Annual Report 2024
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
☐
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
OR
☑
EXCHANGE ACT OF 1934
For the fiscal year ended
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
Commission file number:
(Jurisdiction of Incorporation or Organization)
,
,
,
,
(Address of Principal Executive Offices)
UBS AG meets the conditions set forth in General Instruction (I)(1)(a) and (b) of Form 10-K, as applied to annual
reports on Form 20-F, and is therefore filing this Form 20-F with the reduced disclosure format.
, New York
Telephone:
-
(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:
Please see page 3.
Securities registered or to be registered pursuant to Section 12(g) of the Act:
Please see page 3.
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
Please see page 3.
Annual Report 2024
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of 31 December 2024:
UBS AG
Ordinary shares, par value USD 0.10 per share:
(none of which are 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
☐
☑
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
☐
☑
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.
☑
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).
☑
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
☐
☑
☐
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
☐
Standards Board
☑
Other
☐
Annual Report 2024
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
☐
☑
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
ETRACS Alerian MLP Index ETN Series B due July 18, 2042
AMUB
NYSE Arca
ETRACS Quarterly Pay 1.5x Leveraged MarketVector BDC Liquid Index ETN due June 10,
2050
BDCX
NYSE Arca
ETRACS MarketVector Business Development Companies Liquid Index ETN due April 26,
2041
BDCZ
NYSE Arca
ETRACS Monthly Pay 1.5x Leveraged Closed-End Fund Index ETN due June 10, 2050
CEFD
NYSE Arca
ETRACS Monthly Pay 2xLeveraged US High Dividend Low Volatility ETN Series B due
October 21, 2049
HDLB
NYSE Arca
ETRACS IFED Invest with the Fed TR Index ETN due September 15, 2061
IFED
NYSE Arca
ETRACS 2x Leveraged US Value Factor TR ETN due February 9, 2051
IWDL
NYSE Arca
ETRACS 2x Leveraged US Growth Factor TR ETN due February 9, 2051
IWFL
NYSE Arca
ETRACS 2x Leveraged US Size Factor TR ETN due February 9, 2051
IWML
NYSE Arca
E-TRACS Alerian MLP Infrastructure Index Series B due April 2, 2040
MLPB
NYSE Arca
ETRACS Quarterly Pay 1.5x Leveraged Alerian MLP Index ETN due June 10, 2050
MLPR
NYSE Arca
ETRACS 2x Leveraged MSCI US Momentum Factor TR ETN due February 9, 2051
MTUL
NYSE Arca
ETRACS Monthly Pay 1.5x Leveraged Mortgage REIT ETN due June 10, 2050
MVRL
NYSE Arca
ETRACS Monthly Pay 2xLeveraged Preferred Stock ETN due September 25, 2048
PFFL
NYSE Arca
ETRACS 2x Leveraged MSCI US Quality Factor TR ETN due February 9, 2051
QULL
NYSE Arca
ETRACS 2x Leveraged US Dividend Factor TR ETN due February 9, 2051
SCDL
NYSE Arca
ETRACS Monthly Pay 2xLeveraged US Small Cap High Dividend ETN Series B due
November 10, 2048
SMHB
NYSE Arca
ETRACS CMCI Total Return ETN Series B due April 5, 2038
UCIB
NYSE Arca
ETRACS 2x Leveraged MSCI US Minimum Volatility Factor TR ETN due February 9, 2051
USML
NYSE Arca
ETRACS Gold Shares Covered Call ETN due February 2, 2033
GLDI
NASDAQ
ETRAC Silver Shares Covered Call ETN due April 21, 2033
SLVO
NASDAQ
ETRAC Crude Oil Shares Covered Call ETN due April 24, 2037
USOI
NASDAQ
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
Cautionary Statement:
Refer to the
Cautionary Statement Regarding Forward -Looking Statements
Report 2024 (page 271).
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
●
Supplement
refers to certain supplemental information contained in this forepart of the Form 20-F, starting on page 9
following the cross-reference table.
●
Financial Statements
refers to the consolidated financial statements of UBS 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 3 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.
B – Capitalization and
Indebtedness.
Not applicable.
C – Reasons for the Offer and
Use of Proceeds.
Not applicable.
D – Risk Factors.
Annual Report,
(24-36).
Item 4
. Information on the Company.
A
– History and Development
of the Company
Not required under the reduced disclosure format.
B – Business Overview.
Annual Report,
Our businesses
C – Organizational Structure.
Not required under the reduced disclosure format.
D – Property, Plant and
Equipment.
Annual Report,
Property, plant and equipment
(257).
Information required by SEC
Regulation S-K Part 1400
Annual Report,
Information required by Subpart 1400 of Regulation S-K
(258-263),
Loss
history statistics
(71-72), and Note 10 to the Financial Statements (
Financial assets at
amortized cost and other positions in scope of expected credit loss measurement)
182).
Item 4A
. Unresolved Staff
Comments.
None.
Item 5
. Operating and Financial Review and Prospects.
A
– Operating Results.
Annual Report,
Financial and operating performance
Statements (
Summary of material accounting policies
) (150-166).
B – Liquidity and Capital
Resources.
Not required under the reduced disclosure format.
C—Research and Development,
Patents and Licenses, etc.
Not required under the reduced disclosure format.
D—Trend Information.
Not required under the reduced disclosure format.
E—Critical Accounting
Estimates
Not applicable.
Item 6.
A
– Directors and Senior
Management.
Not required under the reduced disclosure format.
B – Compensation.
Not required under the reduced disclosure format.
C – Board practices.
1: Annual Report,
Board of Directors
(112-121). The term of office for members of the
Board of Directors and its Chairman expires after completion of the next Annual General
Meeting.
2: Annual Report,
Change of control and defense measures
Financial Statements (
Related parties
) (246-248).
3: Annual Report,
Audit Committee
Compensation Committee
(120), and
Auditors
(131-133).
Annual Report 2024
D—Employees.
Not required under the reduced disclosure format.
E—Share Ownership.
Not required under the reduced disclosure format.
F—Disclosure of a registrant’s
action to recover erroneously
awarded compensation.
Not applicable.
Item 7.
A—Major Shareholders.
Not required under the reduced disclosure format.
B—Related Party Transactions.
Not required under the reduced disclosure format.
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
Financial and operating performance
and Note 3b to the Financial Statements (
Segment reporting by geographic location
)
(172)
7: Annual Report, Note 18 to the Financial Statements (
Provisions and contingent
liabilities
) (189-196).
For developments during the year, please see also the note
Provisions and contingent
liabilities
reports for the First, Second and Third Quarters 2024, filed on Forms 6-K dated May 7,
2024, August 23, 2024 and November 8, 2024, respectively. The disclosures in each such
Quarterly Report speak only as of their respective dates.
8: Annual Report,
(111).
B—Significant Changes.
None.
Item 9
. The Offer and Listing.
A
– Offer and Listing Details.
Not applicable.
B—Plan of Distribution.
Not applicable.
C—Markets.
Cover page (3). UBS AG shares are not listed.
D—Selling Shareholders.
Not applicable.
E—Dilution.
Not applicable.
F—Expenses of the Issue.
Not applicable.
Item 10
. Additional Information.
A—Share Capital.
Not applicable.
B—Memorandum and Articles
of Association.
1: Supplement (10-13).
2: Supplement (10-13).
3: Annual Report,
Share
capital structure
(110-111),
Shareholders' participation rights
(111), and
Elections and terms of office
4: Supplement (10-13).
5: Supplement (10-13).
6: Annual report,
Share
capital structure
(110-111), and
Shareholders’ participation
rights
7: Annual Report,
Change of control and defense measures
8: There is no requirement for UBS AG shareholders to disclose ownership, as UBS AG
shares are not listed.
9: Supplement (10-13) and Annual Report,
Share
capital structure
(110-111),
Shareholders' participation rights
Elections and terms of office
Change of
control and defense measures
10: Supplement (10-13).
Annual Report 2024
C—Material Contracts.
UBS AG entered into a definitive merger agreement with Credit Suisse AG on 7
December 2023, which was filed as Exhibit 4.3 to UBS AG'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 4.4 to UBS AG'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. For further
information, please see
Integration of Credit Suisse
on page 4 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 4.1, and is described in Note 34 to
the Financial Statements (
Supplemental Guarantor Information
) on page 252 of the
Annual Report.
D—Exchange Controls.
Other than in relation to economic sanctions, there are no restrictions under the Articles
of Association of UBS 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.
UBS AG has no shareholders other than UBS Group AG, which is a Swiss company .
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
(72-80),
Total loss-absorbing capacity
(92-95) and
Currency
Management
(108).
(b) Qualitative Information
About Market Risk.
Annual Report,
Market risk
(72-80),
Total loss-absorbing capacity
(92-95) and
Currency
Management
(108).
(c) Interim Periods.
Not applicable.
Item 12.
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 AG or any of its
significant subsidiaries.
Item 14.
to the Rights of Security Holders
and Use of Proceeds.
None.
Item 15.
(a)
Disclosure Controls and
Procedures
Annual Report,
US disclosure requirements
(133), and
Exhibit 12 to this Form 20-
F.
Annual Report 2024
(b) Management’s Annual
Report on Internal Control over
Financial Reporting
Annual Report,
Management’s report on internal control over financial reporting
(c) Attestation Report of the
Registered Public Accounting
Firm
Annual Report,
Report of Independent Registered Public Accounting Firm
(136-141).
(d) Changes in Internal Control
over Financial Reporting
None.
Item 16A.
Audit Committee
Financial Expert.
Not required under the reduced disclosure format.
Item 16B.
Code of Ethics.
Not required under the reduced disclosure format.
Item 16C.
Principal Accountant
Fees and Services.
Annual Report,
Auditors
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.
Listing Standards for Audit
Committees.
Not applicable.
Item 16E.
Purchases of Equity
Securities by the Issuer and
Affiliated Purchasers.
UBS AG does not have any class of equity securities registered pursuant to Section 12 of
the Exchange Act.
Item 16F.
Changes in
Registrant’s Certifying
Accountant.
Not applicable.
Item 16G.
Corporate
Governance.
UBS AG has debt securities listed on the New York Stock Exchange (NYSE), and
therefore discloses below the key differences from its corporate governance practices to
the NYSE standards relevant to US-listed companies.
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 (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 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, UBS Group AG’s Compensation Committee, together with its
BoD, proposes for shareholder approval at the UBS Group AG 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. As UBS AG’s BoD members are the same as the
UBS Group AG BoD members, this approval by group shareholders is also applicable for
UBS AG. 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
Annual Report 2024
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.
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
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
Risk management and
control
Cybersecurity governance
Item 17.
Financial Statements.
Not applicable.
Item 18.
Annual Report,
Financial statements
(134-254), and
Additional regulatory information
(255-263).
Item 19.
Exhibits
Supplement (14).
Annual Report 2024
Supplemental information
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 (CHF14).
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
Item 10. Additional Information.
B—Memorandum and Articles of Association.
Please see the Articles of Association of UBS AG (Exhibit 1.1 to this Form 20-F) and the Organization Regulations of UBS
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 AG (the “Articles”),
Organization Regulations of UBS AG (the “Organization Regulations”) and relevant Swiss laws, in particular the Swiss Code
of Obligations, relating to the ordinary shares of UBS 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 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)
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 AG. The shares rank
pari passu
including voting rights, entitlement to dividends, share of the liquidation proceeds in case of the liquidation of UBS 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
).
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 AG to keep a share register in which the names, addresses 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.
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 sent to all registered shareholders. 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.
Annual Report 2024
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 a 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;
●
Dispensing with the designation of an independent voting representative for conducting a virtual shareholders’
meeting in the case of corporations whose shares are not listed on a stock exchange (e.g., UBS AG); or
●
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.
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. Any remaining net profit of the corporation may be allocated,
subject to the provisions of the Swiss Code of Obligations and of the Federal 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.
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.
Annual Report 2024
Notices
Notices to the shareholders may, at the choice of the BoD, be validly given by publication in the Swiss Official Gazette of
Commerce or in a form that allows proof by text. The BoD may designate further means of publication as well.
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.
Listed companies, such as UBS Group AG, may grant loans to members of their BoD based on their articles of association.
UBS Group AG’s articles of association restrict its ability to grant loans to members of its BoD 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. As all
the members of UBS AG’s BoD are part of UBS Group AG’s BoD, these restrictions are enforced with respect to the UBS
AG’s BoD members even though this provision of Swiss law is not applicable to UBS AG.
BoD Compensation
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. As determined
in the Articles and the 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, such as the total
compensation for the Chairman and the non-independent BoD members, and, upon proposal of the Chairman, proposes the
remuneration / fee framework for independent BoD members for approval by the BoD.
All the members of the BoD of UBS AG are part of the UBS Group AG BoD. For UBS Group AG, 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. Annually, and on behalf of the Group BoD, the
Compensation Committee of UBS Group AG (among other things):
●
approves the total compensation for the Chairman and the non-independent BoD members;
●
proposes the remuneration / fee framework for independent BoD members for approval by the BoD;
●
upon proposal of the Chairman and Group CEO, approves the remuneration / fee frameworks for external supervisory
board members of significant Group entities;
●
proposes to the BoD, for approval by the annual general meeting, the maximum aggregate amounts of BoD
compensation and GEB fixed compensation and the aggregate amount of variable compensation for the GEB.
For the Chairman and Vice Chairman, fees are paid 50% in cash and 50% in shares, which are blocked for four years. Other
members of the UBS Group AG BoD receive at a minimum 50% of their fees in UBS Group AG shares, which are blocked for
four years, and they may elect to receive up to 100% of their fees to purchase 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.
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
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 AG was incorporated and registered as a corporation limited by shares (
Aktiengesellschaft
) under the laws of Switzerland.
It is entered into the commercial registers of Canton Zurich and Canton Basel-City on February 28, 1978 under the registration
number CHE-101.329.561 and has registered domiciles in Zurich and Basel, Switzerland. The business purpose of UBS AG,
as set forth in article 2 of the Articles, is the operation of a bank, with a scope of operations extending to all types of banking,
financial, advisory, trading and service activities in Switzerland and abroad.
UBS AG may establish branches and
representative offices as well as banks, finance companies and other enterprises of any kind in Switzerland and abroad, hold
equity interests in these companies, and conduct their management. UBS AG is authorized to acquire, mortgage and sell real
estate and building rights in Switzerland and abroad. UBS AG may borrow and invest money on the capital markets. UBS AG
is part of the group of companies controlled by the group parent company UBS Group AG. It may promote the interests of the
group parent company or other group companies. It may provide loans, guarantees and other kinds of financing and security
for group companies. UBS AG is a wholly owned subsidiary of UBS Group AG.
Duration and Liquidation
UBS 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 AG is a Swiss bank, the Swiss Financial Market
Supervisory Authority FINMA is the only competent authority to open restructuring or liquidation (bankruptcy) proceedings
with respect to UBS 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 AG. Thereafter, any balance must be distributed to shareholders in proportion to the
paid-up nominal value of shares held.
Other
, Aeschengraben 27, 4051
, PCAOB number
, have been appointed as statutory
auditors and as auditors of the consolidated accounts of UBS AG. The auditors are subject to election each year by the
shareholders at the annual general meeting.
Annual Report 2024
Item 19. Exhibits.
Exhibit
number
Description
1.1
. (Incorporated by reference to Form 6-K of UBS 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)
4.1
(Incorporated by
reference to Form 6-K of UBS AG filed on June 17, 2015)
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
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 AG
_/s/ Sergio Ermotti _______________
Name: Sergio Ermotti
Title: President of the Executive Board
Name: Todd Tuckner
Title: Chief Financial Officer
Name: Steffen Henrich
Title: Controller
Date: March 17, 2025
Contents
2
1
Our business model and environment
4
6
14
15
20
24
2
Financial and
operating performance
37
38
44
45
47
48
50
50
3
Risk, capital, liquidity and funding,
and balance sheet
52
88
4
Corporate governance
109
5
Financial
statements
134
253
6
Additional
regulatory information
256
A
Appendix
264
268
270
271
Corporate information
UBS AG
Art. 620ff. of the Swiss Code of Obligations as an Aktiengesellschaft, a
corporation limited by shares. The addresses and telephone numbers of the
two registered offices of UBS AG are: Bahnhofstrasse 45, CH-8001 Zurich,
Switzerland, telephone +41-44-234 11 11; and Aeschenvorstadt 1, CH-4051
Basel, Switzerland, telephone +41-61-288 50 50. The corporate identification
number is CHE-101.329.561. UBS AG is a bank. The company was formed on
29 June 1998, when Union Bank of Switzerland (founded in 1862) and
Swiss Bank Corporation (founded in 1872) merged to form UBS 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 AG
Information about future publication dates is available at
ubs.com/global/en/investor-relations/events/calendar.html
Imprint
Publisher: UBS 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
Our key figures
UBS AG consolidated key figures
As of or for the year ended
USD m, except where indicated
31.12.24
31.12.23
31.12.22
Results
Total revenues
Credit loss expense / (release)
Operating expenses
Operating profit / (loss) before tax
Net profit / (loss) attributable to shareholders
Profitability and growth
1,2
Return on equity (%)
Return on tangible equity (%)
Return on common equity tier 1 capital (%)
Return on leverage ratio denominator, gross (%)
Cost / income ratio (%)
Net profit growth (%)
Resources
1
Total assets
Equity attributable to shareholders
Common equity tier 1 capital
3
Risk-weighted assets
3
Common equity tier 1 capital ratio (%)
3
Going concern capital ratio (%)
3
Total loss-absorbing capacity ratio (%)
3
Leverage ratio denominator
3
Common equity tier 1 leverage ratio (%)
3
Liquidity coverage ratio (%)
4
Net stable funding ratio (%)
Other
Invested assets (USD bn)
2,5
Personnel (full-time equivalents)
1 Refer to the “Targets, capital guidance and ambitions” section of the UBS Group Annual Report 2024, available under “Annual reporting” at ubs.com/investors, for more information about our performance
measurement. 2 Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method. 3 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. 4 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 and 63 data points in the fourth quarter of 2023. Refer to the “Capital, liquidity and funding, and balance sheet” section of this report
for more information. 5 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.
