirements are met using short-term unsecured funding
 
sources, including
retail and wholesale
 
deposits and the regular
 
issuance of money market
 
securities. A change in the
 
availability of short-
term funding could occur quickly.
 
Annual Report 2024 |
Our strategy, business model and environment
 
| Risk factors
 
63
The addition
 
of loss-absorbing
 
debt as
 
a component
 
of capital
 
requirements,
 
the regulatory
 
requirements
 
to maintain
minimum TLAC at UBS’s holding company and at certain
 
of its subsidiaries, as well as the
 
power of resolution authorities
to bail in TLAC instruments and other debt obligations, and uncertainty as to how such powers will be exercised, caused
and may still cause
 
a further increase in UBS’s
 
cost of funding, and
 
could potentially increase the total amount
 
of funding
required, in the absence of other changes
 
in its business.
Reductions in our credit ratings
 
may adversely affect the market value
 
of the securities and
 
other obligations and increase
our funding costs,
 
in particular with
 
regard to funding from
 
wholesale unsecured sources, and could
 
affect the availability
of certain kinds of funding. In addition,
 
as experienced in connection with the Moody’s Investors Service Ltd. downgrade
of UBS AG’s long-term debt rating in June 2012, rating downgrades can require
 
us to post additional collateral or make
additional
 
cash
 
payments
 
under
 
trading
 
agreements.
 
Our
 
credit
 
ratings,
 
together
 
with
 
our
 
capital
 
strength
 
and
reputation, also contribute to
 
maintaining client and counterparty confidence,
 
and it is
 
possible that rating changes
 
could
influence the performance of some of our businesses. The acquisition of the Credit Suisse Group has elevated these
 
risks
and
 
may
 
cause
 
these
 
risks
 
to
 
intensify.
 
Upon
 
the
 
close
 
of
 
the
 
acquisition
 
in
 
June
 
2023,
 
Fitch
 
Ratings
 
Ireland
 
Limited
downgraded the Long-Term
 
Issuer Default Ratings (IDRs)
 
of UBS Group AG
 
to “A” from “A+”
 
and of UBS AG to
 
“A+”
from “AA–“. Fitch Ratings Ltd. also upgraded Credit
 
Suisse AG’s Long-Term
 
IDR to “A+” from “BBB+”.
The requirement
 
to maintain
 
a liquidity
 
coverage
 
ratio of
 
high-quality
 
liquid assets
 
to estimated
 
stressed short-term
 
net cash
outflows,
 
and other
 
similar liquidity
 
and funding
 
requirements, oblige
 
us to maintain
 
high levels
 
of overall
 
liquidity, limit our
ability to optimize
 
interest income and expense,
 
make certain lines
 
of business less attractive
 
and reduce our overall ability
to generate profits. The liquidity coverage
 
ratio and net stable funding ratio requirements
 
are intended to ensure that we
are not overly reliant on short-term funding
 
and that we have sufficient long-term funding
 
for illiquid assets. The relevant
calculations make assumptions about the relative likelihood and amount of outflows of funding and available sources of
additional funding
 
in market-wide and
 
firm-specific stress situations. In
 
an actual
 
stress situation, however,
 
our funding
outflows could
 
exceed the
 
assumed amounts.
 
Further, UBS is subject
 
to increased
 
liquidity requirements
 
related to too-big-
to-fail (TBTF)
 
measures under
 
the direction
 
of FINMA, which
 
became effective
 
on 1 January
 
2024.
 
Annual Report 2024 |
Financial and operating performance | Accounting
 
and financial reporting
 
64
Financial and operating
performance
Management report
Accounting and financial reporting
 
Critical accounting estimates and judgments
In
 
preparing
 
our
 
financial
 
statements
 
in
 
accordance
 
with
 
IFRS
 
Accounting
 
Standards,
 
as
 
issued
 
by
 
the
 
International
Accounting
 
Standards
 
Board
 
(the
 
IASB),
 
we
 
apply
 
judgment
 
and
 
make
 
estimates
 
and
 
assumptions
 
that
 
may
 
involve
significant
 
uncertainty
 
at
 
the
 
time
 
they
 
are
 
made.
 
We
 
regularly
 
reassess
 
those
 
estimates
 
and
 
assumptions,
 
which
encompass historical
 
experience, expectations
 
of the
 
future and
 
other pertinent
 
factors, to
 
determine their
 
continuing
relevance based on current conditions, and
 
update them as necessary.
 
Changes in estimates and assumptions may have
significant
 
effects
 
on the
 
financial
 
statements.
 
Furthermore,
 
actual
 
results
 
may
 
differ
 
significantly from
 
our estimates,
which could result in significant losses to the Group,
 
beyond what we expected or provided for.
 
Key
 
areas
 
involving
 
a
 
high
 
degree
 
of
 
judgment
 
and
 
areas
 
where
 
estimates
 
and
 
assumptions
 
are
 
significant
 
to
 
the
consolidated financial statements include
 
the following (note references below
 
are found in the “Consolidated financial
statements” section of this report):
–
provisional
 
amounts
 
of identifiable
 
assets
 
acquired
 
and
 
liabilities assumed
 
with
 
the
 
acquisition
 
of the
 
Credit
 
Suisse
Group (refer to “Note 2 Accounting for the acquisition of
 
Credit Suisse Group”);
–
expected credit loss measurement (refer to “Note 20 Expected
 
credit loss measurement”);
–
fair value measurement (refer to “Note 21 Fair value
 
measurement”);
–
income taxes (refer to “Note 9 Income taxes”);
–
provisions and contingent liabilities (refer to “Note 18 Provisions
 
and contingent liabilities”);
–
post-employment benefit plans (refer to “Note 26 Post-employment
 
benefit plans”);
–
goodwill (refer to “Note 13 Goodwill and intangible assets”);
 
and
 
–
consolidation of structured entities (refer to “Note 28 Interests
 
in subsidiaries and other entities”).
›
Refer to “Note 1 Summary of material accounting
 
policies” in the “Consolidated financial statements”
 
section of this report and to
the “Risk factors” section of this report for more information
Accounting and financial reporting changes after 2024
IFRS 18,
Presentation and Disclosure in Financial Statements
In
 
April
 
2024,
 
the
 
IASB
 
issued
 
a
 
new
 
standard,
 
IFRS 18,
Presentation
 
and
 
Disclosure
 
in
 
Financial
 
Statements
,
 
which
replaces IAS 1,
Presentation of Financial Statements
, and is effective from 1 January 2027. The main changes introduced
by
 
IFRS 18
 
relate
 
to
 
the
 
structure
 
of
 
income
 
statements,
 
new
 
disclosure
 
requirements
 
for
 
management
 
performance
measures and enhanced guidance on aggregation and disaggregation of information. UBS is assessing the impact of the
new requirements on its reporting
 
but expects it to be limited.
Amendments to IFRS 9,
Financial Instruments
, and IFRS 7,
Financial Instruments: Disclosures
In
 
May
 
2024,
 
the
 
IASB
 
issued
Amendments
 
to
 
the
 
Classification
 
and
 
Measurement
 
of
 
Financial
 
Instruments
 
–
Amendments
 
to
 
IFRS 9
 
and
 
IFRS 7
 
(the
 
Amendments).
 
The
 
Amendments
 
relate
 
to derecognition
 
of financial
 
liabilities
settled
 
through
 
electronic
 
transfer
 
systems
 
and
 
classification
 
of
 
financial
 
assets,
 
and
 
they
 
introduce
 
new
 
disclosure
requirements. The Amendments are effective
 
from 1 January 2026, with early application permitted either for the entire
set of amendments
 
or for only
 
those that
 
relate to
 
classification of
 
financial instruments.
 
UBS is currently
 
assessing the
impact of the new requirements on
 
its financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Financial and operating performance | Group
 
performance
 
65
Group performance
Income statement
For the year ended
% change from
USD m
31.12.24
31.12.23
1
31.12.22
31.12.23
Net interest income
 
7,108
 
7,297
 
6,621
 
(3)
Other net income from financial instruments measured
 
at fair value through profit or loss
 
14,690
 
11,583
 
7,517
 
27
Net fee and commission income
 
26,138
 
21,570
 
18,966
 
21
Other income
 
675
 
384
 
1,459
 
76
Total revenues
 
48,611
 
40,834
 
34,563
 
19
Negative goodwill
 
27,264
Credit loss expense / (release)
 
551
 
1,037
 
29
 
(47)
Personnel expenses
 
27,318
 
24,899
 
17,680
 
10
General and administrative expenses
 
10,124
 
10,156
 
5,189
 
0
Depreciation, amortization and impairment of non-financial
 
assets
 
3,798
 
3,750
 
2,061
 
1
Operating expenses
 
41,239
 
38,806
 
24,930
 
6
Operating profit / (loss) before tax
 
6,821
 
28,255
 
9,604
 
(76)
Tax expense / (benefit)
 
 
1,675
 
873
 
1,942
 
92
Net profit / (loss)
 
5,146
 
27,382
 
7,661
 
(81)
Net profit / (loss) attributable to non-controlling interests
 
60
 
16
 
32
 
272
Net profit / (loss) attributable to shareholders
 
5,085
 
27,366
 
7,630
 
(81)
Comprehensive income
Total comprehensive income
 
3,401
 
28,374
 
3,167
 
(88)
Total comprehensive income attributable to non-controlling interests
 
13
 
22
 
18
 
(39)
Total comprehensive income attributable to shareholders
 
3,388
 
28,352
 
3,149
 
(88)
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this
 
report for more information
about the relevant adjustments.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Financial and operating performance | Group
 
performance
 
66
Selected financial information of our business divisions and Group Items
For the year ended 31.12.24
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
 
Management
Investment
Bank
Non-core and
Legacy
Group Items
Total
Total revenues as reported
 
24,516
 
9,334
 
3,182
 
10,948
 
1,605
 
(975)
 
48,611
of which: PPA effects and other integration items
1
 
891
 
1,038
 
989
 
(41)
 
2,877
of which: loss related to an investment in an associate
 
(21)
 
(59)
 
(80)
Total revenues (underlying)
 
23,646
 
8,355
 
3,182
 
9,958
 
1,605
 
(933)
 
45,814
Credit loss expense / (release)
 
(16)
 
404
 
(1)
 
97
 
69
 
(2)
 
551
Operating expenses as reported
 
20,608
 
5,741
 
2,663
 
8,934
 
3,512
 
(220)
 
41,239
of which: integration-related expenses and PPA effects
2
 
1,807
 
749
 
351
 
717
 
1,154
 
(12)
 
4,766
of which: items related to the Swisscard transactions
3
 
41
 
41
Operating expenses (underlying)
 
18,802
 
4,951
 
2,312
 
8,217
 
2,359
 
(208)
 
36,432
Operating profit / (loss) before tax as reported
 
3,924
 
3,189
 
520
 
1,917
 
(1,976)
 
(752)
 
6,821
Operating profit / (loss) before tax (underlying)
 
4,860
 
3,000
 
871
 
1,644
 
(822)
 
(723)
 
8,831
For the year ended 31.12.23
4,5
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
 
Management
Investment
Bank
Non-core and
Legacy
Group Items
Negative
goodwill
Total
Total revenues as reported
 
21,556
 
7,687
 
2,686
 
8,703
 
697
 
(495)
 
40,834
of which: PPA effects and other integration items
1
 
923
 
783
 
583
 
(9)
 
2,280
of which: loss related to an investment in an associate
 
(190)
 
(317)
 
(508)
Total revenues (underlying)
 
20,823
 
7,222
 
2,686
 
8,120
 
697
 
(486)
 
39,062
Negative goodwill
 
27,264
 
27,264
Credit loss expense / (release)
 
166
 
482
 
0
 
190
 
193
 
6
 
1,037
Operating expenses as reported
 
17,945
 
4,394
 
2,353
 
8,585
 
5,091
 
438
 
38,806
of which: integration-related expenses and PPA effects
2
 
1,018
 
398
 
205
 
697
 
1,775
 
451
 
4,543
of which: acquisition-related costs
 
202
 
202
Operating expenses (underlying)
 
16,927
 
3,996
 
2,149
 
7,889
 
3,316
 
(215)
 
34,061
Operating profit / (loss) before tax as reported
 
3,445
 
2,811
 
332
 
(72)
 
(4,587)
 
(938)
 
27,264
 
28,255
Operating profit / (loss) before tax (underlying)
 
3,730
 
2,744
 
537
 
42
 
(2,812)
 
(277)
 
3,963
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 Represents the termination
 
fee paid to
 
American
Express related to the expected sale in 2025 of our 50% holding in Swisscard.
 
4 Comparative-period information has been restated for changes in business division perimeters, Group Treasury
 
allocations and Non-
core and Legacy
 
cost allocations. Refer
 
to “Note 3
 
Segment reporting” in
 
the “Consolidated financial
 
statements” section of
 
this report for
 
more information about
 
the relevant changes.
 
5 Comparative-period
information has been
 
revised to
 
reflect measurement
 
period adjustments impacting
 
negative goodwill.
 
Refer to “Note
 
2 Accounting
 
for the acquisition
 
of the Credit
 
Suisse Group” in
 
the “Consolidated
 
financial
statements” section of this report for more information about the relevant adjustments.
Integration-related expenses, by business division and Group Items
For the year ended
USD m
31.12.24
31.12.23
1
Global Wealth Management
 
1,845
 
1,013
Personal & Corporate Banking
 
654
 
338
Asset Management
 
351
 
205
Investment Bank
 
717
 
697
Non-core and Legacy
 
1,154
 
1,775
Group Items
 
36
 
451
Total integration-related expenses
 
4,757
 
4,478
of which: total revenues
 
104
 
0
of which: operating expenses
 
4,653
 
4,478
of which: personnel expenses
 
2,541
 
2,192
of which: general and administrative expenses
 
1,681
 
1,436
of which: depreciation, amortization and impairment of non-financial
 
assets
 
430
 
850
1 Comparative-period information
 
has been restated for
 
changes in business
 
division perimeters, Group
 
Treasury allocations
 
and Non-core and
 
Legacy cost allocations.
 
Refer to “Note 3
 
Segment reporting” in
 
the
“Consolidated financial statements” section of this report for more information about the relevant changes.
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 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 on financial instruments within Non-core and Legacy,
 
due to the nature of its business model.
Underlying revenues also exclude losses related to an investment
 
in an associate.
 
Annual Report 2024 |
Financial and operating performance | Group
 
performance
 
67
In 2024, 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. Underlying operating expenses also
 
exclude items related to the Swisscard
 
transactions.
Results 2024 vs 2023
In 2024, reported net
 
profit attributable to shareholders decreased by
 
USD 22,281m to USD 5,085m, largely
 
due to 2023
including negative goodwill of
 
USD 27,264m relating to
 
the acquisition of the Credit
 
Suisse Group.
 
There was a net
 
tax
expense of USD 1,675m in 2024.
 
Operating
 
profit
 
before
 
tax
 
decreased
 
by
 
USD 21,434m
 
to
 
USD 6,821m,
 
primarily
 
due
 
to
 
2023
 
including
 
negative
goodwill and higher
 
operating expenses in 2024,
 
partly offset by
 
an increase in total
 
revenues and lower net
 
credit loss
expenses.
 
Total
 
revenues
 
increased
 
by
 
USD 7,777m,
 
or
 
19%,
 
to
 
USD 48,611m,
 
driven
 
by
 
the
 
consolidation
 
of
 
Credit
Suisse
 
revenues
 
for
 
the
 
full
 
period,
 
and
 
included
 
an
 
increase
 
of
 
USD 597m
 
in
 
accretion
 
impacts
 
resulting
 
from
 
PPA
adjustments on financial instruments and
 
other PPA effects. Net fee
 
and commission income increased by
 
USD 4,568m,
total combined net
 
interest income and
 
other net income
 
from financial instruments
 
measured at fair
 
value through profit
or
 
loss
 
increased
 
by
 
USD 2,918m
 
and
 
other
 
income
 
increased
 
by
 
USD 291m.
 
Operating
 
expenses
 
increased
 
by
USD 2,433m, or 6%, to USD 41,239m, largely due to the consolidation of Credit
 
Suisse expenses for the full period,
 
and
included a USD 223m increase in integration-related expenses and PPA effects
 
.
 
This was mainly driven by a USD 2,419m
increase
 
in
 
personnel
 
expenses,
 
as well
 
as
 
a
 
USD 48m
 
increase
 
in depreciation,
 
amortization
 
and
 
impairment
 
of
 
non-
financial assets,
 
partly offset
 
by a
 
USD 32m decrease
 
in general
 
and administrative
 
expenses. Net
 
credit loss
 
expenses
were USD 551m, compared with USD 1,037m in 2023.
Underlying results 2024 vs 2023
Underlying total revenues for
 
2024 excluded PPA effects
 
and other integration items
 
of USD 2,877m, as well
 
as USD 80m
of losses related to an
 
investment in an associate.
 
Underlying operating expenses
 
excluded integration-related expenses
and PPA effects of USD 4,766m, as well as a USD 41m expense
 
related to the Swisscard transactions.
 
On an underlying basis, profit before tax increased by USD 4,868m to USD 8,831m, reflecting a USD 6,752m
 
increase in
underlying total revenues and
 
a USD 486m decrease
 
in net credit loss expenses,
 
partly offset by a USD 2,371m
 
increase
in underlying operating expenses.
Total revenues
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 2,918m to USD 21,798m, largely as
 
a result of the
 
consolidation of Credit Suisse revenues
for
 
the
 
full
 
period,
 
and
 
included
 
an
 
increase
 
of
 
USD 363m
 
in
 
accretion
 
impacts
 
resulting
 
from
 
PPA
 
adjustments
 
on
financial instruments and other PPA
 
effects.
Global Wealth Management revenues increased by USD 547m to USD 9,031m, largely as a result of the consolidation of
Credit Suisse revenues for the full period, and included a
 
USD 37m increase in accretion of PPA adjustments on financial
instruments and other PPA effects. Excluding the aforementioned effects,
 
net interest income decreased, reflecting lower
deposit and loan revenues and higher
 
liquidity and funding costs, and transaction-based income increased, mainly
 
driven
by higher levels of client activity,
 
particularly in the Asia Pacific and Americas regions.
 
Personal & Corporate Banking revenues
 
increased by USD 940m to USD
 
6,479m, largely as a result
 
of the consolidation
of
 
Credit
 
Suisse
 
revenues
 
for
 
the
 
full
 
period,
 
and
 
included
 
a
 
USD 266m
 
increase
 
in
 
accretion
 
of
 
PPA
 
adjustments
 
on
financial instruments and other PPA effects.
 
Excluding the aforementioned effects, net interest income decreased, mainly
due to lower deposit
 
revenues, including the effect from
 
shifts to lower-margin deposit products,
 
and higher liquidity and
funding costs.
Revenues
 
in
 
the
 
Investment
 
Bank
 
increased
 
by
 
USD 1,109m
 
to
 
USD 6,164m,
 
and
 
included
 
a
 
USD 71m
 
increase
 
of
accretion of PPA adjustments on financial instruments and other PPA effects.
 
The overall increase was mainly attributable
to the Derivatives & Solutions business, mostly driven by
 
growth in Equity Derivatives and Foreign Exchange revenues
 
.
 
In
addition, Financing revenues increased, particularly in the Capital Markets Financing business.
 
There was also an increase
in
 
Global
 
Banking,
 
mainly
 
from
 
higher
 
revenues
 
across
 
Public
 
Capital
 
Markets,
 
primarily
 
driven
 
by
 
Leveraged
 
Capital
Markets.
Non-core and Legacy revenues increased by USD 842m to USD 1,163m, mainly due to the consolidation of Credit Suisse
revenues
 
for
 
the
 
full
 
period.
 
Revenues
 
included
 
net
 
gains
 
from
 
position
 
exits,
 
along
 
with
 
net
 
interest
 
income
 
from
securitized products and credit products
 
.
 
Total revenues also included
 
a net gain of USD 272m,
 
after accounting for the
PPA adjustments recorded
 
at the
 
closing of the
 
acquisition of the
 
Credit Suisse Group,
 
from the sale
 
of assets from
 
the
former Credit Suisse securitized products group to Apollo
 
Management Holdings and certain other entities.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Financial and operating performance | Group
 
performance
 
68
Group Items revenues
 
were negative USD 1,054m,
 
compared with negative USD 513m
 
in 2023. This
 
included the income
from
 
Group
 
hedging
 
and
 
own
 
debt,
 
including
 
hedge
 
accounting
 
ineffectiveness,
 
within
 
Group
 
Treasury.
 
Revenues
 
in
2024
 
were
 
driven
 
by
 
mark-to-market
 
effects
 
on
 
portfolio-level
 
economic
 
hedges,
 
mainly
 
due
 
to
 
cross-currency-basis
widening.
›
Refer to “Note 4 Net interest income and other
 
net income from financial instruments measured at fair value through
 
profit or
loss” in the “Consolidated financial statements”
 
section of this report for more information
Net interest income and other net income from financial instruments measured at fair value through profit or loss
For the year ended
% change from
USD m
31.12.24
31.12.23
1
31.12.22
31.12.23
Net interest income from financial instruments measured
 
at amortized cost and fair value through other
comprehensive income
 
47
 
3,527
 
5,218
 
(99)
Net interest income from financial instruments measured
 
at fair value through profit or loss and other
 
7,061
 
3,770
 
1,403
 
87
Other net income from financial instruments measured
 
at fair value through profit or loss
 
14,690
 
11,583
 
7,517
 
27
Total
 
21,798
 
18,880
 
14,137
 
15
Global Wealth Management
 
9,031
 
8,484
 
6,355
 
6
of which: net interest income
 
7,358
 
7,082
 
5,273
 
4
of which: transaction-based income from foreign exchange and other
 
intermediary activity
2
 
1,673
 
1,402
 
1,082
 
19
Personal & Corporate Banking
 
 
6,479
 
5,539
 
2,685
 
17
of which: net interest income
 
 
5,650
 
4,878
 
2,191
 
16
of which: transaction-based income from foreign exchange and other
 
intermediary activity
2
 
829
 
661
 
494
 
25
Asset Management
 
16
 
(5)
 
(23)
Investment Bank
 
6,164
 
5,055
 
5,769
 
22
Non-core and Legacy
 
1,163
 
321
 
118
 
262
Group Items
 
(1,054)
 
(513)
 
(767)
 
105
1 Comparative-period information
 
has been restated for
 
changes in business
 
division perimeters, Group
 
Treasury allocations
 
and Non-core and Legacy
 
cost allocations. Refer
 
to “Note 3 Segment
 
reporting” in the
“Consolidated financial statements” section of this
 
report for more information about the relevant
 
changes.
 
2 Mainly includes spread-related income in
 
connection with client-driven transactions,
 
foreign currency
translation effects and
 
income and expenses
 
from precious metals,
 
which are included
 
in the income
 
statement line Other
 
net income from
 
financial instruments measured
 
at fair value
 
through profit or
 
loss. The
amounts reported on this line are
 
one component of Transaction
 
-based income in the management discussion
 
and analysis of Global Wealth
 
Management and Personal & Corporate
 
Banking in the “Global Wealth
Management” and “Personal & Corporate Banking” sections of this report, respectively.
Net fee and commission income
Net fee
 
and commission
 
income increased
 
by USD 4,568m
 
to USD 26,138m,
 
largely as
 
a result
 
of the
 
consolidation of
Credit Suisse
 
revenues
 
for the
 
full period,
 
and included
 
an increase
 
of USD 257m
 
in accretion
 
of PPA
 
adjustments on
financial instruments and other PPA
 
effects, predominantly in the Investment
 
Bank.
Fees for portfolio management
 
and related services increased
 
by USD 1,650m
 
to USD 12,323m and investment
 
fund fees
increased
 
by
 
USD 930m
 
to
 
USD 5,767m,
 
predominantly
 
in
 
Global
 
Wealth
 
Management
 
and
 
Asset
 
Management,
respectively,
 
both
 
largely
 
as
 
a
 
result
 
of
 
the
 
consolidation
 
of
 
Credit
 
Suisse
 
revenues
 
for
 
the
 
full
 
period.
 
Global
 
Wealth
Management
 
also
 
benefited
 
from
 
positive
 
market
 
performance.
 
The
 
increase
 
in
 
Asset
 
Management
 
was
 
also
 
due
 
to
positive market performance and foreign currency effects,
 
as well as the revaluation of a real estate fund co-investment,
partly offset by effects of continued margin compression
 
and the impact of exits from non-strategic businesses.
Net brokerage fees increased by USD 1,009m to USD 4,224m, reflecting an increase across all
 
regions in Cash Equities in
Execution Services in the Investment
 
Bank, as well as an increase in Global
 
Wealth Management that was
 
due to higher
levels of client activity, particularly in the Asia Pacific and
 
Americas regions.
Underwriting fee income increased by
 
USD 218m to USD 786m, mainly due
 
to an increase in
 
debt underwriting revenues
from public offerings in Global Banking in the Investment
 
Bank, reflecting higher levels of client activity.
›
Refer to “Note 5 Net fee and commission
 
income” in the “Consolidated financial statements”
 
section of this report for more
information
Other income
Other income
 
was USD 675m
 
compared with
 
USD 384m in
 
2023, mainly
 
due to
 
a USD 492m
 
increase in
 
the share
 
of
net
 
profits
 
from
 
associates
 
and
 
joint
 
ventures.
 
In
 
addition,
 
there
 
was
 
a
 
USD 135m
 
gain
 
related
 
to
 
the
 
sale
 
of
 
our
investment in an associate, with half of the
 
gain being recognized within the Investment Bank and the other half
 
in Non-
core
 
and
 
Legacy,
 
and
 
USD 113m
 
net
 
gains
 
in
 
Asset
 
Management
 
from
 
the
 
sale
 
of
 
non-strategic
 
businesses.
 
These
increases were partly offset by
 
a USD 139m reduction
 
in gains recognized on
 
repurchases of UBS’s own
 
debt instruments.
2024 also included
 
losses of USD
 
75m relating
 
to insurance
 
and similar contracts,
 
compared with
 
gains of USD
 
41m in
2023. The insurance and similar contracts are hedged with derivative instruments, with offsetting gains and losses in the
income statement within
Other net income from financial instruments measured at
 
fair value through profit or loss
.
›
Refer to “Note 6 Other income” in the “Consolidated
 
financial statements”
 
section of this report for more information
›
Refer to “Note 29 Changes in organization and
 
acquisitions and disposals of subsidiaries and businesses”
 
in the “Consolidated
financial statements”
 
section of this report for more information about disposals
 
of subsidiaries and businesses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Financial and operating performance | Group
 
performance
 
69
Credit loss expense / release
Total net credit loss expenses
 
in 2024
 
were USD 551m, reflecting net
 
releases of USD 99m
 
related to performing
 
positions
and net expenses of USD 651m on credit-impaired
 
positions. Net credit loss expenses were
 
USD 1,037m in 2023.
›
Refer to “Note 10 Financial assets at amortized
 
cost and other positions in scope of expected
 
credit loss measurement” and
“Note 20 Expected credit loss measurement” in the “Consolidated
 
financial statements” section of this report for more
information about credit loss expenses / releases
›
Refer to the “Risk factors” section of this report for
 
more information
Credit loss expense / (release)
Performing positions
Credit-impaired positions
USD m
Stages 1 and 2
Stage 3
Purchased
 
Total
For the year ended 31.12.24
Global Wealth Management
 
(60)
 
41
 
3
 
(16)
Personal & Corporate Banking
 
(63)
 
487
 
(21)
 
404
Asset Management
 
(1)
 
0
 
0
 
(1)
Investment Bank
 
56
 
42
 
0
 
97
Non-core and Legacy
 
(30)
 
42
 
57
 
69
Group Items
 
(2)
 
0
 
0
 
(2)
Total
 
(99)
 
612
 
39
 
551
For the year ended 31.12.23
Global Wealth Management
 
127
 
27
 
13
 
166
Personal & Corporate Banking
 
271
 
183
 
27
 
482
Asset Management
 
1
 
(1)
 
0
 
0
Investment Bank
 
110
 
78
 
2
 
190
Non-core and Legacy
 
78
 
91
 
25
 
193
Group Items
 
5
 
0
 
0
 
6
Total
 
593
 
378
 
67
 
1,037
For the year ended 31.12.22
Global Wealth Management
 
(5)
 
5
 
0
Personal & Corporate Banking
 
27
 
12
 
39
Asset Management
 
0
 
0
 
0
Investment Bank
 
6
 
(18)
 
(12)
Non-core and Legacy
 
0
 
2
 
2
Group Items
 
1
 
0
 
1
Total
 
29
 
0
 
29
 
Operating expenses
Personnel expenses
Personnel expenses increased
 
by USD 2,419m to
 
USD 27,318m, largely due
 
to the
 
consolidation of
 
Credit Suisse expenses
for the
 
full period,
 
partly offset
 
by the
 
impact of
 
a smaller
 
workforce. Salaries
 
and variable
 
compensation increased
 
by
USD 2,205m,
 
including
 
a
 
USD 744m
 
increase
 
in
 
financial
 
advisor
 
compensation
 
as
 
a
 
result
 
of
 
higher
 
compensable
revenues.
 
Personnel
 
expenses
 
included
 
a
 
USD 349m
 
increase
 
in
 
integration-related
 
expenses
 
largely
 
related
 
to
 
higher
salaries, partly offset by lower costs related
 
to post-employment benefit plans and variable comp
 
ensation.
›
Refer to the “Compensation”
 
section of this report for more information
›
Refer to “Note 7 Personnel expenses”, “Note 26
 
Post-employment benefit plans” and “Note 27
 
Employee benefits: variable
compensation” in the “Consolidated financial statements”
 
section of this report for more information
General and administrative expenses
General and administrative expenses decreased by USD 32m to USD 10,124m, primarily due to a USD 937m decrease in
expenses for
 
litigation, regulatory
 
and similar
 
matters, mainly
 
reflecting
 
USD 665m higher
 
expenses in
 
2023 related
 
to
the
 
US
 
residential
 
mortgage-backed
 
securities
 
litigation
 
matter,
 
as
 
well
 
as
 
a
 
USD 300m
 
release
 
in
 
2024
 
of
 
IFRS 3
acquisition-related
 
contingent
 
liabilities
 
following
 
settlements.
 
These
 
decreases
 
were
 
largely
 
offset
 
by
 
a
 
USD 505m
increase
 
in
 
technology
 
costs,
 
mainly
 
reflecting
 
higher
 
cloud
 
computing
 
usage
 
and
 
the
 
consolidation
 
of
 
Credit
 
Suisse
expenses for the full
 
period,
 
as well as a
 
USD 245m increase
 
in integration-related
 
expenses, mainly driven
 
by increases
in outsourcing and marketing costs.
 
›
Refer to “Note 8 General and administrative expenses”
 
and “Note 18 Provisions and contingent liabilities” in
 
the “Consolidated
financial statements” section of this report for more information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Financial and operating performance | Group
 
performance
 
70
Depreciation, amortization and impairment of non-financial
 
assets
Depreciation, amortization and impairment of non-financial assets increased by USD 48m
 
to USD 3,798m, mainly due to
an
 
increase
 
in
 
underlying
 
expenses
 
of
 
USD 468m
 
reflecting
 
higher
 
amortization
 
of
 
internally
 
generated
 
capitalized
software, as a result of the consolidation of Credit Suisse expenses for the full period and a higher cost basis of software
assets. These
 
expenses were
 
partly offset
 
by a
 
USD 420m decrease
 
in integration-related
 
expenses, primarily
 
due to
 
a
USD 206m
 
impairment
 
of
 
a
 
software
 
project
 
in
 
progress
 
in
 
2023,
 
resulting
 
from
 
a
 
reprioritization
 
of
 
software
development
 
activity,
 
as
 
well
 
as
 
a
 
USD 171m
 
decrease
 
associated
 
with
 
real
 
estate
 
leases,
 
reflecting
 
higher
 
levels
 
of
impairment and accelerated depreciation in 2023
 
.
Operating expenses
For the year ended
% change from
USD m
31.12.24
31.12.23
31.12.22
31.12.23
Personnel expenses
 
 
27,318
 
24,899
 
17,680
 
10
of which: salaries
 
12,178
 
10,997
 
7,045
 
11
of which: variable compensation
 
10,870
 
9,845
 
7,954
 
10
of which: performance awards
 
4,456
 
3,986
 
3,205
 
12
of which: financial advisors
1
 
5,293
 
4,549
 
4,508
 
16
of which: other
 
1,121
 
1,310
 
241
 
(14)
of which: other personnel expenses
2
 
4,270
 
4,058
 
2,681
 
5
General and administrative expenses
 
 
10,124
 
10,156
 
5,189
 
0
of which: net expenses for litigation, regulatory and similar
 
matters
 
(128)
 
809
 
348
Depreciation, amortization and impairment of non-financial
 
assets
 
3,798
 
3,750
 
2,061
 
1
Total operating expenses
 
41,239
 
38,806
 
24,930
 
6
1 Financial advisor compensation consists of cash
 
compensation, determined using a formulaic
 
approach based on production, and
 
deferred awards. It also
 
includes expenses related to compensation commitments
with financial advisors
 
entered into
 
at the time
 
of recruitment
 
that are subject
 
to vesting
 
requirements.
 
2 Consists of expenses
 
related to
 
contractors, social
 
security, post-employment
 
benefit plans,
 
and other
personnel expenses. Refer to “Note 7 Personnel expenses” in the “Consolidated financial statements”
 
section of this report for more information.
 
Tax
Income tax expenses
 
of USD 1,675m were
 
recognized for the
 
Group in 2024,
 
representing an effective
 
tax rate of
 
24.6%,
compared with USD 873m for 2023, which represented an effective tax rate
 
of 3.1%. The income tax expenses for
 
2024
included a net Swiss tax expense of USD 968m and a
 
net non-Swiss tax expense of USD 707m.
The net Swiss
 
tax expense included
 
current tax expenses of
 
USD 672m in respect
 
of taxable profits
 
of UBS Switzerland AG
and other
 
Swiss entities
 
and deferred
 
tax expenses
 
of USD 361m
 
that primarily
 
related to
 
the amortization
 
of deferred
tax
 
assets
 
(DTAs)
 
previously
 
recognized
 
in
 
relation
 
to
 
deductible
 
temporary
 
differences,
 
partly
 
offset
 
by
 
a
 
benefit
 
of
USD 65m in respect of a net upward revaluation of DTAs.
 
The net
 
non-Swiss tax expense
 
included current tax
 
expenses of USD 831m
 
that mainly related
 
to US
 
corporate alternative
minimum tax
 
with an
 
equivalent deferred
 
tax benefit
 
for DTAs recognized
 
in respect
 
of tax
 
credits carried
 
forward and
USD 667m in
 
respect
 
of other
 
taxable profits
 
of non-Swiss
 
subsidiaries and
 
branches. These
 
current tax
 
expenses were
partly offset
 
by a
 
net non-Swiss deferred
 
tax benefit, which
 
reflected benefits of
 
USD 831m related to
 
the aforementioned
deferred
 
tax
 
benefit
 
and
 
USD 417m
 
in
 
respect
 
of
 
a
 
net
 
upward
 
revaluation
 
of
 
DTAs,
 
partly
 
offset
 
by
 
an
 
expense
 
of
USD 457m that primarily
 
related to the
 
amortization of
 
DTAs previously recognized
 
in relation
 
to tax
 
losses carried
 
forward
and deductible temporary differences.
The Group’s
 
effective tax
 
rate for
 
the year
 
would have
 
been 31.6%
 
without the
 
aforementioned deferred
 
tax benefits
from
 
DTA
 
revaluations.
 
This
 
is
 
higher
 
than
 
the
 
Group’s
 
structural
 
rate
 
of
 
23%
 
mainly
 
because
 
its
 
net
 
profit
 
includes
operating losses of
 
certain entities, mostly reflecting
 
expenses related to the
 
integration of the
 
legacy operations of Credit
Suisse into the UBS Group, which include
 
restructuring costs and other expenses resulting
 
from the ongoing integration
activities that did not result in any tax benefits, because they cannot be offset with profits of other entities in the Group,
and did not result in any DTA recognition. We expect
 
that the 2025 full year effective tax rate
 
for the UBS Group will be
materially less than the structural rate of 23% due to projected
 
reorganization-related tax benefits.
 
›
Refer to “Note 9 Income taxes”
 
in the “Consolidated financial statements”
 
section of this report for more information
›
Refer to the “Risk factors” section of this report for
 
more information
Total comprehensive income attributable to shareholders
In 2024, total comprehensive income attributable to shareholders was USD 3,388m, reflecting net profit of USD 5,085m
and negative other comprehensive income (OCI),
 
net of tax, of USD 1,698m.
Foreign currency translation OCI was negative USD 1,754m, mainly due
 
to the strengthening of the US
 
dollar against the
Swiss franc and the euro.
Defined benefit plan OCI,
 
net of tax, was
 
negative USD 261m. Total pre-tax
 
OCI related to the
 
Swiss pension plans
 
was
negative USD 184m,
 
reflecting
 
losses of
 
USD 4,017m from
 
a remeasurement
 
of the
 
defined benefit
 
obligation (DBO),
largely offset by an increase in the plan assets of USD 2,596m and a decrease in
 
the effect of the asset ceiling under IFRS
Accounting Standards of USD 1,237m. The DBO remeasurement loss of USD 4,017m was mainly driven by losses due to
changes
 
in
 
financial
 
assumptions
 
of
 
USD 2,723m
 
and
 
an
 
experience
 
loss
 
of
 
USD 1,269m,
 
reflecting
 
the
 
effects
 
of
differences between the previous actuarial assumptions
 
and what actually occurred.
 
Annual Report 2024 |
Financial and operating performance | Group
 
performance
 
71
Total pre-tax OCI related to our non-Swiss pension plans was negative
 
USD 123m, mostly driven by the Credit Suisse UK
plan following a buy-in insurance transaction to mitigate
 
inherent risks.
OCI related
 
to cost of
 
hedging was negative
 
USD 146m, mainly driven
 
by a
 
widening of the
 
US dollar /
 
euro cross-currency
basis that decreased the fair value of the cross-currency
 
swaps.
OCI related
 
to cash
 
flow hedges
 
was USD
 
481m, mainly reflecting
 
net losses
 
on hedging instruments
 
that were reclassified
from OCI to the income statement, partly
 
offset by net unrealized losses on US
 
dollar hedging derivatives resulting from
increases in the relevant US dollar long-term interest rates.
›
Refer to “Statement of comprehensive income” in the
 
“Consolidated financial statements” section of this
 
report for more
information
›
Refer to “Note 25 Hedge accounting”
 
in the “Consolidated financial statements”
 
section of this report for more information about
cash flow hedges of forecast transactions
›
Refer to “Note 26 Post-employment benefit plans”
 
in the “Consolidated financial statements” section
 
of this report for more
information about OCI related to defined benefit plans
Sensitivity to interest rate movements
As of 31 December 2024, it
 
is estimated that a parallel
 
shift in yield curves
 
by +100 basis points
 
could lead to a
 
combined
increase in annual net
 
interest income from
 
our banking book of
 
approximately USD 1.2bn
 
in the first year
 
after such a
shift. Of this
 
increase, approximately
 
USD 0.7bn, USD 0.3bn
 
and USD 0.1bn
 
would result
 
from changes
 
in Swiss
 
franc,
US dollar and euro interest rates, respectively.
A parallel
 
shift in
 
yield curves
 
by –100
 
basis points
 
could lead
 
to a
 
combined increase
 
in annual
 
net interest
 
income of
approximately USD 0.6bn.
 
Of this increase,
 
approximately USD 1.1bn
 
would result from
 
changes in Swiss
 
franc interest
rates, driven by both contractual and assumed flooring benefits
 
under negative interest rates. US dollar and euro interest
rates would lead to an offsetting decrease
 
of USD 0.4bn and USD 0.1bn, respectively.
These estimates are based on a
 
hypothetical scenario of an immediate change
 
in interest rates, equal across all
 
currencies
and relative
 
to
 
implied
 
forward
 
rates
 
as of
 
31 December
 
2024 applied
 
to
 
our
 
banking
 
book.
 
These
 
estimates
 
further
assume no change
 
to balance
 
sheet size
 
and product
 
mix, stable
 
foreign exchange
 
rates, and
 
no specific management
action. These estimates do not represent
 
net interest income forecasts.
Seasonal characteristics
Our revenues
 
may show
 
seasonal patterns,
 
notably in
 
the Investment
 
Bank and
 
transaction-based revenues
 
for Global
Wealth Management, and
 
typically reflect the
 
highest client
 
activity levels in
 
the first quarter, with lower
 
levels throughout
the rest of the year,
 
especially during the summer months and the end-of-year
 
holiday season.
 
Key figures
 
Below we provide an overview of selected key figures
 
of the Group. For further information about key figures
 
related to
capital management, refer to the “Capital, liquidity
 
and funding, and balance sheet” section of this report.
Cost / income ratio
The
 
cost
 
/
 
income
 
ratio
 
was
 
84.8%,
 
compared
 
with
 
95.0%,
 
and
 
on
 
an
 
underlying
 
basis the
 
cost
 
/
 
income
 
ratio
 
was
79.5%, compared with 87.2%. Both of these decreases were as a result of higher total revenues,
 
partly offset by higher
operating expenses.
Return on common equity tier 1 capital
The return on
 
common equity tier 1
 
(CET1) capital was
 
6.7%, compared with 41.8%,
 
reflecting a USD 22,281m decrease
in net profit attributable to
 
shareholders,
 
predominantly due to the
 
recognition of negative goodwill
 
in 2023, as well as
a USD 10.2bn increase in average CET1 capital. On an underlying basis, the
 
return on CET1 capital was 8.7%, compared
with
 
4.2%.
 
This
 
increase
 
was
 
as
 
a
 
result
 
of
 
an
 
increase
 
in
 
net
 
profit
 
attributable
 
to
 
shareholders,
 
partly
 
offset
 
by
 
an
increase in average CET1 capital.
CET1 capital
CET1 capital decreased
 
by USD 6.6bn to USD 71.4bn
 
as of 31 December 2024,
 
mainly as operating profit
 
before tax of
USD 6.8bn was
 
more than
 
offset by
 
regular and
 
voluntary amortization
 
of the
 
remaining transitional
 
CET1 capital
 
PPA
adjustments
 
of
 
USD 4.3bn
 
(net
 
of
 
tax),
 
dividend
 
accruals
 
of
 
USD 2.8bn,
 
current
 
tax
 
expenses
 
of
 
USD 2.2bn,
 
foreign
currency
 
translation
 
losses
 
of
 
USD 1.8bn,
 
a
 
negative
 
effect
 
from
 
compensation-
 
and
 
own-share-related
 
capital
components of USD 1.4bn, and share repurchases
 
of USD 1.0bn under our 2024 share
 
repurchase program.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Financial and operating performance | Group
 
performance
 
72
Risk-weighted assets
During 2024,
 
RWA
 
decreased
 
by USD 48.0bn
 
to USD 498.5bn,
 
driven by
 
a USD 32.9bn
 
decrease
 
resulting from
 
asset
size and other
 
movements, a
 
USD 14.6bn decrease
 
from currency
 
effects, and
 
a decrease
 
of USD 0.4bn resulting
 
from
model updates and methodology changes.
CET1 capital ratio
Our CET1
 
capital
 
ratio
 
remained
 
broadly
 
unchanged
 
at
 
14.3%,
 
as a
 
USD 48.0bn
 
decrease
 
in RWA
 
was
 
offset
 
by the
aforementioned decrease in CET1 capital.
Leverage ratio denominator
During 2024,
 
the leverage
 
ratio denominator
 
(LRD) decreased
 
by USD 175.9bn
 
to USD 1,519.5bn,
 
mainly due
 
to asset
size and other movements of USD 102.3bn, as well as currency
 
effects of USD 73.6bn.
CET1 leverage ratio
Our CET1 leverage ratio increased to 4.7%
 
from 4.6%, due to the USD 175.9bn decrease in the
 
LRD, partly offset by the
aforementioned decrease in CET1 capital.
 
Personnel
The
 
number
 
of
 
internal
 
and
 
external
 
personnel
 
employed
 
was
 
approximately
 
128,983
 
(workforce
 
count)
 
as
 
of
31 December
 
2024,
 
a
 
net
 
decrease
 
of
 
9,479
 
compared
 
with
 
31 December
 
2023.
 
The
 
number
 
of
 
internal
 
personnel
employed
 
as
 
of
 
31 December
 
2024
 
was
 
108,648
 
(full-time
 
equivalents),
 
a
 
net
 
decrease
 
of
 
4,194
 
compared
 
with
31 December 2023. The number of external staff was approximately
 
20,335 (workforce count), a net decrease
 
of 5,284
compared with 31 December 2023.
Equity, CET1 capital and returns
As of or for the year ended
USD m, except where indicated
31.12.24
31.12.23
1
31.12.22
Net profit
Net profit attributable to shareholders
 
5,085
 
27,366
 
7,630
Equity
 
Equity attributable to shareholders
 
85,079
 
85,624
 
56,876
less: goodwill and intangible assets
6,887
7,515
6,267
Tangible equity attributable to shareholders
78,192
78,109
50,609
less: other CET1 deductions
6,825
107
5,152
CET1 capital
71,367
78,002
45,457
Return on equity
Return on equity (%)
6.0
36.9
13.3
Return on tangible equity (%)
6.5
40.8
14.9
Underlying return on tangible equity (%)
8.5
4.1
12.8
Return on CET1 capital (%)
6.7
41.8
17.0
Underlying return on CET1 capital (%)
8.7
4.2
14.6
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this
 
report for more information
about the relevant adjustments.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Financial and operating performance | Global
 
Wealth Management
 
73
Global Wealth Management
Global Wealth Management
1
As of or for the year ended
% change from
USD m, except where indicated
31.12.24
31.12.23
2
31.12.23
Results
Net interest income
7,358
7,082
4
Recurring net fee income
3
12,625
10,988
15
Transaction-based income
3
4,503
3,623
24
Other income
31
(137)
Total revenues
24,516
21,556
14
Credit loss expense / (release)
(16)
166
Operating expenses
20,608
17,945
15
Business division operating profit / (loss) before tax
3,924
3,445
14
Underlying results
Total revenues as reported
24,516
21,556
14
of which: PPA effects and other integration items
4
891
923
(3)
of which: PPA effects recognized in net interest income
 
910
873
4
of which: PPA effects and other integration items recognized in transaction-based income
(19)
49
of which: loss related to an investment in an associate
(21)
(190)
(89)
Total revenues (underlying)
3
23,646
20,823
14
Credit loss expense / (release)
(16)
166
Operating expenses as reported
20,608
17,945
15
of which: integration-related expenses and PPA effects
3,5
1,807
1,018
77
Operating expenses (underlying)
3
18,802
16,927
11
of which: expenses for litigation, regulatory and similar matters
147
122
20
Business division operating profit / (loss) before tax as reported
3,924
3,445
14
Business division operating profit / (loss) before tax (underlying)
3
4,860
3,730
30
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
3
13.9
(30.8)
Cost / income ratio (%)
3
84.1
83.2
Average attributed equity (USD bn)
6
33.3
29.3
14
Return on attributed equity (%)
3,6
11.8
11.8
Financial advisor compensation
7
5,292
4,548
16
Net new fee-generating assets (USD bn)
3
61.7
Fee-generating assets (USD bn)
3
1,816
1,661
9
Net new money (USD bn)
3
5.5
61.2
Net new assets (USD bn)
3
96.7
128.3
Invested assets (USD bn)
3
4,182
3,922
7
Loans, gross (USD bn)
8
300.5
322.1
(7)
Customer deposits (USD bn)
8
470.1
485.0
(3)
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
3,9
0.4
0.5
Advisors (full-time equivalents)
9,803
10,469
(6)
Underlying performance measures
 
Pre-tax profit growth (year-on-year, %)
3
30.3
(21.6)
Cost / income ratio (%)
3
79.5
81.3
Return on attributed equity (%)
3,6
14.6
12.7
1 Comparatives may differ 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.
 
2 Comparative figures
 
have been
 
restated for changes
 
in business division
 
perimeters, Group
 
Treasury allocations
 
and Non-core
 
and Legacy cost
 
allocations, as
 
well as changes
 
in the
 
equity
attribution framework. Refer to “Note 3 Segment reporting” in the “Consolidated
 
financial statements” section and “Capital management” in the “Capital,
 
liquidity and funding, and balance sheet” section of this
report for more information.
 
3 Refer to “Alternative performance measures” in the appendix to
 
this report for the definition
 
and calculation method.
 
4 Includes accretion of PPA adjustments on financial
 
instruments
and other PPA effects, as well as temporary and incremental items directly related to the integration.
 
5 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.
 
6 Refer to “Capital management” in the “Capital, liquidity and funding, and balance sheet” section of this report for more
information about the equity attribution framework.
 
7 Relates to licensed professionals with the ability
 
to provide investment advice to clients in
 
the Americas. Consists of cash
 
compensation, determined using a
formulaic approach based on production, and deferred awards. Also includes expenses related to compensation commitments with financial advisors entered into at the time of recruitment that are subject to vesting
requirements. Recruitment loans to
 
financial advisors were USD 1,683m as
 
of 31 December 2024.
 
8 Loans and Customer deposits in
 
this table include customer brokerage
 
receivables and payables,
 
respectively,
which are presented in separate reporting lines on the balance sheet.
 
9 Refer to the “Risk management and control” section of this report for more information about (credit-)impaired exposures. Excludes loans to
financial advisors.
 
Annual Report 2024 |
Financial and operating performance | Global
 
Wealth Management
 
74
2024 compared with 2023
Results
Profit
 
before
 
tax increased
 
by USD 479m,
 
or 14%,
 
to USD 3,924m,
 
mainly due
 
to the
 
acquisition of
 
the Credit
 
Suisse
Group and also due
 
to higher total revenues, partly offset
 
by higher operating expenses. Underlying
 
profit before tax was
USD 4,860m, an increase of 30%, after excluding from operating expenses USD 1,807m of integration-related expenses
and purchase price
 
allocation (PPA
 
)
 
effects, and also
 
excluding from total
 
revenues USD 891m of
 
PPA
 
effects and other
integration items and a loss of USD 21m related
 
to an investment in an associate.
 
Total revenues
Total
 
revenues increased by USD 2,960m, or
 
14%, to USD 24,516m, largely driven by the consolidation
 
of Credit Suisse
revenues
 
for the
 
full period,
 
as well
 
as higher
 
recurring
 
net fee
 
income and
 
transaction-based
 
income. Total
 
revenues
included a
 
USD 32m decrease
 
in PPA
 
effects and
 
other integration
 
items. It also
 
included a loss
 
of USD 21m
 
related to
an investment in an associate.
 
Excluding PPA
 
effects and other
 
integration items of USD 891m and
 
the aforementioned
loss, underlying total revenues were
 
USD 23,646m, an increase of 14%.
Net interest income
 
increased by USD 276m,
 
or 4%, to
 
USD 7,358m, largely attributable
 
to the consolidation
 
of Credit
Suisse
 
net
 
interest
 
income
 
for
 
the
 
full
 
period,
 
and
 
included
 
a
 
USD 37m
 
increase
 
in
 
accretion
 
of
 
PPA
 
adjustments
 
on
financial instruments and other PPA effects.
 
The remaining variance was largely driven by lower deposit revenues, mainly
as a
 
result of
 
lower margins,
 
and included
 
the effects
 
of shifts to
 
lower-margin deposit
 
products. The
 
change was
 
also
due to
 
higher liquidity
 
and funding
 
costs, as
 
well as
 
lower loan
 
revenues, reflecting
 
lower average
 
volumes. Excluding
accretion and other effects of USD 910m, underlying net
 
interest income was USD 6,448m, an increase of 4%.
Recurring
 
net
 
fee
 
income
 
increased
 
by
 
USD 1,637m,
 
or
 
15%,
 
to
 
USD 12,625m,
 
mainly
 
driven
 
by
 
positive
 
market
performance and the consolidation of Credit Suisse recurring
 
net fee income for the full period.
Transaction-based
 
income
 
increased
 
by
 
USD 880m,
 
or
 
24%,
 
to
 
USD 4,503m,
 
mainly
 
driven
 
by
 
higher
 
levels
 
of
 
client
activity, particularly
 
in the
 
Asia Pacific
 
and Americas
 
regions, and
 
the consolidation
 
of Credit
 
Suisse
 
transaction-based
income for
 
the full
 
period.
 
Transaction-based
 
income
 
included USD
 
29m of
 
accretion
 
of PPA
 
adjustments
 
on financial
instruments and other
 
PPA effects, compared
 
with USD 49m in
 
2023. 2024 also
 
included negative USD 48m
 
of temporary
and incremental items directly related to the integration of Credit Suisse. Excluding
 
negative USD 19m resulting from the
aforementioned accretion and other effects and temporary
 
and incremental items, underlying transaction-based income
was USD 4,521m, an increase of 27%.
 
Other
 
income
 
was
 
positive
 
USD 31m,
 
compared
 
with
 
negative
 
USD 137m.
 
Other
 
income
 
in
 
2024
 
included
 
a
 
loss
 
of
USD 21m related
 
to an
 
investment in
 
an associate,
 
compared with
 
a loss
 
of USD 190m
 
related to
 
an investment
 
in an
associate recognized in 2023. Excluding the aforementioned loss,
 
underlying other income was positive USD 52m.
Credit loss expense / release
Net credit
 
loss releases
 
were
 
USD 16m,
 
compared
 
with
 
net credit
 
loss expenses
 
of
 
USD 166m
 
in 2023.
 
Prior-year
 
net
credit loss expenses
 
were largely
 
driven by the
 
initial recognition of
 
expected credit
 
loss allowances and
 
provisions with
respect to Credit-Suisse-related
 
positions.
Operating expenses
Operating
 
expenses
 
increased
 
by
 
USD 2,663m,
 
or
 
15%,
 
to
 
USD 20,608m,
 
and
 
included
 
a
 
USD 785m
 
increase
 
in
integration-related expenses. The
 
remaining variance was due to
 
the consolidation of Credit Suisse
 
expenses for the full
period and
 
higher personnel
 
expenses, primarily
 
reflecting
 
an increase
 
in financial
 
advisor compensation
 
as a
 
result
 
of
higher compensable revenues.
 
This was offset by 2023 including a charge of USD 60m for the special assessment by the
US
 
Federal
 
Deposit
 
Insurance
 
Corporation
 
(the
 
FDIC).
 
Excluding
 
integration-related
 
expenses
 
and
 
PPA
 
effects
 
of
USD 1,807m, underlying operating expenses were
 
USD 18,802m, an increase of 11%.
Cost / income ratio
The cost / income ratio increased
 
to 84.1% from 83.2%, as
 
the relative increase
 
in operating expenses was higher
 
than
the relative increase in
 
total revenues. The underlying cost
 
/ income ratio
 
decreased to 79.5% from 81.3%,
 
as an increase
in underlying total revenues more than
 
offset an increase in underlying operating
 
expenses.
Invested assets
Invested assets increased by USD 260bn to USD 4,182bn, mainly driven by positive market performance of
 
USD 291.9bn
and net new
 
asset inflows of
 
USD 96.7bn, partly
 
offset by
 
negative foreign
 
currency effects
 
of USD 77.0bn and
 
by the
reclassification of USD 49.0bn of certain Credit
 
Suisse client assets from invested assets to custody-only
 
assets.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Financial and operating performance | Global
 
Wealth Management
 
75
Loans
Loans decreased by USD 21.6bn to USD 300.5bn, driven by negative net new loans of USD 11.8bn and negative foreign
currency effects.
›
Refer to the “Risk management and control” section of this
 
report for more information
Customer deposits
Customer deposits decreased by USD 14.9bn to USD 470.1bn,
 
mainly driven by negative foreign currency
 
effects, partly
offset by net new deposit inflows of USD 0.9bn.
Regional breakdown of performance measures
As of or for the year ended 31.12.24
USD bn, except where indicated
Americas
1
Asia Pacific
EMEA
Switzerland
Global
2
Global Wealth
Management
Total revenues (USD m)
 
11,263
 
3,612
 
4,677
 
4,083
 
882
 
24,516
Operating profit / (loss) before tax (USD m)
 
1,044
 
1,182
 
1,234
 
1,442
 
(978)
 
3,924
Operating profit / (loss) before tax (underlying) (USD m)
3
 
1,044
 
1,182
 
1,234
 
1,442
 
(41)
 
4,860
Cost / income ratio (%)
3
 
90.5
 
67.5
 
74.0
 
65.2
 
84.1
Cost / income ratio (underlying) (%)
3
 
90.5
 
67.5
 
74.0
 
65.2
 
79.5
Loans, gross
 
97.6
4
 
41.5
 
57.4
 
102.9
 
1.0
 
300.5
Net new loans
 
0.4
 
(2.5)
 
(4.6)
 
(4.9)
 
(0.2)
 
(11.8)
Net new fee-generating assets
3
 
50.7
 
12.0
 
(2.7)
 
2.2
 
(0.4)
 
61.7
Fee-generating assets
3
 
1,062
 
172
 
364
 
217
 
1
 
1,816
Net new money
3
 
(6.6)
 
2.9
 
(9.6)
 
21.0
 
(2.2)
 
5.5
Net new assets
3
 
41.7
 
20.7
 
3.0
 
33.5
 
(2.1)
 
96.7
Net new assets growth rate (%)
3
 
2.2
 
3.2
 
0.5
 
4.6
 
2.5
Invested assets
3
 
2,109
 
665
 
655
 
749
 
5
 
4,182
Advisors (full-time equivalents)
 
5,968
 
924
 
1,520
 
1,311
 
79
 
9,803
1 Including the following business units: United States
 
and Canada; and Latin America.
 
2 Includes minor functions, which are
 
not included in the four regions individually presented
 
in this table, and also includes
impacts from accretion of PPA
 
adjustments on financial instruments
 
and other PPA
 
effects and integration-related
 
expenses.
 
3 Refer to “Alternative
 
performance measures” in the
 
appendix to this report
 
for the
definition and calculation method.
 
4 Loans include customer brokerage receivables,
 
which are presented in a separate reporting line on the balance sheet.
Regional comments: 2024 compared with 2023
Americas
Profit before
 
tax increased
 
by USD 12m to
 
USD 1,044m and
 
included an increase
 
in provisions for
 
litigation, regulatory
and similar
 
matters. In
 
addition, 2023
 
included the
 
aforementioned
 
charge of
 
USD 60m for
 
the special
 
assessment by
the FDIC.
 
Total
 
revenues
 
increased
 
by USD 892m,
 
or 9%,
 
to USD 11,263m
 
,
 
mainly driven
 
by higher
 
recurring
 
net fee
income, higher transaction-based income and the
 
consolidation of Credit Suisse revenues for the full
 
period, partly offset
by
 
lower
 
net
 
interest
 
income.
 
The
 
cost / income
 
ratio
 
increased
 
to
 
90.5%
 
from
 
89.9%.
 
Loans
 
were
 
broadly
 
stable
compared with 2023, at USD 97.6bn. Net new
 
asset inflows were USD 41.7bn.
Asia Pacific
Profit
 
before
 
tax
 
increased
 
by
 
USD 591m
 
to
 
USD 1,182m.
 
Total
 
revenues
 
increased
 
by
 
USD 659m,
 
or
 
22%,
 
to
USD 3,612m, mainly driven by
 
the consolidation of Credit Suisse
 
revenues for the full period.
 
The remaining variance was
due to
 
increases
 
in transaction
 
-based
 
income
 
and recurring
 
net
 
fee
 
income,
 
offset
 
by lower
 
net
 
interest
 
income.
 
The
cost / income ratio decreased to
 
67.5% from 79.5%.
 
Loans decreased 10% compared with
 
2023, to USD 41.5bn,
 
mainly
driven by negative net new loans and negative foreign
 
currency effects. Net new asset inflows were
 
USD 20.7bn.
EMEA
Profit before tax
 
increased by
 
USD 157m to
 
USD 1,234m. Total revenues increased by
 
USD 337m, or
 
8%, to
 
USD 4,677m,
mainly driven by the consolidation of Credit Suisse revenues for the full period. The
 
remaining variance was due to lower
net interest income and lower recurring net fee income. The cost / income ratio decreased to 74.0% from 74.8%. Loans
decreased 8%
 
compared with
 
2023, to
 
USD 57.4bn, mainly
 
driven by
 
USD 4.6bn of
 
negative net
 
new loans.
 
Net new
asset inflows were USD 3.0bn.
Switzerland
Profit
 
before
 
tax
 
increased
 
by
 
USD 329m
 
to
 
USD 1,442m.
 
Total
 
revenues
 
increased
 
by
 
USD 944m,
 
or
 
30%,
 
to
USD 4,083m, mostly driven by
 
the consolidation of Credit Suisse
 
revenues for the full period.
 
The remaining variance was
due to higher recurring
 
net fee income and
 
higher transaction-based income. The cost / income ratio
 
increased to 65.2%
from 63.9%. Loans
 
decreased 11% compared
 
with 2023, to
 
USD 102.9bn, mainly
 
reflecting negative
 
foreign currency
effects and USD 4.9bn of negative net new
 
loans. Net new asset inflows were USD 33.5bn.
Global
Operating
 
loss
 
before
 
tax
 
was
 
USD 978m,
 
mainly
 
including
 
USD 1,807m
 
of
 
the
 
aforementioned
 
integration-related
expenses and PPA
 
effects in
 
operating expenses,
 
partly offset
 
by the aforementioned
 
USD 891m related
 
to PPA
 
effects
and other integration items and a loss of USD 21m related
 
to an investment in an associate in total revenues.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Financial and operating performance | Personal
 
& Corporate Banking
 
76
Personal & Corporate Banking
Personal & Corporate Banking – in Swiss francs
1
As of or for the year ended
% change from
CHF m, except where indicated
31.12.24
31.12.23
2
31.12.23
Results
Net interest income
4,987
4,350
15
Recurring net fee income
3
1,425
1,137
25
Transaction-based income
3
1,821
1,591
14
Other income
7
(198)
Total revenues
8,241
6,880
20
Credit loss expense / (release)
357
433
(18)
Operating expenses
5,070
3,919
29
Business division operating profit / (loss) before tax
2,814
2,528
11
Underlying results
Total revenues as reported
8,241
6,880
20
of which: PPA effects and other integration items
4
915
692
32
of which: PPA effects recognized in net interest income
 
841
609
38
of which: PPA effects and other integration items recognized in transaction-based income
74
83
(11)
of which: loss related to an investment in an associate
(54)
(267)
(80)
Total revenues (underlying)
3
7,379
6,455
14
Credit loss expense / (release)
357
433
(18)
Operating expenses as reported
5,070
3,919
29
of which: integration-related expenses and PPA effects
3,5
662
350
89
of which: items related to the Swisscard transactions
6
37
Operating expenses (underlying)
3
4,371
3,569
22
of which: expenses for litigation, regulatory and similar matters
1
(8)
Business division operating profit / (loss) before tax as reported
2,814
2,528
11
Business division operating profit / (loss) before tax (underlying)
3
2,651
2,453
8
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
3
11.3
46.4
Cost / income ratio (%)
3
61.5
57.0
Average attributed equity (CHF bn)
7
19.0
15.1
26
Return on attributed equity (%)
3,7
14.8
16.7
Net interest margin (bps)
3
201
204
Loans, gross (CHF bn)
242.3
251.8
(4)
Customer deposits (CHF bn)
254.1
257.8
(1)
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
3,8
1.3
1.0
Underlying performance measures
Pre-tax profit growth (year-on-year, %)
3
8.1
42.1
Cost / income ratio (%)
3
59.2
55.3
Return on attributed equity (%)
3,7
13.9
16.3
1 Comparatives may differ 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.
 
2
Comparative figures
 
have been
 
restated for
 
changes in
 
business division
 
perimeters, Group
 
Treasury
 
allocations and
 
Non-core and
 
Legacy cost
 
allocations, as
 
well as
 
changes in
 
the equity
attribution framework. Refer to “Note 3 Segment
 
reporting” in the “Consolidated financial statements”
 
section and “Capital management” in the “Capital,
 
liquidity and funding, and balance sheet” section
 
of this
report for more information.
 
3
Refer to “Alternative performance measures” in the appendix to this report for
 
the definition and calculation method.
 
4
Includes accretion of PPA adjustments on financial instruments
and other PPA effects, as well as temporary and incremental items directly related to the integration.
 
5
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.
 
6
 
R
epresents the termination fee
 
paid to American
 
Express related to
 
the expected sale
 
in 2025 of
 
our 50% holding
 
in
Swisscard.
 
7
Refer to “Capital management”
 
in the “Capital, liquidity
 
and funding, and balance
 
sheet” section of this
 
report for more information
 
about the equity attribution
 
framework.
 
8
Refer to the “Risk
management and control” section of this report for more information about (credit-)impaired exposures.
 
Annual Report 2024 |
Financial and operating performance | Personal
 
& Corporate Banking
 
77
2024 compared with 2023
Results
Profit
 
before
 
tax increased
 
by CHF 286m,
 
or 11%,
 
to CHF
 
2,814m, mainly
 
due to
 
the acquisition
 
of the
 
Credit
 
Suisse
Group. Underlying profit before tax was CHF 2,651m, an increase of 8%, after excluding
 
from total revenues CHF 915m
of purchase price allocation (PPA
 
)
 
effects and other integration items and
 
a loss of CHF 54m related to an
 
investment in
an associate, and also
 
excluding from operating expenses integration-related expenses and
 
PPA effects of CHF 662m and
a CHF 37m expense related to the Swisscard
 
transactions.
Total revenues
Total
 
revenues
 
increased
 
by
 
CHF 1,361m,
 
or
 
20%,
 
to
 
CHF 8,241m,
 
mainly
 
due
 
to
 
the
 
consolidation
 
of
 
Credit
 
Suisse
revenues
 
for the
 
full period,
 
and included
 
a CHF 223m
 
increase
 
in PPA
 
effects
 
and other
 
integration items.
 
2024 also
included a loss
 
of CHF 54m related
 
to an investment
 
in an associate.
 
Excluding PPA
 
effects and
 
other integration items
of CHF 915m and the aforementioned loss, underlying
 
total revenues were CHF 7,379m,
 
an increase of 14%.
Net interest income
 
increased by
 
CHF 637m, or
 
15%, to CHF 4,987m,
 
largely as a
 
result of the
 
consolidation of
 
Credit
Suisse
 
net
 
interest
 
income
 
for
 
the
 
full period,
 
and
 
included
 
a
 
CHF 232m
 
increase
 
in
 
accretion
 
of PPA
 
adjustments
 
on
financial instruments
 
and other
 
PPA effects.
 
This was partly
 
offset by
 
lower deposit revenues
 
,
 
including the
 
effect from
shifts
 
to
 
lower-margin
 
deposit
 
products,
 
and
 
higher
 
liquidity
 
and
 
funding
 
costs.
 
Excluding
 
PPA
 
effects
 
of
 
CHF 841m,
underlying net interest income was CHF 4,146m, an increase
 
of 11%.
Recurring net
 
fee income
 
increased by
 
CHF 288m, or
 
25%, to
 
CHF 1,425m, mainly
 
due to
 
the consolidation
 
of Credit
Suisse recurring net
 
fee income for
 
the full period,
 
as well as an
 
increase in revenues
 
due to higher
 
investment product
levels, reflecting positive market performance
 
and net new inflows.
 
Transaction-based income
 
increased by
 
CHF 230m, or
 
14%, to
 
CHF 1,821m, largely
 
as a
 
result of
 
the consolidation
 
of
Credit Suisse transaction-based income
 
for the full
 
period.
 
Excluding PPA effects and
 
other integration items of
 
CHF 74m,
underlying transaction-based income was CHF 1,747m,
 
an increase of 16%.
Other
 
income
 
was
 
positive
 
CHF 7m,
 
compared
 
with
 
negative
 
CHF 198m.
 
Other
 
income
 
in
 
2024
 
included
 
a
 
loss
 
of
CHF 54m related to an investment in
 
an associate,
 
compared with a loss of CHF 267m recognized
 
in 2023. Excluding the
aforementioned loss, underlying other income was CHF 61m, a
 
decrease of 12%.
Credit loss expense / release
Net credit loss expenses were CHF 357m and reflect
 
ed net expenses on credit-impaired positions, primarily
 
in the legacy
Credit Suisse corporate loan book, partly offset by net credit loss releases related
 
to performing positions. Net credit loss
expenses in
 
2023 were
 
CHF 433m and
 
were largely
 
driven by
 
the initial
 
recognition of
 
expected credit
 
loss allowances
and provisions with respect to Credit
 
-Suisse-related positions.
Operating expenses
Operating expenses increased by CHF 1,151m, or 29%, to CHF 5,070m, largely
 
due to the consolidation of Credit Suisse
expenses for the full period,
 
and included a CHF 273m increase in integration-related
 
expenses and a CHF 37m expense
related to
 
the Swisscard
 
transactions in
 
2024. Excluding
 
integration-related expenses
 
and PPA
 
effects of
 
CHF 662m, as
well as the aforementioned expense
 
of CHF 37m, underlying operating
 
expenses were CHF 4,371m, an increase of
 
22%.
Cost / income ratio
The cost / income ratio increased to 61.5% from 57.0%, with
 
an increase on an underlying basis to
 
59.2% from 55.3%,
as the
 
relative
 
increases
 
in operating
 
expenses
 
and underlying
 
operating
 
expenses,
 
respectively,
 
were
 
higher than
 
the
relative increases in total revenues
 
and underlying total revenues, respectively
 
.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Financial and operating performance | Personal
 
& Corporate Banking
 
78
Personal & Corporate Banking – in US dollars
1
As of or for the year ended
% change from
USD m, except where indicated
31.12.24
31.12.23
2
31.12.23
Results
Net interest income
5,650
4,878
16
Recurring net fee income
3
1,614
1,272
27
Transaction-based income
3
2,061
1,779
16
Other income
10
(241)
Total revenues
9,334
7,687
21
Credit loss expense / (release)
404
482
(16)
Operating expenses
5,741
4,394
31
Business division operating profit / (loss) before tax
3,189
2,811
13
Underlying results
Total revenues as reported
9,334
7,687
21
of which: PPA effects and other integration items
4
1,038
783
33
of which: PPA effects recognized in net interest income
 
954
688
39
of which: PPA effects and other integration items recognized in transaction-based income
84
94
(11)
of which: loss related to an investment in an associate
(59)
(317)
(81)
Total revenues (underlying)
3
8,355
7,222
16
Credit loss expense / (release)
404
482
(16)
Operating expenses as reported
5,741
4,394
31
of which: integration-related expenses and PPA effects
3,5
749
398
88
of which: items related to the Swisscard transactions
6
41
Operating expenses (underlying)
3
4,951
3,996
24
of which: expenses for litigation, regulatory and similar matters
1
(9)
Business division operating profit / (loss) before tax as reported
3,189
2,811
13
Business division operating profit / (loss) before tax (underlying)
3
3,000
2,744
9
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
3
13.4
55.2
Cost / income ratio (%)
3
61.5
57.2
Average attributed equity (USD bn)
7
21.6
16.8
28
Return on attributed equity (%)
3,7
14.8
16.7
Net interest margin (bps)
3
200
206
Loans, gross (USD bn)
266.9
299.2
(11)
Customer deposits (USD bn)
279.9
306.2
(9)
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
3,8
1.3
1.0
Underlying performance measures
Pre-tax profit growth (year-on-year, %)
3
9.3
51.5
Cost / income ratio (%)
3
59.3
55.3
Return on attributed equity (%)
3,7
13.9
16.3
1 Comparatives may differ 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.
 
2 Comparative figures
 
have been
 
restated for changes
 
in business
 
division perimeters,
 
Group Treasury
 
allocations and
 
Non-core and
 
Legacy cost allocations,
 
as well
 
as changes in
 
the equity
attribution framework. Refer to “Note 3 Segment
 
reporting” in the “Consolidated financial statements” section
 
and “Capital management” in the “Capital, liquidity and
 
funding, and balance sheet” section of this
report for more information.
 
3 Refer to “Alternative performance measures” in the appendix to
 
this report for the definition
 
and calculation method.
 
4 Includes accretion of PPA adjustments on financial instruments
and other PPA effects, as well as temporary and incremental items directly related to the integration.
 
5 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.
 
6 Represents the termination
 
fee paid to American
 
Express related to the
 
expected sale in 2025
 
of our 50% holding
 
in
Swisscard.
 
7 Refer to “Capital management”
 
in the “Capital, liquidity
 
and funding, and balance sheet”
 
section of this report for
 
more information about the
 
equity attribution framework.
 
8 Refer to the “Risk
management and control” section of this report for more information about (credit-)impaired exposures.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Financial and operating performance | Asset
 
Management
 
79
Asset Management
Asset Management
1
As of or for the year ended
% change from
USD m, except where indicated
31.12.24
31.12.23
2
31.12.23
Results
Net management fees
3
2,921
2,554
14
Performance fees
149
104
43
Net gain from disposals
113
27
316
Total revenues
3,182
2,686
18
Credit loss expense / (release)
(1)
0
Operating expenses
2,663
2,353
13
Business division operating profit / (loss) before tax
520
332
56
Underlying results
Total revenues as reported
3,182
2,686
18
Total revenues (underlying)
4
3,182
2,686
18
Credit loss expense / (release)
(1)
0
Operating expenses as reported
2,663
2,353
13
of which: integration-related expenses
4
351
205
72
Operating expenses (underlying)
4
2,312
2,149
8
of which: expenses for litigation, regulatory and similar matters
7
8
(18)
Business division operating profit / (loss) before tax as reported
520
332
56
Business division operating profit / (loss) before tax (underlying)
4
871
537
62
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
4
56.3
(76.2)
Cost / income ratio (%)
4
83.7
87.6
Average attributed equity (USD bn)
5
2.7
2.3
15
Return on attributed equity (%)
4,5
19.2
14.1
Gross margin on invested assets (bps)
4
18
19
Underlying performance measures
 
Pre-tax profit growth (year-on-year, %)
4
62.2
(2.4)
Cost / income ratio (%)
4
72.7
80.0
Return on attributed equity (%)
4,5
32.1
22.8
Information by business line / asset
 
class
Net new money (USD bn)
4
Equities
20.7
(4.0)
Fixed Income
18.0
17.8
of which: money market
18.5
22.3
Multi-asset & Solutions
(1.5)
2.2
Hedge Fund Businesses
(3.5)
(4.2)
Real Estate & Private Markets
0.1
2.7
Total net new money excluding associates
33.8
14.6
of which: net new money excluding money market
15.4
(7.7)
Associates
6
10.8
1.1
Total net new money
44.6
15.7
Invested assets (USD bn)
4
Equities
755
644
17
Fixed Income
464
445
4
of which: money market
157
134
18
Multi-asset & Solutions
268
274
(2)
Hedge Fund Businesses
58
57
3
Real Estate & Private Markets
143
156
(8)
Total invested assets excluding associates
1,689
1,577
7
of which: passive strategies
807
715
13
Associates
6
84
72
16
Total invested assets
1,773
1,649
7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Financial and operating performance | Asset
 
Management
 
80
Asset Management (continued)
1
As of or for the year ended
% change from
USD m, except where indicated
31.12.24
31.12.23
2
31.12.23
Information by region
Invested assets (USD bn)
4
Americas
443
402
10
Asia Pacific
7
224
211
6
EMEA (excluding Switzerland)
435
354
23
Switzerland
670
682
(2)
Total invested assets
1,773
1,649
7
Information by channel
Invested assets (USD bn)
4
Third-party institutional
1,008
939
7
Third-party wholesale
169
177
(4)
UBS’s wealth management businesses
512
461
11
Associates
6
84
72
16
Total invested assets
1,773
1,649
7
1 Comparatives may differ 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.
 
2 Comparative figures
 
have been
 
restated for changes
 
in business
 
division perimeters,
 
Group Treasury
 
allocations and
 
Non-core and
 
Legacy cost allocations,
 
as well
 
as changes
 
in the
 
equity
attribution framework. Refer to “Note 3 Segment
 
reporting” in the “Consolidated financial statements”
 
section and “Capital management” in the “Capital,
 
liquidity and funding, and balance sheet” section
 
of this
report for more information.
 
3 Net management fees include transaction fees,
 
fund administration revenues (including net interest and
 
trading income from lending activities and foreign-exchange hedging
 
as part
of the fund services offering),
 
distribution fees, incremental
 
fund-related expenses, gains
 
or losses from seed
 
money and co-investments, funding
 
costs, the negative
 
pass-through impact of third-party
 
performance
fees, and other items that are not Asset
 
Management’s performance fees.
 
4 Refer to “Alternative performance measures” in the appendix to this report for
 
the definition and calculation method.
 
5 Refer to “Capital
management” in the
 
“Capital, liquidity and
 
funding, and balance
 
sheet” section of
 
this report for
 
more information about
 
the equity attribution
 
framework.
 
6 The invested assets
 
and net new
 
money amounts
reported for associates are prepared in accordance with their local regulatory requirements and practices.
 
7 Includes invested assets from associates.
2024 compared with 2023
Results
Profit before
 
tax increased by
 
USD 188m, or 56%,
 
to USD 520m, mainly
 
due to higher
 
net gains from
 
the sale of
 
non-
strategic
 
businesses
 
and
 
the
 
acquisition
 
of
 
the
 
Credit
 
Suisse
 
Group.
 
Underlying
 
profit
 
before
 
tax
 
was
 
USD 871m,
 
an
increase of 62%, after excluding integration-related
 
expenses of USD 351m.
Total revenues
Total
 
revenues increased
 
by USD 496m, or
 
18%, to USD 3,182m,
 
primarily reflecting
 
the consolidation of
 
Credit Suisse
revenues
 
for the
 
full period.
 
Total
 
revenues
 
in 2024
 
included USD 113m
 
of net
 
gains from
 
the aforementioned
 
sales,
compared with net gains on sales of USD 27m in
 
2023.
Net
 
management
 
fees
 
increased
 
by
 
USD 367m,
 
or
 
14%,
 
to
 
USD 2,921m,
 
largely
 
attributable
 
to
 
the
 
consolidation
 
of
Credit Suisse
 
net management
 
fees for
 
the full
 
period, positive
 
market performance
 
and foreign
 
currency effects,
 
and
the revaluation
 
of a
 
real estate
 
fund co-investment,
 
partly offset
 
by continued
 
margin compression
 
and the
 
impact of
exits from non-strategic businesses. In
 
addition, 2023 included negative pass-through fees,
 
with the corresponding offset
in performance fees.
Performance fees increased by USD 45m, or 43%, to USD
 
149m, mostly due to increases in Hedge Fund Businesses
 
and
Fixed Income,
 
as well
 
as the
 
consolidation
 
of Credit
 
Suisse performance
 
fees for
 
the full
 
period. These
 
increases were
partly offset by lower performance fees due to 2023 including both the aforementioned
 
pass-through fees and the final
distribution of fees from a legacy fund.
Operating expenses
Operating expenses increased
 
by USD 310m,
 
or 13%,
 
to USD 2,663m, mainly
 
reflecting the consolidation
 
of Credit Suisse
expenses for the full period. Operating expenses included integration-related expenses of USD 351m, which represented
a USD 146m
 
increase
 
compared
 
with the
 
USD 205m of
 
integration-related
 
expenses
 
recorded
 
in 2023.
 
Excluding the
aforementioned integration-related
 
expenses, underlying operating expenses were
 
USD 2,312m, an increase of 8%.
 
 
 
 
 
 
 
Annual Report 2024 |
Financial and operating performance | Asset
 
Management
 
81
Cost / income ratio
The cost / income ratio decreased to 83.7% from 87.6%, with a
 
decrease on an underlying basis to 72.7%
 
from 80.0%,
as an
 
increase
 
in total
 
revenues
 
more than
 
offset
 
increases
 
in operating
 
expenses and
 
underlying operating
 
expenses,
respectively.
 
Invested assets
Invested assets increased by USD 124bn to USD 1,773bn, reflecting positive market performance of USD 157bn, positive
net new money of USD 45bn,
 
partly offset by adverse foreign currency effects of USD 68bn. There
 
was also a USD 10bn
decrease in
 
invested assets related
 
to the impact
 
of exits from
 
non-strategic businesses.
 
Excluding money
 
market flows
and associates, net new money was USD 15bn.
Investment performance
As of
 
year-end 2024,
 
Morningstar assigned
 
a four-
 
or five-star
 
rating to
 
65% of
 
our traditional
 
retail and
 
institutional
funds assets under management
 
(AuM) (both actively
 
managed and passive),
 
on an AuM-weighted
 
basis. Furthermore,
57% of our
 
actively managed traditional
 
open-ended retail and
 
institutional funds AuM
 
are ranked, on
 
an AuM-weighted
basis over a three-year investment period, above their respective
 
peer median.
Investment performance as of 31 December 2024
In %
Total traditional
investments
Equities
Fixed Income
Multi-asset
Percentage of UBS Asset Management fund assets rated as 4- or 5-star
1,2
65
76
51
42
Percentage of UBS Asset Management fund assets above peer median
 
over a 3-year investment period
1,3
57
69
70
22
1 Morningstar® Essentials Quantitative Star Rating & Rankings; © Morningstar 2025, extract date 13 January 2025. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and / or its
content providers; (2) may
 
not be copied or
 
distributed; (3) is not
 
warranted to be
 
accurate, complete
 
or timely; and (4)
 
does not constitute advice
 
of any kind, whether
 
investment, tax, legal or
 
otherwise. User is
solely responsible for ensuring that it complies with
 
all laws, regulations and restrictions applicable
 
to it. Neither Morningstar nor its content
 
providers are responsible for any damages or
 
losses arising from any use
of this
 
information, except
 
where such
 
damages or
 
losses cannot
 
be limited
 
or excluded
 
by law
 
in your
 
jurisdiction. Past
 
performance is
 
no guarantee
 
of future
 
results. For
 
more detailed
 
information about
 
the
Morningstar Rating,
 
including its
 
methodology, please
 
go to:
 
https://s21.q4cdn.com/198919461/files/doc_downloads/othe_disclosure_materials/MorningstarRatingforFunds.pdf.
 
2 Percentage
 
of AuM
 
to which
Morningstar has assigned a four- or
 
five-star rating. AuM reflect the AuM of Asset
 
Management’s retail and institutional funds (both
 
actively managed and passive) across all domiciles for
 
which Asset Management
owns the investment performance, i.e. Asset Management is either the sole portfolio manager or co-portfolio manager. Universe is approximately 35% of all active and passive traditional assets of Asset Management
(Equities, Fixed Income excluding money market, and
 
Multi-asset) as of 31 December 2024.
 
3 Percentage of AuM above
 
peer median over a three-year
 
investment period. AuM reflect the
 
AuM of Asset Management’s
actively managed open-ended
 
retail and institutional
 
funds across all
 
domiciles for which
 
Asset Management owns
 
the investment performance,
 
i.e. Asset
 
Management is either
 
the sole portfolio
 
manager or co-
portfolio manager. Universe is approximately 28% of all active traditional
 
assets of Asset Management (Equities, Fixed Income excluding money market,
 
and Multi-asset) as of 31 December 2024.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Financial and operating performance | Investment
 
Bank
 
82
Investment Bank
Investment Bank
1
As of or for the year ended
% change from
USD m, except where indicated
31.12.24
31.12.23
2
31.12.23
Results
Advisory
907
751
21
Capital Markets
2,547
1,668
53
Global Banking
3,454
2,418
43
Execution Services
3
1,719
1,354
27
Derivatives & Solutions
3
3,478
2,951
18
Financing
2,297
1,980
16
Global Markets
7,494
6,285
19
of which: Equities
5,588
4,550
23
of which: Foreign Exchange, Rates and Credit
 
1,906
1,735
10
Total revenues
10,948
8,703
26
Credit loss expense / (release)
97
190
(49)
Operating expenses
8,934
8,585
4
Business division operating profit / (loss) before tax
1,917
(72)
Underlying results
Total revenues as reported
10,948
8,703
26
of which: PPA effects
4
989
583
70
of which: PPA effects recognized in Global Banking revenue line
972
580
67
Total revenues (underlying)
5
9,958
8,120
23
Credit loss expense / (release)
97
190
(49)
Operating expenses as reported
8,934
8,585
4
of which: integration-related expenses
5
717
697
3
Operating expenses (underlying)
5
8,217
7,889
4
of which: expenses for litigation, regulatory and similar matters
9
78
(89)
Business division operating profit / (loss) before tax as reported
1,917
(72)
Business division operating profit / (loss) before tax (underlying)
5
1,644
42
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
5
n.m.
n.m.
Cost / income ratio (%)
5
81.6
98.6
Average attributed equity (USD bn)
6
17.1
15.9
7
Return on attributed equity (%)
5,6
11.2
(0.5)
Underlying performance measures
 
Pre-tax profit growth (year-on-year, %)
5
n.m.
(97.9)
Cost / income ratio (%)
5
82.5
97.1
Return on attributed equity (%)
5,6
9.6
0.3
1 Comparatives may differ 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.
 
2
Comparative figures
 
have been
 
restated for
 
changes in
 
business division
 
perimeters, Group
 
Treasury
 
allocations and
 
Non-core and
 
Legacy cost
 
allocations, as
 
well as
 
changes in
 
the equity
attribution framework. Refer to “Note 3 Segment
 
reporting” in the “Consolidated financial statements”
 
section and “Capital management” in the “Capital,
 
liquidity and funding, and balance sheet” section
 
of this
report for more information.
 
3
Comparative figures for the year ended 31
December 2023 have been restated as a result of the
 
shift of the foreign exchange products that are traded
 
over electronic platforms from
Execution Services to Derivatives & Solutions.
 
The restatement had no effect on
 
total Global Markets revenues.
 
4
Includes accretion of PPA adjustments
 
on financial instruments and other PPA
 
effects.
 
5
Refer to
“Alternative performance measures” in the appendix
 
to this report for the definition and calculation method.
 
6
Refer to “Capital management” in the “Capital, liquidity and funding, and balance sheet” section
 
of
this report for more information about the equity attribution framework.
 
Annual Report 2024 |
Financial and operating performance | Investment
 
Bank
 
83
2024 compared with 2023
Results
Profit before
 
tax was
 
USD 1,917m, compared
 
with a
 
loss before
 
tax of
 
USD 72m, mainly due
 
to higher total
 
revenues,
partly offset by higher operating
 
expenses. Underlying profit
 
before tax was USD 1,644m, after
 
excluding USD 989m of
purchase price allocation (PPA
 
)
 
effects and USD 717m of integration-related
 
expenses.
Total revenues
Total
 
revenues increased by USD 2,245m,
 
or 26%, to USD 10,948m, with higher revenues
 
for both Global Markets and
Global Banking,
 
and
 
included a
 
USD 406m
 
increase
 
in PPA
 
effects.
 
Excluding these
 
effects,
 
underlying total
 
revenues
were USD 9,958m, an increase of 23%.
Global Banking
Global
 
Banking
 
revenues
 
increased
 
by
 
USD 1,036m,
 
or
 
43%,
 
to
 
USD 3,454m,
 
and
 
included
 
a
 
USD 392m
 
increase
 
in
accretion of PPA adjustments on financial instruments and other PPA
 
effects. Excluding such accretion and other effects,
underlying Global Banking revenues were
 
USD 2,482m, an increase of 35%.
Advisory
 
revenues
 
increased
 
by
 
USD 156m,
 
or
 
21%,
 
to
 
USD 907m,
 
mainly
 
due
 
to
 
higher
 
merger
 
and
 
acquisition
transaction revenues.
Capital
 
Markets
 
revenues
 
increased
 
by
 
USD 879m,
 
or
 
53%,
 
to
 
USD 2,547m,
 
and
 
included
 
a
 
USD 392m
 
increase
 
in
accretion of PPA adjustments on financial instruments and other PPA effects.
 
Excluding such accretion and other effects,
underlying
 
Capital
 
Markets
 
revenues
 
increased
 
by
 
USD 487m,
 
or
 
45%,
 
with
 
increases
 
across
 
all
 
products,
 
led
 
by
Leveraged Capital Markets.
Global Markets
Global Markets
 
revenues increased
 
by USD 1,209m, or
 
19%, to USD 7,494m,
 
driven by higher
 
Derivatives & Solutions,
Execution Services and Financing revenues.
Execution Services revenues increased
 
by USD 365m, or
 
27%, to USD 1,719m,
 
mainly driven by
 
increases in Cash
 
Equities
across all regions.
Derivatives
 
&
 
Solutions
 
revenues
 
increased
 
by
 
USD 527m,
 
or
 
18%,
 
to
 
USD 3,478m,
 
with
 
increases
 
largely
 
in
 
Equity
Derivatives and Foreign Exchange.
Financing
 
revenues
 
increased
 
by
 
USD 317m,
 
or
 
16%,
 
to
 
USD 2,297m,
 
mainly
 
from
 
Capital
 
Markets
 
Financing,
 
and
included a USD 67m gain from the sale of our
 
investment in an associate.
Equities
Global Markets Equities revenues increased by USD 1,038m, or 23%, to
 
USD 5,588m, mainly driven by increases in Cash
Equities, Equity Derivatives and Financing, as well as by the
 
aforementioned gain from sale.
Foreign Exchange, Rates and Credit
Global Markets Foreign
 
Exchange, Rates and Credit
 
revenues increased by
 
USD 171m, or 10%, to
 
USD 1,906m,
 
mainly
driven by increases in Foreign Exchange.
Credit loss expense / release
Net credit loss expenses were USD 97m, reflecting
 
net credit loss expenses on performing and credit
 
-impaired positions,
including the impact of model
 
updates. This compared with net credit loss expenses
 
of USD 190m in 2023, largely driven
by the initial recognition of
 
expected credit loss allowances and provisions with respect to
 
Credit-Suisse-related positions.
Operating expenses
Operating expenses
 
increased by
 
USD 349m, or
 
4%, to USD 8,934m,
 
and included
 
a USD 20m increase
 
in integration-
related expenses. Excluding integration-related
 
expenses, underlying operating expenses were
 
USD 8,217m, an increase
of 4%, mainly due to higher variable compensation and
 
higher technology expenses.
Return on attributed equity
Return on
 
attributed
 
equity
 
was
 
11.2%, compared
 
with
 
negative
 
0.5% in
 
2023.
 
The
 
underlying return
 
on attributed
equity was 9.6%, compared with 0.3% in 2023.
Cost / income ratio
The cost / income ratio decreased to 81.6% from 98.6%, with a
 
decrease on an underlying basis to 82.5%
 
from 97.1%,
as increases
 
in total
 
revenues and underlying
 
total revenues,
 
respectively, more than offset increases
 
in operating
 
expenses
and underlying operating expenses.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Financial and operating performance | Non-core
 
and Legacy
 
84
Non-core and Legacy
Non-core and Legacy
1
As of or for the year ended
% change from
USD m, except where indicated
31.12.24
31.12.23
2
31.12.23
Results
Total revenues
1,605
697
130
Credit loss expense / (release)
69
193
(64)
Operating expenses
3,512
5,091
(31)
Operating profit / (loss) before tax
(1,976)
(4,587)
(57)
Underlying results
Total revenues as reported
1,605
697
130
Total revenues (underlying)
3
1,605
697
130
Credit loss expense / (release)
69
193
(64)
Operating expenses as reported
3,512
5,091
(31)
of which: integration-related expenses
3
1,154
1,775
(35)
Operating expenses (underlying)
3
2,359
3,316
(29)
of which: expenses for litigation, regulatory and similar matters
(300)
637
Operating profit / (loss) before tax as reported
(1,976)
(4,587)
(57)
Operating profit / (loss) before tax (underlying)
3
(822)
(2,812)
(71)
Performance measures and other information
Average attributed equity (USD bn)
4
9.5
6.0
59
Risk-weighted assets (USD bn)
41.4
74.0
(44)
Leverage ratio denominator (USD bn)
53.5
168.5
(68)
1 Comparatives may differ 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.
 
2 Comparative figures
 
have been
 
restated for changes
 
in business
 
division perimeters,
 
Group Treasury
 
allocations and
 
Non-core and
 
Legacy cost allocations,
 
as well
 
as changes
 
in the
 
equity
attribution framework. Refer to “Note 3 Segment
 
reporting” in the “Consolidated financial statements”
 
section and “Capital management” in the “Capital,
 
liquidity and funding, and balance sheet” section
 
of this
report for more information.
 
3 Refer to “Alternative
 
performance measures” in the appendix
 
to this report for the
 
definition and calculation method.
 
4 Refer to “Capital management”
 
in the “Capital, liquidity
and funding, and balance sheet” section of this report for more information about the equity attribution framework.
 
Composition of Non-core and Legacy
RWA
Total assets
LRD
USD bn
31.12.24
31.12.23
31.12.24
31.12.23
1
31.12.24
31.12.23
Exposure category
Equities
 
0.9
 
3.4
 
2.6
 
20.5
 
2.0
 
14.3
Macro
 
4.4
 
9.9
 
26.3
 
56.7
 
10.2
 
26.2
Loans
 
2.8
 
11.6
 
3.2
 
14.0
 
4.0
 
16.4
Securitized products
 
5.2
 
14.1
 
7.4
 
27.5
 
8.8
 
29.7
Credit
 
0.3
 
3.1
 
0.2
 
5.4
 
0.2
 
5.5
High-quality liquid assets
 
27.2
 
74.4
 
27.2
 
74.4
Operational risk
 
27.1
 
30.0
Other
 
0.7
 
1.9
 
1.4
 
2.6
 
1.1
 
1.9
Total
 
41.4
 
74.0
 
68.3
 
201.1
 
53.5
 
168.5
1 Comparative figures have been restated for changes in business division perimeters, Group Treasury allocations and Non-core and Legacy cost allocations. Refer to “Note 3 Segment reporting” in the “Consolidated
financial statements” section of this report for more information.
2024 compared with 2023
Results
Loss
 
before
 
tax
 
was
 
USD 1,976m,
 
compared
 
with
 
a
 
loss
 
before
 
tax
 
of
 
USD 4,587m.
 
Underlying
 
loss
 
before
 
tax
 
was
USD 822m, after excluding integration-related expenses
 
of USD 1,154m.
 
Annual Report 2024 |
Financial and operating performance | Non-core
 
and Legacy
 
85
Total revenues
Total
 
revenues were USD 1,605m, which was USD
 
908m higher than the total revenues recorded
 
in 2023, and included
the
 
impact of
 
the
 
consolidation
 
of
 
Credit
 
Suisse
 
revenues
 
for
 
the
 
full
 
period.
 
Total
 
revenues
 
reflected
 
net
 
gains
 
from
position exits, along with net interest income from securitized products and credit products. Total revenues also included
a net
 
gain of USD 272m,
 
after accounting
 
for the
 
purchase price
 
allocation adjustments
 
recorded
 
at the
 
closing of
 
the
acquisition of the Credit
 
Suisse Group, from
 
the sale of assets
 
from the former
 
Credit Suisse securitized products
 
group
to Apollo
 
Management
 
Holdings and
 
certain other
 
entities (collectively,
 
Apollo). In
 
addition, total
 
revenues
 
included a
USD 67m gain from the sale of our investment
 
in an associate.
›
Refer to “Note 2 Accounting for the acquisition
 
of the Credit Suisse Group” in the “Consolidated financial
 
statements” section of
this report for information about the conclusion of an
 
investment management agreement with Apollo
 
and the transfer of senior
secured asset-based financing
Credit loss expense / release
Net credit
 
loss expenses
 
were
 
USD 69m, mainly
 
reflecting
 
net credit
 
loss expenses
 
on credit-impaired
 
positions with
 
a
small number of corporate counterparties, partly
 
offset by net credit loss
 
releases related to performing
 
positions. These
compared with net credit loss expenses of USD 193m in 2023,
 
largely driven by the initial recognition of expected credit
loss allowances and provisions with respect
 
to Credit-Suisse-related positions.
Operating expenses
Operating expenses were
 
USD 3,512m, which was USD 1,579m
 
lower than the
 
amount recorded for
 
2023, mainly due
to a
 
USD 621m decrease
 
in integration-related
 
expenses, lower
 
litigation expenses
 
and lower
 
outsourcing expenses.
 
In
addition, operating
 
expenses in
 
2024 included
 
releases
 
of USD 300m
 
of IFRS 3
 
acquisition-related
 
contingent liabilities
following settlements
 
reached
 
in 2024.
 
2023 included
 
USD 665m of
 
expenses related
 
to the
 
US residential
 
mortgage-
backed securities litigation matter, which was settled in the third quarter
 
of 2023. Excluding integration-related expenses
of USD 1,154m, underlying operating expenses in 2024
 
were USD 2,359m, a decrease of 29%.
Risk-weighted assets and leverage ratio denominator
Risk-weighted
 
assets
 
(RWA)
 
decreased
 
by
 
USD 32.6bn
 
to
 
USD 41.4bn,
 
and
 
the
 
leverage
 
ratio
 
denominator
 
(the
 
LRD)
decreased by USD 115.0bn
 
to USD 53.5bn. The
 
active unwinding
 
of Non-core and
 
Legacy assets
 
resulted in a
 
decrease
in RWA, mainly
 
related to the
 
securitized product,
 
loan and macro
 
portfolios, and a
 
decrease in the
 
LRD, mainly
 
driven
by reductions in the high-quality liquid asset,
 
securitized product, macro and loan portfolios.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Financial and operating performance | Group
 
Items
 
86
Group Items
Group Items
1
As of or for the year ended
% change from
USD m
31.12.24
31.12.23
2
31.12.23
Results
Total revenues
(975)
(495)
97
Credit loss expense / (release)
(2)
6
Operating expenses
(220)
438
Operating profit / (loss) before tax
(752)
(938)
(20)
Underlying results
Total revenues as reported
(975)
(495)
97
of which: PPA effects and other integration items
3
(41)
(9)
373
Total revenues (underlying)
4
(933)
(486)
92
Credit loss expense / (release)
(2)
6
Operating expenses as reported
(220)
438
of which: integration-related expenses
4
(12)
451
of which: acquisition-related costs
202
Operating expenses (underlying)
4
(208)
(215)
(3)
of which: expenses for litigation, regulatory and similar matters
9
(27)
Operating profit / (loss) before tax as reported
(752)
(938)
(20)
Operating profit / (loss) before tax (underlying)
4
(723)
(277)
161
1 Comparatives may differ 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.
 
2 Comparative
 
figures have
 
been restated
 
for changes in
 
business division
 
perimeters, Group
 
Treasury allocations
 
and Non-core
 
and Legacy
 
cost allocations,
 
as well as
 
changes in
 
the equity
attribution framework. Refer to “Note 3 Segment
 
reporting” in the “Consolidated financial statements”
 
section and “Capital management” in the “Capital,
 
liquidity and funding, and balance sheet” section
 
of this
report for more
 
information.
 
3
Includes accretion of
 
PPA adjustments
 
on financial instruments
 
and other PPA
 
effects, as
 
well as temporary
 
and incremental items
 
directly related to
 
the integration.
 
4
Refer to
“Alternative performance measures” in the appendix to this report for the definition
 
and calculation method.
2024 compared with 2023
Results
Loss
 
before
 
tax
 
decreased
 
by
 
USD 186m,
 
or
 
20%,
 
to
 
USD 752m.
 
Underlying
 
loss
 
before
 
tax
 
was
 
USD 723m,
 
after
excluding from
 
total revenues
 
negative USD 41m
 
of purchase
 
price allocation (PPA
 
)
 
effects and
 
other integration
 
items
and also excluding from
 
operating expenses negative
 
USD 12m of integration-related
 
expenses.
 
This compared with
 
an
underlying
 
loss before
 
tax
 
of USD 277m
 
in 2023,
 
after
 
excluding
 
from
 
operating
 
expenses
 
USD 451m
 
of integration-
related expenses and USD 202m of acquisition-related costs and also excluding
 
from total revenues negative USD 9m of
PPA effects
 
and other integration items.
Income from
 
Group hedging
 
and own
 
debt, including
 
hedge accounting
 
ineffectiveness, was
 
net negative
 
USD 175m,
compared with net positive
 
income of USD 247m. The
 
losses in 2024
 
were driven by mark-to-market effects
 
on portfolio-
level economic hedges, mainly due to cross-currency-basis
 
widening.
 
 
 
 
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet
 
87
Risk, capital, liquidity and
funding, and balance sheet
Management report
Audited information according to IFRS 7 and IAS 1
Risk and capital disclosures
 
provided in line with
 
the requirements of IFRS 7,
Financial Instruments: Disclosures,
and IAS 1,
Presentation
 
of
Financial
 
Statements,
form
 
part
 
of
 
the
 
financial
 
statements
 
included
 
in
 
the
 
“Consolidated
 
financial
statements” section of
 
this report and
 
are audited by the
 
independent registered public
 
accounting firm Ernst
 
& Young
Ltd, Basel. This information is marked as “Audited” within
 
this section of the report.
Signposts
The
Audited |
signpost that is displayed at the beginning
 
of a section, table or chart indicates that
 
those items have been audited. A triangle
 
symbol –
 
–
indicates the end of the audited section, table
 
or chart.
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
88
Risk management and control
Table of contents
89
90
93
95
98
100
112
121
123
130
135
 
 
 
 
 
 
 
ubs-20241231p113i4ubs-20241231p113i3ubs-20241231p113i2ubs-20241231p113i1ubs-20241231p113i0
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
89
Risk management and control
With
 
regard
 
to
 
the
 
ongoing
 
integration
 
of
 
Credit
 
Suisse,
 
we
 
have
 
substantially
 
completed
 
the
 
initial
 
phases
 
of
 
the
integration, focusing on the
 
alignment of governance structures
 
and frameworks (aligning Credit
 
Suisse policies to UBS
standards)
 
and the
 
merger or
 
reparenting
 
of key
 
legal entities, including
 
the merger
 
of Credit
 
Suisse AG with
 
UBS AG,
the
 
merger
 
of
 
Credit
 
Suisse
 
(Schweiz) AG
 
with
 
UBS
 
Switzerland AG
 
and
 
the
 
reparenting
 
of
 
Credit
 
Suisse
Holdings (USA), Inc. in connection
 
with the transition to
 
a single US intermediate
 
holding company.
 
These steps set
 
the
stage for the next critical phase of client account and
 
data migrations. In 2024, we completed client account
 
migrations
in Hong
 
Kong,
 
Singapore
 
and Japan,
 
and in
 
some
 
locations
 
in Europe.
 
Our goal
 
is
 
to ensure
 
a
 
smooth and
 
seamless
transition for our clients,
 
minimizing any disruption. We are also
 
working toward a fully integrated
 
risk framework, which
is expected
 
to
 
be achieved
 
by the
 
end
 
of
 
2025, and
 
a
 
single-model
 
risk
 
management
 
framework
 
by retiring
 
and / or
integrating legacy Credit Suisse models into the
 
UBS risk management framework.
 
Top and emerging risks
An overview
 
of our
 
top and
 
emerging risks,
 
from a
 
risk management
 
perspective, is
 
disclosed below.
 
Investors should
also carefully review all information set out in the “Risk factors” section of this report, where we discuss these and other
material
 
risks
 
that
 
could
 
have
 
an
 
effect
 
on
 
our
 
ability
 
to
 
execute
 
our
 
strategy
 
and
 
may
 
affect
 
our
 
business
 
activities,
financial condition, results of operations and business
 
prospects.
Top and emerging risk
Description
Geopolitical uncertainty
We remain watchful of a range of geopolitical developments
 
and political changes in a number of countries,
 
as well as
international tensions arising from the Russia–Ukraine
 
war and global trade relations, and we continue
 
to monitor
conflicts in the Middle East. Geopolitical tensions
 
will continue to create uncertainty and complicate
 
the energy price
outlook.
Macroeconomic risks
We are exposed to a number of macroeconomic risks,
 
as well as general market conditions. As noted
 
in “Market,
credit and macroeconomic risks” in the “Risk factors”
 
section of this report, these external pressures may
 
have a
significant adverse effect on our business activities
 
and related financial results, primarily through reduced margins and
revenues, asset impairments and other valuation
 
adjustments,
 
and exit prices for our Non-core and Legacy portfolio.
Accordingly, these macroeconomic factors are considered in the development of stress-testing scenarios
 
for our
ongoing risk management activities.
Inflation has abated to some extent in major
 
Western economies, though there are still concerns
 
that inflation could
return, including upward pressure on interest rates.
 
Central banks’ monetary policy remains in the spotlight.
 
In China,
stress in the property sector and strained local government
 
finances continue to have an adverse impact
 
on economic
growth, raising the risk of financial instability. This combination of factors translates
 
into a more uncertain and volatile
environment, which increases the risk of financial market
 
disruption.
The commercial real estate sector continues to be a
 
source of concerns, especially the office sector in the
 
US, given
structural changes (higher interest rates and the shift
 
to remote working).
 
We remain focused on non-bank financial intermediation
 
and growth in private markets, given their significance
 
and
interconnectivity across the financial sector, with the potential to create spillover effects into the broader
 
financial
system. Across our business divisions we undertake
 
a broad range of private-markets-related activities, including
financing, advisory services,
 
investment facilitation and asset management.
Regulatory and legal risks
We are exposed to substantial changes in the regulation of
 
our businesses that could have a material
 
adverse effect on
our business, as discussed in the “Regulatory
 
and legal developments” section of this report
 
and in “Regulatory and
legal risks” in the “Risk factors” section of this
 
report.
As a global financial services firm, we are subject
 
to many different legal, tax and regulatory regimes and extensive
regulatory oversight. We are exposed to significant liability risk,
 
and we are subject to various claims, disputes, legal
proceedings and government investigations,
 
as noted in “Regulatory and legal risks”
 
in the “Risk factors” section of
this report. Information about litigation, regulatory and
 
similar matters we consider significant is disclosed
 
in “Note 18
Provisions and contingent liabilities” in the “Consolidated
 
financial statements” section of this report.
 
Cyber risks
Global geopolitical trends increase the likelihood of external
 
state-driven cyber activity. Alongside a general trend
toward more sophisticated forms of ransomware and other
 
cyber threats, there is a risk of operational disruption to
business activities at our locations and those
 
of third-party suppliers or corruption or loss of data.
 
Additionally, as a
result of the dynamic and material nature of recent geopolitical
 
and environmental events and the operational
complexity of all our businesses, we are continually
 
exposed to operational resilience scenarios such
 
as process error,
failed execution, system failures,
 
loss of third-party service and fraud.
›
Refer to “Non-financial risk” and “Cybersecurity and information security”
 
in this section for more information
Conduct risks
Conduct risks are inherent in our businesses. Achieving
 
fair outcomes for our clients, upholding
 
market integrity and
cultivating the highest standards of employee conduct
 
are of critical importance to us. Management of
 
conduct risks is
an integral part of our risk management framework.
›
Refer to “Non-financial risk” in this section and “Strategy,
 
management and operational risks” in the “Risk factors”
section of this report for more information
 
 
 
 
 
ubs-20241231p114i2ubs-20241231p114i1ubs-20241231p114i0
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
90
Top and emerging risk
Description
Financial crime risks
Financial crime (including money laundering,
 
terrorist financing, sanctions violations, fraud,
 
bribery, and corruption)
presents significant risk and is subject to heightened
 
regulatory expectations and attention.
 
This requires investment in
people and systems, while emerging technologies
 
and changing geopolitical risks further increase
 
the complexity of
identifying and preventing financial crime, in particular
 
managing the continuously evolving sanctions
 
environment.
›
Refer to “Non-financial risk” in this section for more information
Sustainability and climate risks
Sustainability and climate risks continue to be in
 
focus for UBS,
 
for regulators and for stakeholders. To address these
emerging risks, UBS has further enhanced its
 
transition and physical risk methodologies and
 
updated its guidelines on
sustainable finance and on carbon and environmental
 
markets.
›
Refer to “Sustainability and climate risk” in this section for more information
›
Refer to “Appendix 1 – Governance” to the UBS Group Sustainability Report 2024, available under “Annual reporting”
at ubs.com/investors
, for a full description of our sustainability and climate risk policy framework
Regulatory requirements and industry guidelines are emerging
 
simultaneously in various jurisdictions, leading
 
to an
increased risk of divergence, which in turn
 
increases the risk that UBS may not comply with
 
all relevant regulations.
New technologies
New risks related to client demand for distributed
 
ledger technology, blockchain-based assets and virtual currencies
continue to emerge.
 
Our exposure to these risks is currently limited, and relevant control frameworks
 
are continuously
being enhanced and implemented. Furthermore, technological
 
developments in the areas of artificial intelligence
 
(AI)
and digitization will have a significant impact
 
and create not only opportunities but also heightened
 
operational risks.
As the digitalization of our business and the
 
marketplace results in the adoption of new technologies,
 
the responsible
use of AI and the increasing regulatory and client expectations
 
on ensuring ethical data usage are becoming
 
more
important. With rapidly advancing technology
 
and changing communication preferences, there is heightened
 
focus on
electronic communications,
 
including the use of approved communication channels
 
and appropriate recordkeeping.
›
Refer to “Non-financial risk” in this section for more information
Risk oversight
Risk governance
Our risk governance framework operates along three lines
 
of defense.
 
Our first line
 
of defense, business
 
and Group functions
 
management, owns its
 
risks and is
 
accountable for
 
maintaining
effective processes
 
and systems
 
to manage
 
them in
 
compliance with
 
applicable laws,
 
rules and
 
regulations, as
 
well as
internal standards, including identifying control weaknesses and
 
inadequate processes.
Our
 
second
 
line
 
of
 
defense,
 
control
 
functions,
 
is
 
separate
 
from
 
the
 
business
 
and
 
reports
 
directly
 
to
 
the
 
Group
 
Chief
Executive Officer
 
(the
 
Group CEO).
 
Control functions provide
 
independent oversight, challenge
 
financial and non-financial
risks arising from the firm’s business activities, and establish independent frameworks for risk
 
assessment, measurement,
aggregation, control and reporting, protecting against non-compliance
 
with applicable laws, rules and regulations.
Our third line of defense, Group
 
Internal Audit (GIA), reports to the Chairman
 
and to the Audit Committee. This
 
function
assesses the
 
design and
 
operating effectiveness
 
and sustainability
 
of processes
 
to define
 
risk appetite,
 
governance, risk
management, internal
 
controls, remediation
 
activities and
 
processes to
 
comply with
 
legal and
 
regulatory requirements
and internal governance standards.
The key roles
 
and responsibilities for
 
risk management and
 
control are shown
 
in the chart
 
below and described
 
further
below.
 
ubs-20241231p115i0
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
91
Audited |
The Board of
 
Directors (the
 
BoD) approves
 
the risk
 
management and
 
control framework
 
of the Group,
 
including
the Group and
 
business division
 
overall risk
 
appetite. The
 
BoD is supported
 
by its Risk
 
Committee, which monitors
 
and
oversees the Group’s risk
 
profile and the
 
implementation of the
 
risk framework approved
 
by the BoD and
 
approves the
Group’s risk appetite methodology.
 
›
Refer to the “Corporate governance” section
 
of this report for more information about the responsibilities of
 
the Risk Committee
and other BoD committees
The Group Executive Board (the
 
GEB) has overall responsibility for establishing
 
and implementing a risk management and
control framework in the Group, managing the risk profile
 
of the Group as a whole.
The
 
Group
 
CEO
 
has
 
responsibility
 
and
 
accountability
 
for
 
the
 
management
 
and
 
performance
 
of
 
the
 
Group,
 
has
 
risk
authority over
 
transactions, positions
 
and exposures,
 
and allocates
 
risk authority
 
delegated by
 
the BoD
 
to the
 
business
divisions and Group functions.
The business
 
division Presidents
 
and Group
 
function heads
 
are responsible
 
for the
 
operation and
 
management of
 
their
business divisions and Group functions, including controlling the
 
risk appetite of the business divisions.
The regional Presidents ensure cross-divisional
 
collaboration in their regions
 
and are mandated to inform
 
the GEB about
any regional activities and issues that may give rise to actual
 
or potentially material regulatory or reputational concerns.
The Group
 
Chief Risk
 
Officer (the
 
Group CRO)
 
is responsible
 
for developing
 
the Group’s
 
risk management
 
and control
framework (including risk
 
principles and risk appetite)
 
for credit, market,
 
country, treasury, model and
 
sustainability and
climate risks. This includes risk measurement and
 
aggregation, portfolio controls, risk reporting,
 
and taking decisions on
transactions,
 
positions,
 
exposures,
 
portfolio
 
limits,
 
and
 
allowances
 
in
 
accordance
 
with
 
the
 
risk
 
control
 
authorities
delegated to the Group CRO.
The Group
 
Chief Compliance
 
and Governance
 
Officer is
 
responsible for
 
developing the
 
Group’s risk
 
management and
control
 
framework
 
(including
 
taxonomies
 
and
 
risk
 
appetite)
 
for
 
non-financial
 
risks.
 
This
 
includes
 
implementing
independent control
 
frameworks
 
for compliance
 
and conduct,
 
financial crime,
 
and operational
 
risks. The
 
Group Chief
Compliance and Governance Officer
 
is also responsible
 
for managing governmental and
 
regulatory affairs, investigations,
and interactions with governments, regulators and international
 
standard setters.
 
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The Group Chief Financial Officer (the Group CFO) is responsible for transparency
 
in assessing the financial performance
of the
 
Group
 
and
 
the
 
business
 
divisions
 
and
 
for
 
managing
 
the
 
Group’s
 
financial
 
accounting,
 
controlling,
 
forecasting,
planning and reporting.
 
The Group
 
Chief Operations and
 
Technology Officer is
 
responsible for driving
 
digitalization, delivering technology
 
services,
infrastructure
 
and
 
operations,
 
including
 
cybersecurity
 
and
 
information
 
security,
 
and
 
providing
 
Group-wide
 
data
governance.
 
The Group General Counsel manages the
 
Group’s legal affairs, including effective and timely
 
assessment of legal matters
impacting the Group or its businesses, and managing and
 
reporting all litigation matters.
The Head
 
Group Human Resources
 
& Group
 
Corporate Services
defines and
 
executes a
 
human resources
 
strategy aligned
 
to UBS’s
objectives, supplies real
 
estate infrastructure and
 
controls supply and
 
demand management activities
.
The Group
 
Integration Officer develops
 
UBS’s
 
integration
 
strategy
 
with
 
regard
 
to
 
Credit
 
Suisse
 
within
 
agreed
 
design
principles and in accordance with UBS’s strategy.
Some of these
 
roles and
 
responsibilities are
 
replicated on
 
the level
 
of the business
 
divisions, regions
 
and / or significant
entities of the
 
Group. Designated
 
entity risk officers
 
oversee and control
 
financial and non-financial
 
risks for significant
entities of UBS
 
as part of
 
the entity
 
control framework,
 
which complements
 
the Group’s
 
risk management
 
and control
framework.
Risk identification
Risk identification
 
at UBS
 
is the
 
process of
 
systematically identifying,
 
assessing and
 
cataloguing risks
 
across all
 
business
activity and
 
risk categories.
 
It is
 
a fundamental
 
component
 
of our
 
risk management
 
approach,
 
ensuring
 
that the
 
firm
maintains a
 
comprehensive
 
understanding of
 
its risk
 
exposure.
 
Our structured
 
risk identification
 
framework
 
integrates
both bottom-up and top-down risk identification approaches and enhances our ability to
 
capture, measure, monitor and
control risks, in alignment with global regulatory expectations. The process involves
 
subject matter experts from both the
first and
 
second lines
 
of defense,
 
including senior
 
management across
 
the organization,
 
and is conducted
 
periodically,
complementing
 
day-to-day
 
risk
 
identification
 
and
 
risk
 
management
 
frameworks.
 
By
 
anchoring
 
to
 
a
 
common
 
risk
taxonomy and
 
risk materiality
 
approach, we
 
ensure consistent
 
categorization and
 
prioritization of
 
risks across
 
business
divisions and significant
 
Group entities. Additionally, documenting root-cause drivers and
 
early warning signs
 
strengthens
our ability to monitor emerging risks.
Various
 
review
 
and
 
approval
 
steps
 
are
 
embedded
 
throughout
 
the
 
process
 
to
 
maximize
 
risk
 
transparency,
 
including
presentation at
 
senior governance bodies
 
for each
 
business division,
 
applicable significant Group
 
entities and at
 
the Group
level.
 
The
 
output
 
of
 
the
 
process
 
helps
 
ensure
 
that
 
UBS
 
stress-testing
 
exercises
 
take
 
into
 
account
 
the
 
firm’s
 
key
vulnerabilities, while also supporting broader risk management
 
activity.
Internal risk reporting
Comprehensive
 
and transparent
 
reporting of
 
risks is
 
central to
 
our risk
 
governance framework’s
 
control and
 
oversight
responsibilities and required by
 
our risk management
 
and control principles.
 
Accordingly, risks are reported at a
 
frequency
and level
 
of detail
 
commensurate
 
with the
 
extent
 
and
 
variability of
 
the
 
risk and
 
the
 
needs of
 
the various
 
governance
bodies, regulators
 
and risk
 
authority holders.
 
Data used
 
to produce
 
risk reports
 
is generally
 
aligned with
 
that used
 
by
both the business divisions and control functions for managing and monitoring risks. This alignment ensures consistency
in risk assessment and decision-making across the
 
organization.
The Group
 
Risk Report
 
provides a
 
detailed qualitative
 
and quantitative
 
monthly
 
overview of
 
developments
 
in financial
and non-financial risks at
 
the firm-wide level, including
 
the status of our
 
risk appetite objectives and
 
the results of firm-
wide
 
stress
 
testing.
 
The
 
Group
 
Risk
 
Report
 
is
 
distributed
 
internally
 
to
 
the
 
BoD,
 
the
 
GEB
 
and
 
senior
 
members
 
of
 
Risk
Control, GIA,
 
Finance
 
and Legal.
 
Risk
 
reports
 
are
 
also produced
 
covering
 
significant
 
Group entities
 
and branches
 
(i.e.
entities and branches subject to enhanced standards of corporate
 
governance).
Monthly divisional
 
risk reports
 
are supplemented
 
with daily
 
or weekly
 
reports, at
 
various levels
 
of granularity,
 
covering
market and
 
credit risks of
 
the business
 
divisions to
 
enable risk
 
officers and
 
senior management
 
to monitor
 
and control
the Group’s risk profile.
Our internal risk
 
reporting covers financial and
 
non-financial risks and is
 
supported by risk
 
data and measurement systems
that are
 
used for risk
 
management and
 
monitoring purposes
 
and also
 
for external
 
disclosure and
 
regulatory reporting.
Dedicated
 
units
 
within
 
Risk
 
Control
 
assume
 
responsibility
 
for
 
measurement,
 
analysis
 
and
 
reporting
 
of
 
risk
 
and
 
for
overseeing the quality and
 
integrity of risk-related
 
data. Our risk data
 
and measurement systems
 
are subject to
 
periodic
review by GIA, which applies a risk-based audit approach.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Risk categories
We categorize our
 
risk exposures as
 
outlined in the table
 
below. Our
 
risk appetite framework
 
is designed to capture
 
all
risk categories.
›
Refer to “Risk appetite framework” in this
 
section for more information
Risk
managed by
Independent
oversight by
Financial risks
Audited |
 
Credit risk:
the risk of loss resulting from the failure of a client or counterparty
 
(including an issuer) to meet its
contractual obligations toward UBS. This includes
 
loan underwriting risk and settlement risk.
Loan underwriting risk:
 
the risk of loss arising during the holding
 
period of financing transactions that are intended
for further distribution.
Settlement risk:
 
the short-term form of credit risk arising when
 
UBS delivers its side of an agreed-upon transaction
but does not receive an expected value in return
 
from the counterparty.
›
Refer to “Credit risk” in this section for more information
Business
divisions
Risk Control
Audited |
 
 
 
Market risk:
 
the risk of loss resulting from adverse movements in
 
market variables. Market risks are actively
taken as part of trading activities but can
 
also arise from non-trading activities. Market variables
 
include observable
variables, such as interest rates, foreign exchange rates,
 
equity prices, credit spreads and commodity (including precious
metal) prices, as well as variables that may
 
be unobservable or only indirectly observable,
 
such as volatilities and
correlations. Market risk includes issuer risk and investment
 
risk.
Issuer risk:
 
the risk of loss that would occur if an issuer to
 
which we are exposed through tradable securities or
derivatives referencing the issuer was subject to a credit-related
 
event.
Investment risk:
 
the risk associated with positions held
 
as financial investments.
›
Refer to “Market risk” in this section for more information
Business
divisions and
Group
Treasury
Risk Control
Treasury risk:
 
the risks associated with asset and liability
 
management and our liquidity and funding
 
positions, as well as
structural exposures,
 
including pension risks.
Audited |
Liquidity risk:
 
the risk that UBS is unable to meet business-as-usual
 
or stress cash / collateral flows.
Audited |
Funding risk:
 
the risk that UBS is unable to borrow funds to
 
support its current business and desired
strategy.
›
Refer to “Liquidity and funding management” in the “Capital, liquidity and funding, and balance sheet” section of this
report for more information
Interest rate risk in the banking book:
the risk to the firm’s capital and earnings
 
arising from the adverse effects of
interest rate movements on the firm’s banking book
 
positions. The risk is transferred from the originating
 
business
divisions, i.e. Global Wealth Management and Personal
 
& Corporate Banking, to Group Treasury to risk manage this
centrally and benefit from Group-wide netting while leaving
 
the business divisions with margin
 
management.
›
Refer to “Market risk” in this section for more information
Structural foreign exchange risk:
 
the risk of decreases in our capital due to changes
 
in foreign exchange rates with
an adverse translation effect on capital held in currencies
 
other than the US dollar.
Group
Treasury
Risk Control
Pension risk:
 
the risk of a negative impact on our capital
 
as a result of deteriorating funded status from decreases in
the fair value of assets held in defined benefit
 
pension funds and / or changes in the value
 
of defined benefit pension
obligations due to changes in actuarial assumptions
 
(e.g. discount rate, life expectancy and rate
 
of pension increase)
and / or changes to plan designs.
Group
Treasury and
Human
Resources
Risk Control
and Finance
Country risk:
 
the risk of loss resulting from country-specific events.
 
This includes the risk of sovereign default and
 
also
transfer risk, which involves a country’s
 
authorities preventing or restricting the payment of an
 
obligation, as well as
systemic risk events arising from country-specific political
 
or macroeconomic developments.
›
Refer to “Country risk” in this section for more information
Business
divisions
Risk Control
Sustainability and climate risk:
 
the risk that UBS negatively impacts, or is
 
impacted by, climate change, natural capital,
human rights, and other environmental and social
 
matters. Sustainability and climate risks
 
may manifest as credit, market,
liquidity, business and non-financial risks for UBS resulting in potential adverse
 
financial, liability and reputational impacts.
These risks extend to the value of investments
 
and may also affect the value of collateral (e.g. real estate).
 
Sustainability
and climate risk includes transition risk and physical
 
risk.
Transition risk:
 
climate-driven transition risks arise
 
from global efforts to mitigate the effects of climate change.
 
They
cover the financial impact on our clients or on
 
UBS itself as reflected in the creditworthiness of UBS’s counterparties
 
or
the value of collateral held by UBS.
Physical risk:
 
climate-driven physical risks arise from acute
 
hazards, which are increasing in severity and frequency,
and from chronic climate risks,
 
which arise from an incrementally changing climate. These
 
effects may include
increased temperature and sea-level rise, and the gradual
 
changes may affect productivity and property values and
increase the severity and frequency of acute hazards.
›
Refer to “Sustainability and climate risk” in this section for more information
Business
divisions
Risk Control
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Risk
managed by
Independent
oversight by
Financial risks (continued)
Capital risk:
the risk that UBS does not maintain
 
adequate capital to support its activities and
 
maintain the minimum
capital requirements.
 
›
Refer to “Capital management” in the “Capital, liquidity and funding, and balance sheet” section of this report
 
for more
information
Group
Treasury
Risk Control
 
and Finance
Business risk:
 
the potential negative impact on earnings
 
from lower-than-expected business volumes
 
and / or margins, to
the extent they are not offset by a decrease in expenses. For
 
example, changes in the competitive landscape,
 
client
behavior or market conditions can have a negative
 
impact.
Business
divisions
Risk Control
and Finance
Strategic risk:
the idiosyncratic risk arising from the impact
 
of strategic decisions on UBS, which can be
 
driven by
exogenous factors,
 
such as changes in the industry environment, or by
 
endogenous factors,
 
such as constraints related to
or execution of strategic decisions.
›
Refer to “Strategy, management and operational
 
risks” in the “Risk factors”
 
section of this report for more information
Business
divisions and
Group
functions
Finance, Chief
Strategy Office
and Risk
Control
Non-financial risks
 
Compliance risk:
 
the risk of failure to comply with laws, rules and
 
regulations, internal policies and procedures, and the
firm’s Code of Conduct and Ethics.
 
›
Refer to “Non-financial risk” in this section for more information
Business
divisions
GCRG
Employment risk:
 
the risk arising from acts inconsistent with laws,
 
rules and regulations or the firm’s human
resources policies governing employment practices,
 
discrimination, compensation and employee-related
 
taxes and
benefits.
Human
Resources
Conduct risk:
 
the risk that the conduct of the firm or its
 
individuals unfairly impacts clients or counterparties,
undermines the integrity of the financial system
 
or impairs effective competition to the detriment
 
of consumers.
GCRG
Market conduct risk:
the risk of failure to maintain appropriate standards to
 
ensure fair and effective markets and
meet legal / regulatory requirements and expectations governing
 
activities undertaken on or through a market
 
or in
pricing- / transaction-related bilateral interactions
 
between counterparties.
GCRG
Client suitability risk:
 
the risk arising from an inability to demonstrate
 
adherence to applicable investment suitability
standards, laws, rules and regulations.
GCRG
Financial crime risk:
 
the risk of failure to prevent financial crime (including
 
money laundering, terrorist financing,
sanctions or embargo violations, internal
 
and external fraud, bribery, and corruption).
›
Refer to “Non-financial risk” in this section for more information
Business
divisions and
Financial
Crime
Prevention
 
GCRG
Operational risk:
 
the risk resulting from inadequate or failed internal
 
processes,
 
people or systems, or from external
causes (deliberate, accidental or natural).
›
Refer to “Non-financial risk” in this section for more information
Business
divisions
GCRG
Cybersecurity and information-security
 
risk:
 
the risk of a malicious internal or
 
external act, or a failure of IT
hardware or software, or human error, leading to a material impact on confidentiality, integrity or availability of UBS’s
data or information systems.
 
›
Refer to “Non-financial risk” in this section for more information
Business
divisions and
GOTO
GCRG
Model risk:
 
the risk of adverse consequences (e.g. financial
 
loss, due to legal matters, operational loss,
 
biased
business decisions, or reputational damage) resulting from decisions
 
based on incorrect / inadequate or misused
 
model
outputs and reports.
›
Refer to “Model risk” in this section for more information
Business
divisions and
Group
functions
Risk Control
Legal risk:
 
the risk of: (i) being held liable for a breach of
 
applicable laws, rules or regulations; (ii) being held
 
liable for a
breach of contractual or other legal obligations;
 
(iii) an inability or failure to enforce or protect contractual rights
 
or non-
contractual rights sufficiently to protect UBS’s interests; and
 
(iv) being party to a claim or investigated
 
by a regulator or
public authority in respect of any of the above
 
(and the risk of loss of attorney–client privilege
 
in the context of any such
claim).
Business
divisions
Legal
Reputational risk:
 
the risk of an unfavorable perception of UBS
 
or a decline in the firm’s reputation from the point
 
of
view of clients, shareholders, regulators, employees
 
or society, which may lead to potential financial loss and / or loss of
market share.
›
Refer to “Non-financial risk” in this section for more information
All business
divisions and
Group
functions
All control
functions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Overview of risks arising from our business activities
Key risks by business division and Group functions
Business divisions and Group functions
Key financial risks arising from business activities
Global Wealth Management
Credit risk
 
from collateralized lending primarily against
 
securities, residential and commercial real estate,
other real assets (such as ships and aircraft), private equity
 
and hedge fund interest, and investors’ uncalled
capital commitments, as well as from collateralized
 
clients’ derivatives trading. Also includes
 
unsecured
lending, i.e. cash-flow-based corporate lending
 
to entities owned and controlled by our Global
 
Wealth
Management clients,
 
and recourse-based lending.
Limited contribution to
market risk
 
from municipal securities and taxable fixed-income
 
securities. Interest
rate risk in the banking book related to Global
 
Wealth Management is transferred to and managed
 
by Group
Treasury.
Personal & Corporate Banking
Credit risk
 
from mortgages (owner-occupied and
 
income-producing), secured and
 
unsecured corporate
lending, commodity trade finance,
 
trade and export finance, consumer finance,
 
and lending to banks and
other regulated clients, as well as a small amount
 
of derivatives trading activity.
Minimal contribution to
market risk
. Interest rate risk in the banking book related to
 
Personal & Corporate
Banking is transferred to and managed by Group Treasury.
Asset Management
Limited exposure to
credit risk
 
and
market risk
 
from on-balance sheet positions such as seed capital
 
and co-
investments in funds managed by Asset Management.
Indirect exposure to credit risk and market risk from client assets invested
 
in Asset Management funds,
 
which
can adversely impact management and performance
 
fees and cause heightened fund outflows
 
and liquidity
risk.
Investment Bank
Credit risk
 
from lending (take-and-hold, as well as temporary
 
loan underwriting activities), derivatives
 
trading
and securities financing.
 
Market risk
 
from primary underwriting activities and
 
secondary trading.
Non-core and Legacy
Credit risk
 
arising from large, less-liquid structured financing transactions,
 
including some with residential
and commercial real estate collateral, a material corporate
 
loan portfolio and a counterparty credit trading
portfolio with lending against securities collateral
 
and derivatives.
 
Market risk
 
from structured trades, large portfolios of loans
 
and securitized products, and both complex
 
and
simple credit, interest rate and equity derivative transactions.
Group functions
Credit risk
,
market risk
 
and
treasury risk
 
arising from Group Treasury’s management of the Group’s
balance sheet (asset and liability management),
 
capital, profit or loss, and liquidity and funding.
All business divisions and the Group functions
 
are exposed to
country risk
,
sustainability and climate risk
 
and
non-financial risk
.
Non-financial risk is an
inevitable consequence of being an operating
 
firm and can arise as a result of our past and current business
 
activities.
Risk appetite framework
Our risk
 
appetite is
 
defined at
 
the aggregate
 
Group level
 
and reflects
 
the risk
 
that we
 
are willing
 
to accept
 
or wish
 
to
avoid. It is set via complementary qualitative and quantitative risk appetite statements defined at a firm-wide level and is
embedded throughout our business divisions and legal entities by
 
Group, business division and legal entity policies, limits
and authorities. Our risk appetite is reviewed and recalibrated annually, with the aim of ensuring that risk-taking at every
level of
 
the organization
 
is in
 
line with
 
our strategic
 
priorities, our
 
capital and
 
liquidity plans,
 
our
Pillars, Principles
 
and
Behaviors
,
 
and
 
minimum
 
regulatory
 
requirements.
 
It
 
is
 
governed
 
by
 
a
 
single
 
overarching
 
policy
 
and
 
conforms
 
to
 
the
Financial Stability Board’s
 
Principles for an
 
Effective Risk Appetite
 
Framework. The “Risk
 
appetite framework” chart
 
below
shows the key elements of the framework, which is described
 
in detail in this section.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Risk principles and risk culture
Qualitative risk appetite statements aim to ensure
 
we maintain the desired risk culture.
 
Maintaining a strong risk culture
is a
 
prerequisite
 
for success
 
in today’s
 
highly complex
 
operating environment
 
and a
 
source
 
of sustainable
 
competitive
advantage.
 
Our risk appetite
 
framework combines
 
all the important
 
elements of our
 
risk culture,
 
expressed in our
Pillars, Principles
and
 
Behaviors
,
 
our
 
risk
 
management
 
and
 
control
 
principles,
 
our
 
Code
 
of
 
Conduct
 
and
 
Ethics,
 
and
 
our
 
Total
 
Reward
Principles. They
 
help to
 
create a
 
solid foundation
 
for promoting
 
risk awareness,
 
leading to
 
appropriate risk-taking
 
and
the establishing of robust risk management and control
 
processes.
 
›
Refer to “Employees” in the “How we create value
 
for our stakeholders” section of this report for
 
more information about our
Pillars, Principles and Behaviors
›
Refer to the Code of Conduct and Ethics of
 
UBS, available at
ubs.com/code
, for more information
Risk management and control principles
Protection of financial strength
Protecting our financial strength by controlling our risk exposure
 
and avoiding potential risk concentrations
 
at
individual exposure levels, at specific portfolio levels
 
and at an aggregate firm-wide level across all risk
 
types.
Protection of reputation
Protecting our reputation through a sound risk culture characterized
 
by a holistic and integrated view of risk,
performance and reward, and through full compliance with our
 
standards and principles, particularly our Code
of Conduct and Ethics.
Business management accountability
Maintaining management accountability, whereby business management owns
 
all risks assumed throughout the
Group and is responsible for the continuous and
 
active management of all risk exposures to provide for
balanced risk and return.
Independent controls
Independent control functions that monitor the
 
effectiveness of the businesses’ risk management
 
and oversee
risk-taking activities.
Risk disclosure
Disclosure of risks to senior management, the BoD,
 
investors, regulators, credit rating agencies
 
and other
stakeholders with an appropriate level of comprehensiveness
 
and transparency.
Quantitative risk appetite objectives
We use
 
both scenario-based
 
stress tests
 
and economic
 
capital risk
 
measurement techniques
 
to stress
 
test our
 
business
activities. The quantitative risk appetite objectives
 
are supported by a comprehensive
 
suite of risk limits set at a portfolio
level
 
to
 
monitor
 
specific
 
portfolios
 
and
 
to
 
identify
 
potential
 
risk
 
concentrations.
 
The
 
portfolio
 
limits
 
and
 
associated
approval
 
authorities
 
are
 
subject
 
to
 
periodic
 
reviews
 
and
 
changes,
 
particularly
 
in
 
the
 
context
 
of
 
our
 
annual
 
business
planning process. The status of our quantitative risk appetite objectives and portfolio
 
limits is evaluated each month and
reported to the BoD and the GEB.
 
›
Refer to “Risk measurement” in this section for
 
more information about our stress testing and economic
 
capital measures
 
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These objectives are complemented by a standardized set of quantitative firm-wide
 
non-financial risk appetite objectives
established at the Group and business-division
 
levels. Non-financial risk events exceeding predetermined
 
risk tolerances,
expressed as percentages of
 
UBS’s total revenue
 
and operational risk regulatory
 
capital, trigger a
 
review of key loss
 
drivers
and required mitigation measures,
 
and are reported in the
 
Group Risk Report.
 
Risk appetite statements at the business-division level are derived from
 
the firm-wide risk appetite. They may also include
business-division-specific
 
strategic goals
 
related to
 
that business
 
division’s activities
 
and risks.
 
Risk appetite
 
statements
are also set for certain legal entities, which must be consistent with the firm-wide risk appetite framework and approved
in
 
accordance
 
with
 
Group
 
and
 
legal
 
entity
 
regulations.
 
Differences
 
may
 
exist
 
that
 
reflect
 
the
 
specific
 
nature,
 
size,
complexity and regulations applicable to the relevant legal entity.
Portfolio and position limits
We maintain
 
a comprehensive
 
set of
 
risk limits
 
across our
 
major risk
 
portfolios. These
 
portfolio limits
 
are set
 
based on
our risk appetite and periodically reviewed and adjusted
 
as part of the business planning process.
Firm-wide
 
stress and
 
statistical metrics
 
are complemented
 
by more
 
granular
 
portfolio
 
and position
 
limits, triggers
 
and
targets.
 
Combining
 
these
 
measures
 
provides
 
a
 
comprehensive
 
framework
 
for
 
control
 
of
 
the
 
key
 
risks
 
of
 
our
 
business
divisions, as well as significant legal entities.
We apply limits to a variety of exposures at the portfolio level, using statistical and stress
 
-based measures, such as value-
at-risk, liquidity-adjusted stress, loan
 
underwriting limits, economic value
 
sensitivity and portfolio default
 
simulations for
loan books. These are complemented
 
with a set of controls for
 
net interest income sensitivity,
 
mark-to-market losses on
available-for-sale portfolios, and the effect of foreign exchange
 
movements on capital and capital ratios.
 
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Portfolio measures are
 
supplemented with counterparty-
 
and position-level controls.
 
Risk measures for position
 
controls
are
 
based
 
on
 
market
 
risk
 
sensitivities
 
and
 
counterparty-level
 
credit
 
risk
 
exposures.
 
Market
 
risk
 
sensitivities
 
include
sensitivities to changes
 
in general market
 
risk factors (e.g. equity
 
indices, foreign exchange
 
rates and interest rates)
 
and
sensitivities
 
to
 
issuer-specific
 
factors
 
(e.g.
 
changes
 
in
 
an
 
issuer’s
 
credit
 
spread
 
or
 
default
 
risk).
 
We
 
monitor
 
numerous
market
 
and
 
treasury
 
risk
 
controls
 
on
 
a
 
daily
 
basis.
 
Counterparty
 
measures
 
capture
 
the
 
current
 
and
 
potential
 
future
exposure to an individual counterparty, considering collateral
 
and legally enforceable netting agreements.
 
Since the merger
 
of UBS AG and Credit
 
Suisse AG on 31 May
 
2024, UBS has significantly
 
extended its set of
 
combined
portfolio limits applied to the UBS Group to oversee the aggregate risk profile. Only certain market risk limits
 
continue to
be separately monitored
 
on the legacy
 
Credit Suisse infrastructure
 
until these positions
 
are migrated
 
to UBS infrastructure.
›
Refer to
“
Credit risk
”
 
in this section for more information about counterparty limits
 
Risk measurement
Audited |
We apply a
 
variety of methodologies
 
and measurements
 
to quantify the
 
risks of our
 
portfolios and potential
 
risk
concentrations. Risks that are
 
not fully reflected within standard
 
measures are subject to
 
additional controls, which may
include
 
preapproval
 
of
 
specific
 
transactions
 
and
 
the
 
application
 
of
 
specific
 
restrictions.
 
Models
 
to
 
quantify
 
risk
 
are
generally developed by dedicated units within control
 
functions and are subject to independent validation.
›
Refer to “Credit risk”, “Market risk” and “Non-financial
 
risk” in this section for more information about model
 
confirmation
procedures
Stress testing
We perform stress testing to
 
estimate losses that could
 
result from extreme yet plausible macroeconomic and
 
geopolitical
stress events to
 
identify, better understand and
 
manage our potential
 
vulnerabilities and risk
 
concentrations. Stress testing
has a
 
key
 
role
 
in our
 
limits
 
framework
 
at the
 
firm-wide,
 
business
 
division,
 
legal
 
entity
 
and portfolio
 
levels. Stress
 
test
results are regularly reported to the BoD and the GEB. We also provide detailed stress loss analyses to the Swiss Financial
Market
 
Supervisory
 
Authority
 
(FINMA)
 
and
 
regulators
 
of
 
our
 
legal
 
entities
 
in
 
accordance
 
with
 
their
 
requirements.
 
As
described in “Risk
 
appetite framework”,
 
stress testing,
 
along with economic
 
capital measures,
 
has a central
 
role in
 
our
risk appetite and business planning processes.
Our stress-testing
 
framework has
 
three pillars:
 
(i) combined stress
 
tests; (ii) an
 
extensive set
 
of portfolio-
 
and risk-type-
specific stress tests; and (iii) reverse stress testing.
The combined stress-testing
 
(CST) framework is scenario
 
based and aims to
 
quantify overall firm-wide
 
losses that could
result
 
from
 
various
 
potential
 
global
 
systemic
 
events.
 
The
 
framework
 
captures
 
all
 
material
 
risks,
 
as
 
covered
 
in
 
“Risk
categories”.
Scenarios are forward looking and encompass macroeconomic and geopolitical stress events calibrated
 
to different levels
of severity.
 
In each
 
scenario we
 
assume changes
 
in a
 
wide range
 
of macroeconomic
 
and market
 
variables to
 
stress the
key risk drivers of our portfolios. We also
 
capture the business risk resulting from
 
lower fee, interest and trading income
net of
 
lower expenses.
 
These effects
 
are measured
 
for all
 
businesses and
 
material risk
 
types to
 
calculate the
 
aggregate
estimated effect of the given
 
scenario on profit or loss,
 
other comprehensive income, risk-weighted
 
assets, the leverage
ratio
 
denominator
 
and,
 
ultimately,
 
capital
 
and
 
leverage
 
ratios.
 
The
 
assumed
 
changes
 
in
 
macroeconomic
 
and
 
market
variables are updated periodically to account for changes
 
in the current and possible future market environment.
At least once a year, the Risk Committee approves the most relevant scenario, known
 
as the binding scenario, for use as
the main scenario for regular CST reporting and for monitoring risk exposure against our minimum capital, earnings and
leverage
 
ratio
 
objectives
 
in
 
our
 
risk
 
appetite
 
framework.
 
In
 
2024,
 
the
 
binding
 
scenario
 
for
 
CST
 
was
 
the
 
internal
stagflationary geopolitical crisis
 
scenario. This
 
scenario assumes
 
that a
 
geopolitical event
 
leads to
 
economic regionalization
and fears
 
of prolonged
 
stagflation.
 
Central banks
 
signal a
 
firm commitment
 
to price
 
stability and
 
continue to
 
tighten
monetary policy, triggering a broad rise in interest rates
 
and impacting economic activity and asset values.
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
99
As part of the CST framework, we routinely monitored the
 
following three additional stress scenarios throughout
 
2024:
–
The
global crisis
 
scenario
 
assumes
 
a
 
fall
 
in
 
global
 
trade,
 
which
 
particularly
 
hits
 
China
 
and
 
leads
 
to
 
a
 
hard
 
landing.
Combined with political, solvency and liquidity concerns, this results in a sharp sell-off
 
of emerging markets sovereign
debt and some emerging markets
 
default. The macroeconomic and market impacts
 
amplify concerns about peripheral
European sovereign debt, causing Greece and Cyprus to
 
default.
–
The
global depression
 
scenario explores a global risk-off market with a combination
 
of political, solvency and liquidity
concerns
 
around
 
emerging
 
markets
 
sovereign
 
debt,
 
causing
 
several
 
large
 
emerging
 
markets
 
to
 
default.
 
Several
European
 
economies
 
also
 
default,
 
and
 
some
 
leave
 
the
 
Eurozone.
 
A
 
negative
 
feedback
 
loop
 
between
 
collapsing
demand,
 
declining
 
asset
 
values
 
and
 
commodity
 
prices,
 
and
 
disruption
 
in
 
the
 
banking
 
system
 
leads
 
to
 
a
 
deep
 
and
prolonged recession across the globe.
–
The
US
 
monetary
 
crisis
 
scenario
 
explores
 
a
 
loss
 
of
 
confidence
 
in
 
the
 
US,
 
which
 
leads
 
to
 
a
 
sell-off
 
of
 
US dollar-
denominated assets,
 
sparking an
 
abrupt and
 
substantial
 
depreciation of
 
the US
 
dollar. The
 
US economy
 
is hit
 
hard,
financial markets enter a period of high volatility and other industrialized countries replicate the cyclical pattern of the
US. Regional
 
inflation
 
trends
 
diverge
 
as the
 
US
 
experiences
 
significant
 
inflationary
 
pressures
 
while
 
other
 
developed
markets experience deflation.
Portfolio-specific stress tests are measures tailored to the risks
 
of specific portfolios. Our portfolio stress loss measures are
derived
 
from
 
data
 
on
 
past
 
events,
 
but
 
also
 
include
 
forward-looking
 
elements
 
(e.g.
 
we
 
derive
 
the
 
expected
 
market
movements in our liquidity-adjusted stress metric using a combination
 
of historical market behavior, based on an analysis
of historical events, and
 
forward-looking analysis, including consideration of defined scenarios
 
that have never occurred).
Results
 
of
 
portfolio-specific
 
stress
 
tests
 
may
 
be
 
subject
 
to
 
limits
 
to
 
explicitly
 
control
 
risk-taking
 
or
 
may
 
be
 
monitored
without limits to identify vulnerabilities.
Reverse stress testing starts from a defined stress outcome (e.g. a specified loss amount, reputational damage, a liquidity
shortfall
 
or
 
a
 
breach
 
of
 
minimum
 
capital
 
ratios)
 
and
 
works
 
backward
 
to
 
identify
 
macroeconomic
 
scenarios
 
and / or
idiosyncratic
 
events
 
that
 
could
 
result
 
in
 
such
 
an
 
outcome.
 
As
 
such,
 
reverse
 
stress
 
testing
 
is
 
intended
 
to
 
complement
scenario-based stress
 
tests by
 
assuming “what
 
if” outcomes
 
that could
 
extend beyond
 
the range
 
normally considered,
and thereby potentially challenge assumptions regarding
 
severity and plausibility.
With regard to treasury risk, we
 
routinely analyze the effect of movements
 
in interest rates and changes in the
 
structure
of
 
yield
 
curves.
 
We
 
also
 
perform
 
stress
 
testing
 
to
 
determine
 
the
 
optimal
 
asset
 
and
 
liability
 
structure,
 
enabling
 
us
 
to
maintain an
 
appropriately balanced
 
liquidity and
 
funding position
 
under various
 
scenarios. These
 
scenarios differ
 
from
those
 
outlined
 
above,
 
because
 
they
 
focus
 
on
 
specific
 
situations
 
that
 
could
 
generate
 
liquidity
 
and
 
funding
 
stress,
 
as
opposed to the scenarios used in the CST framework,
 
which focus on the effect on profit or loss and capital.
›
Refer to “Credit risk” and “Market risk” in this
 
section for more information about stress loss measures
›
Refer to the “Capital, liquidity and funding,
 
and balance sheet” section of this report for more information
 
about stress testing
›
Refer to “Note 20 Expected credit loss measurement”
 
in the “Consolidated financial statements” section
 
of this report for more
information about scenarios used for expected
 
credit loss measurement
Economic capital measures
We
 
complement
 
the
 
scenario-based
 
CST
 
measures
 
with
 
economic capital
 
stress
 
measures
 
to calculate
 
and aggregate
risks using statistical techniques to derive stress events
 
at chosen confidence levels.
This framework
 
is
 
used
 
to derive
 
a
 
loss
 
distribution,
 
considering
 
effects
 
on
 
both
 
income
 
and
 
expenses,
 
based
 
on
 
the
simulation of historically observed financial and economic risk factors in combination with the firm’s actual earnings and
relevant risk exposures. From that, we determine earnings-at-risk (EaR), measuring the potential shortfall in earnings (i.e.
the deviation from forecast
 
earnings) at a 95%
 
confidence level and
 
evaluated over a
 
one-year horizon. EaR
 
is used for
the assessment of the earnings
 
objectives in our risk appetite framework.
We
 
extend
 
the
 
EaR
 
measure,
 
incorporating
 
the
 
effects
 
of
 
gains
 
and
 
losses
 
recognized
 
through
 
other
 
comprehensive
income, to
 
derive a
 
distribution of potential
 
effects of
 
stress events on
 
common equity tier 1
 
capital. From
 
this distribution,
we derive our capital-at-risk (CaR) buffer measure at
 
a 95% confidence level to assess our capital
 
and leverage ratio risk
appetite
 
objectives, and
 
we
 
derive
 
our CaR
 
solvency
 
measure
 
at
 
a
 
99.9% confidence
 
level to
 
assess our
 
solvency
 
risk
appetite objective.
We use the CaR solvency measure
 
as a basis for deriving the
 
contributions of the business divisions
 
to risk-based capital
(RBC). RBC measures the potential capital impairment from
 
an extreme stress event at a 99.9% confidence level.
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
100
Risk concentrations
Audited |
Risk concentrations may exist where one or several positions within
 
or across different
 
risk categories could result
in significant losses relative
 
to UBS’s financial strength.
 
Identifying such risk concentrations
 
and assessing their potential
impact is a critical component of our risk management and
 
control process.
For financial risks, we consider a number of elements, such
 
as shared characteristics of positions, the size of the portfolio
and the sensitivity of positions to changes in the underlying risk factors. Also
 
important in our assessment is the liquidity
of the markets
 
where the positions
 
are traded, as
 
well as the
 
availability and effectiveness
 
of hedges or
 
other potential
risk-mitigating factors. Particular attention is given to identification of wrong-way risk and risk on risk. Wrong-way risk is
defined as
 
a positive
 
correlation between
 
the size
 
of the
 
exposure and
 
the likelihood
 
of a
 
loss. Risk
 
on risk
 
refers to
 
a
situation where a position and its risk mitigation can be impacted
 
by the same event.
For non-financial risks, risk concentrations may result from, for example, a single operational risk issue that is large on its
own (i.e. it
 
has the potential
 
to produce a
 
single high-impact
 
loss or a
 
number of losses
 
that together
 
are high impact)
or related risk issues that may link together to create
 
a high impact.
Risk
 
concentrations
 
are
 
subject
 
to
 
increased
 
oversight
 
by
 
Group
 
Risk
 
Control
 
and
 
Group
 
Compliance,
 
Regulatory
 
&
Governance, and assessed
 
to determine whether they
 
should be reduced
 
or mitigated, depending on
 
the available means
to do
 
so. It is
 
possible that
 
material losses
 
could occur
 
on financial
 
or non-financial
 
risks, particularly
 
if the
 
correlations
that emerge in a stressed environment differ markedly from those
 
envisaged by risk models.
›
Refer to
“
Credit risk
”
 
and
“
Market risk
”
 
in this section for more information about the
 
composition of our portfolios and how risk
concentrations are monitored and mitigated
›
Refer to the
“
Risk factors
”
 
section of this report for more information
Credit risk
Audited |
Main sources of credit risk
–
In Global Wealth
 
Management,
 
credit risk arises
 
from collateralized lending, primarily against
 
securities, residential and
commercial
 
real
 
estate,
 
other
 
real
 
assets
 
(such
 
as
 
ships
 
and
 
aircraft),
 
private
 
equity
 
and
 
hedge
 
fund
 
interest,
 
and
investors’ uncalled
 
capital commitments,
 
as well
 
as from
 
collateralized clients’
 
derivatives trading.
 
In addition,
 
credit
risk also arises from
 
unsecured lending,
 
i.e. cash-flow-based corporate lending to
 
entities owned and controlled by our
Global Wealth Management clients, and recourse-based
 
lending.
–
A
 
substantial
 
portion
 
of
 
our
 
credit
 
risk
 
arises
 
from
 
Personal
 
&
 
Corporate
 
Banking’s
 
lending
 
exposure,
 
including
mortgage loans, secured mainly by owner-occupied properties and income-producing real estate, as well as corporate
loans, that depends on the performance of the Swiss economy
 
and real estate market.
–
The Investment
 
Bank’s credit
 
risk arises
 
mainly from
 
lending, derivatives
 
trading and
 
securities financing.
 
Derivatives
trading and securities financing are mainly
 
investment grade. Loan underwriting activity can
 
be lower rated and gives
rise to temporary concentrated exposure.
–
Credit risk in
 
Non-core and Legacy
 
relates to large,
 
less-liquid structured
 
financing transactions,
 
including some
 
with
residential and commercial real estate collateral, a corporate loan portfolio and
 
a counterparty credit trading portfolio
with lending against securities collateral and derivatives.
Audited |
Overview of measurement, monitoring and management
 
techniques
–
Credit risk
 
from transactions
 
with individual
 
counterparties
 
is based
 
on our
 
estimates of
 
probability of
 
default (PD),
exposure at default (EAD) and loss given default (LGD). Limits are established for individual counterparties and groups
of
 
related
 
counterparties
 
covering
 
banking
 
and
 
traded
 
products,
 
and
 
for
 
settlement
 
amounts.
 
Risk
 
authorities
 
are
approved by
 
the Board
 
of Directors
 
and are
 
delegated
 
to the
 
Group CEO,
 
the Group
 
Chief Risk
 
Officer (the
 
Group
CRO) and divisional CROs, based on risk exposure amounts,
 
internal credit rating and potential for losses.
–
Limits apply not only to the current outstanding
 
amount but also to contingent commitments and the potential future
exposure of traded products.
–
The Investment Bank monitoring, measurement and limit framework distinguishes between
 
exposures intended to be
held to maturity (take-and-hold exposures) and those intended
 
for distribution or risk transfer (temporary exposures).
–
We use models
 
to derive portfolio
 
credit risk measures
 
of expected
 
loss, statistical loss
 
and stress loss
 
at Group-wide
and business division levels, and to establish portfolio limits.
–
Credit risk concentrations can arise if clients are engaged
 
in similar activities, located in the same geographical
 
region
or have
 
comparable economic
 
characteristics,
 
e.g. if
 
their
 
ability to
 
meet contractual
 
obligations
 
would
 
be similarly
affected by changes
 
in economic, political
 
or other conditions.
 
To avoid credit risk
 
concentrations, we establish
 
limits
and operational controls that
 
constrain risk concentrations at portfolio,
 
sub-portfolio or counterparty levels
 
for sector
exposure, country risk exposure and specific product exposures.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
101
Credit risk profile of the Group
The exposures
 
detailed in
 
this section
 
are based
 
on management’s
 
view of
 
credit risk,
 
which differs
 
in certain
 
respects
from the expected credit loss (ECL) measurement requirements
 
of IFRS Accounting Standards.
Internally, we
 
classify credit
 
risk exposures
 
into two
 
broad categories:
 
banking products
 
and traded
 
products. Banking
products include drawn loans,
 
guarantees and loan commitments,
 
amounts due from banks,
 
balances at central banks,
and other
 
financial assets at
 
amortized cost. Traded
 
products include over-the-counter
 
(OTC) derivatives, exchange-traded
derivatives
 
(ETD)
 
and
 
securities
 
financing
 
transactions
 
(SFTs),
 
consisting
 
of
 
securities
 
borrowing
 
and
 
lending,
 
and
repurchase and reverse repurchase agreements.
Banking and traded products exposure in our business divisions and Group Items
31.12.24
USD m
Global
Wealth
Management
Personal &
Corporate
Banking
Asset
 
Management
Investment
 
Bank
Non-core
and Legacy
Group
 
Items
Total
Banking products exposure, gross
1,2
 
452,053
 
424,994
 
1,530
 
72,964
 
33,150
 
17,478
 
1,002,169
of which: loans and advances to customers (on-balance sheet)
 
295,856
 
266,869
 
9
 
17,497
 
1,163
 
551
 
581,944
of which: guarantees and irrevocable loan commitments (off-balance sheet)
 
18,978
 
46,986
 
5
 
34,516
 
2,211
 
17,164
 
119,859
Committed unconditionally revocable credit lines
3
 
79,460
 
65,749
 
0
 
452
 
4
 
0
 
145,665
Traded products exposure, gross
2,4
 
14,900
 
5,034
 
0
 
46,076
 
66,009
of which: over-the-counter derivatives
 
11,705
 
4,594
 
0
 
17,371
 
33,670
of which: securities financing transactions
 
186
 
0
 
0
 
18,352
 
18,538
of which: exchange-traded derivatives
 
3,009
 
440
 
0
 
10,353
 
13,802
Total credit-impaired exposure, gross
1
 
1,397
 
3,714
 
0
 
595
 
930
 
0
 
6,637
of which: stage 3
 
1,324
 
3,358
 
0
 
549
 
69
 
0
 
5,300
of which: PCI
 
73
 
356
 
0
 
46
 
861
 
0
 
1,337
Total allowances and provisions for expected credit losses
 
292
 
1,512
 
0
 
379
 
318
 
6
 
2,507
of which: stage 1
 
97
 
269
 
0
 
110
 
4
 
6
 
487
of which: stage 2
 
68
 
247
 
0
 
142
 
2
 
0
 
459
of which: stage 3
 
121
 
960
 
0
 
124
 
48
 
0
 
1,253
of which: PCI
 
7
 
36
 
0
 
2
 
264
 
0
 
309
31.12.23
5,6
USD m
Global
Wealth
Management
Personal &
Corporate
Banking
Asset
 
Management
Investment
 
Bank
Non-core
and Legacy
Group
Items
Total
Banking products exposure, gross
1,2
 
495,846
 
482,822
 
1,699
 
115,203
 
72,770
 
10,555
 
1,178,895
of which: loans and advances to customers (on-balance sheet)
 
317,137
 
299,150
 
13
 
16,993
 
7,942
 
131
 
641,367
of which: guarantees and irrevocable loan commitments (off-balance sheet)
 
22,706
 
57,494
 
59
 
36,230
 
3,235
 
18,109
 
137,834
Committed unconditionally revocable credit lines
3
 
83,077
 
75,334
 
0
 
4,714
 
5
 
126
 
163,256
Traded products exposure, gross
2,4,7
 
11,812
 
4,748
 
0
 
47,630
 
64,191
of which: over-the-counter derivatives
 
8,397
 
4,116
 
0
 
12,400
 
24,913
of which: securities financing transactions
 
371
 
19
 
0
 
23,044
 
23,434
of which: exchange-traded derivatives
 
3,045
 
613
 
0
 
12,186
 
15,844
Total credit-impaired exposure, gross
1
 
1,662
 
3,066
 
0
 
469
 
1,002
 
1
 
6,200
of which: stage 3
 
1,022
 
2,632
 
0
 
408
 
290
 
1
 
4,352
of which: PCI
 
640
 
434
 
0
 
61
 
712
 
0
 
1,848
Total allowances and provisions for expected credit losses
 
392
 
1,231
 
1
 
358
 
271
 
8
 
2,261
of which: stage 1
 
176
 
364
 
1
 
133
 
20
 
7
 
700
of which: stage 2
 
63
 
259
 
0
 
78
 
16
 
0
 
416
of which: stage 3
 
98
 
590
 
0
 
146
 
158
 
0
 
993
of which: PCI
 
55
 
19
 
0
 
1
 
77
 
0
 
153
1 IFRS 9 gross exposure
 
for banking products includes the
 
following financial instruments in scope
 
of expected credit loss measurement:
 
balances at central banks,
 
amounts due from banks,
 
loans and advances to
customers, other
 
financial assets at
 
amortized cost, guarantees
 
and irrevocable loan
 
commitments.
 
2 Internal management
 
view of credit
 
risk, which differs
 
in certain respects
 
from IFRS Accounting
 
Standards.
 
3 Commitments that can be canceled by UBS at any time but expose UBS to credit risk if the client has the ability to draw the facility before UBS
 
can take action. These commitments are subject to expected credit loss
requirements.
 
4 As counterparty
 
risk for
 
traded
 
products is
 
managed at
 
counterparty level,
 
no further
 
split between
 
exposures in
 
the Investment
 
Bank, Non-core
 
and Legacy,
 
and Group
 
Items is
 
provided.
 
5 Comparative-period information
 
has been restated
 
for changes in
 
business division perimeters
 
and Group Treasury
 
allocations. Refer
 
to “Note
 
3 Segment
 
reporting” in the
 
“Consolidated financial
 
statements”
section of this report for more information.
 
6 Comparative-period information has been revised. Refer to “Note 2 Accounting of
 
the integration of the Credit Suisse Group” in the “Consolidated financial
 
statements”
section of this report for more information.
 
7 Credit Suisse traded products are presented before reflection
 
of the impact of the purchase price allocation
 
performed under IFRS 3, Business Combinations,
 
following
the acquisition of the Credit Suisse Group by UBS. The acquisition date adjustment is less than
 
USD 1bn and, if applied, would lead to a reduction in our reported traded products exposure.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
102
Banking products
›
Refer to “Note 1 Summary of material accounting
 
policies” in the “Consolidated financial statements”
 
section of this report for
more information about our accounting policy for allowances
 
and provisions for ECL
›
Refer to “Note 10 Financial assets at amortized
 
cost and other positions in scope of expected
 
credit loss measurement” and
“Note 20 Expected credit loss measurement” in the “Consolidated
 
financial statements” section of this report for more
information about ECL measurement requirements under IFRS
Accounting Standards
›
Refer to “Note 14 Other assets” in the “Consolidated
 
financial statements” section of this report for
 
more details
 
Global Wealth Management, Personal & Corporate Banking, and Investment Bank: banking products exposure, by
internal UBS ratings
1,2
USD m, except where indicated
31.12.24
31.12.23
3
Investment
grade /
Rating
1–5
Sub-investment grade
Defaulted /
Credit-impaired
Banking
 
products
 
exposure,
gross
Investment
grade /
Rating
1–5
Sub-investment grade
Defaulted /
Credit-impaired
Banking
 
products
 
exposure,
gross
Business divisions
Rating
 
6–9
Rating
 
10–13
Rating
 
6–9
Rating
 
10–13
Global Wealth Management
277,091
46,664
2,154
1,397
327,307
255,734
51,020
3,393
1,681
311,828
Personal & Corporate Banking
227,099
84,197
8,547
3,714
323,556
293,090
93,684
15,400
3,419
405,592
Investment Bank
26,347
16,692
15,582
595
59,216
28,309
18,956
14,574
462
62,301
1 Excluding balances at central banks and Group Treasury reallocations.
 
2 The ratings of the major credit rating agencies, and their mapping to our internal rating scale,
 
are shown in the “Internal UBS rating scale
and mapping of external ratings” table in this section.
 
3 Comparative-period information has not been restated for business perimeter changes. For
 
the Investment Bank and Personal & Corporate Banking, legacy
Credit Suisse exposure includes only loans and advances to customers and guarantees and loan commitments,
 
before reflection of the impact of the purchase price allocation adjustments.
 
Global Wealth Management
Gross banking products exposure
 
decreased by USD 44bn to USD 452bn as of
 
31 December 2024, due to a decrease in
balances at central banks, currency effects
 
and negative net new loans.
Our Global
 
Wealth
 
Management
 
loan portfolio
 
is mainly
 
secured
 
by securities
 
(Lombard
 
loans) and
 
by residential
 
real
estate. As of 31 December 2024, most
 
of our USD 179bn of Lombard
 
loans, including traded products
 
collateralized by
securities, were of high
 
quality,
 
with 92%
 
rated as investment grade
 
based on our internal ratings.
 
Moreover,
 
Lombard
loans
 
are
 
typically
 
uncommitted,
 
short-term
 
in
 
nature
 
and
 
can
 
be
 
canceled
 
immediately
 
if
 
the
 
collateral
 
quality
deteriorates and
 
margin calls
 
are not met.
 
Lending values
 
in the
 
Lombard book are
 
derived by
 
applying discounts (haircuts)
to the
 
pledged collateral’s
 
market value
 
in line
 
with a
 
possible adverse
 
change in
 
market value
 
over a
 
given close-out
period and confidence level. Less-liquid or
 
more volatile collateral will typically have
 
larger haircuts. In 2024, the Lombard
book, including traded products, remained
 
stable, with an overall decrease of approximately
 
3%.
 
The residential real estate portfolio decreased by approximately 7% in 2024, mainly driven by our Swiss mortgage book,
in line with a 7% strengthening of the US dollar
 
over the year.
 
Specialized
 
financings
 
as
 
of
 
31 December
 
2024
 
accounted
 
for
 
approximately
 
13%
 
of
 
the
 
total
 
banking
 
products
exposure. This portfolio
 
mainly consists of
 
commercial real estate loans,
 
financing for ships,
 
yachts and aircraft, unsecured
lending, and loans collateralized with
 
uncalled capital commitments.
 
These financings decreased by approximately
 
12%
in 2024, mainly
 
driven by a
 
decrease in unsecured
 
loans originated by
 
legacy Credit
 
Suisse entities and
 
the termination
of our municipal bond issuer program in the US.
 
›
Refer to “Lending secured by real estate” and “Lombard lending”
 
in this section for further information about
 
these types of
lending
Collateralization of Loans and advances to customers
1
Global Wealth Management
Personal & Corporate Banking
USD m, except where indicated
31.12.24
31.12.23
2
31.12.24
31.12.23
2
Secured by collateral
 
290,053
 
308,120
 
232,913
 
259,734
Residential real estate
 
106,124
 
111,755
 
184,404
 
204,184
Commercial / industrial real estate
 
9,312
 
10,860
 
36,682
 
42,560
Cash
 
28,418
 
36,813
 
2,624
 
3,269
Equity and debt instruments
 
120,223
 
122,079
 
2,778
 
3,666
Other collateral
3
 
25,977
 
26,613
 
6,424
 
6,055
Subject to guarantees
 
1,715
 
1,048
 
6,886
 
8,132
Uncollateralized and not subject to guarantees
 
4,088
 
7,969
 
27,070
 
31,284
Total loans and advances to customers, gross
 
295,856
 
317,137
 
266,869
 
299,150
Allowances
 
(221)
 
(181)
 
(1,271)
 
(987)
Total loans and advances to customers, net of allowances
 
295,635
 
316,957
 
265,598
 
298,163
Collateralized loans and advances to customers as a percentage of
 
total loans and advances to customers, gross (%)
 
98.0
 
97.2
 
87.3
 
86.8
1 Collateral arrangements generally incorporate a range of collateral, including cash, equity and
 
debt instruments, real estate and other collateral. For the purpose of
 
this disclosure, UBS applies a risk-based approach
that generally prioritizes collateral according
 
to its liquidity profile. In
 
the case of loan facilities with
 
funded and unfunded elements,
 
the collateral is first allocated
 
to the funded element. For
 
legacy Credit Suisse a
risk-based approach is
 
applied that generally
 
prioritizes real estate
 
collateral and prioritizes
 
other collateral
 
according to its
 
liquidity profile.
 
In the case
 
of loan facilities
 
with funded and
 
unfunded elements,
 
the
collateral is
 
proportionately allocated.
 
2 Comparative-period
 
information has
 
been restated
 
for changes
 
in business
 
division parameters.
 
Refer to
 
“Note 3
 
Segment reporting”
 
in the
 
“Consolidated financial
statements” section of this report for more information.
 
3 Includes but is not limited to life insurance contracts, rights in respect of subscription or capital commitments from
 
fund partners, inventory, gold and other
commodities.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
103
Personal & Corporate Banking
Gross banking products exposure decreased by USD 58bn to USD 425bn as of 31 December
 
2024, predominantly due
to strengthening of the US dollar versus the Swiss franc
 
and negative net new loans.
The exposure
 
is mainly
 
driven by
 
our Swiss
 
mortgage portfolio,
 
our Swiss
 
corporate banking
 
portfolio and,
 
to a
 
lesser
extent,
 
our commodity trade finance portfolio. As of 31 December 2024, the majority of the banking products exposure
was rated investment grade, and 87% of loans and advances to customers were secured by collateral, mainly
 
residential
and
 
commercial
 
property.
 
The
 
total
 
unsecured
 
amount
 
mainly
 
consists
 
of
 
cash-flow-based
 
lending
 
to
 
corporate
counterparties.
 
Our Swiss corporate
 
banking products take
 
-and-hold portfolio exposure
 
was USD 73bn (CHF 66bn)
 
as of 31 December
2024 and decreased by USD
 
20bn compared with 31 December
 
2023, due to strengthening of
 
the US dollar versus the
Swiss franc
 
and negative
 
net
 
new
 
loans. The
 
portfolio
 
consists
 
of loans,
 
guarantees
 
and loan
 
commitments
 
to
 
multi-
national and domestic counterparties. The small and medium-sized entity
 
portfolio, in particular, is well diversified across
industries. However,
 
such companies are
 
reliant on the
 
domestic economy and
 
the economies
 
to which they
 
export, in
particular the EU and the US.
Our
 
commodity
 
trade
 
finance
 
portfolio
 
focuses
 
on
 
energy
 
and
 
base-metal
 
trading
 
companies,
 
where
 
the
 
related
commodity
 
price
 
risk
 
is hedged
 
to a
 
large
 
extent
 
by the
 
commodity
 
trader.
 
The
 
majority of
 
limits
 
in this
 
business
 
are
uncommitted,
 
transactional
 
and
 
short-term
 
in
 
nature.
 
Our
 
portfolio
 
size
 
was
 
USD 9bn
 
(CHF 8bn)
 
as
 
of
 
31 December
2024,
 
compared
 
with
 
USD 11bn
 
(CHF 9bn)
 
as
 
of
 
31 December
 
2023,
 
primarily
 
driven
 
by
 
lower
 
market
 
activity.
 
A
considerable part of the exposure correlates
 
with commodity prices.
Swiss mortgage loan portfolio
Our Swiss mortgage loan portfolio secured
 
by residential and commercial
 
real estate in Switzerland
 
continued to be our
largest
 
loan
 
portfolio.
 
These
 
mortgage
 
loans
 
(including
 
loans
 
on
 
owner-occupied
 
commercial
 
real
 
estate),
 
totaling
USD 313bn
 
(CHF 284bn)
 
as
 
of
 
31 December
 
2024,
 
mainly
 
originated
 
from
 
Personal
 
&
 
Corporate
 
Banking,
 
with
contributions also from Global Wealth Management
 
Region Switzerland.
Of
 
the
 
aggregate
 
amount
 
of
 
Swiss
 
residential
 
mortgages,
 
99.9%
 
would
 
continue
 
to
 
be
 
covered
 
by
 
the
 
real
 
estate
collateral even if the
 
collateral value were to decrease
 
20%, and more than
 
99% would remain covered by
 
the real estate
collateral if the collateral value were to decrease 30%.
Swiss mortgages: exposure by exposure segments and loan-to-value (LTV)
 
buckets
1
USD bn, except where indicated
31.12.24
31.12.23
LTV buckets
Exposure segment
≤30%
31–50%
51–60%
61–70%
71–80%
81–100%
>100%
Total
Total
Residential mortgages
Exposure
154.4
61.8
14.1
5.5
1.5
0.3
0.1
237.6
261.6
Income-producing real estate
Exposure
39.4
14.3
2.7
1.0
0.2
0.1
0.1
57.7
70.0
Corporates
Exposure
10.7
3.4
0.7
0.4
0.2
0.1
0.2
15.7
19.8
Other segments
Exposure
1.4
0.5
0.1
0.1
0.0
0.0
0.0
2.2
1.1
Mortgage-covered exposure
Exposure
206.0
80.0
17.7
6.9
1.9
0.5
0.3
313.2
352.3
as a percentage of total
66
26
6
2
1
0
0
100
100
Mortgage-covered exposure 31.12.23
Exposure
220.4
93.4
24.5
10.7
2.5
0.4
0.5
352.3
as a percentage of total
63
27
7
3
1
0
0
100
1 The amount of each mortgage loan is allocated across
 
the LTV buckets
 
to indicate the portion at risk at the various value
 
levels shown; for example, a loan of 75
 
with an LTV ratio
 
of 75% (i.e. a collateral value
 
of
100) would result in allocations of 30 in the less-than-or-equal-to-30% LTV
 
bucket, 20 in the 31–50% bucket, 10 in the 51–60% bucket,
 
10 in the 61–70% bucket and 5 in the 71–80% bucket.
Investment Bank
The Investment
 
Bank’s lending
 
activities are
 
largely associated
 
with corporate
 
and non-bank
 
financial institutions.
 
The
business is broadly diversified across industry
 
sectors but concentrated in North America.
Gross banking products
 
exposure decreased
 
by USD 42bn to
 
USD 73bn as of
 
31 December 2024,
 
due to a
 
decrease in
balances at
 
central banks.
 
The banking
 
products exposure
 
is almost equally
 
distributed between
 
investment grade
 
and
sub-investment grade rating, with a slight predominance
 
of the latter.
Mandated loan underwriting commitments on a notional basis were USD
 
4.6bn as of 31 December 2024 (31 December
2023: USD 2.1bn), reflecting new
 
mandates during the
 
year. As of
 
31 December 2024, USD 0.2bn of
 
these commitments
had not yet been distributed
 
as originally planned. The
 
loan underwriting commitments
 
reported as of the end
 
of 2023
were fully syndicated or canceled in 2024.
 
Loan underwriting exposures are classified
 
as held for trading,
 
with fair values reflecting the
 
market conditions at the end
of 2024. Credit hedges are in place to help protect against fair
 
value movements in the portfolio.
›
Refer to “Credit risk models” in this section for
 
more information about rating grades and rating agency
 
mappings
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
104
Investment Bank: banking products exposure, by geographical region
1
31.12.24
31.12.23
2
USD m
%
USD m
%
Asia Pacific
5,813
9.8
5,405
8.7
Latin America
778
1.3
791
1.3
Middle East and Africa
392
0.7
413
0.7
North America
37,568
63.4
40,542
65.1
Switzerland
132
0.2
168
0.3
Rest of Europe
14,533
24.5
14,983
24.0
Exposure
59,216
100.0
62,301
100.0
1 Excluding balances at
 
central banks and Group
 
Treasury reallocations.
 
2 Legacy Credit Suisse
 
exposure includes only loans
 
and advances to
 
customers and guarantees and
 
loan commitments presented
 
before
reflection of the impact of the purchase price allocation adjustments.
Investment Bank: banking products exposure, by industry sector
1
31.12.24
31.12.23
2
USD m
%
USD m
%
Banks
6,895
11.6
5,281
8.5
Chemicals
2,403
4.1
1,752
2.8
Electricity, gas, water supply
443
0.7
843
1.4
Financial institutions, excluding banks
21,278
35.9
17,543
28.2
Manufacturing
5,168
8.7
8,220
13.2
Mining
1,461
2.5
1,548
2.5
Public authorities
587
1.0
1,356
2.2
Real estate and construction
2,226
3.8
2,491
4.0
Retail and wholesale
5,238
8.8
5,667
9.1
Technology and communications
7,274
12.3
8,234
13.2
Transport and storage
838
1.4
1,160
1.9
Other
5,405
9.1
8,206
13.2
Exposure
59,216
100.0
62,301
100.0
1 Excluding balances at
 
central banks and Group
 
Treasury reallocations.
 
2 Legacy Credit Suisse
 
exposure includes only loans
 
and advances to
 
customers and guarantees and
 
loan commitments presented
 
before
reflection of the impact of the purchase price allocation adjustments.
Non-core and Legacy
Gross
 
banking
 
products
 
exposure
 
decreased
 
by
 
USD 40bn
 
to
 
USD 33bn
 
as
 
of
 
31 December
 
2024,
 
mainly
 
due
 
to
 
a
decrease
 
in
 
balances
 
at
 
central
 
banks
 
and
 
also
 
due
 
to
 
reductions
 
in
 
all
 
other
 
banking
 
product
 
exposures,
 
reflecting
portfolio de-risking.
 
As
 
of
 
31 December
 
2024,
 
Non-core
 
and
 
Legacy
 
had
 
no
 
mandated
 
loan
 
underwriting
 
commitments,
 
compared
 
with
commitments of USD 1.0bn on a notional basis as of 31
 
December 2023.
›
Refer to “Balance sheet assets” in the “Capital,
 
liquidity and funding, and balance sheet” section
 
of this report for more
information
›
Refer to the “Our businesses” section of this
 
report for more information
›
Refer to the “Non-core and Legacy” section of this
 
report for more information
Group Items
Gross banking products
 
exposure, which arises
 
primarily in connection with
 
treasury activities, increased
 
by USD 7bn to
USD 17bn as of 31 December 2024, due to an
 
increase in balances at central banks,
 
partly offset by a decrease
 
in other
financial assets at amortized cost.
›
Refer to “Balance sheet assets” in the “Capital,
 
liquidity and funding, and balance sheet” section
 
of this report for more
information
›
Refer to the “Group Items” section of this report for more information
Traded products
Audited |
Counterparty credit
 
risk (CCR)
 
arising from
 
traded products,
 
which include
 
OTC derivatives,
 
ETD exposures
 
and
SFTs originating in the Investment
 
Bank, Non-core and Legacy,
 
and Group Treasury, is generally
 
managed on a close-out
basis. This takes
 
into account possible
 
effects of market
 
movements on the
 
exposure and any
 
associated collateral
 
over
the time
 
it would
 
take to
 
close out
 
our positions.
 
Limits are
 
applied to
 
the potential
 
future exposure
 
per counterparty,
with
 
the
 
size
 
of
 
the
 
limit
 
dependent
 
on
 
the
 
counterparty’s
 
creditworthiness
 
(as
 
determined
 
by
 
Risk
 
Control).
 
Limit
frameworks are also used to control overall exposure
 
to specific sectors. Such portfolio limits are monitored and reported
to senior management.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
105
Trading in OTC derivatives
 
is conducted through central
 
counterparties where practicable.
 
Where central counterparties
are not used, we have clearly defined
 
policies and processes for trading on a
 
bilateral basis. Trading is typically conducted
under bilateral International Swaps and Derivatives
 
Association agreements or similar master netting agreements,
 
which
generally
 
permit
 
close-out
 
and
 
netting
 
of
 
transactions
 
in
 
case
 
of
 
default,
 
subject
 
to
 
applicable
 
law.
 
For
 
certain
counterparties, initial margin is taken
 
to cover some or all of the
 
calculated close-out exposure. This is in addition
 
to the
variation
 
margin
 
taken
 
to
 
settle
 
changes
 
in
 
market
 
value
 
of
 
transactions.
 
For
 
most
 
major
 
market
 
participant
counterparties, we
 
use two-way collateral
 
agreements under which
 
either party can
 
be required to
 
provide collateral
 
in
the form
 
of cash or
 
marketable securities when
 
the exposure exceeds
 
specified levels. Non-cash
 
collateral typically consists
of well-rated government debt or other collateral acceptable
 
to Risk Control and permitted by applicable regulations.
In
 
the
 
tables
 
below,
 
OTC
 
derivatives
 
exposures
 
are
 
generally
 
presented
 
as
 
net
 
positive
 
replacement
 
values
 
after
 
the
application
 
of
 
legally
 
enforceable
 
netting
 
agreements
 
and
 
the
 
deduction
 
of
 
cash
 
and
 
marketable
 
securities
 
held
 
as
collateral.
 
SFT
 
exposures
 
are
 
reported
 
taking
 
into
 
account
 
collateral
 
received,
 
and
 
ETD
 
exposures
 
take
 
into
 
account
collateral margin calls.
›
Refer to “Note 11 Derivative instruments”
 
in the “Consolidated financial statements” section
 
of this report for more information
about OTC derivatives settled through central counterparties
›
Refer to “Note 22 Offsetting financial assets and financial
 
liabilities” in the “Consolidated financial statements”
 
section of this
report for more information about the effect of netting and collateral
 
arrangements on derivative exposures
Investment Bank, Non-core and Legacy,
 
and Group Treasury:
 
traded products exposure, by internal UBS ratings
1
USD m, except where indicated
31.12.24
31.12.23
Investment
 
grade /
 
Rating
 
1–5
Sub-investment grade
Defaulted /
 
Credit-impaired
Traded
 
products
 
exposure,
net
2
Investment
 
grade /
 
Rating
 
1–5
Sub-investment grade
Defaulted /
 
Credit-impaired
Traded
 
products
 
exposure,
net
2
Product
Rating
 
6–9
Rating
 
10–13
Rating
 
6–9
Rating
 
10–13
OTC derivatives
16,266
841
40
211
17,357
10,708
1,081
165
95
12,049
ETD
10,245
109
0
0
10,353
12,108
73
5
0
12,186
SFTs
18,063
289
0
0
18,352
22,807
227
10
0
23,044
Traded products exposure, net
2
44,573
1,239
40
211
46,062
45,623
1,381
181
95
47,279
1 The ratings
 
of the major credit
 
rating agencies, and
 
their mapping to our
 
internal rating scale,
 
are shown in the
 
“Internal UBS rating
 
scale and mapping of
 
external ratings” table in
 
this section.
 
2 After credit
valuation adjustments and hedges.
Investment Bank, Non-core and Legacy,
 
and Group Treasury:
 
net OTC derivatives and SFT exposure, by geographical
region
Net OTC derivatives exposure
Net SFT exposure
31.12.24
31.12.23
31.12.24
31.12.23
USD m
%
USD m
%
USD m
%
USD m
%
Asia Pacific
5,126
29.5
1,638
13.6
2,307
12.6
2,840
12.3
Latin America
88
0.5
349
2.9
27
0.1
67
0.3
Middle East and Africa
111
0.6
236
2.0
511
2.8
437
1.9
North America
4,165
24.0
4,555
37.8
4,946
27.0
3,243
14.1
Switzerland
2,522
14.5
1,029
8.5
494
2.7
3,939
17.1
Rest of Europe
5,345
30.8
4,243
35.2
10,066
54.9
12,517
54.3
Exposure
17,357
100.0
12,049
100.0
18,352
100.0
23,044
100.0
Investment Bank, Non-core and Legacy,
 
and Group Treasury:
 
net OTC derivatives and SFT exposure, by industry sector
Net OTC derivatives exposure
Net SFT exposure
31.12.24
31.12.23
31.12.24
31.12.23
USD m
%
USD m
%
USD m
%
USD m
%
Banks
1,673
9.6
1,829
15.2
1,577
8.6
3,008
13.1
Chemicals
7
0.0
19
0.2
0
0.0
0
0.0
Electricity, gas, water supply
138
0.8
116
1.0
0
0.0
0
0.0
Financial institutions, excluding banks
14,804
85.3
8,577
71.2
16,357
89.1
16,143
70.1
Manufacturing
32
0.2
51
0.4
0
0.0
0
0.0
Mining
65
0.4
17
0.1
0
0.0
0
0.0
Public authorities
446
2.6
993
8.2
417
2.3
3,890
16.9
Retail and wholesale
9
0.1
20
0.2
0
0.0
0
0.0
Transport, storage and communication
24
0.1
174
1.4
0
0.0
3
0.0
Other
159
0.9
255
2.1
0
0.0
0
0.0
Exposure
17,357
100.0
12,049
100.0
18,352
100.0
23,044
100.0
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
106
Credit risk mitigation
Audited |
We
 
actively
 
manage
 
credit
 
risk
 
in
 
our
 
portfolios
 
by
 
taking
 
collateral
 
against
 
exposures
 
and
 
by
 
utilizing
 
credit
hedging.
Lending secured by real estate
Audited |
We
 
use
 
a
 
scoring
 
model
 
as
 
part
 
of
 
a
 
standardized
 
front-to-back
 
process
 
for
 
credit
 
decisions
 
on
 
originating
 
or
modifying Swiss mortgage loans. The model’s two key factors
 
are the LTV
 
ratio and an affordability calculation.
The calculation of affordability takes
 
into account interest payments, minimum amortization
 
requirements and potential
property maintenance costs
 
in relation to gross
 
income or rental
 
income for rental properties.
 