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 UBS’s 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 under “Alternative performance measures” in the appendix to
this report. These APMs may qualify as non-GAAP measures as defined by US Securities and Exchange Commission (SEC)
regulations.
1
Annual Report 2024
Terms used in this report
”UBS”, ”UBS Group”, “UBS Group AG consolidated”, “Group” and “the
Group”
UBS Group AG and its consolidated subsidiaries
“UBS AG”, “UBS AG consolidated“, “we”, “us” and “our”
UBS AG and its consolidated subsidiaries
“Credit Suisse AG” and “Credit Suisse AG consolidated”
Credit Suisse AG and its consolidated subsidiaries before the merger
with UBS AG
“Credit Suisse Group”
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”
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
“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
“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 includes seven months of
consolidated data following the merger of UBS AG and Credit Suisse AG (June to December 2024) and five months of
pre-merger UBS AG data only (January to May 2024). Comparative information for the years ended 31 December 2023
and 31 December 2022 includes pre-merger UBS AG data only.
Balance sheet information as at 31 December 2024 includes post-merger consolidated information. Balance sheet
information as at 31 December 2023 and 31 December 2022 reflects pre-merger UBS AG information only.
Annual Report 2024
Our 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 successfully executed our integration plans, we won
back, retained and grew 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.
›
Refer to “Note 2 Accounting for the merger of UBS AG and Credit Suisse AG” in the “Consolidated financial statements” section of
this report for more information about the accounting for the merger of UBS AG and Credit Suisse 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 expect the first wave of Swiss business migrations to commence in the second quarter of 2025.
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.
›
Refer to “Integration of Credit Suisse” in the “Our strategy, business model and environment” section of the UBS Group Annual
Report 2024, available under “Annual reporting” at
ubs.com/investors
, for more information
Other developments
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 AG 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 UBS AG’s risk-weighted assets by around USD 1.3bn and UBS AG’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 AG recorded an expense of USD 41m in connection with the termination of the Swisscard
joint venture.
Annual Report 2024
Material weakness in internal control over financial reporting
As a registrant with the US Security and Exchange Commission (the SEC), UBS AG 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. 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.
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 business model and environment | Our businesses 6
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 the UBS Group Annual Report 2024, available under “Annual reporting” at
ubs.com/investors,
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.
Annual Report 2024 |
Our business model and environment | Our businesses 7
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
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.
Annual Report 2024 |
Our business model and environment | Our businesses 8
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.
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
sustainability in investment and commercial properties.
Annual Report 2024 |
Our business model and environment | Our businesses 9
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
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
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.
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.
Annual Report 2024 |
Our business model and environment | Our businesses 10
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.
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
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 business model and environment | Our businesses 11
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 business model and environment | Our businesses 12
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
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.
Annual Report 2024 |
Our business model and environment | Our businesses 13
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.
›
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.
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.
Annual Report 2024 |
Our business model and environment | Our environment 14
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.
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
Annual Report 2024 |
Our business model and environment | Regulation and supervision 15
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). The Group’s 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.
UBS is a global systemically important bank, as designated by the Financial Stability Board, and a systemically relevant
bank (an SRB) in Switzerland, UBS Group entities are subject to stricter regulatory requirements and supervision than
most other Swiss banks.
›
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, including UBS AG, 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), UBS is subject to capital and total loss-absorbing
capacity (TLAC) requirements at both the group level, for UBS Group AG, and the parent bank level, for UBS AG, that
are based on both risk-weighted assets and the leverage ratio denominator, and are among the most stringent in the
world. UBS Group AG, UBS AG and UBS Switzerland AG 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
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.
Annual Report 2024 |
Our business model and environment | Regulation and supervision 16
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.
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
Annual Report 2024 |
Our business model and environment | Regulation and supervision 17
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.
–
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.
Annual Report 2024 |
Our business model and environment | Regulation and supervision 18
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 business model and environment | Regulation and supervision 19
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 UBS AG 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 decarbonization 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 firms, 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 business model and environment | Regulation and supervision 20
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 business model and environment | Regulatory and legal developments 21
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 similar impact on UBS AG consolidated
as on UBS Group, with a USD 1bn increase in UBS AG’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 UBS AG.
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.
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Our business model and environment | Regulatory and legal developments 22
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.
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Our business model and environment | Regulatory and legal developments 23
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.
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Our business model and environment | Risk factors 24
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 AG to heightened litigation risk and regulatory scrutiny and
entails significant additional costs, liabilities and business integration risks
UBS Group AG 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. 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.
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Our business model and environment | Risk factors 25
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 the acquisition of Credit Suisse by UBS Group 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 AG. 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, UBS AG 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 our 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 AG
relative to peers.
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Our business model and environment | Risk factors 26
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.
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 AG’s ability to compete with firms subject to less stringent capital requirements
and increase UBS AG’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 AG 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 AG 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.
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Our business model and environment | Risk factors 27
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
AG’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.
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Our business model and environment | Risk factors 28
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 and the integration of UBS AG with Credit Suisse AG 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 business model and environment | Risk factors 29
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 Executive Board (EB), as well as certain other employees. UBS is also required to maintain and enforce
provisions requiring UBS to recover from EB members and certain other executives a portion of performance-based
incentive compensation in the event that the UBS Group and UBS AG, 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 UBS Group AG Board of Directors (the Group Board) and the UBS Group AG Group Executive
Board (GEB) each year. If UBS Group AG’s shareholders fail to approve the compensation for the GEB or the Group Board,
this could have an adverse effect on our ability to retain experienced directors and our senior management.
Our operating results, financial condition and ability to pay our obligations in the future may be affected by funding,
dividends and other distributions received directly or indirectly from its subsidiaries, which may be subject to restrictions
UBS AG’s ability to pay its obligations in the future will depend on the level of funding, dividends and other distributions,
if any, received from UBS Switzerland AG and other subsidiaries. The ability of such subsidiaries to make loans or
distributions, directly or indirectly, to UBS 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 AG’s direct and indirect subsidiaries, including 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 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.
Furthermore, UBS AG may guarantee some of the payment obligations of certain of the Group’s subsidiaries from time
to time. These guarantees may require UBS AG to provide substantial funds or assets to subsidiaries or their creditors or
counterparties at a time when UBS AG is in need of liquidity to fund its own obligations.
Annual Report 2024 |
Our business model and environment | Risk factors 30
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:
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.
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.
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Our business model and environment | Risk factors 31
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 AG 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 AG), 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 AG’s net interest income. However, as returns on alternatives to deposits increase with rising
interest rates, such as returns on money market funds, UBS AG 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 AG to obtain
alternative funding, which would likely be more costly than customer deposits.
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 UBS AG’s 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 coverage ratios.
Annual Report 2024 |
Our business model and environment | Risk factors 32
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 against UBS 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.
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.
If we experience financial difficulties, FINMA has the power to open restructuring or liquidation proceedings or impose
protective measures in relation to UBS AG or UBS Switzerland AG, and such proceedings or measures may have a
material adverse effect on 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 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.
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Our business model and environment | Risk factors 33
If restructuring proceedings are opened with respect to 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. 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 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 AG 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.
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. For the year ended
31 December 2023, UBS AG concluded that its internal control over financial reporting was effective.
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Our business model and environment | Risk factors 34
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 AG’s 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 AG’s internal control framework and risk assessment and evaluation
processes in 2024. In addition, UBS AG 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 AG, 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 the
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.
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.
Annual Report 2024 |
Our business model and environment | Risk factors 35
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.
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
’
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.
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 AG remeasures DTAs could affect UBS AG’s
effective tax rate, particularly in the year in which the change is made.
Annual Report 2024 |
Our business model and environment | Risk factors 36
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 combination with Credit Suisse
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. Following the acquisition of the Credit Suisse Group and the subsequent
combination of Credit Suisse AG with UBS AG, tax acquisition costs of certain participations held by Credit Suisse Group
AG and its subsidiaries have been transferred to UBS AG. 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 AG’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.
The addition of loss-absorbing debt as a component of capital requirements, the regulatory requirements to maintain
minimum TLAC at UBS AG 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 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 AG 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 37
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 UBS AG, 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):
–
determination of carrying amounts of assets and liabilities and treatment of reserves for business combinations under
common control (refer to “Note 2 Accounting for the merger of UBS AG and Credit Suisse AG”);
–
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
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 | UBS AG consolidated performance 38
UBS AG consolidated performance
Income statement
For the year ended
% change from
USD m
31.12.24
31.12.23
31.12.22
31.12.23
Net interest income
Other net income from financial instruments measured at fair value through profit or loss
Net fee and commission income
Other income
Total revenues
Credit loss expense / (release)
Personnel expenses
General and administrative expenses
Depreciation, amortization and impairment of non-financial assets
Operating expenses
Operating profit / (loss) before tax
Tax expense / (benefit)
Net profit / (loss)
Net profit / (loss) attributable to non-controlling interests
Net profit / (loss) attributable to shareholders
Comprehensive income
Total comprehensive income
Total comprehensive income attributable to non-controlling interests
Total comprehensive income attributable to shareholders
Integration-related expenses, by business division and Group Items
For the year ended
USD m
31.12.24
31.12.23
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Non-core and Legacy
Group Items
Total integration-related expenses
of which: total revenues
of which: operating expenses
of which: personnel expenses
of which: general and administrative expenses
of which: depreciation, amortization and impairment of non-financial assets
2024 compared with 2023
The legal merger of UBS AG and Credit Suisse AG on 31 May 2024 has had a significant impact on the results from June
2024 onward. This discussion and analysis of results compares the 2024 financial year, which covers seven full months
of post-merger results, with the 2023 financial year, which included only pre-merger results. This is a material driver in
many of the increases across both revenues and operating expenses.
›
Refer to “Note 2 Accounting for the merger of UBS AG and Credit Suisse AG” in the “Consolidated financial statements” section of
this report for more information about the accounting for the merger of UBS AG and Credit Suisse AG
Results 2024 vs 2023
In 2024, net profit attributable to shareholders decreased by USD 1,809m to USD 1,481m, and included a net tax expense
of USD 900m.
Annual Report 2024 |
Financial and operating performance | UBS AG consolidated performance 39
Operating profit before tax decreased by USD 2,088m, or 46%, to USD 2,433m, reflecting higher operating expenses
and an increase in net credit loss expenses, partly offset by higher total revenues . Operating expenses increased by
USD 10,335m, or 36%, to USD 39,346m and included USD 3,737m of integration-related expenses. This increase was
mainly driven by increases of USD 5,430m in general and administrative expenses and USD 4,303m in personnel
expenses, as well as a USD 602m increase in depreciation, amortization and impairment of non-financial assets. Net
credit loss expenses were USD 544m, compared with USD 143m in 2023. Total revenues increased by USD 8,648m, or
26%, to USD 42,323m, mainly driven by a USD 3,137m increase in total combined net interest income and other net
income from financial instruments measured at fair value through profit and loss, USD 4,828m higher net fee and
commission income, and a USD 682m increase in other income.
Integration -related expenses are defined as expenses that are temporary, incremental and directly related to the
integration of Credit Suisse into UBS, including costs of internal staff and contractors substantially dedicated to
integration activities, retention awards, redundancy costs, incremental expenses from the shortening of useful lives of
property, equipment and software, and impairment charges relating to these assets. Classification as integration-
related expenses does not affect the timing of recognition and measurement of those expenses or the presentation
thereof in the income statement.
Integration -related expenses in general and administrative expenses primarily included shared services costs charged
from other companies in the UBS Group reporting scope, consulting fees and outsourcing costs . Integration-related
personnel expenses were mainly due to salaries and variable compensation related to the integration of Credit Suisse.
In addition, there was accelerated depreciation of properties and leasehold improvements in depreciation, amortization
and impairment of non-financial assets .
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 3,137m to USD 17,637m, mainly driven by the consolidation of Credit Suisse AG revenues.
Global Wealth Management increased by USD 858m to USD 7,373m, mainly driven by the consolidation of Credit Suisse
AG revenues. The remaining variance included a decrease in net interest income, reflecting lower deposit and loan
revenues and higher liquidity and funding costs, and an increase in transaction-based income, mainly driven by higher
levels of client activity, particularly in the Asia Pacific and Americas regions.
Personal & Corporate Banking increased by USD 1,183m to USD 4,755m, predominantly driven by the consolidation of
Credit Suisse AG revenues.
The Investment Bank increased by USD 1,106m to USD 6,129m. The overall increase was mainly attributable to the
Derivatives & Solutions business, mostly driven by increases in Equity Derivatives and Foreign Exchange. In addition,
Financing revenues increased, particularly in the Capital Markets Financing business. Global Banking revenues also
increased mainly due to higher revenues across Public Capital Markets, primarily driven by Leveraged Capital Markets.
›
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
Net interest income from financial instruments measured at fair value through profit or loss and other
Other net income from financial instruments measured at fair value through profit or loss
Total
Global Wealth Management
of which: net interest income
of which: transaction-based income from foreign exchange and other intermediary activity
2
Personal & Corporate Banking
of which: net interest income
of which: transaction-based income from foreign exchange and other intermediary activity
2
Asset Management
Investment Bank
Non-core and Legacy
Group Items
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 4,828m to USD 23,438m, mainly driven by the consolidation of Credit
Suisse AG revenues.
Annual Report 2024 |
Financial and operating performance | UBS AG consolidated performance 40
Fees from portfolio management increased by USD 2,237m to USD 11,328m, and investment fund fees increased by
USD 939m to USD 5,669m, predominantly in Global Wealth Management and Asset Management, respectively. The
increase in Global Wealth Management was mainly due to positive market performance and the consolidation of Credit
Suisse AG revenues. For Asset Management, the increase was mainly from the consolidation of Credit Suisse AG revenues,
positive market performance and foreign currency effects, as well as the revaluation of a real estate fund co-investment,
partly offset by the effects of continued margin compression .
Net brokerage fees increased by USD 1,002m to USD 4,081m, largely as a result of the consolidation of Credit Suisse AG
revenues. The remaining variance included an increase in Cash Equities across all regions in Execution Services in the
Investment Bank. There was also an increase in Global Wealth Management which was driven by higher levels of client
activity, particularly in the Asia Pacific and Americas regions, and the consolidation of Credit Suisse AG transaction-based
income.
›
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 1,248m, compared with USD 566m in 2023, and included the consolidation of Credit Suisse AG
income. Included in other income was a loss of USD 80m related to an investment in an associate, compared with a loss
of USD 255m related to an investment in an associate recognized in 2023. In addition, there was a USD 125m net gain
in Asset Management from the sale of non-strategic businesses, as well as a USD 119m gain related to the sale of our
investment in an associate. Other income also included higher costs charged to shared services subsidiaries of
UBS Group AG.
›
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
Credit loss expense / release
Total net credit loss expenses were USD 544m, reflecting net releases of USD 63m related to stage 1 and 2 positions and
net expenses of USD 608m related to credit -impaired stage 3 positions. Credit loss expenses were USD 143m 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
Total
For the year ended 31.12.24
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Non-core and Legacy
Group Items
Total
For the year ended 31.12.23
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Non-core and Legacy
Group Items
Total
For the year ended 31.12.22
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Non-core and Legacy
Group Items
Total
Annual Report 2024 |
Financial and operating performance | UBS AG consolidated performance 41
Operating expenses
Personnel expenses
Personnel expenses increased by USD 4,303m to USD 19,958m, mainly driven by the consolidation of Credit Suisse AG
expenses reflecting the combined workforce resulting from the merger. Salaries and variable compensation increased by
USD 3,731m, including a USD 744m increase in financial advisor compensation as a result of higher compensable
revenues.
›
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 increased by USD 5,430m to USD 16,548m, largely driven by an increase of
USD 2,659m in shared services costs for Technology, Finance, Risk charged by other subsidiaries of UBS Group AG,
resulting from the consolidation of Credit Suisse AG expenses. General and administrative expenses also included
USD 698m higher expenses for litigation, regulatory and similar matters , largely reflecting UBS’s decision from 2024 to
fund an offer by the Credit Suisse supply chain finance funds to redeem all of the outstanding units of the respective
funds. In addition, there were increases of USD 520m in consulting, legal and audit fees, USD 354m in technology costs
and USD 351m in outsourcing 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
Depreciation, amortization and impairment of non-financial assets
Depreciation, amortization and impairment of non-financial assets increased by USD 602m to USD 2,840m, which
included the consolidation of Credit Suisse AG expenses, as well as an increase in amortization of internally generated
capitalized software and depreciation of real estate leases, partly offset by a USD 206m decrease in impairment, following
the impairment of software projects in 2023, resulting from a reprioritization of software development activity following
the acquisition of the Credit Suisse Group .
Operating expenses
For the year ended
% change from
USD m
31.12.24
31.12.23
31.12.22
31.12.23
Personnel expenses
of which: salaries
of which: variable compensation
of which: performance awards
of which: financial advisors
1
of which: other
of which: other personnel expenses
2
General and administrative expenses
of which: net expenses for litigation, regulatory and similar matters
Depreciation, amortization and impairment of non-financial assets
Total operating expenses
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 900m were recognized for UBS AG in 2024, representing an effective tax rate of 37.0%
compared with USD 1,206m for 2023, which represented an effective tax rate of 26.7%.