The imputed interest
 
rate
is set at 5% per annum, independently of the current interest
 
rate environment.
For residential
 
properties
 
occupied
 
by the
 
borrower,
 
the maximum
 
LTV
 
for the
 
standard
 
approval
 
process
 
is 80%.
 
For
income-producing real estate
 
(IPRE), the maximum
 
LTV allowed within
 
the standard approval
 
process ranges from
 
30%
to 75%, depending on the type and age of the property,
 
and the amount of renovation work needed.
 
Audited |
The value we assign to each property is based on the lowest
 
value determined from model-derived valuations, the
purchase price, an asset value for IPRE and, in some cases,
 
an additional external valuation.
To
 
take
 
market
 
developments
 
into
 
account
 
for
 
external
 
valuation
 
models,
 
an
 
external
 
vendor
 
regularly
 
updates
 
the
parameters and / or
 
refines the
 
architecture for
 
each model.
 
Model changes
 
and parameter
 
updates are
 
subject to
 
the
same validation procedures as our internally developed
 
models.
 
Audited |
We similarly apply
 
underwriting guidelines
 
for our
 
Global Wealth Management
 
Region Americas
 
mortgage loan
portfolio,
 
taking
 
into
 
account
 
loan
 
affordability
 
and
 
collateral
 
sufficiency.
 
LTV
 
standards
 
are
 
defined
 
for
 
the
 
various
mortgage types, such
 
as residential mortgages
 
or investment properties,
 
based on
 
associated risk factors,
 
such as
 
property
type and
 
loan size
 
and purpose.
 
The maximum
 
LTV allowed
 
within the standard
 
approval process
 
ranges from
45
% to
80
%. In addition to
 
LTV, other credit risk
 
metrics, such as debt-to-income ratios,
 
credit scores and required
 
client reserves,
are also part of our underwriting guidelines.
A risk limit framework is applied to
 
the Global Wealth Management Region Americas mortgage loan portfolio. Limits
 
are
set
 
to
 
govern
 
exposures
 
within
 
LTV
 
categories,
 
geographic
 
concentrations,
 
portfolio
 
growth
 
and
 
high-risk
 
mortgage
segments, such
 
as interest-only loans.
 
These limits
 
are monitored by
 
a specialized
 
credit risk
 
monitoring team and
 
reported
to senior
 
management. Supplementing
 
this limit
 
framework is
 
a real
 
estate lending
 
policy and
 
procedures framework,
set up to
 
govern real estate
 
lending activities. Quality
 
assurance and quality
 
control programs monitor
 
compliance with
mortgage underwriting and documentation requirements.
For our mortgage
 
loan portfolio
 
in the
 
Global Wealth
 
Management regions
 
of EMEA
 
and Asia
 
Pacific, we
 
apply global
underwriting guidelines with regional variations to allow for
 
regulatory and market differentials. As in other regions, the
underwriting guidelines
 
take
 
into account
 
affordability
 
and collateral
 
sufficiency. Affordability
 
is assessed
 
at a
 
stressed
interest
 
rate
 
using,
 
for
 
residential
 
real
 
estate,
 
the
 
borrowers’
 
sustainable
 
income
 
and
 
declared
 
liabilities,
 
and
 
for
commercial real estate
 
the quality and
 
sustainability of rental
 
income. For interest-only
 
loans, a declared
 
and evidenced
repayment strategy
 
must be in
 
place. The applicable
 
LTV for each
 
mortgage is based
 
on the quality
 
and liquidity
 
of the
property
 
and assessed
 
against
 
valuations
 
from bank-appointed
 
third-party
 
valuers.
 
Maximum
 
LTV
 
varies
 
from
30
% to
70
%, depending on
 
the type and
 
location of
 
the property, as
 
well as
 
other factors. Serviceability
 
may be
 
further supported
by personal
 
guarantees from
 
related third
 
parties. The
 
overall portfolio
 
is centrally
 
assessed against
 
a number
 
of stress
scenarios to ensure that exposures remain within predefined
 
stress limits.
›
Refer to “Swiss mortgage loan portfolio” in this
 
section for more information about LTV in our Swiss mortgage portfolio
Lombard lending
 
Audited |
Lombard loans are
 
secured by pledges of marketable
 
securities, guarantees and other
 
forms of collateral. Eligible
financial
 
securities
 
are
 
primarily
 
liquid
 
and
 
actively
 
traded
 
transferable
 
securities
 
(such
 
as
 
bonds,
 
equities
 
and
 
certain
hybrid securities),
 
and other
 
transferable
 
securities, such
 
as approved
 
structured
 
products
 
for which
 
regular
 
prices are
available and the issuer of the security provides a
 
market. To
 
a lesser degree, less-liquid collateral is also
 
used.
We derive lending
 
values by applying
 
discounts (haircuts) to
 
the pledged collateral’s
 
market value. Haircuts
 
for marketable
securities are calculated to cover a possible adverse change in market value
 
over a given close-out period and confidence
level. Less-liquid or more volatile collateral will typically have
 
larger haircuts.
We assess
 
concentration
 
and correlation
 
risks across
 
collateral
 
posted at
 
a counterparty
 
level, and
 
at a
 
divisional level
across
 
counterparties.
 
We
 
also
 
perform
 
targeted
 
Group-wide
 
reviews
 
of
 
concentration.
 
Concentration
 
of
 
collateral
 
in
single securities,
 
issuers or
 
issuer groups,
 
industry sectors,
 
countries, regions
 
or currencies
 
may result
 
in higher
 
risk and
reduced
 
liquidity.
 
In
 
such
 
cases,
 
the
 
lending
 
value
 
of
 
the
 
collateral,
 
margin
 
call
 
and
 
close-out
 
levels
 
are
 
adjusted
accordingly.
Exposures
 
and collateral
 
market
 
values are
 
monitored
 
daily, with
 
the
 
aim
 
of ensuring
 
that
 
the
 
credit exposure
 
always
remains within the
 
established risk
 
tolerance. A shortfall
 
occurs when the
 
lending value
 
drops below the
 
exposure; if it
exceeds a defined
 
trigger level, a
 
margin call is
 
initiated, requiring the
 
client to provide
 
additional collateral,
 
reduce the
exposure or take other action to bring exposure in line with the agreed lending value of the collateral. If a shortfall is not
corrected
 
within
 
the
 
required
 
period,
 
a
 
close-out
 
is
 
initiated,
 
through
 
which
 
collateral
 
is
 
liquidated,
 
open
 
derivative
positions are closed and guarantees are called.
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
107
We
 
conduct
 
stress
 
testing
 
of
 
collateralized
 
exposures
 
to
 
simulate
 
market
 
events
 
that
 
reduce
 
collateral
 
market
 
value,
increase exposure
 
of traded
 
products, or
 
do both.
 
For certain
 
classes of
 
counterparties, limits
 
on such
 
calculated stress
exposures are applied and controlled at a counterparty level.
 
Also, portfolio limits are applied across certain businesses or
collateral types.
 
›
Refer to “Stress loss” in this section for more information
 
about our stress testing
Credit hedging
Audited |
We use single-name
 
credit default
 
swaps (CDSs), credit-index
 
CDSs, structured
 
portfolio hedges (SPHs),
 
bespoke
protection and other instruments to actively manage credit
 
risk. The aim is to reduce concentrations of risk from specific
counterparties,
 
sectors
 
or
 
portfolios
 
and,
 
for
 
CCR,
 
the
 
profit
 
or
 
loss
 
effect
 
arising
 
from
 
changes
 
in
 
credit
 
valuation
adjustments.
We have
 
strict guidelines
 
with regard
 
to taking credit
 
hedges into account
 
for credit
 
risk mitigation purposes.
 
For example,
when
 
monitoring
 
exposures
 
against counterparty
 
limits,
 
we
 
do not
 
usually apply
 
certain
 
credit risk
 
mitigants,
 
such
 
as
proxy
 
hedges
 
(credit
 
protection
 
on
 
a
 
correlated
 
but
 
different
 
name)
 
or
 
credit-index
 
CDSs,
 
to
 
reduce
 
counterparty
exposures. SPHs are
 
structured to achieve
 
true risk transfer
 
by providing
 
explicit protection against events
 
that could cause
a loss in the referenced hedged
 
positions, with the hedge
 
payoff matched to the actual
 
loss incurred on those positions
(i.e.
 
no
 
basis
 
risk).
 
Buying
 
credit
 
protection,
 
if
 
unfunded,
 
also
 
creates
 
credit
 
exposure
 
with
 
regard
 
to
 
the
 
protection
provider.
 
We
 
monitor
 
and
 
limit
 
exposures
 
to
 
credit
 
protection
 
providers
 
and
 
also
 
monitor
 
the
 
effectiveness
 
of
 
credit
hedges.
›
Refer to “Note 11 Derivative instruments”
 
in the “Consolidated financial statements”
 
section of this report for more information
›
Refer to the 31 December 2024 Pillar 3 Report,
 
available under “Pillar 3 disclosures” at
ubs.com/investors,
for more information
about risk transfer through synthetic securitizations
Mitigation of settlement risk
To
 
mitigate settlement
 
risk, we
 
reduce
 
actual settlement
 
volumes by
 
using multi-lateral
 
and bilateral
 
agreements
 
with
counterparties, including
 
payment netting.
 
In relation to
 
the exchange of
 
cash or securities,
 
transactions can
 
be settled
on a delivery-versus-payment basis.
Foreign exchange
 
transactions are
 
our most
 
significant
 
source of
 
settlement
 
risk. We
 
are a
 
member of
 
CLSSettlement
(operated
 
by
 
CLS,
 
formerly
 
known
 
as
 
Continuous
 
Linked
 
Settlement),
 
an
 
industry
 
utility
 
that
 
provides
 
a
 
multi-lateral
framework to settle transactions on
 
a payment-versus-payment basis, thus reducing foreign-exchange-related settlement
risk relative
 
to the
 
volume of
 
business. However,
 
mitigation of
 
settlement risk
 
through CLS
 
and other
 
means does
 
not
fully eliminate credit risk
 
in foreign exchange
 
transactions resulting from
 
changes in exchange
 
rates prior to settlement,
which is managed as part of our overall credit risk management
 
of OTC derivatives.
 
Credit risk models
Basel III – A-IRB credit risk models
Audited |
We have developed tools and models to estimate future credit losses that may be implicit in our current
 
portfolio.
Exposures to individual counterparties are measured using three generally accepted parameters: PD, EAD and LGD. For a
given credit facility, the product of these three parameters results
 
in the expected loss (the EL). These parameters
 
are the
basis for the
 
majority of our
 
internal measures of
 
credit risk, and
 
key inputs for
 
regulatory capital
 
calculation under
 
the
advanced internal ratings-based (A
 
-IRB) approach of the
 
Basel III framework. We also
 
use models to derive the
 
portfolio
credit risk measures of EL, statistical loss and stress loss.
›
Refer to the 31 December 2024 Pillar 3 Report,
 
available under “Pillar 3 disclosures” at
ubs.com/investors,
for more information
about the regulatory capital calculation under the A-IRB approach
 
and our key credit risk models
Audited |
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Internal UBS rating scale and mapping of external ratings
Internal UBS rating
1-year PD range, in %
Description
Moody’s Investors
Service mapping
S&P mapping
Fitch mapping
0 and 1
0.00–0.02
Investment grade
Aaa
AAA
AAA
2
0.02–0.05
Aa1 to Aa3
AA+ to AA–
AA+ to AA–
3
0.05–0.12
A1 to A3
A+ to A–
A+ to A–
4
0.12–0.25
Baa1 to Baa2
BBB+ to BBB
BBB+ to BBB
5
0.25–0.50
Baa3
BBB–
BBB–
6
0.50–0.80
Sub-investment grade
Ba1
BB+
BB+
7
0.80–1.30
Ba2
BB
BB
8
1.30–2.10
Ba3
BB–
BB–
9
2.10–3.50
B1
B+
B+
10
3.50–6.00
B2
B
B
11
6.00–10.00
B3
B–
B–
12
10.00–17.00
Caa1 to Caa2
CCC+ to CCC
CCC+ to CCC
13
>17
Caa3 to C
CCC– to C
CCC– to C
Counterparty is in default
 
Default
Defaulted
D
D
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
108
Probability of default
PD estimates
 
the likelihood
 
of a
 
counterparty defaulting
 
on its
 
contractual obligations
 
over the
 
next 12 months
 
and is
assessed using rating tools tailored to the various categories
 
of counterparties.
 
The ratings of major credit rating agencies, and their mapping to the UBS masterscale and internal PD bands, are shown
in the
 
“Internal UBS
 
rating scale
 
and mapping
 
of external
 
ratings” table
 
above. For
 
Moody’s and
 
S&P, the
 
mapping is
based on the
 
long-term average of
 
one-year default rates
 
available from these
 
rating agencies, with
 
Fitch ratings being
mapped to the equivalent
 
S&P ratings. For each
 
external rating category,
 
the average default rate
 
is compared with our
internal PD bands to derive a periodically reviewed mapping
 
to our internal rating scale.
Exposure at default
EAD is the amount we expect to be owed by a counterparty at the time of possible default. We derive EAD from current
exposure to the counterparty and possible future
 
exposure development.
The EAD of an on-balance
 
sheet loan is its
 
notional amount,
 
while for off-balance
 
sheet commitments
 
that are not drawn,
credit conversion
 
factors (CCFs)
 
are used in order
 
to obtain an
 
expected on-balance
 
sheet amount.
For traded
 
products
 
under the
 
internal
 
model method
 
for derivatives
 
and the
 
repo value-at-risk
 
approach
 
for SFTs,
 
we derive
EAD by
 
modeling the
 
range of
 
possible
 
exposure outcomes
 
at various
 
points in
 
time using
 
a simulation
 
based on
 
a scenario-
consistent
 
technique.
 
We assess
 
the net
 
amount that
 
may be
 
owed to
 
us or
 
that we
 
may owe
 
to others,
 
taking into
 
account
the effect of
 
market movements
 
over the potential
 
time it would
 
take to close
 
out positions.
 
We
 
assess
 
exposures
 
where
 
there
 
is
 
a
 
material
 
correlation
 
between
 
the
 
factors
 
driving
 
the
 
credit
 
quality
 
of
 
the
counterparty and those driving the
 
potential future value of our
 
traded products exposure (wrong-way risk), and
 
we have
established specific controls to mitigate such risks.
 
Loss given default
LGD is
 
the magnitude
 
of the
 
likely loss
 
if there
 
is a
 
default. Our
 
LGD estimates,
 
which consider
 
downturn conditions,
include
 
loss
 
of
 
principal,
 
interest
 
and other
 
amounts
 
less
 
recovered
 
amounts.
 
We
 
determine
 
LGD
 
based
 
on
 
the
 
likely
recovery
 
rate
 
of
 
claims
 
against
 
defaulted
 
counterparties,
 
which
 
depends
 
on
 
the
 
type
 
of
 
counterparty
 
and
 
any
 
credit
mitigation due
 
to collateral
 
or guarantees.
 
Our estimates
 
are supported
 
by internal
 
loss data
 
and external
 
information,
where available. If we hold collateral,
 
such as marketable securities or a
 
mortgage on a property,
 
LTV
 
ratios are typically
a key
 
parameter in
 
determining LGD.
 
For risk-weighted
 
asset (RWA)
 
calculation, floors
 
are applied
 
to LGD
 
in line
 
with
regulation.
Expected loss
We use the concept of EL to quantify future
 
credit losses that may be implicit in our current
 
portfolio. The EL for a given
credit facility
 
is the product
 
of the three
 
components described above,
 
i.e. PD, EAD
 
and LGD. We
 
aggregate the
 
EL for
individual counterparties to derive expected portfolio credit
 
losses.
IFRS 9 – ECL credit risk models
Expected credit loss
ECL is
 
defined as
 
the difference
 
between
 
contractual
 
cash flows
 
and those
 
UBS expects
 
to receive,
 
discounted
 
at the
effective interest
 
rate (EIR) or
 
contractual interest
 
rate. For loan
 
commitments and other
 
credit facilities in
 
scope of ECL
requirements, expected cash shortfalls are determined by considering expected future drawdowns. Rather than focusing
on an
 
average
 
through-the-cycle
 
(TTC)
 
expected
 
annual loss,
 
the
 
purpose
 
of ECL
 
is
 
to estimate
 
the
 
amount of
 
losses
inherent in
 
a portfolio
 
based on
 
current conditions
 
and future
 
outlook (a
 
point-in-time (PIT)
 
measure), whereby
 
such a
forecast has
 
to be unbiased
 
(i.e. exclude conservative
 
adjustments) and include
 
all information available
 
without undue
cost
 
and
 
effort,
 
and
 
address
 
multiple
 
scenarios
 
where
 
there
 
is perceived
 
non-linearity
 
between
 
changes
 
in
 
economic
conditions
 
and
 
their
 
effect
 
on
 
credit
 
losses.
 
From
 
a
 
credit
 
risk
 
modeling
 
perspective,
 
ECL
 
parameters
 
are
 
generally
derivations of the factors assessed for regulatory Basel
 
III EL.
Comparison of Basel III EL and IFRS 9 ECL credit risk
 
models
The IFRS 9 ECL concept has a number
 
of key differences from
 
our Basel III credit risk models,
 
both in the loss estimation
process
 
and
 
the
 
result
 
thereof.
 
Most
 
notably,
 
regulatory
 
Basel III
 
EL
 
parameters
 
are
 
TTC / downturn
 
estimates,
 
which
might
 
include
 
a
 
margin
 
of
 
conservatism,
 
while
 
IFRS 9
 
ECL
 
parameters
 
are
 
typically
 
PIT,
 
reflecting
 
current
 
economic
conditions and
 
future
 
outlook. The
 
table below
 
summarizes the
 
main differences.
 
Stage 1 and 2 ECL
 
releases
 
in 2024
were USD 99m,
 
and the
 
respective allowances
 
and provisions
 
as of 31
 
December 2024
 
were USD 946m.
 
This included
ECL allowances and provisions
 
of USD 838m related to
 
positions under the Basel III A-IRB
 
approach. Basel III EL for
 
non-
defaulted positions was USD 1,406m.
›
Refer to “Note 1 Summary of material accounting
 
policies” in the “Consolidated financial statements”
 
section of this report for
more information about our accounting policy for allowances
 
and provisions for ECL including key definitions
 
relevant for the ECL
calculation under IFRS 9
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
109
The table below shows the main differences between the
 
two expected loss measures.
Basel III EL (A-IRB approach)
IFRS 9 ECL
Scope
The Basel III A-IRB approach applies to most credit risk
 
exposures.
It includes transactions measured at amortized
 
cost, at fair value
through profit or loss and at fair value through OCI, including
loan commitments and financial guarantees.
The IFRS 9 ECL calculation mainly applies to financial
 
assets
measured at amortized cost and debt instruments
 
measured at
fair value through OCI, as well as loan commitments
 
and financial
guarantees not at fair value through profit or loss.
12-month versus
lifetime
expected loss
The Basel III A-IRB approach takes into account expected
 
losses
resulting from expected default events occurring within
 
the next
12 months.
In the absence of a significant increase in credit risk
 
(an SICR), a
maximum 12-month ECL is recognized. Once an
 
SICR event has
occurred, a lifetime ECL is recognized considering
 
expected
default events over the life of the transaction.
Exposure at
default
(EAD)
EAD is the amount we expect a counterparty
 
to owe us at the
time of a possible default. For banking products,
 
EAD equals the
book value as of the reporting date; for traded products,
 
the vast
majority of EAD is modeled. For lending, EAD
 
is expected to
remain constant over a 12-month period. For loan
 
commitments,
a credit conversion factor is applied to model expected
 
future
drawdowns.
EAD is generally calculated on the basis of the
 
cash flows that are
expected to be outstanding at the individual
 
points in time during
the life of the transaction.
 
For loan commitments, a credit
conversion factor is applied to model expected
 
future drawdowns.
Probability of
default
(PD)
PD estimates are determined on a through-the-cycle
 
(TTC) basis.
They represent historical average PDs, taking into account
observed losses over a prolonged historical period,
 
and therefore
are less sensitive to movements in the underlying
 
economy.
PD estimates are determined on a point-in-time
 
(PIT) basis, based
on current conditions and incorporating forecasts for
 
future
economic conditions at the reporting date.
Loss given
default
(LGD)
LGD includes prudential adjustments, such
 
as downturn LGD
assumptions and floors. Similar to PD, LGD
 
is determined on a
TTC basis.
LGD should reflect the losses that are reasonably expected
 
and
prudential adjustments should therefore not be applied.
 
Similar to
PD, LGD is determined on the basis of a PIT
 
approach.
Use of scenarios
No use of scenarios.
Multiple forward-looking scenarios have to be taken
 
into account
to determine a probability-weighted ECL.
Further key aspects of credit risk models
Stress loss
We complement our statistical modeling approach with
 
scenario-based stress loss measures. Stress tests are run regularly
to monitor potential effects
 
of extreme, but nevertheless
 
plausible, events on our portfolios,
 
under which key credit
 
risk
parameters are assumed to deteriorate substantially.
 
Where we consider it appropriate
 
we apply limits on this basis.
Stress scenarios and methodologies are tailored to portfolios’
 
natures, ranging from regionally focused to global systemic
events and varying in time horizon.
›
Refer to “Stress testing” in this section for more information
 
about our stress-testing framework
Credit risk model confirmation
Our approach to
 
model confirmation involves
 
both quantitative methods,
 
such as monitoring compositional
 
changes in
portfolios and
 
results
 
of backtesting,
 
and qualitative
 
assessments,
 
such as
 
feedback
 
from
 
users on
 
model output
 
as a
practical
 
indicator
 
of
 
a
 
model’s
 
performance
 
and
 
reliability.
 
In
 
addition,
 
changes
 
in
 
market,
 
regulatory
 
and
 
business
practices are assessed.
Material changes
 
in portfolio
 
composition may
 
invalidate the
 
conceptual soundness
 
of a
 
model. We
 
therefore perform
regular analyses of the evolution of portfolios to identify
 
such changes in the structure and credit quality of portfolios.
 
›
Refer to “Model risk” in this section for more information
 
Backtesting
We monitor the performance
 
of models by backtesting
 
and benchmarking them, with
 
model outcomes compared
 
with
actual results, based
 
on our internal experience and
 
externally observed results. To
 
assess the predictive
 
power of credit
exposure models for
 
traded products, such
 
as OTC derivatives
 
and ETD products,
 
we statistically compare
 
predicted future
exposure distributions at different
 
forecast horizons with realized values.
 
For PD, we derive a predicted distribution of the number of defaults. The observed number of defaults is compared with
the upper tail of the predicted distribution. If the observed number
 
of defaults is higher than a given upper tail quantile,
we conclude
 
there is
 
evidence
 
that the
 
model may
 
underpredict
 
the number
 
of defaults.
 
Based on
 
historical
 
long-run
average
 
default rates
 
and, if
 
required, additional
 
margin
 
of conservatism,
 
we
 
also
 
derive
 
PD calibration
 
targets
 
and a
lower boundary. As a general
 
rule, follow-up actions,
 
such as a recalibration of
 
the rating tool,
 
are defined if the portfolio
average PD lies below the derived lower boundary.
 
For LGD, backtesting statistically
 
tests whether the mean
 
difference between the observed
 
and predicted LGD is
 
zero. If
the test fails, there is evidence that
 
our predicted LGD is too low. In such
 
cases, and where these differences are
 
outside
expectations,
 
follow-up actions, such as a recalibration of the models, are
 
taken.
 
CCFs,
 
used
 
for
 
the
 
calculation
 
of
 
EAD
 
for
 
undrawn
 
facilities,
 
are
 
dependent
 
on
 
several
 
credit
 
facility
 
contractual
dimensions.
 
We
 
compare
 
the
 
predicted
 
amount
 
drawn
 
with
 
observed
 
historical
 
use
 
of
 
such
 
facilities
 
by
 
defaulted
counterparties. If
 
any statistically
 
significant deviation
 
is observed,
 
follow-up actions,
 
such as an
 
update of
 
the relevant
CCFs, are performed.
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
110
Changes to models and model parameters during the period
As
 
part
 
of
 
our
 
continuous
 
efforts
 
to
 
enhance
 
models
 
to
 
reflect
 
market
 
developments
 
and
 
newly
 
available
 
data,
 
we
updated several models in 2024.
In Personal
 
& Corporate
 
Banking and
 
Global Wealth
 
Management,
 
we implemented
 
a new
 
Swiss corporate
 
PD model
and updated
 
the retail
 
and corporate
 
LGD parameters
 
of the
 
Swiss LGD
 
model. In
 
addition, we
 
implemented an
 
RWA
add-on
 
for
 
IPRE mortgages
 
to private
 
clients in
 
Switzerland
 
as an
 
alternative
 
to recalibrating
 
the
 
PD model
 
.
 
In
 
Global
Wealth
 
Management,
 
the
 
conservative
 
fixed
 
RWA
 
add-on
 
for
 
concentrated
 
equity
 
lending
 
and
 
lending
 
against
concentrated
 
hedge fund
 
and private
 
equity collateral
 
was replaced
 
by a
 
dynamic RWA
 
buffer calculation
 
based on
 
a
detailed transactional risk
 
assessment that will
 
be in place
 
until the expected
 
go-live of dedicated
 
models in the
 
second
half of 2025.
In the Investment Bank, new PD models for broker-dealers and mortgage originators went live, and PD models for banks
and hedge
 
funds were
 
recalibrated. In
 
addition, certain
 
RWA multipliers
 
were adjusted
 
as a
 
result of
 
improvements to
models,
 
and
 
the
 
majority
 
of
 
the
 
mortgage
 
originators
 
portfolio
 
has
 
been
 
switched
 
from
 
the
 
A-IRB
 
approach
 
to
 
the
securitization standardized approach framework. Furthermore, we
 
deployed a new US
 
commercial real estate LGD model
across the
 
Investment
 
Bank
 
and Global
 
Wealth
 
Management, and
 
in
 
Global Wealth
 
Management
 
we
 
implemented
 
a
supervisory slotting model for the commercial real estate portfolio
 
outside the US and Switzerland.
For the sovereign
 
portfolio on the
 
legacy Credit Suisse
 
infrastructure, we rolled
 
out the UBS
 
sovereign PD model,
 
replacing
the previous
 
Credit Suisse
 
model. In
 
addition, the
 
Credit Suisse
 
PD model
 
for fund-linked
 
products and
 
the equity
 
REIT
supervisory
 
slotting
 
model
 
were
 
decommissioned,
 
as
 
there
 
was
 
no
 
remaining
 
exposure
 
on
 
the
 
legacy
 
Credit
 
Suisse
infrastructure.
 
The
 
Credit
 
Suisse
 
models
 
for
 
hedge
 
funds
 
and
 
broker-dealers
 
were
 
also
 
decommissioned,
 
due
 
to
 
the
reduced remaining materiality
 
of the respective portfolios
 
on the legacy Credit
 
Suisse infrastructure, with
 
the remaining
exposure now
 
subject to
 
the standardized
 
approach for
 
the calculation
 
of risk-weighted
 
assets. For
 
positions that
 
have
migrated from Credit Suisse to UBS infrastructure,
 
UBS models have been adopted accordingly.
Where required,
 
changes
 
to
 
models and
 
model
 
parameters
 
were
 
approved by
 
the
 
Swiss Financial
 
Market
 
Supervisory
Authority (FINMA) before implementation.
›
Refer to “Risk-weighted assets” in the “Capital,
 
liquidity and funding, and balance sheet” section
 
of this report for more
information about the effect of the changes to models
 
and model parameters on credit risk RWA
Credit-risk-model-related regulatory capital developments
In Switzerland,
 
the amendments
 
to the
 
Capital Adequacy
 
Ordinance
 
that
 
incorporate
 
the final
 
Basel III
 
standards
 
into
Swiss law entered
 
into force on 1 January
 
2025, together with implementing
 
ordinances issued by
 
FINMA in 2024. The
adoption
 
of
 
the
 
final
 
Basel III
 
standards
 
led
 
to
 
a
 
number
 
of
 
revisions
 
to
 
the
 
internal
 
ratings-based
 
(IRB)
 
approaches,
namely: (i)
removing the option
 
of using the A-IRB
 
approach for
 
certain asset classes (including
 
general corporates with
consolidated annual
 
revenues greater
 
than EUR 500m,
 
and banks
 
and other
 
financial institutions);
 
(ii)
placing floors
 
on
certain model inputs under the IRB
 
approach, e.g. PD and LGD; and (iii)
introducing various requirements to reduce RWA
variability (e.g. for LGD). In addition, the removal of the internal
 
model approach for credit valuation adjustment became
effective on 1 January 2025. The aforementioned revisions have
 
been adopted for all
 
FINMA-regulated entities, including
the UBS Group.
›
Refer to “Capital management objectives, planning and activities” in the “Capital, liquidity
 
and funding, and balance sheet” section
of this report
 
for more information
 
about the
 
development
 
of RWA
›
Refer to “Risk measurement” in this section for
 
more information about our approach to model confirmation
 
procedures
›
Refer to the “Regulatory and legal developments”
 
and “Risk factors” sections of this report for
 
more information
Credit policies for distressed assets
Non-performing
Audited |
In line with the
 
regulatory definition,
 
we report a
 
claim as non-performing
 
when: (i) it is
 
more than 90
 
days past
due; (ii) it is subject to restructuring proceedings, where
 
preferential conditions concerning interest
 
rates, subordination,
tenor,
 
etc. have been granted in order to avoid default of the counterparty (forbearance);
 
(iii) the counterparty is subject
to
 
bankruptcy / enforced
 
liquidation
 
proceedings
 
in
 
any
 
form,
 
even
 
if
 
there
 
is
 
sufficient
 
collateral
 
to
 
cover
 
the
 
due
payment; or (iv) there is other evidence that payment
 
obligations will not be fully met without recourse to collateral.
Default and credit impaired
UBS
 
uses
 
a
 
single
 
definition
 
of
 
default
 
for
 
classifying
 
assets
 
and
 
determining
 
the
 
PD
 
of
 
its
 
obligors
 
for
 
risk
 
modeling
purposes.
 
The
 
definition
 
of
 
default
 
is
 
based
 
on
 
quantitative
 
and
 
qualitative
 
criteria.
 
A
 
counterparty
 
is
 
classified
 
as
defaulted when material
 
payments of
 
interest, principal or
 
fees are overdue
 
for more than
 
90 days, or
 
more than 180 days
for certain exposures in
 
relation to loans to
 
private and commercial clients in
 
Personal & Corporate Banking
 
and to private
clients of
 
Global Wealth
 
Management Region
 
Switzerland. UBS
 
does not
 
consider the
 
general 90-day
 
presumption for
default recognition
 
appropriate
 
for those
 
portfolios, given
 
the cure
 
rates, which
 
show that
 
strict application
 
of the
 
90-
day criterion
 
would not
 
accurately reflect
 
the inherent
 
credit risk.
 
Counterparties are
 
also classified as
 
defaulted when:
bankruptcy,
 
insolvency
 
proceedings
 
or
 
enforced
 
liquidation
 
have
 
commenced;
 
obligations
 
have
 
been
 
restructured
 
on
preferential terms (forbearance);
 
or there is
 
other evidence that
 
payment obligations
 
will not
 
be fully
 
met without
 
recourse
to collateral. The latter may
 
be the case even
 
if, to date, all
 
contractual payments have been made
 
when due. If one
 
claim
against a counterparty is defaulted on, generally all claims against
 
the counterparty are treated
 
as defaulted.
 
ubs-20241231p135i0
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
111
An instrument
 
is classified
 
as credit
 
impaired
 
if the
 
counterparty
 
is classified
 
as defaulted
 
and / or
 
the instrument
 
is identified
as purchased credit
 
impaired (PCI). An
 
instrument is PCI if
 
it has been purchased
 
at a deep discount to its carrying
 
amount
following a
 
risk
 
event
 
of
 
the
 
issuer
 
or
 
originated with
 
a
 
defaulted counterparty.
 
Once
 
a
 
financial asset
 
is
 
classified as
defaulted /
 
credit impaired
 
(except PCI),
 
it
 
is
 
reported as
 
a
 
stage 3 instrument
 
and
 
remains as
 
such
 
unless all
 
past
 
due
amounts
 
have
 
been
 
rectified,
 
additional
 
payments
 
have
 
been
 
made
 
on
 
time,
 
the
 
position
 
is
 
not
 
classified
 
as
 
credit-
restructured, and there is general
 
evidence of credit recovery. A three-month
 
probation period is applied before
 
a transfer
back to stages
 
1 or 2 can be
 
triggered. However,
 
most instruments
 
remain in stage
 
3 for a longer
 
period of time.
Forbearance (credit restructuring)
Audited |
If payment
 
default is
 
imminent or
 
default has
 
already occurred,
 
we may
 
grant concessions
 
to borrowers
 
in financial
difficulties that we would otherwise not consider in the normal course of business, such as offering preferential interest
 
rates,
extending
 
maturity,
 
modifying
 
the
 
schedule
 
of
 
repayments,
 
debt / equity
 
swap,
 
subordination,
 
etc.
 
When
 
a
 
forbearance
measure takes
 
place, each case
 
is considered
 
individually, and
 
the exposure
 
is generally
 
classified as
 
defaulted. Forbearance
classification
 
remains
 
until
 
the
 
loan
 
is
 
repaid
 
or
 
written
 
off,
 
non-preferential
 
conditions
 
are
 
granted
 
that
 
supersede
 
the
preferential conditions or the counterparty has
 
recovered, and the preferential conditions no
 
longer exceed our risk tolerance.
Contractual
 
adjustments
 
when
 
there
 
is
 
no
 
evidence
 
of
 
imminent
 
payment
 
default,
 
or
 
where
 
changes
 
to
 
terms
 
and
conditions are within our usual risk tolerance, are not considered
 
to be forborne.
Loss history statistics
An
 
instrument
 
is
 
classified
 
as
 
credit
 
impaired
 
if
 
the
 
counterparty
 
has
 
defaulted.
 
This
 
also
 
includes
 
credit-impaired
exposures for which no loss has occurred
 
or for which no allowance has been recognized
 
(e.g. where we expect to fully
recover the exposures via collateral
 
held).
 
Coverage ratios are
 
calculated for
 
the core loan
 
portfolio by taking
 
ECL allowances
 
and provisions divided
 
by the
 
gross
carrying amount
 
of the
 
exposures. Core
 
loan exposure
 
is defined
 
as the
 
sum of
 
Loans and
 
advances to
 
customers and
Loans to financial advisors.
 
The total combined on-
 
and off-balance sheet coverage ratio
 
was 27 basis points as of
 
31 December 2024, 5 basis points
higher than the ratio as of 31 December 2023. The combined
 
stage 1 and 2 ratio of 10 basis points, 1 basis point
 
lower
than
 
the
 
ratio
 
as
 
of
 
31 December
 
2023;
 
the
 
stage 3
 
ratio
 
was
 
22%,
 
1 percentage
 
point
 
higher
 
than
 
the
 
ratio
 
as
 
of
31 December 2023, and the PCI ratio was 21%.
›
Refer to “Note 10 Financial assets at amortized
 
cost and other positions in scope of expected
 
credit loss measurement” and
“Note 20 Expected credit loss measurement” in the “Consolidated
 
financial statements” section of this report for more
information about
 
ECL measurement and the calculation of the coverage ratio
›
Refer to “Note 14 Other assets”
 
in the “Consolidated financial statements” section
 
of this report for more details
›
Refer to the “Group performance” section of this report for
 
more information about credit loss expense / release
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
112
Loss history statistics
USD m, except where indicated
31.12.24
31.12.23
1
31.12.22
Banking products, core exposure and off-balance sheet, gross
2
869,171
966,279
509,024
of which: amounts due from banks and loans and advances to customers, gross
600,884
662,525
402,801
Credit-impaired exposure, gross (stage 3 and PCI)
6,637
6,200
2,455
of which: credit-impaired amounts due from banks and loans
 
and advances to customers (stage 3 and PCI)
5,793
5,367
2,012
Non-performing amounts due from banks and loans and
 
advances to customers
 
6,044
5,806
2,333
ECL allowances and provisions for credit losses
3
2,507
2,261
1,091
of which: core loan exposure (all stages)
2,339
2,097
1,043
of which: amounts due from banks and loans and advances to customers
 
(all stages)
2,014
1,710
789
of which: amounts due from banks and loans and advances to customers
 
(stage 3 and PCI)
1,408
990
474
Write-offs (stage 3 and PCI)
348
93
95
of which: write-offs for amounts due from banks and loans
 
and advances to customers
329
78
74
Credit loss expense / (release)
4
551
1,037
29
Ratios
Credit-impaired lending assets as a percentage of total lending
 
assets, gross (%)
5
1.0
0.8
0.5
Non-performing lending assets as a percentage of total lending
 
assets, gross (%)
5
1.0
0.9
0.6
ECL allowances for lending assets as a percentage of total lending
 
assets, gross (%)
5
0.3
0.3
0.2
Write-offs as a percentage of average gross lending assets outstanding
 
during the period (%)
5
0.1
0.0
0.0
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
 
2 Includes amounts due from
 
banks, core loan
 
exposure (Loans and advances
 
to customers and Loans
 
to financial advisors) and off-balance
 
sheet items defined as
 
guarantees and loan commitments.
 
3 Includes
provisions for ECL of guarantees and
 
loan commitments and allowances for
 
securities financing transactions.
 
4 Includes credit loss expense / (release)
 
for other financial assets at amortized
 
cost, guarantees, loan
commitments, and securities financing transactions.
 
5 Lending assets include amounts due from banks and loans and advances to customers.
Market risk
Audited |
Main sources of market risk
Market risks arise from both trading and non-trading
 
business activities.
–
Trading market risks arise
 
primarily in the Investment
 
Bank, Non-core and Legacy
 
and, to a lesser
 
extent, Global Wealth
Management. In the Investment Bank these risks are mainly connected with primary debt and equity underwriting, as
well as securities
 
and derivatives trading for
 
market-making and client facilitation.
 
In Non-core and
 
Legacy,
 
market risks
arise mainly from structured trades, portfolios
 
of loans and securitized products, and
 
both complex and simple credit,
interest rate
 
and equity
 
derivative transactions.
 
A limited
 
contribution to
 
market risk
 
in Global
 
Wealth Management
comes from municipal securities and taxable fixed-income securities.
–
Non-trading market
 
risks arise predominantly
 
in the form
 
of interest rate
 
and foreign exchange
 
risks connected
 
with
personal banking and lending in our wealth management
 
businesses, the Swiss business of our Personal & Corporate
Banking business division, the Investment Bank’s lending
 
business, and treasury activities.
–
Group Treasury assumes market risks
 
in the process of
 
managing interest rate risk, structural foreign
 
exchange risk and
the Group’s liquidity and funding profile, including high-quality
 
liquid assets (HQLA).
–
Equity and
 
debt
 
investments
 
can
 
also give
 
rise to
 
market
 
risks, as
 
can
 
some aspects
 
of employee
 
benefits,
 
such
 
as
defined benefit pension schemes.
Audited |
Overview of measurement, monitoring and management techniques
–
Market
 
risk limits
 
are
 
set for
 
the Group,
 
the
 
business
 
divisions and
 
Group
 
Treasury
 
at granular
 
levels in
 
the various
business lines, reflecting the nature and magnitude of the
 
market risks.
–
Management value-at-risk (VaR) measures exposures under
 
the market risk framework, including trading market risks
and some non-trading
 
market risks.
 
Non-trading market
 
risks not included
 
in VaR
 
are covered
 
in the risks
 
controlled
by the Market and Treasury Risk Control functions.
–
Our primary portfolio measures of market risk are liquidity-adjusted stress
 
loss and VaR. Both are subject to limits that
are approved
 
by the
 
Board of
 
Directors (the
 
BoD). Market
 
risk measurement
 
for certain
 
legacy Credit
 
Suisse components
can differ from
 
the UBS Group
 
excluding the aforementioned legacy
 
Credit Suisse components,
 
as set out
 
below. These
positions continue to be managed
 
on legacy Credit Suisse infrastructure
 
until full migration of these positions
 
to UBS
infrastructure or the liquidation of the positions.
–
These measures are
 
complemented by
 
concentration and
 
granular limits for
 
general and specific
 
market risk factors.
Our trading businesses are subject
 
to multiple market risk limits, which
 
take into account the extent of
 
market liquidity
and volatility, business outlook and growth,
 
and, for our single-name exposures, issuer credit quality.
–
Trading
 
market
 
risks
 
are
 
managed
 
at
 
portfolio
 
level.
 
As
 
risk
 
factor
 
sensitivities
 
change
 
due
 
to
 
new
 
transactions,
transaction expiries or changes
 
in market levels, risk
 
factors are dynamically
 
rehedged to remain
 
within limits. We
 
do
not generally seek to distinguish in the trading portfolio between
 
specific positions and associated hedges.
–
Issuer
 
risk
 
for
 
credit
 
products
 
is
 
controlled
 
by
 
limits
 
applied
 
at
 
the
 
business
 
division
 
level
 
based
 
on
 
jump-to-zero
measures, which estimate maximum default exposure (the
 
default event loss assuming zero recovery).
–
Non-trading
 
foreign
 
exchange
 
risks
 
are
 
managed
 
under
 
market
 
risk
 
limits,
 
with
 
the
 
exception
 
of
 
Group
 
Treasury
management of consolidated capital activity.
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
113
Our CRO Treasury function applies a holistic risk framework, setting the appetite for treasury-related risk-taking activities
across the
 
Group. Key
 
elements
 
of the
 
framework
 
include an
 
overarching
 
regulatory
 
(interest rate
 
risk in
 
the banking
book (IRRBB)) delta
 
economic value of
 
equity (EVE) target, set
 
by the BoD. Limits
 
are also set by
 
the BoD to balance
 
the
effect of foreign
 
exchange movements on
 
our common equity
 
tier 1 (CET1) capital
 
and CET1 capital
 
ratio. Non-trading
interest rate and foreign exchange risks are included in Group-wide statistical and
 
stress-testing metrics, which flow into
our risk appetite framework.
Equity
 
and
 
debt
 
investments
 
are
 
subject
 
to
 
a
 
range
 
of
 
risk
 
controls,
 
including
 
preapproval
 
of
 
new
 
investments
 
for
commercial purposes by business
 
management and Risk Control
 
and regular monitoring and
 
reporting by Group Finance.
They are also included in Group-wide statistical and stress-testing
 
metrics.
›
Refer to “Currency management” in the “Capital, liquidity
 
and funding, and balance sheet” section of
 
this report for more
information about Group Treasury’s management of foreign exchange risks
›
Refer to the “Capital, liquidity and funding,
 
and balance sheet” section of this report for more information
 
about the sensitivity
of our CET1 capital and CET1 capital ratio to currency movements
Market risk stress loss
The
 
measurement
 
and
 
management
 
of
 
market
 
risks
 
include
 
an
 
extensive
 
set
 
of
 
stress
 
tests
 
and
 
scenario
 
analyses,
continuously evaluated to
 
ensure that losses
 
resulting from an
 
extreme yet plausible
 
event do
 
not exceed
 
our risk
 
appetite.
Liquidity-adjusted stress
Liquidity-adjusted
 
stress
 
is
 
our
 
primary
 
stress
 
loss
 
measure
 
for
 
Group-wide
 
market
 
risk.
 
The
 
framework
 
captures
 
the
economic
 
losses
 
that
 
could
 
arise
 
under
 
specified
 
stress
 
scenarios.
 
Shocks
 
are
 
applied
 
to
 
positions
 
based
 
on
 
expected
market movements in the liquidity-adjusted holding periods
 
resulting from the specified scenario.
The holding periods used for
 
liquidity-adjusted stress are calibrated to reflect
 
the time needed to reduce
 
or hedge the risk
of
 
positions
 
in
 
each
 
major
 
risk
 
factor
 
in
 
a
 
stressed
 
environment.
 
We
 
apply
 
minimum
 
holding
 
periods,
 
regardless
 
of
observed liquidity levels, as identification of and reaction
 
to a crisis may not always be immediate.
The expected market movements are derived using historical market behavior (based on analysis of
 
historical events) and
forward-looking analysis including consideration of defined
 
scenarios that have not occurred in the past.
Stress-based limits apply at several
 
levels of the organizational hierarchy. Liquidity
 
-adjusted stress is also the core
 
market
risk component of our combined stress test framework and
 
therefore integral to our overall risk appetite framework.
›
Refer to “Risk appetite framework” in this
 
section for more information
›
Refer to “Stress testing” in this section for more information
 
about our stress-testing framework
Value-at-risk
VaR definition
Audited |
VaR
 
is a
 
statistical
 
measure
 
of market
 
risk, quantifying
 
the potential
 
market risk
 
losses over
 
a
 
set time
 
horizon
(holding period) at an established level of
 
confidence. VaR
 
assumes no change in the Group’s
 
trading positions over the
set time horizon.
We calculate VaR daily.
 
The profit or loss
 
distribution from which VaR
 
is estimated is
 
derived from our internally
 
developed
VaR model,
 
which simulates
 
returns over
 
the holding
 
period for
 
risk factors
 
our trading
 
positions are
 
sensitive to,
 
and
subsequently
 
quantifies the profit / loss effect
 
of these risk
 
factor returns on
 
our trading positions. Systematic
 
commodity,
credit,
 
equity,
 
foreign
 
exchange
 
rate
 
and
 
interest
 
rate
 
risk
 
factor
 
returns
 
are
 
based
 
on
 
a
 
pure
 
historical
 
simulation
approach. An unweighted
 
five-year look-back window
 
is used for the
 
UBS Group excluding certain
 
legacy Credit Suisse
components and an exponentially weighted two-year window for the aforementioned legacy Credit Suisse components.
Modeling idiosyncratic
 
and specific
 
risks for
 
equity and
 
credit risk
 
factors using
 
historical simulation
 
is challenging,
 
due
to the
 
limited availability
 
of continuous
 
good-quality historical
 
data. Wherever
 
possible, historical
 
simulation to
 
model-
specific risk is used for
 
the legacy Credit Suisse components; however, both traded market risk
 
portfolios rely upon factor
models
 
to
 
distinguish
 
systematic
 
and
 
idiosyncratic
 
returns.
 
For
 
the
 
UBS
 
Group
 
excluding
 
certain
 
legacy
 
Credit
 
Suisse
components, idiosyncratic
 
returns are simulated
 
through a Monte
 
Carlo model, aggregating
 
the sum of
 
systematic and
residual returns
 
in such
 
a way
 
that systematic
 
and residual
 
risk are
 
consistently
 
captured.
 
For
 
the legacy
 
Credit
 
Suisse
components, the available
 
distribution of idiosyncratic
 
returns is used
 
to determine an
 
extreme scenario for
 
a given risk
factor’s
 
specific
 
risk;
 
the
 
resultant
 
VaR
 
and extreme
 
scenario
 
loss for
 
a
 
given
 
risk
 
factor
 
are
 
aggregated
 
using
 
a
 
zero-
correlation assumption.
 
For both the UBS Group excluding certain legacy Credit Suisse components and the aforementioned legacy Credit Suisse
components,
 
VaR
 
models
 
are
 
used for
 
internal
 
management
 
purposes
 
and
 
for
 
determining
 
market
 
risk risk-weighted
assets
 
(RWA),
 
although
 
the
 
two
 
use
 
cases
 
consider
 
different
 
confidence
 
levels
 
and
 
time
 
horizons.
 
For
 
internal
management purposes, risk
 
limits are established and
 
exposures measured using
 
VaR at a
95
% confidence level for
 
the
UBS Group
 
excluding
 
certain
 
legacy
 
Credit
 
Suisse
 
components
 
and
98
% for
 
the
 
aforementioned
 
legacy
 
Credit
 
Suisse
components,
 
with a 1-day holding period, aligned to the
 
way we consider the risks associated with our trading
 
activities.
The regulatory
 
measure of
 
market risk
 
used to
 
underpin the
 
market risk
 
capital requirements
 
under Basel III
 
involves a
measure equivalent to a
99
% confidence level using a 10-day holding
 
period. To calculate a 10-day holding period
 
VaR,
we use 10-day risk factor returns.
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
114
The portfolio
 
populations for
 
management and
 
regulatory VaR
 
are slightly
 
different. The
 
one for
 
regulatory VaR
 
meets
regulatory
 
requirements
 
for
 
inclusion
 
in
 
regulatory
 
VaR.
 
Management
 
VaR
 
includes
 
a
 
broader
 
range
 
of
 
positions.
 
For
example, regulatory
 
VaR excludes
 
credit spread
 
risks from
 
the securitization
 
portfolio, which
 
are treated
 
instead under
the securitization approach for regulatory purposes.
We also
 
use stressed
 
VaR (SVaR)
 
for the
 
calculation of
 
market risk
 
RWA. SVaR
 
uses broadly
 
the same
 
methodology as
regulatory
 
VaR and
 
is calculated
 
using the
 
same
 
population,
 
holding
 
period (10-day)
 
and confidence
 
level (
99
%). For
SVaR, both for the UBS Group excluding certain
 
legacy Credit Suisse components and the aforementioned
 
legacy Credit
Suisse components, the most
 
significant one-year period
 
of financial stress from
 
a historical dataset covering
 
the period
from 1 January 2007 to the present is identified.
›
Refer to the 31 December 2024 Pillar 3 Report,
 
available under “Pillar 3 disclosures” at
ubs.com/investors,
for more information
about the regulatory capital calculation under the advanced
 
internal ratings-based approach
Management VaR for the period
The
 
UBS
 
Group
 
excluding
 
certain
 
legacy
 
Credit
 
Suisse
 
components
 
continued
 
to
 
maintain
 
generally
 
low
 
levels
 
of
management VaR.
 
Average management
 
VaR
 
(1-day,
 
95% confidence
 
level) decreased
 
to USD 12m
 
from USD
 
15m in
2024, mainly driven by the Investment Bank’s Global Markets
 
business.
Average management VaR (1-day, 98% confidence level) of the legacy Credit Suisse components decreased to USD 12m
from USD 29m in 2024, driven by continued strategic migration of positions to UBS and exposure reduction in Non-core
and Legacy.
Audited |
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Management value-at-risk (1-day, 95% confidence level, 5 years of historical data) of the business divisions and Group
Items excluding certain legacy Credit Suisse components, by general market risk type
1,2
For the year ended 31.12.24
USD m
Equity
Interest
rates
Credit
spreads
Foreign
exchange
Commodities
Min.
0
11
6
1
2
Max.
12
24
16
9
14
Average
4
16
9
4
4
31.12.24
1
20
10
3
4
Total management VaR
5
23
12
11
Average (per business division and risk type)
Global Wealth Management
1
2
2
1
0
1
2
0
0
Personal & Corporate Banking
0
0
0
0
0
0
0
0
0
Asset Management
0
0
0
0
0
0
0
0
0
Investment Bank
3
23
11
10
4
15
8
3
4
Non-core and Legacy
1
3
1
1
0
1
1
0
0
Group Items
4
12
5
6
1
4
3
1
0
Diversification effect
3,4
(6)
(8)
(1)
(5)
(4)
(1)
0
For the year ended 31.12.23
USD m
Equity
Interest
rates
Credit
spreads
Foreign
exchange
Commodities
Min.
3
9
3
1
1
Max.
19
21
19
10
10
Average
9
12
6
2
3
31.12.23
11
19
7
2
3
Total management VaR
7
25
15
19
Average (per business division and risk type)
Global Wealth Management
1
2
1
2
0
1
2
0
0
Personal & Corporate Banking
0
0
0
0
0
0
0
0
0
Asset Management
0
0
0
0
0
0
0
0
0
Investment Bank
5
23
14
18
9
12
5
2
3
Non-core and Legacy
1
2
1
1
0
1
1
0
0
Group Items
3
6
4
5
1
4
3
1
0
Diversification effect
3,4
(6)
(7)
(1)
(5)
(4)
(1)
0
1 The legacy Credit Suisse components not
 
included in the UBS Group management VaR
 
predominantly reflect the portfolio in Non-core and Legacy.
 
These positions continue to be managed on legacy
 
Credit Suisse
infrastructure based on legacy Credit Suisse management VaR methodology until full migration of these positions
 
to UBS infrastructure or the liquidation of the positions. This process is ongoing, and
 
the management
VaR of the legacy Credit Suisse components is
 
expected to continue decreasing over time.
 
2 Statistics at individual levels may not be
 
summed to deduce the corresponding aggregate figures. The minima and maxima
for each level
 
may occur on
 
different days, and,
 
likewise, the
 
VaR for
 
each business line
 
or risk type,
 
being driven by
 
the extreme loss
 
tail of the
 
corresponding distribution of
 
simulated profits and
 
losses for that
business line or risk type,
 
may well be driven by different
 
days in the historical time series,
 
rendering invalid the simple
 
summation of figures to arrive at
 
the aggregate total.
 
3 The difference between the
 
sum of
the standalone VaR
 
for the business
 
divisions and Group
 
Items and the
 
total VaR.
 
4 As the
 
minima and maxima for
 
different business divisions
 
and Group Items
 
occur on different
 
days, it is
 
not meaningful to
calculate a portfolio diversification effect.
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
115
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Management value-at-risk (1-day, 98% confidence level, 2 years of historical data) of certain legacy Credit
 
Suisse
components of the business divisions and Group Items, by general market risk type
1,2
For the year ended 31.12.24
USD m
Equity
Interest
rates
Credit
spreads
Foreign
exchange
Commodities
Min.
1
2
4
0
0
Max.
13
12
14
5
1
Average
5
6
9
1
0
31.12.24
1
2
4
1
0
Total management VaR
5
21
12
5
Average (per business division and risk type)
Global Wealth Management
1
3
2
1
1
0
1
0
0
Personal & Corporate Banking
0
0
0
0
0
0
0
0
0
Asset Management
0
0
0
0
0
0
0
0
0
Investment Bank
1
11
3
1
2
1
1
0
0
Non-core and Legacy
4
16
10
4
4
4
9
1
0
Group Items
0
0
0
0
0
0
0
0
0
Diversification effect
3,4
(3)
(1)
(2)
1
(2)
0
0
For the year ended 31.12.23
5
USD m
Equity
Interest
rates
Credit
spreads
Foreign
exchange
Commodities
Min.
9
10
13
0
0
Max.
17
40
34
5
3
Average
13
17
20
2
1
31.12.23
13
12
13
1
0
Total management VaR
20
46
29
21
Average (per business division and risk type)
Global Wealth Management
2
14
9
2
1
1
9
0
0
Personal & Corporate Banking
0
1
0
0
0
0
0
0
0
Asset Management
0
0
0
0
0
0
0
0
0
Investment Bank
8
15
11
11
10
1
3
1
1
Non-core and Legacy
15
33
20
16
8
13
17
2
0
Group Items
0
0
0
0
0
0
0
0
0
Diversification effect
3,4
(12)
(8)
(6)
1
(9)
(1)
0
1 The legacy Credit Suisse components not
 
included in the UBS Group management VaR
 
predominantly reflect the portfolio in Non-core and Legacy.
 
These positions continue to be managed on legacy
 
Credit Suisse
infrastructure based on legacy Credit Suisse management VaR methodology until full migration of these positions
 
to UBS infrastructure or the liquidation of the positions. This process is ongoing, and
 
the management
VaR of the legacy Credit Suisse components is
 
expected to continue decreasing over time.
 
2 Statistics at individual levels may not be
 
summed to deduce the corresponding aggregate figures. The minima and maxima
for each level
 
may occur on
 
different days, and,
 
likewise, the
 
VaR for
 
each business line
 
or risk type,
 
being driven by
 
the extreme loss
 
tail of the
 
corresponding distribution of
 
simulated profits and
 
losses for that
business line or risk type,
 
may well be driven by different
 
days in the historical time series,
 
rendering invalid the simple
 
summation of figures to arrive at
 
the aggregate total.
 
3 The difference between the
 
sum of
the standalone VaR
 
for the business
 
divisions and Group
 
Items and the
 
total VaR.
 
4 As the
 
minima and maxima for
 
different business divisions
 
and Group Items
 
occur on different
 
days, it is
 
not meaningful to
calculate a portfolio diversification
 
effect.
 
5 Divisional comparative-period
 
information has been restated
 
for changes in business
 
division perimeters. The
 
Investment Bank management VaR
 
consists of positions
that we plan to retain and which were previously reported in Non-core and Legacy.
VaR limitations
Audited |
Actual realized market risk losses may differ
 
from those implied by VaR
 
for a variety of reasons.
–
VaR is calibrated to a specified level of confidence and
 
may not indicate potential losses beyond this confidence
 
level.
–
The 1-day time horizon used
 
for VaR for internal management
 
purposes (a 10-day horizon for regulatory
 
VaR) may not
fully capture market risk of positions that cannot be closed
 
out or hedged within the specified period.
–
In
 
some
 
cases,
 
VaR
 
calculations
 
approximate
 
the
 
effect
 
of
 
changes
 
in
 
risk
 
factors
 
on
 
the
 
values
 
of
 
positions
 
and
portfolios.
 
–
Effects
 
of
 
extreme
 
market
 
movements
 
are
 
subject
 
to
 
estimation
 
errors,
 
which
 
may
 
result
 
from
 
non-linear
 
risk
sensitivities,
 
and
 
the
 
potential
 
for
 
actual
 
volatility
 
and
 
correlation
 
levels
 
to
 
differ
 
from
 
assumptions
 
implicit
 
in
 
VaR
calculations.
–
The choice of a
 
longer historical window means
 
sudden increases in market
 
volatility will tend not
 
to increase VaR as
quickly as
 
the use
 
of shorter
 
historical observation
 
periods, but
 
such increases
 
will affect
 
VaR for
 
a longer
 
period of
time. Similarly, after periods
 
of increased volatility, as markets
 
stabilize, VaR predictions will remain
 
more conservative
for a period of time, influenced by the length of the historical
 
observation period.
 
SVaR is subject
 
to the limitations
 
noted for VaR
 
above, but the
 
use of one-year
 
datasets avoids the
 
smoothing effect of
longer datasets used
 
for VaR. In addition,
 
the ability to
 
select a one-year
 
period outside of
 
recent market
 
history allows
for a
 
wider variety
 
of potential
 
loss events.
 
Therefore, although
 
the significant
 
period of
 
stress during
 
the 2007–2009
financial crisis is no
 
longer contained in the
 
look-back window used for management
 
and regulatory VaR, SVaR
 
continues
to use that data. This approach
 
aims to reduce the procyclicality of the regulatory capital
 
requirements for market risks.
We recognize
 
that no
 
single measure
 
can encompass
 
all
 
risks associated
 
with a
 
position or
 
portfolio. We
 
use a
 
set of
metrics
 
with
 
both
 
overlapping
 
and
 
complementary
 
characteristics
 
to
 
create
 
a
 
holistic
 
framework
 
that
 
aims
 
to
 
ensure
material completeness of risk
 
identification and measurement. As
 
a statistical aggregate
 
risk measure, VaR supplements
our comprehensive stress-testing framework.
We also have a framework to identify and quantify potential
 
risks not fully captured by our VaR model and refer
 
to such
risks as risks not in VaR. The framework underpins these potential
 
risks with additional regulatory capital.
 
ubs-20241231p140i1ubs-20241231p140i0
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
116
Backtesting of VaR
VaR backtesting
 
is a performance
 
measurement process
 
in which a
 
1-day VaR
 
prediction is
 
compared with
 
the realized
1-day
 
profit
 
or
 
loss.
 
We
 
compute
 
backtesting
 
VaR
 
using
 
a
 
99%
 
confidence
 
level
 
and
 
1-day
 
holding
 
period
 
for
 
the
regulatory
 
VaR
 
population.
 
Since 99%
 
VaR
 
at UBS
 
is defined
 
as a
 
risk measure
 
that operates
 
on the
 
lower tail
 
of the
profit
 
or
 
loss
 
distribution,
 
99%
 
backtesting
 
VaR
 
is
 
a
 
negative
 
number.
 
Backtesting
 
revenues
 
exclude
 
non-trading
revenues, such as valuation reserves,
 
fees and commissions,
 
and revenues from
 
intraday trading, so as to provide
 
a like-
for-like
 
comparison.
 
A
 
backtesting
 
exception
 
occurs
 
when
 
backtesting
 
revenues
 
are
 
lower
 
than
 
the
 
previous
 
day’s
backtesting VaR.
 
Statistically, given the 99% confidence level,
 
two or three backtesting exceptions a
 
year can be expected. More than
 
four
exceptions could
 
indicate that
 
the VaR
 
model is not
 
performing appropriately,
 
as could too
 
few exceptions
 
over a
 
long
period. However,
 
as noted
 
for VaR
 
limitations above,
 
a sudden
 
increase (or
 
decrease) in
 
market volatility
 
relative to
 
the
volatility observed
 
in the look
 
-back window
 
could lead
 
to a
 
higher (or lower)
 
number of
 
exceptions. Therefore,
 
Group-
level backtesting exceptions
 
are investigated, as are
 
exceptional positive backtesting
 
revenues, with the
 
results reported
to senior business management and regulators.
The UBS Group excluding certain legacy Credit Suisse components had no new negative backtesting exceptions in
 
2024.
The number
 
of negative
 
backtesting exceptions
 
within the
 
most recent
 
250-business-day window
 
remained at
 
zero at
the end of 2024.
For
 
legacy
 
Credit
 
Suisse
 
components,
 
the
 
number
 
of
 
negative
 
backtesting
 
exceptions
 
within
 
the
 
most
 
recent
 
250-
business-day window remained at three at the end of 2024. This reflected three new exceptions driven by Non-core and
Legacy that
 
counted toward
 
the total
 
number of
 
exceptions relevant
 
for the
 
capital multiplier
 
and the
 
roll-off of
 
three
2023 exceptions from the 250-business-day window.
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
117
As
 
the
 
number
 
of
 
negative
 
backtesting
 
exceptions
 
for
 
both
 
the
 
UBS
 
Group
 
excluding
 
certain
 
legacy
 
Credit
 
Suisse
components and the aforementioned
 
legacy Credit Suisse components remained
 
below five, the Swiss Financial
 
Market
Supervisory
 
Authority
 
(FINMA)
 
VaR
 
multiplier
 
derived
 
from
 
negative
 
backtesting
 
exceptions
 
for
 
market
 
risk
 
RWA
 
was
unchanged compared with 2023, at 3.0.
 
VaR model confirmation
In addition
 
to the
 
for-regulatory-purposes
 
backtesting described
 
above, we
 
conduct extended
 
backtesting for
 
internal
model confirmation purposes. This includes
 
observing model performance across the entire profit or loss
 
distribution (not
just the tails) and at multiple levels within the business
 
division hierarchies.
›
Refer to “Risk measurement” in this section for
 
more information about our approach to model confirmation
 
procedures
VaR model developments in 2024
Audited |
In January 2024 we made two material VaR model changes to the VaR model of the UBS Group excluding certain
legacy Credit
 
Suisse components:
 
(i) the integration
 
of time
 
decay into
 
regulatory VaR
 
and stressed
 
VaR
 
for derivatives
with optionality;
 
and (ii) an improvement
 
in the profit or
 
loss representation
 
of derivatives with multiple
 
underlyings. As
reported
 
in the
 
UBS Group
 
first quarter
 
2024 report,
 
the two
 
changes resulted
 
in a
 
significant increase
 
in market
 
risk
RWA.
 
In the
 
second quarter
 
of 2024,
 
certain components
 
of the
 
legacy Credit
 
Suisse VaR
 
model were
 
upgraded: (i) the
 
full-
revaluation
 
framework
 
was
 
extended
 
to
 
include
 
interest
 
rate
 
and
 
interest
 
rate
 
volatility
 
risk
 
factors;
 
(ii) empirical
correlations in the aggregation of specific risk
 
for the price risk of fund-linked products were added; and
 
(iii) a two-factor
regression model for traded loans was introduced. These changes did not have a material impact on market risk RWA.
Market-risk-related regulatory capital developments
 
The Basel
 
Committee on
 
Banking Supervision
 
(the BCBS)
 
final Basel III
 
standards on
 
the minimum
 
capital requirements
for market risk, known
 
as the Fundamental Review
 
of the Trading Book (the FRTB), entered into
 
force on 1 January 2025.
FINMA issued implementing
 
ordinances to
 
support these
 
changes. These ordinances
 
are effective
 
from 1 January
 
2025
and
 
provide
 
technical
 
details
 
for
 
the
 
revised
 
Capital
 
Adequacy
 
Ordinance,
 
ensuring
 
alignment
 
with
 
international
standards. Key elements of the revised market risk framework include:
 
(i) changes to the internal model-based approach,
including
 
changes
 
to
 
the
 
model
 
approval
 
and
 
performance
 
measurement
 
process;
 
(ii) changes
 
to
 
the
 
standardized
approach with the aim
 
of providing a credible
 
fallback method for an
 
internal model-based approach; and
 
(iii) a revised
boundary between the trading book and the banking book.
As part of
 
going live with
 
the FRTB,
 
UBS has adopted
 
the standardized approach
 
for all FINMA-regulated
 
legal entities,
including the UBS Group.
 
›
Refer to “Risk-weighted assets” in the “Capital,
 
liquidity and funding, and balance sheet” section
 
of this report for more
information about the development of RWA,
 
including the regulatory add-on
›
Refer to “Risk measurement” in this section for
 
more information about our approach to model confirmation
 
procedures
›
Refer to the “Regulatory and legal developments”
 
and “Risk factors” sections of this report for
 
more information
Interest rate risk in the banking book
Sources of interest rate risk in the banking book
 
Audited |
IRRBB arises
 
from balance
 
sheet positions
 
such as
 
Amounts due
 
from banks,
 
Loans and
 
advances to
 
customers,
Financial assets at fair
 
value not held for
 
trading, Financial assets
 
measured at amortized
 
cost, Customer deposits,
 
Debt
issued measured
 
at amortized
 
cost, and
 
Derivative financial
 
instruments, including
 
those subject
 
to hedge
 
accounting.
Fair value changes to these positions may affect other comprehensive income (OCI) or the income statement, depending
on their accounting treatment.
Our largest
 
banking book
 
interest rate
 
exposures arise
 
from customer
 
deposits and
 
lending products
 
in Global
 
Wealth
Management and Personal & Corporate Banking, as
 
well as from debt issuance, liquidity buffers and
 
interest rate hedges
in Group Treasury. The inherent interest rate risks stemming from Global Wealth Management and Personal & Corporate
Banking are generally
 
transferred to Group
 
Treasury, to manage
 
them centrally together
 
with our modeled
 
interest rate
duration assigned to equity, goodwill and real estate. This makes
 
the netting of interest rate risks across different sources
possible, while leaving
 
the originating businesses
 
with commercial margin and
 
volume management. The residual
 
interest
rate risk is mainly hedged with interest rate swaps, to the vast majority of which we apply hedge accounting. Short-term
exposures and HQLA classified as Financial assets
 
at fair value not held for trading
 
are hedged with derivatives accounted
for on a mark-to-market basis. Long-term fixed-rate debt
 
issued and HQLA hedged with external interest rate swaps are
designated in fair value hedge accounting relationships.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
118
Risk management and governance
IRRBB is measured using several metrics, the most
 
relevant of which are the following.
–
EVE sensitivity
 
to yield
 
curve moves
 
is calculated
 
as changes
 
in the
 
present value
 
of future
 
cash flows
 
irrespective of
accounting treatment.
 
These yield curve
 
moves are also
 
the key
 
risk factors for
 
statistical and stress-based
 
measures,
e.g. VaR and stress scenarios, as well as the
 
regulatory interest rate scenarios. These are
 
measured and reported daily.
The regulatory IRRBB
 
EVE exposure is
 
the most adverse
 
regulatory interest rate scenario
 
that is netted
 
across currencies.
It excludes the sensitivity from additional tier 1 (AT1) capital instruments (as per
 
specific FINMA requirements) and the
modeled interest rate duration assigned to equity, goodwill
 
and real estate. UBS also applies granular internal interest
rate shock scenarios to its banking book positions to monitor its
 
specific risk profile.
 
–
Net
 
interest
 
income
 
(NII) sensitivities
 
to yield
 
curve
 
moves
 
are
 
calculated
 
as changes
 
of baseline
 
NII over
 
a
 
set time
horizon, which we
 
internally compute
 
by assuming interest
 
rates in all
 
currencies develop
 
according to their
 
market-
implied forward rates and assuming constant business volumes
 
and product mix and no specific management actions.
The sensitivities are measured and reported monthly.
 
We actively
 
manage IRRBB,
 
with the
 
aim of
 
reducing the
 
volatility of
 
NII subject
 
to limits
 
and triggers
 
for EVE
 
and NII
exposure at consolidated and significant legal entity levels.
The Group Asset
 
and Liability Committee
 
(the Group
 
ALCO) and, where
 
relevant, ALCOs at
 
a legal entity
 
level perform
independent
 
oversight
 
over
 
the
 
management
 
of
 
IRRBB,
 
which
 
is
 
also
 
subject
 
to
 
Group
 
Internal
 
Audit
 
and
 
model
governance.
›
Refer to “Group Internal Audit” in the “Corporate
 
governance” section of this report and to
 
“Risk measurement” in this section for
more information
Key modeling assumptions
The cash
 
flows from
 
customer deposits
 
and lending
 
products used
 
in calculation
 
of EVE
 
sensitivity exclude
 
commercial
margins and
 
other spread
 
components, are
 
aggregated
 
by daily
 
time buckets
 
and are
 
discounted using
 
risk-free
 
rates.
Our external issuances are discounted using UBS’s senior debt curve,
 
and capital instruments are modeled to the first call
date. NII
 
sensitivity,
 
which includes
 
commercial margins,
 
is calculated
 
over a
 
one-year time
 
horizon, assuming
 
constant
balance sheet structure and volumes, and considers
 
embedded interest rate options.
The average repricing
 
maturity of non-maturing
 
deposits and
 
loans is
 
determined via
 
target replication
 
portfolios designed
to protect
 
product margins. Optimal
 
replicating portfolios are
 
determined at granular
 
currency- and product-specific
 
levels
by simulating and applying a real-world market rate
 
model to historically calibrated client rate and volume models.
We use
 
an econometric
 
prepayment model
 
to forecast
 
prepayment rates
 
on US
 
mortgage loans
 
in UBS
 
Bank USA
 
and
agency mortgage-backed securities (MBSs) held in various liquidity portfolios of UBS Americas Holding LLC
 
consolidated.
These
 
prepayment
 
rates
 
are
 
used
 
to
 
forecast
 
both
 
mortgage
 
loan
 
and
 
MBS
 
balances
 
under
 
various
 
macroeconomic
scenarios.
 
The
 
prepayment
 
model
 
is
 
used
 
for
 
a
 
variety
 
of
 
purposes,
 
including
 
risk
 
management
 
and
 
regulatory
 
stress
testing. Swiss mortgages and fixed-term deposits generally
 
do not carry similar optionality, due to prepayment and
 
early
redemption penalties.
Effect of interest rate changes on shareholders’ equity and
 
CET1 capital
The “Accounting and
 
capital effect
 
of changes in
 
interest rates” table
 
below shows the
 
effects on shareholders’
 
equity
and CET1
 
capital of gains
 
and losses from
 
changes in interest
 
rates in
 
the main
 
banking book positions.
 
We use derivatives
to hedge
 
interest
 
rate risks
 
in the
 
banking book
 
and these
 
reflect changes
 
in interest
 
rates as
 
an immediate
 
fair value
gain or loss, recognized either in the income statement or through OCI.
 
Where hedged items are accrual accounted, we
aim to minimize accounting asymmetries by applying hedge
 
accounting to reflect the economic hedge relationship.
In a rising
 
rate scenario, we
 
would have an
 
initial decrease in
 
shareholders’ equity as
 
a result of
 
fair value losses
 
on our
derivatives recognized
 
in OCI,
 
while we would
 
expect higher
 
NII over time
 
as rates increase.
 
The effect
 
on CET1 capital
would be much lower, as gains and losses on interest
 
rate swaps designated as cash flow hedges are
 
not recognized for
regulatory capital purposes.
Accounting and capital effect of changes in interest rates
1
Recognition
Shareholders’ equity
CET1 capital
Timing
Income statement / OCI
Gains
Losses
Gains
Losses
Loans and deposits at amortized cost
2,3
Gradual
Income statement
l
l
l
l
Other financial assets and liabilities measured at amortized
 
cost
2
Gradual
Income statement
l
l
l
l
Debt issued measured at amortized cost
2,3
Gradual
Income statement
l
l
l
l
Receivables and payables from securities financing transactions
2
Gradual
Income statement
l
l
l
l
Financial assets at fair value not held for trading
Immediate
Income statement
l
l
l
l
Financial assets at fair value through other comprehensive income
Immediate
OCI
l
l
l
Derivatives designated as cash flow hedges
Immediate
OCI
4
l
l
Derivatives designated as fair value hedges
5
Immediate
Income statement
l
l
l
l
Derivatives transacted as economic hedges
Immediate
Income statement
l
l
l
l
1 Refer to the “Reconciliation
 
of equity under IFRS
 
Accounting Standards to Swiss SRB
 
common equity tier 1
 
capital” table in the
 
“Capital, liquidity and funding,
 
and balance sheet” section of
 
this report for more
information about the differences between shareholders’ equity
 
and CET1 capital.
 
2 For fixed-rate financial instruments,
 
changes in interest rates affect the income
 
statement when these instruments roll over and
reprice.
 
3 For hedge-accounted
 
items, a fair
 
value adjustment
 
is applied in
 
line with the
 
treatment of the
 
hedging derivatives.
 
4 Excluding hedge
 
ineffectiveness that is
 
recognized in the
 
income statement in
accordance with IFRS Accounting Standards.
 
5 The fair value of
 
the derivatives is offset by
 
the fair value adjustment of
 
the hedged items. Under
 
the fair value hedge program
 
applied to cross-currency swaps and
foreign currency debt, the foreign currency basis spread is excluded from the hedge designation and accounted for through OCI, which is included in CET1.
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
119
Economic value of equity sensitivity
Audited |
The EVE sensitivity
 
in the UBS
 
Group banking
 
book to a
 
+1-basis-point parallel shift
 
in yield curves
 
was negative
USD
37.3
m as of 31
 
December 2024, compared
 
with negative USD
30.1
m as of 31
 
December 2023. This
 
excluded the
sensitivity of
 
USD
5.5
m from
 
AT1
 
capital instruments
 
(as per
 
specific FINMA
 
requirements)
 
in contrast
 
to general
 
BCBS
guidance.
 
The
 
exposure
 
in
 
the
 
banking
 
book
 
of
 
the
 
UBS
 
Group
 
increased
 
in
 
2024,
 
driven
 
by
 
net
 
interest
 
income
stabilization initiatives.
The majority
 
of our
 
IRRBB is
 
a reflection
 
of the
 
net asset
 
duration that
 
we ran
 
to offset
 
our modeled
 
sensitivity of
 
net
USD
29.4
m (31 December 2023:
 
USD
24.3
m) assigned to
 
our equity, goodwill and real
 
estate, with the
 
aim of generating
a
 
stable
 
NII contribution.
 
Of
 
this,
 
USD
17.1
m
 
and
 
USD
10.6
m
 
were
 
attributable
 
to the
 
US
 
dollar
 
and
 
the
 
Swiss
 
franc
portfolios, respectively,
 
(31 December 2023: USD
17.6
m and USD
5.6
m, respectively).
In addition to the aforementioned sensitivity, we calculate
 
the six interest rate shock scenarios prescribed by FINMA. The
“Parallel up” scenario, assuming all positions were measured at fair value, was the most severe and would have resulted
in a
 
change in
 
EVE of
 
negative USD
6.7
bn, or
7.6
%, of
 
our tier 1
 
capital (31 December
 
2023: negative
 
USD
5.7
bn, or
6.2
%), which is well below the
15
% threshold as per the BCBS supervisory outlier test
 
for high levels of IRRBB.
The
 
immediate
 
effect
 
on our
 
tier 1
 
capital
 
in
 
the
 
“Parallel
 
up”
 
scenario
 
as
 
of 31
 
December
 
2024 would
 
have
 
been
 
a
decrease of
 
approximately USD
0.9
bn, or
1.0
% (31 December
 
2023: USD
0.9
bn, or
0.9
%), reflecting
 
the fact
 
that the
vast majority of our banking book
 
is accrual accounted or subject to hedge
 
accounting. The “Parallel up” scenario would
subsequently have a positive effect on NII, assuming a constant
 
balance sheet.
As
 
the
 
overall
 
interest
 
rate
 
risk
 
sensitivity
 
shows
 
a
 
greater
 
impact
 
from
 
slower
 
asset
 
repricing
 
compared
 
with
 
faster
liabilities repricing, the “Parallel down”
 
scenario was the most beneficial and
 
would have resulted in a change
 
in EVE of
positive USD
7.2
bn (31 December 2023: positive USD
5.9
bn) and a small positive immediate effect on our tier 1
 
capital.
 
Net interest income sensitivity
The main NII
 
sensitivity in the
 
banking book resides
 
in Global Wealth
 
Management and Personal
 
& Corporate
 
Banking.
We
 
assign a
 
target
 
duration
 
to our
 
investment
 
of equity
 
portfolio,
 
and
 
Group
 
Treasury
 
actively
 
manages
 
the
 
residual
IRRBB. This
 
sensitivity is
 
assessed using
 
a number
 
of scenarios
 
assuming parallel
 
and non-parallel
 
shifts in
 
yield curves,
with various
 
degrees
 
of
 
severity,
 
and we
 
have
 
set
 
and
 
monitor
 
thresholds
 
for
 
the
 
NII sensitivity
 
to
 
immediate
 
parallel
shocks of –200 and +200 basis points under the assumption of no change to balance sheet size and product
 
mix, stable
foreign exchange rates, and no specific management
 
action.
›
Refer to the “Group performance”
 
section of this report for more information about sensitivity
 
to interest rate movements
Audited |
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate risk – banking book
31.12.24
USD m
Effect on EVE
1
 
– FINMA
Effect on EVE
1
 
– BCBS
Scenarios
CHF
EUR
GBP
USD
Other
Total
Additional tier 1 (AT1) capital
instruments
Total
+1 bp
(10.5)
(1.4)
(0.3)
(24.6)
(0.5)
(37.3)
5.5
(31.7)
Parallel up
2
(1,509.7)
(263.7)
(65.5)
(4,758.9)
(95.6)
(6,693.4)
1,000.4
(5,693.0)
Parallel down
2
1,643.9
295.9
76.2
5,068.6
101.1
7,185.8
(1,173.0)
6,012.8
Steepener
3
(749.1)
(10.4)
(12.7)
(1,255.4)
(9.7)
(2,037.3)
168.0
(1,869.3)
Flattener
4
464.0
(33.3)
(0.2)
161.0
(10.5)
581.0
61.0
642.1
Short-term up
5
(149.4)
(112.2)
(22.8)
(1,820.7)
(46.1)
(2,151.1)
484.4
(1,666.7)
Short-term down
6
132.6
112.2
23.3
1,931.8
46.6
2,246.5
(504.4)
1,742.2
31.12.23
USD m
Effect on EVE
1
 
– FINMA
Effect on EVE
1
 
– BCBS
Scenarios
CHF
EUR
GBP
USD
Other
Total
Additional tier 1 (AT1) capital
instruments
Total
+1 bp
(3.7)
(0.6)
0.1
(26.0)
0.2
(30.1)
4.9
(25.2)
Parallel up
2
(548.9)
(119.3)
16.2
(5,027.2)
(0.9)
(5,680.2)
904.6
(4,775.5)
Parallel down
2
561.8
124.3
(29.2)
5,216.0
2.8
5,875.7
(1,044.5)
4,831.3
Steepener
3
(305.3)
(13.1)
(11.9)
(1,037.0)
(33.8)
(1,401.1)
93.4
(1,307.6)
Flattener
4
189.6
(5.0)
14.0
(124.2)
30.8
105.2
109.6
214.8
Short-term up
5
(27.3)
(39.4)
19.4
(2,171.3)
23.9
(2,194.7)
486.3
(1,708.4)
Short-term down
6
26.5
41.8
(21.8)
2,312.1
(26.8)
2,331.9
(507.8)
1,824.1
1 Economic value
 
of equity.
 
2 Rates across
 
all tenors move
 
by ±150 bps
 
for Swiss franc,
 
±200 bps for
 
euro and US
 
dollar, and
 
±250 bps for
 
pound sterling.
 
3 Short-term rates
 
decrease and long-term
 
rates
increase.
 
4 Short-term rates increase and long-term rates decrease.
 
5 Short-term rates increase more than long-term rates.
 
6 Short-term rates decrease more than long-term rates.
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
120
Other market risk exposures
Own credit
We
 
are
 
exposed to
 
changes
 
in our
 
own credit
 
reflected
 
in the
 
valuation of
 
financial
 
liabilities designated
 
at fair
 
value
when our
 
own credit
 
risk would
 
be considered
 
by market
 
participants, except
 
for fully
 
collateralized liabilities
 
or other
obligations for which it is established market practice
 
to not include an own-credit component.
›
Refer to “Note 21 Fair value measurement” in the “Consolidated
 
financial statements” section of this report for more information
about own credit
Structural foreign exchange risk
Upon consolidation,
 
assets and
 
liabilities held
 
in foreign
 
operations are
 
translated into
 
US dollars
 
at the
 
closing foreign
exchange rate on the
 
balance sheet date. Value changes (in
 
US dollars) of non-US-dollar assets
 
or liabilities due to
 
foreign
exchange movements are recognized in OCI
 
and therefore affect
 
shareholders’ equity and CET1 capital.
Group
 
Treasury
 
uses
 
strategies
 
to
 
manage
 
this
 
foreign
 
currency
 
exposure,
 
including
 
matched
 
funding
 
of
 
assets
 
and
liabilities and net investment hedging.
›
Refer to the “Capital, liquidity and funding,
 
and balance sheet” section of this report for more information
 
about our exposure to
and management of structural foreign exchange risk
›
Refer to “Note 11 Derivative instruments”
 
in the “Consolidated financial statements”
 
section of this report for more information
about our hedges of net investments in foreign operations
Equity investments and investment fund units
Audited |
We make direct investments in a variety of entities and buy equity holdings in both listed and unlisted companies,
with the aim of supporting
 
our business activities and delivering
 
strategic value to the
 
firm. This includes investments
 
in
exchange
 
and
 
clearing
 
house
 
memberships,
 
as
 
well
 
as
 
minority
 
investments
 
in
 
early-stage
 
fintechs
 
and
 
technology
companies via
 
UBS Next.
 
We
 
may also
 
make investments
 
in funds
 
that we
 
manage
 
in order
 
to fund
 
or seed
 
them
 
at
inception or to demonstrate that our interests align with those of investors. We also buy, and are sometimes required
 
by
agreement or regulation to buy,
 
securities and units from investment vehicles
 
that we have sold to clients.
The
 
fair
 
value
 
of
 
equity
 
investments
 
tends
 
to
 
be
 
influenced
 
by
 
factors
 
specific
 
to
 
the
 
individual
 
investments.
 
Equity
investments are generally intended
 
to be held for the
 
medium or long term
 
and may be subject
 
to lock-up agreements.
For these reasons,
 
we generally do
 
not control these
 
exposures by using
 
market risk measures
 
applied to trading
 
activities.
However, such equity investments are subject to a different
 
range of controls, including preapproval of new investments
for
 
commercial
 
purposes
 
by
 
business
 
management
 
and
 
Risk
 
Control,
 
portfolio
 
and
 
concentration
 
limits,
 
and
 
regular
monitoring and reporting to
 
senior management. They are
 
also included in our Group
 
-wide statistical and stress-testing
metrics, which flow into our risk appetite framework.
As of
 
31 December 2024, we
 
held equity investments
 
and investment fund
 
units totaling USD
6.8
bn (31 December 2023:
USD
7.2
bn), of which USD
4.5
bn (31 December 2023: USD
4.8
bn) was classified as Financial assets at fair value not held
for trading and USD
2.3
bn (31 December 2023: USD
2.4
bn) as Investments in associates
.
›
Refer to “Note 21 Fair value measurement” and “Note 28
 
Interests in subsidiaries and other entities”
 
in the “Consolidated
financial statements” section of this report for more information
›
Refer to “Note 1 Summary of material accounting
 
policies” in the “Consolidated financial statements”
 
section of this report for
more information about the classification of financial instruments
Debt investments
Audited |
Debt investments classified
 
as Financial assets
 
measured at
 
fair value through
 
other comprehensive
 
income as of
31 December
 
2024
 
can
 
broadly
 
be
 
categorized
 
as
 
money
 
market
 
instruments
 
and
 
debt
 
securities
 
primarily
 
held
 
for
statutory,
 
regulatory or liquidity reasons.
The risk control framework applied to debt instruments classified
 
as Financial assets measured at fair value through other
comprehensive
 
income depends
 
on the nature
 
of the instruments
 
and the purpose
 
for which
 
we hold them.
 
Our exposures
may be included in
 
market risk limits
 
or be subject to
 
specific monitoring
 
and interest rate
 
sensitivity
 
analysis. They
 
are also
included in
 
our Group-wide
 
statistical and
 
stress-testing
 
metrics, which
 
flow into our
 
risk appetite
 
framework.
 
Debt instruments
 
classified
 
as Financial
 
assets
 
measured
 
at fair
 
value through
 
other
 
comprehensive
 
income
 
had a
 
fair
value of USD
2.2
bn as of 31 December 2024 (31 December 2023: USD
2.2
bn).
›
Refer to “Note 21 Fair value measurement” in the “Consolidated
 
financial statements”
 
section of this report for more information
›
Refer to “Economic value of equity sensitivity”
 
in this section for more information
›
Refer to “Note 1 Summary of material accounting
 
policies” in the “Consolidated financial statements”
 
section of this report for
more information about the classification of financial instruments
Pension risk
We provide a number of pension plans for past and current
 
employees, some classified as defined benefit pension plans
under IFRS Accounting Standards,
 
which can have a material effect
 
on our equity under IFRS Accounting Standards
 
and
CET1 capital.
Pension risk is the risk that defined benefit plans’ funded status
 
might decrease, negatively affecting our capital. This can
result from
 
falls in
 
the value
 
of a
 
plan’s assets
 
or in
 
the investment
 
returns, increases
 
in defined
 
benefit obligations,
 
or
combinations of the above.
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
121
Important risk factors affecting the fair
 
value of pension plans’ assets include equity
 
market returns, interest rates, bond
yields,
 
and
 
real
 
estate
 
prices.
 
Important
 
risk
 
factors
 
affecting
 
the
 
present
 
value
 
of
 
expected
 
future
 
benefit
 
payments
include high-grade bond yields, interest rates, inflation rates,
 
and life expectancy.
Pension
 
risk
 
is
 
included
 
in
 
our
 
Group-wide
 
statistical
 
and
 
stress-testing
 
metrics,
 
which
 
flow
 
into
 
our
 
risk
 
appetite
framework. The potential effects are thus captured in the
 
post-stress capital ratio calculations.
›
Refer to “Note 1 Summary of material accounting
 
policies” and “Note 26 Post-employment benefit plans”
 
in the “Consolidated
financial statements”
 
section of this report for more information about defined
 
benefit plans
UBS own share exposure
Group Treasury
 
holds UBS Group AG shares
 
to hedge future share
 
delivery obligations related to employee
 
share-based
compensation awards and also holds shares purchased under the share repurchase program.
 
In addition, the Investment
Bank holds
 
a limited
 
number of
 
UBS Group
 
AG shares,
 
primarily in
 
its capacity
 
as a
 
market-maker with
 
regard
 
to UBS
Group AG shares and related
 
derivatives, and to hedge certain issued structured debt
 
instruments.
›
Refer to “UBS shares” in the “Capital, liquidity and funding,
 
and balance sheet” section of this report for
 
more information
 
Country risk
Country risk framework
Country risk includes all
 
country-specific events occurring in a
 
sovereign jurisdiction that may lead
 
to impairment of UBS’s
exposures. It
 
may take
 
the form
 
of: (i) sovereign
 
risk, which
 
is the
 
ability and
 
willingness of
 
a government
 
to honor
 
its
financial
 
commitments;
 
(ii) transfer
 
risk,
 
which
 
arises
 
if
 
a
 
counterparty
 
or
 
issuer
 
cannot
 
acquire
 
foreign
 
currencies
following a
 
moratorium by
 
a central
 
bank on
 
foreign exchange
 
transfers; or
 
(iii) “other” country
 
risk. “Other”
 
country
risk may
 
manifest
 
itself through
 
increased
 
and multiple
 
counterparty
 
and issuer
 
default
 
risk (systemic
 
risk)
 
or through
events that
 
may affect
 
a country’s
 
standing, such
 
as adverse
 
shocks affecting
 
political stability
 
or institutional
 
and / or
legal frameworks.
We assign
 
a country
 
rating to
 
each country,
 
which reflects
 
our view
 
of its
 
creditworthiness
 
and of
 
the probability
 
of a
country risk
 
event occurring.
 
Country ratings
 
are mapped
 
to statistically
 
derived
 
default probabilities,
 
described
 
under
“Probability of default” in this section.
 
We use this internal analysis
 
to set the credit ratings of
 
governments and central
banks, estimate
 
the probability
 
of a transfer
 
event occurring,
 
and establish
 
rules on how
 
aspects of country
 
risk should
be incorporated in counterparty ratings of non-sovereign
 
entities domiciled in the respective country.
Country ratings are
 
also used to
 
define our risk
 
appetite regarding foreign
 
countries. A country
 
risk limit (i.e.
 
maximum
aggregate exposure) applies to exposures to counterparties
 
or issuers of securities and financial investments in the
 
given
foreign country. We may limit
 
the extension of credit, transactions
 
in traded products or positions
 
in securities based on
a country risk ceiling even if our exposure to a counterparty
 
is otherwise acceptable.
Our country risk
 
framework differs across the
 
UBS Group, and alignment of
 
approaches is part of
 
the ongoing integration
of Credit Suisse.
For internal measurement and
 
control of country risk,
 
we also consider the
 
financial effect of market
 
disruptions arising
prior to, during and
 
after a country
 
crisis. These may
 
take the form
 
of a severe deterioration
 
in a country’s
 
debt, equity
or other asset
 
markets, or a
 
sharp depreciation of
 
its currency. We
 
use stress testing
 
to assess potential
 
financial effects
of severe country or sovereign crises.
 
This involves the developing of plausible stress
 
scenarios for combined stress testing
and
 
the
 
identification
 
of
 
countries
 
that
 
may
 
potentially
 
be
 
subject
 
to
 
a
 
crisis
 
event,
 
determining
 
potential
 
losses
 
and
making assumptions
 
about
 
recovery
 
rates
 
depending
 
on
 
the
 
types
 
of credit
 
transactions
 
involved
 
and
 
their
 
economic
importance to the affected countries.
Country risk exposure
Country risk exposure measure
The presentation of country risk follows
 
our internal risk view, where
 
the basis for measuring exposures depends
 
on the
product category in which we classify the exposures.
 
In addition to the classification of exposures into
 
banking products
and traded
 
products, covered
 
in “Credit
 
risk profile
 
of the
 
Group” in
 
this section,
 
for the
 
UBS Group excluding
 
certain
legacy Credit Suisse components the trading
 
inventory is also shown. Issuer
 
risk on securities (such as
 
bonds and equities)
and risk relating to underlying reference assets for derivative positions are classified
 
under trading inventory. The trading
inventory is
 
managed on
 
a net
 
basis, and
 
the value
 
of long
 
positions is
 
netted against
 
that of
 
short positions
 
with the
same underlying issuer.
 
Net exposures are floored at zero per issuer.
 
As a result, potentially offsetting benefits of certain
hedges and short positions across issuers are
 
not recognized.
We do not recognize any expected recovery values when reporting country exposures as
 
exposure before hedges, except
for
 
risk-reducing
 
effects
 
of
 
master
 
netting
 
agreements
 
and
 
collateral
 
held
 
in
 
either
 
cash
 
or
 
portfolios
 
of
 
diversified
marketable
 
securities,
 
which
 
we
 
deduct
 
from
 
the
 
potential
 
exposure
 
values.
 
Within
 
banking
 
products
 
and
 
traded
products, risk-reducing effects of credit
 
protection are generally taken
 
into account on
 
a notional basis
 
when determining
the net of hedge exposures.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
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balance sheet | Risk management and control
 
122
Country risk exposure allocation
In general, exposures
 
are shown against
 
the country of
 
domicile of the
 
contractual counterparty or
 
the issuer of
 
the
security.
 
For
 
some
 
counterparties
 
whose
 
economic
 
substance
 
in
 
terms
 
of
 
assets
 
or
 
source
 
of
 
revenues
 
is
 
primarily
located in a different country, the exposure is allocated to
 
the risk domicile of those assets or revenues.
In the case of derivatives,
 
we show the counterparty’s
 
risk potential exposure
 
against the counterparty’s
 
country of risk
(presented
 
within
 
traded
 
products).
 
In
 
addition,
 
risk
 
associated
 
with
 
an
 
instantaneous
 
fall
 
in
 
value
 
of
 
underlying
reference assets
 
to zero (assuming
 
no recovery) is
 
shown against the
 
country of risk
 
of the issuer
 
of the reference
 
asset
(presented within the trading inventory for the UBS Group excluding certain legacy Credit Suisse components
 
only). This
approach enables us to capture both counterparty and, where applicable, issuer elements
 
of risk arising from derivatives
and applies comprehensively
 
for all derivatives,
 
including single-name
 
credit default swaps
 
and other credit
 
derivatives.
Top 20 country risk exposures
The table
 
below shows
 
our 20
 
largest country
 
exposures by product
 
type, excluding
 
our home
 
country, as of 31 December
2024 compared with 31 December 2023.
Compared
 
with
 
2023,
 
our
 
net
 
exposure
 
decreased,
 
due
 
to
 
an
 
overall
 
reduction
 
in
 
country
 
risk
 
exposures
 
and
 
the
alignment of our country risk
 
framework.
 
The list of our top 20 countries
 
remained broadly unchanged, with
 
three new
entries (Norway,
 
Belgium and
 
Finland)
 
at the
 
bottom of
 
the list and
 
the exposure
 
to each of
 
those three
 
not exceeding
USD 2.0bn. Based
 
on the
 
sovereign rating
 
categories, as
 
of 31 December
 
2024, 85%
 
of our
 
emerging market
 
country
exposure was rated investment grade, compared with 83%
 
as of 31 December 2023.
Israel and Middle East
As of
 
31 December 2024, our
 
direct country risk
 
exposure to Israel
 
was USD 284m, mainly
 
from lending and
 
collateralized
over-the-counter
 
derivatives
 
exposure
 
within
 
the
 
Investment
 
Bank.
 
Our
 
direct
 
exposure
 
to
 
Gulf
 
Cooperation
 
Council
countries was USD 4.0bn. As of 31 December 2024, our direct exposure to Egypt, Jordan
 
and Lebanon was limited, and
we had no direct exposure to Iran,
 
Iraq or Syria.
Russia
Our direct country risk exposure to Russia contributed USD 365m to our total emerging market exposure of USD 27.3bn
as of 31 December
 
2024. This included
 
cash account balances,
 
loans and trade
 
finance exposures in Non-core
 
and Legacy
and
 
Personal
 
&
 
Corporate
 
Banking.
 
We
 
had
 
no
 
material
 
direct
 
country
 
risk
 
exposure
 
to
 
Belarus
 
or
 
to
 
Ukraine
 
as
 
of
31 December 2024. Potential second-order
 
impacts, such as European energy security,
 
continue to be monitored.
Top
 
20 country risk net exposures, by product type
USD m
Total
Banking products
(loans, guarantees, loan
 
commitments)
Traded products
(counterparty risk from derivatives
and securities financing)
after master netting agreements
and net of collateral
Trading inventory
(securities and potential
benefits / remaining
exposure from derivatives)
Net of hedges
1
Net of hedges
1
Net of hedges
Net long per issuer
2
31.12.24
31.12.23
31.12.24
31.12.23
31.12.24
31.12.23
31.12.24
31.12.23
United States
228,353
303,410
156,763
234,226
28,847
35,853
42,744
33,331
United Kingdom
35,737
58,202
15,745
33,934
18,112
22,602
1,880
1,666
Germany
30,205
30,634
15,247
14,151
7,162
10,364
7,796
6,118
Japan
25,819
20,354
20,131
14,338
4,757
5,446
931
571
Australia
16,920
14,972
6,357
8,168
8,404
4,765
2,158
2,038
France
14,729
14,740
2,007
4,844
4,936
5,444
7,786
4,453
Singapore
12,260
12,405
3,568
4,025
3,565
3,555
5,127
4,827
Canada
8,516
11,093
835
2,369
2,839
3,293
4,843
5,431
Luxembourg
7,649
26,161
6,360
25,034
1,191
959
99
169
Netherlands
5,446
7,420
1,830
3,490
2,572
2,989
1,044
941
China
4,911
9,781
1,662
5,720
1,278
918
1,971
3,144
South Korea
4,368
6,139
602
1,147
666
1,764
3,100
3,228
Hong Kong SAR
3,792
4,602
1,490
2,636
1,190
959
1,111
1,007
Italy
3,355
3,540
1,542
2,501
909
801
904
238
Sweden
3,334
4,269
413
1,152
1,479
1,628
1,442
1,490
Spain
2,099
3,431
937
2,456
661
649
502
325
Norway
1,809
2,201
70
114
440
561
1,299
1,526
Belgium
1,742
1,174
614
589
421
331
706
253
Finland
1,713
1,309
76
108
303
400
1,335
800
Ireland
1,673
3,525
1,146
3,068
475
388
53
69
Total top 20
3
414,430
539,362
237,395
364,070
90,207
103,669
86,831
71,625
1 Before deduction of
 
IFRS 9 ECL allowances
 
and provisions.
 
2 Trading
 
inventory exposures are for
 
UBS Group excluding legacy
 
Credit Suisse components
 
only.
 
3 Excluding Switzerland, supranationals,
 
global
funds and legacy Credit Suisse shipping finance exposures.
 
 
 
 
 
 
Annual Report 2024 |
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balance sheet | Risk management and control
 
123
Emerging markets¹ net exposure², by internal UBS country rating category
USD m
31.12.24
31.12.23
Investment grade
23,170
36,851
Sub-investment grade
4,155
7,654
Total
27,325
44,505
1 We classify countries as emerging markets based on per capita GDP,
 
historical real GDP growth, alignment with international institutions (such as the BIS, the World Bank,
 
the IMF and the MSCI) and other factors.
 
2 Net of credit hedges (for
 
banking products and for
 
traded products); net long
 
per issuer (for trading
 
inventory) for the UBS Group
 
excluding legacy Credit Suisse
 
components only. Before
 
deduction of IFRS 9
 
ECL
allowances and provisions.
Sustainability and climate risk
Managing sustainability and climate risk
 
is a key component of our corporate responsibility.
 
We define sustainability and
climate risk as the risk that we negatively impact, or are impacted by, climate
 
change, natural capital, human rights, and
other environmental and social matters. Sustainability and climate risks may
 
manifest as credit, market, liquidity, business
and non-financial risks for UBS, resulting in potential adverse
 
financial, liability and reputational impacts.
 
Group Risk
 
Control is
 
responsible for
 
our firm-wide
 
sustainability and
 
climate risk
 
framework and
 
the management
 
of
exposure to sustainability and
 
climate (financial) risks on
 
an ongoing basis as
 
a second line of
 
defense, while our Group
Compliance,
 
Regulatory
 
&
 
Governance
 
monitors
 
the
 
adequacy
 
of
 
our
 
control
 
environment
 
for
 
non-financial
 
risks,
applying
 
independent
 
control
 
and
 
oversight.
 
We
 
manage
 
sustainability
 
and
 
climate
 
risk
 
within
 
a
 
dedicated
 
risk
management framework.
 
Our sustainability
 
and climate
 
risk framework
 
continues to
 
evolve through
 
our multi-year
 
initiative focused
 
on meeting
regulatory
 
requirements
 
and
 
enhancing
 
core
 
processes,
 
such
 
as
 
reporting
 
and
 
disclosure.
 
Overseen
 
by
 
senior
management, the framework applies
 
to the balance sheet,
 
our own operations and
 
our supply chain. It consists
 
of four
different phases:
 
(i) risk
 
identification and
 
measurement; (ii)
 
monitoring and
 
risk appetite
 
setting; (iii) risk
 
management
and control; and (iv) risk reporting and disclosure.
 
›
Refer to the UBS Group Sustainability Report 2024,
 
available under “Annual reporting” at
ubs.com/investors
, for more
information about our sustainability and climate
 
risk framework and our investment approach
›
Refer to “Sustainability and climate risk policy
 
framework” in the Supplement to the
 
UBS Group Sustainability Report 2024,
available under “Annual reporting” at
ubs.com/investors
, for more information
Risk identification and measurement
We
 
assess
 
the
 
materiality
 
of
 
our
 
sustainability-
 
and
 
climate-driven
 
risks
 
and
 
impacts
 
on
 
an
 
annual
 
basis.
 
That
 
is
underpinned by
 
an assessment
 
of how
 
these risk
 
drivers may
 
impact us
 
through financial
 
and non-financial
 
risks (e.g.
credit losses or reputational incidences resulting in lost revenues) and assessing the
 
proximity of our activities to potential
negative impacts on the environment (including climate)
 
and human rights.
We aim to identify sustainability and
 
climate risks at divisional and cross-divisional
 
levels, both through the sustainability
and
 
climate
 
risk
 
materiality
 
assessment
 
mentioned
 
above
 
and,
 
increasingly,
 
by
 
integrating
 
them
 
into
 
the
 
firm-wide
traditional risk identification and measurement process.
 
Our risk identification
 
methodologies collectively define
 
our focus areas and
 
key risk drivers.
 
The results of
 
these efforts
contribute to our sustainability and climate risk management
 
strategy by:
 
–
identifying concentrations
 
of climate-sensitive
 
exposure that
 
may make
 
us vulnerable
 
to financial
 
and non-financial
risks, facilitating resource prioritization to enhance risk quantification
 
and subsequent management actions; and
–
supporting the implementation
 
of a
 
client-centric business strategy, in
 
which we support
 
clients with their
 
sustainability
transition and identify clients who can benefit from sustainability
 
-focused UBS products and services.
 
The outputs
 
of the
 
above processes
 
support senior
 
management in
 
taking informed
 
decisions about
 
sustainability and
climate-related risks and provides stakeholders with key information
 
through our external disclosures.
›
Refer to “Managing sustainability and climate risks”
 
in the UBS Group Sustainability Report 2024, available
 
under “Annual
reporting” at
ubs.com/investors
, for more information
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
124
Transition risk
 
Climate-driven transition risks, which
 
arise from the efforts
 
to mitigate the effects
 
of climate change, may
 
contribute to
a
 
structural
 
change
 
across
 
economies
 
and
 
consequently
 
affect
 
banks and
 
the
 
stability
 
of the
 
broader
 
financial
 
sector.
These risks extend to the value of investments and may also affect
 
the value of collateral (e.g. real estate).
In 2024, UBS developed a transition risk rating model (the TR RM), which is aligned with the transition risk heatmap (the
TR H) and designed to provide a company-level
 
rating of transition risk, where input
 
data is available. The TR RM mainly
relies
 
on
 
two
 
inputs:
 
(i) the
 
output
 
of
 
the
 
TR
 
H
 
and
 
(ii) the
 
corporate
 
transition
 
assessment
 
scorecard
 
(the
 
CTAS),
 
an
internal UBS
 
tool that
 
systematically categorizes
 
listed companies
 
based on
 
publicly available
 
data from
 
external third-
party data sources
 
into climate transition
 
readiness categories. Whenever
 
the CTAS does
 
not provide an
 
assessment for
a company, the model falls back to an existing TR H.
The climate transition
 
risk profile chart
 
shows that, at
 
the end of
 
2024, the exposure
 
of the UBS
 
Group to climate-sensitive
sectors and related business activities has
 
decreased due to an accelerated wind-down of
 
Non-core and Legacy corporate
exposures.
 
Climate-driven
 
transition-risk-sensitive
 
exposure
 
accounted
 
for
 
17.1%
 
of
 
the
 
total
 
gross
 
lending
 
exposure,
down from 19.2% in
 
2023. The key sectors contributing to
 
sensitive exposure were the same as
 
for 2023, i.e. real estate,
industrials
 
and
 
transportation.
 
Compared
 
with
 
2023,
 
our
 
sensitive
 
exposure
 
to
 
the
 
Services
 
and
 
technology
 
sector
increased, in
 
line with
 
a methodology
 
change where
 
certain business
 
activities that
 
were previously
 
rated non-sensitive
are now rated sensitive due to increased reliance on
 
artificial intelligence (AI) and data center operations requiring higher
use of power.
›
Refer to “Managing sustainability and climate risks”
 
in the UBS Group Sustainability Report 2024, available
 
under “Annual
reporting” at
ubs.com/investors
, for more information
 
ubs-20241231p149i0
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balance sheet | Risk management and control
 
125
 
Annual Report 2024 |
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balance sheet | Risk management and control
 
126
Physical risk
 
Climate-driven physical risks arise from acute
 
hazards, which are increasing in
 
severity and frequency, and chronic climate
risks arise
 
from an
 
incrementally changing
 
climate. Climate
 
-driven physical
 
risks may
 
contribute to
 
a structural
 
change
across economies
 
and consequently
 
affect banks
 
and the
 
stability of
 
the broader
 
financial sector.
 
These risks
 
extend to
the value of investments and may also affect the value of
 
collateral (e.g. real estate).
In 2024, UBS developed a physical risk rating
 
model (the PR RM), which is aligned with
 
the physical risk heatmap model
(the PR HM).
 
The PR RM
 
is designed to
 
provide a company-level indication
 
of physical risk
 
while both models are
 
designed
to provide
 
the UBS
 
Group’s exposure
 
to climate-driven
 
physical risks.
 
The PR
 
RM and
 
PR HM
 
measure how
 
four acute
physical risk hazards (i.e. wildfires, heatwaves, floods and
 
tropical cyclones) may drive physical risk of companies.
 
The climate physical risk profile chart shows that,
 
at the end of 2024, the exposure of
 
the UBS Group to climate-sensitive
sectors and related
 
business activities
 
decreased,
 
due to
 
the accelerated
 
wind-down of Non-core
 
and Legacy
 
corporate
exposures. Climate-driven physical-risk-sensitive exposure accounted for 9.8% of the total gross lending
 
exposure, down
from 11.7%
 
in 2023.
 
Geographically,
 
the majority
 
of the
 
sensitive exposure
 
is from
 
the Americas
 
region, followed
 
by
Switzerland
 
and
 
other
 
geographical
 
locations.
 
Most
 
of
 
the
 
year-on-year
 
reduction
 
in
 
sensitive
 
exposure
 
is
 
due
 
to
 
the
wind-down of Non
 
-core and Legacy
 
exposure in the
 
Americas region.
 
At the Group
 
level, most of
 
the climate-sensitive
physical risk exposure is located in
 
countries that have a relatively high
 
adaptive capacity to manage physical risk hazards,
resulting in a moderately low risk profile at the regional level.
›
Refer to “Managing sustainability and climate risks”
 
in the UBS Group Sustainability Report 2024, available
 
under “Annual
reporting” at
ubs.com/investors
, for more information
 
ubs-20241231p151i0
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
127
 
Annual Report 2024 |
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balance sheet | Risk management and control
 
128
Climate scenario analysis
 
We use scenario-based approaches to
 
assess our exposure to physical
 
and transition risks stemming from
 
climate change.
We
 
have
 
introduced
 
several
 
in-house
 
assessments,
 
facilitated
 
by
 
industry
 
collaboration,
 
to
 
tailor
 
approaches
 
for
addressing methodological
 
and data
 
challenges.
 
We
 
have
 
utilized dedicated
 
risk
 
models incorporating
 
systematic
 
and
idiosyncratic effects to carry out stress-testing exercises covering
 
short-, medium-
 
and long-term time horizons.
The work performed includes regulatory
 
scenario analysis and stress-testing exercises such
 
as the Bank of
 
England’s 2021
Climate Biennial Exploratory Scenario
 
and the 2022 Climate Risk Stress
 
Test of the European Central Bank,
 
which assess
banks’ preparedness
 
for dealing
 
with financial
 
and economic
 
shocks stemming
 
from
 
climate risk;
 
and the
 
2024
 
Swiss
Financial Market
 
Supervisory Authority (FINMA)
 
/ Swiss National
 
Bank climate scenario
 
analysis exercise. These
 
exercises
facilitated
 
the identification
 
of financial
 
risks from
 
climate
 
change and
 
enabled
 
UBS to
 
assess management
 
actions in
response to
 
different scenario
 
results and
 
to perform
 
a counterparty
 
-level analysis.
 
While these
 
exercises showed
 
mild
losses and low exposure to
 
climate risk for the in-scope
 
entities,
 
given the limited impact on
 
the macroeconomic financial
environment, the analysis enabled UBS to enhance climate risk scenario analysis and stress testing, further developing its
capabilities for assessing risks and vulnerabilities from climate
 
change.
In 2024, we further advanced
 
our capabilities surrounding internal climate risk scenario analysis and
 
stress testing for the
UBS Group. We
 
refined and
 
expanded our
 
internal climate
 
risk scenarios,
 
with a
 
focus on
 
both transition
 
and physical
risk projections across 30
 
years. In addition, we
 
developed additional climate risk methodologies
 
to enhance and broaden
portfolio coverage.
Over the last few
 
years, we have also
 
leveraged industry-wide initiatives,
 
such as the Paris
 
Agreement Capital Transition
Assessment exercise
 
launched by
 
the Swiss
 
Federal Office
 
for the
 
Environment in
 
2020, 2022
 
and 2024.
 
Through this
exercise,
 
we
 
assessed
 
the
 
climate
 
alignment
 
of
 
our
 
listed
 
investments
 
(including
 
equities
 
and
 
bonds),
 
mortgages
 
and
direct real estate portfolios.
 
The assessment enabled us to
 
compare our results with the
 
aggregated performance of the
portfolios of all participating banks, showing the progress
 
made over time and the efforts still needed.
›
Refer to “Managing sustainability and climate risks”
 
in the UBS Group Sustainability Report 2024, available
 
under “Annual
reporting” at
ubs.com/investors
, for more information
Monitoring and risk appetite setting
Our sustainability and climate risk
 
policy framework defines the qualitative
 
and quantitative risk appetite for
 
sustainability
and climate risk and is subject to periodic updates and enhancements.
 
›
Refer to “Sustainability and Climate Risk Management
 
Framework” in the supplement to the UBS
 
Group Sustainability Report
2024, available under “Annual reporting” at
ubs.com/investors
, for more information
As a
 
part of
 
the sustainability
 
and climate
 
risk monitoring
 
process,
 
we have
 
developed
 
methodologies
 
and metrics
 
to
assess our
 
continued exposure
 
to carbon-related
 
assets and climate
 
-related risk-sensitive
 
sectors. When developing
 
our
metrics, we
 
consider the
 
inputs and
 
guidance provided
 
by standard-setting
 
organizations, as
 
well as
 
new or
 
enhanced
regulatory
 
requirements
 
for
 
climate
 
disclosures.
 
In
 
2024,
 
we
 
continued
 
working
 
on
 
methodologies
 
covering
 
climate-
driven transition physical risks.
›
Refer to “Climate-related materiality assessment” in the UBS
 
Group Sustainability Report 2024, available under “Annual
reporting” at
ubs.com/investors
, for more information
The table
 
below includes climate
 
-related risk
 
metrics for
 
UBS Group, UBS AG
 
on a
 
standalone basis,
 
as well
 
as for
 
UBS
Switzerland AG and UBS Europe SE, both on a standalone basis. The
 
trend analysis of exposure is available,
 
starting from
2023, as UBS Group exposures were reported on a consolidated
 
basis after the integration of Credit Suisse.
The
 
proportion of
 
the
 
UBS Group’s
 
total
 
gross
 
lending
 
exposure accounted
 
for
 
by carbon-related
 
assets
 
decreased
 
to
10.9% in 2024 compared with 12.1% in 2023. The UBS Group metrics were reported on
 
a consolidated basis, including
Credit Suisse exposures starting in 2023.
Following
 
the
 
mergers
 
of
 
UBS AG
 
and
 
Credit
 
Suisse AG
 
in
 
May
 
2024
 
and
 
of
 
UBS
 
Switzerland
 
AG
 
and
 
Credit
 
Suisse
(Schweiz)
 
AG
 
in
 
July
 
2024,
 
the
 
total
 
gross
 
lending
 
exposures
 
of
 
UBS
 
AG
 
standalone
 
and
 
UBS
 
Switzerland
 
AG
 
have
increased due to the inclusion of legacy Credit
 
Suisse exposure. Consequently, the climate-driven transition risk, physical-
risk-sensitive exposure and carbon-related assets have increased
 
on an absolute basis, as expected.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
129
Risk management – Climate-related metrics
For the year ended
% change from
31.12.24
31.12.23
31.12.23
Climate-related metrics (USD bn)
1, 2, 3, 4
Carbon-related assets: UBS Group AG consolidated
1, 2, 3, 4, 5, 6
76.5
93.9
(18.5)
Carbon-related assets proportion of total gross lending exposure, UBS Group
 
AG consolidated (%)
1, 2, 3, 4, 5, 6
10.9
12.1
Carbon-related assets: UBS AG (standalone)
1, 2, 3, 4, 5, 6
30.3
9.2
228.3
Carbon-related assets: UBS Switzerland AG (standalone)
1, 2, 3, 4, 5, 6
46.6
27.4
69.8
Carbon-related assets: UBS Europe SE (standalone)
1, 2, 3, 4, 5, 6
0.0
0.0
0.0
Total exposure to climate-sensitive sectors, transition risk, UBS Group AG consolidated
1, 2, 3, 4, 6, 7, 8
120.3
149.0
(19.3)
Climate-sensitive sectors, transition risk, proportion of total gross lending exposure, UBS
 
Group AG consolidated (%)
1, 2, 3, 4, 6, 7, 8
17.1
19.2
Total exposure to climate-sensitive sectors, transition risk, UBS AG (standalone)
1, 2, 3, 4, 6, 7, 8
36.6
12.8
186.4
Total exposure to climate-sensitive sectors, transition risk, UBS Switzerland AG (standalone)
1, 2, 3, 4, 6, 7, 8
83.0
49.8
66.6
Total exposure to climate-sensitive sectors, transition risk, UBS Europe SE (standalone)
1, 2, 3, 4, 6, 7, 8
0.0
0.0
0.0
Exposure to climate-sensitive sectors, transition risk, Traded products, UBS Group AG consolidated
1, 2, 3, 4, 7, 8, 9
2.1
Exposure to climate-sensitive sectors, transition risk, Issuer risk, UBS Group
 
AG consolidated
1, 2, 3, 4, 7, 8, 10
6.8
Total exposure to climate-sensitive sectors, physical risk, UBS Group AG consolidated
1, 2, 3, 4, 6,7,8
68.9
90.7
(24.0)
Climate-sensitive sectors, physical risk, proportion of total gross lending exposure, UBS
 
Group AG consolidated (%)
1, 2, 3, 4, 6, 7, 8
9.8
11.7
Total exposure to climate-sensitive sectors, physical risk, UBS AG (standalone)
1, 2, 3, 4, 6, 7, 8
65.7
52.5
25.2
Total exposure to climate-sensitive sectors, physical risk, UBS Switzerland AG (standalone)
1, 2, 3, 4, 6, 7, 8
22.6
15.1
50.0
Total exposure to climate-sensitive sectors, physical risk, UBS Europe SE (standalone)
1, 2, 3, 4, 6, 7, 8
0.0
0.0
0.0
Exposure to climate-sensitive sectors, physical risk, Traded products, UBS Group AG consolidated
1, 2, 3, 4, 7, 8, 9
3.3
Exposure to climate-sensitive sectors, physical risk, Issuer risk, UBS Group
 
AG consolidated
1, 2, 3, 4, 7, 8, 10
12.6
1
 
Methodologies for assessing climate-related risks are emerging and may change over time. As the methodologies, tools and data availability improve, we will further develop our risk identification and measurement
approaches. Lombard lending rating is
 
assigned based on the average riskiness of
 
collateral.
 
2
 
Metrics for 2023 are recalculated and restated based
 
on the 2024 methodology for comparison purpose.
 
Percentage
change is calculated based on the
 
full underlying exposure, which may result in small deviations
 
when calculated using reported figures that
 
are rounded to one decimal.
 
3
 
Over the last year, the UBS Group continued
its effort to
 
integrate Credit
 
Suisse systems
 
and data.
 
As a result,
 
the metric
 
calculation process
 
benefits from
 
data enhancement
 
even when
 
the methodology
 
remains the same
 
year on year.
 
At the same
 
time,
integration work is ongoing and expected to bring in further data alignment in future, which may require restatement of reported metrics.
 
4
 
UBS continues to collaborate to resolve methodological and industry data
challenges, and seeks to integrate both impacts to and dependencies on a changing natural and climatic environment, into how UBS evaluates its risks and opportunities.
 
5
 
As defined by the Task Force on Climate-
related Financial Disclosures (the TCFD), in its expanded definition published in
 
2021, UBS defines carbon-related assets through industry-identifying attributes of the firm’s banking book. UBS further includes the four
non-financial sectors addressed by the TCFD,
 
including, but not limited to,
 
fossil fuel extraction, carbon-based power
 
generation, transportation (air,
 
sea, rail, and auto manufacture),
 
metals production and mining,
manufacturing industries,
 
real estate development,
 
chemicals, petrochemicals,
 
and pharmaceuticals,
 
building and construction
 
materials and activities,
 
forestry, agriculture,
 
fishing, food and
 
beverage production,
including trading companies that
 
may trade any of
 
the above (e.g. oil
 
trading or agricultural commodity
 
trading companies). This
 
metric is agnostic of risk
 
rating, and therefore may
 
include exposures of companies
that may be
 
already transitioning or
 
adapting their business
 
models to climate
 
risks, unlike
 
UBS climate-sensitive sectors
 
methodology, which
 
takes a risk
 
-based approach to
 
defining material exposure
 
to climate
impacts.
 
6
 
Gross lending exposure consists of total on balance sheet loans and advances to customers and off-balance sheet guarantees and irrevocable loan commitments (within the scope of expected credit loss)
and is based on consolidated IFRS numbers (inclusive of purchase price allocation adjustments recorded in UBS Group as a result of the acquisition of Credit Suisse in compliance with IFRS 3, Business Combinations).
 
7
 
Climate-related risks are scored between 0 and 1,
 
based on sustainability and climate risk transmission channels. Risk ratings represent a range of scores
 
across five rating categories: low, moderately low, moderate,
moderately high, and high. The climate-sensitive exposure metrics are determined based upon the top three of the five rated categories, i.e.
 
moderate to high.
 
8
 
As the transition and physical risk rating models and
physical risk heatmap model are embedded
 
further into the risk management framework, we
 
may identify new use cases that
 
could trigger validation of the model for
 
identified use cases and associated enhancements.
As a consequence,
 
restatement of
 
reported metrics
 
may be required.
 
9
 
For traded
 
products, the
 
metric is
 
calculated using
 
over-the-counter (OTC)
 
derivatives, exchange-traded
 
derivatives (ETDs)
 
and securities
financing transactions (SFTs), consisting of securities borrowing and lending, and repurchase and reverse repurchase agreements.
 
10
 
For issuer risk, the metric is calculated upon HQLA assets, debt securities, bonds,
liquidity buffer securities. After the parent bank merger,
 
the issuer risk in legacy Credit Suisse entities is less than 4% of overall UBS Group and considered non-material and excluded
 
from reported metrics.
 
Annual Report 2024 |
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balance sheet | Risk management and control
 
130
Non-financial risk
Compliance risk, financial crime
 
risk and operational risk
 
are independently overseen by
 
Group Compliance, Regulatory &
Governance (GCRG) and are covered
 
in this section. Legal risk is overseen by
 
Group Legal. Reputational risk
 
is managed
by the business divisions and Group functions and
 
overseen by control functions.
›
Refer to “Top and emerging risks” in this section for more information about legal risk
Compliance risk
Achieving fair
 
outcomes for
 
our clients,
 
upholding market
 
integrity and
 
cultivating
 
the highest
 
standards of
 
employee
conduct are of critical importance
 
to us. Therefore, we maintain a
 
conduct risk framework across
 
our activities, which is
designed to align
 
our standards and
 
conduct with these
 
objectives and to
 
retain momentum on
 
fostering a strong
 
culture.
Suitability risk,
 
product selection,
 
cross-divisional service
 
offerings, quality
 
of advice
 
and price
 
transparency continue
 
to
be areas of heightened focus for UBS and for the industry as a whole.
 
Cross-border risk (including the risk of unintended
permanent establishment)
 
remains an area
 
of regulatory
 
attention for
 
global financial
 
institutions, including
 
a focus
 
on
market access, such
 
as third-country
 
market access
 
into the European
 
Economic Area.
 
We maintain a
 
series of controls
designed
 
to
 
address
 
these
 
risks,
 
and
 
we
 
are
 
increasing
 
the
 
number
 
of
 
automated
 
controls,
 
thereby
 
increasing
 
overall
control coverage.
Reputational risk, regulatory fragmentation related to environmental, social and governance topics, and the elevated risk
of greenwashing arising from our service offering, disclosures and
 
commitments remain key risks for 2025.
›
Refer to “Top and emerging risks” in this section for more information
Financial crime risk
Financial
 
crime,
 
including
 
money
 
laundering,
 
terrorist
 
financing,
 
sanctions
 
violations,
 
fraud,
 
bribery
 
and
 
corruption,
presents
 
a
 
major
 
risk,
 
as
 
technological
 
innovation
 
and
 
geopolitical
 
developments
 
increase
 
the
 
complexity
 
of
 
doing
business and heightened regulatory attention continues.
An
 
effective
 
financial
 
crime
 
prevention
 
program
 
therefore
 
remains
 
essential,
 
and
 
we
 
continue
 
to
 
focus
 
on
 
strategic
enhancements to
 
our global
 
anti-money-laundering,
 
know-your-client and
 
sanctions programs.
 
Money laundering
 
and
financial
 
fraud
 
techniques
 
are
 
becoming
 
increasingly
 
sophisticated,
 
and
 
geopolitical
 
volatility
 
makes
 
the
 
sanctions
landscape more complex. The extensive and continuously evolving sanctions arising from the Russia–Ukraine war require
constant
 
attention
 
to
 
manage
 
circumvention
 
risks,
 
while
 
conflicts
 
in
 
the
 
Middle
 
East
 
may
 
further
 
increase
 
terrorist-
financing risks.
›
Refer to “Top and emerging risks” in this section for more information
Operational risk
There is an
 
increased risk
 
of cyber-related
 
operational disruption
 
to business activities
 
at our locations
 
and / or those
 
of
third-party suppliers due to
 
operating a more complex
 
set of legal entities
 
since the acquisition of
 
Credit Suisse and
 
the
increasingly dynamic threat environment, which is intensified by current
 
geopolitical factors and evidenced by continuing
high volumes
 
of, and
 
the increasing
 
sophistication of,
 
cyberattacks against
 
financial institutions globally
 
and on
 
third-party
service providers.
We remain on
 
heightened alert to respond
 
to and mitigate elevated
 
cyber- and information-security
 
threats, and continue
to
 
invest
 
in
 
improving
 
our
 
technology
 
infrastructure
 
and
 
information-security
 
governance
 
to
 
improve
 
our
 
defense,
detection and
 
response capabilities
 
against attacks.
 
In addition,
 
we are
 
implementing a
 
global framework
 
designed to
drive enhancements
 
in operational
 
resilience across
 
all business
 
divisions and
 
relevant
 
jurisdictions, as
 
well as
 
working
with the third-party service providers
 
that are of critical
 
importance to our operations to
 
assess their operational resilience
against our standards.
The increasing
 
interest in
 
data-driven advisory
 
processes and
 
the use
 
of artificial
 
intelligence (AI)
 
and machine
 
learning
are opening
 
up new
 
questions
 
related to
 
the fairness
 
of AI
 
algorithms,
 
data life-cycle
 
management,
 
data ethics,
 
data
privacy and security, and records management.
Legal entity integration, including
 
that of existing Credit Suisse
 
businesses, and the closing of
 
legacy businesses introduce
operational complexity
 
and the
 
risk that
 
businesses in wind-down
 
are not
 
effectively managed.
 
These risks
 
continue to
be carefully monitored in addition to the delivery of consolidated
 
financial and regulatory reporting submissions.
›
Refer to “Top and emerging risks” in this section for more information
 
Annual Report 2024 |
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balance sheet | Risk management and control
 
131
Non-financial risk framework
We
 
follow
 
a
 
Group-wide
 
non-financial
 
risk
 
framework
 
that
 
establishes
 
requirements
 
for
 
identifying,
 
controlling,
managing, assessing and mitigating
 
compliance risk, financial
 
crime risk and operational
 
risk to maintain the
 
safety and
soundness of the firm and to protect its
 
financial position and reputation.
 
The framework is built on the following pillars:
–
classifying
 
inherent risks
 
through
 
19
 
non-financial
 
risk taxonomies,
 
which
 
define
 
the
 
universe
 
of non-financial
 
risks
that can arise as a consequence of our business activities
 
and external factors;
–
performing
 
control
 
assurance
 
activities,
 
including
 
self-assessing
 
the
 
design
 
and
 
operating
 
effectiveness
 
of
 
controls,
first- and second-line-of-defense control reviews,
 
and independent control testing;
–
defining
 
the
 
non-financial
 
risk
 
appetite
 
(including
 
relevant
 
indicators
 
for
 
each
 
non-financial
 
risk
 
taxonomy)
 
and
assessing risk exposure against appetite;
–
assessing inherent
 
and residual risk
 
through risk
 
assessment processes and
 
determining whether additional
 
remediation
plans are required to address identified deficiencies;
 
and
–
proactively and sustainably remediating identified control deficiencies.
Reputational risk is an integral part of the non-financial risk framework. It is one of the key impacts of non-financial risk,
alongside regulatory and financial risks.
Divisional Presidents
 
are accountable
 
for the
 
effectiveness of
 
non-financial risk
 
management and
 
for the
 
robustness of
the front-to-back control
 
environment within their
 
business divisions, and
 
legal-entity-responsible executives are in
 
charge
of non-financial
 
risk management
 
within their
 
legal entities.
 
Group function
 
heads are
 
accountable for
 
supporting the
divisional Presidents and legal
 
-entity-responsible executives of
 
our legal entities in
 
the discharge of this
 
responsibility, by
confirming completeness
 
and effectiveness
 
of the control
 
environment and non-financial
 
risk management
 
within their
Group functions. Collectively,
 
divisional Presidents, central
 
Group function heads
 
and legal-entity-responsible executives
are in charge of implementing the non-financial risk framework
 
.
GCRG owns
 
the firm’s
 
non-financial risk
 
framework,
 
and it
 
is responsible
 
for providing
 
an independent
 
and objective
view of
 
the adequacy
 
of non-financial
 
risk management
 
across the
 
Group and
 
ensuring that
 
compliance risk,
 
financial
crime risk and operational risk are understood, owned and managed in accordance with our risk appetite. Compliance &
Operational
 
Risk
 
Control
 
(C&ORC)
 
business-
 
or
 
function-aligned
 
teams
 
are
 
embedded
 
within
 
the
 
GCRG
 
function,
reporting to the Group
 
Chief Compliance and Governance
 
Officer, who is a member
 
of the Group Executive
 
Board (the
GEB).
The non-financial risk
 
framework forms the
 
common basis for
 
managing and assessing
 
compliance risk, financial
 
crime
risk
 
and
 
operational
 
risk,
 
and
 
there
 
are
 
additional
 
C&ORC
 
activities
 
intended
 
to
 
ensure
 
we
 
are
 
able
 
to
 
demonstrate
compliance with applicable laws, rules and regulations.
All functions
 
within UBS
 
are required
 
to periodically
 
assess the
 
design and
 
operating effectiveness
 
of key
 
internal non-
financial risk controls.
Key control deficiencies identified during the internal control and risk
 
assessment processes must be reported in the non-
financial
 
risk
 
inventory,
 
and
 
sustainable
 
remediation
 
must
 
be
 
defined
 
and
 
executed.
 
These
 
control
 
deficiencies
 
are
assigned to
 
owners at
 
senior management
 
level and
 
the remediation
 
progress is
 
reflected
 
in the
 
respective managers’
annual performance
 
measurement and
 
objectives. To
 
assist with
 
prioritizing the
 
most material
 
control deficiencies
 
and
measuring aggregated risk exposure, irrespective of origin,
 
a common rating methodology is applied
 
across all three lines
of defense, as well as by external audit.
In 2024, we focused on finalizing the rollout of
 
the framework to the combined organization and ensuring adherence to
the
 
framework
 
standards.
 
We
 
continue
 
to
 
improve
 
effectiveness
 
by
 
simplifying
 
and
 
automating
 
non-financial
 
risk
framework-related processes.
Reputational risk management
Our reputation
 
is ultimately
 
defined by
 
our ability
 
to adhere
 
to the
 
three
 
keys: our
Pillars
,
Principles
 
and
Behaviors
. In
accordance with
 
our Code
 
of Conduct
 
and Ethics,
 
it is
 
the responsibility
 
of the
 
Board of
 
Directors
 
(the BoD)
 
and each
employee to refrain from any conduct
 
which may pose a risk to our reputation.
All employees are responsible for carefully evaluating
 
the reputational risks involved in all
 
business activities. Reputational
risk
 
is
 
considered
 
as
 
part
 
of
 
standard
 
risk
 
identification
 
and
 
assessment
 
processes
 
governed
 
by
 
relevant
 
frameworks
relating to new and existing clients, transactions, products and services. The business divisions and Group functions have
primary responsibility for identifying,
 
assessing and managing reputational risk. The control functions
 
are responsible for
providing independent oversight and challenge and must raise their concerns
 
if they disagree with the assessment of the
business
 
divisions
 
or
 
Group
 
functions
 
of
 
any
 
reputational
 
risk.
 
For
 
instances
 
where
 
the
 
inherent
 
reputational
 
risk
 
is
determined
 
to
 
be
 
high,
 
these
 
cases
 
must
 
be
 
escalated
 
to
 
the
 
relevant
 
divisional
 
management
 
team
 
for
 
review
 
and
decision. At
 
the discretion
 
of those
 
teams, cases
 
may also
 
be presented
 
to the
 
GEB for
 
further evaluation
 
and decision
through the respective divisional President.
 
Annual Report 2024 |
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balance sheet | Risk management and control
 
132
Cybersecurity and information security
Risk management and strategy
Cybersecurity
 
and
 
information-security
 
(CIS)
 
risk
 
is
 
the
 
risk
 
that
 
a
 
malicious
 
internal or
 
external
 
act,
 
or
 
a
 
failure
 
of
 
IT
hardware
 
or software,
 
or human
 
error may
 
have a
 
material impact
 
on confidentiality,
 
integrity,
 
or availability
 
of UBS’s
data or information systems.
CIS
 
risk
 
is
 
a
 
key
 
operational
 
risk
 
facing
 
UBS,
 
and
 
we
 
devote
 
considerable
 
resources
 
to
 
establishing
 
and
 
maintaining
processes for
 
assessing, identifying
 
and managing
 
CIS risk
 
through our
 
global workforce
 
and cyber-operations
 
centers
around the world.
›
Refer to “Risk governance” in this section
 
for information about our risk governance
 
framework
Governance
In line
 
with our
 
overall non-financial
 
risk management
 
framework,
 
we take
 
a cross-functional
 
approach to
 
addressing
CIS risk, with
 
the Group Operations and
 
Technology Office (GOTO), business divisions, GCRG, Group Risk Control,
 
Group
Legal, and
 
Group Internal Audit
 
all playing
 
key roles. Our
 
risk control framework
 
follows the
 
three-lines-of-defense model.
GOTO establishes the policies and procedures designed to safeguard our information systems and the information those
systems collect
 
and process.
 
The business
 
divisions, together
 
with GOTO,
 
are then
 
responsible for
 
implementing those
policies and
 
procedures
 
as part
 
of the
 
first line
 
of defense.
 
GCRG leads
 
the second
 
line of
 
defense, by
 
convening and
consulting
 
with
 
additional
 
control
 
functions
 
to
 
provide
 
independent
 
oversight,
 
and
 
challenges
 
the
 
first
 
line’s
 
CIS
framework and
 
implementation. As
 
the third
 
line of
 
defense, Group
 
Internal Audit
 
conducts independent
 
reviews and
validates the first-line and second-line processes and
 
functions.
The Cyber and Information Security Committee
 
(the CIS-C)
 
is the
 
primary decision-making
 
body with
 
oversight of
 
and
accountability
 
for
 
the
 
Group-wide
 
CIS
 
program.
 
The
 
committee
 
is jointly
 
chaired
 
by
 
the
 
Group
 
Chief
 
Operations
 
and
Technology
 
Officer
 
and
 
the
 
Group
 
Chief
 
Compliance
 
and
 
Governance
 
Officer.
 
The
 
Head
 
Group
 
Internal
 
Audit
 
is
 
a
permanent guest. The committee meets on a monthly basis
 
and serves as a platform for interaction across
 
the three lines
of defense
 
for
 
the
 
identification
 
and effective
 
governance
 
of CIS
 
strategy,
 
risks and
 
regulatory
 
obligations.
The CIS-C
governance structure is intended to streamline decision-making and, where necessary, escalation to the BoD and the
GEB.
Following the merger of UBS AG and Credit Suisse AG on 31 May 2024, UBS established a unified governance structure
and
 
consolidated
 
CIS
 
leadership
 
under
 
a
 
single
 
Group
 
Chief
 
Information
 
Security
 
Officer
 
(Group
 
CISO)
 
function.
 
This
unified governance
 
ensures that
 
consistent and robust
 
security measures
 
are embedded
 
across the
 
entire organization.
Consequently,
 
the
 
role
 
of
 
the
 
Credit
 
Suisse
 
Chief
 
Information
 
Security
 
Officer
 
has
 
been
 
dissolved,
 
and
 
all
 
CIS
responsibilities are now managed centrally by the Group CISO.
 
We have raised the profile and highlighted the
 
role of our
regional CISOs
 
to better
 
position our
 
ability to
 
engage
 
with regulators
 
and other
 
key stakeholders.
 
All regional
 
CISOs
now report directly to the Group CISO.
›
Refer to “Cybersecurity governance” in
 
“Board of Directors” in the “Corporate governance”
 
section of this report for more
information
CIS program
Our CIS program is led by the Group CISO, who
 
reports both to the Group Chief Operations and Technology Officer and
the
 
Group
 
Chief
 
Compliance
 
and
 
Governance
 
Officer.
 
The
 
CIS
 
program
 
is
 
designed
 
to
 
identify,
 
prevent,
 
detect
 
and
respond to CIS events, with the goal of
 
maintaining the integrity and availability of our technology infrastructure and the
confidentiality and
 
integrity of
 
our information.
 
Our Group
 
CISO, senior
 
management within
 
GOTO and
 
management
personnel overseeing the CIS
 
program all have substantial relevant expertise
 
in the areas of
 
cybersecurity and information
security. Our
 
CIS program includes the following elements:
–
Threat intelligence:
 
We systematically gather
 
threat information and
 
monitor threat alerts
 
from external sources.
 
Our
cyber-threat
 
intelligence
 
team
 
analyzes
 
such
 
information
 
and
 
uses
 
it
 
to
 
enhance
 
existing
 
defense
 
capabilities,
 
to
respond to identified
 
threats and to
 
adjust our
 
CIS strategy
 
where needed.
 
In 2024,
 
the team’s remit
 
was expanded
to include providing research, analysis and advice on CIS risks associated
 
with emerging technologies,
 
including AI.
–
Preventative and detection
 
controls:
 
We use layered
 
firm-wide controls to
 
prevent and detect
 
cyberattacks. Defenses
include system hardening, firewalls, intrusion prevention
 
and detection systems, and other controls. External
 
network
connections are identified
 
and recorded in
 
an inventory. Access
 
rights are defined
 
for information assets,
 
and IT systems
and
 
applications
 
enforce
 
authentication.
 
We
 
maintain
 
access
 
controls
 
and
 
approval
 
processes
 
designed
 
to
 
prevent
unauthorized access.
–
Cyber-defense
 
and
 
incident
 
response
 
capabilities
:
 
The
 
Cybersecurity
 
Operations
 
Center
 
is responsible
 
for
 
providing
24/7/365 real-time monitoring, detection
 
and response capabilities
 
for cyberattacks and acting
 
as the primary
 
interface
for cybersecurity events.
 
Incidents assessed as
 
having the potential
 
to adversely affect our
 
critical operations are
 
subject
to
 
mandatory
 
management
 
notification.
 
If
 
assessed
 
as
 
potentially
 
significant,
 
cybersecurity
 
and
 
data
 
incidents
 
are
managed under our crisis management framework.
–
Education and
 
training:
All UBS
 
staff, including
 
the external
 
workforce,
 
receive appropriate
 
CIS awareness
 
training,
commensurate with their roles and responsibilities.
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
133
–
Third-party risk: Vulnerabilities in the cyber-risk environment of third parties represent a particular threat to our CIS
and our ability to maintain our business services. We follow a risk-based approach to assess and mitigate CIS risks
related to third parties. Third-party services and processes are monitored and checked on an ongoing basis, with
appropriate supervision from the CIS-C. This is a key component of our third-party risk management program,
notwithstanding the challenges we face in imposing the same levels of protection to the systems and data of third
parties that we rely on ourselves.
–
Monitoring
 
and
 
testing:
 
Effective
 
incident
 
response
 
and
 
problem
 
management
 
processes
 
are
 
complemented
 
by
vulnerability assessments, penetration
 
and testing
 
engagements based
 
on specific
 
threat scenarios
 
that simulate
 
tactics,
techniques
 
and
 
procedures
 
that
 
might
 
be
 
used
 
against
 
our
 
systems,
 
as
 
mandated
 
by
 
our
 
policy
 
regulations.
 
This
includes testing by internal and external
 
red teams (simulating attacks by potential adversaries). Actual
 
security-related
events are directly correlated with threat scenarios
 
to monitor and detect potential threats,
 
such as network-intrusion
and malware-driven events.
 
Our deployed
 
security measures are
 
designed with
 
the objective of
 
isolating and
 
containing
threats that are detected to allow for effective incident response
 
and analysis.
CIS assessment framework
Our CIS
 
assessment framework
 
includes internal
 
and external
 
cybersecurity risk
 
assessments for
 
applications and
 
bank
processes alongside
 
a structured
 
risk assessment process
 
of third-party
 
service providers.
 
These processes
 
are designed,
along with our security capabilities, to support business
 
objectives and priorities.
We conduct
 
assessments to
 
evaluate and
 
test our
 
CIS program
 
and provide
 
guidance on
 
operating and
 
improving the
program, including
 
the design
 
and operational
 
effectiveness
 
of the
 
security and
 
resiliency of
 
our information
 
systems.
Our assessments,
 
along with
 
our threat
 
intelligence capabilities,
 
are used
 
to assess
 
and prioritize
 
programs to
 
improve
our security, our incident response capabilities and our operational resilience. As the cyber-threat landscape evolves at an
increasing pace, we
 
seek to enhance
 
our CIS controls
 
to meet developing
 
threats. We
 
have ongoing programs
 
that are
intended
 
to
 
increase
 
our
 
CIS
 
maturity
 
across
 
various
 
dimensions,
 
including
 
governance,
 
identification,
 
protection
 
and
detection, as well as cyberattack response and recovery,
 
and risk from third-party service providers.
We recognize
 
that we
 
will never
 
be able
 
to completely
 
eliminate the
 
risk of
 
a future
 
cyberattack, but,
 
by using
 
a risk-
based approach, we
 
work toward reducing
 
the likelihood of
 
a successful attack
 
and toward mitigation
 
of the potential
business impact of such an attack.
The BoD, its Risk Committee and the GEB receive regular presentations and reports throughout the year from our Group
Chief Operations
 
and Technology
 
Officer and
 
our Group
 
CISO on
 
internal and
 
external
 
CIS developments,
 
threats and
risks. In addition, on a
 
quarterly basis, the BoD receives reports on
 
the performance of CIS risk appetite metrics, including
metrics on vulnerabilities
 
and third-party CIS
 
risks and incidents, and
 
is notified promptly
 
if a Board-level
 
CIS risk limit is
breached. The Risk Committee of the BoD and the GEB also receive regular updates on
 
CIS strategy, risks and alignment
with regulatory requirements.
Operational resilience and incident response
Our business continuity and resilience framework is designed to limit the disruption CIS events cause to our business
activities. In accordance with the firm’s cyber-incident response framework, the CIS-C, including the incident response
team, tracks, documents, responds to and analyzes CIS threats and incidents, including those experienced by the firm’s
third-party service providers that may impact the firm. Additionally, we maintain established procedures for responding
to, and escalating, CIS and other system availability incidents. These are regularly practiced, including tabletop exercises
up to and including the Group Crisis Task Force.
Our CIS and data confidentiality contingency plans include event playbooks and escalation procedures designed to
support a structured assessment of potential incidents and timely escalation and reporting of incidents based on the
assessed potential impact. Incidents assessed to have the potential to adversely affect our critical operations are subject
to mandatory management notification. If assessed as potentially significant, cybersecurity and data incidents are
managed under our crisis management framework, which provides pre-established cross-functional task forces to
manage the incident, ensure appropriate and timely regulatory, market and client communications and robust oversight
by management, with escalation frameworks to inform and ensure oversight by the GEB and the BoD.
›
Refer to “Crisis management framework” in the
 
“Regulation and supervision” section of this
 
report for more information about
our crisis management framework
 
Annual Report 2024 |
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balance sheet | Risk management and control
 
134
Non-financial risk capital measurement
The non-financial risk framework underpins the calculation of regulatory capital for operational risk, which enables us to
quantify operational
 
risk and
 
define effective
 
risk-mitigating management
 
incentives as
 
part of
 
the related
 
operational
risk capital allocation approach to the business divisions.
In 2024, we measured
 
non-financial risk exposure
 
and calculated operational
 
risk regulatory capital
 
using the advanced
measurement
 
approach
 
(AMA)
 
in
 
accordance
 
with
 
Swiss
 
Financial
 
Market
 
Supervisory
 
Authority
 
(FINMA)
 
and
international
 
requirements.
 
As
 
reported
 
in
 
the
 
UBS
 
Group
 
Annual
 
Report
 
2023,
 
total
 
operational-risk-related
 
risk-
weighted assets
 
(RWA) are
 
derived by
 
an aggregation
 
of the
 
respective AMA
 
models of
 
UBS and
 
legacy Credit
 
Suisse,
taking into account a related diversification effect as agreed
 
with FINMA.
 
An
 
entity-specific
 
AMA
 
model
 
has
 
been
 
applied
 
for
 
UBS
 
Switzerland AG,
 
which
 
has
 
included
 
a
 
similar
 
relative
diversification benefit since the merger with Credit Suisse (Schweiz) AG. For other regulated entities, the basic indicators
or standardized approaches are
 
adopted for regulatory capital
 
in agreement with local
 
regulators. The UBS
 
AMA model
methodology
 
continues
 
to
 
be
 
leveraged
 
for
 
internal
 
capital
 
adequacy
 
assessment
 
processes
 
and
 
further
 
supports
 
risk
identification and related assessments for non-financial risks
 
.
The AMA
 
models
 
are reviewed
 
regularly to
 
maintain risk
 
sensitivity and
 
recalibrated at
 
least annually.
 
Furthermore, the
models are subject to an
 
independent validation performed by Model Risk
 
Management & Control in line
 
with our model
risk management framework.
For model
 
calibration purposes,
 
and in
 
line with
 
regulatory expectations,
 
the AMA
 
capital model
 
methodology
 
utilizes
both historical internal losses and external losses suffered by
 
the broader industry. Initial model outputs driven by
 
the loss
history are reviewed
 
and adjusted to
 
reflect fast-changing external
 
developments, such as
 
new regulations, geopolitical
change,
 
volatile
 
market
 
and
 
economic
 
conditions,
 
and
 
internal
 
factors
 
(e.g.
 
changes
 
in
 
business
 
strategy
 
and
 
control
framework enhancements). The
 
resulting baseline
 
data-driven frequency and
 
severity distributions
 
are reviewed
 
by subject
matter
 
experts
 
and
 
where
 
necessary
 
adjusted
 
based
 
on
 
a
 
review
 
of
 
qualitative
 
information
 
about
 
the
 
business
environment and internal control factors, as well as expert
 
judgment, with the aim of forecasting losses. Any changes to
regulatory capital as a result of a
 
recalibration or methodology changes are
 
subject to FINMA approval.
The AMA was replaced by the
 
standardized approach for determining regulatory
 
capital on 1 January 2025, in
 
line with
the final Basel Committee on Banking Supervision (BCBS) Basel III standards.
 
The adoption of the standardized approach
is expected to lead to a USD 7bn decrease in operation
 
al risk RWA to USD 138bn from USD 145bn
 
under the AMA.
 
We
will report RWA under the
 
revised framework for the first time
 
in the first quarter of
 
2025, and we will provide an
 
update
in our first quarter 2025
 
report on further improvements from mitigating actions
 
and our dialogue with FINMA regarding
various aspects of the final Basel III rules.
›
Refer to “Risk-weighted assets” in the “Capital,
 
liquidity and funding, and balance sheet” section
 
of this report for more
information about the capital impacts from the adoption
 
of the final Basel III standards on 1 January
 
2025
Although the AMA capital model
 
is being replaced for regulatory
 
capital reporting activities, we will continue
 
to maintain
a
 
non-financial
 
risk
 
measurement
 
model,
 
closely
 
aligned
 
with
 
the
 
historical
 
UBS
 
AMA
 
calibration
 
and
 
governance
practices. The related model has been
 
refined and enhanced to reflect
 
the full risk exposures after the acquisition
 
of the
Credit Suisse Group and to support broader internal usage
 
as referenced.
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Risk management and control
 
135
Model risk
Main sources of model risk
We rely on models to inform risk
 
management and control decisions, to measure risks or exposures, to value
 
instruments
or positions, to conduct
 
stress testing, to assess
 
adequacy of capital,
 
and to manage
 
clients’ assets and our
 
own assets.
Models may also be used
 
to measure and monitor
 
compliance with rules and
 
regulations, for surveillance activities
 
,
 
and
to meet financial or regulatory reporting requirements. Our artificial intelligence (AI)-based solutions may rely on models,
and models may include functionalities defined as AI.
Model risk
 
is defined
 
as the
 
risk of
 
adverse consequences
 
(e.g. financial
 
losses or
 
reputational damage)
 
resulting from
incorrect or
 
misused models. AI-specific
 
risks are
 
managed in
 
conjunction with
 
other relevant risk
 
frameworks,
 
and specific
guidelines for the recognition of those risks apply.
Overview of measurement, monitoring and management
 
techniques
Our model governance
 
framework establishes requirements for
 
identifying, measuring, monitoring, reporting,
 
controlling
and mitigating model risk. All
 
the models that we use are
 
subject to governance and controls throughout
 
their life cycles,
with rigor,
 
depth and
 
frequency determined
 
by the
 
model’s materiality
 
and complexity.
 
This is
 
designed to
 
ensure that
risks arising from model use are identified, understood, managed, monitored, controlled and
 
reported on both a model-
specific and an aggregated level. Before approval for use
 
is granted, all our models are independently validated.
Once
 
approved
 
for
 
use,
 
a
 
model
 
is
 
subject
 
to
 
ongoing
 
model
 
monitoring,
 
regular
 
model
 
confirmation
 
and
 
periodic
revalidation, ensuring that the model is only used if it continues
 
to be fit for purpose.
Our
 
model
 
risk
 
governance
 
framework
 
follows
 
our
 
overarching
 
risk
 
governance
 
framework
 
along
 
the
 
three
 
lines
 
of
defense, with: (i) the
 
business divisions and
 
Group functions (including
 
Risk Control, Finance
 
and Compliance) responsible
for
 
the
 
development,
 
maintenance
 
and
 
appropriate
 
use
 
of
 
the
 
models;
 
(ii) the
 
Model
 
Risk
 
Management
 
&
 
Control
function, headed
 
by the
 
Chief Model
 
Risk Officer,
 
responsible
 
for independent
 
review, oversight
 
and challenge
 
of the
models; and (iii) Group Internal
 
Audit,
 
responsible for the assessment
 
of the design and operating
 
effectiveness and the
sustainability of the related processes.
Model risk is included in the Group-wide risk appetite
 
framework.
Model
 
oversight
 
committees
 
and
 
forums
 
ensure
 
that
 
model
 
risk
 
is
 
overseen
 
at
 
different
 
levels
 
of
 
the
 
organization,
appropriate model risk management and control actions are taken and, where necessary, escalated to the next level. The
Group Model
 
Governance
 
Committee is
 
our most
 
senior oversight
 
and escalation
 
body for
 
all models
 
in scope
 
of our
model governance framework. It is co-chaired by the Group Chief Risk Officer and
 
the Group CFO and is responsible for:
(i) reviewing and approving
 
changes to the
 
framework; (ii) approving
 
the model risk
 
appetite statement;
 
(iii) overseeing
adherence to the UBS model risk governance framework;
 
and (iv) monitoring model risk at a Group-wide level.
The migration
 
of client
 
accounts and
 
positions to
 
UBS infrastructure
 
impacts models
 
to some extent.
 
Respective model
integration plans are defined and overseen by the Group Model Governance Committee. The legacy Credit Suisse model
inventory has been reduced by more than 50% since
 
June 2023, with certain legacy Credit Suisse models still being
 
used
until they are retired or integrated into the UBS risk management
 
framework.
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Capital management
 
137
Capital management
Capital management objectives, planning and activities
 
Capital management objectives
Audited |
An adequate level of
 
common equity tier 1
 
(CET1) capital and total
 
loss-absorbing capacity (TLAC)
 
meeting both
internal assessment and regulatory requirements
 
is a prerequisite for conducting our
 
business activities.
We
 
are
 
therefore
 
committed
 
to
 
maintaining
 
a
 
strong
 
CET1
 
capital
 
and
 
TLAC
 
position
 
at
 
all
 
times,
 
in
 
order
 
to
 
meet
regulatory capital requirements and our target capital ratios,
 
and to support the growth of our businesses.
As
 
of
 
31 December
 
2024,
 
our
 
CET1
 
capital
 
ratio
 
was
 
14.3%
 
and
 
our
 
CET1
 
leverage
 
ratio
 
4.7%,
 
each
 
above
 
the
requirements
 
for
 
Swiss
 
systemically
 
relevant
 
banks
 
(SRBs)
 
and
 
Basel
 
Committee
 
on
 
Banking
 
Supervision
 
(BCBS)
requirements,
 
and
 
also
 
above
 
our
 
capital
 
guidance.
 
We
 
believe
 
that
 
our
 
capital
 
strength,
 
consistent
 
with
 
our
 
capital
guidance,
 
is
 
a
 
source
 
of
 
confidence
 
for
 
our
 
stakeholders,
 
contributes
 
to
 
our
 
sound
 
credit
 
ratings
 
and
 
is
 
one
 
of
 
the
foundations of our success.
 
In
 
Switzerland,
 
the
 
amendments
 
to
 
the
 
Capital
 
Adequacy
 
Ordinance
 
(the
 
CAO)
 
that
 
incorporate
 
the
 
final
 
Basel III
standards
 
into
 
Swiss
 
law,
 
including
 
the
 
five
 
new
 
ordinances
 
that
 
contain
 
the
 
implementing
 
provisions
 
for
 
the
 
revised
CAO, entered into force on 1 January 2025.
 
›
Refer to the “Our strategy” and “Targets, capital guidance and ambitions” sections of this
 
report for more information about our
capital and resource guidelines
 
›
Refer to “We may be unable to maintain our capital
 
strength” in the “Risk factors” section of this report for
 
more information
about capital ratio-related risks
›
Refer to “Developments related to the implementation
 
of the final Basel III standards” in the “Regulatory and
 
legal
developments” section of this report for more information
 
about the incorporation of final Basel III standards
 
›
Refer to “Risk-weighted assets” and “Leverage ratio
 
denominator” in this section for more information
 
about the impacts
resulting from the adoption of the final Basel III standards on risk-weighted
 
assets (RWA) and leverage ratio denominator (LRD)
Capital planning and activities
Audited |
We manage our balance sheet, RWA, LRD and TLAC ratio levels based on our regulatory requirements,
 
within our
internal limits and targets, and our externally provided guidance.
 
Our strategic focus
 
is on achieving
 
an optimal attribution
 
and use of
 
financial resources
 
between our business
 
divisions
and Group functions, as well
 
as between our legal entities,
 
while remaining within the limits
 
defined for the Group and
allocated to the business divisions by the Board of Directors
 
(the BoD).
 
Audited |
These resource
 
allocations are
 
based on
 
our business
 
plans and
 
earnings projections,
 
which are
 
reflected in
 
our
capital
 
plans.
 
The
 
equity
 
double
 
leverage
 
ratio
 
at
 
the
 
UBS
 
Group AG
 
standalone
 
level
 
(calculated
 
as
 
investments
 
in
subsidiaries divided by total
 
equity) is a key
 
consideration when planning for
 
distributions from UBS AG to
 
UBS Group AG
and from UBS Group AG to its shareholders.
The annual
 
strategic planning
 
process includes
 
a capital
 
planning component
 
that is
 
key in
 
defining our
 
target capital
levels and
 
returns. The
 
capital planning
 
component is
 
based on
 
an attribution
 
of Group
 
RWA and
 
LRD capacity
 
to the
business divisions.
 
Limits and targets are
 
established at the Group
 
and business-division levels and
 
are approved by the
 
BoD at least annually.
In
 
the
 
target-setting
 
process
 
we
 
take
 
into
 
account,
 
among
 
other
 
factors,
 
the
 
current
 
and
 
potential
 
future
 
TLAC
requirements,
 
our
 
aggregate
 
risk
 
exposure
 
in
 
terms
 
of
 
the
 
combined
 
stress
 
test
 
(the
 
CST)
 
and
 
the
 
effect
 
of
 
expected
accounting policy changes.
 
Monitoring is based on these internal limits and targets and provides indications if any changes are required. Any breach
of limits in place triggers a series of required remediating actions.
Group Treasury plans for and monitors consolidated TLAC information on an ongoing basis, reflecting business and legal
entity
 
requirements,
 
as
 
well
 
as
 
regulatory
 
developments
 
in
 
capital
 
regulations.
 
In
 
addition,
 
capital
 
planning
 
and
monitoring
 
are
 
performed
 
at
 
the
 
legal
 
entity
 
level
 
for
 
our
 
significant
 
subsidiaries
 
and
 
sub-groups
 
that
 
are
 
subject
 
to
prudential supervision and must meet capital and other
 
supervisory requirements.
›
Refer to “Capital and capital ratios of our significant
 
regulated subsidiaries” in this section for more information
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Capital management
 
138
Swiss SRB total loss-absorbing capacity framework
The disclosures
 
in this section
 
are provided
 
for UBS
 
Group AG on
 
a consolidated
 
basis and
 
focus on
 
key developments
during the reporting period and information in accordance
 
with the Basel III framework, as applicable to Swiss SRBs.
Additional regulatory
 
disclosures for
 
UBS Group AG
 
on a
 
consolidated basis
 
are provided
 
in our
 
31 December 2024 Pillar 3
Report.
 
The
 
Pillar 3
 
Report
 
also
 
includes
 
information
 
relating
 
to
 
our
 
significant
 
regulated
 
subsidiaries
 
and
 
sub-groups
(UBS AG consolidated, UBS AG standalone, UBS Switzerland AG standalone, UBS Europe SE consolidated, UBS Americas
Holding LLC
 
consolidated
 
and
 
Credit
 
Suisse
 
International
 
standalone
 
as
 
of
 
31 December
 
2024
 
and
 
is
 
available
 
under
“Pillar 3 disclosures”
 
at
ubs.com/investors
.
Capital
 
and
 
other
 
regulatory
 
information
 
for
 
UBS AG
 
consolidated
 
in
 
accordance
 
with
 
the
 
Basel III
 
framework,
 
as
applicable to
 
Swiss SRBs,
 
is provided
 
in the
 
UBS AG consolidated Annual
 
Report 2024,
 
available under
 
“Annual reporting”
at
ubs.com/investors
.
Regulatory framework
The Basel III framework came
 
into effect in Switzerland
 
on 1 January 2013 and
 
is embedded in the CAO.
 
The CAO also
includes the too-big-to-fail (TBTF) provisions applicable
 
to Swiss SRBs.
 
Under the Swiss SRB framework, going and
 
gone concern requirements represent the Group’s
 
TLAC requirement. TLAC
encompasses regulatory capital, such
 
as CET1 capital,
 
loss-absorbing additional tier 1 (AT1)
 
and tier 2 capital
 
instruments,
and liabilities that can be written down
 
or converted into equity in case of resolution
 
or for the purpose of restructuring
measures.
 
RWA
 
calculations
 
are
 
based
 
on
 
the
 
applicable
 
rules
 
and
 
models
 
approved
 
by
 
the
 
Swiss
 
Financial
 
Market
Supervisory Authority (FINMA)
 
for the respective legal entities.
Capital and other instruments contributing to our total loss-absorbing
 
capacity
In addition to CET1 capital, the following instruments contribute
 
to our loss-absorbing capacity:
–
loss-absorbing AT1 capital instruments (high and low trigger);
–
non-Basel III-compliant tier 2 capital instruments; and
–
TLAC-eligible senior unsecured debt instruments.
Under
 
the
 
Swiss
 
SRB
 
rules,
 
going
 
concern
 
capital
 
includes
 
CET1
 
capital
 
and
 
high-trigger
 
loss-absorbing
 
AT1
 
capital
instruments. Our existing outstanding low-trigger loss-absorbing AT1 capital instruments are available to meet the going
concern capital requirements until their first call date. As of their
 
first call date, these instruments are eligible to meet the
gone concern requirements.
Outstanding
 
high-
 
and
 
low-trigger
 
loss-absorbing
 
tier 2
 
capital
 
instruments,
 
non-Basel III-compliant
 
tier 2
 
capital
instruments and
 
TLAC-eligible senior
 
unsecured debt
 
instruments are
 
eligible to meet
 
gone concern requirements
 
until
one year before maturity. A maximum of 25% of the gone concern requirements can be met with instruments that have
a remaining maturity of between one and two years (i.e. are in the last year of eligibility). However, once at least 75% of
the minimum gone concern requirement has been
 
met with instruments that have a remaining
 
maturity of greater than
two years, all
 
instruments that have
 
a remaining maturity
 
of between one
 
and two years
 
remain eligible to be
 
included
in the total gone concern capital.
 
›
Refer to “Bondholder information”,
 
available at
ubs.com/investors,
 
for more information about the eligibility of capital and
 
senior
unsecured debt instruments and key features and terms and
 
conditions of capital instruments
Total loss-absorbing capacity and leverage ratio requirements
Going concern capital requirements
Under
 
the
 
Swiss
 
SRB
 
requirements,
 
total
 
going
 
concern
 
minimum
 
requirements
 
for
 
all
 
Swiss
 
SRBs
 
are
 
a
 
capital
 
ratio
requirement of 12.86% of RWA and a leverage ratio requirement
 
of 4.5%. In addition to these minimum requirements,
an add-on
 
reflecting the degree of
 
systemic importance is
 
applied, based on
 
market share and
 
LRD. The applicable
 
market
share and
 
LRD add-on
 
requirements
 
for UBS
 
were both
 
unchanged at
 
0.72% of
 
RWA and
 
0.25% of
 
LRD, resulting
 
in
add-ons of
 
1.44% of
 
RWA
 
and 0.50%
 
of LRD.
 
As a
 
result
 
of the
 
acquisition
 
of the
 
Credit Suisse
 
Group
 
in 2023,
 
the
capital add-ons for market share and LRD for UBS Group
 
AG consolidated will increase commensurate
 
with the Group’s
increased
 
market
 
share
 
and
 
higher
 
LRD
 
after
 
the
 
acquisition.
 
The
 
phase-in
 
of
 
the
 
increased
 
capital
 
requirements
 
will
commence from the end of 2025 and will be completed
 
by the beginning of 2030, at the latest.
The
 
Swiss
 
countercyclical
 
capital
 
buffer,
 
at
 
a
 
maximum
 
level
 
of
 
2.5%
 
on
 
risk-weighted
 
positions
 
that
 
are
 
directly
 
or
indirectly backed
 
by residential
 
properties in Switzerland
 
,
 
increased our
 
minimum CET1
 
capital requirement
 
by 37 basis
points as
 
of 31 December 2024.
 
We also
 
continued to apply
 
countercyclical buffer requirements introduced
 
in other BCBS
member jurisdictions,
 
which
 
resulted in
 
an additional
 
buffer
 
requirement
 
of
 
16 basis points
 
as of
 
31 December
 
2024.
Overall,
 
countercyclical
 
capital
 
buffers
 
contributed
 
52 basis
 
points
 
to
 
our
 
minimum
 
CET1
 
capital
 
requirement
 
as
 
of
31 December 2024.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Capital management
 
139
The
 
total
 
going
 
concern
 
capital
 
requirements
 
applicable
 
are
 
14.82%
 
of
 
RWA
 
(including
 
countercyclical
 
buffer
requirements) and 5.00%
 
of the LRD. Furthermore,
 
of the total
 
going concern capital
 
requirement of 14.82%
 
of RWA,
at least 10.52% must be met with CET1 capital, while a maximum of 4.3% can be met with high-trigger loss-absorbing
AT1 capital instruments
 
(and our existing
 
outstanding low-trigger
 
AT1 capital instruments,
 
which qualify until
 
their first
call date as mentioned above).
 
Similarly, of the total going
 
concern leverage ratio requirement of 5.00%, at least
 
3.50% must be met with
 
CET1 capital,
while
 
a
 
maximum
 
of
 
1.5%
 
can
 
be
 
met
 
with
 
high-trigger
 
loss-absorbing
 
AT1
 
capital
 
instruments
 
(and
 
our
 
existing
outstanding low-trigger AT1 capital instruments, which qualify until
 
their first call date as mentioned above).
Gone concern loss-absorbing capacity requirements
As an
 
internationally active
 
Swiss SRB,
 
UBS is
 
also subject
 
to gone
 
concern loss-absorbing
 
capacity requirements.
 
The
gone concern requirements also include add-ons for
 
market share and LRD.
 
In
 
November
 
2022, the
 
Swiss
 
Federal
 
Council
 
adopted
 
amendments
 
to
 
the
 
Banking
 
Act and
 
the
 
Banking
 
Ordinance,
which entered into force as of 1 January 2023.
 
The amendments replaced the resolvability discount on the gone concern
capital
 
requirements
 
for
 
systemically
 
important
 
banks
 
(SIBs),
 
including
 
UBS,
 
with
 
reduced
 
base
 
gone
 
concern
 
capital
requirements equivalent to 75% of
 
the total going concern requirements
 
(excluding countercyclical buffer requirements).
In addition,
 
as of
 
July 2024,
 
FINMA has
 
the authority
 
to impose
 
a surcharge
 
of up
 
to 25%
 
of the
 
total going
 
concern
capital requirements
 
(excluding countercyclical buffer requirements) based on obstacles to an SIB’s resolvability identified
in future resolvability assessments. Our total gone concern
 
requirements remained substantially unchanged in
 
2024.
Our
 
gone
 
concern
 
requirements
 
can
 
be
 
reduced
 
when
 
higher-quality
 
capital
 
instruments
 
(CET1
 
capital,
 
low-trigger
loss-absorbing AT1 or certain
 
low-trigger tier 2 capital
 
instruments)
 
are used to meet
 
gone concern requirements.
 
As of
31 December 2024, UBS did not use any higher-quality capital
 
instruments to fulfill gone concern requirements.
From 1 January 2022
 
onward, the gone
 
concern requirement after
 
the potential reduction
 
for the use
 
of higher-quality
capital instruments has been floored at 10.0% and 3.75%
 
for the RWA- and LRD-based requirements, respectively.
In
 
this
 
report,
 
we
 
refer
 
to
 
the
 
RWA-based
 
gone
 
concern
 
requirements
 
as
 
gone
 
concern
 
loss-absorbing
 
capacity
requirements and the RWA-based gone concern ratio is
 
referred to as the gone concern loss-absorbing capacity ratio.
The table below provides the RWA- and LRD-based requirements
 
and information as of 31 December 2024.
Swiss SRB going and gone concern requirements and information
As of 31.12.24
RWA
LRD
USD m, except where indicated
in %
in %
Required going concern capital
Total going concern capital
 
14.82
1
 
73,898
 
5.00
1
 
75,974
Common equity tier 1 capital
 
10.52
 
52,461
 
3.50
2
 
53,182
of which: minimum capital
 
4.50
 
22,434
 
1.50
 
22,792
of which: buffer capital
 
5.50
 
27,420
 
2.00
 
30,390
of which: countercyclical buffer
 
0.52
 
2,607
Maximum additional tier 1 capital
 
4.30
 
21,437
 
1.50
 
22,792
of which: additional tier 1 capital
 
3.50
 
17,449
 
1.50
 
22,792
of which: additional tier 1 buffer capital
 
0.80
 
3,988
Eligible going concern capital
Total going concern capital
 
17.60
 
87,739
 
5.77
 
87,739
Common equity tier 1 capital
 
14.32
 
71,367
 
4.70
 
71,367
Total loss-absorbing additional tier 1 capital
3
 
3.28
 
16,372
 
1.08
 
16,372
of which: high-trigger loss-absorbing additional tier 1 capital
 
3.03
 
15,126
 
1.00
 
15,126
of which: low-trigger loss-absorbing additional tier 1 capital
0.25
 
1,245
 
0.08
1,245
Required gone concern capital
Total gone concern loss-absorbing capacity
4,5,6
 
10.73
 
53,468
 
3.75
 
56,980
of which: base requirement including add-ons for market share and LRD
 
10.73
7
 
53,468
 
3.75
7
 
56,980
Eligible gone concern capital
Total gone concern loss-absorbing capacity
 
19.59
 
97,655
 
6.43
 
97,655
Total tier 2 capital
 
0.04
 
207
 
0.01
 
207
of which: non-Basel III-compliant tier 2 capital
 
0.04
 
207
 
0.01
 
207
TLAC-eligible senior unsecured debt
 
19.55
 
97,449
 
6.41
 
97,449
Total loss-absorbing capacity
Required total loss-absorbing capacity
 
25.55
 
127,366
 
8.75
 
132,954
Eligible total loss-absorbing capacity
 
37.19
 
185,394
 
12.20
 
185,394
Risk-weighted assets / leverage ratio denominator
Risk-weighted assets
 
498,538
Leverage ratio denominator
 
1,519,477
1 Includes
 
applicable add-ons
 
of 1.44%
 
for risk-weighted
 
assets (RWA)
 
and 0.50%
 
for leverage
 
ratio denominator
 
(LRD).
 
2 Our
 
minimum CET1
 
leverage ratio
 
requirement of
 
3.5% consists
 
of a
 
1.5% base
requirement, a 1.5% base buffer capital requirement, a 0.25% LRD add-on requirement and a 0.25% market share add-on requirement based on our Swiss credit business.
 
3 Includes outstanding low-trigger loss-
absorbing additional tier 1 capital instruments,
 
which are available under the Swiss
 
SRB framework to meet the
 
going concern requirements until their first
 
call date. As of their first call
 
date, these instruments are
eligible to meet the gone concern requirements.
 
4 A maximum of 25% of the gone concern requirements can be met with instruments that have a remaining
 
maturity of between one and two years. Once at least
75% of the minimum gone
 
concern requirement has
 
been met with instruments
 
that have a remaining
 
maturity of greater than two
 
years, all instruments
 
that have a remaining maturity
 
of between one and
 
two
years remain eligible to be included in the total
 
gone concern capital.
 
5 From 1 January 2023, the
 
resolvability discount on the gone concern
 
capital requirements for systemically important banks (SIBs)
 
has been
replaced with reduced base
 
gone concern capital requirements
 
equivalent to 75%
 
of the total going
 
concern requirements (excluding countercyclical
 
buffer requirements).
 
6 As of July
 
2024, the Swiss Financial
Market Supervisory Authority
 
(FINMA) has the authority
 
to impose a surcharge
 
of up to 25%
 
of the total going
 
concern capital requirements (excluding
 
countercyclical buffer requirements)
 
should obstacles to
 
an
SIB’s resolvability be identified in future resolvability assessments.
 
7 Includes applicable add-ons of 1.08% for RWA and 0.38% for LRD.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Capital management
 
140
Transitional purchase price allocation adjustments for
 
regulatory capital
As
 
part
 
of
 
the
 
acquisition
 
of
 
the
 
Credit
 
Suisse
 
Group
 
in
 
2023,
 
the
 
assets
 
acquired
 
and
 
liabilities
 
assumed,
 
including
contingent
 
liabilities,
 
were
 
recognized
 
at
 
fair
 
value
 
as
 
of
 
the
 
acquisition
 
date
 
in
 
accordance
 
with
 
IFRS
 
3,
Business
Combinations
. The purchase price allocation
 
(PPA) fair
 
value adjustments required under
 
IFRS 3 were recognized
 
as part
of negative goodwill and included
 
effects on financial instruments measured at amortized cost,
 
such as fair value
 
impacts
from
 
interest
 
rates
 
and
 
own
 
credit,
 
that
 
are
 
expected
 
to
 
accrete
 
back
 
to
 
par
 
through
 
the
 
income
 
statement
 
as
 
the
instruments are
 
held to
 
maturity.
 
FINMA approved
 
a transitional
 
CET1 capital
 
treatment
 
for certain
 
of these
 
fair value
adjustments, given the
 
substantially temporary nature
 
of the IFRS-3-accounting-driven
 
effects,
 
which neutralized equity
reductions under IFRS
 
Accounting Standards of
 
USD 5.9bn (before
 
tax)
 
and USD 5.0bn (net of
 
tax) as of the
 
acquisition
date. The transitional treatment was subject to linear
 
amortization through 30 June 2027.
 
In the third
 
quarter of
 
2024, we voluntarily
 
accelerated the amortization
 
of the remaining
 
transitional CET1
 
capital PPA
adjustments.
 
The amortization of transitional CET1 capital PPA adjustments since the acquisition date totaled USD 5.0bn
(net of tax) as of the end of 2024, an increase of USD 4.3bn (net
 
of tax) in 2024.
Total loss-absorbing capacity
Swiss SRB going and gone concern information
USD m, except where indicated
31.12.24
31.12.23
1
Eligible going concern capital
Total going concern capital
 
87,739
 
91,894
Total tier 1 capital
 
87,739
 
91,894
Common equity tier 1 capital
 
71,367
 
78,002
Total loss-absorbing additional tier 1 capital
 
16,372
 
13,892
of which: high-trigger loss-absorbing additional tier 1 capital
 
15,126
 
12,678
of which: low-trigger loss-absorbing additional tier 1 capital
 
1,245
 
1,214
Eligible gone concern capital
Total gone concern loss-absorbing capacity
 
97,655
 
107,106
Total tier 2 capital
 
207
 
538
of which: non-Basel III-compliant tier 2 capital
 
207
 
538
TLAC-eligible senior unsecured debt
 
97,449
 
106,567
Total loss-absorbing capacity
Total loss-absorbing capacity
 
185,394
 
199,000
Risk-weighted assets / leverage ratio denominator
Risk-weighted assets
 
498,538
 
546,505
Leverage ratio denominator
 
1,519,477
 
1,695,403
Capital and loss-absorbing capacity ratios (%)
Going concern capital ratio
 
17.6
 
16.8
of which: common equity tier 1 capital ratio
 
14.3
 
14.3
Gone concern loss-absorbing capacity ratio
 
19.6
 
19.6
Total loss-absorbing capacity ratio
 
37.2
 
36.4
Leverage ratios (%)
Going concern leverage ratio
 
5.8
 
5.4
of which: common equity tier 1 leverage ratio
 
4.7
 
4.6
Gone concern leverage ratio
 
6.4
 
6.3
Total loss-absorbing capacity leverage ratio
 
12.2
 
11.7
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Capital management
 
141
Audited |
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of equity under IFRS Accounting Standards to Swiss SRB common equity tier 1 capital
USD m
31.12.24
31.12.23
1
Total equity under IFRS Accounting Standards
85,574
86,156
Equity attributable to non-controlling interests
(494)
(531)
Defined benefit plans, net of tax
(833)
(965)
Deferred tax assets recognized for tax loss carry-forwards
(2,288)
(3,039)
Deferred tax assets for unused tax credits
(688)
(97)
Deferred tax assets on temporary differences, excess over threshold
(803)
Goodwill, net of tax
2
(5,702)
(5,750)
Intangible assets, net of tax
(702)
(894)
Compensation-related components (not recognized in net profit)
(2,800)
(2,186)
Expected losses on advanced internal ratings-based portfolio less provisions
(568)
(713)
Unrealized (gains) / losses from cash flow hedges, net of tax
2,585
3,109
Own credit related to (gains) / losses on financial liabilities
 
measured at fair value that existed at the balance sheet date, net of tax
1,178
1,291
Own credit related to (gains) / losses on derivative financial instruments
 
that existed at the balance sheet date
(62)
(89)
Prudential valuation adjustments
(167)
(368)
Accruals for dividends to shareholders
(2,835)
(2,240)
Transitional CET1 capital PPA adjustments, net of tax
4,316
Other
(25)
3
Total common equity tier 1 capital
71,367
78,002
1 Comparative-period information has been revised. Refer
 
to “Note 2 Accounting for the acquisition of the Credit
 
Suisse Group” in the “Consolidated financial statements” section
 
of this report for more information.
 
2 Includes goodwill related to significant investments in financial institutions of USD
19
m as of 31 December 2024 (31 December 2023: USD
20
m) presented on the balance sheet line Investments in associates.
Total loss-absorbing capacity and movement
 
Our TLAC decreased by USD 13.6bn to USD 185.4bn
 
as of 31 December 2024.
 
Going concern capital and movement
Audited
 
|
Our CET1
 
capital
 
mainly
 
consists
 
of: share
 
capital;
 
share premium,
 
which primarily
 
consists
 
of additional
 
paid-in capital
related to
 
shares issued;
 
and retained
 
earnings.
 
A detailed
 
reconciliation
 
of equity
 
under IFRS
 
Accounting
 
Standards to
 
CET1
capital is provided
 
in the
 
“Reconciliation of equity under IFRS
 
Accounting Standards to Swiss
 
SRB common equity
 
tier 1
capital” table.
 
Our CET1 capital decreased by USD
6.6
bn to USD
71.4
bn as of 31 December 2024, mainly as operating
 
profit before tax
of USD
6.8
bn was more than offset by regular and voluntary amortization of the remaining transitional CET1 capital PPA
adjustments
 
of
 
USD
4.3
bn
 
(net
 
of
 
tax),
 
dividend
 
accruals
 
of
 
USD
2.8
bn,
 
current
 
tax
 
expenses
 
of
 
USD
2.2
bn,
 
foreign
currency
 
translation
 
losses
 
of
 
USD
1.8
bn,
 
a
 
negative
 
effect
 
from
 
compensation-
 
and
 
own-share-related
 
capital
components of USD
1.4
bn, and share repurchases of USD
1.0
bn under our 2024 share repurchase program.
›
Refer to “UBS shares” in this section for more information about
 
our share repurchase programs
Our loss-absorbing
 
AT1 capital
 
increased by
 
USD
2.5
bn to
 
USD
16.4
bn, mainly
 
reflecting new
 
issuances of
 
AT1 capital
instruments of USD
3.5
bn partly offset by a call of USD
1.0
bn equivalent of AT1 capital instruments.
Following the approval of
 
a maximum amount of
 
conversion capital by UBS
 
Group AG’s shareholders at the 2024
 
Annual
General
 
Meeting,
 
AT1
 
capital
 
instruments
 
issued
 
from
 
the
 
beginning
 
of
 
the
 
fourth
 
quarter
 
of
 
2023
 
are,
 
upon
 
the
occurrence of a trigger event or a viability event,
 
subject to conversion into UBS Group AG ordinary
 
shares rather than a
write-down. AT1 capital instruments issued prior to the fourth
 
quarter of 2023 remain subject to a write-down.
›
Refer to “Conversion capital” in the “Corporate governance”
 
section of this report for more information about conversion
 
capital
Gone concern loss-absorbing capacity and movement
Audited |
Our total gone concern loss-absorbing capacity
 
decreased by
 
USD
9.5
bn to
 
USD
97.7
bn as of 31 December 2024
and included
 
USD
97.4
bn of TLAC-eligible
 
senior unsecured
 
debt.
The decrease
 
of USD 9.5bn
 
mainly reflected
 
the call
 
of USD 11.9bn
 
equivalent of
 
TLAC-eligible senior
 
unsecured debt
instruments,
 
as well as USD 5.6bn equivalent of senior unsecured debt
 
instruments
 
and USD 0.3bn of tier 2 instruments
ceasing to be eligible
 
as gone concern capital
 
as they entered the
 
final year before maturity,
 
and negative impacts
 
from
interest rate risk hedge, foreign currency
 
translation and other effects.
 
The aforementioned decreases were
 
partly offset
by new issuances of USD 9.7bn equivalent of TLAC-eligible
 
senior unsecured debt instruments.
Loss-absorbing capacity and leverage ratios
Our CET1
 
capital
 
ratio
 
remained
 
broadly
 
unchanged
 
at
 
14.3%,
 
as a
 
USD 48.0bn
 
decrease
 
in RWA
 
was
 
offset
 
by the
aforementioned decrease in CET1 capital
 
.
Our CET1 leverage
 
ratio increased to 4.7%
 
from 4.6%, due
 
to a USD 175.9bn decrease
 
in the LRD, partly offset
 
by the
decrease in CET1 capital.
Our going concern capital ratio increased to 17.6% from 16.8%, reflecting the aforementioned decrease in RWA, partly
offset by a decrease in going concern capital of USD 4.2bn.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Capital management
 
142
Our
 
going
 
concern
 
leverage
 
ratio
 
increased
 
to
 
5.8%
 
from
 
5.4%,
 
reflecting
 
the
 
aforementioned
 
decrease
 
in
 
the
 
LRD,
partly offset by the decrease in going concern capital of
 
USD 4.2bn.
Our gone concern
 
loss-absorbing capacity
 
ratio was broadly
 
unchanged at 19.6%,
 
as a decrease
 
in gone concern
 
loss-
absorbing capacity of USD 9.5bn was offset by the aforementioned
 
decrease in RWA.
Our gone concern
 
leverage ratio
 
increased to
 
6.4% from 6.3%,
 
driven by the
 
decrease in the
 
LRD,
 
partly offset
 
by the
aforementioned decrease in gone concern loss-absorbing
 
capacity.
Swiss SRB total loss-absorbing capacity movement
1
USD m
Going concern capital
Swiss SRB
Common equity tier 1 capital as of 31.12.23
 
78,002
Operating profit / (loss) before tax
 
6,821
Current tax (expense) / benefit
 
(2,170)
Foreign currency translation effects, before tax
 
(1,778)
Compensation-
 
and own-share-related capital components
 
(1,382)
Share repurchase program
 
(1,000)
Accruals for proposed dividends to shareholders
 
(2,835)
Voluntary acceleration of the amortization of the remaining transitional CET1 capital
 
PPA adjustments, net of tax
 
(3,371)
Regular amortization of the transitional CET1 capital PPA adjustments, net of tax
 
(945)
Other
 
26
Common equity tier 1 capital as of 31.12.24
 
71,367
Loss-absorbing additional tier 1 capital as of 31.12.23
 
13,892
Issuance of high-trigger loss-absorbing additional tier 1 capital
 
3,483
Call of high-trigger loss-absorbing additional tier 1 capital
 
(1,015)
Interest rate risk hedge, foreign currency translation and other effects
 
13
Loss-absorbing additional tier 1 capital as of 31.12.24
 
16,372
Total going concern capital as of 31.12.23
 
91,894
Total going concern capital as of 31.12.24
 
87,739
Gone concern loss-absorbing capacity
Tier 2 capital as of 31.12.23
 
538
Debt no longer eligible as gone concern loss-absorbing capacity
 
due to residual tenor falling to below one year
 
(328)
Interest rate risk hedge, foreign currency translation and other effects
 
(4)
Tier 2 capital as of 31.12.24
 
207
TLAC-eligible unsecured debt as of 31.12.23
 
106,567
Issuance of TLAC-eligible senior unsecured debt
 
9,744
Call of TLAC-eligible senior unsecured debt
 
(11,890)
Debt no longer eligible as gone concern loss-absorbing capacity
 
due to residual tenor falling to below one year
 
(5,568)
Interest rate risk hedge, foreign currency translation and other effects
 
(1,405)
TLAC-eligible unsecured debt as of 31.12.24
 
97,449
Total gone concern loss-absorbing capacity as of 31.12.23
 
107,106
Total gone concern loss-absorbing capacity as of 31.12.24
 
97,655
Total loss-absorbing capacity
Total loss-absorbing capacity as of 31.12.23
 
199,000
Total loss-absorbing capacity as of 31.12.24
 
185,394
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
 
Additional information
Active management of sensitivity to foreign exchange movements
Group
 
Treasury
 
is mandated
 
to
 
minimize
 
adverse
 
effects
 
from
 
changes
 
in
 
foreign
 
currency
 
rates
 
on our
 
CET1
 
capital
and / or
 
CET1
 
capital
 
ratio.
 
A
 
significant
 
portion
 
of
 
our
 
CET1
 
capital
 
and
 
RWA
 
is
 
denominated
 
in
 
Swiss
 
francs,
 
euro,
pounds sterling
 
and other
 
currencies. In order
 
to hedge
 
the CET1
 
capital ratio, CET1
 
capital needs
 
to have
 
foreign currency
exposure, leading to foreign currency
 
rates sensitivity of CET1 capital.
 
Consequently,
 
it is not possible to simultaneously
 
fully hedge CET1 capital and the
 
CET1 capital ratio. As the proportion
of
 
RWA
 
denominated
 
in
 
currencies
 
other
 
than
 
the
 
US
 
dollar
 
outweighs
 
CET1
 
capital
 
in
 
such
 
currencies,
 
a
 
significant
appreciation of the
 
US dollar against
 
such currencies could
 
benefit our capital
 
ratios, while a
 
significant depreciation
 
of
the US dollar against these currencies could adversely affect
 
our capital ratios.
The Group Asset and
 
Liability Committee, a
 
committee of the Group
 
Executive Board, has
 
mandated Group Treasury
 
to
adjust the
 
currency mix of
 
CET1 capital,
 
within limits set
 
by the
 
BoD, to
 
balance the
 
effect of foreign
 
exchange movements
on CET1 capital and
 
the CET1 capital ratio. Limits
 
are in place for
 
the sensitivity of both CET1
 
capital and the CET1 capital
ratio to an appreciation or depreciation of 10% in the value
 
of the US dollar against other currencies.
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Capital management
 
143
Sensitivity to currency movements
 
Risk-weighted assets
We
 
estimate
 
that
 
a
 
10%
 
depreciation
 
of
 
the
 
US
 
dollar
 
against
 
other
 
currencies
 
would
 
have
 
increased
 
our
 
RWA
 
by
USD 22bn and our CET1 capital by USD 2.4bn as of 31 December 2024 (31 December 2023: USD 24bn and USD 2.6bn,
respectively) and decreased our CET1 capital
 
ratio by 14 basis points (31 December 2023: 13 basis points).
Conversely, a 10%
 
appreciation of the
 
US dollar against
 
other currencies would
 
have decreased our
 
RWA by USD 20bn
and our
 
CET1 capital
 
by USD 2.2bn
 
(31 December
 
2023: USD 21bn
 
and USD 2.4bn,
 
respectively) and
 
increased our
CET1 capital ratio by 14 basis points (31 December 2023: 13 basis
 
points).
Leverage ratio denominator
Our leverage ratio is also sensitive to
 
foreign exchange movements as a result of the currency mix of our
 
capital and LRD.
When adjusting the currency mix in capital, potential effects on the going concern leverage ratio are taken into account,
and the
 
sensitivity
 
of the
 
going concern
 
leverage
 
ratio to
 
an appreciation
 
or depreciation
 
of 10%
 
in the
 
value
 
of the
US dollar against other currencies is actively monitored.
We
 
estimate
 
that
 
a
 
10%
 
depreciation
 
of
 
the
 
US
 
dollar
 
against
 
other
 
currencies
 
would
 
have
 
increased
 
our
 
LRD
 
by
USD 97bn as of 31 December 2024 (31 December 2023: USD 114bn)
 
and decreased our CET1 leverage ratio by 13 basis
points (31
 
December 2023:
 
15 basis points).
 
Conversely, a
 
10% appreciation
 
of the
 
US dollar
 
against other
 
currencies
would have decreased our LRD by USD 88bn (31 December 2023: USD 103bn) and increased our CET1 leverage ratio by
14 basis points (31 December 2023: 15 basis points).
The aforementioned sensitivities
 
do not
 
consider foreign currency
 
translation effects related
 
to defined
 
benefit plans other
than those related to the currency translation of the net
 
equity of foreign operations.
Capital and capital ratios of our significant regulated
 
subsidiaries
UBS
 
Group AG
 
is
 
a
 
holding
 
company
 
conducting
 
substantially
 
all
 
of
 
its
 
operations
 
through
 
UBS AG
 
and
 
subsidiaries
thereof.
 
UBS Group AG and
 
UBS AG have
 
contributed a
 
significant portion
 
of their
 
respective capital
 
to, and
 
provided
substantial
 
liquidity
 
to,
 
subsidiaries.
 
Many
 
of
 
these
 
subsidiaries
 
are
 
subject
 
to
 
regulations
 
requiring
 
compliance
 
with
minimum capital, liquidity
 
and similar requirements.
 
Regulatory capital components
 
and capital ratios
 
of our significant
regulated subsidiaries determined under the regulatory framework
 
of each subsidiary’s home jurisdiction are provided in
the “Financial and regulatory key figures for our significant
 
regulated subsidiaries and sub-groups” section of this report.
Supervisory authorities
 
generally have
 
discretion
 
to
 
impose higher
 
requirements,
 
or to
 
otherwise
 
limit the
 
activities
 
of
subsidiaries. Supervisory authorities
 
also may require
 
entities to measure
 
capital and leverage
 
ratios on a stressed
 
basis,
and may
 
limit the
 
ability of
 
the entity
 
to engage
 
in new
 
activities or
 
take capital
 
actions based
 
on the
 
results
 
of those
tests.
 
›
Refer to the 31 December 2024 Pillar 3 Report,
 
available under “Pillar 3 disclosures” at
ubs.com/investors,
for more capital and
other regulatory information about our significant regulated
 
subsidiaries and sub-groups
Joint liability of UBS AG and UBS Switzerland AG
In June
 
2015, upon the
 
transfer of the
 
Personal & Corporate
 
Banking and Global
 
Wealth Management businesses booked
in
 
Switzerland
 
from
 
UBS AG
 
to
 
UBS
 
Switzerland AG,
 
UBS AG
 
and
 
UBS
 
Switzerland AG
 
assumed
 
joint
 
liability
 
for
obligations
 
transferred
 
to UBS
 
Switzerland AG
 
and
 
existing
 
at
 
UBS AG,
 
respectively.
 
Under
 
certain
 
circumstances,
 
the
Swiss
 
Banking
 
Act
 
and
 
FINMA’s
 
Banking
 
Insolvency
 
Ordinance
 
authorize
 
FINMA
 
to
 
modify,
 
extinguish
 
or
 
convert
 
to
common equity liabilities of a bank in connection with a reso
 
lution or insolvency of such bank.
The joint liability amounts have declined
 
as obligations matured, terminated or were novated following
 
the transfer date.
As
 
of
 
31 December
 
2024,
 
the
 
liability
 
of
 
UBS
 
Switzerland AG
 
amounted
 
to
 
CHF 2.4bn
 
(USD 2.6bn),
 
a
 
decrease
 
of
CHF 0.4bn
 
(USD 0.7bn)
 
compared
 
with
 
31 December
 
2023.
 
The
 
respective
 
liability
 
of
 
UBS AG
 
has
 
been
 
substantially
extinguished.
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Capital management
 
144
Risk-weighted assets
RWA development in 2024
During 2024, RWA decreased by
 
USD 48.0bn to USD 498.5bn, driven by
 
a USD 32.9bn decrease resulting from
 
asset size
and other movements, a USD 14.6bn decrease from currency effects, and a decrease of USD 0.4bn resulting
 
from model
updates and methodology changes.
 
›
Refer to the 31 December 2024 Pillar 3 Report,
 
available under “Pillar 3 disclosures” at
ubs.com/investors,
 
for more information
about RWA movements and definitions of RWA movement key drivers
Movement in risk-weighted assets, by key driver
USD bn
RWA as of
31.12.23
Currency
effects
Model updates
and
methodology
changes
Asset size and
other
1
RWA as of
31.12.24
Credit and counterparty credit risk
2
 
345.3
 
(13.6)
 
(6.6)
 
(33.0)
 
292.2
Non-counterparty-related risk
3
 
34.4
 
(1.1)
 
0.5
 
33.7
Market risk
 
21.4
 
6.2
 
(0.4)
 
27.2
Operational risk
 
145.4
 
145.4
Total
 
546.5
 
(14.6)
 
(0.4)
 
(32.9)
 
498.5
1 Includes the Pillar
 
3 categories “Asset
 
size”, “Credit quality
 
of counterparties”, “Acquisitions
 
and disposals” and “Other”.
 
For more information,
 
refer to the 31
 
December 2024 Pillar
 
3 Report, available
 
under
“Pillar 3 disclosures” at ubs.com/investors.
 
2 Includes settlement risk, credit valuation adjustments, equity and investments in funds exposures in the banking book,
 
and securitization exposures in the banking book.
 
3 Non-counterparty-related risk includes deferred tax assets recognized for temporary differences, property,
 
equipment, software and other items.
Credit and counterparty credit risk
Credit
 
and
 
counterparty
 
credit
 
risk
 
RWA
 
decreased
 
by
 
USD
 
53.1bn
 
to
 
USD 292.2bn
 
as
 
of
 
31 December
 
2024.
 
This
decrease
 
was
 
driven
 
by
 
asset
 
size
 
and
 
other
 
movements
 
of
 
USD 33.0bn,
 
currency
 
effects
 
of
 
USD 13.6bn,
 
and
 
model
updates and methodology changes of USD 6.6bn.
Asset size and other movements decreased by
 
USD 33.0bn, mainly due to lower RWA in Non-core
 
and Legacy, primarily
driven by our
 
actions to actively
 
unwind the portfolio,
 
in addition to
 
the natural
 
roll-off, and,
 
to a lesser
 
extent,
 
due to
lower RWA
 
from loans
 
and loan
 
commitments across
 
Personal &
 
Corporate Banking,
 
Global Wealth
 
Management and
the Investment Bank.
Model updates
 
and methodology
 
changes resulted
 
in a
 
RWA decrease
 
of USD
 
6.6bn, mainly
 
due to
 
the phase-out
 
of
certain multipliers following improvements to models.
›
Refer to “Credit risk” in the “Risk management and
 
control” section of this report for more information about
 
credit and
counterparty credit risk developments
›
Refer to the 31 December 2024 Pillar 3 Report,
 
available under “Pillar 3 disclosures” at
ubs.com/investors,
 
for more information
about credit and counterparty credit risk developments
Market risk
Market risk RWA
 
increased by USD 5.8bn
 
to USD 27.2bn as of
 
31 December 2024, driven
 
by an increase
 
of USD 6.2bn
from the
 
FINMA-approved integration
 
of time decay
 
into regulatory
 
value-at-risk (VaR
 
)
 
and stressed
 
VaR for
 
derivatives
with
 
optionality,
 
which
 
was
 
partly
 
offset
 
by
 
an
 
improvement
 
in
 
the
 
profit
 
and
 
loss
 
representation
 
of
 
derivatives
 
with
multiple underlyings
 
in the
 
first quarter
 
of 2024,
 
as well
 
as from
 
the capital
 
buffer newly
 
introduced
 
by FINMA
 
in the
third quarter of
 
2024 to capitalize potential
 
maturity mismatches between
 
positions and hedges
 
in the incremental
 
risk
charge. This
 
change was
 
partly offset by
 
a decrease of
 
USD 0.4bn from asset
 
size and
 
other movements
 
due to
 
a reduction
of RWA in Non-core and Legacy
 
as a result of our actions to unwind the portfolio.
 
›
Refer to “Market risk” in the “Risk management
 
and control” section of this report for more information about
 
market risk
developments
›
Refer to the 31 December 2024 Pillar 3 Report,
 
available under “Pillar 3 disclosures” at
ubs.com/investors,
 
for more information
about market risk developments
Operational risk
 
Operational risk
 
RWA were unchanged at
 
USD 145.4bn as of
 
31 December 2024. In
 
the first quarter
 
of 2024,
 
we updated
the methodology that we use to allocate operational risk
 
RWA to the business divisions and Group
 
Items.
›
Refer to “Non-financial risk capital measurement” in the
 
“Risk management and control” section of this
 
report for more
information about the advanced measurement approach,
 
which has been used to measure Group operational risk exposure
 
and
calculate operational risk regulatory capital
Outlook
The adoption of the
 
final Basel III standards in
 
January 2025 led to
 
a USD 1bn increase in the
 
UBS Group’s RWA, resulting
in a minimal
 
impact on the
 
CET1 capital ratio.
 
The USD 1bn increase was
 
primarily driven by
 
a USD 7bn increase
 
in market
risk RWA and a
 
USD 3bn increase in credit
 
valuation adjustment-related
 
RWA resulting from
 
the implementation of the
Fundamental Review of the Trading Book (the FRTB) framework,
 
largely offset by a USD 7bn reduction in operational
 
risk
RWA and a USD 1bn reduction
 
in credit risk RWA. We
 
will provide in our first quarter 2025
 
report an update on further
improvements from mitigating actions and our dialogue with FINMA regarding
 
various aspects of the final Basel III rules.
These changes do not take into account the impact
 
of the output floor.
 
The output floor,
 
which is being phased in until
2028, is currently not binding for the UBS Group
 
.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Capital management
 
145
In addition to the impact
 
of the final Basel III standards,
 
we expect that model updates
 
will result in an RWA
 
increase of
around USD 3bn in 2025, primarily as a result of the migration of Credit Suisse portfolios to UBS models. The extent and
timing of RWA changes may
 
vary as model updates are
 
completed and receive regulatory
 
approval, along with changes
in the composition of the relevant portfolios.
Furthermore, we
 
expect exposures
 
in Non-core
 
and Legacy
 
to reduce
 
as a
 
result of
 
maturities and
 
active unwinding
 
of
positions, mitigating the impact from the FRTB.
Risk-weighted assets, by business division and Group Items
1
USD bn
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group
 
Items
Total
RWA
31.12.24
Credit and counterparty credit risk
2
 
93.6
 
120.6
 
7.2
 
56.2
 
10.7
 
3.9
 
292.2
Non-counterparty-related risk
3
 
6.4
 
2.9
 
0.7
 
3.6
 
1.5
 
18.7
 
33.7
Market risk
 
2.7
 
0.2
 
0.0
 
22.1
 
2.2
 
0.0
 
27.2
Operational risk
 
63.2
 
19.3
 
7.2
 
24.4
 
27.1
 
4.2
 
145.4
Total
 
165.8
 
143.0
 
15.1
 
106.4
 
41.4
 
26.8
 
498.5
31.12.23
Credit and counterparty credit risk
2
 
99.0
 
133.0
 
7.6
 
67.1
 
35.9
 
2.7
 
345.3
Non-counterparty-related risk
3
 
6.8
 
3.4
 
0.8
 
3.8
 
2.5
 
17.1
 
34.4
Market risk
 
1.8
 
0.2
 
0.0
 
13.8
 
5.6
 
0.0
 
21.4
Operational risk
 
59.4
 
17.6
 
7.2
 
25.0
 
30.0
 
6.2
 
145.4
Total
 
167.1
 
154.2
 
15.6
 
109.7
 
74.0
 
25.9
 
546.5
31.12.24 vs 31.12.23
Credit and counterparty credit risk
2
 
(5.4)
 
(12.5)
 
(0.4)
 
(10.9)
 
(25.2)
 
1.3
 
(53.1)
Non-counterparty-related risk
3
 
(0.5)
 
(0.5)
 
(0.1)
 
(0.2)
 
(1.0)
 
1.6
 
(0.6)
Market risk
 
0.8
 
0.0
 
0.0
 
8.4
 
(3.4)
 
0.0
 
5.8
Operational risk
 
3.8
 
1.7
 
0.0
 
(0.6)
 
(2.9)
 
(2.0)
Total
 
(1.3)
 
(11.3)
 
(0.5)
 
(3.3)
 
(32.5)
 
0.8
 
(48.0)
1 From the first quarter of 2024 onward, we
 
have started to further push out risk-weighted assets
 
from Group Items to the business divisions. Prior periods have
 
been restated to reflect these changes. Refer to “Note 3
Segment reporting” in the “Consolidated financial
 
statements” section of this report for more
 
information about the realignment of the business
 
divisions.
 
2 Includes settlement risk, credit valuation
 
adjustments,
equity and investments in funds exposures in the banking book,
 
and securitization exposures in the banking book.
 
3 Non-counterparty-related risk includes deferred tax assets recognized for
 
temporary differences
(31 December 2024: USD 18.1bn; 31 December 2023: USD 16.4bn), as well as property, equipment, software
 
and other items (31 December 2024: USD 15.7bn; 31 December 2023: USD 18.0bn).
Leverage ratio denominator
LRD development in 2024
During 2024, the LRD
 
decreased by USD 175.9bn
 
to USD 1,519.5bn, mainly
 
due to asset
 
size and other
 
movements of
USD 102.3bn, as well as currency effects
 
of USD 73.6bn.
Movement in leverage ratio denominator, by key driver
USD bn
LRD as of
 
31.12.23
Currency
 
effects
Asset size and
 
other
LRD as of
 
31.12.24
On-balance sheet exposures (excluding derivatives and securities
 
financing transactions)
1
 
1,329.2
 
(59.1)
 
(117.9)
 
1,152.2
Derivatives
1
 
128.1
 
(6.1)
 
10.0
 
132.0
Securities financing transactions
 
165.4
 
(5.7)
 
17.3
 
177.1
Off-balance sheet items
 
79.9
 
(2.9)
 
(7.3)
 
69.8
Deduction items
 
(7.2)
 
0.1
 
(4.5)
 
(11.6)
Total
 
1,695.4
 
(73.6)
 
(102.3)
 
1,519.5
1 Prior to the fourth quarter
 
of 2024, certain exposures related
 
to derivative cash collateral
 
were included in On-balance
 
sheet exposures. From
 
the fourth quarter of 2024
 
onward, we have refined the
 
approach to
include these exposures in Derivatives, which had no bottom-line impact on total LRD.
 
The comparative period has not been restated.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Capital management
 
146
The LRD movements described below exclude currency
 
effects.
 
On-balance
 
sheet
 
exposures
 
(excluding
 
derivatives
 
and
 
securities
 
financing
 
transactions)
 
decreased
 
by
 
USD 117.9bn,
reflecting a decrease in cash and balances at central banks, mainly due to repayment of funding from the Swiss National
Bank, as
 
well as
 
a decrease
 
in
 
lending balances
 
due to
 
negative
 
net new
 
loans
 
in
 
Personal
 
& Corporate
 
Banking and
Global Wealth Management.
 
There were also decreases in trading portfolio assets, mainly driven
 
by unwinding activities
in Non-core
 
and Legacy,
partly offset
 
by an
 
increase in
 
inventory held
 
in the
 
Investment Bank
 
to hedge
 
client positions
and decreases in financial assets reflecting maturities of the high-quality
 
liquid asset portfolio securities.
Derivatives exposures increased
 
by USD 10.0bn, mainly
 
due to market-driven
 
movements on foreign
 
currency contracts
in the Investment Bank, partly offset by lower trading volumes,
 
mainly in Non-core and Legacy.
Securities financing transactions
 
exposures increased by USD 17.3bn,
 
mainly reflecting higher
 
cash reinvestment in
 
Group
Treasury and brokerage receivables reflecting increases in
 
client activity levels.
 
Off-balance sheet items exposures decreased by USD
 
7.3bn, mainly driven by lower loan commitments.
Deduction items
 
increased by
 
USD 4.5bn to
 
USD 11.6bn from
 
USD 7.2bn, mainly
 
due to
 
our voluntary
 
acceleration of
the amortization of the remaining transitional CET1 capital
 
PPA adjustments in the third quarter of 2024.
›
Refer to “Balance sheet and off-balance sheet” in this
 
section for more information about balance sheet
 
and off-balance sheet
movements
›
Refer to “Transitional purchase price allocation adjustments for regulatory capital” in this section
 
for more information about the
change in deduction items
Outlook
The
 
adoption
 
of the
 
final Basel
 
III standards
 
in
 
January
 
2025 led
 
to a
 
low
 
single-digit
 
percentage
 
increase
 
in the
 
UBS
Group’s LRD, reducing the CET1 leverage
 
ratio by around 10 basis points.
 
Leverage ratio denominator, by business division and Group Items
1
USD bn
Global Wealth
Management
 
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group Items
Total
 
31.12.24
On-balance sheet exposures
2
 
480.0
 
398.4
 
5.4
 
211.8
 
40.3
 
16.2
 
1,152.2
Derivatives
2
 
11.9
 
5.6
 
0.0
 
104.6
 
9.5
 
0.4
 
132.0
Securities financing transactions
 
71.6
 
44.8
 
0.1
 
59.2
 
2.3
 
(0.9)
 
177.1
Off-balance sheet items
 
18.4
 
30.9
 
0.1
 
18.2
 
1.8
 
0.2
 
69.8
Items deducted from Swiss SRB tier 1 capital
 
(5.3)
 
(0.9)
 
(1.2)
 
(0.4)
 
(0.4)
 
(3.4)
 
(11.6)
Total
 
576.6
 
478.9
 
4.5
 
393.5
 
53.5
 
12.5
 
1,519.5
31.12.23
On-balance sheet exposures
2
 
514.4
 
442.8
 
5.8
 
235.3
 
117.7
 
13.2
 
1,329.2
Derivatives
2
 
8.7
 
3.2
 
0.0
 
90.6
 
25.5
 
0.1
 
128.1
Securities financing transactions
 
50.4
 
40.0
 
0.1
 
50.6
 
24.3
 
0.2
 
165.4
Off-balance sheet items
 
22.2
 
37.0
 
0.2
 
18.5
 
1.7
 
0.3
 
79.9
Items deducted from Swiss SRB tier 1 capital
 
(3.2)
 
1.9
 
(1.2)
 
(0.4)
 
(0.7)
 
(3.6)
 
(7.2)
Total
 
592.5
 
524.8
 
4.9
 
394.5
 
168.5
 
10.2
 
1,695.4
31.12.24 vs 31.12.23
On-balance sheet exposures
 
(34.4)
 
(44.3)
 
(0.4)
 
(23.5)
 
(77.3)
 
3.0
 
(177.0)
Derivatives
 
3.2
 
2.4
 
0.0
 
14.0
 
(16.0)
 
0.3
 
3.9
Securities financing transactions
 
21.2
 
4.8
 
0.0
 
8.7
 
(22.0)
 
(1.1)
 
11.6
Off-balance sheet items
 
(3.8)
 
(6.1)
 
0.0
 
(0.3)
 
0.1
 
(0.1)
 
(10.1)
Items deducted from Swiss SRB tier 1 capital
 
(2.1)
 
(2.8)
 
0.0
 
0.1
 
0.2
 
0.2
 
(4.3)
Total
 
(15.9)
 
(45.9)
 
(0.4)
 
(1.0)
 
(115.0)
 
2.4
 
(175.9)
1 From the first
 
quarter of 2024
 
onward, we have
 
started to further push
 
out LRD from Group
 
Items to the business
 
divisions. Prior periods
 
have been restated
 
to reflect these changes.
 
Refer to “Note 3
 
Segment
reporting” in the “Consolidated financial statements” section of
 
this report for more information about the realignment
 
of the business divisions.
 
2 Prior to the fourth quarter of 2024,
 
certain exposures related to
derivative cash collateral were
 
included in On-balance sheet
 
exposures. From the
 
fourth quarter of 2024
 
onward, we have refined
 
the approach to include
 
these exposures in Derivatives,
 
which had no bottom-line
impact on total LRD. The comparative period has not been restated.
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Capital management
 
147
Equity attribution
We have updated
 
our equity attribution
 
framework as of
 
1 January 2024. Specifically,
 
we have increased
 
the allocation
of tangible
 
equity to
 
the
 
business
 
divisions
 
by aligning
 
the
 
capital
 
ratios for
 
RWA
 
and the
 
LRD
 
more
 
closely
 
with
 
our
current Group
 
capital targets. Alongside
 
the updates to
 
our equity attribution
 
framework, we have
 
reflected the increased
allocation of balance sheet resources
 
previously retained centrally. As a
 
result, Group Items primarily retains equity
 
related
to deferred
 
tax assets,
 
accruals for
 
shareholder returns,
 
and unrealized
 
gains / losses
 
from cash
 
flow hedges.
 
The prior
year has been restated to reflect these changes.
 
Under
 
our
 
equity
 
attribution
 
framework,
 
tangible
 
equity
 
is
 
attributed
 
based
 
on
 
equally
 
weighted
 
average
 
RWA
 
and
average LRD, which both include
 
resource allocations from our
 
Group functions to the
 
business divisions.
 
Average RWA
and LRD are converted to CET1 capital equivalents
 
using target capital ratios. If the attributed
 
tangible equity calculated
under the weighted-driver approach
 
is less than the
 
CET1 capital equivalent of
 
risk-based capital (RBC)
 
for any business
division, the CET1 capital equivalent of RBC is used as a floor for that business division.
 
In 2024, the floor was applicable
for Asset Management and Non-core and Legacy and
 
in 2023 for Asset Management.
In addition to tangible equity, we
 
allocate equity to the business divisions
 
to support goodwill and intangible
 
assets. We
also allocate
 
to the
 
business divisions
 
attributed equity
 
related to
 
CET1 capital
 
deduction items
 
that are
 
attributable to
divisional activities, such as compensation-related components or
 
expected losses on the advanced internal
 
ratings-based
portfolio less provisions. We attribute all remaining capital
 
deduction items to Group Items.
 
›
Refer to “Balance sheet and off-balance sheet” in this
 
section for more information about movements in equity
 
attributable to
shareholders
Average attributed equity
For the year ended
USD bn
31.12.24
31.12.23
1
31.12.22
Global Wealth Management
 
33.3
 
29.3
 
20.0
Personal & Corporate Banking
 
21.6
 
16.8
 
9.3
Asset Management
 
2.7
 
2.3
 
1.7
Investment Bank
 
17.1
 
15.9
 
13.0
Non-core and Legacy
 
9.5
 
6.0
 
1.1
Group Items
2
 
1.1
 
3.8
 
12.5
Average equity attributed to business divisions and Group Items
 
85.2
 
74.2
 
57.6
1 The prior year has been restated to reflect
 
the changes to the equity attribution framework. Prior year average
 
numbers were impacted by the acquisition of the
 
Credit Suisse Group in June 2023.
 
2 Includes average
attributed equity related to capital deduction items for deferred tax assets, accruals for shareholder returns and unrealized gains / losses
 
from cash flow hedges.
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Liquidity and funding management
 
148
Liquidity and funding management
We
 
manage the
 
structural risks
 
of our
 
balance sheet,
 
including interest
 
rate
 
risk, structural
 
foreign
 
exchange
 
risk and
collateral risk,
 
as well
 
as liquidity
 
and funding
 
risk. This
 
section provides information
 
about liquidity
 
and funding
 
regulatory
requirements,
 
governance, management
 
(including sources
 
of liquidity
 
and funding),
 
contingency planning,
 
and stress
testing.
 
The
 
balances
 
disclosed
 
in
 
this
 
section
 
represent
 
year-end
 
positions,
 
unless
 
indicated
 
otherwise.
 
Intra-period
balances fluctuate in the ordinary course of business
 
and may differ from year-end positions.
Following the completion of
 
the acquisition of the
 
Credit Suisse Group in
 
June 2023, the merger
 
of UBS AG and Credit
Suisse AG in May 2024, the
 
transition to a single
 
US intermediate holding company in
 
June 2024, and the merger
 
of UBS
Switzerland AG and
 
Credit Suisse
 
(Schweiz) AG in
 
July 2024,
 
Credit Suisse
 
became part
 
of the
 
overall liquidity
 
and funding
management of the UBS Group.
 
Strategy, objectives and governance
Audited |
 
Our management of liquidity and funding ensures that our business franchises are protected and that our internal
and regulatory liquidity
 
and funding requirements
 
are prudently managed.
 
We measure liquidity
 
and funding risk using
internal
 
and
 
regulatory
 
models
 
and
 
metrics.
 
We
 
define
 
and
 
implement
 
internal
 
stress
 
testing
 
across
 
different
 
time
horizons, scenarios
 
and currencies
 
to ensure
 
we have
 
sufficient liquidity
 
and funding,
 
while remaining
 
compliant
 
with
regulatory
 
liquidity
 
and
 
funding
 
requirements.
 
Our
 
liquidity
 
and
 
funding
 
strategy
 
is
 
proposed
 
by
 
Group
 
Treasury
 
and
approved by the
 
Group Asset and
 
Liability Committee (the
 
Group ALCO), which
 
is a committee
 
of the Group
 
Executive
Board (the GEB) that is overseen by the Risk Committee
 
of the Board of Directors (the BoD).
Liquidity and
 
funding limits
 
and other
 
indicators (including
 
early-warning indicators)
 
are set
 
at Group
 
and, where
appropriate, at
 
legal entity
 
and business-division
 
levels. Key
 
limits (which
 
are under
 
the authority
 
of the
 
BoD) and
indicators linked to these
 
limits are reviewed and
 
reconfirmed at least once
 
a year by the
 
BoD, the GEB, the
 
Group
ALCO,
 
the
 
Group
 
Chief
 
Financial
 
Officer,
 
the
 
Group
 
Chief
 
Risk
 
Officer
 
and
 
the
 
Group
 
Treasurer,
 
taking
 
into
consideration the Group’s business strategy and risk appetite. Treasury Risk Control provides independent oversight
over liquidity
 
and funding
 
risk, including
 
the setting
 
of key
 
internal limits
 
and early-warning
 
indicators associated
with these limits.
›
Refer to the “Corporate governance” and
 
“Risk management and control” sections of this report
 
for more information
Group
 
Treasury
 
monitors
 
and
 
oversees
 
the
 
implementation
 
and
 
execution
 
of
 
our
 
liquidity
 
and
 
funding
 
strategy
 
and
manages liquidity
 
and funding
 
risk within
 
the limits
 
and other
 
relevant indicators,
 
thereby adhering
 
to the
 
internal risk
appetite and regulatory
 
requirements. This includes the management of both our cash and
 
non-cash collateral, including
our high-quality liquid assets (HQLA),
 
and centralizes the Group’s access
 
to wholesale funding markets in Group
 
Treasury.
To
 
complement
 
our
 
business-as-usual
 
management,
 
Group
 
Treasury
 
maintains
 
a
 
Contingency
 
Funding
 
Plan
 
and
contributes to plans for recovery and resolution,
 
defining crisis management processes throughout the crisis
 
continuum.
Group Treasury
 
reports on
 
the Group’s
 
liquidity and
 
funding status
 
and position,
 
at least
 
monthly, to
 
the Group
 
ALCO
and the Risk Committee of the BoD.
Liquidity and funding stress testing
Audited |
 
Our liquidity and funding risk appetite objective is
 
to ensure that the firm has sufficient liquidity to survive a
 
severe
three-month
 
idiosyncratic
 
and
 
market-wide
 
liquidity
 
stress
 
event
 
and
 
to
 
ensure
 
that
 
the
 
firm
 
has
 
sufficient
 
long-term
funding to
 
maintain franchise
 
assets at
 
a constant
 
level under
 
stressed
 
market
 
conditions
 
for up
 
to one
 
year,
 
in both
cases without government support and allowing for discrete
 
management actions.
 
Group Treasury maintains a
 
diversified, high-quality pool of
 
unencumbered liquid assets under
 
Treasury control. The liquid
asset portfolio is
 
managed dynamically,
 
so as to
 
operate at
 
all times within
 
the internal
 
risk appetite and
 
other relevant
Group, UBS AG and subsidiary liquidity and funding requirements.
Our liquidity
 
and funding
 
stress testing
 
has been
 
further refined
 
to cover
 
three main
 
stress scenarios:
 
a combined
 
(i.e.
market and idiosyncratic) scenario, an idiosyncratic scenario and
 
a structural market-wide scenario.
 
›
Refer to “Risk measurement” in the “Risk management
 
and control” section of this report for more information about
 
stress
testing
Combined (market and idiosyncratic) scenario
In
 
this
 
scenario,
 
UBS
 
faces
 
the
 
consequences
 
of
 
both
 
a
 
severely
 
deteriorated
 
macroeconomic
 
and
 
financial
 
market
environment and
 
a UBS-specific
 
event, resulting
 
in an
 
acute loss
 
of liquidity
 
over a
 
relatively short
 
period of
 
time. This
scenario represents
 
severe
 
yet plausible
 
events encompassing
 
both
 
market-wide
 
and idiosyncratic
 
elements,
 
in which,
however,
 
franchise client relationships are materially maintained.
UBS ensures
 
that its
 
liquidity risk
 
appetite objective
 
is met
 
by maintaining
 
a cumulative
 
liquidity surplus
 
on each
 
day in
the three-month stress horizon.
 
The liquidity gap is
 
assessed by modeling the
 
stressed liquidity value of
 
the liquidity buffer
and stressed liquidity inflows and outflows under the scenario.
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Liquidity and funding management
 
149
Idiosyncratic scenario
In this three
 
-month stress
 
scenario, UBS is
 
subject to a
 
significant and
 
unforeseen event
 
specific to UBS.
 
This materially
damages the market’s
 
perception of the
 
reputation and
 
creditworthiness of
 
UBS. The event
 
occurs in otherwise
 
benign
macroeconomic and financial market conditions. UBS’s difficulties throughout the
 
scenario are limited to UBS
 
and do not
trigger material market moves.
Structural market-wide scenario
In this scenario, UBS is subject
 
to a significant deterioration of macroeconomic
 
and financial market conditions
 
globally.
Macroeconomic shocks
 
result in
 
deteriorated financial
 
market conditions
 
over the
 
scenario horizon
 
of one
 
year.
 
UBS is
assumed to be affected equally relative
 
to other global financial institutions.
UBS ensures that
 
its funding risk
 
appetite objective
 
is met by
 
maintaining a
 
positive cumulative
 
behavioral liquidity
 
gap
across the
 
3-month,
 
6-month,
 
9-month
 
and
 
12-month
 
tenors.
 
The
 
liquidity
 
gap
 
is assessed
 
by
 
modeling
 
the
 
stressed
liquidity value of the liquidity buffer and the stressed liquidity inflows
 
and outflows under the scenario.
 
Management of liquidity and funding risk
Audited
 
|
 
Group Treasury
 
monitors the
 
Group’s funding
 
position,
 
including concentration
 
risk, aiming
 
to ensure
 
that
 
the
Group maintains a
 
well-balanced and diversified liability
 
structure. Group Treasury also looks to create the
 
optimal liability
structure to finance our businesses
 
in a reliable and
 
cost-efficient manner. Our funding activities are planned by
 
analyzing
the overall liquidity and funding requirements,
 
taking into account the amount
 
of stable funding that would
 
be needed
to support ongoing business activities through periods
 
of difficult market conditions.
The funding strategy of UBS Group is set annually in the Funding Plan and is reviewed on an
 
ongoing basis. The Funding
Plan is developed by Group Treasury and approved by the
 
Group ALCO.
›
Refer to “Balance sheet and off-balance sheet” in this
 
section for more information about the development
 
of our short- and
long-term debt during 2024
Global Wealth Management
 
and Personal
 
& Corporate
 
Banking provide
 
significant, cost-efficient
 
and stable
 
sources of
funding. These include deposits
 
and debt issued through the
 
Swiss central mortgage institutions and
 
UBS’s covered bond
programs,
 
which use a
 
portion of our
 
portfolio of Swiss
 
residential mortgages as
 
collateral to generate
 
long-term funding.
In addition,
 
we have
 
several short-,
 
medium- and
 
long-term funding
 
programs under
 
which we
 
issue senior unsecured
debt and structured
 
notes, as well
 
as short-term debt.
 
These programs enable
 
UBS to source
 
funding from institutional
and private
 
investors who are
 
active in
 
Europe, the
 
US and Asia
 
Pacific. Collectively,
 
these broad
 
product offerings
 
and
funding sources, together with the global scope of our business activities,
 
support our funding stability.
Internal funding and funds transfer pricing
We use our
 
global liquidity and funding
 
framework to govern the
 
liquidity management of our
 
branches and subsidiaries.
Group Treasury
 
meets internal demands for funding
 
by channeling funds from
 
entities generating surplus cash to
 
those
in need of financing, except in circumstances where
 
transfer restrictions exist.
Funding costs and benefits
 
are allocated to our
 
business divisions according to
 
our liquidity and
 
funding risk management
framework. Our internal funds transfer pricing system aims to
 
balance funding supply and demand.
Credit ratings
Credit ratings
 
can affect
 
the cost and
 
availability of
 
funding, especially from
 
wholesale unsecured
 
sources. UBS’s
 
credit
ratings can also influence
 
the performance of some of
 
its businesses and the
 
levels of client and
 
counterparty confidence.
Rating agencies
 
take into
 
account a
 
range of
 
factors when
 
assessing creditworthiness
 
and setting
 
credit ratings.
 
These
include the
 
firm’s strategy,
 
its business position
 
and franchise
 
value, stability
 
and quality
 
of earnings, capital
 
adequacy,
risk
 
profile
 
and
 
management,
 
liquidity
 
management,
 
diversification
 
of
 
funding
 
sources,
 
asset
 
quality,
 
and
 
corporate
governance. Credit ratings reflect the opinions of the
 
rating agencies and can change at any time.
In evaluating
 
our liquidity
 
and funding
 
requirements, we
 
consider the
 
potential effect
 
of a
 
reduction in
 
our long-term
credit ratings
 
and a
 
corresponding reduction
 
in short-term
 
ratings. If
 
our credit
 
ratings were
 
to be
 
downgraded, rating
trigger clauses could result in an immediate cash settlement or the
 
need to deliver additional collateral to counterparties
from contractual obligations
 
related to over-the-counter
 
(OTC) derivative
 
positions and other
 
obligations. Based
 
on our
credit ratings as of 31 December
 
2024, in the event of
 
a one-notch reduction in our
 
long-term credit ratings, we
 
would
have been required to
 
provide USD 0.1bn in cash or
 
other collateral. In the event
 
of a two-notch reduction, it
 
would have
been
 
USD 0.4bn
 
and
 
for
 
a
 
three-notch
 
downgrade,
 
USD 1.2bn.
 
In
 
the
 
two-
 
and
 
three-notch
 
scenarios
 
the
 
collateral
requirements predominantly relate to OTC derivative positions.
During 2024,
 
rating agencies
 
took the
 
following actions
 
regarding UBS
 
Group AG’s ratings:
 
Moody’s Investors
 
Service
Limited (Moody’s) changed
 
the outlook
 
on its “A3”
 
long-term senior unsecured
 
debt rating to
 
“Developing”; and S&P
Global
 
Ratings
 
Europe
 
Limited
 
(S&P)
 
changed
 
the
 
outlook
 
on
 
its
 
“A–”
 
long-term
 
Issuer
 
Credit
 
Rating
 
to
 
“Stable”.
 
In
addition, Moody’s upgraded the long-term senior unsecured
 
debt ratings of UBS AG to Aa2 from Aa3.
›
Refer to “Liquidity and funding management are critical
 
to UBS’s ongoing performance” in the “Risk factors” section of this report
for more information
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Liquidity and funding management
 
150
Contingency Funding Plan
Audited
 
|
 
We maintain our
 
Contingency Funding Plan
 
in preparation and
 
as an action
 
plan, aiming to ensure
 
we maintain
sufficient liquidity to meet
 
payment obligations in a
 
liquidity and funding stress scenario.
 
The plan specifies the
 
processes,
tools and responsibilities
 
that we have
 
available to effectively
 
manage liquidity and
 
funding through
 
these periods. Our
funding
 
diversification
 
and
 
global
 
scope
 
help
 
to
 
protect
 
our
 
liquidity
 
position
 
in
 
the
 
event
 
of
 
a
 
crisis. Our
 
contingent
funding sources include our
 
HQLA portfolios, available central
 
bank-eligible non-HQLA collateral
 
for liquidity facilities at
several major
 
central banks,
 
contingent reductions of
 
trading portfolio assets,
 
and other
 
actions available
 
to management.
Liquidity coverage ratio
The liquidity coverage ratio (the LCR) measures the short-term resilience of
 
a bank’s liquidity profile by assessing whether
sufficient HQLA are
 
available to meet
 
expected net cash
 
outflows from
 
a significant liquidity
 
stress scenario,
 
as defined
by the relevant regulator.
For UBS,
 
HQLA are
 
low-risk unencumbered
 
assets under
 
the control
 
of Group
 
Treasury that
 
are easily
 
and immediately
convertible into
 
cash at
 
little or
 
no loss
 
of value,
 
in order
 
to meet
 
liquidity needs.
 
Our HQLA
 
predominantly consist
 
of
assets that qualify as Level 1 in the LCR framework, including cash, central bank reserves and government bonds. Group
HQLA are held by UBS AG and its subsidiaries and
 
may include amounts that are available to meet funding
 
and collateral
needs in certain jurisdictions but are not readily
 
available for use by the Group as
 
a whole. These limitations are typically
the result of
 
local regulatory requirements,
 
including local LCR
 
and large exposure
 
requirements. Funds that
 
are effectively
restricted in
 
subsidiaries and
 
branches are
 
excluded from
 
the calculation
 
of Group
 
HQLA. On this
 
basis, USD 56.3bn
 
of
assets were excluded from our
 
daily average Group HQLA for
 
the fourth quarter of 2024.
 
Amounts held in excess of
 
local
liquidity requirements that are not subject to other restricti
 
ons are generally available for transfer within the Group
 
.
Basel Committee on
 
Banking Supervision (BCBS) standards
 
require an LCR
 
of at least
 
100%. In a
 
period of financial stress,
the Swiss
 
Financial Market
 
Supervisory Authority
 
(FINMA) may
 
permit banks
 
to use
 
their HQLA
 
and allow
 
their LCR
 
to
temporarily fall below
 
the minimum threshold.
 
We monitor the
 
LCR in all
 
significant currencies in
 
order to manage
 
any
currency mismatches between HQLA and the net expected
 
cash outflows in times of stress.
Our daily
 
average
 
LCR for
 
the
 
fourth
 
quarter
 
of
 
2024 was
 
188.4%,
 
compared
 
with
 
215.7% in
 
the
 
fourth
 
quarter
 
of
2023, remaining above the prudential requirement communicated
 
by FINMA.
The movement in the average LCR was primarily driven by a decrease in HQLA of
 
USD 84.1bn to USD 331.5bn, primarily
due to lower cash available from the
 
repayment of funding from the Swiss National Bank, a
 
reduction of HQLA following
an increase in non-HQLA securities financing transactions, lower
 
cash available from additional funding of trading
 
assets,
higher margin requirements,
 
a decrease in
 
debt issued
 
and an increase
 
in Swiss regulatory
 
minimum reserve requirements.
The aforementioned decreases in HQLA were partly offset by higher cash available from the unwinding activities of Non-
core and Legacy.
 
The effect of the decrease in HQLA was partly offset by a decrease in net cash outflows of USD 16.8bn to USD 176.0bn,
mainly
 
attributable
 
to
 
higher
 
net
 
inflows
 
from
 
securities
 
financing
 
transactions,
 
lower
 
outflows
 
from
 
irrevocable
 
loan
commitments and lower net outflows from derivatives,
 
partly offset by higher outflows from customer deposits.
 
›
Refer to the 31 December 2024 Pillar 3 Report,
 
available under “Pillar 3 disclosures” at
ubs.com/investors,
for more information
about the LCR
›
Refer to the “Significant regulated subsidiary and
 
sub-group information” section of this report
for more information about the
LCR of UBS AG and UBS Switzerland AG
Liquidity coverage ratio
USD bn, except where indicated
Average 4Q24
1
Average 4Q23
1
High-quality liquid assets
331.5
415.6
Total net cash outflows
2
176.0
192.8
Liquidity coverage ratio (%)
3
188.4
215.7
1 Calculated based on an average of 64 data points in the
 
fourth quarter of 2024 and 63 data points in the fourth
 
quarter of 2023.
 
2 Represents the net cash outflows expected over a stress period
 
of 30 calendar
days.
 
3 Calculated after the application of haircuts and inflow and outflow rates, as well as,
 
where applicable, caps on Level 2 assets and cash inflows.
Too-big-to-fail liquidity requirements
The too-big-to-fail (TBTF)
 
liquidity requirements communicated
 
by FINMA in the
 
third quarter of
 
2023 became effective
on 1 January
 
2024. The
 
affected legal
 
entities of
 
the UBS
 
Group were
 
compliant with
 
these requirements
 
throughout
2024.
 
 
 
 
 
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Liquidity and funding management
 
151
Net stable funding ratio
The net stable funding ratio
 
(the NSFR) framework is intended
 
to limit overreliance on
 
short-term wholesale funding, to
encourage a better
 
assessment of funding
 
risk across all
 
on-
 
and off-balance sheet
 
items and
 
to promote funding
 
stability.
The
 
NSFR
 
has
 
two
 
components:
 
available
 
stable
 
funding
 
(ASF),
 
as
 
numerator,
 
and
 
required
 
stable
 
funding
 
(RSF),
 
as
denominator.
 
ASF is
 
the portion
 
of capital
 
and liabilities
 
expected to
 
be available
 
over the
 
period of
 
one year.
 
RSF is
 
a
measure of the stable funding requirement
 
of assets based on their maturity,
 
encumbrance and other characteristics, as
well as the
 
potential for contingent
 
calls on funding
 
liquidity from off-balance sheet exposures.
 
The BCBS NSFR
 
regulatory
framework requires a ratio of at
 
least 100%.
As of 31 December 2024, the NSFR of the UBS Group increased
 
0.9 percentage points to 125.5%, remaining above the
prudential requirement communicated by FINMA.
Available stable
 
funding decreased
 
by USD 69.6bn
 
to USD 856.8bn,
 
mainly driven
 
by lower
 
customer deposits,
 
largely
driven by currency effects, lower regulatory capital and debt
 
issued.
Required stable funding
 
decreased by USD 60.7bn
 
to USD 682.5bn, predominantly
 
reflecting lower lending
 
assets, largely
due to currency effects.
›
Refer to the 31 December 2024 Pillar 3 Report,
 
available under “Pillar 3 disclosures” at
ubs.com/investors,
for more information
about the NSFR
›
Refer to the “Significant regulated subsidiary and
 
sub-group information” section of this report
for more information about the
NSFR of UBS AG and UBS Switzerland AG
Net stable funding ratio
USD bn, except where indicated
31.12.24
31.12.23
Available stable funding (ASF)
856.8
926.4
Required stable funding (RSF)
682.5
743.2
Net stable funding ratio (%)
125.5
124.7
Balance sheet and off-balance sheet
The
 
balances
 
disclosed
 
in
 
this
 
section
 
represent
 
year-end
 
positions,
 
unless
 
indicated
 
otherwise.
 
Intra-period
 
balances
fluctuate in the ordinary course of business and may differ from year
 
-end positions. Refer to the “Consolidated financial
statements”
 
section
 
of
 
this
 
report
 
for
 
more
 
information
 
about
 
the
 
development
 
of
 
our
 
financial
 
position.
 
For
 
more
information about the effects of
 
the acquisition of the Credit
 
Suisse Group on our balance
 
sheet and off-balance sheet,
refer to “Note 2
 
Accounting for the
 
acquisition of the Credit
 
Suisse Group” in the
 
“Consolidated financial statements”
section of this report.
Balance sheet
Balance sheet assets
As
 
of
 
31 December
 
2024,
 
balance
 
sheet
 
assets
 
totaled
 
USD 1,565.0bn,
 
a
 
decrease
 
of
 
USD 151.9bn
 
compared
 
with
31 December 2023.
Cash and balances
 
at central banks
 
decreased by USD
 
90.8bn, mainly due
 
to the repayment
 
of funding from
 
the Swiss
National Bank (the
 
SNB),
 
net investments in
 
securities financing transactions at
 
amortized cost and currency
 
effects, partly
offset by
 
inflows from
 
the disposal
 
of high-quality
 
liquid asset
 
(HQLA) portfolio
 
securities. Lending
 
assets decreased
 
by
USD 61.9bn, primarily driven by currency effects of approximately USD 33.1bn and negative net new loans in Personal &
Corporate
 
Banking
 
and
 
Global
 
Wealth
 
Management.
 
Trading
 
assets
 
decreased
 
by
 
USD 10.5bn,
 
mainly
 
driven
 
by
unwinding
 
activities
 
in
 
Non-core
 
and Legacy,
 
partly
 
offset
 
by an
 
increase
 
in
 
inventory
 
held
 
in
 
the
 
Investment
 
Bank
 
to
hedge client positions.
 
Other financial assets measured
 
at fair value
 
decreased by USD 8.6bn,
 
mainly reflecting unwinding
activities in Non-core and Legacy.
 
Other financial assets measured at amortized cost
 
decreased by USD 6.7bn, mainly due
to maturities of the HQLA portfolio securities and currency
 
effects.
These decreases
 
were partly
 
offset by
 
an increase
 
of USD 19.3bn
 
in securities
 
financing transactions
 
at amortized
 
cost,
mainly
 
reflecting
 
higher
 
cash
 
reinvestment
 
in
 
Group
 
Treasury.
 
Brokerage
 
receivables
 
increased
 
by
 
USD 4.9bn,
 
mainly
reflecting
 
higher
 
client
 
activity
 
levels.
 
Derivative
 
and
 
cash
 
collateral
 
receivables
 
on
 
derivative
 
instruments
 
increased
 
by
USD 3.3bn, mainly in foreign currency contracts reflecting market-driven increases,
 
partly offset by a decrease in interest
rate contracts,
 
primarily reflecting unwinding activities in Non-core and Legacy.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Balance sheet and off-balance
 
sheet
 
152
Assets
As of
% change from
USD bn
31.12.24
31.12.23
1
31.12.23
Cash and balances at central banks
 
223.3
 
314.1
 
(29)
Lending
2
 
598.9
 
660.8
 
(9)
Securities financing transactions at amortized cost
 
118.3
 
99.0
 
19
Trading assets
 
159.1
 
169.6
 
(6)
Derivatives and cash collateral receivables on derivative instruments
 
229.5
 
226.2
 
1
Brokerage receivables
 
25.9
 
21.0
 
23
Other financial assets measured at amortized cost
 
 
58.8
 
65.5
 
(10)
Other financial assets measured at fair value
3
 
97.7
 
106.3
 
(8)
Non-financial assets
 
 
53.6
 
54.5
 
(2)
Total assets
 
1,565.0
 
1,716.9
 
(9)
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
 
2 Consists of Loans and advances to customers and Amounts due from banks.
 
3 Consists of Financial assets at fair value not held for trading and Financial assets measured at
 
fair value through other comprehensive
income.
 
Asset encumbrance
The table below provides a breakdown of on- and off-balance sheet assets between encumbered assets, unencumbered
assets and assets that cannot be pledged as collateral.
Assets are presented as
 
Encumbered if they have
 
been pledged as collateral
 
against an existing liability
 
or are otherwise
not available for
 
securing additional funding.
 
Included within the
 
latter category are
 
assets protected under
 
client asset
segregation rules,
 
financial assets
 
for unit-linked
 
investment contracts
 
and assets
 
held in certain
 
jurisdictions to
 
comply
with explicit minimum local asset maintenance requirements.
Assets
 
that
 
cannot
 
be
 
pledged
 
as
 
collateral
 
represent
 
assets
 
that
 
are
 
not
 
encumbered,
 
but
 
by
 
their
 
nature
 
are
 
not
considered available to secure funding or meet collateral
 
needs.
All other
 
assets are
 
presented
 
as Unencumbered.
 
This
 
category
 
consists of
 
cash and
 
securities readily
 
realizable
 
in the
normal course
 
of business,
 
which include
 
our HQLA
 
and unencumbered
 
positions in
 
our trading
 
portfolio. In
 
addition,
unencumbered assets include loans
 
and advances to customers
 
and amounts due from
 
banks. Unencumbered assets that
are considered to be available to secure funding at the legal
 
-entity level may be subject to restrictions that limit the total
amount of assets available to the Group as a whole.
 
›
Refer to “Note 23 Restricted and transferred financial
 
assets”
 
in the “Consolidated financial statements” section
 
of this report for
more information
Asset encumbrance as of 31 December 2024
USD bn
Encumbered
Unencumbered
assets
Assets that
cannot be
pledged as
collateral
Total Group
Assets pledged
as collateral
Assets
otherwise
restricted and
not available to
secure funding
Balance sheet
Cash and balances at central banks
 
0.9
0.1
 
222.3
0.0
223.3
Amounts due from banks
2.6
 
16.3
0.0
18.9
Receivables from securities financing transactions measured at amortized
 
cost
118.3
118.3
Cash collateral receivables on derivative instruments
8.0
 
0.0
35.9
44.0
Loans and advances to customers
 
70.3
0.2
 
509.4
0.1
580.0
Other financial assets measured at amortized cost
 
8.7
1
4.2
 
37.7
8.3
58.8
Total financial assets measured at amortized cost
 
79.9
15.1
 
785.7
162.6
1,043.3
Financial assets at fair value held for trading
 
71.1
1
0.3
 
87.7
0.0
159.1
Derivative financial instruments
185.6
185.6
Brokerage receivables
25.9
25.9
Financial assets at fair value not held for trading
 
3.6
1
20.6
 
45.1
26.1
95.5
Total financial assets measured at fair value through profit or loss
 
74.7
20.9
 
132.8
237.6
465.9
Financial assets measured at fair value through other comprehensive income
1.9
 
0.3
2.2
Non-financial assets
 
24.8
28.8
53.6
Total balance sheet assets as of 31 December 2024
 
154.6
37.8
 
943.6
429.0
1,565.0
Total balance sheet assets as of 31 December 2023
3
 
222.8
38.0
 
1,043.3
412.9
1,716.9
Off-balance sheet
Fair value of securities accepted as collateral as of 31 December 2024
 
383.2
7.5
 
191.0
0.0
581.8
Fair value of securities accepted as collateral as of 31 December 2023
 
382.3
5.3
 
189.0
576.6
Total balance sheet assets and off-balance sheet securities accepted as collateral as of
31 December 2024
 
537.8
45.3
 
1,134.6
2
429.0
2,146.8
Total balance sheet assets and off-balance sheet securities accepted as collateral as of
31 December 2023
3
605.1
43.3
 
1,232.3
2
412.9
2,293.5
1 Includes assets pledged
 
as collateral that
 
may be sold or
 
repledged by counterparties.
 
The respective amounts
 
are disclosed in
 
“Note 23 Restricted and
 
transferred financial assets”
 
in the “Consolidated financial
statements” section of this report.
 
2 Includes high-quality liquid assets (31 December 2024: USD 338.9bn;
 
31 December 2023: USD 443.0bn).
 
3 Comparative-period information has been revised. Refer to “Note
2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Balance sheet and off-balance
 
sheet
 
153
Balance sheet liabilities
Total
 
liabilities as of 31 December 2024 were
 
USD 1,479.5bn, a decrease of USD 151.3bn compared
 
with 31 December
2023.
Short-term borrowings decreased
 
by USD 55.6bn, mainly
 
related to the
 
repayment of funding
 
from the SNB,
 
as well as
maturities
 
of
 
commercial
 
paper
 
and
 
certificates
 
of
 
deposits.
 
Customer
 
deposits
 
decreased
 
by
 
USD 46.2bn,
 
mainly
reflecting currency effects and net new deposit outflows. Debt issued designated at fair value and long-term debt issued
measured
 
at
 
amortized
 
cost
 
decreased
 
by
 
USD 36.0bn,
 
mainly
 
driven
 
by
 
net
 
redemptions,
 
including
 
an
 
effect
 
of
 
the
unwinding activities
 
in Non-core
 
and Legacy,
 
and currency
 
effects. Derivative
 
and cash collateral
 
payables on derivative
instruments
 
decreased
 
by
 
USD 17.7bn,
 
mainly
 
reflecting
 
a
 
decrease
 
in
 
interest
 
rate
 
contracts,
 
primarily
 
reflecting
unwinding activities in Non-core
 
and Legacy, partly offset
 
by an increase in foreign
 
currency contracts in
 
the Investment
Bank.
These decreases
 
were partly
 
offset by
 
an increase
 
of USD 6.5bn
 
in brokerage
 
payables, reflecting
 
higher client
 
activity
levels as on the asset side.
›
Refer to “Capital management” in this section for
 
more information
 
Equity
Equity attributable to shareholders decreased
 
by USD 545m to USD 85,079m as of 31 December 2024.
 
The decrease of
 
USD 545m was mainly driven
 
by net treasury share
 
activity, which reduced
 
equity by USD 2,895m.
 
This
was predominantly due
 
to the purchas
 
ing of USD 1,981m
 
of shares in
 
relation to employee
 
share-based compensation
plans
 
and
 
share
 
repurchases
 
with
 
an
 
acquisition
 
cost
 
of
 
USD 1,000m
 
under
 
our
 
2024
 
share
 
repurchase
 
program.
 
In
addition, distributions
 
to shareholders
 
reduced equity
 
by USD 2,256m,
 
reflecting a
 
dividend payment
 
of USD 0.70
 
per
share.
These decreases were partly
 
offset by total comprehensive income
 
attributable to shareholders of USD 3,388m,
 
reflecting
net profit
 
of USD 5,085m, and
 
negative other comprehensive
 
income (OCI) of
 
USD 1,698m. OCI mainly
 
included negative
OCI
 
related
 
to
 
foreign
 
currency
 
translation
 
of
 
USD 1,754m,
 
partly
 
offset
 
by
 
cash
 
flow
 
hedge
 
OCI
 
of
 
USD 481m.
 
In
addition, deferred share-based compensation
 
awards of USD 1,104m
 
were expensed in
 
the income statement, increasing
share premium.
›
Refer to the “Group performance”
 
and “Consolidated financial statements”
 
sections of this report for more information about OCI
›
Refer to the “Reconciliation of equity under IFRS
 
Accounting Standards to Swiss SRB common equity tier
 
1 capital” table in this
section for more information about the effects of OCI on common
 
equity tier 1 capital
›
Refer to “UBS shares” in this section for more information about
 
our share repurchase programs
Liabilities and equity
As of
% change from
USD bn
31.12.24
31.12.23
1
31.12.23
Short-term borrowings
2,3
 
53.9
 
109.5
 
(51)
Securities financing transactions at amortized cost
 
14.8
 
14.4
 
3
Customer deposits
 
745.8
 
792.0
 
(6)
Debt issued designated at fair value and long-term debt issued measured
 
at amortized cost
3
 
291.6
 
327.6
 
(11)
Trading liabilities
 
35.2
 
34.2
 
3
Derivatives and cash collateral payables on derivative instruments
 
216.1
 
233.8
 
(8)
Brokerage payables
 
49.0
 
42.5
 
15
Other financial liabilities measured at amortized cost
 
21.0
 
20.9
 
1
Other financial liabilities designated at fair value
 
28.7
 
29.5
 
(3)
Non-financial liabilities
 
23.2
 
26.5
 
(12)
Total liabilities
 
1,479.5
 
1,630.8
 
(9)
Share capital
 
0.3
 
0.3
 
0
Share premium
 
12.0
 
13.2
 
(9)
Treasury shares
 
(6.4)
 
(4.8)
 
33
Retained earnings
 
78.0
 
74.4
 
5
Other comprehensive income
4
 
1.1
 
2.5
 
(56)
Total equity attributable to shareholders
 
85.1
 
85.6
 
(1)
Equity attributable to non-controlling interests
 
0.5
 
0.5
 
(7)
Total equity
 
85.6
 
86.2
 
(1)
Total liabilities and equity
 
1,565.0
 
1,716.9
 
(9)
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
 
2 Consists of short-term debt issued measured at amortized cost and amounts due to banks, which includes amounts due to
 
central banks.
 
3 The classification of debt issued measured at amortized cost into short-
term and long-term is
 
based on original contractual
 
maturity and therefore long-term
 
debt also includes debt
 
with a remaining time
 
to maturity of less
 
than one year.
 
This classification does
 
not consider any
 
early
redemption features.
 
4 Excludes other comprehensive income related to defined benefit plans and own credit, which is recorded directly in Retained earnings.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ubs-20241231p178i0
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Balance sheet and off-balance
 
sheet
 
154
Liabilities by product and currency
USD equivalent
All currencies
of which: USD
of which: CHF
of which: EUR
USD bn
31.12.24
31.12.23
1
31.12.24
31.12.23
1
31.12.24
31.12.23
1
31.12.24
31.12.23
1
Short-term borrowings
53.9
109.5
22.5
49.2
5.7
41.5
11.7
8.3
of which: amounts due to banks
23.3
71.0
8.1
20.4
5.4
41.1
3.1
3.1
of which: short-term debt issued
2,3
30.5
38.5
14.5
28.8
0.3
0.3
8.6
5.2
Securities financing transactions at amortized cost
14.8
14.4
7.9
7.8
3.8
2.4
2.9
3.3
Customer deposits
745.8
792.0
310.3
311.8
297.2
328.0
71.1
80.6
of which: demand deposits
221.8
240.9
54.0
57.4
107.8
114.9
32.8
38.3
of which: retail savings / deposits
182.3
186.1
34.9
28.9
143.3
152.6
4.0
4.5
of which: sweep deposits
41.9
41.0
41.9
41.0
0.0
0.0
0.0
0.0
of which: time deposits
299.8
324.0
179.4
184.4
46.1
60.5
34.3
37.8
Debt issued designated at fair value and long-term debt issued measured
 
at
amortized cost
3
291.6
327.6
165.7
185.8
41.5
44.7
62.1
69.6
Trading liabilities
35.2
34.2
14.4
12.6
1.3
1.1
10.0
9.3
Derivatives and cash collateral payables on derivative instruments
216.1
233.8
182.9
181.0
4.4
9.9
18.0
26.7
Brokerage payables
49.0
42.5
38.1
31.5
0.5
0.7
3.4
2.4
Other financial liabilities measured at amortized cost
 
21.0
20.9
11.7
11.3
3.7
3.9
2.0
2.0
Other financial liabilities designated at fair value
28.7
29.5
4.1
6.8
0.1
0.1
4.3
3.5
Non-financial liabilities
23.2
26.5
13.0
13.3
4.1
4.2
2.8
4.4
Total liabilities
1,479.5
1,630.8
770.7
811.0
362.3
436.5
188.3
210.0
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
 
2 Short-term debt issued consists of certificates of deposit, commercial paper,
 
acceptances and promissory notes, and other money market paper.
 
3 The classification of debt issued measured at amortized cost into
short-term and long-term is based
 
on original contractual
 
maturity and therefore long-term
 
debt also includes debt
 
with a remaining time to
 
maturity of less than
 
one year.
 
This classification does not
 
consider any
early redemption features.
 
Off-balance sheet
In the
 
normal course of
 
business,
 
we enter into
 
transactions where, pursuant
 
to IFRS Accounting
 
Standards, the maximum
contractual
 
exposure
 
may
 
not
 
be
 
recognized
 
in
 
whole
 
or
 
in
 
part
 
on
 
our
 
balance
 
sheet.
 
These
 
transactions
 
include
derivative instruments, guarantees,
 
loan commitments and similar arrangements.
When we
 
incur an
 
obligation or
 
become entitled
 
to an
 
asset through
 
these arrangements,
 
we recognize
 
them on
 
the
balance sheet.
 
It should
 
be noted that
 
in certain
 
instances the amount
 
recognized on
 
the balance sheet
 
does not
 
represent
the full gain or loss potential inherent in such arrangements.
The
 
following
 
paragraphs
 
provide
 
more
 
information
 
about
 
certain
 
off-balance
 
sheet
 
arrangements.
 
Additional
 
off-
balance sheet
 
information is
 
primarily provided
 
in Notes 10, 11,
 
18, 20, 21h,
 
23 and 28
 
in the “Consolidated
 
financial
statements” section of this report
 
and in the 31 December
 
2024 Pillar 3 Report, available
 
under “Pillar 3 disclosures” at
ubs.com/investors.
Guarantees,
 
loan commitments and similar arrangements
In the normal
 
course of business,
 
we issue various
 
forms of guarantees, commitments
 
to extend credit, standby
 
and other
letters of credit
 
to support our clients, forward
 
starting transactions, note
 
issuance facilities,
 
and revolving underwriting
facilities.
 
With the
 
exception
 
of related
 
premiums,
 
generally
 
these
 
guarantees
 
and similar
 
obligations
 
are
 
kept
 
as off-
balance sheet items, unless a provision to cover probable
 
losses or expected credit losses is required.
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Balance sheet and off-balance
 
sheet
 
155
Guarantees represent irrevocable assurances that, subject
 
to the satisfying of certain conditions, we will make
 
payments
if our clients
 
fail to fulfill
 
their obligations
 
to third
 
parties. As of
 
31 December 2024,
 
the net exposure
 
(i.e. gross
 
values
less
 
sub-participations)
 
from
 
guarantees
 
and
 
similar
 
instruments
 
was
 
USD 38.4bn,
 
compared
 
with
 
USD 43.9bn
 
as
 
of
31 December 2023. The decrease of
 
USD 5.5bn mainly reflected business-driven lower volumes.
 
Fee income from issuing
guarantees compared with total net fee and commission
 
income was insignificant for both 2024 and 2023.
We also
 
enter
 
into commitments
 
to extend
 
credit in
 
the
 
form of
 
credit
 
lines available
 
to secure
 
the
 
liquidity
 
needs of
clients.
 
For
 
the
 
majority
 
of
 
irrevocable
 
loan
 
commitments,
 
UBS
 
is
 
committed
 
to
 
provide
 
credit
 
at
 
any
 
time
 
within
 
a
contractual maturity period of
 
up to three
 
years from the
 
balance sheet date.
 
During 2024, Irrevocable
 
loan commitments
decreased by USD 12.0bn,
 
mainly reflecting client-driven decreases
 
in Personal &
 
Corporate Banking as
 
well as unwinding
activities
 
in
 
Non-core
 
and
 
Legacy.
 
Committed
 
unconditionally
 
revocable
 
credit
 
lines
 
decreased
 
by
 
USD 17.6bn,
 
mainly
driven
 
by
 
currency
 
effects.
 
Forward
 
starting
 
reverse
 
repurchase
 
and
 
securities
 
borrowing
 
agreements
 
increased
 
by
USD 6.5bn,
 
mainly
 
reflecting
 
fluctuations
 
in
 
levels
 
of
 
business
 
division
 
activity
 
in
 
short-dated
 
securities
 
financing
transactions,
 
partly offset by roll-offs of trades
 
measured at amortized cost, with
 
the new trades measured at
 
fair value,
and these agreements being accounted for as derivatives.
Off-balance sheet
As of
% change from
USD bn
31.12.24
31.12.23
31.12.23
Guarantees
1,2
 
38.4
 
43.9
 
(12)
Irrevocable loan commitments
1
 
79.6
 
91.6
 
(13)
Committed unconditionally revocable credit lines
 
145.7
 
163.3
 
(11)
Forward starting reverse repurchase and securities borrowing agreements
 
24.9
 
18.4
 
35
1 Guarantees and irrevocable loan commitments are shown net of sub-participations.
 
2 Includes guarantees measured at fair value through profit or loss.
If customers
 
fail to
 
meet their
 
obligations, our
 
maximum exposure
 
to credit
 
risk is
 
generally the
 
contractual amount
 
of
these
 
instruments.
 
The
 
risk
 
is
 
similar
 
to
 
the
 
risk
 
involved
 
in
 
extending
 
loan
 
facilities
 
and
 
is
 
subject
 
to
 
the
 
same
 
risk
management and control framework.
 
In 2024, we recognized net credit
 
loss releases of USD 14m related
 
to irrevocable
loan commitments,
 
guarantees and
 
other credit
 
facilities in
 
the scope
 
of expected
 
credit loss
 
measurement, compared
with net credit loss expenses of USD 142m in 2023. Provisions recognized for irrevocable loan commitments, guarantees
and other
 
credit facilities
 
in the
 
scope of
 
expected credit
 
loss measurement
 
were USD 320m
 
as of
 
31 December 2024,
compared with USD 350m as of 31 December 2023.
›
Refer to “Note 10 Financial
 
assets at
 
amortized
 
cost and
 
other positions
 
in scope
 
of expected
 
credit loss
 
measurement”
 
and “Note 20
Expected
 
credit loss
 
measurement”
 
in the “Consolidated
 
financial
 
statements”
 
section of this report for more information about
provisions for expected credit losses
For certain obligations, we enter
 
into partial sub-participations to mitigate
 
various risks from guarantees and
 
irrevocable
loan commitments. A sub-participation is an agreement by another party to take a share of the loss in the event that the
obligation
 
is
 
not
 
fulfilled
 
by
 
the
 
obligor
 
and,
 
where
 
applicable,
 
to
 
fund
 
a
 
part
 
of
 
the
 
credit
 
facility.
 
We
 
retain
 
the
contractual
 
relationship
 
with
 
the
 
obligor,
 
and the
 
sub-participant
 
has only
 
an
 
indirect
 
relationship. Generally,
 
we
 
only
enter into
 
sub-participation agreements
 
with banks
 
to which
 
we ascribe
 
a credit
 
rating equal
 
to or
 
better than
 
that of
the obligor.
We also provide representations, warranties and indemnifications
 
to third parties in the normal course of business.
Support provided to non-consolidated investment funds
In 2024, the
 
Group did
 
not provide material
 
support, financial or
 
otherwise, to unconsolidated
 
investment funds when
the Group was not contractually obligated to do so, nor
 
does it currently have an intention to do so.
Clearing house and exchange memberships
We
 
are
 
a
 
member
 
of numerous
 
securities
 
and derivative
 
exchanges
 
and clearing
 
houses.
 
In connection
 
with some
 
of
these memberships, we may be required to pay
 
a share of the financial obligations of another member
 
who defaults,
 
or
we may be otherwise exposed to additional financial obligations. While the membership rules vary,
 
obligations generally
would arise only if the exchange or clearing house had exhausted its resources. We consider the probability of a material
loss due to such obligations to be remote.
Deposit insurance
Swiss banking
 
law and
 
the deposit
 
insurance system
 
require Swiss
 
banks and
 
securities dealers
 
to jointly
 
guarantee an
amount of
 
up to
 
CHF 7.9bn
 
for privileged
 
client deposits
 
in the
 
event that
 
a Swiss
 
bank or
 
securities dealer
 
becomes
insolvent. As
 
of 31 December
 
2024, FINMA
 
estimates our
 
share in
 
the deposit
 
insurance system
 
to be
 
CHF 1.6bn. This
represents a contingent payment
 
obligation and exposes us
 
to additional risk. As
 
of 31 December 2024,
 
we considered
the probability of a material loss from our ob
 
ligations to be remote.
UBS is also
 
subject to, or
 
is a member
 
of, other deposit
 
protection schemes in
 
other countries.
 
However, no contingent
payment obligation existed as of 31 December 2024 from
 
any other material scheme.
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Balance sheet and off-balance
 
sheet
 
156
Material cash requirements
The Group’s material cash requirements
 
as of 31 December 2024 are
 
represented by the
 
residual contractual maturities
for non-derivative and
 
non-trading financial
 
liabilities included
 
in the table
 
presented in
 
“Note 24b Maturity
 
analysis of
financial liabilities on an undiscounted basis”
 
in the “Consolidated financial statements”
 
section of this report. Included
in
 
the
 
table
 
are
 
Debt
 
issued
 
designated
 
at
 
fair
 
value
 
(USD 130.8bn)
 
and
 
Debt
 
issued
 
measured
 
at
 
amortized
 
cost
(USD 254.5bn). The amounts represent
 
estimated future interest and principal payments
 
on an undiscounted basis.
In the normal course
 
of business, we also
 
issue or enter into
 
various forms of guarantees,
 
loan commitments and
 
other
similar arrangements that may result in an outflow of cash in the future. The maturity profile of these obligations, which
are presented
 
off-balance sheet,
 
are included
 
in “Note 24b
 
Maturity analysis
 
of financial
 
liabilities on
 
an undiscounted
basis” in
 
the “Consolidated
 
financial statements”
 
section of
 
this report.
 
Refer to
 
“Guarantees, loan
 
commitments and
similar arrangements” in this section for more information.
Cash flows
As we are a global financial institution, our cash flows are complex and often may bear little relation to our net earnings
and net
 
assets.
 
Consequently,
 
we believe
 
that a
 
traditional cash
 
flow analysis
 
is less
 
meaningful when
 
evaluating
 
our
liquidity position than the
 
liquidity,
 
funding and capital
 
management frameworks and
 
measures described elsewhere
 
in
this section.
›
Refer to “Liquidity and funding management” in
 
this section for more information
Cash and cash equivalents
As of
 
31 December 2024,
 
cash and
 
cash equivalents
 
totaled USD 244.1
 
bn, a
 
decrease
 
of USD 96.1bn
 
compared
 
with
31 December 2023, driven
 
by net cash
 
outflows used in
 
financing activities and
 
negative foreign exchange effects,
 
largely
reflecting
 
the
 
strengthening
 
of
 
the
 
US
 
dollar
 
against
 
the
 
Swiss
 
franc
 
in
 
2024.
 
These
 
effects
 
were
 
partly
 
offset
 
by
USD 4.0bn of net cash inflows from operating and
 
investing activities.
Operating activities
Net cash
 
inflows from operating
 
activities were USD 3.3bn
 
in 2024,
 
compared with USD 86.1bn
 
in 2023.
 
The net
 
negative
change in operating assets and liabilities of USD 22.7bn
 
was mainly driven by a USD 23.9bn increase in receivables from
securities financing
 
transactions measured at amortized
 
cost,
 
outflows from a USD 15.1bn decrease in customer deposits
and a USD 13.6bn negative change
 
in financial assets and liabilities at
 
fair value held for trading and
 
derivative financial
instruments. These effects were partly offset by inflows from a USD 27.0bn decrease in loans and
 
advances to customers
and a
 
USD 5.3bn positive
 
change in
 
financial assets
 
and liabilities
 
at fair
 
value not
 
held for
 
trading and
 
other financial
assets and liabilities.
 
Non-cash items
 
included in
 
net profit
 
and other adjustments
 
are mainly
 
to remove
 
the net impact
of non-cash effects in the balance sheet, such as
 
foreign currency effects.
 
Investing activities
Investing activities
 
resulted in
 
a net cash
 
inflow of USD
 
0.7bn in 2024,
 
compared with
 
USD 103.1bn in 2023,
 
primarily
reflecting
 
USD 2.4bn
 
of net
 
cash proceeds
 
from
 
disposals
 
and redemptions
 
of debt
 
securities
 
measured
 
at
 
amortized
cost, largely offset by outflows of USD 2.0bn related
 
to property,
 
equipment and software.
 
Financing activities
Financing activities
 
resulted in a
 
net cash outflow
 
of USD 84.2bn
 
in 2024,
 
compared with USD
 
58.3bn in 2023,
 
mainly due
to the repayment
 
of USD 42.6bn of
 
funding from the
 
Swiss National Bank, USD 29.5bn of
 
net cash used
 
to repay
 
debt
designated at fair value
 
and long-term debt measured at amortized
 
cost, USD 7.4bn of net cash used to repay short-term
debt measured
 
at amortized cost,
 
USD
 
2.9bn of net cash used to repurchase
 
treasury shares and
 
a dividend distribution
 
to
shareholders of
 
USD 2.3bn. These
 
outflows were
 
partly
 
offset
 
by
 
net
 
issuance proceeds
 
of
 
USD 1.5bn from
 
securities
financing transactions
 
measured at amortized
 
cost.
 
›
Refer to “Primary financial statements and share information”
 
in the “Consolidated financial statements” section
 
of this report for
more information about cash flows
Statement of cash flows (condensed)
For the year ended
USD bn
31.12.24
31.12.23
1
Net cash flow from / (used in) operating activities
3.3
86.1
Net cash flow from / (used in) investing activities
0.7
103.1
Net cash flow from / (used in) financing activities
(84.2)
(58.3)
Effects of exchange rate differences on cash and cash equivalents
 
(15.9)
14.0
Net increase / (decrease) in cash and cash equivalents
 
(96.1)
144.9
Cash and cash equivalents at the end of the year
 
244.1
340.2
1 Comparative-period information has been revised.
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | Currency management
 
157
Currency management
Strategy, objectives and governance
Group Treasury
 
focuses on three main areas of currency risk management: (i) currency-matched funding and investment
of non-US-dollar assets and liabilities; (ii) the sell-down of foreign currency IFRS Accounting Standards profits
 
and losses;
and
 
(iii) selective
 
hedging
 
of
 
anticipated
 
non-US-dollar
 
profits
 
and
 
losses
 
to
 
further
 
mitigate
 
the
 
effect
 
of
 
structural
imbalances in the balance sheet.
 
Currency-matched funding and investment of non-US-dollar
 
assets and liabilities
For monetary balance sheet items and
 
other investments, as far
 
as is practical and efficient, UBS
 
follows the principle of
matching the
 
currencies of
 
its assets
 
and liabilities for
 
funding purposes.
 
This avoids
 
profits and
 
losses arising
 
from the
translation of non-US-dollar assets and liabilities.
UBS Group AG
 
and UBS AG
 
apply net
 
investment hedge
 
accounting to
 
non-US-dollar
 
core investments
 
to balance
 
the
effect of foreign exchange movements
 
on both common equity tier 1 (CET1) capital and
 
the CET1 capital ratio.
›
Refer to “Note 1 Summary of material accounting
 
policies” and “Note 25 Hedge accounting” in the
 
“Consolidated financial
statements”
 
section of this report for more information
›
Refer to “Capital management” in this section for
 
more information about our active management of
 
sensitivity to currency
movements and the effect thereof on our key ratios
Sell-down of non-US-dollar profits and losses
Income
 
statement
 
items
 
of Group
 
entities
 
with
 
a
 
functional
 
currency
 
other
 
than
 
the
 
US
 
dollar
 
are
 
translated
 
into
 
US
dollars at
 
average exchange
 
rates. To
 
reduce earnings
 
volatility on
 
the translation
 
of previously
 
recognized earnings
 
in
foreign currencies, Group Treasury centralizes the profits and losses (under IFRS Accounting Standards)
 
arising in UBS AG
and
 
its
 
branches
 
and
 
sells
 
or
 
buys
 
the
 
profit
 
or
 
loss
 
for
 
US
 
dollars
 
on
 
a
 
monthly
 
basis.
 
UBS
 
Group AG
 
and
 
UBS AG
subsidiaries
 
follow
 
a
 
similar
 
monthly
 
sell-down
 
process
 
into
 
their
 
own
 
functional
 
currencies.
 
The
 
retained
 
earnings in
subsidiaries and branches with a functional currency other than the US dollar are integrated and managed as part of the
UBS Group’s net investment hedge accounting program.
Hedging of anticipated non-US-dollar profits and losses
Although UBS did not have hedges for anticipated future profits and losses in place as of 31 December 2024, the Group
Asset and Liability
 
Committee may
 
at any time
 
instruct Group Treasury
 
to execute hedges
 
to protect
 
anticipated future
profits and losses in foreign currencies
 
against potential adverse movements of foreign
 
exchange rates.
 
Dividend distribution
UBS Group AG declares
 
dividends in US dollars. Shareholders holding shares through SIX SIS AG will receive dividends in
Swiss francs, based on
 
a published exchange rate calculated up
 
to five decimal places,
 
on the day prior
 
to the ex-dividend
date. Shareholders holding shares
 
through DTC or Computershare will be
 
paid dividends in US dollars.
›
Refer to the UBS Group AG Standalone financial statements
 
and regulatory information for the year ended
 
31 December 2024,
available under “Holding company and significant
 
regulated subsidiaries and sub-groups” at
ubs.com/investors
, for more
information about the proposed dividend distribution
 
of UBS Group AG for the 2024 financial year
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | UBS shares
 
158
UBS shares
UBS Group AG shares
Audited |
 
As
 
of
 
31 December
 
2024,
 
equity
 
attributable
 
to
 
shareholders
 
under
 
IFRS
 
Accounting
 
Standards
 
amounted
 
to
USD
85,079
m, represented by
3,462,087,722
 
shares issued.
 
Shares issued remained
 
unchanged in
 
2024.
 
Each share has a nominal value
 
of USD 0.10, carries
 
one vote if entered into
 
the share register as having
 
the right to vote,
and entitles the
 
holder to
 
a
 
proportionate share of
 
distributed dividends. All shares
 
are fully
 
paid up.
 
As the
 
Articles of
Association of
 
UBS Group AG
 
indicate, there
 
are no other classes
 
of shares and
 
no preferential
 
rights for shareholders.
›
Refer to the “Corporate governance”
 
section of this report for more information about UBS
 
shares
UBS Group share information
As of or for the year ended
% change from
31.12.24
31.12.23
1
31.12.23
Shares issued
3,462,087,722
3,462,087,722
0
Treasury shares
2
287,262,471
253,233,437
13
of which: related to share repurchase program 2022
120,506,008
120,506,008
0
of which: related to share repurchase program 2024
32,962,298
Shares outstanding
3,174,825,251
3,208,854,285
(1)
Basic earnings per share (USD)
3
1.59
8.68
(82)
Diluted earnings per share (USD)
3
1.52
8.30
(82)
Equity attributable to shareholders (USD m)
85,079
85,624
(1)
Less: goodwill and intangible assets (USD m)
6,887
7,515
(8)
Tangible equity attributable to shareholders (USD m)
78,192
78,109
0
Ordinary cash dividends per share (USD)
4,5
0.90
0.70
29
Total book value per share (USD)
26.80
26.68
0
Tangible book value per share (USD)
24.63
24.34
1
Share price (USD)
6
30.54
31.01
(2)
Market capitalization (USD m)
7
105,719
107,355
(2)
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
 
2 Based on a settlement date view.
 
3 Refer to “Share information and earnings per share” in the “Consolidated financial statements” section of this report for more information.
 
4 Dividends and / or distributions
out of the capital contribution reserve are normally approved and paid in the year subsequent to the reporting period.
 
5 Refer to “Statement of proposed appropriation of total profit and dividend distribution out of
total profit and
 
capital contribution reserve”
 
in the “UBS
 
Group AG standalone
 
financial statements”
 
section of the
 
UBS Group AG
 
Standalone financial statements
 
and regulatory information
 
for the year
 
ended
31 December 2024 report, available
 
under “Holding company and
 
significant regulated subsidiaries and
 
sub-groups” at ubs.com/investors,
 
for more information.
 
6 Represents the share price
 
as listed on the SIX
Swiss Exchange, translated to US dollars using the closing exchange rate as of the respective date.
 
7 The calculation of market capitalization reflects total shares issued multiplied by the share price at the end of the
period.
Holding of UBS Group AG shares
 
Group Treasury
 
holds UBS Group AG shares
 
to hedge future share
 
delivery obligations related to employee
 
share-based
compensation awards, and also holds shares purchased under share repurchase programs. As of 31 December 2024, we
held a total of 287,262,471 treasury shares
 
(31 December 2023: 253,233,437).
Our 2022 share repurchase program was concluded on 28 March 2024. The
 
shares acquired under this program totaled
121m as
 
of 31 December
 
2024 for
 
a total
 
acquisition
 
cost of
 
USD 2,277m
 
(CHF 2,138m).
 
Those
 
121m shares
 
will be
canceled by means of a capital reduction, pending approval
 
by the shareholders at a future AGM.
On 3 April 2024, we launched a new, 2024 share
 
repurchase program of up to USD 2bn over two years. Shares
 
acquired
under this
 
program totaled
 
33m as
 
of 31 December
 
2024 for
 
a total
 
acquisition cost
 
of USD 1,000m
 
(CHF 871m). We
plan to
 
repurchase USD 1bn
 
of shares
 
in the
 
first half
 
of 2025.
 
We aim
 
to repurchase
 
up to
 
an additional
 
USD 2bn of
shares in
 
the second
 
half of
 
2025 and
 
are maintaining
 
our ambition
 
for share
 
repurchases in
 
2026 to
 
exceed full-year
2022 levels.
 
Our share
 
repurchases will
 
be consistent
 
with delivering
 
on our
 
financial plans,
 
maintaining our
 
common
equity tier 1 capital
 
ratio target
 
of around 14%
 
and the
 
absence of material,
 
immediate changes
 
to the current
 
capital
regime.
Treasury
 
shares
 
held
 
to
 
hedge
 
our
 
share
 
delivery
 
obligations
 
related
 
to
 
employee
 
share-based
 
compensation
 
awards
totaled 133m shares
 
as of 31 December
 
2024 (31 December 2023:
 
131m). Share delivery obligations
 
related to employee
share-based compensation
 
awards totaled
 
183m shares
 
as of
 
31 December 2024
 
(31 December 2023:
 
196m) and
 
are
calculated on the
 
basis of
 
undistributed notional
 
share awards,
 
taking applicable
 
performance conditions
 
into account.
Treasury
 
shares
 
held
 
are
 
delivered
 
to
 
employees
 
at
 
exercise
 
or
 
vesting.
 
As
 
of
 
31 December
 
2024,
 
up
 
to
 
122m
UBS Group AG
 
shares
 
(31 December
 
2023:
 
122m)
 
could
 
have
 
been
 
issued
 
out
 
of
 
conditional
 
capital
 
to
 
satisfy
 
share
delivery obligations of any future employee share option programs
 
or similar awards.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Risk, capital, liquidity and funding, and
 
balance sheet | UBS shares
 
159
The Investment
 
Bank also
 
holds a
 
limited number
 
of UBS Group
 
AG shares,
 
primarily in
 
its capacity
 
as a
 
market-maker
with regard to UBS Group AG shares and related derivatives,
 
and to hedge certain issued structured debt instruments.
 
The
 
table
 
below
 
outlines
 
the
 
market
 
purchases
 
of
 
UBS Group
 
AG
 
shares
 
by
 
Group
 
Treasury.
 
It
 
does
 
not
 
include
 
the
activities of the Investment Bank.
Treasury
 
share purchases
Share repurchase programs
1
Other treasury shares purchased
2
Month of purchase
3
Number of shares
Average price
in USD
Remaining volume of
2022 share repurchase
program in USD m
at month-end
Remaining volume of
2024 share repurchase
program in USD m
at month-end
Number of shares
Average price
in USD
January 2024
755
February 2024
755
12,618,618
27.95
March 2024
12,381,382
30.36
April 2024
2,000
May 2024
2,000
12,204,648
30.30
June 2024
4,965,000
30.47
1,849
3,972,313
31.64
July 2024
6,629,400
30.45
1,647
August 2024
4,835,000
28.51
1,509
September 2024
7,050,000
29.63
1,300
8,280,000
30.18
October 2024
5,687,100
31.63
1,120
November 2024
2,696,000
31.57
1,035
December 2024
1,099,798
31.92
1,000
1 In March 2022, UBS
 
initiated a share repurchase program to buy
 
back up to USD 6bn of
 
its own shares over a two-year
 
period and this program was concluded on 28
 
March 2024. UBS has an active
 
share repurchase
program of up to
 
USD 2bn over two years.
 
The share buybacks
 
were transacted in Swiss
 
francs on a separate
 
trading line on the
 
SIX Swiss Exchange.
 
2 This table excludes
 
purchases for the purpose of
 
hedging
derivatives linked to UBS Group AG shares and for market
 
-making in UBS Group AG shares. The table also excludes UBS Group
 
AG shares purchased by post-employment benefit funds for UBS employees, which are
managed by
 
a board
 
of UBS
 
management and
 
employee representatives
 
in accordance
 
with Swiss
 
law. UBS’s
 
post-employment benefit
 
funds purchased
 
1,573,887 UBS
 
Group AG
 
shares during
 
2024 and
 
held
13,155,186 UBS Group AG shares as of 31 December 2024.
 
3 Based on the transaction date of the respective treasury share purchases.
 
Trading volumes
For the year ended
1,000 shares
31.12.24
31.12.23
31.12.22
SIX Swiss Exchange total
 
1,480,816
2,102,613
2,433,051
SIX Swiss Exchange daily average
5,923
8,377
9,579
New York Stock Exchange total
114,583
170,875
186,468
New York Stock Exchange daily average
455
684
743
Source: Reuters.
Listing of UBS Group AG shares
UBS Group AG shares
 
are listed
 
on the SIX
 
Swiss Exchange
 
(SIX). They are
 
also listed on
 
the New York
 
Stock Exchange
(the NYSE)
 
as global
 
registered
 
shares. As
 
such, they
 
can be
 
traded and
 
transferred across
 
applicable borders,
 
without
the need for conversion, with identical shares traded
 
on different stock exchanges in different
 
currencies.
During 2024, the average daily trading volume of UBS Group AG shares was 5.9m
 
shares on SIX and 0.5m shares on the
NYSE. SIX is expected
 
to remain the
 
main venue for determining
 
the movement in
 
our share price, because
 
of the high
volume traded on this exchange.
During the hours in
 
which both SIX and
 
the NYSE are simultaneously
 
open for trading, price
 
differences between these
exchanges are likely
 
to be arbitraged
 
away by
 
professional market-makers.
 
Accordingly, the
 
share price will
 
typically be
similar between the
 
two exchanges when
 
considering the
 
prevailing US dollar
 
/ Swiss franc
 
exchange rate.
 
When SIX is
closed
 
for
 
trading,
 
globally
 
traded
 
volumes
 
will
 
typically
 
be
 
lower.
 
However,
 
the
 
specialist
 
firm
 
making
 
a
 
market
 
in
UBS Group AG
 
shares on
 
the NYSE is
 
required to
 
facilitate sufficient liquidity
 
and maintain
 
an orderly
 
market in
 
UBS Group
AG shares throughout normal NYSE trading hours.
Ticker symbols UBS Group AG
Security identification codes
Trading exchange
SIX / NYSE
Bloomberg
Reuters
ISIN
CH0244767585
SIX Swiss Exchange
UBSG
UBSG SW
UBSG.S
Valoren
24 476 758
New York Stock Exchange
UBS
UBS UN
UBS.N
CUSIP
CINS H42097 10 7
 
Annual Report 2024 |
Corporate governance and compensation
 
160
Corporate governance and
compensation
Management report
Audited information according to the Swiss law and applicable regulatory
requirements and guidance
Disclosures
 
provided
 
are
 
in
 
line
 
with
 
the
 
requirements
 
of
 
the
 
Swiss
 
Code
 
of
 
Obligations
 
(tables
 
containing
 
such
information are marked as “Audited” throughout this section),
 
as well as other applicable regulations and guidance.
 
Annual Report 2024 |
Corporate governance and compensation
 
| Corporate governance
 
161
Corporate governance
Table of contents
162
163
164
168
170
186
195
195
197
 
Annual Report 2024 |
Corporate governance and compensation
 
| Corporate governance
 
162
Corporate governance
UBS Group AG is subject to, and complies with, all relevant Swiss legal and regulatory requirements regarding
 
corporate
governance, including the
 
SIX Swiss Exchange’s Directive on
 
Information relating to Corporate Governance
 
(the SIX Swiss
Exchange Corporate Governance
 
Directive) and the
 
standards established in
 
the Swiss Code
 
of Best
 
Practice for Corporate
Governance.
 
As a non-US company with shares listed on the New York Stock Exchange (the NYSE), UBS Group AG also complies with
all relevant corporate governance standards applicable to
 
foreign private issuers.
The Organization Regulations of UBS Group AG, adopted by the Board of
 
Directors (the BoD) based on Art. 716b of the
Swiss Code of
 
Obligations and articles
 
25 and 27
 
of the Articles
 
of Association of
 
UBS Group AG
 
(the AoA), constitute
UBS Group AG’s primary corporate governance guidelines.
 
›
Refer to the Articles of Association of UBS Group AG
 
and to the Organization Regulations of UBS Group AG, available
 
at
ubs.com/governance,
 
for more information
›
The SIX Swiss Exchange Corporate Governance
 
Directive is available at
 
ser-ag.com/content/dam/
serag/downloads/regulation/listing/directives/dcg-en.pdf,
 
the Swiss Code of Best Practice for Corporate
 
Governance at
economiesuisse.ch/en/publications/swiss-code-best-practice-corporate-governance
 
and the NYSE rules at
nyseguide.srorules.com/listed-company-manual
Differences from corporate governance standards relevant
 
to US-listed companies
The NYSE standards on
 
corporate governance
 
require foreign private issuers
 
to disclose any significant
 
ways in which their
corporate governance
 
practices differ
 
from
 
those that
 
have
 
to
 
be
 
followed by
 
US
 
companies. The
 
key
 
differences are
discussed below.
Responsibility of the Audit Committee regarding independent
 
auditors
Our Audit Committee
 
is responsible
 
for the compensation,
 
retention and oversight
 
of independent
 
auditors. It
 
assesses the
performance and qualifications
 
of external auditors
 
and submits proposals for appointment,
 
reappointment or removal of
independent auditors
 
to
 
the
 
BoD.
 
As
 
required
 
by
 
the
 
Swiss
 
Code
 
of
 
Obligations, the
 
BoD
 
submits its
 
proposals for
 
a
shareholder vote
at the Annual General Meeting (the AGM). Under NYSE standards audit committees are responsible for
appointing independent
 
auditors.
Discussion of risk assessment and risk management policies by the
 
Risk Committee
As per
 
the
 
Organization
 
Regulations
 
of UBS
 
Group
 
AG, the
 
Risk Committee,
 
instead
 
of the
 
Audit
 
Committee,
 
as per
NYSE standards,
 
oversees our
 
risk principles
 
and risk
 
capacity on
 
behalf of
 
the BoD.
 
The Risk Committee
 
is responsible
for
 
monitoring
 
our
 
adherence
 
to
 
those
 
risk
 
principles
 
and
 
monitoring
 
whether
 
business
 
divisions
 
and
 
control
 
units
maintain appropriate systems of risk management and control.
Supervision of the internal audit function
Although under NYSE standards only audit
 
committees supervise internal audit functions, the Chairman of the BoD
 
(the
Chairman) and the Audit
 
Committee share the supervisory responsibility and authority with respect
 
to the
 
internal audit
function.
Responsibility of the Compensation Committee for performance
 
evaluations of senior management of UBS Group AG
In line with Swiss
 
law, our
 
Compensation Committee,
 
together with the BoD,
 
proposes for shareholder
 
approval at the
AGM
 
the
 
maximum
 
aggregate
 
amount
 
of
 
compensation
 
for
 
the
 
BoD,
 
the
 
maximum
 
aggregate
 
amount
 
of
 
fixed
compensation for the Group
 
Executive Board (the GEB) and
 
the aggregate amount of
 
variable compensation for the
 
GEB.
The members of the Compensation Committee are elected
 
by the AGM. Under NYSE standards it is the responsibility
 
of
compensation committees to
 
evaluate senior management’s performance
 
and to determine
 
and approve, as
 
a committee
or together with the other independent directors, the
 
compensation thereof.
Proxy statement reports of the Audit Committee and the
 
Compensation Committee
NYSE standards require the aforementioned committees to submit their reports directly to shareholders. However, under
Swiss law
 
all reports to
 
shareholders, including those
 
from the aforementioned
 
committees, are provided to
 
and approved
by the BoD, which has ultimate responsibility to the
 
shareholders.
Shareholder votes on equity compensation plans
NYSE
 
standards
 
require
 
shareholder
 
approval
 
for
 
establishing
 
all
 
equity
 
compensation
 
plans
 
and
 
material
 
revisions
thereto.
 
However,
 
as per
 
Swiss law,
 
the BoD
 
approves
 
compensation plans.
 
Shareholder approval
 
is only
 
mandatory if
equity-based compensation
 
plans require
 
an increase
 
in capital.
 
No shareholder
 
approval is
 
required
 
if shares
 
for such
plans are purchased in the market.
›
Refer to
 
in this section for more information about the BoD’s committees
›
Refer to “Share capital structure” in this section for more information
 
about UBS Group AG’s share capital
 
Annual Report 2024 |
Corporate governance and compensation
 
| Corporate governance
 
163
Group structure and shareholders
Operational Group structure
As at 31 December 2024,
 
the operational structure
 
of the UBS Group
 
is composed of the
 
Global Wealth Management,
Personal &
 
Corporate Banking,
 
Asset Management,
 
the Investment
 
Bank, and
 
Non-core and
 
Legacy business
 
divisions,
as well as Group functions.
 
›
Refer to the
 
section of this report for more information about our
 
business divisions and Group functions
›
Refer to
 
and to
 
in the
section of this report for more information
›
Refer to the
 
section of this report for more information
Listed and non-listed companies belonging to the
 
Group
The Group includes a number of consolidated
 
entities, of which only UBS Group AG shares
 
are listed.
 
UBS Group AG’s registered office is at Bahnhofstrasse 45, CH-8001
 
Zurich, Switzerland. UBS Group AG shares are listed
on the SIX Swiss Exchange (ISIN CH0244767585) and on
 
the NYSE (CUSIP H42097107).
›
Refer to
 
in the
 
section of this report for information about UBS
Group AG’s market capitalization and shares held by Group entities
›
Refer to
 
in the
 
section of this report for
more information about the significant subsidiaries of the
 
Group
Significant shareholders
General rules
Under the Swiss
 
Federal Act on Financial
 
Market Infrastructures and Market Conduct
 
in Securities and Derivatives
 
Trading
of 19 June 2015
 
(the FMIA), anyone
 
who directly,
 
indirectly or
 
acting in concert
 
with third parties,
 
acquires or
 
disposes
of shares in
 
a company listed
 
in Switzerland or
 
holds other purchase
 
or sale
 
positions relating to
 
such shares, and,
 
thereby,
directly,
 
indirectly
 
or
 
in
 
concert
 
with
 
third
 
parties
 
reaches,
 
falls
 
below
 
or
 
exceeds
 
one
 
of
 
the
 
following
 
percentage
thresholds: 3, 5,
 
10, 15, 20,
 
25, 33
1
⁄
3
, 50 or 66
2
⁄
3
% of the voting
 
rights in such
 
company,
 
regardless of
 
whether or not
such rights
 
may be
 
exercised,
 
must notify
 
the company
 
and the
 
Swiss stock
 
exchange on
 
which such
 
shares are
 
listed.
Nominee
 
companies
 
that
 
cannot
 
autonomously
 
decide
 
how voting
 
rights are
 
exercised
 
are
 
not required
 
to notify
 
the
company and such stock exchange if they reach,
 
exceed or fall below the aforementioned thresholds.
Shareholders subject to FMIA disclosure notifications
According to the mandatory FMIA disclosure notifications filed with UBS Group AG and the SIX Swiss Exchange (SIX), on
31 December 2024, the following entities held more than 3% of the total voting rights of UBS Group AG: Norges Bank,
Oslo,
 
which
 
disclosed
 
a
 
holding
 
of
 
5.00%
 
on
 
12 December
 
2024;
 
and
 
BlackRock
 
Inc.,
 
New
 
York,
 
which
 
disclosed
 
a
holding of 5.01% on 30 November 2023.
 
On 22 January
 
2025, Norges Bank,
 
Oslo, disclosed a
 
holding of 4.90%
 
of the total
 
share capital of
 
UBS Group AG.
 
No
new disclosures of significant shareholdings have been made
 
since that date.
In accordance with the FMIA, the aforementioned holdings are calculated in relation to
 
the voting rights associated with
the total
 
share
 
capital
 
of UBS
 
Group
 
AG entered
 
into the
 
commercial
 
register
 
at the
 
time of
 
the respective
 
disclosure
notification.
 
As
 
registration
 
in
 
the
 
UBS
 
share
 
register
 
is
 
optional,
 
the
 
aforementioned
 
shareholders
 
that
 
crossed
 
the
 
indicated
percentage
 
thresholds
 
and
 
were
 
required
 
to
 
notify
 
their
 
holding
 
to
 
UBS
 
and
 
SIX
 
do
 
not
 
necessarily
 
appear
 
in
 
the
“Distribution of UBS shares” table below, as such table
 
only discloses registered shareholders.
Information
 
on
 
disclosures
 
under
 
the
 
FMIA
 
is
 
available
 
at
ser-ag.com/en/resources/notifications-market-
participants/significant-shareholders.html.
 
Cross-shareholdings
UBS Group
 
AG has
 
no cross
 
-shareholdings
 
where
 
reciprocal
 
ownership would
 
be in
 
excess of
 
5% of
 
capital or
 
voting
rights with any other company.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Corporate governance and compensation
 
| Corporate governance
 
164
Share capital structure
Ordinary share capital
At
 
the
 
end
 
of
 
2024,
 
UBS
 
Group
 
AG
 
had
 
3,462,087,722
 
issued
 
fully
 
paid
 
registered
 
shares
 
with
 
a
 
nominal
 
value
 
of
USD 0.10 each, equating to a share capital of
 
USD 346,208,772.20.
 
Under Swiss company
 
law, shareholders
 
must approve, in
 
a general meeting
 
of shareholders, any
 
increase or reduction
in the ordinary share
 
capital, the creation
 
of conditional capital
 
or the introduction of
 
a capital band. In
 
addition, under
the Swiss
 
Banking Act, shareholders
 
of a
 
Swiss top holding
 
company of a
 
financial group or
 
of a
 
Swiss bank must
 
approve,
in a general meeting of shareholders, the introduction of, or
 
changes to, conversion capital or reserve capital.
 
In
 
2024,
 
the
 
shareholders
 
of
 
UBS
 
Group
 
AG
 
were
 
not
 
asked
 
to
 
approve
 
the
 
creation
 
of
 
conditional
 
capital
 
or
 
the
introduction of capital band or
 
reserve capital. As of
 
the date of this
 
report, UBS Group AG
 
has no capital band or
 
reserve
capital.
No shares were issued out of UBS Group AG’s existing conditional
 
or conversion capital in 2024.
Distribution of UBS Group AG shares
 
As of 31 December 2024
Shareholders registered
Shares registered
Number of shares registered
Number
%
Number
% of shares issued
1–100
 
63,246
 
26.1
 
2,482,570
 
0.1
101–1,000
 
110,923
 
45.8
 
48,207,063
 
1.4
1,001–10,000
 
61,845
 
25.5
 
172,602,320
 
5.0
10,001–100,000
 
5,602
 
2.3
 
128,992,928
 
3.7
100,001–1,000,000
 
470
 
0.2
 
134,635,209
 
3.9
1,000,001–5,000,000
 
89
 
0.0
 
189,458,478
 
5.5
5,000,001–34,620,877 (1%)
 
25
 
0.0
 
259,981,947
 
7.5
1–2%
 
2
 
0.0
 
96,748,112
 
2.8
2–3%
 
0
 
0.0
 
0
 
0.0
3–4%
 
1
 
0.0
 
128,119,711
 
3.7
4–5%
 
0
 
0.0
 
0
 
0.0
Over 5%
 
1
1
 
0.0
 
224,327,195
 
6.5
Total shares registered
 
242,204
 
100.0
 
1,385,555,533
2
 
40.0
Shares not registered
3
 
2,076,532,189
 
60.0
Total
 
100.0
 
3,462,087,722
 
100.0
1 On 31 December 2024,
 
the US securities clearing
 
organization DTC (Cede &
 
Co.), New York,
 
was registered with 6.48%
 
of all UBS shares issued
 
and is not subject
 
to the 5% voting limit
 
as a securities clearing
organization.
 
2 Of the total shares registered, 106,160,841 shares did not carry voting rights.
 
3 Shares not entered in the UBS share register as of 31 December 2024.
Conditional capital
At year-end 2024, the following conditional capital was
 
available to UBS Group AG’s BoD.
 
–
Conditional
 
capital
 
in
 
the
 
amount
 
of
 
USD 38,000,000
 
for
 
the
 
issuance
 
of
 
a
 
maximum
 
of
 
380,000,000
 
fully
 
paid
registered shares with a nominal value of USD 0.10 each, to be issued through the voluntary or mandatory exercise of
conversion rights and /
 
or warrants granted
 
in connection with the
 
issuance of bonds or
 
similar financial instruments
by
 
UBS
 
Group
 
AG
 
or
 
another
 
member
 
of
 
the
 
Group
 
on
 
national
 
or
 
international
 
capital
 
markets.
 
This
 
conditional
capital allowance was approved
 
at the Extraordinary General
 
Meeting (the EGM) held on 26
 
November 2014, having
originally been approved at the AGM of UBS AG on 14 April
 
2010. The BoD has not made use of such allowance.
–
Conditional
 
capital
 
in
 
the
 
amount
 
of
 
USD 12,170,583
 
for
 
the
 
issuance
 
of
 
a
 
maximum
 
of
 
121,705,830
 
fully
 
paid
registered shares with
 
a nominal value
 
of USD 0.10
 
each, to be
 
issued upon exercise
 
of employee options
 
and stock
appreciation rights issued
 
to employees and
 
members of the
 
management and of
 
the BoD of
 
UBS Group AG and
 
its
subsidiaries;
 
however,
 
there
 
were
 
no
 
employee
 
options
 
or
 
stock
 
appreciation
 
rights
 
outstanding.
 
This
 
conditional
capital allowance was approved by the shareholders at the
 
same EGM in 2014.
 
›
Refer to article 4a of the AoA for more information
 
about the terms and conditions of the
 
issue of shares out of existing
conditional capital. The AoA are available at
 
ubs.com/governance
›
Refer to the
 
section of this report for more information
Conditional capital of UBS Group AG
As of 31 December 2024
Maximum number of shares to
be issued
Year approved by Extra-
ordinary General Meeting
% of shares issued
Employee equity participation plans
 
121,705,830
2014
 
3.52
Conversion rights / warrants granted in connection with bonds
 
380,000,000
2014
 
10.98
Total
 
501,705,830
 
14.49
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Corporate governance and compensation
 
| Corporate governance
 
165
Conversion capital
On 31 December 2024,
 
UBS Group AG
 
had conversion capital in
 
the amount of USD
 
70,000,000, for the issuance
 
of a
maximum of 700,000,000 fully paid registered
 
shares with a nominal value of USD 0.10 each. The issuance
 
of fully paid
registered
 
shares only
 
occurs through
 
the mandatory
 
conversion of
 
claims arising
 
upon the
 
occurrence of
 
one or more
trigger
 
events
 
under
 
financial
 
market
 
instruments
 
with
 
contingent
 
conversion
 
features
 
issued by
 
UBS
 
Group
 
AG.
 
The
creation of this conversion capital was approved
 
at the AGM held on 24 April 2024.
›
Refer to article 4b of the AoA for more information
 
about the terms and conditions of the
 
issue of shares out of existing
conversion capital – the AoA are available at
 
ubs.com/governance
Capital band and reserve capital
As of the date of this report,
 
UBS Group AG had not introduced any capital
 
band or any reserve capital.
Changes in capital
In
 
accordance
 
with
 
IFRS
 
Accounting
 
Standards,
 
Group
 
equity
 
attributable
 
to
 
shareholders
 
was
 
USD 85.1bn
 
on
31 December 2024 (2023: USD 85.6bn; 2022: USD 56.9bn). The equity of UBS Group AG shareholders was represented
by
 
3,462,087,722
 
issued
 
shares
 
on
 
31 December
 
2024
 
(31 December
 
2023:
 
3,462,087,722;
 
31 December
 
2022:
3,524,635,722 issued shares).
 
›
Refer to
 
in the
 
section of this report for more information
about changes in shareholders’ equity over the last three years
Ownership
Ownership of UBS Group AG
 
shares is widely spread. The tables
 
in this section provide information
 
about the distribution
of
 
UBS
 
Group
 
AG
 
shareholders
 
by
 
category
 
and
 
geographic
 
location.
 
This
 
information
 
relates
 
only
 
to
 
shareholders
registered in the UBS share register and cannot be assumed to be representative
 
of UBS Group AG’s entire investor base
or the
 
actual beneficial
 
ownership. Only
 
shareholders registered
 
in the UBS
 
share register
 
as “shareholders
 
with voting
rights” are entitled to exercise voting rights.
›
Refer to
 
in this section for more information
On 31 December 2024,
 
1,279,394,692 UBS Group AG
 
shares were registered
 
in the UBS
 
share register and
 
carried voting
rights, 106,160,841
 
shares were
 
registered in
 
the UBS
 
share register
 
without voting
 
rights, and
 
2,076,532,189 shares
were not
 
registered in
 
the UBS share
 
register. As
 
of the
 
same date,
 
all such
 
shares were
 
fully paid
 
and eligible
 
for dividends.
There are no preferential rights for shareholders, and no
 
other classes of shares have been issued by UBS Group AG.
Shareholders, legal entities and nominees: type and geographical distribution
Shareholders registered
As of 31 December 2024
Number
%
Individual shareholders
 
237,531
 
98.1
Legal entities
 
4,522
 
1.9
Nominees, fiduciaries
 
151
 
0.1
Total shares registered
 
242,204
 
100.0
Shares not registered
Total
 
242,204
 
100.0
Individual shareholders
Legal entities
Nominees
Total
Number
%
Number
%
Number
%
Number
%
Americas
 
1,826
 
0.8
 
100
 
0.0
 
70
 
0.0
 
1,996
 
0.8
of which: US
 
1,310
 
0.5
 
63
 
0.0
 
65
 
0.0
 
1,438
 
0.6
Asia Pacific
 
6,500
 
2.7
 
89
 
0.0
 
7
 
0.0
 
6,596
 
2.7
Europe, Middle East and Africa
 
14,924
 
6.2
 
250
 
0.1
 
38
 
0.0
 
15,212
 
6.3
of which: Germany
 
4,450
 
1.8
 
45
 
0.0
 
3
 
0.0
 
4,498
 
1.9
of which: UK
 
5,515
 
2.3
 
7
 
0.0
 
6
 
0.0
 
5,528
 
2.3
of which: rest of Europe
 
4,524
 
1.9
 
192
 
0.1
 
27
 
0.0
 
4,743
 
2.0
of which: Middle East and Africa
 
435
 
0.2
 
6
 
0.0
 
2
 
0.0
 
443
 
0.2
Switzerland
 
214,281
 
88.5
 
4,083
 
1.7
 
36
 
0.0
 
218,400
 
90.2
Total shares registered
Shares not registered
Total
 
237,531
 
98.1
 
4,522
 
1.9
 
151
 
0.1
 
242,204
 
100.0
At year-end
 
2024, UBS
 
owned
 
287,262,471 UBS
 
Group
 
AG shares,
 
which corresponded
 
to 8.30%
 
of the
 
total share
capital of UBS Group AG.
 
At the same time, UBS had acquisition
 
positions relating to 315,686,229
 
voting rights of UBS
Group AG and disposal positions relating to 501,074,069 such rights, corresponding to 9.12% and 14.47% of the total
voting rights
 
of UBS
 
Group AG,
 
respectively.
 
Of the
 
disposal positions,
 
179,321,831 related
 
to voting
 
rights on
 
shares
deliverable
 
in
 
respect
 
of
 
employee
 
awards.
 
The
 
calculation
 
methodology
 
for
 
the
 
acquisition
 
and
 
disposal
 
positions
 
is
based
 
on
 
the
 
Ordinance
 
of
 
the
 
Swiss
 
Financial
 
Market
 
Supervisory
 
Authority
 
on
 
Financial
 
Market
 
Infrastructures
 
and
Market
 
Conduct in
 
Securities and
 
Derivatives Trading,
 
which states
 
that all
 
future
 
potential share
 
delivery obligations,
irrespective of the contingent nature
 
of the delivery,
 
must be considered.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Corporate governance and compensation
 
| Corporate governance
 
166
Employee share ownership
Employee share ownership is encouraged and made possible in a variety of ways. Our Equity Plus
 
Plan is a voluntary plan
that provides eligible employees with the opportunity
 
to purchase UBS Group AG shares
 
at market value and receive, at
no additional
 
cost, one
 
notional UBS
 
Group
 
AG share
 
for every
 
three shares
 
purchased. Additional
 
shares
 
vest after
 
a
maximum
 
of
 
three
 
years,
 
provided
 
the
 
employee
 
remains
 
employed
 
by
 
UBS
 
and
 
has
 
retained
 
the
 
purchased
 
shares
throughout the holding period. The Equity
 
Ownership Plan (the EOP) is a mandatory deferral
 
plan for all employees that
are subject
 
to deferral
 
requirements (regulatory
 
-driven or
 
total compensation
 
greater than
 
USD / CHF
 
300,000) but
 
do
not
 
receive
 
LTIP
 
awards.
 
EOP
 
recipients
 
receive
 
a
 
portion
 
of
 
their
 
deferred
 
performance
 
award
 
in
 
notional
 
shares
 
(or
notional
 
funds
 
under
 
the
 
Fund
 
Ownership
 
Plan
 
for
 
employees
 
in
 
Investment
 
Areas
 
within
 
Asset
 
Management).
 
GEB
members and
 
most Managing
 
Directors
 
reporting
 
to the
 
GEB and
 
their direct
 
reports
 
at MD
 
level
1
 
receive
 
the equity-
based Long-Term Incentive Plan (the LTIP)
 
instead of the EOP.
 
Both the EOP and LTIP include employment conditions and
malus conditions
 
that allow
 
the firm
 
to reduce
 
or fully
 
forfeit unvested
 
deferred
 
awards
 
under certain
 
circumstances,
pursuant to performance and harmful acts provisions. In addition, forfeiture is triggered in cases where employment
 
has
been terminated for cause. Underlining our emphasis on sustainable performance and risk management, and to support
delivering on our ambitious
 
integration goals and business / financial targets, LTIP
 
awards will only vest if predetermined
performance conditions are met.
On 31 December 2024, UBS employees
 
held at least 7.41% of UBS shares
 
outstanding (including approximately 5.03%
in unvested deferred notional shares from our compensation programs). These figures are based on known shareholding
information from employee
 
participation plans, personal
 
holdings with UBS and
 
selected individual retirement
 
plans. At
the end of
 
2024, at least
 
26.22%
 
of all employees
 
held UBS shares
 
through the firm’s employee
 
share participation plans.
›
Refer to the
 
section of this report for more information
Trading restrictions in UBS shares
UBS
 
employees
 
with
 
regular
 
access
 
to
 
unpublished
 
price-sensitive
 
information
 
about
 
the
 
firm
 
are
 
subject
 
to
 
specific
restrictions in respect to UBS financial instruments, including, but not limited to, pre
 
-clearance requirements and regular
blackout periods. Such
 
UBS employees are
 
not permitted to
 
trade UBS financial
 
instruments in the
 
period starting from
the close of business in New York
 
on the seventh business day of the
 
final month of the financial quarter
 
of UBS Group
AG and ending at close of business on the day of the publication
 
of the quarterly financial results.
 
Shareholders, legal entities and nominees: type and geographical distribution (continued)
Shares registered
As of 31 December 2024
Number
%
Individual shareholders
 
363,038,328
 
10.5
Legal entities
 
508,691,495
 
14.7
Nominees, fiduciaries
 
513,825,710
 
14.8
Total shares registered
 
1,385,555,533
 
40.0
Shares not registered
 
2,076,532,189
 
60.0
Total
 
3,462,087,722
 
100.0
Individual shareholders
Legal entities
Nominees
Total
Number of shares
%
Number of shares
%
Number of shares
%
Number of shares
%
Americas
 
2,162,817
 
0.1
 
59,578,071
 
1.7
 
308,409,543
 
8.9
 
370,150,431
 
10.7
of which: US
 
896,824
 
0.0
 
52,238,512
 
1.5
 
308,208,421
 
8.9
 
361,343,757
 
10.4
Asia Pacific
 
18,530,376
 
0.5
 
7,843,163
 
0.2
 
4,821,198
 
0.1
 
31,194,737
 
0.9
Europe, Middle East and Africa
 
38,669,844
 
1.1
 
32,016,358
 
0.9
 
189,777,028
 
5.5
 
260,463,230
 
7.5
of which: Germany
 
11,044,097
 
0.3
 
2,099,929
 
0.1
 
7,241,074
 
0.2
 
20,385,100
 
0.6
of which: UK
 
16,607,619
 
0.5
 
112,392
 
0.0
 
170,123,547
 
4.9
 
186,843,558
 
5.4
of which: rest of Europe
 
9,632,087
 
0.3
 
29,520,767
 
0.9
 
12,293,339
 
0.4
 
51,446,193
 
1.5
of which: Middle East and Africa
 
1,386,041
 
0.0
 
283,270
 
0.0
 
119,068
 
0.0
 
1,788,379
 
0.1
Switzerland
 
303,675,291
 
8.8
 
409,253,903
 
11.8
 
10,817,941
 
0.3
 
723,747,135
 
20.9
Total shares registered
 
363,038,328
 
10.5
 
508,691,495
 
14.7
 
513,825,710
 
14.8
 
1,385,555,533
 
40.0
Shares not registered
 
0
 
0
 
0
 
2,076,532,189
 
60.0
Total
 
363,038,328
 
10.5
 
508,691,495
 
14.7
 
513,825,710
 
14.8
 
3,462,087,722
 
100.0
Shares and participation certificates
UBS Group
 
AG has
 
a single
 
class of
 
shares, which
 
are
 
registered
 
shares in
 
the form
 
of uncertificated
 
securities (in
 
the
sense of
 
the Swiss
 
Code of
 
Obligations). Each
 
registered
 
share
 
has a
 
nominal value
 
of CHF 0.10
 
and carries
 
one vote,
subject to the restrictions set out under “Transferability,
 
voting rights and nominee registration” below.
We have no participation certificates outstanding.
UBS Group AG shares are listed on SIX and also on the New York Stock Exchange (the NYSE) as global registered shares.
As such,
 
they can
 
be traded
 
and transferred
 
across applicable
 
borders, without
 
the need
 
for conversion,
 
with identical
shares traded on different stock exchanges in different currencies.
›
Refer to
 
in the
 
section of this report for more information
 
Annual Report 2024 |
Corporate governance and compensation
 
| Corporate governance
 
167
Distributions to shareholders
The decision to pay a dividend
 
and the amount of any dividend
 
depend on a variety of factors, including
 
our profits, cash
flow generation and capital ratios.
 
At the
 
2025 AGM,
 
the BoD
 
is proposing
 
to shareholders
 
for approval
 
a dividend
 
of USD 0.90
 
per share
 
for the
 
2024
financial year. Shareholders whose shares are held through SIX SIS AG will receive dividends in Swiss francs, based on an
exchange rate published
 
on the day
 
prior to the
 
ex-dividend date. Shareholders
 
holding shares through
 
The Depository
Trust Company in New York or Computershare will be paid
 
dividends in US dollars.
 
In compliance with Swiss tax law, 50% of the dividend will be paid out of retained earnings and the balance will be paid
out
 
of
 
the
 
capital
 
contribution
 
reserve.
 
Dividends
 
paid
 
out
 
of
 
capital
 
contribution
 
reserves
 
are
 
not
 
subject
 
to
 
Swiss
withholding tax.
 
The portion
 
of the
 
dividend paid
 
out of
 
retained earnings
 
will be
 
subject to a
 
35% 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.
In May 2024,
 
the US changed
 
its settlement practice
 
from T+2, which
 
is common in
 
Europe, to T+1,
 
to reduce the
 
risk
between
 
the
 
execution
 
and
 
the
 
settlement
 
of
 
a
 
trade.
 
To
 
align
 
the
 
two
 
different
 
settlement
 
practices
 
regarding
 
the
corporate event
 
key dates,
 
UBS has
 
decided to
 
set the
 
ex-dividend date
 
on the
 
NYSE one
 
day later
 
than on
 
SIX. If
 
the
proposed dividend
 
distribution out
 
of retained
 
earnings
 
and out
 
of the
 
capital contribution
 
reserve
 
is approved
 
at the
AGM on 10 April 2025,
 
the payment of USD 0.90
 
(or the Swiss franc
 
equivalent) per share will
 
be made on 17 April
 
2025
to holders of
 
shares on
 
the record
 
date 16 April
 
2025 on
 
SIX and
 
the NYSE.
 
However, on
 
SIX the
 
shares will be
 
traded
ex-dividend as
 
of 15 April
 
2025, and,
 
accordingly, the
 
last day
 
on which
 
the shares
 
may be
 
traded with
 
entitlement to
receive the dividend
 
will be
 
14 April 2025. On
 
the NYSE
 
the shares will
 
be traded ex-dividend
 
as of 16 April
 
2025,
 
and
the last day on which the shares may be traded with entitlement
 
to receive the dividend will be 15 April 2025.
The
 
2022
 
share
 
repurchase
 
program
 
was
 
concluded
 
at
 
the
 
end
 
of
 
its
 
two-year
 
term
 
on
 
28 March
 
2024.
 
In
 
total,
298,537,950 UBS Group AG shares were repurchased,
 
representing 8.62% of the current registered share capital of
 
UBS
Group AG. The total repurchase
 
volume amounted to CHF 5,009,665,264
 
(USD 5,244,697,247). On 12 April
 
2023, the
Swiss Takeover
 
Board had
 
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.
 
The
 
cancellation
 
of
 
the
 
remaining
120,506,008 registered shares repurchased is expected to be resolved
 
at the 2025 AGM.
On 3 April 2024, UBS launched a two-year 2024 share repurchase program of up to USD 2bn and repurchased shares in
the amount of USD 1bn
 
by 31 December 2024.
 
All shares repurchased under
 
this program are intended
 
to be canceled
by way
 
of capital
 
reduction, which
 
will be
 
subject to
 
shareholder approval
 
at one
 
or several
 
subsequent AGMs.
 
In the
interim period, the acquisition and holding of
 
such shares are not subject to
 
the 10% threshold for UBS Group AG’s
 
own
shares within the meaning of Art. 659 para 2 of the Swiss
 
Code of Obligations.
 
In 2025,
 
we plan
 
to repurchase
 
USD 1bn of
 
shares in
 
the first
 
half of
 
2025 and
 
aim to
 
repurchase up
 
to an
 
additional
USD 2bn of shares
 
in the second
 
half of 2025. Our
 
share repurchases will
 
be consistent with
 
delivering on our financial
plans, maintaining our common equity tier 1 capital ratio target of around 14% and the absence of material, immediate
changes to the current capital regime.
›
Refer to
 
in the
 
section of this report for more information about
the share repurchase programs
Transferability, voting rights and nominee registration
We
 
do
 
not
 
apply
 
any
 
restrictions
 
or
 
limitations
 
on
 
the
 
transferability
 
of
 
UBS
 
Group
 
AG
 
shares.
 
Voting
 
rights
 
may
 
be
exercised without any
 
restrictions by shareholders
 
entered into the
 
UBS share register
 
if they
 
expressly render a
 
declaration
of beneficial ownership according to the provisions
 
of the AoA.
We have special provisions for
 
the registration of nominees. Nominees
 
are entered in the UBS share
 
register with voting
rights up to
 
a total of
 
5% of all
 
issued UBS Group
 
AG shares if
 
they agree to
 
disclose, upon our request,
 
beneficial owners
holding 0.3% or
 
more of all
 
issued UBS Group
 
AG shares. An
 
exception to the
 
5% voting limit
 
rule is
 
in place for
 
securities
clearing organizations, such as The Depository Trust Company
 
in New York.
 
›
Refer to
 
in this section for more information
 
 
Annual Report 2024 |
Corporate governance and compensation
 
| Corporate governance
 
168
Convertible bonds and options
UBS Group AG has issued additional tier 1 (AT1) instruments
 
that have terms providing an equity conversion feature
 
;
 
on
31 December 2024, such instruments with an aggregate principal
 
amount of USD 6.9bn were outstanding.
›
Refer to the
 
section of this report for more information about our outstanding
capital instruments
On
 
31 December
 
2024,
 
there
 
were
 
no
 
employee
 
options
 
or
 
stock
 
appreciation
 
rights
 
outstanding.
 
Option-based
compensation
 
plans
 
are
 
sourced
 
by
 
issuing
 
new
 
shares
 
out
 
of
 
UBS
 
Group
 
AG’s
 
conditional
 
capital.
 
On
 
31 December
2024, UBS Group
 
AG had USD 12,170,583
 
in conditional capital
 
available for the
 
issuance of new
 
shares for this
 
purpose.
›
Refer to “
 
in this section for more information
›
Refer to
 
in the
 
section of this report for
more information about outstanding options and stock appreciation
 
rights
1
Includes senior managers who received
 
LTIP awards
 
for the 2023 performance
 
year and who are
 
no longer reporting to
 
the GEB or their
 
direct reports at MD
 
level, excludes MDs in
 
Asset Management Investment
Areas who receive the Fund Ownership Plan instead of LTIP.
Shareholders’ participation rights
We are committed
 
to shareholder participation in
 
decision-making processes. Our online
 
voting platform offers
 
registered
shareholders a convenient
 
log-in and online voting
 
process. Registered
 
shareholders are
 
sent personal invitations
 
to the
general meetings. Together
 
with the invitation
 
materials, they
 
receive a
 
personal one-time
 
password and
 
a QR code
 
to
easily log into
 
the online voting
 
platform, where
 
they can enter
 
their voting instructions
 
or order
 
an admission card
 
for
the general meeting.
 
Shareholders
 
who
 
choose
 
not
 
to
 
receive
 
the
 
comprehensive
 
invitation
 
materials
 
are
 
informed
 
of
 
upcoming
 
general
meetings
 
by a
 
short
 
letter
 
containing
 
a
 
personal
 
one-time
 
password,
 
a
 
QR
 
code
 
for
 
online voting
 
and
 
a
 
reference
 
to
ubs.com/agm
,
where all information for the upcoming meeting is
 
available.
General meetings
 
offer shareholders
 
the opportunity
 
to raise
 
questions for the
 
BoD, the
 
GEB and internal
 
and external
auditors.
 
Voting rights, restrictions and representation
We place no restrictions on share
 
ownership and voting rights. However,
 
certain limitations apply to nominees pursuant
to general principles formulated by the BoD.
 
Nominees normally represent a large number of individual shareholders and
may hold
 
an unlimited
 
number of
 
shares.
 
Nominees have
 
voting rights
 
limited to
 
a maximum
 
of 5%
 
of all
 
issued UBS
Group AG shares
 
if they agree to disclose,
 
upon our request, beneficial
 
owners holding 0.3% or
 
more of all issued
 
UBS
Group
 
AG shares.
 
Any shares
 
above the
 
5% limit,
 
or for
 
which no
 
agreement
 
exists to
 
disclose the
 
beneficiaries,
 
are
entered in the
 
share register without voting rights.
 
This 5% limit
 
has been implemented to
 
avoid large shareholders being
entered
 
in the
 
UBS share
 
register
 
via nominee
 
companies
 
so as
 
to exercise
 
influence
 
without directly
 
registering
 
their
shares with
 
UBS. An
 
exception to
 
the 5%
 
voting limit
 
rule is
 
in place
 
for securities
 
clearing organizations,
 
such as
 
The
Depository Trust
 
Company in New York.
Shareholders can
 
exercise voting
 
rights conferred
 
by shares
 
only if
 
they are
 
registered in
 
our share
 
register with
 
voting
rights. To register,
 
shareholders must confirm
 
that they have
 
acquired UBS Group
 
AG shares in their
 
own name and
 
for
their own account.
 
All shareholders registered with voting rights are entitled to participate in
 
general meetings. If they do not
 
wish to attend
in person, they may issue instructions
 
to support, reject or abstain for each individual
 
item on the meeting agenda, either
by giving instructions to an
 
independent proxy in accordance
 
with article 14 of the AoA
 
or by granting a written
 
power
of
 
attorney
 
to
 
a
 
third
 
person
 
of
 
their
 
choice
 
(which
 
does
 
not
 
need
 
to
 
be
 
a
 
shareholder)
 
to
 
vote
 
on
 
their
 
behalf.
Alternatively, registered
 
shareholders may issue their voting instructions to the independent
 
proxy electronically through
our online voting
 
platform. Nominee companies normally submit
 
the proxy material to
 
the beneficial owners and
 
forward
the collected votes to the independent proxy.
›
Refer to article 14 of the AoA, available
 
at
ubs.com/governance
, for more information about the issuing of
 
instructions to
independent voting right representatives
 
Statutory quorums
Motions are decided at a general meeting by a majority of the votes represented, excluding blank and invalid ballots. For
the approval of
 
certain specific issues, the
 
Swiss Code of Obligations
 
requires a positive
 
vote from a two-thirds
 
majority
of the
 
votes represented
 
at the given
 
general meeting
 
and from
 
a majority
 
of the
 
nominal value
 
of shares
 
represented
thereat. Such issues include creating shares with privileged voting rights, introducing restrictions
 
on the transferability of
registered shares, creating conditional capital or introducing a capital band or reserve
 
capital and restricting or excluding
shareholders’ preemptive rights.
 
 
Annual Report 2024 |
Corporate governance and compensation
 
| Corporate governance
 
169
The AoA also require a two-thirds majority of votes represented
 
for approval of any change to their provisions regarding
the number of BoD members, any decision to remove one-quarter or more of
 
the BoD members and any modification to
the provision establishing this qualified quorum.
Votes and elections are generally conducted electronically to ascertain the exact number of votes represented.
 
Voting by
a
 
show
 
of
 
hands
 
is
 
possible
 
if
 
a
 
clear
 
majority
 
is
 
predictable.
 
Shareholders
 
representing
 
at
 
least
 
3%
 
of
 
the
 
votes
represented may
 
request that
 
a vote or election
 
be carried out
 
electronically or by
 
written ballot. To
 
allow shareholders
to clearly express their views on all
 
individual topics, each agenda item is separately
 
put to a vote and BoD members are
elected on a person-by-person basis.
Convocation of general meetings of shareholders
The AGM
 
must be
 
held within
 
six months
 
of the
 
close of
 
the financial
 
year (i.e.
 
31 December). In
 
2025, the
 
AGM will
take place on 10 April.
Extraordinary
 
general
 
meetings
 
(EGMs)
 
may
 
be
 
convened
 
whenever
 
the
 
BoD
 
or
 
the
 
auditors
 
consider
 
it
 
necessary.
Shareholders individually
 
or jointly
 
representing at
 
least 5%
 
of the
 
share capital
 
may at
 
any time,
 
including during
 
an
AGM, require, by way of a written statement, that
 
an EGM be convened to address a specific issue they put forward.
A
 
personal
 
invitation,
 
including
 
a
 
detailed
 
agenda,
 
is
 
made
 
available
 
to
 
every
 
registered
 
shareholder
 
at
 
least
 
20
 
days
ahead of each
 
scheduled general
 
meeting. The items
 
on the agenda
 
are also
 
published in
 
the Swiss Official
 
Gazette of
Commerce, as well as at
ubs.com/agm.
Placing of items on the agenda
Pursuant to the AoA, shareholders
 
individually or jointly representing
 
shares with an aggregate
 
minimum nominal value
of USD 62,500 may submit requests for items to be placed on the agenda for consideration
 
at the next general meeting
of shareholders or for motions relating to agenda
 
items to be included in the notice to convene the general
 
meeting.
In January of
 
each year,
 
the invitation to
 
submit such agenda
 
items or motions
 
relating to agenda
 
items is published
 
in
the Swiss Official
 
Gazette of Commerce
 
and at
ubs.com/agm.
 
Requests for motions
 
relating to agenda items
 
and items
to be placed on the agenda must include the actual motions to be put forward,
 
together with a short explanation. Such
requests must
 
be submitted
 
to the
 
BoD no later
 
than the
 
deadline published
 
by UBS
 
Group AG,
 
including a
 
statement
from the depository
 
bank confirming the
 
number of shares
 
held by the requesting
 
shareholder(s) and that
 
these shares
are blocked from
 
sale until
 
the end of
 
the general meeting
 
of shareholders. The
 
BoD formulates opinions
 
on such
 
requests
from shareholders, which are
 
published together with the motions from the BoD.
Registrations in the UBS share register
The UBS share register, where around 241,578 UBS Group
 
AG shareholders are directly registered on 24 February
 
2025,
is
 
an
 
internal,
 
non-public
 
register
 
subject
 
to
 
statutory
 
confidentiality,
 
secrecy,
 
privacy
 
and
 
data
 
protection
 
regulations
protecting registered
 
shareholders.
 
In general,
 
third parties
 
and shareholders
 
have no
 
inspection rights
 
with regard
 
to
data related to other shareholders. Disclosure of such data is permitted only in specific and limited instances. In line with
the Swiss Federal Act on Data
 
Protection, the disclosure of personal data
 
as defined thereunder is only allowed
 
with the
consent of
 
the registered
 
shareholder and
 
in cases
 
where there
 
is an
 
overriding private
 
or public
 
interest or
 
if explicitly
provided for
 
by Swiss
 
law. The
 
Swiss Federal
 
Act on
 
Financial Market
 
Infrastructures and
 
Market Conduct
 
in Securities
and
 
Derivatives
 
Trading
 
contains
 
specific
 
reporting
 
duties,
 
such
 
as
 
in
 
relation
 
to
 
significant
 
shareholders
 
(refer
 
to
“Significant shareholders” in this section for more information).
 
Disclosure may also be required or requested by a court
of a
 
competent jurisdiction,
 
by any
 
regulatory body
 
that regulates
 
the conduct
 
of UBS
 
Group AG or
 
by other
 
statutory
provisions.
The general rules for entry into our
 
Swiss share register with voting rights are described in article 5
 
of our AoA. The same
rules
 
apply
 
to
 
our
 
US
 
transfer
 
agent
 
that
 
operates
 
the
 
US
 
share
 
register
 
for
 
all
 
UBS
 
Group
 
AG
 
shares
 
in
 
a
 
custodian
account in the US, where some 424,358 US shareholders
 
are indirectly registered via nominee companies on 29 January
2025. In order to
 
determine the voting rights
 
of each shareholder,
 
our share register
 
generally closes two business
 
days
prior
 
to
 
a
 
general
 
meeting.
 
Our
 
independent
 
proxy
 
agent
 
processes
 
voting
 
instructions
 
from
 
shareholders
 
as
 
long
 
as
technically possible, generally also until two business days
 
before a general meeting. Such technical closure
 
of our share
register
 
facilitates
 
the
 
determination
 
of
 
the
 
actual
 
voting
 
rights
 
of
 
every
 
shareholder
 
that
 
issued
 
a
 
voting
 
instruction.
Irrespective
 
of
 
this
 
technical
 
closure,
 
shares
 
that
 
are
 
registered
 
in
 
our
 
share
 
register
 
are
 
never
 
immobilized
 
and
 
such
closure does not affect the tradability of such shares at any
 
time, irrespective of any issued voting instructions.
›
Refer to article 5 of our AoA, available at
ubs.com/governance
, for more information about the general rules for
 
entry into the
UBS share register
 
Annual Report 2024 |
Corporate governance and compensation
 
| Corporate governance
 
170
Board of Directors
 
The Board of Directors of UBS Group AG (the BoD), led by the Chairman, consists of between 6 and 12 members, as per
our AoA.
 
The BoD decides on the
 
strategy of the Group,
 
upon recommendation by
 
the Group Chief Executive
 
Officer (the Group
CEO), and
 
is responsible
 
for the
 
overall direction,
 
supervision and
 
control of
 
the Group
 
and its
 
management.
 
It is
 
also
responsible for supervising compliance with applicable laws, rules and regulations. The BoD exercises oversight over UBS
Group AG
 
and its
 
subsidiaries, and
 
is responsible
 
for establishing
 
a clear
 
Group governance framework
 
to provide
 
effective
steering and supervision of the Group, taking into account the material risks to which UBS Group AG and its subsidiaries
are exposed. The BoD has ultimate responsibility
 
for the success of the Group and
 
for delivering sustainable shareholder
value within a
 
framework of prudent
 
and effective controls.
 
It approves all
 
financial statements and
 
appoints and removes
all members of the Group Executive Board.
 
Members of the Board of Directors
At the
 
AGM
 
on
 
24
 
April
 
2024,
 
Colm Kelleher
 
was
 
re-elected
 
as Chairman
 
of the
 
Board
 
and Lukas
 
Gähwiler,
 
Jeremy
Anderson, Claudia
 
Böckstiegel, William
 
C. Dudley,
 
Patrick Firmenich,
 
Fred Hu,
 
Mark Hughes,
 
Nathalie Rachou,
 
Julie G.
Richardson
 
and Jeanette
 
Wong
 
were
 
re-elected
 
as members
 
of the
 
BoD.
 
Gail Kelly
 
was
 
elected
 
to the
 
BoD as
 
a
 
new
member.
 
At that same
 
AGM, Julie G.
 
Richardson and
 
Jeanette Wong were
 
re-elected and Fred
 
Hu elected as
 
members
of the
 
Compensation Committee.
ADB Altorfer
 
Duss &
 
Beilstein AG
 
was re-elected as
 
independent proxy agent.
 
Following
their election, the BoD
 
appointed Lukas Gähwiler as Vice
 
Chairman and Jeremy Anderson as Senior
 
Independent Director
of UBS Group AG.
On 4 March 2025, the BoD announced that Claudia
 
Böckstiegel and Nathalie Rachou would not stand for
 
re-election at
the
 
forthcoming
 
AGM,
 
after
 
serving
 
on
 
the
 
BoD
 
for
 
four
 
years
 
and
 
five
 
years,
 
respectively,
 
and
 
that
 
Renata
 
Jungo
Brüngger and Lila
 
Tretikov would be
 
nominated for election to
 
the BoD at
 
the same AGM.
 
Ms. Jungo Brüngger
 
has served
as a member of the Board of Management
 
of Mercedes-Benz Group AG, overseeing the
 
areas of Integrity, Governance,
and
 
Sustainability
 
and
 
being
 
responsible
 
for
 
the
 
legal,
 
compliance
 
and
 
corporate
 
audit
 
functions.
 
In
 
this
 
role,
 
she
 
is
appointed
 
until
 
December
 
2025.
 
Ms.
 
Tretikov
 
leads
 
AI
 
Strategy
 
at
 
New
 
Enterprise
 
Associates,
 
a
 
Silicon
 
Valley-based
venture capital
 
firm. Until 2024,
 
she served as
 
Deputy Chief
 
Technology Officer
 
at Microsoft,
 
where she
 
led substantial
transformation initiatives.
Article 31
 
of our
 
AoA limits
 
the number
 
of mandates
 
that members
 
of the
 
BoD may
 
hold outside
 
UBS Group
 
to four
mandates in
 
listed companies
 
and five
 
additional mandates
 
in non-listed
 
companies.
 
Mandates
 
in companies
 
that are
controlled by us or that control
 
us are not subject to this
 
limitation. In addition, members of
 
the BoD may hold no more
than 10 mandates
 
at UBS’s request
 
and 10 mandates
 
in associations, charitable
 
organizations, foundations,
 
trusts, and
employee welfare foundations without commercial purpose.
 
On 31 December 2024, no member
 
of the BoD reached
 
any
of these thresholds.
 
The following biographies provide information about the BoD members who were in office after the 2024 AGM and the
Group Company Secretary. In
 
addition to information on
 
mandates, the biographies include
 
information on memberships
or other activities or functions, as required by the SIX Swiss Exchange
 
Corporate Governance Directive.
 
ubs-20241231p28i1
Annual Report 2024 |
Corporate governance and compensation
 
| Corporate governance
 
171
Colm Kelleher
Chairman of the Board of Directors,
 
independent and non-
executive member of the Board since 2022
–
Chairperson of the Corporate Culture and Responsibility Committee
since 2022
–
Chairperson of the Governance and Nominating
 
Committee since
2022
Nationality:
 
Irish |
Year of birth:
 
1957
Colm Kelleher
 
was elected
 
Chairman of
 
UBS in April
 
2022. In
 
March 2023,
he
 
led
 
the successful
 
negotiations for
 
UBS
 
to acquire
 
the Credit
 
Suisse
Group. He served as
 
President of Morgan Stanley until
 
retiring from that
firm
 
in
 
2019,
 
overseeing
 
both
 
the
 
Institutional
 
Securities
 
Business
 
and
Wealth
 
Management.
 
Before
 
that,
 
he
 
was
 
Co-President
 
and
 
then
President
 
of
 
Morgan
 
Stanley
 
Institutional
 
Securities.
 
During
 
the
 
global
financial
 
crisis,
 
he
 
held
 
the
 
position
 
of
 
CFO
 
and
 
Co-Head
 
Corporate
Strategy from 2007 to 2009.
 
Mr. Kelleher is a well-respected leader in
 
the
financial services sector. His 30-year
 
career with Morgan Stanley
 
attests to
his
 
solid
 
leadership
 
experience
 
in
 
banking
 
and
 
excellent
 
relationships
around the
 
world. He
 
has a
 
deep understanding
 
of the
 
global banking
landscape
 
and
 
broad
 
banking
 
experience
 
across
 
all
 
the
 
geographical
regions and major business areas in which UBS operates.
Professional experience
2016 – 2019
President,
 
Morgan Stanley, responsible for Institutional
Securities and Wealth Management
2011 – 2016
CEO of Morgan Stanley International, Morgan
 
Stanley
2013 – 2015
President, Institutional Securities, Morgan Stanley
2010 – 2012
Co-President, Institutional Securities, Morgan Stanley
2007 – 2009
CFO and Co-Head Corporate Strategy, Morgan Stanley
2006 – 2007
Head Global Capital Markets, Morgan Stanley
2004 – 2006
Co-Head Fixed Income, Europe, Morgan Stanley
1989 – 2004
Various roles, Morgan Stanley
Education
–
Master’s degree, modern history, the University of Oxford
–
Fellow of the Institute of Chartered Accountants in England
 
and
Wales
Listed company boards
–
Member of the Board of Norfolk Southern Corporation
 
(chair of the
finance and risk management committee)
Other activities and functions
–
Chairman of the Board of Directors of UBS AG
 
–
Member of the Board of Directors of the Bretton Woods Committee
–
Member of the Board of the Swiss Finance Council
–
Member of the International Monetary Conference
–
Member of the Board of the Bank Policy Institute
–
Member of the Board of Americans for Oxford
–
Visiting Professor of Banking and Finance, Loughborough Business
School
–
Member of the European Financial Services Round Table
–
Member of the European Banking Group
–
Member of the International Advisory Council
 
of the China Securities
Regulatory Commission
–
Member of the Chief Executive’s Advisory Council (Hong
 
Kong)
Key competencies
–
Banking (wealth management, asset management, personal
 
and
corporate banking)
 
and insurance
–
Investment banking, capital markets
–
Finance, audit, accounting
–
Risk management, compliance and legal
Leadership experience
–
CEO, Chairman
 
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Lukas Gähwiler
Vice Chairman, non-independent and non-executive
member of the Board since 2022
–
Member of the Governance and Nominating Committee since 2023
–
Member of the Risk Committee since 2023
Nationality:
 
Swiss |
Year of birth:
 
1965
Lukas
 
Gähwiler
 
brings
 
a
 
wealth
 
of
 
industry
 
experience
 
and
 
an
 
in-depth
understanding
 
of
 
UBS
 
to
 
the
 
Board
 
of
 
Directors
 
of
 
UBS.
 
He
 
served
 
as
Chairman
 
of
 
the
 
Board
 
of
 
UBS
 
Switzerland
 
AG
 
for
 
five
 
years
 
and
 
was
previously a
 
member of
 
the Group
 
Executive Board
 
of UBS
 
and President
UBS Switzerland,
 
responsible for
 
the private
 
clients, wealth
 
management,
corporate
 
and
 
institutional
 
clients,
 
investment
 
banking,
 
and
 
asset
management businesses in UBS’s
 
home market. Before
 
joining UBS, Mr.
Gähwiler worked for Credit Suisse for over
 
twenty years, his last role being
Chief Credit
 
Officer, Global
 
Private and
 
Corporate Banking.
 
In addition
 
to
his
 
leadership
 
and
 
industry
 
experience
 
across
 
all
 
parts
 
of
 
the
 
banking
business, his
 
strong connections
 
and network,
 
particularly in
 
Switzerland,
are instrumental
 
for the
 
firm. After
 
the acquisition
 
of the
 
Credit Suisse
 
Group
in 2023,
 
Mr. Gähwiler served
 
as Chairman
 
of Credit Suisse
 
AG.
Professional experience
2023 – May 2024
Chairman of the Board of Directors of Credit Suisse AG
2017 – 2022
Chairman of the Board of Directors
 
of UBS Switzerland AG
2010 – 2016
Member of the Group Executive Board,
UBS and President UBS Switzerland
2003 – 2010
Chief Credit Officer, Global Private and Corporate
Banking, Credit Suisse
2002 – 2003
Head Credit Risk Management, Corporate Clients
Switzerland, Credit Suisse
1998 – 2001
Chief of Staff to CEO, Private and Corporate Clients,
Credit Suisse
1990 – 1998
Various senior front office roles in Corporate Clients in
Switzerland and North America, Credit Suisse
1981 – 1986
Client Advisor Retail and Wealth Management,
St.Galler Kantonalbank
Education
–
Advanced Management Program, Harvard Business School
–
MBA program, International Bankers School, New
 
York
–
Bachelor’s degree, business administration, University of Applied
Sciences, St. Gallen
Non-listed company boards
–
Vice Chairman of the Board of Directors of Pilatus Aircraft Ltd
–
Member of the Board of Directors of Ringier AG
Other activities and functions
 
–
Vice Chairman of the Board of Directors of UBS AG
 
–
Member of the Board and Board Committee of economiesuisse
–
Chairman of the Employers Association of Banks in
 
Switzerland
–
Member of the Board of Directors of the Swiss Employers Association
–
Member of the Board of Directors and the Board of Directors
Committee of the Swiss Bankers Association
–
Member of the Board of the Swiss Finance Council
–
Member of the Board of Trustees of Avenir Suisse
Key competencies
–
Banking (wealth management, asset management, personal
 
and
corporate banking)
 
and insurance
–
Finance, audit, accounting
 
–
Risk management, compliance and legal
–
Human resources management, including compensation
Leadership experience
–
CEO, Chairman
Jeremy Anderson
Senior Independent Director since 2020,
 
independent and non-
executive member of the Board since
 
2018
–
Chairperson of the Audit Committee since 2018
–
Member of the Governance and Nominating
 
Committee since 2019
Nationality:
 
British |
Year of birth:
 
1958
Jeremy Anderson is a financial services veteran, with more than 30 years’
experience working
 
in the
 
banking and
 
insurance sector
 
in an
 
advisory
capacity,
 
covering a broad
 
range of topics,
 
including strategy,
 
audit and
risk management,
 
technology-enabled transformation,
 
mergers, and
 
bank
restructuring. Before retiring from KPMG in
 
2017, he was its
 
Chairman of
Global Financial Services.
 
Mr. Anderson is also an IT
 
expert, having started
out
 
as
 
a
 
software
 
developer
 
in
 
the
 
early
 
1980s,
 
before
 
working
 
in
 
IT
consulting and developing a broad
 
knowledge of systems integration
 
and
IT outsourcing services,
 
as well as
 
software development.
 
He cemented
 
his
reputation as a
 
tech specialist by
 
becoming a
 
founding sponsor
 
of KPMG’s
Global Fintech Network in 2014.
Professional experience
2010 – 2017
Chairman of Global Financial Services, KPMG International
2008 – 2011
Head of Clients and Markets KPMG Europe, KPMG
International
2006 – 2011
Head of Financial Services KPMG Europe, KPMG
International
2004 – 2006
Head of Financial Services KPMG UK, KPMG International
2002 – 2004
Member of the Group Management Board and Head of
UK operations, Atos Origin SA
1985 – 2002
KPMG consulting UK, KPMG
1980 – 1985
Software developer, Triad
 
Computing Systems
Education
–
Bachelor’s degree, economics, University College London
Listed company boards
–
Member of the Board of Prudential plc (chair of the
 
risk committee)
Non-listed company boards
–
Chairman of Lamb’s Passage Holding Ltd
Other activities and functions
–
Member of the Board of Directors of UBS AG
 
–
Member of the Board of Credit Suisse International
–
Trustee of the UK’s Productivity Leadership Group
Key competencies
–
Banking (wealth management, asset management, personal
 
and
corporate banking)
 
and insurance
–
Finance, audit, accounting
–
Risk management, compliance and legal
–
Technology,
 
including artificial intelligence and cybersecurity
Leadership experience
–
Executive board leadership
 
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Claudia Böckstiegel
Independent and non-executive member of the Board since
 
2021
 
–
Member of the Corporate Culture and Responsibility Committee
 
since 2022
Nationality:
 
Swiss and German |
Year of birth:
 
1964
Claudia
 
Böckstiegel
 
has
 
been
 
General
 
Counsel
 
and
 
a
 
member
 
of
 
the
Enlarged
 
Executive
 
Committee
 
of
 
Roche
 
Holding
 
AG
 
since
 
2020.
 
She
started
 
her
 
professional
 
career
 
as
 
an
 
attorney
 
in
 
private
 
practice
 
in
Germany,
 
then
 
joined
 
the
 
Swiss
 
pharmaceutical
 
company
 
Roche
 
in
Germany in 2001
 
and subsequently
 
held various global
 
legal management
positions in Switzerland. Ms. Böckstiegel brings a wealth
 
of know-how in
a highly regulated
 
sector,
 
including safety,
 
health,
 
and environment and
sustainability.
 
Her responsibilities
 
at Roche
 
Holding AG
 
include a
 
broad
range of topics, such as patents, audit and risk
 
advisory, and compliance.
Professional experience
2020 – date
General Counsel and member of the Enlarged Executive
Committee, Roche Holding AG
2016 – 2020
Head of Legal Diagnostics, F. Hoffmann-La Roche Ltd,
Basel, Switzerland, Roche Group
2010 – 2016
Head Legal Business, Roche Diagnostics International
 
Ltd,
Rotkreuz, Switzerland, Roche Group
2005 – 2010
Head Legal Business, Roche Diagnostics GmbH,
Mannheim, Germany, Roche Group
2001 – 2005
Legal Counsel, Roche Diagnostics GmbH, Mannheim,
Germany, Roche Group
1995 – 2001
Attorney (Partner), Philipp & Littig, Mannheim, Germany
1992 – 1995
Attorney (Associate), Dr. Hermann Büttner, Karlsruhe,
Germany
Education
–
Master’s degree, law, Universities of Mannheim and Heidelberg
–
Master of Laws (LL.M.), Georgetown University, Washington, DC
Listed company boards
–
Member of the Enlarged Executive Committee of Roche
 
Holding AG
Other activities and functions
–
Member of the Board of Directors of UBS AG
 
–
Member of the Chairman’s Committee of the Board of
 
the Chamber
of Commerce Germany-Switzerland
Key competencies
–
Finance, audit, accounting
–
Risk management, compliance and legal
–
Regulatory authority, central bank
–
Environmental, social and governance (ESG)
Leadership experience
–
Executive board leadership
William C. Dudley
Independent and non-executive member of the Board since
 
2019
–
Member of the Corporate Culture and Responsibility Committee
 
since 2019
–
Member of the Risk Committee since 2019
Nationality:
 
American (US) |
Year of birth:
 
1953
William C. Dudley served as
 
the President and CEO of the
 
Federal Reserve
Bank of New York for nine
 
years. He demonstrated
 
exceptional leadership
in monetary
 
policy and as
 
a top
 
regulator,
 
including during the
 
years of
the global financial crisis. During that period, his additional area
 
of focus
included
 
cultural
 
behavior
 
and
 
social
 
and
 
governance
 
topics
 
in
 
the
financial
 
services
 
industry.
 
He
 
also
 
served
 
as
 
the
 
Vice
 
Chairman
 
and
 
a
permanent member of the Federal Open Market Committee. Mr.
 
Dudley
brings a
 
wealth of
 
experience in
 
banking and
 
research thanks
 
to his
 
former
management positions at
 
Goldman Sachs
 
Group and
 
Morgan Guaranty
Trust.
Professional experience
2009 – 2018
President and CEO, the Federal Reserve Bank of New York
2007 – 2009
Executive Vice President and Head Markets Group,
the Federal Reserve Bank of New York
2006
Senior advisor (part-time), Goldman Sachs Group
2002 – 2005
Partner and Director US Economic Research Group,
Goldman Sachs Group
1996 – 2002
Managing Director and Director US Economic Research
Group, Goldman Sachs Group
1983 – 1996
Economist at Goldman Sachs Group, Morgan Guaranty
Trust Company,
 
and Board of Governors of the Federal
Reserve System
Education
–
Bachelor of Arts, New College of Florida
–
Doctorate, economics, University of California, Berkeley
Non-listed company boards
–
Member of the Advisory Board of Suade Labs
Other activities and functions
–
Member of the Board of Directors of UBS AG
 
–
Senior Advisor to the Griswold Center for Economic
 
Policy Studies,
Princeton University
–
Member of the Group of Thirty
–
Member of the Council on Foreign Relations
–
Chairman of the Bretton Woods Committee Board of Directors
–
Member of the Board of the Council for Economic
 
Education
Key competencies
–
Investment banking, capital markets
–
Risk management, compliance and legal
–
Regulatory authority, central bank
–
Environmental, social and governance (ESG)
Leadership experience
–
CEO, Chairman
 
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Patrick Firmenich
Independent and non-executive member of the Board since
 
2021
–
Member of the Audit Committee since 2021
–
Member of the Corporate Culture and Responsibility Committee
 
since 2021
Nationality:
 
Swiss |
Year of birth:
 
1962
Patrick Firmenich
 
was Chairman
 
of the
 
Board of
 
Firmenich International
SA, a privately owned
 
fragrances and flavorings company,
 
from 2016 to
2023 and
 
its CEO
 
for 12
 
years. In
 
2023, he
 
became Vice
 
Chairman of
dsm–firmenich,
 
a
 
listed
 
company.
 
He
 
has
 
demonstrated
 
his
entrepreneurial
 
leadership
 
by
 
significantly
 
advancing
 
the
 
Firmenich
group’s
 
global
 
position
 
through
 
organic
 
and
 
in-organic
 
growth
 
and
succeeded in
 
transforming the
 
organization to
 
continuously respond
 
to
client
 
needs
 
and
 
the
 
market
 
environment.
 
He
 
developed
 
an
 
ambitious
sustainability strategy for the group
 
to lead the industry
 
in health, safety
and environmental performance.
 
Before joining Firmenich,
 
he held several
positions
 
in
 
the
 
legal
 
and
 
banking
 
sectors,
 
including
 
working
 
as
 
an
international investment banking analyst.
Professional experience
2016 – 2023
Chairman of the Board of Firmenich International
 
SA,
Geneva
2014 – 2016
Vice Chairman of the Board, Firmenich International
 
SA,
Geneva
2002 – 2014
CEO, Firmenich SA, Geneva
2001 – 2002
Corporate Vice President, Special Operations,
Firmenich SA, Geneva
1997 – 2001
Vice President Fine Fragrance worldwide and
Président Directeur Général, Firmenich & Cie, Paris,
and Firmenich Inc, New York
1993 – 1997
 
Vice President Fine Fragrance North America,
Firmenich Inc, New York
1990 – 1993
Account Manager, Firmenich & Cie, Paris
1988 – 1989
Analyst, International Investment Banking,
 
Credit Suisse
First Boston
1988
Production administrator, Firmenich SA de CV, Mexico
1984 – 1986
Attorney, Business Law, Patry,
 
Junet, Simon & Le Fort,
Geneva
Education
–
Master’s degree, law, University of Geneva, admitted to the bar
 
in Geneva
–
MBA, INSEAD Fontainebleau
Listed company boards
–
Vice Chairman of the Board of dsm–firmenich (chair of
 
the
governance and nomination committee)
Other activities and functions
–
Member of the Board of Directors of UBS AG
 
–
Member of the Board of Directors of INSEAD and La Fondation
Mondiale INSEAD
 
–
Member of the Advisory Council of the Swiss Board Institute
Key competencies
–
Finance, audit, accounting
–
Risk management, compliance and legal
–
Human resources management, including compensation
–
Environmental, social and governance (ESG)
Leadership experience
–
CEO, Chairman
Fred Hu
Independent and non-executive member of the Board since
 
2018
–
Member of the Compensation Committee since 2024
–
Member of the Governance and Nominating
 
Committee since 2020
Nationality:
 
Chinese |
Year of birth:
 
1963
Fred Hu has been the Chairman and CEO of Primavera Capital Group, an
Asia-based private investment firm focused on emerging technology and
innovative industries, since
 
founding it
 
in 2010.
 
In that
 
role he
 
oversees
the
 
overall
 
strategy,
 
talent
 
development, and
 
culture
 
and
 
assumes
 
the
primary
 
responsibilities
 
for
 
establishing
 
and
 
maintaining
 
the
 
long-term
partnerships
 
with
 
global
 
investors.
 
Prior
 
to
 
that,
 
he
 
was
 
a
 
Partner
 
and
Chairman for
 
Greater China
 
at Goldman
 
Sachs. Mr.
 
Hu has
 
a profound
understanding
 
of
 
China’s
 
economy
 
and
 
rapidly
 
developing
 
financial
system,
 
and
 
a
 
vast
 
amount
 
of
 
experience
 
in
 
founding,
 
advising
 
and
investing in leading firms in
 
the tech, consumer and
 
health-care sectors in
China and
 
globally.
 
He has
 
worked at
 
the IMF
 
and advised
 
the Chinese
government on economic policy.
Professional experience
2010 – date
Founder, Chairman and CEO, Primavera Capital Group,
China
2008 – 2010
Partner and Chairman of Greater China, Goldman Sachs
2004 – 2008
Partner and Co-Head, Investment Banking, China,
Goldman Sachs
Education
–
Master’s degree, engineering science, Tsinghua University
–
Master’s degree and doctorate, economics, Harvard University
Listed company boards
–
Non-executive Chairman of the Board of Yum China Holdings (chair
of the nomination and governance committee)
–
Member of the Board of ICBC (chair of the nomination
 
committee)
Non-listed company boards
–
Chairman of Primavera Capital Ltd
Other activities and functions
–
Member of the Board of Directors of UBS AG
 
–
Trustee of the China Medical Board
–
Co-Chairman of the Nature Conservancy Asia Pacific Council
–
Member of the Board of Trustees, the Institute for Advanced Study
Key competencies
–
Banking (wealth management, asset management, personal
 
and
corporate banking)
 
and insurance
–
Investment banking, capital markets
–
Technology,
 
including artificial intelligence and cybersecurity
–
Regulatory authority, central bank
Leadership experience
–
CEO, Chairman
 
 
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Mark Hughes
Independent and non-executive member of the Board since
 
2020
–
Chairperson of the Risk Committee since 2020
–
Member of the Corporate Culture and Responsibility Committee
 
since 2020
Nationality:
 
Canadian, British and American (US) |
Year of birth:
 
1958
Mark Hughes is a highly experienced professional in the financial services
sector, having spent more than 35 years working for RBC (the
 
Royal Bank
of Canada) in Canada, the US and
 
the UK. In his final role as Group
 
Chief
Risk Officer of RBC, he
 
was responsible for the strategic management of
risk on an enterprise-wide basis and oversaw all risk functions. During
 
his
career, Mr. Hughes has also
 
held senior
 
management positions
 
in the
 
front
office and key operational roles. Currently, he is a frequent lecturer
 
at the
University of
 
Leeds and
 
the University
 
of Manchester
 
(both in
 
England) and
is
 
chair
 
of
 
the
 
Global
 
Risk
 
Institute,
 
bringing
 
an
 
enormous
 
amount
 
of
experience as a risk specialist to the Board of Directors of UBS.
Professional experience
2014 – 2018
Group Chief Risk Officer and member
Group Executive Committee, RBC
2013
Deputy Chief Risk Officer, RBC
2008 – 2013
COO, RBC Capital Markets, RBC
2001 – 2008
Head of Global Credit, RBC
1999 – 2001
Head of Debt Products, RBC
1998 – 1999
Senior Vice President and General Manager USA, RBC
1997 – 1998
Senior Vice President Financial Services, RBC
1982 – 1996
Various positions, RBC
Education
–
Bachelor of Laws (LL.B.), University of Leeds
–
MBA, finance, University of Manchester
Other activities and functions
–
Member of the Board of Directors of UBS AG
 
–
Chair of the Board of Directors of the Global Risk Institute
–
Senior advisor to McKinsey & Company
Key competencies
–
Banking (wealth management, asset management,
 
personal and corporate banking) and insurance
–
Investment banking, capital markets
–
Risk management, compliance and legal
–
Technology,
 
including artificial intelligence and cybersecurity
Leadership experience
–
Executive board leadership
Gail Kelly
Non-independent and non-executive member of the
 
Board
since 2024
–
Member of the Governance and Nominating Committee
 
since 2024
Nationality:
 
Australian |
Year of birth:
 
1956
Gail Kelly brings to the
 
board more than 35
 
years of banking experience
in South Africa
 
and Australia.
 
She served
 
as the Group
 
CEO and
 
Managing
Director for two banks in Australia: St. George
 
Bank, from 2002 to 2007,
followed by
 
Westpac Banking
 
Corporation, from
 
2008 to
 
2015. During
her tenure as
 
CEO, Ms. Kelly
 
navigated Westpac through the
 
challenges
of the global financial crisis in 2008 and 2009 and
 
the successful merger
with
 
St.
 
George
 
Bank
 
in
 
2008,
 
the
 
largest
 
in-market
 
financial
 
services
merger
 
in
 
Australia.
 
At
 
the
 
time
 
of
 
her
 
retirement
 
from
 
that
 
firm,
 
the
Westpac Group was the
 
12th largest bank
 
in the world
 
in terms of
 
market
capitalization. After
 
her executive
 
career,
 
Ms. Kelly
 
continues to
 
hold a
portfolio
 
of
 
roles,
 
leveraging
 
her
 
experience
 
and
 
insights
 
as
 
a
 
global
leader. She was a Senior Global Advisor for UBS from 2016 to 2023.
Professional experience
2008 – 2015
Group CEO and Managing Director,
Westpac Banking Corporation
2002 – 2007
Group CEO and Managing Director, St. George Bank
1999 – 2001
Group Executive, Customer Service Division,
Commonwealth Bank of Australia
1997 – 1999
Group Manager, Strategic Marketing, Commonwealth
Bank of Australia
1990 – 1997
Various General Manager positions, Nedbank Group,
South Africa
Education
–
Bachelor of Arts, the University of Cape Town
–
MBA, University of Witwatersrand,
 
Johannesburg
Listed company boards
–
Member of the Board of Singtel Communications (chair of
 
the
executive resource and compensation committee)
Other activities and functions
–
Member of the Board of Directors of UBS AG
–
Member of the Group of Thirty
–
Member of the Board of Directors of the Bretton Woods Committee
–
Member of the Board of Directors of the Australia Philanthropic
Services
–
Member of the Australian American Leadership
 
Dialogue Advisory
Board
–
Senior advisor to McKinsey & Company
Key competencies
–
Banking (wealth management, asset management, personal
 
and
corporate banking) and insurance
–
Investment banking, capital markets
–
Human resources management, including compensation
–
Regulatory authority, central bank
Leadership experience
–
CEO, Chairman
 
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Nathalie Rachou
Independent and non-executive member of the Board since
 
2020
–
Member of the Audit Committee since 2024
–
Member of the Governance and Nominating
 
Committee since 2022
Nationality:
 
French |
Year of birth:
 
1957
Nathalie Rachou is
 
a seasoned expert
 
in financial
 
services, having held
 
a
number of banking positions, such as CEO
 
of Prime Brokerage and head
of a business line in
 
Capital Markets at Crédit Agricole
 
Indosuez in the UK
and in France. In 1999, she
 
founded a London-based asset management
company that
 
merged with
 
a French
 
asset manager and
 
continued as a
senior
 
adviser
 
until
 
2020.
 
Alongside
 
these
 
roles,
 
Ms.
 
Rachou
 
brings
extensive experience from serving
 
as a board member
 
of Société Générale
for
 
12
 
years.
 
Currently,
 
she
 
sits
 
on
 
the
 
boards
 
of
 
two
 
other
 
listed
companies:
 
the
 
pan-European
 
bourse,
 
Euronext
 
N.V.
 
,
 
and
 
Lancashire
Holdings Limited,
 
a provider of
 
global insurance
 
and reinsurance products.
Professional experience
2015 – 2020
Senior Advisor, Clartan Associés
(formerly Rouvier Associés), France
1999 – 2014
Founding partner and CEO, Topiary Finance Ltd, UK
1996 – 1999
Head of Global Foreign Exchange and Currency Options,
Crédit Agricole Indosuez (formerly Banque Indosuez), UK
1991 – 1996
Corporate Secretary and Secretary to the
Board of Directors, Crédit Agricole Indosuez, France
1986 – 1991
COO, Carr Futures, France (owned by Banque Indosuez),
Crédit Agricole Indosuez, France
1983 – 1986
Head of Asset and Liability Management & Market Risks,
Crédit Agricole Indosuez, France
1978 – 1982
Position in Forex Exchange Sales, Crédit Agricole Indosuez,
France and UK
Education
–
Master’s degree, management, HEC Paris
–
MBA, INSEAD Fontainebleau
Listed company boards
–
Member of the Board of Euronext N.V.
 
(chair of the remuneration committee)
–
Member of the Board of Lancashire Holdings Limited
Non-listed company boards
 
–
Member of the Board of the African Financial Institutions
 
Investment
Platform
 
Other activities and functions
–
Member of the Board of Directors of UBS AG
–
Member of the Board of Directors of Fondation Léopold Bellan
 
Key competencies
–
Banking (wealth management, asset management,
 
personal and corporate banking) and insurance
–
Investment banking, capital markets
–
Finance, audit, accounting
–
Risk management, compliance and legal
Julie G. Richardson
Independent and non-executive member of the Board since
 
2017
–
Chairperson of the Compensation Committee since 2019
–
Member of the Risk Committee since 2017
Nationality:
 
American (US) |
Year of birth:
 
1963
Julie G. Richardson
 
spent more
 
than 25 years
 
on Wall
 
Street as a
 
senior
investment banker and
 
private equity investor,
 
with a focus
 
on telecom,
media
 
and
 
technology.
 
She
 
began
 
her
 
career
 
at
 
Merrill
 
Lynch,
 
before
moving to JPMorgan Chase, where she
 
headed the telecommunications,
media and technology investment banking
 
group. Later,
 
she moved into
private equity, as head, and subsequently senior advisor, of the New York
office
 
of
 
Providence
 
Equity
 
Partners,
 
where
 
she
 
spearheaded
 
many
important
 
investments
 
and
 
buyouts.
 
Throughout
 
her
 
career,
 
Ms.
Richardson has
 
spent substantial amounts
 
of time
 
with both
 
incumbent
and new technology
 
companies, acting as
 
an independent board
 
member
of a digital
 
knowledge management
 
company,
 
a leading
 
cloud monitoring
firm and a cyber insurance company.
Professional experience
2012 – 2014
Senior advisor, Providence Equity Partners, New York
2003 – 2012
Partner and Head of the New York office,
Providence Equity Partners, New York
1998 – 2003
Vice Chairman of the Investment Banking division
 
of
JPMorgan Chase & Co. and Head of its Global
Telecommunications, Media and Technology
 
group
1986 – 1998
Various positions
 
at Merrill Lynch, final position: Managing
Director Media and Communications Investment Banking
Education
–
Bachelor’s degree, business administration, University of
 
Wisconsin–Madison
Listed company boards
–
Member of the Board of Yext (chair of the audit committee) (stepped
down in February 2025)
 
–
Member of the Board of Datadog (chair of the audit committee)
Non-listed company boards
 
–
Member of the Board of Fivetran
–
Member of the Board of Coalition, Inc.
 
Other activities and functions
–
Member of the Board of Directors of UBS AG
 
Key competencies
–
Investment banking, capital markets
–
Risk management, compliance and legal
–
Human resources management, including compensation
–
Technology,
 
including artificial intelligence and cybersecurity
 
ubs-20241231p201i1ubs-20241231p201i0
 
Annual Report 2024 |
Corporate governance and compensation
 
| Corporate governance
 
177
Jeanette Wong
Independent and non-executive member of the Board since
 
2019
–
Member of the Audit Committee since 2019
–
Member of the Compensation Committee since 2020
Nationality:
 
Singaporean |
Year of birth:
 
1960
Jeanette Wong has
 
more than 30
 
years of operational
 
experience in the
financial sector in Singapore. She retired from DBS Group in 2019,
 
where
she
 
was
 
Group
 
Executive
 
responsible
 
for
 
the
 
institutional
 
banking
business, a post that encompassed corporate banking, global transaction
services,
 
strategic
 
advisory,
 
and
 
mergers
 
and
 
acquisitions.
 
She
 
has
 
also
held the positions of
 
Director of DBS Bank
 
(China) Limited, Chairperson
 
of
DBS Bank (Taiwan)
 
Ltd and CFO
 
of DBS Group.
 
During a
 
16-year career
with JPMorgan, Ms. Wong helped build up
 
its Asia FX, fixed income and
emerging markets business. She brings extensive experience from serving
as a member
 
of the board
 
of directors of
 
two high-value listed
 
companies.
Professional experience
2008 – 2019
Group Executive institutional banking business, DBS Bank,
Singapore
2003 – 2008
CFO, DBS Bank, Singapore
2003
Chief Administration Officer, DBS Bank, Singapore
1997 – 2002
Country Manager Singapore, JPMorgan, Singapore
1986 – 1997
Various roles in Global Markets and Emerging Markets
Sales and Trading business, Asia, JPMorgan, Singapore
1984 – 1986
Manager, Private Banking, Citibank, Singapore
1982 – 1984
Manager, Corporate Banking, Paribas, Singapore
Education
–
Bachelor’s degree, business administration, the National University
 
of Singapore
–
MBA, University of Chicago
Listed company boards
–
Member of the Board of Prudential plc
–
Member of the Board of Singapore Airlines Limited
Non-listed company boards
–
Member of the Board of GIC Pte Ltd
–
Member of the Board of PSA International
–
Member of the Board of Pavilion Capital Holdings Pte Ltd
Other activities and functions
–
Member of the Board of Directors of UBS AG
 
–
Chairman of the CareShield Life Council
–
Member of the Securities Industry Council
–
Member of the Board of Trustees of the National University
 
of Singapore
Key competencies
–
Banking (wealth management, asset management,
 
personal and corporate banking) and insurance
–
Investment banking, capital markets
–
Finance, audit, accounting
–
Environmental, social and governance (ESG)
Leadership experience
–
Executive board leadership
Markus Baumann
Group Company Secretary since 2017
Nationality:
 
Swiss |
Year of birth:
1963
Markus Baumann
 
joined UBS
 
in 1979
 
as a
 
banking apprentice
and has now been with the firm for more than 40 years.
 
He has
held
 
a
 
broad
 
range
 
of
 
leadership
 
roles
 
across
 
the
 
Group
 
in
Switzerland, the US
 
and Japan, including
 
COO EMEA for
 
Asset
Management and COO of Group Internal Audit. Since 2015, he
has supported the
 
Chairmen of the Board
 
of Directors as
 
Chief
of Staff and later as Group Company Secretary.
Professional experience
2017 – date
Group Company Secretary of UBS Group AG and
Company Secretary of UBS AG
2015 – 2016
Chief of Staff to the Chairman of the
Board of Directors, UBS
2006 – 2015
COO, Group Internal Audit, UBS
2005 – 2006
Head Global Reporting & Controlling, Global
Asset Management, UBS
2002 – 2004
Head Management Support CEO EMEA, Global
Asset Management, UBS
1998 – 2002
COO EMEA, Global Asset Management, UBS
1979 – 1997
Various positions, Union Bank of Switzerland
Education
–
Swiss Federal Diploma as a Business Analyst
–
MBA, INSEAD Fontainebleau
Other activities and functions
–
Chairman of the Board of Directors of the Savoy Baur en
Ville, Zurich
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Corporate governance and compensation
 
| Corporate governance
 
178
Elections and terms of office
Shareholders
 
annually
 
elect
 
each
 
member
 
of
 
the
 
BoD
 
individually,
 
as
 
well
 
as
 
the
 
Chairman
 
and
 
the
 
members
 
of
 
the
Compensation Committee, based on proposals from
 
the BoD.
 
As set
 
out in
 
the Organization
 
Regulations, BoD
 
members are
 
normally expected
 
to serve
 
for at
 
least three
 
years. BoD
members are limited to serving
 
for a maximum of 10 consecutive
 
terms of office; in exceptional
 
circumstances, the BoD
may extend that limit.
 
›
Refer to
 
in this section for more information
Organizational principles and structure
Following each
 
AGM, the
 
BoD meets
 
to appoint
 
one or
 
more Vice
 
Chairmen, a
 
Senior Independent
 
Director,
 
the BoD
committee members (other than the Compensation Committee members, who are elected
 
by the shareholders) and the
respective
 
committee
 
Chairpersons.
 
At
 
the
 
same
 
meeting,
 
the
 
BoD
 
appoints
 
the
 
Group
 
Company
 
Secretary,
 
who,
pursuant to the Organization Regulations, acts as secretary
 
to the BoD and its committees.
Pursuant to the AoA and the Organization Regulations, the BoD meets
 
as often as business requires but at least six times
a year. The presence of either the Chairman, one of
 
the Vice Chairmen or the Senior Independent Director, as well as the
majority of the members
 
of the BoD,
 
is required to
 
pass valid BoD
 
resolutions. In 2024,
 
the majority of
 
the meetings of
the BoD were
 
held in person.
 
During 2024,
 
a total of
 
32 BoD meetings
 
were held,
 
16 of which
 
were attended
 
by GEB
members. The
 
average participation
 
in the
 
BoD meetings
 
was 99%.
 
In addition
 
to the
 
BoD meetings
 
attended by
 
GEB
members, the
 
Group CEO
 
regularly attended
 
some of
 
the meetings
 
of the
 
BoD without
 
the participation
 
of other
 
GEB
members. The meetings had an average duration of 110
 
minutes.
 
The BoD held a
 
two-day strategy workshop,
 
which focused on
 
reconfirming the firm’s
 
key strategic priorities,
 
including
the integration of
 
Credit Suisse. These
 
were further
 
discussed in meetings
 
throughout the
 
year,
 
with deep dives
 
on the
Asia
 
Pacific
 
region
 
and
 
the
 
US
 
wealth
 
management
 
business.
 
The
 
progress
 
of
 
the
 
integration
 
of
 
Credit
 
Suisse
 
was
discussed in detail in each meeting of the BoD.
 
Board of Directors
Members in 2024
Meeting attendance
without GEB
1
Meeting attendance
with GEB
Key responsibilities include:
Colm Kelleher, Chairman
16/16
100%
16/16
100%
The BoD has ultimate responsibility for the success
 
of the Group and for
delivering sustainable shareholder value within a framework
 
of prudent
and effective controls. It decides on the Group’s strategy and
 
the
necessary financial and human resources, upon recommendation
 
of the
Group CEO, and sets the Group’s values and standards to ensure that
the Group’s obligations to shareholders and other stakeholders
 
are met.
›
Refer to the Organization Regulations of UBS Group
 
AG,
available at
ubs.com/governance
, for more information
Lukas Gähwiler
16/16
100%
16/16
100%
Jeremy Anderson
16/16
100%
16/16
100%
Claudia Böckstiegel
16/16
100%
15/16
94%
William C. Dudley
16/16
100%
16/16
100%
Patrick Firmenich
16/16
100%
16/16
100%
Fred Hu
16/16
100%
16/16
100%
Mark Hughes
16/16
100%
16/16
100%
Gail Kelly
2
13/14
93%
 
12/12
100%
 
Nathalie Rachou
16/16
100%
16/16
100%
Julie G. Richardson
16/16
100%
16/16
100%
Dieter Wemmer
3
2/2
100%
5/5
100%
Jeanette Wong
16/16
100%
16/16
100%
1
 
Additionally, three ad hoc
 
video calls took place in
 
2024.
 
2
At the 2024 AGM, Gail
 
Kelly was newly elected
 
to the Board of Directors;
 
indicated are her attended and
 
total meetings.
 
3
 
At the 2024 AGM, Dieter
Wemmer did not stand for re-election; indicated are his attended and total meetings.
 
At the BoD
 
meetings, each committee chair provides
 
the BoD with
 
an update on the
 
committee’s activities and important
issues. We also continued with the coordination and
 
exchange of information between UBS Group AG and
 
its significant
group entities.
 
Joint meetings
 
between the
 
BoD of UBS
 
Group AG and
 
the boards
 
of directors of
 
the significant
 
group
entities, as well as between
 
the respective chairs of the
 
risk and audit committees,
 
have been held. As in
 
prior years, an
annual workshop was held for non-executive board members
 
of all significant group entities.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Corporate governance and compensation
 
| Corporate governance
 
179
Performance assessment
In spring 2024, the BoD self-assessment was
 
conducted in-house, with an extensive questionnaire.
 
The results confirmed
that the BoD operated efficiently and effectively.
 
Every third year,
 
an external assessment of the effectiveness of the BoD
is performed. The
 
most recent
 
external review was
 
conducted in 2022
 
and concluded that
 
the BoD and
 
its committees
operate
 
effectively,
 
in
 
line
 
with
 
best
 
practices
 
and
 
meet
 
the
 
highest
 
standards,
 
including
 
in
 
comparison
 
with
 
leading
international peers. The next external review will take place in the fourth
 
quarter of 2025.
 
BoD committees
The
 
committees
 
listed
 
below
 
assist the
 
BoD with
 
fulfilling
 
its responsibilities.
 
These
 
committees
 
and their
 
charters
 
are
described
 
in
 
our
 
Organization
 
Regulations,
 
available
 
at
ubs.com/governance.
 
The
 
committees
 
meet
 
as
 
often
 
as
 
their
business requires
 
but no
 
less than
 
four times
 
a year
 
in the
 
case of
 
the Audit
 
Committee,
 
the Risk
 
Committee and
 
the
Compensation
 
Committee
 
and
 
no
 
less
 
than
 
twice
 
a
 
year
 
in
 
the
 
case
 
of
 
the
 
Corporate
 
Culture
 
and
 
Responsibility
Committee (the CCRC) and the Governance and Nominating Committee.
 
Topics
 
of common
 
interest
 
or affecting
 
more
 
than one
 
committee
 
are
 
discussed at
 
joint committee
 
meetings.
 
During
2024, a total of 12 joint committee
 
meetings were held. The Audit Committee
 
met four times with the Risk Committee
and
 
five
 
times
 
with
 
the
 
CCRC.
 
The
 
Risk
 
Committee
 
met
 
twice
 
with
 
the
 
CCRC
 
and
 
once
 
with
 
the
 
Compensation
Committee.
 
Audit Committee
Throughout 2024, the Audit Committee consisted of four independent BoD members;
 
changes in the composition after
the AGM
 
included
 
Nathalie
 
Rachou joining
 
the
 
committee
 
and Dieter
 
Wemmer
 
stepping
 
down.
 
All Audit
 
Committee
members
 
have
 
accounting
 
or
 
related
 
financial
 
management
 
expertise
 
and,
 
in
 
compliance
 
with
 
the
 
rules
 
established
pursuant to
 
the 2002
 
US Sarbanes–Oxley
 
Act, at
 
least one
 
member qualifies
 
as a
 
financial expert.
 
The NYSE
 
standards
on
 
corporate
 
governance
 
and
 
Rule
 
10A-3
 
under
 
the
 
US
 
Securities
 
Exchange
 
Act
 
set
 
more
 
stringent
 
independence
requirements for members of audit committees
 
than for the other members of the BoD. Throughout 2024, all
 
members
of the
 
Audit Committee
 
satisfied these
 
requirements, in
 
that they
 
did not receive,
 
directly or
 
indirectly,
 
any consulting,
advisory or
 
compensatory fees
 
from any
 
member of
 
the Group
 
other than
 
in their
 
capacity as
 
a BoD
 
member,
 
did not
hold, directly or indirectly, UBS Group AG shares in excess of 5% of the outstanding capital thereof and did not serve on
the audit committees of more than two other
 
public companies.
During 2024, the
 
Audit Committee held
 
14 committee meetings,
 
with a participation
 
rate of 100%. The
 
meetings had
an average duration of approximately 135 minutes. Additional attendees included the Group CFO, the Group Controller,
the Chief Accounting Officer, the
 
Head Group Internal Audit (GIA) and
 
the external auditors. The Chairman
 
of the BoD,
the
 
Vice
 
Chairman
 
and
 
the
 
Group
 
CEO
 
attended
 
most
 
meetings.
 