The income tax expenses for 2024 included a net Swiss tax expense of USD 461m and a net non-Swiss tax expense of
USD 439m.
The net Swiss tax expense included current tax expenses of USD 567m in respect of taxable profits of UBS Switzerland AG
and other Swiss entities and a deferred tax benefit of USD 106m that mainly related to a USD 65m net upward revaluation
of deferred tax assets (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 608m 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, USD 417m in respect of a net upward revaluation of DTAs
and USD 252m in respect of an increase in deferred tax asset recognition for UBS AG’s US branch. These benefits were
partly offset by an expense of USD 500m that primarily related to the amortization of DTAs previously recognized in
relation to tax losses carried forward and deductible temporary differences.
›
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
Annual Report 2024 |
Financial and operating performance | UBS AG consolidated performance 42
Total comprehensive income attributable to shareholders
In 2024, total comprehensive income attributable to shareholders was USD 747m, reflecting net profit of USD 1,481m
and negative other comprehensive income (OCI), net of tax, of USD 735m.
Foreign currency translation OCI was negative USD 1,261m, mainly due to the US dollar strengthening against the Swiss
franc and the euro.
OCI related to cash flow hedges was USD 635m, 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
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 0.4bn and USD 0.1bn would result from changes in Swiss franc,
US dollar and euro interest rates, respectively.
A parallel shift in yield curves by –100 basis points could lead to a combined 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 UBS AG consolidated. 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 93.0%, compared with 86.2%, reflecting an increase in operating expenses, partly offset by
an increase in total revenues.
Return on common equity tier 1 capital
The return on common equity tier 1 (CET1) capital was 2.2%, compared with 7.6%, reflecting a USD 1,809m decrease
in net profit attributable to shareholders and a USD 24.3bn increase in average CET1 capital.
Annual Report 2024 |
Financial and operating performance | UBS AG consolidated performance 43
CET1 capital
CET1 capital increased by USD 29.7bn to USD 73.8bn as of 31 December 2024, primarily due to the merger of UBS AG
and Credit Suisse AG, which resulted in an increase of USD 41.4bn as of the date of the merger, operating profit before
tax of USD 2.4bn and an increase in eligible deferred tax assets on temporary differences of USD 2.6bn. These increases
were partly offset by dividend accruals of USD 13.0bn, current tax expense of USD 2.0bn, and foreign currency translation
losses of USD 1.3bn.
Risk-weighted assets
Risk-weighted assets (RWA) increased by USD 161.1bn to USD 495.1bn, predominantly due to the merger of UBS AG
and Credit Suisse AG, which resulted in a USD 190.0bn increase in RWA. Excluding that merger, RWA decreased by
USD 28.9bn, primarily driven by decreases of USD 23.3bn due to asset size and other movements and USD 10.2bn due
to currency effects, partly offset by an increase of USD 4.6bn due to model updates and methodology changes.
CET1 capital ratio
Our CET1 capital ratio increased to 14.9% from 13.2%, reflecting a USD 29.7bn increase in CET1 capital, partly offset
by a USD 161.1bn increase in RWA.
Leverage ratio denominator
The leverage ratio denominator (the LRD) increased by USD 418.9bn to USD 1,523.3bn, predominantly due to the merger
of UBS AG and Credit Suisse AG, which resulted in a USD 516.4bn increase in the LRD. Excluding that merger, the LRD
decreased by USD 97.5bn, driven by currency effects of USD 49.9bn and asset size and other movements of USD 47.6bn.
CET1 leverage ratio
Our CET1 leverage ratio increased to 4.8% from 4.0%, due to the aforementioned increase in CET1 capital, partly offset
by the aforementioned increase in the LRD.
Personnel
The number of internal personnel employed as of 31 December 2024 was 68,982 (full-time equivalents), a net increase
of 21,392 compared with 31 December 2023, predominantly driven by the legal merger of UBS AG and Credit Suisse AG
on 31 May 2024.
Equity, CET1 capital and returns
As of or for the year ended
USD m, except where indicated
31.12.24
31.12.23
31.12.22
Net profit
Net profit attributable to shareholders
Equity
Equity attributable to shareholders
less: goodwill and intangible assets
Tangible equity attributable to shareholders
less: other CET1 deductions
CET1 capital
Return on equity
Return on equity (%)
Return on tangible equity (%)
Return on CET1 capital (%)
Annual Report 2024 |
Financial and operating performance | Global Wealth Management 44
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
5,901
5,345
10
Recurring net fee income
3
12,082
10,143
19
Transaction-based income
3
4,122
3,079
34
Other income
43
(28)
Total revenues
22,148
18,539
19
Credit loss expense / (release)
(1)
25
Operating expenses
18,893
14,900
27
Business division operating profit / (loss) before tax
3,255
3,614
(10)
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
3
(9.9)
(26.2)
Cost / income ratio (%)
3
85.3
80.4
Financial advisor compensation
4
5,292
4,548
16
Net new money (USD bn)
3
13.0
75.0
Invested assets (USD bn)
3
4,182
3,187
31
Loans, gross (USD bn)
5
302.2
218.3
38
Customer deposits (USD bn)
5
470.6
355.3
32
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
3,6
0.4
0.3
Advisors (full-time equivalents)
9,803
8,838
11
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 Group Treasury allocations. Refer to “Note 3 Segment reporting” in the “Consolidated financial statements” 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 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. 5 Loans and Customer
deposits in this table include customer brokerage receivables and payables, respectively, which are presented in a separate reporting line on the balance sheet. 6 Refer to the “Risk management and control” section
of this report for more information about (credit-)impaired exposures. Excludes loans to financial advisors.
2024 compared with 2023
Results
Profit before tax decreased by USD 359m, or 10%, to USD 3,255m, mainly driven by higher operating expenses, partly
offset by higher total revenues, and included a positive impact from the merger of UBS AG and Credit Suisse AG.
Total revenues
Total revenues increased by USD 3,609m, or 19%, to USD 22,148m, mainly due to the consolidation of Credit Suisse AG
revenues. The remaining increase largely reflected increases in recurring net fee income and transaction-based income.
Net interest income increased by USD 556m, or 10%, to USD 5,901m, mainly driven by the consolidation of Credit
Suisse AG net interest income. The remaining variance was due to 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.
Recurring net fee income increased by USD 1,939m, or 19%, to USD 12,082m, mainly driven by positive market
performance and the consolidation of Credit Suisse AG recurring net fee income.
Transaction-based income increased by USD 1,043m, or 34%, to USD 4,122m, mainly driven by higher levels of client
activity, particularly in the Asia Pacific and Americas regions, and due to the consolidation of Credit Suisse AG transaction-
based income.
Other income was USD 43m, compared with other income of negative USD 28m. Other income in 2024 included a loss
of USD 21m related to an investment in an associate, compared with a loss of USD 64m related to an investment in an
associate recognized in 2023. The change in other income was also due to an increase in shared services costs charged
to other subsidiaries of UBS Group AG, which was mainly related to secondments.
Credit loss expense / release
Net credit loss releases were USD 1m, compared with net expenses of USD 25m in 2023.
Annual Report 2024 |
Financial and operating performance | Global Wealth Management 45
Operating expenses
Operating expenses increased by USD 3,993m, or 27%, to USD 18,893m, mainly driven by the consolidation of Credit
Suisse AG operating expenses and higher personnel expenses (primarily reflecting an increase in financial advisor
compensation as a result of higher compensable revenues ), as well as by higher integration-related expenses and higher
technology expenses.
Cost / income ratio
The cost / income ratio increased to 85.3% from 80.4%, as an increase in operating expenses more than offset an
increase in total revenues.
Invested assets
Invested assets increased by USD 995bn, or 31%, to USD 4,182bn, mainly driven by the consolidation of Credit Suisse AG
invested assets, positive market performance of USD 114bn and net new money inflows, offset by negative foreign
currency effects of USD 41bn.
Loans
Loans increased by USD 83.9bn to USD 302.2bn, mainly driven by the consolidation of Credit Suisse AG loans, partly
offset by negative foreign currency effects and negative net new loans.
›
Refer to the “Risk management and control” section of this report for more information
Customer deposits
Customer deposits increased by USD 115.3bn to USD 470.6bn, mainly driven by the consolidation of Credit Suisse AG
customer deposits and net new deposit inflows, partly offset by negative foreign currency effects.
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
3,554
2,743
30
Recurring net fee income
3
1,190
851
40
Transaction-based income
3
1,529
1,179
30
Other income
32
(83)
Total revenues
6,305
4,689
34
Credit loss expense / (release)
348
46
660
Operating expenses
4,152
2,589
60
Business division operating profit / (loss) before tax
1,805
2,055
(12)
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
3
(12.2)
20.5
Cost / income ratio (%)
3
65.9
55.2
Net interest margin (bps)
3
168
188
Loans, gross (CHF bn)
245.3
146.8
67
Customer deposits (CHF bn)
255.5
169.6
51
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
3,4
1.5
0.9
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 Group Treasury allocations. Refer to “Note 3 Segment reporting” in the “Consolidated financial statements” 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 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 46
2024 compared with 2023
Results
Profit before tax decreased by CHF 250m, or 12%, to CHF 1,805m, as higher total revenues were more than offset by
higher operating expenses and net credit loss expenses.
Total revenues
Total revenues increased by CHF 1,616m, or 34%, to CHF 6,305m, mainly due to the consolidation of Credit Suisse AG
revenues, with the remaining variance largely reflecting increases in all revenue lines.
Net interest income increased by CHF 811m to CHF 3,554m, largely reflecting the consolidation of Credit Suisse AG net
interest income.
Recurring net fee income increased by CHF 339m to CHF 1,190m, mainly due to the consolidation of Credit Suisse AG
recurring net fee income, 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 350m to CHF 1,529m, largely due to the consolidation of Credit Suisse AG
transaction-based income.
Other income was positive CHF 32m, compared with negative CHF 83m.
Other income in 2024 included a loss of
CHF 54m related to an investment in an associate, compared with a loss of CHF 161m recognized in 2023.
Credit loss expense / release
Net credit loss expenses were CHF 348m, mainly due to the consolidation of Credit Suisse AG, and reflected net credit
loss 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 46m.
Operating expenses
Operating expenses increased by CHF 1,563m, or 60%, to CHF 4,152m, largely due to the consolidation of Credit
Suisse AG expenses, and included higher integration-related expenses.
Cost / income ratio
The cost / income ratio increased to 65.9% from 55.2%, as the relative increase in operating expenses was higher than
the relative increase in total revenues.
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
4,035
3,059
32
Recurring net fee income
3
1,350
949
42
Transaction-based income
3
1,734
1,314
32
Other income
39
(105)
Total revenues
7,159
5,216
37
Credit loss expense / (release)
393
50
679
Operating expenses
4,714
2,889
63
Business division operating profit / (loss) before tax
2,052
2,277
(10)
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
3
(9.9)
27.2
Cost / income ratio (%)
3
65.9
55.4
Net interest margin (bps)
3
168
189
Loans, gross (USD bn)
270.2
174.4
55
Customer deposits (USD bn)
281.4
201.5
40
Impaired loan portfolio as a percentage of total loan portfolio, gross (%)
3,4
1.5
0.9
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 Group Treasury allocations. Refer to “Note 3 Segment reporting” in the “Consolidated financial statements” 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 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 47
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
2,538
1,977
28
Performance fees
136
70
94
Net gain from disposals
125
23
437
Total revenues
2,799
2,071
35
Credit loss expense / (release)
0
(1)
Operating expenses
2,334
1,706
37
Business division operating profit / (loss) before tax
465
366
27
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
4
27.1
(73.8)
Cost / income ratio (%)
4
83.4
82.4
Gross margin on invested assets (bps)
4
18
18
Information by business line / asset class
Net new money (USD bn)
4
Equities
28.1
0.2
Fixed Income
23.8
29.5
of which: money market
17.9
23.6
Multi-asset & Solutions
2.9
3.3
Hedge Fund Businesses
(4.0)
(3.9)
Real Estate & Private Markets
1.0
2.7
Total net new money excluding associates
51.9
31.8
of which: net new money excluding money market
34.0
8.1
Associates
5
8.8
0.5
Total net new money
60.6
32.3
Invested assets (USD bn)
4
Equities
755
539
40
Fixed Income
464
323
44
of which: money market
157
131
20
Multi-asset & Solutions
268
180
49
Hedge Fund Businesses
58
54
9
Real Estate & Private Markets
143
102
40
Total invested assets excluding associates
1,689
1,199
41
of which: passive strategies
807
540
49
Associates
5
84
24
255
Total invested assets
1,773
1,222
45
Information by region
Invested assets (USD bn)
4
Americas
443
350
27
Asia Pacific
6
224
153
46
EMEA (excluding Switzerland)
435
314
39
Switzerland
670
405
65
Total invested assets
1,773
1,222
45
Information by channel
Invested assets (USD bn)
4
Third-party institutional
1,008
659
53
Third-party wholesale
169
126
35
UBS’s wealth management businesses
512
414
24
Associates
5
84
24
255
Total invested assets
1,773
1,222
45
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 Group Treasury allocations. Refer to “Note 3 Segment reporting” in the “Consolidated financial statements” 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 The invested assets and net
new money amounts reported for associates are prepared in accordance with their local regulatory requirements and practices. 6 Includes invested assets from associates.
Annual Report 2024 |
Financial and operating performance | Asset Management 48
2024 compared with 2023
Results
Profit before tax increased by USD 99m, or 27%, to USD 465m, mainly reflecting the impact from the consolidation of
Credit Suisse AG, including net gains of USD 125m from the sale of non-strategic businesses.
Total revenues
Total revenues increased by USD 728m, or 35%, to USD 2,799m, primarily reflecting the consolidation of Credit
Suisse AG revenues, and included USD 125m net gains from the aforementioned sales.
Net management fees increased by USD 561m, or 28%, to USD 2,538m, largely attributable to the consolidation of
Credit Suisse AG net management fees, positive market performance and foreign currency effects, and the revaluation
of a real estate fund co-investment, partly offset by continued margin compression. In addition, 2023 included the fee
income of the former UBS Hana Asset Management Co. and negative pass-through fees, with the corresponding offset
in performance fees.
Performance fees increased by USD 66m, or 94%, to USD 136m, mainly due to increases in Hedge Fund Businesses and
Fixed Income, and included Credit Suisse AG performance fees. These increases were partly offset by lower performance
fees due to 2023 including the aforementioned pass-through fees.
Operating expenses
Operating expenses increased by USD 628m, or 37%, to USD 2,334m, largely due to the consolidation of Credit
Suisse AG operating expenses, and included higher integration -related expenses.
Cost / income ratio
The cost / income ratio increased to 83.4% from 82.4%, as the relative increase in operating expenses was higher than
the relative increase in total revenues .
Invested assets
Invested assets increased by USD 551bn, or 45%, to USD 1,773bn, mainly reflecting the impact of the merger of UBS AG
and Credit Suisse AG and related business transfers, positive market performance of USD 140bn and net new money of
USD 61bn, partly offset by negative foreign currency effects of USD 48bn. Excluding money market flows and associates,
net new money was USD 34bn.
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
871
604
44
Capital Markets
1,511
1,005
50
Global Banking
2,382
1,609
48
Execution Services
3
1,714
1,336
28
Derivatives & Solutions
3
3,446
2,860
21
Financing
2,296
1,980
16
Global Markets
7,455
6,175
21
of which: Equities
5,563
4,457
25
of which: Foreign Exchange, Rates and Credit
1,893
1,718
10
Total revenues
9,837
7,784
26
Credit loss expense / (release)
98
67
47
Operating expenses
8,753
7,588
15
Business division operating profit / (loss) before tax
987
130
658
Performance measures and other information
Pre-tax profit growth (year-on-year, %)
4
658.5
(92.9)
Cost / income ratio (%)
4
89.0
97.5
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 Group Treasury allocations. Refer to “Note 3 Segment reporting” in the “Consolidated financial statements” 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
Refer to “Alternative performance measures” in the appendix to this report for the definition and calculation method.
Annual Report 2024 |
Financial and operating performance | Investment Bank 49
2024 compared with 2023
Results
Profit before tax increased by USD 857m to USD 987m, mainly due to higher total revenues, partly offset by higher
operating expenses.
Total revenues
Total revenues increased by USD 2,053m, or 26%, to USD 9,837m, reflecting increases in Global Markets and Global
Banking.
Global Banking
Global Banking revenues increased by USD 773m, or 48%, to USD 2,382m, reflecting higher Capital Markets and
Advisory revenues.
Advisory revenues increased by USD 267m, or 44%, to USD 871m, mostly due to higher merger and acquisition
transaction revenues.
Capital Markets revenues increased by USD 506m, or 50%, to USD 1,511m, mainly due to higher revenues across all
products, led by Leveraged Capital Markets.
Global Markets
Global Markets revenues increased by USD 1,280m, or 21%, to USD 7,455m, driven by higher Derivatives & Solutions ,
Execution Services and Financing revenues.
Execution Services revenues increased by USD 378m, or 28%, to USD 1,714m, mainly due to increases in Cash Equities
across all regions.
Derivatives & Solutions revenues increased by USD 586m, or 21%, to USD 3,446m, mainly reflecting increases in Equity
Derivatives and Foreign Exchange.
Financing revenues increased by USD 316m, or 16%, to USD 2,296m , mainly driven by Capital Markets Financing, and
included a USD 51m gain from the sale of our investment in an associate.
Equities
Global Markets Equities revenues increased by USD 1,106m, or 25%, to USD 5,563m, mainly due to increases in Equity
Derivatives, Cash Equities and Financing, as well as the aforementioned gain from sale.
Foreign Exchange, Rates and Credit
Global Markets Foreign Exchange, Rates and Credit revenues increased by USD 175m, or 10%, to USD 1,893m, mainly
driven by increases in Foreign Exchange.
Credit loss expense / release
Net credit loss expenses were USD 98m, compared with net credit loss expenses of USD 67m, reflecting net credit loss
expenses on performing and credit-impaired positions, including the impact of model updates.
Operating expenses
Operating expenses increased by USD 1,165m, or 15%, to USD 8,753m, and included higher integration-related
expenses, with the remaining increase reflecting higher personnel expenses (including secondment of Credit Suisse
employees prior to the merger of UBS AG and Credit Suisse AG, as well as variable compensation) and higher technology
expenses.
Cost / income ratio
The cost / income ratio decreased to 89.0% from 97.5%, as the increase in total revenues more than offset the increase
in operating expenses.
Annual Report 2024 |
Financial and operating performance | Non-core and Legacy 50
Non-core and Legacy
Non-core and Legacy
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
335
58
474
Credit loss expense / (release)
55
1
Operating expenses
3,673
1,010
264
Operating profit / (loss) before tax
(3,392)
(952)
256
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 Group Treasury 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 3,392m, primarily due to the impact of the merger of UBS AG and Credit Suisse AG, compared
with a loss before tax of USD 952m.
Total revenues
Total revenues were USD 335m, which was USD 277m higher than the amount recorded in 2023, mainly due to the
consolidation of Credit Suisse AG revenues. In 2024, total revenues reflected net gains from position exits, along with
net interest income from securitized products and credit products. Total revenues in 2024 also included a USD 67m gain
from the sale of our investment in an associate .
Credit loss expense / release
Net credit loss expenses were USD 55m, almost entirely driven by credit-impaired positions, compared with net credit
loss expenses of USD 1m.
Operating expenses
Operating expenses were USD 3,673m, compared with operating expenses of USD 1,010m recorded in 2023, with the
change largely due to the consolidation of Credit Suisse AG expenses, and included a USD 606m increase in integration-
related expenses. Operating expenses also included litigation expenses of USD 1,338m, largely reflecting UBS agreeing
in the second quarter of 2024 to fund an offer by the Credit Suisse supply chain finance funds to redeem all the
outstanding units of the respective funds. 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.
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
45
6
653
Credit loss expense / (release)
0
1
Operating expenses
979
919
7
Operating profit / (loss) before tax
(935)
(914)
2
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 Group Treasury 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 increased by USD 21m to USD 935m, mainly due to higher shared services costs charged by other
subsidiaries of UBS Group AG, partly offset by lower integration-related expenses.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet 51
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 52
Risk management and control
Table of contents
53
54
55
57
59
60
72
81
83
87
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 53
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.
Following the merger of UBS AG and Credit Suisse AG on 31 May 2024, the risk profile of UBS AG consolidated does
not differ materially from that of UBS Group AG consolidated . The changes over the year primarily reflect this merger.
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
UBS AG remains 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 UBS AG continues to
monitor conflicts in the Middle East. Geopolitical tensions will continue to create uncertainty and complicate the
energy price outlook.
Macroeconomic risks
UBS AG is 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 UBS AG’s business activities and related financial results, primarily through reduced
margins and revenues, asset impairments and other valuation adjustments, and exit prices for its Non-core and Legacy
portfolio. Accordingly, these macroeconomic factors are considered in the development of stress-testing scenarios for
UBS AG’s 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).
UBS AG remains 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 its business divisions UBS AG undertakes a broad range of private-markets-related activities, including
financing, advisory services, investment facilitation and asset management.
Regulatory and legal risks
UBS AG is exposed to substantial changes in the regulation of its businesses that could have a material adverse effect
on its 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, UBS AG is subject to many different legal, tax and regulatory regimes and extensive
regulatory oversight. UBS AG is exposed to significant liability risk, and it is 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 considered 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 UBS AG’s 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 its businesses, UBS AG is 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 UBS AG’s businesses. Achieving fair outcomes for its clients, upholding market integrity
and cultivating the highest standards of employee conduct are of critical importance to UBS AG. Management of
conduct risks is an integral part of UBS AG’s 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
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 54
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 AG, for regulators and for stakeholders. To address
these emerging risks, UBS AG 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 the “Risk management and control” section of the UBS Group Annual
Report 2024, available under “Annual reporting” at
ubs.com/investors
, 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 AG 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. UBS AG’s 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 UBS AG’s 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
The risk governance of UBS AG is modeled on that of the UBS Group, with the same three lines of defense and equal
governance structure in terms of key roles and responsibility for risk management.
›
Refer to “Risk governance” in the “Risk management and control” section of the UBS Group Annual Report 2024, available under
“Annual reporting” at
ubs.com/investors,
Risk identification
Risk identification at UBS AG is the process of systematically identifying, assessing and cataloguing risks across all business
activity and risk categories. It is a fundamental component of UBS AG’s risk management approach, ensuring that a
comprehensive understanding of its risk exposure is maintained. UBS AG’s structured risk identification framework
integrates both bottom -up and top-down risk identification approaches and enhances its 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, UBS AG ensures consistent categorization and prioritization of risks across
business divisions and significant entities. Additionally, documenting root-cause drivers and early warning signs
strengthens UBS AG’s 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 entities and at the UBS AG
level. The output of the process helps ensure that 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.
As UBS AG’s risk profile is closely aligned to that of the Group, it relies on the internal risk reporting framework for the
Group to cover the reporting for UBS AG.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 55
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. The Group Risk Report is distributed internally to the BoD and the Executive
Board (EB), and senior members of Risk Control, Internal Audit (IA), 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), which also include significant entities and branches of UBS AG.
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
our 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 IA, which applies a risk-based audit approach.
Risk categories
UBS AG categorizes its risk exposures in line with the UBS Group and as outlined in the table below. The 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 AG. This includes loan underwriting risk and settlement risk.
Loan underwriting risk:
for further distribution.
Settlement risk:
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:
derivatives referencing the issuer was subject to a credit-related event.
Investment risk:
›
Refer to “Market risk” in this section for more information
Business
divisions and
Group
Treasury
Risk Control
Treasury risk:
well as structural exposures, including pension risks.
Audited |
Liquidity risk:
Audited |
Funding risk:
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 firm-wide netting while leaving the business divisions with margin management.
›
Refer to “Market risk” in this section for more information
Structural foreign exchange risk:
with an adverse translation effect on capital held in currencies other than the US dollar.
Group
Treasury
Risk Control
Pension risk:
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:
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
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 56
Risk
managed by
Independent
oversight by
Financial risks (continued)
Sustainability and climate risk:
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 AG 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:
cover the financial impact on clients or on UBS AG itself as reflected in the creditworthiness of UBS AG’s counterparties
or the value of collateral held by UBS AG.
Physical risk:
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 the “Risk management and control” section of the UBS Group Annual Report
2024, available under “Annual reporting” at
ubs.com/investors
, for more information
Business
divisions
Risk Control
Capital risk:
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 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:
firm’s Code of Conduct and Ethics.
›
Refer to “Non-financial risk” in this section for more information
Business
divisions
GCRG
Employment risk:
policies governing employment practices, discrimination, compensation and employee-related taxes and benefits.
Human
Resources
Conduct risk:
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:
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:
causes (deliberate, accidental or natural).
›
Refer to “Non-financial risk” in this section for more information
Business
divisions
GCRG
Cybersecurity and information-security risk:
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:
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:
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 AG’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:
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
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 57
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
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 UBS AG’s Global Wealth
Management clients, and recourse-based lending.
Limited contribution to
market risk
rate risk in the banking book related to Global Wealth Management is transferred to and managed by Group
Treasury.
Personal & Corporate Banking
Credit risk
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
market risk
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
and securities financing.
Market risk
Non-core and Legacy
Credit risk
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
simple credit, interest rate and equity derivative transactions.
Group functions
Credit risk
,
market risk
treasury risk
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
non-financial risk
. Non-financial risk is an
inevitable consequence of being an operating firm and can arise as a result of UBS AG’s 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.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 58
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 the UBS Group Annual Report 2024, available
under “Annual reporting” at
ubs.com/investors
, for more information about our Pillars, Principles and Behaviors
›
Refer to the Code of Conduct and Ethics of UBS, available at
ubs.com/code
Risk management and control principles
Protection of financial strength
Protecting UBS AG’s financial strength by controlling its 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 UBS AG’s reputation through a sound risk culture characterized by a holistic and integrated view of
risk, performance and reward, and through full compliance with its standards and principles, particularly its
Code of Conduct and Ethics.
Business management accountability
Maintaining management accountability, whereby business management owns all risks assumed throughout
UBS AG 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
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 59
The quantitative risk appetite objectives are complemented by a standardized set of quantitative firm-wide non-financial
risk appetite objectives . Non-financial risk events exceeding predetermined risk tolerances, expressed as percentages of
UBS AG’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 are 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
With the risk profile of UBS AG closely aligned to that of the Group since the merger of UBS AG and Credit Suisse AG,
we ensure that UBS AG’s risk exposure remains within the desired risk capacity through a comprehensive suite of risk
portfolio limits set at Group level.
Since the aforementioned merger, UBS has significantly extended its set of combined portfolio limits 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 EB. 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 has a central role in our risk appetite and business planning
processes.
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.
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
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 60
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 AG’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
”
“
Market risk
”
concentrations are monitored and mitigated
›
Refer to the
“
Risk factors
”
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 President of the Executive Board, the Chief Risk Officer
(the 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 firm-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.
Credit risk profile of UBS AG
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.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 61
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
of which: loans and advances to customers (on-balance sheet)
of which: guarantees and irrevocable loan commitments (off-balance sheet)
Committed unconditionally revocable credit lines
3
Traded products exposure, gross
2,4
of which: over-the-counter derivatives
of which: securities financing transactions
of which: exchange-traded derivatives
Total credit-impaired exposure, gross
1
Total allowances and provisions for expected credit losses
of which: stage 1
of which: stage 2
of which: stage 3
31.12.23
5
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
of which: loans and advances to customers (on-balance sheet)
of which: guarantees and irrevocable loan commitments (off-balance sheet)
Committed unconditionally revocable credit lines
3
Traded products exposure, gross
2,4
of which: over-the-counter derivatives
of which: securities financing transactions
of which: exchange-traded derivatives
Total credit-impaired exposure, gross
1
Total allowances and provisions for expected credit losses
of which: stage 1
of which: stage 2
of which: stage 3
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 AG at any time but expose UBS AG to credit risk if the client has the ability to draw the facility before UBS AG 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 Group Treasury allocations. Refer to “Note 3 Segment reporting” in the “Consolidated financial statements” section of this report for more
information.
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
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
278,566
46,912
2,166
1,421
329,065
198,159
34,726
1,641
925
235,450
Personal & Corporate Banking
229,372
84,758
8,601
4,187
326,918
134,095
63,357
6,724
1,698
205,873
Investment Bank
26,357
16,699
15,588
595
59,239
17,954
11,644
6,662
331
36,591
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.
Global Wealth Management
Gross banking products exposure increased by USD 111bn to USD 454bn as of 31 December 2024, driven by the merger
of UBS AG and Credit Suisse AG.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 62
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, increased approximately 29%, driven by the merger of UBS AG and Credit Suisse AG.
The residential real estate portfolio increased by approximately 47% in 2024, due to the aforementioned merger.
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 . As a result of the aforementioned merger, these
financings almost doubled in 2024.
›
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
31.12.24
31.12.23
Secured by collateral
Residential real estate
Commercial / industrial real estate
Cash
Equity and debt instruments
Other collateral
2
Subject to guarantees
Uncollateralized and not subject to guarantees
Total loans and advances to customers, gross
Allowances
Total loans and advances to customers, net of allowances
Collateralized loans and advances to customers as a percentage of total loans and advances to customers, gross (%)
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 AG 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 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.
Personal & Corporate Banking
Gross banking products exposure increased by USD 153bn to USD 428bn as of 31 December 2024, due to the merger
of UBS AG and Credit Suisse AG.
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 increased by USD 35bn compared with 31 December 2023, due to the merger of UBS AG and Credit
Suisse AG. 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 6bn (CHF 5bn) as of 31 December 2023. The increase of USD 3bn was due to the
aforementioned merger. 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. The increase of USD 112bn compared with
31 December 2023 was due to the aforementioned merger.
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%.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 63
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
162.4
Income-producing real estate
Exposure
39.4
14.3
2.7
1.0
0.2
0.1
0.1
57.7
25.5
Corporates
Exposure
10.7
3.4
0.7
0.4
0.2
0.1
0.2
15.7
12.2
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
201.1
as a percentage of total
66
26
6
2
1
0
0
100
100
Mortgage-covered exposure 31.12.23
Exposure
129.5
52.4
12.4
5.1
1.4
0.3
0.1
201.1
as a percentage of total
64
26
6
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 9bn to USD 73bn as of 31 December 2024, driven by a decrease in
balances at central banks, partly offset by an increase in guarantees and irrevocable loan commitments and loans and
advances to customers due to the merger of UBS AG and Credit Suisse AG. 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
Investment Bank: banking products exposure, by geographical region
1
31.12.24
31.12.23
USD m
%
USD m
%
Asia Pacific
5,821
9.8
4,618
12.6
Latin America
778
1.3
745
2.0
Middle East and Africa
392
0.7
249
0.7
North America
37,567
63.4
19,901
54.4
Switzerland
132
0.2
135
0.4
Rest of Europe
14,550
24.6
10,943
29.9
Exposure
59,239
100.0
36,591
100.0
1 Excluding balances at central banks and Group Treasury reallocations.
Investment Bank: banking products exposure, by industry sector
1
31.12.24
31.12.23
USD m
%
USD m
%
Banks
6,895
11.6
5,092
13.9
Chemicals
2,376
4.0
587
1.6
Electricity, gas, water supply
443
0.7
359
1.0
Financial institutions, excluding banks
21,295
35.9
15,562
42.5
Manufacturing
5,174
8.7
1,889
5.2
Mining
1,461
2.5
894
2.4
Public authorities
587
1.0
258
0.7
Real estate and construction
2,234
3.8
1,718
4.7
Retail and wholesale
5,249
8.9
2,945
8.0
Technology and communications
7,277
12.3
2,033
5.6
Transport and storage
839
1.4
341
0.9
Other
5,409
9.1
4,913
13.4
Exposure
59,239
100.0
36,591
100.0
1 Excluding balances at central banks and Group Treasury reallocations.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 64
Non-core and Legacy
Gross banking products exposure increased by USD 30bn to USD 34bn as of 31 December 2024, due to the merger of
UBS AG and Credit Suisse AG.
As of 31 December 2024, Non-core and Legacy had no mandated loan underwriting commitments.
›
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, decreased by USD 12bn
to USD 20bn as of 31 December 2024, due to decreases in amounts due from banks and other financial assets measured
at amortized cost. This was partly offset by an increase in balances at central banks.
›
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.
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
7,307
701
3
6
8,017
ETD
10,245
109
0
0
10,353
9,735
61
0
0
9,796
SFTs
18,063
289
0
0
18,352
16,631
151
10
0
16,792
Traded products exposure, net
2
44,573
1,239
40
211
46,062
33,672
914
14
6
34,605
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.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 65
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
970
12.1
2,307
12.6
2,510
14.9
Latin America
88
0.5
93
1.2
27
0.1
0
0.0
Middle East and Africa
111
0.6
232
2.9
511
2.8
414
2.5
North America
4,165
24.0
3,118
38.9
4,946
27.0
3,044
18.1
Switzerland
2,522
14.5
900
11.2
494
2.7
499
3.0
Rest of Europe
5,345
30.8
2,704
33.7
10,066
54.9
10,324
61.5
Exposure
17,357
100.0
8,017
100.0
18,352
100.0
16,792
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
1,544
19.3
1,577
8.6
1,200
7.1
Chemicals
7
0.0
17
0.2
0
0.0
0
0.0
Electricity, gas, water supply
138
0.8
111
1.4
0
0.0
0
0.0
Financial institutions, excluding banks
14,804
85.3
5,721
71.4
16,357
89.1
15,093
89.9
Manufacturing
32
0.2
29
0.4
0
0.0
0
0.0
Mining
65
0.4
0
0.0
0
0.0
0
0.0
Public authorities
446
2.6
441
5.5
417
2.3
496
3.0
Retail and wholesale
9
0.1
18
0.2
0
0.0
0
0.0
Transport, storage and communication
24
0.1
74
0.9
0
0.0
3
0.0
Other
159
0.9
63
0.8
0
0.0
0
0.0
Exposure
17,357
100.0
8,017
100.0
18,352
100.0
16,792
100.0
Credit risk mitigation
Audited |
UBS AG actively manages credit risk in its portfolios by taking collateral against exposures and by utilizing credit
hedging.
Lending secured by real estate
Audited |
UBS AG uses 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 assigned 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 |
UBS AG similarly applies underwriting guidelines for its 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
% to
%. 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.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 66
For UBS AG’s mortgage loan portfolio in the Global Wealth Management regions of EMEA and Asia Pacific, global
underwriting guidelines with regional variations are applied 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
% to
%, 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 the 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.
Lending values are derived 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.
Concentration and correlation risks across collateral posted are assessed at a counterparty level, and at a divisional level
across counterparties. Targeted firm-wide reviews of concentration are also performed. 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.
Stress testing of collateralized exposures is conducted 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 |
UBS AG uses 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.
UBS AG has strict guidelines with regard to taking credit hedges into account for credit risk mitigation purposes. For
example, when monitoring exposures against counterparty limits, UBS AG does 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. UBS AG monitors and limits exposures to credit protection providers and also monitors 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, actual settlement volumes are reduced 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.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 67
Foreign exchange transactions are UBS AG’s most significant source of settlement risk. UBS AG is 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 UBS AG’s overall credit risk management of OTC derivatives.