The
 
Chairperson
 
and
 
the
 
committee
 
continued
 
to
maintain regular contact with core supervisory authorities.
Audit Committee
Members in 2024
Meeting attendance
 
Key responsibilities include:
Jeremy Anderson (Chairperson)
14/14
100%
The function of the Audit Committee is to support
 
the BoD in fulfilling its oversight duty
 
relating
to financial reporting and internal controls over financial
 
reporting, the effectiveness of the
external and internal audit functions,
 
and the effectiveness of whistleblowing procedures.
Management is responsible for the preparation, presentation
 
and integrity of the financial
statements, while the external auditors
 
are responsible for auditing financial statements. The
 
Audit
Committee’s responsibility is one of oversight
 
and review.
›
Refer to the Organization Regulations of UBS Group
 
AG,
available at
ubs.com/governance
, for more information
Patrick Firmenich
14/14
100%
 
Nathalie Rachou
1
9/9
100%
Dieter Wemmer
2
5/5
100%
Jeanette Wong
14/14
100%
1
Nathalie Rachou became a member of
 
this committee after the 2024
 
AGM; indicated are her attended
 
and total meetings.
 
2
 
Dieter Wemmer stepped down at
 
the 2024 AGM; indicated
 
are his attended and total
meetings.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Corporate governance and compensation
 
| Corporate governance
 
180
Compensation Committee
Throughout 2024, the Compensation Committee consisted of three independent
 
members;
 
changes in the composition
at the AGM included Fred Hu joining the committee and Dieter Wemmer
 
stepping down at the AGM. In addition to the
key
 
responsibilities
 
indicated
 
in the
 
table
 
below,
 
the
 
Compensation
 
Committee
 
reviews
 
the
 
compensation
 
disclosures
included in this report.
During 2024,
 
the Compensation
 
Committee held
 
seven meetings,
 
with a
 
participation rate
 
of 95%. The
 
meetings had
an average duration of approximately
 
90 minutes. All meetings in 2024
 
were held in the presence
 
of the Chairman and
the
 
Group
 
CEO.
 
External
 
advisors
 
were
 
present
 
when
 
required.
 
In
 
2024,
 
the
 
Chairperson
 
met
 
regularly
 
with
 
core
supervisory authorities.
›
Refer to
 
in the
 
section of this report for more information about the
Compensation Committee’s decision-making procedures
Compensation Committee
Members in 2024
Meeting attendance
 
Key responsibilities include:
Julie G. Richardson (Chairperson)
7/7
100%
The Compensation Committee is responsible for:
(i)
supporting the BoD
 
in its duties to set guidelines on compensation
 
and benefits;
(ii)
 
approving the total compensation for the Chairman
 
and the non-independent BoD
 
members;
(iii) proposing, upon proposal of the Chairman, financial
 
and non-financial performance targets
 
and objectives for the Group CEO for approval by the
 
BoD and reviewing, upon the proposal
 
of the Group CEO, the performance framework
 
for the other GEB members;
(iv) proposing, upon proposal of the Chairman, the Group CEO’s performance assessment
 
for
 
approval by the BoD, as well as informing the BoD
 
of the performance assessments of
 
all GEB members;
 
(v)
 
proposing, upon proposal of the Chairman, the total
 
compensation for the Group CEO for
approval by the BoD; and
(vi)
 
proposing, upon proposal of the Group CEO, the individual total
 
compensation for the other
 
GEB members for approval by the BoD.
›
Refer to the Organization Regulations of UBS Group
 
AG,
available at
ubs.com/governance
, for more information
Fred Hu
1
 
4/5
80%
 
Dieter Wemmer
2
2/2
100%
Jeanette Wong
7/7
100%
1
At the 2024 AGM,
 
Fred Hu was
 
elected to this
 
committee; indicated are
 
his attended and total
 
meetings.
 
2
 
At the 2024 AGM,
 
Dieter Wemmer did
 
not stand for re-election;
 
indicated are his attended
 
and total
meetings.
Corporate Culture and Responsibility Committee
Throughout
 
2024,
 
the
 
CCRC
 
consisted
 
of
 
the
 
same
 
five
 
independent
 
BoD
 
members.
 
The
 
Chairman
 
chaired
 
the
committee. Additional attendees included the
 
Group CEO, the Group
 
Chief Risk Officer,
 
the GEB Lead for Sustainability
and Impact, the Group General
 
Counsel and the Chief Sustainability
 
Officer.
 
During 2024, six meetings were
 
held, with
a participation rate of 100%. The average duration of each
 
of the meetings was approximately 70 minutes
 
.
Corporate Culture and Responsibility Committee
Members in 2024
Meeting attendance
 
Key responsibilities include:
Colm Kelleher (Chairperson)
6/6
100%
The CCRC supports the BoD in its duties to
 
safeguard and advance the Group’s reputation for
responsible and sustainable conduct. Its function
 
is forward-looking in that it monitors and reviews
societal trends and transformational developments
 
and assesses their potential relevance for the
Group.
In undertaking this assessment, it reviews stakeholder
 
concerns and expectations pertaining
 
to the
societal performance of UBS and to the development
 
of its corporate culture. The CCRC’s function
also encompasses the monitoring of the
 
current state and implementation of the programs
 
and
initiatives within the Group pertaining to corporate
 
culture and corporate responsibility, including
sustainability.
›
Refer to the Organization Regulations of UBS Group
 
AG,
available at
ubs.com/governance
, for more information
Claudia Böckstiegel
6/6
100%
William C. Dudley
6/6
100%
Patrick Firmenich
6/6
100%
Mark Hughes
6/6
100%
.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Corporate governance and compensation
 
| Corporate governance
 
181
Governance and Nominating Committee
Before
 
the
 
2024
 
AGM,
 
the
 
Governance
 
and
 
Nominating
 
Committee,
 
chaired
 
by
 
the
 
Chairman,
 
consisted
 
of
 
four
independent members
 
and the
 
Vice Chairman,
 
and, after
 
the AGM,
 
Gail Kelly
 
joined the
 
committee. During
 
2024, six
meetings were held, with a participation rate
 
of 97%. The average duration of each of the meetings
 
was approximately
35 minutes. The Group CEO attended meetings as appropriate
 
.
Governance and Nominating Committee
Members in 2024
Meeting attendance
1
Key responsibilities include:
Colm Kelleher (Chairperson)
6/6
100%
The function of the Governance and
 
Nominating Committee is to support the BoD in
 
fulfilling its
duty to establish best practices in corporate governance
 
across the Group, including conducting a
BoD assessment, establishing and maintaining
 
a process for appointing new BoD and GEB
members, as well as for the annual performance
 
assessment of the BoD.
›
Refer to the Organization Regulations of UBS Group
 
AG,
available at
ubs.com/governance
, for more information
Lukas Gähwiler
 
6/6
100%
Jeremy Anderson
6/6
100%
Fred Hu
6/6
100%
Gail Kelly
2
3/4
75%
Nathalie Rachou
 
6/6
100%
1
Additionally, two ad hoc calls took place in 2024.
 
2
 
Gail Kelly became a member of this committee after the 2024 AGM; indicated are her attended and total meetings.
 
Risk Committee
In
 
2024,
 
the
 
Risk
 
Committee
 
consisted
 
of
 
four
 
independent
 
members
 
and
 
the
 
Vice
 
Chairman
 
before
 
the
 
AGM.
Immediately after the AGM, Nathalie Rachou
 
stepped down from this committee. During 2024,
 
the Risk Committee held
nine
 
committee
 
meetings,
 
with
 
a
 
participation
 
rate
 
of
 
100%.
 
The
 
average
 
duration
 
of
 
each
 
of
 
the
 
meetings
 
was
approximately 190
 
minutes. The
 
Chairman of
 
the BoD,
 
the Group
 
CEO, the
 
Group CFO,
 
the Group
 
Chief Risk
 
Officer,
the Group Chief Operations and Technology Officer,
 
the Group Treasurer,
 
the Group Chief Compliance and Governance
Officer,
 
the Group
 
General
 
Counsel, the
 
Head GIA,
 
and the
 
external auditors
 
attended the
 
meetings as
 
required.
 
The
Chairperson and the committee continued to maintain regular
 
contact with core supervisory authorities.
Risk Committee
Members in 2024
Meeting attendance
1
Key responsibilities include:
Mark Hughes (Chairperson)
9/9
100%
The function of the Risk Committee is to oversee
 
and support the BoD
 
in fulfilling its duty to set
and supervise an appropriate risk management
 
and control framework in the areas of:
 
(i)
financial and non-financial risks;
(ii)
 
balance sheet, treasury and capital management, including
 
funding,
 
 
liquidity and equity attribution.
›
Refer to the Organization Regulations of UBS Group
 
AG,
available at
ubs.com/governance
, for more information
Lukas Gähwiler
9/9
100%
 
William C. Dudley
9/9
100%
Nathalie Rachou
2
2/2
100%
Julie G. Richardson
9/9
100%
1
 
Additionally, one ad hoc call took place in 2024.
 
2
 
Nathalie Rachou stepped down from this committee after the 2024 AGM; indicated are her attended and total meetings.
Ad hoc committees
 
The Special Committee and
 
the Strategy Committee are two
 
ad hoc committees, which
 
have a standing composition
 
and
hold meetings as and when required.
 
In
 
2024,
 
the
 
Special
 
Committee
 
was
 
chaired
 
by
 
Jeremy
 
Anderson,
 
with
 
Colm
 
Kelleher,
 
Lukas
 
Gähwiler,
 
Claudia
Böckstiegel, Nathalie Rachou
 
and Julie G.
 
Richardson as its
 
members. Its primary
 
purpose is to
 
oversee activities
 
related
to
 
selected
 
litigation
 
and
 
investigation
 
matters,
 
review
 
management’s
 
respective
 
proposals
 
and
 
provide
 
to
 
the
 
BoD
recommendations for decisions.
 
Additional attendees included
 
the Group CEO
 
and the Group General
 
Counsel.
 
During
2024, one meeting of the Special Committee was held.
 
In 2024,
 
the Strategy
 
Committee was
 
chaired by
 
Colm Kelleher,
 
with Lukas
 
Gähwiler, William
 
C. Dudley,
 
Fred Hu
 
and
Julie Richardson as its
 
standing members. The primary purpose of
 
this committee is to support
 
management and the BoD
with regard
 
to the
 
assessment of
 
strategic considerations
 
and to
 
prepare decisions
 
on behalf
 
of the
 
BoD. No
 
Strategy
Committee meetings were held,
 
as these topics were discussed in the BoD as a whole.
 
 
 
 
Annual Report 2024 |
Corporate governance and compensation
 
| Corporate governance
 
182
Roles and responsibilities of the Chairman of the Board
 
of Directors
At the
 
2024 AGM,
 
Colm Kelleher
 
was re-elected
 
as the
 
Chairman of
 
the BoD.
 
The Chairman
 
coordinates
 
tasks within
the BoD, calls BoD meetings and sets the meeting agendas. He presides over all general meetings of shareholders, chairs
the
 
Governance
 
and
 
Nominating
 
Committee,
 
as
 
well
 
as
 
the
 
CCRC,
 
and
 
works
 
with
 
the
 
committee
 
Chairpersons
 
to
coordinate the
 
work of all
 
BoD committees.
 
Together
 
with the Group
 
CEO, the Chairman
 
undertakes responsibility
 
for
UBS’s reputation,
 
and is
 
responsible
 
for
 
effective
 
communication
 
with shareholders
 
and other
 
stakeholders, including
government officials,
 
regulators and public
 
organizations. This is
 
in addition
 
to establishing
 
and maintaining
 
close working
relationships with the Group CEO and other
 
GEB members, and providing advice and support
 
when appropriate.
›
Refer to
 
in the
 
section of this report for information about our Pillars,
Principles and Behaviors
In 2024, the Chairman met regularly
 
with core supervisors
 
in all major locations where UBS
 
is active. Meetings with other
important supervisory authorities were scheduled on an ad hoc or
 
needs-driven basis.
Roles and responsibilities of the Vice Chairmen and the Senior
 
Independent Director
The BoD
 
appoints one
 
or more
 
Vice Chairmen
 
and a
 
Senior Independent
 
Director.
 
If the
 
BoD appoints
 
more than
 
one
Vice Chairman, at least one of them must be independent. Both
 
the Vice Chairman and the Senior Independent Director
support and advise
 
the Chairman. In
 
conjunction with the
 
Chairman and the
 
Governance and Nominating
 
Committee,
they facilitate good Group-wide corporate governance, as well as balanced leadership and control within the Group, the
BoD and the committees.
Lukas Gähwiler was
 
appointed as Vice
 
Chairman following the
 
2022 AGM. Jeremy
 
Anderson was re-appointed
 
the Senior
Independent Director after that same
 
meeting and has held that post since
 
2020. The Vice Chairman is required
 
to lead
meetings
 
of
 
the
 
BoD
 
in
 
the
 
temporary
 
absence
 
of
 
the
 
Chairman.
 
Together
 
with
 
the
 
Governance
 
and
 
Nominating
Committee, either the Senior Independent Director or the Vice Chairman is tasked with the ongoing monitoring and the
annual evaluation of the Chairman. The Vice Chairman also represents
 
UBS on behalf of the Chairman in meetings with
internal or external
 
stakeholders. In
 
particular, Lukas Gähwiler
 
represents UBS
 
across a broad
 
range of associations
 
and
industry bodies in Switzerland.
 
The
 
Senior
 
Independent
 
Director
 
enables
 
and
 
supports
 
communication
 
and
 
the
 
flow
 
of
 
information
 
among
 
the
independent BoD members.
 
At least twice
 
a year, he
 
organizes and
 
leads a meeting
 
of the independent
 
BoD members
without the participation of the
 
Chairman. In 2024, two independent
 
BoD meetings were held with
 
a participation rate
of
 
100%
 
and
 
an
 
average
 
duration
 
of
 
approximately
 
90
 
minutes.
 
The
 
Senior
 
Independent
 
Director
 
also
 
relays
 
to
 
the
Chairman any issues or
 
concerns raised by the independent BoD
 
members and acts as a
 
point of contact for shareholders
and stakeholders seeking discussions with an independent BoD
 
member
.
 
Important business connections of independent members
 
of the Board of Directors
As a global
 
financial services provider and
 
a major Swiss
 
bank, UBS has
 
business relationships with many
 
large companies,
including some
 
in which
 
BoD members
 
have management
 
or independent
 
board responsibilities.
 
The Governance
 
and
Nominating Committee determines
 
in each instance whether
 
the nature of
 
the Group’s business
 
relationship with such
a company might compromise our BoD members’ capacity
 
to express independent judgment.
Our
 
Organization
 
Regulations
 
require
 
three-quarters
 
of
 
the
 
BoD
 
members
 
to
 
be
 
independent.
 
For
 
this
 
purpose,
independence
 
is
 
determined
 
in
 
accordance
 
with
 
FINMA
 
Circular
 
2017/1
 
“Corporate
 
governance
 
–
 
banks”
 
and
 
the
relevant NYSE rules.
 
In 2024, our BoD met the standards of the Organization Regulations for the percentage
 
of directors who are considered
independent
 
under
 
the
 
criteria
 
described
 
above.
 
No
 
current
 
BoD
 
member
 
has
 
either
 
an
 
employment
 
contract
 
or
 
a
significant
 
business
 
connection
 
to
 
UBS
 
or
 
any
 
of
 
its
 
subsidiaries.
 
No
 
BoD
 
member
 
currently
 
carries
 
out
 
operational
management tasks within the
 
Group. Except for the
 
Vice Chairman who was
 
Chairman of UBS Switzerland
 
AG until April
2022, and Gail
 
Kelly, who was
 
a Senior Global
 
Advisor for UBS
 
until September 2023,
 
no BoD member
 
has carried out
operational management tasks within the Group over the past
 
three years.
 
All relationships and transactions with UBS Group AG’s independent BoD members are conducted in
 
the ordinary course
of business
 
and are
 
on the
 
same terms
 
as those
 
prevailing at
 
the time
 
for comparable
 
transactions with
 
non-affiliated
persons. All relationships and transactions with BoD members’
 
associated companies are conducted at arm’s length.
›
Refer to
 
in the
 
section of this report for more information
 
Annual Report 2024 |
Corporate governance and compensation
 
| Corporate governance
 
183
Checks and balances: the Board of Directors and the
 
Group Executive Board
We
 
operate
 
under a
 
strict dual
 
board
 
structure,
 
as mandated
 
by Swiss
 
banking law.
 
The separation
 
of responsibilities
between the BoD and the GEB is clearly defined in the Organization Regulations. The BoD decides on the strategy of the
Group, upon
 
recommendations
 
by the
 
Group CEO,
 
and exercises
 
ultimate supervision
 
over management;
 
whereas the
GEB, headed by the
 
Group CEO, has
 
executive management responsibility.
 
The functions of
 
Chairman and Group
 
CEO
are assigned to two different
 
persons, leading to a separation of
 
powers. This structure
 
establishes checks and balances
and
 
preserves
 
the
 
institutional
 
independence
 
of
 
the
 
BoD
 
from
 
the
 
executive
 
management
 
of
 
the
 
Group,
 
for
 
which
responsibility is delegated to the GEB. No member
 
of one board may simultaneously be a member of
 
the other.
Supervision
 
and
 
control
 
of
 
the
 
GEB
 
remain
 
with
 
the
 
BoD.
 
The
 
authorities
 
and
 
responsibilities
 
of
 
the
 
two
 
bodies
 
are
governed by the AoA and the Organization Regulations.
Skills, expertise and training of the Board of Directors
The
 
BoD
 
is
 
well-diversified
 
and
 
composed
 
of
 
members
 
with
 
a
 
broad
 
spectrum
 
of
 
skills,
 
educational
 
backgrounds,
experience, and expertise
 
from a range
 
of sectors that
 
reflect the nature and
 
scope of
 
the firm’s business.
 
The Governance
and Nominating Committee
 
maintains a competencies
 
and experience matrix
 
to identify gaps
 
in the competencies
 
and
experiences
 
considered
 
most
 
relevant
 
to the
 
BoD,
 
taking
 
into
 
consideration
 
the
 
firm’s
 
business
 
exposure,
 
risk
 
profile,
strategy and geographic reach.
 
In
 
recent
 
years,
 
the
 
composition
 
of
 
the
 
BoD
 
has
 
been
 
systematically
 
shaped
 
along
 
the
 
identified
 
requirements.
 
The
appointments
 
of a new Chairman
 
and Vice Chairman in
 
2022, as well as
 
the nominations
 
of Gail Kelly in January
 
2024
and Renata
 
Jungo Brüngger
 
and Lila
 
Tretikov in
 
March 2025,
 
were important
 
elements in
 
this continuous
 
process. We
maintain and update a list of potential future candidates
 
for the BoD of UBS Group AG.
Key competencies
–
banking (wealth management, asset management, personal and
 
corporate banking) and insurance
–
investment banking, capital markets
 
–
finance, audit, accounting
 
–
risk management, compliance and legal
 
–
human resources management, including compensation
–
technology, including artificial intelligence and cybersecurity
–
regulatory authority, central bank
 
–
environmental, social and governance (ESG)
Leadership experience
–
experience as a CEO or chairperson
–
executive board leadership experience (e.g. as CFO, chief
 
risk officer or COO of a listed company)
The
 
Governance
 
and
 
Nominating
 
Committee
 
reviews
 
these
 
categories
 
and
 
ratings
 
annually
 
to
 
confirm
 
that
 
the
 
BoD
continues to possess the most relevant experience and competencies
 
to perform its duties.
With regard
 
to the
 
composition of
 
the BoD
 
after the
 
2024 AGM,
 
the BoD
 
members thereof
 
identified all
 
of the
 
target
competencies as being
 
their key competencies.
 
Particularly strong levels
 
of experience and
 
expertise existed in
 
these areas:
–
financial services
 
–
risk management, compliance and legal
 
–
finance, audit, accounting
Furthermore, 10
 
of the
 
12 BoD
 
members have
 
held or
 
currently hold
 
chairperson,
 
CEO or
 
other executive
 
board-level
leadership positions.
Moreover,
 
we
 
consider
 
the
 
continuous
 
education
 
of
 
our
 
BoD
 
members
 
to
 
be an
 
important
 
priority
 
and
 
support
 
their
attendance
 
to
 
various
 
training
 
sessions.
 
In
 
addition
 
to
 
a
 
comprehensive
 
induction
 
program
 
for
 
new
 
BoD
 
members,
continuous training and topical deep dives are part of
 
the BoD agenda.
 
Cybersecurity governance
Cybersecurity,
 
as one of the
 
inherently highest and
 
most rapidly evolving non-financial
 
risks, is a key
 
focus for the BoD.
It is primarily
 
covered by
 
the Risk Committee
 
through a
 
combination of (i) regular
 
reporting as
 
part of the
 
monthly risk
reports
 
and
 
quarterly
 
cybersecurity
 
updates,
 
and
 
(ii) dedicated
 
deep
 
dives
 
on
 
specific
 
cybersecurity
 
topics,
 
including
assessments
 
of
 
actual
 
cybersecurity
 
incidents
 
in
 
the
 
industry,
 
assessments
 
of
 
the
 
firm’s
 
security
 
posture
 
and
 
related
continuous
 
improvement
 
measures.
 
In
 
addition,
 
the
 
BoD
 
members
 
receive
 
periodic
 
updates
 
from
 
the
 
Group
 
Chief
Information Security Office on key cybersecurity threats and
 
incidents across the globe and industries, and
 
education and
training sessions are organized regularly for
 
all BoD members.
›
Refer to
 
in the
 
section of this report for information about
 
our risk
governance framework
›
Refer to
 
in the
 
section of this report for information about cybersecurity
 
 
ubs-20241231p208i0
Annual Report 2024 |
Corporate governance and compensation
 
| Corporate governance
 
184
Succession planning
 
Succession planning is
 
one of the
 
key responsibilities of
 
both the BoD
 
and the GEB.
 
Across all divisions
 
and regions, an
inclusive talent
 
development and
 
succession planning
 
process is
 
in place
 
that aims
 
to foster
 
the personal
 
development
and Group-wide mobility
 
of our
 
employees. Although the
 
recruiting process for
 
BoD and
 
GEB members
 
takes into
 
account
a broad spectrum of factors, such as skills, backgrounds, experience and expertise, our approach with regard to diversity
considerations does not constitute
 
a diversity policy within the meaning
 
of the EU Directive
 
on Non-Financial Reporting,
and Swiss law does not require UBS to
 
maintain such a policy.
In 2022, the GEB launched several strategic initiatives with the close involvement of the BoD and with the aim of further
strengthening internal
 
succession planning
 
at UBS.
 
This included
 
the early
 
identification of
 
talents and
 
their systematic
development,
 
including
 
international
 
and
 
cross-divisional
 
rotations.
 
The
 
succession
 
plans
 
for
 
the
 
GEB
 
and
 
the
management layers below it are managed under the lead of the Group CEO and are reviewed and approved annually by
the
 
BoD.
 
Moreover
 
in
 
2023,
 
to
 
cater
 
to
 
the
 
challenges
 
posed
 
by
 
the
 
acquisition
 
of
 
the
 
Credit
 
Suisse
 
Group,
 
the
composition of the GEB was complemented with new members.
 
For the BoD, the Chairman leads a systematic
 
succession planning process as illustrated
 
in the chart below. Our strategy
and the business environment
 
constitute the main drivers
 
in our succession planning
 
process for new BoD
 
members, as
they
 
define
 
the
 
key
 
competencies
 
required
 
on
 
the
 
BoD.
 
Taking
 
the
 
diversity
 
and
 
the
 
tenure
 
of
 
the
 
existing
 
BoD
 
into
account,
 
the
 
Governance
 
and
 
Nominating
 
Committee
 
defines the
 
recruiting
 
profile
 
for
 
the
 
search.
 
Both external
 
and
internal sources
 
contribute to
 
identifying suitable
 
candidates. The
 
Chairman and
 
the members
 
of the
 
Governance and
Nominating Committee meet with potential
 
candidates and, with the support
 
of the full BoD,
 
nominations are submitted
to
 
the
 
AGM
 
for
 
approval.
 
New
 
BoD
 
members
 
follow
 
an
 
in-depth
 
onboarding
 
process
 
designed
 
to
 
enable
 
them
 
to
integrate efficiently and become effective
 
in their new role. Due to this succession
 
planning process, the composition of
the BoD is in line with the demanding requirements of a
 
leading global financial services firm.
 
The
 
smooth
 
and
 
effective
 
succession
 
at
 
the
 
GEB
 
level
 
and the
 
appointments
 
of internal
 
talent
 
as
 
new
 
GEB
 
members
demonstrates the strength of the
 
succession planning at UBS.
 
The BoD and the
 
GEB remain committed to the
 
continuous
focus on developing a high-quality bench of succession candidates
 
at all levels in the organization.
 
ubs-20241231p209i0
Annual Report 2024 |
Corporate governance and compensation
 
| Corporate governance
 
185
Information and control instruments with regard to
 
the Group Executive Board
The BoD is kept informed of the GEB’s activities
 
in various ways, including regular meetings
 
between the Chairman, the
Group CEO and GEB
 
members. The Group CEO
 
and other GEB members
 
also participate in BoD meetings
 
to update its
members on
 
all significant
 
issues. The
 
BoD receives
 
regular
 
comprehensive
 
reports
 
covering financial,
 
capital, funding,
liquidity,
 
regulatory,
 
compliance
 
and
 
legal
 
developments,
 
as
 
well
 
as
 
performance
 
against
 
plan
 
and
 
forecasts
 
for
 
the
remainder of the year. For important developments, BoD members are also updated by the GEB in between meetings. In
addition, the Chairman receives the meeting material and
 
minutes of the GEB meetings.
BoD members may request from other
 
BoD or GEB members any
 
information about matters concerning the
 
Group that
they require in order to fulfill
 
their duties. When these requests are
 
raised outside BoD meetings, such
 
requests must go
through the Group Company Secretary and be addressed to the
 
Chairman.
 
The BoD
 
is supported
 
in discharging
 
its governance
 
responsibilities by
 
GIA, which
 
independently assesses
 
whether risk
management, control and governance processes are designed
 
and operating sustainably and effectively.
The Head GIA reports
 
directly to the Chairman.
 
In addition, GIA has
 
a functional reporting
 
line to the Audit
 
Committee
in accordance
 
with its
 
responsibilities
 
as set
 
forth in
 
our Organization
 
Regulations.
 
The Audit
 
Committee
 
assesses the
independence and performance of GIA
 
and the effectiveness of
 
both the Head GIA
 
and GIA as an
 
organization, approves
GIA’s annual audit plan
 
and objectives and
 
monitors GIA’s delivery
 
of these objectives.
 
The committee is also
 
in regular
contact with the Head GIA.
 
GIA issues
 
quarterly reports
 
that provide
 
an overview
 
of significant
 
audit results
 
and key
 
issues, as
 
well as
 
themes and
trends, based on results of individual audits, continuous risk assessment and issue assurance. The reports are provided to
the
 
Chairman,
 
the
 
members
 
of
 
the
 
Audit
 
and
 
the
 
Risk
 
Committees,
 
the
 
GEB
 
and
 
other
 
stakeholders.
 
The
 
Head
 
GIA
regularly updates the Chairman and the Audit Committee on GIA’s activities, processes, audit plan execution, resourcing
requirements and other
 
important developments. GIA
 
issues an annual
 
Activity Report, which
 
is provided
 
to the Chairman
and the Audit Committee to support their assessment
 
of GIA’s effectiveness.
›
Refer to
 
in this section for more information
›
Refer to
 
in the
 
section of this report for information about reporting to
the BoD
 
Annual Report 2024 |
Corporate governance and compensation
 
| Corporate governance
 
186
Group Executive Board
The BoD delegates the management of the business to the
 
Group Executive Board (the GEB).
 
Responsibilities, authorities and organizational principles
 
of the Group Executive Board
On 31 December
 
2024, the
 
GEB, under
 
the
 
leadership
 
of the
 
Group
 
CEO, consisted
 
of 15
 
members.
 
It has
 
executive
management responsibility for the steering of the Group and its business, develops the strategies of the Group, business
divisions
 
and
 
Group
 
functions,
 
and
 
implements
 
the
 
BoD-approved
 
strategies.
 
The
 
GEB
 
is
 
also
 
the
 
risk
 
council
 
of
 
the
Group, with
 
overall responsibility
 
for establishing
 
and supervising
 
the implementation
 
of risk
 
management and
 
control
principles, as well as for managing the risk profile
 
of the Group, as determined by the BoD and the
 
Risk Committee.
 
In 2024, the GEB held a total of 31 meetings.
 
›
Refer to the Organization Regulations of UBS
 
Group AG, available at
ubs.com/governance
, for more information about the
authorities of the Group Executive Board
Changes to the Group Executive Board
On 1 March 2024, Aleksandar Ivanovic became President
 
Asset Management,
 
succeeding Suni Harford.
 
On 30 May 2024, a number of changes to the composition
 
of the GEB were announced.
 
The following changes became effective on 1 July 2024:
–
Iqbal Khan became Co-President Global Wealth Management
 
;
–
Robert Karofsky became Co-President Global Wealth Management
 
and President UBS Americas;
–
George Athanasopoulos and Marco Valla joined the GEB
 
as Co-Presidents of the Investment Bank;
 
–
Damian Vogel joined
 
the GEB as Group
 
Chief Risk Officer,
 
succeeding Christian Bluhm,
 
who stepped down
 
from the
GEB;
 
–
Stefan Seiler, Head Group Human Resources and Corporate
 
Services, additionally took on the responsibility for Group
Communications and Branding;
 
–
Ulrich Körner, formerly CEO of Credit Suisse AG, stepped
 
down from the GEB; and
–
Naureen Hassan, formerly President UBS Americas, retired from
 
UBS.
Effective 1 September
 
2024, Edmund
 
Koh stepped
 
down from
 
the GEB,
 
with Iqbal
 
Khan succeeding
 
him as
 
President
UBS Asia Pacific, as announced on 30 May 2024. Mr. Koh
 
remains at UBS as Regional Chair Asia Pacific.
 
The biographies below provide information about the GEB members in office on 31 December 2024. The biographies of
five former GEB
 
members (i.e. Christian
 
Bluhm, Suni Harford,
 
Naureen Hassan, Edmund
 
Koh and Ulrich
 
Körner)
 
can be
found on pages 211, 212, 214 and 215 of the UBS Group AG Annual Report
 
2023, available under “Annual reporting”
at
ubs.com/investors
. In addition to information on mandates,
 
the biographies include memberships and
 
other activities
or functions, as required by the SIX Swiss Exchange Corporate
 
Governance Directive.
In line
 
with Swiss
 
law, article
 
36 of
 
our AoA
 
limits the
 
number of
 
mandates that
 
GEB members
 
may hold
 
outside UBS
Group to
 
one mandate in
 
a listed company
 
and five
 
additional mandates in
 
non-listed companies. Mandates
 
in companies
that are controlled by UBS or that control UBS are
 
not subject to this limitation. In addition, GEB members
 
may not hold
more
 
than
 
10
 
mandates
 
at
 
one
 
time
 
at
 
the
 
request
 
of
 
the
 
company
 
and
 
more
 
than
 
eight
 
mandates
 
in
 
associations,
charitable
 
organizations,
 
foundations,
 
trusts
 
and
 
employee
 
welfare
 
foundations
 
without
 
commercial
 
purpose.
 
On
31 December 2024, no member of the GEB reached the
 
aforementioned thresholds.
Responsibilities and authorities of the Asset and Liability Committee
The Asset and Liability Committee of UBS
 
Group AG (the GALCO) is responsible for managing assets and liabilities in line
with the strategy,
 
risk appetite,
 
regulatory commitments
 
and the interests
 
of shareholders
 
and other
 
stakeholders. The
GALCO proposes the framework for capital management, capital allocation,
 
and liquidity and funding risk, and
 
proposes
limits and indicators for the Group to the BoD for approval.
 
It oversees the balance sheet management of the Group,
 
its
business divisions and Group functions. In 2024, the GALCO
 
held 11 meetings.
Management contracts
We
 
have
 
not
 
entered
 
into
 
management
 
contracts
 
with
 
any
 
companies
 
or
 
natural
 
persons
 
that
 
do
 
not
 
belong
 
to
 
the
Group.
 
 
 
ubs-20241231p211i0
Annual Report 2024 |
Corporate governance and compensation
 
| Corporate governance
 
187
Sergio P.
 
Ermotti
 
Group Chief Executive Officer,
member of the GEB
from 2011 to 2020 and since 2023
 
Nationality:
 
Swiss |
Year of birth:
 
1960
Sergio P. Ermotti has been Group CEO of UBS Group
 
AG and President of
the Executive Board
 
of UBS AG since
 
2023. He was also
 
the Group CEO
from
 
2011
 
to
 
2020.
 
He
 
re-joined
 
UBS
 
from
 
Swiss
 
Re,
 
where
 
he
 
was
Chairman of
 
the Board
 
of
 
Directors
 
until
 
2023. Prior
 
to
 
joining UBS
 
in
2011, he was at UniCredit
 
Group, where from 2007 to 2010
 
he served as
Group
 
Deputy CEO
 
and Head
 
of Corporate
 
&
 
Investment Banking
 
and
Private
 
Banking,
 
prior
 
to
 
which
 
he
 
served
 
as
 
Head
 
of
 
the
 
Markets
 
&
Investment
 
Banking
 
Division.
 
Before
 
that,
 
he
 
held
 
various
 
positions
 
at
Merrill Lynch & Co. in the areas of equity derivatives and capital markets.
He
 
became
 
Co-Head
 
of
 
Global
 
Equity
 
Markets
 
and
 
a
 
member
 
of
 
the
Executive
 
Management
 
Committee
 
for
 
Global
 
Markets
 
&
 
Investment
Banking in 2001.
Professional experience
2023 – date
Group CEO, UBS Group AG, and
President of
the Executive Board,
UBS AG
2021 – 2023
Chairman of the Board of Directors, Swiss Re
2020 – 2021
Member of the Board of Directors, Swiss Re
2011 – 2020
Group CEO, UBS
2011
Chairman and CEO UBS Group Europe, Middle East and
Africa, and member of the Group Executive Board,
 
UBS
2007 – 2010
Group Deputy CEO and Head Corporate & Investment
Banking and Private Banking, UniCredit
2005 – 2007
Head Markets & Investment Banking Division, UniCredit
1987 – 2004
Various senior management positions, Merrill Lynch & Co
Education
–
Swiss-certified banking expert
–
Advanced Management Programme, the University of Oxford
Listed company boards
–
Member of the Board of Ermenegildo Zegna N.V. (Lead Non-Executive
Director)
Non-listed company boards
–
Member of the Board of Società Editrice del Corriere del Ticino
 
SA
Other activities and functions
–
President of the Executive Board of
UBS AG
–
Member of the Board of Innosuisse,
 
the Swiss Innovation Agency
–
Member of Institut International d’Etudes Bancaires
–
Member of the WEF International Business Council
 
and Governor of
the Financial Services / Banking Community
 
–
Member of the MAS International Advisory Panel
–
Member of the Board of the Institute of International
 
Finance
–
Member of the Board of the Swiss-American Chamber of
 
Commerce
 
 
 
 
 
ubs-20241231p212i1ubs-20241231p212i0
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| Corporate governance
 
188
George Athanasopoulos
 
Co-President Investment Bank,
member of the GEB since
July 2024
 
Nationality:
 
Greek and British |
Year of birth:
 
1969
George Athanasopoulos became Co-President of the
 
Investment Bank in
July
 
2024.
 
He
 
jointly
 
manages
 
the
 
Investment
 
Bank
 
with
 
Marco
 
Valla
across all regions
 
to ensure an
 
unparalleled global offering for
 
our client
franchise. Having worked in financial markets for more than 30 years, he
brings a
 
wealth of
 
experience into
 
the position.
 
He started
 
his career
 
in
1992, working in
 
Europe and Asia
 
for NatWest Markets
 
and Merrill Lynch.
Before joining
 
UBS in
 
2010, he
 
was General
 
Manager at
 
Eurobank EFG
and previously worked for Barclays Capital,
 
most recently responsible for
Global Foreign Exchange
 
and Global Emerging
 
Markets Distribution.
 
Since
joining UBS
 
in 2010,
 
Mr.
 
Athanasopoulos has
 
held various
 
senior roles,
including Co-Head Global Markets from 2020 to June 2024 and Head of
Global Family and Institutional Wealth from 2022 to June 2024.
Professional experience
July 2024 –
 
date
Co-President of the Investment Bank,
UBS Group AG and UBS AG
2022 – June
 
2024
Head Global Family and Institutional Wealth, UBS
2020 – June
 
2024
Co-Head of Global Markets, UBS
2016 – 2019
Global Head of Foreign Exchange, Rates and Credit and
Head of Non-Core, UBS
2013 – 2016
Global Co-Head of Foreign Exchange,
Rates and Credit, UBS
2011 – 2013
Co-Head of Global Foreign Exchange and
Precious Metals, UBS
2010 – 2011
Head of Global Foreign Exchange Distribution, UBS
2009 – 2010
General Manager, Group Head of Trading, Sales and
Structuring, Eurobank EFG
2008 – 2009
Global Head of Foreign Exchange and Emerging
Markets Distribution, Barclays Capital
2004 – 2008
Various management positions in FX Markets,
Barclays Capital
Education
–
Master’s degree, shipping, trade and finance, Bayes Business
 
School
–
Diploma in mechanical engineering, the National Technical University
of Athens
Other activities and functions
–
Member of the Executive Board of
UBS AG
Michelle Bereaux
Group Integration Officer,
member of the GEB since 2023
 
Nationality:
 
British and Trinidadian & Tobagonian |
Year of birth:
 
1964
Michelle
 
Bereaux
 
was
 
appointed
 
Group
 
Integration
 
Officer
 
in
 
2023.
Working
 
closely
 
with
 
all
 
GEB
 
members
 
and
 
workstream
 
leads,
 
she
manages
 
the
 
Group
 
Integration
 
function
 
to
 
ensure
 
the
 
coherent
 
and
consistent execution of
 
integration plans and milestones
 
for consolidating
Credit Suisse
 
into UBS.
 
Ms. Bereaux
 
has been
 
at UBS
 
for more
 
than 25
years and has held
 
various leadership roles across the
 
firm. She has served
as both COO and Head
 
HR for our Investment Bank,
 
has successfully led
multiple firm-wide cost
 
and transformation projects,
 
and, most recently,
served as COO and
 
UK Country Head of
 
Asset Management. She brings
both
 
a
 
wealth
 
of
 
transformation
 
experience
 
and
 
a
 
strong
 
legal,
 
HR,
investment
 
banking
 
and
 
asset
 
management
 
background
 
to
 
lead
 
our
integration efforts.
Professional experience
2023 – date
Group Integration Officer, UBS Group AG and Integration
Officer, UBS AG
2021 – 2023
Country Head UBS Asset Management UK and
CEO Asset Management UK Ltd
2020 – 2023
COO, UBS Asset Management
2018 – 2020
Head of Group Efficiency and Cost Management,
UBS Business Solutions AG
2015 – 2018
Non-Executive Director and Chairman Remuneration
Committee, UBS Limited
2011 – 2014
Global Head Human Resources, UBS Investment Bank
2011
Global Strategic Projects at CEO Management Office,
UBS Investment Bank
2009 – 2010
Chief of Staff and Joint Global COO, UBS Investment Bank
Education
–
Bachelor’s degree, law, the University of Cambridge
 
–
Bachelor’s degree, politics, economics and law, the University of
Buckingham
Other activities and functions
–
Member of the Executive Board of
UBS AG
 
ubs-20241231p213i1ubs-20241231p213i0
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Corporate governance and compensation
 
| Corporate governance
 
189
Mike Dargan
Group Chief Operations and Technology Officer,
member of the GEB since 2021
Nationality:
 
British |
Year of birth:
 
1977
Mike
 
Dargan
 
was
 
appointed
 
Group
 
Chief
 
Operations
 
and
 
Technology
Officer
 
in
 
2023
 
and
 
is
 
accountable
 
for
 
delivering
 
digital
 
platforms,
technology
 
services,
 
infrastructure,
 
and
 
operations,
 
including
cybersecurity and
 
information security.
 
In addition,
 
he is
 
responsible for
driving Group-wide innovation and
 
digitalization by defining and
 
driving
the implementation of the firm’s strategy for artificial intelligence, digital
assets
 
and
 
other
 
emerging
 
technologies.
 
In
 
his
 
role,
 
Mr.
 
Dargan
 
also
oversees the
 
capabilities and
 
tools to
 
migrate Credit
 
Suisse clients
 
and data
to UBS
 
platforms, facilitating the
 
firm’s key legal
 
entity transactions and
the decommissioning of the Credit
 
Suisse applications and infrastructure
after
 
these
 
migrations.
 
Previously,
 
he
 
was
 
Group
 
Chief
 
Digital
 
and
Information Officer (CDIO), after leading our Group Technology
 
function
since joining UBS
 
in 2016. Prior
 
to joining
 
UBS, he held
 
various senior roles
in
 
technology,
 
corporate
 
strategy
 
and
 
investment
 
banking
 
at
 
Standard
Chartered Bank, Merrill Lynch, and Oliver Wyman.
Professional experience
2023 – date
Group Chief Operations and Technology Officer,
UBS Group AG, and Chief Operations and
Technology Officer,
 
UBS AG
2021 – date
President of the Executive Board,
UBS Business Solutions AG
2021 – 2023
Group CDIO, UBS Group AG, and CDIO, UBS AG
2016 – 2021
Head Group Technology,
 
UBS
2015 – 2016
CIO for Corporate and Institutional Banking,
Standard Chartered Bank
2014 – 2015
Global Group Technology and Operations Head for
Global Markets, Wealth Management, Private Banking
and Securities Services, Group Technology and Operations
Engineering, Standard Chartered Bank
2013 – 2014
CIO for Financial Markets, Standard Chartered Bank
2009 – 2013
Global Head of Strategy and Corporate M&A,
Global Markets, Standard Chartered Bank
2005 – 2009
Head Corporate Strategy & M&A, EMEA and Pacific Rim,
Merrill Lynch
Education
–
Master’s degree, politics, philosophy and economics,
 
St. John’s College, the University of Oxford
Other activities and functions
–
Member of the Executive Board of
UBS AG
–
Member of the Board of Directors and President of the Executive
Board of UBS Business Solutions AG
–
Member of the Board of UBS Optimus Foundation
–
Member of the Advisory Board of SCION Association
Aleksandar Ivanovic
 
President Asset Management,
 
member of the GEB
since March 2024
 
Nationality:
 
Swiss |
Year of birth:
 
1976
Aleksandar Ivanovic
 
was appointed
 
President Asset
 
Management in
 
March
2024. With his experience and broad
 
network across the UBS Group,
 
he
is leading
 
the Asset Management
 
business division forward,
 
creating an
even
 
stronger
 
organization
 
through
 
integration
 
and
 
providing
 
cross-
divisional solutions to
 
clients with industry-leading capabilities
 
on a truly
global scale.
 
Before joining
 
the GEB,
 
he was
 
Head Client
 
Coverage and
Head of
 
the EMEA
 
and Switzerland
 
regions for
 
Asset Management
 
at UBS.
In those functions Mr.
 
Ivanovic played a key role in the development and
execution
 
of
 
our
 
strategy
 
for
 
Asset
 
Management
 
while
 
leading
 
the
engagement with
 
our institutional
 
and wholesale
 
clients, as
 
well as
 
the
ongoing
 
partnership
 
with
 
Global
 
Wealth
 
Management.
 
Starting
 
as
 
an
apprentice at UBS in
 
1992, he has worked
 
in all our business
 
divisions and
later held various leadership roles at Credit Suisse and Morgan Stanley.
Professional experience
March 2024 – date
President Asset Management, UBS Group AG and
UBS AG
2019 – Feb. 2024
Head Region EMEA, Asset Management, UBS
2018 – Feb. 2024
Head Client Coverage, Asset Management, UBS
2018 – Feb. 2024
Head Region Switzerland, Asset Management, UBS
2017 – 2018
Head Institutional Client Coverage,
Asset Management, UBS
2011 – 2016
Head of Europe, Middle East and Africa, Distribution,
Financial Engineering, Structured Products,
Institutional Equity Derivatives, London,
Morgan Stanley
2008 – 2011
Head of Distribution Northern Europe, Structured
Products, Institutional Equity Derivatives, London,
Credit Suisse
2000 – 2008
Various positions in Global Markets,
UBS Investment Bank, London / Switzerland, UBS
Education
–
Master’s degree, finance, London Business School
–
Bachelor’s degree, Economics and Business Administration,
Hochschule für Wirtschaft Zurich
Other activities and functions
–
Member of the Executive Board of
UBS AG
–
Chairman of UBS Asset Management AG
 
ubs-20241231p214i1ubs-20241231p214i0
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| Corporate governance
 
190
Robert Karofsky
Co-President Global Wealth Management and
President UBS Americas,
 
member of the GEB since 2018
 
Nationality:
 
American (US) |
Year of birth:
1967
Robert Karofsky
 
became Co-President
 
Global Wealth
 
Management and
President UBS
 
Americas in July
 
2024. He jointly
 
manages Global Wealth
Management across all regions to
 
ensure an unparalleled global offering
for our wealth management client franchise. As President UBS Americas,
he is responsible for
 
the cross-divisional collaboration and represents
 
the
Group to the broader public in the Americas. Mr.
 
Karofsky was President
Investment
 
Bank
 
from
 
2021
 
to
 
June
 
2024
 
and
 
previously
 
Co-President
Investment Bank
 
from 2018
 
to 2021.
 
Before that
 
he was President
 
UBS
Securities
 
LLC
 
from
 
2015
 
to
 
2021.
 
He
 
reshaped
 
the
 
Investment
 
Bank
business
 
division,
 
realigning
 
efforts
 
around
 
clients’
 
evolving
 
needs,
focusing resources on opportunities for profitable
 
growth and reinvesting
in
 
UBS’s digital
 
transformation. Before
 
joining UBS,
 
he acquired
 
know-
how in investment banking as an analyst and trader,
 
working for various
financial
 
institutions,
 
including
 
Morgan
 
Stanley,
 
Deutsche
 
Bank
 
and
AllianceBernstein.
Professional experience
July 2024 – date
Co-President Global Wealth Management and President
UBS Americas, UBS Group AG and UBS AG
2021 – June 2024
President Investment Bank, UBS
2018 – 2021
Co-President Investment Bank, UBS
2015 – 2021
President UBS Securities LLC, UBS
2014 – 2018
Global Head Equities, UBS
2011 – 2014
Global Head of Equity Trading, AllianceBernstein
2008 – 2010
Co-Head of Global Equities, Deutsche Bank
2005 – 2008
Head of North American Equities, Deutsche Bank
Education
–
Bachelor’s degree, economics, Hobart and William
 
Smith Colleges,
New York
–
MBA, finance and statistics, the University of Chicago
 
Booth School of
Business
Other activities and functions
–
Member of the Executive Board of
UBS AG
–
Member of the Board of UBS Americas Holding LLC
–
Member of the Board of UBS Optimus Foundation
Sabine Keller-Busse
President Personal & Corporate Banking and
President UBS Switzerland, member of the GEB since
 
2016
Nationality:
 
Swiss and German |
Year of birth:
 
1965
Sabine
 
Keller-Busse
 
was
 
appointed
 
President
 
Personal
 
&
 
Corporate
Banking
 
and
 
President
 
UBS
 
Switzerland
 
in
 
2021,
 
heading
 
the
 
leading
universal bank in
 
Switzerland. In her
 
role, she oversees our
 
comprehensive
offering in
 
retail and
 
corporate and institutional
 
banking in Switzerland,
selected financial services to businesses and financial
 
institutions globally,
and wealth management services to individuals in Switzerland, which
 
are
provided jointly
 
with Global
 
Wealth Management.
 
Previously,
 
as Group
COO,
 
she
 
oversaw
 
global
 
functions
 
such
 
as
 
technology,
 
operations,
human resources and
 
corporate services. She has
 
been pivotal in
 
driving
business
 
alignment,
 
and
 
digital
 
and
 
cultural
 
transformation, while
 
also
facilitating
 
business
 
growth
 
as
 
President
 
UBS
 
Europe,
 
Middle
 
East
 
and
Africa.
 
Ms.
 
Keller-Busse
 
also
 
brings
 
in-depth
 
experience
 
regarding
financial market infrastructure, having served on
 
the Board of SIX Group
for nine years.
 
Professional experience
2021 – date
President Personal & Corporate Banking and
President UBS Switzerland, UBS Group AG
2021 – date
President of the Executive Board, UBS Switzerland AG
2019 – 2021
President UBS Europe, Middle East and Africa, UBS
2018 – 2021
Group COO of UBS and President of the Executive Board,
UBS Business Solutions AG
2016 – 2021
Member of the Executive Board of UBS AG
 
2014 – 2017
Group Head Human Resources, UBS
2010 – 2014
COO UBS Switzerland, UBS
Education
–
Master’s degree, economic sciences, University of St. Gallen
–
Ph.D., economic sciences (Dr. oec.), University of St. Gallen
Listed company boards
–
Member of the Board of Zurich Insurance Group
Other activities and functions
–
President of the Executive Board of UBS Switzerland AG
–
Chairwoman of the Foundation Board of the Pension Fund
 
of UBS
–
Member of the Foundation Council of the UBS Center
 
for Economics in Society, University of Zurich
–
Member of the Board and Board Committee of Zurich Chamber
 
of Commerce
–
Member of the Board of the University Hospital Zurich
 
Foundation
–
Member of the Board of Trustees of the Swiss Entrepreneurs
Foundation
–
Member of the Board of Trustees of the HSG Foundation (University
of St. Gallen)
–
Member of the Foundation Board of Deep Tech Nation Switzerland
 
ubs-20241231p215i1ubs-20241231p215i0
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| Corporate governance
 
191
Iqbal Khan
Co-President Global Wealth Management and
President UBS Asia Pacific,
 
member of the GEB since 2019
Nationality:
 
Swiss |
Year of birth:
 
1976
Iqbal Khan became
 
Co-President Global Wealth
 
Management in
 
July 2024
and
 
President UBS
 
Asia Pacific
 
in September
 
2024. He
 
jointly manages
Global Wealth Management across
 
all regions to
 
ensure an unparalleled
global offering for our wealth
 
management client franchise. As Regional
President
 
UBS
 
Asia
 
Pacific,
 
he
 
is
 
responsible
 
for
 
the
 
cross-divisional
collaboration and represents the Group
 
to the broader public in
 
the Asia
Pacific region.
 
Previously,
 
he was
 
President Global
 
Wealth Management
from 2022 to
 
June 2024
 
and President
 
UBS Europe,
 
Middle East
 
and Africa
from 2021 to
 
2023. He joined
 
UBS in 2019
 
as Co-President Global
 
Wealth
Management. Prior to UBS, Mr. Khan was at Credit
 
Suisse, holding senior
leadership positions as CFO
 
Private Banking &
 
Wealth Management and
CEO International
 
Wealth Management.
 
He joined
 
Ernst &
 
Young in 2001,
holding
 
numerous
 
leadership
 
positions
 
and
 
becoming
 
a
 
very
 
young
executive
 
and
 
a
 
partner of
 
the firm’s
 
Swiss arm;
 
when leaving
 
Ernst &
Young, he was lead auditor of UBS.
 
Professional experience
September
 
2024
 
–
date
President UBS Asia Pacific, UBS Group AG and UBS AG
July 2024 – date
Co-President Global Wealth Management, UBS Group
AG and UBS AG
2022 – June 2024
President Global Wealth Management, UBS
2021 – 2023
President UBS Europe, Middle East and Africa, UBS
2019 – 2022
Co-President Global Wealth Management, UBS
2015 – 2019
CEO International Wealth Management, Credit Suisse
2013 – 2015
CFO Private Banking & Wealth Management,
 
Credit Suisse
2011 – 2013
Managing Partner Assurance and Advisory Services –
Financial Services, Ernst & Young
2009 – 2011
Industry Lead Partner Banking and Capital Markets,
Switzerland and EMEA Private Banking, Ernst &
 
Young
2001 – 2009
Various positions in Ernst & Young
Education
–
Swiss Certified Public Accountant
–
Advanced Master of International Business Law (LL.M.)
 
degree,
University of Zurich
Other activities and functions
–
Member of the Executive Board of
UBS AG
–
Member of the Board of UBS Optimus Foundation
Barbara Levi
Group General Counsel, member of the GEB since 2021
 
Nationality:
 
Italian |
Year of birth:
 
1971
Barbara Levi has been Group General
 
Counsel since 2021. In her
 
role, she
provides
 
legal
 
advice
 
and
 
manages
 
the
 
Group’s
 
legal
 
affairs,
 
ensuring
effective and timely assessment
 
of legal matters impacting
 
the Group and
its businesses. A qualified
 
attorney-at-law, she has been
 
admitted to the
Supreme Court of the United States, the New York State bar and the bar
of Milan,
 
Italy, and has worked
 
in several
 
law firms
 
in New
 
York and Milan.
Ms.
 
Levi
 
began
 
her corporate
 
career
 
with Novartis
 
Group
 
in
 
2004 and
worked there for 16
 
years, holding a number
 
of senior legal roles
 
across
Europe. Before
 
joining UBS, she
 
served as Chief
 
Legal Officer &
 
External
Affairs at Rio Tinto Group and, before that, as General Counsel, based in
London. In
 
both roles,
 
she was
 
a member
 
of that
 
company’s executive
committee.
Professional experience
2021 – date
Group General Counsel, UBS Group AG, and
General Counsel, UBS AG
2021
Chief Legal Officer & External Affairs, Rio Tinto Group
2020 – 2021
Group General Counsel, Rio Tinto Group
2019
Group Legal Head, M&A and Strategic Transactions,
Novartis
2016 – 2019
Global General Counsel, Sandoz International GmbH,
Novartis
2014 – 2016
Global Legal Head, Product Strategy & Commercialization,
Novartis
2013 – 2014
Global Legal Head, TechOps, Primary Care and Established
Medicines, Novartis
2009 – 2013
Head of Legal & Compliance, Region Asia-Pacific,
 
Middle
East, and African Countries, Region Group Emerging
Markets, Novartis
Education
–
Law degree, the University of Milan
–
Master of Laws (LL.M.), banking, corporate and finance
 
law, Fordham
University School of Law, New York
Other activities and functions
–
Member of the Executive Board of
UBS AG
–
Member of the Board of Directors of the European General Counsel
Association
–
Member of the Legal Committee of the Swiss-American
 
Chamber of
Commerce
 
ubs-20241231p216i1ubs-20241231p216i0
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| Corporate governance
 
192
Beatriz Martin Jimenez
Head Non-core and Legacy and President UBS Europe,
Middle East and Africa,
 
member of the GEB since 2023
 
Nationality:
 
Spanish |
Year of birth:
 
1973
Beatriz
 
Martin
 
Jimenez
 
became Head
 
Non-core
 
and
 
Legacy,
 
as
 
well
 
as
President UBS Europe, Middle East and Africa of UBS
 
Group AG, in 2023.
She has been the UBS
 
GEB Lead for Sustainability
 
and Impact since March
2024 and the
 
UBS Chief Executive
 
for the UK
 
since 2019. In
 
her role as
the
 
GEB
 
Lead
 
for
 
Sustainability
 
and
 
Impact,
 
she
 
is
 
responsible
 
for
 
the
implementation of
 
the Group’s
 
sustainability and
 
impact strategy. As
 
Head
Non-core
 
and
 
Legacy,
 
she
 
effectively
 
manages
 
the
 
derisking
 
and
 
cost
efforts for the integration of
 
Credit Suisse into UBS. Her
 
responsibilities as
Regional President UBS Europe, Middle East and Africa include the cross-
divisional collaboration
 
and representation
 
of the
 
Group to
 
the broader
public in the region. Before joining UBS in 2012, she held various roles in
fixed income sales and trading at Morgan Stanley and
 
Deutsche Bank.
 
Professional experience
2023 – date
Head Non-core and Legacy and President UBS Europe,
Middle East and Africa, UBS Group AG and UBS AG
March 2024 – date
UBS GEB Lead for Sustainability and Impact,
UBS Group AG
2019 – date
UK Chief Executive, UBS AG London Branch
2020 – 2023
Group Treasurer,
 
UBS Group AG
2022 – 2023
Chief Transformation Officer,
 
UBS Group AG
2015 – 2020
COO, UBS Investment Bank
2015 – 2019
UK COO, UBS AG London Branch and UBS Limited
2012 – 2015
Chief of Staff to CEO, UBS Investment Bank
1996 – 2012
Various positions in Global Markets, Morgan Stanley
and Deutsche Bank
Education
–
Master of Business Administration, Universidad Autónoma de
 
Madrid,
Madrid
–
Erasmus Exchange programme, Hochschule für Bankwirtschaft,
Frankfurt
Other activities and functions
–
Member of the Executive Board of
UBS AG
–
Member of the Supervisory Board of UBS Europe
 
SE
–
Member of the Board of Directors of Credit Suisse International
 
–
Chair of the Board of UBS Optimus Foundation
Markus Ronner
Group Chief Compliance and Governance Officer,
member of the GEB since 2018
Nationality:
 
Swiss |
Year of birth:
 
1965
Markus Ronner has
 
served as Group
 
Chief Compliance and
 
Governance
Officer since 2018, overseeing
 
compliance, financial crime
 
prevention and
operational risk control as well as regulatory and
 
governance functions at
the
 
Group
 
level.
 
In
 
more
 
than
 
40
 
years
 
at
 
UBS,
 
he
 
has
 
acquired
 
deep
expertise
 
across
 
businesses
 
and
 
in
 
non-financial
 
risk
 
management
 
and
control.
 
In that
 
time, Mr.
 
Ronner has
 
held a
 
variety
 
of senior
 
positions
across
 
the
 
firm,
 
including
 
managing
 
the
 
Group-wide
 
too-big-to-fail
program, COO
 
Wealth Management
 
& Swiss
 
Bank, Head
 
Products and
Services of Wealth Management & Swiss Bank,
 
COO Asset Management,
and
 
Head
 
Group
 
Internal
 
Audit.
 
From
 
2022
 
until
 
2023,
 
he
 
served
 
as
Chairman of UBS Switzerland AG, the leading Swiss universal
 
bank.
Professional experience
2018 – date
Group Chief Compliance and Governance Officer,
UBS Group AG, and Chief Compliance and Governance
Officer,
 
UBS AG
2022 – 2023
Chairman of UBS Switzerland AG
2012 – 2018
Head Group Regulatory and Governance, UBS
2011 – 2013
Manager Group-wide too-big-to-fail program, UBS
2010 – 2011
COO Wealth Management & Swiss Bank, UBS
2009 – 2010
Head Products and Services of Wealth Management &
Swiss Bank, UBS
2007 – 2009
COO Asset Management, UBS
2001 – 2007
Head Group Internal Audit, UBS
Education
–
Swiss Banking Diploma
Other activities and functions
–
Member of the Executive Board of
UBS AG
 
ubs-20241231p217i1ubs-20241231p217i0
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| Corporate governance
 
193
Stefan Seiler
Head Group Human Resources & Corporate Services,
member of the GEB since 2023
Nationality:
 
Swiss |
Year of birth:
 
1974
Stefan
 
Seiler
 
has
 
been
 
Head
 
Group
 
Human
 
Resources
 
&
 
Corporate
Services of
 
UBS Group
 
AG and UBS
 
AG since
 
2023. He
 
leads the
 
combined
Group
 
Human
 
Resources
 
and
 
Corporate
 
Services
 
function,
 
ensuring
effective
 
and
 
efficient alignment
 
of our
 
people, real
 
estate
 
and vendor
management strategies. His
 
responsibility was expanded
 
to include Group
Communications and Branding in July
 
2024. Mr.
 
Seiler started his career
at the Swiss Military Academy at ETH
 
Zurich and, after working for Credit
Suisse from 2002 to 2006, he
 
returned to the Swiss Military Academy as
Department Head
 
of Leadership
 
and
 
Communication. Mr.
 
Seiler joined
UBS in 2011
 
and became
 
Group Head
 
HR in 2018
 
after gaining
 
experience
as Head HR for Switzerland and Group Functions, as well as Global Head
Talent
 
and Recruiting. During his
 
career,
 
he has lived
 
in Switzerland, the
UK, the US and Singapore.
Professional experience
2023 – date
Head Group Human Resources & Corporate Services,
UBS Group AG and Head Human Resources & Corporate
Services, UBS AG
2018 – 2023
Group Head Human Resources, UBS
2016 – 2018
Global Head Talent & Recruiting, UBS
2014 – 2016
Head HR UBS Switzerland and Global Head HR Group
Control & CEO Functions, UBS
2012 – 2016
Head HR UBS Switzerland, UBS
2011 – 2012
Global Head HR Corporate Center, UBS
2010 – 2011
Visiting Professor, Nanyang Business School, Singapore
2006 – 2011
Department Head of Leadership and Communication,
Swiss Military Academy, ETH Zurich
2002 – 2006
Assessment specialist, HR Transformation Manager and
Global Lead for Human Capital Management
Implementation Group Functions, Credit Suisse, Zurich and
New York
Education
–
Master of Science (lic. Phil.), Educational Psychology, University of
Fribourg
–
PhD in Educational Psychology, University of Fribourg
Other activities and functions
–
Member of the Executive Board of
UBS AG
–
Member of the Foundation Board of the Pension Fund of
 
UBS
–
Member of the Foundation Council of the UBS Center for
 
Economics
in Society,
 
University of Zurich
–
Chairman of the Foundation Board of the Swiss Finance Institute
–
Member of the IMD Foundation Board
–
Adjunct Professor for Leadership and Strategic Human Resource
Management, Nanyang Technological University (NTU), Singapore
Todd
 
Tuckner
Group Chief Financial Officer, member of the GEB since 2023
Nationality:
 
American (US) |
Year of birth:
 
1965
Todd
 
Tuckner
 
was appointed to the
 
GEB of UBS Group
 
AG in 2023 and
became Group CFO on the date of
 
legal closing of the acquisition of the
Credit Suisse Group in 2023. In his role,
 
he oversees the Group’s financial
accounting,
 
controlling,
 
forecasting,
 
planning
 
and
 
reporting
 
processes,
ensuring
 
the
 
transparency
 
in
 
and
 
the
 
assessment
 
of
 
the
 
financial
performance
 
of
 
the
 
Group
 
and
 
the
 
business
 
divisions.
 
He
 
is
 
also
responsible for managing and controlling the Group’s
 
tax affairs, treasury
and
 
capital
 
management,
 
including
 
funding
 
and
 
liquidity
 
risk,
 
and
regulatory
 
capital
 
ratios.
 
Additionally,
 
he
 
coordinates
 
relations
 
with
analysts and investors alongside
 
the Group CEO. He
 
was previously CFO
and
 
Head
 
Business
 
Performance
 
and
 
Risk
 
Management
 
for
 
our
 
Global
Wealth
 
Management
 
business.
 
Mr.
 
Tuckner
 
joined
 
UBS
 
in
 
2004
 
after
working for KPMG
 
for 17 years
 
and has since
 
held various leadership
 
roles
across the Group Finance function.
 
Professional experience
2023 – date
Group CFO, UBS Group AG and CFO, UBS AG
2020 – 2023
CFO and Head Business Performance and Risk
Management,
 
Global Wealth Management, UBS
2016 – 2021
Group Controller and Chief Accounting Officer, UBS
2012 – 2019
Group Finance COO, UBS
2009 – 2012
Group Head Tax & Accounting Policy,
 
UBS
2004 – 2009
Group Head Tax – Americas, UBS
1987 – 2004
Various management positions, KPMG LLP, New York
 
Education
–
Bachelor’s degree, economics, Princeton University
–
MBA, accounting, New York University
 
Other activities and functions
–
Member of the Executive Board of
UBS AG
 
ubs-20241231p218i1ubs-20241231p218i0
Annual Report 2024 |
Corporate governance and compensation
 
| Corporate governance
 
194
Marco Valla
Co-President Investment Bank, member of the GEB since July
 
2024
Nationality:
 
American (US) |
Year of birth:
 
1972
Marco Valla became Co-President
 
of the Investment
 
Bank in July
 
2024. He
jointly manages the Investment
 
Bank with George Athanasopoulos
 
across
all
 
regions
 
to
 
ensure
 
an
 
unparalleled
 
global
 
offering
 
for
 
our
 
client
franchise. Having
 
spent more
 
than 30
 
years in
 
investment banking,
 
he
brings
 
together
 
a
 
unique
 
set
 
of
 
capabilities
 
to
 
drive
 
UBS’s
 
competitive
position,
 
creating
 
a
 
powerful
 
proposition
 
for
 
clients,
 
employees,
 
and
shareholders. He began his career at Credit Suisse First Boston in 1994
 
as
an Investment Banking analyst, before working for Lehman Brothers and
Barclays. During
 
his tenure
 
at Barclays,
 
he was
 
the Global
 
Head of
 
TMT
and
 
Consumer
 
Retail
 
Investment
 
Banking,
 
overseeing
 
the
 
coverage
 
of
technology, media, telecommunications, consumer and retail clients, and
a member of the Investment Banking
 
Management Committee. Mr. Valla
has
 
held
 
increasingly
 
senior
 
management
 
roles
 
and
 
advised
 
over
 
300
completed transactions across various industries.
Professional experience
July 2024 – date
Co-President of the Investment Bank, UBS Group AG
and UBS AG
2023 – June 2024
Co-Head of Global Banking, Investment Banking,
 
UBS
2020 – 2023
Global Head of TMT and Consumer Retail, Investment
Banking Member of the Investment Banking
Management Committee, Barclays
2013 – 2019
Global Co-Head of Consumer Retail Group, Investment
Banking, Barclays
2008 – 2013
Managing Director, Retail Group, Investment Banking,
Barclays
2005 – 2008
Managing Director, Retail Group, Investment Banking,
Lehman Brothers
1994 – 2005
Investment Banking, Credit Suisse First Boston
Education
–
Bachelor’s degree, economics and Italian literature, University of
California, Berkeley
Other activities and functions
–
Member of the Executive Board of
UBS AG
–
Member of the Board of Directors of Good Shepherd Services
–
Member of the Board of the Mount Sinai Department
 
of Urology
Damian Vogel
Group Chief Risk Officer, member of the GEB since July 2024
Nationality:
 
Swiss |
Year of birth:
 
1972
Damian Vogel was appointed Group Chief Risk
 
Officer in July 2024 and
 
is
responsible
 
for
 
the
 
development of
 
the
 
Group’s
 
risk
 
management and
control framework for various
 
risk categories and the implementation of
its
 
independent
 
control
 
frameworks.
 
He
 
has
 
sound
 
financial
 
services
experience, as well as risk management experience, which he has gained
during his career at UBS and Credit Suisse. Since joining UBS in 2010, he
has
 
held
 
various
 
risk-related
 
leadership
 
roles
 
across
 
Global
 
Wealth
Management, Personal & Corporate Banking and the
 
Switzerland region
before being appointed
 
Chief Risk
 
Officer for
 
Credit Suisse and
 
Group Risk
Control
 
Head
 
of
 
Integration
 
in
 
2023.
 
In
 
his
 
most
 
recent
 
role,
 
he
 
was
responsible for the
 
risk control related
 
integration activities, defining the
best possible
 
setup for
 
the combined
 
Group Risk
 
Control
 
function and
assisting with the shaping of the risk function of
 
the future.
Professional experience
July 2024 – date
Group Chief Risk Officer, UBS Group AG and Chief Risk
Officer, UBS AG
2023 – June 2024
Chief Risk Officer, Credit Suisse AG
Group Risk Control Head Integration, UBS
2018 – 2023
Chief Risk Officer Global Wealth Management, UBS
2016 – 2018
Chief Risk Officer Personal & Corporate Banking and
Region Switzerland, Zurich, UBS
2012 – 2016
Portfolio Underwriter and Head Risk Control Swiss
Corporates, Zurich, UBS
2010 – 2011
Project Manager within Chief Risk Officer Wealth
Management and Swiss Bank, Zurich, UBS
2009 – 2010
Credit Risk Manager, Credit Risk Management
Investment Banking, New York, Credit Suisse
2008 – 2009
Head Structured Lombard Solutions, Credit Risk
Management Private Banking, Zurich, Credit Suisse
1999 – 2008
Various management positions in Credit Suisse
Education
–
Bachelor’s degree, business and administration, University of Applied
Sciences, Visp
–
Executive Program, Stanford University Graduate School of Business
–
Master of Advanced Study, corporate finance, University of Lucerne
Other activities and functions
–
Member of the Executive Board of
UBS AG
–
Member of the Board of UBS Switzerland AG
–
Member of Foundation Board of the International
 
Financial Risk
Institute
 
Annual Report 2024 |
Corporate governance and compensation
 
| Corporate governance
 
195
Change of control and defense measures
Our Articles
 
of Association
 
(the
 
AoA) do
 
not
 
provide
 
any
 
measures
 
for
 
delaying,
 
deferring or
 
preventing
 
a change
 
of
control.
 
Duty to make an offer
Pursuant to the
 
Swiss Federal Act
 
on Financial Market
 
Infrastructures and
 
Market Conduct
 
in Securities and
 
Derivatives
Trading
 
of 19 June
 
2015, anyone
 
who has
 
acquired (whether
 
directly,
 
indirectly
 
or in
 
concert with
 
third
 
parties) more
than 33
1
⁄
3
% of all voting rights of a
 
company listed in Switzerland, whether such rights are exercisable or not, is required
to submit a takeover offer for all listed shares
 
outstanding. We have not elected to change
 
or opt out of this rule.
Clauses on change of control
Neither the
 
terms regulating the
 
BoD members’
 
mandate nor any
 
employment contracts with
 
GEB members or
 
employees
holding key functions within the Group contain change
 
of control clauses.
All employment contracts with GEB members stipulate a notice period of
 
six to twelve months. During the notice period,
GEB members are entitled to
 
their salaries and the
 
continuation of existing employment
 
benefits and may be
 
eligible to
be considered for a discretionary performance award
 
based on their contribution during their tenure.
In case
 
of a
 
change of
 
control, we
 
may, at
 
our discretion,
 
accelerate the
 
vesting of
 
and /
 
or relax
 
applicable forfeiture
provisions of employees’ awards.
 
›
Refer to the
 
section of this report for more information
Auditors
 
Audit is an
 
integral part of
 
corporate governance. While
 
safeguarding their
 
independence, the
 
external auditors closely
coordinate
 
their
 
work with
 
Group
 
Internal Audit
 
(GIA).
 
The
 
Audit Committee
 
and, ultimately,
 
the
 
BoD supervise
 
s
 
the
effectiveness of audit work.
›
Refer to
 
in this section for more information about the Audit
 
Committee
External independent auditors
The 2024 Annual General Meeting
 
(the AGM) re-elected Ernst
 
& Young Ltd (EY) as
 
auditors for the Group
 
for the 2024
financial year.
 
UBS Group also
 
appointed EY
 
as the auditors
 
of the Credit
 
Suisse entities
 
for the 2024
 
financial year.
 
EY
assumes virtually all
 
auditing functions according to
 
laws, regulatory requests and
 
the AoA. Robert Jacob
 
is the EY
 
partner
in charge of the overall coordination of
 
the UBS Group financial and regulatory
 
audits and the co-signing partner
 
of the
financial audit. In 2020, Maurice McCormick became the lead audit partner for the financial statement
 
audit and has an
incumbency limit
 
of five
 
years. Mr.
 
Jacob will
 
be succeeded
 
in 2025
 
by Isabelle
 
Santenac, who
 
will take
 
over as
 
the EY
partner overseeing
 
UBS Group’s
 
financial audits
 
and as
 
the lead
 
audit partner
 
for the
 
financial statement
 
audit, with
 
a
five-year term.
 
At the same
 
time, Mr. McCormick
 
will be succeeded
 
by Robert Wadley,
 
who will assume
 
the role of
 
co-
signing partner for the financial statement audit, with
 
a seven-year incumbency limit. In 2021,
 
Hannes Smit became the
Lead Auditor to
 
the Swiss Financial
 
Market Supervisory Authority (FINMA)
 
with an incumbency limit
 
of seven years.
 
Daniel
Martin has been the co-signing partner for the FINMA audit since
 
2019, with an incumbency limit of seven years.
 
During 2024, the Audit Committee held 14 meetings with the
 
external auditors.
Review of UBS Group AG audit engagement
 
Forvis Mazars
 
has been
 
appointed as
 
auditors of
 
UBS Europe
 
SE, an
 
indirect
 
subsidiary of
 
UBS Group
 
AG, as
 
EU rules
require
 
to
 
rotate
 
its
 
external
 
auditors
 
in
 
the
 
2024
 
financial
 
year.
 
In
 
connection
 
with
 
this
 
required
 
change,
 
and
 
in
consideration of governance best practices, the
 
BoD considered whether it
 
would propose to shareholders
 
a rotation of
the
 
Group
 
auditor
 
concurrent
 
with
 
the
 
change
 
at
 
UBS
 
Europe
 
SE.
 
Under
 
the
 
direction
 
of
 
the
 
Audit
 
Committee,
 
UBS
conducted a formal review of
 
the Group audit engagement including
 
soliciting proposals from potential auditors. In early
2022, based on the results of this assessment,
 
the BoD decided to retain EY as the Group’
 
s
 
external auditors.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Corporate governance and compensation
 
| Corporate governance
 
196
Audit effectiveness assessment
The Audit Committee
 
assesses the performance,
 
effectiveness and
 
independence of the
 
external auditors on an
 
annual
basis. The assessment is generally
 
based on interviews with senior
 
management and survey feedback
 
from stakeholders
across the Group. Assessment criteria include quality of service delivery, quality and competence of the audit team,
 
value
added
 
as
 
part
 
of
 
the
 
audit,
 
insightfulness,
 
and
 
the
 
overall
 
relationship
 
with
 
EY.
 
Based
 
on
 
its
 
own
 
analysis
 
and
 
the
assessment results, including
 
feedback received
 
as part of the
 
review of the
 
Group audit engagement
 
described above,
the Audit Committee concluded that EY’s audit has been effective.
 
Services performed by EY and related fees
The Audit Committee
 
oversees all services
 
provided to
 
UBS by the
 
external auditors. For
 
services requiring
 
the approval
from
 
the
 
Audit
 
Committee,
 
a
 
preapproval
 
may
 
be
 
granted
 
either
 
for
 
a
 
specific
 
mandate
 
or
 
in
 
the
 
form
 
of
 
a
 
blanket
preapproval authorizing
 
a limited and
 
well-defined type and
 
scope of services.
 
The fees (including
 
expenses) paid to
 
EY
are set forth in the table below.
 
Audit work
 
includes all
 
services necessary
 
to perform
 
the
 
audit for
 
the Group
 
in accordance
 
with applicable
 
laws and
generally
 
accepted
 
auditing
 
standards,
 
as
 
well
 
as
 
other
 
assurance
 
services
 
that
 
conventionally
 
only
 
the
 
auditor
 
can
provide. These include statutory and regulatory audits, attestation
 
services and the review of documents to be filed with
regulatory
 
bodies.
 
The
 
additional
 
services
 
classified
 
as audit
 
in 2024
 
included
 
several
 
engagements
 
for
 
which
 
EY
 
was
mandated at the request of FINMA.
Audit-related
 
work
 
consists
 
of
 
assurance
 
and
 
related
 
services
 
traditionally
 
performed
 
by
 
auditors,
 
such
 
as
 
attestation
services related to financial reporting, internal control reviews and performance standard reviews, as well as consultation
concerning financial accounting and reporting standards.
Tax
 
work
 
involves
 
services
 
performed
 
by
 
professional
 
staff
 
in
 
EY’s
 
tax
 
division
 
and
 
includes
 
tax
 
compliance
 
and
 
tax
consultation with respect to our own affairs.
“Other” services are permitted services, which include technical
 
IT security control reviews and assessments.
 
In addition, EY received USD 52m in 2024 (USD 31m in 2023) for services performed on behalf of our investment funds,
many of which have independent fund boards or trustees.
Fees paid to EY
UBS Group AG and its subsidiaries (for 2023 including UBS AG and Credit Suisse AG) paid the following fees (including expenses) to
EY.
For the year ended
USD m
31.12.24
31.12.23
Audit
Global audit fees
 
121
 
82
Additional services classified as audit (services required
 
by law or statute, including work of a non-recurring nature mandated by
 
regulators)
 
24
 
5
Total audit
 
145
 
87
Non-audit
Audit-related fees
 
18
 
11
of which: assurance and attestation services
 
14
 
6
of which: control and performance reports
 
5
 
5
of which: consultation concerning financial accounting and
 
reporting standards
 
0
 
0
Tax fees
 
3
 
3
All other fees
 
1
 
6
Total non-audit
 
22
 
20
Special auditors for potential capital increases
At
 
the
 
AGM
 
on
 
24 April
 
2024,
 
BDO
 
AG
 
was
 
reappointed
 
as
 
special
 
auditors
 
for
 
a
 
three-year
 
term
 
of
 
office.
 
Special
auditors provide audit opinions in connection with potential
 
capital increases independently from
 
other auditors.
Group Internal Audit
GIA performs the internal auditing role
 
for the Group. It is
 
an independent function that
 
provides expertise and insights
to confirm
 
controls
 
are
 
functioning correctly
 
and highlight
 
where
 
UBS needs
 
to better
 
manage current
 
and emerging
risks. In 2024, GIA operated with an average headcount
 
of 898 full-time equivalent employees.
 
 
 
 
 
 
 
 
Annual Report 2024 |
Corporate governance and compensation
 
| Corporate governance
 
197
GIA supports
 
the BoD
 
in discharging
 
its governance
 
responsibilities by
 
taking a
 
dynamic approach
 
to audit,
 
issue assurance
and risk assessment, confirming where
 
controls are functioning well and
 
highlighting where UBS needs to
 
better manage
current and emerging risks.
 
By doing so, it drives
 
action to prevent
 
unexpected loss or damage
 
to the firm’s reputation.
To support the achievement of UBS’s objectives, GIA independently,
 
objectively and systematically assesses the:
(i)
soundness of the Group’s risk and control culture;
 
(ii)
reliability and integrity of financial and operational
 
information, including whether activities are properly,
 
accurately
and completely recorded, and the quality of underlying data
 
and models; and
(iii)
design, operating effectiveness and sustainability of:
–
processes to define strategy and risk appetite, as well as
 
the overall adherence to the approved strategy;
–
governance processes;
 
–
risk management, including whether risks are appropriately
 
identified and managed;
 
–
internal controls, specifically whether they are commensurate
 
with the risks taken;
–
remediation activities; and
–
processes
 
to
 
comply
 
with
 
legal
 
and
 
regulatory
 
requirements,
 
internal
 
policies,
 
and
 
the
 
Group’s
 
constitutional
documents and contracts.
Audit reports that include significant issues
 
are provided to the Group CEO,
 
relevant GEB members and other responsible
management. The
 
Chairman, the
 
Audit Committee
 
and the Risk
 
Committee of
 
the BoD are
 
regularly informed
 
of such
issues.
In
 
addition,
 
GIA
 
provides
 
independent
 
assurance
 
on
 
the
 
effective
 
and
 
sustainable
 
remediation
 
of
 
control
 
deficiencies
within its mandate,
 
taking a prudent and
 
conservative risk-based approach
 
and assessing at
 
the issue level whether
 
the
root cause and the potential exposure for the firm have
 
been holistically and sustainably addressed. GIA also
 
cooperates
closely with risk control functions and internal and external
 
legal advisors on investigations into major control issues.
To ensure GIA’s
 
independence from
 
management, the
 
Head GIA reports
 
to the
 
Chairman of the
 
BoD and
 
to the Audit
Committee,
 
which
 
assesses
 
annually
 
whether
 
GIA
 
has
 
sufficient
 
resources
 
to
 
perform
 
its
 
function,
 
as
 
well
 
as
 
its
independence and performance. In the Audit Committee’s assessment, GIA is sufficiently resourced to fulfill
 
its mandate
and complete its
 
auditing objectives. GIA’s
 
role, position,
 
responsibilities and
 
accountability are set
 
out in
 
our Organization
Regulations and the
 
Charter for GIA,
 
available at
ubs.com/governance.
GIA has unrestricted
 
access to all
 
accounts, books,
records, systems, property
 
and personnel, and
 
must be provided
 
with all information
 
and data that
 
it needs to
 
fulfill its
auditing responsibilities. GIA also conducts special audits at the request of the
 
Audit Committee, or other BoD members,
committees or the Group CEO in consultation with the Audit
 
Committee.
 
GIA enhances the efficiency of its work through coordination
 
and close cooperation with the external auditors.
Information policy
We provide regular information to
 
our shareholders and to the wider financial community.
Financial reports for UBS Group AG are expected to be published
 
on the following dates:
First quarter 2025
30 April 2025
Second quarter 2025
30 July 2025
Third quarter 2025
29 October 2025
The annual general meetings of the shareholders of UBS
 
Group AG will take place on the following dates:
2025
10 April 2025
2026
15 April 2026
›
Refer to the corporate calendar available at
ubs.com/investors
 
for the dates of the publication of
 
financial reports and other key
dates, including the dates of the publication
 
of UBS AG’s financial reports
We meet with institutional investors worldwide throughout the year and regularly hold results presentations, attend and
present
 
at investor
 
conferences,
 
and, from
 
time to
 
time, host
 
investor days.
 
When appropriate,
 
investor meetings
 
are
hosted by
 
senior management and
 
are attended by
 
members of our
 
Investor Relations team.
 
We use
 
various technologies,
such as webcasting, audio links and cross-location videoconferencing,
 
to widen our audience and maintain contact with
shareholders globally.
 
Annual Report 2024 |
Corporate governance and compensation
 
| Corporate governance
 
198
We make our publications available to all shareholders simultaneously to provide them with equal access to our financial
information.
Our annual
 
and quarterly publications
 
are available
 
in a
 
fully digital
 
and .pdf
 
format at
ubs.com/investors
, under
 
“Financial
information.” We no longer provide
 
printed copies of our Annual
 
Report and our Compensation Report in
 
any language.
›
Refer to
ubs.com/investors
 
for a complete set of published reporting documents
 
and a selection of senior management
 
industry
conference presentations
›
Refer to the
 
section of this report for more information
›
Refer to
 
of this report for more information
Financial disclosure principles
 
We fully support
 
transparency and consistent
 
and informative disclosure.
 
We aim
 
to communicate our
 
strategy and results
in
 
a
 
manner
 
that
 
enables
 
stakeholders
 
to
 
gain
 
a
 
good
 
understanding
 
of
 
how
 
our
 
Group
 
operates,
 
what
 
our
 
growth
prospects are, and the
 
risks that our businesses and
 
our strategy entail. We
 
assess feedback from
 
analysts and investors
on a regular basis and, where appropriate, reflect this in our disclosures. To continue achieving these goals, we apply the
following principles in our financial reporting and
 
disclosure:
–
transparency
, which enhances the understanding of economic drivers and
 
builds trust and credibility;
–
consistency
, within each reporting period and between reporting
 
periods;
–
simplicity
, which enables readers to gain a good understanding
 
of the performance of our businesses;
–
relevance,
by
 
focusing
 
not
 
only
 
on
 
what
 
is
 
required
 
by
 
regulation
 
or
 
statute
 
but
 
also
 
on
 
what
 
is
 
relevant
 
to
 
our
stakeholders; and
 
–
best practice
, which leads to improved standards.
We regard the continuous
 
improvement of our disclosures as an ongoing
 
commitment.
Financial reporting policies
We
 
report
 
our
 
Group’s
 
results
 
for
 
each
 
financial
 
quarter,
 
including
 
a
 
breakdown
 
of
 
results
 
by
 
business
 
division
 
and
disclosures or
 
key developments
 
relating to
 
risk management
 
and control,
 
capital, liquidity
 
and funding
 
management.
Each quarter,
 
we publish quarterly financial reports for UBS
 
Group AG, on the same day as the earnings releases.
The
 
consolidated
 
financial
 
statements
 
of
 
UBS
 
Group
 
AG
 
and
 
UBS
 
AG
 
are
 
prepared
 
in
 
accordance
 
with
 
International
Financial Reporting Standards as issued by the International Accounting
 
Standards Board.
 
›
Refer to
 
in the
 
section of this report for
more information about the basis of accounting
We are committed to
 
maintaining the transparency
 
of our reported results
 
and allowing analysts
 
and investors to
 
make
meaningful comparisons
 
with prior
 
periods. If
 
there is a
 
major reorganization
 
of our
 
business divisions
 
or if changes
 
to
accounting standards or interpretations lead to a material change in
 
the Group’s reported results, our results are restated
for previous
 
periods as
 
required by
 
applicable
 
accounting
 
standards. These
 
restatements
 
show how
 
our results
 
would
have been reported on the new basis and provide clear
 
explanations of all relevant changes.
US disclosure requirements
As a
 
foreign private
 
issuer,
 
we must
 
file reports
 
and other
 
information, including
 
certain financial
 
reports, with
 
the US
Securities and Exchange Commission (the SEC) under the
 
US federal securities laws.
 
An evaluation of the
 
effectiveness of our
 
disclosure controls and
 
procedures (as defined
 
in Rule 13a–15e)
 
under the US
Securities Exchange Act of 1934 has been carried out, under the supervision of management,
 
including the Group CEO,
the Group
 
CFO and
 
the Group
 
Controller. Based
 
on that
 
evaluation, and
 
reflecting the
 
determination that
 
our internal
control over financial
 
reporting was not
 
effective as of
 
31 December 2024,
 
the Group CEO
 
and the Group
 
CFO concluded
that our disclosure controls and procedures were not effective
 
as of 31 December 2024.
No significant
 
changes have
 
been made
 
to our internal
 
controls or to
 
other factors
 
that could
 
significantly affect
 
these
controls subsequent to the date of their evaluation.
›
Refer to the
 
section of this report for more information
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
199
Compensation
Table of contents
200
203
206
207
212
220
227
230
 
ubs-20241231p224i0
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
200
Compensation
Julie G. Richardson
Chairperson of the
Compensation Committee
of the Board of Directors
Dear Shareholders,
The
 
Board
 
of
 
Directors
 
(the
 
BoD) and
 
I
 
wish
 
to
 
thank
 
you
 
for
 
your
 
support
 
once
 
again
 
at
 
last
 
year’s
 
Annual
 
General
Meeting (the AGM) and for sharing your views on our compensation
 
practices over the past year.
Throughout 2024, the BoD Compensation Committee continued to
 
oversee the compensation process, aiming to ensure
that
 
reward
 
reflects
 
performance,
 
risk-taking
 
is
 
appropriate
 
and
 
employees’
 
interests
 
are
 
aligned
 
with
 
those
 
of
 
our
stakeholders. Following these
 
reviews, we concluded
 
that our compensation
 
framework remains
 
well suited to
 
support
us in
 
achieving our
 
ambitions for
 
the Group
 
and that
 
it provides
 
strong alignment
 
with shareholders’
 
interests. As
 
the
Chairperson of the Compensation Committee, I am pleased
 
to present our Compensation Report for 2024.
Key achievements support our strategy and business
 
model
Our
 
strong
 
performance
 
in
 
2024
 
reflects
 
our
 
unwavering
 
commitment
 
to
 
serving
 
our
 
clients,
 
the
 
strength
 
of
 
our
diversified global
 
franchise and
 
the progress
 
we have
 
made on
 
the integration.
 
Throughout 2024,
 
clients continued
 
to
extend their trust in UBS, evidenced by Group invested assets of USD 6.1trn, up 7% year-on-year. We maintained robust
momentum as we
 
captured growth in
 
Global Wealth Management
 
(USD 97bn of net
 
new assets)
 
and Asset Management
(USD 45bn
 
of
 
net
 
new
 
money)
 
and
 
gained
 
market
 
share
 
in
 
the
 
Investment
 
Bank
 
in
 
the
 
areas
 
where
 
we
 
have
 
made
strategic investments. With over CHF 70bn
 
of loans granted or renewed last year
 
out of a total book of CHF 350bn,
 
we
also maintained our commitment to being a reliable partner for the Swiss economy, helping our communities
 
to prosper
in ways that
 
benefit both households and
 
businesses and our shareholders.
 
As a result,
 
we have delivered on
 
our financial
ambitions and in many cases surpassed market expectations.
Furthermore,
 
we achieved all our
 
key acquisition-related
 
milestones in 2024
 
on or ahead of schedule,
 
significantly
 
reduced
the execution
 
risk of the acquisition
 
of the Credit Suisse
 
Group and accelerated
 
the transition
 
to growth. We are confident
that we
 
will accomplish
 
the most
 
significant
 
aspects of
 
the integration
 
by the
 
end of 2026,
 
achieve our
 
financial
 
targets and
fulfill
 
our growth
 
initiatives.
 
At the
 
same time,
 
we are
 
positioning
 
UBS for
 
a successful
 
future with
 
investments
 
in our
 
people,
products and
 
capabilities,
 
to enhance client
 
experience, improve
 
productivity
 
and achieve sustainable
 
profitable growth.
Progress with the integration of Credit Suisse
In 2024,
 
we made
 
substantial
 
progress
 
related
 
to the
 
integration
 
of Credit
 
Suisse.
 
We continue
 
to execute
 
on our
 
integration
plans, de-risking
 
and optimizing
 
our balance
 
sheet and delivering
 
on our cost
 
reduction ambitions.
 
We maintained
 
our cost
focus momentum
 
across the Group,
 
achieving USD
 
3.4bn of gross
 
cost savings
 
in 2024 and
 
USD 7.5bn compared
 
with the
2022 baseline,
 
which represents
 
around 58% of
 
our total cumulative
 
gross cost save
 
ambition.
 
Our Non-core
 
and Legacy
 
division has
 
cut risk-weighted
 
assets by
 
more than
 
half compared
 
with the
 
post-acquisition
starting point
 
and released
 
over USD 6bn
 
of capital
 
to the
 
Group. Furthermore,
 
with the
 
successful migration
 
of client
accounts
 
in
 
Hong
 
Kong,
 
Singapore,
 
Japan
 
and
 
Luxembourg,
 
we
 
have
 
now
 
transferred
 
over
 
90%
 
of
 
client
 
accounts
outside of Switzerland onto UBS platforms.
The mergers
 
of UBS
 
AG and
 
Credit Suisse
 
AG and
 
of UBS
 
Switzerland AG
 
and Credit
 
Suisse (Schweiz) AG
 
were successfully
completed last year. These mergers are critical steps in enabling us
 
to unlock the next phase of the cost, capital, funding
and tax benefits we expect to realize by the end of 2026.
 
Overall,
 
we
 
successfully
 
transitioned
 
employees
 
from
 
Credit
 
Suisse
 
to
 
UBS
 
entities,
 
with
 
a
 
completion
 
rate
 
of
 
67%,
including four of our
 
top seven countries at
 
100%. We launched a
 
global initiative, “Crafting
 
Our Future”, designed to
unite our senior leaders and
 
line managers, fostering alignment
 
around strategy and culture.
 
This program has played
 
a
pivotal role
 
in our
 
successful
 
cultural integration,
 
strengthening collaboration,
 
pride and
 
engagement
 
as we
 
gradually
transition from integration to growth.
We continue
 
to execute on
 
our ambitious integration
 
priorities,
 
and we
 
remain on
 
track to accomplish
 
the most
 
significant
integration aspects by the
 
end of 2026.
 
Over the next
 
two years,
 
we expect our balance
 
sheet optimization efforts
 
and
ongoing reduction of the
 
Non-core and Legacy
 
footprint to create capacity
 
for sustainable and profitable
 
growth in our
core businesses. We
 
are proud of
 
our employees,
 
who continue
 
to demonstrate
 
high levels of
 
engagement, dedication
and resilience.
 
 
ubs-20241231p225i0
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
201
Financial performance
Our performance
 
in 2024
 
reflects increased
 
revenues driven
 
by strong
 
transactional
 
activity and
 
recurring fee
 
income.
Underlying profit
 
before tax
 
increased significantly
 
to USD 8.8bn
 
in 2024,
 
up from
 
USD 4.0bn in
 
2023, while
 
reported
profit before
 
tax was
 
USD 6.8bn in
 
2024. Net
 
profit attributable
 
to shareholders
 
was USD 5.1bn,
 
and return
 
on CET1
(RoCET1) capital was 6.7%, or 8.7% on an underlying basis, above our expectation for 2024 and that of the
 
market. At
the same time, we continued to deliver on our cost-reduction
 
ambitions and efficiency plans.
Commitment to return capital to shareholders
Capital strength is a key
 
pillar of our strategy, and we
 
remain committed to maintaining a
 
balance sheet for all seasons.
In
 
2024,
 
our
 
strong
 
capital
 
position
 
enabled
 
us
 
to
 
voluntarily
 
accelerate
 
the
 
phase-out
 
of
 
the
 
remaining
 
transitional
purchase price allocation adjustments for common
 
equity tier 1 (CET1) capital purposes agreed
 
with our regulator while
keeping a strong CET1 capital ratio of 14.3%, making us one
 
of the best-capitalized major banks in the world.
 
For 2024, the Board
 
of Directors plans to
 
propose a dividend
 
to UBS Group AG
 
shareholders of USD 0.90
 
per share, an
increase of 29% year-on-year. In 2024,
 
we completed our USD 1bn of share
 
repurchases. In 2025, we plan to
 
repurchase
USD 1bn of shares in the first half
 
of the year and aim to
 
repurchase up to an additional USD 2bn of
 
shares in the second
half of
 
the year.
 
We also
 
maintain our
 
ambition for
 
2026 share
 
repurchases to
 
exceed full-year
 
2022 levels.
 
Our share
repurchases will be consistent with delivering on our financial plans, maintaining
 
our CET1 capital ratio target of around
14% and the absence of material, immediate changes to the
 
current capital regime.
2024 Group performance award pool
For
 
2024,
 
the
 
Group
 
performance
 
award
 
pool
 
was
 
determined
 
by
 
applying
 
our
 
usual
 
approach
 
based
 
on
 
financial
performance,
 
along
 
with
 
consideration
 
of
 
non-financial
 
other
 
factors,
 
such
 
as
 
specific
 
focus
 
on
 
the
 
progress
 
of
 
our
integration, risk management, achievement of strategic objectives,
 
and market position and trends.
 
As a result, the
 
overall pool of USD 4.7bn reflects
 
the strong financial performance and the
 
progress with the integration.
To further
 
support the
 
long-term value
 
creation of
 
the integrated
 
firm, we
 
have continued
 
to apply
 
our strict
 
pay-for-
performance approach
 
with increased
 
performance and pay
 
differentiation aligned with
 
supporting our high
 
performance
culture. We are also mindful of
 
the continuing competition to attract and retain
 
a talented workforce that delivers on
 
our
strategy and financial
 
ambitions. The
 
final pool also
 
reflects market
 
competitive considerations
 
to protect
 
our franchise
and investment.
 
ubs-20241231p226i1
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
202
The
 
Group
 
Executive
 
Board
 
(GEB)
 
pool
 
overall
 
increased
 
by
 
1%
 
to
 
CHF 114.2m
 
compared
 
with
 
the
 
2023
 
GEB
 
pool
adjusted to reflect the elimination
 
of role-based allowances (RBA)
 
for GEB members as
 
the UK regulatory regime
 
with a
2:1 variable-to-fixed compensation cap is no longer in effect. The increase reflects the financial performance
 
of the firm,
the progress
 
with the
 
integration of
 
Credit Suisse
 
and also
 
the changes
 
in GEB
 
composition during
 
2024. The
 
GEB per
capita performance award increased by 8% compared with
 
the previous year’s adjusted per capita performance award
 
.
Continuity of our overall compensation framework
Following a comprehensive annual review, the Compensation Committee confirmed
 
that our Total Reward Principles and
overall compensation framework continue to support the alignment of
 
compensation with the execution of our strategy,
sustainable
 
performance
 
and
 
the
 
delivery
 
of
 
our
 
integration
 
goals.
 
Overall,
 
the
 
compensation
 
framework
 
for
 
all
employees, including the GEB, remains broadly unchanged
 
compared with 2023.
 
In context of evolving UK
 
regulatory requirements,
 
where the 2:1 variable-to-fixed pay ratio
 
was removed, we refined the
compensation framework for UK-regulated
 
GEB members to
 
more closely align
 
to the overall
 
GEB framework. As
 
a result,
we have aligned
 
the individual compensation caps for
 
all GEB members (including UK-regulated
 
members) to seven times
their annual fixed compensation rate.
Regarding our Long
 
-Term Incentive
 
Plan (LTIP) awards
 
for 2024 performance,
 
we have
 
reviewed the three-year
 
average
(2025
 
through
 
2027)
 
reported
 
RoCET1
 
performance
 
metric
 
to
 
reflect
 
our
 
strategic
 
return
 
ambitions
 
and
 
our
 
revised
financial targets.
 
–
 
Specifically, the required performance threshold
 
for the minimum payout has been
 
raised to 7.5% vs 5% last year,
 
to
reflect our financial targets and progress on the integration objectives.
 
–
 
The required reported
 
RoCET1 performance for
 
a maximum payout
 
has been increased
 
to 14% vs
 
10% last year,
 
which
represents the upper end of our target range.
 
The 2025 Annual General Meeting
At the 2025 AGM on 10 April, we will seek your support
 
on the following compensation-related items:
–
 
the maximum aggregate amount of compensation for the BoD for the period from the 2025 AGM to the 2026 AGM;
–
 
the maximum aggregate amount of fixed compensation
 
for the GEB for 2026;
–
 
the aggregate amount of variable compensation for the
 
GEB for 2024; and
 
–
 
shareholder endorsement in an advisory vote for this Compensation
 
Report.
On behalf
 
of the
 
Compensation Committee
 
and the
 
BoD, I thank
 
you again for
 
your feedback
 
and we respectfully
 
ask
for your continued support at the upcoming AGM.
Julie G. Richardson
Chairperson of the Compensation Committee of the
 
Board of Directors
 
 
 
 
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
203
2024 key compensation themes
The feedback that
 
we seek from our
 
shareholders about compensation
 
-related topics is very
 
important to us, as
 
we are
committed
 
to
 
maintaining
 
a
 
strong
 
link
 
between
 
the
 
interests
 
of
 
our
 
employees
 
and
 
those
 
of
 
our
 
shareholders.
 
We
continued
 
engaging
 
with
 
shareholders
 
during
 
2024
 
and
 
received
 
overall
 
positive
 
feedback
 
about
 
our
 
compensation
framework. The below summarizes key
 
compensation themes for 2024 and provides
 
answers to the questions we
 
most
frequently receive from shareholders.
Summary of 2024 key compensation themes / responses
 
to frequently asked questions
 
How does the Long-Term
 
Incentive Plan work and what does the grant level
 
of 50% of the maximum
opportunity mean?
The Long-Term Incentive Plan (the LTIP)
 
is an equity-based award and
 
the final value is subject to
 
performance conditions,
as well as share price development. The final value will reflect
 
UBS’s future performance, cannot exceed 100% and may
also be reduced to zero.
Following the acquisition of the Credit
 
Suisse Group, in 2023 we expanded
 
the scope of the population to
 
approximately
950 participants that receive the LTIP, established
 
a communicated value of 50% and aligned the
 
return on CET1 capital
(RoCET1) thresholds with our financial ambitions.
 
The LTIP is an important
 
element that supports the
 
alignment of the long-term
 
focus of a broad group
 
of senior leaders
with
 
shareholders,
 
while
 
supporting
 
appropriate
 
risk-taking
 
and
 
awareness,
 
and
 
aligns
 
the
 
maximum
 
opportunity
 
to
exceed the stretching nature of our financial ambitions.
Consistent with the approach
 
used in 2023, we awarded
 
the LTIP for the 2024
 
performance year with a communicated
value of 50% of
 
the maximum opportunity
 
(100%). Each participant
 
has the potential
 
to double the
 
number of shares
at
 
grant
 
value,
 
if
 
reported
 
RoCET1
 
over
 
the
 
three-year
 
performance
 
period
 
is
 
at
 
or
 
above
 
14%
 
and
 
relative
 
Total
Shareholder Return (rTSR) is
 
at or above the
 
peer group index
 
by 25 percentage points or
 
more. Similarly, each participant
may receive zero shares if reported
 
RoCET1 over the three-year performance
 
period is less than 7.5% and rTSR
 
is below
the peer
 
group index by
 
more than
 
25 percentage points.
 
The grant
 
valuation percentage
 
is not a
 
share price
 
discount
but reflects the inherent risk to the participant, including
 
the fact that the individual may ultimately receive zero value.
 
The nature
 
of this
 
design incentivizes
 
management to
 
deliver future
 
financial results
 
that exceed
 
our ambitious
 
targets
and shareholders
 
returns that
 
outperform our
 
peers. It
 
aligns with our
 
shareholders’ experience
 
and the
 
success of
 
the
execution of our strategy, which during the ongoing integration
 
requires even more commitment and efforts.
 
We will re-assess our
 
approach and adjust as
 
appropriate as our progress toward
 
our financial ambitions continues. Given
the limited integration-
 
and merger-related incentives utilized to date, the LTIP is important to incentivizing employees to
support the integration efforts for our shareholders.
›
Refer to “2024 Group performance outcomes” in the “Group
 
compensation” section of this report for more information
Illustrative example
An employee receives an LTIP
 
award with a value of
 
CHF 100,000 granted at a
 
share price of CHF 30.328
 
per share
(based on
 
the
 
average
 
closing
 
price
 
of
 
UBS shares
 
over
 
the
 
last ten
 
trading days
 
leading
 
up to
 
and
 
including
 
the
award date
 
in February).
 
This represents
 
the award
 
granted at
 
50% of
 
the maximum
 
opportunity.
 
The actual
 
LTIP
value at the end of the performance period may vary between:
–
CHF 0, i.e. no value, if the
 
achievement level of the performance metrics at the
 
end of the three-year performance
period is below 33%; and
–
CHF 200,000,
 
if the achievement
 
level of the
 
performance metrics at the
 
end of the
 
three-year performance period
is at or above 100%, assuming no change in share price.
Ultimately,
 
the
 
value
 
is
 
determined
 
by
 
consideration
 
of
 
the
 
performance
 
achievement
 
coupled
 
with
 
share
 
price
development
 
(positive
 
or negative).
 
In this
 
manner,
 
management
 
is incentivized
 
to
 
deliver
 
on strategy,
 
integration
targets and
 
financial objectives
 
and to
 
drive long-term
 
growth while
 
also being
 
fully aligned
 
with shareholders
 
on
share price development and relative shareholder returns.
 
ubs-20241231p228i0
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
204
Did UBS change the compensation framework for 2024?
Following a comprehensive annual review, the Compensation Committee confirmed
 
that our Total Reward Principles and
compensation
 
framework
 
continue
 
to
 
support
 
the
 
alignment
 
of
 
compensation
 
with
 
the
 
execution
 
of
 
our
 
strategy,
sustainable performance and the delivery
 
of our integration goals.
 
This aims to ensure
 
that the interests of
 
our employees
are aligned
 
with those
 
of our
 
clients and
 
other stakeholders.
 
Overall, the
 
compensation framework
 
for all
 
employees,
including the GEB, remains broadly unchanged compared with 2023. In the context of evolving regulatory requirements,
we refined the
 
compensation framework
 
for GEB members
 
who are UK
 
Senior Management
 
Functions (SMFs) to
 
more
closely align to the GEB framework.
›
Refer to “GEB compensation framework” in the
 
“Compensation for GEB members” section of
 
this report for more information
What are the performance metrics of the 2024 LTIP
 
(awarded in 2025)?
The overall
 
design of the
 
LTIP is unchanged
 
compared with
 
last year.
 
The 2024 LTIP
 
continues to
 
feature the
 
same two
equally weighted
 
performance metrics
 
(reported RoCET1
 
and rTSR),
 
which are
 
assessed over
 
a three-year
 
performance
period.
 
For the
 
2024 LTIP,
 
we have
 
increased the
 
reported RoCET1
 
performance
 
range to
 
7.5%–14%
 
from 5%
 
–10% for
 
the
2023 LTIP
 
to support
 
exceeding our
 
financial ambitions
 
over the
 
cycle. This
 
increase demonstrates
 
our commitment
 
to
continuously review our LTIP against our evolving return expectations
 
and integration progress.
Other
 
2024 LTIP
 
key
 
features
 
remain
 
unchanged,
 
including
 
the
 
rTSR
 
performance
 
range
 
of
 
±25 percentage
 
points
 
of
UBS’s TSR compared with a peer group index TSR
 
,
 
which continues to demonstrate our ambition
 
of delivering attractive
relative returns to shareholders.
What is the achievement level of the LTIP
 
granted in 2022 for 2021 performance?
The deferred portion of the performance award granted in 2022 for the 2021 financial performance year (the 2021 LTIP)
to members of the
 
GEB and selected
 
senior management was
 
in part delivered
 
through the LTIP
 
award. This award
 
has
been designed to
 
support alignment of
 
compensation with the
 
execution of our
 
strategy, financial performance
 
and long-
term growth.
The
 
performance
 
metrics
 
of
 
the
 
2021
 
LTIP
 
are
 
average
 
reported
 
RoCET1
 
and
 
rTSR,
 
both
 
measured
 
over
 
a
 
three-year
performance period from 2022 to 2024.
In 2021
 
when the
 
Compensation
 
Committee
 
set the
 
relevant performance
 
range
 
of the
 
reported
 
RoCET1
 
metric (i.e.
8%–18% for
 
the performance
 
period 2022–2024),
 
it considered
 
several factors
 
including our
 
strategic plan,
 
which at
that time reflected a reported RoCET1 target range
 
of 15%–18%. However, the acquisition and integration
 
of the Credit
Suisse Group significantly impacted the financial results of
 
UBS during the performance period of the 2021 LTIP.
Against this
 
background, the
 
Compensation Committee
 
has carefully
 
considered these
 
integration-related aspects
 
and
made
 
the
 
following
 
adjustments
 
to
 
the
 
reported
 
RoCET1
 
for
 
2023
 
and
 
2024
 
in
 
order
 
to
 
determine
 
the
 
2021
 
LTIP
achievement
 
level in
 
line with
 
our strict
 
pay-for-performance
 
approach and
 
to remove
 
both the
 
positive and
 
negative
impacts related to the integration.
–
For 2023 RoCET1,
 
as already communicated
 
in the Compensation
 
Report 2023, we
 
used UBS sub-group
 
results as a
starting point but excluded
 
both the positive and negative
 
one-time financial impacts of
 
the acquisition of the
 
Credit
Suisse Group (such as the negative goodwill, or gain, of USD
 
27.7bn).
–
For 2024 RoCET1, we
 
used UBS Group results
 
and applied an
 
adjustment based on a
 
review of the plans
 
before and
after the integration in order to align the RoCET1 performance
 
relative to the plan applicable at the time of grant.
While
 
the
 
Compensation
 
Committee
 
decided
 
to
 
apply
 
the
 
above-mentioned
 
adjustments
 
with
 
regard
 
to
 
the
 
RoCET1
metric outcomes, no adjustments were made to the rTSR
 
achievement.
The
 
three-year
 
performance
 
period
 
of
 
the
 
2021
 
LTIP
 
concluded
 
at
 
the
 
end
 
of
 
2024.
 
As
 
a
 
result,
 
the
 
RoCET1
 
metric
outcome for the
 
2021 LTIP, including
 
the adjustments
 
above,
 
was 17.44%. With
 
these adjustments to
 
the RoCET1 metric,
the
 
overall
 
achievement
 
level
 
of
 
the
 
2021
 
LTIP
 
resulted
 
in
 
93.33%
 
of
 
the
 
maximum
 
opportunity
 
(100%).
 
If
 
the
Compensation Committee
 
had not
 
made the
 
above-mentioned adjustments
 
to the
 
2023 and
 
2024 RoCET1
 
outcomes
but had
 
instead applied
 
reported UBS
 
Group AG
 
financial results,
 
the achievement
 
level for
 
RoCET1 would
 
have been
100%.
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
205
How does UBS support pay fairness?
Compensating employees fairly and consistently is key to ensuring equal opportunities.
 
A strong commitment to pay for
performance
 
and pay
 
equity is
 
embedded
 
in our
 
compensation
 
policies. In
 
this context,
 
we regularly
 
conduct internal
reviews on pay equity,
 
and our statistical analyses show
 
a differential between male and
 
female employees in similar roles
across our core financial hubs of less than 1%.
 
If we find any gaps not explained by business
 
or by appropriate employee
factors,
 
such as role, responsibility, experience, performance or location, we
 
look at the root causes and address them.
›
Refer to the “Compensation philosophy and governance”
 
section of this report for more information about pay
 
fairness
›
Refer to the “People and culture make the difference“ section
 
of the UBS Group Sustainability Report 2024,
 
available under
“Annual reporting” at
ubs.com/investors
, for more information about workforce inclusion
How is UBS supporting employees during the ongoing
 
integration period?
We are committed
 
to being a
 
responsible employer, and
 
to caring for
 
our employees. To
 
support employees during
 
the
integration,
 
UBS
 
offers
 
a
 
range
 
of well
 
-being
 
sessions
 
with internal
 
and
 
external
 
experts
 
on the
 
themes
 
of resilience,
growth
 
mindset,
 
dealing
 
with
 
uncertainty
 
and
 
burnout
 
prevention.
 
Employees
 
have
 
ongoing
 
access
 
to
 
confidential
support from our global Employee Assistance Program and the
 
Social Counseling team in Switzerland.
Employees in
 
the Swiss
 
labor market
 
affected by
 
restructuring are
 
entitled to
 
a reorientation
 
program with
 
a key
 
focus
on redeployment
 
within
 
UBS.
 
Outside
 
of the
 
Swiss
 
labor
 
market,
 
we
 
offer
 
severance
 
terms
 
that
 
at
 
least
 
comply
 
with
applicable local laws. In many locations, we provide severance packages negotiated
 
with our local social partners that go
beyond these minimum legal requirements or offer additional time in
 
order to find a new position. In many
 
locations, we
also offer redeployment support from our internal recruiters and via
 
external outplacement firms for employees affected
by
 
redundancies.
 
We
 
believe
 
these
 
measures
 
help
 
skilled
 
employees
 
affected
 
by
 
restructuring
 
to
 
favorably
 
position
themselves on the labor market.
›
Refer to the “People and culture make the difference“ section
 
of the UBS Group Sustainability Report 2024,
 
available under
“Annual reporting” at
ubs.com/investors
, for more information about workforce inclusion
How does UBS support the well-being of its employees?
We
 
care
 
about
 
our
 
people’s
 
well-being
 
and
 
want
 
everyone
 
to thrive.
 
A culture
 
of
 
collective well
 
-being
 
and
 
resilience
enables
 
us
 
to
 
drive
 
sustainable
 
performance.
 
Spanning
 
social,
 
physical,
 
mental
 
and
 
financial
 
well-being,
 
our
comprehensive
 
health
 
and
 
well-being
 
offering
 
includes
 
a
 
wide
 
range
 
of
 
programs,
 
benefits,
 
awareness
 
sessions,
 
e-
learning, toolkits and
 
workplace resources. All are
 
designed to help
 
our employees manage their
 
health, foster well-being
and promote the organization’s sustainability.
 
Over
 
the
 
past
 
year,
 
we
 
have
 
particularly
 
focused
 
on
 
helping
 
employees
 
and
 
line
 
managers
 
across
 
our
 
combined
organization adapt
 
to changes
 
related to
 
the integration
 
of Credit
 
Suisse, offering
 
a range
 
of well-being
 
sessions with
internal
 
and
 
external
 
experts
 
on
 
the
 
themes
 
of
 
resilience,
 
growth
 
mindset,
 
dealing
 
with
 
uncertainty,
 
and
 
burnout
prevention.
 
To promote physical
 
and mental
 
health, we sponsor
 
firm-wide or
 
local initiatives such
 
as fitness challenges
 
and provide
mental health support that includes an employee assistance
 
program and access to a specialized mindfulness app.
We
 
are
 
a
 
founding
 
partner
 
of
#WorkingWithCancer
 
to
 
better
 
support
 
employees
 
affected
 
by
 
cancer
 
and
 
focus
 
on
prevention.
 
We
 
also
 
sponsor
 
financial
 
education
 
events
 
in
 
every
 
region
 
and
 
help
 
employees
 
positively
 
impact
 
their
communities by
 
matching charitable
 
donations and
 
offering paid
 
leave to
 
volunteer
 
in community
 
and environmental
initiatives.
›
Refer to
ubs.com/global/en/our-firm/our-employees
 
for more information about our workforce
 
 
 
 
 
 
 
 
 
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
206
Say-on-pay
Say-on-pay votes at the AGM
In
 
line
 
with
 
the
 
Swiss
 
Code
 
of
 
Obligations,
 
we
 
seek
 
binding
 
shareholder
 
approval
 
for
 
the
 
aggregate
 
compensation
awarded to the Group Executive Board (the GEB) and
 
the Board of Directors (the BoD). Prospective approval
 
of the fixed
compensation
 
of
 
the
 
BoD
 
and
 
GEB
 
provides
 
the
 
firm
 
and
 
its
 
governing
 
bodies
 
with
 
the
 
certainty
 
needed
 
to
 
operate
effectively. Retrospective approval
 
of the GEB’s variable
 
compensation aligns their
 
compensation with performance
 
and
contribution.
The table
 
below outlines
 
our compensation
 
proposals,
 
including
 
supporting rationales,
 
that we
 
plan to
 
submit
 
to the
2025 Annual General Meeting
 
(the AGM) for binding
 
votes, in line with
 
the Swiss Code of
 
Obligations and our
 
Articles
of Association.
These binding
 
votes on
 
compensation
 
and the
 
advisory vote
 
on our
 
Compensation
 
Report reflect
 
our commitment
 
to
shareholders having their say on pay.
›
Refer to “Provisions of the Articles of Association related to
 
compensation” in the “Supplemental information”
 
section of this
report for more information
Audited |
Approved GEB fixed compensation and BoD compensation
At the 2023 AGM,
 
the shareholders approved a maximum aggregate fixed compensation amount
 
of CHF 33.0m for GEB
members
 
for
 
the
 
2024
 
performance
 
year.
 
This
 
amount
 
reflects
 
base
 
salaries
 
and estimated
 
standard
 
contributions
 
to
retirement benefit plans, as well as other benefits. The aggregate fixed compensation paid
 
in 2024 to GEB members was
below the approved amount for 2024.
At the
 
2024 AGM,
 
the shareholders
 
approved a
 
maximum aggregate
 
amount of
 
compensation of
 
CHF 16.5m for
 
the
members of the BoD for the period from the 2024
 
AGM to the 2025 AGM.
 
›
Refer to “2024 total compensation for the
 
GEB members” in the “Compensation for GEB
 
members” section of this report
›
Refer to “Remuneration details and additional information
 
for BoD members” in the “Compensation
 
for the Board of Directors”
section of this report
Compensation-related proposals for binding and advisory
 
votes at the 2025 AGM
 
Item
Approved at the 2024
AGM
BoD proposals for the
2025 AGM
Rationale
GEB variable
compensation
Shareholders approved
CHF 108,286,300 for the
2023 financial year
1,2,3
 
(vote “for”: 88.45%)
The BoD proposes an
aggregate amount of
variable compensation of
CHF 114,185,176
4
 
for the
members of the GEB for
the 2024 financial year.
The GEB performance award pool reflects the strong
 
financial performance of the
firm
 
and
 
the
 
significant progress
 
with
 
the
 
integration of
 
Credit
 
Suisse
 
and
 
also
considers the
 
changes in
 
GEB composition
 
during 2024.
 
The 2024
 
GEB performance
award pool has been
 
increased by 1%
 
compared with the 2023
 
adjusted GEB pool,
which is below the Group performance award pool increase
 
of 4% year-on-year.
GEB fixed
compensation
Shareholders approved
CHF 33,000,000 for the
2025 financial year
1,2,3
(vote “for”: 90.97%)
The BoD proposes a
maximum aggregate
amount of fixed
compensation of
CHF 32,000,000 for the
members of the GEB for
the 2026 financial year.
The proposed amount for 2026
 
has been reduced by CHF 1m
 
compared with the
approved 2025
 
aggregate amount.
 
This reduction
 
is driven
 
by the
 
elimination of
role-based
 
allowances
 
for
 
UK-regulated
 
GEB
 
members.
 
The
 
proposed
 
amount
includes the
 
base salaries of
 
the Group
 
CEO and
 
other GEB
 
members,
 
as well
 
as
estimated standard
 
contributions to
 
retirement benefit
 
plans and
 
other benefits.
The
 
amount
 
further
 
provides
 
flexibility
 
in
 
light
 
of
 
potential
 
changes
 
in
 
GEB
composition
 
or
 
roles,
 
competitive
 
considerations
 
as
 
well
 
as
 
other
 
factors
 
(e.g.
changes in foreign exchange rates or benefits).
BoD
compensation
Shareholders approved
CHF 16,500,000 for the
period from the 2024
AGM to the 2025
AGM
1,2,5
(vote “for”: 89.84%)
The BoD proposes a
maximum aggregate
amount of compensation
of CHF 15,000,000 for the
members of the BoD for
the period from the 2025
AGM to the 2026 AGM.
The proposed amount is CHF
 
1.5m lower than the
 
approved aggregate amount for
the previous period from the 2024 AGM to the 2025 AGM.
 
This decrease is driven
by a
 
lower spend
 
for subsidiary
 
board fees
 
as a
 
result of
 
the reduction
 
in Credit
Suisse legal entities. The proposed amount includes
 
the total compensation for the
Chairman and
 
the Vice
 
Chairman, both
 
with unchanged
 
base fees.
 
The fees
 
for
other BoD members also remain unchanged.
Advisory vote
on the
Compensation
Report
Shareholders approved the
UBS Group AG
Compensation Report
2023 in an advisory vote
(vote “for”: 83.54%)
The BoD proposes that the
UBS Group AG
Compensation Report
2024 be ratified in an
advisory vote.
Our Total Reward Principles and compensation framework continue to support
 
the
alignment
 
of
 
compensation
 
with
 
the
 
execution
 
of
 
our
 
strategy
 
and
 
sustainable
performance. They also enable UBS to drive the economic and cultural integration
of Credit Suisse
 
and the long-term
 
value creation of
 
the combined firm.
 
Overall, the
compensation framework
 
for all
 
employees, including
 
the GEB,
 
remains broadly
unchanged compared
 
with 2023.
 
Our compensation
 
policies continue
 
to reflect our
strong commitment to pay for performance and
 
pay equity.
1
 
Local currencies are converted into Swiss francs at the 2024 performance award
 
currency exchange rates.
 
2
 
Excludes the portion related to the legally required employer’s
 
social security contributions.
 
3
 
As stated
in “Group Executive Board” in the “Corporate
 
governance” section of this report, 15 GEB
 
members were in office on 31 December 2024
 
and 16 GEB members were in office
 
on 31 December 2023.
 
4
Includes LTIP
awards for the 2024 performance year with a communicated value of 50% of the maximum opportunity (100%).
 
5
 
Twelve BoD members were in office on 31 December 2024 and on 31 December 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ubs-20241231p231i0
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
207
Compensation philosophy and governance
Our compensation philosophy
Total Reward Principles
Our Total
 
Reward Principles are fully aligned with our strategy
 
and encourage employees to live our strong and inclusive
culture
 
that
 
is
 
grounded
 
in
 
our
 
three
 
keys
 
to
 
success:
 
our
Pillars,
 
Principles
 
and
 
Behaviors.
 
These
 
guiding
 
principles
underpin our approach to compensation
 
and define our compensation
 
framework. In 2024, we refined
 
our Total Reward
Principles to
 
further align
 
them to
 
our strategy
 
and our
 
three keys
 
to success.
 
This aims
 
to ensure
 
that the
 
interests of
our
 
employees
 
are
 
aligned
 
with
 
those
 
of
 
our
 
clients
 
and
 
other
 
stakeholders.
 
In
 
the
 
short-to-medium
 
term,
 
they
 
also
enable
 
UBS
 
to
 
drive
 
the
 
economic
 
and
 
cultural
 
integration
 
of
 
Credit
 
Suisse
 
and
 
the
 
long-term
 
value
 
creation
 
of
 
the
combined firm.
Therefore,
 
our
 
compensation
 
approach
 
supports
 
our
 
capital
 
strength
 
and
 
risk
 
management,
 
and
 
provides
 
for
simplification and efficiency. It encourages employees to focus on client centricity, connectivity and sustainable impact in
everything we
 
do. Moreover, we
 
reward behaviors
 
and conduct
 
that help
 
build and
 
protect the
 
firm’s reputation,
 
including
Accountability
 
with
 
integrity,
 
Collaboration
 
and
 
Innovation.
 
Compensation
 
for
 
each
 
employee
 
is
 
based
 
on
 
individual,
team, business division and Group performance,
 
within the context of the markets in which we operate.
Total Reward Principles
Our Total
 
Reward Principles apply to all employees globally
 
but vary in certain locations according to local legal
requirements, regulations and
 
practices. The table below provides a summary
 
of our Total
 
Reward Principles.
Reinforce our culture and strategy
Compensation reinforces and aligns with the firm’s
 
culture and strategy, fosters engagement among
employees and aligns their long-term interests
 
with those of clients and stakeholders.
Attract, retain and motivate a talented
workforce
We provide competitive and fair pay to support our global
 
and diverse workplace based on meritocracy.
Pay at UBS reflects fair and equal treatment and is competitive.
 
Our investment in a motivated workforce
supports the sustainability of the organization.
Foster pay-for-performance aligned with
sustainable achievement and our ways
 
of
working
We pay for sustainable and holistic performance. Clear
 
objectives as well as a thorough evaluation of
 
what
was achieved and how it was achieved, combined
 
with effective communication, promote clarity,
accountability and establish a strong link between
 
pay and performance. This approach emphasizes
behaviors and conduct,
 
including Accountability with integrity, Collaboration and Innovation.
Reinforce sustainable long-term value
creation and growth
Compensation is appropriately balanced between
 
fixed and variable elements and delivered over
 
an
adequate period to support our growth ambitions
 
and sustainable performance.
Support risk awareness and appropriate
risk-taking
Our compensation structure encourages employees
 
to have a focus on risk management and behave
consistently with the firm’s risk framework
 
and appetite, thereby anticipating and managing
 
risks
effectively to protect our capital and reputation.
Our Total Reward approach
We
 
apply
 
a
 
holistic
 
Total
 
Reward
 
approach,
 
generally
 
consisting
 
of
 
fixed
 
compensation
 
(base
 
salary
 
and
 
role-based
allowances,
 
if
 
applicable),
 
performance
 
awards,
 
pension
 
contributions
 
and
 
benefits.
 
Our
 
Total
 
Reward
 
approach
 
is
structured to support sustainable results and growth ambitions.
For employees whose
 
total compensation exceeds
 
certain levels, performance
 
awards are delivered
 
in a combination
 
of
cash, deferred contingent capital awards and deferred share
 
-based awards.
A substantial portion of performance awards is deferred and vests over a five-year period (or longer for certain regulated
employees).
 
This
 
deferral
 
approach
 
supports
 
alignment
 
of
 
employee
 
and
 
investor
 
interests,
 
our
 
capital
 
base
 
and
 
the
creation of sustainable shareholder value.
›
Refer to “Compensation elements for all employees”
 
in the “Group compensation” section of this report for
 
more information
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
208
Fair and equitable pay
Pay equity and equal opportunity are fundamental to
 
support our strategy. Being an employer of choice and
 
inclusive of
all experiences,
 
perspectives and
 
backgrounds is
 
critical to
 
our success.
 
Factors such
 
as gender,
 
culture, race,
 
ethnicity,
sexual
 
orientation
 
and
 
identity,
 
disability,
 
family,
 
veteran
 
status,
 
generations
 
and
 
part-time
 
status
 
should
 
not
 
impact
opportunities available to our employees.
Fair and consistent
 
pay practices are
 
designed to ensure
 
that employees are
 
appropriately rewarded for their
 
contribution.
We pay for performance, and we take pay equity seriously. We have embedded clear commitments in our compensation
policies and practices
 
and apply
 
the same fair
 
pay standards
 
across all locations
 
.
 
We annually
 
review our approach
 
and
policies, in line with established equal pay methodologies, to
 
support our continuous improvement.
As part of our commitment to equal pay, we regularly conduct internal reviews on
 
pay equity, and our statistical analyses
show a differential
 
between male and
 
female employees in
 
similar roles across
 
our core financial
 
hubs of less than
 
1%.
If we find any gaps not explained by business or
 
by appropriate employee factors,
 
such as role, responsibility, experience,
performance or location, we look at the root causes and
 
address them.
We also aim to ensure that all
 
employees are paid at least a
 
living wage. We regularly assess employees’
 
salaries against
local living wages,
 
using benchmarks
 
defined by the
 
Fair Wage Network.
 
Our analysis in
 
2024 showed that
 
employees’
salaries were at or above the respective benchmarks.
›
Refer to the “People and culture make the difference“ section
 
of the UBS Group Sustainability Report 2024,
 
available under
“Annual reporting” at
ubs.com/investors
, for more information about workplace inclusion
Compensation governance
Board of Directors and Compensation Committee
The
 
Board
 
of
 
Directors
 
(the
 
BoD)
 
is
 
ultimately
 
responsible
 
for
 
approving
 
the
 
compensation
 
strategy
 
and
 
principles
proposed by the
 
Compensation Committee,
 
which determines compensation
 
-related matters
 
in line with the
 
principles
set forth in the Articles of Association (the AoA).
As determined in the
 
AoA and the firm’s
 
Organization Regulations, the Compensation Committee supports
 
the BoD with
its
 
duties
 
to
 
set
 
guidelines
 
on
 
compensation
 
and
 
benefits,
 
to
 
oversee
 
implementation
 
thereof,
 
to
 
approve
 
certain
compensation
 
and
 
to
 
scrutinize
 
executive
 
performance.
 
The
 
Compensation
 
Committee
 
consists
 
of
 
independent
 
BoD
members,
 
who are
 
elected annually
 
by shareholders
 
at the
 
Annual General
 
Meeting (the
 
AGM), and
 
is responsible
 
for
governance
 
and
 
oversight
 
of
 
our
 
compensation
 
process
 
and
 
practices.
 
This
 
includes
 
the
 
alignment
 
between
 
pay
 
and
performance, and ensuring that the compensation framework supports appropriate risk awareness and management, as
well as appropriate risk-taking.
 
In 2024, to additionally
 
support the connection between
 
the Compensation Committee
and the Risk Committee, the Compensation Committee
 
Chairperson was also a member of the Risk Committee.
Annually, and on behalf of the BoD, the Compensation
 
Committee:
–
reviews our Total Reward Principles;
–
approves key
 
features of
 
the compensation
 
framework and
 
plans for
 
the non-independent BoD
 
members and
 
members
of the Group Executive Board (the GEB);
–
reviews performance
 
award funding
 
throughout the
 
year and
 
proposes, upon
 
proposal of
 
the Group
 
CEO, the
 
final
annual Group performance award pool to the BoD for approval;
–
upon proposal of the Group CEO, reviews the performance
 
framework for the other GEB members;
–
upon proposal of
 
the Group
 
CEO, proposes the
 
performance assessments
 
and the
 
individual total
 
compensation for
the other GEB members for approval by the BoD;
–
upon proposal of the
 
Chairman, for the Group
 
CEO, proposes the financial and
 
non-financial performance targets and
objectives, the performance assessment and the total compensation
 
for approval by the BoD;
–
approves the total compensation for the Chairman and the
 
non-independent BoD members;
–
upon
 
proposal
 
of
 
the
 
Chairman,
 
proposes
 
the
 
remuneration
 
/
 
fee
 
framework
 
for
 
independent
 
BoD
 
members
 
for
approval by the BoD;
 
–
upon
 
proposal
 
of
 
the
 
Chairman
 
and
 
the
 
Group
 
CEO,
 
approves
 
the
 
remuneration
 
/
 
fee
 
frameworks
 
for
 
external
supervisory board members
 
of Significant Group
 
Entities and is
 
informed of remuneration
 
/ fee frameworks
 
for external
supervisory board members of Significant Regional Entities;
–
proposes to the
 
BoD for approval
 
the annual compensation
 
report and approves
 
other material public
 
disclosures on
UBS compensation matters;
 
and
–
proposes to
 
the
 
BoD, for
 
approval
 
by the
 
AGM, the
 
maximum aggregate
 
amounts
 
of BoD
 
compensation
 
and
 
GEB
fixed compensation and the aggregate amount of variable
 
compensation for the GEB.
The Compensation
 
Committee is
 
required to
 
meet at least
 
four times each
 
year. All
 
meetings in
 
2024 were
 
held in the
presence of the Chairman
 
and the Group CEO.
 
External advisors were present
 
when required. Individuals,
 
including the
Chairman
 
and
 
the
 
Group
 
CEO,
 
are
 
not
 
permitted
 
to
 
attend
 
a
 
meeting
 
or
 
participate
 
in
 
a
 
discussion
 
on
 
their
 
own
performance and compensation.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
209
After
 
the
 
meetings,
 
the
 
Chairperson
 
of
 
the
 
Compensation
 
Committee
 
reports
 
to
 
the
 
BoD
 
on
 
the
 
Compensation
Committee’s activities
 
and discussions
 
and, if necessary,
 
submits proposals
 
for approval
 
by the
 
full BoD. Compensation
Committee
 
meeting
 
minutes
 
are
 
also
 
sent
 
to
 
all
 
members
 
of
 
the
 
BoD.
 
On
 
31 December
 
2024,
 
the
 
members
 
of
 
the
Compensation Committee were Julie G. Richardson (Chairperson),
 
Fred Hu and Jeanette Wong.
›
Refer to “Board of Directors” in the “Corporate governance”
 
section of this report for more information
External advisors
The Compensation Committee may
 
retain external advisors
 
to support it
 
in fulfilling its
 
duties. In 2024,
 
HCM International
Ltd.
 
(HCM)
 
provided
 
independent
 
advice
 
on
 
compensation
 
matters.
 
HCM
 
holds
 
no
 
other
 
mandates
 
with
 
UBS.
Additionally,
 
Willis Towers
 
Watson plc
 
(WTW) provided
 
the Compensation Committee
 
with data on
 
market trends and
pay levels. Various
 
subsidiaries of WTW provide
 
similar information to UBS’s human
 
resources department in relation
 
to
compensation for
 
employees, including
 
advisory services
 
and secondments
 
to UBS
 
to support
 
the ongoing
 
integration.
WTW holds no other compensation-related mandates
 
with UBS.
The Risk Committee’s role in compensation
The Risk Committee,
 
a committee of
 
the BoD, works
 
closely with the
 
Compensation Committee with the
 
goal of ensuring
that our compensation framework appropriately reflects
 
risk awareness and management, and
 
supports appropriate risk-
taking. It supervises and sets appropriate risk management and risk
 
control principles and is regularly briefed on how risk
is factored into the
 
compensation process. It
 
also monitors the involvement
 
of Group Risk Control
 
and Compliance and
Operational Risk Control in compensation
 
and reviews risk-related aspects
 
of the compensation process.
›
Refer to
ubs.com/governance
 
for more information
Compensation Committee 2024 / 2025 key activities
 
and timeline
July
Sept
Oct
Nov
Dec
1
Jan
Feb
Strategy, policy and governance
Total Reward Principles
l
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Integration-related compensation matters
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Pay fairness in the compensation process
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Compensation disclosure and stakeholder communication matters
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AGM reward-related items
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Compensation Committee governance
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Annual compensation review
Accruals and full-year forecast of the performance award pool
 
funding
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Performance targets and performance assessment of the Group CEO
 
and GEB members
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Group CEO and GEB members’ salaries and individual performance
 
awards
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Update on market practice, trends and peer group matters
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Pay for performance, including governance on certain higher-paid employees, and formulaic compensation
arrangements
 
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Board of Directors remuneration
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Compensation framework
Compensation framework and deferred compensation matters
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Risk and regulatory
Risk management in the compensation approach
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Joint meeting with the BoD Risk Committee
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Regulatory activities impacting employees and engagement
 
with regulators
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1 The Compensation Committee held two meetings in December 2024.
Compensation governance
 
The table below provides an overview of compensation
 
governance by specific role.
 
Recipients
Compensation recommendations proposed by
Approved by
Chairman of the BoD and
 
Vice Chairman of the BoD
Compensation Committee
Compensation Committee
1
Other BoD members
Compensation Committee and Chairman of
 
the BoD
BoD
1
Group CEO
Compensation Committee and Chairman of
 
the BoD
BoD
1
Other GEB members
Compensation Committee and Group CEO
BoD
1
Key Risk Takers (KRTs)
 
/
 
senior employees
Respective GEB member and functional management
team
Individual compensation for KRTs and senior employees:
Group CEO
 
1
 
Aggregate variable compensation and the maximum aggregate amount of fixed compensation for the GEB, as well as maximum
 
aggregate remuneration for the BoD, are subject to shareholder approval.
 
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
210
Performance award pool funding
Our
 
compensation
 
philosophy
 
focuses
 
on
 
balancing
 
performance
 
with
 
appropriate
 
risk-taking,
 
retaining
 
talented
employees and
 
supporting shareholder
 
returns.
 
Our overall
 
performance award
 
pool funding
 
percentage
 
decreases as
financial
 
performance
 
increases.
 
In
 
years
 
of
 
strong
 
financial
 
performance,
 
this
 
prevents
 
excessive
 
compensation
 
and
results in an increased proportion of profit before performance awards
 
being available for distribution to shareholders or
growing the Group’s capital.
 
In years where performance declines
 
,
 
the performance award pool will generally
 
decrease;
however,
 
the funding percentage may increase.
Our
 
performance
 
award
 
pool
 
funding
 
framework
 
is
 
based
 
on
 
Group
 
and
 
business
 
division
 
performance,
 
including
achievements against
 
defined performance
 
measures. In
 
assessing performance,
 
we also
 
consider relative
 
performance
versus
 
peers,
 
market
 
competitiveness
 
of
 
our
 
pay
 
position,
 
as
 
well
 
as
 
progress
 
against
 
our
 
strategic
 
and
 
integration
objectives, including
 
returns,
 
risk-weighted
 
assets
 
and cost
 
efficiency. The
 
Risk and
 
Compliance functions
 
support
 
our
holistic reflection and
 
consideration of
 
the financial and
 
non-financial impact
 
(including reputation)
 
of risk matters.
 
We
further
 
consider
 
the
 
firm’s
 
risk
 
profile
 
and
 
culture,
 
the
 
extent
 
to
 
which
 
operational
 
risks
 
and
 
audit
 
issues
 
have
 
been
identified and resolved, and the success of risk reduction
 
initiatives including accountability for significant events.
 
The funding for Group functions is linked to
 
overall Group performance and also reflects
 
factors such as headcount and
workforce
 
location.
 
For
 
each
 
functional
 
area,
 
quantitative
 
and
 
qualitative
 
assessments
 
evaluate
 
service
 
quality,
 
risk
management and financial achievements.
 
Our decisions
 
regarding the
 
total Group
 
performance award
 
pool also
 
balance consideration
 
of financial
 
performance
with a range of factors, including the impact
 
of litigation, regulatory costs, the effect
 
of changes in financial accounting
standards, capital returns and relative total shareholder return.
For 2024, the performance
 
award pool was determined
 
by applying our usual approach
 
described above. Our decision-
making reflects the progress and complexity of the economic and cultural integration and supports the
 
creation of long-
term value in the combined firm for our shareholders.
 
Sustainability
 
and
 
diversity
 
are
 
well
 
embedded
 
into
 
the
 
culture
 
of
 
our
 
organization
 
and
 
our
 
employee
 
base
 
across
 
all
levels.
 
These
 
topics,
 
including
 
serving
 
our
 
clients’
 
needs,
 
delivering
 
on
 
our
 
reporting
 
requirements
 
and
 
supporting
 
an
inclusive workplace
 
based on
 
meritocracy where
 
all employees
 
can be
 
successful and
 
thrive, continue
 
to be
 
a priority.
Considering our standing in these areas over the
 
last several years,
 
for 2024 these had no
 
impact in our decision-making.
Before making its final proposal
 
to the BoD, the Compensation Committee
 
considers the Group CEO’s proposals and
 
can
apply a positive or negative adjustment to the performance
 
award pool.
 
›
Refer to “2024 Group performance outcomes” in the “Group
 
compensation” section of this report
›
Refer to the “Group performance” section of this report for
 
more information about our results
 
ubs-20241231p235i0
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
211
 
ubs-20241231p236i0
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
212
Compensation for GEB members
GEB compensation framework
In 2024,
 
the Compensation
 
Committee
 
reviewed
 
the Group
 
Executive
 
Board (the
 
GEB)
 
compensation framework
 
and
concluded
 
that
 
it
 
remains
 
well
 
suited
 
to
 
support
 
the
 
alignment
 
of
 
compensation
 
with
 
the
 
execution
 
of
 
our
 
strategy,
sustainable performance and
 
the delivery
 
of our integration
 
goals. The
 
chart below illustrates
 
the compensation
 
elements,
pay mix
 
and key
 
features
 
for GEB
 
members. Of
 
the annual
 
performance award,
 
20% is
 
paid in
 
the form
 
of cash
 
and
80% is deferred over a period of five years, with
 
50% of the annual performance awards granted
 
under the Long-Term
Incentive Plan (the LTIP)
 
and 30% under the Deferred Contingent Capital Plan
 
(the DCCP).
To
 
comply
 
with
 
regulatory
 
requirements,
 
performance
 
awards
 
to
 
GEB
 
members
 
who
 
are
 
UK
 
Senior
 
Management
Functions (SMFs) are
 
subject to longer
 
deferral, blocking and
 
clawback periods. The
 
deferral period is
 
seven years, with
the deferred performance awards vesting no faster than pro
 
rata from years 3 to 7. Such
 
awards are also subject to a 12-
month post-vesting blocking period. The clawback policy for SMFs permits clawback
 
for up to 10 years from the date of
granting a performance award (applicable if an
 
individual is subject to an investigation at
 
the end of the initial
 
seven-year
clawback period).
Effective 1 January 2024, we
 
removed role-based allowances (RBAs) for
 
GEB SMFs,
 
which aligns their fixed
 
compensation
with
 
other
 
GEB
 
members.
 
Considering
 
the
 
RBA
 
elimination
 
and
 
the
 
longer
 
deferral,
 
blocking
 
and
 
clawback
 
periods
applicable to SMFs, as well
 
as the regulatory requirement to deliver half
 
of cash awards in the
 
form of vested but blocked
shares, we have
 
amended the framework
 
for GEB SMFs
 
to more closely
 
align to the
 
overall GEB framework.
 
GEB SMFs
receive
 
50%
 
of
 
their
 
performance
 
award
 
in
 
equity,
 
split
 
between
 
vested
 
but
 
blocked
 
shares
 
(subject
 
to
 
a
 
12-month
blocking period) and the LTIP, 20% in upfront cash and 30% in DCCP.
›
Refer to “Our deferred compensation plans” in the “Group compensation”
 
section of this report for more information
›
Refer to the “Group compensation” section of this report for
 
more information
›
Refer to “Regulated staff”
 
in the “Supplemental information” section of
 
this report for more information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
213
Pay-for-performance safeguards for GEB members
Performance
 
award caps
–
Cap on the total GEB performance award pool
 
(2.5% of profit before tax)
1
–
Caps on individual performance awards for all GEB
 
members,
 
including the Group CEO, of seven times their
 
annual fixed
compensation rate
–
Cap of 20% of performance award in cash
Delivery and
 
deferral
–
80% of performance awards are at risk of forfeiture
–
Long-term deferral over five years (or longer
 
for certain regulated GEB members)
–
Alignment with shareholders (through the LTIP) and bondholders (through the DCCP)
–
Final payout of equity-based / LTIP awards subject to absolute and relative performance
 
conditions (three-year performance period)
Contract
terms
–
No severance terms
–
Notice period between six and twelve months
Other
safeguards
–
Share ownership requirements
–
No hedging allowed
–
GEB variable compensation subject to clawback
 
in line with US regulatory requirements
1
 
The Compensation Committee may consider adjustments to profit for items that are not reflective of underlying performance including integration
 
items.
In
 
2023,
 
we
 
implemented
 
a
 
clawback
 
policy
 
for
 
current
 
and
 
former
 
GEB
 
members
 
based
 
on
 
the
 
US
 
Securities
 
and
Exchange Commission
 
(SEC)
 
requirement for
 
listed companies
 
on US
 
national securities
 
exchanges /
 
associations.
 
This
clawback policy is applied if
 
UBS is required to prepare
 
an accounting restatement of financial statements due
 
to material
non-compliance
 
with
 
financial
 
reporting
 
requirements.
 
In
 
that
 
event,
 
UBS
 
would
 
consider
 
recovering
 
the
 
amount
 
of
variable
 
compensation
 
that
 
exceeds
 
the
 
amount
 
that
 
would
 
have
 
been
 
determined
 
based
 
on
 
the
 
restated
 
financial
statements (the final amount will be determined at the discretion
 
of the Compensation Committee).
GEB share ownership requirements
To
 
align the interests of GEB
 
members with those of our shareholders
 
and to demonstrate personal commitment
 
to the
firm, we require
 
all GEB members
 
including the Group
 
CEO to hold a
 
substantial number of
 
UBS shares. GEB
 
members
must reach their minimum shareholding requirements
 
within five years from their appointment and retain
 
it throughout
their tenure. The total number of UBS shares held by a GEB member consists of any vested or unvested shares, including
privately held shares. At the end of 2024, all GEB members
 
met their share ownership requirements,
 
except for some of
those appointed within the last four years, who still have
 
time to build up and meet the required
 
share ownership.
As of 31 December 2024, our GEB members held shares
 
with an aggregate value of approximately
 
USD 415m.
 
Share ownership requirements
Group CEO
min. 1,000,000 shares
Must be built up within five years from their appointment
 
and retained throughout
their tenure
Other GEB members
min. 500,000 shares
GEB base salary
Each GEB member
 
receives a fixed
 
base salary, which
 
is reviewed
 
annually by the
 
Compensation Committee.
 
The 2024
annual base salary for the Group CEO role was CHF 2.5m
 
and has remained unchanged since 2011.
Over the
 
course of
 
2024,
 
two GEB
 
members
 
held a
 
UK SMF
 
role for
 
one of
 
our
 
UK entities,
 
and two
 
additional
 
GEB
members were identified as a
 
UK-regulated Material Risk Takers
 
(MRTs). Effective 1 January 2024, we
 
removed RBAs for
GEB SMFs and GEB MRTs, which aligns their fixed compensation
 
with other GEB members.
At the Annual General
 
Meeting (the AGM),
 
the shareholders are
 
asked to approve
 
the maximum aggregate
 
amount of
fixed compensation for GEB members for the following financial
 
year.
›
Refer to the “Supplemental information” section of this
 
report for more information about MRTs and SMFs
›
Refer to the “Say-on-pay” section of this report for
 
more information about the AGM vote on fixed compensation
 
for the GEB
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
214
Caps on the GEB performance award pool
The size of the
 
GEB performance award pool
 
may not exceed 2.5%
 
of the Group’s profit
 
before tax. This limits
 
the overall
GEB compensation based
 
on the firm’s profitability.
 
For 2024, the
 
total GEB performance
 
award pool was
 
CHF 114.2m
and below the 2.5% cap.
In
 
line
 
with
 
the
 
individual
 
compensation
 
caps
 
on
 
the
 
proportion
 
of
 
fixed
 
pay
 
to
 
variable
 
pay
 
for
 
all
 
GEB
 
members
(introduced in 2013), granted performance awards (at communicated value)
 
of GEB members (including the Group CEO)
are capped at
 
seven times their
 
annual fixed compensation
 
rate. Where the
 
annual fixed compensation
 
rate (i.e. salary)
is delivered
 
in
 
currencies
 
other
 
than
 
the
 
Swiss
 
franc,
 
the
 
maximum
 
total
 
compensation
 
is
 
aligned
 
to
 
the
 
Swiss
 
franc-
determined GEB members. To
 
the extent that local
 
regulatory requirements on compensation
 
caps apply, we will
 
consider
equivalent
 
ratios
 
to
 
comply
 
with
 
the
 
respective
 
regulatory
 
regime.
 
For
 
2024,
 
performance
 
awards
 
(at
 
communicated
value) granted
 
to all
 
GEB members
 
including the
 
Group CEO
 
were, on
 
average, 4.5
 
times their
 
fixed compensation
 
(in
Swiss franc terms, excluding one-time replacement awards, benefits
 
and contributions to retirement plans).
›
Refer to “Performance award pool funding”
 
in the “Compensation philosophy and governance”
 
section of this report for more
information
GEB employment contracts
GEB members’
 
employment contracts
 
do not
 
include severance
 
terms and
 
are subject
 
to a
 
six-to-twelve-month notice
period. A GEB member leaving UBS before
 
the end of a performance year may be considered
 
for a performance award.
Such awards are subject to approval by the Board of Directors (the BoD), and ultimately by the
 
shareholders at the AGM.
Benchmarking for GEB members
When
 
recommending
 
performance
 
awards
 
for
 
the
 
Group
 
CEO
 
and
 
the
 
other
 
GEB
 
members,
 
the
 
Compensation
Committee
 
reviews
 
the
 
respective
 
total
 
compensation
 
for
 
each
 
role
 
against
 
a
 
financial
 
industry
 
peer
 
group.
 
The
 
peer
group is selected
 
based on comparability
 
of their size,
 
business mix, geographic
 
presence and
 
the extent to
 
which they
compete with
 
us for
 
talent. The
 
Compensation Committee
 
considers our
 
peers’ strategies,
 
practices and
 
pay levels,
 
as
well
 
as
 
their
 
regulatory
 
environment;
 
it
 
also
 
periodically
 
reviews
 
other
 
firms’
 
pay
 
levels
 
or
 
practices,
 
including
 
both
financial and non-financial sector peers,
 
as applicable. The total
 
compensation for a GEB
 
member’s specific role considers
the compensation
 
paid by
 
our peers
 
for a
 
comparable role
 
and performance
 
within the
 
context of
 
our organizational
profile. The Compensation Committee periodically
 
reviews and approves the peer
 
group composition.
The table below presents the composition of our peer group as approved by the Compensation Committee for the 2024
performance year.
Bank of America
HSBC
Barclays
JPMorgan Chase
BlackRock
Julius Baer
BNP Paribas
Morgan Stanley
Citigroup
Standard Chartered
Deutsche Bank
State Street
Goldman Sachs
 
ubs-20241231p239i0
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
215
GEB performance assessments
We assess each GEB member’s performance against a set of financial targets, non-financial objectives and Behaviors. For
2024, the
 
non-financial objectives
 
continue to
 
be assessed
 
predominantly
 
based on
 
achievements
 
relative to
 
concrete
quantitative and measurable key
 
performance indicators and are focused on
 
delivering integration- and strategy-related
initiatives,
 
client
 
centricity,
 
risk
 
and
 
regulatory,
 
environmental
 
and
 
sustainability,
 
and
 
people-
 
and
 
governance-related
objectives. This approach continues to foster a focus
 
on GEB priorities, including delivering the integration objectives
 
and
the success of the Group, and promotes strong individual accountability.
Sustainability
 
and
 
diversity
 
are
 
well
 
embedded
 
into
 
the
 
culture
 
of
 
our
 
organization
 
and
 
our
 
employee
 
base
 
across
 
all
levels.
 
These
 
topics,
 
including
 
serving
 
our
 
clients’
 
needs,
 
delivering
 
on
 
our
 
reporting
 
requirements
 
and
 
supporting
 
an
inclusive workplace
 
based on
 
meritocracy where
 
all employees
 
can be
 
successful and
 
thrive, continue
 
to be
 
a priority.
Considering our standing in these areas over the last several years, in 2024 these had no impact
 
in our decision-making.
In 2024,
 
we
 
enhanced
 
our
 
objective
 
setting
 
and performance
 
assessment
 
approach
 
by
 
leveraging
 
generative
 
artificial
intelligence in the summarization of concrete performance measures.
 
This enhancement contributed toward a consistent
and fact-based
 
initial assessment,
 
which was
 
then robustly
 
reviewed by
 
management and
 
the BoD
 
to ensure
 
accuracy
and contextualize results.
The Compensation Committee exercises its judgment with respect to the
 
performance achieved relative to the prior year,
our
 
strategic
 
plan
 
and
 
our
 
competitors,
 
and
 
considers
 
the
 
Group
 
CEO’s
 
proposals.
 
The
 
Compensation
 
Committee’s
proposals are subject to approval by the BoD.
For the
 
Group CEO,
 
a similar
 
process is
 
followed by
 
the Compensation
 
Committee, and
 
then the
 
full BoD,
 
except that
the proposal comes from the Chairman of the BoD.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
216
Overview of performance assessment measures
We
 
apply
 
a
 
range
 
of
 
quantitative
 
measures
 
to
 
assess
 
GEB
 
member
 
performance
 
against
 
financial
 
and
 
non-financial
objectives, while
 
Behaviors are assessed
 
qualitatively. For 2024 the
 
financial measures were
 
expanded to
 
include divisional
and functional measures, as applicable. The table below provides a summary of the main metrics and measures used for
2024.
Financial measures
(60%)
–
Group profit before tax
–
Group cost / income ratio
–
Group return on CET1 capital
–
Divisional and functional measures (30%, as applicable)
Non-
financial
measures
(30%)
Integration and Strategy
–
Progress on Group strategic and integration priorities
–
Delivery on division- / function-specific strategic
 
programs and initiatives
Clients
–
Foster delivery of the whole firm to our clients
–
Promoting collaboration across the combined organization
–
Delivery on specific key client initiatives
Risk and Regulatory
–
Operating within risk appetite
–
Progress on delivering on risk initiatives and regulatory commitments
Environmental and
Sustainability
–
Supporting clients’ activities related to the environment
 
and sustainability
–
Management of required external sustainability
 
reporting, including consideration of investor feedback
People and Governance
–
People development, mobility, turnover and succession plan metrics
–
Employee listening / sentiment results and feedback
 
on engagement and culture
Behaviors
(10%)
Accountability with integrity
Qualitative assessment
against expected
Behaviors:
–
Responsible for what they say and do
–
Takes ownership and makes things happen
–
Steps up and acts when something is
 
not right
Collaboration
–
Trusts others and helps them to be successful
–
Delivers One UBS, together with their colleagues
–
Fosters an inclusive and equitable work environment
Innovation
–
Challenges perspectives and looks at every
 
opportunity to improve
–
Actively seeks and provides feedback
–
Learns from every success and failure
Performance assessment categories
The performance
 
of non-financial
 
objectives and
 
Behaviors is
 
assessed against
 
three performance
 
categories, Excellent
contribution / Exemplary behavior, Good contribution / Expected behavior, and Needs
 
focus, relative to
 
defined measures
and
 
outcomes.
 
The
 
achievement
 
level
 
for
 
each
 
measure
 
results
 
in
 
a
 
cumulative
 
assessment
 
score
 
for
 
non-financial
objectives and Behaviors, respectively,
 
and cannot exceed 100%.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
217
2024 performance for the Group CEO
The
 
performance
 
award
 
for
 
the
 
Group
 
CEO
 
is
 
based
 
on
 
the
 
achievement
 
of
 
financial
 
performance
 
targets
 
and
 
non-
financial objectives and Behaviors, as described earlier in this section.
These objectives were set to reflect the strategic priorities
 
determined by the Chairman and the BoD.
›
Refer to “GEB compensation framework”
 
in this section of this report for more information
Performance assessment for the Group CEO
The
 
Board
 
of
 
Directors
 
(the
 
BoD)
 
recognizes
 
Mr.
 
Ermotti’s
 
strong
 
and
 
effective
 
leadership
 
throughout
 
2024
 
and
 
his
continued
 
excellent
 
performance,
 
in
 
particular
 
with
 
progress
 
on
 
the
 
integration
 
of
 
Credit
 
Suisse,
 
delivering
 
a
 
strong
financial performance
 
and positioning
 
UBS for
 
long-term growth.
 
We completed
 
over 4,000
 
integration
 
milestones in
2024, including delivering on key
 
legal-entity integrations that unlocked benefits such
 
as the successful migration of
 
over
90% of
 
client
 
accounts
 
outside
 
of Switzerl
 
and onto
 
UBS platforms
 
and a
 
more efficient
 
capital
 
utilization.
 
Additional
integration milestones
 
achieved include
 
the continued
 
active wind-down
 
of Non-core
 
and Legacy,
 
where we
 
delivered
USD 33bn of risk-weighted asset reductions in 2024, well ahead of schedule. All of these efforts supported our ability to
capture almost 60% of our targeted USD 13bn gross cost
 
savings as of the end of 2024.
At the same time, Mr. Ermotti successfully positioned the organization for future growth with investments
 
in our people,
products and capabilities.
 
The financial
 
results for 2024
 
continued to be
 
marked by
 
the acquisition of
 
Credit Suisse but
 
outperformed UBS’s financial
plan and market expectations, with
 
a reported profit before tax
 
of USD 6.8bn and a reported
 
return on common equity
tier 1 (CET1)
 
capital of
 
6.7%. These
 
results demonstrate
 
our ability
 
to serve
 
clients and
 
the strength
 
of our
 
diversified
global franchise while delivering on our integration
 
milestones. The Group’s capital situation remained
 
very robust,
 
with
a CET1 ratio of 14.3%,
 
despite the voluntary acceleration
 
of the remaining transitional
 
capital adjustments agreed
 
with
the Swiss
 
Financial
 
Market
 
Supervisory Authority
 
(FINMA).
 
We also
 
continued
 
to execute
 
our capital
 
return plans.
 
We
accrued for a
 
USD 0.90 dividend, a
 
29% year-on-year
 
increase, to be
 
approved by
 
shareholders at the
 
2025 AGM. We
also completed our planned USD 1bn of share repurchases in
 
2024.
 
The BoD further recognizes Mr. Ermotti’s continued significant
 
personal engagement with clients and his relentless drive
to focus
 
the
 
organization
 
on
 
serving clients.
 
This
 
supported
 
continued client
 
momentum,
 
with USD
 
97bn of
 
net
 
new
assets in Global Wealth Management and Group invested
 
assets of USD 6.1trn, up 7% year on year.
Mr. Ermotti continued to champion a strong risk
 
management and control culture by setting a
 
clear and consistent tone
from
 
the
 
top.
 
He
 
kept
 
the
 
Group
 
focused
 
on
 
evolving
 
regulatory
 
and
 
risk
 
requirements
 
and
 
demonstrated
 
strong
leadership by driving
 
the integration with
 
effective governance to
 
manage the associated
 
risks and by
 
steering the firm
through a challenging geopolitical environment.
Furthermore,
 
the
 
BoD
 
acknowledges
 
that
 
Mr.
 
Ermotti
 
successfully
 
recomposed
 
and
 
strengthened
 
the
 
GEB
 
to
 
meet
strategic
 
needs.
 
He
 
remained
 
an
 
effective
 
ambassador
 
for
 
the
 
integrated
 
firm,
 
both
 
internally
 
and
 
externally,
 
and
continued
 
to
 
successfully
 
drive
 
the
 
cultural
 
integration.
 
Employee
 
surveys
 
demonstrated
 
excellent
 
outcomes
 
with
significant
 
positive
 
feedback,
 
including
 
recommending
 
UBS
 
as
 
a
 
place
 
to
 
work,
 
feeling
 
proud
 
to
 
work
 
for
 
UBS
 
and
believing
 
in
 
our
 
strong
 
team
 
culture.
 
Mr.
 
Ermotti
 
also
 
demonstrated
 
a
 
strong
 
focus
 
on
 
innovation
 
by
 
accelerating
development and
 
adoption of
 
generative artificial
 
intelligence (gen
 
AI) solutions
 
that benefit
 
clients and
 
employees.
 
In
addition, he effectively navigated the firm through the evolving
 
environmental-
 
and sustainability-related requirements.
The table below illustrates the assessment criteria used to evaluate
 
the achievements of Mr. Ermotti in 2024.
Financial performance
Weight
Performance
measures
2024 targets
2024 results
Achieve-
ment
1
Assess-
ment
2024 commentary
20%
Reported Group PbT
USD 3.9bn
USD 6.8bn
100%
20%
–
Profit before tax benefited from strong client momentum,
gains in Non-core and Legacy and progress on synergy
realization.
 
20%
Reported Group C / I
ratio
2
90.2%
84.8%
100%
20%
–
Strong operating leverage drove a 10-ppt year-on-year
improvement in the cost / income ratio.
20%
Reported Group
RoCET1
2.6%
6.7%
100%
20%
–
Return on CET1 was well above our plans
 
and guidance,
significantly de-risking the trajectory towards pre-acquisition
profitability levels.
1
 
Achievement score capped at 100%.
 
2
 
For the assessment of the cost / income ratio,
 
the percentage change of result versus plan is subtracted from the
 
maximum achievement level (100%).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
218
Performance assessment for the Group CEO (continued)
 
Non-financial performance and Behaviors
Weight
Performance
measures
Achieve-
ment
Assess-
ment
2024 commentary
30%
Non-financial
objectives
(Integration and
Strategy, Clients,
Risk and
Regulatory,
Environmental
and
Sustainability,
People and
Governance)
Excellent
contribution
27.0%
The evaluation of each of the five non-financial
 
objectives considers quantitative metrics
 
that
are assessed against internal targets / plan.
–
Progressed with the integration of Credit Suisse and delivered on
 
agreed key 2024
milestones, including legal-entity integration and
 
migration of over 90% of client accounts
outside of Switzerland.
 
–
Positioned UBS for future growth with investments in our
 
people, products and
capabilities. To date, captured almost 60% of our targeted USD 13bn gross cost savings.
–
Progressed strategic initiatives in key businesses and
 
markets laying the ground for
business and revenue growth, for example, by initiating
 
a comprehensive set of measures
to enhance the profitability of Global Wealth Management
 
Americas.
 
–
Strong financial results enabled UBS to maintain its robust capital
 
position and enabled us
to voluntarily accelerate the phase-out of
 
the remaining transitional capital adjustments
agreed with our regulator.
 
–
Engaged personally with clients and continued
 
to focus the organization on serving clients.
–
Championed a strong risk management and control culture,
 
kept the Group focused on
risk remediation items.
–
Recomposed and strengthened the GEB to meet
 
strategic needs.
–
Further strengthened UBS’s culture at the combined firm,
 
as evidenced by excellent
employee feedback.
–
Effectively navigated the firm through the evolving environmental-
 
and sustainability-
related requirements.
10%
Behaviors
(Accountability
with Integrity,
Collaboration,
Innovation)
Exemplary
behavior
10.0%
The assessment of the Behavior objectives is qualitative
 
and has resulted in the following
summary assessment.
–
Remained a role model for the UBS behaviors. Demonstrated
 
exemplary accountability as
well as drive and vision to successfully position
 
the firm for future growth.
–
Further strengthened collaboration throughout the organization,
 
effectively balanced
between delivering integration activities and
 
staying focused on clients.
–
Continued to challenge the organization to be
 
more innovative and leverage technology,
including accelerated development and adoption
 
of gen AI solutions, for the benefit of
clients, employees and shareholders.
Total assessment
(maximum 100%)
97.0%
The
 
BoD
 
approved
 
the
 
proposal
 
by
 
the
 
Compensation
 
Committee
 
to
 
grant
 
Mr.
 
Ermotti
 
a
 
performance
 
award
 
of
CHF 12.1m,
 
resulting
 
in
 
a
 
total
 
compensation
 
for
 
2024
 
of
 
CHF 14.6m
 
(excluding
 
benefits
 
and
 
contributions
 
to
 
his
retirement benefit plan).
Aligned with the GEB compensation
 
framework, the Group CEO’s performance award will
 
be delivered 20% (CHF 2.4m)
in cash and the remaining 80% (CHF 9.7m) subject to deferral and forfeiture provisions, as well as meeting performance
conditions over the next five years.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
219
2024 total compensation for the GEB members
At the 2025 AGM, shareholders
 
will vote on the
 
aggregate 2024 total variable compensation for
 
the GEB in Swiss francs.
The tables below provide the
 
awarded compensation for the Group CEO
 
and the GEB members in Swiss
 
francs and, for
reference,
 
the
 
total
 
amounts
 
in
 
US
 
dollars
 
for
 
comparability
 
with
 
financial
 
performance.
 
The
 
individual
 
variable
performance awards for each GEB member will only be
 
confirmed upon shareholder approval at the AGM.
›
Refer to “Deferred compensation” in the “Supplemental
 
information” section of this report for more information about
 
the
vesting of outstanding awards for GEB members
›
Refer to “Provisions of the Articles of Association related to
 
compensation” in the “Supplemental information”
 
section of this
report for more information
Audited |
Total
 
compensation for GEB members
CHF, except where indicated
USD (for reference)
1
For the
year
Base salary
Contribution
to retirement
benefit plans
Benefits
2
Total fixed
compensation
Cash
3
Performance
award under
LTIP
4
Performance
award under
DCCP
5
Total
variable
compensation
Total fixed
and variable
compensation
6
Total fixed
compensation
Total
variable
compensation
Total fixed
 
and variable
compensation
6
Highest Paid Executive (for 2024 and
 
for 2023 Sergio P. Ermotti, Group CEO)
2024
2,500,000
248,320
78,707
2,827,027
2,420,000
6,050,000
3,630,000
12,100,000
14,927,027
3,220,808
13,785,427
17,006,235
2023
1,875,000
186,240
84,078
2,145,317
2,450,000
6,125,000
3,675,000
12,250,000
14,395,317
Aggregate of all GEB members
7,8,9,10
2024
25,461,247
2,684,041
1,231,177
29,376,465
26,438,714
53,490,910
34,255,553
114,185,176
143,561,641
33,468,357
130,090,201
163,558,558
2023
28,677,051
2,120,421
1,238,708
32,036,180
21,398,036
54,305,166
32,583,098
108,286,300
140,322,480
1 Swiss franc
 
amounts have been
 
translated into US
 
dollars for reference
 
at the 2024
 
performance award currency
 
exchange rate of
 
CHF / USD
 
1.139291.
 
2 All benefits
 
are valued at
 
market price.
 
3 For GEB
members who are also MRTs
 
or SMFs, the
 
cash portion includes blocked
 
shares.
 
4 LTIP
 
awards for performance year
 
2024 were awarded at
 
a value of
 
50.0% of maximum which reflects
 
our best estimate of
 
the
value of the award. The
 
maximum number of shares is determined
 
by dividing the awarded amount
 
by the estimated value of
 
the award at grant, divided
 
by CHF 30.328 or USD 33.537, the
 
average closing price of
UBS shares over the last ten trading days leading up to and including the award date in February.
 
5 The amounts reflect the amount of the notional additional tier 1 (AT1) capital instrument excluding future notional
interest.
 
6 Excludes the portion related to the legally required employer’s
 
social security contributions for 2024 and 2023, which are estimated at
 
grant at CHF 9,990,000 and CHF 7,291,554, respectively,
 
of which
CHF 1,333,000 and CHF 897,679, respectively, are for the highest-paid GEB member. The legally required employees’ social security contributions are included in the
 
amounts shown in the table above, as appropriate.
 
7 As stated in “Group Executive Board”
 
in the “Corporate governance” section
 
of this report, 15 GEB members were
 
in office on 31 December 2024 and
 
16 GEB members were in office on 31
 
December 2023.
 
8
Includes compensation paid under employment contracts during notice periods for GEB members who stepped down during the respective years.
 
9 Includes compensation for newly appointed GEB members for their
time in office as GEB members during the respective years.
 
10 For 2023, base salary may include role-based allowances in line with market practice in response to regulatory requirements. For 2024, base salary does
not include role-based allowances as these have been eliminated since the UK regulatory regime with a 2:1 variable-to-fixed compensation
 
cap is no longer in effect.
Total realized compensation for the Group CEO
The realized compensation for
 
the Group CEO reflects
 
the total amount paid
 
out in the year.
 
It includes the base
 
salary,
cash performance award payments, and all
 
deferred performance awards vested
 
in the year. As such, realized pay
 
is the
natural culmination of awards granted and approved by
 
shareholders in previous years.
To illustrate the
 
effect of our
 
long-term deferral
 
approach, which has
 
been in place
 
since 2012, we
 
disclose the annual
realized compensation of Mr. Ermotti,
 
including a comparison with his total awarded compensation.
Total
 
realized compensation vs awarded compensation for Sergio Ermotti
CHF
Realized
Awarded
For the year
Base salary
Cash award
1
Performance
award under
equity plans
1
Performance
award under
DCCP
1
Total realized
fixed and variable
 
compensation
Total awarded
fixed and variable
compensation
2
2024
 
2,500,000
 
2,450,000
 
0
 
0
 
4,950,000
 
14,600,000
2023
3
 
1,875,000
 
0
 
0
 
0
 
1,875,000
 
14,125,000
1 Excludes dividend / interest payments.
 
2 Excludes contributions to retirement benefit plans and
 
benefits. Includes social security contributions
 
paid by Sergio Ermotti but excludes the
 
portion related to the legally
required social security contributions paid by UBS.
 
3 Includes compensation for 9 months as Sergio Ermotti joined UBS in April 2023.
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
220
Group compensation
Compensation elements for all employees
All elements
 
of pay
 
are
 
considered
 
when making
 
our compensation
 
decisions.
 
We
 
regularly review
 
our principles
 
and
compensation
 
framework
 
in
 
order
 
to
 
remain
 
competitive
 
and
 
aligned
 
with
 
stakeholders’
 
interests.
 
In
 
2024,
 
our
compensation
 
framework
 
remained
 
broadly
 
unchanged.
 
We
 
will
 
continue
 
to
 
review
 
our
 
approach
 
to
 
salaries
 
and
performance
 
awards,
 
considering market
 
developments,
 
our performance
 
and our
 
commitment
 
to deliver
 
sustainable
returns to shareholders.
Base salary and role-based allowance
Employees’ fixed compensation
 
(e.g. base salary)
 
reflects their
 
level of skill,
 
role and
 
experience, as well
 
as local market
practice. Base
 
salaries are
 
usually paid
 
monthly
 
or fortnightly,
 
in line
 
with local
 
market
 
practice. We
 
offer
 
competitive
base salaries that
 
reflect location, function and
 
role. Salary increases generally consider promotions,
 
skill set, performance
and overall responsibility.
In addition to base salary,
 
and as part of fixed
 
compensation, some employees
 
may receive a role-based allowance.
 
This
allowance
 
is
 
a
 
shift
 
in
 
the
 
compensation
 
mix
 
between
 
fixed
 
and
 
variable
 
compensation,
 
not
 
an
 
increase
 
in
 
total
compensation. It
 
reflects the
 
market value
 
of a
 
specific role and
 
is fixed,
 
non-forfeitable compensation.
 
Unlike salary,
 
a
role-based allowance is
 
paid only if
 
the employee is
 
in a
 
specific role.
 
Similar to previous
 
years, 2024 role-based
 
allowances
consisted of a cash portion and, where applicable, a blocked
 
UBS share award.
Pensions and benefits
We
 
provide
 
access
 
to
 
a
 
range
 
of
 
benefit
 
plans,
 
such
 
as
 
retirement
 
benefits
 
and
 
health
 
insurance,
 
aiming
 
to
 
provide
financial protection in
 
case of significant
 
life events,
 
and support
 
our employees’
 
well-being and
 
diverse needs. Retirement
and other benefits are set in the context of local
 
market practice and regularly reviewed
 
for competitiveness.
 
Pension plan
 
rules in
 
any one
 
location are
 
generally the
 
same for
 
all employees
 
in similar
 
circumstances, including
 
GEB
members and other
 
management. Under
 
the Switzerland Pension
 
Fund rules, there
 
are no enhanced
 
or supplementary
pension contributions for the GEB.
Performance award
Most of our
 
employees are eligible for an
 
annual performance award.
 
The level of this
 
award, where applicable, generally
depends
 
on
 
the
 
firm’s
 
overall
 
performance,
 
the
 
employee’s
 
business
 
division,
 
team
 
and
 
individual
 
performance,
 
and
behavior,
 
reflecting
 
their
 
overall
 
contribution
 
to
 
the
 
firm’s
 
results.
 
These
 
awards
 
are
 
in
 
line
 
with
 
applicable
 
local
employment conditions and at the discretion of the
 
firm.
In
 
addition
 
to
 
the
 
firm’s
 
Pillars
 
and
 
Principles,
 
Behaviors
 
related
 
to
 
Accountability
 
with
 
integrity,
 
Collaboration
 
and
Innovation are
 
part of
 
the performance
 
management
 
approach. Therefore,
 
when assessing
 
performance,
 
we consider
not only what was achieved but also how it was achieved
 
.
Our deferred compensation plans
Underlining
 
our emphasis
 
on sustainable
 
performance
 
and risk
 
management,
 
and our
 
focus on
 
achieving
 
our growth
ambitions, we
 
deliver part
 
of our employees’
 
annual variable
 
compensation through
 
deferred compensation
 
plans.
 
We
believe that
 
our approach,
 
with a
 
single incentive
 
decision and
 
mandatory deferral
 
framework,
 
is transparent
 
and well
suited to implementing our compensation philosophy and delivering
 
sustainable performance. This aligns the interests of
our employees and shareholders and appropriately
 
links compensation to longer-term
 
sustainable performance.
 
Our
 
mandatory
 
deferral
 
approach
 
applies
 
to
 
all
 
employees
 
with
 
regulatory-driven
 
deferral
 
requirements
 
or
 
total
compensation
 
greater
 
than
 
USD /
 
CHF 300,000.
 
Certain
 
regulated
 
employees,
 
such
 
as Senior
 
Management
 
Functions
(SMFs) and Material Risk Takers
 
(MRTs),
 
are subject to additional requirements (e.g. more stringent deferral requirements
and additional
 
blocking periods). In
 
addition, SMFs and
 
MRTs receive 50%
 
of their
 
cash portion in
 
the form
 
of immediately
vested shares, which are blocked for 12 months after
 
grant.
 
The deferred
 
amount increases
 
at higher
 
marginal rates
 
in line with
 
the value
 
of the
 
performance award.
 
The effective
deferral rate therefore depends on the amount of the performance
 
award and the amount of total compensation.
We believe
 
our deferral
 
regime has
 
one of
 
the longest
 
vesting periods
 
in the
 
industry.
 
The weighted
 
average
 
deferral
period for non-regulated employees is 4.4 years for GEB members, 3.8 years for Managing Directors (MDs)
 
receiving the
Long-Term
 
Incentive
 
Plan
 
(LTIP)
 
and
 
3.5
 
years
 
for
 
other
 
employees.
 
Additionally,
 
from
 
time
 
to
 
time,
 
we
 
may
 
utilize
alternative deferred compensation arrangements to remain
 
competitive in specific business areas.
 
 
ubs-20241231p245i0
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
221
To further promote sustainable performance, all of our
 
deferred compensation plans include employment conditions and
malus conditions. These enable the firm to reduce or fully forfeit unvested deferred awards under certain
 
circumstances,
pursuant to performance and harmful acts provisions. In addition, forfeiture is triggered
 
in cases where employment has
been terminated for cause.
Upon vesting of
 
the notional share
 
awards, we fulfill
 
our share delivery
 
obligations by delivering
 
treasury shares purchased
in the market.
›
Refer to “Note 27 Employee benefits: variable
 
compensation” in the “Consolidated financial statements”
 
section of this report for
more information
›
Refer to the “Supplemental information” section of this
 
report for more information about MRTs and SMFs
 
Long-Term Incentive Plan
The LTIP
 
granted for
 
2024 performance
 
is a mandatory
 
deferral plan
 
for GEB
 
members and
 
MDs reporting
 
to the
 
GEB
and their direct reports at MD level.
1
 
These senior leaders receive the equity portion of their 2024 performance
 
award in
LTIP
 
to support delivering
 
on our ambitious
 
integration goals and
 
business / financial
 
targets. This further
 
mitigates the
need for a distinct integration award typical
 
for a transaction of this
 
nature. For the 2024 performance year, we awarded
the LTIP
 
to 19 GEB members and 934 MDs in office during 2024, at a communicated value of 50% of the
 
maximum, to
further align the maximum opportunity to exceed the stretching
 
nature of our financial ambitions.
The
 
performance
 
metrics
 
of
 
the
 
share-based
 
LTIP
 
awards
 
are
 
average
 
reported
 
return
 
on
 
CET1
 
capital
 
(RoCET1)
 
and
relative total shareholder
 
return (rTSR)
 
over a three-year
 
performance period
 
starting on 1 January
 
in the year
 
of grant.
Performance outcomes and actual payout levels will be disclosed
 
at the end of the performance period.
For the 2024 LTIP
 
granted in 2025, we
 
have increased the performance range of
 
the three-year average reported RoCET1
metric (50% weighting) to
 
a new range of
 
7.5%–14% from the previous
 
5%–10%. This adjustment reflects
 
the progress
of
 
our
 
ambitious
 
integration
 
objectives,
 
as
 
well
 
as
 
the
 
evolving
 
return
 
ambitions
 
and
 
financial
 
targets
 
over
 
the
 
cycle,
ensuring that
 
the incentive
 
structure of
 
our LTIP
 
is more
 
closely aligned
 
with our
 
long-term objectives
 
and shareholder
interests:
–
the maximum reported RoCET1 of 14% corresponds with a 100% payout and represents the upper end of our target
range;
–
the minimum reported
 
RoCET1 of 7.5%
 
corresponds with a
 
33% payout aligned
 
with sustainable results
 
in the context
of the integration, there is zero payout if RoCET1 is below
 
7.5%; and
–
the linear
 
payout between the
 
threshold and
 
maximum levels
 
supports our
 
focus on
 
delivering sustainable performance
without encouraging excessive risk-taking.
 
The rTSR performance metric
 
(50% weighting) over the
 
three-year period further aligns the
 
interests of employees with
those
 
of
 
shareholders.
 
This
 
metric
 
compares
 
the
 
total
 
shareholder
 
return
 
(the
 
TSR)
 
of
 
UBS
 
with
 
the
 
TSR
 
of
 
an
 
index
consisting of listed Global Systemically Important Banks (G-SIBs):
–
the maximum payout outcome is reached when
 
rTSR is 25 percentage points or more above the index,
 
to mitigate the
potential for excessive risk-taking;
 
–
there is zero payout if rTSR is more than 25 percentage
 
points below the index; and
–
the linear payout between the threshold and maximum levels further
 
supports appropriate risk-taking
This
 
G-SIB
 
index
 
is
 
independently
 
determined
 
by
 
the
 
Financial
 
Stability
 
Board
 
(excluding
 
the
 
UBS
 
Group),
 
our
 
index
includes
 
all
 
publicly
 
traded
 
G-SIBs
 
and
 
reflects
 
companies
 
with
 
a
 
comparable
 
risk
 
profile
 
and
 
impact
 
on
 
the
 
global
economy. The
 
index is
 
equally weighted,
 
calculated in
 
Swiss francs
 
and maintained
 
by an
 
independent index
 
provider,
ensuring independence of the TSR calculation.
1
Includes senior managers who received
 
LTIP awards
 
for the 2023 performance
 
year and who are
 
no longer reporting to
 
the GEB or their
 
direct reports at MD
 
level, excludes MDs in
 
Asset Management Investment
Areas who receive the Fund Ownership Plan (FOP) instead of the LTIP.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
222
G-SIBs that are listed companies
1
Agricultural Bank of China
Goldman Sachs
Santander
Bank of America
Groupe Crédit Agricole
Société Générale
Bank of China
HSBC
Standard Chartered
Bank of Communications
ICBC
State Street
Bank of New York Mellon
ING
Sumitomo Mitsui FG
Barclays
JPMorgan Chase
Toronto-Dominion
BNP Paribas
Mitsubishi UFJ FG
Wells Fargo
China Construction Bank
Mizuho FG
Citigroup
Morgan Stanley
Deutsche Bank
Royal Bank of Canada
1
 
As of November 2024. Excludes the UBS Group.
Dividend equivalents (granted where
 
applicable regulation permits) are
 
subject to the same terms
 
as the underlying LTIP
award.
LTIP awards
 
reflect the
 
long-term focus
 
of our
 
compensation framework.
 
The final
 
number of
 
shares as
 
determined at
the end
 
of the
 
three-year performance
 
period will
 
vest in
 
three equal
 
installments in
 
each of
 
the three
 
years following
the performance period for
 
GEB members (i.e. years
 
3, 4 and 5 after
 
grant) and will cliff-vest
 
for other award recipients
after the performance period (i.e. year 3 after
 
grant),
 
although longer deferral periods may apply for
 
regulated GEB and
other regulated employees.
LTIP payout illustration
–
The final number of notional
shares vesting will vary based on
the achievement versus the
performance metrics.
–
Linear payout between threshold
and maximum performance.
–
Achievement levels are a
percentage of the maximum
opportunity of the LTIP and cannot
exceed 100%.
–
Full forfeiture for performance
below the predefined threshold
levels.
–
UK Senior Management Function
holders (SMFs) and UK Material
Risk Takers (UK MRTs)
 
are subject
to an additional non-financial
metric based on a conduct
assessment with a potential
downward adjustment of up to
100% of the entire award.
Performance metric:
average RoCET1 (50% of award)
Below threshold (<7.5%)
Threshold (7.5%) up to
maximum (<14%)
Maximum and above (>14%)
Full forfeiture
(payout 0%)
Partial vest
(payout between 33% and <100%)
Full vest
(payout 100%)
Performance metric
: rTSR vs G-SIBs index (50% of award)
Below threshold (<–25 ppts)
Threshold (–25 ppts) up to
 
maximum (<+25 ppts)
Maximum and above (>+25 ppts)
Full forfeiture
(payout 0%)
Partial vest
(payout between 33% and <100%)
Full vest
(payout 100%)
Performance achievement of the 2021 LTIP granted
 
in 2022
The 2021 LTIP was
 
granted in 2022 (for
 
2021 performance) at
 
a fair value of
 
67.7% of a maximum
 
of 100%. The final
performance
 
achieved is
 
93.33% of
 
a maximum
 
of 100%.
 
This achievement
 
reflects the
 
outcome of
 
the two
 
equally
weighted performance metrics,
 
RoCET1 and rTSR,
 
both measured over
 
the three-year performance period
 
from 1 January
2022 to 31 December 2024. The achievement
 
level of this 2021 LTIP award (granted in 2022)
 
applies to 13 current GEB
members and 99 other plan participants.
We achieved a three-year average
 
RoCET1 performance of 17.44% against
 
the performance range of 8%
 
to 18%, and
an rTSR performance of +17.85 percentage points versus
 
the index of listed G SIBs.
As
 
explained
 
in
 
the
 
key
 
compensation
 
themes
 
section
 
of
 
this
 
report,
 
the
 
Compensation
 
Committee
 
made
 
certain
adjustments to the reported 2023 and 2024 RoCET1 outcomes to determine the 2021 LTIP achievement level. As noted,
if the Compensation Committee had not made these adjustments but applied reported RoCET1 results, the
 
achievement
level would have been 100%.
For GEB members, the first of the three
 
equal installments of the 2021 LTIP vests on
 
17 March 2025,
 
and the second and
third installments will vest
 
in March 2026 and
 
2027; while for
 
selected senior management,
 
the 2021 LTIP cliff
 
vests on
17 March 2025 (later dates may apply for regulated employees).
 
 
 
 
 
ubs-20241231p228i0
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
223
Equity Ownership Plan / Fund Ownership Plan
The
 
Equity
 
Ownership
 
Plan
 
(the
 
EOP)
 
is
 
the
 
deferred
 
compensation
 
plan
 
for
 
employees
 
that
 
are
 
subject
 
to
 
deferral
requirements
 
but
 
do
 
not
 
receive
 
LTIP
 
awards.
 
For
 
the
 
2024
 
performance
 
year,
 
we
 
granted
 
EOP
 
awards
 
to
 
4,123
employees.
 
Delivering sustainable results
 
is a
 
key objective for
 
UBS. Our EOP
 
creates a direct
 
link with
 
shareholder returns as
 
a notional
equity award
 
and has
 
no upward
 
leverage.
 
This approach
 
promotes growth
 
and sustainable
 
performance.
 
EOP awards
generally vest over three years.
 
In place
 
of EOP,
 
359 employees
 
in investment
 
areas within
 
Asset Management
 
receive notional
 
funds under
 
the Fund
Ownership
 
Plan
 
(the
 
FOP),
 
to
 
align
 
their
 
compensation
 
more
 
closely
 
with
 
industry
 
standards.
 
This
 
plan
 
is
 
generally
delivered in cash and vests over three years.
›
Refer to “Vesting of outstanding awards granted in prior years subject
 
to performance metrics and thresholds” in the
“Supplemental information” section of this report for
 
more information
Deferred Contingent Capital Plan
The
 
Deferred
 
Contingent
 
Capital
 
Plan
 
(the
 
DCCP)
 
is a
 
key
 
component of
 
our
 
compensation
 
framework
 
and supports
alignment of the interests of our senior employees
 
with those of our stakeholders.
Generally,
 
all
 
employees
 
subject
 
to
 
deferral
 
requirements
 
receive
 
DCCP
 
awards.
 