Credit risk models
Basel III – A-IRB credit risk models
Audited |
UBS AG has 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. Models are also used 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 key credit risk models applied to UBS AG exposures
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
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 expected to be owed by a counterparty at the time of possible default. EAD is derived 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, EAD is
derived by modeling the range of possible exposure outcomes at various points in time using a simulation based on a
scenario-consistent technique. UBS AG assesses the net amount that may be owed to it or that it may owe to others, taking
into account the effect of market movements over the potential time it would take to close out positions.
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 UBS AG’s traded products exposure (wrong-way risk) are assessed, and specific
controls to mitigate such risks have been established.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 68
Loss given default
LGD is the magnitude of the likely loss if there is a default. UBS AG’s LGD estimates, which consider downturn conditions,
include loss of principal, interest and other amounts less recovered amounts. UBS AG determines 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. UBS AG’s estimates are supported by internal loss data and external
information, where available. If collateral is held, 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
UBS AG uses the concept of EL to quantify future credit losses that may be implicit in its current portfolio. The EL for a
given credit facility is the product of the three components described above, i.e. PD, EAD and LGD. The EL is aggregated
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 AG 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 the 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 63m and the respective allowances and provisions as of 31 December 2024 were USD 1,110m. This included
ECL allowances and provisions of USD 749m related to positions under the Basel III A-IRB approach. Basel III EL for non-
defaulted positions was USD 1,238m.
›
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
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.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 69
Further key aspects of credit risk models
Stress loss
UBS AG complements its 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 its portfolios, under which key
credit risk parameters are assumed to deteriorate substantially. Where considered appropriate limits on this basis are
applied.
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 the stress-testing framework
Credit risk model confirmation
UBS AG’s 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. UBS AG therefore
performs 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.
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.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 70
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.
›
Refer to “Capital management objectives” 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 AG 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 AG 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.
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, concessions to borrowers in financial difficulties may be
granted that would otherwise not be considered 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 UBS AG’s risk
tolerance.
Contractual adjustments when there is no evidence of imminent payment default, or where changes to terms and
conditions are within UBS AG’s usual risk tolerance, are not considered to be forborne.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 71
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. UBS AG expect s 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 37 basis points as of 31 December 2024, 15 basis
points higher than the ratio as of 31 December 2023. The combined stage 1 and 2 ratio of 10 basis points was unchanged
compared with the ratio as of 31 December 2023; the stage 3 ratio was 31%, 9 percentage points higher than the ratio
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 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 “UBS AG consolidated 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 72
Loss history statistics
USD m, except where indicated
31.12.24
31.12.23
31.12.22
Banking products, core exposure and off-balance sheet, gross
1
879,853
562,095
509,024
of which: amounts due from banks and loans and advances to customers, gross
608,330
434,780
402,801
Credit-impaired exposure, gross (stage 3)
7,492
2,966
2,455
of which: credit-impaired amounts due from banks and loans and advances to customers (stage 3)
7,120
2,586
2,012
Non-performing amounts due from banks and loans and advances to customers
6,044
2,793
2,333
ECL allowances and provisions for credit losses
2
3,527
1,244
1,091
of which: core loan exposure (all stages)
3,203
1,172
1,043
of which: amounts due from banks and loans and advances to customers (all stages)
2,872
942
789
of which: amounts due from banks and loans and advances to customers (stage 3)
2,266
377
474
Write-offs (stage 3)
380
77
95
of which: write-offs for amounts due from banks and loans and advances to customers
361
62
74
Credit loss expense / (release)
3
544
143
29
Ratios
Credit-impaired lending assets as a percentage of total lending assets, gross (%)
4
1.2
0.6
0.5
Non-performing lending assets as a percentage of total lending assets, gross (%)
4
1.0
0.6
0.6
ECL allowances for lending assets as a percentage of total lending assets, gross (%)
4
0.5
0.2
0.2
Write-offs as a percentage of average gross lending assets outstanding during the period (%)
4
0.1
0.0
0.0
1 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. 2 Includes
provisions for ECL of guarantees and loan commitments and allowances for securities financing transactions. 3 Includes credit loss expense / (release) for other financial assets at amortized cost, guarantees, loan
commitments, and securities financing transactions. 4 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 UBS AG 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 73
Our CRO Treasury function applies a holistic risk framework, setting the appetite for treasury-related risk-taking activities
across UBS AG. 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 firm-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 firm-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 firm-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 UBS AG’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 UBS AG 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 UBS AG 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.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 74
For both UBS AG 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
% confidence level for
UBS AG excluding certain legacy Credit Suisse components and
% 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
% confidence level using a 10-day holding period. To calculate a 10-day holding period VaR,
we use 10-day risk factor returns.
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 (
%). For
SVaR, both for UBS AG 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
UBS AG 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 was USD 12m in 2024,
driven by Non-core and Legacy positions.
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.
Max.
Average
31.12.24
Total management VaR
Average (per business division and risk type)
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Non-core and Legacy
Group Items
Diversification effect
3,4
(6 )
(8 )
(1 )
(5 )
(4 )
(1 )
For the year ended 31.12.23
USD m
Equity
Interest
rates
Credit
spreads
Foreign
exchange
Commodities
Min.
Max.
Average
31.12.23
Total management VaR
Average (per business division and risk type)
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Non-core and Legacy
Group Items
Diversification effect
3,4
(6 )
(6 )
(1 )
(4 )
(4 )
(1 )
1 The legacy Credit Suisse components not included in the UBS AG 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 75
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.
Max.
Average
31.12.24
Total management VaR
Average (per business division and risk type)
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Non-core and Legacy
Group Items
Diversification effect
3,4
(3 )
(1 )
(2 )
(2 )
1 The legacy Credit Suisse components not included in the UBS AG 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.
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.
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 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.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 76
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.
UBS AG 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 was three at the end of 2024.
As the number of negative backtesting exceptions for both UBS AG excluding certain legacy Credit Suisse components
and the aforementioned legacy Credit Suisse components was 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
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 77
VaR model developments in 2024
Audited |
In January 2024 we made two material VaR model changes to the VaR model of UBS AG 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 AG 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 AG has adopted the standardized approach for all FINMA-regulated legal entities.
›
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.
UBS AG’s 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 UBS AG’s
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 hedge
accounting is applied. 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.
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 AG 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.
UBS AG actively manages 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 Asset and Liability Committee (the ALCO) of UBS AG and, where relevant, ALCOs at a legal entity level perform
independent oversight over the management of IRRBB, which is also subject to Internal Audit and model governance.
›
Refer to “Internal Audit” in the “Corporate governance” section of this report and to “Risk measurement” in this section for more
information
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 78
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.
UBS AG’s external issuances are discounted using its 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.
UBS AG uses 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.
Economic value of equity sensitivity
Audited |
The EVE sensitivity in UBS AG’s banking book to a +1-basis-point parallel shift in yield curves was negative
USD
m as of 31 December 2024, compared with negative USD
m as of 31 December 2023. This excluded the
sensitivity of USD
m from AT1 capital instruments (as per specific FINMA requirements) in contrast to general BCBS
guidance. The exposure in the banking book of UBS AG increased in 2024, driven by net interest income stabilization
initiatives and the merger of UBS AG and Credit Suisse AG on 31 May 2024.
The majority of UBS AG’s IRRBB is a reflection of the net asset duration that it ran to offset our modeled sensitivity of net
USD
m (31 December 2023: USD
m) assigned to our equity, goodwill and real estate, with the aim of generating
a stable NII contribution. Of this, USD
m and USD
m were attributable to the US dollar and the Swiss franc
portfolios, respectively, (31 December 2023: USD
m and USD
m, respectively).
In addition to the aforementioned sensitivity, UBS AG calculates 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
bn, or
%, of our tier 1 capital (31 December 2023: negative
USD
bn, or
%), which is well below the
% threshold as per the BCBS supervisory outlier test for high levels of
IRRBB.
The immediate effect on UBS AG’s tier 1 capital in the “Parallel up” scenario as of 31 December 2024 would have been
a decrease of approximately USD
bn, or
% (31 December 2023: USD
bn, or
%), reflecting the fact that the
vast majority of UBS AG’s 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.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 79
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
bn (31 December 2023: positive USD
bn) and a small positive immediate effect on UBS AG‘s tier 1
capital.
Net interest income sensitivity
The main NII sensitivity in the banking book resides in Global Wealth Management and Personal & Corporate Banking.
UBS AG assigns a target duration to its 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 UBS AG has set and monitors 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 “UBS AG consolidated 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
Effect on EVE
1
Scenarios
CHF
EUR
GBP
USD
Other
Total
Additional tier 1 (AT1) capital
instruments
Total
+1 bp
(10.5 )
(1.3 )
(0.3 )
(24.6 )
(0.5 )
(37.1 )
(31.6 )
Parallel up
2
(1,510.7 )
(251.8 )
(64.4 )
(4,747.8 )
(96.2 )
(6,670.9 )
(5,661.1 )
Parallel down
2
(1,183.4 )
Steepener
3
(748.7 )
(4.0 )
(10.6 )
(1,253.2 )
(9.2 )
(2,025.8 )
(1,858.2 )
Flattener
4
(37.8 )
(2.2 )
(11.0 )
Short-term up
5
(150.2 )
(112.6 )
(24.0 )
(1,815.4 )
(46.8 )
(2,148.9 )
(1,658.3 )
Short-term down
6
(510.8 )
31.12.23
USD m
Effect on EVE
1
Effect on EVE
1
Scenarios
CHF
EUR
GBP
USD
Other
Total
Additional tier 1 (AT1) capital
instruments
Total
+1 bp
(4.3 )
(0.7 )
(23.1 )
(28.1 )
(23.3 )
Parallel up
2
(608.9 )
(142.9 )
(4,522.3 )
(15.0 )
(5,287.0 )
(4,398.7 )
Parallel down
2
(11.8 )
(1,028.0 )
Steepener
3
(335.2 )
(16.0 )
(13.1 )
(973.6 )
(23.0 )
(1,361.0 )
(1,265.1 )
Flattener
4
(6.8 )
(94.1 )
Short-term up
5
(38.5 )
(48.4 )
(1,909.8 )
(1,976.3 )
(1,498.9 )
Short-term down
6
(14.3 )
(10.0 )
(498.9 )
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.
Other market risk exposures
Own credit
UBS AG is exposed to changes in its own credit reflected in the valuation of financial liabilities designated at fair value
when UBS AG’s 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
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 80
Equity investments and investment fund units
Audited |
UBS AG makes direct investments in a variety of entities and buys equity holdings in both listed and unlisted
companies, with the aim of supporting its 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. UBS AG may also make investments in funds that it manages in order to fund or
seed them at inception or to demonstrate that UBS AG’s interests align with those of investors. UBS AG also buys, and
is sometimes required by agreement or regulation to buy, securities and units from investment vehicles that it ha s 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, UBS AG generally does 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 the firm-wide statistical and stress-
testing metrics, which flow into the risk appetite framework.
As of 31 December 2024, UBS AG held equity investments and investment fund units totaling USD
bn (31 December
2023: USD
bn), of which USD
bn (31 December 2023: USD
bn) was classified as Financial assets at fair value
not held for trading and USD
bn (31 December 2023: USD
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. UBS AG’s
exposures may be included in market risk limits or be subject to specific monitoring and interest rate sensitivity analysis. They
are also included in the firm-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
bn as of 31 December 2024 (31 December 2023: USD
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.
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 firm-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
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 81
Country risk
Country risk framework
Country risk includes all country-specific events occurring in a sovereign jurisdiction that may lead to impairment of
UBS AG’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.
UBS AG assigns a country rating to each country, which reflects its view of a country’s 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. UBS AG uses 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 UBS AG’s 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. UBS AG may limit the extension of credit, transactions in traded products or positions in
securities based on a country risk ceiling even if its exposure to a counterparty is otherwise acceptable.
UBS AG’s country risk framework differs across the firm, and alignment of approaches is part of the ongoing integration
of Credit Suisse.
For internal measurement and control of country risk, UBS AG also considers 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. UBS AG uses 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 UBS AG’s internal risk view, where the basis for measuring exposures depends
on the product category in which the exposures are classified. In addition to the classification of exposures into banking
products and traded products, covered in “Credit risk profile of UBS AG” in this section, for UBS AG 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.
UBS AG does 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 are deducted 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.
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, UBS AG shows 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 UBS AG excluding certain legacy Credit Suisse components only). This
approach enables UBS AG 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.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 82
Top 20 country risk exposures
The table below shows UBS AG’s 20 largest country exposures by product type, excluding its home country, as of
31 December 2024 compared with 31 December 2023.
Compared with 2023, UBS AG’s net exposure generally increased due to the merger of UBS AG and Credit Suisse AG.
The list of UBS AG’s top 20 countries remained broadly unchanged, with two new entries (Belgium and Ireland) at the
bottom of the list, with the exposure to each of those two not exceeding USD 2.0bn. Based on the sovereign rating
categories, as of 31 December 2024, 85% of UBS AG’s emerging market country exposure was rated investment grade,
compared with 88% as of 31 December 2023.
Israel and Middle East
As of 31 December 2024, UBS AG’s direct country risk exposure to Israel was USD 284m, mainly from lending and
collateralized over-the-counter derivatives exposure within the Investment Bank, and its direct exposure to Gulf
Cooperation Council countries was USD 4.0bn. As of 31 December 2024, UBS AG’s direct exposure to Egypt, Jordan and
Lebanon was limited, and there was no direct exposure to Iran, Iraq or Syria.
Russia
UBS AG’s direct country risk exposure to Russia contributed USD 365m to its total emerging market exposure of
USD 27.2bn as of 31 December 2024. This included cash account balances, loans and trade finance exposures in Non-
core and Legacy and Personal & Corporate Banking. UBS AG 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
31.12.24
31.12.23
31.12.24
31.12.23
31.12.24
31.12.23
31.12.24
2
31.12.23
United States
228,353
165,639
156,763
104,845
28,847
27,463
42,744
33,331
United Kingdom
35,637
40,836
15,644
22,248
18,112
16,922
1,880
1,666
Germany
30,205
20,864
15,247
7,212
7,162
7,533
7,796
6,118
Japan
25,819
18,328
20,131
13,300
4,757
4,457
931
571
Australia
16,920
8,446
6,357
1,964
8,404
4,443
2,158
2,038
France
14,729
9,125
2,007
1,466
4,936
3,206
7,786
4,453
Singapore
12,260
10,310
3,568
2,122
3,565
3,362
5,127
4,827
Canada
8,516
8,722
835
550
2,839
2,741
4,843
5,431
Luxembourg
7,649
3,947
6,360
3,212
1,191
566
99
169
Netherlands
5,446
3,804
1,830
812
2,572
2,051
1,044
941
China
4,910
4,993
1,661
1,015
1,278
835
1,971
3,144
South Korea
4,368
4,312
602
437
666
647
3,100
3,228
Hong Kong SAR
3,792
2,776
1,490
884
1,190
885
1,111
1,007
Italy
3,355
1,459
1,542
751
909
470
904
238
Sweden
3,334
3,259
413
225
1,479
1,545
1,442
1,490
Spain
2,099
1,316
937
669
661
321
502
325
Norway
1,809
2,114
70
58
440
530
1,299
1,526
Belgium
1,742
610
614
128
421
229
706
253
Finland
1,713
1,185
76
44
303
341
1,335
800
Ireland
1,673
577
1,146
176
475
332
53
69
Total top 20
3
414,329
312,622
237,293
162,118
90,207
78,879
86,831
71,625
1 Before deduction of IFRS 9 ECL allowances and provisions. 2 Trading inventory exposures are for UBS AG excluding legacy Credit Suisse components only. 3 Excluding Switzerland, supranationals, global funds
and legacy Credit Suisse shipping finance exposures.
Emerging markets¹ net exposure², by internal UBS country rating category
USD m
31.12.24
31.12.23
Investment grade
23,025
19,328
Sub-investment grade
4,155
2,697
Total
27,180
22,025
1 UBS AG classifies 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 UBS AG excluding legacy Credit Suisse components only. Before deduction of IFRS 9 ECL
allowances and provisions.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 83
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 the Group, UBS AG 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 merger of UBS AG and Credit
Suisse AG 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.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 84
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
Non-financial risk framework
We follow a firm-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 firm 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 Chief Compliance and Governance Officer , who is a member of the Executive Board (the EB).
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 EB for further evaluation and decision
through the respective divisional President.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 85
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 AG’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
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 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, Internal Audit conducts independent reviews and validates the first-line and
second-line processes and functions.
accountability for the Group-wide CIS program. The committee is jointly chaired by the Chief Operations and Technology
Officer and the Chief Compliance and Governance Officer. The Head 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.
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 Chief Operations and Technology Officer and the
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:
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:
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 86
–
Monitoring and testing:
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 EB receive regular presentations and reports throughout the year from our 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 EB also receive regular updates on CIS strategy, risks and alignment with
regulatory requirements.
›
Refer to “Crisis management framework” in the “Regulation and supervision” section of this report for more information about
our crisis management framework
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 AG 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.
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.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Risk management and control 87
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 “Capital management objectives” 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.
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) 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 firm-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 firm-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 88
Capital, liquidity and funding, and balance sheet
Table of contents
89
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99
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101
101
102
102
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108
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Capital management 89
Capital management
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, the CET1 capital ratio was 14.9% and CET1 leverage ratio 4.8%, each above the requirements
for Swiss systemically relevant banks (SRBs) and Basel Committee on Banking Supervision (BCBS) requirements. 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. The adoption of the final Basel III standards in January 2025 led to a similar
impact on UBS AG consolidated as on UBS Group, with a USD 1bn increase in UBS AG’s consolidated risk-weighted
assets (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 the Swiss Financial Market
Supervisory Authority (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 UBS AG.