For
 
the
 
2024
 
performance
 
year,
 
we
granted DCCP awards to 5,359 employees.
The DCCP is consistent with
 
many of the features of
 
the loss-absorbing bonds that we issue
 
to investors and may be
 
paid
at vesting in
 
cash or, at
 
the discretion
 
of the firm,
 
as a perpetual,
 
marketable additional
 
tier 1 (AT1) capital
 
instrument.
Employees can elect to have their DCCP awards denominated
 
in Swiss francs or US dollars.
DCCP awards vest in full after five years (longer deferral periods may apply for regulated employees). DCCP awards bear
notional
 
interest
 
paid
 
annually
 
(except
 
as
 
limited
 
by
 
regulation
 
for
 
MRTs),
 
subject
 
to
 
review
 
and
 
confirmation
 
by
 
the
Compensation
 
Committee.
 
The
 
notional interest
 
rate
 
for grants
 
in 2025
 
was
 
2.7%
 
for
 
awards
 
denominated
 
in
 
Swiss
francs and 7.05% for
 
awards denominated in
 
US dollars. These
 
interest rates are
 
based on the current
 
market rates for
similar AT1 capital instruments issued by the UBS Group.
Awards are forfeited if
 
a viability event occurs
 
(i.e. if FINMA notifies
 
the firm that the
 
DCCP awards must be
 
written down
to mitigate the risk of
 
an insolvency, bankruptcy or
 
failure of UBS) or if the
 
firm receives a commitment
 
of extraordinary
support from the public
 
sector that is necessary
 
to prevent such
 
an event. DCCP
 
awards are also
 
written down for
 
GEB
members if the Group’s CET1 capital ratio falls below 10% and
 
for all other employees if it falls below 7%.
In addition, GEB members forfeit 20% of DCCP awards for each loss-making year
 
during the vesting period. This means
100% of
 
the award
 
is subject
 
to risk
 
of forfeiture.
 
The forfeiture
 
features of
 
DCCP create
 
a strong alignment
 
with our
debt holders and support the sustainability of the firm.
Over
 
the
 
last
 
five
 
years,
 
USD 2.07bn
 
of
 
DCCP
 
awards
 
have
 
been
 
issued.
 
DCCP
 
contributes
 
to
 
the
 
Group’s
 
total
 
loss-
absorbing capacity (TLAC). Therefore, DCCP
 
awards not only support competitive pay but
 
also provide a loss absorption
buffer that
 
protects the
 
firm’s capital
 
position. The
 
following table
 
illustrates the
 
contribution of
 
the DCCP
 
to our
 
AT1
capital and the effect on our TLAC ratio.
›
Refer to the “Supplemental information” section of this
 
report for more information about performance award and personnel-
related expenses
›
Refer to the “Supplemental information” section of this
 
report for more information about longer vesting and clawback
 
periods
for MRTs and SMFs
Contribution of the Deferred Contingent Capital Plan to our loss-absorbing capacity
1
USD m, except where indicated
31.12.24
31.12.23
Deferred Contingent Capital Plan (DCCP), eligible
 
as high-trigger loss-absorbing additional
 
tier 1 capital
2,044
1,935
DCCP contribution to the total loss-absorbing capacity
 
ratio (%)
0.4
0.4
1 Refer to “Bondholder information” at ubs.com/investors for more information about the capital instruments of UBS Group
 
AG and UBS AG both on a consolidated and a standalone basis.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
224
Other variable compensation components
To
 
support hiring and retention, particularly at senior
 
levels, we may offer other compensation components
 
,
 
such as:
–
retention payments to key employees to induce them to stay, particularly during critical periods for the firm, such as a
sale or wind-down of a business;
–
on
 
a
 
limited
 
basis,
 
guarantees
 
that
 
may
 
be
 
required
 
to
 
attract
 
individuals
 
with
 
certain
 
skills
 
and
 
experience,
 
these
awards are fixed incentives subject to our standard deferral
 
rules and limited to the first full year of employment;
–
awards
 
granted to
 
employees hired
 
late in
 
the year
 
to replace
 
performance awards
 
that they
 
would have
 
earned at
their previous employer
 
but have foregone
 
by joining UBS, these
 
awards are generally
 
structured with the same
 
level
of deferral as for employees at a similar level at UBS; and
–
in exceptional cases,
 
sign-on awards
 
may be offered
 
to candidates to increase
 
the chances of them
 
accepting our offer.
These other variable compensation components
 
are subject to a comprehensive governance
 
process, which may involve
the Compensation Committee, depending on the amount
 
or type of such payments.
Employees outside of
 
the GEB that
 
are made redundant
 
may receive severance
 
payments. Our severance
 
terms comply
with the applicable local laws (legally obligated severance). In certain locations, we may provide severance packages that
are negotiated with
 
our local social
 
partners and may
 
go beyond the
 
applicable minimum
 
legal requirements (standard
severance).
 
Such payments
 
are
 
governed
 
by
 
location-specific
 
severance
 
policies.
 
In
 
addition,
 
we
 
may
 
make
 
severance
payments that exceed legally obligated or standard severance payments where we believe these are aligned with market
practice
 
and
 
appropriate
 
under
 
the
 
circumstances
 
(supplemental
 
severance).
 
GEB
 
members
 
do
 
not
 
receive
 
severance
payments.
Replacement awards and forfeitures
In line with
 
industry practice, our
 
compensation framework
 
and plans include
 
provisions generally
 
requiring reduction
 
/
forfeiture of a terminated employee’s unvested or deferred awards. In particular, these provisions apply if the terminated
employee joins another financial services organization and /
 
or violates restrictive covenants, such as solicitation of clients
or employees.
 
Conversely, to attract
 
external top talent,
 
market practice dictates
 
that we consider
 
replacing their forfeited
 
compensation
from their
 
prior employer.
 
In select
 
situations and
 
based on
 
careful consideration,
 
we replace
 
the lost compensation
 
of
senior hires. The replacement
 
awards are subject to
 
UBS’s harmful acts provisions.
 
Their value is subject
 
to independent
review as part of the “Report of the statutory auditor on
 
the compensation report” to support the like-for-like
 
nature of
the replacement and to confirm that these awards do not
 
represent sign-on payments (i.e. there are no golden hellos).
Based on a
 
thorough review of
 
available documentation, we aim
 
to mirror the
 
type, conditions and
 
timing of the
 
forfeited
compensation,
 
based
 
on
 
actual
 
facts
 
and
 
circumstances.
 
Replacement
 
awards
 
can
 
include
 
cash
 
payments
 
and
 
/
 
or
deferred awards,
 
including EOP share
 
awards and DCCP
 
awards. Where payments
 
are made in
 
cash, there is typically
 
a
clawback period if
 
the employee leaves
 
UBS voluntarily within
 
12 months of the
 
start of employment.
 
The replacement
awards do not exceed the
 
commercial or fair value
 
of the compensation actually
 
forfeited by the individual
 
and, in case
of GEB
 
members, are
 
disclosed transparently.
 
The total
 
2024 forfeitures
 
of USD 256m
 
of previously
 
awarded deferred
compensation offset the 2024 total sign-on payments, replacement
 
payments and guarantees of USD 144m.
Sign-on payments, replacement payments, guarantees and severance payments
Total 2024
of which: non-deferred
cash
of which: deferred
compensation
awards
Total 2023
Number of beneficiaries
USD m, except where indicated
2024
2023
Total sign-on payments
1
 
0
 
0
 
0
 
0
 
0
 
0
of which: Key Risk Takers
2
 
0
 
0
 
0
 
0
 
0
 
0
Total replacement payments
3
 
108
 
17
 
92
 
145
 
244
 
422
of which: Key Risk Takers
2
 
30
 
4
 
25
 
65
 
10
 
34
Total guarantees
4
 
36
 
17
 
19
 
71
 
21
 
39
of which: Key Risk Takers
2
 
21
 
9
 
12
 
51
 
4
 
15
Total severance payments
1,5
 
735
 
735
 
0
 
485
 
5,696
 
4,389
of which: Key Risk Takers
2
 
5
 
5
 
0
 
7
 
21
 
34
1 GEB members are
 
not eligible for sign-on
 
or severance payments.
 
Sign-on awards exclude
 
one-time payments for
 
junior associate hires into
 
the Investment Bank. Including
 
these, the total
 
sign-on payments are
USD 1m for 2024 and USD 4m for 2023. All one-time payments for junior associate hires are subject to a 12-month clawback condition.
 
2 Expenses for Key Risk Takers are full-year
 
amounts for individuals in office
on 31 December 2024. Key Risk Takers as defined by UBS, including all employees with a total compensation exceeding USD / CHF 2.5m (highly paid employees).
 
3 No GEB member received a replacement payment
in 2024 and 2023. Total
 
amounts include awards granted
 
to employees hired late in
 
the year to replace performance
 
awards that they would
 
have earned at their previous
 
employers, but have foregone
 
by joining
UBS.
 
4 No GEB member received a guarantee in 2024 or 2023.
 
5 Includes legally obligated and standard severance payments,
 
as well as payments in lieu of notice.
 
 
 
 
 
 
 
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
225
Forfeitures
1
Total 2024
Total 2023
USD m, except where indicated
Total forfeitures
 
256
 
1,903
of which: former GEB members
 
0
 
0
of which: Key Risk Takers
2
 
2
 
293
1 For notional share awards,
 
forfeitures are calculated as units forfeited
 
during the year,
 
valued at the share price on
 
31 December 2024 (USD 30.32)
 
for 2024. The 2023 data
 
is valued using the share
 
price on 29
December 2023 (USD 30.90) except for CS Legacy Awards. For LTIP the forfeited units reflect the fair value awarded at grant. For the notional funds awarded to Asset Management employees under the AM EOP/FOP
in 2024 and 2023, and CS
 
Legacy notional funds for 2024,
 
this represents the fair value
 
at the time of the employee
 
forfeiture. The
 
CS Legacy 2023 data, both
 
for notional share and fund
 
awards, were calculated
using value at grant and included
 
the explicit adjustments resulting from the cancellation
 
and reduction order issued by the Federal
 
Department of Finance (FDF) of Switzerland. For
 
the DCCP,
 
the fair value at grant
of the forfeited
 
awards during
 
the year is
 
reflected. All
 
values shown
 
exclude DCCP interest
 
and CCA
 
coupon forfeitures.
 
Value also
 
excludes the
 
forfeited CS
 
Legacy Plan Strategic
 
Delivery Plan Uplift.
 
Numbers
presented may differ from the effect on the
 
income statement in accordance with IFRS.
 
2 Key Risk Takers
 
as defined by UBS, including all employees
 
with a total compensation exceeding USD /
 
CHF 2.5m (Highly
Paid Employees) and excluding former GEB members who forfeited awards in 2024 or 2023.
Employee share ownership
Employee share
 
ownership is
 
encouraged and,
 
in addition
 
to our mandatory
 
deferred share-based
 
compensation plans
LTIP and
 
EOP,
 
made
 
possible
 
through
 
our Equity
 
Plus
 
Plan
 
(EPP).
 
The
 
EPP
 
is our
 
employee
 
share
 
purchase
 
program.
 
It
allows
 
employees
 
up
 
to
 
Executive
 
Director
 
level
 
to
 
voluntarily
 
invest
 
up
 
to
 
30%
 
of
 
their
 
base
 
salary
 
and / or
 
regular
commission payments to
 
purchase UBS shares.
 
In addition (where
 
offered), eligible
 
employees can invest
 
up to 35%
 
of
their performance award under the program. Participation
 
in the program is capped at USD / CHF 20,000 annually.
 
Eligible employees may
 
purchase UBS
 
shares at market
 
price and receive,
 
at no additional
 
cost, one additional
 
notional
share
 
for
 
every
 
three
 
shares
 
purchased
 
through
 
the
 
program.
 
Additional
 
shares
 
vest
 
after
 
a
 
maximum of
 
three
 
years,
provided the employee remains employed by UBS and has retained the purchased shares throughout the holding period.
On
 
31
 
December
 
2024,
 
employees
 
held
 
at
 
least
 
USD 7.1bn
 
of
 
UBS
 
shares
 
(of
 
which
 
approximately
 
USD 4.8bn
 
were
unvested), representing approximately
 
6.8% of our total
 
shares issued. These figures
 
are based on known
 
shareholding
information from employee
 
participation plans, personal
 
holdings with UBS and
 
selected individual retirement
 
plans. At
the end of 2024, at least 26% of all employees held UBS
 
shares through the firm’s employee share participation
 
plans.
›
Refer to “Note 27 Employee benefits: variable
 
compensation” in the “Consolidated financial statements”
 
section of this report for
more information
Compensation for US financial advisors in Global Wealth
 
Management
In line with market practice for US wealth management businesses, the compensation for US financial advisors in Global
Wealth Management consists
 
of cash compensation, determined
 
using a formulaic approach
 
based on production, and
deferred awards. The
 
compensation approach for
 
US financial advisors is set
 
in the context of local
 
market practice and
is regularly reviewed for competitiveness
 
by the Compensation Committee.
The monthly
 
cash compensation
 
is determined
 
using an
 
overall percentage
 
rate for
 
each financial
 
advisor.
 
It reflects
 
a
percentage
 
of
 
the
 
compensable
 
production
 
that
 
each
 
financial
 
advisor
 
generates
 
during
 
that
 
month.
 
Compensable
production is generally based
 
on transaction revenue and investment
 
advisory fees and may reflect
 
further adjustments.
The
 
percentage
 
rate
 
generally
 
varies
 
based
 
on
 
the
 
level
 
of
 
the
 
production
 
and
 
firm
 
tenure,
 
supporting
 
growth
 
and
alignment with the investment strategy and goals of our
 
clients.
Financial advisors may
 
also be granted
 
deferred awards. These amounts
 
generally vest over
 
a six-year period.
 
The deferred
awards
 
may take into account the overall percentage rate
 
and production, as previously outlined.
Cash compensation and deferred awards may be reduced for,
 
among other things, errors, negligence or carelessness, or
failure to
 
comply with
 
the firm’s
 
rules, standards,
 
practices and
 
/ or
 
policies, and
 
/ or
 
applicable laws
 
and regulations.
Similar as with our deferred compensation plans,
 
any cash compensation or deferred awards for US financial advisors
 
are
subject to harmful acts provisions.
Financial
 
advisors
 
may
 
also
 
participate
 
in additional
 
programs
 
to
 
support
 
promoting
 
and developing
 
their
 
business
 
or
supporting the transition of client relationships where
 
appropriate.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
226
2024 Group performance outcomes
Performance
 
awards granted
 
for the 2024
 
performance year
 
The “Variable
 
compensation” table
 
below shows
 
the amount
 
of variable
 
compensation awarded
 
to employees
 
for the
2024 performance year, together with
 
the number
 
of beneficiaries for
 
each type of
 
award granted. In
 
the case
 
of deferred
awards,
 
the
 
final
 
amount
 
paid
 
to
 
an
 
employee
 
depends
 
on
 
performance
 
conditions
 
and
 
consideration
 
of
 
relevant
forfeiture
 
provisions.
 
The deferred
 
share
 
award
 
amount is
 
based on
 
the market
 
value of
 
these awards
 
on the
 
date of
grant.
 
Variable compensation
Expenses recognized
in the IFRS
Accounting
Standards income
statement
Expenses deferred to
future periods
1
Adjustments
1
Total
Number of beneficiaries
2
USD m, except where indicated
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
Non-deferred cash
 
3,290
 
2,859
 
0
 
0
 
2
 
333
3
 
3,292
 
3,192
 
94,086
 
97,265
Deferred compensation awards
 
563
 
523
 
813
 
777
 
30
 
27
 
1,406
 
1,327
 
5,517
 
5,489
of which: Equity Ownership Plan
 
180
 
155
 
280
 
263
 
42
4
 
33
4
 
501
 
452
 
4,228
 
4,177
of which: Deferred Contingent Capital Plan
 
197
 
180
 
336
 
312
 
0
 
0
 
533
 
493
 
5,378
 
5,448
of which: Long-Term Incentive Plan
 
161
 
164
 
166
 
160
 
(12)
5
 
(6)
5
 
314
 
318
 
948
 
954
of which: Fund Ownership Plan
 
26
 
24
 
32
 
41
 
0
 
0
 
58
 
65
 
360
 
371
Variable compensation – performance award pool
 
3,853
 
3,382
 
813
 
777
 
32
 
360
 
4,698
 
4,519
 
94,105
 
97,290
Variable compensation – financial advisors
6
 
4,485
 
3,761
 
1,028
 
1,236
 
0
 
0
 
5,512
 
4,997
 
5,812
 
5,804
Variable compensation – other
7
 
539
 
784
 
229
 
384
 
(175)
8
 
(190)
8
 
593
 
978
Total variable compensation
 
8,876
 
7,927
 
2,070
 
2,398
 
(143)
 
170
 
10,803
 
10,495
1 Estimates as of 31 December 2024 and 2023. Actual amounts to be expensed in
 
future periods may vary; e.g. due to forfeiture
 
of awards.
 
2 Excludes number of beneficiaries who received awards that form part
of Variable compensation – other.
 
3 Includes the 2023 cash bonus liability recognized as of the
 
date of the acquisition of Credit Suisse, of USD 351m, relating to pre-acquisition service as well as
 
currency translation
adjustments.
 
4 Represents estimated post-vesting transfer restriction and permanent forfeiture discounts.
 
5 Net adjustments for LTIP are USD -12m (2023: USD -6m) and include the estimated
 
amounts for (i) the
difference of USD -66m (2023:
 
USD -53m) between the
 
IFRS 2 expense and
 
the communicated value
 
included in the performance
 
award pool, and
 
(ii) the post-vesting transfer
 
restriction and permanent
 
forfeiture
discounts of USD 54m (2023: USD 47m).
 
6 Financial advisor compensation consists of cash
 
compensation, determined using a formulaic approach based
 
on production, and deferred awards. It also includes
 
expenses
related to compensation commitments with financial advisors
 
entered into at the time of recruitment that
 
are subject to vesting requirements.
 
7 Consists of retention awards granted
 
to Credit Suisse employees to
support the completion of the transaction and
 
the early phase of the integration, replacement
 
payments, forfeiture credits, severance
 
payments, retention plan payments and
 
interest expense related to the Deferred
Contingent Capital
 
Plan.
 
8 Included
 
in expenses
 
deferred to
 
future periods
 
is an
 
amount of
 
USD 175m (2023:
 
USD 190m) in
 
interest expense
 
related to
 
the Deferred
 
Contingent Capital
 
Plan. As
 
the amount
recognized as performance award represents the present value of the award at the date it is granted
 
to the employee, this amount is excluded.
2024
performance award pool and expenses
The performance
 
award pool,
 
which includes
 
performance-based variable
 
awards for
 
2024, was
 
USD 4.7bn, reflecting
an increase of
 
4% compared with
 
2023. Performance award expenses
 
for 2024 increased
 
to USD 4.5bn, reflecting higher
performance
 
award
 
expenses
 
accrued
 
in
 
the
 
performance
 
year
 
mainly
 
driven
 
by
 
the
 
consolidation
 
of
 
Credit
 
Suisse
expenses for the full
 
period. The “Performance award pool
 
and expenses” table below compares
 
the performance award
pool with performance award expenses.
Performance award pool and expenses
USD m, except where indicated
2024
2023
% change
Performance award pool
1
 
4,698
 
4,519
 
4
of which: expenses deferred to future periods and adjustments
2,3
 
845
 
1,137
 
(26)
Performance award expenses accrued in the performance year
 
3,853
 
3,382
 
14
Performance award expenses related to prior performance years
 
603
 
604
 
0
Total performance award expenses recognized for the year
4
 
4,456
 
3,986
 
12
1 Excluding employer-paid taxes and
 
social security.
 
2 Estimate as of the end of the performance
 
year. Actual amounts
 
expensed in future periods
 
may vary, e.g.
 
due to forfeiture of awards.
 
3 Refer to details in
the preceding "Variable
 
compensation" table
 
for more
 
information.
 
4 Refer to
 
“Note 27 Employee
 
benefits: variable
 
compensation” in
 
the “Consolidated
 
financial statements”
 
section of
 
this report
 
for more
information.
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
227
Compensation for the Board of Directors
Chairman of the BoD
Under the
 
leadership
 
of the
 
Chairman,
 
Colm Kelleher
 
,
 
the BoD
 
determines,
 
among
 
other things,
 
the
 
strategy
 
for the
Group,
 
based on recommendations by the Group CEO, exercises ultimate supervision over management and
 
appoints all
GEB members.
The Chairman leads
 
all general meetings
 
and BoD meetings
 
and works with
 
the committee Chairpersons
 
to coordinate
the work of all BoD committees.
 
Together with the Group CEO, the Chairman is responsible for effective communication
with
 
shareholders
 
and
 
stakeholders,
 
including
 
clients,
 
government
 
officials,
 
regulators
 
and
 
public
 
organizations.
 
The
Chairman works closely with the
 
Group CEO and other GEB members,
 
providing advice and support when
 
appropriate,
and
 
continues
 
to
 
strengthen
 
and
 
promote
 
our
 
culture
 
through
 
the
 
three
 
keys
 
to
 
success:
 
our
Pillars,
 
Principles
 
and
Behaviors.
As an independent
 
director, the Chairman’s
 
total compensation for
 
the period from
 
Annual General Meeting
 
(AGM) to
AGM consists of a
 
fixed fee without any variable
 
component, which is delivered 50%
 
in cash and 50%
 
in shares (blocked
for four years). For the current period, from the 2024 AGM to the 2025
 
AGM, his fixed fee was CHF 5.5m and consisted
of a cash payment of CHF 2.75m
 
and a share component of CHF 2.75m, consisting of
 
90,675 UBS shares at CHF 30.328
per share. The share
 
component aligns the Chairman’s pay
 
with the Group’s long-term performance.
 
The Chairman does
not receive performance awards, severance payments or pension contributions in addition to his
 
fixed fee, but, given the
full-time nature of his role, he is eligible for employee conditions
 
on UBS products and services.
›
Refer to “Board of Directors” in the “Corporate governance”
 
section of this report for more information about the responsibilities
of the Chairman
Vice Chairman of the BoD
As the Vice Chairman of the BoD, Lukas Gähwiler leads the
 
BoD in the absence of the Chairman and, together with
 
the
Senior Independent Director, he also
 
supports the Chairman in all aspects
 
of corporate governance and oversight
 
across
the Group.
 
In particular,
 
he represents
 
UBS across
 
a broad
 
range of
 
associations and
 
industry bodies
 
in Switzerland.
 
In
2023, Lukas Gähwiler
 
took on additional
 
responsibilities as the
 
chairman of the
 
board of Credit
 
Suisse AG, a
 
subsidiary
of
 
UBS
 
Group
 
AG.
 
This
 
nomination
 
was
 
critical
 
to
 
providing
 
strong
 
governance
 
and
 
oversight
 
of
 
the
 
subsidiary,
 
in
 
a
manner consistent and in compliance with UBS Group AG governance principles,
 
and also to facilitate the integration of
Credit Suisse AG
 
into UBS. Mr.
 
Gähwiler held this
 
mandate until the
 
completion of the legal
 
merger of UBS
 
AG and Credit
Suisse AG on 31 May 2024.
The Vice Chairman’s total
 
compensation for his
 
services in the UBS
 
Group AG Board
 
for the period from
 
AGM to AGM
consists of a fixed
 
fee without any variable
 
component, which is delivered
 
50% in cash and
 
50% in shares (blocked
 
for
four years). For
 
the current period,
 
from the 2024
 
AGM to the
 
2025 AGM, his
 
fixed fee was
 
CHF 1.5m, excluding benefits
and pension
 
fund contributions.
 
The fixed
 
fee consisted
 
of a
 
cash payment
 
of CHF 0.75m
 
and a
 
share component
 
of
CHF 0.75m, consisting of 24,729 UBS shares at CHF 30.328 per
 
share.
As a non-independent director,
 
Mr. Gähwiler is entitled
 
to pension fund contributions
 
and benefits. Including
 
these, his
total reward for his service as Vice Chairman for the current
 
period was CHF 1,869,051.
Serving
 
in a
 
subsidiary
 
board
 
continued
 
to be
 
a
 
substantial
 
increase
 
in the
 
scope,
 
responsibility
 
and complexity
 
of his
mandate and was critical to supporting the integration. Therefore, Mr. Gähwiler is entitled to
 
receive an additional board
member fee for his role as
 
Chairman of Credit Suisse AG,
 
which consists of a fixed fee
 
without any variable component
and is delivered
 
100% in cash.
 
For the current
 
period, from the
 
2024 AGM to
 
the date of
 
the completion of
 
the legal-
entity merger between Credit Suisse AG and UBS AG, his pro-rated
 
total fee for his services as chairman of the board of
Credit Suisse AG was CHF 250,000.
The Vice
 
Chairman is
 
not eligible
 
for performance
 
awards, severance
 
terms or
 
supplementary contributions
 
to pension
plans. The
 
pension contributions
 
and benefits
 
for the
 
Vice Chairman,
 
in his
 
capacity as
 
non-independent
 
director, are
consistent with all UBS employees and aligned with local
 
market practice.
›
Refer to “Board of Directors” in the “Corporate governance”
 
section of this report for more information about the responsibilities
of the Vice Chairman
›
Refer to the “Say-on-pay” section of this report for
 
more information about compensation-related proposals at the
 
AGM 2025
 
ubs-20241231p252i0
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
228
Other BoD members
Other BoD members receive fixed
 
base fees for their services
 
on the BoD and its committees.
 
These fees are unchanged
from the last AGM-to-AGM period. BoD members
 
do not receive performance awards,
 
severance payments, benefits or
pension contributions (the benefit eligibility of the Chairman
 
and that of the Vice Chairman are described above).
BoD members
 
other than
 
the Chairman
 
and the
 
Vice Chairman
 
receive at
 
minimum 50%
 
of their
 
fees in
 
UBS shares,
which are
 
blocked for
 
four
 
years, and
 
they may
 
elect to
 
receive up
 
to 100%
 
of their
 
fees in
 
blocked UBS
 
shares. The
number of shares is calculated based on the average closing price of the 10 trading days leading up to and including the
grant date.
Since 2023, in order
 
to facilitate the
 
integration of Credit
 
Suisse into UBS, two
 
independent BoD members
 
have served
on the boards of directors of significant subsidiary
 
entities. UBS Group AG Board members who have additional roles on
the boards of significant
 
subsidiary entities receive
 
respective fees for the
 
significant increase in the
 
scope, responsibility
and complexity of their mandates.
 
These fees are aligned with other
 
non-executive directors of the respective
 
subsidiary
entities. The total remuneration of other UBS Group AG members, including fees from subsidiaries, is summarized in the
“Remuneration details and additional information for BoD members”
 
table below.
At
 
each
 
AGM,
 
shareholders
 
are
 
invited
 
to
 
approve
 
the
 
aggregate
 
amount
 
of
 
BoD
 
remuneration,
 
including
 
the
compensation for the Chairman
 
and Vice Chairman, which
 
applies until the next
 
AGM. The chart
 
and the tables below
provide details on the fee structure for the BoD members.
Approval governance for BoD compensation
The
 
Chairperson
 
of
 
the
 
Compensation
 
Committee
 
proposes
 
and
 
the
 
Compensation
 
Committee
 
approves
 
the
compensation of the Chairman
 
and that of the
 
Vice Chairman annually for
 
the upcoming AGM-to-AGM
 
period, taking
into consideration fee or compensation
 
levels for comparable roles based
 
on our core financial industry peers
 
and other
relevant leading Swiss companies included in the Swiss
 
Market Index.
The fee
 
structure for
 
the other
 
BoD members
 
is reviewed
 
annually based on
 
the Chairman’s
 
proposal to
 
the Compensation
Committee, which in turn submits a proposal to the BoD for approval. In our regular review of the BoD
 
fee structure, we
concluded that our overall approach for BoD member
 
compensation remains appropriate and therefore
 
unchanged.
›
Refer to “Compensation Governance” in the
 
“Compensation philosophy and governance”
 
section of this report for more
information about the remuneration responsibilities of the BoD
 
and Compensation Committee
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
229
Audited |
Remuneration details and additional information for BoD members
Period 2024 AGM to 2025 AGM
CHF, except where indicated
Name, function
1
Audit Committee
Compensation Committee
Corporate Culture and
Responsibility Committee
Governance and Nominating
Committee
Risk
Committee
Base fee
Committee
fee(s)
Additional
payments
2
Benefits
3
Total
4
Share
percentage
5
Number of
shares
6,7
Subsidiary
entity board
fees
Total
including
subsidiary
fees
 
Colm Kelleher,
 
Chairman
8
C
C
 
5,500,000
 
16,915
 
5,516,915
 
50
 
90,675
 
5,516,915
Lukas Gähwiler, Vice
Chairman
8
M
M
 
1,500,000
 
369,051
 
1,869,051
 
50
 
24,729
 
250,000
 
2,119,051
Jeremy Anderson, Senior
Independent Director
C
M
 
300,000
 
400,000
 
150,000
 
850,000
 
50
 
14,013
 
368,755
 
1,218,755
Claudia Böckstiegel, member
M
 
300,000
 
50,000
 
350,000
 
50
 
5,770
 
350,000
William C. Dudley, member
M
M
 
300,000
 
250,000
 
550,000
 
50
 
9,067
 
550,000
Patrick Firmenich, member
M
M
 
300,000
 
250,000
 
550,000
 
100
 
13,432
 
550,000
Fred Hu, member
M
M
 
300,000
 
200,000
 
500,000
 
100
 
12,206
 
500,000
Mark Hughes, member
M
C
 
300,000
 
400,000
 
700,000
 
50
 
11,540
 
210,607
 
910,607
Gail Kelly, member
M
 
300,000
 
100,000
 
400,000
 
50
 
6,594
 
400,000
Nathalie Rachou, member
M
M
 
300,000
 
300,000
 
600,000
 
50
 
9,891
 
600,000
Julie G. Richardson, member
C
M
 
300,000
 
400,000
 
700,000
 
50
 
11,540
 
700,000
Jeanette Wong, member
M
M
 
300,000
 
300,000
 
600,000
 
100
 
14,658
 
600,000
Aggregate of all BoD members 2024/2025
13,185,966
14,015,328
Aggregate of all BoD members 2024/2025 in USD (for reference)
9
15,022,659
15,967,544
Period 2023 AGM to 2024 AGM
CHF, except where indicated
Name, function
1
Audit Committee
Compensation Committee
Corporate Culture and
Responsibility Committee
Governance and
Nominating Committee
Risk Committee
Base fee
Committee
fee(s)
Additional
payments
2
Benefits
3
Total
4
Share
percentage
5
Number of
shares
6,7
Subsidiary
entity board
fees
Total
including
subsidiary
fees
 
Colm Kelleher,
 
Chairman
8
C
C
 
4,700,000
 
12,830
 
4,712,830
 
50
 
96,173
 
4,712,830
Lukas Gähwiler, Vice
Chairman
8
M
M
 
1,500,000
 
381,368
 
1,881,368
 
50
 
30,693
 
1,000,000
 
2,881,368
Jeremy Anderson, Senior
Independent Director
C
M
 
300,000
 
400,000
 
150,000
 
850,000
 
100
 
26,624
 
893,215
 
1,743,215
Claudia Böckstiegel, member
M
 
300,000
 
50,000
 
350,000
 
50
 
7,161
 
350,000
William C. Dudley, member
M
M
 
300,000
 
250,000
 
550,000
 
50
 
11,254
 
550,000
Patrick Firmenich, member
M
M
 
300,000
 
250,000
 
550,000
 
100
 
16,672
 
550,000
Fred Hu, member
M
 
300,000
 
100,000
 
400,000
 
100
 
12,105
 
400,000
Mark Hughes, member
M
C
 
300,000
 
400,000
 
700,000
 
50
 
14,323
 
795,677
 
1,495,677
Nathalie Rachou, member
M
M
 
300,000
 
300,000
 
600,000
 
50
 
12,277
 
600,000
Julie G. Richardson, member
C
M
 
300,000
 
400,000
 
700,000
 
50
 
14,323
 
700,000
Dieter Wemmer, member
M
M
 
300,000
 
300,000
 
600,000
 
100
 
23,549
 
600,000
Jeanette Wong, member
M
M
 
300,000
 
300,000
 
600,000
 
100
 
18,194
 
600,000
Aggregate of all BoD members 2023/2024
 
12,494,198
 
15,183,090
Legend: C = Chairperson of the respective Committee, M = Member
 
of the respective Committee
1 Twelve BoD members were
 
in office on 31 December 2024 and on
 
31 December 2023.
 
2 These payments are associated with
 
the Senior Independent Director role.
 
3 For the period from the
 
2024 AGM to the
2025 AGM, benefits
 
amount is an
 
estimate. For
 
the Vice Chairman,
 
the benefits include
 
the portion related to
 
UBS’s contribution
 
to the statutory
 
pension scheme.
 
4 Excludes UBS’s
 
portion related to
 
the legally
required social security contributions, which for the period from the 2024 AGM to the 2025 AGM (including the Chairman, Vice Chairman and UBS Group
 
AG members with a role in subsidiaries) is estimated at grant
at CHF 753,000 and which for the period from the 2023 AGM to the 2024 AGM was estimated at grant at CHF 1,000,000. The
 
legally required social security contributions paid by the independent BoD members are
included in the amounts shown
 
in this table, as
 
appropriate.
 
5 For the Chairman
 
and Vice Chairman, fees
 
are paid 50% in cash
 
and 50% in blocked
 
UBS shares. Other BoD
 
members receive at minimum
 
50% of
their fees in UBS shares, which are blocked for four years.
 
6 For 2024, UBS shares were valued at CHF 30.328 (average closing price of UBS shares over the last 10 trading days leading up to and including the grant
date). For 2023, UBS shares were
 
valued at CHF 24.435 (average closing price
 
of UBS shares over the
 
last 10 trading days leading up
 
to and including the grant date).
 
These shares are blocked for four years.
 
7 Number
of shares is reduced in
 
case of the 100%
 
election to deduct legally required
 
contributions. All remuneration
 
payments are, where
 
applicable, subject to social
 
security contributions and / or
 
withholding tax.
 
8 The
Chairman and the Vice Chairman do not receive committee fees in addition to
 
their annual fixed fee.
 
9 Swiss franc amounts have been translated into US dollars for reference at the 2024
 
performance award currency
exchange rate of CHF / USD 1.139291.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
230
Supplemental information
Fixed and variable compensation for GEB
 
members
 
Fixed and variable compensation for GEB members
1,2,3
Total for 2024
Not deferred
Deferred
4
Total for 2023
CHF m, except where indicated
Amount
%
Amount
%
Amount
%
Amount
Total compensation
Amount
5
 
140
 
100
 
52
 
37
 
88
 
63
 
137
Number of beneficiaries
 
20
 
18
Fixed compensation
5,6
 
25
 
18
 
25
 
100
 
0
 
0
 
29
Cash-based
 
25
 
18
 
27
Equity-based
 
0
 
0
 
2
Variable compensation
 
114
 
82
 
26
 
23
 
88
 
77
 
108
Cash
7
 
26
 
19
 
21
Long-Term Incentive Plan (LTIP)
8
 
53
 
38
 
54
Deferred Contingent Capital Plan (DCCP)
8
 
34
 
25
 
33
1 The figures include all GEB members in office during
 
the respective years.
 
2 Includes compensation paid under the employment contract
 
during the notice period for GEB members who stepped down
 
during the
respective years.
 
3 Includes compensation for
 
newly appointed GEB members
 
for their time in
 
office as a GEB
 
member during the respective
 
years.
 
4 Based on the
 
specific plan vesting and
 
reflecting the total
award value at grant,
 
which may differ from the expense recognized in the income statement
 
in accordance with IFRS Accounting Standards.
 
5 Excludes benefits and employer’s
 
contributions to retirement benefit
plans. Includes social security contributions paid by GEB members but excludes the portion related to the legally required social security contributions paid by UBS.
 
6 Includes base salary and role-based allowances,
rounded to the nearest million.
 
7 Includes allocation of vested but blocked shares, in line with the remuneration section of the UK
 
Prudential Regulation Authority Rulebook.
 
8 For the GEB members who are also
MRTs or SMFs, the awards do not include dividend
 
and interest payments.
Regulated staff
Key Risk Takers
Key Risk
 
Takers (KRTs)
 
are defined
 
as those
 
employees that,
 
by the
 
nature of
 
their roles, have
 
been determined
 
to materially
set, commit or control significant
 
amounts of the firm’s resources and / or
 
exert significant influence over its
 
risk profile.
This includes employees
 
working in front-office
 
roles, logistics and
 
control functions. Identifying
 
KRTs globally is
 
part of
our risk control framework
 
and an important element
 
in ensuring we incentivize
 
only appropriate risk-taking. For
 
2024,
in addition
 
to GEB
 
members, 835
 
employees
 
were classified
 
as KRTs
 
throughout
 
the UBS
 
Group globally,
 
including all
employees
 
with
 
a
 
total
 
compensation
 
exceeding
 
USD
 
/
 
CHF 2.5m
 
(Highly
 
Paid
 
Employees),
 
who
 
may
 
not
 
have
 
been
identified as KRTs during the performance year.
 
In line
 
with regulatory
 
requirements, the
 
performance of
 
employees identified
 
as KRTs
 
during the
 
performance
 
year is
evaluated by the control functions. In addition,
 
KRTs’ performance awards are subject to a
 
mandatory deferral rate of at
least
 
50%,
 
regardless
 
of
 
whether
 
the
 
deferral
 
threshold
 
has
 
been
 
met
 
(excluding
 
KRTs
 
with
 
de
 
minimis
 
performance
awards below a predetermined threshold
 
where standard deferral
 
rates apply). Consistent with all other
 
employees, the
deferred portion of a KRT’s compensation is also subject
 
to forfeiture or reduction if the KRT commits harmful acts.
Fixed and variable compensation for Key Risk Takers
1
Total for 2024
Not deferred
Deferred
2
Total for 2023
3
USD m, except where indicated
Amount
%
Amount
%
Amount
%
Amount
Total compensation
Amount
 
1,705
 
100
 
1,037
 
61
 
667
 
39
 
1,801
Number of beneficiaries
 
835
 
1,038
Fixed compensation
3,4
 
550
 
32
 
550
 
100
 
0
 
0
 
668
Cash-based
 
547
 
32
 
547
 
0
 
665
Equity-based
 
3
 
0
 
3
 
0
 
3
Variable compensation
 
1,155
 
68
 
488
 
42
 
667
 
58
 
1,133
Cash
5
 
488
 
29
 
488
 
479
Long-Term Incentive Plan (LTIP) / Equity Ownership
Plan (EOP) / Fund Ownership Plan (FOP)
6
 
401
 
24
 
401
 
396
Deferred Contingent Capital Plan (DCCP)
6
 
266
 
16
 
266
 
258
1 Includes employees with a total compensation exceeding USD / CHF 2.5m (Highly Paid Employees), excludes payments made to individuals related to their time as GEB member.
 
2 Based on the specific plan vesting
and reflecting the total
 
value at grant,
 
which may differ from
 
the expense recognized in
 
the income statement in
 
accordance with IFRS Accounting
 
Standards.
 
3 Excludes benefits
 
and employer’s
 
contributions to
retirement benefits plan. Includes social security contributions paid by KRTs but
 
excludes the legally required social security contributions paid by UBS.
 
4 Includes base salary and role-based allowances.
 
5 Includes
allocation of vested but blocked shares, in line with regulatory requirements where applicable.
 
6 KRTs who are also MRTs do not receive dividend and interest
 
payments.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
231
Deferred compensation of the GEB and KRTs
The
 
table
 
below
 
shows
 
the
 
current
 
economic
 
value
 
of
 
unvested
 
outstanding
 
deferred
 
variable
 
compensation
 
awards
subject to ex post
 
adjustments. For share-based plans, the economic value is
 
determined based on the closing share price
on 31
 
December
 
2024. For
 
notional funds,
 
it is
 
determined
 
using
 
the
 
latest
 
available
 
market
 
price
 
for
 
the
 
underlying
funds at the end of 2024, and for deferred
 
cash plans, it is determined based on the outstanding
 
amount of cash owed
to award recipients.
Deferred compensation of the GEB and KRTs
1,2,3
USD m, except where indicated
Relating to awards
for 2024
4
Relating to
awards for prior
years
5
Total
of which: exposed to
ex post explicit and /
 
or implicit adjustments
Total deferred
compensation
year-end 2023
Total amount of
deferred compensation
distributed in 2024
6
GEB
Deferred Contingent Capital Plan
 
39
 
146
 
185
 
100%
 
153
 
26
Equity Ownership Plan (including notional funds
and Credit Suisse legacy plans)
 
0
 
43
 
43
 
100%
 
57
 
28
Long-Term Incentive Plan
 
61
 
274
 
335
 
100%
 
322
 
92
KRTs
Deferred Contingent Capital Plan
 
266
 
920
 
1,186
 
100%
 
1,183
 
153
Equity Ownership Plan (including notional funds)
 
169
 
894
 
1,063
 
100%
 
1,527
 
479
Long-Term Incentive Plan
 
232
 
290
 
522
 
100%
 
393
 
97
Credit Suisse legacy plans
 
0
 
104
 
104
 
100%
 
195
 
54
Total GEB and KRTs
 
767
 
2,670
 
3,438
 
3,830
 
929
1 Based
 
on the
 
specific plan
 
vesting and
 
reflecting the
 
economic value
 
of the
 
outstanding awards,
 
which may
 
differ from
 
the expense
 
recognized in
 
the income
 
statement in
 
accordance with
 
IFRS. Year
 
-to-year
reconciliations would also need
 
to consider the impacts
 
of additional items including
 
off-cycle awards,
 
FX movements, population
 
changes, and dividend
 
equivalent reinvestments.
 
2 Refer to “Note 27
 
Employee
benefits: variable compensation” in the “Consolidated financial statements” section of this report for more information.
 
3 GEB members and KRTs who are also MRTs do not receive dividend and interest payments.
 
4 Where applicable, amounts are translated into US dollars at
 
the performance award currency exchange rate. LTIP values reflect the fair value awarded at grant.
 
5 Takes into account the ex post implicit adjustments,
given the share price movements since grant. Where applicable, amounts are translated from award currency into US dollars using FX rates as of 31 December 2024. LTIP values reflect the fair value awarded at grant.
 
6 Valued at distribution price and FX rate for all awards distributed in 2024 (this excludes
 
interests on DCCP).
The table below
 
shows the value
 
of actual ex
 
post explicit and
 
implicit adjustments to
 
outstanding deferred compensation
in the 2024 financial year for GEB members and KRTs.
Ex post adjustments
 
occur after
 
an award
 
has been
 
granted. Explicit
 
adjustments occur
 
when we
 
adjust compensation
by forfeiting deferred awards. Implicit adjustments are
 
unrelated to any action taken by the firm and occur as a result of
price movements that affect the value of an award.
GEB and KRTs
 
ex post explicit and implicit adjustments to deferred compensation
 
Ex post explicit adjustments
to unvested awards
1
Ex post implicit adjustments
to unvested awards
2
USD m
31.12.24
31.12.23
31.12.24
31.12.23
GEB
Deferred Contingent Capital Plan
 
0
 
0
 
0
 
0
Equity Ownership Plan (including notional funds and
 
Credit Suisse legacy
plans, if applicable)
 
0
 
(1)
 
13
 
25
Long-Term Incentive Plan
 
0
 
0
 
94
 
119
KRTs
Deferred Contingent Capital Plan
 
(1)
 
(2)
 
0
 
0
Equity Ownership Plan (including notional funds)
 
 
(1)
 
(6)
 
265
 
530
Long-Term Incentive Plan
 
0
 
0
 
99
 
82
Credit Suisse legacy plans
 
(1)
 
(285)
 
22
 
(108)
Total GEB and KRTs
 
(2)
 
(294)
 
492
 
648
1 For notional share awards,
 
ex post explicit adjustments are
 
calculated as units forfeited during
 
the year,
 
valued at the share
 
price on 31 December 2024
 
(USD 30.32) for 2024 (which
 
may differ from the expense
recognized in the income statement in accordance with IFRS). The
 
2023 data is valued using the share price on 31 December
 
2023 (USD 30.9). For LTIP,
 
the forfeited units reflect the fair value awarded at grant.
 
For
the notional funds awarded to Asset Management
 
employees under the AM EOP/FOP in 2024 and
 
2023, and CS Legacy notional funds for
 
2024, this represents the fair value
 
at the time of the employee
 
forfeiture.
For DCCP,
 
the fair value at grant of
 
the forfeited awards during the year
 
is reflected. Credit Suisse legacy
 
plan awards (including Credit Suisse notional
 
fund awards) for 2023 are calculated
 
using value at grant and
include the
 
explicit adjustments
 
resulting from
 
the cancellation
 
and reduction
 
order issued
 
by the
 
Federal
 
Department of
 
Finance (FDF)
 
of Switzerland.
 
All values
 
shown exclude
 
DCCP interest
 
and CCA
 
coupon
forfeitures.
 
2 Ex post implicit adjustments
 
for UBS shares are
 
calculated based on the
 
difference between the weighted
 
average grant date
 
fair value and the
 
share price at year-end.
 
The amount for
 
UBS and CS
legacy notional funds is calculated using the mark-to-market change during 2024 and
 
2023. For the GEB members who were appointed to the
 
GEB during 2024, awards have been fully reflected in the
 
GEB categories.
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
232
Material Risk Takers
For relevant EU- or
 
UK-regulated entities, we identify individuals who
 
are deemed to be Material
 
Risk Takers (MRTs) based
on sectorial
 
and /
 
or local
 
regulatory requirements,
 
including the
 
respective EU
 
Commission Delegated
 
Regulation, the
fifth iteration of
 
the EU Capital
 
Requirements Directive (CRD V)
 
and equivalent UK
 
requirements, as applicable. This
 
group
consists of senior management, risk takers, selected staff in control
 
or support functions and certain highly compensated
employees. For 2024, UBS identified 1,274 MRTs in relation
 
to its relevant EU or UK entities.
 
Subject to individual
 
or legal-entity level
 
proportionality considerations, variable
 
compensation awarded to
 
MRTs is subject
to additional deferral
 
and other requirements.
 
For CRD-relevant entities,
 
these include a
 
minimum deferral rate
 
of 40%
or 60% (depending
 
on role
 
/ variable
 
compensation level)
 
on performance
 
awards and
 
delivery of
 
at least
 
50% of
 
any
upfront performance award
 
in UBS
 
shares that
 
are vested
 
but blocked
 
for 12
 
months after grant.
 
Deferred awards
 
granted
to MRTs
 
under UBS’s
 
deferred compensation
 
plans for
 
their performance
 
in 2024
 
are subject
 
to 6-
 
or 12-month
 
post-
vesting blocking periods and do not pay out dividends or interest
 
during the deferral period.
Additionally, MRTs
 
are subject
 
to a
 
maximum ratio
 
between fixed
 
and variable
 
pay. Across
 
EU locations,
 
the maximum
variable to fixed compensation ratio is set to 200%, based
 
on approval through relevant shareholder votes.
 
For UK-regulated MRTs, the maximum ratio was
 
set by UBS taking into
 
account the business activities and prudential and
conduct risks
 
of the
 
relevant legal
 
entities. In
 
addition, the
 
maximum ratios
 
were set
 
considering the
 
scenario that
 
the
relevant legal entities might exceed their financial objectives, and to align with the ratios applicable for GEB members on
a communicated value basis.
The maximum ratio for all UK-regulated MRTs was approved
 
by the compensation committees of the relevant entities.
For up to seven years after
 
grant, performance awards granted to
 
MRTs are subject to clawback provisions,
 
which allow
the
 
firm
 
to
 
claim
 
repayment
 
of
 
both
 
the
 
upfront
 
and
 
the
 
vested
 
deferred
 
element
 
of
 
any
 
performance
 
award
 
if
 
an
individual is found to have contributed substantially to significant financial losses for
 
the Group or corporate structure in
scope, a material downward restatement of disclosed results,
 
or engaged in misconduct and / or failed to take expected
actions, thus contributing to significant reputational harm.
LTIP awards
 
granted to
 
UK MRTs
 
and
 
Senior Management
 
Functions (SMFs
 
)
 
are subject
 
to an
 
additional
 
non-financial
conduct-related metric as required by UK regulation.
UK Senior Managers and Certification Regime
The
 
Senior
 
Managers
 
and
 
Certification
 
Regime
 
(the
 
SMCR)
 
of
 
the
 
UK
 
Prudential
 
Regulation
 
Authority
 
and
 
Financial
Conduct Authority requires
 
that individuals with specified
 
responsibilities, performing
 
certain significant functions
 
and /
or those in certain other identified categories be designated
 
as SMFs.
Subject to de minimis and other compensation-related
 
considerations,
 
variable compensation
 
awards made to SMFs must
comply with specific requirements,
 
including longer deferral,
 
blocking and clawback periods.
 
The deferral period for SMFs
is seven years, with the deferred performance
 
awards vesting no faster than pro rata from years 3 to 7, except those that
have total compensation
 
below GBP 500,000 and variable incentive
 
accounting for less than 33% of total compensation,
for whom a five-year deferral period
 
(instead of a seven-year period) applies.
 
Such awards are also subject to a 12-month
post-vesting
 
blocking
 
period.
 
The
 
clawback
 
policy
 
for
 
SMFs
 
permits
 
clawback
 
for
 
up
 
to
 
10
 
years
 
from
 
the
 
date
 
of
performance award
 
grants (applicable if
 
an
 
individual is
 
subject to
 
an
 
investigation at
 
the end
 
of the
 
initial seven-year
clawback period).
 
All SMFs
 
are also MRTs
 
and, as such,
 
subject to
 
the same prohibitions
 
on dividend
 
and interest
 
payments.
Australian Material Risk Takers
 
For UBS
 
AG, Australia
 
Branch, we
 
identified individuals
 
who are
 
Australian Material
 
Risk Takers
 
(AUSMRTs
 
)
 
under the
new Australian Prudential
 
Regulation Authority Prudential Standard CPS
 
511 requirements, effective 1 January 2024.
 
The
Prudential Standard outlines that AUSMRTs
 
are individuals whose professional activities have a material potential
 
impact
on the entity’s risk profile, performance and long-term soundness. Variable compensation
 
for these individuals is subject
to additional deferral and
 
other requirements, which includes a minimum deferral rate
 
of 40%, minimum vesting periods
and harmful acts provisions.
Control functions and Group Internal Audit
Our
 
control
 
functions
 
must
 
be
 
independent
 
in
 
order
 
to
 
monitor
 
risk
 
effectively.
 
Therefore,
 
their
 
compensation
 
is
determined separately from the
 
revenue areas that they
 
oversee, supervise or monitor.
 
Their performance award pool is
based not on the performance
 
of these businesses, but
 
on the performance of
 
the Group as a
 
whole. We also
 
consider
other
 
factors,
 
such
 
as
 
how
 
effectively
 
the
 
function
 
has
 
performed
 
and
 
our
 
market
 
position.
 
Decisions
 
on
 
individual
compensation for
 
the senior
 
managers of
 
the control
 
functions are
 
made by
 
the function
 
heads and
 
approved
 
by the
Group CEO. Decisions on individual compensation for the members of Group Internal Audit (GIA) are made by the Head
GIA and
 
approved
 
by
 
the
 
Chairman.
 
Following
 
a
 
proposal
 
by
 
the
 
Chairman,
 
total
 
compensation
 
for
 
the
 
Head
 
GIA is
approved by the Compensation Committee.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
233
2024 Group personnel expenses
The
 
number
 
of
 
personnel
 
employed
 
as
 
of
 
31 December
 
2024
 
decreased
 
by
 
4,194
 
to
 
108,648
 
(full-time
 
equivalents)
compared with 31 December 2023.
The
 
table
 
below
 
shows
 
our
 
total
 
personnel
 
expenses
 
for
 
2024,
 
including
 
salaries,
 
pension
 
expenses,
 
social
 
security
contributions,
 
variable
 
compensation
 
and
 
other
 
personnel
 
costs.
 
Variable
 
compensation
 
includes
 
cash
 
performance
awards paid in 2025 for the 2024 performance year,
 
amortization of unvested deferred awards granted in previous years
and the cost of deferred awards
 
granted to employees that are eligible for
 
retirement in the context of the compensation
framework at the date of grant.
The performance
 
award pool reflects
 
the value of
 
performance awards
 
granted relating to
 
the 2024 performance
 
year,
including awards
 
that are
 
paid out
 
immediately
 
and those
 
that are
 
deferred.
 
To determine
 
our variable
 
compensation
expenses,
 
the
 
following
 
adjustments
 
are
 
required
 
in
 
order
 
to
 
reconcile
 
the
 
performance
 
award
 
pool
 
to
 
the
 
expenses
recognized in the Group’s Financial Statements prepared in accordance
 
with IFRS Accounting Standards:
–
a reduction for
 
expenses deferred
 
to future
 
periods (amortization
 
of unvested
 
awards granted
 
in 2025 for
 
the 2024
performance year) and accounting adjustments; and
 
–
an addition for the 2024 amortization of unvested deferred
 
awards granted in prior years.
As a large
 
part of compensation
 
consists of deferred
 
awards, the
 
amortization of
 
unvested deferred
 
awards granted
 
in
prior years
 
forms a
 
significant part
 
of the
 
IFRS Accounting
 
Standards expenses
 
in both
 
2024 and
 
2025. The
 
expenses
related to prior performance years and total expenses recognized in 2024 include deferred compensation granted under
Credit Suisse
 
Group compensation
 
plans in
 
previous years,
 
which have
 
been expensed
 
from 2023
 
onward due
 
to the
integration of Credit Suisse into UBS.
›
Refer to “Note 7 Personnel expenses”
 
and “Note 27 Employee benefits: variable
 
compensation” in the “Consolidated financial
statements” section of this report for more information
 
Personnel expenses
Expenses recognized in the IFRS Accounting Standards
 
income statement
USD m
Related to the 2024
performance year
Related to prior
performance years
 
Total expenses
recognized in
2024
Total expenses
recognized in
2023
Total expenses
recognized in
2022
Salaries
1
 
12,178
 
0
 
12,178
 
10,997
 
7,045
Non-deferred cash
 
3,290
 
(83)
 
3,206
 
2,807
 
2,260
Deferred compensation awards
 
563
 
687
 
1,250
 
1,179
 
945
of which: Equity Ownership Plan
 
180
 
279
 
458
 
485
 
437
of which: Deferred Contingent Capital Plan
 
197
 
290
 
487
 
421
 
349
of which: Long-Term Incentive Plan
 
161
 
76
 
237
 
204
 
43
of which: Fund Ownership Plan
 
26
 
42
 
68
 
69
 
116
Variable compensation – performance awards
 
3,853
 
603
 
4,456
 
3,986
 
3,205
Variable compensation – financial advisors
2
 
4,485
 
808
 
5,293
 
4,549
 
4,508
Variable compensation – other
3
 
539
 
583
 
1,121
 
1,310
 
241
Total variable compensation
4
 
8,876
 
1,994
 
10,870
 
9,845
 
7,954
Contractors
 
325
 
0
 
325
 
334
 
323
Social security
 
1,514
 
109
 
1,622
 
1,473
 
944
Pension and other post-employment benefit plans
5
 
1,310
 
0
 
1,310
 
1,361
 
794
Other personnel expenses
 
981
 
32
 
1,013
 
890
 
621
Total personnel expenses
 
25,183
 
2,134
 
27,318
 
24,899
 
17,680
1 Includes role-based
 
allowances.
 
2 Financial advisor
 
compensation consists of
 
cash compensation, determined
 
using a formulaic
 
approach based on
 
production, and deferred
 
awards. It
 
also includes expenses
related to compensation commitments with financial
 
advisors entered into at the time of
 
recruitment that are subject to vesting
 
requirements.
 
3 Consists of existing deferred
 
awards and retention awards granted
to Credit Suisse employees as well as replacement payments, forfeiture credits, severance
 
payments, retention plan payments and interest expense related to the Deferred Contingent Capital Plan.
 
4 Refer to “Note
27 Employee benefits:
 
variable compensation” in
 
the “Consolidated financial
 
statements” section of
 
this report for
 
more information.
 
5 Refer to
 
“Note 26 Post-employment
 
benefit plans” in
 
the “Consolidated
financial statements” section of this report for more information.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
234
Deferred compensation
Vesting of outstanding awards
 
granted in prior years subject to performance metrics
 
and thresholds
The tables
 
below show
 
the extent
 
to which
 
the performance
 
metrics and
 
thresholds for
 
awards granted
 
in prior
 
years
have been met and the related vesting in 2025.
 
Long-Term Incentive Plan (LTIP) 2019 (performance period 2020–2022)
Performance metrics
Performance achievement
1
Vesting
Return on common equity tier 1 capital
(RoCET1) and relative Total Shareholder
Return (rTSR)
The overall achievement level is 98.0% of
the maximum opportunity (of up to
100%), based on outcomes for rTSR
(weighted 50%) and RoCET1 (weighted
50%).
–
For GEB, the first, second and third installments
 
vested in 2023,
2024 and 2025, respectively. As outlined in our 2019
Compensation Report, up to CHF 7.3m, or 30%,
 
of the 2019 LTIP
awards at grant for GEB members active in March 2017
 
continues
to be at risk and directly linked to the final resolution
 
of the
French cross-border matter.
 
–
For other select senior management, the full
 
award vested in
2023.
1
 
As disclosed in our Compensation Report 2019, LTIP
 
awards for the 2019 performance year were
 
awarded at a value of 62.25% of maximum,
 
which reflected our best estimate of the fair value
 
of the award. The
maximum number of shares was determined by dividing the awarded amount
 
by the fair value of the award at the date of grant, divided
 
by CHF 12.919 or USD 13.141, the average closing price of UBS shares
 
over
the last ten trading days leading up to and including the grant date.
Long-Term Incentive Plan (LTIP) 2020 (performance period 2021–2023)
Performance metrics
Performance achievement
1
Vesting
Return on common equity tier 1 capital
(RoCET1) and relative Total Shareholder
Return (rTSR)
The overall achievement level is 92.55%
of the maximum opportunity (of up to
100%), based on outcomes for rTSR
(weighted 50%) and RoCET1 (weighted
50%).
–
For GEB, the first installment vested in 2024
 
and the second in
2025. The remaining tranche will vest in 2026 accordingly.
–
For other select senior management, the full
 
award vested in
2024.
1
As disclosed in our Compensation Report 2020, LTIP
 
awards for the 2020 performance year were
 
awarded at a value of 65.90% of maximum,
 
which reflected our best estimate of the fair value
 
of the award. The
maximum number of shares was determined
 
by dividing the awarded amount by
 
the fair value of the award
 
at the date of grant, divided by
 
CHF 13.81 or USD 15.411, the average
 
closing price of UBS shares over
the last ten trading days leading up to and including the grant date.
Long-Term Incentive Plan (LTIP) 2021 (performance period 2022–2024)
Performance metrics
Performance achievement
1
Vesting
Return on common equity tier 1 capital
(RoCET1) and relative Total Shareholder
Return (rTSR)
The overall achievement level is 93.33%
of the maximum opportunity (of up to
100%), based on outcomes for rTSR
(weighted 50%) and RoCET1 (weighted
50%).
–
For GEB, the first installment will vest in 2025
 
and the remaining
tranches will vest in 2026 and 2027 accordingly.
–
For other select senior management, the full
 
award vests
 
in 2025.
1
As disclosed in our Compensation Report
 
2021, LTIP awards
 
for the 2021 performance year
 
were awarded at a value
 
of 67.7% of maximum, which
 
reflected our best estimate of the
 
fair value of the award.
 
The
maximum number of shares was determined by dividing the awarded amount
 
by the fair value of the award at the date of grant, divided
 
by CHF 19.194 or USD 20.700, the average closing price of UBS shares
 
over
the last ten trading days leading up to and including the grant date.
›
Refer to “Performance achievement of the 2021
 
LTIP granted in 2022” in the “Group compensation” section of this report for more
information
The
 
below
 
EOP
 
and
 
DCCP
 
thresholds
 
have
 
been
 
set
 
to
 
support
 
the
 
sustainability
 
of
 
the
 
organization
 
and
 
represent
minimum performance levels to retain the awards.
Equity Ownership Plan (EOP) 2019 / 2020,
 
EOP 2020 / 2021 and EOP 2021 / 2022
Thresholds
Threshold achievement
1
Vesting
EOP 2019 / 2020:
Return on common equity tier 1 capital
(RoCET1) and divisional return on
attributed equity
The Group and divisional thresholds have
been satisfied.
2
The following installments vest in full:
–
for EOP 2019 / 2020, the third and final installment
 
for employees
with extended vesting periods (e.g. as required by
 
applicable
regulators) covered under the plan;
–
for EOP 2020 / 2021, the second installment
 
for employees with
extended vesting periods (e.g. as required by applicable
regulators) covered under the plan;
 
and
–
for EOP 2021 / 2022, the second installment
 
for all other
employees and the first installment for employees
 
with extended
vesting periods (e.g. as required by applicable regulators) covered
under the plan.
EOP 2020 / 2021 and EOP 2021 / 2022:
Return on common equity tier 1 capital
(RoCET1)
The Group thresholds have been satisfied.
1
 
Performance may be adjusted for
 
disclosed items generally not representative
 
of underlying business performance.
 
2
 
As published in our 1Q24 results,
 
as of 1 January 2024, UBS
 
changed our equity attribution
framework which increased the equity attributed to the business divisions. The
 
2023 comparison period was restated accordingly. However,
 
given the EOP 2019 / 2020 divisional RoAE thresholds were set based on
the attributed equity
 
framework prior to
 
this change on
 
the basis of
 
the financial plans
 
applicable at the
 
time (pre-CS acquisition)
 
adjustments to the
 
reported “underlying” RoAE
 
were applied to
 
account for the
change in framework and the impact of the integration. Based on the adjusted evaluations the performance
 
thresholds were fully met and the awards for all divisions will vest at 100%.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
235
Deferred Contingent Capital Plan (DCCP) 2019
 
/ 2020
Thresholds
Threshold achievement
1
Vesting
2
Common equity tier 1 (CET1) capital ratio,
viability event and, additionally for GEB,
Group profit before tax
The thresholds have been satisfied.
–
DCCP 2019 / 2020 vests in full.
1
 
Performance may be adjusted for disclosed items generally not representative of underlying business performance.
 
2
 
Certain regulated employees, such as Senior Management Functions (SMFs) and Material Risk
Takers (MRTs),
 
are subject to extended vesting periods.
Outstanding Credit Suisse Group awards granted in prior years
 
subject to performance conditions
The tables
 
below show
 
the extent
 
to which
 
the performance
 
metrics and
 
thresholds
 
for awards
 
granted by
 
the Credit
Suisse Group in prior years have been met and the
 
related impact of the 2024 results.
As a result of the acquisition by UBS Group AG of Credit Suisse Group AG in 2023, many of the financial measurements
applicable
 
to
 
legacy
 
Credit
 
Suisse
 
Group
 
awards
 
are
 
no
 
longer
 
available
 
or
 
are
 
not
 
fully
 
comparable
 
to
 
previous
performance periods, therefore revised
 
metrics have been adopted as disclosed in the Compensation
 
Report 2023.
Performance Share Awards (PSA) 2017/2018, 2018/2019,
 
2019/2020, 2020/2021, 2021/2022
Threshold
Threshold achievement
1
Vesting
2
Negative adjustment if reported UBS Group AG
return on CET1 capital (RoCET1) is negative
The amended threshold has been satisfied.
–
No negative adjustment applied in respect of
PSAs outstanding on 31 December 2024. The
respective installments will vest in 2025.
1
Performance may be adjusted for disclosed items generally not representative of underlying business performance.
 
2
 
Certain regulated employees, such as Senior Management Functions (SMFs) and Material Risk
Takers (MRTs),
 
are subject to extended vesting periods.
Strategic Delivery Plan (SDP) awards 2021/2022
Threshold
Threshold achievement
1
Vesting
2
Cancellation in full if reported UBS Group AG CET1
ratio is less than 7% on 31 December 2023
 
or
2024
The amended threshold has been satisfied.
–
No cancellation of SDP awards based on 2024
financial results. The awards will vest in 2025.
1
Performance may be adjusted for disclosed items generally not representative of underlying business performance.
 
2
 
Certain regulated employees, such as Senior Management Functions (SMFs) and Material Risk
Takers (MRTs),
 
are subject to extended vesting periods.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
236
Audited |
Share ownership / entitlements of GEB members
1
Name, function
on
31 December
Number of
unvested
shares / at
risk
2
Number of
vested shares
Total number
of shares
Potentially
conferred
voting
rights in %
Sergio Ermotti, Group Chief Executive Officer
2024
 
1,023,411
 
1,732,094
 
2,755,505
 
0.215
2023
 
1,218,685
 
1,220,864
 
2,439,549
 
0.185
George Athanasopoulos, Co-President Investment Bank
2024
 
468,793
 
203,756
 
672,549
 
0.053
2023
-
-
-
-
Michelle Bereaux, Group Integration Officer
2024
 
164,063
 
12,824
 
176,887
 
0.014
2023
 
100,618
 
0
 
100,618
 
0.008
Christian Bluhm, former Group Chief Risk Officer
2024
-
-
-
-
2023
 
715,033
 
51
 
715,084
 
0.054
Mike Dargan, Group Chief Operations and Technology Officer
2024
 
465,358
 
26,815
 
492,173
 
0.038
2023
 
408,308
 
56,024
 
464,332
 
0.035
Aleksandar Ivanovic, President Asset Management
 
2024
 
143,704
 
65,697
 
209,401
 
0.016
2023
-
-
-
-
Suni Harford, former President Asset Management
 
2024
-
-
-
-
2023
 
1,226,219
 
128,081
 
1,354,300
 
0.103
Naureen Hassan, former President UBS Americas
2024
-
-
-
-
2023
 
48,861
 
0
 
48,861
 
0.004
Robert Karofsky, President UBS Americas and Co-President Global Wealth
 
Management
2024
 
1,139,539
 
424,520
 
1,564,059
 
0.122
2023
 
1,116,181
 
446,655
 
1,562,836
 
0.118
Sabine Keller-Busse, President Personal & Corporate Banking and President UBS Switzerland
 
2024
 
982,710
 
425,317
 
1,408,027
 
0.110
2023
 
998,319
 
460,442
 
1,458,761
 
0.111
Iqbal Khan, Co-President Global Wealth Management and President
 
UBS Asia Pacific
2024
 
1,140,180
 
179,433
 
1,319,613
 
0.103
2023
 
1,118,165
 
32,287
 
1,150,452
 
0.087
Edmund Koh, former President UBS Asia Pacific
2024
-
-
-
-
2023
 
906,095
 
530,000
 
1,436,095
 
0.109
Ulrich Körner, former CEO of Credit Suisse AG
2024
-
-
-
-
2023
 
314,134
 
15,126
 
329,260
 
0.025
Barbara Levi, Group General Counsel
2024
 
539,142
 
99,876
 
639,018
 
0.050
2023
 
462,894
 
76,075
 
538,969
 
0.041
Beatriz Martin Jimenez, Head Non-core and Legacy and
 
President UBS EMEA
2024
 
426,691
 
180,706
 
607,397
 
0.047
2023
 
381,209
 
81,823
 
463,032
 
0.035
Markus Ronner, Group Chief Compliance and Governance Officer
2024
 
613,246
 
4,436
 
617,682
 
0.048
2023
 
642,528
 
3,129
 
645,657
 
0.049
Stefan Seiler, Head Group Human Resources & Corporate Services
2024
 
299,428
 
91,393
 
390,821
 
0.031
2023
 
270,359
 
0
 
270,359
 
0.020
Todd Tuckner,
 
Group Chief Financial Officer
2024
 
279,344
 
279,647
 
558,991
 
0.044
2023
 
219,246
 
338,962
 
558,208
 
0.042
Marco Valla, Co-President Investment Bank
2024
 
244,051
 
13,847
 
257,898
 
0.020
2023
-
-
-
-
Damian Vogel, Group Chief Risk Officer
2024
 
74,256
 
23,919
 
98,175
 
0.008
2023
-
-
-
-
Total
2024
 
8,003,916
 
3,764,280
 
11,768,196
 
0.920
2023
 
10,146,854
 
3,389,519
 
13,536,373
 
1.026
1 Includes all vested and unvested
 
shares of GEB members, including those held by
 
related parties. No options were held in 2024 and
 
2023 by any GEB member or
 
any of its related parties. Refer to “Note
 
27 Employee
benefits: variable compensation” in the “Consolidated financial statements” section
 
of this report for more information.
 
2 Includes shares granted under variable compensation
 
plans with forfeiture provisions. For
the 2019/20, 2020/21 and 2021/22 LTIP
 
awards, the values reflect the
 
final value. For all
 
other LTIP awards,
 
the values reflect the fair value awarded
 
at grant. The actual number
 
of shares vesting in the future will
be calculated under the terms of the plans. Refer to the “Group compensation” section of this report for more information about
 
the plans.
Audited |
Total
 
of all vested and unvested shares of GEB members
1,2
Total
of which: vested
of which: vesting
2025
2026
2027
2028
2029
2030
Shares on 31 December 2024
 
11,768,196
 
3,764,280
 
3,154,169
 
1,873,398
 
1,536,132
 
872,036
 
514,292
 
53,887
2024
2025
2026
2027
2028
2029
Shares on 31 December 2023
 
13,536,373
 
3,389,519
 
3,215,832
 
3,063,794
 
2,210,296
 
1,063,396
 
542,441
 
51,095
1 Includes shares held by related parties.
 
2 Includes shares granted under variable compensation plans with forfeiture provisions. The actual number of shares vesting in the future will be calculated under the terms
of the plans. Refer to the “Group compensation” section of this report for more information.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
237
Audited |
Number of shares of BoD members
1
Name, function
on 31 December
Number of shares held
Voting rights in %
Colm Kelleher, Chairman
2024
 
552,218
 
0.043
2023
 
456,045
 
0.035
Lukas Gähwiler, Vice Chairman
2
2024
 
385,609
 
0.030
2023
 
342,248
 
0.026
Jeremy Anderson, Senior Independent Director
2024
 
167,436
 
0.013
2023
 
140,812
 
0.011
Claudia Böckstiegel, member
2024
 
23,684
 
0.002
2023
 
16,523
 
0.001
William C. Dudley, member
2024
 
74,587
 
0.006
2023
 
80,333
 
0.006
Patrick Firmenich, member
2024
 
71,010
 
0.006
2023
 
53,405
 
0.004
Fred Hu, member
2024
 
124,370
 
0.010
2023
 
112,265
 
0.009
Mark Hughes, member
2024
 
80,239
 
0.006
2023
 
65,916
 
0.005
Gail Kelly, member
2024
 
0
 
0.000
2023
–
Nathalie Rachou, member
2024
 
58,334
 
0.005
2023
 
46,057
 
0.003
Julie G. Richardson, member
2024
 
157,946
 
0.012
2023
 
155,623
 
0.012
Dieter Wemmer, former member
2024
–
2023
 
147,251
 
0.011
Jeanette Wong, member
2024
 
133,761
 
0.010
2023
 
115,567
 
0.009
Total
2024
 
1,829,194
 
0.143
2023
 
1,732,045
 
0.131
1 Includes blocked
 
and unblocked shares
 
held by BoD
 
members, including those
 
held by related
 
parties. No
 
options were granted
 
in 2024 and
 
2023.
 
2 Includes 62,051
 
unvested shares granted
 
under variable
compensation plans with forfeiture provisions as part of Lukas Gähwiler’s compensation for his executive
 
roles previously held at UBS.
Audited |
Total
 
of all blocked and unblocked shares of BoD members
1
Total
of which:
unblocked
of which: blocked until
2025
2026
2027
2028
Shares on 31 December 2024
 
1,829,194
2
 
828,950
 
255,550
 
174,310
 
310,585
 
259,799
2024
2025
2026
2027
Shares on 31 December 2023
 
1,732,045
 
674,707
 
275,425
 
263,853
 
192,544
 
325,516
1 Includes shares held by related parties.
 
2 Includes 62,051 unvested shares granted
 
under variable compensation plans
 
with forfeiture provisions as part
 
of Lukas Gähwiler’s compensation
 
for his executive roles
previously held at UBS.
Audited |
Loans granted to GEB members
Pursuant to
 
article 38
 
of the
 
Articles of Association
 
of UBS
 
Group AG (the
 
AoA), GEB
 
members may
 
be granted
 
loans.
Such
 
loans
 
are
 
made
 
in
 
the
 
ordinary
 
course
 
of
 
business
 
on
 
substantially
 
the
 
same
 
terms
 
as
 
those
 
granted
 
to
 
other
employees,
 
including
 
interest
 
rates
 
and
 
collateral,
 
and
 
neither
 
involve
 
more
 
than
 
the
 
normal
 
risk
 
of
 
collectability
 
nor
contain any other unfavorable features
 
for the firm. The total amount of such
 
loans must not exceed CHF 20m
 
per GEB
member.
CHF, except where indicated
1
USD
(for reference)
Name, function
on 31 December
Loans
2,3,4
Loans
2,3,4
Mike Dargan, Group Chief Operations and Technology Officer (highest loan in 2024)
2024
 
10,694,500
 
11,776,805
Ulrich Körner, CEO of Credit Suisse AG (highest loan in 2023)
2023
 
12,490,000
Aggregate of all GEB members
2024
 
43,547,875
 
47,955,007
2023
 
50,980,299
1 Swiss franc and US dollar amounts disclosed
 
represent local currency amounts translated at
 
the relevant year-end closing
 
exchange rate.
 
2 All loans granted are secured
 
loans.
 
3 No unused uncommitted credit
facilities in 2024. Excludes two unused uncommitted credit facilities in 2023 of
 
CHF 11,840,766 (USD 14,067,847) that have been granted
 
to two GEB members.
 
4 No loans have been granted to related parties of
the GEB members at conditions not customary in the market.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
238
Audited |
Loans granted to BoD members
Pursuant to
 
article 33
 
of the
 
AoA, loans
 
to independent
 
BoD members
 
are made
 
in the
 
ordinary course
 
of business
 
at
general market conditions.
 
The Vice Chairman, given
 
the full-time nature of
 
his role, may be
 
granted loans in
 
the ordinary
course of business on substantially the same terms as those granted
 
to employees, including interest rates and collateral.
Such loans neither involve more
 
than the normal risk of collectability
 
nor contain any other unfavorable
 
features for the
firm. The total amount of such loans must not exceed
 
CHF 20m per BoD member.
CHF, except where indicated
1
USD
(for reference)
on 31 December
Loans
2,3,4
Loans
2,3,4
Aggregate of all BoD members
2024
 
2,377,500
 
2,618,108
2023
 
690,000
1 Swiss franc and US dollar amounts disclosed represent local currency amounts translated at the relevant year-end closing exchange rate.
 
2 All loans granted are secured loans.
 
3 CHF 2,377,500 (USD 2,618,108)
for Claudia Böckstiegel (independent BoD
 
member) in 2024 and CHF
 
690,000 (USD 819,775) for Claudia
 
Böckstiegel (independent BoD member)
 
in 2023.
 
4 No loans have been granted
 
to related parties of the
BoD members at conditions not customary in the market.
Audited |
Compensation paid to former BoD and GEB members
1
The compensation and benefits in the table below relate
 
to payments made to former BoD and GEB members.
Variable compensation paid
 
to GEB members who stepped down during the respective
 
years is included in the GEB
performance award pool (see table “Total
 
compensation for GEB members“).
CHF, except where indicated
2,3
USD
(for reference)
2
For the year
Compensation
Benefits
Total
Total
Former BoD members
2024
 
0
 
0
 
0
 
0
2023
 
0
 
3,493
 
3,493
Aggregate of all former GEB members
4
2024
 
0
 
1,951,200
 
1,951,200
 
2,222,985
2023
 
0
 
676,342
 
676,342
Aggregate of all former BoD and GEB members
2024
 
0
 
1,951,200
 
1,951,200
 
2,222,985
2023
 
0
 
679,835
 
679,835
1 Compensation or remuneration that is related to the former
 
members’ activity on the BoD or GEB or that
 
is not at market conditions.
 
2 Swiss franc and US dollar amounts disclosed
 
represent local currency amounts
translated at the relevant
 
year-end closing exchange
 
rate.
 
3 Includes benefit payments
 
in 2024 for four
 
former GEB members and
 
in 2023 to three
 
former GEB members.
 
4 Excludes the portion
 
related to the
legally required employer’s social security contributions for 2024 and 2023, however, the legally required employees’ social security contributions are included in the amounts shown in
 
the table above, as appropriate.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
239
GEB and BoD member mandates outside the Group
In line with the Swiss Code of Obligations, we disclose the mandates of GEB and BoD
 
members outside of the Group in
the tables below. Further information on background and biographies, including mandates in UBS entities, are available
in the “Corporate governance”
 
section of this report.
Audited |
BoD member mandates outside the Group
Name, function
Mandates
Colm Kelleher, Chairman
–
Member of the Board of Norfolk Southern Corporation
 
(chair of the finance and risk management
committee)
–
Member of the Board of Directors of the Bretton Woods Committee
–
Member of the Board of the Swiss Finance Council
–
Member of the International Monetary Conference
–
Member of the Board of the Bank Policy Institute
–
Member of the Board of Americans for Oxford
–
Visiting Professor of Banking and Finance, Loughborough
 
Business School
–
Member of the European Financial Services Round
 
Table
–
Member of the European Banking Group
–
Member of the International Advisory
 
Council of the China Securities Regulatory Commission
–
Member of the Chief Executive’s Advisory Council
 
(Hong Kong)
Lukas Gähwiler, Vice Chairman
–
Vice Chairman of the Board of Directors of Pilatus Aircraft
 
Ltd
–
Member of the Board of Directors of Ringier AG
–
Member of the Board and Board Committee of economiesuisse
–
Chairman of the Employers Association of Banks
 
in Switzerland
–
Member of the Board of Directors of the Swiss Employers
 
Association
–
Member of the Board of Directors and the Board of Directors Committee
 
of the Swiss Bankers Association
–
Member of the Board of the Swiss Finance Council
–
Member of the Board of Trustees of Avenir Suisse
Jeremy Anderson, Senior Independent
Director
–
Member of the Board of Prudential plc (chair of
 
the risk committee)
–
Chairman of Lamb’s Passage Holding Ltd
1
–
Trustee of the UK’s Productivity Leadership Group
Claudia Böckstiegel, member
–
Member of the Enlarged Executive Committee
 
of Roche Holding AG
–
Member of the Chairman’s Committee of
 
the Board of the Chamber of Commerce Germany-Switzerland
1
William C. Dudley, member
–
Member of the Board of Treliant LLC (stepped down in July 2024)
–
Member of the Advisory Board of Suade Labs
–
Senior Advisor to the Griswold Center for
 
Economic Policy Studies, Princeton University
–
Member of the Group of Thirty
–
Member of the Council on Foreign Relations
–
Chairman of the Bretton Woods Committee Board of Directors
–
Member of the Board of the Council for Economic
 
Education
Patrick Firmenich, member
–
Vice Chairman of the Board of dsm–firmenich
 
(chair of the governance and nomination
 
committee)
–
Member of the Board of Directors of INSEAD and La
 
Fondation Mondiale INSEAD
–
Member of the Advisory Council of the Swiss
 
Board Institute
Fred Hu, member
–
Non-executive Chairman of the Board of Yum China Holdings (chair of the
 
nomination and governance
committee)
–
Member of the Board of ICBC (chair of the nomination
 
committee)
–
Chairman of Primavera Capital Ltd
–
Trustee of the China Medical Board
–
Co-Chairman of the Nature Conservancy Asia
 
Pacific Council
–
Member of the Board of Trustees, the Institute for Advanced Study
–
Director and member of the Executive Committee
 
of China Venture Capital and Private Equity Association
Ltd. (stepped down in August 2024)
Mark Hughes, member
–
Chair of the Board of Directors of the Global Risk Institute
–
Senior advisor to McKinsey & Company
Gail Kelly, member
–
Member of the Board of Singtel Communications
 
(chair of the executive resource and compensation
committee)
–
Member of the Group of Thirty
–
Member of the Board of Directors of the Bretton Woods Committee
–
Member of the Board of Directors of the Australia Philanthropic
 
Services
–
Member of the Australian American Leadership
 
Dialogue Advisory Board
–
Senior advisor to McKinsey & Company
Nathalie Rachou, member
–
Member of the Board of Euronext N.V. (chair of the remuneration committee)
–
Member of the Board of Veolia Environnement SA (stepped down in April
 
2024)
–
Member of the Board of Lancashire Holdings Limited
1
–
Member of the Board of the African Financial Institutions
 
Investment Platform
–
Member of the Board of Directors of Fondation Léopold
 
Bellan
Julie G. Richardson, member
–
Member of the Board of Yext (chair of the audit committee) (stepped down
 
in February 2025)
–
Member of the Board of Datadog (chair of the
 
audit committee)
–
Member of the Board of Fivetran
–
Member of the Board of Coalition, Inc.
–
Member of the Board of Checkout.com (stepped down
 
in January 2024)
1
 
New 2024 mandate compared with 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
240
Audited |
BoD member mandates outside the Group (continued)
Name, function
Mandates
Jeanette Wong, member
–
Member of the Board of Prudential plc
–
Member of the Board of Singapore Airlines Limited
–
Member of the Board of GIC Pte Ltd
–
Member of the Board of Jurong Town Corporation (stepped down in March 2024)
–
Member of the Board of PSA International
–
Member of the Board of Pavilion Capital Holdings
 
Pte Ltd
–
Chairman of the CareShield Life Council
–
Member of the Securities Industry Council
–
Member of the Board of Trustees of the National University of Singapore
›
Refer to “Board of Directors” in the “Corporate governance”
 
section of this report for more information
Audited |
GEB member mandates outside the Group
Name, function
Mandates
Sergio P. Ermotti, Group Chief Executive
Officer
–
Member of the Board of Ermenegildo Zegna N.V. (Lead Non-Executive Director)
–
Member of the Board of Società Editrice del Corriere del
 
Ticino SA
–
Member of the Board of Innosuisse, the Swiss Innovation
 
Agency
–
Member of Institut International d’Etudes
 
Bancaires
–
Member of the WEF International Business
 
Council and Governor of the Financial
 
Services / Banking
Community
 
–
Member of the MAS International Advisory
 
Panel
–
Member of the Board of the Institute of International
 
Finance
–
Member of the Board of the Swiss-American Chamber
 
of Commerce
George Athanasopoulos,
 
Co-President
Investment Bank
–
None
Michelle Bereaux, Group Integration
Officer
–
None
Mike Dargan, Group Chief Operations
and Technology Officer
–
Member of the Advisory Board of SCION Association
1
Aleksandar Ivanovic, President Asset
Management
–
None
Robert Karofsky, Co-President Global
Wealth Management and President UBS
Americas
 
–
None
Sabine Keller-Busse, President Personal &
Corporate Banking and President UBS
Switzerland
 
–
Member of the Board of Zurich Insurance Group
–
Chairwoman of the Foundation Board of the Pension
 
Fund of UBS
–
Member of the Foundation Council of the
 
UBS Center for Economics in Society, University of Zurich
–
Member of the Board and Board Committee of Zurich
 
Chamber of Commerce
–
Member of the Board of the University Hospital
 
Zurich Foundation
–
Member of the Board of Trustees of the Swiss Entrepreneurs Foundation
–
Member of the Board of Trustees of the HSG Foundation (University of St.
 
Gallen)
1
–
Member of the Foundation Board of Deep Tech Nation Switzerland
1
Iqbal Khan, Co-President Global Wealth
Management and President UBS Asia
Pacific
–
None
Barbara Levi, Group General Counsel
–
Member of the Board of Directors of the European General
 
Counsel Association
–
Member of the Legal Committee of the Swiss-American
 
Chamber of Commerce
Beatriz Martin Jimenez, Head Non-core
and Legacy and
 
President UBS EMEA
–
Member of the Advisory Board of Frankfurt School
 
of Finance & Management (stepped down
 
in December
2024)
–
Member of the Leadership Council, TheCityUK,
 
London (stepped down in February 2024)
Markus Ronner, Group Chief Compliance
and Governance Officer
–
None
Stefan Seiler, Head Group Human
Resources & Corporate Services
–
Member of the Foundation Board of the Pension
 
Fund of UBS
–
Member of the Foundation Council of the
 
UBS Center for Economics in Society, University of Zurich
–
Chairman of the Foundation Board of the Swiss Finance
 
Institute
–
Member of the IMD Foundation Board
–
Adjunct Professor for Leadership and Strategic Human
 
Resource Management, Nanyang Technological
University (NTU), Singapore
Todd Tuckner,
 
Group Chief Financial
Officer
–
None
Marco Valla,
 
Co-President Investment
Bank
–
Member of the Board of Directors of Good Shepherd Services
–
Member of the Board of the Mount Sinai Department
 
of Urology
 
Damian Vogel,
 
Group Chief Risk Officer
–
Member of Foundation Board of the International
 
Financial Risk Institute
1
New 2024 mandate compared with 2023.
›
Refer to “Group Executive Board” in the “Corporate governance”
 
section of this report for more information
 
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
241
Provisions of the Articles of Association related to compensation
Swiss say-on
 
-pay
 
provisions
 
give shareholders
 
of companies
 
listed
 
in Switzerland
 
significant
 
influence
 
over
 
board
 
and
management compensation. At UBS, this is achieved by means of an annual binding say-on-pay vote in accordance with
the following provisions of the AoA.
Say on pay
 
In line with article 43 of the AoA, the General Meeting approves
 
proposals from the BoD in relation
 
to:
a) the maximum aggregate amount of compensation
 
of the BoD for the period until the next AGM;
b) the maximum aggregate amount of fixed compensation
 
of the GEB for the following financial year; and
c) the aggregate amount of variable compensation
 
of the GEB for the preceding financial year.
The
 
BoD
 
may
 
submit
 
for
 
approval
 
by
 
the
 
General
 
Meeting
 
deviating
 
or
 
additional
 
proposals
 
relating
 
to
 
the
 
same
 
or
different periods. If the General Meeting does not approve a proposal from the BoD, the BoD will determine, taking into
account all relevant factors, the respective
 
(maximum) aggregate amount or (maximum) partial amounts
 
and submit the
amount(s) so determined for approval by the General Meeting. UBS Group
 
AG or companies controlled by it may pay or
grant compensation prior to approval by the General
 
Meeting, subject to subsequent approval.
Principles of compensation
In line
 
with articles
 
45 and
 
46 of
 
the AoA,
 
compensation of
 
the members
 
of the
 
BoD includes
 
base remuneration
 
and
may
 
include
 
other
 
compensation
 
elements
 
and
 
benefits.
 
Compensation
 
of
 
the
 
members
 
of
 
the
 
BoD
 
is
 
intended
 
to
recognize the responsibility and governance nature of their role, to attract and retain qualified individuals, and to ensure
alignment with shareholders’ interests.
 
Compensation
 
of
 
the
 
members
 
of
 
the
 
GEB
 
includes
 
fixed
 
and
 
variable
 
compensation
 
elements.
 
Fixed
 
compensation
includes the
 
base salary
 
and may
 
include other
 
compensation elements
 
and benefits.
 
Variable compensation
 
elements
are governed by
 
financial and non-financial performance measures
 
that take into
 
account the performance of
 
UBS Group
AG and
 
/ or
 
parts thereof,
 
targets
 
in relation
 
to the
 
market,
 
other companies
 
or comparable
 
benchmarks,
 
short-
 
and
long-term
 
strategic
 
objectives,
 
and / or
 
individual
 
targets.
 
The
 
BoD
 
or,
 
where
 
delegated
 
to
 
it,
 
the
 
Compensation
Committee, determines the
 
respective performance measures,
 
the overall and individual
 
performance targets, and
 
their
achievement.
 
The
 
BoD
 
or,
 
where
 
delegated
 
to
 
it,
 
the
 
Compensation
 
Committee,
 
aims
 
to
 
ensure
 
alignment
 
with
sustainable
 
performance
 
and
 
appropriate
 
risk-taking
 
through
 
adequate
 
deferrals,
 
forfeiture
 
conditions,
 
caps
 
on
compensation,
 
harmful acts
 
provisions and
 
similar means
 
with regard
 
to parts
 
of or
 
all of
 
the compensation.
 
Parts
 
of
variable compensation are subject to a multi-year vesting
 
period.
Additional amount for GEB members appointed after
 
the vote on the aggregate amount of compensation by the
 
AGM
In line
 
with article
 
46 of
 
the AoA
 
of UBS
 
Group AG, if
 
the maximum
 
aggregate amount of
 
compensation already approved
by the
 
General Meeting
 
is not
 
sufficient
 
to also
 
cover the
 
compensation of
 
a person
 
that becomes
 
a member
 
of or
 
is
being promoted within
 
the GEB
 
after the
 
General Meeting
 
has approved the
 
compensation, UBS Group
 
AG, or
 
companies
controlled by it, is authorized to pay or grant
 
each such GEB member a supplementary amount during the compensation
period(s) already approved.
 
The aggregate pool
 
for such supplementary
 
amounts per
 
compensation period cannot
 
exceed
40% of the average of total annual compensation paid or
 
granted to the GEB during the previous three
 
years.
›
Refer to
ubs.com/governance
for more information
 
ubs-20241231p266i0
Advisory vote
|
 
Corporate governance and compensation
 
| Compensation
 
242
 
Annual Report 2024 |
Financial statements | Consolidated financial
 
statements
 
243
Financial statements
Consolidated financial statements
Table of contents
244
245
246
248
254
254
254
255
256
257
259
261
263
263
1
280
2
284
3a
287
3b
288
288
4
288
5
289
6
289
7
290
8
290
9
294
294
10
298
11
300
12
300
13
302
14
303
15
303
16
304
17
304
18
313
19
314
314
20
326
21
340
22
341
23
344
24
347
25
349
26
355
27
359
28
362
29
363
30
365
31
366
32
366
33
 
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Financial statements | Consolidated financial
 
statements
 
244
Management’s report on internal control over financial
 
reporting
Management’s responsibility for internal control over financial reporting
The Board
 
of Directors
 
and management
 
of UBS
 
Group AG
 
(UBS) are
 
responsible
 
for establishing
 
and maintaining
 
adequate
internal control
 
over financial reporting.
 
UBS’s internal
 
controls over financial
 
reporting are designed
 
to provide reasonable
assurance
 
regarding
 
the
 
preparation
 
and
 
fair
 
presentation
 
of
 
published
 
financial
 
statements
 
in
 
accordance
 
with
 
IFRS
Accounting Standards,
 
as issued by
 
the International
 
Accounting Standards
 
Board (IASB).
UBS’s internal controls over financial reporting include those policies
 
and procedures that:
–
pertain
 
to
 
the
 
maintenance
 
of
 
records
 
that,
 
in
 
reasonable
 
detail,
 
accurately
 
and
 
fairly
 
reflect
 
transactions
 
and
dispositions of assets;
–
provide reasonable assurance
 
that transactions are
 
recorded as necessary
 
to permit preparation
 
and fair presentation
of financial statements,
 
and that
 
receipts and expenditures
 
of the company
 
are being made
 
only in accordance
 
with
authorizations of UBS management; and
–
provide
 
reasonable
 
assurance
 
regarding
 
the
 
prevention
 
or
 
timely
 
detection
 
of
 
unauthorized
 
acquisition,
 
use
 
or
disposition of the company’s assets that could have a material
 
effect on the financial statements.
Because
 
of its
 
inherent
 
limitations,
 
internal
 
control
 
over
 
financial
 
reporting
 
may
 
not
 
prevent
 
or detect
 
misstatements.
Also, projections
 
of any
 
evaluation of
 
effectiveness to
 
future
 
periods are
 
subject to
 
the risk
 
that controls
 
may become
inadequate
 
because
 
of
 
changes
 
in
 
conditions,
 
or
 
that
 
the
 
degree
 
of
 
compliance
 
with
 
the
 
policies
 
or
 
procedures
 
may
deteriorate.
Management’s
 
assessment of
 
internal control
 
over financial
 
reporting as
 
of 31 December
 
2024
UBS management
 
has assessed
 
the effectiveness
 
of UBS’s
 
internal control
 
over financial
 
reporting
 
as of
 
31 December
2024 based on
 
the criteria set forth by
 
the Committee of Sponsoring
 
Organizations of the Treadway Commission (COSO)
in Internal
 
Control – Integrated Framework
 
(2013 Framework). Based
 
on this assessment
 
for the reasons
 
discussed below,
management
 
believes that,
 
as of
 
31 December 2024,
 
UBS’s internal
 
control
 
over financial
 
reporting
 
was not
 
effective
because of the material weakness described below related
 
to the Credit Suisse business acquired in
 
2023.
 
A material weakness is a deficiency or a combination of deficiencies
 
in internal control over financial reporting such that
there is a reasonable
 
possibility that a
 
material misstatement of a
 
registrant’s financial statements
 
will not be prevented
or detected on a timely basis.
 
Prior to the acquisition, Credit Suisse management had identified and
 
disclosed three material weaknesses, one of which
related
 
to
 
controls
 
to
 
design
 
and
 
maintain
 
an
 
effective
 
risk
 
assessment
 
process.
 
Management
 
concluded
 
that
 
as
 
of
31 December 2024, changes made to the
 
risk assessment process were designed effectively,
 
but that additional time, in
part
 
due
 
to
 
the
 
broader
 
integration
 
and
 
migration
 
efforts
 
underway,
 
is
 
required
 
to
 
conclude
 
that
 
these
 
controls
 
are
operating effectively on a sustained basis.
The effectiveness of UBS’s internal control over financial reporting as of 31 December
 
2024 has been audited by Ernst &
Young Ltd, UBS’s independent registered public accounting
 
firm, as stated in their Report of the
 
independent registered
public
 
accounting
 
firm
 
on
 
internal
 
control
 
over
 
financial
 
reporting,
 
which
 
expresses
 
an
 
adverse
 
opinion
 
on
 
the
effectiveness of UBS’s internal control over financial reporting
 
as of 31 December 2024.
Remediation of Credit Suisse material weaknesses
In March 2023,
 
prior to the
 
acquisition by UBS
 
Group AG, the
 
Credit Suisse Group
 
and Credit Suisse
 
AG disclosed that
their management had identified material weaknesses in internal control over financial reporting as a result of which the
Credit
 
Suisse
 
Group
 
and
 
Credit
 
Suisse
 
AG
 
had
 
concluded
 
that,
 
as
 
of
 
31 December
 
2022,
 
their
 
internal
 
control
 
over
financial reporting
 
was not
 
effective,
 
and for
 
the same
 
reasons, reached
 
the same
 
conclusion regarding
 
31 December
2021. Following the
 
acquisition and merger
 
of Credit Suisse
 
Group AG into
 
UBS Group AG
 
in June 2023, Credit
 
Suisse
AG concluded that
 
as of 31 December
 
2023 its internal
 
control over
 
financial reporting
 
continued to be
 
ineffective. As
permitted by SEC guidance
 
in the year of
 
an acquisition, UBS Group
 
AG excluded Credit
 
Suisse AG from its
 
assessment
of internal control over financial reporting for the year
 
ended 31 December 2023 and concluded that its internal control
over financial reporting was effective
 
as of such date.
 
In May 2024,
 
Credit Suisse
 
AG and UBS
 
AG merged with
 
UBS AG as
 
the surviving
 
entity. Although Credit
 
Suisse AG
 
is
no longer a
 
separate legal entity,
 
numerous of its
 
booking, accounting and
 
risk management systems
 
remain in use
 
for
activities that have not yet been exited or migrated to UBS
 
systems.
 
The material weaknesses
 
that were identified
 
by Credit Suisse
 
related to the
 
failure to design
 
and maintain an
 
effective
risk
 
assessment
 
process
 
to
 
identify
 
and
 
analyze
 
the
 
risk
 
of
 
material
 
misstatements
 
in
 
its
 
financial
 
statements
 
and
 
the
failure to
 
design
 
and
 
maintain
 
effective
 
monitoring
 
activities
 
relating
 
to (i)
 
providing
 
sufficient
 
management
 
oversight
over the internal control evaluation
 
process to support Credit Suisse
 
internal control objectives; (ii) involving
 
appropriate
and sufficient
 
management resources
 
to support
 
the risk
 
assessment and
 
monitoring objectives;
 
and (iii) assessing
 
and
communicating the
 
severity of
 
deficiencies in
 
a timely
 
manner to
 
those parties
 
responsible for
 
taking corrective
 
action.
These material weaknesses contributed to an additional material weakness, as the Credit Suisse Group management did
not design and maintain effective controls over the classification and presentation of the consolidated statement of cash
flows under US GAAP.
 
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Financial statements | Consolidated financial
 
statements
 
245
Since
 
the
 
Credit
 
Suisse
 
acquisition,
 
we
 
have
 
executed
 
a
 
remediation
 
program
 
to
 
address
 
the
 
identified
 
material
weaknesses
 
and
 
have
 
implemented
 
additional
 
controls
 
and
 
procedures.
 
As
 
of
 
31 December
 
2024,
 
management
 
has
assessed that the changes to internal controls made to address the material weaknesses relating to the classification and
presentation of
 
the consolidated
 
statement of
 
cash flows
 
as well
 
as assessment
 
and communication
 
of the
 
severity of
deficiencies are designed and operating effectively.
 
The remaining material weakness relates to the
 
risk assessment of internal controls. We have
 
integrated the Credit Suisse
control framework
 
into the
 
UBS internal
 
control framework
 
and risk
 
assessment and
 
evaluation
 
processes
 
in 2024.
 
In
addition, UBS has
 
reviewed the
 
processes, systems
 
and internal control
 
processes in
 
connection with the
 
integration of
the financial
 
accounting and controls
 
environment of Credit
 
Suisse into
 
UBS, and
 
implementation of updated
 
or additional
processes and controls to
 
reflect the increase in
 
complexity of the accounting
 
and financial control environment
 
following
the acquisition.
 
Management has assessed
 
that the risk
 
assessment process was
 
designed effectively. However,
 
in light of
 
the increased
complexity of the
 
internal accounting and
 
control environment, the
 
remaining migration efforts
 
still underway and
 
limited
time
 
to
 
demonstrate
 
operating
 
effectiveness
 
and
 
sustainability
 
of
 
the
 
post-merger
 
integrated
 
control
 
environment,
management
 
has
 
concluded
 
that
 
additional
 
evidence
 
of
 
effective
 
operation
 
of
 
the
 
remediated
 
controls
 
is required
 
to
conclude
 
that
 
the
 
risk
 
assessment
 
processes
 
are
 
operating
 
effectively
 
on
 
a
 
sustainable
 
basis.
 
In
 
light
 
of
 
the
 
above,
management has concluded that there is a material
 
weakness in internal control over financial reporting at
 
31 December
2024.
Report of the independent registered public accounting
 
firm included in this report
The accompanying reports of
 
the independent registered public accounting
 
firm on the
 
consolidated financial statements
Report of
 
independent registered
 
public accounting
 
firm on
 
the consolidated
 
financial statements
 
and
internal control
over
 
financial
 
reporting
 
Report
 
of
 
independent
 
registered
 
public
 
accounting
 
firm
 
on
 
internal
 
control
 
over
 
financial
reporting
of UBS Group
 
are included
 
in our filing
 
on 17 March
 
2025 with the
 
Securities and Exchange
 
Commission on
Form 20-F pursuant to US reporting obligations.
 
 
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Group AG consolidated financial statements
 
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UBS Group AG consolidated financial statements
Primary financial statements and share information
Audited |
 
Income statement
For the year ended
USD m
Note
31.12.24
31.12.23
1
31.12.22
Interest income from financial instruments measured at
 
amortized cost and fair value through
other comprehensive income
4
35,994
31,743
11,782
Interest expense from financial instruments measured at
 
amortized cost
4
(35,947)
(28,216)
(6,564)
Net interest income from financial instruments measured
 
at fair value through profit or loss and other
4
7,061
3,770
1,403
Net interest income
4
7,108
7,297
6,621
Other net income from financial instruments measured
 
at fair value through profit or loss
4
14,690
11,583
7,517
Fee and commission income
5
28,730
23,766
20,789
Fee and commission expense
5
(2,592)
(2,195)
(1,823)
Net fee and commission income
5
26,138
21,570
18,966
Other income
6
675
384
1,459
Total revenues
48,611
40,834
34,563
Negative goodwill
2
27,264
Credit loss expense / (release)
20
551
1,037
29
Personnel expenses
7
27,318
24,899
17,680
General and administrative expenses
8
10,124
10,156
5,189
Depreciation, amortization and impairment of non-financial
 
assets
12, 13
3,798
3,750
2,061
Operating expenses
41,239
38,806
24,930
Operating profit / (loss) before tax
6,821
28,255
9,604
Tax expense / (benefit)
 
9
1,675
873
1,942
Net profit / (loss)
5,146
27,382
7,661
Net profit / (loss) attributable to non-controlling interests
60
16
32
Net profit / (loss) attributable to shareholders
5,085
27,366
7,630
Earnings per share (USD)
Basic
1.59
8.68
2.34
Diluted
1.52
8.30
2.25
1 Comparative-period information has been revised. Refer to Note 2 for more information.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
255
Statement of comprehensive income
For the year ended
USD m
Note
31.12.24
31.12.23
1
31.12.22
Comprehensive income attributable to shareholders
Net profit / (loss)
5,085
27,366
7,630
Other comprehensive income that may be reclassified to the income
 
statement
Foreign currency translation
Foreign currency translation movements related to net assets of foreign operations, before tax
(4,726)
3,762
(894)
Effective portion of changes in fair value of hedging instruments
 
designated as net investment hedges, before tax
2,957
(2,320)
337
Foreign currency translation differences on foreign operations reclassified to the
 
income statement
24
58
32
Effective portion of changes in fair value of hedging instruments
 
designated as net investment hedges reclassified to
the income statement
(33)
(28)
(4)
Income tax relating to foreign currency translations, including the effect of
 
net investment hedges
24
(17)
4
Subtotal foreign currency translation, net of tax
(1,754)
2
1,456
(525)
Financial assets measured at fair value through other comprehensive income
Net unrealized gains / (losses), before tax
1
7
(440)
Net realized (gains) / losses reclassified to the income statement
 
from equity
0
(3)
1
Reclassification of financial assets to Other financial assets measured
 
at amortized cost
3
449
Income tax relating to net unrealized gains / (losses)
0
0
(3)
Subtotal financial assets measured at fair value through other comprehensive
 
income, net of tax
1
4
6
Cash flow hedges of interest rate risk
25
Effective portion of changes in fair value of derivative instruments designated
 
as cash flow hedges, before tax
(1,450)
(323)
(5,758)
Net (gains) / losses reclassified to the income statement from
 
equity
2,000
1,905
(159)
Income tax relating to cash flow hedges
(69)
(308)
1,124
Subtotal cash flow hedges, net of tax
481
1,275
(4,793)
Cost of hedging
25
Cost of hedging, before tax
(146)
(19)
45
Income tax relating to cost of hedging
 
0
0
0
Subtotal cost of hedging, net of tax
(146)
(19)
45
Total other comprehensive income that may be reclassified to the income statement, net
 
of tax
(1,417)
2,715
(5,267)
Other comprehensive income that will not be reclassified to the income
 
statement
Defined benefit plans
26
Gains / (losses) on defined benefit plans, before tax
(307)
110
(73)
Income tax relating to defined benefit plans
45
(70)
63
Subtotal defined benefit plans, net of tax
(261)
40
(10)
Own credit on financial liabilities designated at fair value
21
Gains / (losses) from own credit on financial liabilities designated
 
at fair value, before tax
(10)
(1,850)
867
Income tax relating to own credit on financial liabilities designated
 
at fair value
(9)
82
(71)
Subtotal own credit on financial liabilities designated at
 
fair value, net of tax
(19)
(1,769)
796
Total other comprehensive income that will not be reclassified to the income statement,
 
net of tax
(280)
(1,729)
786
Total other comprehensive income
(1,698)
986
(4,481)
Total comprehensive income attributable to shareholders
3,388
28,352
3,149
Comprehensive income attributable to non-controlling
 
interests
Net profit / (loss)
60
16
32
Total other comprehensive income that will not be reclassified to the income statement,
 
net of tax
(47)
5
(14)
Total comprehensive income attributable to non-controlling interests
13
22
18
Total comprehensive income
 
Net profit / (loss)
5,146
27,382
7,661
Other comprehensive income
 
(1,744)
991
(4,494)
of which: other comprehensive income that may be reclassified
 
to the income statement
(1,417)
2,715
(5,267)
of which: other comprehensive income that will not be reclassified
 
to the income statement
(327)
(1,723)
772
Total comprehensive income
 
3,401
28,374
3,167
1 Comparative-period information
 
has been revised.
 
Refer to Note
 
2 for more
 
information.
 
2 Mainly reflects a
 
strengthening of the
 
US dollar against
 
the Swiss franc
 
and the euro.
 
3 Effective 1
 
April 2022, a
portfolio of assets previously classified as Financial assets measured at fair
 
value through other comprehensive income was reclassified to Other financial assets measured at amortized cost.
 
Refer to Note 14a for more
information.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
256
Balance sheet
USD m
Note
31.12.24
31.12.23
 
1
Assets
Cash and balances at central banks
223,329
314,060
Amounts due from banks
10
18,903
21,146
Receivables from securities financing transactions measured at amortized
 
cost
10, 22
118,301
99,039
Cash collateral receivables on derivative instruments
10, 22
43,959
50,082
Loans and advances to customers
10
579,967
639,669
Other financial assets measured at amortized cost
10, 14a
58,835
65,455
Total financial assets measured at amortized cost
1,043,293
1,189,451
Financial assets at fair value held for trading
21
159,065
169,633
of which: assets pledged as collateral that may be sold or repledged
 
by counterparties
38,532
51,263
Derivative financial instruments
11, 21, 22
185,551
176,084
Brokerage receivables
21
25,858
21,037
Financial assets at fair value not held for trading
21
95,472
104,018
Total financial assets measured at fair value through profit or loss
465,947
470,773
Financial assets measured at fair value through other comprehensive income
21
2,195
2,233
Investments in associates
28b
2,306
2,373
Property, equipment and software
12
15,498
17,849
Goodwill and intangible assets
13
6,887
7,515
Deferred tax assets
9
11,134
10,682
Other non-financial assets
14b
17,766
16,049
Total assets
1,565,028
1,716,924
Liabilities
Amounts due to banks
15
23,347
70,962
Payables from securities financing transactions measured at amortized cost
22
14,833
14,394
Cash collateral payables on derivative instruments
22
35,490
41,582
Customer deposits
15
745,777
792,029
Debt issued measured at amortized cost
17
214,219
237,817
Other financial liabilities measured at amortized cost
19a
21,033
20,851
Total financial liabilities measured at amortized cost
1,054,698
1,177,633
Financial liabilities at fair value held for trading
21
35,247
34,159
Derivative financial instruments
11, 21, 22
180,636
192,181
Brokerage payables designated at fair value
21
49,023
42,522
Debt issued designated at fair value
16, 21
107,909
128,289
Other financial liabilities designated at fair value
19b, 21
28,699
29,484
Total financial liabilities measured at fair value through profit or loss
401,514
426,635
Provisions and contingent liabilities
18a
8,409
12,412
Other non-financial liabilities
19c
14,834
14,089
Total liabilities
1,479,454
1,630,769
Equity
Share capital
346
346
Share premium
12,012
13,216
Treasury shares
(6,402)
(4,796)
Retained earnings
78,035
74,397
Other comprehensive income recognized directly in equity, net of tax
1,088
2,462
Equity attributable to shareholders
85,079
85,624
Equity attributable to non-controlling interests
494
531
Total equity
85,574
86,156
Total liabilities and equity
1,565,028
1,716,924
1 Comparative-period information has been revised. Refer to Note 2 for more information.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
257
Statement of changes in equity
USD m
Share
capital
Share
 
premium
Treasury
shares
Retained
earnings
Balance as of 31 December 2021
322
15,928
(4,675)
43,851
Acquisition of treasury shares
(6,262)
2
Delivery of treasury shares under share-based compensation
 
plans
(763)
879
Other disposal of treasury shares
(1)
164
2
Cancellation of treasury shares related to the 2021
 
share repurchase program
(18)
(1,502)
3,022
(1,502)
Share-based compensation expensed in the income statement
716
Tax (expense) / benefit
13
Dividends
(834)
3
(834)
3
Equity classified as obligation to purchase own shares
(15)
Translation effects recognized directly in retained earnings
69
Share of changes in retained earnings of associates and
 
joint ventures
0
New consolidations / (deconsolidations) and other increases
 
/ (decreases)
4
3
Total comprehensive income for the year
8,415
of which: net profit / (loss)
7,630
of which: OCI, net of tax
786
Balance as of 31 December 2022
304
13,546
(6,874)
50,004
Purchase price consideration for the acquisition of the Credit
 
Suisse Group, before consideration of share-based
compensation awards
4
619
2,928
Impact of share-based compensation awards from the acquisition of
 
the Credit Suisse Group
4
162
Impact of the settlement of pre-existing relationships from
 
the acquisition of the Credit Suisse Group
4
(61)
Acquisition of treasury shares
(3,070)
2
Delivery of treasury shares under share-based compensation
 
plans
(858)
970
Other disposal of treasury shares
10
196
2
Cancellation of treasury shares related to the 2021
 
share repurchase program
(7)
(554)
1,115
(554)
Share-based compensation expensed in the income statement
1,097
Tax (expense) / benefit
19
Dividends
(839)
3
(839)
3
Equity classified as obligation to purchase own shares
11
Translation effects recognized directly in retained earnings
150
Share of changes in retained earnings of associates and
 
joint ventures
(1)
Share capital currency change
49
(49)
New consolidations / (deconsolidations) and other increases
 
/ (decreases)
53
5
Total comprehensive income for the year
25,637
of which: net profit / (loss)
27,366
of which: OCI, net of tax
(1,729)
Balance as of 31 December 2023
7
346
13,216
(4,796)
74,397
Acquisition of treasury shares
(3,091)
2
Delivery of treasury shares under share-based compensation
 
plans
(1,286)
1,364
Other disposal of treasury shares
4
121
2
Share-based compensation expensed in the income statement
1,104
Tax (expense) / benefit
23
Dividends
(1,128)
3
(1,128)
3
Equity classified as obligation to purchase own shares
(6)
Translation effects recognized directly in retained earnings
(44)
Share of changes in retained earnings of associates and
 
joint ventures
(3)
New consolidations / (deconsolidations) and other increases
 
/ (decreases)
86
7
Total comprehensive income for the year
4,805
of which: net profit / (loss)
5,085
of which: OCI, net of tax
(280)
Balance as of 31 December 2024
346
12,012
(6,402)
78,035
1 Excludes other comprehensive income related to defined benefit plans and own credit, which is recorded directly in Retained earnings.
 
2 Includes treasury shares acquired and disposed of by the Investment Bank
in its capacity as a market-maker with regard to UBS Group AG shares and related derivatives, and to hedge certain issued structured debt instruments. These acquisitions and disposals are reported based on the sum
of the net
 
monthly movements.
 
3 Reflects
 
the payment
 
of an ordinary
 
cash dividend
 
of USD
0.70
 
(2023: USD
0.55
, 2022:
 
USD
0.50
) per dividend-bearing
 
share. Swiss
 
tax law
 
requires Switzerland-domiciled
companies with shares listed on a Swiss stock exchange to pay no
 
more than
50
% of dividends from capital contribution reserves,
 
with the remainder required to be paid from retained earnings.
 
4 Refer to Note 2
for more information.
 
5 Includes an increase of USD
45
m related to the issuance of high-trigger
 
loss-absorbing additional tier 1 capital with
 
an equity conversion feature.
 
6 Includes an increase of USD
285
m in
the second quarter of 2023 due to the acquisition of the Credit Suisse Group.
 
7 Comparative-period information has been revised. Refer to Note 2 for more information.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
258
Other comprehensive
 
income recognized
 
directly in equity,
 
net of tax
1
of which:
 
foreign currency
 
translation
of which:
 
financial assets at
fair value through OCI
of which:
 
cash flow
 
hedges
Total equity
attributable to
 
shareholders
Non-controlling
 
interests
Total equity
5,236
4,653
(7)
628
60,662
340
61,002
(6,262)
(6,262)
115
115
163
163
0
0
716
716
13
13
(1,668)
(9)
(1,677)
(15)
(15)
(69)
0
(69)
0
0
0
0
(3)
(3)
4
(7)
(3)
(5,267)
(525)
6
(4,793)
3,149
18
3,167
7,630
32
7,661
(5,267)
(525)
6
(4,793)
(4,481)
(14)
(4,494)
(103)
4,128
(4)
(4,234)
56,876
342
57,218
3,547
3,547
162
162
(61)
(61)
(3,070)
(3,070)
112
112
206
206
0
0
1,097
1,097
19
19
(1,679)
(4)
(1,683)
11
11
(150)
0
(150)
0
0
(1)
(1)
0
0
53
172
6
224
2,715
1,456
4
1,275
28,352
22
28,374
27,366
16
27,382
2,715
1,456
4
1,275
986
5
991
2,462
5,584
(1)
(3,109)
85,624
531
86,156
(3,091)
(3,091)
78
78
124
124
1,104
1,104
23
23
(2,256)
(30)
(2,285)
(6)
(6)
44
0
44
0
0
(3)
(3)
93
(20)
73
(1,417)
(1,754)
1
481
3,388
13
3,401
5,085
60
5,146
(1,417)
(1,754)
1
481
(1,698)
(47)
(1,744)
1,088
3,830
0
(2,585)
85,079
494
85,574
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
259
Share information and earnings per share
Ordinary share capital
As of 31 December 2024, UBS Group AG had
3,462,087,722
 
issued fully paid registered shares
 
with a nominal value of
USD
0.10
 
each (31 December 2023:
3,462,087,722
 
shares) leading to a share capital of
 
USD
346,208,772.20
.
 
Conditional capital
As
 
of
 
31 December
 
2024,
 
the
 
following
 
conditional
 
capital
 
was
 
available
 
to
 
the
 
Board
 
of
 
Directors
 
(the
 
BoD)
 
of
UBS Group AG.
 
–
Conditional
 
capital
 
in
 
the
 
amount
 
of
 
USD
38,000,000
 
for
 
the
 
issuance
 
of
 
a
 
maximum
 
of
380,000,000
 
fully
 
paid
registered shares with a nominal value of USD
0.10
 
each, to be issued through the voluntary or mandatory exercise of
conversion rights and /
 
or warrants granted
 
in connection with the
 
issuance of bonds or
 
similar financial instruments
by
 
UBS
 
Group
 
AG
 
or
 
another
 
member
 
of
 
the
 
Group
 
on
 
national
 
or
 
international
 
capital
 
markets.
 
This
 
conditional
capital allowance was approved
 
at the Extraordinary General
 
Meeting (the EGM) held on 26
 
November 2014, having
originally been
 
approved at
 
the Annual
 
General Meeting
 
(the AGM)
 
of UBS
 
AG on
 
14 April 2010.
 
The BoD
 
has not
made use of such allowance.
–
Conditional
 
capital
 
in
 
the
 
amount
 
of
 
USD
12,170,583
 
for
 
the
 
issuance
 
of
 
a
 
maximum
 
of
121,705,830
 
fully
 
paid
registered shares with
 
a nominal value
 
of USD
0.10
 
each, to be
 
issued upon exercise
 
of employee options
 
and stock
appreciation rights issued
 
to employees and
 
members of the
 
management and of
 
the BoD of
 
UBS Group AG and
 
its
subsidiaries;
 
however, there
 
were no
 
employee options
 
or stock
 
appreciation rights
 
outstanding as
 
of 31
 
December
2024. This conditional capital allowance was approved by the
 
shareholders at the same EGM in 2014.
Conversion capital
As of 31 December 2024, UBS
 
Group AG had conversion
 
capital in the amount of
 
USD
70,000,000
, for the issuance of
a maximum
 
of
700,000,000
 
fully paid
 
registered
 
shares
 
with a
 
nominal value
 
of USD
0.10
 
each. The
 
issuance of
 
fully
paid registered
 
shares only
 
occurs through
 
the mandatory
 
conversion of
 
claims arising
 
upon the
 
occurrence of
 
one or
more trigger
 
events under
 
financial market
 
instruments with
 
contingent conversion
 
features issued
 
by UBS
 
Group AG.
The creation of this conversion capital was approved
 
at the AGM held on 24 April 2024.
Capital band and reserve capital
As of 31 December 2024, UBS Group AG had not introduced
 
any capital band or any reserve capital.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
260
Share repurchase programs
In March 2022, UBS
 
commenced a two-year share repurchase program
 
of up to USD
6
bn, which concluded on 28 March
2024. Under this program, UBS repurchased
121
m shares for a total acquisition cost of USD
2,277
m (CHF
2,138
m). UBS
intends
 
to
 
cancel
 
the
121
m
 
shares
 
repurchased
 
under
 
the
 
2022
 
program
 
by
 
means
 
of
 
a
 
capital
 
reduction,
 
pending
approval by shareholders at a future AGM.
On 3 April 2024, UBS launched a new 2024 share repurchase program. Shares acquired under
 
this program totaled
33
m
as of 31 December 2024 for a total acquisition cost of
 
USD
1,000
m (CHF
871
m).
 
As of or for the year ended
31.12.24
31.12.23
1
31.12.22
Shares outstanding
Shares issued
Balance at the beginning of the year
3,462,087,722
3,524,635,722
3,702,422,995
Shares canceled
(62,548,000)
2
(177,787,273)
3
Balance at the end of the year
3,462,087,722
3,462,087,722
3,524,635,722
Treasury shares
Balance at the beginning of the year
253,233,437
416,909,010
302,815,328
Acquisitions
102,499,468
138,791,939
359,378,093
Disposals
(68,470,434)
(64,270,031)
(67,497,138)
Cancellation of second trading line treasury shares
(62,548,000)
2
(177,787,273)
3
Shares transferred to Credit Suisse Group shareholders as consideration
 
for the acquisition of
 
the Credit Suisse Group
4
(175,649,481)
Balance at the end of the year
287,262,471
253,233,437
416,909,010
Shares outstanding
3,174,825,251
3,208,854,285
3,107,726,712
Basic and diluted earnings (USD m)
Net profit / (loss) attributable to shareholders for basic
 
EPS
5,085
27,366
7,630
Less: (profit) / loss on own equity derivative contracts
0
0
0
Net profit / (loss) attributable to shareholders for diluted
 
EPS
5,085
27,366
7,630
Weighted average shares outstanding
Weighted average shares outstanding for basic EPS
5
3,198,481,827
3,152,579,449
3,260,938,561
Effect of dilutive potential shares resulting from notional
 
employee shares, in-the-money options and warrants
outstanding
6
152,630,143
143,416,753
136,531,654
Weighted average shares outstanding for diluted EPS
3,351,111,970
3,295,996,202
3,397,470,215
Earnings per share (USD)
Basic
1.59
8.68
2.34
Diluted
 
1.52
8.30
2.25
Potentially dilutive instruments
7
Employee share-based compensation awards
11,003,130
2,807,589
4,182,799
Other equity derivative contracts
3,121,746
2,831,228
1,690,247
Total
14,124,877
5,638,817
5,873,046
1 Comparative-period information has been revised. Refer to Note 2 for more information.
 
2 Reflects the cancellation of shares purchased under UBS’s 2021
 
share repurchase program as approved by shareholders
at the 2023 Annual General Meeting (the AGM).
 
3 Reflects the cancellation of shares purchased under UBS’s 2021 share repurchase program as approved by shareholders at the 2022 AGM.
 
4 Refer to Note 2 for
more information.
 
5 The weighted average shares outstanding for basic EPS are calculated by taking the number of shares at the beginning of the period, adjusted by the number of shares acquired or issued during
the period, multiplied by a time-weighted factor for the period outstanding. As a result, balances are
 
affected by the timing of acquisitions and issuances during the period.
 
6 The weighted average number of shares
for notional employee awards with performance conditions reflects all potentially
 
dilutive shares that are expected to vest under the terms of the awards.
 
7 Reflects potential shares that could dilute basic earnings
per share in the future but were not dilutive for the periods presented.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
261
Statement of cash flows
For the year ended
USD m
31.12.24
31.12.23
1
31.12.22
Cash flow from / (used in) operating activities
Net profit / (loss)
5,146
27,382
7,661
Non-cash items included in net profit and other adjustments:
Depreciation, amortization and impairment of non-financial
 
assets
3,798
3,750
2,061
Credit loss expense / (release)
551
1,037
29
Share of net (profits) / loss of associates and joint ventures and
 
impairment related to associates
(144)
348
(32)
Deferred tax expense / (benefit)
(495)
(694)
494
Net loss / (gain) from investing activities
101
(102)
(1,470)
Net loss / (gain) from financing activities
(5,314)
8,534
(16,587)
Negative goodwill
(27,264)
Other net adjustments
2
22,379
(15,175)
5,844
Net change in operating assets and liabilities:
2
Amounts due from banks and amounts due to banks
(2,353)
3,291
(1,088)
Receivables from securities financing transactions measured at amortized
 
cost
(23,884)
(3,503)
5,690
Payables from securities financing transactions measured at amortized cost
(552)
(2,014)
(1,247)
Cash collateral on derivative instruments
242
96
76
Loans and advances to customers
27,019
27,877
3,529
Customer deposits
(15,072)
52,786
(8,692)
Financial assets and liabilities at fair value held for trading and derivative financial
 
instruments
(13,594)
3,674
8,006
Brokerage receivables and payables
2,179
(5,962)
6,019
Financial assets at fair value not held for trading and other financial assets
 
and liabilities
5,327
9,938
5,678
Provisions and other non-financial assets and liabilities
(116)
3,920
257
Income taxes paid, net of refunds
(1,938)
(1,852)
(1,582)
Net cash flow from / (used in) operating activities
3,279
3
86,068
3
14,647
Cash flow from / (used in) investing activities
Cash and cash equivalents acquired upon the acquisition of the
 
Credit Suisse Group
108,406
Purchase of subsidiaries, business, associates and intangible assets
(64)
(4)
(3)
Disposal of subsidiaries, business, associates and intangible assets
4
256
121
1,730
Purchase of property, equipment and software
(2,008)
(1,685)
(1,643)
Disposal of property, equipment and software
108
65
161
Net (purchase) / redemption of financial assets measured
 
at fair value through other comprehensive income
(3)
30
(699)
Purchase of debt securities measured at amortized cost
(5,962)
(14,244)
(30,792)
Disposal and redemption of debt securities measured at amortized
 
cost
8,384
10,435
18,799
Net cash flow from / (used in) investing activities
709
103,124
(12,447)
Table
 
continues below.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
262
Statement of cash flows (continued)
Table
 
continued from above.
For the year ended
USD m
31.12.24
31.12.23
1
31.12.22
Cash flow from / (used in) financing activities
Repayment of Swiss National Bank funding
5
(42,587)
(56,516)
Net issuance (repayment) of short-term debt measured at amortized
 
cost
(7,407)
3,169
(12,249)
Net movements in treasury shares and own equity derivative
 
activity
(2,923)
(2,779)
(6,006)
Distributions paid on UBS shares
(2,256)
(1,679)
(1,668)
Issuance of debt designated at fair value and long-term debt measured
 
at amortized cost
100,145
109,735
79,115
Repayment of debt designated at fair value and long-term debt measured
 
at amortized cost
(129,683)
(109,471)
(67,670)
Inflows from securities financing transactions measured at amortized
 
cost
6
6,273
Outflows from securities financing transactions measured at amortized
 
cost
6
(4,740)
Net cash flows from other financing activities
(987)
(721)
(617)
Net cash flow from / (used in) financing activities
(84,165)
(58,262)
(9,094)
Total cash flow
Cash and cash equivalents at the beginning of the year
340,207
195,321
207,875
Net cash flow from / (used in) operating, investing and financing
 
activities
(80,176)
130,931
(6,895)
Effects of exchange rate differences on cash and cash equivalents
2
(15,940)
13,955
(5,659)
Cash and cash equivalents at the end of the year
7,8
244,090
9
340,207
195,321
of which: cash and balances at central banks
8
223,329
313,976
169,363
of which: amounts due from banks
8
17,383
19,212
13,450
of which: money market paper
8,10
3,117
7,018
12,508
Additional information
Net cash flow from / (used in) operating activities includes:
Interest received in cash
53,498
44,581
15,718
Interest paid in cash
48,252
35,969
8,198
Dividends on equity investments, investment funds and associates
 
received in cash
11
2,864
2,296
1,907
1 Comparative-period
 
information has been
 
revised. Refer
 
to Note 2
 
for more information.
 
2 Foreign
 
currency translation
 
and foreign exchange
 
effects on operating
 
assets and liabilities
 
and on cash
 
and cash
equivalents are presented within the Other net adjustments line, with the exception of foreign currency hedge effects related to foreign exchange swaps, which
 
are presented on the line Financial assets and liabilities
at fair value held for trading and derivative financial instruments.
 
3 Includes cash receipts from the sale of loans and loan commitments of USD
13,210
m and USD
4,289
m within Non-core and Legacy for the years
ended 31 December 2024 and 31 December 2023, respectively.
 
4 Includes dividends received from associates.
 
5 Reflects the repayment of the Emergency Liquidity Assistance facility
 
to the Swiss National Bank,
which was recognized in the balance sheet line Amounts due to banks.
 
6 Reflects cash flows from securities financing transactions measured at amortized
 
cost that use UBS debt instruments as the underlying.
 
7
As of 31 December 2024, the balance includes
 
USD
16,584
m (31 December 2023: USD
11,996
m; 31 December 2022: USD
8,648
m) of Cash and cash equivalents
 
not available for general use by
 
the Group, which
consisted of USD
4,730
m (31 December 2023: USD
4,944
m; 31 December 2022: USD
4,253
m) considered by the Group as restricted (refer to Note
 
23 for more information) and USD
11,855
m (31 December 2023:
USD
7,052
m; 31 December 2022: USD
4,395
m) placed at central banks to
 
meet local statutory minimum reserve
 
requirements.
 
8 Includes only balances with an
 
original maturity of three months or
 
less.
 
9 The
balance includes USD
0.3
bn related to cash
 
held in Assets of
 
disposal groups held for
 
sale, recognized within
 
Other non-financial assets.
 
10 Money market paper
 
is included in the
 
balance sheet under Financial
assets at fair value not held for trading (31 December 2024: USD
2,589
m; 31 December 2023: USD
6,345
m; 31 December 2022: USD
6,048
m), Other financial assets measured at amortized cost (31 December 2024:
USD
402
m; 31 December 2023: USD
415
m; 31 December 2022: USD
6,459
m) and Financial assets at fair value held for trading (31 December 2024: USD
126
m; 31 December 2023: USD
259
m; 31 December 2022:
USD
2
m).
 
11 Includes dividends received from associates reported within Net cash flow from / (used in) investing activities.
Changes in liabilities arising from financing activities
USD m
Debt issued
measured at
amortized
cost
of which:
short-term
1
of which:
long-term
2
Securities
financing
transactions
measured at
amortized
cost
3
Swiss
National
Bank
funding
4
Debt issued
designated
at fair value
Over-the-
counter debt
instruments
5
Total
3
Balance as of 31 December 2022
114,621
29,676
84,945
73,638
1,684
189,943
Changes arising upon the acquisition of the Credit
 
Suisse Group
6
110,491
5,303
105,188
7,659
97,146
44,909
4,872
265,077
Cash flows
5,062
3,169
1,893
(56,516)
(520)
(1,109)
(53,083)
Non-cash changes
7,644
381
7,263
4,224
10,262
178
22,308
of which: foreign currency translation
5,291
408
4,882
4,224
1,780
(99)
11,195
of which: fair value changes
8,507
172
8,679
of which: hedge accounting and other effects
2,353
(27)
2,380
(25)
105
2,434
Balance as of 31 December 2023
237,817
38,530
199,288
7,659
44,854
128,289
5,625
424,245
Cash flows
(17,469)
(7,407)
(10,062)
1,533
(42,587)
(19,194)
(281)
(77,998)
Non-cash changes
(6,129)
(613)
(5,516)
(411)
(2,267)
(1,186)
192
(9,801)
of which: foreign currency translation
(6,630)
(613)
(6,017)
(376)
(2,267)
(3,245)
(260)
(12,778)
of which: fair value changes
2,388
(87)
2,301
of which: hedge accounting and other effects
501
501
(35)
(329)
539
676
Balance as of 31 December 2024
214,219
30,509
183,709
8,782
0
107,909
5,536
336,446
1 Debt with an original contractual maturity of less than
 
one year.
 
2 Debt with an original maturity greater than
 
or equal to one year. The classification of debt issued into short-term and long-term does not
 
consider
any early redemption
 
features.
 
3 Comparative
 
information as
 
of 31
 
December 2023
 
was revised
 
to include
 
securities financing
 
transactions measured
 
at amortized cost
 
that use UBS
 
debt instruments
 
as the
underlying. Cash flows
 
in 2023 associated
 
with these instruments
 
were included in
 
operating activities,
 
as they were
 
not material.
 
4 Reflects the Emergency
 
Liquidity Assistance facility
 
from the Swiss
 
National
Bank, which was recognized in the balance sheet line Amounts due to banks.
 
5 Included in balance sheet line Other financial liabilities designated at fair value.
 
6 Refer to Note 2 for more information about the
acquisition of the Credit Suisse Group.
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
264
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note 1
 
Summary of material accounting policies (continued)
a) Material accounting policies
This Note describes
 
the material accounting
 
policies applied in
 
the preparation
 
of the consolidated
 
financial statements
(the
 
Financial Statements)
 
of
 
UBS Group
 
AG and
 
its
 
subsidiaries
 
(UBS
 
or the
 
Group).
 
On 6 March
 
2025,
 
the
 
Financial
Statements were authorized for issue by the
 
UBS Group AG Board of Directors
 
(the BoD).
 
Basis of accounting
The
 
Financial
 
Statements
 
have
 
been
 
prepared
 
in
 
accordance
 
with
 
IFRS
 
Accounting
 
Standards,
 
as
 
issued
 
by
 
the
International Accounting Standards Board (the IASB),
 
and are presented in US dollars.
Disclosures marked as audited in the “Risk, capital, liquidity
 
and funding, and balance sheet” section of this report form
an integral part of the Financial Statements. These disclosures relate to requirements under IFRS 7,
Financial Instruments:
Disclosures
, and IAS 1,
Presentation of Financial Statements
, and are not repeated in this section.
 
The
 
accounting
 
policies
 
described
 
in
 
this
 
Note
 
have
 
been
 
applied
 
consistently
 
in
 
all
 
years
 
presented
 
unless
 
otherwise
stated in Note 1b.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Critical accounting estimates and judgments
Preparation of these Financial Statements under
 
IFRS Accounting Standards requires management to apply
 
judgment and make estimates and assumptions that
affect reported amounts of assets, liabilities,
 
income and expenses, and disclosure
 
of contingent assets and liabilities,
 
and may involve significant uncertainty
 
at the
time they are
 
made. Such estimates
 
and assumptions are
 
based on the best
 
available information. UBS regularly
 
reassesses such estimates and
 
assumptions, which
encompass historical
 
experience, expectations
 
of the
 
future and
 
other pertinent
 
factors, to
 
determine their
 
continuing relevance
 
based on
 
current conditions,
updating them as necessary. Changes in those
 
estimates and assumptions may have a significant effect on
 
the Financial Statements. Furthermore, actual results
may differ significantly from UBS’s estimates, which could result in
 
significant losses to the Group, beyond what was anticipated
 
or provided for.
 
The following
 
areas contain
 
estimation uncertainty
 
or require
 
critical judgment
 
and have
 
a significant
 
effect on
 
amounts recognized
 
in the
 
Financial
Statements:
–
provisional amounts of identifiable assets
 
acquired and liabilities assumed with
 
the acquisition of the Credit Suisse
 
Group (refer to item 1 in this Note
 
and
to Note 2);
–
expected credit loss measurement (refer to item 2g in this Note
 
and to Note 20);
–
fair value measurement (refer to item 2f in this Note
 
and to Note 21);
–
income taxes (refer to item 6 in this Note and to Note
 
9);
–
provisions and contingent liabilities (refer to item 10 in this
 
Note and to Note 18);
–
post-employment benefit plans (refer to item 5 in
 
this Note and to Note 26);
–
goodwill (refer to item 9 in this Note and to Note
 
13); and
–
consolidation of structured entities (refer to item 1 in this Note
 
and to Note 28).
 
1) Consolidation and business combinations
Consolidation
The Financial
 
Statements include
 
the financial
 
statements of
 
the parent
 
company (UBS
 
Group AG) and
 
its subsidiaries,
presented as a
 
single economic entity; intercompany
 
transactions and balances
 
have been eliminated.
 
UBS consolidates
all entities that
 
it controls,
 
including structured
 
entities (SEs),
 
which is the
 
case when
 
it has:
 
(i) power over
 
the relevant
activities of the
 
entity;
 
(ii) exposure to
 
the entity‘s variable
 
returns;
 
and (iii) the ability
 
to use its
 
power to affect
 
its own
returns.
Consideration is given to all facts and circumstances to determine whether the Group has power over another entity, i.e.
the current ability to direct the relevant activities of an entity when
 
decisions about those activities need to be made.
 
Subsidiaries,
 
including
 
SEs,
 
are
 
consolidated
 
from the
 
date
 
when
 
control
 
is gained
 
and deconsolidated
 
from
 
the
 
date
when control ceases. Control, or the lack thereof, is reassessed if facts and circumstances
 
indicate that there is a change
to one or more elements required to establish that control
 
is present.
›
Refer to Note 28 for more information
Critical accounting estimates and judgments
 
 
Each individual entity is assessed for consolidation in line with the aforementioned consolidation principles. The assessment of control
 
can be complex and
requires
 
the use of significant judgment,
 
in particular in determining
 
whether UBS has power over the
 
entity. As the nature and extent of UBS’s involvement
is unique
 
for each
 
entity,
 
there is
 
no uniform
 
consolidation outcome
 
by entity.
 
When carrying
 
out the
 
consolidation assessment,
 
judgment is
 
exercised
considering all the relevant facts and circumstances, including
 
the nature and activities of the investee, as
 
well as the substance of voting and similar
 
rights.
 
›
Refer to Note 28 for more information
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
265
Note 1
 
Summary of material accounting policies
(continued)
 
 
 
 
 
 
 
 
 
 
 
 
Business combinations
Business combinations are accounted
 
for using the acquisition method,
 
as prescribed by IFRS
 
3,
Business Combinations
.
Under this method, any excess of the acquisition-date amounts of
 
the identifiable net assets acquired over the fair value
of the consideration
 
transferred results
 
in negative
 
goodwill that
 
is recognized
 
in the income
 
statement on
 
the date
 
of
the acquisition, with transaction costs expensed as
 
incurred. Provisional amounts of identifiable assets acquired, liabilities
assumed
 
and
 
purchase
 
consideration
 
determined
 
as
 
of
 
the
 
acquisition
 
date
 
may
 
be
 
subject
 
to
 
adjustments
 
within
 
a
maximum of one year from the acquisition date (referred
 
to in this report as measurement period adjustments).
The amount of non-controlling
 
interests, if any,
 
is measured at
 
the non-controlling interest’s
 
proportionate share of
 
the
acquiree’s identifiable net assets.
Critical accounting estimates and judgments
 
 
 
 
When complete information about all relevant facts and circumstances of the acquisition date is not practically available to UBS at the time when the initial
acquisition accounting
 
was applied
 
in the
 
period of
 
acquisition, the
 
amounts that
 
form part
 
of the
 
business combination
 
accounting are considered
 
provisional
and subject to further measurement
 
period adjustments if new
 
information about facts and circumstances
 
existing on the date of the
 
acquisition is obtained
within one year from the acquisition date. In addition, the use of valuation techniques,
 
modeling assumptions and estimates of unobservable
 
market inputs
in
 
determining fair
 
values require
 
significant judgment
 
and could
 
affect
 
the provisional
 
amounts of
 
identifiable assets
 
acquired,
 
liabilities assumed
 
and
purchase consideration, thereby affecting the resulting goodwill / negative
 
goodwill arising from the business combination.
 
›
Refer to Note 2 for more information relating to
 
the acquisition of the Credit Suisse Group
2) Financial instruments
a. Recognition
UBS generally recognizes financial instruments when
 
it becomes a party to contractual provisions of an instrument.
However,
 
UBS
 
does
 
not recognize
 
assets
 
received
 
in
 
transfers
 
that
 
do
 
not
 
qualify
 
for
 
derecognition
 
by
 
the
 
transferor
(applying
 
derecognition
 
principles
 
under
 
IFRS
 
Accounting
 
Standards
 
as
 
described
 
in
 
item 2e
 
below).
 
UBS
 
applies
settlement date accounting to all standard purchases
 
and sales of non-derivative financial instruments.
 
UBS may act in a
 
fiduciary capacity, which results in it holding or
 
placing assets on behalf of individuals, trusts, retirement
benefit plans
 
and other
 
institutions. Unless
 
these items
 
meet the
 
definition of
 
an asset
 
and the
 
recognition criteria
 
are
satisfied,
 
they
 
are
 
not
 
recognized
 
on
 
UBS’s
 
balance
 
sheet
 
and
 
the
 
related
 
income
 
is
 
excluded
 
from
 
the
 
Financial
Statements.
 
Client cash balances associated with derivatives clearing
 
and execution services are not recognized on the
 
balance sheet
if,
 
through
 
contractual
 
agreement,
 
regulation
 
or
 
practice,
 
UBS
 
neither
 
obtains
 
benefits
 
from
 
nor
 
controls
 
such
 
cash
balances.
b. Classification, measurement and presentation
Financial assets
 
Where the contractual
 
terms of a debt
 
instrument result in cash
 
flows that are
 
solely payments of principal and
 
interest
(SPPI) on
 
the principal
 
amount outstanding,
 
the debt
 
instrument is
 
classified as
 
measured at
 
amortized cost
 
if it is
 
held
within a business model that has an objective of holding financial assets to collect contractual cash flows, or at fair value
through other comprehensive income (FVOCI) if it
 
is held within a
 
business model that has an
 
objective of both collecting
contractual cash flows and selling financial assets.
 
All other
 
financial
 
assets
 
are measured
 
at fair
 
value
 
through
 
profit or
 
loss (FVTPL),
 
including those
 
held for
 
trading
 
or
those managed on a fair value basis, except for derivatives designated in certain hedge accounting relationships
 
(refer to
item 2j in this Note for more information).
 
Business model assessment and contractual cash flow characteristics
 
UBS determines
 
the nature
 
of a
 
business
 
model
 
by considering
 
the way
 
portfolios
 
of financial
 
assets
 
are
 
managed
 
to
achieve a particular business objective at the time an asset
 
is recognized.
 
In assessing whether contractual cash flows are SPPI, the Group considers whether the contractual terms of the financial
asset
 
contain
 
a
 
term
 
that
 
could
 
change
 
the
 
timing
 
or
 
amount
 
of
 
contractual
 
cash
 
flows
 
arising
 
over
 
the
 
life
 
of
 
the
instrument. This assessment includes contractual
 
cash flows that may vary
 
due to environmental, social and governance
(ESG) triggers.
 
 
 
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
266
Note 1
 
Summary of material accounting policies
(continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial liabilities
 
Financial liabilities measured at amortized cost
 
Debt issued
 
measured
 
at
 
amortized
 
cost
 
includes
 
contingent
 
capital
 
instruments
 
issued
 
prior
 
to
 
November
 
2023 that
contain
 
contractual
 
provisions
 
under
 
which
 
the
 
principal
 
amounts
 
would
 
be
 
written
 
down
 
upon
 
either
 
a
 
specified
common equity tier 1
 
(CET1) ratio breach or
 
a determination by
 
the Swiss Financial Market
 
Supervisory Authority (FINMA)
that a viability
 
event has occurred.
 
Such contractual
 
provisions are
 
not derivatives, as
 
the underlying
 
is deemed to
 
be a
non-financial
 
variable
 
specific
 
to a
 
party
 
to the
 
contract.
 
Issuances
 
after
 
November
 
2023 include
 
a
 
contractual
 
equity
conversion feature
 
with the same
 
triggers, i.e. a
 
CET1 ratio breach
 
or FINMA viability
 
event. When the
 
debt is issued
 
in
US dollars, these conversion features are classified as equity and
 
are accounted for in
Share premium
 
separately from the
amortized cost debt host.
 
When the legal bail-in mechanism for write-down
 
or conversion into equity does not form part
 
of the contractual terms
of issued debt instruments, it does not affect the accounting classification
 
of these instruments as debt or equity.
If a debt were to be written down or converted into equity in a future period, it would be partially or fully derecognized,
with
 
the
 
difference
 
between
 
its
 
carrying
 
amount
 
and
 
the
 
fair
 
value
 
of
 
any
 
equity
 
issued
 
recognized
 
in
 
the
 
income
statement,
 
with the conversion features classified as equity always remaining
 
in
Equity attributable to shareholders
.
 
Financial liabilities measured at fair value through profit or
 
loss
 
UBS designates certain issued debt instruments as financial liabilities at fair value through profit or loss, on the basis that
such financial instruments
 
include embedded
 
derivatives that
 
are not
 
closely related
 
and which significantly
 
impact the
cash flows of the instrument and
 
/ or are managed on a
 
fair value basis (refer to
 
the table below for more information).
Financial instruments
 
including embedded
 
derivatives arise
 
predominantly from
 
the issuance
 
of certain
 
structured debt
instruments.
 
Measurement and presentation
 
On initial recognition, financial instruments are measured at fair value adjusted for directly attributable transaction costs,
unless the instrument is classified at FVTPL, in which case transaction
 
costs are excluded.
After initial recognition, UBS classifies, measures and presents its financial assets and liabilities in accordance with IFRS 9,
as described in the table below.
 
Classification, measurement and presentation
 
of financial assets
 
Financial assets classification
Significant items included
Measurement and presentation
Measured at
 
amortized cost
This classification includes:
–
cash and balances at central banks;
–
amounts due from banks;
–
receivables from securities financing transactions;
–
cash collateral receivables on derivative instruments;
–
residential and commercial mortgages;
–
corporate loans;
–
secured loans, including Lombard loans, and
unsecured loans;
 
and
–
debt securities held as high-quality liquid
 
assets
(HQLA).
 
Measured at amortized cost using the effective interest
method less allowances for expected credit losses
 
(ECL)
(refer to items 2d and 2g in this Note for more information).
The following items are recognized in the income
statement:
–
interest income, which is accounted for in accordance
with item 2d in this Note;
–
ECL and reversals; and
–
foreign exchange (FX) translation gains and losses.
When a financial asset at amortized cost is derecognized,
the gain or loss is recognized in the income statement.
For amounts arising from settlement of certain derivatives,
see below in this table.
 
Measured at
FVOCI
 
Debt
instruments
measured at
FVOCI
This classification primarily includes debt securities
held as HQLA.
Measured at fair value,
 
with unrealized gains and losses
reported in
Other comprehensive income
, net of applicable
income taxes, until such investments are derecognized.
Upon derecognition, any accumulated balances in
Other
comprehensive income
 
are reclassified to the income
statement and reported within
Other income.
The following items, which are determined on the
 
same
basis as for financial assets measured at amortized
 
cost, are
recognized in the income statement:
–
interest income, which is accounted for in accordance
with item 2d in this Note;
–
ECL and reversals; and
–
FX translation gains and losses.
 
 
 
 
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
267
Note 1
 
Summary of material accounting policies (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Classification, measurement and presentation
 
of financial assets
Financial assets classification
Significant items included
Measurement and presentation
Measured at
FVTPL
Held for
 
trading
Financial assets held for trading include:
–
all derivatives with a positive replacement value,
 
except
those that are designated and effective hedging
instruments; and
–
other financial assets originated or acquired principally
for the purpose of selling or repurchasing in the near
term, or that are part of a portfolio of identified
financial instruments that are managed together
 
and for
which there is evidence of a recent actual pattern of
short-term profit taking. Included in this category
 
are
debt instruments (including those in the form
 
of
securities, money market paper,
 
and traded corporate
and bank loans) and equity instruments.
 
Measured at fair value,
 
with changes recognized in the
income statement.
Derivative assets (including derivatives that
 
are designated
and effective hedging instruments) are generally
presented as
Derivative financial instruments
, except those
exchange-traded derivatives (ETD) and over-the-counter
(OTC)-cleared derivatives that are legally settled on
 
a daily
basis or economically net settled on a daily basis,
 
which
are presented within
Cash collateral receivables on
derivative instruments.
Changes in fair value, initial transaction costs,
 
dividends
and gains and losses arising on disposal or redemption
 
are
recognized in
Other net income from financial
instruments measured at fair value through
 
profit or loss
,
except interest income on instruments other than
derivatives (refer to item 2d in this Note), interest on
derivatives designated as hedging instruments
 
in hedges
of interest rate risk and forward points on certain short-
and long-duration FX contracts acting as economic
hedges,
 
which are reported in
Net interest income.
 
Changes in the fair value of derivatives that
 
are
designated and effective hedging instruments are
presented either in the income statement or
Other
comprehensive income
, depending on the type of hedge
relationship (refer to item 2j in this Note for more
information).
Mandatorily
measured at
FVTPL – Other
Financial assets mandatorily measured at FVTPL
 
that are
not held for trading include:
 
–
certain structured instruments, certain commercial loans,
and receivables from securities financing transactions
that are managed on a fair value basis;
 
–
loans managed on a fair value basis, including
 
those
hedged with credit derivatives;
–
certain debt securities held as HQLA and
 
managed on a
fair value basis;
 
–
brokerage receivables, for which contractual cash flows
do not meet the SPPI criterion because the
 
aggregate
balance is accounted for as a single unit of
 
account,
with interest being calculated on the individual
components;
–
equity instruments; and
–
assets held under unit-linked investment contracts.
 
 
 
 
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
268
Note 1
 
Summary of material accounting policies (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Classification, measurement and presentation
 
of financial liabilities
Financial liabilities classification
Significant items included
Measurement and presentation
Measured at amortized cost
This classification includes:
–
demand and time deposits;
 
–
retail savings / deposits;
–
sweep deposits;
–
payables
 
from securities financing transactions;
 
–
non-structured debt issued;
 
–
subordinated debt;
 
–
commercial paper and certificates of deposit; and
–
cash collateral payables on derivative instruments.
Measured at amortized cost using the effective interest
method.
When a financial liability at amortized cost is
derecognized, the gain or loss is recognized in the income
statement.
 
Interest income generated from client deposits
derecognized pursuant to certain deposit sweep
 
programs
is presented within
Net interest income from financial
instruments measured at fair value through
 
profit or loss
and other
.
Measured at
FVTPL
Held for trading
Financial liabilities held for trading include:
–
all derivatives with a negative replacement value
(including certain loan commitments),
 
except those
that are designated and effective hedging
instruments; and
–
obligations to deliver financial instruments,
 
such as
debt and equity instruments, that UBS has
 
sold to
third parties but does not own (short positions).
Measurement and presentation of financial liabilities
classified at FVTPL follow the same principles
 
as for
financial assets classified at FVTPL, except that
 
the amount
of change in the fair value of a financial liability
designated at FVTPL that is attributable to changes
 
in
UBS’s own credit risk is presented in
Other comprehensive
income
 
directly within
Retained earnings
 
and is never
reclassified to the income statement.
Derivative liabilities (including derivatives that
 
are
designated and effective hedging instruments)
 
are
generally presented as
Derivative financial instruments
,
except those exchange-traded and OTC-cleared
derivatives that are legally settled on a daily basis
 
or
economically net settled on a daily basis, which
 
are
presented within
Cash collateral payables on derivative
instruments.
Designated at
FVTPL
Financial liabilities designated at FVTPL include:
–
issued hybrid debt instruments,
 
primarily equity-
linked, credit-linked and rates-linked bonds or notes;
–
issued debt instruments managed on a fair
 
value
basis;
–
certain payables from securities financing transactions;
–
amounts due under unit-linked investment
 
contracts,
the cash flows of which are linked to financial
 
assets
measured at FVTPL and eliminate an accounting
mismatch;
 
and
–
brokerage payables, which arise in conjunction with
brokerage receivables and are measured at FVTPL to
achieve measurement consistency.
c. Loan commitments and financial guarantees
Loan
 
commitments
 
are
 
arrangements
 
to
 
provide
 
credit
 
under
 
defined
 
terms
 
and
 
conditions.
 
Irrevocable
 
loan
commitments
 
are
 
classified
 
as:
 
(i) derivative
 
loan
 
commitments
 
measured
 
at
 
fair
 
value
 
through
 
profit
 
or
 
loss;
 
(ii) loan
commitments
 
designated
 
at
 
fair
 
value
 
through
 
profit
 
or
 
loss;
 
or (iii)
 
loan commitments
 
not
 
measured
 
at
 
fair
 
value,
 
in
which case the ECL requirements as set out
 
in item 2g in this Note apply.
 
Financial guarantee contracts are
 
contracts that require UBS
 
to make specified payments
 
to reimburse the holder
 
for an
incurred loss
 
because a
 
specified debtor
 
fails to
 
make payments
 
when due
 
in accordance
 
with the
 
terms of a
 
specified
debt instrument.
 
The ECL
 
requirements as
 
set out
 
in item
 
2g in
 
this Note
 
apply to
 
financial guarantees
 
issued that
 
are
not accounted for at FVTPL.
Financial
 
guarantee
 
contracts
 
held
 
by
 
UBS
 
for
 
credit
 
risk
 
mitigation
 
purposes
 
that
 
are
 
assessed
 
to
 
be
 
integral
 
to
 
the
guaranteed
 
exposure
 
are
 
accounted
 
for
 
as
 
a
 
component
 
of
 
that
 
exposure
 
with
 
cash
 
flows
 
expected
 
from
 
the
 
credit
enhancement included in the measurement of the ECL of the respective
 
exposure. Rights to reimbursement arising from
financial
 
guarantees
 
held
 
that
 
are
 
not
 
integral
 
to
 
the
 
terms
 
of
 
the
 
exposure
 
they
 
cover
 
are
 
recognized
 
when
 
their
realization is considered to be virtually certain.
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
269
Note 1
 
Summary of material accounting policies (continued)
d. Interest income and expense
Interest income
 
from financial
 
instruments measured
 
at amortized
 
cost and
 
FVOCI and
 
interest expense
 
from financial
instruments measured at amortized cost are recognized in the income statement based on
 
the effective interest method.
When
 
calculating
 
the
 
effective
 
interest
 
rate
 
(the
 
EIR)
 
for
 
financial
 
instruments
 
(other
 
than
 
credit-impaired
 
financial
instruments), UBS estimates future
 
cash flows considering
 
all contractual terms
 
of the instrument,
 
but not expected
 
credit
losses, with the
 
EIR applied to the
 
gross carrying amount of the
 
financial asset or
 
the amortized cost of
 
a financial liability.
However,
 
when
 
a
 
financial
 
asset
 
becomes
 
credit
 
impaired
 
after
 
initial
 
recognition,
 
interest
 
income
 
is
 
determined
 
by
applying the EIR
 
to the amortized
 
cost of the
 
instrument, which
 
represents the
 
gross carrying
 
amount adjusted
 
for any
credit loss allowance.
 
Upfront fees, including fees on loan commitments not measured at fair value where a loan is expected to be issued, and
direct costs are
 
included within the
 
initial measurement
 
of a financial
 
instrument measured
 
at amortized
 
cost or FVOCI
and recognized over the expected life of the instrument
 
as part of its EIR.
Fees related
 
to loan
 
commitments where
 
no loan
 
is expected
 
to be
 
issued, as
 
well as
 
loan syndication
 
fees where
 
UBS
does not retain a
 
portion of the
 
syndicated loan or where
 
UBS does retain a
 
portion of the
 
syndicated loan at the
 
same
effective
 
yield
 
for
 
comparable
 
risk
 
as
 
other
 
participants,
 
are
 
included
 
in
Net
 
fee
 
and
 
commission
 
income
 
and
 
either
recognized over the life of the commitment or when syndication
 
occurs.
 
›
Refer to item 3 in this Note for more information
Interest
 
income
 
on
 
financial
 
assets,
 
excluding
 
derivatives,
 
is
 
included
 
in
 
interest
 
income
 
when
 
positive
 
and
 
in
 
interest
expense
 
when
 
negative.
 
Similarly,
 
interest
 
expense
 
on
 
financial
 
liabilities,
 
excluding
 
derivatives,
 
is
 
included
 
in
 
interest
expense, except when interest rates are negative,
 
in which case it is included in interest income.
 
›
Refer to item 2b in this Note and Note
4
 
for more information
e. Derecognition
 
Financial assets
UBS derecognizes a transferred financial
 
asset, or a
 
portion of a
 
financial asset, if the
 
purchaser has obtained substantially
all the risks and rewards of the asset or a significant part of the risks and
 
rewards combined with a practical ability to sell
or pledge the asset.
 
Where
 
financial
 
assets
 
have
 
been
 
pledged
 
as
 
collateral
 
or
 
in
 
similar
 
arrangements,
 
they
 
are
 
considered
 
to
 
have
 
been
transferred
 
if the
 
counterparty
 
has received
 
the contractual
 
rights to
 
the
 
cash flows
 
of the
 
pledged assets,
 
as
 
may be
evidenced
 
by,
 
for
 
example,
 
the
 
counterparty’s
 
right to
 
sell or
 
repledge
 
the
 
assets.
 
In
 
transfers
 
where
 
control
 
over
 
the
financial asset is retained,
 
UBS continues to recognize
 
the asset to the extent
 
of its continuing involvement,
 
determined
by the extent to which it is exposed to changes in the value
 
of the transferred asset following the transfer.
 
›
Refer to Note
23
 
for more information
 
Financial liabilities
UBS
 
derecognizes
 
a
 
financial
 
liability
 
when
 
it
 
is
 
extinguished,
 
i.e.
 
when
 
the
 
obligation
 
specified
 
in
 
the
 
contract
 
is
discharged, canceled or expires. When an existing financial liability is exchanged for a new one from the same lender on
substantially
 
different
 
terms,
 
or
 
the
 
terms
 
of
 
an
 
existing
 
liability
 
are
 
substantially
 
modified,
 
the
 
original
 
liability
 
is
derecognized
 
and
 
a
 
new
 
liability
 
recognized
 
with
 
any
 
difference
 
in
 
the
 
respective
 
carrying
 
amounts
 
recorded
 
in
 
the
income statement.
 
Most
 
OTC
 
derivative
 
contracts
 
and
 
exchange-traded
 
futures
 
and
 
option
 
contracts
 
cleared
 
through
 
central
 
clearing
counterparties
 
and exchanges are
 
considered to be
 
settled on a
 
daily basis, as
 
the payment or
 
receipt of a
 
variation margin
on a daily basis represents a legal or economic settlement,
 
which results in derecognition of the associated derivatives.
›
Refer to Note 22 for more information
 
f. Fair value of financial instruments
UBS accounts for a significant portion
 
of its assets and liabilities at fair
 
value. Fair value is the price on
 
the measurement
date that would be
 
received for the sale of
 
an asset or paid
 
to transfer a liability
 
in an orderly transaction between market
participants in the principal market, or in the most advantageous
 
market in the absence of a principal market.
 
›
Refer to Note
21
 
for more information
 
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
270
Note 1
 
Summary of material accounting policies (continued)
 
 
 
 
 
 
 
 
 
Critical accounting estimates and judgments
 
 
 
 
The use of valuation techniques, modeling assumptions and estimates of
 
unobservable market inputs in the fair valuation of
 
financial instruments requires
significant
 
judgment
 
and
 
could
 
affect
 
the
 
amount
 
of
 
gain
 
or
 
loss
 
recorded
 
for
 
a
 
particular
 
position.
 
Valuation
 
techniques
 
that
 
rely
 
more
 
heavily
 
on
unobservable inputs
 
and sophisticated
 
models inherently
 
require a
 
higher level
 
of judgment
 
and may
 
require adjustment
 
to reflect
 
factors that
 
market
participants would consider in estimating fair value,
 
such as close-out costs, which are presented in Note
 
21d.
 
UBS’s governance framework
 
over fair value
 
measurement is described
 
in Note 21b,
 
and UBS provides
 
a sensitivity analysis
 
of the estimated
 
effects arising
from changing significant unobservable inputs in
 
Level 3 financial instruments to reasonably possible
 
alternative assumptions in Note 21f.
 
›
Refer to Note 21 for more information
g. Allowances and provisions for expected credit losses
ECL are
 
recognized for
 
financial assets
 
measured at
 
amortized cost,
 
financial assets
 
measured at
 
FVOCI, fee
 
and lease
receivables,
 
financial
 
guarantees,
 
and
 
loan
 
commitments
 
not
 
measured
 
at
 
fair
 
value.
 
ECL
 
are
 
also
 
recognized
 
on
 
the
undrawn portion of comm
 
itted unconditionally revocable
 
credit lines, which
 
include UBS’s credit
 
card limits and
 
master
credit facilities, as UBS is exposed to credit risk because the borrower has the ability to draw down funds before UBS can
take credit risk mitigation actions.
Recognition of expected credit losses
 
ECL are recognized on the following basis.
–
Stage 1 –
 
those instruments
 
for which
 
no significant
 
increase in
 
credit risk
 
(SICR) has
 
been observed
 
(see
Significant
increase in credit
 
risk
 
below): Maximum 12-month
 
ECL are recognized
 
from initial recognition,
 
reflecting the portion
of lifetime ECL that would result if a default occurs in the 12 months after the reporting date, weighted
 
by the risk of
a default occurring.
 
–
Stage 2
 
–
 
those
 
instruments
 
for
 
which
 
an
 
SICR
 
is
 
observed
 
but
 
which
 
are
 
not
 
credit
 
impaired:
 
Lifetime
 
ECL
 
are
recognized reflecting lifetime cash shortfalls that would result from
 
all possible default events over the expected life of
a financial instrument,
 
weighted by the
 
risk of a
 
default occurring. When
 
an SICR is
 
no longer observed,
 
the instrument
will move back to stage 1.
–
Stage 3 – credit-impaired financial instruments (as determined by the occurrence of one or more loss events): Lifetime
ECL are
 
always recognized
 
by estimating
 
expected cash
 
flows based
 
on a
 
chosen recovery
 
strategy. Credit-impaired
exposures may include positions for which no allowance has been recognized, for example because they are expected
to be fully recoverable through collateral held.
–
Changes in lifetime ECL since initial recognition are also
 
recognized for assets that are purchased credit impaired (PCI).
PCI financial
 
instruments include
 
those that
 
are purchased
 
at a
 
deep discount
 
or newly
 
originated with
 
a defaulted
counterparty;
 
they remain a separate category until derecognition.
 
Consistent with
 
the requirements
 
of IFRS 3
 
and IFRS 9,
 
immediately after
 
the application
 
of the
 
acquisition method
 
to
the business combination, acquired
 
financial instruments carried at
 
amortized cost or FVOCI
 
that are not deemed credit
impaired are
 
classified as stage 1
 
financial instruments and
 
a maximum
 
12-month ECL is
 
recognized, resulting in
 
a carrying
amount of the respective financial instruments below their
 
acquisition-date fair value. As and when significant
 
increases
in credit risk subsequently arise, these exposures will move
 
to stage 2, and if assessed to be credit-impaired, to stage
 
3.
All or part
 
of a financial
 
asset is written
 
off if it
 
is deemed uncollectible
 
or forgiven. Write-offs
 
reduce the principal
 
amount
of a claim
 
and are charged against
 
related allowances for credit
 
losses. Recoveries, in part or
 
in full, of
 
amounts previously
written off are generally credited to
Credit loss expense / (release)
.
 
ECL are recognized in the income statement in
Credit loss expense / (release)
. A corresponding ECL allowance is reported
as a decrease
 
in the carrying
 
amount of financial
 
assets measured at
 
amortized cost on
 
the balance sheet.
 
For financial
assets that
 
are measured
 
at FVOCI,
 
the carrying
 
amount is
 
not reduced,
 
but an
 
accumulated
 
amount is
 
recognized in
Other comprehensive
 
income
. For
 
off-balance sheet
 
financial instruments
 
and other
 
credit lines,
 
provisions for
 
ECL are
presented in
Provisions.
Default and credit impairment
UBS applies
 
a
 
single
 
definition
 
of default
 
for
 
credit
 
risk
 
management
 
purposes,
 
regulatory
 
reporting
 
and
 
ECL,
 
with
 
a
counterparty classified as defaulted based on quantitative
 
and qualitative criteria.
 
›
Refer to the “Risk management and control” section of this
 
report for more information
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
271
Note 1
 
Summary of material accounting policies (continued)
Measurement of expected credit losses
IFRS 9 ECL reflect
 
an unbiased, probability
 
-weighted estimate
 
based on loss
 
expectations resulting
 
from default
 
events.
The method
 
used to
 
calculate ECL
 
applies the
 
following principal
 
factors: probability
 
of default
 
(PD), loss
 
given default
(LGD) and
 
exposure at
 
default (EAD).
 
Parameters are
 
generally determined
 
on an
 
individual financial
 
asset level.
 
Based
on the materiality of
 
the portfolio, for
 
credit card
 
exposures and personal
 
account overdrafts
 
in Switzerland, a portfolio
approach is applied that
 
derives an average PD
 
and LGD for
 
the entire portfolio. PDs
 
and LGDs used in
 
the ECL calculation
are point-in-time (PIT)-based
 
for key portfolios
 
and consider
 
both current
 
conditions and expected
 
cyclical changes. For
material portfolios, PDs
 
and LGDs are determined
 
for different scenarios, whereas EAD projections are
 
treated as scenario
independent.
For the purpose
 
of determining the
 
ECL-relevant parameters,
 
UBS leverages its
 
Basel III advanced internal
 
ratings-based
(A-IRB) models that
 
are also used
 
in determining expected loss
 
(EL) and risk-weighted assets
 
under the Basel III framework
and
 
Pillar 2
 
stress
 
loss
 
models.
 
Adjustments
 
have
 
been
 
made
 
to
 
these
 
models
 
and
 
IFRS-9-related
 
models
 
have
 
been
developed that consider the complexity, structure and risk profile of relevant portfolios
 
and take account of the fact that
PDs and LGDs
 
used in the
 
ECL calculation are
 
PIT based, as
 
opposed to the
 
corresponding Basel III through-the-cycle (TTC)
parameters. All models that
 
are relevant for
 
measuring expected credit losses
 
are subject to
 
UBS’s model validation
 
and
oversight processes.
 
Probability of default:
PD represents the probability
 
of a default over a
 
specified time period. A 12-month
 
PD represents
the probability of default determined for the next 12 months and a lifetime PD represents
 
the probability of default over
the remaining lifetime
 
of the instrument.
 
PIT PDs are
 
derived from TTC
 
PDs and scenario
 
forecasts. The modeling
 
is region,
industry and
 
client segment
 
specific and considers
 
both macroeconomic
 
scenario dependencies
 
and client-idiosyncratic
information.
Exposure at default:
EAD represents an estimate of
 
the exposure to credit
 
risk at the time
 
of a potential default occurring,
considering expected repayments, interest payments and accruals,
 
discounted at the EIR. Future drawdowns on facilities
are considered through
 
a credit conversion
 
factor (a CCF)
 
that is reflective
 
of historical
 
drawdown and default
 
patterns
and the characteristics of the respective portfolios.
Loss given default:
LGD represents an estimate
 
of the loss at the time of a potential
 
default occurring,
 
taking into account
expected
 
future
 
cash
 
flows
 
from
 
collateral
 
and
 
other
 
credit
 
enhancements,
 
or
 
expected
 
payouts
 
from
 
bankruptcy
proceedings
 
for unsecured claims
 
and, where applicable,
 
time to realization
 
of collateral and
 
the seniority of
 
claims. LGD is
commonly expressed
 
as a percentage
 
of EAD.
Estimation of expected credit losses
Number of scenarios and estimation of scenario weights
Determination
 
of probability-weighted
 
ECL requires evaluating
 
a range of
 
diverse and
 
relevant future economic
 
conditions,
especially
 
with a view to
 
modeling the
 
non-linear effect
 
of assumptions
 
about macroeconomic
 
factors on the
 
estimate.
 
To
 
accommodate
 
this
 
requirement,
 
UBS
 
uses
 
different
 
economic
 
scenarios
 
in
 
the
 
ECL
 
calculation.
 
Each
 
scenario
 
is
represented by
 
a specific
 
scenario
 
narrative,
 
which
 
is relevant
 
considering
 
the exposure
 
of key
 
portfolios to
 
economic
risks, and for
 
which a set
 
of consistent macroeconomic variables
 
is determined. The
 
estimation of the
 
appropriate weights
for
 
these
 
scenarios
 
is
 
predominantly
 
judgment
 
based.
 
The
 
assessment
 
is
 
based
 
on
 
a
 
holistic
 
review
 
of
 
the
 
prevailing
economic or
 
political conditions,
 
which
 
may exhibit
 
different
 
levels of
 
uncertainty.
 
It takes
 
into account
 
the impact
 
of
changes in the nature and severity of the underlying scenario
 
narratives and the projected economic variables.
 
The determined weights constitute
 
the probabilities that
 
the respective set of
 
macroeconomic conditions will
 
occur and
not that the chosen particular narratives with the related
 
macroeconomic variables will materialize.
Macroeconomic and other factors
The range
 
of macroeconomic,
 
market and
 
other factors
 
that is
 
modeled as
 
part of
 
the scenario
 
determination is
 
wide,
and historical information
 
is used to support
 
the identification of
 
the key factors.
 
As the forecast
 
horizon increases, the
availability of
 
information decreases,
 
requiring an
 
increase
 
in judgment.
 
For cycle-sensitive
 
PD and
 
LGD determination
purposes, UBS projects the relevant economic factors for
 
a period of three years
 
before reverting, over a specified period,
to cycle-neutral PD and LGD for longer-term
 
projections.
 
Factors relevant
 
for ECL
 
calculation vary
 
by type
 
of exposure.
 
Regional and
 
client-segment characteristics
 
are generally
taken into account, with specific focus on Switzerland and
 
the US, considering UBS’s key ECL-relevant portfolios.
For UBS, the following forward-looking macroeconomic variables represent the most relevant factors for ECL calculation:
 
–
gross domestic product (GDP)
 
growth rates, given their significant effect on borrowers’ performance;
 
–
unemployment rates, given their significant effect on private
 
clients’ ability to meet contractual obligations;
 
–
house price indices, given their significant effect on mortgage
 
collateral valuations;
 
–
interest rates, given their significant effect on counterparties’
 
abilities to service debt;
 
–
consumer price
 
indices, given
 
their overall
 
relevance for
 
companies’ performance,
 
private clients’
 
purchasing power
and economic stability; and
–
equity indices, given that they are an important factor
 
in UBS’s corporate rating tools.
 
›
Refer to Note 20 for more information
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
272
Note 1
 
Summary of material accounting policies (continued)
ECL measurement period
 
The period
 
for which
 
lifetime ECL
 
are determined
 
is based
 
on the maximum
 
contractual period
 
that UBS
 
is exposed
 
to
credit
 
risk,
 
taking
 
into
 
account
 
contractual
 
extension,
 
termination
 
and
 
prepayment
 
options.
 
For
 
irrevocable
 
loan
commitments and
 
financial guarantee
 
contracts, the
 
measurement period
 
represents
 
the maximum
 
contractual period
for which UBS has an obligation to extend credit.
Additionally, some financial instruments include both an on-demand loan and a revocable undrawn commitment, where
the
 
contractual
 
cancellation
 
right does
 
not
 
limit UBS’s
 
exposure to
 
credit
 
risk to
 
the
 
contractual
 
notice period,
 
as the
client has
 
the ability
 
to draw
 
down funds
 
before UBS
 
can take
 
risk-mitigating actions.
 
In such
 
cases UBS
 
is required
 
to
estimate the
 
period over
 
which it is
 
exposed to
 
credit risk.
 
This applies to
 
UBS’s credit
 
card limits, which
 
do not
 
have a
defined contractual maturity date, are
 
callable on demand
 
and where the drawn
 
and undrawn components are
 
managed
as one exposure. The exposure arising from
 
UBS’s credit card limits is not significant
 
and is managed at a portfolio level,
with credit actions triggered when balances
 
are past due. An ECL
 
measurement period of seven years is
 
applied for credit
card limits, capped at 12 months for stage 1 balances,
 
as a proxy for the period that UBS is exposed to credit
 
risk.
Customary master credit
 
agreements in the
 
Swiss corporate market
 
also include
 
on-demand loans and
 
revocable undrawn
commitments.
 
For
 
smaller
 
commercial
 
facilities,
 
a
 
risk-based
 
monitoring
 
(RbM)
 
approach
 
is
 
in
 
place
 
that
 
highlights
negative
 
trends
 
as
 
risk
 
events,
 
at
 
an
 
individual
 
facility
 
level,
 
based
 
on
 
a
 
combination
 
of
 
continuously
 
updated
 
risk
indicators. The risk
 
events trigger additional
 
credit reviews by
 
a risk officer,
 
enabling informed credit decisions
 
to be taken.
Larger corporate facilities are
 
not subject to RbM but are
 
reviewed at least annually through
 
a formal credit review. UBS
has assessed these credit risk management practices and
 
considers both the RbM approach and formal credit reviews
 
as
substantive
 
credit
 
reviews
 
resulting
 
in
 
a
 
re-origination
 
of
 
the
 
given
 
facility.
 
Following
 
this,
 
a
 
12-month
 
measurement
period from the
 
reporting date is
 
used for both
 
types of facilities
 
as an appropriate
 
proxy of the
 
period over which
 
UBS
is exposed to
 
credit risk, with 12
 
months also used
 
as a look-back period
 
for assessing an SICR,
 
always from the
 
respective
reporting date.
Significant increase in credit risk
 
Financial instruments subject
 
to ECL are
 
monitored on an
 
ongoing basis. To
 
determine whether the
 
recognition of a
maximum 12
 
-month ECL
 
continues to
 
be appropriate,
 
an assessment
 
is
 
made as
 
to whether
 
an SICR
 
has occurred
since initial recognition of the financial instrument, applying both
 
quantitative and qualitative factors.
 
Primarily, UBS
 
assesses changes
 
in an
 
instrument’s risk
 
of default
 
on a
 
quantitative basis
 
by comparing
 
the annualized
forward-looking and scenario-weighted lifetime PD of an
 
instrument determined at two different dates:
 
–
at the reporting date; and
 
–
at inception of the instrument.
If, based on UBS’s
 
quantitative modeling, an
 
increase exceeds a
 
set threshold, an
 
SICR is deemed
 
to have occurred
 
and
the instrument is transferred to stage 2 with lifetime ECL
 
recognized.
The threshold
 
applied varies
 
depending on
 
the original
 
credit quality
 
of the
 
borrower, with
 
a higher
 
SICR threshold
 
set
for those
 
instruments with
 
a low
 
PD at
 
inception. The
 
SICR assessment
 
based on
 
PD changes
 
is made
 
at an
 
individual
financial asset
 
level. A
 
high-level overview
 
of the
 
SICR trigger,
 
which is
 
a multiple
 
of the
 
annualized remaining
 
lifetime
PIT
 
PD expressed
 
in rating
 
downgrades,
 
is provided
 
in the
 
“SICR thresholds”
 
table
 
below. The
 
actual
 
SICR
 
thresholds
applied are defined on a more granular level by interpolating
 
between the values shown in the table.
 
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
273
Note 1
 
Summary of material accounting policies (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SICR thresholds
Internal rating at origination
 
of the instrument
Rating downgrades /
SICR trigger
0–3
3
4–8
2
9–13
1
›
Refer to the “Risk management and control” section of this
 
report for more details about UBS’s internal rating system
Irrespective of
 
the SICR
 
assessment based
 
on default
 
probabilities, credit
 
risk is
 
generally deemed
 
to have
 
significantly
increased for an instrument if contractual payments
 
are more than 30 days past due. For certain
 
less material portfolios,
specifically the Swiss
 
credit card portfolio, the
 
30-day past due
 
criterion is used
 
as the primary
 
indicator of an
 
SICR. Where
instruments are trans
 
ferred to stage 2
 
due to the
 
30-day past due
 
criterion, a minimum
 
period of six
 
months is applied
before a
 
transfer back
 
to stage 1 can
 
be triggered,
 
where applicable.
 
For instruments
 
in Personal &
 
Corporate Banking
and Global
 
Wealth Management
 
Region Switzerland
 
that
 
are between
 
90 and
 
180
 
days past
 
due but
 
have not
 
been
reclassified to stage 3, a one-year period is applied before
 
a transfer back to stage 1 can be triggered.
Additionally,
 
based
 
on
 
individual
 
counterparty-specific
 
indicators,
 
external
 
market
 
indicators
 
of
 
credit
 
risk
 
or
 
general
economic conditions, counterparties may be moved to a watch list, which is used as a secondary qualitative indicator for
an
 
SICR.
 
Exception
 
management
 
is
 
further
 
applied,
 
allowing
 
for
 
individual
 
and
 
collective
 
adjustments
 
on
 
exposures
sharing the same credit risk characteristics to take account
 
of specific situations that are not otherwise fully reflected.
In general, the overall SICR determination process does not
 
apply to Lombard loans, securities financing transactions and
certain
 
other
 
asset-based
 
lending
 
transactions,
 
because
 
of
 
the
 
risk
 
management
 
practices
 
adopted,
 
including
 
daily
monitoring processes
 
with strict
 
margining. If
 
margin calls
 
are not
 
satisfied, a
 
position is
 
closed out
 
and classified
 
as a
stage 3 position. In exceptional cases, an individual adjustment and a transfer into stage 2 may be made to take account
of specific facts.
Credit risk
 
officers are
 
responsible for
 
the identification
 
of an
 
SICR, which
 
for accounting
 
purposes is
 
in some
 
respects
different
 
from
 
internal
 
credit
 
risk
 
management
 
processes.
 
This
 
difference
 
mainly
 
arises
 
because
 
ECL
 
accounting
requirements are instrument specific, such that a
 
borrower can have multiple exposures allocated
 
to different stages, and
maturing loans in stage 2 will migrate to stage 1 upon renewal irrespective of the
 
actual credit risk at that time. Under a
risk-based
 
approach,
 
a
 
holistic
 
counterparty
 
credit
 
assessment
 
and
 
the
 
absolute
 
level
 
of
 
risk
 
at
 
any
 
given
 
date
 
will
determine what risk-mitigating actions may be warranted.
›
Refer to the “Risk management and control” section of this
 
report for more information
Critical accounting estimates and judgments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The calculation of ECL requires
 
management to apply significant
 
judgment and make estimates
 
and assumptions that can
 
result in significant changes to
 
the
timing and the amount of ECL recognized.
 
Determination of a significant increase in
 
credit risk
 
IFRS 9 does
 
not include
 
a definition
 
of what
 
constitutes an
 
SICR, with
 
UBS’s assessment
 
considering qualitative
 
and quantitative
 
criteria. An
 
IFRS 9 ECL
Management Forum has been established to
 
review and challenge the SICR results.
Scenarios, scenario weights and macroeconomic
 
variables
 
ECL reflect an unbiased
 
and probability-weighted amount,
 
which UBS determines
 
by evaluating a range
 
of possible outcomes.
 
Management selects forward-
looking
 
scenarios
 
that
 
include
 
relevant
 
macroeconomic
 
variables
 
and
 
management’s assumptions
 
around
 
future
 
economic
 
conditions.
 
IFRS 9
 
Scenario
Sounding Sessions,
 
in addition to the IFRS 9 ECL Management Forum,
 
are in place to derive,
 
review and challenge the scenario selection and weights,
 
and
to determine whether any additional post-model
 
adjustments are required that may significantly affect ECL.
 
ECL measurement period
Lifetime ECL are generally
 
determined based upon
 
the contractual maturity
 
of the transaction, which
 
significantly affects ECL. For
 
credit card limits and
 
Swiss
callable master credit facilities, judgment is
 
required, as UBS must determine the period
 
over which it is exposed to credit risk.
 
A seven-year period is applied
for credit card limits, capped at 12 months for stage 1
 
positions, and a 12-month period applied for
 
master credit facilities.
 
Modeling and post-model adjustments
A number of
 
complex models have
 
been developed or
 
modified to calculate
 
ECL, with additional
 
post-model adjustments required
 
that may significantly
affect ECL. The models are governed
 
by UBS’s model validation controls and
 
approved by the GMGC.
 
The post-model adjustments are approved by the
 
ECL
Management Forum and endorsed by the
 
GMGC.
A sensitivity analysis covering key macroeconomic
 
variables, scenario weights and SICR trigger
 
points on ECL measurement is provided in Note 20f.
 
›
Refer to Note 20 for more information
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
274
Note 1
 
Summary of material accounting policies
(continued)
h. Restructured and modified financial assets
When payment default
 
is expected,
 
or where default
 
has already occurred,
 
UBS may grant
 
concessions to borrowers
 
in
financial difficulties
 
that it
 
would not
 
consider in
 
the normal
 
course of
 
its business,
 
such as
 
preferential
 
interest
 
rates,
extension of maturity,
 
modifying the schedule of repayments, debt / equity
 
swap, subordination, etc.
 
›
Refer to the “Risk management and control” section of this
 
report for more information
Modifications result in an alteration of future contractual cash flows and can occur within UBS’s normal risk tolerance or
as part
 
of a
 
credit restructuring
 
where a
 
counterparty
 
is in
 
financial
 
difficulties. The
 
restructuring
 
or modification
 
of a
financial asset
 
could lead
 
to
 
a
 
substantial change
 
in
 
the
 
terms
 
and conditions,
 
resulting
 
in
 
the
 
original
 
financial
 
asset
being
 
derecognized
 
and
 
a
 
new
 
financial
 
asset
 
being
 
recognized.
 
Where
 
the
 
modification
 
does
 
not
 
result
 
in
 
a
derecognition, any difference between
 
the modified contractual cash
 
flows discounted at the
 
original EIR and
 
the existing
gross carrying amount of the given financial asset is recognized
 
in the income statement as of the date of modification.
 
i. Offsetting
UBS presents recognized financial assets and liabilities
 
net on its balance sheet only if (i) it has a legally enforceable
 
right
to set
 
off the
 
recognized amounts
 
and (ii) it
 
intends either
 
to settle
 
on a net
 
basis or to
 
realize the
 
asset and settle
 
the
liability simultaneously.
 
Netted positions include, for example, certain derivatives and repurchase
 
and reverse repurchase
transactions with various counterparties, exchanges and clearing
 
houses.
In
 
assessing
 
whether
 
UBS
 
intends
 
to
 
either
 
settle
 
on
 
a
 
net
 
basis,
 
or
 
to
 
realize
 
the
 
asset
 
and
 
settle
 
the
 
liability
simultaneously, emphasis is
 
placed on the effectiveness
 
of operational settlement
 
mechanics in eliminating
 
substantially
all credit and liquidity exposure between the counterparties. This condition precludes offsetting
 
on the balance sheet for
substantial
 
amounts
 
of
 
UBS’s
 
financial
 
assets
 
and
 
liabilities,
 
even
 
though
 
they
 
may
 
be
 
subject
 
to
 
enforceable
 
netting
arrangements. Repurchase arrangemen
 
ts and securities financing
 
transactions are presented
 
net only to the
 
extent that
the settlement
 
mechanism
 
eliminates, or
 
results in
 
insignificant, credit
 
and liquidity
 
risk, and
 
processes the
 
receivables
and payables in a single settlement process or cycle.
›
Refer to Note 22
for more information
 
j. Hedge accounting
The
 
Group
 
applies
 
hedge
 
accounting
 
requirements
 
of
 
IFRS 9
 
where
 
the
 
criteria
 
for
 
documentation
 
and
 
hedge
effectiveness
 
are
 
met. If
 
a hedge
 
relationship
 
no longer
 
meets the
 
criteria for
 
hedge accounting,
 
hedge
 
accounting is
discontinued. Voluntary discontinuation
 
of hedge accounting is not permitted under IFRS 9.
Fair value hedges of interest rate risk related to
 
debt instruments and loan assets
The
 
fair
 
value
 
change
 
of
 
the
 
hedged
 
item
 
attributable
 
to
 
a
 
hedged
 
risk
 
is reflected
 
as
 
an
 
adjustment
 
to
 
the
 
carrying
amount
 
of
 
the
 
hedged
 
item
 
and
 
recognized
 
in
 
the
 
income
 
statement
 
along
 
with
 
the
 
change
 
in
 
the
 
fair
 
value
 
of
 
the
hedging instrument.
Fair value hedges of FX risk related to debt instruments
The fair value change of the hedged item attributable
 
to the hedged risk is reflected
 
in the measurement of the hedged
item and
 
recognized
 
in the
 
income statement
 
along with
 
the change
 
in the
 
fair value
 
of the
 
hedging instrument.
 
The
foreign currency basis spread of cross-currency swaps designated as
 
hedging derivatives is excluded from the
 
designation
and accounted
 
for
 
as a
 
cost of
 
hedging with
 
amounts
 
deferred
 
in
Other
 
comprehensive
 
income
 
within
Equity
.
 