In UBS AG’s consolidated leverage ratio denominator (LRD), the adoption led to a single-digit percentage increase,
reducing the CET1 leverage ratio by around 10 basis points.
›
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 the “Regulatory and legal developments” section of this report for more information about the incorporation of final
Basel III standards
›
Refer to “Capital and capital ratios of our significant regulated subsidiaries” in this section for more information
Swiss SRB total loss-absorbing capacity framework
The disclosures in this section are provided for UBS 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 AG on a consolidated basis are provided in the 31 December 2024 Pillar 3
Report, available under “Pillar 3 disclosures” at
ubs.com/investors
.
Capital and other regulatory information for UBS Group AG consolidated in accordance with the Basel III framework, as
applicable to Swiss SRBs, is provided in the UBS Group Annual Report 2024, available under “Annual reporting” at
ubs.com/investors
.
Merger of UBS AG and Credit Suisse AG
On 31 May 2024, the merger of UBS AG and Credit Suisse AG was completed, with UBS AG becoming the sole Swiss
parent entity, succeeding by operation of Swiss law to all assets and liabilities of Credit Suisse AG, and becoming the
direct or indirect shareholder of all of the former direct and indirect subsidiaries of Credit Suisse AG. UBS has accounted
for the acquisition as a business combination under common control accounting principles. As part of this method of
accounting, the assets and liabilities of Credit Suisse AG have been converted from US generally accepted accounting
principles to IFRS Accounting Standards. Prior periods have not been restated.
The merger of UBS AG and Credit Suisse AG resulted in a USD 190.0bn increase in RWA and a USD 41.4bn increase in
CET1 capital as of the date of the merger.
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.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Capital management 90
Under the Swiss SRB framework, going and gone concern requirements represent UBS AG’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.
Capital and other instruments contributing to total loss-absorbing capacity
In addition to CET1 capital, the following instruments contribute to loss-absorbing capacity:
–
loss-absorbing AT1 capital instruments (high and low trigger);
–
non-Basel III-compliant tier 2 capital instruments; and
–
TLAC-eligible unsecured debt instruments.
Under the Swiss SRB rules, going concern capital includes CET1 capital and high-trigger loss-absorbing AT1 capital
instruments. Existing outstanding low-trigger loss-absorbing AT1 capital instruments are available to meet the going
concern capital requirements at the UBS AG consolidated level, as agreed with FINMA, 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 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,
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 add-on and LRD requirements for UBS AG 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.
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 the 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 15 basis points as of 31 December 2024.
Overall, countercyclical capital buffers contributed 52 basis points to the minimum CET1 capital requirement as of
31 December 2024.
The UBS AG going concern requirements include the FINMA Pillar 2 capital add-on of USD 338m related to the supply
chain finance funds matter at Credit Suisse. This Pillar 2 capital add-on results in an additional CET1 capital ratio
requirement of 7 basis points and an additional CET1 leverage ratio requirement of 2 basis points as of 31 December
2024.
The total going concern capital requirements applicable are 14.89% of RWA (including countercyclical buffer
requirements and the Pillar 2 add-on) and 5.02% of LRD. Furthermore, of the total going concern capital requirement of
14.89% of RWA, at least 10.59% 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 5.02%, at least 3.52% 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 AG 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
and the Pillar 2 add-on). In addition, as of July 2024, FINMA has the authority to impose a surcharge of up to 25% of
the total going concern requirements (excluding countercyclical buffer requirements and the Pillar 2 add-on) based on
obstacles to an SIB’s resolvability identified in future resolvability assessments. Our total gone concern requirements
remained substantially unchanged in 2024.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Capital management 91
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
1
1
Common equity tier 1 capital
2
of which: minimum capital
of which: buffer capital
of which: countercyclical buffer
Maximum additional tier 1 capital
of which: additional tier 1 capital
of which: additional tier 1 buffer capital
Eligible going concern capital
Total going concern capital
Common equity tier 1 capital
Total loss-absorbing additional tier 1 capital
3
of which: high-trigger loss-absorbing additional tier 1 capital
of which: low-trigger loss-absorbing additional tier 1 capital
3
0.25
1,245
Required gone concern capital
Total gone concern loss-absorbing capacity
4,5,6
of which: base requirement including add-ons for market share and LRD
7
7
Eligible gone concern capital
Total gone concern loss-absorbing capacity
Total tier 2 capital
of which: non-Basel III-compliant tier 2 capital
TLAC-eligible unsecured debt
Total loss-absorbing capacity
Required total loss-absorbing capacity
Eligible total loss-absorbing capacity
Risk-weighted assets / leverage ratio denominator
Risk-weighted assets
Leverage ratio denominator
1 Includes applicable add-ons of 1.51% for risk-weighted assets (RWA) and 0.52% for leverage ratio denominator (LRD), of which 7 basis points for RWA and 2 basis points for LRD reflect the FINMA Pillar 2 capital
add-on of USD 338m related to the supply chain finance funds matter at Credit Suisse. 2 Our minimum CET1 leverage ratio requirement of 3.52% consists of a 1.5% base requirement, a 1.5% base buffer capital
requirement, a 0.25% LRD add-on requirement, a 0.25% market share add-on requirement based on our Swiss credit business and a 0.02% Pillar 2 capital add-on related to the supply chain finance funds matter
at Credit Suisse. 3 Existing outstanding low-trigger additional tier 1 capital instruments qualify as going concern capital at the UBS AG consolidated level, as agreed with FINMA, until their first call date. As of their
first call date, these instruments are eligible to meet the gone concern requirements. 4 A maximum of 25% of the gone concern requirements can be met with instruments that have a remaining maturity of between
one and two years. Once at least 75% of the minimum gone concern requirement has been met with instruments that have a remaining maturity of greater than two years, all instruments that have a remaining
maturity of between one and two years remain eligible to be included in the total gone concern capital. 5 From 1 January 2023, the resolvability discount on the gone concern capital requirements for systemically
important banks (SIBs) has been replaced with reduced base gone concern capital requirements equivalent to 75% of the total going concern requirements (excluding countercyclical buffer requirements and the Pillar
2 add-on). 6 As of July 2024, FINMA has the authority to impose a surcharge of up to 25% of the total going concern capital requirements (excluding countercyclical buffer requirements and the Pillar 2 add-on)
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 92
Total loss-absorbing capacity
Swiss SRB going and gone concern information
USD m, except where indicated
31.12.24
31.12.23
Eligible going concern capital
Total going concern capital
Total tier 1 capital
Common equity tier 1 capital
Total loss-absorbing additional tier 1 capital
of which: high-trigger loss-absorbing additional tier 1 capital
of which: low-trigger loss-absorbing additional tier 1 capital
Eligible gone concern capital
Total gone concern loss-absorbing capacity
Total tier 2 capital
of which: non-Basel III-compliant tier 2 capital
TLAC-eligible unsecured debt
Total loss-absorbing capacity
Total loss-absorbing capacity
Risk-weighted assets / leverage ratio denominator
Risk-weighted assets
Leverage ratio denominator
Capital and loss-absorbing capacity ratios (%)
Going concern capital ratio
of which: common equity tier 1 capital ratio
Gone concern loss-absorbing capacity ratio
Total loss-absorbing capacity ratio
Leverage ratios (%)
Going concern leverage ratio
of which: common equity tier 1 leverage ratio
Gone concern leverage ratio
Total loss-absorbing capacity leverage ratio
Audited |
Reconciliation of equity under IFRS Accounting Standards to Swiss SRB common equity tier 1 capital
USD m
31.12.24
31.12.23
Total equity under IFRS Accounting Standards
Equity attributable to non-controlling interests
(662 )
(335 )
Defined benefit plans, net of tax
(822 )
(336 )
Deferred tax assets recognized for tax loss carry-forwards
(2,288 )
(3,004 )
Deferred tax assets for unused tax credits
(688 )
(97 )
Deferred tax assets on temporary differences, excess over threshold
(1,233 )
Goodwill, net of tax
1
(6,207 )
(5,750 )
Intangible assets, net of tax
(103 )
(146 )
Expected losses on advanced internal ratings-based portfolio less provisions
(569 )
(532 )
Unrealized (gains) / losses from cash flow hedges, net of tax
Own credit related to (gains) / losses on financial liabilities measured at fair value that existed at the balance sheet date, net of tax
Own credit related to (gains) / losses on derivative financial instruments that existed at the balance sheet date
(62 )
(63 )
Prudential valuation adjustments
(167 )
(177 )
Accruals for dividends to shareholders
(13,000 )
2
(3,000 )
Other
(69 )
(39 )
Total common equity tier 1 capital
1 Includes goodwill related to significant investments in financial institutions of USD
m as of 31 December 2024 (31 December 2023: USD
m) presented on the balance sheet line Investments in associates.
2 Reflects a proposed ordinary dividend distribution of USD
bn and the appropriation of USD
bn to a special dividend reserve, both subject to approval at the Annual General Meeting in the second quarter of
2025. The decision on the distribution of the special dividend is intended to be made at an Extraordinary General Meeting in the second half of 2025, considering any proposed requirements from Switzerland’s ongoing
review of its capital regime.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Capital management 93
Total loss-absorbing capacity and movement
TLAC increased by USD 70.7bn to USD 181.8bn as of 31 December 2024.
Going concern capital and movement
Audited |
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.
CET1 capital increased by USD
bn to USD
bn as of 31 December 2024, primarily due to the merger of UBS AG
and Credit Suisse AG (which resulted in an increase of USD
bn as of the date of the merger), operating profit before
tax of USD
bn and an increase in eligible deferred tax assets on temporary differences of USD
bn. These increases
were partly offset by dividend accruals of USD
bn, current tax expense of USD
bn, and foreign currency translation
losses of USD
bn. Accruals for dividends to UBS Group AG of USD
bn as of 31 December 2024 reflect a proposed
ordinary dividend distribution of USD
bn and the appropriation of USD
bn to a special dividend reserve, both
subject to approval at the Annual General Meeting in the second quarter of 2025. The decision on the distribution of the
special dividend is intended to be made at an Extraordinary General Meeting in the second half of 2025, considering any
proposed requirements from Switzerland’s ongoing review of its capital regime.
Loss-absorbing AT1 capital issued by the Group and on lent to UBS AG increased by USD
bn to USD
bn, mainly
driven by new issuances of AT1 capital instruments of USD
bn, USD
bn of AT1 capital instruments recognized by
UBS AG upon the merger of UBS AG and Credit Suisse AG, and positive impacts from interest rate risk hedge, foreign
currency translation and other effects. These increases were partly offset by the call of AT1 capital instruments equivalent
to USD
bn.
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. The
corresponding AT1 capital instruments on lent to UBS AG contain the same provisions.
›
Refer to “Conversion capital” in the “Corporate Governance” section of the UBS Group Annual Report 2024, available under
“Annual Reporting” at
ubs.com/investors
, for more information about conversion capital
Gone concern loss-absorbing capacity and movement
Audited |
Total gone concern loss-absorbing capacity increased by USD
bn to USD
bn as of 31 December 2024 and
included USD
bn of TLAC-eligible unsecured debt issued by the Group and on lent to UBS AG.
The increase of USD 37.7bn mainly reflected TLAC-eligible unsecured debt instruments totaling an equivalent of
USD 41.6bn recognized by UBS AG upon the merger of UBS AG and Credit Suisse AG and new issuances of USD 9.7bn
equivalent of TLAC-eligible unsecured debt instruments. These increases were partly offset by the call of USD 10.3bn
equivalent of TLAC-eligible unsecured debt instruments, as well as USD 3.1bn equivalent of unsecured debt instruments
and USD 0.3bn tier 2 instruments ceasing to be eligible as gone concern capital as they entered the final year before
maturity.
Loss-absorbing capacity and leverage ratios
Our CET1 capital ratio increased to 14.9% from 13.2%, reflecting a USD 29.7bn increase in CET1 capital, partly offset
by a USD 161.1bn increase in RWA .
Our CET1 leverage ratio increased to 4.8% from 4.0%, due to the aforementioned increase in CET1 capital, partly offset
by a USD 418.9bn increase in the LRD.
Our going concern capital ratio increased to 18.1% from 17.0%, reflecting a USD 33.0bn increase in going concern
capital, partly offset by a USD 161.1bn increase in RWA.
Our going concern leverage ratio increased to 5.9% from 5.1%, due to the aforementioned increase in going concern
capital, partly offset by a USD 418.9bn increase in the LRD.
Our gone concern loss-absorbing capacity ratio increased to 18.6% from 16.3%, due to an increase in gone concern
loss-absorbing capacity of USD 37.7bn, partly offset by the aforementioned increase in RWA.
Our gone concern leverage ratio increased to 6.1% from 4.9%, driven by the aforementioned increase in gone concern
loss-absorbing capacity, partly offset by the increase in the LRD.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Capital management 94
Swiss SRB total loss-absorbing capacity movement
USD m
Going concern capital
Swiss SRB
Common equity tier 1 capital as of 31.12.23
Operating profit / (loss) before tax
Current tax (expense) / benefit
Foreign currency translation effects, before tax
Eligible deferred tax assets on temporary differences
CET1 capital taken over from Credit Suisse AG consolidated as of the date of the merger
Accruals for proposed dividends to shareholders
1
Other
Common equity tier 1 capital as of 31.12.24
Loss-absorbing additional tier 1 capital as of 31.12.23
Issuance of high-trigger loss-absorbing additional tier 1 capital
Call of high-trigger loss-absorbing additional tier 1 capital
Instruments recognized by UBS AG upon the merger of UBS AG and Credit Suisse AG
Interest rate risk hedge, foreign currency translation and other effects
Loss-absorbing additional tier 1 capital as of 31.12.24
Total going concern capital as of 31.12.23
Total going concern capital as of 31.12.24
Gone concern loss-absorbing capacity
Tier 2 capital as of 31.12.23
Debt no longer eligible as gone concern loss-absorbing capacity due to residual tenor falling to below one year
Interest rate risk hedge, foreign currency translation and other effects
Tier 2 capital as of 31.12.24
TLAC-eligible unsecured debt as of 31.12.23
Issuance of TLAC-eligible unsecured debt
Call of TLAC-eligible unsecured debt
Debt no longer eligible as gone concern loss-absorbing capacity due to residual tenor falling to below one year
Instruments recognized by UBS AG upon the merger of UBS AG and Credit Suisse AG
Interest rate risk hedge, foreign currency translation and other effects
TLAC-eligible unsecured debt as of 31.12.24
Total gone concern loss-absorbing capacity as of 31.12.23
Total gone concern loss-absorbing capacity as of 31.12.24
Total loss-absorbing capacity
Total loss-absorbing capacity as of 31.12.23
Total loss-absorbing capacity as of 31.12.24
1 Reflects a proposed ordinary dividend distribution of USD 6.5bn and the appropriation of USD 6.5bn to a special dividend reserve, both subject to approval at the Annual General Meeting in the second quarter of
2025. The decision on the distribution of the special dividend is intended to be made at an Extraordinary General Meeting in the second half of 2025, considering any proposed requirements from Switzerland’s
ongoing review of its capital regime.
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 of UBS AG consolidated. 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 UBS AG Asset and Liability Committee has mandated Group Treasury to adjust the currency mix of CET1 capital of
UBS AG consolidated, within limits set by the Board of Directors, 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.
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 21bn and our CET1 capital by USD 2.6bn as of 31 December 2024 (31 December 2023: USD 15bn and USD 1.5bn,
respectively) and decreased our CET1 capital ratio by 11 basis points (31 December 2023: 12 basis points).
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Capital management 95
Conversely, a 10% appreciation of the US dollar against other currencies would have decreased our RWA by USD 19bn
and our CET1 capital by USD 2.3bn (31 December 2023: USD 13bn and USD 1.4bn, respectively) and increased our
CET1 capital ratio by 11 basis points (31 December 2023: 12 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 69bn) and decreased our CET1 leverage ratio by 13 basis
points (31 December 2023: 10 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 62bn) and increased our CET1 leverage ratio by
13 basis points (31 December 2023: 11 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 AG has contributed a significant portion of capital to, and provided substantial liquidity to its 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 the UBS Group Annual Report 2024, available under
“Annual reporting” at
ubs.com/investors
. 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 96
Risk-weighted assets
RWA development in 2024
During 2024, RWA increased by USD 161.1bn to USD 495.1bn, predominantly due to the merger of UBS AG and Credit
Suisse AG, which resulted in a USD 190.0bn increase in RWA. Excluding that merger, RWA decreased by USD 28.9bn,
primarily driven by decreases of USD 23.3bn due to asset size and other movements and USD 10.2bn due to currency
effects, partly offset by an increase of USD 4.6bn due to 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 on a UBS Group AG consolidated basis
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
Merger of UBS
AG and Credit
Suisse AG on
30.6.24
2
RWA as of
31.12.24
Credit and counterparty credit risk
3
Non-counterparty-related risk
4
Market risk
Operational risk
Total
1 Includes the Pillar 3 categories “Asset size”, “Credit quality of counterparties”, “Acquisitions and disposals” and “Other”. For more information, refer to the 31 December 2024 Pillar 3 Report, available under
“Pillar 3 disclosures” at ubs.com/investors. 2 Reflects the RWA acquired as part of the merger of UBS AG and Credit Suisse AG as reported in the UBS AG second quarter 2024 report, available under “Quarterly
reporting” at ubs.com/investors. Subsequent changes in this portfolio in the second half of 2024 are shown under currency effects, model updates and methodology changes or asset size and other changes. 3 Includes
settlement risk, credit valuation adjustments, equity and investments in funds exposures in the banking book, and securitization exposures in the banking book. 4 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 increased by USD 72.2bn to USD 292.3bn as of 31 December 2024, mainly due
to the merger of UBS AG and Credit Suisse AG, which resulted in a USD 115.2bn increase in credit and counterparty
credit risk RWA. Excluding that merger, RWA decreased by USD 43.0bn, primarily driven by asset size and other
movements of USD 26.6bn, currency effects of USD 9.8bn and model updates and methodology changes of USD 6.6bn.
Asset size and other movements decreased RWA by USD 26.6bn, 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, the Investment Bank and
Global Wealth Management, as well as reductions of RWA in Group Treasury.
Model updates and methodology changes resulted in an 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,
about credit and counterparty credit risk developments on a UBS Group AG consolidated basis
Market risk
Market risk RWA increased by USD 12.5bn to USD 27.2bn as of 31 December 2024, primarily driven by an increase of
USD 6.5bn 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 underlying 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. The merger of UBS AG and Credit Suisse AG resulted in a USD 4.1bn increase in market risk RWA. Further
increases in market risk RWA were due to increases in asset size and other movements of USD 1.9bn, mainly in the
Investment Bank.
›
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,
about market risk developments on a UBS Group AG consolidated basis
Operational risk
Operational risk RWA increased by USD 68.9bn to USD 145.4bn as of 31 December 2024 primarily as a result of the
merger of UBS AG and Credit Suisse AG, which resulted in a USD 64.2bn increase in operational risk RWA. Excluding
that merger, RWA increased by USD 4.8bn, driven by a recalibration of the advanced measurement approach (AMA)
used for the calculation of operational risk capital. In addition, 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 AMA, which has been used to measure operational risk exposure and calculate operational risk regulatory
capital
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Capital management 97
Risk-weighted assets, by business division and Group Items
1
USD bn
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Manage-
ment
Investment
Bank
Non-core and
Legacy
Group
Items
Total
RWA
31.12.24
Credit and counterparty credit risk
2
Non-counterparty-related risk
3
Market risk
Operational risk
Total
31.12.23
Credit and counterparty credit risk
2
Non-counterparty-related risk
3
Market risk
Operational risk
Total
31.12.24 vs 31.12.23
Credit and counterparty credit risk
2
Non-counterparty-related risk
3
Market risk
Operational risk
Total
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 17.9bn; 31 December 2023: USD 11.3bn), as well as property, equipment, software and other items (31 December 2024: USD 12.2bn; 31 December 2023: USD 11.4bn).
Leverage ratio denominator
During 2024, the LRD increased by USD 418.9bn to USD 1,523.3bn, predominantly due to the merger of UBS AG and
Credit Suisse AG, which resulted in a USD 516.4bn increase in the LRD. Excluding that merger, the LRD decreased by
USD 97.5bn, driven by currency effects of USD 49.9bn and asset size and other movements of USD 47.6bn.
Movement in leverage ratio denominator, by key driver
USD bn
LRD as of
31.12.23
Currency
effects
Asset size and
other
Merger of UBS
AG and Credit
Suisse AG on
30.6.24
1
LRD as of
31.12.24
On-balance sheet exposures (excluding derivatives and securities financing transactions)
2
Derivatives
2
Securities financing transactions
Off-balance sheet items
Deduction items
Total
1 Reflects the LRD acquired as part of the merger of UBS AG and Credit Suisse AG as reported in the UBS AG second quarter 2024 report, available under “Quarterly reporting” at ubs.com/investors. Subsequent
changes in this portfolio in the second half of 2024 are shown under currency effects, model updates and methodology changes or asset size and other changes. 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.
The LRD movements described below exclude currency effects and the impact of the merger.
On-balance sheet exposures (excluding derivatives and securities financing transactions) decreased by USD 81.0bn,
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 due to unwinding activities in Non-
core and Legacy and financial assets reflecting maturities of the high-quality liquid asset portfolio securities. These
decreases were partly offset by an increase in trading portfolio assets driven by higher inventory held to hedge client
positions in the Investment Bank.
Derivative exposures increased by USD 18.0bn mainly due to market-driven movements on foreign currency contracts in
the Investment Bank, partly offset by lower trading volumes in Non-core and Legacy.
Securities financing transactions increased by USD 16.5bn, mainly reflecting higher cash reinvestment in Group Treasury
and brokerage receivables reflecting increases in client activity levels.
Off-balance sheet items decreased by USD 2.1bn, mainly driven by lower commitments.
›
Refer to “Balance sheet and off-balance sheet” in this section for more information about balance sheet movements
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Capital management 98
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
Derivatives
2
Securities financing transactions
Off-balance sheet items
Items deducted from Swiss SRB tier 1 capital
Total
31.12.23
On-balance sheet exposures
2
Derivatives
2
Securities financing transactions
Off-balance sheet items
Items deducted from Swiss SRB tier 1 capital
Total
31.12.24 vs 31.12.23
On-balance sheet exposures
Derivatives
Securities financing transactions
Off-balance sheet items
Items deducted from Swiss SRB tier 1 capital
Total
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 | Liquidity and funding management 99
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 merger of UBS AG and Credit Suisse AG in May 2024, Credit Suisse AG became part of
the overall liquidity and funding management of UBS AG.
Strategy, objectives and governance
Audited |
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 Asset and Liability Committee (the ALCO) of UBS AG, which is a committee of the Executive Board (the
EB) 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 UBS AG (consolidated)
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 of UBS AG, the EB of
UBS AG, the ALCO of UBS AG 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 liquidity and funding status and position, at least monthly, to the ALCO of UBS AG and
the Risk Committee of the BoD.
Liquidity and funding stress testing
Audited |
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.
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.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Liquidity and funding management 100
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 |
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 AG 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 ALCO of UBS AG.
›
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 our 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 company’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 of UBS AG,
UBS Europe SE, UBS Switzerland AG and Credit Suisse International, we would have been required to provide USD 0.0bn
in cash or other collateral. In the event of a two-notch reduction, it would have been USD 0.3bn and for a three-notch
downgrade, USD 1.1bn. In the two- and three-notch scenarios the collateral requirements predominantly relate to OTC
derivative positions.
During 2024, 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 AG’s ongoing performance” in the “Risk factors” section of this
report for more information
Contingency Funding Plan
Audited |
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.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Liquidity and funding management 101
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 AG, 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. 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 UBS AG consolidated 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 UBS AG consolidated HQLA. On
this basis, USD 56.3bn of assets were excluded from our daily average UBS AG consolidated HQLA for the fourth quarter
of 2024. Amounts held in excess of local liquidity requirements that are not subject to other restrictions are generally
available for transfer within UBS AG consolidated.
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 of UBS AG consolidated for the fourth quarter of 2024 was 186.1%, compared with 189.7% in
the fourth quarter of 2023.
The HQLA of UBS AG consolidated for the fourth quarter of 2024 increased by USD 77.1bn to USD 331.6bn, substantially
related to the merger of UBS AG and Credit Suisse AG, partly offset by a reduction of HQLA following an increase in
non-HQLA-related securities financing transactions, lower cash available from additional funding of trading assets , and
higher margin requirements. The net cash outflows of UBS AG consolidated for the fourth quarter of 2024 increased by
USD 43.9bn to USD 178.2bn, mainly due to higher outflows from customer deposits as a result of the merger of UBS AG
and Credit Suisse AG.
›
Refer to the 31 December 2024 Pillar 3 Report, available under “Pillar 3 disclosures” at
ubs.com/investors,
for more information
about the LCR on a UBS Group AG consolidated basis
Liquidity coverage ratio
USD bn, except where indicated
Average 4Q24
1
Average 4Q23
1
High-quality liquid assets
331.6
254.5
Total net cash outflows
2
178.2
134.3
Liquidity coverage ratio (%)
3
186.1
189.7
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 UBS AG consolidated were compliant with these requirements
throughout 2024.
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%.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Liquidity and funding management 102
As of 31 December 2024, the NSFR of UBS AG consolidated increased 4.5 percentage points to 124.1%.
Available stable funding increased by USD 244.4bn to USD 847.0bn, predominantly driven by the contribution of Credit
Suisse after the merger, mainly reflecting deposit balances, regulatory capital and debt issued.
Required stable funding increased by USD 178.7bn to USD 682.5bn, predominantly driven by the contribution of Credit
Suisse after the merger, substantially reflecting lending assets.
›
Refer to the 31 December 2024 Pillar 3 Report, available under “Pillar 3 disclosures” at
ubs.com/investors,
for more information
about the NSFR on a UBS Group AG consolidated basis
Net stable funding ratio
USD bn, except where indicated
31.12.24
31.12.23
Available stable funding (ASF)
847.0
602.6
Required stable funding (RSF)
682.5
503.8
Net stable funding ratio (%)
124.1
119.6
Balance sheet and off-balance sheet
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 UBS AG’s financial position. For more
information about the effects of the merger of UBS AG and Credit Suisse AG on the balance sheet, refer to “Note 2
Accounting for the merger of UBS AG and Credit Suisse AG” in the “Consolidated financial statements” section of this
report.
Balance sheet assets
Total assets were USD 1,568.1bn as of 31 December 2024. The increase of USD 412.1bn compared with 31 December
2023 was primarily related to the merger of UBS AG and Credit Suisse AG, which contributed USD 489.3bn in May 2024.
Cash and balances at central banks increased by USD 51.5bn, mainly reflecting the aforementioned merger, which
contributed USD 114.8bn in May 2024. Excluding the effects of the merger, cash and balances at central banks decreased
by USD 63.3bn, mainly due to net investments in securities financing transactions at amortized cost, the repayment of
funding from the Swiss National Bank (the SNB) and currency effects, partly offset by inflows from the disposal of high-
quality liquid asset (HQLA) portfolio securities.
Lending assets increased by USD 171.7bn, predominantly reflecting the aforementioned merger, which contributed
USD 229.8bn in May 2024. Excluding the effects of the merger, lending assets decreased by USD 58.1bn, primarily
reflecting currency effects and negative net new loans in Personal & Corporate Banking and Global Wealth Management.
Securities financing transactions at amortized cost increased by USD 44.2bn to USD 118.3bn, reflecting the
aforementioned merger, which added USD 28.4bn in May 2024. Excluding the effects of the merger, there was an
increase of USD 15.8bn, mainly reflecting higher cash reinvestment in Group Treasury.
Trading assets increased by USD 24.1bn, mainly driven by the aforementioned merger, which contributed USD 15.5bn in
May 2024, with the remaining increase of USD 8.6bn reflecting a higher inventory held in the Investment Bank to hedge
client positions.
Derivatives and cash collateral receivables on derivative instruments increased by USD 66.4bn, mainly as a result of the
aforementioned merger, which contributed USD 42.3bn in May 2024. Excluding the effects of the merger, there was an
increase of USD 24.1bn, 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.
Brokerage receivables increased by USD 5.0bn, mainly reflecting higher client activity levels. Other financial assets
measured at amortized cost increased by USD 5.0bn, mainly due the aforementioned merger, which contributed
USD 10.9bn in May 2024. Excluding the effects of the merger, there was a decrease of USD 5.9bn, mainly reflecting
HQLA portfolio securities maturing.
Other financial assets measured at fair value increased by USD 31.4bn to USD 97.4bn, mainly reflecting the effects of the
aforementioned merger, which contributed USD 36.6bn in May 2024. Excluding the effects of the merger, there was a
decrease of USD 5.2bn, mainly reflecting unwinding activities in Non-core and Legacy. Non-financial assets increased by
USD 12.9bn, primarily reflecting the effects of the merger.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Balance sheet and off-balance sheet 103
Assets
As of
% change from
USD bn
31.12.24
31.12.23
31.12.23
Cash and balances at central banks
Lending
1
Securities financing transactions at amortized cost
Trading assets
Derivatives and cash collateral receivables on derivative instruments
Brokerage receivables
Other financial assets measured at amortized cost
Other financial assets measured at fair value
2
Non-financial assets
Total assets
1 Consists of Loans and advances to customers and Amounts due from banks. 2 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 HQLA and unencumbered positions in the trading portfolio of UBS AG.
Unencumbered assets also includes 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 UBS AG 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
0.1
0.0
223.3
Amounts due from banks
2.5
0.0
18.1
Receivables from securities financing transactions
measured at amortized cost
118.3
118.3
Cash collateral receivables on derivative instruments
8.0
35.9
44.0
Loans and advances to customers
0.2
0.1
587.3
Other financial assets measured at amortized cost
1
4.2
8.7
59.3
Total financial assets measured at amortized cost
15.0
163.0
1,050.3
Financial assets at fair value held for trading
1
0.3
0.0
159.2
Derivative financial instruments
186.4
186.4
Brokerage receivables
25.9
25.9
Financial assets at fair value not held for trading
1
20.4
26.1
95.2
Total financial assets measured at fair value through
profit or loss
20.6
238.4
466.7
Financial assets measured at fair value through other
comprehensive income
1.9
2.2
Non-financial assets
27.2
48.8
Total balance sheet assets as of 31 December 2024
37.5
428.7
1,568.0
Total balance sheet assets as of 31 December 2023
30.7
286.7
1,156.0
Off-balance sheet
Fair value of securities accepted as collateral as of
31 December 2024
7.5
0.0
581.8
Fair value of securities accepted as collateral as of
31 December 2023
5.3
489.5
Total balance sheet assets and off-balance sheet
securities accepted as collateral as of 31 December 2024
45.0
2
428.7
2,149.8
Total balance sheet assets and off-balance sheet
securities accepted as collateral as of 31 December 2023
2
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 339.0bn; 31 December 2023: USD 261.7bn).
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Balance sheet and off-balance sheet 104
Balance sheet liabilities
Total liabilities were USD 1,473.4bn as of 31 December 2024. The increase of USD 373.0bn compared with 31 December
2023 was primarily related to the merger of UBS AG and Credit Suisse AG, which contributed USD 429.7bn in May 2024.
Short-term borrowings were broadly stable, with the increase of USD 20.7bn in May 2024 relating to the effects of the
aforementioned merger, broadly offset by the repayment of the funding from the SNB, as well as maturities of commercial
paper and certificate of deposits.
Securities financing transactions at amortized cost increased by USD 9.0bn, primarily reflecting the effects of the
aforementioned merger. Customer deposits increased by USD 193.8bn, with an increase of USD 224.6bn in May 2024
relating to the aforementioned merger. Excluding the effects of the merger, there was a decrease of USD 30.8bn, mainly
reflecting currency effects and net new deposit outflows. Funding from UBS Group AG measured at amortized cost
increased by USD 40.6bn, mainly reflecting the effects of the aforementioned merger. Debt issued designated at fair
value and long-term debt issued measured at amortized cost increased by USD 54.3bn, mainly reflecting the effects of
the aforementioned merger, which contributed USD 70.5bn in May 2024. Excluding the effects of the merger, there was
a decrease of USD 16.2bn, mainly driven by net redemptions and currency effects.
Derivatives and cash collateral payables on derivative instruments increased by USD 41.4bn to USD 217.0bn. The increase
was mainly related to the aforementioned merger, which added USD 39.7bn in May 2024. Excluding the effects of the
merger, there was an increase of USD 1.7bn, mainly reflecting an increase in foreign currency contracts in the Investment
Bank, largely offset by a decrease in interest rate contracts, primarily reflecting unwinding activities in Non-core and
Legacy. Brokerage payables increased by USD 6.7bn, mainly reflecting higher client activity levels as on the asset side.
Other financial liabilities measured at amortized cost increased by USD 9.1bn, Other financial liabilities measured at fair
value increased by USD 6.6bn and Non-financial liabilities increased by USD 7.8bn, all mostly due to the aforementioned
merger.
›
Refer to the “Capital management” section of this report for more information
Equity
Equity attributable to shareholders increased by USD 38,769m to USD 94,003m as of 31 December 2024.
This increase was mainly driven by the effects of the merger of UBS AG and Credit Suisse AG, which resulted in an
increase in equity of USD 41,432m as of the date of the merger and total comprehensive income attributable to
shareholders of USD 747m, reflecting net profit of USD 1,481m and negative other comprehensive income (OCI) of
USD 735m. OCI mainly included negative OCI related to foreign currency translation of USD 1,261m , partly offset by
cash flow hedge OCI of USD 635m.
These increases were partly offset by a dividend distribution of USD 3,000m to UBS Group AG.