These
amounts are released to the income
 
statement over the term of the hedged item.
Discontinuation of fair value hedges
Discontinuations for reasons
 
other than
 
derecognition of the
 
hedged item result
 
in an
 
adjustment to the
 
carrying amount,
which
 
is
 
amortized
 
to
 
the
 
income
 
statement
 
over
 
the
 
remaining
 
life
 
of
 
the
 
hedged
 
item
 
using
 
the
 
effective
 
interest
method. If the hedged item is derecognized, the unamortized fair value adjustment or deferred
 
cost of hedging amount
is recognized immediately in the income statement
 
as part of any derecognition gain or loss.
Cash flow hedges of forecast transactions
Fair value gains or
 
losses associated with the
 
effective portion of derivatives designated as
 
cash flow hedges for cash
 
flow
repricing
 
risk are
 
recognized
 
initially
 
in
Other
 
comprehensive
 
income
 
within
Equity
 
and reclassified
 
to
Interest
 
income
from financial
 
instruments measured
 
at amortized
 
cost and
 
fair value
 
through other
 
comprehensive income
 
or
Interest
expense
 
from
 
financial
 
instruments
 
measured
 
at
 
amortized
 
cost
 
in
 
the
 
periods
 
when
 
the
 
hedged
 
forecast
 
cash
 
flows
affect profit
 
or loss, including
 
discontinued hedges
 
for which forecast
 
cash flows are
 
expected to
 
occur.
 
If the
 
forecast
transactions
 
are
 
no
 
longer
 
expected
 
to occur,
 
the
 
deferred
 
gains
 
or
 
losses
 
are
 
immediately
 
reclassified
 
to the
 
income
statement.
Hedges of net investments in foreign operations
Gains or losses
 
on the hedging
 
instrument relating
 
to the
 
effective portion
 
of a
 
hedge are
 
recognized directly
 
in
Other
comprehensive income
 
within
Equity
, while any gains
 
or losses relating to
 
the ineffective and
 
/ or undesignated portion
(for example, the
 
interest element of
 
a forward contract) are
 
recognized in the
 
income statement. Upon
 
disposal or partial
disposal of the foreign
 
operation, the cumulative
 
value of any
 
such gains or losses
 
recognized in
Equity
 
associated with
the entity
is reclassified to
Other income
.
›
Refer to Note 25 for more information
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
275
Note 1
 
Summary of material accounting policies
(continued)
3) Fee and commission income and expenses
UBS earns
 
fee income
 
from the
 
diverse range
 
of services
 
it provides
 
to its
 
clients. Fee
 
income can
 
be divided
 
into two
broad
 
categories:
 
fees
 
earned from
 
services
 
that
 
are
 
provided
 
over
 
a
 
certain
 
period
 
of time,
 
such
 
as
 
management
 
of
clients’ assets, custody services
 
and certain advisory
 
services; and fees
 
earned from PIT services,
 
such as underwriting fees,
deal-contingent merger and acquisitions fees, and brokerage fees (e.g. securities and derivatives execution
 
and clearing).
UBS recognizes
 
fees earned
 
from
 
PIT
 
services
 
when
 
it has
 
fully
 
provided
 
the
 
service
 
to the
 
client.
 
Where
 
the contract
requires services to be provided
 
over time, income is recognized on a systematic
 
basis over the life of the agreement.
Consideration
 
received
 
is allocated
 
to the
 
separately
 
identifiable performance
 
obligations
 
in a
 
contract.
 
Owing to
 
the
nature of UBS’s business, contracts that
 
include multiple performance obligations are
 
typically those that are considered
to include a
 
series of similar
 
performance obligations
 
fulfilled over time
 
with the
 
same pattern of
 
transfer to the
 
client,
e.g.
 
management
 
of
 
client
 
assets
 
and
 
custodial
 
services.
 
As
 
a
 
consequence,
 
UBS
 
is
 
not
 
required
 
to
 
apply
 
significant
judgment in allocating the consideration received across
 
the various performance obligations.
PIT services
 
are generally
 
for a
 
fixed price
 
or dependent
 
on deal
 
size, e.g.
 
a fixed
 
number of
 
basis points
 
of trade
 
size,
where the amount of revenue is known when the performance obligation is met. Fixed-over-time fees are recognized on
a straight-line
 
basis over
 
the performance period.
 
Custodial and asset
 
management fees
 
can be
 
variable through
 
reference
to
 
the
 
size
 
of
 
the
 
customer
 
portfolio.
 
However,
 
they
 
are
 
generally
 
billed
 
on
 
a
 
monthly
 
or
 
quarterly
 
basis
 
once
 
the
customer’s
 
portfolio
 
size
 
is
 
known
 
or
 
known
 
with
 
near
 
certainty
 
and
 
therefore
 
also
 
recognized
 
ratably
 
over
 
the
performance period. UBS
 
does not recognize performance
 
fees related to management
 
of clients’ assets or
 
fees related
to contingencies beyond UBS’s control until such uncertainties
 
are resolved.
 
UBS’s
 
fees
 
are
 
generally
 
earned
 
from
 
short-term
 
contracts.
 
As
 
a
 
result,
 
UBS’s
 
contracts
 
do
 
not
 
include
 
a
 
financing
component or
 
result in
 
the recognition
 
of significant
 
receivables or
 
prepayment assets.
 
Furthermore, due
 
to the
 
short-
term nature of such contracts, UBS
 
has not capitalized any material
 
costs to obtain or fulfill a contract
 
or generated any
significant contract assets or liabilities.
UBS presents expenses primarily in line with their nature in the income statement, differentiating between expenses that
are directly attributable
 
to the satisfaction
 
of specific performance
 
obligations associated with
 
the generation of
 
revenues,
which
 
are
 
generally
 
presented
 
within
Total
 
revenues
 
as
Fee
 
and
 
commission
 
expense
,
 
and
 
those
 
that
 
are
 
related
 
to
personnel, general and administrative expenses, or depreciation and amortization, which
 
are presented within
Operating
expenses
. For derivatives execution and
 
clearing services (where UBS
 
acts as an agent), UBS
 
only records its specific fees
in
 
the
 
income
 
statement,
 
with fees
 
payable
 
to
 
other
 
parties
 
not
 
recognized
 
as
 
an
 
expense
 
but
 
instead
 
directly
 
offset
against the associated income collected from the given client.
›
Refer to Note 5 for more information, including the
 
disaggregation of revenues
4) Share-based and other deferred compensation plans
UBS recognizes
 
expenses for
 
deferred
 
compensation awards
 
over the
 
period that
 
the employee
 
is required
 
to provide
service to
 
become entitled
 
to the
 
award. Where
 
the service
 
period is
 
shortened, for
 
example in
 
the case
 
of employees
affected by restructuring programs or mutually agreed termination provisions, recognition of such expense is accelerated
to the
 
termination date.
 
Where no
 
future service
 
is required,
 
such as
 
for employees
 
who are
 
eligible for
 
retirement
 
or
who
 
have
 
met
 
certain
 
age
 
and
 
length-of-service
 
criteria,
 
the
 
services
 
are
 
presumed
 
to
 
have
 
been
 
received
 
and
compensation expense is
 
recognized over the
 
performance year or,
 
in the case of
 
off-cycle awards,
 
immediately on the
grant date.
Share-based compensation plans
Share-based compensation
 
expense is measured
 
by reference
 
to the fair value
 
of the equity
 
instruments on the
 
date of
grant, taking
 
into account
 
the terms
 
and conditions
 
inherent
 
in the
 
award, including,
 
where
 
relevant, dividend
 
rights,
transfer restrictions in effect beyond the vesting
 
date, market conditions, and non-vesting conditions.
 
For equity-settled awards,
 
fair value is
 
not remeasured unless the
 
terms of the award
 
are modified such that
 
there is an
incremental
 
increase
 
in
 
value.
 
Expenses
 
are
 
recognized,
 
on
 
a
 
per-tranche
 
basis,
 
over
 
the
 
service
 
period
 
based
 
on
 
an
estimate of
 
the number
 
of instruments
 
expected to
 
vest and
 
are adjusted
 
to reflect
 
the actual
 
outcomes of
 
service or
performance conditions.
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
276
Note 1
 
Summary of material accounting policies (continued)
 
 
 
 
 
 
 
 
 
 
 
For equity-settled
 
awards, forfeiture
 
events resulting
 
from a
 
breach of
 
a non-vesting
 
condition (i.e.
 
one that
 
does not
relate to a service or performance condition) do not result
 
in any adjustment to the share-based compensation
 
expense.
For cash-settled
 
share-based
 
awards,
 
fair
 
value
 
is remeasured
 
at
 
each
 
reporting
 
date,
 
so that
 
the
 
cumulative
 
expense
recognized equals the cash distributed.
 
Other deferred compensation plans
Compensation
 
expense
 
for
 
other
 
deferred
 
compensation
 
plans
 
is
 
recognized
 
on
 
a
 
per-tranche
 
or
 
straight-line
 
basis,
depending on
 
the nature
 
of the
 
plan. The
 
amount recognized
 
is measured
 
based on
 
the present
 
value of
 
the amount
expected to be paid under the
 
plan and is remeasured at each reporting date, so
 
that the cumulative expense recognized
equals the cash or the fair value of respective financial
 
instruments distributed.
›
Refer to Note 27 for more information
 
5) Post-employment benefit plans
Defined benefit plans
Defined benefit plans specify an amount of benefit
 
that an employee will receive, which usually depends on one or
 
more
factors,
 
such as age,
 
years of service
 
and compensation.
 
The defined benefit
 
liability recognized
 
in the balance
 
sheet is
the present value of the
 
defined benefit obligation,
 
measured using the projected
 
unit credit method, less the
 
fair value
of the
 
plan’s assets
 
at
 
the
 
balance
 
sheet
 
date,
 
with changes
 
resulting
 
from
 
remeasurements
 
recorded
 
immediately
 
in
Other comprehensive income
. If the fair value of the plan’s assets is higher than the present value of the defined benefit
obligation, the recognition of
 
the resulting net asset is limited
 
to the present value of
 
economic benefits available in the
form of
 
refunds from
 
the plan
 
or reductions
 
in future
 
contributions to
 
the plan.
 
Calculation of
 
the net
 
defined benefit
obligation or
 
asset takes
 
into account
 
the specific
 
features of
 
each plan,
 
including risk
 
sharing between
 
employee and
employer, and
 
is calculated periodically by independent qualified actuaries.
Critical accounting estimates and judgments
 
 
 
The net defined benefit
 
liability or asset at
 
the balance sheet date
 
and the related personnel
 
expense depend on the
 
expected future benefits to
 
be provided,
determined
 
using
 
a
 
number
 
of
 
economic
 
and
 
demographic assumptions.
 
A
 
range
 
of
 
assumptions
 
could
 
be
 
applied,
 
and
 
different
 
assumptions could
significantly alter the defined
 
benefit liability or asset and
 
pension expense recognized. The most
 
significant assumptions include life expectancy,
 
discount
rate, expected
 
salary increases,
 
pension increases
 
and interest
 
credits on
 
retirement savings
 
account balances. Sensitivity
 
analysis for
 
reasonable possible
movements in each significant assumption for
 
UBS‘s post-employment obligations is
 
provided in Note 26.
›
Refer to Note 26
for more information
Defined contribution plans
A
 
defined
 
contribution
 
plan
 
pays
 
fixed
 
contributions
 
into
 
a
 
separate
 
entity
 
from
 
which
 
post-employment
 
and
 
other
benefits are paid. UBS has no legal or constructive
 
obligation to pay further amounts if the plan does
 
not hold sufficient
assets to pay
 
employees the benefits
 
relating to employee service
 
in the current
 
and prior periods.
 
Compensation expense
is recognized when
 
the employees have
 
rendered services
 
in exchange for
 
contributions. This
 
is generally in the
 
year of
contribution. Prepaid
 
contributions are
 
recognized as
 
an asset to
 
the extent that
 
a cash refund
 
or a reduction
 
in future
payments is available.
6) Income taxes
UBS is subject to the income
 
tax laws of Switzerland and those
 
of the non-Swiss jurisdictions in which
 
UBS has business
operations.
The Group’s provision for income taxes is composed of current and deferred taxes. Current income taxes represent taxes
to be paid or refunded for the current period or previous periods
 
.
 
Deferred tax assets
 
(DTAs) and
 
deferred tax liabilities
 
(DTLs) are recognized
 
for temporary differences
 
between the carrying
amounts and
 
tax bases
 
of assets
 
and liabilities
 
that will
 
result in
 
deductible
 
or taxable
 
amounts,
 
respectively
 
in future
periods. DTAs may also arise
 
from other sources, including unused
 
tax losses and unused tax
 
credits. DTAs and DTLs are
measured using
 
the applicable
 
tax rates
 
and laws
 
that
 
have been
 
enacted
 
or substantively
 
enacted
 
by the
 
end of
 
the
reporting period and that will be in effect when such differences
 
are expected to reverse.
DTAs are recognized
 
only to the extent
 
it is probable
 
that sufficient taxable
 
profits will be
 
available against which
 
these
differences can
 
be used
 
.
 
When an
 
entity
 
or tax
 
group has
 
a history
 
of recent
 
losses, DTAs
 
are only
 
recognized
 
to the
extent that there are sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable
profit will be available against which the unused tax losses
 
can be utilized.
Deferred and current tax
 
assets and liabilities are
 
offset when: (i) they arise
 
in the same tax
 
reporting group; (ii) they relate
to the
 
same tax
 
authority; (iii) the
 
legal right
 
to offset
 
exists; and
 
(iv) with respect
 
to current
 
taxes they
 
are intended
 
to
be settled net or realized simultaneously.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
277
Note 1
 
Summary of material accounting policies (continued)
 
 
 
 
 
 
 
 
 
 
 
 
Current and deferred taxes are recognized as income tax benefit or expense
 
in the income statement, except for current
and deferred taxes recognized in relation to: (i)
 
the acquisition of a subsidiary (for which
 
such amounts would affect the
amount of
 
goodwill arising
 
from the
 
acquisition); (ii) gains
 
and losses
 
on the
 
sale of
 
treasury shares
 
(for which
 
the tax
effects
 
are
 
recognized
 
directly
 
in
Equity
);
 
(iii) unrealized
 
gains
 
or
 
losses
 
on
 
financial
 
instruments
 
that
 
are
 
classified
 
at
FVOCI; (iv) changes in fair value
 
of derivative instruments designated as
 
cash flow hedges; (v) remeasurements of defined
benefit plans; or
 
(vi) certain foreign
 
currency translations
 
of foreign operations.
 
Amounts relating
 
to points (iii)
 
through
(vi) above are recognized in
Other comprehensive income
 
within
Equity
.
UBS
 
reflects
 
the
 
potential
 
effect
 
of
 
uncertain
 
tax
 
positions
 
for
 
which
 
acceptance
 
by
 
the
 
relevant
 
tax
 
authority
 
is
 
not
considered probable by
 
adjusting current or deferred
 
taxes, as applicable, using
 
either the most
 
likely amount or
 
expected
value methods,
 
depending on which
 
method is
 
deemed a better
 
predictor of the
 
basis on which,
 
and extent
 
to which,
the uncertainty will be resolved.
 
Critical accounting estimates and judgments
 
 
 
 
 
 
 
Tax
 
laws are complex, and judgment and interpretations about the application of such laws are required when accounting for income taxes. UBS considers
the performance of
 
its businesses and
 
the accuracy of
 
historical forecasts and
 
other factors when
 
evaluating the
 
recoverability of its
 
DTAs, including
 
the
remaining tax loss carry-forward period, and its
 
assessment of expected future taxable profits in
 
the forecast period used for recognizing DTAs.
 
Estimating
future profitability and business plan forecasts is inherently subjective
 
and is particularly sensitive to future economic,
 
market and other conditions.
 
Forecasts are
 
reviewed annually,
 
but adjustments may be
 
made at other
 
times, if required.
 
If recent losses
 
have been incurred,
 
convincing evidence is
required to prove
 
there is sufficient
 
future profitability given
 
that the value of
 
UBS’s DTAs
 
may be affected,
 
with effects primarily recognized
 
through the
income statement.
In addition, judgment is
 
required to assess the expected
 
value of uncertain tax
 
positions and the related
 
probabilities, including interpretation
 
of tax laws,
the resolution of any income-tax-related appeals and litigation.
 
›
Refer to Note 9 for more information
 
7) Investments in associates
Interests in entities where UBS
 
has significant influence over
 
the financial and
 
operating policies of these
 
entities but does
not have
 
control are
 
classified as
 
investments in
 
associates and
 
accounted for
 
under the
 
equity method
 
of accounting.
Typically,
 
UBS has
 
significant influence
 
when it
 
holds, or
 
has the
 
ability to hold,
 
between 20%
 
and 50%
 
of an
 
entity’s
voting rights. Investments in associates are initially recognized at cost, and the
 
carrying amount is increased or decreased
after the date of acquisition to recognize the Group’s share of the investee’s
 
comprehensive income and any impairment
losses. The net
 
investment in an
 
associate is impaired
 
if there is
 
objective evidence of
 
a loss event
 
and the carrying
 
amount
of the investment in the associate exceeds its recoverable
 
amount.
›
Refer to Note 28 for more information
8) Property, equipment and software
Property,
 
equipment and
 
software
 
is measured
 
at cost
 
less accumulated
 
depreciation and
 
impairment losses.
 
Software
development costs are capitalized
 
only when the costs can be measured
 
reliably and it is probable
 
that future economic
benefits
 
will
 
arise.
 
Depreciation
 
of
 
property,
 
equipment
 
and
 
software
 
begins
 
when
 
they
 
are
 
available
 
for
 
use
 
and
 
is
calculated on a straight-line basis over an asset’s estimated
 
useful life.
 
Property,
 
equipment
 
and
 
software
 
are
 
generally
 
tested
 
for
 
impairment
 
at
 
the
 
appropriate
 
cash-generating
 
unit
 
level,
alongside goodwill and intangible assets as
 
described in item 9 in this Note.
 
An impairment charge is recognized for
 
such
assets
 
if
 
the
 
recoverable
 
amount
 
is
 
below
 
its
 
carrying
 
amount.
 
The
 
recoverable
 
amounts
 
of
 
such
 
assets,
 
other
 
than
property that has a
 
market price, are
 
generally determined using
 
a replacement cost
 
approach that reflects
 
the amount
that would be currently required by a market participant to replace the service capacity of the asset. If such assets are no
longer used, they are tested individually for impairment.
›
Refer to Note 12 for more information
9) Goodwill and other separately identifiable intangible
 
assets
Goodwill represents
 
the
 
excess
 
of
 
the
 
consideration over
 
the
 
fair
 
value
 
of
 
identifiable assets,
 
liabilities and
 
contingent
liabilities
 
acquired that
 
arises in
 
a business
 
combination.
 
Goodwill
 
is not
 
amortized
 
but is
 
assessed
 
for impairment
 
at the
 
end
of each reporting period,
 
or when indicators of impairment exist.
 
UBS tests goodwill for impairment
 
annually,
 
irrespective
of whether there
 
is any
 
indication of impairment.
 
An
 
impairment
 
charge
 
is recognized
 
in
 
the
 
income
 
statement
 
if the
carrying amount exceeds the recoverable amount of
 
a cash-generating unit.
Negative goodwill, generally determined based on the difference between the (provisional) fair
 
values for the identifiable
assets
 
acquired
 
and
 
liabilities
 
assumed
 
and
 
consideration
 
transferred,
 
is
 
recognized
 
in
 
the
 
income
 
statement
 
on
 
the
acquisition date.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
278
Note 1
 
Summary of material accounting policies (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Separately from goodwill, UBS recognizes identifiable intangible assets acquired in a business combination that were not
previously recognized
 
in the
 
financial statements
 
of the
 
acquiree. Amortization
 
of these
 
intangible assets
 
is recognized
on a straight
 
-line basis
 
over their
 
estimated useful
 
life. These
 
assets are
 
tested for
 
impairment at
 
the appropriate
 
cash-
generating-unit level.
Critical accounting estimates and judgments
 
 
 
 
 
 
 
UBS‘s methodology for
 
goodwill impairment testing is
 
based on a
 
model that is
 
most sensitive to
 
the following key
 
assumptions:
 
(i) forecasts of earnings
available to shareholders (typically
 
estimated on a discrete basis for
 
years one to three but could
 
extend up to five years, as permitted
 
under IFRS Accounting
Standards, in order to reflect facts and circumstances specific to a cash-generating
 
unit); (ii) changes in the discount rates; and (iii) changes
 
in the long-term
growth rate.
 
Earnings available to shareholders are estimated on the basis of forecast results, which are part of the business plan approved by the BoD. The discount
rates and
 
growth rates
 
are determined
 
using external information,
 
and also
 
considering inputs from
 
both internal and
 
external analysts and
 
the view
 
of
management.
 
The key assumptions used to determine the recoverable amounts of each cash-generating unit are tested for sensitivity by
 
applying reasonably possible
changes to those assumptions.
 
›
Refer to Notes
3
and
 
13
 
for more information
 
 
10) Provisions and contingent liabilities
Provisions are
 
liabilities of
 
uncertain timing or
 
amount, and
 
are generally recognized
 
in accordance
 
with IAS 37,
Provisions,
Contingent Liabilities
 
and Contingent
 
Assets
, when:
 
(i) UBS has
 
a present
 
obligation as
 
a result
 
of a
 
past event;
 
(ii) it is
probable that an outflow of resources will be required to
 
settle the obligation; and (iii) a reliable estimate of the amount
of the
 
obligation can
 
be made.
 
IAS 37 provisions
 
are measured
 
considering the
 
best estimate
 
of the
 
consideration required
to settle the present obligation at the balance sheet
 
date.
 
When conditions required to recognize a provision are not met, a contingent liability is disclosed, unless the likelihood of
an outflow
 
of resources
 
is remote.
 
Contingent liabilities
 
are also
 
disclosed for
 
possible obligations
 
that arise
 
from past
events,
 
the existence of which will be confirmed only by uncertain future
 
events not wholly within the control of UBS.
Contingent
 
liabilities,
 
more
 
specifically
 
in
 
relation
 
to
 
litigations,
 
recognized
 
in
 
a
 
business
 
combination
 
are
 
initially
measured at fair value. Subsequently, they are measured at the higher
 
of the initial fair value and the amount that would
be recognized in accordance with the requirements for provisions
 
outlined above, until the contingency is resolved.
Critical accounting estimates and judgments
 
 
 
 
 
Recognition of provisions often involves significant judgment in assessing the existence of an obligation that results from past events and in
 
estimating the
probability, the timing and the amount of any outflows of resources. This is particularly the case for litigation, regulatory and similar matters, which, due to
their nature, are subject to many uncertainties,
 
making their outcome difficult to predict.
 
The amount of any provision
 
recognized is sensitive to the assumptions used,
 
and there could be a
 
wide range of possible outcomes for any
 
particular
matter.
Management regularly reviews all the available information regarding such matters, including legal advice, to assess whether the recognition criteria
 
for
provisions have been satisfied and to determine the
 
timing and the amount of any potential outflows.
›
Refer to item 1 in this Note, Note 2
 
and Note
18
 
for more information
11) Foreign currency translation
Transactions
 
denominated in a foreign currency
 
are translated into the functional
 
currency of the reporting entity
 
at the
spot exchange
 
rate
 
on the
 
date of
 
the transaction.
 
At the
 
balance sheet
 
date, all
 
monetary
 
assets, including
 
those at
FVOCI, and
 
monetary
 
liabilities
 
denominated
 
in foreign
 
currency
 
are
 
translated
 
into
 
the functional
 
currency
 
using the
closing exchange rate. Translation
 
differences are
 
reported in
Other net income from
 
financial instruments measured
 
at
fair value through profit or loss
.
Non-monetary items measured at historical cost are translated
 
at the exchange rate on the date of the transaction.
 
Upon consolidation,
 
assets and
 
liabilities
 
of foreign
 
operations
 
are translated
 
into US dollars,
 
UBS’s presentation
 
currency,
 
at
the closing exchange
 
rate on the balance
 
sheet date, and income
 
and expense items
 
and other comprehensive
 
income are
translated at
 
the average rate for
 
the period. The
 
resulting foreign
 
currency translation
 
differences are
 
recognized in
Equity
and reclassified
 
to the income
 
statement
 
when UBS
 
disposes of,
 
partially or
 
in its entirety,
 
the foreign
 
operation
 
and UBS no
longer controls
 
the foreign operation.
Share
 
capital issued,
 
share premium
 
and treasury shares
 
held are translated
 
at the historic
 
average rate, with
 
the difference
between the historic
 
average rate and
 
the spot rate realized
 
upon repayment of
 
share capital or
 
disposal of treasury
 
shares
reported
 
as
Share
 
premium.
 
Cumulative
 
amounts
 
recognized
 
in
Other
 
comprehensive
 
income
 
in respect
 
of cash
 
flow hedges
and financial assets
 
measured at FVOCI
 
are translated
 
at the closing exchange
 
rate as of the balance
 
sheet dates, with
 
any
translation
 
effects adjusted
 
through
Retained earnings
.
›
Refer to Note 32 for more information
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
279
Note 1
 
Summary of material accounting policies
(continued)
12) UBS Group AG shares held (treasury shares)
 
UBS Group AG
 
shares held
 
by the Group,
 
including those purchased
 
as part of
 
market-making activities,
 
are presented
in
Equity
 
as
Treasury
 
shares
 
at their
 
acquisition cost
 
and are
 
deducted from
Equity
 
until they
 
are canceled
 
or reissued.
The difference between the proceeds
 
from sales of treasury shares
 
and their weighted average cost (net of tax, if
 
any) is
reported as
Share premium
.
13) Cash and cash equivalents
For the purposes of the statement of cash flows, cash and
 
cash equivalents consist of balances with an original
 
maturity
of three months or less including cash, money
 
market paper and balances with central and other banks.
In certain circumstances
 
cash and cash
 
equivalent balances
 
held by UBS
 
are not available
 
for the use
 
by the
 
Group, for
example
 
amounts
 
placed
 
at
 
central
 
banks
 
to
 
meet
 
local
 
statutory
 
minimum
 
reserve
 
requirements,
 
balances
 
protected
under client asset segregation rules and balances pledged
 
under the depositor protection schemes.
 
b) Changes in IFRS Accounting Standards and Interpretations
 
IFRS 18,
Presentation and Disclosure in Financial Statements
In
 
April
 
2024,
 
the
 
IASB
 
issued
 
a
 
new
 
standard,
 
IFRS 18,
Presentation
 
and
 
Disclosure
 
in
 
Financial
 
Statements
,
 
which
replaces IAS 1,
Presentation of Financial Statements
. The main changes introduced by IFRS 18 relate
 
to:
–
the structure of income statements;
–
new disclosure requirements for management performance
 
measures; and
–
enhanced guidance on aggregation and disaggregation
 
of information on the face of
 
financial statements and in the
notes thereto.
IFRS 18 is effective
 
from 1 January
 
2027 and
 
will also
 
apply to comparative
 
information. UBS
 
will first
 
apply these
 
new
requirements
 
in
 
the
 
Annual
 
Report
 
2027
 
and,
 
for
 
interim
 
reporting,
 
in
 
the
 
first
 
quarter
 
2027
 
interim
 
report.
 
UBS
 
is
assessing the impact of the
 
new requirements on its reporting but
 
expects it to be limited.
 
UBS will evaluate the grouping
of
 
items
 
in
 
the
 
primary
 
financial
 
statements
 
and
 
in
 
the
 
notes
 
thereto
 
based
 
on
 
new
 
principles
 
of
 
aggregation
 
and
disaggregation in IFRS 18.
Amendments to IFRS 9,
Financial Instruments
, and IFRS 7,
Financial Instruments: Disclosures
In
 
May
 
2024,
 
the
 
IASB
 
issued
 
Amendments
 
to
 
the
 
Classification
 
and
 
Measurement
 
of
 
Financial
 
Instruments
 
–
Amendments to IFRS 9 and IFRS 7 (the Amendments).
The Amendments relate to:
–
derecognition of financial liabilities settled through electronic transfer
 
systems;
–
assessment of contractual cash
 
flow characteristics in classifying
 
financial assets, including those
 
with environmental,
social and corporate
 
governance and similar features,
 
non-recourse features, and
 
contractually linked instruments; and
–
disclosure
 
of
 
information
 
about
 
financial
 
instruments
 
with
 
contingent
 
features
 
that
 
can
 
change
 
the
 
amount
 
of
contractual cash flows, as well as equity instruments designated
 
at fair value through other comprehensive income.
The
 
Amendments
 
are
 
effective
 
from
 
1 January
 
2026,
 
with
 
early
 
application
 
permitted
 
either
 
for
 
the
 
entire
 
set
 
of
amendments or for only those
 
that relate to classification
 
of financial instruments. UBS
 
is currently assessing the
 
impact
of the new requirements on its financial statements.
Other amendments to IFRS Accounting Standards
The IASB has issued
 
a number of
 
minor amendments to
 
IFRS Accounting Standards,
 
effective from
 
1 January 2024 and
later.
 
These amendments do not have or are not expected
 
to have a significant effect on UBS when they are
 
adopted.
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
280
 
Note 2
 
Accounting for the acquisition of the Credit Suisse Group
The transaction
On 12 June
 
2023, UBS Group AG
 
acquired Credit
 
Suisse Group AG,
 
succeeding by
 
operation of
 
Swiss law
 
to all
 
assets
and liabilities
 
of Credit
 
Suisse Group
 
AG, and
 
became the
 
direct or
 
indirect shareholder
 
of all
 
of the
 
former direct
 
and
indirect
 
subsidiaries
 
of
 
Credit
 
Suisse
 
Group AG.
 
The
 
acquisition
 
of
 
Credit
 
Suisse
 
Group AG
 
constituted
 
a
 
business
combination
 
under
 
IFRS 3,
Business
 
Combinations
, and
 
was
 
required
 
to
 
be accounted
 
for
 
by applying
 
the
 
acquisition
method of accounting.
 
IFRS 3 measurement period adjustments for the acquisition
 
of the Credit Suisse Group
The
 
acquisition
 
of Credit
 
Suisse
 
Group AG
 
was
 
made
 
without
 
the
 
ordinary
 
due diligence
 
procedures
 
and outside
 
the
conventional time
 
frame
 
for an
 
acquisition
 
of this
 
scale
 
and nature.
 
As such,
 
complete
 
information about
 
all relevant
facts
 
and
 
circumstances
 
as
 
of
 
the
 
acquisition
 
date
 
was
 
not
 
practically
 
available
 
to
 
UBS
 
at
 
the
 
time
 
when
 
the
 
initial
acquisition accounting was applied,
 
with the amounts that form
 
part of the business combination
 
accounting therefore
considered
 
provisional
 
and
 
subject
 
to
 
further
 
measurement
 
period
 
adjustments
 
if
 
new
 
information
 
about
 
facts
 
and
circumstances existing on the date of the acquisition were to be obtained within one year from the acquisition date. The
acquisition of Credit
 
Suisse Group AG resulted in
 
provisional negative goodwill of
 
USD
27.7
bn reported in
 
the UBS Group
Annual Report 2023.
 
For details
 
of the
 
accounting
 
for the
 
acquisition,
 
including
 
measurement
 
period adjustments
 
effected
 
during the
 
year
ended 31 December 2023,
 
refer to “Note 1a
 
Material accounting
 
policies” and “Note
 
2 Accounting for the
 
acquisition
of the Credit Suisse Group” in the “Consolidated financial
 
statements” section of the UBS Group Annual Report
 
2023.
 
In the second quarter of 2024, in
 
light of the additional information about circumstances existing on
 
the acquisition date
that became available to management,
 
IFRS 3 measurement period adjustments
 
of USD
0.2
bn were made in relation to
Provisions and
 
contingent
 
liabilities
 
(refer
 
to
“Change
 
in provisions
 
and contingent
 
liabilities”
 
below). In
 
addition, fair
value measurement adjustments of
 
USD
0.3
bn were made
 
to the acquisition
 
date fair values
 
of exposures associated with
Russia, as well as other positions
 
in Non-core and Legacy, following the completion of
 
a detailed review. The adjustments
reflect management’s
 
final conclusions
 
on critical
 
assumptions and
 
judgments, which
 
are within
 
a range
 
of reasonably
possible
 
outcomes,
 
relating
 
to
 
significant
 
uncertainties
 
that
 
existed
 
on
 
the
 
acquisition
 
date.
 
Comparative-period
information has been revised accordingly.
 
The measurement period adjustments effected in the second quarter of 2024 resulted in a decrease in negative goodwill
to USD
27.3
bn from the provisional
 
amount of USD
27.7
bn previously reported
 
in the UBS Group
 
Annual Report 2023.
Retained earnings have been revised to reflect the impact on the prior-period
 
income statement of net USD
0.5
bn. With
the
 
measurement
 
period
 
adjustments
 
effected
 
in
 
the
 
second
 
quarter
 
of
 
2024
 
and
 
the
 
finalization
 
of
 
the
 
amount
 
of
negative goodwill, the acquisition accounting for the transaction
 
is complete.
Change in provisions and contingent liabilities
In addition to
 
the existing USD
1.3
bn litigation provisions previously recorded by
 
the Credit Suisse Group, UBS
 
recognized
on
 
the
 
acquisition
 
date
 
USD
5.6
bn
 
in
Provisions
 
and
 
contingent
 
liabilities
 
for
 
additional
 
litigation
 
provisions
 
and
contingent
 
liabilities,
 
which
 
includes
 
USD
1.6
bn
 
for
 
litigation
 
provisions
 
to
 
reflect
 
management’s
 
assessment
 
of
 
the
associated probability,
 
timing and amount considering new information, and
 
USD
4.0
bn contingent liabilities for certain
obligations in respect
 
of litigation, regulatory
 
and similar matters
 
identified in the
 
purchase price
 
allocation. The
 
timing
and
 
actual
 
amount
 
of
 
outflows
 
associated
 
with
 
litigation
 
matters
 
are
 
uncertain.
 
UBS
 
has
 
continued
 
to
 
assess
 
the
development
 
of
 
these
 
obligations
 
and
 
the
 
amount
 
and
 
timing
 
of
 
potential
 
outflows.
 
The
 
USD
4.0
bn
 
of
 
contingent
liabilities reflect an increase
 
of USD
0.2
bn in the second quarter
 
of 2024 from the USD
3.8
bn previously reported
 
in the
UBS Group Annual Report 2023.
Effect of measurement period adjustments on the acquisition
 
date balance sheet
 
The table
 
below sets
 
out the
 
identifiable net
 
assets attributable
 
to the
 
acquisition of
 
the Credit
 
Suisse Group
 
as at
 
the
acquisition date adjusted to reflect
 
the effects of measurement period
 
adjustments made in the second quarter
 
of 2024
detailed above.
 
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
281
Note 2
 
Accounting for the acquisition of the Credit Suisse Group
 
(continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
USD m
Purchase price consideration, after consideration of share-based compensation awards
3,710
Credit Suisse Group net identifiable assets on the acquisition
 
date
Assets
As previously
reported in the
Annual Report 2023
Measurement period
adjustments made in
the second quarter of
2024
Revised
Cash and balances at central banks
93,012
(89)
92,923
Amounts due from banks
13,590
(15)
13,575
Receivables from securities financing transactions measured at amortized
 
cost
26,194
26,194
Cash collateral receivables on derivative instruments
20,878
20,878
Loans and advances to customers
247,219
(175)
247,044
Other financial assets measured at amortized cost
13,428
(43)
13,385
Total financial assets measured at amortized cost
414,322
(322)
414,000
Financial assets at fair value held for trading
56,237
56,237
Derivative financial instruments
62,162
62,162
Brokerage receivables
366
366
Financial assets at fair value not held for trading
54,199
54,199
Total financial assets measured at fair value through profit or loss
172,964
172,964
Financial assets measured at fair value through other comprehensive income
0
0
Investments in associates
1,569
1,569
Property, equipment and software
6,055
6,055
Intangible assets
1,287
1,287
Deferred tax assets
998
998
Other non-financial assets
6,892
6,892
Total assets
604,088
(322)
603,766
Liabilities
Amounts due to banks
107,617
107,617
Payables from securities financing transactions measured at amortized cost
11,911
11,911
Cash collateral payables on derivative instruments
10,939
10,939
Customer deposits
183,119
183,119
Debt issued measured at amortized cost
110,491
110,491
Other financial liabilities measured at amortized cost
7,992
7,992
Total financial liabilities measured at amortized cost
432,070
432,070
Financial liabilities at fair value held for trading
5,711
5,711
Derivative financial instruments
67,782
67,782
Brokerage payables designated at fair value
316
316
Debt issued designated at fair value
44,909
44,909
Other financial liabilities designated at fair value
7,574
7,574
Total financial liabilities measured at fair value through profit or loss
126,292
126,292
Provisions and contingent liabilities
9,945
161
10,106
Other non-financial liabilities
3,901
3,901
Total liabilities
572,209
161
572,370
Non-controlling interests
(285)
(285)
Fair value of net assets acquired
31,594
(483)
31,110
Settlement of pre-existing relationships
135
135
Negative goodwill resulting from the acquisition
27,748
(483)
27,264
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
282
Note 2
 
Accounting for the acquisition of the Credit Suisse Group
 
(continued)
The tables
 
below set
 
out the
 
consequential impact
 
of the
 
measurement period
 
adjustments on
 
the previously
 
reported
income statement for the year
 
ended 31 December 2023, the balance
 
sheet as of 31 December 2023,
 
and the statement
of cash flows for the year ended 31 December 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effect of the measurement period adjustments on the income statement for the year ended 31 December 2023
For the year ended 31 December 2023
USD m
As previously
reported in the
Annual Report
2023
 
Measurement
period
adjustments
made in the
second quarter
of 2024
Revised
Net interest income
7,297
7,297
Other net income from financial instruments measured
 
at fair value through profit or loss
11,583
11,583
Fee and commission income
23,766
23,766
Fee and commission expense
(2,195)
(2,195)
Net fee and commission income
21,570
21,570
Other income
384
384
Total revenues
40,834
40,834
Negative goodwill
27,748
(483)
27,264
Credit loss expense / (release)
1,037
1,037
Personnel expenses
24,899
24,899
General and administrative expenses
10,156
10,156
Depreciation, amortization and impairment of non-financial
 
assets
3,750
3,750
Operating expenses
38,806
38,806
Operating profit / (loss) before tax
28,739
(483)
28,255
Tax expense / (benefit)
873
873
Net profit / (loss)
27,866
(483)
27,382
Net profit / (loss) attributable to non-controlling interests
16
16
Net profit / (loss) attributable to shareholders
27,849
(483)
27,366
 
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
283
Note 2
 
Accounting for the acquisition of the Credit Suisse Group
 
(continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effect of the measurement period adjustments on the balance sheet as of 31 December 2023
USD m
As of 31 December 2023
Assets
As previously
reported in the
Annual Report
2023
Measurement
period
adjustments
made in the
second quarter
of 2024
Revised
Total financial assets measured at amortized cost
1,189,773
(322)
1,189,451
of which: Cash and balances at central banks
314,148
(89)
314,060
of which: Amounts due from banks
21,161
(15)
21,146
of which: Loans and advances to customers
639,844
(175)
639,669
of which: Other financial assets measured at amortized cost
65,498
(43)
65,455
Total assets
1,717,246
(322)
1,716,924
Liabilities
Provisions and contingent liabilities
12,250
161
12,412
Total liabilities
1,630,607
161
1,630,769
Equity
Equity attributable to shareholders
86,108
(483)
85,624
of which: Retained earnings
74,880
(483)
74,397
Total equity
86,639
(483)
86,156
Total liabilities and equity
1,717,246
(322)
1,716,924
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effect of the measurement period adjustments on the statement of cash flows for the year ended 31 December 2023
For the year ended 31 December 2023
USD m
As previously
reported in the
Annual Report
2023
Measurement
period
adjustments
made in the
second quarter
of 2024
Revised
Cash flow from / (used in) operating activities
Net profit / (loss)
27,866
(483)
27,382
Non-cash items included in net profit and other adjustments:
of which: Negative goodwill
(27,748)
483
(27,264)
Net cash flow from / (used in) operating activities
86,068
86,068
Net cash flow from / (used in) investing activities
103,228
(104)
103,124
of which: Cash and cash equivalents acquired upon acquisition of
 
the Credit Suisse Group
108,510
(104)
108,406
Net cash flow from / (used in) financing activities
(58,262)
(58,262)
Total cash flow
Cash and cash equivalents at the beginning of the period
195,321
195,321
Net cash flow from / (used in) operating, investing and financing
activities
131,035
(104)
130,931
Effects of exchange rate differences on cash and cash equivalents
13,955
13,955
Cash and cash equivalents at the end of the period
340,311
(104)
340,207
of which: cash and balances at central banks
314,065
(89)
313,976
of which: amounts due from banks
19,227
(15)
19,212
of which: money market paper
7,018
7,018
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
284
Note 2
 
Accounting for the acquisition of the Credit Suisse Group
 
(continued)
Conclusion of an investment management agreement
 
with Apollo and the transfer of senior secured
 
asset-
based financing
In the
 
first quarter
 
of 2024,
 
UBS and
 
entities associated with
 
Apollo Global
 
Management (Apollo) and
 
Atlas SP
 
(Atlas)
entered into
 
agreements to
 
conclude the
 
investment management agreement
 
under which
 
Atlas has
 
managed Credit
Suisse’s retained portfolio of assets of its former securitized products
 
group. Following the closure of this agreement, the
assets previously managed by Atlas are to
 
be managed in Non-core and
 
Legacy. The
 
parties also agreed to conclude the
transition
 
services
 
agreement under
 
which Credit
 
Suisse has
 
provided services
 
to Atlas.
 
In addition,
 
Credit Suisse
 
AG entered
into
 
an agreement
 
with Apollo
 
Capital
 
Management
 
(ACM)
 
and other
 
parties
 
managed,
 
controlled
 
and / or
 
advised
 
by ACM
or its affiliates (collectively, the Assignees) to transfer USD
8.0
bn of senior secured asset-based financing,
 
with USD
6.0
bn
funded as
 
of 31 December
 
2023 recognized
 
as financial
 
assets at
 
fair value
 
held for
 
trading
 
at a fair
 
value of
 
USD
5.5
bn and
the remaining notional of USD
2.0
bn recognized as derivative loan commitments at a fair value of
 
USD
0.15
bn, with the
fair values of both financing components derecognized from the Group’s balance sheet as of 31 March 2024. As part of
the
 
loan transfer,
 
the
 
Group
 
extended a
 
one-year senior
 
swingline facility
 
to
 
the
 
Assignees with
 
a
 
total amount
 
as
 
of
31 December 2024 of
 
USD
0.75
bn, which
 
is accounted for
 
as an
 
off-balance sheet irrevocable commitment. In
 
the first
quarter of
 
2024, the
 
Group
 
recognized a
 
net
 
gain
 
of
 
USD
0.3
bn
 
from
 
the
 
conclusion of
 
the
 
investment management
agreement and the assignment of the loan
 
facilities, after the accounting
 
for the purchase price allocation
 
adjustments at
the closing
 
of the acquisition
 
of the Credit
 
Suisse Group.
Other transactions related to businesses and subsidiaries
 
of Credit Suisse
In June 2024, the Credit
 
Suisse supply chain finance funds
 
(the SCFFs) made a voluntary
 
offer to the SCFFs’ investors
 
to
redeem all outstanding fund units.
 
›
Refer to Note 18 for more information
In August
 
2024 and
 
October 2024,
 
respectively, UBS
 
has also
 
entered into
 
the agreements
 
to sell
 
Select Portfolio Servicing,
the US mortgage servicing business of Credit Suisse, and
 
its
50
% interest in Swisscard AECS GmbH.
›
Refer to Note 29 for more information
 
Note 3a
 
Segment reporting
UBS’s businesses are
 
organized globally into
 
five business divisions:
 
Global Wealth
 
Management, Personal
 
& Corporate
Banking, Asset
 
Management, the
 
Investment Bank,
 
and Non-core
 
and Legacy.
 
All five
 
business divisions are
 
supported
by our
 
Group
 
functions
 
and qualify
 
as reportable
 
segments for
 
the purpose
 
of segment
 
reporting.
 
Together
 
with the
Group functions,
 
the five business divisions reflect the
 
management structure of the Group.
–
Global Wealth
 
Management
 
provides financial
 
services, advice
 
and solutions
 
to private
 
wealth clients.
 
Its offering
ranges from investment
 
management to estate
 
planning and corporate
 
finance advice, in
 
addition to specific
 
wealth
management and banking products and services.
 
–
Personal
 
&
 
Corporate
 
Banking
 
serves
 
its
 
private,
 
corporate,
 
and
 
institutional
 
clients’
 
needs,
 
from
 
banking
 
to
retirement, financing,
 
investments and
 
strategic transactions,
 
in Switzerland,
 
through its
 
branch network
 
and digital
channels.
–
Asset Management
 
is a global, large-scale
 
and diversified asset manager.
 
It offers investment capabilities
 
and styles
across
 
all
 
major
 
traditional
 
and
 
alternative
 
asset
 
classes,
 
as
 
well
 
as
 
advisory
 
support
 
to
 
institutions,
 
wholesale
intermediaries and wealth management clients.
 
–
The
Investment Bank
 
provides a range of
 
services to institutional,
 
corporate and wealth management
 
clients globally,
to
 
help
 
them
 
raise
 
capital,
 
grow
 
their
 
businesses,
 
invest
 
and
 
manage
 
risks.
 
Its
 
offering
 
includes
 
research,
 
advisory
services, facilitating clients raising debt
 
and equity from the public
 
and private markets and capital
 
markets, cash and
derivatives trading across equities and fixed income, and
 
financing.
 
–
Non-core and Legacy
 
includes positions and businesses not aligned with our long-term
 
strategy and risk appetite. It
consists of selected
 
assets and liabilities
 
from the Credit
 
Suisse business divisions,
 
as well as
 
residual assets and
 
liabilities
from UBS’s former Non-core and
 
Legacy Portfolio that preceded the acquisition of
 
the Credit Suisse Group and smaller
amounts of
 
assets and
 
liabilities of
 
UBS’s business
 
divisions that
 
have been
 
assessed as
 
not strategic
 
in light
 
of that
acquisition.
 
–
Our Group functions are
 
support and control functions
 
that provide services to
 
the Group. Virtually
 
all costs incurred
by the
 
Group functions
 
are allocated
 
to the
 
business divisions,
 
leaving a
 
residual amount
 
that we
 
refer to
 
as
Group
Items
 
in our segment reporting. Group functions include the following major areas: Group Services (which consists of
the Group
 
Operations and
 
Technology Office,
 
Group Compliance,
 
Regulatory &
 
Governance, Group
 
Finance, Group
Risk Control, Group Human Resources and Corporate Services, Communications
 
& Branding, Group Legal, the Group
Integration Office, Group Sustainability and Impact and the
 
Chief Strategy Office) and Group Treasury.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
285
Note 3a
 
Segment reporting (continued)
Financial information about
 
the five business divisions
 
and Group Items
 
is presented separately
 
in internal management
reports to the
 
Group Executive
 
Board (the GEB),
 
which is considered
 
the “chief
 
operating decision-maker”
 
pursuant to
IFRS 8,
Operating Segments
.
UBS’s
 
internal
 
accounting
 
policies,
 
which
 
include
 
management
 
accounting
 
policies
 
and
 
service
 
level
 
agreements,
determine
 
the
 
revenues
 
and
 
expenses
 
directly
 
attributable
 
to
 
each
 
reportable
 
segment.
 
Transactions
 
between
 
the
reportable segments are carried out at internally agreed rates and are
 
reflected in the operating results of the reportable
segments.
 
Revenue-sharing
 
agreements
 
are
 
used
 
to
 
allocate
 
external
 
client
 
revenues
 
to
 
reportable
 
segments
 
where
several
 
reportable
 
segments
 
are
 
involved
 
in
 
the
 
value
 
creation
 
chain.
 
Total
 
intersegment
 
revenues
 
for
 
the
 
Group
 
are
immaterial, as the majority of the
 
revenues are allocated across the segments by
 
means of revenue-sharing agreements.
Interest
 
income
 
earned
 
from
 
managing
 
UBS’s
 
consolidated
 
equity
 
is
 
allocated
 
to
 
the
 
reportable
 
segments
 
based
 
on
average attributed equity and currency composition. Assets and
 
liabilities of the reportable segments are funded
 
through
and invested with Group functions, and the net interest
 
margin is reflected in the results of each reportable segment.
Segment
 
assets
 
are
 
based
 
on
 
a
 
third-party
 
view
 
and
 
do
 
not
 
include
 
intercompany
 
balances.
 
This
 
view
 
is
 
in
 
line
 
with
internal
 
reporting
 
to
 
the
 
GEB.
 
If
 
one
 
operating
 
segment
 
is
 
involved
 
in
 
an
 
external
 
transaction
 
together
 
with
 
another
operating segment
 
or Group
 
function, additional
 
criteria are
 
considered to
 
determine the
 
segment that
 
will report
 
the
associated
 
assets.
 
This
 
will
 
include
 
a
 
consideration
 
of
 
which
 
segment’s
 
business
 
needs
 
are
 
being
 
addressed
 
by
 
the
transaction
 
and
 
which
 
segment
 
is
 
providing
 
the
 
funding
 
and
 
/
 
or
 
resources.
 
Allocation
 
of
 
liabilities
 
follows
 
the
 
same
principles.
Non-current assets
 
disclosed
 
for segment
 
reporting purposes
 
represent assets
 
that are
 
expected to
 
be recovered
 
more
than
 
12
 
months
 
after
 
the
 
reporting
 
date,
 
excluding
 
financial
 
instruments,
 
deferred
 
tax
 
assets
 
and
 
post-employment
benefits.
As part of
 
the continued
 
refinement of
 
UBS’s reporting
 
structure and
 
organizational setup,
 
in the first
 
quarter of
 
2024
certain changes
 
were made,
 
with an
 
impact on
 
segment reporting
 
for UBS’s
 
business divisions
 
and Group
 
Items. Prior-
period information has been adjusted for comparability.
 
The changes are as follows.
–
Change in
 
business division
 
perimeters
:
UBS has
 
transferred certain
 
businesses from
 
Swiss Bank
 
(Credit Suisse),
previously
 
included
 
in
 
Personal
 
&
 
Corporate
 
Banking,
 
to
 
Global
 
Wealth
 
Management.
 
The
 
change
 
predominantly
related
 
to
 
the
 
high
 
net
 
worth
 
client
 
segment
 
and
 
represented
 
approximately
 
USD
72
bn
 
in
 
invested
 
assets
 
and
approximately
 
USD
0.6
bn
 
in
 
annualized
 
revenues.
 
A
 
number
 
of
 
other
 
smaller
 
business
 
shifts
 
were
 
also
 
executed
between the business divisions in the first quarter of
 
2024.
 
–
Changes to Group Treasury allocations
:
UBS has allocated to the business divisions
 
nearly all Group Treasury costs
that historically were retained and reported in Group Items. Costs that continue to be retained in Group Items include
costs related to hedging and own
 
debt, and deferred tax asset
 
funding costs. UBS has also aligned
 
the internal funds
transfer pricing
 
methodologies applied
 
by Credit
 
Suisse entities
 
to UBS’s
 
funds transfer
 
pricing methodology.
 
These
changes resulted
 
in funding
 
costs of
 
approximately
 
USD
0.3
bn for
 
2023 moving
 
from
 
Group
 
Items to
 
the
 
business
divisions, predominantly
 
related
 
to the
 
second half
 
of 2023.
 
In parallel
 
with the
 
aforementioned
 
changes, UBS
 
has
increased the allocation of balance sheet resources from
 
Group Treasury to the business divisions.
–
Updated
 
cost
 
allocations
:
 
UBS
 
has
 
reallocated
 
USD
0.3
bn
 
of
 
annualized
 
costs
 
from
 
Non-core
 
and
 
Legacy
 
to
 
the
other business divisions, with the aim of avoiding stranded costs in Non-core and Legacy at the end of the integration
process.
Following the changes outlined
 
above, prior-period information for
 
the twelve-month period ended
 
31 December 2023
has
 
been
 
restated,
 
resulting
 
in
 
decreases
 
in
Operating
 
profit
 
/
 
(loss)
 
before
 
tax
 
of
 
USD
144
m
 
for
 
Global
 
Wealth
Management,
 
USD
337
m for
 
Personal
 
&
 
Corporate
 
Banking
 
and
 
USD
28
m for
 
the
 
Investment
 
Bank,
 
and
 
increases
 
in
Operating profit / (loss) before tax
 
of USD
341
m for Group Items, USD
154
m for Non-core and Legacy and USD
14
m for
Asset Management.
Prior-period
 
information
 
as
 
of
 
31 December
 
2023
 
has
 
also
 
been
 
restated,
 
resulting
 
in
 
increases
 
of
Total
 
assets
 
of
USD
98.4
bn in
 
Global Wealth Management,
 
USD
13.3
bn in
 
Personal &
 
Corporate Banking, USD
28.9
bn in
 
the Investment
Bank and USD
28.6
bn in Non-core and
 
Legacy, with a corresponding
 
decrease of
Total assets
 
of USD
169.2
bn in Group
Items.
These changes had no effect on the reported results or financial
 
position of the Group.
 
 
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
286
Note 3a
 
Segment reporting (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
 
Management
Investment
Bank
Non-core and
Legacy
Group Items
UBS
For the year ended 31 December 2024
Net interest income
7,358
5,650
(63)
(3,597)
126
(2,365)
7,108
Non-interest income
17,158
3,684
3,246
14,544
1,480
1,391
41,503
Total revenues
24,516
9,334
3,182
10,948
1,605
(975)
48,611
Credit loss expense / (release)
(16)
404
(1)
97
69
(2)
551
Operating expenses
20,608
5,741
2,663
8,934
3,512
(220)
41,239
Operating profit / (loss) before tax
3,924
3,189
520
1,917
(1,976)
(752)
6,821
Tax expense / (benefit)
1,675
Net profit / (loss)
5,146
Additional information
Total assets
559,601
447,068
22,702
453,422
68,260
13,975
1,565,028
Additions to non-current assets
889
361
100
768
88
0
2,206
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
USD m
Global
Wealth
Management
Personal &
Corporate
Banking
Asset
 
Management
Investment
Bank
Non-core and
Legacy
Group Items
Negative
goodwill
1
UBS
For the year ended 31 December 2023
2
Net interest income
7,082
4,878
(40)
(2,915)
437
(2,144)
7,297
Non-interest income
14,474
2,810
2,726
11,619
260
1,648
33,536
Total revenues
21,556
7,687
2,686
8,703
697
(495)
40,834
Negative goodwill
27,264
27,264
Credit loss expense / (release)
166
482
0
190
193
6
1,037
Operating expenses
17,945
4,394
2,353
8,585
5,091
438
38,806
Operating profit / (loss) before tax
3,445
2,811
332
(72)
(4,587)
(938)
27,264
28,255
Tax expense / (benefit)
873
Net profit / (loss)
27,382
Additional information
Total assets
1,2
567,648
483,794
21,804
428,269
201,131
14,277
1,716,924
Additions to non-current assets
2,584
3,279
709
530
3,062
550
10,714
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
 
Management
Investment
Bank
Non-core and
Legacy
Group Items
UBS
For the year ended 31 December 2022
Net interest income
5,273
2,191
(19)
(242)
1
(585)
6,621
Non-interest income
13,694
2,111
2,980
3
8,958
236
(37)
27,942
Total revenues
18,967
4,302
2,961
8,717
237
(622)
34,563
Credit loss expense / (release)
0
39
0
(12)
2
1
29
Operating expenses
13,989
2,452
1,564
6,832
104
(12)
24,930
Operating profit / (loss) before tax
4,977
1,812
1,397
1,897
131
(611)
9,604
Tax expense / (benefit)
1,942
Net profit / (loss)
7,661
Additional information
Total assets
388,530
235,226
17,348
391,320
13,367
58,574
1,104,364
Additions to non-current assets
42
13
1
34
0
1,970
2,060
1 Comparative-period information has been
 
revised to reflect measurement period
 
adjustments. Refer to Note
 
2 for more information.
 
2 Comparative-period information has
 
been restated for changes in
 
business
division perimeters, Group Treasury allocations and Non-core and Legacy cost allocations.
 
3 Includes an USD
848
m gain in Asset Management related to the sale
 
of UBS‘s shareholding in Mitsubishi Corp.-UBS Realty
Inc.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
287
Note 3b
 
Segment reporting by geographic location
The operating
 
regions shown
 
in the
 
table below
 
correspond to
 
the regional
 
management structure
 
of the
 
Group. The
allocation of total revenues to these
 
regions reflects, and is consistent with, the
 
basis on which the business is managed
and its performance
 
is evaluated.
 
These allocations
 
involve assumptions
 
and judgments
 
that management
 
considers to
be reasonable and
 
may be refined
 
to reflect changes
 
in estimates or
 
management structure.
 
The main principles
 
of the
allocation
 
methodology
 
are
 
that
 
client
 
revenues
 
are
 
attributed
 
to
 
the
 
domicile
 
of
 
the
 
given
 
client,
 
and
 
trading
 
and
portfolio
 
management
 
revenues
 
are
 
attributed
 
to
 
the
 
country
 
where
 
the
 
risk
 
is
 
managed.
 
This
 
revenue
 
attribution
 
is
consistent with the mandate of the
 
regional Presidents. Certain revenues,
 
such as those related to Non-core
 
and Legacy
and Group Items, are included in the
Global
 
line.
The
 
geographical
 
analysis
 
of
 
non-current
 
assets
 
is
 
based
 
on
 
the
 
location
 
of
 
the
 
entity
 
in
 
which
 
the
 
given
 
assets
 
are
recorded.
For 2023, the allocation of total revenues by geographical region for Credit Suisse is not available on
 
the same allocation
basis as for the UBS Group and the cost to develop this
 
information would have been excessive. Therefore,
 
as permitted
under
 
IFRS
 
8,
 
the
 
respective
 
information
 
is
 
not
 
disclosed.
 
UBS AG
 
and
 
Credit
 
Suisse AG
 
disclosed
 
total
 
revenues
 
by
geographical region in their 2023 annual reports according
 
to their respective allocation methodologies.
›
Refer to “UBS AG consolidated financial information”
 
in the “Consolidated financial statements”
 
section of the UBS AG Annual
Report 2023 for more information on total revenues by geographical
 
region for UBS AG
›
Refer to the Credit Suisse AG consolidated financial
 
statements 2023, available at
https://www.ubs.com/global/en/investor-
relations/complementary-financial-information/disclosure-legal-entities/credit-suisse-ag-consolidated.html
, for more information
on total revenues by geographical region for Credit Suisse AG
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended 31 December 2024
Total revenues
Total non-current assets
USD bn
Share %
USD bn
Share %
 
Americas
1
16.8
35
8.6
35
Asia Pacific
6.8
14
1.4
6
Europe, Middle East and Africa (excluding Switzerland)
7.7
16
3.1
12
Switzerland
15.1
31
11.6
47
Global
2
2.2
5
0.0
0
Total
48.6
100
24.7
100
For the year ended 31 December 2023
Total revenues
3
Total non-current assets
USD bn
Share %
USD bn
Share %
 
Americas
1
9.4
34
Asia Pacific
1.7
6
Europe, Middle East and Africa (excluding Switzerland)
3.3
12
Switzerland
13.3
48
Global
0.0
0
Total
27.7
100
For the year ended 31 December 2022
Total revenues
Total non-current assets
USD bn
Share %
USD bn
Share %
 
Americas
1
13.8
40
8.9
46
Asia Pacific
5.6
16
1.5
8
Europe, Middle East and Africa (excluding Switzerland)
7.0
20
2.9
15
Switzerland
7.7
22
6.3
32
Global
0.5
1
0.0
0
Total
34.6
100
19.7
100
1 Predominantly related to the US.
 
2 Includes certain revenues in Asset Management and Global Wealth Management that were not allocated to geographical regions.
 
3 For 2023, the allocation of total revenues
by geographical region for Credit Suisse is not
 
available on the same allocation basis as for
 
the UBS Group and the cost to develop this information
 
would have been excessive. Therefore,
 
as permitted under IFRS 8,
the respective information is not disclosed.
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
288
Income statement notes
Note 4
 
Net interest
 
income and other
 
net income from
 
financial instruments
 
measured at fair
 
value through
profit or loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended
USD m
31.12.24
31.12.23
31.12.22
Net interest income from financial instruments measured
 
at fair value through profit or loss and other
7,061
3,770
1,403
Other net income from financial instruments measured
 
at fair value through profit or loss
1
14,690
11,583
7,517
Total net income from financial instruments measured at fair value through profit or loss and
 
other
21,752
15,353
8,920
Net interest income
Interest income from loans and deposits
2
32,494
28,569
9,612
Interest income from securities financing transactions measured
 
at amortized cost
3
4,074
3,948
1,378
Interest income from other financial instruments measured
 
at amortized cost
1,371
1,187
545
Interest income from debt instruments measured at fair
 
value through other comprehensive income
104
103
74
Interest resulting from derivative instruments designated as cash
 
flow hedges
 
(2,049)
(2,064)
173
Total interest income from financial instruments measured at amortized cost and fair
 
value through other comprehensive income
35,994
31,743
11,782
Interest expense on loans and deposits
4
19,653
15,011
2,579
Interest expense on securities financing transactions measured
 
at amortized cost
5
2,051
1,968
1,089
Interest expense on debt issued
14,053
11,072
2,803
Interest expense on lease liabilities
191
166
92
Total interest expense from financial instruments measured at amortized cost
35,947
28,216
6,564
Total net interest income from financial instruments measured at amortized cost and fair
 
value through other comprehensive income
47
3,527
5,218
Total net interest income from financial instruments measured at fair value through profit or loss
 
and other
7,061
3,770
1,403
Total net interest income
7,108
7,297
6,621
1 Includes net losses
 
from financial liabilities designated
 
at fair value of
 
USD
1,836
m (net losses of
 
USD
4,843
m in 2023 and
 
net gains of USD
17,037
m in 2022). This
 
complementary “of which”
 
information for
financial liabilities designated at fair value excludes fair value changes on hedges related to financial liabilities designated at fair value, and foreign currency translation effects arising from translating foreign currency
transactions into the
 
respective functional currency,
 
both of which
 
are reported within
 
Other net income
 
from financial instruments
 
measured at fair
 
value through profit
 
or loss. Net
 
gains / (losses)
 
from financial
liabilities designated at fair value included net losses of USD
1,844
m (net losses of USD
2,045
m and net gains of USD
4,112
m in 2023 and 2022, respectively) from financial liabilities related to unit-linked investment
notes issued by
 
UBS’s Asset
 
Management business division.
 
These gains /
 
(losses) are fully
 
offset within Other
 
net income from
 
financial instruments measured
 
at fair value
 
through profit or
 
loss by the
 
fair value
change on the financial assets hedging the unit-linked investment contracts, which are not disclosed as part of Net gains / (losses) from financial liabilities designated at fair value.
 
2 Consists of interest income from
cash and balances at central banks,
 
amounts due from banks and customers, and
 
cash collateral receivables on derivative
 
instruments, as well as negative
 
interest on amounts due to banks, customer
 
deposits, and
cash collateral payables on
 
derivative instruments.
 
3 Includes negative interest, including
 
fees, on payables
 
from securities financing transactions
 
measured at amortized cost.
 
4 Consists of interest expense
 
on
amounts due to banks,
 
cash collateral payables
 
on derivative instruments,
 
and customer deposits,
 
as well as negative
 
interest on cash and
 
balances at central
 
banks, amounts due
 
from banks, and
 
cash collateral
receivables on
 
derivative instruments.
 
5 Includes
 
interest expense
 
on payables
 
from securities
 
financing transactions
 
and negative
 
interest, including
 
fees, on
 
receivables from
 
securities financing
 
transactions
measured at amortized cost.
Total
 
combined
 
net
 
interest
 
income
 
and other
 
net
 
income
 
from
 
financial
 
instruments
 
measured
 
at
 
fair
 
value
 
through
profit or loss increased by
 
USD
2,918
m to USD
21,798
m, largely as a
 
result of the consolidation of
 
Credit Suisse revenues
for the
 
full year,
 
and included
 
an increase
 
of USD
363
m in
 
accretion
 
impacts resulting
 
from
 
purchase
 
price allocation
(PPA)
 
adjustments
 
on financial
 
instruments and
 
other PPA
 
effects.
 
Accretion
 
from
 
PPA
 
adjustments
 
is included
 
within
Interest income from loans and deposits
.
Note 5
 
Net fee and commission income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended
USD m
31.12.24
31.12.23
31.12.22
Underwriting fees
786
568
579
M&A and corporate finance fees
1,049
840
804
Brokerage fees
4,586
3,542
3,484
Investment fund fees
5,767
4,837
4,942
Portfolio management and related services
12,323
10,673
9,059
Other
4,217
3,306
1,920
Total fee and commission income
1
28,730
23,766
20,789
of which: recurring
18,208
15,911
14,229
of which: transaction-based
10,371
7,761
6,492
of which: performance-based
150
94
68
Fee and commission expense
2,592
2,195
1,823
Net fee and commission income
26,138
21,570
18,966
1 For the
 
year ended 31 December
 
2024, reflects third-party
 
fee and commission
 
income of USD
16,341
m for Global
 
Wealth Management, USD
2,996
m for Personal
 
& Corporate Banking,
 
USD
3,737
m for Asset
Management, USD
5,235
m for the Investment Bank, negative USD
7
m for Group Items and USD
428
m for Non-core and Legacy (for the year ended 31 December 2023: USD
13,950
m for Global Wealth Management,
USD
2,417
m for Personal & Corporate Banking, USD
3,376
m for Asset Management, USD
3,979
m for the Investment Bank, negative USD
85
m for Group Items and USD
128
m for Non-core and Legacy; for the year
ended 31 December 2022: USD
12,990
m for Global Wealth Management,
 
USD
1,654
m for Personal & Corporate
 
Banking, USD
2,840
m for Asset Management, USD
3,296
m for the Investment Bank, USD
10
m for
Group Items and USD
0
m for Non-core and Legacy).
 
Comparative-period information has been restated for
 
changes in business division perimeters, Group
 
Treasury allocations and Non-core and Legacy cost
 
allocations.
Refer to Note 3 for more information about the relevant changes.
Net fee
 
and commission
 
income
 
increased by
 
USD
4,568
m to
 
USD
26,138
m, largely
 
as a
 
result of
 
the consolidation
 
of
Credit Suisse revenues
 
for the full year,
 
and included an
 
increase of USD
257
m in accretion
 
of purchase price
 
allocation
(PPA)
 
adjustments
 
on
 
financial
 
instruments
 
and
 
other
 
PPA
 
effects,
 
which
 
was
 
reflected
 
in
 
other
 
fee
 
and
 
commission
income. Accretion
 
of PPA
 
adjustments on
 
financial
 
instruments is
 
accelerated
 
when the
 
related financial
 
instrument is
terminated or disposed of before its contractual maturity.
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
289
Note 6
 
Other income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended
USD m
31.12.24
31.12.23
31.12.22
Associates, joint ventures and subsidiaries
Net gains / (losses) from acquisitions and disposals of
 
subsidiaries
1
9
24
148
Net gains / (losses) from disposals of investments in associates
 
and joint ventures
135
4
844
2
Share of net profits of associates and joint ventures
3
144
(348)
32
Total
288
(319)
1,024
Net gains / (losses) from disposals of financial assets measured
 
at fair value through other comprehensive income
0
3
(1)
Income from properties
4
49
39
20
Net gains / (losses) from properties held for sale
(17)
12
24
Other
5
354
6
648
7
391
8
Total other income
675
384
1,459
1 Includes foreign exchange gains / (losses) reclassified from other comprehensive income
 
related to the disposal or closure of foreign operations.
 
Refer to Note 29 for more information about UBS’s
 
acquisitions and
disposals of subsidiaries and businesses.
 
2 2022 included an USD
848
m gain related to the sale of UBS’s
 
shareholding in Mitsubishi Corp.-UBS Realty Inc.
 
3 2024 includes a loss of USD
80
m due to UBS’s share
of proportionate impairment losses reflected in the profit and loss of an
 
associate (2023: loss of USD
508
m).
 
4 Includes rent received from third parties.
 
5 2024 includes gains of USD
21
m related to the repurchase
of UBS’s own
 
debt instruments (compared with gains
 
of USD
160
m in 2023 and gains
 
of USD
98
m in 2022).
 
6 Includes USD
113
m net gains in Asset Management
 
from the sale of the
 
Brazilian real estate fund
management business.
 
7 Includes USD
174
m of mortgage servicing rights fee income from the Credit Suisse Group.
 
8 Mainly relates to a portion of the total USD
133
m gain on the sale of UBS’s domestic wealth
management business in
 
Spain of USD
111
m (with the
 
remaining amount disclosed
 
within Net gains
 
/ (losses) from
 
acquisitions and
 
disposals of subsidiaries),
 
income of USD
111
m related to
 
a legacy litigation
settlement and a legacy bankruptcy claim.
Note 7
 
Personnel expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended
USD m
31.12.24
31.12.23
31.12.22
Salaries
1
12,178
10,997
7,045
Variable compensation
2
10,870
9,845
7,954
of which: performance awards
4,456
3,986
3,205
of which: financial advisors
3
5,293
4,549
4,508
of which: other
1,121
1,310
241
Contractors
325
334
323
Social security
1,622
1,473
944
Post-employment benefit plans
4
1,310
1,361
794
of which: defined benefit plans
731
847
437
of which: defined contribution plans
578
514
357
Other personnel expenses
1,013
890
621
Total personnel expenses
27,318
24,899
17,680
1 Includes role-based allowances.
 
2 Refer to Note 27
 
for more information.
 
3 Financial advisor compensation
 
consists of cash compensation,
 
determined using a formulaic
 
approach based on production,
 
and
deferred awards. It also includes expenses related to compensation commitments with financial advisors entered into at the time of recruitment that are subject to vesting requirements.
 
4 Refer to Note 26 for more
information. Includes curtailment gains of USD
104
m for the year ended 31 December 2024
 
(for the year ended 31 December
 
2023: USD
29
m; for the year ended 31
 
December 2022: USD
20
m), which represent a
reduction in the defined benefit obligation related to the Swiss pension plans resulting from a decrease in headcount following restructuring activities.
Personnel expenses increased
 
by USD
2,419
m to
 
USD
27,318
m, largely
 
due to
 
the consolidation of
 
Credit Suisse expenses
for the full year and included employee costs arising due to the integration of the legacy operations of Credit Suisse into
the UBS Group.
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
290
Note 8
 
General and administrative expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended
USD m
31.12.24
31.12.23
31.12.22
Outsourcing costs
1,816
1,492
896
Technology costs
2,356
1,851
1,146
Consulting, legal and audit fees
1,616
1,619
592
Real estate and logistics costs
1,200
1,342
605
Market data services
749
684
419
Marketing and communication
575
408
265
Travel and entertainment
337
278
172
Litigation, regulatory and similar matters
1
(128)
809
348
Other
1,604
1,673
2
746
Total general and administrative expenses
10,124
10,156
5,189
1 Reflects the net
 
increase / (decrease) in
 
provisions for litigation,
 
regulatory and similar matters
 
recognized in the income
 
statement, including a release
 
of IFRS 3 acquisition-related
 
contingent liabilities.
 
Refer to
Note 18 for more information.
 
2 Includes USD
296
m attributable to setting up a provision related to onerous contracts.
 
General and administrative expenses
 
decreased by USD
32
m to USD
10,124
m and included expenses arising
 
due to the
integration of the legacy operations of Credit Suisse into
 
the UBS Group.
Note 9
 
Income taxes
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended
USD m
31.12.24
31.12.23
31.12.22
Tax expense / (benefit)
Swiss
Current
672
883
730
Deferred
296
152
(15)
Total Swiss
968
1,035
715
Non-Swiss
Current
1,498
684
718
Deferred
(791)
(846)
509
Total non-Swiss
707
(162)
1,227
Total income tax expense / (benefit) recognized in the income statement
1,675
873
1,942
Income tax recognized in the income statement
The Swiss current tax expenses related to taxable profits
 
of UBS Switzerland AG and other Swiss entities.
The net
 
Swiss deferred
 
tax expenses
 
included expenses of
 
USD
361
m that primarily
 
related to the
 
amortization of
 
deferred
tax
 
assets
 
(DTAs)
 
previously
 
recognized
 
in
 
relation
 
to
 
deductible
 
temporary
 
differences,
 
partly
 
offset
 
by
 
a
 
benefit
 
of
USD
65
m in respect of a net upward revaluation of DTAs.
 
The non-Swiss
 
current tax
 
expenses included
 
USD
831
m that
 
mainly related
 
to US
 
corporate alternative
 
minimum tax,
with an
 
equivalent deferred
 
tax benefit
 
for DTAs recognized
 
in respect of
 
tax credits
 
carried forward
 
and USD
667
m in
respect of other taxable profits of non-Swiss subsidiaries
 
and branches.
The net
 
non-Swiss deferred tax
 
benefit included benefits
 
of USD
831
m related to
 
the aforementioned deferred
 
tax benefit
and USD
417
m in respect of
 
a net upward revaluation
 
of DTAs, partly offset
 
by an expense of
 
USD 457m that primarily
related
 
to
 
the
 
amortization
 
of
 
DTAs
 
previously
 
recognized
 
in
 
relation
 
to
 
tax
 
losses
 
carried
 
forward
 
and
 
deductible
temporary differences.
The Group’s effective tax rate for the year was
24.6
%, although it would have been
31.6
% without the aforementioned
deferred tax
 
benefits from
 
DTA revaluations.
 
This is higher
 
than the Group’s
 
structural rate
 
of
23
%, mainly
 
because its
net profit includes operating losses of certain
 
entities, mostly reflecting expenses related to
 
the integration of the legacy
operations of Credit Suisse into the UBS Group, which
 
include restructuring costs and other expenses
 
resulting from the
ongoing integration activities
 
that did not
 
result in any
 
tax benefits
 
because they cannot
 
be offset with
 
profits of
 
other
entities in the Group, and did not result in any DTA recognition.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
291
Note 9
 
Income taxes (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended
USD m
31.12.24
31.12.23
31.12.22
Operating profit / (loss) before tax
6,821
28,255
9,604
of which: Swiss
3,002
32,237
4,425
of which: non-Swiss
3,819
(3,981)
5,178
Income taxes at Swiss tax rate of
18.5
% for 2024,
18.5
% for 2023 and
18
% for 2022
1,262
5,227
1,729
Increase / (decrease) resulting from:
Non-Swiss tax rates differing from Swiss tax rate
(197)
(224)
284
Tax effects of losses not recognized
1,012
1,584
74
Previously unrecognized tax losses now utilized
(454)
(401)
(217)
Non-taxable and lower-taxed income
1
(447)
(5,641)
(335)
Non-deductible expenses and additional taxable income
1,774
1,651
429
Adjustments related to prior years, current tax
(102)
(87)
(41)
Adjustments related to prior years, deferred tax
9
(1)
13
Change in deferred tax recognition
(1,480)
(1,288)
(217)
Adjustments to deferred tax balances arising from changes
 
in tax rates
(40)
26
0
Other items
338
25
222
Income tax expense / (benefit)
1,675
873
1,942
1 The reconciling item for non-taxable and lower-taxed income
 
for 2023 primarily reflects that the negative goodwill gain that was
 
recorded in the income statement in relation
 
to the acquisition of the Credit Suisse
Group did not result in any tax expense.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The components of
 
operating profit before tax,
 
and the differences between
 
income tax expense
 
reflected in the
 
financial
statements and the amounts calculated at the Swiss tax rate,
 
are provided in the table above and explained
 
below.
Component
Description
Non-Swiss tax rates
differing from the Swiss
tax rate
To the extent that Group profits or losses arise outside Switzerland, the applicable local tax
 
rate may differ from the Swiss
tax rate. This item reflects, for such profits, an adjustment
 
from the tax expense that would arise at the
 
Swiss tax rate to
the tax expense that would arise at the applicable
 
local tax rate. Similarly, it reflects, for such losses, an adjustment from
the tax benefit that would arise at the Swiss tax
 
rate to the tax benefit that would arise
 
at the applicable local tax rate.
Tax effects of losses not
recognized
This item relates to tax losses of entities arising in the
 
year that are not recognized as DTAs and where no tax benefit
arises in relation to those losses. Therefore, the tax benefit
 
calculated by applying the local tax rate to
 
those losses as
described above is reversed.
Previously
unrecognized tax losses
now utilized
This item relates to taxable profits of the year that are offset by tax losses
 
of previous years for which no DTAs were
previously recorded. Consequently, no current tax or deferred tax expense arises in relation to those taxable
 
profits and
the tax expense calculated by applying the local
 
tax rate on those profits is reversed.
Non-taxable and lower-
taxed income
This item relates to tax deductions for the year in
 
respect of permanent differences. These include deductions in
 
respect of
profits that are either not taxable or are taxable at a lower rate
 
of tax than the local tax rate. They also
 
include deductions
made for tax purposes, which are not reflected in the
 
accounts.
Non-deductible
expenses and
additional taxable
income
This item relates to additional taxable income for
 
the year in respect of permanent differences. These include
 
income that
is recognized for tax purposes by an entity but is
 
not included in its profit that is reported in the financial
 
statements, as
well as expenses for the year that are non-deductible
 
(e.g. client entertainment costs are not deductible
 
in certain
locations).
Adjustments related to
prior years, current tax
This item relates to adjustments to current tax expense for
 
prior years (e.g. if the tax payable for a year
 
is agreed with the
tax authorities in an amount that differs from the amount
 
previously reflected in the financial statements).
Adjustments related to
prior years, deferred
tax
This item relates to adjustments to deferred tax positions
 
recognized in prior years (e.g. if a tax loss for
 
a year is fully
recognized and the amount of the tax loss agreed with
 
the tax authorities is expected to differ from the
 
amount
previously recognized as DTAs in the accounts).
Change in deferred tax
recognition
This item relates to changes in DTAs, including changes in DTAs previously recognized resulting from reassessments of
expected future taxable profits. It also includes changes
 
in temporary differences in the year, for which deferred tax is not
recognized.
Adjustments to
deferred tax balances
arising from changes in
tax rates
This item relates to remeasurements of DTAs and liabilities recognized due to changes
 
in tax rates. These have the effect
of changing the future tax saving that is expected from tax
 
losses or deductible tax differences and therefore the amount
of DTAs recognized or, alternatively,
 
changing the tax cost of additional taxable
 
income from taxable temporary
differences and therefore the deferred tax liability.
Other items
Other items include other differences between profits or losses
 
at the local tax rate and the actual local tax
 
expense or
benefit, including movements in provisions for uncertain
 
positions in relation to the current year and other items.
Income tax recognized directly in equity
A net tax expense of
 
USD
9
m was recognized in
Other comprehensive income
 
(2023: net expense of
 
USD
314
m) and a
net tax benefit of USD
23
m was recognized in
Share premium
 
(2023: net benefit of USD
19
m).
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
292
Note 9
 
Income taxes (continued)
Deferred tax assets and liabilities
The Group has gross
 
DTAs, valuation
 
allowances and recognized
 
DTAs related
 
to tax loss carry-forwards
 
and deductible
temporary differences, as well as deferred tax liabilities in respect of taxable temporary differences, as shown in
 
the table
below.
 
The valuation
 
allowances reflect
 
DTAs
 
that were
 
not recognized
 
because, as
 
of the
 
last remeasurement
 
period,
management
 
did not
 
consider
 
it probable
 
that
 
there
 
would be
 
sufficient
 
future
 
taxable
 
profits
 
available
 
to utilize
 
the
related tax loss carry-forwards and deductible
 
temporary differences.
The recognition of DTAs
 
is supported by forecasts of
 
taxable profits for the entities
 
concerned. In addition, tax planning
opportunities are available that would
 
result in additional future taxable
 
income and these would
 
be utilized, if
 
necessary.
Deferred tax
 
liabilities are recognized
 
in respect of
 
investments in subsidiaries,
 
branches and associates,
 
and interests
 
in
joint arrangements, except to
 
the extent that the Group
 
can control the timing
 
of the reversal of
 
the associated taxable
temporary difference and it is probable that such will not reverse in the foreseeable future. However,
 
as of 31 December
2024, this exception was not considered to apply to
 
any taxable temporary differences.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
USD m
31.12.24
31.12.23
Deferred tax assets
1
Gross
Valuation
allowance
Recognized
Gross
Valuation
allowance
Recognized
Tax loss carry-forwards
19,940
(17,663)
2,277
19,070
(16,078)
2,992
Unused tax credits
675
0
675
95
0
95
Temporary differences
10,841
(2,659)
8,182
11,159
(3,564)
7,595
of which: related to real estate costs capitalized for US
 
tax
purposes
2,971
0
2,971
2,703
0
2,703
of which: related to compensation and benefits
1,984
(503)
1,482
1,795
(471)
1,324
of which: related to cash flow hedges
529
0
529
765
(139)
626
of which: other
5,358
(2,156)
3,201
5,896
(2,954)
2,942
Total deferred tax assets
31,456
(20,322)
11,134
2
30,324
(19,642)
10,682
2
of which: related to the US
9,340
9,023
of which: related to other locations
1,794
1,659
Deferred tax liabilities
Total deferred tax liabilities
340
325
1 After offset of DTLs, as applicable.
 
2 As of 31 December 2024, the Group recognized DTAs of USD
697
m (31 December 2023: USD
426
m) in respect of entities that incurred losses in either 2024 or 2023.
In general, US federal tax losses incurred prior
 
to 31 December 2017 can be carried
 
forward for 20 years. US federal tax
losses incurred after that date
 
can be carried forward indefinitely,
 
although the utilization of such
 
losses is limited to
 
80%
of the
 
entity’s future
 
year taxable
 
profits. UK
 
tax losses
 
can also
 
be carried
 
forward indefinitely;
 
they can
 
shelter up
 
to
either 25% or 50%
 
of future year taxable
 
profits, depending on when
 
the tax losses
 
arose. The amounts of
 
US tax loss
carry-forwards that
 
are included
 
in the table
 
below are
 
based on their
 
amount for
 
federal tax
 
purposes rather
 
than for
state and local tax purposes.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrecognized tax loss carry-forwards
USD m
31.12.24
31.12.23
Within 1 year
387
342
From 2 to 5 years
9,491
10,839
From 6 to 10 years
3,127
7,114
From 11 to 20 years
3,760
1,818
No expiry
50,838
44,222
Total
67,603
64,335
of which: related to the US
1
19,213
12,354
of which: related to the UK
38,293
37,773
of which: related to other locations
10,097
14,208
1 Mainly related to UBS AG’s US branch.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
293
Note 9
 
Income taxes (continued)
Pillar Two top-up taxes under Global Anti-Base Erosion
 
rules
Certain countries
 
in which
 
the Group
 
operates have
 
enacted
 
legislation implementing
 
the Pillar
 
Two
 
Global Anti-Base
Erosion rules published by the Organisation for Economic Co-operation and Development that introduced domestic top-
up taxes
 
that applied
 
to local
 
UBS Group
 
entities during
 
2024. These
 
include Switzerland,
 
the UK,
 
Japan, Canada
 
and
most EU
 
Member States.
 
Moreover,
 
Switzerland and
 
most EU
 
Member States
 
had enacted
 
legislation by
 
31 December
2024 that
 
introduced
 
non-domestic
 
top-up taxes
 
that are
 
effective
 
from
 
1 January
 
2025, which
 
apply to
 
the Group’s
worldwide entities.
 
The exception in
 
paragraph 4A of
 
IAS 12,
Income Taxes
, which
 
requires that deferred tax assets
 
and deferred tax liabilities
be neither recognized nor disclosed in respect of such top-up taxes,
 
has been applied for the purposes of these financial
statements.
The Group’s current tax expenses for 2024 do not include
 
a material expense in relation to top-up taxes because,
 
to the
extent that the Group’s
 
profits arose in
 
entities to which top-up
 
taxes applied, these
 
profits were almost
 
all in countries
that had effective tax rates of 15% or more.
 
An
 
assessment
 
of
 
the
 
Group’s
 
potential
 
future
 
exposure
 
to
 
top-up
 
taxes
 
under
 
legislation
 
that
 
was
 
enacted
 
or
substantively
 
enacted
 
to
 
implement
 
the
 
Pillar
 
Two
 
model
 
rules
 
by
 
31 December
 
2024
 
but
 
was
 
not
 
yet
 
in
 
effect
 
was
performed,
 
reflecting
 
country-by-country
 
reporting
 
and
 
also
 
the
 
corporate
 
tax
 
expenses
 
of
 
group
 
entities
 
that
 
are
expected in
 
future
 
years. This
 
assessment indicated
 
that the
 
Group’s profits
 
in future
 
years are
 
expected to
 
be almost
entirely earned
 
in countries
 
with corporate
 
tax expenses
 
that are
 
at an
 
effective tax
 
rate of
 
15% or more
 
and will not,
therefore,
 
be subject
 
to top-up
 
taxes. Consequently,
 
the Group
 
is not
 
expected to
 
have a
 
material annual
 
exposure to
top-up taxes for future years under this legislation.
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
294
Balance sheet notes
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note 10
 
Financial assets at amortized cost and other positions in
 
scope of expected credit loss measurement
The tables
 
below provide
 
information about
 
financial instruments
 
and certain
 
credit
 
lines that
 
are
 
subject to
 
expected
credit loss (ECL)
 
requirements.
 
UBS’s ECL disclosure
 
segments, or “ECL
 
segments”,
 
are aggregated
 
portfolios based on
shared
 
risk characteristics
 
and on
 
the same
 
or similar
 
rating methods
 
applied. The
 
key segments
 
are
 
presented
 
in the
table below.
›
Refer to Note 20 for more information about expected
 
credit loss measurement
Segment
Segment description
Description of credit risk sensitivity
Business division
 
Private clients with
mortgages
Lending to private clients secured by
owner-occupied real estate and personal
account overdrafts of those clients
Sensitive to Swiss GDP, interest rate
environment, unemployment levels, real
estate collateral values and other regional
aspects
 
–
Personal & Corporate Banking
–
Global Wealth Management
Real estate financing
Rental or income-producing real estate
financing to private and corporate clients
secured by real estate
Sensitive to Swiss GDP, unemployment
levels, the interest rate environment, real
estate collateral values and other regional
aspects
 
–
Personal & Corporate Banking
–
Global Wealth Management
–
Investment Bank
Large corporate
clients
Lending to large corporate and multi-
national clients
Sensitive to GDP developments,
unemployment levels, credit default swap
(CDS)
 
indices, seasonality, business cycles
and collateral values (diverse collateral,
including real estate and other collateral
types)
–
Personal & Corporate Banking
–
Investment Bank
–
Global Wealth Management
–
Non-core and Legacy
SME clients
Lending to small and medium-sized
corporate clients
Sensitive to GDP developments,
unemployment levels, the interest rate
environment and, to some extent,
seasonality, business cycles and collateral
values (diverse collateral, including real
estate and other collateral types)
–
Personal & Corporate Banking
Lombard
Loans secured by pledges of marketable
securities, guarantees and other forms of
collateral (including hedge funds, private
equity and unlisted equities)
Sensitive to equity and debt markets (e.g.
changes in collateral values)
–
Global Wealth Management
–
Non-core and Legacy
Credit cards
Credit card exposures in Switzerland and
the US
Sensitive to unemployment levels
–
Personal & Corporate Banking
–
Global Wealth Management
Commodity trade
finance
Working capital financing of commodity
traders, generally extended on a self-
liquidating transactional basis
Sensitive primarily to the strength of
individual transaction structures and
collateral values (price volatility of
commodities), as the primary source for
debt service is directly linked to the
shipments financed
–
Personal & Corporate Banking
Consumer financing
Consumer loans and car leasing
Sensitive to unemployment levels
–
Personal & Corporate Banking
Ship financing
Ship financing mainly includes bulk
carriers, oil tankers, containers and
liquefied natural gas carriers
Sensitive to real GDP, earnings of tankers
and earnings of bulk carriers
–
Global Wealth Management
Aircraft financing
Corporate aircraft financing
Sensitive to collateral values
–
Global Wealth Management
Financial
intermediaries and
hedge funds
Lending to financial institutions and
pension funds, including exposures to
broker-dealers and clearing houses
Sensitive to GDP development, CDS
indices, the interest rate environment,
price and volatility risks in financial
markets, regulatory and political risk,
 
and
collateral values (diverse collateral,
including real estate and other collateral
types)
–
Personal & Corporate Banking
–
Investment Bank
–
Global Wealth Management
–
Non-core and Legacy
›
Refer to Note 20f for more details regarding sensitivity
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
295
Note 10
 
Financial assets at amortized cost and other positions in
 
scope of expected credit loss measurement
(continued)
The tables
 
below provide
 
ECL exposure
 
and ECL
 
allowance and
 
provision
 
information about
 
financial instruments
 
and
certain non-financial instruments that are
 
subject to ECLs.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
USD m
31.12.24
Carrying amount
1
ECL allowances
Financial instruments measured at amortized cost
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Cash and balances at central banks
223,329
223,201
13
0
114
(47)
0
(21)
0
(25)
Amounts due from banks
18,903
18,704
198
0
0
(36)
(1)
(5)
0
(30)
Receivables from securities financing transactions measured at
amortized cost
118,301
118,301
0
0
0
(2)
(2)
0
0
0
Cash collateral receivables on derivative instruments
43,959
43,959
0
0
0
0
0
0
0
0
Loans and advances to customers
579,967
553,532
22,049
3,565
820
(1,978)
(276)
(323)
(1,134)
(244)
of which: Private clients with mortgages
249,756
239,540
8,987
1,146
84
(160)
(46)
(70)
(30)
(14)
of which: Real estate financing
82,602
78,410
3,976
195
20
(58)
(24)
(27)
(7)
0
of which: Large corporate clients
25,286
20,816
3,462
707
301
(573)
(72)
(123)
(277)
(100)
of which: SME clients
20,768
17,403
2,265
952
148
(742)
(55)
(47)
(613)
(26)
of which: Lombard
147,504
147,136
260
48
61
(42)
(6)
0
(18)
(18)
of which: Credit cards
1,978
1,533
406
39
0
(41)
(6)
(11)
(25)
0
of which: Commodity trade finance
4,203
4,089
106
8
0
(81)
(9)
0
(71)
0
of which: Ship / aircraft financing
7,848
6,974
874
0
0
(31)
(14)
(16)
0
0
of which: Consumer financing
2,820
2,480
114
159
67
(93)
(15)
(19)
(62)
4
Other financial assets measured at amortized cost
58,835
58,209
436
178
12
(125)
(25)
(7)
(84)
(8)
of which: Loans to financial advisors
2,723
2,568
59
95
0
(41)
(4)
(1)
(37)
0
Total financial assets measured at amortized cost
1,043,293
1,015,906
22,697
3,743
946
(2,187)
(304)
(357)
(1,218)
(307)
Financial assets measured at fair value through other comprehensive
income
2,195
2,195
0
0
0
0
0
0
0
0
Total on-balance sheet financial assets in scope of ECL requirements
1,045,488
1,018,102
22,697
3,743
946
(2,187)
(304)
(357)
(1,218)
(307)
Total exposure
ECL provisions
Off-balance sheet (in scope of ECL)
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Guarantees
40,279
38,858
1,242
151
27
(64)
(16)
(24)
(24)
0
of which: Large corporate clients
7,817
7,096
635
78
8
(17)
(7)
(9)
(2)
0
of which: SME clients
2,524
2,074
393
41
15
(26)
(5)
(15)
(7)
0
of which: Financial intermediaries and hedge funds
 
21,590
21,449
141
0
0
(1)
(1)
0
0
0
of which: Lombard
3,709
3,652
24
29
4
(6)
(1)
0
(5)
0
of which: Commodity trade finance
2,678
2,676
2
0
0
(1)
(1)
0
0
0
Irrevocable loan commitments
79,579
75,158
4,178
187
56
(177)
(105)
(61)
(10)
(2)
of which: Large corporate clients
47,381
43,820
3,393
125
43
(155)
(91)
(54)
(8)
(2)
Forward starting reverse repurchase and securities borrowing
agreements
24,896
24,896
0
0
0
0
0
0
0
0
Committed unconditionally revocable credit lines
145,665
143,262
2,149
250
5
(76)
(59)
(17)
0
0
of which: Real estate financing
7,674
7,329
345
0
0
(6)
(4)
(2)
0
0
of which: Large corporate clients
14,690
14,089
584
14
3
(22)
(14)
(7)
(2)
0
of which: SME clients
9,812
9,289
333
190
0
(34)
(28)
(6)
0
0
of which: Lombard
73,267
73,181
84
0
1
0
0
0
0
0
of which: Credit cards
10,074
9,604
467
3
0
(8)
(6)
(2)
0
0
Irrevocable committed prolongation of existing loans
4,608
4,602
4
2
0
(3)
(3)
0
0
0
Total off-balance sheet financial instruments and other credit lines
295,027
286,776
7,572
590
89
(320)
(183)
(102)
(34)
(2)
Total allowances and provisions
(2,507)
(487)
(459)
(1,253)
(309)
1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective
 
ECL allowances.
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
296
Note 10
 
Financial assets at amortized cost and other positions in
 
scope of expected credit loss measurement
(continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
USD m
31.12.23
Carrying amount
1,2
ECL allowances
Financial instruments measured at amortized cost
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Cash and balances at central banks
314,060
314,025
18
0
17
(48)
0
(26)
0
(22)
Amounts due from banks
21,146
21,091
17
0
38
(12)
(6)
(1)
0
(5)
Receivables from securities financing transactions measured at
amortized cost
99,039
99,039
0
0
0
(2)
(2)
0
0
0
Cash collateral receivables on derivative instruments
50,082
50,082
0
0
0
0
0
0
0
0
Loans and advances to customers
639,669
610,922
24,408
2,869
1,470
(1,698)
(423)
(289)
(862)
(123)
of which: Private clients with mortgages
268,616
256,614
10,695
929
378
(209)
(62)
(97)
(39)
(11)
of which: Real estate financing
97,817
92,084
5,367
270
97
(103)
(41)
(31)
(21)
(11)
of which: Large corporate clients
30,084
25,671
3,182
700
532
(575)
(105)
(70)
(312)
(89)
of which: SME clients
25,957
22,155
2,919
754
129
(402)
(71)
(42)
(277)
(13)
of which: Lombard
156,353
156,299
3
50
0
(41)
(13)
(11)
(17)
0
of which: Credit cards
2,041
1,564
438
39
0
(42)
(6)
(11)
(24)
0
of which: Commodity trade finance
5,727
5,662
25
22
18
(130)
(18)
(1)
(111)
0
of which: Ship / aircraft financing
9,214
8,920
273
4
17
(51)
(48)
(3)
0
(1)
of which: Consumer financing
2,982
2,795
92
38
57
(59)
(22)
(17)
(20)
0
Other financial assets measured at amortized cost
65,455
64,268
968
158
61
(151)
(41)
(10)
(94)
(5)
of which: Loans to financial advisors
2,615
2,422
79
114
0
(49)
(4)
(1)
(44)
0
Total financial assets measured at amortized cost
1,189,451
1,159,428
25,410
3,027
1,586
(1,911)
(473)
(326)
(956)
(156)
Financial assets measured at fair value through other comprehensive
income
2,233
2,233
0
0
0
0
0
0
0
0
Total on-balance sheet financial assets in scope of ECL requirements
1,191,684
1,161,661
25,410
3,027
1,586
(1,911)
(473)
(326)
(956)
(156)
Total exposure
ECL provisions
Off-balance sheet (in scope of ECL)
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 3
PCI
Guarantees
46,191
44,487
1,495
151
58
(73)
(28)
(22)
(23)
0
of which: Large corporate clients
9,267
8,138
1,023
89
17
(31)
(11)
(13)
(7)
0
of which: SME clients
2,839
2,469
337
31
2
(14)
(4)
(5)
(5)
0
of which: Financial intermediaries and hedge funds
 
22,922
22,876
46
0
0
(12)
(8)
(3)
0
0
of which: Lombard
5,045
5,045
0
0
0
(1)
0
0
(1)
0
of which: Commodity trade finance
2,037
2,027
9
0
0
(1)
(1)
0
0
0
Irrevocable loan commitments
91,643
87,080
4,297
218
48
(178)
(117)
(51)
(14)
4
of which: Large corporate clients
50,696
46,708
3,881
59
48
(149)
(94)
(41)
(12)
(2)
Forward starting reverse repurchase and securities borrowing
agreements
18,444
18,444
0
0
0
0
0
0
0
0
Committed unconditionally revocable credit lines
163,256
160,456
2,654
146
0
(95)
(78)
(17)
0
0
of which: Real estate financing
15,846
15,033
813
0
0
(14)
(11)
(3)
0
0
of which: Large corporate clients
17,139
16,678
454
8
0
(23)
(17)
(6)
0
0
of which: SME clients
11,658
11,253
375
29
0
(38)
(33)
(5)
0
0
of which: Lombard
77,618
77,618
0
1
0
0
0
0
0
0
of which: Credit cards
10,458
9,932
522
4
0
(10)
(8)
(2)
0
0
Irrevocable committed prolongation of existing loans
4,608
4,593
11
4
0
(4)
(4)
0
0
0
Total off-balance sheet financial instruments and other credit lines
324,141
315,060
8,456
519
106
(350)
(226)
(90)
(37)
3
Total allowances and provisions
(2,261)
(700)
(416)
(993)
(153)
1 The carrying amount of financial assets measured at amortized cost represents the total gross exposure net of the respective
 
ECL allowances.
 
2
 
Comparative-period information has been revised. Refer to Note
2 for more information.
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
297
Note 10
 
Financial assets at amortized cost and other positions in
 
scope of expected credit loss measurement
(continued)
Coverage ratios are
 
calculated for
 
the core loan
 
portfolio by taking
 
ECL allowances
 
and provisions
 
divided by the
 
gross
carrying amount
 
of the
 
exposures. Core
 
loan exposure
 
is defined
 
as the
 
sum of
Loans and
 
advances to
 
customers
 
and
Loans to financial advisors
.
 
These ratios are influenced by the following key factors:
 
–
Lombard loans are generally secured with marketable securities in portfolios that are, as a rule, highly diversified,
 
with
strict lending policies that are intended to ensure that
 
credit risk is minimal under most circumstances;
 
–
mortgage loans
 
to private
 
clients and real
 
estate financing
 
are controlled
 
by conservative
 
eligibility criteria,
 
including
low loan-to-value ratios and strong debt service capabilities;
–
the amount of unsecured retail lending (including credit cards and
 
consumer financing)
 
is not material;
 
–
contractual
 
maturities
 
in
 
the
 
loan portfolio,
 
which
 
are
 
a
 
factor
 
in the
 
calculation
 
of
 
ECLs,
 
are
 
generally
 
short,
 
with
Lombard lending
 
typically having
 
average
 
contractual
 
maturities of
 
12 months
 
or less,
 
real estate
 
lending generally
between two
 
and three
 
years in
 
Switzerland, with
 
long-dated
 
maturities in
 
the US,
 
and corporate
 
lending between
one and two years with related loan commitments up to
 
four years; and
 
–
write-offs of
 
ECL allowances against
 
the gross
 
loan balances
 
when all
 
or part
 
of a
 
financial asset
 
is deemed
 
uncollectible
or forgiven reduce the coverage ratios.
The total combined on-
 
and off-balance sheet coverage ratio
 
was
27
 
basis points as of
 
31 December 2024,
5
 
basis points
higher than
 
the ratio
 
as of
 
31 December 2023.
 
The combined
 
stage 1 and
 
2 ratio
 
of
10
 
basis points
 
was
1
 
basis point
lower than the ratio as of 31 December 2023; the stage 3 ratio was
22
%,
1
 
percentage point higher than the ratio as of
31 December 2023, and the PCI ratio was
21
%.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
31.12.24
Gross carrying amount (USD m)
ECL coverage (bps)
On-balance sheet
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
PCI
Private clients with mortgages
249,916
239,586
9,056
1,176
98
6
2
77
5
257
1,447
Real estate financing
82,660
78,434
4,003
202
20
7
3
67
6
353
2
Total real estate lending
332,576
318,020
13,059
1,378
118
7
2
74
5
271
1,203
Large corporate clients
25,859
20,888
3,585
983
402
222
35
344
80
2,814
2,500
SME clients
21,510
17,459
2,312
1,565
174
345
32
205
52
3,918
1,474
Total corporate lending
47,369
38,347
5,897
2,549
576
278
33
290
67
3,492
2,190
Lombard
147,547
147,141
260
66
79
3
0
8
0
2,719
2,317
Credit cards
2,019
1,539
416
64
0
205
39
256
85
3,857
0
Commodity trade finance
4,284
4,098
106
79
0
189
22
40
23
8,984
4,226
Ship / aircraft financing
7,879
6,988
891
0
0
39
20
184
39
0
0
Consumer financing
2,912
2,495
133
221
63
318
62
1,449
132
2,786
0
Other loans and advances to customers
37,359
35,179
1,610
342
228
42
8
57
10
917
3,909
Loans to financial advisors
2,764
2,571
60
132
0
149
14
159
17
2,785
0
Total other lending
204,764
200,012
3,477
905
370
24
4
164
7
2,691
2,804
Total
1
584,708
556,380
22,433
4,831
1,064
35
5
145
10
2,424
2,294
Gross exposure (USD m)
ECL coverage (bps)
Off-balance sheet
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
PCI
Private clients with mortgages
8,473
8,271
176
25
1
4
4
22
4
84
0
Real estate financing
8,694
8,300
394
0
0
7
6
33
7
0
0
Total real estate lending
17,167
16,571
570
25
1
6
5
30
6
84
0
Large corporate clients
69,892
65,009
4,612
217
54
28
17
150
26
588
290
SME clients
13,944
12,788
842
287
27
53
30
324
48
281
0
Total corporate lending
83,837
77,797
5,454
504
81
32
19
177
30
413
186
Lombard
80,390
80,235
120
30
4
1
0
1
0
1,764
0
Credit cards
10,074
9,604
467
3
0
8
6
36
8
0
0
Commodity trade finance
3,487
3,464
23
0
0
3
3
51
3
0
0
Ship / aircraft financing
2,669
2,663
6
0
0
13
13
49
13
0
0
Consumer financing
134
134
0
0
0
6
6
0
6
0
0
Financial intermediaries and hedge funds
19,609
19,145
464
0
0
1
1
8
1
0
0
Other off-balance sheet commitments
52,765
52,268
468
27
2
4
2
28
2
2,903
0
Total other lending
169,127
167,512
1,549
61
6
2
1
23
2
2,171
0
Total
2
270,131
261,880
7,572
590
89
12
7
135
11
580
171
Total on- and off-balance sheet
3
854,839
818,260
30,006
5,421
1,153
27
6
142
10
2,223
2,131
1 Includes Loans and advances
 
to customers and Loans
 
to financial advisors,
 
which are presented on
 
the balance sheet line Other
 
financial assets measured
 
at amortized cost.
 
2 Excludes Forward
 
starting reverse
repurchase and securities borrowing agreements.
 
3 Includes on-balance sheet exposure, gross and off-balance sheet exposure (notional) and the related
 
ECL coverage ratio (bps).
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
298
Note 10
 
Financial assets at amortized cost and other positions in
 
scope of expected credit loss measurement
(continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
31.12.23
Gross carrying amount (USD m)
ECL coverage (bps)
On-balance sheet
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
PCI
Private clients with mortgages
268,825
256,675
10,792
968
389
8
2
90
6
399
283
Real estate financing
97,920
92,124
5,398
290
108
11
4
57
7
713
980
Total real estate lending
366,745
348,800
16,190
1,258
497
9
3
79
6
472
434
Large corporate clients
30,660
25,775
3,252
1,012
620
188
41
215
60
3,083
1,429
SME clients
26,359
22,226
2,961
1,031
142
153
32
141
45
2,689
893
Total corporate lending
57,019
48,001
6,213
2,042
762
172
37
180
53
2,884
1,329
Lombard
156,394
156,312
15
67
0
3
1
7,616
2
2,487
0
Credit cards
2,083
1,571
449
63
0
200
40
253
87
3,801
0
Commodity trade finance
5,858
5,681
26
133
18
223
32
365
34
8,333
6
Ship / aircraft financing
9,265
8,968
276
4
17
56
54
99
55
0
315
Consumer financing
3,041
2,817
110
58
57
195
79
1,559
135
3,422
7
Other loans and advances to customers
40,961
39,196
1,419
105
242
21
10
39
11
3,981
(3)
Loans to financial advisors
2,665
2,426
80
159
0
185
17
122
20
2,793
0
Total other lending
220,267
216,971
2,373
589
334
21
7
210
9
4,376
9
Total
1
644,031
613,772
24,777
3,889
1,593
27
7
117
11
2,329
773
Gross exposure (USD m)
ECL coverage (bps)
Off-balance sheet
Total
Stage 1
Stage 2
Stage 3
PCI
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
PCI
Private clients with mortgages
9,782
9,505
261
15
0
6
5
27
6
40
0
Real estate financing
17,107
16,281
826
0
0
9
8
44
9
0
0
Total real estate lending
26,889
25,786
1,088
15
0
8
7
40
8
40
0
Large corporate clients
77,103
71,524
5,357
157
65
26
17
111
24
1,217
242
SME clients
16,762
15,868
812
80
2
40
29
196
37
640
0
Total corporate lending
93,865
87,392
6,170
236
67
29
19
122
26
1,022
221
Lombard
86,173
86,173
0
1
0
0
0
0
0
0
0
Credit cards
10,458
9,932
522
4
0
10
8
35
10
0
0
Commodity trade finance
4,640
4,628
13
0
0
6
5
151
6
0
0
Ship / aircraft financing
1,053
1,053
0
0
0
26
26
0
26
0
0
Consumer financing
153
153
0
0
0
0
0
0
0
0
0
Financial intermediaries and hedge funds
42,578
42,325
253
0
0
3
3
142
3
0
0
Other off-balance sheet commitments
39,887
39,174
411
263
39
7
4
111
5
453
0
Total other lending
184,944
183,438
1,199
268
39
3
2
85
3
486
0
Total
2
305,697
296,616
8,456
519
106
11
8
107
10
717
0
Total on- and off-balance sheet
3
949,729
910,388
33,233
4,408
1,699
22
7
114
11
2,140
706
1 Includes Loans
 
and advances
 
to customers and
 
Loans to financial
 
advisors, which
 
are presented on
 
the balance sheet
 
line Other
 
financial assets measured
 
at amortized cost.
 
2 Excludes Forward
 
starting reverse
repurchase and securities borrowing agreements.
 
3 Includes on-balance sheet exposure, gross and off-balance sheet exposure (notional) and the related
 
ECL coverage ratio (bps).
 
Note 11
 
Derivative instruments
Overview
Over-the-counter (OTC) derivative
 
contracts are usually traded under a standardized International Swaps
 
and Derivatives
Association (ISDA) master
 
agreement or other
 
recognized local industry-standard
 
master agreements
 
between UBS and
its counterparties. Terms are negotiated directly with counterparties and the contracts have industry-standard settlement
mechanisms prescribed by ISDA
 
or similar industry-standard solutions. Other
 
OTC derivatives are cleared through
 
clearing
houses, in particular interest rate swaps with LCH,
 
where a settled-to-market method has been generally adopted, under
which
 
cash
 
collateral
 
exchanged
 
on
 
a
 
daily
 
basis
 
is
 
considered
 
to
 
legally
 
settle
 
the
 
market
 
value
 
of
 
the
 
derivatives.
Regulators
 
in
 
various
 
jurisdictions
 
have
 
introduced
 
rules
 
requiring
 
the
 
payment
 
and
 
collection
 
of
 
initial
 
and
 
variation
margins on certain OTC derivative contracts, which may
 
have a bearing on price and other relevant terms
 
.
Exchange-traded derivatives (ETD) are standardized in terms of their amounts and
 
settlement dates, and are bought and
sold
 
on
 
regulated
 
exchanges.
 
Exchanges
 
offer
 
the
 
benefits
 
of
 
pricing
 
transparency,
 
standardized
 
daily
 
settlement
 
of
changes in value and, consequently, reduced credit risk.
Most
 
of
 
the
 
Group’s
 
derivative
 
transactions
 
relate
 
to
 
sales
 
and
 
market-making
 
activity.
 
Sales
 
activities
 
include
 
the
structuring and marketing of derivative products to customers to enable them to take, transfer, modify or reduce current
or expected
 
risks. Market
 
-making aims
 
to directly
 
support the
 
facilitation and
 
execution
 
of client
 
activity, and
 
involves
quoting
 
bid
 
and
 
offer
 
prices
 
to
 
other
 
market
 
participants
 
with
 
the
 
aim
 
of
 
generating
 
revenues
 
based
 
on
 
spread
 
and
volume. The Group also uses various derivative instruments
 
for hedging purposes.
›
Refer to Notes 16 and 21 for more information about
 
derivative instruments
›
Refer to Note 25 for more information about derivatives
 
designated in hedge accounting relationships
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
299
Note 11
 
Derivative instruments (continued)
Risks of derivative instruments
The
 
derivative
 
financial
 
assets
 
shown
 
on
 
the
 
balance
 
sheet
 
can
 
be
 
an
 
important
 
component
 
of
 
the
 
Group’s
 
credit
exposure; however, the positive replacement values related to a respective counterparty are rarely an adequate reflection
of the
 
Group’s credit
 
exposure in
 
its derivatives
 
business with
 
that counterparty.
 
This is
 
generally the
 
case because,
 
on
the one hand, replacement values can increase over time (potential future exposure), while, on the other hand,
 
exposure
may be mitigated
 
by entering
 
into master
 
netting agreements
 
and bilateral
 
collateral arrangements.
 
Both the exposure
measures used
 
internally by
 
the Group to
 
control credit
 
risk and the
 
capital requirements
 
imposed by
 
regulators reflect
these additional factors.
›
Refer to Note 22 for more information about derivative
 
financial assets and liabilities after consideration
 
of netting potential
permitted under enforceable netting arrangements
›
Refer to the “Risk management and control” section of this
 
report for more information about the risks arising from derivative
instruments
Derivative instruments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
31.12.24
31.12.23
USD bn
Derivative
financial
assets
Derivative
financial
liabilities
Notional
amounts related
to derivative
financial assets
and liabilities
1,2
Other
notional
amounts
1,3
Derivative
financial
assets
Derivative
financial
liabilities
Notional
amounts related
to derivative
financial assets
and liabilities
1,2
Other
notional
amounts
1,3
Interest rate
41.4
36.6
3,643.8
16,843.5
55.6
52.9
3,524.1
20,073.9
of which: forwards (OTC)
4
0.1
0.0
92.9
851.5
0.1
0.1
122.4
2,532.2
of which: swaps (OTC)
26.5
20.3
1,354.1
14,974.2
37.7
32.6
1,331.6
16,601.3
of which: options (OTC)
14.7
16.1
2,189.1
17.7
20.0
2,066.7
of which: futures (ETD)
827.5
843.7
of which: options (ETD)
0.1
0.0
7.8
190.3
0.0
0.0
3.4
96.1
Credit derivatives
3.1
3.7
143.8
4.0
4.7
274.9
of which: credit default swaps (OTC)
2.8
3.3
138.7
3.8
4.4
269.6
of which: total return swaps (OTC)
0.0
0.3
1.0
0.1
0.3
3.7
Foreign exchange
100.9
94.6
7,207.3
268.8
78.7
89.9
6,913.3
180.4
of which: forwards (OTC)
36.9
32.3
2,267.7
18.7
24.1
2,152.0
of which: swaps (OTC)
55.2
53.5
3,785.4
267.0
52.2
58.1
3,809.7
178.7
of which: options (OTC)
8.6
8.7
1,145.2
7.7
7.6
944.4
Equity / index
36.9
42.7
1,364.8
93.3
35.5
41.4
1,396.8
95.0
of which: swaps (OTC)
5.9
8.2
352.8
6.6
9.2
273.3
of which: options (OTC)
4.4
8.3
226.1
4.9
9.0
245.2
of which: futures (ETD)
84.6
86.6
of which: options (ETD)
13.4
13.5
784.7
8.7
15.4
14.3
876.6
8.5
of which: client-cleared transactions (ETD)
13.1
12.7
8.3
8.2
Commodities
2.6
2.2
155.4
17.1
2.0
1.6
142.9
16.4
of which: swaps (OTC)
0.9
1.1
58.3
0.9
0.7
50.0
of which: options (OTC)
0.8
0.4
42.2
0.6
0.3
42.3
of which: futures (ETD)
12.6
13.7
of which: forwards (ETD)
0.0
0.0
27.3
0.0
0.0
31.5
of which: client-cleared transactions (ETD)
0.3
0.4
0.2
0.3
Other
5
0.6
0.8
86.9
0.4
1.6
116.5
Total derivative instruments,
 
based on netting under IFRS Accounting Standards
6
185.6
180.6
12,602.0
17,222.8
176.1
192.2
12,368.5
20,365.8
1 In cases where derivative financial instruments are
 
presented on a net basis on the balance
 
sheet, the respective notional amounts of the netted derivative
 
financial instruments are still presented on a gross
 
basis.
 
2 Notional amounts of client-cleared
 
ETD and OTC transactions through central clearing counterparties
 
are not disclosed, as they
 
have a significantly different risk profile.
 
3 Other notional amounts relate
 
to derivatives
that are cleared through either
 
a central counterparty or an
 
exchange and settled on a
 
daily basis (except for
 
OTC derivatives
 
settled through collateralized-to-market arrangements, which are presented under
 
Derivative
financial assets and Derivative financial liabilities). The fair value of these derivatives is presented on the balance sheet net of the corresponding cash margin under Cash collateral receivables on derivative instruments
and Cash collateral payables on derivative instruments and was not material for any of the periods presented.
 
4 Includes certain forward starting repurchase and reverse repurchase agreements that are classified as
measured at fair value through profit or
 
loss and are recognized within derivative
 
instruments.
 
5 Includes mainly derivative loan commitments
 
measured at FVTPL, as well as unsettled
 
purchases and sales of non-
derivative financial instruments
 
for which the
 
changes in the
 
fair value between
 
trade date and
 
settlement date are
 
recognized as derivative
 
financial instruments.
 
6 Derivative financial
 
assets and liabilities
 
are
presented net on
 
the balance sheet
 
if UBS has
 
the unconditional and
 
legally enforceable
 
right to offset
 
the recognized amounts,
 
both in the
 
normal course of
 
business and in
 
the event of
 
default, bankruptcy or
insolvency of
 
the entity
 
and all
 
of the
 
counterparties, and
 
intends either
 
to settle
 
on a
 
net basis
 
or to
 
realize the
 
asset and
 
settle the
 
liability simultaneously.
 
Refer to
 
Note 22
 
for more
 
information on
 
netting
arrangements.
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
300
Note 11
 
Derivative instruments (continued)
On
 
a
 
notional
 
amount
 
basis,
 
approximately
55
%
 
of
 
OTC
 
interest
 
rate
 
contracts
 
held
 
as
 
of
 
31 December
 
2024
(31 December 2023:
50
%) mature
 
within one year,
27
% (31 December 2023:
30
%) within one to
 
five years and
18
%
(31 December 2023:
20
%) after five years.
 
Notional amounts of interest rate contracts cleared through either a central counterparty
 
or an exchange that are legally
settled or economically
 
net settled on a
 
daily basis are
 
presented under
Other notional amounts
 
in the table
 
above and
are categorized into maturity
 
buckets on the basis
 
of contractual maturities of
 
the cleared underlying derivative
 
contracts.
Other notional
 
amounts related
 
to interest rate
 
contracts decreased
 
by USD
3.2
trn compared
 
with 31 December
 
2023,
mainly reflecting unwinding activities in Non-core and Legacy, partly offset by higher business volumes in the Investment
Bank.
Note 12
 
Property, equipment and software
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At historical cost less accumulated depreciation
USD m
Owned
properties and
equipment
1
Leased
properties and
equipment
2
Software
Projects in
progress
2024
2023
Historical cost
Balance at the beginning of the year
16,710
6,613
11,726
863
35,913
27,127
Balance recognized upon the acquisition of the Credit Suisse
 
Group
3
6,055
Additions
229
230
48
1,691
2,199
1,796
Disposals / write-offs
4
(532)
(139)
(437)
0
(1,108)
(1,791)
Reclassifications
5
238
(13)
1,406
(1,725)
(94)
1,203
Foreign currency translation
(925)
(224)
(322)
(54)
(1,525)
1,523
Balance at the end of the year
15,721
6,467
12,421
776
35,385
35,913
Accumulated depreciation
Balance at the beginning of the year
9,207
2,545
6,312
18,064
14,839
Depreciation
923
893
1,788
3,605
3,022
Impairment
6
3
4
45
52
593
Disposals / write-offs
4
(529)
(139)
(438)
(1,105)
(1,783)
Reclassifications
5
29
(4)
(5)
20
686
Foreign currency translation
(494)
(87)
(167)
(749)
708
Balance at the end of the year
9,139
3,212
7,536
19,887
18,064
Net book value
 
Net book value at the beginning of the year
7,503
4,068
5,413
863
17,849
12,288
Net book value at the end of the year
6,582
3,255
4,884
776
7
15,498
17,849
1 Includes leasehold
 
improvements and IT
 
hardware.
 
2 Represents right-of-use
 
assets recognized by UBS
 
as lessee. UBS
 
predominantly enters into
 
lease contracts, or
 
contracts that include
 
lease components,
 
in
relation to real
 
estate, including offices,
 
retail branches and
 
sales offices. The
 
total cash outflow
 
for leases during 2024
 
was USD
1,138
m (2023: USD
878
m). Interest expense
 
on lease liabilities
 
is included within
Interest expense from financial instruments measured at amortized cost and Lease liabilities is included within Other financial liabilities measured at amortized
 
cost. Refer to Notes 4 and 19a, respectively. There were
no material gains or losses arising from sale-and-leaseback transactions in 2024 and in 2023.
 
3 Refer to Note 2 for more information about the acquisition of the Credit Suisse Group.
 
4 Includes write-offs of fully
depreciated assets.
 
5 The total
 
reclassification amount for the
 
respective periods represents net
 
reclassifications from /
 
to Other non-financial assets.
 
6 Impairment charges recorded
 
in 2024 generally
 
relate to
assets that are no longer used, of which
 
USD
51
m for Group Items and USD
1
m for Global Wealth Management. The
 
recoverable amount based on a value-in-use
 
approach was determined to be zero.
 
7 Consists
of USD
460
m related to software and USD
317
m related to Owned properties and equipment.
 
Note 13
 
Goodwill and intangible assets
Introduction
UBS performs an impairment test on its goodwill assets
 
on an annual basis or when indicators of impairment exist.
 
UBS considers Asset Management,
 
as reported in Note 3a,
 
as a separate cash-generating unit (a CGU),
 
as that is the level
at which the performance of investment (and the
 
related goodwill) is reviewed and assessed by management. Given that
a significant amount of goodwill in Global Wealth Management relates to the acquisition of PaineWebber Group, Inc. in
2000, which
 
mainly affected
 
the Americas
 
portion of
 
the business,
 
this goodwill
 
remains separately
 
monitored by
 
the
Americas,
 
despite
 
the
 
formation
 
of
 
Global
 
Wealth
 
Management
 
in
 
2018.
 
Therefore,
 
goodwill
 
for
 
Global
 
Wealth
Management
 
is
 
separately
 
considered
 
for
 
impairment
 
at
 
the
 
level
 
of
 
two
 
CGUs:
 
Americas;
 
and
 
Switzerland
 
and
International (consisting of EMEA, Asia Pacific and Global).
The impairment
 
test is
 
performed for
 
each CGU
 
to which
 
goodwill is
 
allocated by
 
comparing the
 
recoverable amount
with the carrying amount of the respective CGU. UBS determines
 
the recoverable amount of the respective CGUs
 
based
on their value in use. An impairment charge is recognized
 
if the carrying amount exceeds the recoverable amount.
The acquisition
 
of the
 
Credit Suisse
 
Group in
 
2023 resulted
 
in negative
 
goodwill, which
 
was recognized
 
in the
 
income
statement on
 
the date of
 
the acquisition. No
 
goodwill related to
 
the acquisition of
 
the Credit
 
Suisse Group
 
was recognized
on the balance sheet.
›
Refer to Note 2 for more information about the acquisition
 
of the Credit Suisse Group
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
301
Note 13
 
Goodwill and intangible assets (continued)
As
 
of
 
31 December
 
2024,
 
total
 
goodwill
 
recognized
 
on
 
the
 
balance
 
sheet
 
was
 
USD
6.0
bn,
 
of
 
which
 
USD
3.7
bn
 
was
carried by
 
the Global
 
Wealth Management
 
Americas CGU,
 
USD
1.2
bn was
 
carried by
 
the Global
 
Wealth Management
Switzerland and International CGU, and USD
1.1
bn was carried by Asset Management. Based on the impairment testing
methodology described
 
below, UBS
 
concluded that
 
the goodwill
 
balances as
 
of 31 December
 
2024 allocated
 
to these
CGUs were not impaired. For each
 
of the CGUs, the recoverable amount
 
substantially exceeded the carrying value
 
as of
31 December
 
2024,
 
and
 
there
 
was
 
no
 
indication
 
of
 
a
 
significant
 
risk
 
of
 
goodwill
 
impairment
 
based
 
on
 
the
 
testing
performed as of 31 December 2024.
Methodology for goodwill impairment testing
The recoverable
 
amounts are
 
determined using
 
a discounted
 
cash flow
 
model, which
 
has been
 
adapted to
 
use inputs
that consider features of
 
the banking business and its
 
regulatory environment.
 
The recoverable amount of
 
a CGU is the
sum of
 
the discounted
 
earnings attributable
 
to shareholders
 
from the
 
first three
 
forecast years
 
and the
 
terminal value,
adjusted for the effect of the capital
 
assumed to be needed over the next
 
three years and to support growth beyond that
period. The
 
terminal value,
 
which covers
 
all periods
 
beyond the
 
third year,
 
is calculated
 
on the
 
basis of
 
the forecast
 
of
the third-year
 
profit, the
 
discount rate
 
and the
 
long-term growth
 
rate, as well
 
as the
 
implied perpetual
 
capital growth.
For the
 
Global Wealth
 
Management
 
Americas
 
CGU, the
 
methodology
 
is consistently
 
applied,
 
but
 
the
 
forecast
 
period
covers five
 
years (with
 
a terminal
 
value thereafter) in
 
order to provide
 
for the
 
CGU’s specific planning
 
assumptions, namely
the ongoing investments
 
in the core
 
banking infrastructure
 
in the US to
 
enhance the product
 
capabilities and offerings
in this
 
market in
 
the medium
 
term. The
 
extended forecast period
 
of five
 
years did
 
not trigger, defer or
 
avoid an
 
impairment
of goodwill as of 31 December 2024.
The carrying amount for each
 
CGU is determined by reference
 
to the Group’s equity attribution
 
framework. Within this
framework,
 
UBS
 
attributes
 
equity
 
to
 
the
 
businesses
 
on
 
the
 
basis
 
of
 
their
 
risk-weighted
 
assets
 
and
 
leverage
 
ratio
denominator
 
(both
 
metrics
 
include
 
resource
 
allocations
 
from
 
Group
 
functions
 
to
 
the
 
business
 
divisions),
 
or
 
by
 
their
common equity tier 1
 
(CET1) capital equivalent
 
of risk-based capital
 
if higher,
 
their goodwill and
 
their intangible assets,
as
 
well
 
as
 
attributed
 
equity
 
related
 
to
 
certain
 
CET1
 
capital
 
deduction
 
items.
 
The
 
framework
 
is
 
primarily
 
used
 
for
 
the
purpose
 
of
 
measuring
 
the
 
performance
 
of
 
the
 
businesses
 
and
 
includes
 
certain
 
management
 
assumptions.
 
Attributed
equity
 
is
 
equal
 
to
 
the
 
capital
 
a
 
CGU
 
requires
 
to
 
conduct
 
its
 
business
 
and
 
is
 
currently
 
considered
 
a
 
reasonable
approximation of
 
the carrying
 
amount of
 
the CGUs.
 
The attributed
 
equity methodology
 
is also
 
applied in
 
the business
planning process, the inputs from which are used in calculating the
 
recoverable amounts of the respective CGU.
Assumptions
Valuation parameters
 
used within the Group’s
 
impairment test model
 
are linked to
 
external market information, where
applicable. The
 
model used
 
to determine
 
the recoverable
 
amount is
 
most sensitive
 
to changes
 
in the
 
forecast earnings
available to shareholders in years one to three, to changes in the discount rates and to changes in the long-term growth
rate. The applied
 
long-term growth
 
rate is based
 
on long-term economic
 
growth rates for
 
different regions
 
worldwide.
Earnings available
 
to
 
shareholders
 
are
 
estimated
 
on
 
the
 
basis of
 
forecast
 
results,
 
which
 
are
 
part
 
of the
 
business
 
plan
approved by the Board of Directors.
The
 
discount
 
rates
 
are
 
determined
 
by
 
applying
 
a
 
capital
 
asset
 
pricing
 
model-based
 
approach,
 
as
 
well
 
as
 
considering
quantitative and qualitative inputs from both internal and external analysts and the view of management. They also take
into account
 
regional differences
 
in risk-free
 
rates at
 
the level of
 
the individual
 
CGUs. In line
 
with discount
 
rates, long-
term growth rates are determined at the regional level based
 
on nominal GDP growth rate forecasts.
Key
 
assumptions
 
used
 
to
 
determine
 
the
 
recoverable
 
amounts
 
of
 
each
 
CGU
 
are
 
tested
 
for
 
sensitivity
 
by
 
applying
 
a
reasonably possible change to
 
those assumptions. Forecast earnings available
 
to shareholders were changed by
20
%, the
discount rates
 
were changed by
1.5
 
percentage points, and
 
the long-term
 
growth rates
 
were changed
 
by
0.75
 
percentage
points. Under all scenarios,
 
reasonably possible changes
 
in key assumptions did
 
not result in an
 
impairment of goodwill
or
 
intangible
 
assets
 
reported
 
by
 
Global
 
Wealth
 
Management
 
Americas,
 
Global
 
Wealth
 
Management
 
Switzerland
 
and
International, and Asset Management.
 
If the estimated earnings
 
and other assumptions in future periods
 
deviate from the current outlook,
 
the value of goodwill
attributable to
 
Global Wealth
 
Management Americas,
 
Global Wealth
 
Management
 
Switzerland and
 
International, and
Asset Management may become impaired in the
 
future, giving rise to losses
 
in the income statement. Recognition of any
impairment of
 
goodwill would
 
reduce IFRS
 
Accounting Standards
 
equity and
 
net profit.
 
It would
 
not affect
 
cash flows
and,
 
as
 
goodwill
 
is
 
required
 
to
 
be
 
deducted
 
from
 
capital
 
under
 
the
 
Basel III
 
capital
 
framework,
 
no
 
effect
 
would
 
be
expected on the Group’s capital ratios.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Discount and growth rates
Discount rates
Growth rates
In %
31.12.24
31.12.23
31.12.24
31.12.23
Global Wealth Management Americas
9.5
9.5
3.8
3.8
Global Wealth Management Switzerland and International
9.5
9.5
3.7
3.4
Asset Management
9.0
9.0
3.3
3.3
 
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
302
Note 13
 
Goodwill and intangible assets (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
USD m
Goodwill
Intangible
assets
1
2024
2023
Historical cost
Balance at the beginning of the year
6,043
2,964
9,006
7,641
Acquisition of the Credit Suisse Group
2
0
0
0
1,287
Additions
0
7
7
6
Disposals
3
0
(1)
(1)
(40)
Reclassifications
4
0
(384)
(384)
0
Foreign currency translation
(52)
(135)
(187)
112
Balance at the end of the year
5,990
2,451
8,441
9,006
Accumulated amortization and impairment
Balance at the beginning of the year
0
1,491
1,491
1,374
Amortization
0
190
190
134
Impairment / (reversal of impairment)
0
1
1
0
Disposals
3
0
0
0
(30)
Reclassifications
4
0
(96)
(96)
0
Foreign currency translation
0
(32)
(32)
13
Balance at the end of the year
0
1,554
1,554
1,491
Net book value at the end of the year
5,990
897
6,887
7,515
of which: Global Wealth Management Americas
3,706
28
3,734
3,748
of which: Global Wealth Management Switzerland and International
1,158
113
1,271
1,236
of which: Personal & Corporate Banking
0
657
657
908
of which: Asset Management
1,127
0
1,127
1,149
of which: Investment Bank
0
98
98
135
of which: Non-core and Legacy
0
1
1
339
1 Intangible assets
 
mainly include customer
 
relationships, core
 
deposits, contractual
 
rights and the
 
fully amortized branch
 
network intangible asset
 
recognized in connection
 
with the acquisition
 
of PaineWebber
Group, Inc. in 2000.
 
2 Refer to Note 2 for more information about the acquisition of the
 
Credit Suisse Group.
 
3 Reflects the derecognition of goodwill allocated to businesses and intangible assets held by entities
that have been disposed of.
 
4 In 2024, certain intangible assets were reclassified to Assets of disposal group held for sale. Refer to Note 29 for
 
more information.
 
The table below presents estimated aggregated
 
amortization expenses for intangible assets.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
USD m
Intangible assets
Estimated aggregated amortization expenses for:
2025
126
2026
122
2027
122
2028
117
2029
111
Thereafter
296
Not amortized due to indefinite useful life
3
Total
897
Note 14
 
Other assets
 
a) Other financial assets measured at amortized cost
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
USD m
31.12.24
31.12.23
1
Debt securities
41,585
45,057
Loans to financial advisors
2,723
2,615
Fee- and commission-related receivables
2,242
2,576
Finance lease receivables
5,879
6,288
Settlement and clearing accounts
 
430
338
Accrued interest income
2,115
3,163
Other
2
3,862
5,418
Total other financial assets measured at amortized cost
58,835
65,455
1 Comparative-period information has
 
been revised. Refer to
 
Note 2 for more information.
 
2 Predominantly includes cash collateral
 
provided to exchanges and
 
clearing houses to secure securities
 
trading activity
through those counterparties.
Effective 1
 
April 2022, UBS
 
reclassified a
 
portfolio of HQLA
 
financial assets from
Financial assets measured
 
at fair value
through other comprehensive income
 
with a fair value of USD
6.9
bn (the Portfolio) to
Other financial assets measured at
amortized cost
.
 
 
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
303
Note 14
 
Other assets (continued)
The Portfolio’s cumulative fair value losses of USD
449
m pre-tax and USD
333
m post-tax, previously recognized in Other
comprehensive income,
 
were removed
 
from equity
 
and adjusted
 
against the
 
value of
 
the assets
 
on the
 
reclassification
date, so
 
that the
 
Portfolio was
 
measured as
 
if the
 
assets had
 
always been
 
classified at
 
amortized cost,
 
with a
 
value of
USD
7.4
bn as
 
on 1
 
April 2022.
 
The reclassification
 
has had
 
no effect
 
on the
 
income statement. At
 
the time,
 
the accounting
reclassification
 
arose
 
as
 
a
 
direct
 
result
 
of
 
the
 
planned
 
transformation
 
of
 
UBS’s
 
Global
 
Wealth
 
Management
 
Americas
business, involving significant growth
 
and extension of
 
the business, generating substantial
 
cash balances, with
 
a number
of new saving and deposit products being launched that are longer in duration. Additional lending, and a broader range
of customer
 
segments were
 
targeted. As
 
a consequence,
 
the Portfolio
 
is no
 
longer held
 
in a
 
business model
 
to collect
the contractual
 
cash flows
 
and sell
 
the assets
 
but
 
is instead
 
solely held
 
to collect
 
the contractual
 
cash flows
 
until the
assets mature, requiring a reclassification of the Portfolio
 
in line with IFRS 9 with effect from 1 April 2022.
b) Other non-financial assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
USD m
31.12.24
31.12.23
Precious metals and other physical commodities
 
7,341
5,930
Deposits and collateral provided in connection with litigation,
 
regulatory and similar matters
1
1,946
2,726
Prepaid expenses
1,679
2,080
Current tax assets
 
1,546
1,456
VAT,
 
withholding tax and other tax receivables
1,233
1,327
Properties and other non-current assets held for sale
196
188
Assets of disposal groups held for sale
2
1,705
Other
2,119
2,342
Total other non-financial assets
17,766
16,049
1 Refer to Note 18 for more information.
 
2 Refer to Note 29 for more information about the agreement to sell Select Portfolio
 
Servicing.
 
Note 15
 
Amounts due to banks and customer deposits
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
USD m
31.12.24
31.12.23
Amounts due to banks
 
23,347
70,962
Customer deposits
745,777
792,029
of which: demand deposits
221,797
240,942
of which: retail savings / deposits
182,274
186,087
of which: sweep deposits
41,935
41,045
of which: time deposits
1
299,771
323,955
Total amounts due to banks and customer deposits
769,124
862,990
1 Includes customer deposits in UBS AG Jersey Branch and UBS AG Guernsey Branch placed by UBS
 
Switzerland AG and UBS AG Swiss Branch on behalf of their clients.
Amounts due to banks decreased mainly due to the repayment of funding regarding the Emergency Liquidity Assistance
facility from
 
the Swiss
 
National
 
bank. Customer
 
deposits decreased
 
mainly reflecting
 
foreign
 
currency
 
effects
 
and net
new deposit outflows
 
mainly in time
 
deposits due
 
to maturities,
 
partly offset
 
by shifts into
 
retail savings
 
/ deposits as
 
a
result of the aforementioned maturities.
Note 16
 
Debt issued designated at fair value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
USD m
31.12.24
31.12.23
Issued debt instruments
Equity-linked
1
54,069
60,573
Rates-linked
23,641
28,883
Credit-linked
5,225
7,730
Fixed-rate
14,250
20,541
Commodity-linked
3,592
3,844
Other
7,131
6,718
of which: debt that contributes to total loss-absorbing capacity
4,934
4,629
Total debt issued designated at fair value
2
107,909
128,289
of which: issued by UBS AG standalone with original maturity greater
 
than one year
3
82,491
73,544
of which: issued by Credit Suisse AG standalone with original maturity
 
greater than one year
3
29,948
of which: issued by Credit Suisse International standalone
 
with original maturity greater than one year
3
96
1,471
1 Includes investment
 
fund unit-linked
 
instruments issued.
 
2 As of
 
31 December 2024,
100
% of Total
 
debt issued designated
 
at fair value
 
was unsecured.
 
3 Based on
 
original contractual
 
maturity without
considering any early redemption features.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
304
Note 17
 
Debt issued measured at amortized cost
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
USD m
31.12.24
31.12.23
Short-term debt
1
30,509
38,530
Senior unsecured debt
 
133,159
147,547
of which: contributes to total loss-absorbing capacity (TLAC)
92,515
101,939
of which: issued by UBS AG standalone with original maturity greater
 
than one year
32,664
18,446
of which: issued by Credit Suisse AG standalone with original maturity
 
greater than one year
24,609
Covered bonds
8,762
5,214
Subordinated debt
15,030
17,644
of which: eligible as high-trigger loss-absorbing additional
 
tier 1 capital instruments
2
13,084
10,744
of which: eligible as low-trigger loss-absorbing additional
 
tier 1 capital instruments
1,245
1,214
of which: eligible as non-Basel III-compliant tier 2 capital
 
instruments
207
538
Debt issued through the Swiss central mortgage institutions
26,335
27,377
Other long-term debt
424
1,506
Long-term debt
3
183,709
199,288
Total debt issued measured at amortized cost
4,5
214,219
237,817
1 Debt with an original contractual maturity of less than one year,
 
includes mainly certificates of deposit and commercial paper.
 
2 For 31 December 2024, includes USD
6.9
bn (31 December 2023: USD
3.6
bn) that
are, upon the occurrence
 
of a trigger event or
 
a viability event, subject to
 
conversion into ordinary UBS
 
shares.
 
3 Debt with an original
 
contractual maturity greater than
 
or equal to one year.
 
The classification of
debt issued into short-term and long-term does not consider any early redemption features.
 
4 Net of bifurcated embedded derivatives, the fair value
 
of which was not material for the periods presented.
 
5 Except
for Covered bonds (
100
% secured), Debt issued
 
through the Swiss central
 
mortgage institutions (
100
% secured) and Other long-term
 
debt (
91
% secured),
100
% of the balance was
 
unsecured as of 31 December
2024.
The Group uses
 
interest rate and
 
foreign exchange
 
derivatives to manage
 
the risks inherent
 
in certain debt instruments
held at amortized cost.
 
In some cases, the
 
Group applies hedge
 
accounting for interest
 
rate risk, as discussed
 
in item 2j
in Note 1a and Note 25. As a result of applying hedge accounting, the
 
life-to-date adjustment to the carrying amount of
debt issued
 
was a
 
decrease
 
of USD
3.1
bn as
 
of 31
 
December 2024
 
and a
 
decrease
 
of USD
3.0
bn as
 
of 31
 
December
2023, reflecting changes in fair value due to
 
interest rate movements.
Subordinated debt consists
 
of unsecured debt
 
obligations that are
 
contractually subordinated
 
in right of
 
payment to all
other
 
present
 
and
 
future
 
non-subordinated
 
obligations
 
of
 
the
 
respective
 
issuing
 
entity.
 
All
 
of
 
the
 
subordinated
 
debt
instruments outstanding as of 31 December 2024 pay a
 
fixed rate of interest.
›
Refer to Note 24 for maturity information
UBS Group
 
AG, together
 
with UBS
 
AG, has
 
fully and
 
unconditionally guaranteed
 
the outstanding
 
SEC-registered debt
securities of Credit
 
Suisse (USA)
 
LLC, which
 
as of 31
 
December 2024
 
consisted of
 
a single outstanding
 
issuance with
 
a
balance
 
of
 
USD
742
m
 
maturing
 
in
 
July
 
2032.
 
Credit
 
Suisse
 
(USA)
 
LLC
 
is
 
an
 
indirect,
 
wholly
 
owned
 
subsidiary
 
of
UBS Group AG. UBS Group AG
 
assumed Credit Suisse Group
 
AG’s obligations under the
 
guarantee as of 12 June
 
2023
(i.e. the date of the merger). In accordance with the guarantee, if Credit Suisse (USA) LLC fails
 
to make a timely payment
under
 
the
 
agreements
 
governing
 
such
 
debt
 
securities,
 
the
 
holders
 
of
 
the
 
debt
 
securities
 
may
 
demand
 
payment
 
from
either UBS Group AG or UBS AG, without first proceeding against
 
Credit Suisse (USA) LLC.
 
 
Note 18
 
Provisions and contingent liabilities
a) Provisions
The table below presents an overview of total provisions
 
and contingent liabilities.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
USD m
31.12.24
31.12.23
1
Provisions related to expected credit losses (IFRS 9,
Financial Instruments
)
2
320
350
Provisions related to Credit Suisse loan commitments (IFRS
 
3,
Business Combinations
)
3
997
1,924
Provisions related to litigation, regulatory and similar matters
 
(IAS 37,
Provisions, Contingent Liabilities and Contingent Assets
)
3,602
4,020
Acquisition-related contingent liabilities relating to litigation,
 
regulatory and similar matters (IFRS 3,
Business Combinations
)
3
2,122
3,993
Restructuring, real-estate and other provisions (IAS 37,
 
Provisions, Contingent Liabilities and Contingent Assets
)
1,368
2,123
Total provisions and contingent liabilities
8,409
12,412
1 Comparative-period information has
 
been revised. Refer to
 
Note 2 for more
 
information.
 
2 Refer to Note
 
10 for more information.
 
3 Refer to Note
 
2 for more information
 
about the acquisition of
 
the Credit
Suisse Group.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
305
Note 18
 
Provisions and contingent liabilities (continued)
The
 
table
 
below
 
presents
 
additional
 
information
 
for
 
provisions
 
under
 
IAS 37,
Provisions,
 
Contingent
 
Liabilities
 
and
Contingent Assets
.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
USD m
Litigation,
regulatory and
similar matters
1
Restructuring
2
Real estate
3
Other
4
Total 2024
Balance at the beginning of the year
4,020
741
259
1,123
6,144
Increase in provisions recognized in the income statement
321
1,008
20
159
1,508
Release of provisions recognized in the income statement
(97)
(234)
(5)
(880)
(1,217)
Reclassifications
1,594
5
0
0
0
1,594
Provisions used in conformity with designated purpose
(2,129)
5
(704)
(18)
(52)
(2,903)
Foreign currency translation and other movements
(108)
1
(16)
(34)
(157)
Balance at the end of the year
3,602
813
240
315
4,969
1 Consists of provisions for losses resulting from legal, liability and compliance risks.
 
2 Consists of USD
383
m of provisions for onerous contracts related to real estate as of 31 December 2024 (31 December 2023:
USD
448
m), USD
334
m of
 
personnel-related restructuring
 
provisions as
 
of 31
 
December 2024
 
(31 December
 
2023: USD
294
m) and
 
onerous contracts
 
related to
 
technology.
 
3 Mainly includes
 
provisions for
reinstatement costs with respect to leased properties.
 
4 Mainly includes provisions related to employee benefits,
 
VAT and operational
 
risks.
 
5 Includes reclassifications from IFRS 3 contingent
 
liabilities to IAS 37
provisions, including the funding
 
by UBS of the offer
 
made in June 2024
 
by the Credit Suisse supply
 
chain finance funds to redeem
 
all of their outstanding units.
 
As a result of the
 
offer, UBS reclassified
 
USD
944
m
from IFRS 3 acquisition-related contingent liabilities to IAS 37 provisions related to litigation, regulatory and similar matters, as the probability
 
of an outflow of resources increased, bringing the total IAS 37 provision
for this matter to USD
1,421
m, with no impact on
 
the income statement. The
 
provision has been used
 
to recognize the funding obligation,
 
which was accounted for
 
as a derivative liability
 
with a fair value
 
of USD
1,421
m. Post the expiry of the offer, USD
92
m was reclassified from derivative liabilities back into IAS 37 provisions in relation to investors
 
who did not accept the redemption offer.
Restructuring provisions
 
are generally
 
recognized as
 
a consequence
 
of management
 
agreeing to
 
materially change
 
the
scope of the
 
business or the
 
manner in which
 
it is conducted,
 
including changes in
 
management structures. Restructuring
provisions relate to
 
onerous contracts for
 
property and personnel-related
 
provisions. Onerous
 
contracts for property
 
are
recognized
 
when
 
UBS
 
is
 
committed
 
to
 
pay
 
for
 
non-lease
 
components,
 
such
 
as
 
utilities,
 
service
 
charges,
 
taxes
 
and
maintenance,
 
when
 
a
 
property
 
is
 
vacated
 
or
 
not
 
fully
 
recovered
 
from
 
sub-tenants.
 
Personnel-related
 
restructuring
provisions are
 
generally used
 
within a
 
short period
 
of time.
 
The level
 
of personnel-related
 
provisions can
 
change when
natural
 
staff
 
attrition
 
reduces
 
the
 
number
 
of
 
people
 
affected
 
by
 
a
 
restructuring
 
event,
 
and
 
therefore
 
results
 
in
 
lower
estimated costs.
Other provisions mainly include
 
provisions related to onerous
 
contracts,
 
employee benefits and operational
 
risks.
 
Onerous
contracts are
 
recognized for
 
certain contractual
 
arrangements where
 
the costs
 
exceed the
 
economic benefits
 
expected
to be received.
Information about provisions
 
and contingent liabilities
 
in respect of
 
litigation, regulatory
 
and similar matters,
 
as a class,
is included in Note 18b. There are no material contingent
 
liabilities associated with the other classes of provisions.
 
b) Litigation, regulatory and similar matters
The Group operates in a legal and regulatory environment
 
that exposes it to significant litigation and similar risks
 
arising
from disputes and regulatory proceedings. As a result, UBS (which for purposes of this Note may refer to
 
UBS Group AG
and/or
 
one
 
or
 
more
 
of
 
its
 
subsidiaries,
 
as
 
applicable)
 
is
 
involved
 
in
 
various
 
disputes
 
and
 
legal
 
proceedings,
 
including
litigation, arbitration, and regulatory and criminal investigations
 
.
Such matters
 
are subject
 
to many uncertainties,
 
and the outcome
 
and the timing
 
of resolution
 
are often difficult
 
to predict,
particularly
 
in the
 
earlier stages
 
of a
 
case. There
 
are also
 
situations
 
where the
 
Group may
 
enter into
 
a settlement
 
agreement.
This may
 
occur in
 
order to
 
avoid the
 
expense, management
 
distraction
 
or reputational
 
implications
 
of continuing
 
to contest
liability, even
 
for those matters
 
for which the Group
 
believes it should
 
be exonerated.
 
The uncertainties
 
inherent in all
 
such
matters
 
affect the
 
amount and
 
timing of
 
any potential
 
outflows
 
for both
 
matters
 
with respect
 
to which
 
provisions
 
have been
established and other contingent liabilities.
 
The Group makes provisions for such matters brought against it when, in the
opinion
 
of management
 
after seeking
 
legal
 
advice,
 
it is
 
more likely
 
than not
 
that the
 
Group
 
has a
 
present
 
legal
 
or constructive
obligation as a result of past
 
events, it is probable that an
 
outflow of resources will be required, and the amount
 
can be
reliably estimated.
 
Where these factors are otherwise
 
satisfied, a provision
 
may be established for claims
 
that have not yet
been
 
asserted
 
against
 
the Group,
 
but are
 
nevertheless
 
expected
 
to be,
 
based
 
on the
 
Group’s
 
experience
 
with similar
 
asserted
claims. If any
 
of those
 
conditions is not
 
met, such matters
 
result in contingent
 
liabilities. If the
 
amount of an
 
obligation
cannot be
 
reliably estimated,
 
a liability
 
exists that
 
is not recognized
 
even if an
 
outflow of
 
resources is
 
probable. Accordingly,
no provision
 
is established even
 
if the
 
potential outflow of
 
resources with
 
respect to
 
such matters
 
could be
 
significant.
Developments relating to
 
a
 
matter that
 
occur after
 
the relevant
 
reporting period,
 
but prior
 
to the
 
issuance of
 
financial
statements,
 
which
 
affect
 
management’s
 
assessment
 
of
 
the
 
provision
 
for
 
such
 
matter
 
(because,
 
for
 
example,
 
the
developments
 
provide evidence
 
of conditions
 
that existed
 
at the end
 
of the reporting
 
period), are
 
adjusting events
 
after the
reporting period
 
under IAS 10
 
and must be recognized
 
in the financial
 
statements for
 
the reporting
 
period.
Specific
 
litigation,
 
regulatory
 
and
 
other
 
matters
 
are
 
described
 
below,
 
including
 
all
 
such
 
matters
 
that
 
management
considers
 
to
 
be
 
material
 
and
 
others
 
that
 
management
 
believes
 
to
 
be
 
of
 
significance
 
to
 
the
 
Group
 
due
 
to
 
potential
financial, reputational and other effects. The amount of damages claimed, the
 
size of a transaction or other information
is provided where available and appropriate in order to assist users in
 
considering the magnitude of potential exposures.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
306
Note 18
 
Provisions and contingent liabilities (continued)
In the case of certain matters below, we
 
state that we have established a provision,
 
and for the other matters, we make
no such statement.
 
When we
 
make this statement
 
and we
 
expect disclosure
 
of the
 
amount of a
 
provision to prejudice
seriously our position with other parties in the matter because it would reveal what
 
UBS believes to be the probable and
reliably estimable
 
outflow, we
 
do not
 
disclose that
 
amount. In
 
some cases
 
we are
 
subject to
 
confidentiality obligations
that preclude
 
such disclosure.
 
With respect
 
to the
 
matters
 
for which
 
we do
 
not state
 
whether
 
we have
 
established a
provision, either: (a) we have
 
not established a provision;
 
or (b) we have established
 
a provision but expect disclosure
 
of
that fact
 
to prejudice
 
seriously our
 
position with
 
other parties
 
in the
 
matter because
 
it would
 
reveal the
 
fact that
 
UBS
believes an outflow of resources to be probable and reliably estimable.
With respect to certain litigation, regulatory and similar matters for which we have established provisions, we are able to
estimate the expected
 
timing of outflows.
 
However, the aggregate
 
amount of the
 
expected outflows for
 
those matters
for which
 
we are
 
able to
 
estimate expected
 
timing is
 
immaterial relative
 
to our
 
current and
 
expected levels
 
of liquidity
over the relevant time periods.
The aggregate amount provisioned for litigation, regulatory and similar matters as a class
 
is disclosed in the “Provisions”
table in Note 18a) above.
 
UBS provides below an estimate
 
of the aggregate liability
 
for its litigation, regulatory
 
and similar
matters as a class
 
of contingent liabilities.
 
Estimates of contingent
 
liabilities
 
are inherently imprecise
 
and uncertain as
 
these
estimates require
 
UBS to make
 
speculative
 
legal assessments
 
as to claims
 
and proceedings
 
that involve
 
unique fact
 
patterns
or novel
 
legal theories,
 
that have
 
not yet
 
been initiated
 
or are
 
at early
 
stages of
 
adjudication,
 
or as
 
to which
 
alleged
 
damages
have not been quantified
 
by the claimants. Taking
 
into account these
 
uncertainties and
 
the other factors described
 
herein,
UBS estimates
 
the future losses
 
that could
 
arise from litigation,
 
regulatory and
 
similar matters
 
disclosed below
 
for which
 
an
estimate
 
is possible,
 
that are
 
not covered
 
by existing
 
provisions
 
(including
 
acquisition-related
 
contingent
 
liabilities
 
established
under IFRS 3
 
in connection
 
with the acquisition
 
of Credit Suisse),
 
are in the range
 
of USD
0
bn to USD
1.9
bn.
 
Litigation, regulatory and
 
similar matters may also
 
result in non-monetary
 
penalties and consequences.
 
A guilty plea to,
or conviction
 
of, a
 
crime could
 
have material
 
consequences for
 
UBS. Resolution
 
of regulatory
 
proceedings may
 
require
UBS to obtain waivers of regulatory disqualifications to maintain certain operations,
 
may entitle regulatory authorities to
limit,
 
suspend
 
or
 
terminate
 
licenses
 
and
 
regulatory
 
authorizations,
 
and
 
may
 
permit
 
financial
 
market
 
utilities
 
to
 
limit,
suspend or terminate UBS’s participation in
 
such utilities. Failure to obtain such waivers,
 
or any limitation, suspension or
termination of licenses, authorizations or participations, could
 
have material consequences for UBS.
The amounts shown
 
in the table
 
below reflect the
 
provisions recorded under
 
IFRS Accounting Standards.
 
In connection
with the acquisition of Credit Suisse,
 
UBS Group AG additionally has reflected
 
in its purchase accounting under
 
IFRS 3 a
valuation adjustment
 
reflecting an
 
estimate of
 
outflows relating
 
to contingent
 
liabilities for
 
all present
 
obligations included
in the scope of the acquisition
 
at fair value upon closing,
 
even if it is not probable that
 
the contingent liability will result
in an
 
outflow of
 
resources, significantly
 
decreasing the
 
recognition threshold
 
for litigation
 
liabilities beyond
 
those that
generally apply
 
under IFRS
 
Accounting Standards.
 
The IFRS
 
3 acquisition-related
 
contingent
 
liabilities of
 
USD
2.1
bn at
31 December 2024 reflect a decrease of USD
1.9
bn from 31 December 2023 as a result
 
of reclassifications to provisions
under IAS 37 and releases upon resolution of the relevant
 
matter.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provisions for litigation, regulatory and similar matters
 
by business division and in Group Items
1
USD m
Global Wealth
Management
Personal &
Corporate
Banking
 
Asset
Management
Investment
Bank
Non-core
and Legacy
Group Items
Total 2024
Balance at the beginning of the year
1,235
157
15
294
2,186
134
4,020
Increase in provisions recognized in the income statement
165
1
7
19
118
12
321
Release of provisions recognized in the income statement
(18)
0
0
(11)
(66)
(2)
(97)
Reclassifications
2
17
0
0
0
1,578
0
1,594
Provisions used in conformity with designated purpose
2
(59)
0
(20)
(26)
(2,020)
(4)
(2,129)
Foreign currency translation and other movements
(69)
(10)
0
(12)
(17)
(1)
(108)
Balance at the end of the year
1,271
147
1
266
1,779
139
3,602
1 Provisions, if any, for the matters described in items 2
 
and 10 of this Note are recorded in Global Wealth Management. Provisions, if any,
 
for the matters described in items 5, 6, 7, 8, 9, 11, 13 and 14 of this Note
are recorded in Non-core and Legacy. Provisions,
 
if any, for the matters described in item 1
 
of this Note are allocated between Global Wealth Management,
 
Personal & Corporate Banking and Non-core and
 
Legacy.
Provisions, if any, for the matters described in item 3 of this Note are allocated between the Investment Bank, Non-core and Legacy and Group Items. Provisions, if any, for the matters described in item 4 of this Note
are allocated between Global Wealth Management
 
and Personal & Corporate Banking.
 
Provisions, if any,
 
for the matters described in item 12 of
 
this Note are allocated between the
 
Investment Bank and Non-core
and Legacy.
 
2 Includes reclassifications from IFRS 3 contingent liabilities to IAS 37 provisions, including the funding by UBS of the offer made in June 2024 by the Credit Suisse supply chain finance funds to redeem
all of their outstanding units.
 
As a result of the offer,
 
UBS reclassified USD
944
m from IFRS 3 acquisition-related
 
contingent liabilities to IAS 37
 
provisions related to litigation, regulatory
 
and similar matters, as
 
the
probability of an outflow of
 
resources increased, bringing the
 
total IAS 37 provision for
 
this matter to USD
1,421
m, with no impact
 
on the income statement.
 
The provision has been
 
used to recognize the
 
funding
obligation, which was accounted for as a derivative liability with
 
a fair value of USD
1,421
m. Post the expiry of the offer,
 
USD
92
m was reclassified from derivative liabilities back into
 
IAS 37 provisions in relation to
investors who did not accept the redemption offer.
1. Inquiries regarding cross-border wealth management businesses
Tax and regulatory authorities in a number of
 
countries have made inquiries,
 
served requests for information or
 
examined
employees located in their
 
respective jurisdictions
 
relating to the
 
cross-border wealth
 
management services provided
 
by
UBS and other financial
 
institutions. Credit Suisse
 
offices in various locations,
 
including the UK, the
 
Netherlands, France
and
 
Belgium,
 
have
 
been
 
contacted
 
by
 
regulatory
 
and
 
law
 
enforcement
 
authorities
 
seeking
 
records
 
and
 
information
concerning
 
investigations
 
into
 
Credit
 
Suisse’s
 
historical
 
private
 
banking
 
services
 
on
 
a
 
cross-border
 
basis
 
and
 
in
 
part
through its local branches and banks. The
 
UK and French aspects of these issues
 
have been closed. UBS is continuing to
cooperate with the authorities.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
307
Note 18
 
Provisions and contingent liabilities (continued)
Since 2013, UBS (France) S.A., UBS AG and certain former employees have been under investigation in
 
France in relation
to UBS’s cross-border business with French clients. In connection with this investigation, the
 
investigating judges ordered
UBS AG to provide bail (“
caution
”) of EUR
1.1
bn.
In 2019, the court
 
of first instance
 
returned a verdict
 
finding UBS AG
 
guilty of unlawful solicitation
 
of clients on
 
French
territory
 
and aggravated
 
laundering of
 
the proceeds
 
of tax
 
fraud, and
 
UBS (France)
 
S.A. guilty
 
of aiding
 
and abetting
unlawful solicitation
 
and of
 
laundering the
 
proceeds of
 
tax fraud.
 
The court
 
imposed fines
 
aggregating
 
EUR
3.7
bn on
UBS AG and UBS (France) S.A. and
 
awarded EUR
800
m of civil damages to the
 
French state. A trial in the Paris
 
Court of
Appeal took place in March 2021. In December
 
2021, the Court of Appeal found UBS
 
AG guilty of unlawful solicitation
and aggravated
 
laundering
 
of the
 
proceeds of
 
tax
 
fraud. The
 
court
 
ordered a
 
fine of
 
EUR
3.75
m, the
 
confiscation
 
of
EUR
1
bn, and awarded civil
 
damages to the French
 
state of EUR
800
m. UBS appealed the
 
decision to the French
 
Supreme
Court.
 
The
 
Supreme
 
Court
 
rendered
 
its
 
judgment
 
on
 
15 November
 
2023.
 
It
 
upheld
 
the
 
Court
 
of
 
Appeal’s
 
decision
regarding unlawful solicitation and aggravated
 
laundering of the proceeds of tax
 
fraud, but overturned the confiscation
of EUR
1
bn, the
 
penalty of
 
EUR
3.75
m and
 
the EUR
800
m of
 
civil damages
 
awarded to
 
the French
 
state. The
 
case has
been remanded to
 
the Court of
 
Appeal for a
 
retrial regarding these
 
overturned elements. The
 
French state has
 
reimbursed
the EUR
800
m of civil damages to UBS AG.
In May 2014, Credit Suisse entered into
 
settlement agreements with the SEC, Federal Reserve and
 
New York Department
of Financial Services and
 
entered into an agreement with
 
the US Department of
 
Justice (DOJ) to plead
 
guilty to conspiring
to aid and abet
 
US taxpayers in
 
filing false tax
 
returns (2014 Plea
 
Agreement). Credit Suisse
 
continued to report
 
to and
cooperate with US
 
authorities in accordance
 
with its obligations
 
under the 2014
 
Plea Agreement, including
 
by conducting
a review of cross-border
 
services provided by Credit
 
Suisse. In this connection,
 
Credit Suisse provided information
 
to US
authorities regarding potentially
 
undeclared US assets
 
held by clients
 
at Credit Suisse.
 
UBS continues to
 
cooperate with
the ongoing investigation by the DOJ.
Our balance sheet
 
at 31 December
 
2024 reflected
 
a provision
 
in an amount
 
that UBS
 
believes to
 
be appropriate under
the applicable accounting standard. As in the case of other matters
 
for which we have established provisions, the future
outflow
 
of
 
resources
 
in
 
respect
 
of
 
such
 
matters
 
cannot
 
be
 
determined
 
with
 
certainty
 
based
 
on
 
currently
 
available
information and accordingly may ultimately
 
prove to be substantially greater
 
(or may be less) than the provision that
 
we
have recognized.
2. Madoff
In relation to the Bernard L. Madoff Investment Securities LLC (BMIS) investment fraud,
 
UBS AG, UBS (Luxembourg) S.A.
(now UBS Europe SE, Luxembourg branch) and certain other UBS
 
subsidiaries have been subject to inquiries by a
 
number
of regulators,
 
including the
 
Swiss Financial Market
 
Supervisory Authority
 
(FINMA) and the
 
Luxembourg Commission
 
de
Surveillance du
 
Secteur Financier.
 
Those inquiries
 
concerned two
 
third-party funds
 
established under
 
Luxembourg law,
substantially all assets of which
 
were with BMIS,
 
as well as certain
 
funds established in offshore
 
jurisdictions with either
direct or
 
indirect exposure
 
to BMIS. These
 
funds faced severe
 
losses, and the
 
Luxembourg funds
 
are in
 
liquidation. The
documentation
 
establishing
 
both
 
funds
 
identifies
 
UBS
 
entities
 
in
 
various
 
roles,
 
including
 
custodian,
 
administrator,
manager,
 
distributor and promoter,
 
and indicates that UBS employees serve as board
 
members.
In 2009 and 2010,
 
the liquidators of
 
the two Luxembourg
 
funds filed claims
 
against UBS entities,
 
non-UBS entities and
certain
 
individuals,
 
including
 
current
 
and former
 
UBS
 
employees,
 
seeking
 
amounts
 
totaling
 
approximately
 
EUR
2.1
bn,
which includes amounts that the funds may be held liable
 
to pay the trustee for the liquidation of BMIS (BMIS Trustee).
A large number of alleged beneficiaries have filed claims against UBS entities (and non-UBS entities) for purported losses
relating to the Madoff fraud. The majority of these
 
cases have been filed in Luxembourg, where decisions that the claims
in
 
eight
 
test
 
cases
 
were
 
inadmissible
 
have
 
been
 
affirmed
 
by
 
the
 
Luxembourg
 
Court
 
of
 
Appeal,
 
and
 
the
 
Luxembourg
Supreme Court has dismissed a further appeal in one of
 
the test cases.
In the US, the BMIS Trustee
 
filed claims against UBS entities, among others, in
 
relation to the two Luxembourg funds and
one of the offshore funds. The total amount
 
claimed against all defendants in these
 
actions was not less than USD
2
bn.
In 2014,
 
the US
 
Supreme Court
 
rejected the
 
BMIS Trustee’s
 
motion for
 
leave to
 
appeal decisions,
 
dismissing all
 
claims
against UBS defendants except those for the recovery of approximately USD
125
m of payments alleged to be fraudulent
conveyances and
 
preference payments.
 
Similar claims
 
have been
 
filed against
 
Credit Suisse
 
entities seeking
 
to recover
redemption payments.
 
In 2016,
 
the bankruptcy
 
court dismissed
 
these claims
 
against the
 
UBS entities
 
and most
 
of the
Credit Suisse entities.
 
In 2019, the
 
Court of Appeals
 
reversed the
 
dismissal of the
 
BMIS Trustee’s remaining
 
claims. The
case has been remanded to the Bankruptcy Court for further
 
proceedings.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
308
Note 18
 
Provisions and contingent liabilities (continued)
3. Foreign exchange, LIBOR and benchmark rates, and other
 
trading practices
Foreign-exchange-related
 
regulatory
 
matters:
 
Beginning
 
in
 
2013,
 
numerous
 
authorities
 
commenced
 
investigations
concerning
 
possible
 
manipulation
 
of
 
foreign
 
exchange
 
markets
 
and
 
precious
 
metals
 
prices.
 
As
 
a
 
result
 
of
 
these
investigations, UBS entered
 
into resolutions with
 
Swiss, US and
 
UK regulators and
 
the European
 
Commission. UBS was
granted conditional immunity by the
 
Antitrust Division of the DOJ
 
and by authorities in other
 
jurisdictions in connection
with potential
 
competition law violations
 
relating to foreign
 
exchange and
 
precious metals businesses.
 
In December
 
2021,
the European Commission issued a decision imposing a fine of EUR
83.3
m on Credit Suisse entities based on findings of
anticompetitive
 
practices
 
in
 
the
 
foreign
 
exchange
 
market.
 
Credit
 
Suisse
 
has
 
appealed
 
the
 
decision
 
to
 
the
 
European
General Court. UBS received leniency and accordingly
 
no fine was assessed.
Foreign-exchange-related civil litigation:
 
Putative class actions
 
have been filed
 
since 2013 in
 
US federal courts
 
and in other
jurisdictions against UBS, Credit Suisse and other banks on behalf of putative classes of persons who engaged in foreign
currency transactions with any
 
of the defendant banks.
 
UBS and Credit
 
Suisse have resolved US
 
federal court class actions
relating
 
to
 
foreign
 
currency
 
transactions
 
with
 
the
 
defendant
 
banks
 
and
 
persons
 
who
 
transacted
 
in
 
foreign
 
exchange
futures contracts
 
and options
 
on such
 
futures.
 
Certain class
 
members
 
have excluded
 
themselves from
 
that settlement
and filed individual actions in US and English courts against UBS, Credit Suisse and other banks, alleging violations of US
and
 
European
 
competition
 
laws
 
and
 
unjust
 
enrichment.
 
UBS,
 
Credit
 
Suisse
 
and
 
the
 
other
 
banks
 
have
 
resolved
 
those
individual
 
matters.
 
Credit
 
Suisse
 
and
 
UBS,
 
together
 
with
 
other
 
financial
 
institutions,
 
were
 
named
 
in
 
a
 
consolidated
putative class action in Israel, which made allegations similar
 
to those made in the actions pursued in other
 
jurisdictions.
In April 2022,
 
Credit Suisse entered
 
into an agreement
 
to settle all
 
claims in this
 
action. In February
 
2024, UBS entered
into an agreement to settle all claims in this action. Both
 
settlements remain subject to court approval.
A
 
putative
 
class
 
action
 
was
 
filed
 
in
 
federal
 
court
 
against
 
UBS
 
and
 
numerous
 
other
 
banks
 
on
 
behalf
 
of
 
persons
 
and
businesses in the US
 
who directly purchased foreign
 
currency from the defendants
 
and alleged co-conspirators
 
for their
own end use. In May 2024, the Second Circuit upheld the
 
district court’s dismissal of the case.
LIBOR
 
and
 
other
 
benchmark-related
 
regulatory
 
matters:
 
Numerous
 
government
 
agencies
 
conducted
 
investigations
regarding potential improper attempts by UBS,
 
among others, to manipulate LIBOR and
 
other benchmark rates at certain
times. UBS and
 
Credit Suisse
 
reached settlements
 
or otherwise
 
concluded investigations
 
relating to
 
benchmark interest
rates with the
 
investigating authorities.
 
UBS was
 
granted conditional
 
leniency or conditional
 
immunity from authorities
in certain
 
jurisdictions, including
 
the Antitrust
 
Division of
 
the DOJ
 
and the
 
Swiss Competition
 
Commission (WEKO),
 
in
connection with potential antitrust or competition
 
law violations related to certain
 
rates. However, UBS has not reached
a final settlement with WEKO, as the Secretariat
 
of WEKO has asserted that UBS does not qualify for full
 
immunity.
LIBOR and other
 
benchmark-related civil litigation:
 
A number of
 
putative class actions
 
and other actions
 
are pending in
the federal
 
courts in
 
New York
 
against UBS
 
and numerous
 
other banks
 
on behalf
 
of parties
 
who transacted
 
in certain
interest rate benchmark-based derivatives.
 
Also pending in
 
the US and
 
in other jurisdictions are
 
a number of other
 
actions
asserting losses related
 
to various products
 
whose interest
 
rates were
 
linked to LIBOR
 
and other benchmarks,
 
including
adjustable
 
rate
 
mortgages,
 
preferred
 
and
 
debt
 
securities,
 
bonds
 
pledged
 
as
 
collateral,
 
loans,
 
depository
 
accounts,
investments
 
and
 
other
 
interest-bearing
 
instruments.
 
The
 
complaints
 
allege
 
manipulation,
 
through
 
various
 
means,
 
of
certain
 
benchmark
 
interest
 
rates,
 
including
 
USD LIBOR,
 
Yen
 
LIBOR,
 
EURIBOR,
 
CHF LIBOR,
 
and
 
GBP
 
LIBOR
 
and
 
seek
unspecified compensatory and other damages under various
 
legal theories.
USD LIBOR class and individual actions
 
in the US:
Beginning in 2013, putative class
 
actions were filed in
 
US federal district
courts (and subsequently consolidated in the US District Court for the Southern District of New York (SDNY)) by
 
plaintiffs
who
 
engaged
 
in
 
over-the-counter
 
instruments,
 
exchange-traded
 
Eurodollar
 
futures
 
and
 
options,
 
bonds
 
or
 
loans
 
that
referenced
 
USD LIBOR.
 
The
 
complaints
 
allege
 
violations
 
of
 
antitrust
 
law
 
and
 
the
 
Commodities
 
Exchange
 
Act,
 
as
 
well
breach of contract
 
and unjust enrichment.
 
Following various rulings
 
by the district
 
court and the
 
Second Circuit
 
dismissing
certain of the causes of action and allowing
 
others to proceed, one class action
 
with respect to transactions in over-the-
counter
 
instruments
 
and
 
several
 
actions
 
brought
 
by
 
individual
 
plaintiffs
 
are
 
proceeding
 
in
 
the
 
district
 
court.
 
UBS
 
and
Credit
 
Suisse
 
have
 
entered
 
into
 
settlement
 
agreements
 
in
 
respect
 
of
 
the
 
class
 
actions
 
relating
 
to
 
exchange-traded
instruments, bonds and loans. These settlements have received final court approval and the actions have been dismissed
as to UBS and Credit Suisse. In addition,
 
an individual action was filed in the
 
Northern District of California against UBS,
Credit Suisse and numerous other
 
banks alleging that the defendants
 
conspired to fix the interest
 
rate used as the basis
for loans to consumers by jointly setting
 
the USD ICE LIBOR rate and monopolized the market for LIBOR-based consumer
loans and credit cards. The court dismissed the initial complaint and subsequently dismissed an amended complaint with
prejudice. In
 
January 2024,
 
plaintiffs appealed
 
the dismissal
 
to the
 
Ninth Circuit
 
Court of
 
Appeals, which
 
affirmed the
dismissal in November 2024.
Other
 
benchmark
 
class actions
 
in
 
the
 
US:
The
 
Yen LIBOR/Euroyen
 
TIBOR,
 
EURIBOR
 
and GBP
 
LIBOR
 
actions
 
have
 
been
dismissed. Plaintiffs have appealed the dismissals.
In November 2022, defendants moved
 
to dismiss the complaint in
 
the CHF LIBOR action. In 2023,
 
the court approved a
settlement by Credit Suisse of the claims against it in this matter.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
309
Note 18
 
Provisions and contingent liabilities (continued)
Government bonds:
 
In 2021, the European Commission issued a decision finding that UBS and six other banks breached
European
 
Union
 
antitrust
 
rules
 
between
 
2007
 
and
 
2011
 
relating
 
to
 
European
 
government
 
bonds.
 
The
 
European
Commission fined
 
UBS EUR
172
m. UBS
 
has appealed
 
the amount
 
of the
 
fine.
Also in
 
2021, the
 
European Commission
issued a decision finding that Credit Suisse and four
 
other banks had breached European Union antitrust rules relating to
supra-sovereign,
 
sovereign
 
and
 
agency
 
bonds
 
denominated
 
in
 
USD.
 
The
 
European
 
Commission
 
fined
 
Credit
 
Suisse
EUR
11.9
m, which amount was confirmed on appeal.
Credit Suisse, together with other financial institutions, was named in two
 
Canadian putative class actions, which allege
that defendants conspired to
 
fix the prices of
 
supranational, sub-sovereign and agency bonds
 
sold to and
 
purchased from
investors in
 
the secondary
 
market. One
 
action was
 
dismissed against
 
Credit Suisse
 
in February
 
2020. In
 
October 2022,
Credit Suisse
 
entered into
 
an agreement
 
to settle
 
all claims
 
in the
 
second action,
 
which was
 
approved by
 
the court
 
in
November 2024.
 
Credit default swap auction litigation
 
– In June 2021, Credit Suisse, along with other banks and entities, was named in a
putative class action complaint filed
 
in the US District
 
Court for the District
 
of New Mexico alleging
 
manipulation of credit
default swap (CDS)
 
final auction prices.
 
Defendants filed
 
a motion to
 
enforce a
 
previous CDS class
 
action settlement
 
in
the SDNY. In January 2024, the SDNY ruled that, to the extent claims in the New Mexico action arise from conduct
 
prior
to 30 June 2014, those claims are barred by the SDNY settlement.
 
The plaintiffs have appealed the SDNY decision.
With respect to
 
additional matters
 
and jurisdictions
 
not encompassed
 
by the
 
settlements and
 
orders referred
 
to above,
UBS’s balance sheet at 31 December 2024 reflected a provision in an amount
 
that UBS believes to be appropriate under
the applicable accounting standard. As in the case of other matters
 
for which we have established provisions, the future
outflow
 
of
 
resources
 
in
 
respect
 
of
 
such
 
matters
 
cannot
 
be
 
determined
 
with
 
certainty
 
based
 
on
 
currently
 
available
information and accordingly may ultimately
 
prove to be substantially greater
 
(or may be less) than the provision that
 
we
have recognized.
4. Swiss retrocessions
 
The Federal Supreme Court of Switzerland
 
ruled in 2012, in a test case
 
against UBS, that distribution fees paid
 
to a firm
for distributing third-party and intra-group investment funds and structured products must be disclosed and surrendered
to clients who have entered
 
into a discretionary mandate
 
agreement with the firm,
 
absent a valid waiver.
 
FINMA issued
a supervisory note to
 
all Swiss banks
 
in response to
 
the Supreme
 
Court decision. UBS
 
has met the FINMA
 
requirements
and has notified all potentially affected clients.
The Supreme
 
Court decision has
 
resulted, and
 
continues to
 
result, in
 
a number
 
of client
 
requests to
 
disclose and
 
potentially
surrender retrocessions.
 
Client requests
 
are assessed
 
on a
 
case-by-case basis.
 
Considerations taken
 
into account
 
when
assessing these cases
 
include, among other things,
 
the existence of
 
a discretionary mandate and
 
whether or not
 
the client
documentation contained a valid waiver with respect to
 
distribution fees.
UBS’s balance
 
sheet at
 
31 December 2024
 
reflected a
 
provision with
 
respect to
 
matters described
 
in this
 
item 4
 
in an
amount that UBS
 
believes to be
 
appropriate under the
 
applicable accounting standard. The
 
ultimate exposure will
 
depend
on client requests and
 
the resolution thereof, factors that are
 
difficult to predict and
 
assess. Hence, as in the
 
case of other
matters for which
 
we have established
 
provisions, the future
 
outflow of resources
 
in respect of
 
such matters cannot
 
be
determined
 
with
 
certainty
 
based
 
on
 
currently
 
available
 
information
 
and
 
accordingly
 
may
 
ultimately
 
prove
 
to
 
be
substantially greater (or may be less) than the provision that
 
we have recognized.
5. Mortgage-related matters
Government and regulatory related matters
:
DOJ RMBS settlement
 
– In January 2017, Credit Suisse Securities (USA) LLC
(CSS LLC) and
 
its current
 
and former US
 
subsidiaries and
 
US affiliates
 
reached a
 
settlement with the
 
US Department
 
of
Justice (DOJ) related to its legacy
 
Residential Mortgage-Backed Securities (RMBS) business, a business
 
conducted through
2007. The
 
settlement resolved potential
 
civil claims
 
by the
 
DOJ related
 
to certain
 
of those
 
Credit Suisse
 
entities’ packaging,
marketing, structuring, arrangement, underwriting,
 
issuance and sale of RMBS.
 
Pursuant to the terms of
 
the settlement
a civil monetary penalty
 
was paid to the
 
DOJ in January 2017.
 
The settlement also required
 
the Credit Suisse
 
entities to
provide certain levels of consumer relief measures, including affordable housing payments
 
and loan forgiveness, and the
DOJ and Credit Suisse
 
agreed to the appointment of
 
an independent monitor to oversee
 
the completion of the
 
consumer
relief requirements of the
 
settlement. UBS continues to evaluate its approach
 
toward satisfying the remaining
 
consumer
relief obligations. The aggregate amount of the
 
consumer relief obligation increased after 2021 by
5
% per annum of the
outstanding amount due
 
until these obligations
 
are settled. The monitor
 
publishes reports periodically on
 
these consumer
relief matters.
Civil litigation: Repurchase
 
litigations
 
– Credit Suisse
 
affiliates are defendants
 
in various civil
 
litigation matters related
 
to
their roles as
 
issuer, sponsor,
 
depositor, underwriter
 
and/or servicer
 
of RMBS transactions.
 
These cases
 
currently include
repurchase
 
actions
 
by
 
RMBS
 
trusts
 
and/or
 
trustees,
 
in
 
which
 
plaintiffs
 
generally
 
allege
 
breached
 
representations
 
and
warranties in respect of mortgage loans and failure
 
to repurchase such mortgage loans as required
 
under the applicable
agreements. The amounts disclosed below do not reflect
 
actual realized plaintiff losses to date. Unless otherwise
 
stated,
these amounts reflect the original unpaid principal balance
 
amounts as alleged in these actions.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
310
Note 18
 
Provisions and contingent liabilities (continued)
DLJ Mortgage Capital,
 
Inc. (DLJ) is
 
a defendant in New
 
York State court in
 
five actions: An action
 
brought by Asset Backed
Securities
 
Corporation
 
Home
 
Equity
 
Loan
 
Trust,
 
Series
 
2006-HE7
 
alleges
 
damages
 
of
 
not
 
less
 
than
 
USD
374
m.
 
In
December 2023, the court granted in part DLJ’s motion to dismiss, dismissing with prejudice all
 
notice-based claims; the
parties have appealed.
 
An action by
 
Home Equity Asset
 
Trust, Series 2006-8, alleges
 
damages of not less
 
than USD
436
m.
An action by Home Equity Asset
 
Trust 2007-1 alleges damages of not less
 
than USD
420
m. Following a non-jury trial, the
court issued a
 
decision in December
 
2024 that the
 
plaintiff had established
 
breaches of representations
 
and warranties
relating to
210
 
of the
783
 
loans at issue.
 
The court deferred
 
decision as to
 
damages, which will
 
either be agreed
 
upon
by the parties or briefed for further decision by the court. An action by Home Equity Asset Trust 2007-2 alleges damages
of not less than USD
495
m. An action by CSMC Asset-Backed Trust 2007-NC1 does
 
not allege a damages amount.
6. ATA litigation
Since November 2014, a series of lawsuits have been
 
filed against a number of banks, including
 
Credit Suisse, in the US
District Court
 
for the
 
Eastern District
 
of New
 
York
 
(EDNY) and
 
the SDNY
 
alleging claims
 
under the
 
United States
 
Anti-
Terrorism
 
Act (ATA)
 
and the Justice Against Sponsors of Terrorism
 
Act. The plaintiffs in each of these lawsuits are, or are
relatives
 
of,
 
victims
 
of
 
various
 
terrorist
 
attacks
 
in
 
Iraq
 
and
 
allege
 
a
 
conspiracy
 
and/or
 
aiding
 
and
 
abetting
 
based
 
on
allegations
 
that
 
various
 
international
 
financial
 
institutions,
 
including
 
the
 
defendants,
 
agreed
 
to
 
alter,
 
falsify
 
or
 
omit
information
 
from
 
payment
 
messages
 
that
 
involved
 
Iranian
 
parties
 
for
 
the
 
express
 
purpose
 
of
 
concealing
 
the
 
Iranian
parties’ financial
 
activities and
 
transactions from
 
detection by
 
US authorities.
 
The lawsuits
 
allege that
 
this conduct
 
has
made it possible for Iran to transfer funds to Hezbollah and other terrorist organizations actively engaged
 
in harming US
military personnel
 
and civilians.
 
In January
 
2023, the
 
United States
 
Court of
 
Appeals for
 
the Second
 
Circuit affirmed
 
a
September 2019 ruling by the EDNY granting
 
defendants’ motion to dismiss the first filed
 
lawsuit. In October 2023, the
United States Supreme Court denied plaintiffs’
 
petition for a writ of certiorari.
 
In February 2024, plaintiffs filed a motion
to
 
vacate
 
the
 
judgment
 
in
 
the
 
first
 
filed
 
lawsuit.
 
Of
 
the
 
other
 
seven
 
cases,
 
four
 
are
 
stayed,
 
including
 
one
 
that
 
was
dismissed as to Credit Suisse
 
and most of the
 
bank defendants prior to
 
entry of the stay, and in three cases plaintiffs have
filed amended complaints.
7. Customer account matters
Several clients have claimed that a former relationship
 
manager in Switzerland had exceeded his investment authority
 
in
the
 
management
 
of their
 
portfolios,
 
resulting
 
in
 
excessive
 
concentrations
 
of certain
 
exposures
 
and
 
investment
 
losses.
Credit Suisse AG has investigated
 
the claims, as well as transactions among
 
the clients. Credit Suisse
 
AG filed a criminal
complaint
 
against
 
the
 
former
 
relationship
 
manager
 
with
 
the
 
Geneva
 
Prosecutor’s
 
Office
 
upon
 
which
 
the
 
prosecutor
initiated a
 
criminal investigation.
 
Several
 
clients of
 
the former
 
relationship manager
 
also filed
 
criminal complaints
 
with
the Geneva Prosecutor’s Office. In February 2018, the former relationship manager was sentenced to five years in prison
by
 
the
 
Geneva
 
criminal
 
court
 
for
 
fraud,
 
forgery
 
and
 
criminal
 
mismanagement
 
and
 
ordered
 
to
 
pay
 
damages
 
of
approximately
 
USD
130
m.
 
On appeal,
 
the
 
Criminal
 
Court of
 
Appeals
 
of Geneva
 
and,
 
subsequently,
 
the
 
Swiss
 
Federal
Supreme Court upheld the main findings of the Geneva
 
criminal court.
Civil lawsuits have been initiated
 
against Credit Suisse AG and / or
 
certain affiliates in various jurisdictions,
 
based on the
findings established in the criminal proceedings against the
 
former relationship manager.
In Singapore, in a civil lawsuit against Credit Suisse Trust Limited, the Singapore International Commercial Court issued a
judgment
 
finding
 
for
 
the
 
plaintiffs and,
 
in
 
September 2023,
 
the
 
court
 
awarded
 
damages
 
of USD
742.73
m, excluding
post-judgment
 
interest.
 
This
 
figure
 
does
 
not
 
exclude
 
potential
 
overlap
 
with
 
the
 
Bermuda
 
proceedings
 
against
 
Credit
Suisse Life
 
(Bermuda) Ltd.,
 
described below,
 
and the
 
court ordered
 
the parties
 
to ensure
 
that there
 
shall be
 
no double
recovery in relation to
 
this award and
 
the Bermuda proceedings.
 
On appeal from this
 
judgment, in July 2024,
 
the court
ordered some
 
changes to
 
the calculation
 
of damages
 
and directed
 
the parties
 
to agree
 
adjustments to
 
the award.
 
The
court ordered a revised award of USD
461
m, including interest and costs, in October 2024.
In Bermuda, in the civil lawsuit brought against
 
Credit Suisse Life (Bermuda) Ltd., the Supreme
 
Court of Bermuda issued
a judgment finding for the plaintiff and awarded damages of USD
607.35
m to the plaintiff. Credit Suisse Life (Bermuda)
Ltd. appealed the decision and in June 2023, the Bermuda Court of Appeal confirmed the award issued by the Supreme
Court of Bermuda
 
and the finding
 
that Credit Suisse
 
Life (Bermuda) Ltd.
 
had breached its
 
contractual and fiduciary duties,
but overturning
 
the
 
finding
 
that
 
Credit
 
Suisse
 
Life
 
(Bermuda)
 
Ltd.
 
had
 
made
 
fraudulent
 
misrepresentations.
 
In
 
March
2024,
 
the
 
Bermuda
 
Court
 
of
 
Appeal
 
granted
 
a
 
motion
 
by
 
Credit
 
Suisse
 
Life
 
(Bermuda)
 
Ltd.
 
for
 
leave
 
to
 
appeal
 
the
judgment to
 
the Judicial
 
Committee of
 
the Privy Council
 
and the
 
notice of
 
such appeal was
 
filed. The
 
Court of Appeal
also
 
ordered
 
that
 
the
 
current
 
stay
 
continue
 
pending
 
determination
 
of the
 
appeal
 
on the
 
condition
 
that
 
the
 
damages
awarded remain within the escrow account plus interest calculated at the Bermuda statutory
 
rate of
3.5
%. In December
2023, USD
75
m was released from the escrow account and paid to plaintiffs.
In Switzerland,
 
civil lawsuits
 
have been
 
commenced against
 
Credit Suisse AG
 
in the
 
Court of
 
First Instance
 
of Geneva,
with statements of claim served in March 2023 and March
 
2024.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
311
Note 18
 
Provisions and contingent liabilities (continued)
8. Mozambique matter
Credit Suisse was subject to investigations by regulatory and enforcement authorities, as well as civil litigation, regarding
certain
 
Credit
 
Suisse
 
entities’
 
arrangement
 
of
 
loan
 
financing
 
to
 
Mozambique
 
state
 
enterprises,
 
Proindicus
 
S.A.
 
and
Empresa
 
Moçambicana
 
de
 
Atum
 
S.A.
 
(EMATUM),
 
a
 
distribution
 
to
 
private
 
investors
 
of
 
loan
 
participation
 
notes
 
(LPN)
related to
 
the EMATUM
 
financing in
 
September 2013,
 
and certain
 
Credit Suisse
 
entities’ subsequent
 
role in
 
arranging
the exchange of
 
those LPNs for
 
Eurobonds issued
 
by the Republic
 
of Mozambique.
 
In 2019, three
 
former Credit
 
Suisse
employees pleaded guilty in the EDNY to accepting improper personal benefits in
 
connection with financing transactions
carried out with two Mozambique state enterprises.
In October 2021, Credit Suisse reached settlements
 
with the DOJ, the US Securities
 
and Exchange Commission (SEC), the
UK Financial
 
Conduct Authority
 
(FCA) and
 
FINMA to
 
resolve inquiries
 
by these
 
agencies, including
 
findings that
 
Credit
Suisse failed to appropriately
 
organize and conduct
 
its business with due
 
skill and care, and
 
manage risks. Credit
 
Suisse
Group AG entered into a three-year Deferred Prosecution Agreement (DPA) with
 
the DOJ in connection with the criminal
information charging Credit Suisse Group AG with conspiracy to commit wire fraud and Credit Suisse Securities (Europe)
Limited (CSSEL) entered
 
into a Plea
 
Agreement and
 
pleaded guilty
 
to one count
 
of conspiracy to
 
violate the US
 
federal
wire
 
fraud
 
statute.
 
Under
 
the
 
terms
 
of
 
the
 
DPA,
 
UBS
 
Group
 
AG
 
(as
 
successor
 
to
 
Credit
 
Suisse
 
Group
 
AG)
 
continued
compliance enhancement and
 
remediation efforts agreed
 
by Credit
 
Suisse, and undertake
 
additional measures
 
as outlined
in the DPA. In January 2025, as permitted under the terms of the DPA,
 
the DOJ elected to extend the term of the DPA by
one year.
 
9. ETN-related litigation
XIV litigation:
Since March
 
2018, three
 
class action
 
complaints were
 
filed in
 
the SDNY
 
on behalf
 
of a
 
putative class
 
of
purchasers of VelocityShares
 
Daily Inverse VIX Short-Term
 
Exchange Traded
 
Notes linked to the S&P 500 VIX Short-Term
Futures Index
 
(XIV ETNs). The
 
complaints have
 
been consolidated
 
and asserts
 
claims against
 
Credit Suisse
 
for violations
of various anti-fraud and
 
anti-manipulation provisions of US securities laws
 
arising from a decline in
 
the value of XIV
 
ETNs
in February
 
2018. On
 
appeal from
 
an order
 
of the
 
SDNY dismissing
 
all claims,
 
the Second
 
Circuit issued
 
an order
 
that
reinstated a portion of the claims. In
 
decisions in March 2023 and February 2025, the court
 
granted class certification for
two of the three classes proposed by plaintiffs
 
and denied class certification of the third proposed
 
class.
10. Bulgarian former clients matter
In December 2020, the Swiss Office of the Attorney General brought charges against Credit Suisse AG and other parties
concerning the diligence
 
and controls
 
applied to
 
a historical
 
relationship with
 
Bulgarian former
 
clients who
 
are alleged
to
 
have
 
laundered
 
funds
 
through
 
Credit
 
Suisse
 
AG
 
accounts.
 
In
 
June
 
2022,
 
following
 
a
 
trial,
 
Credit
 
Suisse
 
AG
 
was
convicted
 
in
 
the
 
Swiss
 
Federal
 
Criminal
 
Court
 
of
 
certain
 
historical
 
organizational
 
inadequacies
 
in
 
its
 
anti-money-
laundering
 
framework
 
and
 
ordered
 
to pay
 
a
 
fine
 
of
 
CHF
2
m. In
 
addition,
 
the
 
court
 
seized certain
 
client
 
assets
 
in
 
the
amount
 
of
 
approximately
 
CHF
12
m
 
and
 
ordered
 
Credit
 
Suisse
 
AG
 
to
 
pay
 
a
 
compensatory
 
claim
 
in
 
the
 
amount
 
of
approximately CHF
19
m. Credit
 
Suisse AG
 
appealed the
 
decision to
 
the Swiss
 
Federal Court
 
of Appeals.
 
Following the
merger of UBS AG and Credit Suisse AG,
 
UBS AG confirmed the appeal. In November 2024,
 
the court issued a judgment
that acquitted
 
UBS AG and
 
annulled the fine
 
and compensatory
 
claim ordered
 
by the
 
first instance
 
court. The court
 
of
appeal’s judgment may be appealed to the Swiss Federal
 
Supreme Court.
11. Supply chain finance funds
Credit
 
Suisse
 
has
 
received
 
requests
 
for
 
documents
 
and
 
information
 
in
 
connection
 
with
 
inquiries,
 
investigations,
enforcement and
 
other actions relating
 
to the supply
 
chain finance
 
funds (SCFFs)
 
matter by FINMA,
 
the FCA and
 
other
regulatory and governmental agencies.
In February 2023, FINMA announced
 
the conclusion of its enforcement
 
proceedings against Credit Suisse
 
in connection
with the SCFFs matter. In its
 
order, FINMA reported that Credit Suisse
 
had seriously breached applicable Swiss supervisory
laws in
 
this context
 
with regard
 
to risk
 
management
 
and appropriate
 
operational structures.
 
While FINMA
 
recognized
that
 
Credit
 
Suisse
 
had
 
already
 
taken
 
extensive
 
organizational
 
measures
 
to
 
strengthen
 
its
 
governance
 
and
 
control
processes,
 
FINMA
 
ordered
 
certain
 
additional
 
remedial
 
measures.
 
These
 
include
 
a
 
requirement
 
that
 
Credit
 
Suisse
documents
 
the
 
responsibilities
 
of
 
approximately
600
 
of
 
its
 
highest-ranking
 
managers.
 
This
 
measure
 
has
 
been
 
made
applicable to UBS Group. FINMA has
 
also separately opened four enforcement
 
proceedings against former managers
 
of
Credit Suisse.
In
 
May
 
2023,
 
FINMA
 
opened
 
an
 
enforcement
 
proceeding
 
against
 
Credit
 
Suisse
 
in
 
order
 
to
 
confirm
 
compliance
 
with
supervisory
 
requirements
 
in
 
response
 
to inquiries
 
from
 
FINMA’s
 
enforcement
 
division
 
in the
 
SCFFs
 
matter.
 
FINMA
 
has
closed
 
the
 
enforcement
 
proceeding,
 
finding
 
that
 
Credit
 
Suisse
 
breached
 
its
 
cooperation
 
obligations
 
with
 
FINMA
Enforcement. FINMA refrained from ordering any remedial measures
 
as it did not find similar issues with UBS.
In December 2024, the Luxembourg Commission de Surveillance du Secteur Financier (CSSF) concluded its investigation.
The
 
CSSF
 
identified
 
non-compliance
 
with
 
several
 
obligations
 
under
 
Luxembourg
 
law
 
and
 
imposed
 
a
 
sanction
 
of
 
EUR
250,000
.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
312
Note 18
 
Provisions and contingent liabilities (continued)
The Attorney General of the Canton
 
of Zurich has initiated a criminal
 
procedure in connection with the SCFFs matter and
several fund investors have joined
 
the procedure as interested parties. Certain
 
former and active Credit Suisse
 
employees,
among others, have been named as accused persons, but
 
Credit Suisse itself was not made a party to the proceeding.
Certain civil actions have
 
been filed by fund
 
investors and other
 
parties against Credit
 
Suisse and/or certain officers
 
and
directors in
 
various jurisdictions,
 
which make
 
allegations including
 
mis-selling and
 
breaches of
 
duties of
 
care, diligence
and other fiduciary duties. In June 2024, the
 
Credit Suisse SCFFs made a voluntary offer to
 
the SCFFs investors to redeem
all outstanding fund units. The offer expired on
 
31 July 2024, and fund units representing around
92
% of the SCFFs’ net
asset value were tendered in the offer and accepted. Fund units accepted in the offer were redeemed at
90
% of the net
asset value determined on 25 February 2021, net of any payments made by the relevant fund to the fund
 
investors since
that time. Investors whose units were redeemed
 
released any claims they may have had
 
against the SCFFs, Credit Suisse
or UBS. The offer was funded by UBS through the purchase
 
of units of feeder sub-funds.
12. Archegos
Credit Suisse and UBS have received requests for documents and information in connection with inquiries, investigations
and/or
 
actions
 
relating
 
to
 
their
 
relationships
 
with
 
Archegos
 
Capital
 
Management
 
(Archegos),
 
including
 
from
 
FINMA
(assisted by
 
a third
 
party appointed
 
by FINMA),
 
the DOJ,
 
the SEC,
 
the US
 
Federal Reserve,
 
the US
 
Commodity Futures
Trading Commission (CFTC), the US Senate Banking Committee, the Prudential Regulation Authority (PRA), the FCA, the
WEKO, the Hong Kong
 
Competition Commission and
 
other regulatory and
 
governmental agencies. UBS
 
is cooperating
with the
 
authorities
 
in these
 
matters. In
 
July 2023,
 
CSI and
 
CSSEL entered
 
into a
 
settlement
 
agreement
 
with the
 
PRA
providing
 
for
 
the
 
resolution
 
of
 
the
 
PRA’s
 
investigation.
 
Also
 
in
 
July
 
2023,
 
FINMA
 
issued
 
a
 
decree
 
ordering
 
remedial
measures and the Federal Reserve Board issued
 
an Order to Cease and Desist.
 
Under the terms of
 
the order, Credit Suisse
paid
 
a
 
civil
 
money
 
penalty
 
and
 
agreed
 
to
 
undertake
 
certain
 
remedial
 
measures
 
relating
 
to
 
counterparty
 
credit
 
risk
management, liquidity risk
 
management and non-financial
 
risk management, as
 
well as enhancements
 
to board oversight
and governance. UBS
 
Group, as the
 
legal successor to
 
Credit Suisse Group AG,
 
is a party
 
to the FINMA
 
decree and Federal
Reserve Board Cease and Desist Order.
 
Civil actions
 
relating to
 
Credit Suisse’s
 
relationship with
 
Archegos have
 
been filed
 
against Credit
 
Suisse and/or
 
certain
officers and directors, including claims for breaches of fiduciary
 
duties.
13. Credit Suisse financial disclosures
Credit
 
Suisse
 
Group
 
AG
 
and
 
certain
 
directors,
 
officers
 
and
 
executives
 
have
 
been
 
named
 
in
 
securities
 
class
 
action
complaints pending in the SDNY. These complaints, filed on behalf
 
of purchasers of Credit Suisse shares, additional
 
tier 1
capital notes,
 
and other
 
securities in
 
2023, allege
 
that defendants
 
made misleading
 
statements regarding:
 
(i) customer
outflows in
 
late 2022;
 
(ii) the
 
adequacy of
 
Credit
 
Suisse’s
 
financial reporting
 
controls;
 
and (iii)
 
the adequacy
 
of Credit
Suisse’s
 
risk
 
management
 
processes,
 
and
 
include
 
allegations
 
relating
 
to
 
Credit
 
Suisse
 
Group AG’s
 
merger
 
with
 
UBS
Group AG. Many of the actions have been consolidated, and a motion to dismiss was granted in part and denied in part
in September 2024. For one additional action, filed in October
 
2023, a motion to dismiss remains pending.
Credit
 
Suisse
 
has
 
received
 
requests
 
for
 
documents
 
and
 
information
 
from
 
regulatory
 
and
 
governmental
 
agencies
 
in
connection with
 
inquiries, investigations and/or
 
actions relating
 
to these
 
matters, as
 
well as
 
for other
 
statements regarding
Credit Suisse’s financial condition,
 
including from the SEC, the
 
DOJ and FINMA. UBS is
 
cooperating with the authorities
in these matters.
14. Merger-related litigation
Certain Credit Suisse
 
Group AG affiliates
 
and certain directors,
 
officers and executives
 
have been named
 
in class action
complaints
 
pending
 
in
 
the
 
SDNY
 
and
 
New
 
Jersey
 
federal
 
court.
 
One
 
complaint,
 
brought
 
on
 
behalf
 
of
 
Credit
 
Suisse
shareholders, alleges breaches
 
of fiduciary duty under Swiss
 
law and civil RICO claims
 
under US federal law.
 
In February
2024, the court
 
granted defendants’
 
motions to dismiss
 
the civil RICO
 
claims and conditionally
 
dismissed the Swiss
 
law
claims pending defendants’ acceptance
 
of jurisdiction in Switzerland. In March
 
2024, having received consents
 
to Swiss
jurisdiction
 
from
 
all
 
defendants
 
served
 
with
 
the
 
complaint,
 
the
 
court
 
dismissed
 
the
 
Swiss
 
law
 
claims
 
against
 
those
defendants.
 
Additional
 
complaints,
 
brought
 
on
 
behalf
 
of
 
holders
 
of
 
Credit
 
Suisse
 
additional
 
tier 1
 
capital
 
notes
 
(AT1
noteholders) allege breaches
 
of fiduciary duty under
 
Swiss law,
 
arising from a series
 
of scandals and misconduct,
 
which
led
 
to
 
Credit
 
Suisse
 
Group
 
AG’s
 
merger
 
with
 
UBS
 
Group
 
AG,
 
causing
 
losses
 
to
 
shareholders
 
and
 
AT1
 
noteholders.
Motions to dismiss these complaints
 
were granted in
 
March 2024 and September
 
2024 on the basis that
 
Switzerland is
the most appropriate forum for litigation. Plaintiff
 
in one of these cases has appealed the dismissal.
 
 
 
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
313
Note 19
 
Other liabilities
a) Other financial liabilities measured at amortized
 
cost
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
USD m
31.12.24
31.12.23
Other accrued expenses
3,140
3,270
Accrued interest expenses
5,876
6,692
Settlement and clearing accounts
1,944
1,519
Lease liabilities
4,597
5,502
Other
 
5,476
3,868
Total other financial liabilities measured at amortized cost
21,033
20,851
b) Other financial liabilities designated at fair value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
USD m
31.12.24
31.12.23
Financial liabilities related to unit-linked investment contracts
17,203
15,992
Securities financing transactions
5,798
7,416
Over-the-counter debt instruments and other
5,698
6,076
Total other financial liabilities designated at fair value
28,699
29,484
c) Other non-financial liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
USD m
31.12.24
31.12.23
Compensation-related liabilities
9,592
9,746
of which: Deferred Contingent Capital Plan
1,847
1,709
of which: financial advisor compensation plans
1,621
1,483
of which: cash awards and other compensation plans
4,393
4,723
of which: net defined benefit liability
763
796
of which: other compensation-related liabilities
1
969
1,035
Current tax liabilities
1,671
1,460
Deferred tax liabilities
340
325
VAT,
 
withholding tax and other tax payables
1,156
1,120
Deferred income
555
635
Liabilities of disposal groups held for sale
2
1,199
Other
320
802
Total other non-financial liabilities
14,834
14,089
1
 
Includes liabilities for payroll taxes and untaken vacation.
 
2
 
Refer to Note 29 for more information about the agreement to sell Select Portfolio Servicing.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
314
 
 
Additional information
Note 20
 
Expected credit loss measurement
a) Expected credit losses in the period
Total net credit loss
 
expenses were
 
USD
551
m in 2024,
 
reflecting
 
net credit
 
loss releases
 
of USD
99
m related
 
to stage 1
 
and
2 positions and net
 
credit loss expenses of USD
651
m related to
 
credit-impaired (stage 3 and purchased credit-impaired)
positions,
 
predominantly
 
in the corporate
 
lending portfolios.
›
Refer to Note 20b for more information regarding changes to ECL
 
models, scenarios, scenario weights and the post-model
adjustments and to Note 20c for more information
 
regarding the development of ECL allowances and provisions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Credit loss expense / (release)
Performing positions
Credit-impaired positions
USD m
Stages 1 and 2
Stage 3
Purchased
 
Total
For the year ended 31.12.24
Global Wealth Management
(60)
41
3
(16)
Personal & Corporate Banking
(63)
487
(21)
404
Asset Management
(1)
0
0
(1)
Investment Bank
56
42
0
97
Non-core and Legacy
(30)
42
57
69
Group Items
(2)
0
0
(2)
Total
(99)
612
39
551
For the year ended 31.12.23
Global Wealth Management
127
27
13
166
Personal & Corporate Banking
271
183
27
482
Asset Management
1
(1)
0
0
Investment Bank
110
78
2
190
Non-core and Legacy
78
91
25
193
Group Items
5
0
0
6
Total
593
378
67
1,037
For the year ended 31.12.22
Global Wealth Management
(5)
5
0
Personal & Corporate Banking
27
12
39
Asset Management
0
0
0
Investment Bank
6
(18)
(12)
Non-core and Legacy
0
2
2
Group Items
1
0
1
Total
29
0
29
 
b) Changes to
 
ECL models, scenarios,
 
scenario weights
 
and key inputs
 
Refer to
 
Note 1a for
 
information about
 
the
 
principles governing
 
expected credit
 
loss (ECL)
 
models, scenarios,
 
scenario
weights and
 
key inputs.
 
Governance
Comprehensive
 
cross-functional
 
and cross-divisional
 
governance
 
processes are
 
in place
 
and are
 
used to
 
discuss and
 
approve
scenario updates and weights,
 
to assess whether
 
significant increases in credit
 
risk resulted in
 
stage transfers, to
 
review
model outputs
 
and to reach conclusions
 
regarding post-model
 
adjustments.
 
Model changes
During 2024, the model review and enhancement
 
process led to adjustments of the probability
 
of default (PD), loss given
default (LGD) and credit
 
conversion factor
 
(CCF) models, resulting
 
in a USD
49
m increase in ECL allowances.
 
This included
an increase
 
of USD
68
m in
 
the Investment
 
Bank related
 
to large
 
corporate
 
clients and
 
a USD
17
m decrease
 
in Global
 
Wealth
Management related
 
to lending for
 
ship financing.
 
Scenario and
 
key input updates
During 2024, the scenarios and related macroeconomic
 
factors were updated from those applied
 
at the end of 2023 by
considering
 
the
 
prevailing
 
economic
 
and
 
political
 
conditions
 
and
 
uncertainty.
 
The
 
review
 
focused
 
on
 
events
 
that
significantly changed
 
the economic
 
outlook during
 
the
 
year:
 
the milder
 
inflation outlook
 
and the
 
start of
 
a monetary
policy easing cycle, and
 
geopolitical uncertainties. ECLs for legacy
 
Credit Suisse positions were calculated based
 
on legacy
Credit Suisse models, including the same scenario
 
and scenario weight inputs as for UBS’s existing business
 
activity.
Baseline
 
scenario
: the
 
projections
 
of the
 
baseline scenario,
 
which are
 
aligned
 
to the
 
economic and
 
market assumptions
 
used
for
 
UBS’s
 
business
 
planning
 
purposes,
 
are
 
broadly
 
in
 
line
 
with
 
external
 
benchmarks,
 
such
 
as
 
those
 
from
 
Bloomberg
Consensus, Oxford
 
Economics and
 
the International
 
Monetary Fund World
 
Economic Outlook.
 
The expectation
 
for 2025 is
that global growth
 
slows due to rising
 
uncertainty,
 
with the prospect
 
of renewed tariff
 
escalation,
 
and a deceleration
 
in US
economic
 
growth.
 
Unemployment
 
rates
 
are forecast
 
to increase
 
somewhat
 
from their
 
2024 levels.
 
After
 
declining
 
over 2024,
long-term interest rates are expected to
 
remain broadly stable in 2025.
 
The outlook for house
 
prices worldwide remains
resilient,
 
including in
 
Switzerland.
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
315
Note 20
 
Expected credit loss measurement (continued)
Mild
 
debt crisis
 
scenario
:
The first
 
hypothetical
 
downside
 
scenario
 
is the
 
mild debt
 
crisis
 
scenario.
 
The mild
 
debt crisis
 
assumes
that political, solvency and
 
liquidity concerns cause
 
a
 
sell-off of
 
sovereign debt in
 
emerging markets and
 
the peripheral
Eurozone. The global economy
 
and financial markets are
 
negatively affected,
 
and central banks are assumed
 
to ease their
monetary policy.
Stagflationary geopolitical crisis scenario
:
The second
 
downside scenario is
 
aligned with
 
the 2024
 
Group binding
 
stress
scenario and was updated in 2024
 
to reflect expected risks, resulting in minimal changes. Geopolitical tensions cause an
escalation
 
of security
 
concerns
 
and undermine
 
globalization.
 
The ensuing
 
economic
 
regionalization
 
leads
 
to a
 
surge
 
in global
commodity prices and further disruptions of supply chains and raises the specter of
 
prolonged stagflation. Central banks
are forced
 
to further tighten
 
monetary policy
 
to contain inflationary
 
pressures.
Asset price appreciation
 
scenario
:
The upside scenario
 
is based on positive
 
developments,
 
such as an easing of
 
geopolitical
tensions across
 
the globe
 
and a rebound
 
in Chinese
 
economic growth.
 
A combination
 
of lower commodity
 
prices, effective
monetary
 
policies
 
and easing
 
supply chain
 
disruptions
 
helps to
 
reduce inflation.
 
Improved
 
consumer
 
and business
 
sentiment
lead to
 
a global
 
economic rebound,
 
enabling central
 
banks to
 
normalize interest
 
rates, which
 
causes asset
 
prices to
 
increase
significantly.
The table below details the key assumptions for the four scenarios applied
 
as of 31 December 2024.
Scenario generation, review process and governance
A
 
team
 
of
 
economists
 
within
 
Group
 
Risk
 
Control
 
develops
 
the
 
forward-looking
 
macroeconomic
 
assumptions,
 
with
 
a
broad range of experts also being involved in that
 
process.
The scenarios,
 
their weights
 
and the
 
key macroeconomic
 
and other
 
factors are
 
subject to
 
a critical
 
assessment by
 
the
IFRS 9 Scenario
 
Sounding Sessions
 
and ECL
 
Management
 
Forum, which
 
include senior
 
management
 
from Group
 
Risk
and Group
 
Finance. Important
 
aspects for
 
the review
 
include whether
 
there may
 
be particular
 
credit risk
 
concerns that
may not be capable
 
of being addressed systematically
 
and require post-model adjustments
 
for stage allocation and
 
ECL
allowances.
 
The Group Model
 
Governance Committee,
 
as the highest
 
authority under UBS’s
 
model governance framework,
 
ratifies
the decisions taken by the ECL Management Forum.
 
Scenario weights and post-model adjustments
Scenario weights, as illustrated in the table below,
 
are unchanged.
 
However, unquantifiable risks continue to be relevant, as the
 
geopolitical risks remained high in 2024, and the
 
impact on
the world economy from
 
escalations with unforeseeable consequences could be
 
severe. In the near
 
term, this uncertainty
relates
 
primarily
 
to
 
developments
 
in
 
the
 
Russia–Ukraine
 
war
 
and
 
Middle
 
East
 
conflicts.
 
Models,
 
which
 
are
 
based
 
on
supportable
 
statistical
 
information
 
from
 
past
 
experiences
 
regarding
 
interdependencies
 
of
 
macroeconomic
 
factors
 
and
their implications for credit risk portfolios, cannot comprehensively reflect such extraordinary events, such as a pandemic
or a
 
fundamental change
 
in the
 
world political
 
order. Rather
 
than creating
 
multiple additional
 
scenarios to
 
attempt to
gauge these
 
risks and
 
applying model
 
parameters that
 
lack supportable
 
information and
 
cannot be
 
robustly validated,
management continued to also apply post-model adjustments.
 
Total
 
stage
 
1 and
 
2
 
allowances
 
and
 
provisions
 
were
 
USD
946
m
 
as
 
of
 
31 December
 
2024
 
and
 
included
 
post-model
adjustments of
 
USD
235
m (31 December
 
2023: USD
326
m). Post-model
 
adjustments are
 
to address
 
uncertainty levels,
including those arising from the
 
geopolitical situation, and to align Credit
 
Suisse’s model results with the
 
results expected
under the applicable UBS model after the migration of positions.
 
.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Economic scenarios and weights applied
Assigned weights in %
ECL scenario
31.12.24
31.12.23
Asset price appreciation / inflation
0.0
0.0
Baseline
60.0
60.0
Mild debt crisis
15.0
15.0
Stagflationary geopolitical crisis
25.0
25.0
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
316
Note 20
 
Expected credit loss measurement (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Scenario assumptions
One year
 
Three years cumulative
 
31.12.24
Asset price
inflation
Baseline
Mild debt
crisis
Stagflationary
geopolitical
crisis
 
Asset price
inflation
Baseline
Mild debt
crisis
Stagflationary
geopolitical
crisis
 
Real GDP growth (percentage change)
United States
3.5
2.0
(1.4)
(4.8)
8.6
5.5
0.8
(4.4)
Eurozone
2.5
0.9
(1.7)
(5.6)
5.6
3.2
(0.1)
(5.7)
Switzerland
2.7
0.9
(1.1)
(4.8)
6.2
4.2
0.4
(4.9)
Consumer price index (percentage change)
 
United States
2.3
2.6
0.0
10.0
8.1
7.8
2.5
15.8
Eurozone
2.0
2.2
0.0
9.6
7.3
5.9
2.0
14.8
Switzerland
1.4
0.7
(0.2)
5.8
5.7
2.7
1.4
10.7
Unemployment rate (end-of-period level, %)
United States
3.1
4.3
6.8
9.8
3.0
4.1
8.1
12.4
Eurozone
6.0
7.0
7.9
10.5
6.0
6.8
8.3
11.7
Switzerland
2.3
2.6
3.4
4.6
2.3
2.5
4.2
5.5
Fixed income: 10-year government bonds (change in yields, basis points)
USD
0
77
(137)
270
45
82
(77)
245
EUR
0
25
(113)
245
38
35
(68)
215
CHF
0
(4)
(22)
195
38
11
(1)
180
Equity indices (percentage change)
S&P 500
20.0
12.0
(28.1)
(56.5)
51.7
26.7
(14.0)
(51.2)
EuroStoxx 50
16.0
(0.6)
(27.9)
(56.6)
41.7
9.9
(18.3)
(52.7)
SPI
14.0
(0.6)
(26.0)
(56.6)
37.9
8.0
(13.0)
(52.7)
Swiss real estate (percentage change)
Single-Family Homes
 
4.5
3.2
(4.3)
(18.5)
10.7
8.8
(3.0)
(28.6)
Other real estate (percentage change)
United States (S&P / Case–Shiller)
6.3
3.4
(7.6)
(20.2)
16.8
11.9
(5.2)
(30.5)
Eurozone (House Price Index)
4.5
3.7
(6.1)
(8.4)
10.7
11.6
(5.6)
(12.9)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Scenario assumptions
One year
 
Three years cumulative
 
31.12.23
Asset price
inflation
Baseline
Mild debt
crisis
Stagflationary
geopolitical
crisis
 
Asset price
inflation
Baseline
Mild debt
crisis
Stagflationary
geopolitical
crisis
 
Real GDP growth (percentage change)
United States
4.0
0.1
(1.6)
(4.8)
9.1
4.4
0.6
(4.4)
Eurozone
3.0
0.5
(1.7)
(5.6)
6.2
2.9
(0.1)
(5.7)
Switzerland
3.0
1.4
(1.2)
(4.8)
6.6
4.4
0.3
(4.9)
Consumer price index (percentage change)
 
United States
2.5
2.3
(0.1)
10.0
8.1
7.1
2.3
15.8
Eurozone
2.3
2.0
(0.2)
9.6
7.4
6.1
1.8
14.8
Switzerland
2.1
1.5
(0.4)
5.8
6.2
4.3
0.8
10.7
Unemployment rate (end-of-period level, %)
United States
3.0
4.4
6.3
9.2
3.0
4.4
7.7
11.8
Eurozone
6.0
6.9
8.2
10.6
6.0
6.8
9.0
11.8
Switzerland
1.6
2.3
2.9
4.1
1.5
2.3
3.8
5.0
Fixed income: 10-year government bonds (change in yields, basis points)
USD
13
(82)
(215)
270
37
(78)
(155)
245
EUR
20
(90)
(185)
225
58
(78)
(140)
195
CHF
25
(41)
(73)
195
63
(34)
(28)
180
Equity indices (percentage change)
S&P 500
20.0
15.3
(26.6)
(51.5)
51.7
28.1
(12.2)
(45.6)
EuroStoxx 50
20.0
12.0
(26.4)
(51.6)
46.6
22.9
(16.6)
(47.2)
SPI
15.0
4.6
(24.5)
(51.6)
39.2
15.9
(11.2)
(47.2)
Swiss real estate (percentage change)
Single-Family Homes
 
6.6
(1.5)
(4.4)
(18.5)
14.0
0.8
(3.0)
(28.6)
Other real estate (percentage change)
United States (S&P / Case–Shiller)
8.1
0.6
(8.6)
(20.0)
19.7
5.8
(5.2)
(30.2)
Eurozone (House Price Index)
7.0
0.6
(5.9)
(8.4)
15.4
6.4
(5.2)
(12.9)
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
317
Note 20
 
Expected credit loss measurement (continued)
 
c) Development of ECL allowances and provisions
 
The ECL allowances and provisions recognized
 
in the period are impacted by a variety
 
of factors, such as:
–
the effect of selecting and updating forward-looking scenarios
 
and the respective weights;
–
origination of new instruments during the period;
 
–
the effect of
 
passage of
 
time (lower residual
 
lifetime PD and
 
the effect of
 
discount unwind) as
 
the ECL on
 
an instrument
for the remaining lifetime decreases (all other factors remaining
 
the same);
–
derecognition of instruments in the period;
–
change in individual asset quality of instruments;
–
movements
 
from
 
a
 
maximum
 
12-month
 
ECL to
 
the
 
recognition
 
of lifetime
 
ECL (and
 
vice versa)
 
following transfers
between stages 1 and 2;
 
–
movements from stages 1 and 2 to stage 3 (credit-impaired status)
 
when default has become certain and PD increases
to 100% (or vice versa);
–
changes in models or updates to model parameters;
–
write-off; and
–
foreign exchange translations for assets denominated in
 
foreign currencies.
The
 
table
 
below
 
explains
 
the
 
changes
 
in
 
the
 
ECL
 
allowances
 
and
 
provisions
 
for
 
on-
 
and
 
off-balance
 
sheet
 
financial
instruments and credit lines within the scope of ECL requirements between the beginning and the end of
 
the period due
to the factors listed above.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Development of ECL allowances and
 
provisions
USD m
Total
Stage 1
Stage 2
Stage 3
PCI
Balance as of 31 December 2023
(2,261)
(700)
(416)
(993)
(153)
Net movement from new and derecognized transactions
1
37
30
(21)
29
0
of which: Private clients with mortgages
2
(6)
8
0
0
of which: Real estate financing
8
5
3
0
0
of which: Large corporate clients
(12)
(6)
(34)
28
0
of which: SME clients
10
4
5
0
0
of which: Other
30
33
(3)
0
1
 
of which: Loans to financial advisors
(2)
(2)
0
0
0
Remeasurements with stage transfers
2
(509)
32
(53)
(488)
0
of which: Private clients with mortgages
(6)
0
(7)
0
0
of which: Real estate financing
(8)
2
(4)
(5)
0
of which: Large corporate clients
(100)
21
(20)
(101)
0
of which: SME clients
(295)
3
(11)
(287)
0
of which: Other
(100)
6
(10)
(96)
1
Remeasurements without stage transfers
3
(30)
127
36
(153)
(40)
of which: Private clients with mortgages
27
18
18
(7)
(2)
of which: Real estate financing
44
16
5
6
17
of which: Large corporate clients
29
55
31
(25)
(32)
of which: SME clients
(90)
5
2
(97)
0
of which: Other
(40)
32
(19)
(29)
(23)
 
of which: Sovereign
(9)
12
(21)
0
0
Model changes
4
(49)
(14)
(35)
0
0
Movements with profit or loss impact
5
(551)
175
(74)
(612)
(39)
Movements without profit or loss impact (write-off, FX and other)
6
305
37
31
353
(116)
Balance as of 31 December 2024
(2,507)
(487)
(459)
(1,253)
(309)
1 Represents the
 
increase and decrease
 
in allowances and
 
provisions resulting from
 
financial instruments (including
 
guarantees
 
and facilities) that
 
were newly originated,
 
purchased or renewed
 
and from the
 
final
derecognition of loans
 
or facilities on
 
their maturity
 
date or earlier.
 
2 Represents the
 
remeasurement between 12-month
 
and lifetime ECL
 
due to stage
 
transfers.
 
3 Represents the
 
change in allowances
 
and
provisions related to changes in model inputs or assumptions, including changes in forward-looking macroeconomic conditions, changes in the exposure
 
profile, PD and LGD changes, and unwinding of the time value.
 
4 Represents the change in the allowances and provisions related to changes in
 
models and methodologies.
 
5 Includes ECL movements from new and derecognized transactions, remeasurement changes, and model
and methodology changes.
 
6 Represents the decrease in allowances and
 
provisions resulting from write-offs of the ECL allowance
 
against the gross carrying amount when all or
 
part of a financial asset is deemed
uncollectible or forgiven and movements in foreign exchange rates.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
318
Note 20
 
Expected credit loss measurement (continued)
Movements
 
with
 
profit
 
or
 
loss
 
impact
:
Stage 1
 
and
 
2
 
ECL
 
allowances
 
and
 
provisions
 
decreased
 
on
 
a
 
net
 
basis
 
by
USD
169
m.
– Net movement
 
from new
 
and derecognized transactions
 
includes stage 1 releases
 
of USD
30
m and stage 2
 
expenses
of USD
21
m. Stage 1
 
releases are mainly
 
driven by releases
 
on other smaller
 
segments, mainly due
 
to repayments. Stage 2
expenses are predominantly driven by expenses
 
on the corporate lending portfolios.
– Remeasurements with
 
stage transfers
 
include USD
53
m expenses
 
in stage 2, following
 
corporate and real
 
estate lending
credit reviews and transfers
 
to stage 2.
– Model changes:
refer to Note 20b for more information.
Movements without
 
profit or
 
loss impact
:
Stage 1 and
 
2 allowances
 
decreased
 
by USD
68
m, almost
 
entirely driven
 
by
foreign exchange effects.
Stage 3
 
and PCI
 
allowances
 
decreased
 
by
 
USD
237
m,
 
driven
 
by
 
net
 
write-offs
 
of
 
USD
348
m,
 
partly
 
offset
 
by
 
foreign
exchange and other movements of USD
111
m.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Development of ECL allowances and
 
provisions
USD m
Total
Stage 1
Stage 2
Stage 3
PCI
Balance as of 31 December 2022
(1,091)
(259)
(267)
(564)
0
Acquisition of Credit Suisse AG portfolios
(541)
(541)
0
0
0
Net movement from new and derecognized transactions
1
14
(2)
9
7
0
of which: Private clients with mortgages
(4)
(7)
3
0
0
of which: Real estate financing
1
(2)
3
0
0
of which: Large corporate clients
18
8
3
7
0
of which: SME clients
(2)
(2)
0
0
0
of which: Other
1
1
0
0
0
 
of which: Financial intermediaries and hedge funds
(1)
(1)
0
0
0
 
of which: Loans to financial advisors
0
0
0
0
0
Remeasurements with stage transfers
2
(507)
42
(149)
(400)
0
of which: Private clients with mortgages
(12)
2
(3)
(12)
0
of which: Real estate financing
(35)
8
(27)
(16)
0
of which: Large corporate clients
(223)
17
(21)
(220)
0
of which: SME clients
(167)
6
(59)
(115)
0
of which: Other
(69)
8
(39)
(38)
0
 
of which: Financial intermediaries and hedge funds
1
0
0
0
0
of which: Loans to financial advisors
1
2
(1)
0
0
Remeasurements without stage transfers
3
17
58
12
14
(67)
of which: Private clients with mortgages
3
1
16
(3)
(11)
of which: Real estate financing
(1)
5
3
(1)
(9)
of which: Large corporate clients
(42)
(18)
(1)
(8)
(16)
of which: SME clients
65
31
1
44
(11)
of which: Other
(7)
39
(8)
(18)
(20)
 
of which: Sovereign
(37)
0
(15)
0
(22)
 
of which: Loans to financial advisors
(7)
1
0
(8)
0
Model changes
4
(22)
(14)
(8)
0
0
Movements with profit or loss impact
5
(1,037)
(457)
(136)
(378)
(67)
Movements without profit or loss impact (write-off, FX and other)
6
(132)
17
(13)
(50)
(86)
Balance as of 31 December 2023
(2,261)
(700)
(416)
(993)
(153)
1 Represents the
 
increase and decrease
 
in allowances and
 
provisions resulting from
 
financial instruments (including
 
guarantees and facilities)
 
that were newly
 
originated, purchased or
 
renewed and from
 
the final
derecognition of loans
 
or facilities on
 
their maturity
 
date or earlier.
 
2 Represents the
 
remeasurement between 12-month
 
and lifetime ECL
 
due to stage
 
transfers.
 
3 Represents the
 
change in allowances
 
and
provisions related to changes in model inputs or assumptions, including changes in forward-looking macroeconomic conditions, changes in the exposure
 
profile, PD and LGD changes, and unwinding of the time value.
 
4 Represents the change in the allowances and provisions related to changes in
 
models and methodologies.
 
5 Includes ECL movements from new and derecognized transactions, remeasurement changes, and model
and methodology changes.
 
6 Represents the decrease in allowances and
 
provisions resulting from write-offs of the ECL allowance
 
against the gross carrying amount when all or
 
part of a financial asset is deemed
uncollectible or forgiven and movements in foreign exchange rates.
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
319
Note 20
 
Expected credit loss measurement (continued)
As explained in Note 1a, the assessment of a significant increase in credit risk (an
 
SICR) considers a number of qualitative
and quantitative
 
factors to
 
determine whether
 
a stage
 
transfer between
 
stage 1 and
 
stage 2 is
 
required,
 
although the
primary assessment considers changes
 
in PD based on
 
rating analyses and economic
 
outlook. Additionally, UBS takes into
consideration counterparties
 
that have
 
moved to
 
a credit
 
watch list
 
and those
 
with payments
 
that are
 
at least
 
30 days
past due.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ECL stage 2 (“significant deterioration
 
in credit risk”) allowances / provisions as of 31 December
 
2024 – classification by trigger
USD m
Total
of which:
PD layer
of which:
watch list
of which:
≥30 days
 
past due
Private clients with mortgages
(71)
(47)
(1)
(22)
Real estate financing
(29)
(18)
(2)
(9)
Large corporate clients
(194)
(96)
(95)
(4)
SME clients
(76)
(41)
(20)
(14)
Ship / aircraft financing
(17)
(16)
(1)
(1)
Financial intermediaries and hedge funds
(2)
(1)
0
(1)
Loans to financial advisors
(1)
0
0
(1)
Credit cards
(12)
0
0
(12)
Consumer financing
(19)
(12)
0
(7)
Commodity trade finance
(1)
0
0
0
Other
(37)
(25)
(10)
(1)
On- and off-balance sheet
 
(459)
(256)
(131)
(72)
 
d) Maximum exposure to credit risk
The
 
tables
 
below
 
provide
 
the
 
Group’s
 
maximum
 
exposure
 
to
 
credit
 
risk
 
for
 
financial
 
instruments
 
subject
 
to
 
ECL
requirements
 
and
 
the
 
respective
 
collateral
 
and
 
other
 
credit
 
enhancements
 
mitigating
 
credit
 
risk
 
for
 
these
 
classes
 
of
financial instruments.
 
The maximum exposure
 
to credit risk
 
includes the carrying
 
amounts of financial
 
instruments recognized on
 
the balance
sheet subject to credit risk
 
and the notional amounts for off-balance sheet
 
arrangements. Where information is available,
collateral is presented at fair
 
value. For other collateral, such as
 
real estate, a reasonable alternative
 
value is used. Credit
enhancements,
 
such
 
as
 
credit
 
derivative
 
contracts
 
and
 
guarantees,
 
are
 
included
 
at
 
their
 
notional
 
amounts.
 
Both
 
are
capped at
 
the maximum
 
exposure to
 
credit risk
 
for which
 
they serve
 
as security.
 
The “Risk
 
management
 
and control”
section of this
 
report describes
 
management’s view
 
of credit
 
risk and the
 
related exposures,
 
which can differ
 
in certain
respects from the requirements of IFRS Accounting Standards.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
320
Note 20
 
Expected credit loss measurement (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum exposure to credit risk
 
31.12.24
Collateral
1,2
Credit enhancements
1
Exposure to
credit risk
after collateral
and credit
enhancements
USD bn
Maximum
exposure to
credit risk
Cash
collateral
received
Collateralized
by equity
 
and debt
instruments
 
Secured by
real estate
Other
collateral
3
Netting
Credit
derivative
contracts
Guarantees
and sub-
participations
Financial assets measured at
 
amortized cost on the balance sheet
Cash and balances at central banks
223.3
223.3
Amounts due from banks
4
18.9
0.0
0.2
0.1
0.2
18.4
Receivables from securities financing transactions
measured at amortized cost
118.3
0.0
113.2
4.1
1.0
Cash collateral receivables on derivative instruments
5,6
44.0
28.3
15.7
Loans and advances to customers
580.0
30.8
130.1
337.5
40.9
0.0
9.3
31.4
Other financial assets measured at amortized cost
58.8
0.2
0.7
0.0
5.3
52.7
Total financial assets measured at amortized cost
1,043.3
31.0
244.1
337.5
50.3
28.3
0.0
9.5
342.6
Financial assets measured at fair value
 
through other comprehensive income – debt
2.2
2.2
Total maximum exposure to credit risk
 
reflected on the balance sheet within the scope of ECL
1,045.5
31.0
244.1
337.5
50.3
28.3
0.0
9.5
344.7
Guarantees
7
40.2
1.9
19.6
0.4
2.3
0.0
3.9
12.3
Irrevocable loan commitments
79.4
0.2
3.8
1.6
22.7
0.0
4.2
46.8
Forward starting reverse repurchase and securities
borrowing agreements
24.9
24.9
0.0
Committed unconditionally revocable credit lines
145.6
19.4
61.6
12.9
1.5
3.1
47.1
Total maximum exposure to credit risk not
 
reflected on the balance sheet within the scope of ECL
290.1
21.4
109.9
14.9
26.4
0.0
0.0
11.2
106.2
31.12.23
8
Collateral
1,2
Credit enhancements
1
Exposure to
credit risk
after collateral
and credit
enhancements
USD bn
Maximum
exposure to
credit risk
Cash
collateral
received
Collateralized
by equity
 
and debt
instruments
 
Secured by
real estate
Other
collateral
3
Netting
Credit
derivative
contracts
Guarantees
and sub-
participations
Financial assets measured at
 
amortized cost on the balance sheet
Cash and balances at central banks
314.1
314.1
Amounts due from banks
4
21.1
0.0
0.2
0.2
0.3
20.5
Receivables from securities financing transactions
measured at amortized cost
99.0
0.0
95.6
2.8
0.7
Cash collateral receivables on derivative instruments
5,6
50.1
32.9
17.2
Loans and advances to customers
639.7
40.2
131.9
372.9
38.9
0.0
11.9
43.9
Other financial assets measured at amortized cost
65.5
0.1
0.8
0.1
5.7
58.8
Total financial assets measured at amortized cost
1,189.5
40.4
228.5
373.0
47.5
32.9
0.0
12.1
455.1
Financial assets measured at fair value
 
through other comprehensive income – debt
2.2
2.2
Total maximum exposure to credit risk
 
reflected on the balance sheet within the scope of ECL
1,191.7
40.4
228.5
373.0
47.5
32.9
0.0
12.1
457.3
Guarantees
7
46.1
2.9
21.4
0.3
3.4
0.1
4.6
13.3
Irrevocable loan commitments
91.5
0.5
3.2
2.2
17.1
0.4
5.9
62.3
Forward starting reverse repurchase and securities
borrowing agreements
18.4
18.4
0.0
Committed unconditionally revocable credit lines
163.2
20.3
58.5
17.6
6.2
4.4
56.2
Total maximum exposure to credit risk not
 
reflected on the balance sheet within the scope of ECL
319.2
23.7
101.6
20.1
26.6
0.0
0.5
14.8
131.8
1 Of which: USD
3,742
m for 31 December 2024
 
(31 December 2023: USD
3,824
m) relates to total credit-impaired
 
financial assets measured at amortized
 
cost and USD
356
m for 31 December 2024
 
(31 December
2023: USD
237
m) to total off-balance sheet financial instruments and
 
credit lines for credit-impaired positions.
 
2 Collateral arrangements generally incorporate
 
a range of collateral, including cash, equity
 
and debt
instruments, real estate and other
 
collateral. For the purpose
 
of this disclosure, UBS applies
 
a risk-based approach that generally
 
prioritizes collateral according to its
 
liquidity profile. In the case
 
of loan facilities with
funded and unfunded
 
elements, the
 
collateral is
 
first allocated
 
to the
 
funded element.
 
For legacy
 
Credit Suisse
 
a risk-based
 
approach is
 
applied that
 
generally prioritizes
 
real estate
 
collateral and
 
prioritizes other
collateral according to its liquidity profile. In the
 
case of loan facilities with funded and unfunded elements,
 
the collateral is proportionally allocated.
 
3 Includes but is not limited to life insurance contracts,
 
rights in
respect of subscription
 
or capital commitments
 
from fund partners,
 
lien claims on
 
assets of borrowers,
 
leasing items, mortgage
 
loans, inventory,
 
gold and other
 
commodities.
 
4 Amounts due from
 
banks include
amounts held with
 
third-party banks on
 
behalf of clients.
 
The credit risk
 
associated with these
 
balances may be
 
borne by those
 
clients.
 
5 Included within Cash
 
collateral receivables on
 
derivative instruments
 
are
margin balances due from exchanges or clearing houses.
 
Some of these margin balances reflect amounts transferred
 
on behalf of clients who retain the associated credit risk.
 
6 The amount shown in the “Netting”
column represents the netting potential not recognized on the balance sheet. Refer to Note 22
 
for more information.
 
7 Guarantees collateralized by equity and debt instruments include certain
 
overnight repurchase
and reverse repurchase transactions where UBS acts as a sponsoring
 
member for eligible clients when clearing through the Fixed Income
 
Clearing Corporation (the FICC). As part of this arrangement,
 
UBS guarantees
the FICC for prompt and full payment and performance of the clients‘ respective obligations under the FICC rules. The
 
Group minimizes its liability under these guarantees by obtaining a security interest in the cash or
high-quality securities collateral
 
that the clients
 
place with the
 
clearing house; therefore,
 
the risk of
 
loss is expected
 
to be remote.
 
8 Comparative-period
 
information has been
 
revised. Refer to
 
Note 2 for
 
more
information.
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
321
Note 20
 
Expected credit loss measurement (continued)
 
e) Financial assets subject to credit risk by rating category
The table below shows
 
the credit quality
 
and the maximum
 
exposure to credit
 
risk based on the
 
Group’s internal credit
rating system and year-end stage classification. Under IFRS 9, the credit risk rating
 
reflects the Group’s assessment of the
probability of default of individual counterparties,
 
prior to substitutions. The amounts presented are gross of impairment
allowances.
›
Refer to the “Risk management and control” section of this
 
report for more details about the Group’s internal grading system
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial assets subject to credit risk by rating
 
category
USD m
31.12.24
Rating category
1
0–1
2–3
4–5
6–8
9–13
Credit-
impaired
(defaulted)
Total gross
carrying
amount
ECL
allowances
Net carrying
amount
(maximum
exposure to
credit risk)
Financial assets measured at amortized cost
Cash and balances at central banks
222,735
442
24
0
174
0
223,375
(47)
223,329
of which: stage 1
222,735
442
24
0
0
0
223,201
0
223,201
of which: stage 2
0
0
0
0
35
0
35
(21)
13
of which: PCI
0
0
0
0
140
0
140
(25)
114
Amounts due from banks
156
15,238
2,409
809
326
0
18,938
(36)
18,903
of which: stage 1
156
15,206
2,331
791
221
0
18,705
(1)
18,704
of which: stage 2
0
32
78
18
75
0
203
(5)
198
of which: PCI
0
0
0
0
30
0
30
(30)
0
Receivables from securities financing transactions
 
67,467
17,033
6,361
26,097
1,345
0
118,303
(2)
118,301
of which: stage 1
67,467
17,033
6,361
26,097
1,345
0
118,303
(2)
118,301
Cash collateral receivables on derivative instruments
10,166
19,998
7,794
5,893
109
0
43,959
0
43,959
of which: stage 1
10,166
19,998
7,794
5,893
109
0
43,959
0
43,959
Loans and advances to customers
1,868
261,017
169,139
106,577
37,652
5,692
581,944
(1,978)
579,967
of which: stage 1
1,868
259,251
165,762
98,176
28,752
0
553,808
(276)
553,532
of which: stage 2
0
1,754
3,373
8,375
8,870
0
22,373
(323)
22,049
of which: stage 3
0
0
0
0
0
4,699
4,699
(1,134)
3,565
of which: PCI
0
11
5
25
30
992
1,064
(244)
820
Other financial assets measured at amortized cost
26,078
21,060
2,920
6,958
1,661
282
58,959
(125)
58,835
of which: stage 1
26,078
21,030
2,893
6,820
1,413
0
58,233
(25)
58,209
of which: stage 2
0
30
27
139
247
0
444
(7)
436
of which: stage 3
0
0
0
0
0
262
262
(84)
178
of which: PCI
0
0
0
0
0
20
20
(8)
12
Total financial assets measured at amortized cost
328,469
334,788
188,646
146,334
41,267
5,974
1,045,479
(2,187)
1,043,293
On-balance sheet financial instruments
Financial assets measured at FVOCI – debt instruments
1,393
702
0
101
0
0
2,195
0
2,195
Total on-balance sheet financial instruments
329,862
335,490
188,646
146,435
41,267
5,974
1,047,675
(2,187)
1,045,488
1 Refer to the “Internal UBS rating scale and mapping of external ratings” table in the “Risk management and
 
control” section of this report for more information about rating categories.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Off-balance sheet positions subject to expected
 
credit loss by rating category
USD m
31.12.24
Rating category
1
0–1
2–3
4–5
6–8
9–13
Credit-
impaired
(defaulted)
Total carrying
amount
 
(maximum
exposure to
credit risk)
ECL provision
Off-balance sheet financial instruments
Guarantees
 
17,395
7,282
8,403
5,196
1,829
174
40,279
(64)
of which: stage 1
17,395
7,247
8,362
4,484
1,371
0
38,858
(16)
of which: stage 2
0
35
41
708
459
0
1,242
(24)
of which: stage 3
0
0
0
0
0
151
151
(24)
of which: PCI
0
0
0
4
0
23
27
0
Irrevocable loan commitments
1,119
23,843
22,361
14,249
17,807
200
79,579
(177)
of which: stage 1
1,119
23,650
21,974
13,742
14,673
0
75,158
(105)
of which: stage 2
0
193
387
507
3,091
0
4,178
(61)
of which: stage 3
0
0
0
0
0
187
187
(10)
of which: PCI
0
0
0
0
43
13
56
(2)
Forward starting reverse repurchase and securities borrowing agreements
0
0
0
24,896
0
0
24,896
0
Total off-balance sheet financial instruments
18,515
31,125
30,763
44,340
19,636
374
144,754
(241)
Credit lines
Committed unconditionally revocable credit lines
2,180
100,663
22,875
13,258
6,434
255
145,665
(76)
of which: stage 1
2,180
100,106
22,414
12,690
5,872
0
143,262
(59)
of which: stage 2
0
557
461
568
562
0
2,149
(17)
of which: stage 3
0
0
0
0
0
250
250
0
of which: PCI
 
0
 
0
 
0
 
0
 
0
 
5
 
5
 
0
Irrevocable committed prolongation of existing loans
6
1,997
946
739
918
2
4,608
(3)
of which: stage 1
6
1,997
946
739
914
0
4,602
(3)
of which: stage 2
0
0
0
1
3
0
4
0
of which: stage 3
0
0
0
0
0
2
2
0
Total credit lines
2,186
102,661
23,821
13,997
7,351
257
150,273
(79)
1 Refer to the “Internal UBS rating scale and mapping of external ratings” table in the “Risk management and
 
control” section of this report for more information about rating categories.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
322
Note 20
 
Expected credit loss measurement (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial assets subject to credit risk by rating
 
category
USD m
31.12.23
Rating category
1,2
0–1
2–3
4–5
6–8
9–13
Credit-
impaired
(defaulted)
Total gross
carrying
amount
ECL
allowances
Net carrying
amount
(maximum
exposure to
credit risk)
Financial assets measured at amortized cost
Cash and balances at central banks
251,462
61,936
627
0
43
40
314,108
(48)
314,060
of which: stage 1
251,462
61,936
627
0
0
0
314,025
0
314,025
of which: stage 2
0
0
0
0
43
0
43
(26)
18
of which: PCI
0
0
0
0
0
40
40
(22)
17
Amounts due from banks
1,081
15,438
2,215
1,589
792
43
21,159
(12)
21,146
of which: stage 1
1,081
15,438
2,210
1,589
780
0
21,098
(6)
21,091
of which: stage 2
0
0
5
0
12
0
18
(1)
17
of which: PCI
0
0
0
0
0
43
43
(5)
38
Receivables from securities financing transactions
 
45,838
30,171
6,397
15,544
1,091
0
99,041
(2)
99,039
of which: stage 1
45,838
30,171
6,397
15,544
1,091
0
99,041
(2)
99,039
Cash collateral receivables on derivative instruments
8,009
30,334
6,425
5,117
198
0
50,082
0
50,082
of which: stage 1
8,009
30,334
6,425
5,117
198
0
50,082
0
50,082
Loans and advances to customers
6,428
288,117
180,792
119,191
41,557
5,282
641,367
(1,698)
639,669
of which: stage 1
6,428
286,683
177,962
109,996
30,276
0
611,346
(423)
610,922
of which: stage 2
0
1,428
2,829
9,171
11,269
0
24,697
(289)
24,408
of which: stage 3
0
0
0
0
0
3,731
3,731
(862)
2,869
of which: PCI
0
6
0
24
12
1,551
1,593
(123)
1,470
Other financial assets measured at amortized cost
25,755
25,875
2,875
9,619
1,163
318
65,605
(151)
65,455
of which: stage 1
25,755
25,788
2,854
9,070
841
1
64,309
(41)
64,268
of which: stage 2
0
87
21
548
321
0
978
(10)
968
of which: stage 3
0
0
0
0
0
253
253
(94)
158
of which: PCI
0
0
0
0
1
64
66
(5)
61
Total financial assets measured at amortized cost
338,572
451,871
199,331
151,060
44,844
5,683
1,191,361
(1,911)
1,189,451
On-balance sheet financial instruments
Financial assets measured at FVOCI – debt instruments
1,222
850
0
161
0
0
2,233
0
2,233
Total on-balance sheet financial instruments
339,794
452,721
199,331
151,221
44,844
5,683
1,193,594
(1,911)
1,191,684
1 Refer to
 
the “Internal UBS
 
rating scale
 
and mapping of
 
external ratings” table
 
in the “Risk
 
management and
 
control” section
 
of this report
 
for more information
 
on rating categories.
 
2 Comparative-period
information has been revised. Refer to Note 2 for more information.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Off-balance sheet positions subject to expected
 
credit loss by rating category
USD m
31.12.23
Rating category
1,2
0–1
2–3
4–5
6–8
9–13
Credit-
impaired
(defaulted)
Total carrying
amount
 
(maximum
exposure to
credit risk)
ECL provision
Off-balance sheet financial instruments
Guarantees
 
17,805
10,961
9,421
5,916
1,882
207
46,191
(73)
of which: stage 1
17,805
10,922
9,310
5,054
1,398
0
44,487
(28)
of which: stage 2
0
39
111
861
484
0
1,495
(22)
of which: stage 3
0
0
0
0
0
151
151
(23)
of which: PCI
0
0
0
1
1
56
58
0
Irrevocable loan commitments
1,722
31,936
24,050
19,661
14,006
266
91,643
(178)
of which: stage 1
1,722
31,936
23,989
19,079
10,354
0
87,080
(117)
of which: stage 2
0
0
62
583
3,652
0
4,297
(51)
of which: stage 3
0
0
0
0
0
218
218
(14)
of which: PCI
0
0
0
0
0
48
48
4
Forward starting reverse repurchase and securities borrowing agreements
10,152
2
84
8,206
0
0
18,444
0
Total off-balance sheet financial instruments
29,679
42,899
33,554
33,783
15,888
473
156,278
(251)
Credit lines
Committed unconditionally revocable credit lines
2,659
108,395
28,669
17,739
5,648
146
163,256
(95)
of which: stage 1
2,659
107,992
28,188
16,921
4,696
0
160,456
(78)
of which: stage 2
0
403
481
818
952
0
2,654
(17)
of which: stage 3
0
0
0
0
0
146
146
0
Irrevocable committed prolongation of existing loans
4
1,803
1,045
1,251
501
4
4,608
(4)
of which: stage 1
4
1,803
1,045
1,249
493
0
4,593
(4)
of which: stage 2
0
0
0
2
9
0
11
0
of which: stage 3
0
0
0
0
0
4
4
0
Total credit lines
2,663
110,197
29,714
18,990
6,149
150
167,864
(99)
1 Refer to
 
the “Internal UBS
 
rating scale
 
and mapping of
 
external ratings” table
 
in the “Risk
 
management and
 
control” section
 
of this report
 
for more information
 
on rating categories.
 
2 Comparative-period
information has been revised. Refer to Note 2 for more information.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
323
Note 20
 
Expected credit loss measurement (continued)
 
f) Sensitivity information
As outlined in Note 1a, ECL estimates involve significant uncertainties
 
at the time they are made.
ECL models
The models applied to determine point-in-time PD and LGD rely on market and statistical data, which has been found
to
 
correlate
 
well
 
with
 
historically
 
observed
 
defaults
 
in sufficiently
 
homogeneous
 
segments.
 
The risk
 
sensitivities
 
for
each of the ECL reporting segments to such factors are summarized
 
in Note 10.
Sustainability and climate risk
Sustainability
 
and
 
climate
 
risk
 
may
 
negatively
 
affect
 
clients
 
or
 
portfolios
 
due
 
to
 
direct
 
or
 
indirect
 
transition
 
costs,
 
or
exposure to chronic and acute physical risks in locations likely to be impacted by climate change. Such effects could lead
to a deterioration in credit worthiness, which in turn would
 
have an impact on ECLs.
 
While
 
some
 
macroeconomic
 
indicators
 
used
 
in
 
the
 
current
 
PD
 
models
 
could
 
be
 
influenced
 
by
 
climate
 
change,
 
UBS
currently does not use a specific sustainability and climate risk scenario in addition to the typically four general economic
scenarios
 
applied
 
to
 
derive
 
the
 
weighted-average
 
ECL.
 
The
 
rationale
 
for
 
the
 
approach
 
at
 
this
 
point
 
in
 
time
 
is
 
the
significance of model risks and challenges in calibration
 
and probability weight assessments
 
given the paucity of data.
 
Instead, UBS focuses on the process of vetting clients and business transactions, where
 
both physical and transition risks
for
 
selected
 
sensitive
 
portfolios
 
use
 
internally
 
developed,
 
counterparty
 
level,
 
climate
 
assessment
 
models.
 
This
 
review
process may lead
 
to a downward
 
revision of the
 
counterparty’s credit
 
rating, or the
 
adoption of risk
 
mitigating actions,
impacting the individual contribution to ECLs.
At the
 
portfolio
 
level,
 
UBS
 
has started
 
to
 
use
 
stress
 
loss assumptions
 
to assess
 
the
 
extent
 
to which
 
sustainability
 
and
climate
 
risk
 
may
 
affect
 
the
 
quality
 
of
 
the
 
loans
 
extended
 
to
 
small
 
and
 
medium-sized
 
entities
 
(SMEs),
 
large
 
corporate
clients and financial institutions.
The tests used were based on a set of
 
assumptions and methodologies from a mainstream leading climate model vendor
and complemented by
 
the Network for Greening
 
the Financial System (the
 
NGFS) (2023) climate pathway
 
scenarios. Such
analysis undertaken during 2024 as
 
part of a regulatory
 
climate scenario analysis exercise mandated
 
by FINMA concluded
that the
 
counterparties are
 
not expected
 
to be
 
significantly impacted
 
by physical or
 
transition risks,
 
mainly as
 
there are
no material
 
risk
 
concentrations
 
in
 
high-risk
 
sectors.
 
The
 
analysis
 
of the
 
corporate
 
loan
 
book has
 
also
 
shown
 
that
 
any
potential significant impacts from transition
 
costs or physical risks would materialize
 
over a time horizon that exceeds
 
in
most cases the contractual
 
lifetime of the underlying
 
assets. The analysis
 
and its results are
 
also subject to challenges
 
in
model assumptions, calibration and heightened model
 
uncertainty,
 
as are other climate models in the novel discipline
 
of
climate
 
risk
 
modeling.
 
Based
 
on
 
current
 
internal
 
modeling
 
exercises,
 
this
 
conclusion
 
holds
 
for
 
the
 
portfolio
 
of
 
private
clients with mortgages and the portfolio of real estate
 
financing.
As a result of the aforementioned factors, it was assessed that the magnitude of any impact of sustainability and climate
risk on
 
the weighted
 
-average
 
ECL would
 
not be
 
material
 
as of
 
31 December
 
2024. Therefore,
 
no specific
 
post-model
adjustment was made in this regard.
›
Refer to “Sustainability and climate risk” in
 
the “Risk management and control” section of this
 
report
 
›
Refer to “Our focus on sustainability”
 
in the “Our strategy, business model and environment” section of this report
›
Refer to the “UBS Group AG consolidated supplemental
 
disclosures required under SEC regulations” section of this report for
more information about the maturity profile of UBS’s core loan book
 
Forward-looking scenarios
Depending on
 
the scenario
 
selection and
 
related
 
macroeconomic
 
assumptions for
 
the risk
 
factors, the
 
components of
the
 
relevant
 
weighted-average
 
ECL
 
change.
 
This
 
is
 
particularly
 
relevant
 
for
 
interest
 
rates,
 
which
 
can
 
move
 
in
 
both
directions under
 
a given
 
growth
 
assumption, e.g.
 
low growth
 
with high
 
interest
 
rates in
 
a stagflation
 
scenario, versus
low growth and falling
 
interest rates
 
in a recession. Management
 
generally looks for scenario
 
narratives that reflect
 
the
key risk drivers of a given credit portfolio.
As forecasting
 
models are complex,
 
due to
 
the combination of
 
multiple factors, simple
 
what-if analyses involving
 
a change
of individual parameters
 
do not necessarily provide
 
realistic information on
 
the exposure of
 
segments to changes
 
in the
macroeconomy.
 
Portfolio-specific
 
analyses
 
based
 
on
 
their
 
key
 
risk
 
factors
 
would
 
also
 
not
 
be
 
meaningful,
 
as
 
potential
compensatory effects in other
 
segments would be ignored. The table
 
below indicates some sensitivities to ECLs,
 
if a key
macroeconomic
 
variable
 
for
 
the
 
forecasting
 
period
 
is
 
amended
 
across
 
all
 
scenarios
 
with
 
all
 
other
 
factors
 
remaining
unchanged.
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
324
Note 20
 
Expected credit loss measurement (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Potential effect on stage 1 and stage 2 positions
 
from changing key parameters as of 31 December
 
2024
USD m
100% Baseline
100% Mild debt
crisis
100%
Stagflationary
geopolitical crisis
 
Weighted average
 
Change in key parameters
Fixed income: Government bonds (absolute change)
–0.50%
(5)
(6)
(124)
(15)
+0.50%
6
11
139
20
+1.00%
12
24
302
43
Unemployment rate (absolute change)
–1.00%
(6)
(10)
(117)
(18)
–0.50%
(3)
(5)
(63)
(9)
+0.50%
3
6
72
11
+1.00%
7
12
154
22
Real GDP growth (relative change)
–2.00%
55
85
86
67
–1.00%
25
40
47
32
+1.00%
(24)
(44)
(49)
(27)
+2.00%
(48)
(80)
(83)
(55)
House Price Index (relative change)
–5.00%
9
26
241
37
–2.50%
4
12
111
18
+2.50%
(6)
(14)
(102)
(20)
+5.00%
(9)
(23)
(188)
(33)
Equity (S&P500, EuroStoxx, SMI) (relative change)
–10.00%
9
13
18
12
–5.00%
2
5
7
4
+5.00%
(7)
(8)
(13)
(8)
+10.00%
(10)
(13)
(22)
(12)
Sensitivities
 
can
 
be
 
more
 
meaningfully
 
assessed
 
in
 
the
 
context
 
of
 
coherent
 
scenarios
 
with
 
consistently
 
developed
macroeconomic
 
factors.
 
The
 
table
 
above
 
outlines
 
favorable
 
and
 
unfavorable
 
effects,
 
based
 
on
 
reasonably
 
possible
alternative changes
 
to the
 
economic conditions for
 
stage 1 and
 
stage 2 positions.
 
The ECL
 
impact is
 
calculated for
 
material
portfolios and disclosed for each scenario.
 
Changes to these timelines may have an effect on ECLs:
 
depending on the cycle, a longer or shorter forecasting
 
horizon
will lead to different annualized lifetime PD and average LGD estimations. This is currently not deemed to be
 
material for
UBS, as a large
 
proportion of loans,
 
including mortgages in
 
Switzerland, have maturities
 
that are within the
 
forecasting
horizon.
Scenario weights and stage allocation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Potential effect on stage 1 and stage 2 positions
 
from changing scenario weights or moving
 
to an ECL lifetime calculation as of 31 December
 
2024
Actual ECL allowances and
provisions, including
staging (as per Note 10)
 
Pro forma ECL allowances and provisions, including staging
 
and assuming application of 100% scenario weighting
 
Pro forma ECL allowances
and provisions, assuming all
positions being subject to
lifetime ECL
 
Scenarios
Weighted average
100% Baseline
100%
Stagflationary
geopolitical crisis
 
100% Mild debt
crisis
Weighted average
USD m, except where indicated
Segmentation
Private clients with mortgages
(118)
(43)
(718)
(68)
(408)
Real estate financing
(57)
(40)
(164)
(49)
(185)
Large corporate clients
(377)
(247)
(757)
(401)
(673)
SME clients
(180)
(151)
(259)
(223)
(327)
Ship financing
(24)
(27)
(42)
(28)
(78)
Consumer financing / credit cards
(58)
(63)
(72)
(65)
(168)
Other segments
(131)
(82)
(206)
(119)
(231)
Total
(946)
(654)
(2,217)
(952)
(2,071)
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
325
Note 20
 
Expected credit loss measurement (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Potential effect on stage 1 and stage 2 positions
 
from changing scenario weights or moving
 
to an ECL lifetime calculation as of 31 December
 
2023
Actual ECL allowances and
provisions, including
staging (as per Note 10)
 
Pro forma ECL allowances and provisions, including staging
 
and assuming application of 100% scenario weighting
 
Pro forma ECL allowances
and provisions, assuming all
positions being subject to
lifetime ECL
 
Scenarios
Weighted average
100% Baseline
100%
Stagflationary
geopolitical crisis
 
100% Mild debt
crisis
Weighted average
USD m, except where indicated
Segmentation
Private clients with mortgages
(161)
(66)
(816)
(81)
(409)
Real estate financing
(88)
(53)
(293)
(49)
(196)
Large corporate clients
(368)
(282)
(533)
(419)
(645)
SME clients
(188)
(158)
(274)
(226)
(296)
Ship financing
(48)
(46)
(50)
(49)
(125)
Consumer financing / credit cards
(74)
(71)
(81)
(75)
(186)
Other segments
(189)
(157)
(269)
(197)
(368)
Total
(1,115)
(832)
(2,317)
(1,095)
(2,225)
Scenario weights
ECL is sensitive to changing scenario weights, in particular if narratives and parameters are
 
selected that are not close to
the baseline scenario, highlighting the non-linearity of credit
 
losses.
As shown
 
in the
 
table
 
above,
 
the
 
ECLs for
 
stage 1
 
and stage
 
2 positions
 
would
 
have
 
been
 
USD
654
m (31
 
December
2023: USD
832
m) instead
 
of USD
946
m (31 December
 
2023: USD
1,115
m) if
 
ECLs had
 
been determined
 
solely on
 
the
baseline scenario
. The weighted-average ECL therefore amounted
 
to
143
% (31 December 2023:
134
%) of the baseline
value. The effects of weighting each of the four scenarios at
 
100% are shown in the table above.
Stage allocation and SICR
The determination of
 
what constitutes an
 
SICR is based
 
on management judgment,
 
as explained in
 
Note 1a. Changing
the SICR trigger will have a direct effect on ECLs, as more or
 
fewer positions would be subject to lifetime ECLs under any
scenario.
 
The
 
relevance
 
of the
 
SICR trigger
 
on overall
 
ECL is
 
demonstrated
 
in the
 
table
 
above
 
with the
 
indication that
 
the
 
ECL
allowances and provisions for stage 1 and stage
 
2 positions would have been USD
2,071
m, if all non-impaired positions
across the portfolio
 
had been measured for
 
lifetime ECLs irrespective
 
of their actual
 
SICR status. This amount
 
compares
with actual stage 1 and 2 allowances and provisions of USD
946
m as of 31 December 2024.
Maturity profile
The maturity
 
profile
 
is an
 
important driver
 
in ECLs,
 
in particular
 
for transactions
 
in stage
 
2. A
 
transfer of
 
a transaction
into
 
stage 2
 
may
 
therefore
 
have
 
a
 
significant
 
effect
 
on
 
ECLs.
 
The
 
current
 
maturity
 
profile
 
of
 
most
 
lending
 
books
 
is
relatively short.
 
Lending to
 
large corporate
 
clients is
 
generally between
 
one and
 
two years,
 
with related
 
loan commitments
 
up to
 
four
years. Real estate lending is generally between two and three years in Switzerland, with long-dated maturities in the US.
Lombard-lending
 
contracts
 
typically
 
have
 
average
 
contractual
 
maturities
 
of
 
12
 
months
 
or
 
less,
 
and
 
include
 
callable
features.
A significant
 
portion of
 
our lending
 
to SME
 
clients and
 
real estate
 
financing is
 
documented under
 
multi-purpose credit
agreements, which
 
allow for
 
various forms
 
of utilization
 
but are
 
unconditionally cancelable
 
by UBS
 
at any
 
time: (i) for
drawings under such agreements with a fixed
 
maturity, the respective term is applied for ECL
 
calculations, or a maximum
of 12 months in stage
 
1; (ii) for unused credit
 
lines and all drawings that
 
have no fixed maturity
 
(e.g. current accounts),
UBS generally applies a 12-month maturity from the reporting date, given the credit review policies, which require either
continuous monitoring of key indicators and behavioral patterns for smaller positions or an annual formal review for any
other limit. The ECLs for these products are sensitive
 
to shortening or extending the maturity assumption.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
326
 
Note 21
 
Fair value measurement
 
 
a) Valuation principles
All financial and non-financial
 
assets and liabilities
 
measured or disclosed
 
at fair value
 
are categorized into
 
one of three
fair
 
value
 
hierarchy
 
levels
 
in
 
accordance
 
with
 
IFRS
 
Accounting
 
Standards.
 
The
 
fair
 
value
 
hierarchy
 
is
 
based
 
on
 
the
transparency
 
of inputs
 
to the
 
valuation of
 
an asset
 
or liability
 
as of
 
the measurement
 
date. In
 
certain cases,
 
the inputs
used to measure fair value may fall within different
 
levels of the fair value hierarchy.
 
For disclosure purposes, the level in
the hierarchy within which an instrument is classified in its entirety is based on the lowest level input
 
that is significant to
the position’s fair value measurement:
–
Level 1 – quoted prices (unadjusted) in active markets
 
for identical assets and liabilities;
–
Level 2 – valuation techniques for which all significant inputs
 
are, or are based on, observable market data;
 
or
–
Level 3 – valuation techniques for which significant inputs
 
are not based on observable market data.
Fair values are determined using quoted
 
prices in active markets for
 
identical assets or liabilities, where available.
 
Where
the
 
market
 
for
 
a
 
financial
 
instrument
 
or
 
non-financial
 
asset
 
or
 
liability
 
is
 
not
 
active,
 
fair
 
value
 
is
 
established
 
using
 
a
valuation
 
technique,
 
including
 
pricing
 
models.
 
Valuation
 
adjustments
 
may
 
be
 
made
 
to
 
allow
 
for
 
additional
 
factors,
including model, liquidity, credit
 
and funding risks, which are
 
not explicitly captured within
 
the valuation technique, but
which would nevertheless
 
be considered by
 
market participants
 
when establishing a
 
price. The limitations
 
inherent in a
particular valuation technique
 
are considered in
 
the determination of
 
the classification of
 
an asset or
 
liability within the
fair value hierarchy. Generally, the unit of account for a financial instrument is the individual instrument, and UBS applies
valuation
 
adjustments
 
at
 
an
 
individual
 
instrument
 
level,
 
consistent
 
with
 
that
 
unit
 
of
 
account.
 
However,
 
if
 
certain
conditions
 
are
 
met,
 
UBS
 
may
 
estimate
 
the
 
fair
 
value
 
of
 
a
 
portfolio
 
of
 
financial
 
assets
 
and
 
liabilities
 
with
 
substantially
similar and offsetting risk exposures on the basis of the
 
net open risks.
›
Refer to Note 21d for more information
 
b) Valuation governance
UBS’s
 
fair
 
value
 
measurement
 
and
 
model
 
governance
 
framework
 
includes
 
numerous
 
controls
 
and
 
other
 
procedural
safeguards that
 
are intended
 
to maximize
 
the quality
 
of fair
 
value measurements
 
reported
 
in the
 
financial statements.
New products and
 
valuation techniques
 
must be reviewed
 
and approved
 
by key stakeholders
 
from the
 
risk and finance
control functions. Responsibility
 
for the ongoing measurement
 
of financial and non-financial
 
instruments at fair value
 
is
with the business divisions.
 
Fair
 
value
 
estimates
 
are
 
validated
 
by
 
the
 
risk
 
and
 
finance
 
control
 
functions,
 
which
 
are
 
independent
 
of
 
the
 
business
divisions. Independent price verification is performed by Finance through benchmarking the business divisions’ fair
 
value
estimates
 
with
 
observable
 
market
 
prices
 
and
 
other
 
independent
 
sources.
 
A
 
governance
 
framework
 
and
 
associated
controls are
 
in place
 
in order
 
to monitor
 
the quality
 
of third-party
 
pricing sources
 
where
 
used. For
 
instruments
 
where
valuation models are used to
 
determine fair value, independent
 
valuation and model control
 
groups within Finance and
Risk Control evaluate
 
UBS’s models on
 
a regular basis, including
 
valuation and model input
 
parameters, as well
 
as pricing.
As a result
 
of the valuation
 
controls employed, valuation
 
adjustments may be
 
made to the
 
business divisions’ estimates
of fair value to align with independent market data
 
and the relevant accounting standard.
›
Refer to Note 21d for more information
 
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
327
Note 21
 
Fair value measurement (continued)
 
c) Fair value hierarchy
The table
 
below provides the
 
fair value
 
hierarchy classification of
 
financial and non-financial
 
assets and
 
liabilities measured
at
 
fair
 
value.
 
The
 
narrative
 
that
 
follows
 
describes
 
valuation
 
techniques
 
used
 
in
 
measuring
 
their
 
fair
 
value
 
of
 
different
product types
 
(including significant
 
valuation inputs
 
and assumptions
 
used), and
 
the factors
 
considered in
 
determining
their classification within the fair value hierarchy.
During 2024, assets and liabilities that were transferred from Level 2 to Level 1, or from Level 1 to Level 2 and were held
for the entire reporting period, were not material.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Determination of fair values from quoted market
 
prices or valuation techniques
1
31.12.24
31.12.23
USD m
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial assets measured at fair value on a recurring basis
Financial assets at fair value held for trading
128,393
27,564
3,108
159,065
118,975
28,045
22,613
169,633
of which: Equity instruments
116,501
430
91
117,022
102,602
1,403
321
104,325
of which: Government bills / bonds
4,443
3,261
41
7,746
6,995
8,763
73
15,830
of which: Investment fund units
6,537
987
151
7,675
8,392
1,124
129
9,645
of which: Corporate and municipal bonds
911
17,462
838
19,211
984
12,801
1,284
15,069
of which: Loans
0
5,200
1,799
6,998
0
3,837
19,618
23,456
of which: Asset-backed securities
1
219
153
373
3
112
133
248
Derivative financial instruments
795
181,965
2,792
185,551
622
172,903
2,559
176,084
of which: Foreign exchange
472
100,328
66
100,867
347
78,060
253
78,659
of which: Interest rate
0
40,553
878
41,431
0
55,190
407
55,597
of which: Equity / index
0
35,747
1,129
36,876
0
34,174
1,299
35,473
of which: Credit
0
2,555
581
3,136
0
3,456
513
3,969
of which: Commodities
1
2,599
17
2,617
1
1,869
13
1,883
Brokerage receivables
0
25,858
0
25,858
0
21,037
0
21,037
Financial assets at fair value not held for trading
35,911
50,813
8,748
95,472
30,717
64,865
8,435
104,018
of which: Financial assets for unit-linked investment contracts
17,101
6
0
17,106
15,877
7
0
15,884
of which: Corporate and municipal bonds
31
14,695
133
14,859
62
16,722
215
17,000
of which: Government bills / bonds
18,264
6,204
0
24,469
14,306
4,801
0
19,107
of which: Loans
0
4,427
3,192
7,619
0
4,252
2,258
6,510
of which: Securities financing transactions
0
24,026
611
24,638
0
36,857
52
36,909
of which: Asset-backed securities
0
972
597
1,569
0
1,525
180
1,704
of which: Auction rate securities
0
0
191
191
0
0
1,208
1,208
of which: Investment fund units
423
401
681
1,505
367
548
678
1,592
of which: Equity instruments
93
0
2,917
3,010
105
38
3,097
3,241
Financial assets measured at fair value through other comprehensive income on
 
a recurring basis
Financial assets measured at fair value through other comprehensive
 
income
59
2,137
0
2,195
68
2,165
0
2,233
of which: Commercial paper and certificates of deposit
0
1,959
0
1,959
0
1,948
0
1,948
of which: Corporate and municipal bonds
59
178
0
237
68
207
0
276
Non-financial assets measured at fair value on a recurring basis
Precious metals and other physical commodities
7,341
0
0
7,341
5,930
0
0
5,930
Non-financial assets measured at fair value on a non-recurring basis
Other non-financial assets
2
0
0
84
84
0
0
31
31
Total assets measured at fair value
172,499
288,337
14,732
475,568
156,312
289,015
33,639
478,966
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
328
Note 21
 
Fair value measurement (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Determination of fair values from quoted market
 
prices or valuation techniques (continued)
1
31.12.24
31.12.23
USD m
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial liabilities measured at fair value on a recurring basis
Financial liabilities at fair value held for trading
24,577
10,429
240
35,247
27,684
6,315
161
34,159
of which: Equity instruments
18,528
257
29
18,814
18,266
248
92
18,606
of which: Corporate and municipal bonds
5
8,771
206
8,982
28
4,981
62
5,071
of which: Government bills / bonds
4,336
1,174
0
5,510
8,559
905
0
9,464
of which: Investment fund units
1,708
162
3
1,873
832
118
4
954
Derivative financial instruments
829
175,747
4,060
180,636
771
185,815
5,595
192,181
of which: Foreign exchange
506
94,035
46
94,587
457
89,394
36
89,887
of which: Interest rate
0
36,313
324
36,636
0
52,673
246
52,920
of which: Equity / index
0
39,597
3,142
42,739
0
38,046
3,333
41,380
of which: Credit
0
3,280
414
3,694
0
4,081
619
4,700
of which: Commodities
1
2,200
15
2,216
0
1,437
21
1,458
of which: Loan commitments measured at FVTPL
0
75
62
137
0
135
1,037
1,172
Financial liabilities designated at fair value on a recurring basis
Brokerage payables designated at fair value
0
49,023
0
49,023
0
42,522
0
42,522
Debt issued designated at fair value
0
94,573
13,336
107,909
0
113,012
15,276
128,289
Other financial liabilities designated at fair value
0
25,931
2,768
28,699
0
26,878
2,606
29,484
of which: Financial liabilities related to unit-linked investment contracts
0
17,203
0
17,203
0
15,992
0
15,992
of which: Securities financing transactions
0
5,798
0
5,798
0
7,416
0
7,416
of which: Over-the-counter debt instruments and others
0
2,930
2,768
5,698
0
3,471
2,606
6,076
Total liabilities measured at fair value
25,406
355,703
20,405
401,514
28,454
374,542
23,638
426,635
1 Bifurcated embedded derivatives are presented on the same balance sheet lines
 
as their host contracts and are not included in this table. The fair value of these derivatives was not
 
material for the periods presented.
 
2 Other non-financial assets primarily consist of properties and other non-current assets held for sale, which are measured at the
 
lower of their net carrying amount or fair value less costs to sell.
Valuation techniques
 
UBS uses widely
 
recognized valuation techniques for determining the
 
fair value of financial
 
and non-financial instruments
that are
 
not actively
 
traded and
 
quoted. The
 
most frequently
 
applied valuation
 
techniques include
 
discounted value
 
of
expected cash flows, relative value and option
 
pricing methodologies.
Discounted
 
value
 
of
 
expected
 
cash
 
flows
 
is
 
a
 
valuation
 
technique
 
that
 
measures
 
fair
 
value
 
using
 
estimated
 
expected
future cash flows from
 
assets or liabilities and
 
then discounts these
 
cash flows using a
 
discount rate or discount
 
margin
that
 
reflects
 
the
 
credit and
 
/ or
 
funding spreads
 
required
 
by the
 
market
 
for
 
instruments with
 
similar
 
risk and
 
liquidity
profiles to
 
produce
 
a present
 
value. When
 
using such
 
valuation
 
techniques,
 
expected
 
future cash
 
flows are
 
estimated
using an observed
 
or implied
 
market price
 
for the future
 
cash flows or
 
by using
 
industry-standard cash
 
flow projection
models.
 
The
 
discount
 
factors
 
within
 
the
 
calculation
 
are
 
generated
 
using
 
industry-standard
 
yield
 
curve
 
modeling
techniques and models.
Relative
 
value models
 
measure fair
 
value based
 
on the
 
market prices
 
of equivalent
 
or comparable
 
assets or
 
liabilities,
 
making
adjustments
 
for differences
 
between the
 
characteristics
 
of the observed
 
instrument and
 
the instrument
 
being valued.
Option
 
pricing
 
models
 
incorporate
 
assumptions
 
regarding
 
the
 
behavior
 
of
 
future
 
price
 
movements
 
of
 
an
 
underlying
referenced
 
asset
 
or
 
assets
 
to
 
generate
 
a
 
probability-weighted
 
future
 
expected
 
payoff
 
for
 
the
 
option.
 
The
 
resulting
probability-weighted expected
 
payoff is
 
then discounted
 
using discount
 
factors generated
 
from industry-standard
 
yield
curve modeling
 
techniques and
 
models. The
 
option pricing
 
model may
 
be implemented
 
using a
 
closed-form analytical
formula or other mathematical techniques (e.g. binomial tree
 
or Monte Carlo simulation).
Where available, valuation techniques use
 
market-observable assumptions and inputs. If
 
such data is not
 
available, inputs
may be derived
 
by reference
 
to similar assets
 
in active markets,
 
from recent prices
 
for comparable
 
transactions or
 
from
other observable market data.
 
In such cases,
 
the inputs selected are
 
based on historical
 
experience and practice for
 
similar
or analogous
 
instruments, derivation of
 
input levels
 
based on
 
similar products
 
with observable price
 
levels, and
 
knowledge
of current market conditions and valuation approaches.
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
329
Note 21
 
Fair value measurement (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For
 
more
 
complex
 
instruments,
 
fair
 
values
 
may
 
be
 
estimated
 
using
 
a
 
combination
 
of
 
observed
 
transaction
 
prices,
consensus pricing services and relevant quotes. Consideration is given to
 
the nature of the quotes (e.g. indicative or firm)
and the relationship
 
of recently evidenced
 
market activity to
 
the prices provided by
 
consensus pricing services.
 
UBS also
uses internally developed models,
 
which are typically based on
 
valuation methods and techniques recognized
 
as standard
within the industry. Assumptions
 
and inputs used in
 
valuation techniques include
 
benchmark interest rate
 
curves, credit
and funding
 
spreads
 
used in
 
estimating
 
discount
 
rates, bond
 
and equity
 
prices, equity
 
index prices,
 
foreign
 
exchange
rates, levels of market volatility and correlation. Refer to
 
Note 21e for more information. The discount curves used by the
Group incorporate the funding and credit characteristics
 
of the instruments to which they are applied.
Financial instruments excluding derivatives: valuation and classification in the fair value hierarchy
Product
Valuation and classification in the fair value hierarchy
Government bills
and bonds
Valuation
–
Generally valued using prices obtained directly
 
from the market.
–
Instruments
 
not
 
priced
 
directly
 
using
 
active-market data
 
are
 
valued
 
using
 
discounted
 
cash
 
flow
valuation techniques that incorporate market
 
data for similar government instruments.
 
Fair value hierarchy
–
Generally traded
 
in active
 
markets with
 
prices that
 
can be
 
obtained directly
 
from these
 
markets,
resulting in classification as Level 1,
 
while the remaining positions
 
are classified as Level 2 or
 
Level 3.
Corporate and
municipal bonds
Valuation
–
Generally valued using prices obtained directly
 
from the market for the security, or
 
similar securities,
adjusted for seniority, maturity and liquidity.
–
When
 
prices
 
are
 
not
 
available,
 
instruments
 
are
 
valued
 
using
 
discounted
 
cash
 
flow
 
valuation
techniques incorporating the credit spread of
 
the issuer or similar issuers.
–
For convertible
 
bonds without
 
directly comparable
 
prices, issuances
 
may be
 
priced using
 
a convertible
bond model.
Fair value hierarchy
–
Generally classified as
 
Level 1 or
 
Level 2, depending on
 
the depth
 
of trading
 
activity behind
 
price
sources.
–
Level 3 instruments have no suitable pricing information
 
available.
Traded loans and
loans measured at
fair value
Valuation
–
Valued directly using
 
market prices that
 
reflect recent transactions
 
or quoted dealer
 
prices, where
available.
–
Where no
 
market price
 
data
 
is available,
 
loans are
 
valued by
 
relative value
 
benchmarking using
pricing derived from
 
debt instruments
 
in comparable entities
 
or different products
 
in the same
 
entity,
or by using a
 
credit default swap
 
valuation technique,
 
which requires inputs
 
for credit spreads,
 
credit
recovery rates and interest rates.
 
–
Securitization lending
 
facilities are
 
valued using
 
a
 
discounted cashflow
 
analysis that
 
incorporates
adjustments for any bespoke
 
features of the loan
 
and collateral. Recently originated
 
commercial real
estate loans are measured using a securitization
 
approach based on rating agency guidelines.
Fair value hierarchy
–
Instruments with suitably deep and liquid pricing
 
information are classified as Level 2.
–
Positions requiring the use of valuation techniques, or for
 
which the price sources have insufficient
trading depth, are classified as Level 3.
Investment fund
units
Valuation
–
Predominantly exchange-traded,
 
with readily
 
available quoted
 
prices in
 
liquid markets.
 
Where market
prices are not available, fair value may be measured
 
using net asset values (NAVs).
Fair value hierarchy
–
Listed units
 
are classified
 
as Level 1,
 
provided there
 
is sufficient
 
trading activity
 
to justify
 
active-market
classification, while other positions are classified
 
as Level 2.
–
Positions for which NAVs are not available, or where the unit or underlying investments are illiquid,
are classified as Level 3.
Asset-backed
securities (ABS)
Valuation
–
For liquid securities, the valuation process will use trade and
 
price data, updated for movements in
market levels
 
between the
 
time of
 
trading and
 
the time
 
of valuation.
 
Less liquid
 
instruments are
measured using discounted expected cash flows incorporating price data for instruments or indices
with similar risk profiles.
Fair value hierarchy
–
Residential mortgage-backed securities,
 
commercial mortgage-backed securities and other ABS are
generally classified
 
as Level 2 when
 
reliable external
 
price quotes
 
are available. However,
 
if significant
inputs are
 
unobservable, or
 
if market
 
or fundamental
 
data is
 
not available,
 
they are
 
classified as
Level 3.
Auction rate
securities (ARS)
Valuation
–
ARS are valued utilizing a discounted cash flow methodology. The model captures interest rate
 
risk
emanating
 
from
 
the
 
note
 
coupon,
 
credit
 
risk
 
attributable
 
to
 
the
 
underlying
 
closed-end
 
fund
investments,
 
liquidity
 
risk
 
as
 
a
 
function
 
of
 
the
 
level
 
of
 
trading
 
volume
 
in
 
these
 
positions,
 
and
extension risk,
 
as ARS are perpetual instruments
 
that require an assumption
 
regarding their maturity
or issuer redemption date.
 
Fair value hierarchy
–
Granular and liquid
 
pricing information is
 
generally not available
 
for ARS. As
 
a result, these securities
are classified as Level 3.
Equity instruments
Valuation
–
Listed equity instruments are generally valued
 
using prices obtained directly from the market.
–
Unlisted equity holdings, including private
 
equity positions, are initially
 
marked at their transaction
price and are
 
revalued when reliable
 
evidence of
 
price movement becomes
 
available or when
 
the
position is deemed to be impaired.
 
Fair value hierarchy
–
The majority of equity securities are actively traded on public stock exchanges where quoted prices
are readily and regularly available, resulting
 
in Level 1 classification.
–
Equity securities less actively traded will be
 
classified as Level 2 and illiquid positions
 
as Level 3.
Financial assets for
unit-linked
investment
contracts
Valuation
–
The majority of assets are listed on exchanges
 
and fair values are determined using quoted
 
prices.
Fair value hierarchy
–
Most assets are classified as Level 1 if actively traded
 
or Level 2 if trading is not active.
–
Instruments for which prices are not readily available
 
are classified as Level 3.
 
 
 
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
330
Note 21
 
Fair value measurement (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Product
Valuation and classification in the fair value hierarchy
Securities
financing
transactions
Valuation
–
These instruments
 
are valued
 
using discounted expected
 
cash flow
 
techniques. The
 
discount rate
applied is based on funding curves that are relevant
 
to the collateral eligibility terms.
Fair value hierarchy
–
Collateral
 
funding
 
curves
 
for
 
these
 
instruments
 
are
 
generally
 
observable
 
and,
 
as
 
a
 
result,
 
these
positions are classified as Level 2.
–
Where the collateral
 
terms are non-standard,
 
the funding curve
 
may be considered
 
unobservable,
and these positions are classified as Level 3.
Brokerage
receivables and
payables
Valuation
–
Fair value is determined based on the value of
 
the underlying balances.
Fair value hierarchy
–
Due to their on-demand nature, these receivables
 
and payables are deemed as Level 2.
Financial liabilities
related to unit-
linked investment
contracts
Valuation
–
The fair values of investment contract liabilities are determined by reference to the fair value of the
corresponding assets.
Fair value hierarchy
–
The liabilities themselves are
 
not actively traded
 
but are mainly
 
referenced to instruments that
 
are
actively traded and are therefore classified
 
as Level 2.
Precious metals
and other physical
commodities
Valuation
–
Physical assets are valued using the spot rate
 
observed in the relevant market.
Fair value hierarchy
–
Generally traded
 
in active
 
markets with
 
prices that
 
can be
 
obtained directly
 
from these
 
markets,
resulting in classification as Level 1.
Debt issued
designated at fair
value
Valuation
–
The risk management and
 
the valuation approaches for these
 
instruments are closely aligned with
the equivalent derivatives
 
business and the
 
underlying risk, and
 
the valuation techniques
 
used for
this component are the same as the relevant
 
valuation techniques described below.
Fair value hierarchy
–
The observability is closely aligned with the equivalent
 
derivatives business and the underlying risk.
Commercial paper
and certificates of
deposit
Valuation
–
Generally valued using
 
discounted cash flow valuation
 
techniques incorporating the spread
 
of the
issuer or similar issuers over the underlying currency
 
risk-free curve.
Fair value hierarchy
–
Due to the
 
short-dated nature of
 
the positions and
 
liquid underlying
 
pricing inputs they
 
are generally
classified as Level 2.
Derivative instruments: valuation and classification
 
in the fair value hierarchy
The curves used
 
for discounting expected cash
 
flows in the
 
valuation of collateralized
 
derivatives reflect the funding
 
terms
associated with the relevant collateral arrangement for the instrument
 
being valued. These collateral arrangements differ
across
 
counterparties
 
with
 
respect
 
to
 
the
 
eligible
 
currency
 
and
 
interest
 
terms
 
of
 
the
 
collateral.
 
The
 
majority
 
of
collateralized derivatives are
 
measured using a discount
 
curve based on funding rates
 
derived from overnight interest
 
in
the cheapest eligible currency for the respective
 
counterparty collateral agreement.
Uncollateralized and
 
partially collateralized
 
derivatives are
 
discounted using
 
the alternative
 
reference rate
 
(the ARR)
 
(or
equivalent)
 
curve
 
for
 
the
 
currency
 
of the
 
instrument.
 
As described
 
in
 
Note 21d,
 
the
 
fair
 
value
 
of uncollateralized
 
and
partially collateralized
 
derivatives
 
is then
 
adjusted
 
by credit
 
valuation
 
adjustments
 
(CVAs),
 
debit valuation
 
adjustments
(DVAs) and
 
funding valuation
 
adjustments (FVA
 
s), as
 
applicable,
 
to reflect
 
an estimation
 
of the
 
effect
 
of counterparty
credit risk, UBS’s own credit risk, and funding costs and
 
benefits.
›
Refer to Note 11 for more information about derivative
 
instruments
Derivative product
Valuation and classification in the fair value hierarchy
Interest rate
contracts
Valuation
–
Interest rate
 
swap contracts
 
are valued
 
by estimating
 
future interest
 
cash flows
 
and discounting
 
those
cash flows using a rate
 
that reflects the appropriate funding rate
 
for the position being measured.
The yield curves used to estimate
 
future index levels and discount
 
rates are generated using market-
standard yield
 
curve models
 
using interest
 
rates associated
 
with
 
current market
 
activity. The
 
key
inputs to the models are interest rate swap rates, forward rate agreement rates, short-term interest
rate futures prices, basis swap spreads and
 
inflation swap rates.
–
Interest rate option contracts are valued using various market-standard option models,
 
using inputs
that include interest rate yield curves, inflation
 
curves, volatilities and correlations.
–
When the maturity of an interest rate swap or option contract
 
exceeds the term for which standard
market
 
quotes
 
are
 
observable
 
for
 
a
 
significant
 
input
 
parameter,
 
the
 
contracts
 
are
 
valued
 
by
extrapolation from the last observable point using standard assumptions or by reference
 
to another
observable comparable input parameter to represent
 
a suitable proxy for that portion of the term.
Fair value hierarchy
–
The majority of
 
interest rate swaps
 
are classified as
 
Level 2, as the
 
standard market contracts that
form the inputs for yield curve models are generally
 
traded in active and observable markets.
–
Options are generally treated as Level 2, as
 
the calibration process enables the model output to
 
be
validated to active-market
 
levels. Models calibrated
 
in this way are
 
then used to revalue
 
the portfolio
of both standard options and more exotic
 
products.
–
Interest
 
rate swap
 
or
 
option
 
contracts are
 
classified as
 
Level 3 when
 
the terms
 
exceed standard
market-observable quotes.
–
Exotic options
 
for
 
which appropriate
 
volatility or
 
correlation input
 
levels cannot
 
be implied
 
from
observable market data are classified as Level 3.
 
 
 
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
331
Note 21
 
Fair value measurement (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative product
Valuation and classification in the fair value hierarchy
Credit derivative
contracts
Valuation
–
Credit
 
derivative contracts
 
are
 
valued using
 
industry-standard models
 
based primarily
 
on
 
market
credit spreads, upfront pricing points and implied recovery rates. Where a derivative credit
 
spread is
not directly available, it may be derived from
 
the price of the reference cash bond.
 
–
Asset-backed
 
credit
 
derivatives
 
are
 
valued
 
using
 
a
 
valuation
 
technique
 
similar
 
to
 
that
 
of
 
the
underlying security
 
with an
 
adjustment to reflect
 
the funding differences
 
between cash
 
and synthetic
form.
Fair value hierarchy
–
Single-entity and
 
portfolio credit
 
derivative contracts
 
are classified
 
as Level 2 when
 
credit spreads
 
and
recovery rates are
 
determined from actively
 
traded observable market
 
data. Where the
 
underlying
reference name(s) are not actively traded and the correlation cannot be directly
 
mapped to actively
traded tranche instruments, these contracts
 
are classified as Level 3.
 
–
Asset-backed credit derivatives
 
follow the characteristics
 
of the underlying
 
security and are therefore
distributed across Level 2 and Level 3.
Foreign exchange
contracts
Valuation
–
Open spot foreign
 
exchange (FX) contracts
 
are valued using the
 
FX spot rate observed
 
in the market.
–
Forward FX contracts are valued using
 
the FX spot rate adjusted for forward
 
pricing points observed
from standard market-based sources.
–
Over-the-counter
 
(OTC)
 
FX
 
option
 
contracts
 
are
 
valued
 
using
 
market-standard
 
option
 
valuation
models. The models used
 
for shorter-dated options (i.e.
 
maturities of five years
 
or less) tend to
 
be
different from
 
those used
 
for longer-dated
 
options,
 
because the
 
models needed
 
for longer-dated
OTC FX contracts require additional consideration
 
of interest rate and FX rate interdependency.
–
The valuation for multi-dimensional
 
FX options uses a
 
multi-local volatility model,
 
which is calibrated
to the observed FX volatilities for all relevant
 
FX pairs.
Fair value hierarchy
–
The markets for FX spot and FX forward pricing points
 
are both actively traded and observable and,
therefore,
 
such FX contracts are generally classified as
 
Level 2.
 
–
A significant
 
proportion of OTC
 
FX option
 
contracts are classified
 
as Level 2
 
as inputs
 
are derived
mostly from standard market contracts traded
 
in active and observable markets.
Equity / index
contracts
Valuation
–
Equity
 
forward
 
contracts
 
have
 
a
 
single
 
stock
 
or
 
index
 
underlying and
 
are
 
valued
 
using
 
market-
standard models. The key inputs
 
to the models are stock prices,
 
estimated dividend rates and
 
equity
funding rates (which
 
are implied from
 
prices of forward
 
contracts observed
 
in the market).
 
Estimated
cash flows are
 
then discounted
 
using market-standard
 
discounted cash flow
 
models using a
 
rate that
reflects
 
the
 
appropriate funding
 
rate
 
for
 
that
 
portion
 
of
 
the
 
portfolio. When
 
no
 
market
 
data
 
is
available
 
for
 
the
 
instrument maturity,
 
they are
 
valued
 
by
 
extrapolation of
 
available
 
data,
 
use
 
of
historical dividend data, or use of data for
 
a related equity.
 
–
Equity option contracts are valued
 
using market-standard models that estimate the equity
 
forward
level as
 
described for
 
equity forward
 
contracts and
 
incorporate inputs
 
for stock
 
volatility and
 
for
correlation
 
between
 
stocks
 
within
 
a
 
basket.
 
The
 
probability-weighted
 
expected
 
option
 
payoff
generated is then
 
discounted using market-standard discounted
 
cash flow models
 
applying a rate
that reflects the appropriate funding rate for that
 
portion of the portfolio. When volatility, forward
or correlation inputs
 
are not available,
 
they are valued
 
using extrapolation
 
of available data,
 
historical
dividend, correlation or volatility data,
 
or the equivalent data for a related equity.
Fair value hierarchy
–
As inputs
 
are derived
 
mostly from
 
standard market
 
contracts traded
 
in active
 
and observable
 
markets,
a significant proportion of equity forward contracts
 
are classified as Level 2.
 
–
Equity option positions for which
 
inputs are derived from standard
 
market contracts traded in
 
active
and observable markets are also classified as Level 2. Level 3 positions are those for which volatility,
forward or correlation inputs are not observable.
Commodity
contracts
Valuation
–
Commodity
 
forward
 
and
 
swap
 
contracts
 
are
 
measured
 
using
 
market-standard
 
models
 
that
 
use
market forward levels on standard instruments.
 
–
Commodity option contracts are measured using market-standard option models that estimate the
commodity forward
 
level as
 
described for
 
commodity forward
 
and swap
 
contracts, incorporating
inputs for the volatility of the underlying index or commodity. For commodity
 
options on baskets of
commodities or bespoke
 
commodity indices,
 
the valuation technique
 
also incorporates inputs
 
for the
correlation between different commodities or
 
commodity indices.
Fair value hierarchy
–
Individual commodity
 
contracts are
 
typically classified
 
as Level 2,
 
because active
 
forward and
 
volatility
market data is available.
Loan commitments
measured at FVTPL
Valuation
–
Valued directly using
 
market prices that
 
reflect recent transactions
 
or quoted dealer
 
prices, where
available.
–
Where
 
no
 
market
 
price
 
data
 
is
 
available,
 
loan
 
commitments
 
are
 
valued
 
by
 
relative
 
value
benchmarking
 
using
 
pricing
 
derived
 
from
 
debt
 
instruments
 
in
 
comparable
 
entities
 
or
 
different
products in the
 
same entity, or
 
by using a
 
credit default swap valuation
 
technique, which requires
inputs for credit spreads, credit recovery rates
 
and interest rates.
Fair value hierarchy
–
Instruments with suitably deep and liquid pricing
 
information are classified as Level 2.
–
Positions requiring the use of valuation techniques, or for
 
which the price sources have insufficient
trading depth, are classified as Level 3.
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
332
Note 21
 
Fair value measurement (continued)
 
d) Valuation adjustments and other items
The output
 
of a
 
valuation technique
 
is always
 
an estimate of
 
a fair
 
value that
 
cannot be
 
measured with complete
 
certainty.
As a result,
 
valuations are adjusted where appropriate
 
and when such
 
factors would be
 
considered by market participants
in estimating fair value, to reflect close-out costs, credit exposure, model-driven valuation uncertainty,
 
funding costs and
benefits, trading restrictions and other factors.
 
Deferred day-1 profit or loss reserves
For new
 
transactions where
 
the valuation
 
technique used
 
to measure
 
fair value
 
requires
 
significant inputs
 
that are
 
not
based on observable market data, the financial instrument is initially recognized at the transaction price. The transaction
price may differ from the fair value obtained using
 
a valuation technique, where any such difference
 
is deferred and not
initially recognized in the income statement.
 
Deferred day-1 profit or loss
 
is generally released into
Other net income from financial
 
instruments measured at fair value
through profit
 
or loss
 
when pricing
 
of equivalent
 
products or
 
the underlying
 
parameters
 
becomes observable
 
or when
the transaction is closed out.
The table below summarizes the changes in deferred day-1
 
profit or loss reserves during the respective period.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred day-1 profit or loss reserves
USD m
2024
2023
2022
Reserve balance at the beginning of the year
404
422
418
Profit / (loss) deferred on new transactions
244
260
299
(Profit) / loss recognized in the income statement
(221)
(278)
(295)
Foreign currency translation
(6)
0
0
Reserve balance at the end of the year
421
404
422
Own credit
 
Own
 
credit
 
risk
 
is
 
reflected
 
in
 
the
 
valuation
 
of
 
UBS’s
 
fair
 
value
 
option
 
liabilities
 
where
 
this
 
component
 
is
 
considered
relevant for valuation purposes by UBS’s counterparties
 
and other market participants.
Changes in
 
the fair
 
value of
 
financial liabilities
 
designated at
 
fair value
 
through profit
 
or loss
 
related to
 
own credit
 
are
recognized
 
in
Other
 
comprehensive
 
income
 
directly
 
within
Retained
 
earnings,
 
with
 
no
 
reclassification
 
to
 
the
 
income
statement
 
in
 
future
 
periods.
 
This
 
presentation
 
does
 
not
 
create
 
or
 
increase
 
an
 
accounting
 
mismatch
 
in
 
the
 
income
statement, as the Group does not hedge changes in own
 
credit.
Own credit is estimated using own credit adjustment (OCA) curves, which incorporate observable market data,
 
including
market-observed secondary prices for UBS’s debt
 
and debt curves of peers. In the
 
table below, the change in unrealized
own credit
 
consists of
 
changes in
 
fair value
 
that are
 
attributable to
 
the change
 
in UBS’s
 
credit spreads,
 
as well
 
as the
effect of changes in
 
fair values attributable
 
to factors other
 
than credit spreads,
 
such as redemptions,
 
effects from time
decay and
 
changes in
 
interest and
 
other market
 
rates. Realized
 
own credit
 
is recognized
 
when an
 
instrument with
 
an
associated
 
unrealized
 
OCA
 
is
 
repurchased
 
prior
 
to
 
the
 
contractual
 
maturity
 
date.
 
Life-to-date
 
amounts
 
reflect
 
the
cumulative unrealized change since initial recognition.
›
Refer to Note 16 for more information about debt
 
issued designated at fair value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Own credit adjustments on financial liabilities
 
designated at fair value
Included in Other comprehensive income
For the year ended
USD m
31.12.24
31.12.23
31.12.22
Recognized during the period:
Realized gain / (loss)
 
(94)
8
1
Unrealized gain / (loss)
 
84
(1,858)
866
Total gain / (loss), before tax
(10)
(1,850)
867
USD m
31.12.24
31.12.23
31.12.22
Recognized on the balance sheet as of the end of the period:
Unrealized life-to-date gain / (loss)
 
(1,165)
(1,287)
556
of which: debt issued designated at fair value
(1,188)
(1,297)
453
of which: other financial liabilities designated at fair value
23
10
103
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
333
Note 21
 
Fair value measurement (continued)
Credit valuation adjustments
In
 
order
 
to
 
measure
 
the
 
fair
 
value
 
of
 
OTC
 
derivative
 
instruments,
 
including
 
funded
 
derivative
 
instruments
 
that
 
are
classified as
Financial assets at
 
fair value
 
not held
 
for trading,
 
CVAs are needed to
 
reflect the credit
 
risk of
 
the counterparty
inherent
 
in
 
these
 
instruments.
 
This
 
amount
 
represents
 
the
 
estimated
 
fair
 
value
 
of
 
protection
 
required
 
to
 
hedge
 
the
counterparty credit risk of
 
such instruments. A CVA
 
is determined for each counterparty,
 
considering all exposures with
that counterparty,
 
and is dependent on the expected future
 
value of exposures, default probabilities
 
and recovery rates,
applicable collateral or netting arrangements, break
 
clauses, funding spreads, and other contractual
 
factors.
 
Funding valuation adjustments
Uncollateralized
 
FVAs reflect the costs
 
and benefits of
 
funding associated with
 
uncollateralized and partially
 
collateralized
derivative
 
receivables
 
and
 
payables
 
and
 
are
 
calculated
 
as
 
the
 
valuation
 
effect
 
from
 
moving
 
the
 
discounting
 
of
 
the
uncollateralized
 
derivative
 
cash
 
flows
 
from
 
the
 
ARR
 
to
 
OCA
 
using
 
the
 
CVA
 
framework,
 
including
 
the
 
probability
 
of
counterparty default. An FVA is also
 
applied to collateralized derivative assets
 
in cases where the collateral
 
cannot be sold
or repledged
 
and in
 
cases where
 
collateral agreements
 
contain optionality
 
regarding
 
the type
 
of collateral
 
that can
 
be
pledged or received.
Debit valuation adjustments
A DVA is estimated to incorporate own credit in the valuation of derivatives where an FVA is not already recognized. The
DVA calculation
 
is effectively consistent with
 
the CVA framework,
 
being determined for each counterparty,
 
considering
all exposures
 
with that
 
counterparty
 
and taking
 
into account
 
collateral
 
netting agreements,
 
expected
 
future
 
mark-to-
market movements and UBS’s credit default spreads.
Other valuation adjustments
Instruments that are measured as
 
part of a
 
portfolio of combined long
 
and short positions
 
are valued at mid-market levels
to ensure consistent valuation
 
of the long- and
 
short-component risks. A liquidity
 
valuation adjustment is then
 
made to
the overall
 
net long
 
or short
 
exposure to
 
move the
 
fair value
 
to bid
 
or offer
 
as appropriate,
 
reflecting current
 
levels of
market
 
liquidity.
 
The bid–offer
 
spreads
 
used in
 
the calculation
 
of this
 
valuation adjustment
 
are
 
obtained from
 
market
transactions and other relevant sources and
 
are updated periodically.
Uncertainties
 
associated
 
with
 
the
 
use of
 
model-based
 
valuations
 
are
 
incorporated
 
into the
 
measurement
 
of fair
 
value
through the use
 
of model reserves. These
 
reserves reflect the amounts
 
that the Group
 
estimates should be deducted
 
from
valuations produced directly
 
by models to incorporate
 
uncertainties in the relevant
 
modeling assumptions, in the
 
model
and market inputs used,
 
or in the calibration
 
of the model output
 
to adjust for known
 
model deficiencies. In arriving
 
at
these estimates,
 
the Group
 
considers a
 
range of
 
market practices,
 
including how
 
it believes
 
market participants
 
would
assess these uncertainties. Model reserves
 
are reassessed periodically in light
 
of data from market
 
transactions, consensus
pricing services and other relevant sources.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other valuation adjustment reserves on the
 
balance sheet
As of
USD m
31.12.24
31.12.23
31.12.22
Credit valuation adjustments
1
(125)
(145)
(33)
Funding and debit valuation adjustments
(96)
(116)
(46)
Other valuation adjustments
(1,207)
(2,654)
(839)
of which: liquidity
(746)
(2,051)
(311)
of which: model uncertainty
(460)
(603)
(529)
1 Amount does not include reserves against defaulted counterparties.
 
e) Level 3 instruments: valuation techniques and inputs
 
The table below presents
 
material Level 3 assets
 
and liabilities, together
 
with the valuation techniques
 
used to measure
fair value,
 
the inputs
 
used in
 
a given
 
valuation technique
 
that are
 
considered significant
 
as of
 
31 December 2024
 
and
unobservable, and a range of values for those unobservable inputs.
 
The range of
 
values represents the highest-
 
and lowest-level inputs used
 
in the valuation
 
techniques. Therefore, the range
does not
 
reflect the level
 
of uncertainty regarding
 
a particular
 
input or
 
an assessment
 
of the reasonableness
 
of the
 
Group’s
estimates and assumptions, but rather the different underlying characteristics of the relevant assets and liabilities held by
the Group. The ranges will therefore vary
 
from period to period and parameter to parameter
 
based on characteristics of
the instruments held at each balance sheet date. Furthermore, the ranges of unobservable inputs may
 
differ across other
financial institutions, reflecting the diversity of the products
 
in each firm’s inventory.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
334
Note 21
 
Fair value measurement (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Valuation techniques and inputs used in the fair value measurement
 
of Level 3 assets and liabilities
Fair value
Significant
unobservable
input(s)
1
Range of inputs
Assets
Liabilities
Valuation
technique(s)
31.12.24
31.12.23
USD bn
31.12.24
31.12.23
31.12.24
31.12.23
low
high
weighted
average
2
low
high
weighted
average
2
unit
1
Financial assets and liabilities at fair value held for trading and Financial assets at fair
 
value not held for trading
Corporate and municipal
bonds
1.0
1.5
0.2
0.1
Relative value to
market comparable
Bond price equivalent
23
114
98
5
126
99
points
Discounted expected
cash flows
Discount margin
868
868
868
135
491
463
basis
points
Traded loans, loans
designated at fair value
and guarantees
5.2
22.0
0.0
0.0
Relative value to
market comparable
Loan price equivalent
1
173
84
1
120
88
points
Discounted expected
cash flows
Credit spread
16
545
195
19
2,681
614
basis
points
Market comparable
and securitization
model
Credit spread
75
1,899
208
162
1,849
318
basis
points
Asset-backed securities
0.7
0.1
0.0
0.0
Relative value to
market comparable
Bond price equivalent
0
112
79
1
205
57
points
Investment fund units
3
0.8
0.8
0.0
0.0
Relative value to
market comparable
Net asset value
Equity instruments
3
3.0
3.4
0.0
0.1
Relative value to
market comparable
Price
Debt issued designated at
fair value
4
13.3
15.3
Other financial liabilities
designated at fair value
2.8
2.6
Discounted expected
cash flows
Funding spread
95
201
51
201
basis
points
Derivative financial instruments
Interest rate
0.9
0.4
0.3
0.2
Option model
Volatility of interest
rates
50
156
45
154
basis
points
IR-to-IR correlation
60
99
4
100
%
Discounted expected
cash flows
Funding spread
5
20
basis
points
Credit
0.6
0.5
0.4
0.6
Discounted expected
cash flows
Credit spreads
 
2
1,789
1
2,421
basis
points
Credit correlation
50
66
50
66
%
Recovery rates
0
100
14
100
%
Option model
Credit volatility
59
127
60
60
%
Equity / index
1.1
1.3
3.1
3.3
Option model
Equity dividend yields
0
16
0
17
%
Volatility of equity
stocks, equity and
other indices
4
126
4
142
%
Equity-to-FX
correlation
(65)
80
(40)
77
%
Equity-to-equity
correlation
0
100
(50)
100
%
Loan commitments
measured at FVTPL
0.1
1.0
Relative value to
market comparable
Loan price equivalent
60
101
35
102
points
1 The ranges of significant unobservable inputs are represented in points, percentages and basis points.
 
Points are a percentage of par (e.g. 100 points would be 100% of par).
 
2 Weighted averages are provided for
most non-derivative
 
financial instruments
 
and were
 
calculated by weighting
 
inputs based
 
on the fair
 
values of
 
the respective instrumen
 
ts. Weighted
 
averages are
 
not provided for
 
inputs related
 
to Other
 
financial
liabilities designated at
 
fair value
 
and Derivative
 
financial instruments,
 
as this would
 
not be meaningful.
 
3 The
 
range of
 
inputs is not
 
disclosed, as there
 
is a dispersion
 
of values
 
given the diverse
 
nature of the
investments.
 
4 Debt issued designated at fair value primarily consists of UBS structured
 
notes, which include variable maturity notes with various
 
equity and foreign exchange underlying risks, as well as rates
 
-linked
and credit-linked notes,
 
all of which have embedded
 
derivative parameters that are
 
considered to be unobservable.
 
The equivalent derivative
 
instrument parameters for debt issued
 
or embedded derivatives for
 
over-
the-counter debt instruments are presented in the respective derivative financial instruments lines in this table.
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
335
Note 21
 
Fair value measurement (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Significant unobservable inputs in Level 3 positions
This section
 
discusses the
 
significant unobservable
 
inputs used
 
in the valuation
 
of Level 3
 
instruments and
 
assesses the
potential effect that
 
a change
 
in each
 
unobservable input in
 
isolation may
 
have on
 
a fair value
 
measurement. Relationships
between observable and unobservable inputs have not
 
been included in the summary below.
Input
Description
Bond price equivalent
–
Where market prices are not available for a bond,
 
fair value is measured by comparison with observable
 
pricing data from
similar instruments. Factors
 
considered when selecting
 
comparable instruments
 
include credit quality,
 
maturity and industry
of the issuer. Fair value may be measured either by a direct price comparison or by conversion of an instrument price into
a yield (either as an outright yield or as a spread
 
to the relevant benchmark rate).
 
–
For corporate and municipal
 
bonds, the range represents
 
the range of prices
 
from reference issuances used
 
in determining
fair value. Bonds priced at 0 are distressed to the point that no recovery is expected, while prices significantly in excess of
100 or par relate to
 
inflation-linked or structured
 
issuances that pay a
 
coupon in excess of
 
the market benchmark
 
as of the
measurement date.
–
For credit derivatives,
 
the bond
 
price range
 
represents the
 
range of
 
prices used
 
for reference
 
instruments, which
 
are typically
converted to an equivalent yield or credit
 
spread as part of the valuation process.
Loan price equivalent
–
Where market prices are not available for a traded loan or
 
a loan commitment, fair value is measured by comparison
 
with
observable pricing data
 
for similar instruments.
 
Factors considered
 
when selecting comparable
 
instruments include
 
industry
segment, collateral
 
quality, maturity
 
and issuer-specific
 
covenants. Fair
 
value may
 
be measured
 
either by
 
a direct
 
price
comparison or by
 
conversion of an
 
instrument price into
 
a yield.
 
The range represents
 
the range of
 
prices derived from
reference issuances of
 
a similar credit quality
 
used to measure fair
 
value for loans classified
 
as Level 3. Loans priced
 
at 0 are
distressed to the point that no recovery is expected,
 
while a current price of 100 represents a loan
 
that is expected to be
repaid in full.
Credit spread
–
Valuation models
 
for many
 
credit derivatives
 
and other
 
credit-sensitive products require
 
an input
 
for the
 
credit spread,
which is a reflection of the credit quality of the associated referenced
 
underlying. The credit spread of a particular
 
security
is quoted
 
in relation
 
to the
 
yield on
 
a benchmark
 
security or
 
reference rate,
 
typically either
 
US Treasury
 
or ARR,
 
and is
generally expressed in terms of basis points. An increase / (decrease) in credit spread will increase
 
/ (decrease) the value of
credit protection offered by
 
credit default swaps and
 
other credit derivative products. The
 
income statement effect from
such changes depends on the nature and direction of the positions held. Credit spreads may be negative where the asset
is
 
more
 
creditworthy
 
than
 
the
 
benchmark
 
against
 
which
 
the
 
spread
 
is
 
calculated.
 
A
 
wider
 
credit
 
spread
 
represents
decreasing creditworthiness.
 
The range
 
represents a
 
diverse set
 
of underlyings,
 
with the
 
lower end
 
of the
 
range representing
credits of the highest quality and the upper
 
end of the range representing greater levels of
 
credit risk.
Discount margin
–
The discount margin (DM) spread represents
 
the discount rates applied to present
 
value cash flows of an
 
asset to reflect
the market return required for uncertainty in the estimated cash
 
flows. DM spreads are a rate or rates applied on top of a
floating index
 
(e.g. Secured
 
Overnight Financing
 
Rate (SOFR))
 
to discount
 
expected cash
 
flows. Generally,
 
a decrease
 
/
(increase) in the DM in isolation would result
 
in a higher / (lower) fair value.
–
The high end
 
of the range
 
relates to securities
 
that are priced
 
low within the
 
market relative to
 
the expected cash
 
flow
schedule. This indicates that the market
 
is pricing an increased risk of credit
 
loss into the security that is greater
 
than what
is being captured by
 
the expected cash flow
 
generation process.
 
The low ends of the
 
ranges are typical
 
of funding rates on
better-quality instruments.
Funding spread
–
Structured financing transactions are
 
valued using synthetic funding curves
 
that best represent the assets that
 
are pledged
as collateral
 
for the
 
transactions. They
 
are not representative
 
of where
 
UBS can
 
fund itself
 
on an
 
unsecured basis
 
but provide
an estimate of where UBS
 
can source and deploy secured
 
funding with counterparties for a given
 
type of collateral. The
funding spreads
 
are expressed
 
in terms
 
of basis
 
points, and
 
if funding
 
spreads widen,
 
this increases
 
the effect
 
of discounting.
 
–
A small proportion
 
of structured
 
debt instruments
 
and non-structured
 
fixed-rate bonds
 
within financial
 
liabilities designated
at fair value had an exposure to funding
 
spreads that was longer in duration than the
 
actively traded market.
Volatility
–
Volatility measures the
 
variability of future
 
prices for a
 
particular instrument and
 
is generally expressed as
 
a percentage,
where a
 
higher number reflects
 
a more
 
volatile instrument, for
 
which future
 
price movements are
 
more likely to
 
occur.
Volatility is a key
 
input into option models, where it
 
is used to derive
 
a probability-based distribution of future prices
 
for
the underlying instrument. The
 
effect of volatility on individual
 
positions within the portfolio is
 
driven primarily by whether
the option contract is a long
 
or short position. In most cases,
 
the fair value of an option
 
increases as a result of an
 
increase
in volatility and is reduced by
 
a decrease in volatility. Generally, volatility used in
 
the measurement of fair value is derived
from active-market option prices
 
(referred to as implied volatility).
 
A key feature of implied
 
volatility is the volatility
 
“smile”
or “skew”,
 
which represents the effect of pricing options
 
of different option strikes at different implied
 
volatility levels.
–
Volatilities of
 
low interest
 
rates tend
 
to be
 
much higher
 
than volatilities
 
of high
 
interest rates.
 
In addition,
 
different currencies
may have significantly different implied volatilities.
 
Recovery rate
–
The projected recovery rate reflects the estimated recovery
 
that will be realized given expected defaults;
 
it is an analogous
pricing input for corporate
 
or sovereign credits.
 
Reduction in recovery
 
rates will result
 
in lower expected
 
cash flows into the
structure upon the default of the instruments.
 
In general, a significant increase
 
/ (decrease) in the recovery rate in
 
isolation
would result in significantly higher / (lower) fair value
 
for the respective underlying cash security. The impact of a
 
change
in recovery
 
rate on
 
a credit
 
derivative position
 
will depend
 
on whether
 
credit protection
 
has been
 
bought or
 
sold. The
recovery rate
 
is ultimately
 
driven by
 
the value
 
recoverable from
 
collateral held
 
after default
 
occurs relative
 
to the
 
outstanding
exposure at that point.
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
336
Note 21
 
Fair value measurement (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Input
Description
Correlation
–
Correlation
 
measures
 
the
 
interrelationship between
 
the
 
movements of
 
two
 
variables.
 
It
 
is
 
expressed
 
as
 
a
 
percentage
between
 
–100% and
 
+100%, where
 
+100% represents
 
perfectly correlated
 
variables (meaning
 
a
 
movement of
 
one variable
 
is
associated with a
 
movement of the
 
other variable in
 
the same direction),
 
and –100% implies
 
that the variables
 
are inversely
correlated (meaning
 
a movement
 
of one
 
variable is
 
associated with
 
a movement
 
of the
 
other variable
 
in the
 
opposite
direction). The effect
 
of correlation on
 
the measurement of
 
fair value depends
 
on the
 
specific terms of
 
the instruments
being valued, reflecting the range of different
 
payoff features within such instruments.
Equity dividend yields
–
The derivation of a forward price
 
for an individual stock or index
 
is important for measuring fair
 
value for forward or swap
contracts and for measuring fair value using option pricing models. The relationship between the current stock price and
the forward
 
price is based
 
on a combination
 
of expected
 
future dividend
 
levels and
 
payment timings,
 
and, to
 
a lesser
 
extent,
the relevant
 
funding rates
 
applicable to
 
the stock
 
in question. Dividend
 
yields are
 
generally expressed as
 
an annualized
percentage of the share price, with the lowest limit of 0%
 
representing a stock that is not expected to pay any dividend.
The dividend yield and timing represent the most
 
significant parameter in determining fair value for instruments that are
sensitive to an equity forward price.
f) Level 3 instruments: sensitivity to changes in unobservable
 
input assumptions
The table below summarizes
 
those financial assets and
 
liabilities classified as Level
 
3 for which a
 
change in one or
 
more
of
 
the
 
unobservable
 
inputs
 
to
 
reflect
 
reasonably
 
possible
 
favorable
 
and
 
unfavorable
 
alternative
 
assumptions
 
would
change fair value significantly, and the estimated effect thereof. The table below does not represent the estimated effect
of stress
 
scenarios.
 
Interdependencies
 
between
 
Level 1,
 
2 and
 
3 parameters
 
have not
 
been
 
incorporated
 
in the
 
table.
Furthermore, direct
 
interrelationships
 
between the
 
Level 3 parameters
 
discussed below
 
are not
 
a significant element
 
of
the valuation uncertainty.
Sensitivity data is estimated
 
using a number of techniques,
 
including the estimation
 
of price dispersion among
 
different
market participants, variation
 
in modeling approaches
 
and reasonably possible
 
changes to assumptions
 
used within the
fair value
 
measurement process.
 
The sensitivity
 
ranges are
 
not always
 
symmetrical around
 
the fair
 
values, as the
 
inputs
used in valuations are not always precisely in the middle
 
of the favorable and unfavorable range.
Sensitivity data
 
is determined at
 
a product or
 
parameter level
 
and then aggregated
 
assuming no diversification
 
benefit.
Diversification would
 
incorporate estimated
 
correlations across
 
different sensitivity
 
results and,
 
as such,
 
would result
 
in
an
 
overall
 
sensitivity
 
that
 
would
 
be
 
less
 
than
 
the
 
sum
 
of
 
the
 
individual
 
component
 
sensitivities.
 
However,
 
the
 
Group
believes that the diversification benefit is not significant to
 
this analysis.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sensitivity of fair value measurements to changes
 
in unobservable input assumptions
1
31.12.24
31.12.23
USD m
Favorable
 
changes
Unfavorable
 
changes
Favorable
 
changes
Unfavorable
 
changes
Traded loans, loans measured at fair value and guarantees
185
(143)
635
(600)
Securities financing transactions
30
(24)
30
(32)
Auction rate securities
8
(6)
67
(21)
Asset-backed securities
32
(28)
39
(36)
Equity instruments
333
(308)
430
(413)
Investment fund units
179
(181)
135
(137)
Loan commitments measured at FVTPL
38
(42)
313
(343)
Interest rate derivatives, net
115
(70)
217
(103)
Credit derivatives, net
112
(117)
140
(131)
Foreign exchange derivatives, net
3
(2)
5
(4)
Equity / index derivatives, net
732
(617)
521
(443)
Other
289
(161)
281
(276)
Total
2,056
(1,700)
2,815
(2,538)
1 Sensitivity of issued and over-the-counter debt instruments is reported with the equivalent derivative
 
or Other.
 
g) Level 3 instruments: movements during the period
The table
 
below presents additional information about
 
material Level 3 assets and
 
liabilities measured at fair
 
value on
 
a
recurring basis.
 
Level 3 assets
 
and liabilities
 
may be hedged
 
with instruments
 
classified as
 
Level 1 or Level
 
2 in the fair
 
value
hierarchy,
 
and, as
 
a result,
 
realized
 
and unrealized
 
gains and
 
losses included
 
in the
 
table may
 
not include
 
the effect
 
of related
hedging activity. Furthermore,
 
the realized and unrealized gains and losses presented in the table are not limited solely to
those arising
 
from Level 3 inputs,
 
as valuations
 
are generally
 
derived from
 
both observable
 
and unobservable
 
parameters.
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
337
Note 21
 
Fair value measurement (continued)
Assets and liabilities
 
transferred into
 
or out of
 
Level 3 are
 
presented as if
 
those assets
 
or liabilities had
 
been transferred
at the beginning of the year.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Movements of Level 3 instruments
USD bn
Balance
at the
 
beginning
of the
period
Credit
Suisse
Level 3
assets and
liabilities
acquired
Net gains /
losses
included in
compre-
hensive
income
1
of which:
related to
instruments
held at the
end of the
period
Purchases
Sales
Issuances
Settlements
Transfers
 
into
 
Level 3
Transfers
 
out of
 
Level 3
Foreign
 
currency
 
translation
Balance
at the
end
of the
period
For the twelve months ended 31 December 2024
2
Financial assets at fair value held for
trading
22.6
0.5
(0.3)
0.9
(14.5)
0.7
(7.7)
1.5
(0.8)
(0.2)
3.1
of which: Equity instruments
0.3
(0.1)
(0.1)
0.0
(0.2)
0.0
(0.0)
0.2
(0.1)
(0.0)
0.1
of which: Corporate and municipal
bonds
1.3
(0.2)
(0.1)
0.4
(0.6)
0.0
0.0
0.1
(0.1)
(0.0)
0.8
of which: Loans
19.6
0.9
(0.2)
0.3
(12.3)
0.7
(7.7)
1.1
(0.6)
(0.1)
1.8
Derivative financial instruments –
assets
2.6
0.2
0.3
0.0
(0.2)
1.2
(1.0)
0.7
(0.7)
(0.0)
2.8
of which: Interest rate
0.4
0.1
0.1
0.0
(0.2)
0.5
(0.2)
0.2
0.0
0.0
0.9
of which: Equity / index
1.3
0.2
0.2
0.0
(0.0)
0.5
(0.4)
0.2
(0.6)
(0.0)
1.1
of which: Credit
0.5
(0.1)
(0.0)
0.0
(0.0)
0.1
(0.2)
0.3
(0.0)
(0.0)
0.6
Financial assets at fair value not held
for trading
8.4
0.2
(0.0)
0.6
(0.7)
2.1
(2.1)
0.8
(0.4)
(0.2)
8.7
of which: Loans
2.3
0.2
0.2
0.2
0.0
1.5
(0.6)
0.0
(0.3)
(0.1)
3.2
of which: Auction rate securities
1.2
0.0
(0.0)
0.0
0.0
0.0
(1.1)
0.0
0.0
0.0
0.2
of which: Equity instruments
3.1
(0.1)
(0.2)
0.2
(0.3)
0.0
(0.0)
0.1
0.0
(0.1)
2.9
of which: Investment fund units
0.7
0.0
0.0
0.1
(0.2)
0.0
(0.0)
0.0
(0.0)
(0.0)
0.7
of which: Asset-backed securities
0.2
(0.0)
(0.0)
0.0
(0.1)
0.0
0.0
0.5
(0.0)
(0.0)
0.6
Derivative financial instruments –
liabilities
5.6
(0.7)
0.2
0.0
(0.2)
1.8
(2.3)
0.6
(0.8)
(0.1)
4.1
of which: Interest rate
0.2
0.0
0.1
0.0
(0.0)
0.0
(0.1)
0.2
(0.0)
(0.0)
0.3
of which: Equity / index
3.3
0.3
0.3
0.0
(0.0)
1.6
(1.9)
0.5
(0.6)
(0.1)
3.1
of which: Credit
0.6
(0.2)
(0.1)
0.0
(0.0)
0.2
(0.1)
0.0
(0.1)
(0.0)
0.4
of which: Loan commitments
measured at FVTPL
1.0
(0.7)
(0.0)
0.0
(0.1)
0.0
(0.1)
0.0
(0.1)
(0.0)
0.1
Debt issued designated at fair value
15.3
(0.3)
0.1
0.0
0.0
4.2
(4.0)
1.8
(3.4)
(0.3)
13.3
Other financial liabilities designated at
fair value
2.6
(0.1)
(0.0)
0.0
(0.0)
1.3
(1.4)
0.4
(0.1)
(0.1)
2.8
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the twelve months ended 31 December 2023
Financial assets at fair value held for
trading
1.5
26.2
(0.9)
(0.5)
1.1
(4.5)
3.6
(5.6)
2.3
(1.1)
0.0
22.6
of which: Equity instruments
0.1
0.4
(0.1)
(0.0)
0.1
(0.2)
0.0
0.0
0.2
(0.1)
0.0
0.3
of which: Corporate and municipal
bonds
0.5
1.1
(0.2)
(0.1)
0.6
(0.8)
0.0
0.0
0.1
(0.0)
0.0
1.3
of which: Loans
0.6
23.1
(0.7)
(0.4)
0.1
(2.7)
3.6
(5.6)
2.0
(0.8)
0.0
19.6
Derivative financial instruments –
assets
1.5
1.4
(0.2)
(0.1)
0.0
(0.0)
1.0
(0.8)
0.3
(0.7)
0.0
2.6
of which: Interest rate
0.5
0.2
(0.0)
(0.0)
0.0
0.0
0.2
(0.3)
0.1
(0.2)
(0.0)
0.4
of which: Equity / index
0.7
0.5
(0.1)
0.0
0.0
0.0
0.6
(0.2)
0.1
(0.3)
0.0
1.3
of which: Credit
0.3
0.2
(0.1)
(0.0)
0.0
0.0
0.1
(0.2)
0.1
(0.0)
0.0
0.5
Financial assets at fair value not held
for trading
3.7
4.2
0.2
0.1
2.1
(2.2)
0.0
(0.0)
0.8
(0.3)
0.1
8.4
of which: Loans
0.7
0.8
0.3
0.3
0.6
(0.4)
(0.0)
(0.0)
0.4
(0.2)
0.0
2.3
of which: Auction rate securities
1.3
0.0
0.0
0.0
0.0
(0.1)
0.0
0.0
0.0
0.0
0.0
1.2
of which: Equity instruments
0.8
2.1
(0.0)
(0.1)
0.5
(0.4)
0.0
(0.0)
0.1
0.0
0.1
3.1
of which: Investment fund units
0.2
0.5
0.0
(0.0)
0.2
(0.2)
0.0
0.0
0.1
(0.0)
(0.0)
0.7
of which: Asset-backed securities
0.0
0.0
0.0
0.0
0.2
0.0
0.0
0.0
0.1
(0.1)
0.0
0.2
Derivative financial instruments –
liabilities
1.7
4.5
(0.4)
0.1
0.0
(0.0)
2.0
(2.0)
0.4
(0.7)
0.0
5.6
of which: Interest rate
0.1
0.2
(0.0)
(0.0)
0.0
0.0
0.1
(0.1)
0.1
(0.2)
0.0
0.2
of which: Equity / index
1.2
1.7
0.2
0.6
(0.0)
(0.0)
1.2
(0.9)
0.2
(0.3)
0.0
3.3
of which: Credit
0.3
0.3
0.0
0.0
0.0
0.0
0.1
(0.1)
0.1
(0.1)
0.0
0.6
of which: Loan commitments
measured at FVTPL
0.0
2.0
(0.6)
(0.5)
0.0
0.0
0.1
(0.5)
0.0
(0.0)
0.0
1.0
Debt issued designated at fair value
10.5
8.5
1.0
0.8
0.0
0.0
3.7
(5.1)
1.0
(4.5)
0.0
15.3
Other financial liabilities designated at
fair value
0.7
2.1
(0.0)
0.0
0.0
0.0
0.2
(0.2)
0.0
(0.1)
0.0
2.6
1 Net gains / losses included
 
in comprehensive income are recognized
 
in Net interest income and
 
Other net income from financial
 
instruments measured at fair value
 
through profit or loss in
 
the Income statement,
and also in Gains / (losses) from
 
own credit on financial liabilities designated
 
at fair value, before
 
tax in the Statement of comprehensive
 
income.
 
2 Total Level 3 assets as
 
of 31 December 2024 were USD
14.7
bn
(31 December 2023: USD
33.6
bn). Total Level 3 liabilities as of 31 December 2024 were USD
20.4
bn (31 December 2023: USD
23.6
bn).
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
338
Note 21
 
Fair value measurement (continued)
 
h) Maximum exposure to credit risk for financial instruments
 
measured at fair value
The tables below
 
provide the
 
Group’s maximum exposure
 
to credit risk
 
for financial instruments
 
measured at
 
fair value
and
 
the
 
respective
 
collateral
 
and
 
other
 
credit
 
enhancements
 
mitigating
 
credit
 
risk
 
for
 
these
 
classes
 
of
 
financial
instruments.
 
The maximum exposure
 
to credit risk
 
includes the carrying
 
amounts of financial
 
instruments recognized on
 
the balance
sheet subject to credit risk
 
and the notional amounts for off-balance sheet
 
arrangements. Where information is available,
collateral is presented at fair
 
value. For other collateral, such as
 
real estate, a reasonable alternative
 
value is used. Credit
enhancements,
 
such
 
as
 
credit
 
derivative
 
contracts
 
and
 
guarantees,
 
are
 
included
 
at
 
their
 
notional
 
amounts.
 
Both
 
are
capped at
 
the maximum
 
exposure to
 
credit risk
 
for which
 
they serve
 
as security.
 
The “Risk
 
management
 
and control”
section of this
 
report describes
 
management’s view
 
of credit
 
risk and the
 
related exposures,
 
which can differ
 
in certain
respects from the requirements of IFRS Accounting Standards.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum exposure to credit risk
 
31.12.24
Maximum
exposure to
credit risk
Collateral
Credit enhancements
Exposure to
credit risk
after collateral
and credit
enhancements
USD bn
Cash
collateral
received
Collateralized
by equity and
debt
instruments
Secured by
real estate
Other
 
collateral
Netting
Credit
derivative
contracts
Guarantees
and sub-
participations
 
Financial assets measured at
 
fair value on the balance sheet
1
Financial assets at fair value
 
held for trading – debt instruments
2,3
34.3
34.3
Derivative financial instruments
4,5
185.6
6.7
155.1
23.8
Brokerage receivables
25.9
25.7
0.2
Financial assets at fair value not
 
held for trading – debt instruments
6
73.8
0.1
31.5
1.0
0.0
0.0
41.3
Total financial assets measured at fair value
319.6
0.1
63.9
0.0
1.0
155.1
0.0
0.0
99.6
Guarantees
0.4
0.1
0.0
0.3
0.0
31.12.23
Maximum
exposure to
credit risk
Collateral
Credit enhancements
Exposure to
credit risk
after collateral
and credit
enhancements
USD bn
Cash
collateral
received
Collateralized
by equity and
debt
instruments
Secured by
real estate
Other
 
collateral
Netting
Credit
derivative
contracts
Guarantees
and sub-
participations
 
Financial assets measured at
 
fair value on the balance sheet
1
Financial assets at fair value
 
held for trading – debt instruments
2,3
54.6
 
54.6
Derivative financial instruments
4,5
176.1
6.4
156.4
13.3
Brokerage receivables
21.0
20.5
0.5
Financial assets at fair value not
 
held for trading – debt instruments
6
83.3
41.7
0.0
0.2
0.0
41.3
Total financial assets measured at fair value
335.0
0.0
68.6
0.0
0.0
156.6
0.0
0.0
109.8
Guarantees
0.1
0.1
0.0
1 The maximum exposure to
 
loss is generally equal to
 
the carrying amount and subject to
 
change over time with market
 
movements.
 
2 For the purpose of
 
this disclosure, collateral and
 
credit enhancements were
not considered as
 
these positions are
 
generally managed under
 
the market risk
 
framework.
 
3 Does not include
 
investment fund units.
 
4 Includes USD
146
m (31 December
 
2023: USD
1,291
m) fair value
 
loan
commitments and USD
20
m (31 December 2023:
 
USD
32
m) forward starting
 
reverse repurchase agreements
 
classified as derivatives.
 
The full contractual
 
committed amount of forward
 
starting reverse repurchase
agreements (generally
 
highly collateralized)
 
of USD
51.5
bn (31
 
December 2023:
 
USD
68.0
bn) and
 
derivative loan
 
commitments (mostly
 
secured) of
 
USD
14.8
bn, of
 
which USD
4.0
bn has
 
been sub-participated
(31 December 2023: USD
32.1
bn, of which USD
5.1
bn had been sub-participated), is presented in Note
 
11 under notional amounts.
 
5 The amount shown in the “Netting” column
 
represents the netting potential
not recognized
 
on the
 
balance sheet.
 
Refer to
 
Note 22 for
 
more information.
 
6 Does not
 
include unit-linked
 
investment contracts
 
and investment
 
fund units.
 
Financial assets
 
at fair
 
value not
 
held for
 
trading
collateralized by equity and debt instruments consisted of structured loans and reverse repurchase and securities borrowing agreements.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
339
Note 21
 
Fair value measurement (continued)
 
i) Financial instruments not measured at fair value
The table below provides the estimated fair values of financial
 
instruments not measured at fair value.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial instruments not measured at fair value
31.12.24
31.12.23
Carrying
amount
Fair value
Carrying
amount
USD bn
Total
Carrying
amount
approximates
fair value
1
Level 1
Level 2
Level 3
Total
Total
Carrying
amount
approximates
fair value
1,2
Level 1
Level 2
Level 3
Total
Assets
Cash and balances at central banks
223.3
223.3
0.0
0.0
0.0
223.3
314.1
314.0
0.0
0.1
0.0
314.1
Amounts due from banks
18.9
17.9
0.0
0.8
0.2
18.9
21.1
19.7
0.0
1.2
0.2
21.2
Receivables from securities financing
transactions measured at amortized cost
118.3
115.1
0.0
2.8
0.4
118.3
99.0
93.6
0.0
3.9
1.5
99.0
Cash collateral receivables on derivative
instruments
44.0
44.0
0.0
0.0
0.0
44.0
50.1
50.1
0.0
0.0
0.0
50.1
Loans and advances to customers
580.0
180.9
0.0
43.9
354.9
579.7
639.7
196.8
0.0
54.5
382.2
633.5
Other financial assets measured at amortized
cost
58.8
10.1
13.2
31.0
2.8
57.0
65.5
13.2
13.9
33.9
2.6
63.9
Liabilities
Amounts due to banks
23.3
16.2
0.0
7.2
0.0
23.4
71.0
62.7
0.0
8.3
0.0
71.0
Payables from securities financing
transactions measured at amortized cost
14.8
7.1
0.0
7.5
0.2
14.8
14.4
8.1
0.0
5.9
0.4
14.4
Cash collateral payables on derivative
instruments
35.5
35.5
0.0
0.0
0.0
35.5
41.6
41.5
0.0
0.0
0.0
41.5
Customer deposits
745.8
673.9
0.0
72.6
0.0
746.6
792.0
694.1
0.0
98.7
0.0
792.9
Debt issued measured at amortized cost
214.2
19.6
0.0
201.0
0.0
220.6
237.8
24.7
0.0
216.3
0.1
241.3
Other financial liabilities measured at
amortized cost
3
16.4
15.0
0.0
0.1
1.3
16.4
15.3
13.4
0.0
0.0
1.7
15.2
1 Includes certain financial instruments where the carrying amount is a reasonable approximation of
 
the fair value due to the instruments’ short-term nature (instruments that
 
are receivable or payable on demand or
with a remaining maturity (excluding the effects of callable features) of three months or less).
 
2 Comparative-period information has been revised. Refer to Note 2 for more information.
 
3 Excludes lease liabilities.
The fair values
 
included in the
 
table above have
 
been calculated for
 
disclosure purposes
 
only.
 
The valuation techniques
and assumptions described below relate
 
only to the fair value
 
of UBS’s financial instruments
 
not measured at fair
 
value.
Other institutions
 
may use
 
different
 
methods and
 
assumptions for
 
their fair
 
value estimations,
 
and therefore
 
such fair
value disclosures cannot necessarily be compared from one financial institution to another. The following principles were
applied when determining fair value estimates for financial
 
instruments not measured at fair value.
–
For financial
 
instruments
 
with remaining
 
maturities greater
 
than three
 
months, the
 
fair value
 
was determined
 
from
quoted market prices, if available.
–
Where quoted market prices were
 
not available, the fair values were estimated
 
by discounting contractual cash flows
using current
 
market
 
interest
 
rates
 
or appropriate
 
yield curves
 
for
 
instruments
 
with
 
similar credit
 
risk and
 
maturity.
These estimates generally include adjustments for counterparty
 
credit risk or UBS’s own credit.
–
For short-term financial instruments with
 
remaining maturities of three months
 
or less, the carrying amount, which
 
is
net of credit loss allowances, is generally considered a reasonable
 
estimate of fair value.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
340
 
Note 22
 
Offsetting financial assets and financial liabilities
UBS enters into netting agreements
 
with counterparties to manage
 
the credit risks associated
 
primarily with repurchase
and
 
reverse
 
repurchase
 
transactions,
 
securities
 
borrowing
 
and
 
lending,
 
over-the-counter
 
derivatives,
 
and
 
exchange-
traded
 
derivatives.
 
These
 
netting agreements
 
and
 
similar
 
arrangements
 
generally
 
enable
 
the
 
counterparties
 
to
 
set
 
off
liabilities against available assets received in the
 
ordinary course of business and / or in the event
 
that the counterparties
to the transaction are unable to fulfill their contractual
 
obligations.
The tables below
 
provide a summary
 
of financial assets
 
and financial liabilities
 
subject to offsetting,
 
enforceable master
netting
 
arrangements
 
and
 
similar
 
agreements,
 
as
 
well
 
as
 
financial
 
collateral
 
received
 
or
 
pledged
 
to
 
mitigate
 
credit
exposures for these financial instruments.
 
The
 
Group
 
engages
 
in
 
a
 
variety
 
of
 
counterparty
 
credit
 
risk
 
mitigation
 
strategies
 
in
 
addition
 
to
 
netting
 
and
 
collateral
arrangements. Therefore, the net
 
amounts presented in the
 
tables below do not purport
 
to represent their actual
 
credit
risk exposure.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial assets subject to offsetting, enforceable
 
master netting arrangements and similar
 
agreements
Assets subject to netting arrangements
 
Netting recognized on the balance sheet
Netting potential not recognized on
the balance sheet
1
Assets not
subject to netting
arrangements
2
Total assets
As of 31.12.24, USD bn
Gross assets
before netting
Netting with
 
gross liabilities
3
Net assets
recognized
on the
balance
 
sheet
Financial
liabilities
Collateral
received
Assets after
consideration
of
netting
potential
Assets
recognized
on the
balance
 
sheet
Total assets
after
consideration
of netting
 
potential
Total assets
recognized
 
on the
 
balance
sheet
Receivables from securities financing
transactions measured at amortized cost
111.4
(13.3)
98.2
(3.1)
(95.0)
0.1
20.1
20.3
118.3
Derivative financial instruments
 
177.9
(2.6)
175.2
(135.5)
(26.2)
13.5
10.3
23.8
185.6
Cash collateral receivables on
 
derivative instruments
4
42.0
0.0
42.0
(25.9)
(2.4)
13.7
1.9
15.7
44.0
Financial assets at fair value
 
not held for trading
112.3
(87.1)
25.2
(1.8)
(23.3)
0.1
70.3
70.4
95.5
of which: reverse
 
repurchase agreements
109.6
(87.1)
22.5
(1.8)
(20.6)
0.1
1.0
1.0
23.4
Total assets
443.6
(103.0)
340.6
(166.4)
(146.9)
27.4
102.7
130.1
443.3
As of 31.12.23, USD bn
Receivables from securities financing
transactions measured at amortized cost
93.7
(12.7)
80.9
(1.5)
(79.2)
0.3
18.1
18.4
99.0
Derivative financial instruments
 
172.4
(3.3)
169.1
(133.0)
(29.8)
6.3
7.0
13.3
176.1
Cash collateral receivables on
 
derivative instruments
4
47.3
0.0
47.3
(29.7)
(3.2)
14.5
2.7
17.2
50.1
Financial assets at fair value
 
not held for trading
129.8
(92.6)
37.2
(2.0)
(35.3)
0.0
66.7
66.7
104.0
of which: reverse
 
repurchase agreements
128.7
(92.6)
36.1
(2.0)
(34.1)
0.0
0.8
0.8
36.9
Total assets
443.2
(108.6)
334.6
(166.2)
(147.4)
21.0
94.6
115.6
429.2
1 For the purpose of this disclosure,
 
the amounts of financial instruments and cash
 
collateral presented have been capped so
 
as not to exceed the net amount
 
of financial assets presented on the balance
 
sheet; i.e.
over-collateralization, where
 
it exists, is
 
not reflected in
 
the table.
 
2 Includes assets
 
not subject to
 
enforceable netting arrangements
 
and other out-of-scope
 
items.
 
3 The logic
 
of the table
 
results in amounts
presented in the “Netting with gross liabilities”
 
column corresponding directly to the amounts
 
presented in the “Netting with gross assets”
 
column in the liabilities table presented
 
below. Netting in this column
 
for
reverse repurchase agreements
 
presented within the
 
lines “Receivables from
 
securities financing transactions
 
measured at amortized
 
cost” and “Financial
 
assets at fair
 
value not held
 
for trading” taken
 
together
corresponds to the amounts presented for repurchase agreements in the “Payables
 
from securities financing transactions measured at amortized cost” and
 
“Other financial liabilities designated at fair value” lines in
the liabilities table presented below.
 
4 The net amount of Cash collateral receivables on derivative instruments recognized on the balance sheet includes certain OTC derivatives that are net settled on a daily basis
either legally or in substance under IAS 32 principles and exchange-traded derivatives that are economically
 
settled on a daily basis.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
341
Note 22
 
Offsetting financial assets and financial liabilities (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial liabilities subject to offsetting, enforceable
 
master netting arrangements and similar
 
agreements
Liabilities subject to netting arrangements
 
Netting recognized on the balance sheet
Netting potential not recognized
 
on the balance sheet
1
Liabilities not
subject
 
to netting
 
arrangements
2
Total liabilities
As of 31.12.24, USD bn
Gross
liabilities
before
netting
Netting with
 
gross assets
3
Net
 
liabilities
recognized
on the
balance
sheet
Financial
assets
Collateral
pledged
Liabilities
after
consideration
 
of netting
potential
Liabilities
recognized
on the
balance
 
sheet
Total
 
liabilities
 
after
consideration
of netting
potential
Total
 
liabilities
recognized
on the
balance
 
sheet
Payables from securities financing
transactions measured at amortized cost
25.0
(11.5)
13.5
(1.1)
(12.4)
4
0.0
1.4
1.4
14.8
Derivative financial instruments
 
176.2
(2.6)
173.5
(135.5)
(30.8)
7.2
7.1
14.3
180.6
Cash collateral payables on
 
derivative instruments
5
33.9
0.0
33.9
(19.3)
(2.4)
12.2
1.6
13.8
35.5
Other financial liabilities
 
designated at fair value
96.8
(88.9)
7.8
(3.8)
(4.0)
0.0
20.9
20.9
28.7
of which: repurchase agreements
94.7
(88.9)
5.8
(3.8)
(2.0)
0.0
0.0
0.0
5.8
Total liabilities
331.8
(103.0)
228.8
(159.8)
(49.5)
19.4
30.9
50.3
259.7
As of 31.12.23, USD bn
Payables from securities financing
transactions measured at amortized cost
25.2
(12.5)
12.6
(0.8)
(11.8)
4
0.0
1.8
1.8
14.4
Derivative financial instruments
 
185.1
(3.3)
181.8
(133.0)
(35.0)
13.9
10.4
24.3
192.2
Cash collateral payables on
 
derivative instruments
5
39.8
0.0
39.7
(23.2)
(3.2)
13.3
1.8
15.2
41.6
Other financial liabilities
 
designated at fair value
102.1
(92.8)
9.3
(2.7)
(4.8)
1.8
20.2
22.0
29.5
of which: repurchase agreements
100.0
(92.8)
7.2
(2.7)
(4.5)
0.0
0.2
0.2
7.4
Total liabilities
352.1
(108.6)
243.5
(159.7)
(54.8)
29.1
34.2
63.2
277.7
1 For the purpose of this disclosure, the amounts of financial instruments and cash collateral presented have been capped so as not to exceed the net amount of financial liabilities presented on the balance sheet; i.e.
over-collateralization, where it
 
exists, is not reflected
 
in the table.
 
2 Includes liabilities not subject to
 
enforceable netting arrangements and
 
other out-of-scope items.
 
3 The logic of
 
the table results in amounts
presented in the “Netting with gross assets” column corresponding to the amounts
 
presented in the “Netting with gross liabilities” column in the assets table
 
presented above. Netting in this column for repurchase
agreements presented within the lines “Payables from securities financing transactions measured at amortized
 
cost” and “Other financial liabilities designated at fair value” taken together corresponds to
 
the amounts
presented for reverse repurchase agreements
 
in the “Receivables from securities
 
financing transactions measured at
 
amortized cost” and “Financial assets
 
at fair value not held
 
for trading” lines in the
 
assets table
presented above.
 
4 Includes collateral of USD
8.8
bn (2023: USD
7.7
bn) for securities financing transactions measured at amortized cost that use UBS debt instruments as the underlying.
 
5 The net amount of Cash
collateral payables on derivative instruments recognized on the balance
 
sheet includes certain OTC derivatives that are net settled
 
on a daily basis either legally or in substance under IAS 32 principles and exchange-
traded derivatives that are economically settled on a daily basis.
 
 
 
Note 23
 
Restricted and transferred financial assets
This Note
 
provides information
 
about restricted
 
financial assets
 
(Note 23a),
 
transfers of
 
financial assets
 
(Note 23b
 
and
23c) and financial assets that are received
 
as collateral with the right to resell or repledge
 
these assets (Note 23d).
a) Restricted financial assets
Restricted
 
financial
 
assets
 
consist
 
of
 
assets
 
pledged
 
as
 
collateral
 
against
 
an existing
 
liability
 
or contingent
 
liability
 
and
other assets that are otherwise explicitly restricted
 
such that they cannot be used to secure
 
funding.
 
Financial
 
assets
 
pledged
 
as
 
collateral
 
mainly
 
include
 
pledged
 
mortgage
 
loans,
 
which
 
serve
 
as
 
collateral
 
for
 
existing
liabilities against
 
loans from Swiss
 
mortgage institutions
 
and US Federal
 
Home Loan Banks,
 
and in connection
 
with the
issuance of covered bonds. Of these pledged
 
mortgage loans, approximately USD
7.2
bn as of 31 December 2024 could
be
 
withdrawn
 
or
 
used
 
as
 
collateral
 
for
 
future
 
liabilities,
 
covered
 
bond
 
issuances
 
or
 
used
 
for
 
securities
 
financing
transactions backed by
 
available retained covered
 
bonds without breaching
 
existing collateral requirements
 
(31 December
2023:
 
approximately
 
USD
7.5
bn). Liabilities
 
in
 
relation
 
to
 
the
 
Emergency
 
Liquidity
 
Assistance
 
facility
 
against
 
the
 
Swiss
National Bank were fully
 
repaid during the year (31
 
December 2023: USD
44.9
bn). Existing liabilities against
 
Swiss central
mortgage institutions and US Federal Home Loan Banks and for existing covered
 
bond issuances were USD
48.4
bn as of
31 December 2024 (31 December 2023: USD
45.5
bn).
Other financial assets
 
are pledged as
 
collateral in relation
 
to securities lending
 
transactions and in
 
repurchase transactions,
which are generally
 
entered into under standard
 
market agreements. For securities
 
lending, the cash
 
received as collateral
may
 
be
 
more
 
or
 
less
 
than
 
the
 
fair
 
value
 
of
 
the
 
securities
 
loaned,
 
depending
 
on
 
the
 
nature
 
of
 
the
 
transaction.
 
For
repurchase agreements,
 
the fair
 
value of
 
the collateral
 
sold under
 
an agreement
 
to repurchase
 
is generally
 
in excess
 
of
the cash borrowed.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
342
Note 23
 
Restricted and transferred financial assets (continued)
Other restricted financial
 
assets include assets
 
protected under client
 
asset segregation rules,
 
assets held under
 
unit-linked
investment contracts to back related liabilities to the policy holders and assets held in certain jurisdictions to comply with
explicit minimum local asset
 
maintenance requirements. The carrying amount
 
of the liabilities associated
 
with these other
restricted financial
 
assets
 
is generally
 
equal to
 
the carrying
 
amount of
 
the assets,
 
with the
 
exception of
 
assets held
 
to
comply with local asset maintenance requirements, for
 
which the associated liabilities are greater.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Restricted financial assets
 
USD m
31.12.24
31.12.23
Restricted
financial assets
of which: assets
pledged as
collateral that
may be sold or
repledged by
counterparties
Restricted
financial assets
of which: assets
pledged as
collateral that
may be sold or
repledged by
counterparties
Financial assets pledged as collateral
Cash and balances at central banks
1
876
1,041
Financial assets at fair value held for trading
71,050
38,532
83,689
51,263
Loans and advances to customers
70,342
127,362
Financial assets at fair value not held for trading
3,645
2,566
3,099
2,110
Debt securities classified as Other financial assets measured
 
at amortized cost
8,703
7,891
7,561
6,299
Total financial assets pledged as collateral
154,616
222,752
Other restricted financial assets
Amounts due from banks
2,570
2,874
Financial assets at fair value held for trading
264
184
Cash collateral receivables on derivative instruments
8,006
9,539
Loans and advances to customers
175
275
Other financial assets measured at amortized cost
2
4,186
4,724
Financial assets at fair value not held for trading
20,645
18,229
Financial assets measured at fair value through other comprehensive
 
income
1,863
1,846
Other
128
354
Total other restricted financial assets
37,837
38,025
Total financial assets pledged and other restricted financial assets
3
192,453
260,777
1 Assets pledged
 
to the depositor protection
 
system in Switzerland.
 
2 Predominantly includes cash
 
collateral provided to exchanges and
 
clearing houses to secure
 
securities trading activity through
 
those counterparties.
 
3 Does not include
 
assets placed with central
 
banks related to undrawn
 
credit lines and for
 
payment, clearing and settlement
 
purposes, as well
 
as undrawn contingency funding
 
facilities (31 December 2024:
 
USD
30.5
bn; 31 December 2023: USD
26.5
bn).
In addition to restrictions
 
on financial assets, UBS Group AG and
 
its subsidiaries are, in
 
certain cases, subject to
 
regulatory
requirements
 
that
 
affect
 
the
 
transfer
 
of
 
dividends
 
and
 
capital
 
within
 
the
 
Group,
 
as
 
well
 
as
 
intercompany
 
lending.
Supervisory authorities
 
also may
 
require entities
 
to measure
 
capital and
 
leverage ratios
 
on a
 
stressed basis,
 
such as
 
the
Federal
 
Reserve
 
Board’s
 
Comprehensive
 
Capital
 
Analysis
 
and
 
Review
 
(CCAR)
 
process,
 
which
 
may
 
limit
 
the
 
relevant
subsidiaries’ ability to make distributions of capital based
 
on the results of those tests.
Supervisory
 
authorities
 
generally
 
have
 
discretion
 
to
 
impose
 
higher
 
requirements
 
or
 
to
 
otherwise
 
limit
 
the
 
activities
 
of
subsidiaries.
 
Non-regulated subsidiaries are generally
 
not subject to such requirements and transfer
 
restrictions. However, restrictions
can
 
also
 
be
 
the
 
result
 
of
 
different
 
legal,
 
regulatory,
 
contractual,
 
entity-
 
or
 
country-specific
 
arrangements
 
and
 
/
 
or
requirements.
›
Refer to the “Financial and regulatory key figures for our significant
 
regulated subsidiaries and sub-groups” section of this report
for financial information about significant regulated subsidiaries
 
of the Group
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
343
Note 23
 
Restricted and transferred financial assets (continued)
 
b) Transferred financial assets that are not derecognized
 
in their entirety
The
 
table
 
below
 
presents
 
information
 
for
 
financial
 
assets
 
that
 
have
 
been
 
transferred
 
but
 
are
 
subject
 
to
 
continued
recognition in full, as well as recognized
 
liabilities associated with those transferred assets.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Transferred financial assets subject to continued recognition in full
 
USD m
31.12.24
31.12.23
Carrying amount
of transferred
assets
Carrying amount of
 
associated liabilities
 
recognized
 
on balance sheet
Carrying amount
of transferred
assets
Carrying amount of
 
associated liabilities
 
recognized
 
on balance sheet
Financial assets at fair value held for trading that may be sold or repledged
 
by counterparties
38,532
19,690
51,263
23,765
Financial assets at fair value not held for trading that may be sold or repledged
 
by
counterparties
2,566
2,012
2,110
1,976
Debt securities classified as Other financial assets measured
 
at amortized cost that may be
sold or repledged by counterparties
7,891
7,442
6,299
5,928
Total financial assets transferred
48,989
29,144
59,672
31,669
Transactions
 
in which
 
financial assets
 
are transferred
 
but continue
 
to be
 
recognized
 
in their
 
entirety on
 
UBS’s balance
sheet include
 
securities lending
 
and repurchase
 
agreements,
 
as well
 
as other
 
financial asset
 
transfers. Repurchase
 
and
securities lending
 
arrangements are, for
 
the most
 
part, conducted
 
under standard market
 
agreements and are
 
undertaken
with counterparties subject to UBS’s normal credit risk
 
control processes.
 
›
Refer to Note 1a item 2e for more information about repurchase
 
and securities lending agreements
Financial assets at
 
fair value held
 
for trading that
 
may be sold
 
or repledged
 
by counterparties
 
include securities lending
and
 
repurchase
 
agreements
 
in
 
exchange
 
for
 
cash
 
received,
 
securities
 
lending
 
agreements
 
in
 
exchange
 
for
 
securities
received and other financial asset transfers.
For
 
securities
 
lending
 
and
 
repurchase
 
agreements,
 
a
 
haircut
 
of
 
between
0
%
 
and
15
%
 
is
 
generally
 
applied
 
to
 
the
transferred
 
assets,
 
which
 
results
 
in
 
associated
 
liabilities
 
having
 
a
 
carrying
 
amount
 
below
 
the
 
carrying
 
amount
 
of
 
the
transferred assets. The counterparties to the associated liabilities
 
included in the table above have full recourse to UBS.
In securities
 
lending arrangements
 
entered into
 
in exchange
 
for the
 
receipt of
 
other securities
 
as collateral,
 
neither the
securities received nor the obligation
 
to return them are recognized
 
on UBS’s balance sheet,
 
as the risks and rewards of
ownership are not
 
transferred to
 
UBS. In cases
 
where such
 
financial assets
 
received are
 
subsequently sold
 
or repledged
in another transaction,
 
this is not considered to be a transfer of financial
 
assets.
Other financial asset transfers primarily include
 
securities transferred to collateralize derivative transactions, for which the
carrying amount
 
of associated liabilities
 
is not
 
included in
 
the table above,
 
because those replacement
 
values are
 
managed
on a
 
portfolio basis
 
across counterparties
 
and product
 
types, and
 
therefore there
 
is no
 
direct relationship
 
between the
specific collateral pledged and the associated liability.
Transferred financial assets that are not subject
 
to derecognition in full but remain on the balance
 
sheet to the extent of
the Group’s continuing involvement were not material as
 
of 31 December 2024 and as of 31 December 2023.
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
344
Note 23
 
Restricted and transferred financial assets (continued)
 
c) Transferred financial assets that are derecognized
 
in their entirety with continuing involvement
Continuing involvement in
 
a transferred and
 
fully derecognized financial
 
asset may result from
 
contractual provisions in
the particular transfer
 
agreement or from
 
a separate
 
agreement, with the
 
counterparty or
 
a third party,
 
entered into
 
in
connection with the transfer.
 
The fair value and carrying amount of UBS’s continuing involvement from transferred positions as of 31 December 2024
and 31 December 2023 was not material. Life-to-date losses reported in prior periods primarily relate to legacy positions
in securitization vehicles that have been fully marked
 
down, with no remaining exposure to loss.
 
d) Off-balance sheet assets received
The table below presents assets received from third parties that can be sold or repledged and that are not recognized on
the balance sheet but that are held as collateral, including
 
amounts that have been sold or repledged.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Off-balance sheet assets received
USD m
31.12.24
31.12.23
Fair value of assets received that can be sold or repledged
1
581,769
576,596
of which: sold or repledged
 
2
383,227
382,313
1 Includes securities received as initial margin from its clients that UBS is required to remit to central counterparties,
 
brokers and deposit banks through its exchange-traded derivative
 
clearing and execution services.
 
2 Does not include off-balance sheet securities (31 December 2024: USD
21.4
bn; 31 December 2023: USD
29.1
bn) placed with central banks related to undrawn credit lines and for payment, clearing and settlement
purposes for which there are no associated liabilities or contingent liabilities.
 
 
Note 24
 
Maturity analysis of assets and liabilities
a) Maturity analysis of carrying amounts of assets and
 
liabilities
The table
 
below provides
 
an analysis
 
of carrying
 
amounts of
 
balance sheet
 
assets and
 
liabilities, as
 
well as
 
off-balance
sheet
 
exposures
 
by
 
residual
 
contractual
 
maturity
 
as
 
of
 
the
 
reporting
 
date.
 
The
 
residual
 
contractual
 
maturity
 
of
 
assets
includes the effect
 
of callable features.
 
The residual contractual
 
maturity of liabilities and
 
off-balance sheet exposures
 
is
based on the earliest date on which a third party
 
could require UBS to pay.
Derivative financial instruments
 
and financial assets
 
and liabilities at
 
fair value held for
 
trading are presented
 
in the
Due
within 1 month
 
column;
 
however, the respective contractual maturities may extend
 
over significantly longer periods.
Assets held to hedge unit-linked investment contracts
 
(presented within
Financial assets at fair value not
 
held for trading
)
are
 
presented
 
in
 
the
Due within
 
1
 
month
 
column,
 
consistent
 
with
 
the
 
maturity
 
assigned
 
to
 
the
 
related
 
amounts
 
due
under unit-linked investment contracts (presented within
Other financial liabilities designated at fair value
).
Other financial assets
 
and liabilities with
 
no contractual maturity, such
 
as equity securities,
 
are presented in
 
the
Perpetual /
Not applicable
 
column. Undated or
 
perpetual instruments are
 
classified based on the
 
contractual notice period
 
that the
counterparty
 
of the
 
instrument
 
is entitled
 
to
 
give.
 
Where
 
there
 
is no
 
contractual
 
notice
 
period,
 
undated
 
or perpetual
contracts are presented in the
Perpetual / Not applicable
 
column.
Non-financial assets
 
and liabilities
 
with no
 
contractual maturity
 
are generally
 
included in
 
the
Perpetual /
 
Not applicable
column.
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
345
Note 24
 
Maturity analysis of assets and liabilities (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
31.12.24
USD bn
Due within
 
1 month
Due between
 
1 and 3
months
Due between
 
3 and 12
months
Due between
 
1 and 2 years
Due between
 
2 and 5 years
Due over
 
5 years
Perpetual /
Not
applicable
Total
Assets
Total financial assets measured at amortized cost
556.1
50.6
69.9
115.7
128.9
122.2
1,043.3
Amounts due from banks
17.1
0.8
0.6
0.0
0.2
0.1
18.9
Loans and advances to customers
162.6
33.4
61.5
108.5
110.9
103.1
580.0
Other financial assets measured at amortized cost
9.5
0.9
5.2
6.6
17.6
18.9
58.8
Total financial assets measured at fair value through profit or
loss
412.2
6.5
14.2
13.5
12.7
2.3
4.5
465.9
Financial assets at fair value not held for trading
41.7
6.5
14.2
13.5
12.7
2.3
4.5
95.5
Financial assets measured at fair value through other
comprehensive income
0.5
0.8
0.9
0.0
0.0
0.0
2.2
Total non-financial assets
13.4
0.3
0.6
0.0
2.5
1.1
35.8
53.6
Total assets
982.1
58.1
85.6
129.2
144.1
125.6
40.3
1,565.0
Liabilities
Total financial liabilities measured at amortized cost
687.1
79.9
88.1
45.9
75.1
64.3
14.3
1,054.7
Customer deposits
608.1
65.4
51.2
8.9
11.8
0.3
745.8
Debt issued measured at amortized cost
9.8
9.8
32.7
32.4
54.0
61.2
14.3
214.2
of which: non-subordinated
9.8
9.8
32.4
32.1
53.9
61.2
199.2
of which: subordinated
0.3
0.3
0.1
14.3
15.0
Total financial liabilities measured at fair value through
profit or loss
1
299.7
11.9
27.7
26.7
13.1
22.4
401.5
Debt issued designated at fair value
12.0
11.4
26.3
25.1
11.6
21.6
107.9
Total non-financial liabilities
15.0
4.4
0.1
0.2
0.4
0.4
2.6
23.2
Total liabilities
 
1,001.8
96.3
115.9
72.9
88.6
87.1
16.9
1,479.5
Guarantees, loan commitments and forward starting transactions
2
Irrevocable loan commitments
78.7
0.5
0.4
0.0
79.6
Guarantees
 
40.7
40.7
Forward starting reverse repurchase and securities borrowing
agreements
24.9
24.9
Irrevocable committed prolongation of existing loans
2.5
0.7
1.4
0.0
4.6
Total
146.7
1.2
1.7
0.0
149.8
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
31.12.23
3
USD bn
Due within
 
1 month
Due between
 
1 and 3
months
Due between
 
3 and 12
months
Due between
 
1 and 2 years
Due between
 
2 and 5 years
Due over
 
5 years
Perpetual /
Not
applicable
Total
Assets
Total financial assets measured at amortized cost
645.6
57.7
88.3
125.6
136.8
135.5
1,189.5
Amounts due from banks
18.7
1.1
0.8
0.0
0.3
0.2
21.1
Loans and advances to customers
177.8
34.0
77.5
118.5
116.6
115.3
639.7
Other financial assets measured at amortized cost
12.2
1.8
5.2
6.3
19.8
20.0
65.5
Total financial assets measured at fair value through profit or
loss
417.6
12.2
9.9
8.4
12.6
5.3
4.8
470.8
Financial assets at fair value not held for trading
50.8
12.2
9.9
8.4
12.6
5.3
4.8
104.0
Financial assets measured at fair value through other
comprehensive income
0.1
1.1
1.0
0.1
0.0
0.0
2.2
Total non-financial assets
12.3
0.2
1.3
1.2
1.1
38.4
54.5
Total assets
1,075.6
71.0
99.3
135.3
150.6
142.0
43.2
1,716.9
Liabilities
Total financial liabilities measured at amortized cost
748.7
97.0
115.1
49.8
88.7
66.4
12.0
1,177.6
Customer deposits
618.2
76.5
72.7
15.9
8.4
0.3
792.0
Debt issued measured at amortized cost
10.1
14.7
34.3
31.1
73.2
62.5
12.0
237.8
of which: non-subordinated
7.6
14.7
31.8
30.8
72.8
62.5
220.2
of which: subordinated
2.5
2.5
0.3
0.3
0.0
12.0
17.6
Total financial liabilities measured at fair value through
profit or loss
1
308.3
14.0
30.0
31.2
18.0
25.2
426.6
Debt issued designated at fair value
17.0
13.8
28.8
28.8
15.9
24.0
128.3
Total non-financial liabilities
17.9
4.5
0.2
0.3
0.7
0.4
2.5
26.5
Total liabilities
 
1,074.9
115.6
145.3
81.3
107.4
91.9
14.5
1,630.8
Guarantees, loan commitments and forward starting transactions
2
Irrevocable loan commitments
90.7
0.5
0.4
0.0
0.0
91.6
Guarantees
 
46.3
46.3
Forward starting reverse repurchase and securities borrowing
agreements
18.4
18.4
Irrevocable committed prolongation of existing loans
2.5
0.8
1.3
0.0
0.0
4.6
Total
157.9
1.4
1.8
0.0
0.0
161.0
1 As of 31 December 2024 and 31
 
December 2023, the contractual redemption
 
amount at maturity of debt issued designated
 
at fair value through profit
 
or loss and other financial liabilities designated
 
at fair value
through profit or loss
 
was not materially
 
different from the carrying
 
amount.
 
2 The notional
 
amounts associated with
 
derivative loan commitments,
 
as well as
 
forward starting repurchase
 
and reverse repurchase
agreements, measured at
 
fair value through
 
profit or loss
 
are presented together
 
with notional amounts
 
related to derivative
 
instruments and have
 
been excluded from
 
the table above.
 
Refer to Note
 
11 for more
information.
 
3 Comparative-period information has been revised. Refer to Note 2 for more information.
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
346
Note 24
 
Maturity analysis of assets and liabilities (continued)
 
b) Maturity analysis of financial liabilities on an undiscounted
 
basis
The table below provides
 
an analysis of financial
 
liabilities on an undiscounted
 
basis, including all
 
cash flows relating
 
to
principal and
 
future interest
 
payments. The
 
residual contractual
 
maturities for
 
non-derivative and
 
non-trading financial
liabilities are
 
based on
 
the earliest
 
date on
 
which UBS
 
could be
 
contractually required
 
to pay.
 
Derivative positions
 
and
trading liabilities,
 
predominantly made
 
up of short
 
sale transactions,
 
are presented
 
in the
Due within 1
 
month
 
column
,
as this provides a conservative reflection of the nature of these trading activities. The residual contractual
 
maturities may
extend over significantly longer periods.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
31.12.24
USD bn
Due within
 
1 month
Due between
 
1 and 3
months
Due between
 
3 and 12
months
Due between
 
1 and 2 years
Due between
 
2 and 5 years
Due over
 
5 years
Perpetual /
Not
applicable
Total
Financial liabilities recognized on balance sheet
1
Amounts due to banks
13.5
3.1
3.1
1.5
2.8
24.1
Payables from securities financing transactions
5.4
1.5
0.7
2.8
5.0
15.5
Cash collateral payables on derivative instruments
35.5
35.5
Customer deposits
608.7
66.4
53.7
9.9
13.9
0.3
753.0
Debt issued measured at amortized cost
2
10.4
11.6
36.9
38.3
67.6
74.9
14.8
254.5
Other financial liabilities measured at amortized cost
10.0
0.1
0.8
1.0
2.7
3.1
17.7
 
of which: lease liabilities
0.1
0.1
0.6
0.8
1.8
2.0
5.3
Total financial liabilities measured at amortized cost
683.5
82.8
95.3
53.4
92.1
78.3
14.8
1,100.3
Financial liabilities at fair value held for trading
3,4
35.2
35.2
Derivative financial instruments
3,5
180.6
180.6
Brokerage payables designated at fair value
49.0
49.0
Debt issued designated at fair value
6
12.1
11.7
28.1
27.8
12.7
38.4
130.8
Other financial liabilities designated at fair value
22.6
0.5
1.4
1.7
1.6
1.2
28.9
Total financial liabilities measured at fair value through
profit or loss
299.5
12.2
29.6
29.5
14.3
39.6
424.7
Total
983.0
95.0
124.9
82.9
106.4
117.9
14.8
1,524.9
Guarantees, loan commitments and forward starting transactions
Irrevocable loan commitments
7
78.7
0.5
0.4
0.0
79.6
Guarantees
40.7
40.7
Forward starting reverse repurchase and securities
borrowing agreements
7
24.9
24.9
Irrevocable committed prolongation of existing loans
2.5
0.7
1.4
0.0
4.6
Total
146.7
1.2
1.7
0.0
149.8
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
31.12.23
USD bn
Due within
 
1 month
Due between
 
1 and 3
months
Due between
 
3 and 12
months
Due between
 
1 and 2 years
Due between
 
2 and 5 years
Due over
 
5 years
Perpetual /
Not
applicable
Total
Financial liabilities recognized on balance sheet
1
Amounts due to banks
60.2
2.7
4.2
0.3
4.4
0.0
71.7
Payables from securities financing transactions
5.0
3.2
3.7
2.0
0.9
0.0
14.8
Cash collateral payables on derivative instruments
41.6
41.6
Customer deposits
619.5
77.6
75.4
17.6
9.9
0.3
800.4
Debt issued measured at amortized cost
2
10.7
16.4
38.8
37.4
87.8
75.6
12.4
279.3
Other financial liabilities measured at amortized cost
7.7
0.2
0.9
1.2
3.3
4.2
17.4
 
of which: lease liabilities
0.1
0.1
0.8
0.9
2.1
2.5
6.5
Total financial liabilities measured at amortized cost
744.7
100.2
123.1
58.5
106.3
80.0
12.4
1,225.2
Financial liabilities at fair value held for trading
3,4
34.2
34.2
Derivative financial instruments
3,5
192.2
192.2
Brokerage payables designated at fair value
42.5
42.5
Debt issued designated at fair value
6
17.1
14.3
30.1
32.1
17.4
38.7
149.8
Other financial liabilities designated at fair value
22.2
0.2
1.2
2.3
2.1
1.6
29.7
Total financial liabilities measured at fair value through
profit or loss
308.2
14.6
31.3
34.5
19.5
40.3
448.3
Total
1,052.9
114.8
154.3
93.0
125.7
120.4
12.4
1,673.5
Guarantees, loan commitments and forward starting transactions
Irrevocable loan commitments
7
90.7
0.5
0.4
0.0
0.0
91.6
Guarantees
46.3
46.3
Forward starting reverse repurchase and securities
borrowing agreements
7
18.4
18.4
Irrevocable committed prolongation of existing loans
2.5
0.8
1.3
0.0
0.0
4.6
Total
157.9
1.4
1.8
0.0
0.0
161.0
1 Except for financial liabilities at
 
fair value held for trading
 
and derivative financial instruments
 
(see footnote 3), the amounts
 
presented generally represent undiscounted
 
cash flows of future interest
 
and principal
payments.
 
2 The time-bucket Perpetual / Not applicable
 
includes perpetual loss-absorbing additional tier 1 capital instruments.
 
3 Carrying amount is fair value. Management believes that this best represents
 
the
cash flows that would have to be paid if
 
these positions had to be settled or closed out.
 
4 Contractual maturities of financial liabilities at fair value held for trading are:
 
USD
33.0
bn due within 1 month (31 December
2023: USD
32.3
bn), USD
2.2
bn due between 1 month and
 
1 year (31 December 2023:
 
USD
1.8
bn) and USD
0
bn due between 1 and 5
 
years (31 December 2023: USD
0
bn).
 
5 Includes USD
166
m (31 December
2023: USD
1,195
m) related to fair values
 
of derivative loan commitments
 
and forward starting reverse
 
repurchase agreements classified as
 
derivatives, presented within
 
“Due within 1 month”. The
 
full contractual
committed amount of USD
66.3
bn (31 December 2023:
 
USD
100.1
bn) is presented in
 
Note 11 under
 
notional amounts.
 
6 Future interest payments
 
on variable-rate liabilities
 
are determined by reference
 
to the
applicable interest rate prevailing as of the reporting date. Future principal payments that are variable are determined by reference to the conditions existing at the relevant reporting date.
 
7 Excludes derivative loan
commitments and forward starting reverse repurchase agreements measured at fair value (see footnote 5).
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
347
 
Note 25
 
Hedge accounting
Derivatives designated in hedge accounting relationships
The Group applies hedge
 
accounting to interest rate risk
 
and foreign exchange risk,
 
including structural foreign exchange
risk related to net investments in foreign
 
operations.
 
›
Refer to “Market risk” in the “Risk management
 
and control” section of this report for more information about
 
how risks arise
and how they are managed by the Group
Hedging instruments and hedged risk
Interest rate swaps are
 
designated in fair
 
value hedges or
 
cash flow hedges
 
of interest rate risk
 
arising solely
 
from changes
in benchmark
 
interest
 
rates. Fair
 
value changes
 
arising from
 
such risk
 
are usually
 
the largest
 
component of
 
the overall
change in the fair value of the hedged position in the transaction
 
currency.
 
Cross-currency
 
swaps
 
are
 
designated
 
as
 
fair
 
value
 
hedges
 
of
 
foreign
 
exchange
 
risk.
 
Foreign
 
exchange
 
forwards
 
and
foreign exchange swaps
 
are mainly designated
 
as hedges of
 
structural foreign exchange
 
risk related to
 
net investments
in foreign operations. In both cases the hedged risk arises solely from
 
changes in the spot foreign exchange rate.
 
The notional of the designated hedging instruments matches the
 
notional of the hedged items, except when
 
the interest
rate
 
swaps
 
are
 
designated
 
in
 
cash
 
flow
 
hedges
 
after
 
the
 
trade
 
date,
 
in
 
which
 
case
 
the
 
hedge
 
ratio
 
designated
 
is
determined based on the swap sensitivity.
Hedged items and hedge designation
 
Fair value hedges of interest rate risk related to
 
debt instruments and loan assets
Fair
 
value
 
hedges
 
of
 
interest
 
rate
 
risk
 
related
 
to
 
debt
 
instruments
 
and
 
loan
 
assets
 
involve
 
swapping
 
fixed
 
cash
 
flows
associated with loans to customers
 
(including long-term fixed-rate
 
mortgage loans in Swiss francs),
 
debt securities held,
customer deposits,
 
or debt
 
issued to
 
floating cash
 
flows by
 
entering into
 
interest
 
rate swaps
 
that either
 
pay fixed
 
and
receive floating cash flows or that
 
receive fixed and pay floating cash
 
flows. The floating future cash flows
 
are based on
the
 
following
 
benchmark
 
rates:
 
Secured
 
Overnight
 
Financing
 
Rate
 
(SOFR),
 
Effective
 
Federal
 
Funds
 
Rate
 
(EFFR),
 
Swiss
Average
 
Rate
 
Overnight
 
(SARON),
 
Euro
 
Interbank
 
Offered
 
Rate
 
(EURIBOR),
 
Euro
 
Short-Term
 
Rate
 
(ESTR),
 
Sterling
Overnight
 
Index
 
Average
 
(SONIA),
 
AUD
 
London
 
Interbank
 
Offered
 
Rate
 
(AUD
 
LIBOR),
 
Tokyo
 
Overnight
 
Average
 
Rate
(TONA), Singapore Overnight Rate Average
 
(SORA) and Norwegian Krona Overnight Index Swap (NOK OIS).
 
Cash flow hedges of forecast transactions
The Group hedges forecast cash flows on non-trading financial assets and liabilities that bear interest
 
at variable rates or
are expected
 
to be refinanced
 
or reinvested
 
in the future,
 
due to movements
 
in future
 
market rates.
 
The amounts and
timing of future
 
cash flows, representing both
 
principal and interest flows,
 
are projected on the
 
basis of contractual
 
terms
and
 
other
 
relevant
 
factors,
 
including
 
estimates
 
of
 
prepayments
 
and
 
defaults.
 
The
 
aggregate
 
principal
 
balances
 
and
interest cash
 
flows across
 
all portfolios
 
over time
 
form the
 
basis for identifying
 
the non-trading
 
interest rate
 
risk of the
Group, which is
 
hedged with
 
interest rate swaps,
 
the maximum maturity
 
of which is
 
15 years. Cash
 
flow forecasts
 
and
risk exposures
 
are monitored
 
and adjusted
 
on an
 
ongoing basis,
 
and consequently
 
additional hedging
 
instruments are
traded and designated, or are terminated, resulting
 
in a hedge discontinuance.
 
Fair value hedges of foreign exchange risk related to debt
 
instruments
Debt instruments denominated in currencies other than the US dollar are designated in fair value hedges of spot foreign
exchange
 
risk,
 
in
 
addition
 
to
 
and
 
separate
 
from
 
the
 
fair
 
value
 
hedges
 
of
 
interest
 
rate
 
risk.
 
Cross-currency
 
swaps
economically
 
convert
 
debt
 
instruments
 
denominated
 
in
 
currencies
 
other
 
than
 
the
 
US
 
dollar
 
to
 
US
 
dollars.
 
The
 
hedge
designations also
 
involve intragroup
 
debt instruments
 
that are
 
eliminated upon
 
consolidation, but
 
FX gains
 
and losses
impact consolidated profit or loss.
Hedges of net investments in foreign operations
The
 
Group
 
applies
 
hedge
 
accounting
 
for
 
certain
 
net
 
investments
 
in
 
foreign
 
operations,
 
which
 
include
 
subsidiaries,
branches and associates. Upon maturity of hedging instruments, typically one to three months, the hedge relationship is
terminated and new designations are made
 
to reflect any changes in the net investments
 
in foreign operations.
Economic relationship between hedged item and hedging
 
instrument
The economic relationship
 
between the
 
hedged item and
 
the hedging
 
instrument is
 
determined based
 
on a qualitative
analysis
 
of
 
their
 
critical
 
terms.
 
In
 
cases
 
where
 
hedge
 
designation
 
takes
 
place
 
after
 
the
 
trade
 
date
 
of
 
the
 
hedging
instrument, a quantitative
 
analysis of the
 
possible behavior of
 
the hedging
 
derivative and the
 
hedged item
 
during their
respective terms is also performed.
Sources of hedge ineffectiveness
 
In
 
hedges
 
of
 
interest
 
rate
 
risk,
 
hedge
 
ineffectiveness
 
can
 
arise
 
from
 
mismatches
 
of
 
critical
 
terms
 
and / or
 
the
 
use
 
of
different curves to
 
discount the hedged item and
 
instrument, or from entering
 
into a hedge relationship
 
after the trade
date of the hedging derivative.
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
348
Note 25
 
Hedge accounting (continued)
In hedges of foreign exchange risk related to debt instruments, hedge ineffectiveness can arise due
 
to the discounting of
the hedging
 
instruments and
 
undesignated risk
 
components and
 
lack of
 
such discounting
 
and risk
 
components in
 
the
hedged items.
 
In hedges of net investments in foreign operations, ineffectiveness is unlikely unless the hedged net assets fall below the
designated hedged amount.
 
The exceptions are
 
hedges where the
 
hedging currency is
 
not the same
 
as the currency
 
of
the foreign operation, where the currency basis may cause ineffectiveness.
Hedge ineffectiveness from financial instruments
 
measured at fair value through profit or loss
 
is recognized in
Other net
income from financial instruments measured at fair value
 
through profit or loss.
 
Derivatives not designated in hedge accounting relationships
 
Non-hedge-accounted
 
derivatives
 
are
 
mandatorily
 
held
 
for
 
trading
 
with
 
all
 
fair
 
value
 
movements
 
taken
 
to
Other
 
net
income from financial instruments
 
measured at fair value through
 
profit or loss
, even when held as an
 
economic hedge
or to
 
facilitate client
 
clearing. The
 
one exception
 
relates to
 
forward points
 
on certain
 
short- and
 
long-duration foreign
exchange and interest rate contracts acting as economic
 
hedges, which are reported in
Net interest income.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
All hedges: designated hedging instruments
 
and hedge ineffectiveness
As of or for the year ended
31.12.24
Carrying amount
USD m
Notional
amount
Derivative
financial
assets
Derivative
financial
liabilities
Changes in
 
fair value of
hedging
instruments
1
Changes in
fair value of
hedged
items
1
Hedge
ineffectiveness
recognized in the
income statement
Interest rate risk
Fair value hedges
233,636
25
10
(1,678)
1,692
14
Cash flow hedges
88,256
1
0
(1,715)
1,710
(5)
Foreign exchange risk
Fair value hedges
2
68,423
566
1,515
(1,383)
1,376
(7)
Hedges of net investments in foreign operations
21,777
689
1
2,963
(2,957)
6
As of or for the year ended
31.12.23
Carrying amount
USD m
Notional
amount
Derivative
financial
assets
Derivative
financial
liabilities
Changes in
 
fair value of
hedging
instruments
1
Changes in
fair value of
hedged
items
1
Hedge
ineffectiveness
recognized in the
income statement
Interest rate risk
Fair value hedges
246,909
3
51
2,275
(2,311)
(36)
Cash flow hedges
97,834
3
0
(337)
358
21
Foreign exchange risk
Fair value hedges
2
33,877
468
291
132
(151)
(19)
Hedges of net investments in foreign operations
38,668
17
1,270
(2,317)
2,320
3
1 Amounts used
 
as the basis
 
for recognizing hedge
 
ineffectiveness for the
 
period.
 
2 The foreign
 
currency basis spread
 
of cross-currency
 
swaps designated as
 
hedging derivatives is
 
excluded from the
 
hedge
accounting designation and accounted for as a cost of hedging with amounts deferred in Other comprehensive income within Equity.
 
 
 
 
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
349
Note 25
 
Hedge accounting (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value hedges: designated hedged items
 
recognized on balance sheet
1
USD m
31.12.24
31.12.23
Interest rate
risk
FX risk
Interest rate
risk
FX risk
Loans and advances to customers
Carrying amount of designated loans
56,309
61,107
of which: accumulated amount of fair value hedge adjustment
1,774
457
of which: accumulated amount of fair value hedge adjustment subject
 
to amortization attributable to the portion of the
portfolio that ceased to be part of hedge accounting
(176)
(179)
Other financial assets measured at amortized cost – debt securities
Carrying amount of designated debt securities
9,125
6,333
 
of which: accumulated amount of fair value hedge adjustment
(348)
(109)
Customer deposits
Carrying amount of customer deposits
13,031
8,972
 
of which: accumulated amount of fair value hedge adjustment
(18)
50
Debt issued measured at amortized cost
Carrying amount of designated debt issued
151,481
53,328
156,507
22,329
 
of which: accumulated amount of fair value hedge adjustment
(3,061)
(2,976)
1 In addition, as of 31 December 2024 UBS designated in fair value hedges of FX risk USD
15
bn (31 December 2023 USD
12
bn) of intragroup debt instruments that are not recognized on consolidated balance sheet
but FX gains and losses on these instruments impact consolidated profit or loss.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value hedges: profile of the timing of the
 
nominal amount of the hedging instrument
31.12.24
USD bn
Due within
1 month
Due between
1 and 3 months
Due between
3 and 12 months
Due between
1 and 5 years
Due after
5 years
Total
Interest rate swaps
3
9
38
118
66
234
Cross-currency swaps
 
2
1
8
45
12
68
31.12.23
USD bn
Due within
1 month
Due between
1 and 3 months
Due between
3 and 12 months
Due between
1 and 5 years
Due after
5 years
Total
Interest rate swaps
1
7
29
142
68
247
Cross-currency swaps
 
1
2
2
22
7
34
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash flow hedge reserve on a pre-tax basis
USD m
31.12.24
31.12.23
Amounts related to hedge relationships for which hedge
 
accounting continues to be applied
(2,514)
(2,319)
Amounts related to hedge relationships for which hedge
 
accounting is no longer applied
(714)
(1,487)
Total other comprehensive income recognized directly in equity related to cash flow hedges, on a pre-tax basis
(3,228)
(3,806)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation reserve on a pre-tax basis
USD m
31.12.24
31.12.23
Amounts related to hedge relationships for which hedge
 
accounting continues to be applied
861
(2,063)
Amounts related to hedge relationships for which hedge
 
accounting is no longer applied
266
266
Total other comprehensive income recognized directly in equity related to hedging instruments
 
designated as net investment hedges, on a pre-tax
basis
1,126
(1,798)
Note 26
 
Post-employment benefit plans
 
a) Defined benefit plans
UBS has established
 
defined benefit
 
plans for its
 
employees in various
 
jurisdictions in
 
accordance with
 
local regulations
and practices.
 
The major plans are located in Switzerland,
 
with smaller plans mainly in UK, US and Germany. The level of
benefits depends on the specific plan rules.
Major Swiss pension plans
The major Swiss pension plans
 
consist of the UBS Swiss
 
plan and the Credit Suisse
 
Swiss plan, covering employees of UBS
Group
 
AG in
 
Switzerland
 
and employees
 
of companies
 
in Switzerland
 
that have
 
close economic
 
or financial
 
ties with
UBS Group
 
AG,
 
and
 
exceed
 
the
 
minimum
 
benefit
 
requirements
 
under
 
Swiss
 
pension
 
law.
 
The
 
Swiss
 
plans
 
offer
retirement, disability and survivor benefits
 
and are governed by Pension Foundation
 
Boards. The responsibilities of these
boards are defined by Swiss pension
 
law and the plan rules. The UBS Swiss plan covers contributions
 
for all salary levels.
The Credit Suisse Swiss plan covers contributions up to a salary
 
of CHF
144,060
 
(USD
158,639
), and contributions above
that salary go into the Credit Suisse Swiss 1e plan, which is accounted for under IFRS Accounting Standards as a defined
contribution plan.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
350
Note 26
 
Post-employment benefit plans (continued)
Savings
 
contributions
 
to the
 
Swiss plans
 
are paid
 
by both
 
the employer
 
and the
 
employee.
 
For the
 
UBS
 
Swiss plan,
 
depending
on the age of the
 
employee, UBS pays a savings contribution that ranges between
6.5
% and
27.5
% of the contributory
base salary
 
and between
2.8
% and
9
% of
 
the contributory variable
 
compensation. Employees can
 
choose the
 
level of
savings
 
contributions
 
paid by
 
them, which
 
vary between
2.5
% and
13.5
% of the
 
contributory
 
base salary
 
and between
0
%
and
9
% of the contributory
 
variable compensation,
 
depending on
 
age and choice
 
of savings contribution
 
category. For
 
the
Credit Suisse Swiss
 
plan, depending on
 
the age
 
of the
 
employee, UBS pays
 
a savings contribution that
 
ranges between
7.5
% and
25.0
% of
 
the contributory
 
base salary
 
and
6
% of
 
the contributory
 
variable
 
compensation.
 
Employees
 
can choose
the level of savings
 
contributions paid
 
by them, which vary between
5.0
% and
14.0
% of the contributory
 
base salary and
between
3
% and
9
% of
 
the contributory variable compensation, depending on
 
age and
 
choice of
 
savings contribution
category. UBS
 
also pays risk
 
contributions
 
that are used
 
to fund disability
 
and survivor benefits.
The plans offer to members at the
 
normal retirement age of
65
 
a choice between a lifetime pension
 
and a partial or full
lump sum payment. Participants
 
can choose to draw
 
early retirement benefits starting
 
from the age of
58
, but they can
also continue employment
 
and remain active
 
members of
 
the plan until
 
the age of
70
. Employees can
 
make additional
purchases of benefits to fund early retirement benefits.
The pension amount
 
payable to a
 
participant is calculated
 
by applying a conversion
 
rate to the
 
accumulated balance of
the
 
participant’s
 
retirement
 
savings
 
account
 
at
 
the
 
retirement
 
date.
 
The
 
balance
 
is
 
based
 
on
 
credited
 
vested
 
benefits
transferred
 
from
 
previous
 
employers,
 
purchases
 
of
 
benefits,
 
employee
 
and
 
employer
 
contributions
 
made
 
to
 
the
participant’s
 
retirement
 
savings
 
account,
 
and
 
interest
 
accrued.
 
The
 
annual
 
interest
 
rate
 
credited
 
to
 
participants
 
is
determined by the Pension Foundation Boards at the
 
end of each year.
Although the Swiss plans are
 
based on a defined contribution
 
promise under Swiss pension
 
law, they are accounted for
as defined benefit plans
 
under IFRS Accounting
 
Standards, primarily because
 
of the obligation to
 
accrue interest on
 
the
participants’ retirement savings accounts and the payment
 
of lifetime pension benefits.
Actuarial valuations in accordance
 
with Swiss pension law
 
are performed regularly. Should an
 
underfunded situation on
this basis occur, the
 
Pension Foundation Board of the respective
 
plan is required to
 
take the necessary measures to
 
ensure
that full funding
 
can be expected
 
to be restored within
 
a maximum period
 
of
10
 
years. If a Swiss
 
plan were to
 
become
significantly
 
underfunded
 
on
 
a
 
Swiss
 
pension
 
law
 
basis,
 
additional
 
employer
 
and
 
employee
 
contributions
 
could
 
be
required. In this situation, the risk is shared between employer and employees, and the employer is
 
not legally obliged to
cover more than
50
% of the
 
additional contributions required.
 
As of 31 December
 
2024, the technical funding
 
ratio in
accordance with Swiss pension law was
120.6
% at a
0.5
% technical interest rate for the UBS Swiss plan and
125.7
% at
a
1.31
% technical interest rate
 
for the Credit Suisse Swiss
 
plan (UBS Swiss plan 31 December
 
2023:
119.2
% at a
0.5
%
technical interest rate, Credit Suisse Swiss plan 31 December
 
2023:
124.0
% at a
1.62
% technical interest rate).
The investment strategies of the
 
Swiss plans comply with Swiss pension
 
law, including the rules and regulations
 
relating
to diversification
 
of plan assets,
 
and are derived
 
from the
 
risk budget defined
 
by the Pension
 
Foundation Boards
 
based
on regularly
 
performed
 
asset and
 
liability management
 
analyses. The
 
Pension Foundation
 
Boards strive
 
for a
 
medium-
and long-term balance between assets and liabilities.
As of 31 December
 
2024, the Swiss
 
plans were in
 
surplus situations on
 
an IFRS Accounting
 
Standards measurement basis,
as the fair value of the plan assets exceeded the defined benefit obligation (DBO) by USD
4,724
m for the UBS Swiss plan
and USD
2,900
m for the Credit Suisse
 
Swiss plan (UBS Swiss plan 31 December
 
2023: USD
6,332
m, Credit Suisse Swiss
plan 31 December 2023: USD
3,150
m). However, a surplus is only
 
recognized on the balance sheet
 
to the extent that it
does not exceed
 
the estimated
 
future economic
 
benefit, which
 
equals the
 
difference between
 
the present value
 
of the
estimated
 
future
 
net
 
service
 
cost
 
and
 
the
 
present
 
value
 
of
 
the
 
estimated
 
future
 
employer
 
contributions.
 
As
 
of
 
both
31 December 2024 and 31 December 2023, the
 
estimated future economic benefit of the UBS
 
Swiss plan was zero and
hence no net defined benefit asset was recognized on the balance sheet; as of 31 December 2024 a net defined benefit
asset of
 
USD
28
m was
 
recognized by
 
UBS for
 
prepaid contributions
 
held at
 
the Credit
 
Suisse Swiss
 
plan (31 December
2023: USD
88
m).
The regular employer
 
contributions in
 
2025 are estimated
 
at USD
519
m for the
 
UBS Swiss
 
plan and USD
239
m for the
Credit Suisse Swiss plan.
Changes to the Credit Suisse Swiss pension plan
In December
 
2023, the
 
Pension Foundation
 
Board
 
of the
 
Credit
 
Suisse
 
Swiss plan
 
decided to
 
align the
 
Swiss
 
pension
scheme to
 
that of
 
the UBS
 
Swiss plan,
 
effective
 
as of
 
1 January
 
2027. On
 
that date,
 
the Credit
 
Suisse Swiss
 
plan will
adopt the plan rules
 
of the UBS Swiss
 
plan. The Credit
 
Suisse Swiss 1e plan
 
will remain in
 
place as of this
 
date, but will
be closed for further
 
contributions. In accordance with IFRS Accounting
 
Standards, these decisions and related mitigating
measures led to an increase in UBS’s pension obligations in Switzerland resulting in a one-time pre-tax loss of
 
USD
245
m
(CHF
207
m) and
 
an
 
offsetting
 
gain
 
in other
 
comprehensive
 
income
 
in the
 
fourth
 
quarter
 
of 2023
 
with no
 
impact
 
on
equity and CET1 capital.
Financial information
The tables
 
below provide
 
an analysis
 
of the
 
movement
 
in the
 
net asset
 
/ liability
 
recognized
 
on the
 
balance sheet
 
for
defined benefit plans, as well as an analysis of amounts recognized
 
in net profit and in
Other comprehensive income
.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
351
Note 26
 
Post-employment benefit plans (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net asset / liability of defined benefit
 
plans
USD m
Major Swiss plans
31.12.24
31.12.23
1
Defined benefit obligation at the beginning of the year
44,922
22,272
Defined benefit obligation recognized upon the acquisition
 
of the Credit Suisse Group
15,142
Current service cost
763
567
Interest expense
564
680
Plan participant contributions
446
370
Remeasurements
4,017
4,446
of which: actuarial (gains) / losses due to changes in demographic
 
assumptions
25
76
of which: actuarial (gains) / losses due to changes in financial
 
assumptions
2,723
2,886
of which: experience (gains) / losses
2
1,269
1,484
Past service cost related to plan amendments
0
245
Curtailments
(104)
(29)
Benefit payments
(2,665)
(2,309)
Termination benefits
6
21
Foreign currency translation
(3,332)
3,516
Defined benefit obligation at the end of the year
44,617
44,922
of which: amounts owed to active members
24,576
24,007
of which: amounts owed to deferred members
0
0
of which: amounts owed to retirees
20,041
20,915
of which: funded plans
44,617
44,922
of which: unfunded plans
0
0
Fair value of plan assets at the beginning of the year
54,404
30,119
Fair value of plan assets recognized upon the acquisition of the Credit Suisse Group
18,914
Return on plan assets excluding interest income
2,596
1,234
Interest income
700
916
Employer contributions
 
811
690
Plan participant contributions
446
370
Benefit payments
(2,665)
(2,309)
Administration expenses, taxes and premiums paid
(27)
(19)
Other movements
0
2
Foreign currency translation
(4,024)
4,485
Fair value of plan assets at the end of the year
52,241
54,404
Surplus / (deficit)
7,624
9,482
Asset ceiling effect at the beginning of the year
9,394
7,848
Asset ceiling effect recognized upon the acquisition of
 
the Credit Suisse Group
3,695
Interest expense on asset ceiling effect
128
225
Asset ceiling effect excluding interest expense and foreign currency
 
translation on asset ceiling effect
(1,237)
(3,336)
Foreign currency translation
(688)
963
Asset ceiling effect at the end of the year
7,596
9,394
Net defined benefit asset / (liability) of major Swiss plans
28
88
Other plans
Net defined benefit asset / (liability) of other plans
3
131
205
Total net defined benefit asset / (liability)
159
293
of which: Net defined benefit asset
922
1,088
of which: Net defined benefit liability
4
(763)
(795)
1 Including Credit Suisse from 31 May 2023.
 
2 Experience (gains) / losses are a component of actuarial remeasurements of the defined benefit obligation and reflect the effects of differences
 
between the previous
actuarial assumptions and what has actually occurred.
 
3 Mainly relates to UK, US and German plans.
 
4 Refer to Note 19c.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income statement – expenses related to defined benefit plans
1
USD m
For the year ended
Major Swiss plans
31.12.24
31.12.23
2
Current service cost
763
567
Interest expense related to defined benefit obligation
564
680
Interest income related to plan assets
(700)
(916)
Interest expense on asset ceiling effect
128
225
Administration expenses, taxes and premiums paid
27
19
Past service cost related to plan amendments
0
245
Curtailments
(104)
(29)
Termination benefits
6
21
Other movements
3
3
(2)
Net periodic expenses recognized in net profit for major Swiss plans
687
811
Other plans
Net periodic expenses recognized in net profit for other plans
44
36
Total net periodic expenses recognized in net profit
731
847
1 Refer to Note 7.
 
2 Including Credit Suisse from 31 May 2023.
 
3 Includes differences between actual and estimated performance award accruals.
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
352
Note 26
 
Post-employment benefit plans (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive income – gains / (losses) on defined benefit plans
 
USD m
For the year ended
Major Swiss plans
31.12.24
31.12.23
1
Remeasurement of defined benefit obligation
(4,017)
(4,446)
of which: change in discount rate assumption
(2,846)
(3,278)
of which: change in rate of salary increase assumption
(227)
(74)
of which: change in rate of pension increase assumption
0
0
of which: change in rate of interest credit on retirement savings
 
assumption
349
479
of which: change in life expectancy
0
0
of which: change in other actuarial assumptions
(24)
(88)
of which: experience gains / (losses)
2
(1,269)
(1,484)
Return on plan assets excluding interest income
2,596
1,234
Asset ceiling effect excluding interest expense and foreign currency
 
translation
1,237
3,336
Total gains / (losses) recognized in other comprehensive income for major Swiss plans
(184)
124
Other plans
Total gains / (losses) recognized in other comprehensive income for other plans
3
(123)
(15)
Total gains / (losses) recognized in other comprehensive income
4
(307)
110
1 Including Credit Suisse from 31 May 2023.
 
2 Experience (gains) / losses are a component of actuarial remeasurements of the defined benefit obligation and reflect the effects of differences
 
between the previous
actuarial assumptions and what has actually occurred.
 
3 Mainly relates to UK, US and German plans.
 
4 Refer to the “Statement of comprehensive income”.
The table below provides information about the duration
 
of the DBO and the timing for expected benefit payments.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Major Swiss defined benefit plans
31.12.24
31.12.23
Duration of the defined benefit obligation (in years)
1
13.3
13.1
Maturity analysis of benefits expected to be paid
USD m
Benefits expected to be paid within 12 months
2,911
3,056
Benefits expected to be paid between 1 and 3 years
4,812
5,149
Benefits expected to be paid between 3 and 6 years
7,231
7,671
Benefits expected to be paid between 6 and 11 years
11,203
12,080
Benefits expected to be paid between 11 and 16 years
9,621
10,513
Benefits expected to be paid in more than 16 years
30,398
34,221
1 The duration of the defined benefit obligation represents a weighted average across the UBS
 
and Credit Suisse plans.
Actuarial assumptions
The
 
actuarial
 
assumptions
 
used
 
for
 
the
 
defined
 
benefit
 
plans
 
are
 
based on
 
the
 
economic
 
conditions
 
prevailing
 
in the
jurisdiction in
 
which they
 
are
 
offered.
 
Changes in
 
the defined
 
benefit obligation
 
are
 
most sensitive
 
to changes
 
in the
discount rate. The discount
 
rate is based on
 
the yield of high-quality
 
corporate bonds quoted
 
in an active market
 
in the
currency of the
 
respective plan. A decrease
 
in the discount curve
 
increases the DBO. UBS
 
regularly reviews
 
the actuarial
assumptions used in calculating the DBO to determine their
 
continuing relevance.
›
Refer to Note 1a item 5 for a description of
 
the accounting policy for defined benefit plans
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
353
Note 26
 
Post-employment benefit plans (continued)
The tables below show the significant actuarial assumptions
 
used in calculating the DBO at the end of the year.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Significant actuarial assumptions of
 
major Swiss defined benefit plans
1
In %
31.12.24
31.12.23
Discount rate
0.92
1.48
Rate of salary increase
2.80
2.36
Rate of pension increase
0.00
0.00
Rate of interest credit on retirement savings
 
2.02
2.54
1 Represents weighted average across the UBS and Credit Suisse plans.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
aged 65
aged 45
Swiss mortality table: BVG 2020 G with CMI 2023 projections
1
31.12.24
31.12.23
31.12.24
31.12.23
Life expectancy at age 65 for a male member currently
21.9
21.8
23.5
23.5
Life expectancy at age 65 for a female member currently
23.6
23.5
25.2
25.1
1 In 2023, BVG 2020 G with CMI 2022 projections was used.
Sensitivity analysis of significant actuarial assumptions
The table
 
below presents
 
a sensitivity
 
analysis for
 
each significant
 
actuarial assumption,
 
showing how
 
the DBO
 
would
have been affected
 
by changes in
 
the relevant
 
actuarial assumption that
 
were reasonably
 
possible at the
 
balance sheet
date.
 
Unforeseen
 
circumstances
 
may
 
arise,
 
which
 
could
 
result
 
in
 
variations
 
that
 
are
 
outside
 
the
 
range
 
of
 
alternatives
deemed
 
reasonably
 
possible.
 
Caution
 
should
 
be
 
used
 
in
 
extrapolating
 
the
 
sensitivities
 
below
 
on
 
the
 
DBO,
 
as
 
the
sensitivities may not be linear.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sensitivity analysis of significant actuarial
 
assumptions of major Swiss defined
 
benefit plans
1
Increase / (decrease) in defined benefit obligation
USD m
31.12.24
31.12.23
Discount rate
Increase by 50 basis points
(2,462)
(2,365)
Decrease by 50 basis points
2,790
2,668
Rate of salary increase
Increase by 50 basis points
255
248
Decrease by 50 basis points
(256)
(246)
Rate of pension increase
Increase by 50 basis points
1,947
1,894
Decrease by 50 basis points
–
2
–
2
Rate of interest credit on retirement savings
Increase by 50 basis points
374
334
Decrease by 50 basis points
(374)
(334)
Life expectancy
Increase in longevity by one additional year
1,381
1,315
1 The sensitivity analyses are based on a change in one assumption while
 
holding all other assumptions constant, so that interdependencies between the assumptions are excluded.
 
2 As the assumed rate of pension
increase was
0
% as of 31 December 2024 and as of 31 December 2023, a downward change in assumption is not applicable.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
354
Note 26
 
Post-employment benefit plans (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Composition and fair value of Swiss
 
defined benefit plan assets
31.12.24
31.12.23
Fair value
Plan asset
allocation %
Fair value
Plan asset
allocation %
USD m
Quoted
in an active
market
Other
Total
Quoted
in an active
market
Other
Total
Cash and cash equivalents
911
0
911
2
1,205
0
1,205
2
Equity securities
 
Domestic
0
0
0
0
0
24
24
0
 
Foreign
0
1,425
1,425
3
0
2,132
2,132
4
Bonds
 
Domestic, AAA to BBB–
156
0
156
0
100
0
100
0
 
Foreign, AAA to BBB–
0
0
0
0
51
0
51
0
Real estate / property
Domestic
0
5,967
5,967
11
0
6,195
6,195
11
Foreign
0
1,086
1,086
2
0
1,017
1,017
2
Investment funds
Equity
 
Domestic
1,300
0
1,300
2
1,376
0
1,376
3
Foreign
8,520
2,072
10,592
20
8,317
2,196
10,513
19
Bonds
1
Domestic, AAA to BBB–
6,921
0
6,921
13
7,952
0
7,952
15
Domestic, below BBB–
9
0
9
0
1
0
1
0
Foreign, AAA to BBB–
12,886
0
12,886
25
13,497
0
13,497
25
Foreign, below BBB–
1,393
0
1,393
3
1,249
0
1,249
2
Real estate
Domestic
1,938
0
1,938
4
1,906
0
1,906
4
Foreign
451
117
568
1
537
79
616
1
Other
1,396
3,383
4,780
9
1,960
3,373
5,333
10
Other investments
475
1,833
2,308
4
667
569
1,236
2
Total fair value of plan assets
36,357
15,884
52,241
100
38,817
15,586
54,404
100
31.12.24
31.12.23
Total fair value of plan assets
52,241
54,404
of which: Investments in UBS instruments
2
Bank accounts at UBS
926
666
UBS debt instruments
238
211
UBS shares
64
72
Securities lent to UBS
3
956
827
Property occupied by UBS
73
108
Derivative financial instruments, counterparty UBS
3
(126)
534
1 The bond credit ratings
 
are primarily based on S&P’s
 
credit ratings. Ratings AAA to
 
BBB– and below BBB– represent investment
 
grade and non-investment grade
 
ratings, respectively.
 
In cases where credit ratings
from other rating agencies
 
were used, these were
 
converted to the equivalent
 
rating in S&P’s
 
rating classification.
 
2 Bank accounts at UBS
 
encompass accounts in the name
 
of the Swiss pension funds.
 
The other
positions disclosed in the table encompass both direct investments in UBS instruments and indirect investments, i.e. those made through funds that the pension fund invests in.
 
3 Securities lent to UBS and derivative
financial instruments are presented
 
gross of any collateral.
 
Securities lent to UBS
 
were fully covered by
 
collateral as of 31
 
December 2024 and
 
31 December 2023. Net
 
of collateral, derivative
 
financial instruments
amounted to negative USD
70
m as of 31 December 2024 (31 December 2023: negative USD
33
m).
 
 
b) Defined contribution plans
UBS sponsors several defined contribution
 
plans, with the most significant
 
plans in the US and the
 
UK. UBS’s obligation
is limited to its contributions
 
made in accordance
 
with each plan, which
 
may include direct
 
contributions and matching
contributions. Employer contributions
 
to defined contribution
 
plans are recognized
 
as an expense
 
and were
 
USD
578
m
for the UBS plans in 2024 (2023: USD
514
m).
›
Refer to Note 7 for more information
c) Related-party disclosure
UBS is
 
the principal
 
provider of
 
banking services
 
for the
 
pension funds
 
of UBS
 
and Credit
 
Suisse in
 
Switzerland. In
 
this
capacity,
 
UBS is engaged
 
to execute
 
most of the
 
pension funds’
 
banking activities.
 
These activities
 
can include, but
 
are
not limited to, investment
 
management fees, trading,
 
securities lending and borrowing
 
and derivative transactions. The
non-Swiss pension
 
funds do
 
not have
 
a similar
 
banking relationship
 
with UBS.
 
During 2024,
 
UBS received
 
USD
46
m in
fees for banking
 
services from
 
the major UBS
 
plans (2023: USD
46
m). As of
 
31 December
 
2024, the Swiss,
 
UK and US
post-employment benefit plans held USD
399
m in UBS shares (31 December 2023: USD
443
m).
›
Refer to the “Composition and fair value of
 
Swiss defined benefit plan assets” table in Note
 
26a for more information about fair
value of investments in UBS instruments held
 
by the major Swiss pension funds
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
355
Note 27
 
Employee benefits: variable compensation
 
 
a) Plans offered
The Group
 
has several
 
share-based and
 
other deferred
 
compensation plans
 
that align
 
the interests
 
of Group
 
Executive
Board (GEB) members and other employees with
 
the interests of investors.
 
Share-based awards are granted
 
in the form of
 
notional shares and, where
 
permitted, carry a dividend
 
equivalent that may be
paid in notional shares or cash. Awards are settled by delivering UBS shares at vesting, except in jurisdictions
 
where this is not
permitted for legal or tax reasons.
 
Deferred
 
compensation
 
awards
 
are
 
generally
 
forfeitable
 
upon,
 
among
 
other
 
circumstances,
 
voluntary
 
termination
 
of
employment with UBS. These compensation plans are also designed to meet
 
regulatory requirements and include special
provisions for regulated employees.
 
The most significant deferred compensation plans
 
are described below.
›
Refer to Note 1a
 
item 4 for a description of the accounting
 
policy related to share-based and other deferred compensation plans
Mandatory deferred compensation plans
Long-Term Incentive Plan
The Long-Term
 
Incentive Plan
 
(the LTIP)
 
is a
 
mandatory deferral
 
plan for
 
GEB members
 
and Managing
 
Directors (MDs)
reporting to the GEB and their direct
 
reports at MD level.
The number of notional shares delivered at vesting depends on two equally weighted
 
performance metrics over a three-
year performance period: return
 
on common equity tier 1
 
(CET1) capital and relative
 
total shareholder return (TSR), which
compares the TSR of UBS
 
with the TSR of
 
an index consisting of listed
 
Global Systemically Important Banks as determined
by
 
the
 
Financial
 
Stability
 
Board
 
(excluding
 
UBS).
 
The
 
final
 
number
 
of
 
shares
 
vest
 
over
 
three
 
years
 
following
 
the
performance
 
period for
 
GEB
 
members
 
and
 
cliff
 
vest
 
in
 
the
 
year
 
following the
 
performance
 
period
 
for
 
selected
 
senior
management.
Equity Ownership Plan / Fund Ownership Plan
The Equity
 
Ownership Plan
 
(the EOP)
 
is the
 
deferred share
 
-based compensation
 
plan for
 
employees that
 
are subject
 
to
deferral requirements but do not rec
 
eive LTIP
 
awards.
 
EOP awards generally vest over three
 
years.
 
Certain Asset
 
Management employees
 
receive some
 
or all of
 
their EOP
 
in the form
 
of notional
 
funds (Fund
 
Ownership
Plan or
 
FOP). This
 
plan is
 
generally delivered
 
in cash
 
and vests
 
over three
 
years. The
 
amount delivered
 
depends on
 
the
value of the underlying investment funds at the time of vesting.
 
Deferred Contingent Capital Plan
The Deferred Contingent
 
Capital Plan (the DCCP)
 
is a deferred
 
compensation plan for all
 
employees who are
 
subject to
deferral requirements.
 
Such employees
 
are
 
awarded
 
notional additional
 
tier 1 (AT1)
 
capital instruments,
 
which, at
 
the
discretion of UBS, can be settled in cash or a perpetual, marketable AT1 capital instrument. DCCP awards generally
 
bear
notional
 
interest
 
paid
 
annually
 
(except
 
for
 
certain
 
regulated
 
employees)
 
and
 
vest
 
in
 
full
 
after
 
five
 
years.
 
Awards
 
are
forfeited if a viability
 
event occurs (i.e. if
 
the Swiss Financial Market
 
Supervisory Authority (FINMA) notifies
 
the firm that
the DCCP
 
awards must
 
be written
 
down to
 
mitigate the
 
risk of
 
insolvency,
 
bankruptcy or
 
failure of
 
UBS) or
 
if the
 
firm
receives a commitment of extraordinary support from the public sector that is necessary to prevent such an event. DCCP
awards are also written down if
 
the Group’s CET1 capital ratio falls
 
below a defined threshold. In
 
addition, GEB members
forfeit
20
% of DCCP awards for each loss-making year during the
 
vesting period.
Deferred compensation plans awarded to employees of Credit
 
Suisse
Existing compensation plans offered to employees of Credit Suisse
 
prior to the acquisition
Credit Suisse offered
 
a range of compensation plans to its
 
employees. Generally,
 
outstanding deferred awards
 
continue
to vest
 
according to
 
their original
 
terms. Awards
 
referenced
 
to shares
 
of the
 
Credit Suisse
 
Group were
 
converted into
units over UBS Group shares according to the exchange ratio applied
 
to the merger transaction (1 share in UBS
 
for
22.48
shares in Credit Suisse).
 
Unvested awards include upfront
 
cash awards, share awards
 
and other deferred awards
 
settled in cash and
 
continue to
be expensed over the future service period.
 
Upfront
 
cash
 
awards
 
are
 
subject
 
to
 
repayment
 
(clawback)
 
by
 
the
 
employee
 
in
 
the
 
event
 
of
 
voluntary
 
resignation,
termination for
 
cause or
 
other specified
 
events within
 
three years
 
from the
 
grant date.
 
The expense
 
is recognized
 
over
the three-year service period according to the clawback
 
provisions.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
356
Note 27
 
Employee benefits: variable compensation
 
(continued)
Share
 
awards that
 
were
 
granted as
 
part of
 
the annual
 
performance incentive
 
typically vest
 
over three
 
years with
 
one-
third of the award vesting on each of
 
the three anniversaries of the grant date.
Retention awards
 
were offered
 
to selected employees
 
of the Credit
 
Suisse Group
 
in 2023 prior
 
to the acquisition
 
date.
These awards were contingent
 
on the completion of the acquisition and
 
were delivered
50
% in cash (in general vesting
60
 
days from
 
the completion
 
of the
 
acquisition) and
50
% in
 
shares
 
(in general
 
vesting on
 
the first
 
anniversary of
 
the
completion of the acquisition). Vesting
 
periods are longer for certain regulated
 
employees.
Financial advisor variable compensation
In line with market practice for US wealth management businesses, the compensation for US financial advisors in Global
Wealth Management consists of
 
cash compensation, determined
 
using a formulaic approach
 
based on production, and
deferred awards.
 
Cash
 
compensation
 
reflects
 
a
 
percentage
 
of
 
the
 
compensable
 
production
 
that
 
each
 
financial
 
advisor
 
generates.
Compensable production is generally based on transaction revenue and investment advisory fees and may reflect further
adjustments. The percentage rate generally varies based
 
on the level of the production and firm tenure.
Financial advisors may
 
also be granted
 
deferred awards. These
 
amounts generally vest
 
over a six-year
 
period. The deferred
award takes into account the overall percentage rate
 
and production.
 
Cash compensation and deferred awards may be reduced for, among other things, errors, negligence
 
or carelessness, or
failure to comply with the firm’s rules, standards, practices
 
and / or policies, and / or applicable laws and regulations.
 
Financial
 
advisors
 
may
 
also
 
participate
 
in
 
additional
 
programs
 
to
 
support
 
promoting
 
and
 
developing
 
their
 
business
 
or
supporting the transition of
 
client relationships where appropriate. Financial
 
advisor compensation also includes
 
expenses
related to compensation commitments with financial advisors
 
entered into at the time of recruitment that are
 
subject to
vesting requirements.
Share delivery obligations
Share delivery obligations related to employee
 
share-based compensation awards were
183
m shares as of 31 December
2024 (31 December 2023:
196
m shares). Share delivery obligations are calculated on the basis of undistributed notional
share awards, taking applicable performance conditions into
 
account.
As of 31 December 2024, UBS held
133
m treasury shares (31 December 2023:
131
m) that were available to satisfy
 
share
delivery obligations.
 
b) Effect on the income statement
Effect on the income statement for the financial year and
 
future periods
The table
 
below provides
 
information about
 
compensation
 
expenses related
 
to total
 
variable compensation
 
that were
recognized in the financial year ended
 
31 December 2024, as well as
 
expenses that were deferred and will be
 
recognized
in the income statement
 
for 2025 and later.
 
Deferred expenses related
 
to compensation plans granted
 
to employees of
Credit Suisse
 
in 2023 and
 
earlier years
 
are presented
 
under Variable
 
compensation –
 
other.
 
The expense
 
recognized in
2024 associated
 
with these
 
awards was
 
USD
85
m (2023:
 
USD
335
m) for
 
retention awards
 
granted in
 
connection with
the acquisition and USD
288
m (2023: USD
412
m) for outstanding deferred compensation plans that existed on the date
of the acquisition.
 
The majority
 
of expenses
 
deferred to
 
2025 and
 
later that
 
are related
 
to the
 
2024 performance
 
year pertain
 
to awards
granted in February 2025. The total unamortized compensation expense for unvested share-based awards granted up to
31 December 2024 will be recognized in future periods
 
over a weighted average period of
2.4
 
years.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
357
Note 27
 
Employee benefits: variable compensation
 
(continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Variable compensation
Expenses recognized in 2024
Expenses deferred to 2025 and later
1
USD m
Related to the
2024
performance
year
Related to prior
performance
years
Total
Related to the
2024
performance
year
Related to prior
performance
years
Total
Non-deferred cash
3,290
(83)
3,206
0
0
0
Deferred compensation awards
563
687
1,250
813
853
1,666
of which: Equity Ownership Plan
180
279
458
280
214
493
of which: Deferred Contingent Capital Plan
197
290
487
336
515
851
of which: Long-Term Incentive Plan
161
76
237
166
100
266
of which: Fund Ownership Plan
26
42
68
32
25
56
Variable compensation – performance awards
3,853
603
4,456
813
853
1,666
Variable compensation – financial advisors
2
4,485
808
5,293
1,028
3,639
4,667
of which: non-deferred cash
4,125
(1)
4,124
0
0
0
of which: deferred share-based awards
123
96
219
130
232
362
of which: deferred cash-based awards
203
239
443
476
1,176
1,652
of which: compensation commitments with recruited financial
 
advisors
33
474
507
422
2,231
2,653
Variable compensation – other
3
539
583
1,121
229
465
694
Total variable compensation
8,876
1,994
10,870
4
2,070
4,957
7,027
1 Estimate as of 31 December 2024. Actual amounts to be expensed in future periods may vary; e.g. due to forfeiture of awards
 
.
 
2 Financial advisor compensation consists of cash compensation, determined using
a formulaic approach based
 
on production, and
 
deferred awards. It
 
also includes expenses related
 
to compensation commitments
 
with financial advisors
 
entered into at the
 
time of recruitment that
 
are subject to
vesting requirements.
 
3 Consists
 
of existing deferred
 
awards and
 
retention awards
 
granted to
 
Credit Suisse
 
employees as
 
well as
 
replacement payments,
 
forfeiture credits,
 
severance payments,
 
retention plan
payments and
 
interest expense
 
related to
 
the Deferred
 
Contingent Capital
 
Plan.
 
4 Includes
 
USD
1,128
m in
 
expenses related
 
to share-based
 
compensation (performance
 
awards: USD
695
m; other
 
variable
compensation: USD
213
m; financial advisor
 
compensation: USD
219
m). A further
 
USD
134
m in expenses
 
related to share-based
 
compensation was recognized
 
within other expense
 
categories included in
 
Note 7
(salaries: USD
2
m related to
 
role-based allowances;
 
social security: USD
100
m; other personnel
 
expenses: USD
32
m related to
 
the Equity Plus
 
Plan). Total
 
personnel expense related
 
to share-based equity-settled
compensation excluding social security was USD
1,118
m.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Variable compensation (continued)
Expenses recognized in 2023
Expenses deferred to 2024 and later
1
USD m
Related to the
2023
performance
year
Related to prior
performance
years
Total
Related to the
2023
performance
year
Related to prior
performance
years
Total
Non-deferred cash
2,859
(52)
2,807
0
0
0
Deferred compensation awards
523
656
1,179
777
757
1,534
of which: Equity Ownership Plan
155
330
485
263
245
509
of which: Deferred Contingent Capital Plan
180
241
421
312
451
763
of which: Long-Term Incentive Plan
164
40
204
160
34
193
of which: Fund Ownership Plan
24
46
69
41
27
68
Variable compensation – performance awards
3,382
604
3,986
777
757
1,534
Variable compensation – financial advisors
2
3,761
788
4,549
1,236
3,300
4,536
of which: non-deferred cash
3,440
(4)
3,436
0
0
0
of which: deferred share-based awards
110
87
197
113
209
321
of which: deferred cash-based awards
169
245
414
301
1,029
1,331
of which: compensation commitments with recruited financial
 
advisors
42
459
502
822
2,062
2,884
Variable compensation – other
3
784
526
1,310
384
583
968
Total variable compensation
7,927
1,918
9,845
4
2,398
4,640
7,037
1 Estimate as of 31 December 2023. Actual
 
amounts expensed may vary; e.g.
 
due to forfeiture of awards.
 
2 Financial advisor compensation consists of cash compensation,
 
determined using a formulaic approach
based on production,
 
and deferred awards.
 
It also includes
 
expenses related to
 
compensation commitments with
 
financial advisors entered
 
into at the
 
time of recruitment
 
that are subject
 
to vesting requirements.
 
3 Consists of existing deferred awards and retention awards granted to Credit Suisse employees, as well
 
as replacement payments, forfeiture credits, severance payments, retention plan payments and interest expense
related to the
 
Deferred Contingent Capital
 
Plan.
 
4 Includes USD
1,094
m in expenses
 
related to share-based
 
compensation (performance awards:
 
USD
689
m; other variable
 
compensation: USD
208
m; financial
advisor compensation: USD
197
m). A further USD
169
m in expenses related to share-based compensation was recognized
 
within other expense categories included in Note 7 (salaries: USD
4
m related to role-based
allowances; social security: USD
137
m; other personnel expenses: USD
27
m related to the Equity Plus Plan). Total personnel expense
 
related to share-based equity-settled compensation excluding social security was
USD
1,087
m.
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
358
Note 27
 
Employee benefits: variable compensation
 
(continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Variable compensation (continued)
Expenses recognized in 2022
Expenses deferred to 2023 and later
1
USD m
Related to the
2022
performance
year
Related to prior
performance
years
Total
Related to the
2022
performance
year
Related to prior
performance
years
Total
Non-deferred cash
2,276
(16)
2,260
0
0
0
Deferred compensation awards
364
581
945
605
754
1,359
of which: Equity Ownership Plan
202
235
437
310
250
560
of which: Deferred Contingent Capital Plan
129
219
349
245
408
654
of which: Long-Term Incentive Plan
11
32
43
30
42
71
of which: Fund Ownership Plan
21
95
116
20
54
74
Variable compensation – performance awards
2,640
566
3,205
605
754
1,359
Variable compensation – financial advisors
2
3,799
709
4,508
1,290
2,652
3,942
of which: non-deferred cash
3,481
0
3,481
0
0
0
of which: deferred share-based awards
104
62
166
122
180
302
of which: deferred cash-based awards
185
215
400
588
636
1,224
of which: compensation commitments with recruited financial
 
advisors
29
432
461
580
1,836
2,416
Variable compensation – other
3
169
71
241
237
193
430
Total variable compensation
6,608
1,346
7,954
4
2,131
3,599
5,731
1 Estimate as of 31 December 2022. Actual
 
amounts expensed may vary; e.g.
 
due to forfeiture of awards.
 
2 Financial advisor compensation consists of cash
 
compensation, determined using a formulaic approach
based on production,
 
and deferred awards.
 
It also includes
 
expenses related to
 
compensation commitments with
 
financial advisors entered
 
into at the
 
time of recruitment
 
that are subject
 
to vesting requirements.
 
3 Consists of replacement payments, forfeiture credits, severance payments,
 
retention plan payments and interest expense related to the Deferred Contingent Capital Plan.
 
4 Includes USD
703
m in expenses related
to share-based
 
compensation (performance
 
awards:
 
USD
480
m; other
 
variable
 
compensation: USD
56
m; financial
 
advisor compensation:
 
USD
166
m).
 
A further
 
USD
88
m in
 
expenses related
 
to share-based
compensation was recognized
 
within other expense
 
categories included in Note
 
7 (salaries: USD
4
m related to role-based
 
allowances; social security:
 
USD
61
m; other personnel expenses:
 
USD
23
m related to the
Equity Plus Plan). Total personnel expense related to share-based equity-settled compensation excluding
 
social security was USD
716
m.
 
c) Outstanding share-based compensation awards
Share and performance share awards
Movements in outstanding share-based awards
 
to employees during 2024 and 2023 are provided
 
in the table below.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Movements in outstanding share-based compensation
 
awards
Number of shares
2024
Weighted average
grant date fair value
(USD)
Number of shares
2023
Weighted average
grant date fair value
(USD)
Outstanding, at the beginning of the year
198,908,588
17
181,907,200
15
Share obligations assumed at merger date
0
0
14,535,612
20
Awarded during the year
65,433,201
26
63,907,823
20
Distributed during the year
(64,234,191)
17
(54,365,846)
14
Forfeited during the year
(6,385,261)
20
(7,076,202)
18
Outstanding, at the end of the year
193,722,338
20
198,908,588
17
of which: shares vested for accounting purposes
109,644,250
102,697,819
 
The
 
total
 
carrying
 
amount
 
of
 
the
 
liability
 
related
 
to
 
cash-settled
 
share-based
 
awards
 
as
 
of
 
31 December
 
2024
 
and
31 December 2023 was USD
54
m and USD
64
m, respectively.
d) Valuation
UBS share awards
UBS measures compensation expense
 
based on the average market
 
price of UBS shares
 
on the grant date as quoted
 
on
the SIX
 
Swiss Exchange,
 
taking into
 
consideration post-vesting
 
sale and
 
hedge restrictions,
 
non-vesting conditions
 
and
market conditions, where
 
applicable. The fair
 
value of
 
the share awards subject
 
to post-vesting sale
 
and hedge restrictions
is discounted on
 
the basis of
 
the duration of
 
the post-vesting restriction
 
and is referenced
 
to the cost
 
of purchasing
 
an
at-the-money European
 
put option
 
for the
 
term of
 
the transfer
 
restriction. The
 
grant date
 
fair value
 
of notional
 
shares
without dividend
 
entitlements also
 
includes a
 
deduction for
 
the present
 
value of
 
future
 
expected dividends
 
to be
 
paid
between the grant date and distribution.
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
359
 
 
Note 28
 
Interests in subsidiaries and other entities
a) Interests in subsidiaries
UBS defines its significant subsidiaries as those entities that, either individually or
 
in aggregate, contribute significantly to
the Group’s
 
financial position
 
or results
 
of operations,
 
based on
 
a number
 
of criteria,
 
including the
 
subsidiaries’ equity
and contribution
 
to the
 
Group’s total
 
assets and
 
profit
 
or loss
 
before
 
tax, in
 
accordance
 
with the
 
requirements
 
set by
IFRS 12, Swiss regulations and the rules of the US Securities
 
and Exchange Commission (the SEC).
Individually significant subsidiaries
The
 
two
 
tables
 
below
 
list
 
the
 
Group’s
 
individually
 
significant
 
subsidiaries
 
as
 
of
 
31 December
 
2024.
 
Unless
 
otherwise
stated, the subsidiaries listed below have
 
share capital consisting solely of ordinary shares held
 
entirely by the Group, and
the proportion of ownership interest
 
held is equal to the voting rights held by the Group.
 
The
 
country
 
where
 
the
 
respective
 
registered
 
office
 
is
 
located
 
is also
 
the
 
principal
 
place
 
of business.
 
UBS AG
 
operates
through a global
 
branch network,
 
and a significant
 
proportion of its
 
business activity
 
is conducted outside
 
Switzerland,
including in the UK,
 
the US, Singapore, the Hong
 
Kong SAR and other countries. UBS
 
Europe SE has branches
 
and offices
in a number of EU Member
 
States, including Germany, France,
 
Italy, Luxembourg and Spain. Share
 
capital is provided in
the currency of the legally registered office.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually significant subsidiaries
 
of UBS Group AG as of 31 December 2024
Company
Registered office
Share capital in million
Equity interest accumulated in %
UBS AG
Zurich and Basel, Switzerland
USD
385.8
100.0
UBS Business Solutions AG
1
Zurich, Switzerland
CHF
1.0
100.0
1 UBS Business Solutions AG holds subsidiaries in China, India, Israel, Poland and Switzerland.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually significant subsidiaries
 
of UBS AG as of 31 December 2024
1
Company
Registered office
Primary business
Share capital in million
Equity interest accumulated in %
Credit Suisse International
London, UK
Non-core and Legacy
USD
7,267.5
97.6
2
UBS Americas Holding LLC
Wilmington, Delaware, US
Group Items
USD
2,900.0
3
100.0
UBS Americas Inc.
Wilmington, Delaware, US
Group Items
USD
0.0
100.0
UBS Asset Management AG
Zurich, Switzerland
Asset Management
CHF
43.2
100.0
UBS Bank USA
Salt Lake City, Utah, US
Global Wealth Management
USD
0.0
100.0
UBS Europe SE
Frankfurt, Germany
Global Wealth Management
EUR
446.0
100.0
UBS Financial Services Inc.
Wilmington, Delaware, US
Global Wealth Management
USD
0.0
100.0
UBS Securities LLC
Wilmington, Delaware, US
Investment Bank
USD
1,283.1
4
100.0
UBS Switzerland AG
Zurich, Switzerland
Personal & Corporate Banking
CHF
10.0
100.0
1 Includes direct and indirect
 
subsidiaries of UBS AG.
 
2 UBS Group AG owns
 
the remaining
2.4
%.
 
3 Consists of common share capital of
 
USD
1,000
 
and non-voting preferred share capital of
 
USD
2.9
bn.
 
4 Consists
of common share capital of USD
100,000
 
and non-voting preferred share capital of USD
1.3
bn.
Other subsidiaries
The table below
 
lists other direct
 
and indirect subsidiaries
 
of UBS AG that
 
are not
 
individually significant but
 
contribute
to
 
the
 
Group’s
 
total
 
assets
 
and
 
aggregated
 
profit
 
before
 
tax
 
thresholds
 
and
 
are
 
thus
 
disclosed
 
in
 
accordance
 
with
requirements set by the SEC.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other subsidiaries of UBS AG as of 31
 
December 2024
Company
Registered office
Primary business
Share capital in million
Equity interest
 
accumulated in %
Banco de Investimentos Credit Suisse (Brasil) S.A.
São Paulo, Brazil
Investment Banking
BRL
164.8
100.0
Credit Suisse (UK) Limited
London, UK
Global Wealth Management
GBP
245.2
100.0
Credit Suisse (USA) LLC
Wilmington, Delaware, US
Non-core and Legacy
USD
0.0
100.0
Credit Suisse Securities (Europe) Limited
London, UK
Non-core and Legacy
USD
9.6
100.0
Credit Suisse Securities (USA) LLC
Wilmington, Delaware, US
Non-core and Legacy
USD
0.0
100.0
Credit Suisse Securities (Japan) Limited
Tokyo, Japan
Non-core and Legacy
JPY
78,100.0
100.0
UBS Asset Management (Americas) LLC
Wilmington, Delaware, US
Asset Management
USD
0.0
100.0
UBS Asset Management Life Ltd
London, UK
Asset Management
GBP
15.0
100.0
UBS Business Solutions US LLC
Wilmington, Delaware, US
Group Items
USD
0.0
100.0
UBS Credit Corp.
Wilmington, Delaware, US
Global Wealth Management
USD
0.0
100.0
UBS Fund Management (Switzerland) AG
Basel, Switzerland
Asset Management
CHF
1.0
100.0
UBS (Monaco) S.A.
Monte Carlo, Monaco
Global Wealth Management
EUR
49.2
100.0
UBS Securities Australia Ltd
Sydney, Australia
Investment Bank
AUD
0.3
1
100.0
UBS Securities Hong Kong Limited
Hong Kong SAR, China
 
Investment Bank
HKD
3,254.2
100.0
UBS Securities Japan Co., Ltd.
Tokyo, Japan
Investment Bank
JPY
44,908.7
100.0
UBS SuMi TRUST Wealth Management Co., Ltd.
Tokyo, Japan
Global Wealth Management
JPY
5,165.0
51.0
1 Includes a nominal amount relating to redeemable preference shares.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
360
Note 28
 
Interests in subsidiaries and other entities
 
(continued)
Consolidated structured entities
Consolidated
 
structured
 
entities
 
(SEs)
 
include
 
certain
 
investment
 
funds,
 
securitization
 
vehicles
 
and
 
client
 
investment
vehicles. UBS has no individually significant subsidiaries that
 
are SEs.
In
 
2024
 
and
 
2023,
 
the
 
Group
 
did
 
not
 
enter
 
into
 
any
 
contractual
 
obligation
 
that
 
could
 
require
 
the
 
Group
 
to
 
provide
financial
 
support
 
to
 
consolidated
 
SEs.
 
In
 
addition,
 
the
 
Group
 
did
 
not
 
provide
 
support,
 
financial
 
or
 
otherwise,
 
to
 
a
consolidated
 
SE
 
when
 
the
 
Group
 
was
 
not
 
contractually
 
obligated
 
to
 
do
 
so,
 
nor
 
does
 
the
 
Group
 
currently
 
have
 
any
intention to do so in
 
the future. Furthermore, the
 
Group did not provide
 
support, financial or otherwise,
 
to a previously
unconsolidated SE that resulted in the Group controlling
 
the SE during the reporting period.
 
b) Interests in associates and joint ventures
As of 31 December
 
2024 and 31 December
 
2023, no associate
 
or joint venture
 
was individually
 
material to the
 
Group.
Also, there were no
 
significant restrictions on the
 
ability of associates or
 
joint ventures to transfer
 
funds to UBS Group AG
or its
 
subsidiaries as
 
cash dividends
 
or to
 
repay
 
loans or
 
advances made.
 
There
 
were no
 
quoted market
 
prices for
 
any
associates or joint ventures of the Group.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in associates and joint ventures
USD m
2024
2023
Carrying amount at the beginning of the year
2,373
1,101
Additions
0
1
Acquisition of the Credit Suisse Group
1
0
1,569
Disposals
(8)
0
Reclassifications
0
(33)
Share of comprehensive income
145
(365)
of which: share of net profit / (loss)
2
144
(348)
of which: share of other comprehensive income
3
0
(17)
Share of changes in retained earnings
(3)
(1)
Dividends received
(51)
(90)
Foreign currency translation
(149)
192
Carrying amount at the end of the year
2,306
2,373
of which: associates
2,057
2,164
of which: SIX Group AG, Zurich
1,484
1,646
of which: other associates
573
519
of which: joint ventures
4
249
209
1 Refer to Note 2 for
 
more information about the acquisition of the Credit
 
Suisse Group.
 
2
 
For 2024, consists of USD
91
m from associates and USD
54
m from joint ventures (for 2023, consists
 
of negative USD
383
m
from associates, partly offset by USD
34
m from joint ventures).
 
3 For 2023, consists of negative USD
17
m from associates.
 
4 In October 2024, UBS entered into an agreement to sell its
50
% interest in Swisscard
AECS GmbH. Refer to Note 29 for more information.
 
c) Unconsolidated structured entities
UBS is considered
 
to sponsor another
 
entity if, in
 
addition to
 
ongoing involvement
 
with that
 
entity,
 
it had a
 
key role
 
in
establishing that entity or in
 
bringing together relevant
 
counterparties for a transaction facilitated
 
by that entity.
 
During
2024, the
 
Group sponsored
 
the creation
 
of various SEs
 
and interacted
 
with a
 
number of non-sponsored
 
SEs, including
securitization vehicles, client vehicles
 
and certain investment funds,
 
that UBS did
 
not consolidate as of
 
31 December 2024
because it did not control them.
Interests in unconsolidated structured entities
The table below presents the Group’s interests in and maximum exposure to loss
 
from unconsolidated SEs, as well as the
total assets held by the SEs
 
in which UBS had an interest
 
as of year-end, except for
 
investment funds and other vehicles
sponsored by third parties, for which the
 
carrying amount of UBS’s interest as of year
 
-end has been disclosed.
Sponsored unconsolidated structured entities in which UBS did
 
not have an interest at year-end
During 2024 and
 
2023,
 
the Group
 
did not earn
 
material income
 
from sponsored
 
unconsolidated SEs
 
in which UBS
 
did
not have an interest at year-end.
 
During 2024 and 2023, UBS and third parties did not transfer any assets into sponsored securitization vehicles created in
those years.
 
UBS and
 
third parties
 
transferred assets,
 
alongside deposits
 
and debt
 
issuances (which
 
are assets
 
from the
perspective
 
of
 
the
 
vehicle),
 
of
 
USD
2.5
bn
 
and
 
USD
3.0
bn,
 
respectively,
 
into
 
sponsored
 
client
 
vehicles
 
created
 
in
 
2024
(2023:
 
USD
0.5
bn
 
and
 
USD
0.5
bn,
 
respectively).
 
For
 
sponsored
 
investment
 
funds,
 
several
 
new
 
open
 
ended
 
and
 
close
ended funds were created
 
during the year
 
with further transfers
 
arising from management
 
of the strategy
 
and investor
activity, which,
 
when combined
 
with market
 
movements, resulted
 
in a
 
net asset
 
value movement
 
of USD
1
bn in
 
2024
(2023: USD
3
bn).
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
361
Note 28
 
Interests in subsidiaries and other entities
 
(continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interests in unconsolidated structured entities
31.12.24
USD m, except where indicated
Securitization
vehicles
1
Client
vehicles sponsored
by UBS
2
Investment
funds
Other vehicles
sponsored by third
parties
3
Total
Maximum
exposure to loss
4
Financial assets at fair value held for trading
94
143
6,482
235
6,953
6,953
Derivative financial instruments
2
110
83
0
195
195
Loans and advances to customers
0
138
286
23
446
446
Financial assets at fair value not held for trading
1,275
0
721
236
2,232
2,232
Financial assets measured at fair value through other
comprehensive income
0
0
0
0
0
0
Other financial assets measured at amortized cost
1,023
0
0
0
1,024
1,024
Total assets
2,394
392
7,571
494
10,851
10,851
Derivative financial instruments
1
50
716
0
767
2
Total liabilities
1
50
716
0
767
2
Assets held by the unconsolidated structured entities in
which UBS had an interest (USD bn)
63
5
3
6
195
7
0
8
31.12.23
USD m, except where indicated
Securitization
vehicles
1
Client
vehicles sponsored
by UBS
2
Investment
funds
Other vehicles
sponsored by third
parties
3
Total
Maximum
exposure to loss
4
Financial assets at fair value held for trading
2,086
58
9,653
325
12,122
12,122
Derivative financial instruments
2
174
68
0
244
244
Loans and advances to customers
0
0
312
246
558
558
Financial assets at fair value not held for trading
1,645
0
497
579
2,720
2,720
Financial assets measured at fair value through other
comprehensive income
0
0
0
0
0
0
Other financial assets measured at amortized cost
202
0
1
0
203
453
Total assets
3,935
232
10,531
1,151
15,848
16,098
Derivative financial instruments
7
27
590
0
623
98
Total liabilities
7
27
590
0
623
98
Assets held by the unconsolidated structured entities in
which UBS had an interest (USD bn)
70
5
3
6
276
7
1
8
1 Includes loans with a high
 
LTV and
 
credit-impaired loans to pre-securitization
 
warehouse structured entities managed
 
by third parties, as
 
well as securities issued by
 
securitization structured entities sponsored
 
by
both UBS and third parties.
 
2 Client vehicles sponsored by UBS are structured entities that do not qualify as a securitization in line with regulatory requirements
 
and are not considered an investment fund.
 
3 Other
vehicles sponsored by third parties are structured entities that do not qualify as a securitization in line with regulatory requirements and are not considered an investment fund. Interests in other vehicles sponsored by
third parties included loans with a
 
high LTV
 
and credit-impaired loans provided to
 
third-party structured entities.
 
4 For the purpose of this
 
disclosure, maximum exposure to
 
loss amounts do not consider
 
the risk-
reducing effects of collateral
 
or other credit enhancements.
 
5 Represents the principal
 
amount outstanding.
 
6 Represents the market
 
value of total assets.
 
7 Represents the net asset
 
value of the investment
funds sponsored by UBS and the carrying amount of UBS’s interests in the investment funds not sponsored
 
by UBS.
 
8 Represents the carrying amount of UBS’s interest in other vehicles sponsored
 
by third parties.
The Group retains or purchases
 
interests in unconsolidated SEs in the form
 
of direct investments, financing, guarantees,
letters of
 
credit
 
and derivatives
 
,
 
as well
 
as through
 
management
 
contracts. The
 
Group’s
 
maximum exposure
 
to loss
 
is
generally equal to the carrying amount of
 
the Group’s interest in the given SE, with this
 
subject to change over time with
market
 
movements.
 
Guarantees,
 
letters
 
of
 
credit
 
and
 
credit
 
derivatives
 
are
 
an
 
exception,
 
with
 
the
 
given
 
contract’s
notional amount, adjusted for losses already incurred,
 
representing the maximum loss that
 
the Group is exposed to.
The
 
maximum
 
exposure
 
to
 
loss
 
disclosed
 
in
 
the
 
table
 
above
 
does
 
not
 
reflect
 
the
 
Group’s
 
risk
 
management
 
activities,
including
 
effects
 
from
 
financial
 
instruments
 
that
 
may
 
be
 
used
 
to
 
economically
 
hedge
 
risks
 
inherent
 
in
 
the
 
given
unconsolidated SE or risk-reducing effects of collateral or
 
other credit enhancements.
In
 
2024
 
and
 
2023,
 
the
 
Group
 
did
 
not
 
provide
 
support,
 
financial
 
or
 
otherwise,
 
to
 
any
 
unconsolidated
 
SE
 
when
 
not
contractually obligated to do so, nor does the Group currently
 
have any intention to do so in the future.
In 2024
 
and 2023,
 
income and
 
expenses from
 
interests in
 
unconsolidated SEs
 
primarily resulted
 
from mark-to-market
movements
 
recognized
 
in
Other
 
net
 
income from
 
financial
 
instruments
 
measured
 
at
 
fair
 
value
 
through
 
profit or
 
loss
,
which were generally hedged with
 
other financial instruments, as well
 
as fee and commission income
 
received from UBS-
sponsored funds.
Interests in securitization vehicles
As
 
of
 
31 December
 
2024
 
and
 
31 December
 
2023,
 
the
 
Group
 
held
 
interests,
 
both
 
retained
 
and
 
acquired,
 
in
 
various
securitization vehicles
 
that relate to
 
financing, underwriting, secondary
 
market and
 
derivative trading activities.
 
In addition
to the interests disclosed in the table above, the Group manages the assets of certain securitization vehicles and receives
fees based, in whole or in
 
part, on the asset value
 
of the vehicles. Interest
 
in such vehicles is not represented
 
by the on-
balance sheet fee receivab
 
le but rather by the future
 
exposure to variable fees.
 
The net asset value of
 
such vehicles was
USD
24
bn as of 31 December 2024 (31 December 2023:
 
USD
26
bn) and has been excluded from the table above.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
362
Note 28
 
Interests in subsidiaries and other entities
 
(continued)
The numbers outlined in the table above may differ from the securitization
 
positions presented in the 31 December
 
2024
Pillar 3
 
Report,
 
available
 
under “Pillar
 
3 disclosures”
 
at
ubs.com/investors
, for
 
the following
 
reasons:
 
(i) exclusion
 
of synthetic
securitizations
 
transacted
 
with entities
 
that are
 
not SEs
 
and transactions
 
in which
 
the Group
 
did not
 
have an
 
interest
 
because
it did
 
not absorb
 
any risk;
 
(ii) a
 
different
 
measurement
 
basis in
 
certain
 
cases (e.g.
 
IFRS Accounting
 
Standards
 
carrying
 
amount
within
 
the table
 
above compared
 
with net
 
exposure
 
amount at
 
default
 
for Pillar
 
3 disclosures);
 
and (iii)
 
different
 
classification
of vehicles
 
viewed as sponsored
 
by the Group
 
versus sponsored
 
by third parties.
›
Refer to the 31 December 2024 Pillar 3 Report,
 
available under “Pillar 3 disclosures” at
ubs.com/investors
,
for more information
Interests in client vehicles sponsored by UBS
UBS-sponsored
 
client
 
vehicles
 
are
 
established
 
predominantly
 
for
 
clients
 
to
 
gain
 
exposure
 
to
 
specific
 
assets
 
or
 
risk
exposures. Such vehicles
 
may enter into derivative
 
agreements,
 
with UBS or a
 
third party,
 
to align the cash flows
 
of the
entity with the investor’s intended investment objective,
 
or to introduce other desired risk exposures
 
.
 
As of 31 December 2024
 
and 31 December 2023,
 
the Group retained interests
 
in client vehicles sponsored
 
by UBS that
relate to financing, secondary market and derivative
 
trading activities,
 
and to hedge structured product offerings.
 
Interests in investment funds
Investment funds have a collective
 
investment objective, and are
 
either passively managed, so
 
that any decision-making
does not have a substantive effect
 
on variability,
 
or are actively managed and investors
 
or their governing bodies do not
have substantive voting or similar rights.
The Group holds
 
interests in a
 
number of investment
 
funds,
 
primarily resulting from
 
seed investments or
 
in order to
 
hedge
structured product offerings.
 
In addition to
 
the interests disclosed
 
in the table
 
above, the
 
Group manages the
 
assets of
various pooled investment funds and receives fees based, in whole or in part, on the net asset value of the fund and / or
the performance of the fund. The specific fee structure is determined based on various market
 
factors and considers the
fund’s nature and the
 
jurisdiction of incorporation,
 
as well as fee
 
schedules negotiated with
 
clients. These fee contracts
represent an interest in the fund, as they align the Group’s exposure with investors, providing a
 
variable return based on
the performance
 
of the
 
entity. Depending
 
on the
 
structure of
 
the fund,
 
these fees
 
may be
 
collected directly
 
from the
fund’s assets and / or from
 
the investors. Any amounts
 
due are collected on a
 
regular basis and are generally
 
backed by
the fund’s assets.
 
Therefore, interest
 
in such funds
 
is not represented
 
by the on-balance
 
sheet fee receivable
 
but rather
by
 
the
 
future
 
exposure
 
to
 
variable
 
fees.
 
The
 
net
 
asset
 
value
 
of
 
such
 
funds
 
was
 
USD
532
bn
 
and
 
USD
511
bn
 
as
 
of
31 December 2024
 
and 31 December
 
2023, respectively,
 
and has
 
been excluded
 
from the
 
table above.
 
The Group
 
did
not have any material exposure to loss from these interests
 
as of 31 December 2024 or as of 31 December 2023.
Interests in other vehicles sponsored by third parties
Interests in other vehicles sponsored by third parties
 
include loans with a high LTV
 
and credit-impaired loans provided to
third-party structured entities.
 
 
Note 29
 
Changes in organization and acquisitions and disposals
 
of subsidiaries and businesses
 
Acquisitions of subsidiaries and businesses
Acquisition of Credit Suisse Group
On 12 June
 
2023, UBS
 
Group AG acquired
 
Credit Suisse
 
Group AG, succeeding
 
by operation
 
of Swiss
 
law to
 
all assets
and liabilities
 
of Credit
 
Suisse Group AG,
 
and became
 
the direct
 
or indirect
 
shareholder of
 
all of
 
the former
 
direct and
indirect subsidiaries of Credit Suisse Group AG.
›
Refer to the “Integration of Credit Suisse” section of this
 
report and Note 2 for more information
Disposals of subsidiaries and businesses
Agreement to sell Select Portfolio Servicing
On 13 August 2024, UBS entered
 
into an agreement to
 
sell Select Portfolio Servicing, the
 
US mortgage servicing business
of
 
Credit
 
Suisse,
 
which
 
is
 
managed
 
in
 
Non-core
 
and
 
Legacy.
 
Completion
 
of
 
the
 
transaction
 
is
 
subject
 
to
 
regulatory
approvals and
 
other customar
 
y
 
closing conditions.
 
As of
 
31 December 2024,
 
the associated
 
assets and
 
liabilities were
presented
 
as
Assets
 
of
 
disposal
 
groups
 
held
 
for
 
sale
 
and
Liabilities
 
of
 
disposal
 
groups
 
held
 
for
 
sale
,
 
respectively,
 
and
amounted to USD
1,705
m and USD
1,199
m, respectively. UBS does
 
not expect to recognize
 
a material profit or
 
loss upon
completion of the transaction.
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
363
Note 29
 
Changes in organization and acquisitions and disposals
 
of subsidiaries and businesses (continued)
 
Agreement to sell Swisscard AECS GmbH
In October 2024,
 
UBS entered into
 
an agreement to
 
sell to American
 
Express Swiss Holdings
 
GmbH (American
 
Express)
its
50
% interest in Swisscard AECS
 
GmbH (Swisscard), a joint
 
venture in Switzerland between UBS and
 
American Express,
subject to certain closing conditions.
 
Also in October 2024, UBS entered
 
into an agreement with Swisscard to
 
transition
the Credit
 
Suisse-branded card
 
portfolios to
 
UBS. In January
 
2025, UBS completed
 
the purchase
 
of the
 
card portfolios,
with the
 
actual client
 
migration expected
 
to take
 
place over
 
the following
 
quarters. The
 
two transactions
 
will result
 
in
similar profit and loss effects over
 
the course of 2025 and, therefore,
 
on a net basis are not
 
expected to have a material
impact for UBS. In the fourth quarter of 2024, UBS
 
recorded an expense of USD
41
m in connection with the termination
of the Swisscard joint venture.
Changes in organization
Legal structure integration
On 31
 
May
 
2024, the
 
merger
 
of UBS
 
AG
 
and
 
Credit
 
Suisse
 
AG was
 
completed.
 
UBS
 
AG
 
succeeded
 
to
 
all
 
rights
 
and
obligations of Credit Suisse AG, including all outstanding Credit
 
Suisse AG debt instruments.
On 7 June 2024, the transition to a single US intermediate
 
holding company was completed.
On 1 July 2024, the merger of UBS Switzerland AG and Credit Suisse (Schweiz) AG was completed. UBS Switzerland AG
succeeded to all rights and obligations of Credit Suisse (Schweiz)
 
AG.
›
Refer to the “Integration of Credit Suisse” section of this
 
report for more information
Note
30
 
Related parties
 
Related parties of the Group are:
 
–
associates (entities that are under the significant influence
 
of the Group);
 
–
joint ventures (entities in which UBS shares control with another
 
party);
 
–
post-employment benefit plans for the benefit of UBS employees;
 
–
key management personnel and close family members of
 
key management personnel; and
 
–
entities over which key management personnel or their
 
close family members have solely or jointly a direct
 
or indirect
significant influence.
 
Key management personnel are those persons having authority and responsibility for planning,
 
directing, and controlling
the activities
 
of the
 
Group, directly
 
or indirectly.
 
The Group
 
considers the
 
members of
 
the Board
 
of Directors
 
(the BoD)
and the Group Executive Board (the GEB) to constitute
 
key management personnel.
a) Remuneration of key management personnel
The
 
Vice Chairman
 
of the
 
BoD
 
has a
 
specific
 
management
 
employment
 
contract
 
and receives
 
pension
 
benefits
 
upon
retirement. Total
 
remuneration of the
 
Chairman and the
 
Vice Chairman of the
 
BoD and all GEB
 
members is included
 
in
the table below.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Remuneration of key management
 
personnel
USD m, except where indicated
31.12.24
31.12.23
31.12.22
Base salaries and other cash payments
1
33
35
27
Incentive awards – cash
2
30
24
17
Annual incentive award under DCCP
39
36
25
Employer’s contributions to retirement benefit plans
3
3
2
Benefits in kind, fringe benefits (at market value)
2
1
1
Share-based compensation
3
65
63
45
Total
172
162
118
Total (CHF m)
4
151
147
114
1 For 2023 and 2022, may include role-based allowances in line with market practice and regulatory
 
requirements. For 2024, role-based allowances for GEB
 
members were eliminated.
 
2 The cash portion may also
include blocked shares in line with regulatory
 
requirements.
 
3 Compensation expense is based on the share price
 
on grant date taking into account performance
 
conditions. Refer to Note 27 for more
 
information.
For GEB members, share-based
 
compensation for 2024, 2023 and
 
2022 was entirely composed of LTIP
 
awards. For the
 
Chairman and the Vice Chairman
 
of the BoD, the share-based
 
compensation for 2024, 2023
and 2022 was entirely composed of UBS
 
shares.
 
4 Swiss franc amounts disclosed represent the
 
respective US dollar amounts translated at the
 
applicable performance award currency exchange rates
 
(2024: USD /
CHF
0.88
; 2023: USD / CHF
0.91
; 2022: USD / CHF
0.96
).
The independent members of the BoD, including the Chairman, do not have
 
employment or service contracts with UBS,
and thus are not entitled to benefits upon
 
termination of their service on the BoD.
 
Payments to these individuals for their
services as independent
 
members of the
 
BoD amounted
 
to USD
13.1
m (CHF
11.5
m) in 2024,
 
USD
11.7
m (CHF
10.6
m)
in 2023 and USD
11.1
m (CHF
10.7
m) in 2022.
 
 
 
 
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
364
Note 30
 
Related parties (continued)
b) Equity holdings of key management personnel
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity holdings of key management personnel
1
31.12.24
31.12.23
Number of UBS Group AG shares held by members of the
 
BoD, GEB and parties closely linked to them
2
5,593,474
5,121,564
1 No options were held in 2024 and 2023 by non-independent members of the BoD or
 
any GEB member or any of their related parties.
 
2 Excludes shares granted under variable compensation plans with
 
forfeiture
provisions.
 
Of the
 
share totals
 
above, no
 
shares were
 
held by
 
close family
 
members of
 
key management
 
personnel on
 
31 December
2024
 
and 31 December
 
2023. No
 
shares were
 
held by
 
entities
 
that are
 
directly
 
or indirectly
 
controlled
 
or jointly
 
controlled
 
by
key management
 
personnel or
 
their close
 
family members
 
on 31 December
 
2024
 
and 31 December
 
2023.
 
As of
 
31 December
2024, no member of the
 
BoD or GEB was the beneficial
 
owner of more than 1% of the
 
shares in UBS Group AG.
c) Loans, advances, mortgages and deposit balances
 
with key management personnel
The non-independent member
 
s
 
of the BoD
 
and GEB members
 
are granted
 
loans, fixed advances
 
and mortgages in
 
the
ordinary
 
course
 
of
 
business
 
on
 
substantially
 
the
 
same
 
terms
 
and
 
conditions
 
that
 
are
 
available
 
to
 
other
 
employees,
including interest rates and
 
collateral, and neither
 
involve more than the
 
normal risk of
 
collectability nor contain
 
any other
unfavorable features for the firm. Independent BoD members are granted loans and mortgages in the ordinary course of
business at general market conditions.
Outstanding balances with key management personnel were
 
as follows.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans, advances and mortgages to key management
 
personnel
1
USD m, except where indicated
2024
2023
Balance at the beginning of the year
61
33
Balance at the end of the year
51
61
Balance at the end of the year (CHF m)
2
46
52
1 All loans are secured loans.
 
2 Swiss franc amounts disclosed represent the respective US dollar amounts translated at the relevant
 
year-end closing exchange rate.
In addition,
 
outstanding deposit
 
balances with
 
key management
 
personnel amounted
 
to USD
139
m (CHF
126
m) as
 
of
31 December 2024 and USD
24
m (CHF
21
m) as of 31 December 2023.
 
d) Other related-party transactions with entities controlled
 
by key management personnel
In 2024
 
and 2023, UBS did not enter
 
into transactions
 
with entities over
 
whom UBS’s key management
 
personnel or their
close
 
family
 
members
 
have
 
solely
 
or
 
jointly
 
a
 
direct
 
or
 
indirect
 
significant
 
influence,
 
and
 
as
 
of
 
31 December
 
2024,
31 December
 
2023
 
and 31 December
 
2022 there were
 
no outstanding
 
balances related
 
to such
 
transactions.
 
Furthermore,
in 2024
 
and 2023,
 
such entities
 
did not sell
 
any goods
 
or provide
 
any services
 
to UBS and
 
therefore did
 
not receive
 
any fees
from UBS. UBS
 
also did not provide
 
services to
 
such entities
 
in 2024 and 2023
 
and therefore also
 
received no fees.
e) Transactions with associates and joint ventures
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans to and outstanding receivables from associates
 
and joint ventures
USD m
2024
2023
Carrying amount at the beginning of the year
271
217
Additions
866
824
Reductions
(440)
(796)
Foreign currency translation
(34)
26
Carrying amount at the end of the year
 
663
271
of which: unsecured loans and receivables
656
263
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other transactions with associates and
 
joint ventures
As of or for the year ended
USD m
31.12.24
31.12.23
Payments to associates and joint ventures for goods and services
 
received
228
190
Fees received for services provided to associates and joint ventures
39
24
Liabilities to associates and joint ventures
312
106
In addition to the items in the table above, transactions with associates and joint ventures
 
also include off-balance sheet
exposures of USD
1.1
bn, which are provided on an arm’s length basis.
›
Refer to Note 28 for an overview of investments
 
in associates and joint ventures
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
365
 
Note 31
 
Invested assets and net new money
 
The
 
following
 
disclosures
 
provide
 
a
 
breakdown
 
of
 
UBS’s
 
invested
 
assets
 
and
 
a
 
presentation
 
of
 
their
 
development,
including net new money,
 
as required by the Swiss Financial Market
 
Supervisory Authority (FINMA).
Invested assets
Invested assets
 
consist of
 
all client
 
assets managed
 
by or
 
deposited with
 
UBS for
 
investment purposes.
 
Invested assets
include managed
 
fund assets,
 
managed institutional
 
assets, discretionary
 
and advisory
 
wealth management
 
portfolios,
fiduciary deposits, time deposits, savings accounts, and
 
wealth management securities or brokerage
 
accounts. All assets
held
 
for
 
purely
 
transactional
 
purposes
 
and
 
custody-only
 
assets,
 
including
 
corporate
 
client
 
assets
 
held
 
for
 
cash
management and
 
transactional purposes,
 
are
 
excluded from
 
invested assets,
 
as the
 
Group only
 
administers
 
the assets
and does not
 
offer advice
 
on how they
 
should be invested.
 
Also excluded are
 
non-bankable assets
 
(e.g. art collections)
and deposits from third-party banks for
 
funding or trading purposes.
Discretionary assets
 
are defined
 
as client
 
assets that
 
UBS decides
 
how to
 
invest. Other
 
invested assets
 
are those
 
where
the client ultimately
 
decides how the
 
assets are invested.
 
When a single
 
product is created
 
in one business
 
division and
sold
 
in another,
 
it is
 
counted
 
in
 
both
 
the
 
business
 
division
 
managing
 
the
 
investment
 
and the
 
one
 
distributing
 
it. This
results
 
in
 
double
 
counting
 
within
 
UBS’s
 
total
 
invested
 
assets
 
and
 
net
 
new
 
money,
 
as
 
both
 
business
 
divisions
 
are
independently providing a service to their respective clients,
 
and both add value and generate revenue.
Net new money
Net new money in a reporting period is the amount
 
of invested assets entrusted to UBS by new and existing
 
clients, less
those withdrawn by existing clients and clients who terminated
 
relationships with UBS.
Net new
 
money is
 
calculated using the
 
direct method,
 
under which
 
inflows and
 
outflows to
 
/ from
 
invested assets are
determined at
 
the client level,
 
based on transactions.
 
Interest and dividend
 
income from
 
invested assets
 
are not counted
 
as
net new money inflows.
 
Market and currency
 
movements, as well
 
as fees, commissions
 
and interest on loans
 
charged, are
excluded from net new money,
 
as are effects resulting
 
from any acquisition or divestment
 
of a UBS subsidiary or business.
Reclassifications between invested
 
assets
 
and
 
custody-only assets
 
as
 
a
 
result of
 
a
 
change
 
in
 
service level
 
delivered are
generally treated as net new
 
money flows. However, where the change
 
in service level directly results from an
 
externally
imposed regulation or a
 
strategic decision by UBS
 
to exit
 
a market or
 
specific service offering, the one-time net effect
 
is
reported as
Other effects
.
The Investment Bank does not track
 
invested assets and net new money. However,
 
when a client is transferred from the
Investment Bank
 
to another
 
business division,
 
this may
 
produce net
 
new money
 
even though
 
the client’s
 
assets
 
were
already with UBS.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invested assets and net new money
As of or for the year ended
USD bn
31.12.24
31.12.23
Fund assets managed by UBS
639
624
Discretionary assets
2,213
1,996
Other invested assets
3,235
3,094
Total invested assets
1
6,087
5,714
of which: double counts
503
461
Net new money
1,2
52
80
1 Includes the share of net new money and invested assets relating to associates in the Asset Management business division.
 
2 Includes double counts.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Development of invested assets
USD bn
2024
2023
Total invested assets at the beginning of the year
1,2
5,714
3,981
Net new money
52
80
Market movements
3
542
428
Foreign currency translation
(155)
91
Other effects
(67)
1,134
of which: acquisitions / (divestments)
(6)
1,180
of which: the acquisition of the Credit Suisse Group
1,205
Total invested assets at the end of the year
1,2
6,087
5,714
1 Includes the share of net new money and invested assets relating to associates in the Asset Management business division.
 
2 Includes double counts.
 
3 Includes interest and dividend income.
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
366
 
Note 32
 
Currency translation rates
 
The following table shows
 
the rates of the
 
main currencies used to
 
translate the financial information of
 
UBS’s operations
with a functional currency other than the US dollar
 
into US dollars.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Closing exchange rate
Average rate
1
As of
For the year ended
31.12.24
31.12.23
31.12.24
31.12.23
31.12.22
1 CHF
1.10
1.19
1.13
1.12
1.05
1 EUR
1.04
1.10
1.08
1.08
1.05
1 GBP
1.25
1.28
1.28
1.25
1.23
100 JPY
0.63
0.71
0.66
0.70
0.76
1 Monthly income statement items of
 
operations with a functional currency
 
other than the US dollar
 
are translated into US dollars
 
using month-end rates.
 
Disclosed average rates for
 
a year represent an average
 
of
twelve month-end rates,
 
weighted according to
 
the income and
 
expense volumes of
 
all operations of
 
the Group with
 
the same functional
 
currency for each
 
month. Weighted average
 
rates for individual
 
business
divisions may deviate from the weighted average rates for the Group.
 
Note 33
 
Main differences between IFRS Accounting Standards
 
and Swiss GAAP
 
The consolidated
 
financial statements
 
of UBS
 
Group AG
 
are
 
prepared
 
in accordance
 
with IFRS
 
Accounting Standards.
The Swiss Financial
 
Market Supervisory Authority (FINMA) requires financial
 
groups presenting financial statements under
IFRS Accounting Standards
 
to provide a
 
narrative explanation of
 
the main differences between
 
IFRS Accounting Standards
and Swiss
 
generally accepted
 
accounting principles
 
(GAAP)
 
(the FINMA
 
Accounting Ordinance,
 
FINMA Circular
 
2020/1
“Accounting – banks”
 
and the Banking
 
Ordinance (the
 
BO)). Included in
 
this Note are
 
the significant differences
 
in the
recognition and
 
measurement between
 
IFRS Accounting
 
Standards and
 
the provisions
 
of the
 
BO and
 
the guidelines
 
of
FINMA governing true and fair view financial statement reporting
 
pursuant to Art. 25 to Art. 42 of the BO.
1. Consolidation
Under
 
IFRS
 
Accounting
 
Standards,
 
all
 
entities
 
that
 
are
 
controlled
 
by the
 
holding
 
entity
 
are
 
consolidated.
 
Under
 
Swiss
GAAP,
 
controlled entities
 
deemed immaterial to a
 
group or those
 
held only temporarily are
 
exempt from consolidation,
but
 
instead
 
are
 
recorded
 
as
 
participations
 
accounted
 
for
 
under
 
the
 
equity
 
method
 
of
 
accounting
 
or
 
as
 
financial
investments measured at the lower of cost or market
 
value.
2. Classification and measurement of financial assets
Under
 
IFRS
 
Accounting
 
Standards,
 
debt
 
instruments
 
are
 
measured
 
at
 
amortized
 
cost,
 
fair
 
value
 
through
 
other
comprehensive
 
income
 
(FVOCI)
 
or
 
fair
 
value
 
through
 
profit
 
or
 
loss
 
(FVTPL),
 
depending
 
on
 
the
 
nature
 
of
 
the
 
business
model within which the
 
particular asset is
 
held and the characteristics
 
of the contractual cash
 
flows of the
 
asset. Equity
instruments are accounted for
 
at FVTPL by
 
UBS. Under Swiss GAAP, trading assets and derivatives are
 
measured at FVTPL,
in
 
line with
 
IFRS
 
Accounting
 
Standards.
 
However,
 
non-trading
 
debt
 
instruments
 
are
 
generally
 
measured
 
at
 
amortized
cost, even
 
when the
 
assets are
 
managed on
 
a fair
 
value basis.
 
In addition,
 
the measurement
 
of financial
 
assets in
 
the
form of securities
 
depends on
 
the nature
 
of the asset:
 
debt instruments
 
not held to
 
maturity,
 
i.e. instruments
 
available
for sale, and equity instruments with no permanent
 
holding intent, are classified as
Financial investments
 
and measured
at the lower of
 
(amortized) cost or market
 
value. Market value adjustments
 
up to the original
 
cost amount and realized
gains or
 
losses upon
 
disposal
 
of the
 
investment are
 
recorded
 
in the
 
income statement
 
as
Other income
from
ordinary
activities.
Equity
 
instruments
 
with
 
a
 
permanent
 
holding
 
intent
 
are
 
classified
 
as
 
participations
 
in
Non-consolidated
investments
 
in
 
subsidiaries
 
and
 
other
 
participations
 
and
 
are
 
measured
 
at
 
cost
 
less
 
impairment.
 
Impairment
 
losses
 
are
recorded in the
 
income statement as
Impairment of investments
 
in non-consolidated subsidiaries
 
and other participations.
Reversals of impairments up to the original cost amount and realized gains or losses upon disposal of the investment are
recorded as
Extraordinary income
/
 
Extraordinary expenses
.
3. Fair value option applied to financial liabilities
Under IFRS
 
Accounting Standards,
 
UBS applies
 
the fair
 
value option
 
to certain
 
financial liabilities
 
not held
 
for trading.
Instruments for which the fair value option is applied are accounted for at FVTPL. The
 
amount of change in the fair value
attributable to
 
changes in
 
UBS’s own
 
credit is presented
 
in
Other comprehensive
 
income
 
directly within
Retained earnings
.
The fair value option is applied primarily to issued structured
 
debt instruments, certain non-structured
 
debt instruments,
certain payables under repurchase agreements and cash collateral on securities lending agreements, amounts due under
unit-linked investment contracts, and brokerage
 
payables.
Under Swiss
 
GAAP, the
 
fair value
 
option can
 
only be
 
applied to
 
structured debt
 
instruments consisting
 
of a
 
debt host
contract and
 
one or
 
more embedded
 
derivatives that
 
do not
 
relate to
 
own equity.
 
Furthermore, unrealized
 
changes in
fair value
 
attributable to
 
changes in
 
UBS’s own
 
credit are
 
not recognized,
 
whereas realized
 
own credit
 
is recognized
 
in
Net trading income
.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
367
Note 33
 
Main differences between IFRS Accounting Standards
 
and Swiss GAAP (continued)
4. Allowances and provisions for credit losses
Swiss GAAP permit use
 
of IFRS Accounting Standards for
 
accounting for allowances and
 
provisions for credit losses based
on an expected credit loss (ECL) model. UBS has chosen to
 
apply the IFRS 9 ECL approach to those exposures
 
that are in
the ECL scope of both frameworks, IFRS Accounting Standards
 
and Swiss GAAP.
For the small residual
 
exposures within the scope
 
of Swiss GAAP ECL
 
requirements, which are
 
not subject to ECL
 
under
IFRS Accounting Standards due to classification differences,
 
UBS applies alternative approaches.
 
–
For exposures for which Pillar 1 internal ratings-based models are applied to measure credit risk, ECL is determined by
the regulatory expected loss (EL), with an
 
add-on for scaling up to the
 
residual maturity of exposures maturing beyond
the next
 
12 months,
 
as appropriate.
 
For detailed
 
information on
 
regulatory EL,
 
refer to
 
the “Risk
 
management and
control”
 
section of this report.
 
–
For exposures
 
for which
 
the Pillar 1
 
standardized approach
 
is used to
 
measure credit
 
risk, ECL
 
is determined
 
using a
portfolio approach
 
that derives
 
a conservative
 
probability of
 
default (PD)
 
and a
 
conservative loss
 
given default
 
(LGD)
for the entire portfolio.
 
5. Hedge accounting
Under IFRS Accounting
 
Standards, when cash
 
flow hedge accounting is
 
applied, the fair value
 
gain or loss
 
on the effective
portion of
 
a derivative
 
designated
 
as a
 
cash flow
 
hedge
 
is recognized
 
initially in
 
equity and
 
reclassified
 
to the
 
income
statement when
 
certain conditions
 
are met.
 
When fair
 
value hedge
 
accounting is
 
applied, the
 
fair value
 
change of
 
the
hedged item attributable to the hedged risk is reflected in the measurement of the hedged item and is recognized in the
income statement
 
along with
 
the change
 
in the
 
fair value
 
of the
 
hedging derivative.
 
Under Swiss
 
GAAP,
 
the effective
portion of the fair value change of a derivative
 
instrument designated as a cash flow
 
or as a fair value hedge is deferred
on the balance sheet as
Other assets
 
or
Other liabilities
. The carrying amount of the hedged item designated in fair value
hedges is not adjusted for fair value changes attributable
 
to the hedged risk.
6. Business combinations, goodwill and intangible assets
Under IFRS Accounting Standards,
 
business combinations are accounted for using
 
the acquisition method, as prescribed
by
 
IFRS
 
3,
Business
 
Combinations
.
 
Goodwill
 
and
 
intangible
 
assets
 
with
 
indefinite
 
useful
 
lives
 
acquired
 
in
 
a
 
business
combination
 
are
 
not
 
amortized
 
but
 
tested
 
annually
 
for
 
impairment.
 
Negative
 
goodwill
 
is
 
recognized
 
in
 
the
 
income
statement.
Under
 
Swiss
 
GAAP,
 
assets
 
and
 
liabilities
 
acquired
 
in
 
a
 
business
 
combination
 
are
 
generally
 
recorded
 
at
 
market
 
value.
Goodwill and intangible assets
 
with indefinite useful lives are
 
amortized over a period not exceeding
five years
, unless a
longer
 
useful
 
life,
 
which
 
may
 
not
 
exceed
ten years
,
 
can
 
be
 
justified.
 
In
 
addition,
 
these
 
assets
 
are
 
tested
 
annually
 
for
impairment.
 
If
 
acquisition-date
 
amounts
 
of
 
the
 
net
 
assets
 
acquired
 
exceed
 
the
 
market
 
value
 
of
 
the
 
consideration
transferred,
 
incremental
 
provisions
 
are
 
recognized
 
for
 
expected
 
cash
 
outflows
 
related
 
to
 
taking
 
over
 
control
 
of
 
the
business, e.g. for expected restructuring. Any remaining
 
negative goodwill is recognized in the income statement.
7. Post-employment benefit plans
Swiss GAAP
 
permit the
 
use of
 
IFRS Accounting
 
Standards
 
or Swiss
 
accounting standards
 
for post-employment
 
benefit
plans, with the election made on a plan-by-plan basis.
UBS has elected to
 
apply IAS 19 for the
 
non-Swiss defined benefit
 
plans in the UBS AG
 
standalone financial statements
and Swiss
 
GAAP (FER 16)
 
for the
 
Swiss pension
 
plan in
 
the UBS AG
 
and the
 
UBS Switzerland
 
AG standalone
 
financial
statements. The
 
requirements of
 
Swiss GAAP
 
are better
 
aligned with
 
the specific
 
nature of
 
Swiss pension
 
plans, which
are hybrid in
 
that they combine
 
elements of defined
 
contribution and
 
defined benefit
 
plans, but are
 
treated as defined
benefit plans
 
under IFRS
 
Accounting Standards
 
.
 
Key differences
 
between
 
Swiss GAAP
 
and IFRS
 
Accounting Standards
include
 
the
 
treatment
 
of
 
dynamic
 
elements,
 
such
 
as
 
future
 
salary
 
increases
 
and
 
future
 
interest
 
credits
 
on
 
retirement
savings, which are not considered under the
 
static method used in accordance with
 
Swiss GAAP. Also, the discount rate
used to determine the defined
 
benefit obligation in accordance with
 
IFRS Accounting Standards is based
 
on the yield of
high-quality corporate bonds of the market in the respective pension plan country. The discount rate used in accordance
with Swiss GAAP (i.e. the technical
 
interest rate) is determined by the
 
Pension Foundation Board based on the
 
expected
returns of the Board’s investment strategy.
For defined benefit plans, IFRS Accounting Standards
 
require the full defined benefit obligation net of the
 
plan assets to
be
 
recorded
 
on
 
the
 
balance
 
sheet
 
subject
 
to
 
the
 
asset
 
ceiling
 
rules,
 
with
 
changes
 
resulting
 
from
 
remeasurements
recognized
 
directly
 
in
 
equity.
 
However,
 
for
 
non-Swiss
 
defined
 
benefit
 
plans
 
for
 
which
 
IFRS
 
Accounting
 
Standards
 
are
elected, changes
 
due to
 
remeasurements are
 
recognized
 
in the
 
income
 
statement
 
of UBS
 
AG standalone
 
under
 
Swiss
GAAP.
 
 
Annual Report 2024
| Consolidated financial statements | UBS
 
Group AG consolidated financial statements
 
368
Note 33
 
Main differences between IFRS Accounting Standards
 
and Swiss GAAP (continued)
Swiss GAAP require
 
employer contributions
 
to the pension
 
fund to be
 
recognized as personnel
 
expenses in the
 
income
statement. Swiss GAAP
 
also require an
 
assessment of whether,
 
based on
 
the pension fund’s
 
financial statements prepared
in accordance
 
with Swiss
 
accounting standards
 
(FER 26),
 
an economic
 
benefit to,
 
or obligation
 
of, the
 
employer arises
from
 
the
 
pension
 
fund
 
that
 
is
 
recognized
 
in
 
the
 
balance
 
sheet
 
when
 
conditions
 
are
 
met.
 
Conditions
 
for
 
recording
 
a
pension asset
 
or liability
 
would be
 
met if,
 
for example,
 
an employer
 
contribution reserve
 
is available or
 
the employer
 
is
required to contribute to the reduction of a pension deficit
 
(on an FER 26 basis).
8. Leasing
Under
 
IFRS
 
Accounting
 
Standards,
 
a
 
single
 
lease
 
accounting
 
model
 
applies
 
that
 
requires
 
UBS
 
to
 
record
 
a
 
right-of-use
(RoU) asset
 
and a
 
corresponding lease
 
liability on
 
the balance
 
sheet when
 
UBS is
 
a lessee
 
in a
 
lease arrangement.
 
The
RoU asset
 
and the
 
lease liability
 
are recognized
 
when
 
UBS acquires
 
control of
 
the physical
 
use of
 
the asset.
 
The lease
liability
 
is
 
measured
 
based
 
on
 
the
 
present
 
value
 
of
 
the
 
lease
 
payments
 
over
 
the
 
lease
 
term,
 
discounted
 
using
 
UBS’s
unsecured borrowing
 
rate. The
 
RoU asset
 
is recorded
 
at an
 
amount equal
 
to the
 
lease liability
 
but is
 
adjusted for
 
rent
prepayments, initial direct costs, any
 
costs to refurbish the
 
leased asset and / or
 
lease incentives received. The
 
RoU asset
is depreciated over the shorter of the lease term or the
 
useful life of the underlying asset.
Under
 
Swiss
 
GAAP,
 
leases
 
that
 
transfer
 
substantially
 
all
 
the
 
risks
 
and
 
rewards,
 
but
 
not
 
necessarily
 
legal
 
title
 
in
 
the
underlying assets, are
 
classified as finance
 
leases. All other
 
leases are
 
classified as operating
 
leases. Whereas finance
 
leases
are
 
recognized
 
on
 
the
 
balance
 
sheet
 
and
 
measured
 
in
 
line
 
with
 
IFRS
 
Accounting
 
Standards,
 
operating
 
leases
 
are
 
not
recognized on
 
the balance
 
sheet, with
 
payments recognized
 
as
General and
 
administrative
 
expenses
 
on a
 
straight-line
basis over the lease term, which commences with control of the physical use of the asset. Lease incentives are treated as
a reduction of rental expense and recognized on a consistent
 
basis over the lease term.
9. Netting of derivative assets and liabilities
Under IFRS Accounting Standards
 
,
 
derivative assets, derivative liabilities
 
and related cash collateral
 
not settled to market
are
 
reported
 
on
 
a
 
gross
 
basis
 
unless
 
the
 
restrictive
 
netting
 
requirements
 
under
 
IFRS
 
Accounting
 
Standards
 
are
 
met:
(i) existence
 
of
 
master
 
netting
 
agreements
 
and
 
related
 
collateral
 
arrangements
 
that
 
are
 
unconditional
 
and
 
legally
enforceable,
 
in both
 
the normal
 
course of
 
business and
 
the event
 
of default,
 
bankruptcy
 
or insolvency
 
of UBS
 
and its
counterparties;
 
and
 
(ii) UBS’s
 
intention
 
to
 
either
 
settle
 
on
 
a
 
net
 
basis
 
or
 
to
 
realize
 
the
 
asset
 
and
 
settle
 
the
 
liability
simultaneously. Under Swiss GAAP,
 
derivative assets, derivative liabilities and related cash collateral not settled to
 
market
are
 
generally
 
reported
 
on
 
a
 
net
 
basis,
 
provided
 
the
 
master
 
netting
 
and
 
the
 
related
 
collateral
 
agreements
 
are
 
legally
enforceable in the event of default, bankruptcy
 
or insolvency of UBS’s counterparties.
10. Negative interest
Under IFRS Accounting
 
Standards, negative
 
interest income
 
arising on a
 
financial asset
 
does not meet
 
the definition
 
of
interest
 
income
 
and,
 
therefore,
 
negative
 
interest
 
on
 
financial
 
assets
 
and
 
negative
 
interest
 
on
 
financial
 
liabilities
 
are
presented
 
within interest
 
expense and
 
interest
 
income,
 
respectively.
 
Under Swiss
 
GAAP,
 
negative interest
 
on financial
assets is presented
 
within interest income and
 
negative interest on financial
 
liabilities is presented within
 
interest expense.
11. Extraordinary income and expense
Certain non-recurring and
 
non-operating income and expense
 
items, such as negative
 
goodwill,
 
realized gains or
 
losses
from the
 
disposal of participations,
 
fixed and intangible
 
assets, and reversals
 
of impairments of
 
participations and
 
fixed
assets, are
 
classified
 
as extraordinary
 
items under
 
Swiss
 
GAAP.
 
This
 
distinction
 
is not
 
available
 
under IFRS
 
Accounting
Standards.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024
| Significant regulated subsidiary and
 
sub-group information
 
369
Significant regulated subsidiary
and sub-group information
Financial and regulatory key figures for our significant regulated
subsidiaries and sub-groups
UBS AG
(consolidated)
UBS AG
(standalone)
UBS Switzerland AG
(standalone)
UBS Europe SE
(consolidated)
UBS Americas
Holding LLC
(consolidated)
All values in million, except where indicated
USD
USD
CHF
EUR
USD
Financial and regulatory requirements
IFRS Accounting Standards
Swiss SRB rules
IFRS Accounting
Standards
Swiss SRB rules
IFRS Accounting
Standards
Swiss SRB rules
IFRS Accounting
Standards
EU regulatory rules
US GAAP
US Basel III rules
As of or for the year ended
31.12.24
31.12.23
31.12.24
31.12.23
31.12.24
31.12.23
31.12.24
31.12.23
1
31.12.24
2
31.12.23
2
Financial information
3
Income statement
Total operating income
4
41,779
33,532
19,244
10,005
11,245
9,666
1,193
1,180
17,441
13,888
Total operating expenses
39,346
29,011
12,897
8,195
8,095
5,781
1,045
885
17,262
15,323
Operating profit / (loss) before tax
2,433
4,521
6,347
1,810
3,150
3,885
148
295
178
(1,435)
Net profit / (loss)
1,533
3,315
6,708
1,559
2,644
3,184
89
213
(51)
(1,602)
Balance sheet
Total assets
1,568,060
1,156,016
966,697
698,149
526,521
319,037
55,344
46,769
211,893
222,009
Total liabilities
 
1,473,394
1,100,448
878,365
642,602
500,273
303,673
50,966
42,894
185,168
189,110
Total equity
94,666
55,569
88,332
55,546
26,249
15,364
4,377
3,874
26,725
32,899
Capital
5
Common equity tier 1 capital
 
73,792
 
44,130
 
75,051
 
52,553
 
21,659
 
12,515
3,239
2,625
16,123
14,081
Additional tier 1 capital
 
15,830
 
12,498
 
15,830
 
12,498
 
7,994
 
5,000
600
600
2,818
2,837
Total going concern capital / Tier 1 capital
 
89,623
 
56,628
 
90,881
 
65,051
 
29,652
 
17,515
3,839
3,225
18,941
16,919
Tier 2 capital
 
207
 
538
 
204
 
533
240
202
Total capital
3,839
3,225
19,181
17,120
Total gone concern loss-absorbing capacity
 
92,177
 
54,458
 
92,174
 
54,452
 
19,274
 
11,176
2,540
6
2,522
6
7,800
7
7,400
7
Total loss-absorbing capacity
 
181,800
 
111,086
 
183,055
 
119,504
 
48,926
 
28,691
6,379
5,747
26,741
7
24,319
7
Risk-weighted assets and leverage
ratio denominator
5
Risk-weighted assets
 
495,110
 
333,979
 
507,964
 
354,083
 
186,265
 
107,097
14,079
12,382
78,585
73,096
Leverage ratio denominator
 
1,523,277
 
1,104,408
 
899,348
 
643,939
 
556,053
 
330,515
55,567
45,079
197,487
184,015
Supplementary leverage ratio denominator
227,973
208,242
Capital and leverage ratios (%)
5
Common equity tier 1 capital ratio
 
14.9
 
13.2
 
14.8
 
14.8
 
11.6
 
11.7
 
23.0
 
21.2
 
20.5
 
19.3
Going concern capital ratio / Tier 1 capital ratio
 
18.1
 
17.0
 
17.9
 
18.4
 
15.9
 
16.4
 
27.3
 
26.1
 
24.1
 
23.1
Total capital ratio
 
27.3
 
26.1
 
24.4
 
23.4
Total loss-absorbing capacity ratio
 
36.7
 
33.3
 
26.3
 
26.8
 
45.3
 
46.4
 
34.0
 
33.3
Tier 1 leverage ratio
 
6.9
 
7.2
 
9.6
 
9.2
Supplementary tier 1 leverage ratio
 
8.3
 
8.1
Going concern leverage ratio
 
5.9
 
5.1
 
10.1
 
10.1
 
5.3
 
5.3
Total loss-absorbing capacity leverage ratio
 
11.9
 
10.1
 
8.8
 
8.7
 
11.5
 
12.8
 
13.5
 
13.2
Gone concern capital coverage ratio
 
122.3
 
112.5
Liquidity coverage ratio
5
High-quality liquid assets (bn)
331.6
254.5
142.7
130.0
125.0
76.3
17.3
18.9
26.8
28.0
Net cash outflows (bn)
178.2
134.3
58.6
50.4
87.2
53.6
12.5
12.8
20.1
18.9
Liquidity coverage ratio (%)
186.1
189.7
244.0
8
260.2
143.5
9
142.5
138.9
148.7
133.6
147.7
Net stable funding ratio
5
Total available stable funding (bn)
847.0
602.6
410.2
279.8
359.2
222.7
17.1
13.7
109.3
107.9
Total required stable funding (bn)
682.5
503.8
421.8
304.9
271.7
166.1
13.7
10.4
80.5
81.7
Net stable funding ratio (%)
124.1
119.6
97.3
10
91.7
132.2
10
134.1
125.5
132.1
135.8
132.1
Other
Joint and several liability between UBS AG and
UBS Switzerland AG (bn)
11
3
12
3
1 Total assets and
 
total equity as of 31
 
December 2023 have
 
been restated to reflect a
 
change in the treatment
 
of an internal business
 
transfer in 2023.
 
2 The 2024
 
financial and regulatory information
 
for UBS
Americas Holding LLC is inclusive of Credit Suisse Holdings (USA), Inc. following the reparenting of this entity under UBS Americas Holding
 
LLC on 7 June 2024. 2023 financial information has been restated to include
the information of Credit Suisse Holdings (USA), Inc in line with US GAAP accounting guidance. Regulatory information has not been restated for 2023.
 
3 The financial information disclosed does not represent a full
set of financial statements under the respective GAAP / IFRS Accounting Standards.
 
4 The total operating income includes credit loss expense or release.
 
5 Refer to the 31 December 2024 Pillar 3 Report, available
under “Pillar 3 disclosures” at ubs.com/investors, for more information.
 
6 Consists of positions that meet the conditions laid down in Art. 72a–b of the Capital Requirements Regulation II with regard to contractual,
structural or legal subordination.
 
7 Consists of eligible long-term debt that meets the conditions specified in 12 CFR § 252.162 of the final total loss-absorbing capacity (TLAC) rules. TLAC is the sum of tier 1 capital
and eligible long-term debt.
 
8 In the fourth quarter of 2024, the liquidity coverage ratio (the
 
LCR) of UBS AG was 244.0%, remaining above the prudential
 
requirements communicated by FINMA.
 
9 In the fourth
quarter of 2024,
 
the LCR of
 
UBS Switzerland AG, which
 
is a Swiss
 
SRB, was
 
143.5%, remaining above
 
the prudential requirement
 
communicated by FINMA
 
in connection with
 
the Swiss Emergency
 
Plan.
 
10 In
accordance with Art. 17h para. 3 and 4 of the Liquidity Ordinance, UBS AG standalone is required to maintain a minimum NSFR of at least 80% without taking into account excess funding of UBS Switzerland AG and
100% after taking into account such excess funding.
 
11 Under certain circumstances, the Swiss Banking Act and FINMA’s Banking Insolvency Ordinance authorize FINMA to modify, extinguish or convert to common
equity liabilities of a bank in connection with a
 
resolution or insolvency of such bank.
 
12 As of 31 December 2024, the amount consists of
 
a joint and several liability of UBS Switzerland AG for contractual obligations
of UBS AG
 
related to the
 
establishment of UBS
 
Switzerland AG
 
(CHF 2.4bn), and
 
a joint and
 
several liability
 
of UBS Switzerland
 
AG related
 
to the merger
 
with Credit Suisse
 
(Schweiz) AG
 
in connection with
 
the
international covered bonds program (CHF 0.5bn) which was fully collateralized through cash deposits
 
from UBS AG.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024
| Significant regulated subsidiary and
 
sub-group information
 
370
UBS Group
 
AG is
 
a holding
 
company and
 
conducts substantially
 
all of
 
its operations
 
through UBS
 
AG and
 
subsidiaries
thereof. UBS
 
Group
 
AG and
 
UBS AG
 
have contributed
 
a significant
 
portion
 
of their
 
respective capital
 
to, and
 
provide
substantial liquidity to, such subsidiaries. Many of these subsidiaries are subject to regulations requiring compliance with
minimum
 
capital,
 
liquidity
 
and
 
similar
 
requirements.
 
The
 
tables
 
in
 
this
 
section
 
summarize
 
the
 
regulatory
 
capital
components and capital ratios of our
 
significant regulated subsidiaries and
 
sub-groups determined under the
 
regulatory
framework of each subsidiary’s or sub-group’s home jurisdiction.
›
Refer to “Capital and capital ratios of our significant
 
regulated subsidiaries” in the “Capital, liquidity and
 
funding, and balance
sheet” section of this report for more information
›
Refer to “Note 23 Restricted and transferred financial
 
assets” in the “Consolidated financial statements”
 
section of this report for
more information
Supervisory
 
authorities
 
generally
 
have
 
discretion
 
to
 
impose
 
higher
 
requirements
 
or
 
to
 
otherwise
 
limit
 
the
 
activities
 
of
subsidiaries. Supervisory
 
authorities also
 
may require
 
entities to
 
measure capital
 
and leverage
 
ratios on
 
a stressed
 
basis
and may limit the
 
ability of an entity
 
to engage in new activities
 
or take capital actions based
 
on the results of
 
those tests.
In August 2024, the Federal
 
Reserve Board assigned UBS
 
Americas Holding LLC a stress
 
capital buffer (an SCB)
 
of 9.3%
as of 1 October
 
2024 (previously 9.1%) under
 
the Federal Reserve
 
Board’s SCB rule, resulting
 
in a total common
 
equity
tier 1 capital requirement of 13.8%. The SCB for our US-based intermediate holding company is based on the previously
released results
 
of the Federal
 
Reserve Board’s
 
2024 Dodd–Frank
 
Act Stress Test
 
(DFAST), where
 
UBS Americas
 
Holding
LLC exceeded the minimum capital requirements under the
 
severely adverse scenario.
 
Additional information on
 
the above entities
 
is provided in
 
the 31 December 2024
 
Pillar 3 Report, which
 
is available under
“Pillar 3 disclosures” at
ubs.com/investors
.
Credit Suisse International
(standalone)
All values in million, except where indicated
USD
Financial and regulatory requirements
IFRS Accounting Standards
UK regulatory rules
As of or for the year ended
31.12.24
31.12.23
1
Financial information
2
Income statement
Total operating income
3
1,046
1,397
Total operating expenses
1,106
3,133
Operating profit / (loss) before tax
(60)
(1,736)
Net profit / (loss)
(66)
(1,793)
Balance sheet
Total assets
51,374
122,259
Total liabilities
 
44,035
107,296
Total equity
7,339
14,963
Capital
4
Common equity tier 1 capital
6,883
12,689
Additional tier 1 capital
0
1,200
Total going concern capital / Tier 1 capital
6,883
13,889
Tier 2 capital
0
0
Total capital
6,883
13,889
Total gone concern loss-absorbing capacity
3,043
4,586
Total loss-absorbing capacity
9,926
18,475
Risk-weighted assets and leverage ratio
 
denominator
4
Risk-weighted assets
10,951
34,698
Leverage ratio denominator
32,521
78,135
Capital and leverage ratios (%)
4
Common equity tier 1 capital ratio
62.9
36.6
Going concern capital ratio / Tier 1 capital ratio
62.9
40.0
Total capital ratio
62.9
40.0
Total loss-absorbing capacity ratio
90.6
53.2
Tier 1 leverage ratio
21.2
17.8
Going concern leverage ratio
Total loss-absorbing capacity leverage ratio
30.5
23.6
Liquidity coverage ratio
4
High-quality liquid assets (bn)
15.0
15.4
Net cash outflows (bn)
4.3
6.0
Liquidity coverage ratio (%)
363.3
280.3
Net stable funding ratio
4
Total available stable funding (bn)
17.5
30.4
Total required stable funding (bn)
8.7
24.2
Net stable funding ratio (%)
214.8
125.6
1 Comparative information
 
has been aligned
 
with Credit Suisse
 
International standalone’s
 
final 2023 audited
 
financial statements.
 
2 The financial
 
information disclosed
 
does not represent
 
a full set
 
of financial
statements under the respective GAAP / IFRS Accounting Standards.
 
3 The total operating income includes credit loss
 
expense or release.
 
4 Refer to the 31 December 2024 Pillar 3 Report, available
 
under “Pillar
3 disclosures” at ubs.com/investors, for more information.
 
 
 
Annual Report 2024 |
Additional regulatory information | UBS Group
 
AG consolidated supplemental disclosures
 
required under SEC regulations
 
372
UBS Group AG consolidated supplemental disclosures
required under SEC regulations
A – Introduction
The following pages
 
contain supplemental UBS Group
 
AG disclosures that are required under
 
US Securities and
 
Exchange
Commission
 
(SEC)
 
regulations.
 
UBS
 
Group
 
AG’s consolidated
 
financial
 
statements
 
have
 
been
 
prepared
 
in
 
accordance
with
 
IFRS
 
Accounting
 
Standards
 
as
 
issued
 
by
 
the
 
International
 
Accounting
 
Standards
 
Board
 
(the
 
IASB)
 
and
 
are
denominated in US dollars.
On 12 June
 
2023, UBS Group
 
AG acquired
 
Credit Suisse
 
Group AG, succeeding
 
by operation
 
of Swiss law
 
to all assets
and liabilities
 
of Credit
 
Suisse Group
 
AG, and
 
became the
 
direct or
 
indirect shareholder
 
of all
 
of the
 
former direct
 
and
indirect
 
subsidiaries
 
of
 
Credit
 
Suisse
 
Group
 
AG.
 
The
 
acquisition
 
of
 
the
 
Credit
 
Suisse
 
Group
 
constitutes
 
a
 
business
combination under
 
IFRS 3,
 
Business Combinations, and
 
is required
 
to be
 
accounted for
 
by applying
 
the acquisition method
of accounting.
 
With the
 
acquisition date
 
of 12
 
June 2023,
 
for convenience
 
the Credit
 
Suisse Group
 
was consolidated
from 31 May 2023, as the impact of transactions and activities
 
in the period from 31 May 2023 to 12 June 2023 on the
consolidated financial statements was not material.
›
Refer to “Note 2 Accounting for the acquisition
 
of the Credit Suisse Group” in the “Consolidated financial
 
statements” section of
this report for more information
B – Selected financial data
Dividends received from investments in subsidiaries
In 2024,
 
UBS Group AG
 
received dividends of
 
USD 3,193m (2023: USD 6,269m;
 
2022: USD 4,373m) from
 
its subsidiaries.
Dividends disclosed
 
have been
 
translated to
 
US dollars
 
from the
 
functional currency
 
of the
 
entity paying
 
the dividend,
using the closing exchange rate of the month the dividend
 
was received.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Additional regulatory information | UBS Group
 
AG consolidated supplemental disclosures
 
required under SEC regulations
 
373
Balance sheet data
USD m
31.12.24
31.12.23
1
31.12.22
Assets
Cash and balances at central banks
 
223,329
 
314,060
 
169,445
Amounts due from banks
 
 
18,903
 
21,146
 
14,792
Receivables from securities financing transactions at amortized cost
 
118,301
 
99,039
 
67,814
Cash collateral receivables on derivative instruments
 
43,959
 
50,082
 
35,032
Loans and advances to customers
 
579,967
 
639,669
 
387,220
Other financial assets measured at amortized cost
58,835
65,455
53,264
Total financial assets measured at amortized cost
 
1,043,293
 
1,189,451
 
727,568
Financial assets at fair value held for trading
 
159,065
 
169,633
 
107,866
of which: assets pledged as collateral that may be sold or repledged
 
by counterparties
 
38,532
51,263
 
36,742
Derivative financial instruments
 
185,551
 
176,084
 
150,108
Brokerage receivables
 
25,858
 
21,037
 
17,576
Financial assets at fair value not held for trading
 
95,472
 
104,018
 
59,796
Total financial assets measured at fair value through profit or loss
 
465,947
 
470,773
 
335,347
Financial assets measured at fair value through other comprehensive income
 
2,195
 
2,233
 
2,239
Investments in associates
 
2,306
 
2,373
 
1,101
Property, equipment and software
 
15,498
 
17,849
 
12,288
Goodwill and intangible assets
 
6,887
 
7,515
 
6,267
Deferred tax assets
 
11,134
 
10,682
 
9,389
Other non-financial assets
 
17,766
 
16,049
 
10,166
Total assets
 
1,565,028
 
1,716,924
 
1,104,364
Liabilities
Amounts due to banks
 
23,347
70,962
11,596
Payables from securities financing transactions at amortized cost
14,833
14,394
4,202
Cash collateral payables on derivative instruments
35,490
41,582
36,436
Customer deposits
745,777
792,029
525,051
Debt issued measured at amortized cost
214,219
237,817
114,621
Other financial liabilities measured at amortized cost
21,033
20,851
9,575
Total financial liabilities measured at amortized cost
1,054,698
1,177,633
701,481
Financial liabilities at fair value held for trading
35,247
34,159
29,515
Derivative financial instruments
180,636
192,181
154,906
Brokerage payables designated at fair value
49,023
42,522
45,085
Debt issued designated at fair value
107,909
128,289
73,638
Other financial liabilities designated at fair value
28,699
29,484
30,237
Total financial liabilities measured at fair value through profit or loss
401,514
426,635
333,381
Provisions
8,409
12,412
3,243
Other non-financial liabilities
14,834
14,089
9,040
Total liabilities
1,479,454
1,630,769
1,047,146
Equity attributable to shareholders
85,079
85,624
56,876
Equity attributable to non-controlling interests
494
531
342
Total equity
85,574
86,156
57,218
Total liabilities and equity
1,565,028
1,716,924
1,104,364
1 Comparative-period information has been revised. Refer to “Note 2 Accounting for the acquisition of the Credit Suisse Group” in the “Consolidated financial statements” section of this report for more information.
C – Information about the company
Property, plant and equipment
As of 31
 
December 2024, UBS operated
 
in about 807
 
business and banking locations worldwide,
 
of which approximately
36% were in Switzerland,
 
42%
 
in the Americas, 11% in the rest of Europe, the
 
Middle East and Africa, and 11% in Asia
Pacific. Of
 
the business
 
and banking
 
locations in
 
Switzerland,
 
25% were
 
owned directly
 
by UBS,
 
with the
 
remainder,
along with most of UBS’s offices outside Switzerland, being held under commercial leases. These premises are subject to
continuous maintenance
 
and upgrading
 
and are considered
 
suitable and
 
adequate for
 
current and
 
anticipated operations.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Additional regulatory information | UBS Group
 
AG consolidated supplemental disclosures
 
required under SEC regulations
 
374
D – Information required by Subpart 1400 of Regulation
 
S-K
Selected statistical information
The tables
 
below set
 
forth selected
 
statistical information
 
regarding
 
the Group’s
 
banking operations
 
extracted from
 
its
financial statements. Unless otherwise
 
indicated, average balances for
 
the years ended
 
31 December 2024, 31 December
2023
 
and
 
31 December
 
2022
 
are
 
calculated
 
from
 
monthly
 
data.
 
From
 
31 May
 
2023
 
to
 
31 December
 
2024,
 
the
calculation includes
 
the effect
 
of the acquisition
 
of the
 
Credit Suisse
 
Group. Unless
 
otherwise indicated, the
 
distinction
between domestic (Swiss) and foreign (non-Swiss)
 
is generally based on the booking location.
Average balances and interest rates
The tables below set forth average interest-earning assets and average interest-bearing liabilities, along with the average
yield, for 2024, 2023
 
and 2022. Refer to
 
“Note 4 Net interest
 
income and other net
 
income from financial
 
instruments
measured at fair value through
 
profit or loss” in the “Consolidated
 
financial statements” section of this report
 
for more
information about interest income and interest
 
expense.
For the year ended
31.12.24
31.12.23
31.12.22
USD m, except where indicated
Average
 
balance
Interest
 
income
Average
 
yield (%)
Average
 
balance
Interest
 
income
Average
 
yield (%)
Average
 
balance
Interest
 
income
Average
 
yield (%)
Assets
Balances at central banks
Domestic
 
135,771
 
1,743
 
1.3
 
113,953
 
1,777
 
1.6
 
99,777
 
92
 
0.1
Foreign
 
117,409
 
5,356
 
4.6
 
100,608
 
4,297
 
4.3
 
88,267
 
595
 
0.7
Amounts due from banks
Domestic
 
4,023
 
89
 
2.2
 
3,592
 
68
 
1.9
 
2,966
 
50
 
1.7
Foreign
 
16,655
 
763
 
4.6
 
14,993
 
619
 
4.1
 
12,345
 
8
 
0.1
Receivables from securities financing transactions measured
at amortized cost
1
Domestic
 
14,535
 
340
 
2.3
 
10,978
 
344
 
3.1
 
6,431
 
30
 
0.5
Foreign
 
97,641
 
3,529
 
3.6
 
81,085
 
3,339
 
4.1
 
70,942
 
1,105
 
1.6
Loans and advances to customers
Domestic
 
438,152
 
13,003
 
3.0
 
345,812
 
10,422
 
3.0
 
223,970
 
3,187
 
1.4
Foreign
 
169,485
 
9,205
 
5.4
 
173,161
 
8,974
 
5.2
 
160,509
 
4,829
 
3.0
Financial assets at fair value
1,2
Domestic
 
18,304
 
552
 
3.0
 
7,352
 
210
 
2.9
 
5,892
 
50
 
0.8
Foreign
 
241,780
 
10,410
 
4.3
 
214,671
 
9,672
 
4.5
 
151,504
 
2,113
 
1.4
Other interest-earning assets
Domestic
 
15,081
 
477
 
3.2
 
12,574
 
357
 
2.8
 
8,226
 
125
 
1.5
Foreign
 
82,050
 
2,933
 
3.6
 
81,284
 
2,730
 
3.4
 
63,107
 
858
 
1.4
Total interest-earning assets
3
 
1,350,886
 
48,399
 
3.6
 
1,160,061
 
42,809
 
3.7
 
893,936
 
13,043
 
1.5
Net interest income on swaps
 
5,643
 
2,672
 
1,804
Interest income on off-balance sheet securities and other
 
695
 
744
 
677
Interest income and average interest-earning assets
 
1,350,886
 
54,737
4
 
4.1
 
1,160,061
 
46,224
4
 
4.0
 
893,936
 
15,525
4
 
1.7
Non-interest-earning assets
5
 
359,904
 
333,210
 
299,488
Total average assets
 
1,710,790
 
1,493,271
 
1,193,424
1 Reverse repurchase agreements are presented on a gross basis and therefore, for the purpose of this disclosure, do not reflect the effect of netting permitted
 
under IFRS Accounting Standards.
 
2 Includes financial
assets at fair
 
value held for
 
trading, financial assets
 
at fair value
 
not held for
 
trading, financial assets
 
at fair value
 
through other comprehensive
 
income and brokerage
 
receivables.
 
3 Non-taxable positions
 
and
amounts were not material for the years presented.
 
4 For the purpose of this disclosure, negative interest income on assets is presented as a reduction to interest income, while in the consolidated income statement
negative interest
 
income on
 
assets is
 
presented as
 
interest expense.
 
Refer to
 
“Note 4
 
Net interest
 
income and
 
other net
 
income from
 
financial instruments
 
measured at
 
fair value
 
through profit
 
or loss“
 
in the
“Consolidated financial statements” section of this report for more information.
 
5 Mainly includes derivative financial instruments, equity instruments at fair value held for trading and financial assets for unit-linked
investment contracts.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Additional regulatory information | UBS Group
 
AG consolidated supplemental disclosures
 
required under SEC regulations
 
375
Average balances and interest rates (continued)
For the year ended
31.12.24
31.12.23
31.12.22
USD m, except where indicated
Average
balance
Interest
 
expense
Average
 
interest
 
rate (%)
Average
balance
Interest
 
expense
Average
 
interest
 
rate (%)
Average
 
balance
Interest
 
expense
Average
 
interest
 
rate (%)
Liabilities and equity
Amounts due to banks
Domestic
 
33,767
 
746
 
2.2
 
42,049
 
1,385
 
3.3
 
10,733
 
3
 
0.0
Foreign
 
6,598
 
205
 
3.1
 
5,386
 
137
 
2.5
 
3,255
 
43
 
1.3
Payables from securities financing transactions measured at
amortized cost
1
Domestic
 
11,659
 
537
 
4.6
 
7,874
 
382
 
4.9
 
3,357
 
40
 
1.2
Foreign
 
15,538
 
893
 
5.7
 
17,065
 
890
 
5.2
 
13,351
 
289
 
2.2
Customer deposits
Domestic
 
418,253
 
3,905
 
0.9
 
350,102
 
2,401
 
0.7
 
272,926
 
(82)
 
0.0
of which: demand deposits
 
176,258
 
918
 
0.5
 
161,596
 
754
 
0.5
 
147,903
 
(149)
 
(0.1)
of which: savings and sweep deposits
 
 
151,716
 
496
 
0.3
 
140,716
 
328
 
0.2
 
119,685
 
6
 
0.0
of which: time deposits
 
90,278
 
2,492
 
2.8
 
47,790
 
1,321
 
2.8
 
5,337
 
60
 
1.1
Foreign
 
343,613
 
13,289
 
3.9
 
283,952
 
9,656
 
3.4
 
246,072
 
1,819
 
0.7
of which: demand deposits
 
44,047
 
781
 
1.8
 
44,435
 
736
 
1.7
 
66,987
 
120
 
0.2
of which: savings and sweep deposits
 
 
68,043
 
1,867
 
2.7
 
75,871
 
2,187
 
2.9
 
111,130
 
578
 
0.5
of which: time deposits
 
231,524
 
10,641
 
4.6
 
163,647
 
6,733
 
4.1
 
67,955
 
1,121
 
1.7
Commercial paper
Domestic
 
0
 
0
 
0.0
 
1
 
0
 
0.0
 
1
 
0
 
0.0
Foreign
 
18,373
 
985
 
5.4
 
22,108
 
1,159
 
5.2
 
20,452
 
256
 
1.3
Other short-term debt issued measured at amortized cost
Domestic
 
297
 
2
 
0.6
 
322
 
4
 
1.3
 
366
 
4
 
1.2
Foreign
 
15,421
 
762
 
4.9
 
12,023
 
610
 
5.1
 
11,927
 
124
 
1.0
Long-term debt issued measured at amortized cost
Domestic
 
155,359
 
6,161
 
4.0
 
112,466
 
4,125
 
3.7
 
67,462
 
1,946
 
2.9
Foreign
 
37,583
 
1,919
 
5.1
 
32,387
 
1,900
 
5.9
 
22,929
 
439
 
1.9
Financial liabilities at fair value (excluding debt issued
designated at fair value)
1,2
Domestic
 
727
 
5
 
0.7
 
419
 
13
 
3.1
 
291
 
11
 
3.7
Foreign
 
165,234
 
6,435
 
3.9
 
157,558
 
5,760
 
3.7
 
139,657
 
1,392
 
1.0
Debt issued designated at fair value
Domestic
 
10,974
 
390
 
3.6
 
10,513
 
391
 
3.7
 
9,278
 
127
 
1.4
Foreign
 
103,243
 
4,879
 
4.7
 
93,902
 
4,566
 
4.9
 
63,470
 
1,283
 
2.0
Other interest-bearing liabilities
Domestic
 
3,636
 
117
 
3.2
 
2,832
 
90
 
3.2
 
2,883
 
14
 
0.5
Foreign
 
37,232
 
1,649
 
4.4
 
39,197
 
1,618
 
4.1
 
38,938
 
432
 
1.1
Total interest-bearing liabilities
 
1,377,505
 
42,879
 
3.1
 
1,190,157
 
35,088
 
2.9
 
927,347
 
8,142
 
0.9
Swap interest on hedged debt issued and other swaps
 
4,121
 
3,132
 
40
Interest expense on off-balance sheet securities and other
 
629
 
707
 
723
Interest expense and average interest-bearing liabilities
 
1,377,505
 
47,629
3
 
3.5
 
1,190,157
 
38,927
3
 
3.3
 
927,347
 
8,904
3
 
1.0
Non-interest-bearing liabilities
4
 
247,819
 
230,664
 
208,049
Total liabilities
 
1,625,324
 
1,420,822
 
1,135,396
Total equity
 
85,466
 
72,450
 
58,028
Total average liabilities and equity
 
1,710,790
 
1,493,271
 
1,193,424
Net interest income
 
7,108
 
7,297
 
6,621
Net yield on interest-earning assets
 
0.5
 
0.6
 
0.7
1 Repurchase agreements are presented on a gross basis and therefore, for the
 
purpose of this disclosure, do not reflect the effect of netting permitted under IFRS Accounting Standards.
 
2 Includes financial liabilities
at fair value held for trading, other financial liabilities designated at fair value and
 
brokerage payables designated at fair value.
 
3 For the purpose of this disclosure, negative interest expense on liabilities is presented
as a reduction to interest expense, while
 
in the consolidated income statement negative interest income on
 
liabilities is presented as interest income.
 
Refer to “Note 4 Net interest income and other net income from
financial instruments measured at fair value
 
through profit or loss“ in the “Consolidated
 
financial statements” section of this report
 
for more information.
 
4 Mainly includes derivative financial instruments,
 
equity
instruments at fair value held for trading and financial liabilities related to unit-linked investment
 
contracts.
The percentage of total average interest-earning assets attributable
 
to foreign activities was 54% for 2024 (2023: 57%;
2022: 61%).
 
The
 
percentage
 
of total
 
average
 
interest-bearing
 
liabilities
 
attributable
 
to foreign
 
activities
 
was
 
54% for
2024 (2023: 56%;
 
2022: 60%). All
 
assets and liabilities
 
are translated into
 
US dollars
 
at uniform
 
month-end rates. Interest
income and expense are translated at monthly average
 
rates.
Average rates earned
 
and paid on
 
assets and liabilities
 
can change from
 
period to period,
 
based on the
 
changes in interest
rates in
 
general, but
 
are also
 
affected by
 
changes in
 
the currency
 
mix included
 
in the
 
assets and
 
liabilities. Tax-exempt
income is
 
not recorded
 
on a
 
tax-equivalent basis.
 
For all
 
three years
 
presented, tax-exempt
 
income is
 
considered to
 
be
insignificant, and the effect from such income is therefore
 
negligible.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Additional regulatory information | UBS Group
 
AG consolidated supplemental disclosures
 
required under SEC regulations
 
376
Analysis of changes in interest income and expense
The tables below
 
provide information,
 
by categories of
 
interest-earning assets and
 
interest-bearing liabilities,
 
about the
changes in
 
interest income
 
and expense
 
due to
 
changes in
 
volume and
 
interest rates
 
for the
 
year ended
 
31 December
2024 compared with the year ended 31 December 2023, and for the year ended 31 December 2023 compared with the
year
 
ended 31 December
 
2022. The
 
change in
 
average volume
 
represents
 
the change
 
in the
 
current
 
average balance
compared to
 
the average
 
balance from
 
the prior year
 
with respect
 
to the average
 
rate of the
 
prior year.
 
The change
 
in
average rate represents the
 
difference between the net
 
change in interest
 
income and expense
 
and the change
 
in average
volume.
 
2024 compared with 2023
2023 compared with 2022
Increase / (decrease)
due to changes in
1
Increase / (decrease)
due to changes in
1
USD m
Average
 
volume
Average
interest rate
Net
change
Average
 
volume
Average
 
interest rate
Net
change
Interest income from interest-earning assets
Balances at central banks
Domestic
 
349
 
(383)
 
(34)
 
14
 
1,670
 
1,684
Foreign
 
722
 
336
 
1,058
 
86
 
3,616
 
3,702
Amounts due from banks
Domestic
 
8
 
13
 
21
 
11
 
7
 
18
Foreign
 
68
 
76
 
144
 
3
 
608
 
611
Receivables from securities financing transactions measured at amortized
 
cost
Domestic
 
110
 
(114)
 
(4)
 
23
 
291
 
314
Foreign
 
679
 
(489)
 
190
 
162
 
2,072
 
2,234
Loans and advances to customers
Domestic
 
2,770
 
(189)
 
2,581
 
1,706
 
5,528
 
7,234
Foreign
 
(191)
 
422
 
231
 
380
 
3,765
 
4,145
Financial assets at fair value
Domestic
 
318
 
24
 
342
 
12
 
148
 
160
Foreign
 
1,220
 
(482)
 
738
 
884
 
6,675
 
7,559
Other interest-earning assets
Domestic
 
71
 
49
 
120
 
66
 
166
 
232
Foreign
 
26
 
177
 
203
 
247
 
1,625
 
1,872
Interest income
Domestic
 
3,626
 
(600)
 
3,026
 
1,832
 
7,810
 
9,642
Foreign
 
2,524
 
40
 
2,564
 
1,762
 
18,361
 
20,123
Total interest income from interest-earning assets
 
6,150
 
(560)
 
5,590
 
3,594
 
26,171
 
29,765
Net interest income on swaps
 
2,971
 
867
Interest income on off-balance sheet securities and other
 
(49)
 
67
Total interest income
 
8,512
 
30,699
1 Currency effects are included within the variances disclosed in this table.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Additional regulatory information | UBS Group
 
AG consolidated supplemental disclosures
 
required under SEC regulations
 
377
Analysis of changes in interest income and expense
 
(continued)
2024 compared with 2023
2023 compared with 2022
Increase / (decrease)
due to changes in
1
Increase / (decrease)
due to changes in
1
USD m
Average
 
volume
Average
interest rate
Net
change
Average
 
volume
Average
 
interest rate
Net
change
Interest expense on interest-bearing liabilities
Amounts due to banks
Domestic
 
(273)
 
(367)
 
(640)
 
9
 
1,373
 
1,382
Foreign
 
31
 
37
 
68
 
28
 
65
 
93
Payables from securities financing transactions measured at amortized cost
Domestic
 
184
 
(29)
 
155
 
54
 
288
 
342
Foreign
 
(80)
 
83
 
3
 
80
 
521
 
601
Customer deposits
Domestic
 
1,268
 
235
 
1,503
 
464
 
2,021
 
2,485
of which: demand deposits
 
68
 
96
 
164
 
(14)
 
917
 
903
of which: savings and sweep deposits
 
 
26
 
142
 
168
 
1
 
320
 
321
of which: time deposits
 
1,174
 
(3)
 
1,171
 
477
 
784
 
1,261
Foreign
 
2,561
 
1,072
 
3,633
 
280
 
7,556
 
7,836
of which: demand deposits
 
(6)
 
51
 
45
 
(40)
 
656
 
616
of which: savings and sweep deposits
 
 
(226)
 
(93)
 
(319)
 
(183)
 
1,792
 
1,609
of which: time deposits
 
2,793
 
1,114
 
3,907
 
503
 
5,109
 
5,612
Commercial paper
Domestic
 
0
 
0
 
0
 
0
 
0
 
0
Foreign
 
(196)
 
23
 
(173)
 
21
 
882
 
903
Other short-term debt issued measured at amortized cost
Domestic
 
0
 
(2)
 
(2)
 
(1)
 
1
 
0
Foreign
 
172
 
(20)
 
152
 
1
 
485
 
486
Long-term debt issued measured at amortized cost
Domestic
 
1,573
 
463
 
2,036
 
1,298
 
881
 
2,179
Foreign
 
305
 
(285)
 
20
 
181
 
1,280
 
1,461
Financial liabilities at fair value (excluding debt issued designated
 
at fair value)
Domestic
 
9
 
(17)
 
(8)
 
5
 
(3)
 
2
Foreign
 
281
 
394
 
675
 
178
 
4,190
 
4,368
Debt issued designated at fair value
Domestic
 
17
 
(18)
 
(1)
 
17
 
247
 
264
Foreign
 
454
 
(142)
 
312
 
615
 
2,668
 
3,283
Other interest-bearing liabilities
Domestic
 
26
 
0
 
26
 
0
 
76
 
76
Foreign
 
(81)
 
111
 
30
 
3
 
1,183
 
1,186
Interest expense
Domestic
 
2,804
 
265
 
3,069
 
1,846
 
4,883
 
6,729
Foreign
 
3,447
 
1,273
 
4,720
 
1,387
 
18,832
 
20,219
Total interest expense on interest-bearing liabilities
 
6,251
 
1,538
 
7,789
 
3,233
 
23,715
 
26,948
Swap interest on hedged debt issued and other swaps
 
989
 
3,092
Interest expense on off-balance sheet securities and other
 
(78)
 
(16)
Total interest expense
 
8,700
 
30,025
1 Currency effects are included within the variances disclosed in this table.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Additional regulatory information | UBS Group
 
AG consolidated supplemental disclosures
 
required under SEC regulations
 
378
Deposits
The table below analyzes average deposits and
 
average rates on each deposit category for the
 
years ended 31 December
2024, 31 December 2023 and 31 December 2022.
 
For the purpose of this
 
disclosure, foreign deposits represent deposits
from
 
depositors
 
who
 
are
 
based
 
outside
 
of
 
Switzerland.
 
Deposits
 
by
 
foreign
 
depositors
 
in
 
domestic
 
offices
 
were
USD 87,345m as of 31 December 2024 (31 December
 
2023: USD 92,784m; 31 December 2022: USD 59,744m).
31.12.24
31.12.23
31.12.22
USD m, except where indicated
Average
deposits
Average
 
rate (%)
Average
 
deposits
Average
 
rate (%)
Average
 
deposits
Average
 
rate (%)
Due to banks
Domestic
 
Demand deposits
 
1,931
 
0.0
 
1,355
 
0.0
 
908
 
(0.3)
Time deposits
 
16,920
 
2.7
 
29,827
 
4.0
 
2,793
 
0.5
Total domestic
 
 
18,851
 
2.4
 
31,183
 
3.8
 
3,700
 
0.3
Foreign
Demand deposits
 
11,755
 
1.4
 
9,331
 
1.1
 
5,774
 
(0.1)
Time deposits
 
9,759
 
3.5
 
6,922
 
3.3
 
4,513
 
0.8
Total foreign
 
21,514
 
2.3
 
16,253
 
2.0
 
10,288
 
0.3
Total due to banks
1
 
40,365
 
2.4
 
47,435
 
3.2
 
13,988
 
0.3
Customer deposits
Domestic
 
Demand deposits
 
137,309
 
0.7
 
119,782
 
0.6
 
95,866
 
(0.1)
Savings and sweep deposits
 
139,790
 
0.3
 
127,017
 
0.2
 
109,039
 
0.0
Time deposits
 
114,608
 
3.4
 
45,708
 
2.6
 
8,825
 
0.2
Total domestic
 
 
391,707
 
1.4
 
292,508
 
0.8
 
213,730
 
0.0
Foreign
Demand deposits
 
82,996
 
0.9
 
86,249
 
0.8
 
119,024
 
0.1
Savings and sweep deposits
 
79,971
 
2.4
 
89,569
 
2.5
 
121,776
 
0.5
Time deposits
 
207,193
 
4.4
 
165,728
 
4.1
 
64,468
 
1.8
Total foreign
 
 
370,160
 
3.2
 
341,546
 
2.9
 
305,267
 
0.6
Total customer deposits
1
 
761,867
 
2.3
 
634,054
 
1.9
 
518,997
 
0.3
1 For the
 
purpose of this
 
table, the distinction
 
between foreign and
 
domestic deposits is
 
based on the
 
domicile of the
 
depositor,
 
while foreign and
 
domestic deposits disclosed
 
in previous tables
 
are based on
 
the
booking location.
 
Uninsured deposits
From the
 
combined total
 
of Due
 
to banks
 
and Customer
 
deposits as
 
of 31 December
 
2024, total
 
estimated uninsured
deposits were
 
USD 559bn (31
 
December
 
2023: USD 670bn;
 
31 December
 
2022: USD
 
362bn). Uninsured
 
deposits are
deposits
 
that
 
are
 
in
 
excess
 
of
 
local
 
deposit
 
insurance
 
or
 
protection
 
scheme
 
limits
 
in
 
the
 
key
 
locations
 
in
 
which
 
UBS
operates, calculated based
 
on the
 
respective local regulations, as
 
well as deposits
 
in uninsured accounts.
 
The main deposit
insurance schemes applicable to
 
UBS deposits are the
 
Swiss depositor protection scheme
 
in Switzerland (which protects
applicable
 
deposits
 
up
 
to
 
a
 
maximum
 
of
 
CHF 100,000
 
per
 
client
 
and
 
per
 
bank
 
or
 
securities
 
firm),
 
the
 
Compensation
Scheme
 
of
 
German
 
Banks
 
in
 
combination
 
with
 
the
 
Deposit
 
Protection
 
Fund
 
of
 
the
 
Association
 
of
 
German
 
Banks
 
in
Germany (which protects applicable deposits up to a maximum of EUR 5m per client and
 
EUR 50m per business) and the
Federal
 
Deposit Insurance
 
Corporation (the
 
FDIC) scheme
 
in the
 
Americas (which
 
protects
 
applicable deposits
 
up
 
to a
maximum of USD 250,000 per depositor,
 
per insured bank, for each account ownership category).
The table below presents the maturity of
 
estimated uninsured time deposits as of 31 December 2024. Where a
 
depositor
holds multiple accounts that
 
in aggregate are in excess
 
of a deposit insurance
 
or protection limit, the
 
insured amount is
first allocated to the account with the shortest time to
 
maturity.
 
USD m
 
Uninsured time deposits
1
Within 3 months
227,791
3 to 6 months
29,183
6 to 12 months
19,031
Over 12 months
8,134
Total uninsured time deposits as of 31 December 2024
284,138
1 Amounts are estimated based on the methodologies defined in each local jurisdiction. As of 31 December 2024, there were no
 
US time deposits subject to the FDIC scheme that were in excess of the FDIC insurance
limit.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Additional regulatory information | UBS Group
 
AG consolidated supplemental disclosures
 
required under SEC regulations
 
379
Investments in debt instruments
The table below presents the
 
carrying amount and weighted
 
average yield of debt
 
instruments presented within Financial
assets measured
 
at fair
 
value through
 
other comprehensive
 
income and
 
Other financial
 
assets
 
measured
 
at amortized
cost on the balance sheet by contractual maturity bucket. The yield for each
 
range of maturities is calculated by dividing
the annualized interest
 
income by the average
 
balance of the investment
 
per contractual maturity
 
bucket. The maturity
information presented does not consider any early
 
redemption features.
Within 1 year
1 to 5 years
5 to 10 years
Over 10 years
USD m, except where indicated
Carrying
amount
Yield (%)
Carrying
amount
Yield (%)
Carrying
amount
Yield (%)
Carrying
amount
Yield (%)
Total carrying
amount
Debt instruments measured at fair value through
other comprehensive income
Corporate and other
 
2,165
 
5.26
 
30
 
1.54
 
2,195
Subtotal as of 31 December 2024
 
2,165
 
30
 
2,195
Debt securities measured at amortized cost
 
Asset-backed securities
 
 
200
 
1.51
 
1,545
 
2.81
 
7,146
 
3.40
 
8,891
Government bills / bonds
 
2,480
 
2.33
 
7,353
 
2.41
 
2,782
 
2.81
 
3,562
 
3.94
 
16,177
Corporate and other
 
2,588
 
1.85
 
12,338
 
2.53
 
1,591
 
2.62
 
16,517
Subtotal as of 31 December 2024
 
5,069
 
19,891
 
5,918
 
10,708
 
41,585
Total as of 31 December 2024
 
7,234
 
19,921
 
5,918
 
10,708
 
43,780
Loan portfolio
The
 
table
 
below
 
provides
 
the
 
maturity
 
profile
 
of
 
UBS’s
 
core
 
loan
 
portfolio
 
as
 
of
 
31 December
 
2024.
 
The
 
contractual
maturity
 
is
 
based
 
on
 
carrying
 
amounts
 
and
 
includes
 
the
 
effect
 
of
 
callable
 
features.
 
For
 
loans
 
due
 
after
 
one
 
year,
 
a
breakdown between fixed and adjustable or floating
 
interest rates is also provided.
USD m
31.12.24
Within 1 year
 
1 to 5 years
5 to 15 years
Over 15 years
Total
 
of which: over 1 year
Fixed rate
Adjustable or
floating rate
Private clients with mortgages
 
34,941
 
135,096
 
50,225
 
29,494
 
249,756
 
140,558
 
74,257
Real estate financing
 
33,758
 
34,690
 
13,748
 
405
 
82,602
 
37,141
 
11,703
Large corporate clients
 
11,280
 
12,314
 
1,675
 
17
 
25,286
 
4,325
 
9,680
SME clients
 
12,949
 
6,204
 
1,574
 
41
 
20,768
 
5,618
 
2,201
Lombard
 
137,515
 
9,063
 
927
 
0
 
147,504
 
6,638
 
3,352
Credit cards
 
1,978
 
0
 
0
 
0
 
1,978
 
0
 
0
Commodity trade finance
 
4,058
 
145
 
0
 
0
 
4,203
 
85
 
60
Ship / aircraft financing
 
905
 
4,720
 
2,224
 
0
 
7,848
 
138
 
6,806
Consumer financing
 
1,062
 
1,540
 
218
 
0
 
2,820
 
1,756
 
1
Other loans and advances to customers
 
19,066
 
15,573
 
2,485
 
78
 
37,201
 
4,927
 
13,209
Loans to financial advisors
 
195
 
504
 
1,800
 
223
 
2,723
 
2,527
 
0
Total
 
257,707
 
219,848
 
74,876
 
30,259
 
582,689
 
203,714
 
121,268
Allowance for credit losses
For the
 
years ended
 
31 December 2024,
 
31 December 2023
 
and 31 December
 
2022, the
 
ratio of
 
net charge-offs
 
(i.e.
write-offs
 
of
 
expected
 
credit
 
loss
 
allowances
 
to
 
gross
 
carrying
 
amount
 
of
 
the
 
average
 
loans
 
outstanding)
 
during
 
the
period was not material for
 
UBS’s core loan portfolio,
 
both on an overall basis
 
and on an individual loan
 
category basis.
Total
 
write-offs for 31 December 2024 were USD 348m (31 December 2023: USD
 
93m; 31 December 2022: USD 95m).
Refer to the coverage ratio tables in “Note
 
10 Financial assets at amortized cost and other positions in
 
scope of expected
credit loss measurement” in
 
the “Consolidated financial
 
statements” section of
 
this report for the
 
ratio of expected
 
credit
loss allowances to total loans outstanding at each period end.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Appendix
 
380
Appendix
Alternative performance measures
An alternative
 
performance measure (an
 
APM) is
 
a financial
 
measure of
 
historical or
 
future financial
 
performance, financial
position
 
or
 
cash
 
flows
 
other
 
than
 
a
 
financial
 
measure
 
defined
 
or
 
specified
 
in
 
the
 
applicable
 
recognized
 
accounting
standards
 
or
 
in
 
other
 
applicable
 
regulations.
 
A
 
number
 
of
 
APMs
 
are
 
reported
 
in
 
the
 
discussion
 
of
 
the
 
financial
 
and
operating performance
 
of the
 
external reports
 
(annual, quarterly
 
and other
 
reports). APMs
 
are used
 
to provide
 
a more
complete picture of operating performance and
 
to reflect management’s view of
 
the fundamental drivers of the business
results.
 
A
 
definition
 
of
 
each
 
APM,
 
the
 
method
 
used
 
to
 
calculate
 
it
 
and
 
the
 
information
 
content
 
are
 
presented
 
in
alphabetical order
 
in the table
 
below. These
 
APMs may
 
qualify as non-GAAP
 
measures as
 
defined by US
 
Securities and
Exchange Commission (SEC) regulations.
APM label
Calculation
 
Information content
Cost / income ratio (%)
Calculated as operating expenses divided by
 
total
revenues.
This measure provides information about the
efficiency of the business by comparing operating
expenses with total revenues.
Cost of credit risk (bps)
Calculated as total credit loss expense / (release)
(annualized for reporting periods shorter than
12 months) divided by the average balance
 
of lending
assets for the reporting period, expressed in basis
points. Lending assets include the gross amounts
 
of
Amounts due from banks and Loans and advances
 
to
customers.
This measure provides information about the total
credit loss expense / (release) incurred in relation to
the average balance of gross lending assets for the
period.
Credit-impaired lending assets as a
percentage of total lending assets,
gross (%)
Calculated as credit-impaired lending assets divided
by total lending assets. Lending assets includes
 
the
gross amounts of Amounts due from banks and
Loans and advances to customers. Credit-impaired
lending assets refers to the sum of stage 3 and
purchased credit-impaired positions.
This measure provides information about the
proportion of credit-impaired lending assets in the
overall portfolio of gross lending assets.
Fee-generating assets (USD)
– Global Wealth Management
Calculated as the sum of discretionary and
nondiscretionary wealth management portfolios
(mandate volume) and assets where generated
revenues are predominantly of a recurring nature, i.e.
mainly investment, mutual, hedge and private-market
funds where we have a distribution agreement,
including client commitments into closed-ended
private-market funds from the date that recurring
fees are charged. Assets related to our Global
Financial Intermediaries business are excluded, as
 
are
assets of sanctioned clients.
This measure provides information about the volume
of invested assets that create a revenue stream,
whether as a result of the nature of the contractual
relationship with clients or through the fee structure
of the asset. An increase in the level of fee-generating
assets results in an increase in the associated revenue
stream. Assets of sanctioned clients are excluded from
fee-generating assets.
Gross margin on invested assets (bps)
– Asset Management
Calculated as total revenues (annualized for reporting
periods shorter than 12 months) divided by
 
average
invested assets.
This measure provides information about the total
revenues of the business in relation to invested assets.
Impaired loan portfolio as a percentage
of total loan portfolio, gross (%)
– Global Wealth Management,
Personal & Corporate Banking
Calculated as impaired loan portfolio divided by
 
total
gross loan portfolio.
This measure provides information about the
proportion of impaired loan portfolio in the total gross
loan portfolio.
Integration-related expenses (USD)
Generally include costs of internal staff
 
and
contractors substantially dedicated to integration
activities, retention awards, redundancy costs,
incremental expenses from the shortening of useful
lives of property, equipment and software, and
impairment charges relating to these assets.
Classification as integration-related expenses does
 
not
affect the timing of recognition and measurement of
those expenses or the presentation thereof in the
income statement. Integration-related expenses
incurred by Credit Suisse also included expenses
associated with restructuring programs that existed
prior to the acquisition.
This measure provides information about expenses
that are temporary, incremental and directly related to
the integration of Credit Suisse into UBS.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Appendix
 
381
APM label
Calculation
 
Information content
Invested assets (USD and CHF)
– Global Wealth Management,
Personal & Corporate Banking,
Asset Management
Calculated as the sum of managed fund
 
assets,
managed institutional assets, discretionary and
advisory wealth management portfolios, fiduciary
deposits, time deposits, savings accounts,
 
and wealth
management securities or brokerage accounts.
This measure provides information about the volume
of client assets managed by or deposited with
 
UBS for
investment purposes.
Net interest margin (bps)
– Personal & Corporate Banking
Calculated as net interest income (annualized for
reporting periods shorter than 12 months) divided by
average loans.
This measure provides information about the
profitability of the business by calculating the
difference between the price charged for lending and
the cost of funding, relative to loan value.
Net new assets (USD)
– Global Wealth Management
Calculated as the net amount of inflows and
 
outflows
of invested assets (as defined in UBS policy) recorded
during a specific period, plus interest and dividends.
Excluded from the calculation are movements due to
market performance, foreign exchange translation,
fees, and the effects on invested assets of strategic
decisions by UBS to exit markets or services.
 
This measure provides information about the
development of invested assets during a
 
specific
period as a result of net new asset flows, plus the
effect of interest and dividends.
 
Net new assets growth rate (%)
– Global Wealth Management
Calculated as the net amount of inflows and
 
outflows
of invested assets (as defined in UBS policy) recorded
during a specific period (annualized for reporting
periods shorter than 12 months), plus
 
interest and
dividends, divided by total invested assets
 
at the
beginning of the period.
This measure provides information about the growth
of invested assets during a specific period
 
as a result
of net new asset flows.
 
Net new fee-generating assets (USD)
– Global Wealth Management
Calculated as the net amount of fee-generating
 
asset
inflows and outflows, including dividend
 
and interest
inflows into mandates and outflows from mandate
fees paid by clients during a specific period.
 
Excluded
from the calculation are the effects on fee-generating
assets of strategic decisions by UBS to exit
 
markets or
services.
 
This measure provides information about the
development of fee-generating assets during
 
a
specific period as a result of net flows, excluding
movements due to market performance and
 
foreign
exchange translation, as well as the effects on fee-
generating assets of strategic decisions by UBS
 
to exit
markets or services.
 
Net new money (USD)
– Global Wealth Management,
Asset Management
Calculated as the net amount of inflows and
 
outflows
of invested assets (as defined in UBS policy) recorded
during a specific period. Excluded from the calculation
are movements due to market performance, foreign
exchange translation, dividends, interest and fees,
 
as
well as the effects on invested assets of strategic
decisions by UBS to exit markets
 
or services. Net new
money is not measured for Personal & Corporate
Banking.
This measure provides information about the
development of invested assets during a
 
specific
period as a result of net new money flows.
Net profit growth (%)
Calculated as the change in net profit attributable
 
to
shareholders from continuing operations between
current and comparison periods divided by net profit
attributable to shareholders from continuing
operations of the comparison period.
This measure provides information about profit
growth since the comparison period.
Operating expenses (underlying)
(USD)
Calculated by adjusting operating expenses
 
as
reported in accordance with IFRS Accounting
Standards for items that management believes
 
are
not representative of the underlying performance of
the businesses.
›
Refer to the “Group performance” section of this
report for more information
This measure provides information about the amount
of operating expenses, while excluding items
 
that
management believes are not representative of the
underlying performance of the businesses.
Operating profit / (loss) before tax
(underlying) (USD)
Calculated by adjusting operating profit / (loss) before
tax as reported in accordance with IFRS Accounting
Standards for items that management believes
 
are
not representative of the underlying performance of
the businesses.
›
Refer to the “Group performance” section of this
report for more information
This measure provides information about the amount
of operating profit / (loss) before tax, while excluding
items that management believes are not
representative of the underlying performance of the
businesses.
Pre-tax profit growth (%)
– Global Wealth Management,
Personal & Corporate Banking,
Asset Management,
the Investment Bank
Calculated as the change in net profit before tax
attributable to shareholders from continuing
operations between current and comparison periods
divided by net profit before tax attributable to
shareholders from continuing operations of the
comparison period.
This measure provides information about pre-tax
profit growth since the comparison period.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Appendix
 
382
APM label
Calculation
 
Information content
Pre-tax profit growth (underlying) (%)
– Global Wealth Management,
Personal & Corporate Banking,
Asset Management,
the Investment Bank
Calculated as the change in net profit before tax
attributable to shareholders from continuing
operations between current and comparison periods
divided by net profit before tax attributable to
shareholders from continuing operations of the
comparison period. Net profit before tax attributable
to shareholders from continuing operations excludes
items that management believes are not
representative of the underlying performance of the
businesses and also excludes related tax impact.
This measure provides information about pre-tax
profit growth since the comparison period, while
excluding items that management believes
 
are not
representative of the underlying performance of the
businesses.
Recurring net fee income
(USD and CHF)
– Global Wealth Management,
Personal & Corporate Banking
Calculated as the total of fees for services provided
 
on
an ongoing basis, such as portfolio management
 
fees,
asset-based investment fund fees and custody
 
fees,
which are generated on client assets, and
administrative fees for accounts.
This measure provides information about the amount
of recurring net fee income.
Return on attributed equity
1
 
(%)
Calculated as business division operating profit before
tax (annualized for reporting periods shorter than
12 months) divided by average attributed
 
equity.
This measure provides information about the
profitability of the business divisions in relation to
attributed equity.
Return on common equity tier 1
capital
1
 
(%)
Calculated as net profit attributable to shareholders
(annualized for reporting periods shorter than
12 months) divided by average common equity
 
tier 1
capital.
This measure provides information about the
profitability of the business in relation to common
equity tier 1 capital.
Return on equity
1
 
(%)
Calculated as net profit attributable to shareholders
(annualized for reporting periods shorter than
12 months) divided by average equity attributable
 
to
shareholders.
This measure provides information about the
profitability of the business in relation to equity.
Return on leverage ratio denominator,
gross
1
 
(%)
Calculated as total revenues (annualized for reporting
periods shorter than 12 months) divided by
 
average
leverage ratio denominator.
This measure provides information about the revenues
of the business in relation to the leverage ratio
denominator.
Return on tangible equity
1
 
(%)
Calculated as net profit attributable to shareholders
(annualized for reporting periods shorter than
12 months) divided by average equity attributable
 
to
shareholders less average goodwill and intangible
assets.
This measure provides information about the
profitability of the business in relation to tangible
equity.
Tangible book value per share
(USD)
Calculated as equity attributable to shareholders less
goodwill and intangible assets divided by the
 
number
of shares outstanding.
This measure provides information about tangible net
assets on a per-share basis.
Total book value per share
(USD)
Calculated as equity attributable to shareholders
divided by the number of shares outstanding.
This measure provides information about net assets
on a per-share basis.
Total revenues (underlying)
(USD)
Calculated by adjusting total revenues as reported in
accordance with IFRS Accounting Standards for items
that management believes are not representative of
the underlying performance of the businesses.
›
Refer to the “Group performance” section of this
report for more information
This measure provides information about the amount
of total revenues, while excluding items that
management believes are not representative of the
underlying performance of the businesses.
Transaction-based income
(USD and CHF)
– Global Wealth Management,
Personal & Corporate Banking
Calculated as the total of the non-recurring portion
 
of
net fee and commission income, mainly composed
 
of
brokerage and transaction-based investment fund
fees, and credit card fees, as well as fees for payment
and foreign-exchange transactions, together with
other net income from financial instruments
measured at fair value through profit or loss.
This measure provides information about the amount
of the non-recurring portion of net fee and
commission income, together with other net
 
income
from financial instruments measured at fair value
through profit or loss.
Underlying cost / income ratio (%)
Calculated as underlying operating expenses
 
(as
defined above) divided by underlying total
 
revenues
(as defined above).
 
This measure provides information about the
efficiency of the business by comparing operating
expenses with total revenues, while excluding items
that management believes are not representative of
the underlying performance of the businesses.
Underlying net profit growth (%)
Calculated as the change in net profit attributable
 
to
shareholders from continuing operations between
current and comparison periods divided by net profit
attributable to shareholders from continuing
operations of the comparison period.
 
Net profit
attributable to shareholders from continuing
operations excludes items that management
 
believes
are not representative of the underlying performance
of the businesses and also excludes related tax
impact.
This measure provides information about profit
growth since the comparison period, while excluding
items that management believes are not
representative of the underlying performance of the
businesses.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Report 2024 |
Appendix
 
383
APM label
Calculation
 
Information content
Underlying return on attributed equity
1
(%)
 
Calculated as underlying business division
 
operating
profit before tax (annualized for reporting periods
shorter than 12 months) (as defined above)
 
divided by
average attributed equity.
This measure provides information about the
profitability of the business divisions in relation to
attributed equity, while excluding items that
management believes are not representative of the
underlying performance of the businesses.
Underlying return on common equity
tier 1 capital
1
 
(%)
Calculated as net profit attributable to shareholders
(annualized for reporting periods shorter than
12 months) divided by average common equity
 
tier 1
capital. Net profit attributable to shareholders
excludes items that management believes
 
are not
representative of the underlying performance of the
businesses and also excludes related tax impact.
This measure provides information about the
profitability of the business in relation to common
equity tier 1 capital, while excluding items that
management believes are not representative of the
underlying performance of the businesses.
Underlying return on tangible equity
1
(%)
Calculated as net profit attributable to shareholders
(annualized for reporting periods shorter than
12 months) divided by average equity attributable
 
to
shareholders less average goodwill and intangible
assets. Net profit attributable to shareholders excludes
items that management believes are not
representative of the underlying performance of the
businesses and also excludes related tax impact.
This measure provides information about the
profitability of the business in relation to tangible
equity, while excluding items that management
believes are not representative of the underlying
performance of the businesses.
1
Profit or loss information for 2024
 
is based entirely on consolidated
 
data following the acquisition of
 
the Credit Suisse Group. Profit
 
or loss information for 2023
 
includes seven months (June to
 
December 2023) of
post-acquisition consolidated data and five months of UBS Group data only (January to May 2023).
This is
 
a general
 
list of
 
the APMs
 
used in
 
our financial
 
reporting.
 
Not all
 
of the
 
APMs listed
 
above may
 
appear
 
in this
particular report.
Information related to underlying return on common equity tier 1 capital (RoCET1) and underlying return on tangible
equity (%)
As of or for the year ended
USD m
31.12.24
31.12.23
Underlying operating profit / (loss) before tax
 
8,831
 
3,963
Underlying tax expense / (benefit)
 
2,162
 
1,194
Net profit / (loss) attributable to non-controlling interests
 
60
 
16
Underlying net profit / (loss) attributable to shareholders
 
6,609
 
2,753
Underlying net profit / (loss) attributable to shareholders
 
6,609
 
2,753
Tangible equity
 
78,192
 
78,109
Average tangible equity
 
77,973
 
67,133
CET1 capital
 
71,367
 
78,002
Average CET1 capital
 
75,666
 
65,461
Underlying return on tangible equity (%)
 
8.5
 
4.1
Underlying return on common equity tier 1 capital (%)
 
8.7
 
4.2
 
 
Annual Report 2024 |
Appendix
 
384
Abbreviations frequently used in our financial reports
A
ABS
 
asset-backed securities
AG
 
Aktiengesellschaft
AGM
 
Annual General Meeting of
shareholders
AI
 
artificial intelligence
A-IRB
 
advanced internal ratings-
based
ALCO
 
Asset and Liability
Committee
AMA
 
advanced measurement
approach
AML
 
anti-money laundering
AoA
 
Articles of Association
APM
 
alternative performance
measure
ARR
 
alternative reference rate
ARS
 
auction rate securities
ASF
 
available stable funding
AT1
 
additional tier 1
AuM
 
assets under management
B
BCBS
 
Basel Committee on
Banking Supervision
BIS
 
Bank for International
Settlements
BoD
 
Board of Directors
C
CAO
 
Capital Adequacy
Ordinance
CCAR
 
Comprehensive Capital
Analysis and Review
CCF
 
credit conversion factor
CCP
 
central counterparty
CCR
 
counterparty credit risk
CCRC
 
Corporate Culture and
Responsibility Committee
CDS
 
credit default swap
CEO
 
Chief Executive Officer
CET1
 
common equity tier 1
CFO
 
Chief Financial Officer
CGU
 
cash-generating unit
CHF
 
Swiss franc
CIO
 
Chief Investment Office
C&ORC
 
Compliance & Operational
Risk Control
CRM
 
credit risk mitigation
CRO
 
Chief Risk Officer
CST
 
combined stress test
CUSIP
 
Committee on Uniform
Security Identification
Procedures
CVA
 
credit valuation adjustment
D
DBO
 
defined benefit obligation
DCCP
 
Deferred Contingent
Capital Plan
 
DFAST
 
Dodd–Frank Act Stress Test
DM
 
discount margin
DOJ
 
US Department of Justice
DTA
 
deferred tax asset
DVA
 
debit valuation adjustment
E
EAD
 
exposure at default
EB
 
Executive Board
EC
 
European Commission
ECB
 
European Central Bank
ECL
 
expected credit loss
EGM
 
Extraordinary General
Meeting of shareholders
EIR
 
effective interest rate
EL
 
expected loss
EMEA
 
Europe, Middle East and
Africa
EOP
 
Equity Ownership Plan
EPS
 
earnings per share
ESG
 
environmental, social and
governance
ETD
 
exchange-traded derivatives
ETF
 
exchange-traded fund
EU
 
European Union
EUR
 
euro
EURIBOR
 
Euro Interbank Offered Rate
EVE
 
economic value of equity
EY
 
Ernst & Young Ltd
F
FCA
 
UK Financial Conduct
Authority
FDIC
 
Federal Deposit Insurance
Corporation
FINMA
 
Swiss Financial Market
Supervisory Authority
FMIA
 
Swiss Financial Market
Infrastructure Act
FRTB
 
Fundamental Review of the
Trading Book
FSB
 
Financial Stability Board
FTA
 
Swiss Federal Tax
Administration
FVA
 
funding valuation
adjustment
FVOCI
 
fair value through other
comprehensive income
FVTPL
 
fair value through profit or
loss
FX
 
foreign exchange
G
GAAP
 
generally accepted
accounting principles
GBP
 
pound sterling
GCRG
 
Group Compliance,
Regulatory and Governance
GDP
 
gross domestic product
GEB
 
Group Executive Board
GHG
 
greenhouse gas
GIA
 
Group Internal Audit
GRI
 
Global Reporting Initiative
G-SIB
 
global systemically
important bank
H
HQLA
high-quality liquid assets
I
IA
 
Internal Audit
IAS
 
International Accounting
Standards
IASB
 
International Accounting
Standards Board
IBOR
 
interbank offered rate
IFRIC
 
International Financial
Reporting Interpretations
Committee
IFRS
 
accounting standards
Accounting
 
issued by the IASB
Standards
IRB
 
internal ratings-based
IRRBB
 
interest rate risk in the
banking book
ISDA
 
International Swaps and
Derivatives Association
ISIN
 
International Securities
Identification Number
 
 
Annual Report 2024 |
Appendix
 
385
Abbreviations frequently used in our financial reports (continued)
K
KRT
 
Key Risk Taker
L
LAS
 
liquidity-adjusted stress
LCR
 
liquidity coverage ratio
LGD
 
loss given default
LIBOR
 
London Interbank Offered
Rate
LLC
 
limited liability company
LoD
 
lines of defense
LRD
 
leverage ratio denominator
LTIP
 
Long-Term
 
Incentive Plan
LTV
 
loan-to-value
M
M&A
 
mergers and acquisitions
MRT
 
Material Risk Taker
N
NII
 
net interest income
NSFR
 
net stable funding ratio
NYSE
 
New York Stock Exchange
O
OCA
 
own credit adjustment
OCI
 
other comprehensive
income
OECD
 
Organisation for Economic
Co-operation and
Development
OTC
 
over-the-counter
P
PCI
 
purchased credit impaired
PD
 
probability of default
PIT
 
point in time
PPA
 
purchase price allocation
Q
QCCP
 
qualifying central
counterparty
R
RBC
 
risk-based capital
RbM
 
risk-based monitoring
REIT
 
real estate investment trust
RMBS
 
residential mortgage-
backed securities
RniV
 
risks not in VaR
RoCET1
 
return on CET1 capital
RoU
 
right-of-use
rTSR
 
relative total shareholder
return
RWA
 
risk-weighted assets
S
SA
 
standardized approach or
société anonyme
SA-CCR
 
standardized approach for
counterparty credit risk
SAR
 
Special Administrative
Region of the People’s
Republic of China
SDG
 
Sustainable Development
Goal
SEC
 
US Securities and Exchange
Commission
SFT
 
securities financing
transaction
SIBOR
 
Singapore Interbank
Offered Rate
SICR
 
significant increase in credit
risk
SIX
 
SIX Swiss Exchange
SME
 
small and medium-sized
entities
SMF
 
Senior Management
Function
SNB
 
Swiss National Bank
SOR
 
Singapore Swap Offer Rate
SPPI
 
solely payments of principal
and interest
SRB
 
systemically relevant bank
SVaR
 
stressed value-at-risk
T
TBTF
 
too big to fail
TCFD
 
Task
 
Force on Climate-
related Financial Disclosures
TIBOR
 
Tokyo
 
Interbank Offered
Rate
TLAC
 
total loss-absorbing capacity
TTC
 
through the cycle
U
USD
 
US dollar
V
VaR
 
value-at-risk
VAT
value added tax
This is a general list of the abbreviations frequently used in our financial reporting. Not all of
 
the listed abbreviations may
appear in this particular report.
 
Annual Report 2024 |
Appendix
 
386
Information sources
 
Reporting publications
Annual publications
UBS Group Annual
 
Report
: Published in
 
English,
 
this report provides
 
descriptions of: the
 
Group strategy and
 
performance;
the
 
strategy
 
and
 
performance
 
of
 
the
 
business
 
divisions
 
and
 
Group
 
functions;
 
risk,
 
treasury
 
and
 
capital
 
management;
corporate
 
governance;
 
the
 
compensation
 
framework,
 
including
 
information
 
about
 
compensation
 
for
 
the
 
Board
 
of
Directors and the Group Executive Board members; and financial
 
information, including the financial statements.
 
“Auszug
 
aus
 
dem
 
Geschäftsbericht
”:
 
This
 
publication
 
provides
 
a
 
German
 
translation
 
of
 
selected
 
sections
 
of
 
the
 
UBS
Group Annual Report.
 
Compensation Report
: This report discusses the
 
compensation framework and provides information about compensation
for
 
the
 
Board
 
of
 
Directors
 
and
 
the
 
Group
 
Executive
 
Board
 
members.
 
It
 
is
 
available
 
in
 
English
 
and
 
German
(
“Vergütungsbericht
”) and represents a component of the UBS Group Annual
 
Report.
Sustainability
 
Report
:
 
Published
 
in
 
English,
 
the
 
Sustainability
 
Report
 
provides
 
disclosures
 
on
 
environmental,
 
social
 
and
governance topics related to the UBS Group. It also provides
 
certain disclosures related to diversity, equity and inclusion.
Quarterly publications
 
Quarterly
 
financial
 
report
:
 
This
 
report
 
provides
 
an
 
update
 
on
 
performance
 
and
 
strategy
 
(where
 
applicable)
 
for
 
the
respective quarter. It is available in English.
The
 
annual and
 
quarterly
 
publications
 
are
 
available
 
in
 
.pdf
 
and
 
online
 
formats
 
at
ubs.com/investors
,
 
under
 
“Financial
information”.
 
Printed copies, in any language, of the aforementioned
 
annual publications are no longer provided.
 
Other information
Website
The “Investor Relations”
 
website at
ubs.com/investors
 
provides the following
 
information about UBS:
 
results-related news
releases;
 
financial
 
information,
 
including
 
results-related
 
filings
 
with
 
the
 
US
 
Securities
 
and
 
Exchange
 
Commission
 
(the
SEC);
 
information
 
for
 
shareholders,
 
including
 
UBS
 
dividend
 
and
 
share
 
repurchase
 
program
 
information,
 
and
 
for
bondholders, including rating agencies
 
reports; the corporate calendar;
 
and presentations by management for
 
investors
and financial analysts. Information is available online in English, with
 
some information also available in German.
Results presentations
Quarterly
 
results
 
presentations
 
are
 
webcast
 
live.
 
Recordings
 
of
 
most
 
presentations
 
can
 
be
 
downloaded
 
from
ubs.com/presentations
.
Messaging service
Email
 
alerts
 
to
 
news
 
about
 
UBS
 
can
 
be
 
subscribed
 
for
 
under
 
“UBS
 
News
 
Alert”
 
at
ubs.com/global/en/investor-
relations/contact/investor-services.html
. Messages are sent in English, German, French or Italian, with an option to select
theme preferences for such alerts.
Form 20-F and other submissions to the US Securities
 
and Exchange Commission
UBS files
 
periodic
 
reports
 
with
 
and submits
 
other
 
information
 
to
 
the
 
SEC.
 
Principal
 
among
 
these
 
filings
 
is the
 
annual
report on Form 20-F, filed pursuant to
 
the US Securities Exchange Act of 1934.
 
The filing of Form 20-F is structured
 
as a
wraparound document.
 
Most sections
 
of the
 
filing can
 
be satisfied
 
by referring
 
to the
 
UBS Group AG
 
Annual Report.
However, there is
 
a small
 
amount of
 
additional information in
 
Form 20-F that
 
is not
 
presented elsewhere and
 
is particularly
targeted at readers in the US.
 
Readers are encouraged to refer to this
 
additional disclosure. Any document that filed with
the SEC is available on the SEC’s website:
sec.gov
. Refer to
ubs.com/investors
 
for more information.
 
 
Annual Report 2024 |
Appendix
 
387
Cautionary statement
 
regarding forward-looking statements
 
|
 
This report 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. In particular, the global economy
 
may be negatively affected
 
by
shifting political circumstances, including
 
increased tension between world powers,
 
conflicts in the Middle East,
 
as well as the continuing Russia–Ukraine
 
war. In
addition, the
 
ongoing conflicts
 
may continue
 
to cause
 
significant population
 
displacement, and
 
lead to shortages
 
of vital commodities,
 
including energy
 
shortages
and food
 
insecurity outside
 
the areas
 
immediately involved
 
in armed
 
conflict. Governmental
 
responses to
 
the armed
 
conflicts, including
 
successive sets
 
of sanctions
on Russia and
 
Belarus, and Russian
 
and Belarusian entities
 
and nationals, and
 
the uncertainty
 
as to whether
 
the ongoing conflicts
 
will further widen
 
and intensify,
may have significant adverse effects on
 
the market and macroeconomic conditions,
 
including in ways that cannot
 
be anticipated. UBS’s acquisition of the
 
Credit
Suisse Group has materially changed its outlook and strategic direction and introduced new
 
operational challenges. The integration of the Credit Suisse entities
into the UBS structure is expected to continue through 2026
 
and presents significant operational and execution
 
risk, including the risks that UBS may be
 
unable
to achieve the cost reductions and business benefits contemplated by the transaction, that it may incur higher costs to execute
 
the integration of Credit Suisse
and that the
 
acquired business may
 
have greater risks
 
or liabilities than
 
expected. Following the failure
 
of Credit Suisse,
 
Switzerland is considering significant
changes to its
 
capital, resolution and regulatory
 
regime, which, if
 
proposed and adopted, may
 
significantly increase our capital
 
requirements or impose
 
other
costs on UBS.
 
These factors create greater uncertainty
 
about forward-looking statements.
 
Other factors that may
 
affect UBS’s performance and
 
ability to achieve
its plans, outlook
 
and other objectives
 
also include, but
 
are not limited
 
to: (i) the degree
 
to which UBS
 
is successful in
 
the execution
 
of its strategic
 
plans, including
its cost
 
reduction and
 
efficiency initiatives
 
and its
 
ability to
 
manage its
 
levels of
 
risk-weighted assets
 
(RWA) and
 
leverage ratio
 
denominator (LRD),
 
liquidity
coverage ratio and other financial resources,
 
including changes in RWA assets
 
and liabilities arising from higher market volatility and
 
the size of the combined
Group; (ii) the
 
degree to
 
which UBS
 
is successful
 
in implementing
 
changes to
 
its businesses
 
to meet
 
changing market,
 
regulatory and
 
other conditions;
 
(iii) 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, residential and commercial real estate markets, general economic
conditions, 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;
 
(v) changes in the availability of
 
capital and funding, including any
 
adverse changes in UBS’s
 
credit spreads and credit
 
ratings of UBS, 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 EU
 
and other financial centers
 
that have imposed, or
 
resulted in, or
may do so in the future, more stringent or entity-specific capital, TLAC, leverage ratio, net stable funding ratio, liquidity and funding requirements, heightened
operational resilience requirements, incremental tax requirements, additional levies, limitations on permitted activities, constraints on remuneration, constraints
on transfers
 
of capital
 
and liquidity
 
and sharing
 
of operational
 
costs across
 
the Group
 
or other
 
measures, and
 
the effect
 
these will
 
or would
 
have on
 
UBS’s
business activities; (vii) UBS’s ability to successfully implement resolvability and related regulatory requirements and the potential need to make further changes
to the legal structure
 
or booking model of UBS
 
in response to legal and
 
regulatory requirements and any additional requirements
 
due to its acquisition of the
Credit Suisse Group, 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
 
the 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 its 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 its RWA; (xiii) 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;
 
(xiv) 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; (xv) UBS’s
 
ability to implement new technologies
and business methods,
 
including digital services,
 
artificial intelligence and other
 
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; (xvi) limitations on
 
the effectiveness of
 
UBS’s internal processes
 
for risk
management, risk control,
 
measurement and modeling,
 
and of financial
 
models generally;
 
(xvii) 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 persistently high levels of cyberattack
threats; (xviii) restrictions on the
 
ability of UBS
 
Group AG,
 
UBS AG and
 
regulated subsidiaries of UBS
 
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; (xix) 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; (xx) 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; (xxi) the ability of UBS to access capital markets; (xxii) 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, pandemic, security breach, cyberattack, power
 
loss,
telecommunications failure or
 
other natural or man-made
 
event; and (xxiii) the
 
effect that these or other
 
factors or unanticipated
 
events, including media reports
and speculations, may have on its reputation and the additional consequences that this may have on its 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. UBS’s business and
 
financial
performance could be affected
 
by other factors identified
 
in its past
 
and future filings
 
and reports, including
 
those filed with the
 
US Securities and
 
Exchange
Commission (the SEC).
 
More detailed information
 
about those factors
 
is set forth
 
in documents furnished
 
by UBS and
 
filings made by
 
UBS with the
 
SEC, including
the UBS Group AG and
 
UBS AG Annual Reports
 
on Form 20-F for
 
the year ended 31 December
 
2024. 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 report 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.
Websites |
 
In this report, any
 
website addresses are provided
 
solely for information
 
and are not intended
 
to be active links.
 
UBS is not incorporating
 
the contents
of any such websites into this report.
ubs-20241231p412i0
UBS Group AG
P.O. Box
CH-8098 Zurich
ubs.com

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