›
Refer to the “UBS AG consolidated 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
Liabilities and equity
As of
% change from
USD bn
31.12.24
31.12.23
31.12.23
Short-term borrowings
1,2
Securities financing transactions at amortized cost
Customer deposits
Funding from UBS Group AG measured at amortized cost
Debt issued designated at fair value and long-term debt issued measured at amortized cost
2
Trading liabilities
Derivatives and cash collateral payables on derivative instruments
Brokerage payables
Other financial liabilities measured at amortized cost
Other financial liabilities designated at fair value
Non-financial liabilities
Total liabilities
Share capital
Share premium
Retained earnings
Other comprehensive income
3
Total equity attributable to shareholders
Equity attributable to non-controlling interests
Total equity
Total liabilities and equity
1 Consists of short-term debt issued measured at amortized cost and amounts due to banks, which includes amounts due to central banks. 2 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. 3 Excludes other comprehensive income related to defined benefit plans and own credit, which is recorded directly in Retained earnings.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Balance sheet and off-balance sheet 105
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
31.12.24
31.12.23
31.12.24
31.12.23
31.12.24
31.12.23
Short-term borrowings
53.9
54.0
22.5
35.6
5.7
4.3
11.7
5.9
of which: amounts due to banks
23.3
16.7
8.1
8.1
5.4
3.9
3.1
0.7
of which: short-term debt issued
1,2
30.5
37.3
14.5
27.6
0.3
0.3
8.6
5.2
Securities financing transactions at amortized cost
14.8
5.8
7.9
5.1
3.8
0.0
2.9
0.3
Customer deposits
749.5
555.7
312.5
236.4
298.2
216.0
71.5
51.5
of which: demand deposits
225.0
146.2
55.7
36.8
108.7
61.5
33.2
24.7
of which: retail savings / deposits
182.3
152.7
34.9
28.9
143.3
119.2
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
300.3
215.8
179.9
129.6
46.1
35.4
34.3
22.3
Funding from UBS Group AG measured at amortized cost
107.9
67.3
74.4
44.6
2.6
2.0
27.6
18.9
Debt issued designated at fair value and long-term debt issued
measured at amortized cost
2
173.1
118.8
86.2
75.2
40.5
18.8
30.4
14.4
Trading liabilities
35.2
31.7
14.4
12.0
1.3
1.0
10.0
8.9
Derivatives and cash collateral payables on derivative instruments
217.0
175.6
183.4
146.7
4.4
4.1
18.3
15.2
Brokerage payables
49.0
42.3
38.1
31.4
0.5
0.7
3.4
2.4
Other financial liabilities measured at amortized cost
21.8
12.7
12.9
7.6
3.2
1.9
1.9
1.0
Other financial liabilities designated at fair value
34.0
27.4
6.5
5.7
0.1
0.1
5.6
4.1
Non-financial liabilities
17.0
9.2
8.7
2.4
3.2
2.0
2.5
2.5
Total liabilities
1,473.4
1,100.4
767.5
602.7
363.3
251.0
185.8
125.0
1 Short-term debt issued consists of certificates of deposit, commercial paper, acceptances and promissory notes, and other money market paper. 2 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, UBS AG enters into transactions where, pursuant to IFRS Accounting Standards, the
maximum contractual exposure may not be recognized in whole or in part on its balance sheet. These transactions include
derivative instruments, guarantees, loan commitments and similar arrangements.
When UBS AG incurs an obligation or becomes entitled to an asset through these arrangements, it recognizes 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
.
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Balance sheet and off-balance sheet 106
Guarantees, loan commitments and similar arrangements
In the normal course of business, UBS AG issues various forms of guarantees, commitments to extend credit, standby
and other letters of credit to support 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.
Guarantees represent irrevocable assurances that, subject to the satisfying of certain conditions, UBS AG will make
payments if its 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 31.5bn as
of 31 December 2023. The increase of USD 6.9bn mainly reflected the effect of the merger of UBS AG and Credit
Suisse AG, partly offset by business -driven lower volumes. Fee income from issuing guarantees compared with total net
fee and commission income was insignificant for both 2024 and 2023.
UBS AG also enters 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 AG 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
increased by USD 35.6bn to USD 79.6bn and committed unconditionally revocable credit lines increased by USD 101.5bn
to USD 148.9bn, both predominantly driven by the aforementioned merger. Forward starting reverse repurchase and
securities borrowing agreements increased by USD 14.5bn, mainly reflecting fluctuations in levels of business division
activity in short-dated securities financing transactions.
Off-balance sheet
As of
% change from
USD bn
31.12.24
31.12.23
31.12.23
Guarantees
1,2
38.4
31.5
22
Irrevocable loan commitments
1
79.6
44.0
81
Committed unconditionally revocable credit lines
148.9
47.4
214
Forward starting reverse repurchase and securities borrowing agreements
24.9
10.4
140
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, the maximum exposure to credit risk of UBS AG 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, UBS AG recognized net credit loss releases of USD 11m related to
irrevocable loan commitments, guarantees and other credit facilities in the scope of expected credit loss measurement,
compared with net credit loss releases of USD 13m in 2023. Provisions recognized for irrevocable loan commitments,
guarantees and other credit facilities in the scope of expected credit loss measurement were USD 332m as of
31 December 2024, compared with USD 188m 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, UBS AG enters 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. UBS AG
retains the contractual relationship with the obligor, and the sub-participant has only an indirect relationship. Generally,
UBS AG only enters into sub-participation agreements with banks to which it ascribes a credit rating equal to or better
than that of the obligor.
UBS AG also provides representations, warranties and indemnifications to third parties in the normal course of business.
Support provided to non-consolidated investment funds
In 2024, UBS AG did not provide material support, financial or otherwise, to unconsolidated investment funds when it
was not contractually obligated to do so, nor does it currently have an intention to do so.
Clearing house and exchange memberships
UBS AG is a member of numerous securities and derivative exchanges and clearing houses. In connection with some of
these memberships, UBS AG may be required to pay a share of the financial obligations of another member who defaults,
or UBS AG 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. UBS AG considers 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 UBS AG’s share in the deposit insurance system to be CHF 1.6bn.
This represents a contingent payment obligation and exposes UBS AG to additional risk. As of 31 December 2024,
UBS AG considered the probability of a material loss from its obligations to be remote.
UBS AG 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 107
Material cash requirements
The material cash requirements of UBS AG 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 that table are Debt issued designated at fair value (USD 114.1bn), Debt issued measured at amortized cost
(USD 108.5bn) and Funding from UBS Group AG measured at amortized cost (USD 143.8bn). The amounts represent
estimated future interest and principal payments on an undiscounted basis.
In the normal course of business, UBS AG also issues or enters into various forms of guarantees, irrevocable 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.
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 the “Liquidity and funding management” section of this report for more information
Cash and cash equivalents
As of 31 December 2024, cash and cash equivalents totaled USD 243.4bn, an increase of USD 52.9bn compared with
31 December 2023, driven by net cash inflows from investing activities. These inflows were partly offset by net cash
outflows from financing and operating activities, as well as negative foreign exchange effects, largely reflecting the
strengthening of the US dollar against the Swiss franc in 2024.
Operating activities
Net cash outflows from operating activities were USD 27.1bn in 2024, compared with outflows of USD 28.2bn in 2023.
The net negative change in operating assets and liabilities of USD 41.7bn was mainly driven by a USD 27.6bn movement
in financial assets and liabilities at fair value held for trading and derivative financial instruments, a USD 19.6bn increase
in receivables from securities financing transactions measured at amortized cost, outflows from a USD 13.4bn decrease
in customer deposits and a USD 6.1bn negative movement in cash collateral on derivative instruments. These effects
were partly offset by inflows from a USD 21.2bn decrease in loans and advances to customers , a USD 2.3bn positive
movement in financial assets at fair value not held for trading and a USD 1.8bn positive movement in brokerage
receivables and payables. 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 122.4bn in 2024, compared with a net outflow of USD 4.9bn in
2023, primarily reflecting the effect of cash and cash equivalents acquired upon the merger of UBS AG and Credit Suisse
AG in the amount of USD 121.3bn, as well as net inflows from debt securities measured at amortized cost of USD 2.4bn.
Financing activities
Financing activities resulted in a net cash outflow of USD 32.1bn in 2024, compared with inflow of USD 19.7bn in 2023,
mainly due to USD 15.3bn of net cash used to repay debt designated at fair value and long-term debt measured at amortized
cost, USD 10.3bn repayment of funding from the Swiss National Bank, and USD 6.2bn of net cash used to repay short-term
debt measured at amortized cost. These outflows were partly offset by net issuance proceeds of USD 3.6bn 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
Net cash flow from / (used in) operating activities
(27.1)
(28.2)
Net cash flow from / (used in) investing activities
122.4
(4.9)
Net cash flow from / (used in) financing activities
(32.1)
19.7
Effects of exchange rate differences on cash and cash equivalents
(10.3)
8.7
Net increase / (decrease) in cash and cash equivalents
52.9
(4.7)
Cash and cash equivalents at the end of the year
243.4
190.5
Annual Report 2024 |
Risk, capital, liquidity and funding, and balance sheet | Currency management 108
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 AG 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.
Net investment hedge accounting is applied 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 UBS AG’s active management of sensitivity to currency
movements and the effect thereof on the key ratios
Sell-down of non-US-dollar reported profits and losses
Income statement items of UBS AG subsidiaries and branches 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 AG subsidiaries follow a similar monthly sell-down process into their own functional currencies. Retained earnings
in subsidiaries and branches with a functional currency other than the US dollar are integrated and managed as part of
UBS AG’s net investment hedge accounting program.
Annual Report 2024 |
Corporate governance 109
Corporate governance
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.
Table of contents
110
110
110
111
112
122
131
131
133
Annual Report 2024 |
Corporate governance 110
Corporate governance
UBS AG is incorporated and domiciled in Switzerland and operates under Art. 620 et seq. of the Swiss Code of Obligations
and Swiss banking law as an
Aktiengesellschaft
, a corporation limited by shares. The addresses and telephone numbers
of the two registered offices of UBS AG are: Bahnhofstrasse 45, CH-8001 Zurich, Switzerland, telephone +41-44-234 11
11; and Aeschenvorstadt 1, CH-4051 Basel, Switzerland, telephone +41-61-288 50 50. The corporate identification
number is CHE-101.329.561.
The company was incorporated with unlimited duration on 29 June 1998, when Union Bank of Switzerland (founded in
1862) and Swiss Bank Corporation (founded in 1872) merged to form UBS AG. UBS AG is a regulated bank in Switzerland
and is 100% owned by UBS Group AG, the ultimate parent of the UBS Group. UBS AG’s purpose, in accordance with
art. 2 of its Articles of Association, as amended on 23 April 2024, is the operation of a bank and its scope extends to a
full range of financial services activities in Switzerland and abroad.
As a non-US company with securities listed on the New York Stock Exchange (the NYSE), UBS AG complies with the
relevant corporate governance standards applicable to foreign private issuers listing debt securities. In addition, it also
follows the standards established in the Swiss Code of Best Practice for Corporate Governance. The Organization
Regulations of UBS AG, adopted by the Board of Directors of UBS AG (the BoD) based on Art. 716b of the Swiss Code
of Obligations and Art. 24 and 26 of the Articles of Association of UBS AG (the AoA), constitute UBS AG’s primary
corporate governance guidelines.
Operational structure
Operational structure
As at 31 December 2024, the operational structure of UBS AG 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 “Our businesses” section of this report for more information about our business divisions and Group functions
Share capital structure
Ordinary share capital
At the end of 2024, UBS AG had 3,858,408,466 issued fully paid registered shares, with a nominal value of USD 0.10
each, equating to a share capital of USD 385,840,846.60.
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 share capital or the introduction of a capital band.
Conditional capital
At year-end 2024, the following conditional capital was available to the 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
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.
›
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
Annual Report 2024 |
Corporate governance 111
Conversion capital
On 31 December 2024, UBS 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 AG. The creation of this conversion
capital was approved at the AGM held on 23 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
Capital band and reserve capital
As of the date of this report, UBS AG had not introduced any capital band or any reserve capital .
Shares
UBS 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) and intermediary -held securities (in the sense of the Swiss Federal Act on Intermediated
Securities). Each registered share has a nominal value of USD 0.10 and carries one vote. UBS AG imposes no limitation
on the rights to own its securities.
Dividend distributions
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.
For the 2024 financial year, the BoD is proposing at the 2025 AGM to the shareholder for approval an ordinary dividend
distribution of USD 6,500m, to be paid out shortly after the AGM, and the appropriation of USD 6,500m to a special
dividend reserve. The decision on the distribution of the special dividend is intended to be made at an EGM in the second
half of 2025, considering any proposed requirements from Switzerland’s ongoing review of its capital regime.
On 31 December 2024, UBS AG had 3,858,408,466 issued shares with a nominal value of USD 0.10 each, equating to
a share capital of USD 385,840,846.60. All shares carry voting rights, were fully paid in and eligible for dividends. There
are no preferential rights associated with these shares, and no other classes of shares have been issued by UBS AG.
Shareholders’ participation rights
Voting rights
The sole direct shareholder of UBS AG is UBS Group AG, which holds 100% of UBS AG shares. These shares are entitled
to voting rights without restriction.
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.
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.
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 8 April.
EGMs may be convened whenever the BoD or the auditors consider it necessary. Shareholders individually or jointly
representing at least 10% 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.
Annual Report 2024 |
Corporate governance 112
Board of Directors
The BoD, led by the Chairman, consists of at least 5 and no more than 12 members, as per our AoA.
The BoD, led by the Chairman, decides on the strategy of UBS AG upon recommendation by the President of its Executive
Board (the EB) and exercises the ultimate supervision of management. Its ultimate responsibility for the success of UBS AG
is exercised subject to the parameters set by the Group.
Members of the Board of Directors
Non-executive
members of the
Board
Position
Initial
election
Step
down
UBS business address
Colm Kelleher
Chairman of the BoD
2022
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Lukas Gähwiler
Vice Chairman /
member of the Risk Committee
2022
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Jeremy Anderson
Chairperson of Audit Committee
2018
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Claudia Böckstiegel
Member of the BoD
2021
Bahnhofstrasse 45, 8001 Zurich, Switzerland
William C. Dudley
Member of the Risk Committee
2019
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Patrick Firmenich
Member of the Audit Committee
2021
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Fred Hu
Member of the Compensation Committee
(as of 23.4.2024)
2018
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Mark Hughes
Chairperson of the Risk Committee
2020
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Gail Kelly
Member of the BoD
2024
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Nathalie Rachou
Member of the Audit Committee (as of
24.4.2024) / member of the Risk Committee
(until 24.4.2024)
2020
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Julie G. Richardson
Chairperson of the Compensation
Committee / member of the Risk Committee
2017
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Dieter Wemmer
Member of the Audit Committee /
member of the Compensation Committee
(both until 24.4.2024)
2016
23.4.2024
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Jeanette Wong
Member of the Audit Committee /
member of the Compensation Committee
2019
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Renata Jungo
Brüngger
Candidate to the UBS AG Board
Proposed
for election
at the 2025
AGM
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Lila Tretikov
Candidate to the UBS AG Board
Proposed
for election
at the 2025
AGM
Bahnhofstrasse 45, 8001 Zurich, Switzerland
No current BoD member has either an employment contract or a significant business connection to UBS or any of its
subsidiaries. No member of the BoD 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 members of the BoD are also members of UBS Group AG’s Board of Directors, and committee
membership is the same for both entities.
In 2024, the BoD had three permanent committees: the Audit Committee, the Compensation Committee and the Risk
Committee.
The following biographies provide information about the BoD members who were in office after the 2024 AGM and the
Company Secretary.
Annual Report 2024 |
Corporate governance 113
Colm Kelleher
Chairman of the Board of Directors, independent and non-
executive member of the Board since 2022
Nationality:
Year of birth:
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 Group 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
Annual Report 2024 |
Corporate governance 114
Lukas Gähwiler
Vice Chairman, non-independent and non-executive
member of the Board since 2022
–
Member of the Risk Committee since 2023
Nationality:
Year of birth:
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 Group 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
Independent and non-executive member of the Board since
2018
–
Chairperson of the Audit Committee since 2018
Nationality:
Year of birth:
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 Group 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
Annual Report 2024 |
Corporate governance 115
Claudia Böckstiegel
Independent and non-executive member of the Board since 2021
Nationality:
Year of birth:
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 Group 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 Risk Committee since 2019
Nationality:
Year of birth:
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 Group 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
Annual Report 2024 |
Corporate governance 116
Patrick Firmenich
Independent and non-executive member of the Board since 2021
–
Member of the Audit Committee since 2021
Nationality:
Year of birth:
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 Group 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
Nationality:
Year of birth:
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 Group 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
Annual Report 2024 |
Corporate governance 117
Mark Hughes
Independent and non-executive member of the Board since 2020
–
Chairperson of the Risk Committee since 2020
Nationality:
Year of birth:
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 Group 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
Nationality:
Year of birth:
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 Group 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
Annual Report 2024 |
Corporate governance 118
Nathalie Rachou
Independent and non-executive member of the Board since 2020
–
Member of the Audit Committee since 2024
Nationality:
Year of birth:
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 Group 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:
Year of birth:
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 Group AG
Key competencies
–
Investment banking, capital markets
–
Risk management, compliance and legal
–
Human resources management, including compensation
–
Technology, including artificial intelligence and cybersecurity
Annual Report 2024 |
Corporate governance 119
Jeanette Wong
Independent and non-executive member of the Board since 2019
–
Member of the Compensation Committee since 2020
–
Member of the Audit Committee since 2019
Nationality:
Year of birth:
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 Group 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
Company Secretary since 2017
Nationality:
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 120
Elections and terms of office
UBS AG’s sole shareholder, UBS Group AG, annually elects each member of the BoD individually.
Organizational principles and structure
Following each AGM, the BoD meets to appoint one or more Vice Chairmen, the BoD committee members and the
respective committee Chairpersons. At the same meeting, the BoD appoints the 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 it must meet at
least six times a year. In 2024, the BoD met 32 times jointly with the Board of Directors of UBS Group AG and four times
in standalone UBS AG meetings.
BoD committees
The committees listed below assist the BoD in fulfilling the performance of its responsibilities. Each committee meets as
often as its business requires, but at least four times a year for the Audit Committee, the Compensation Committee and
the Risk Committee.
Audit Committee
Throughout 2024, the Audit Committee consisted of four independent BoD members; Jeremy Anderson (Chairperson),
Patrick Firmenich, Dieter Wemmer and Jeanette Wong. After the AGM, Nathalie Rachou joined the committee after
Dieter Wemmer stepped down from the BoD. 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 AG shares in excess of 5%
of the outstanding capital, and did not serve on the audit committees of more than two other public companies. The
function of the Audit Committee is to support the Board in fulfilling its oversight duty relating to financial reporting and
internal controls over financial reporting, the effectiveness of the external and internal audit functions, as well as the
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 .
Compensation Committee
Throughout 2024, the Compensation Committee consisted of three independent BoD members, Julie G. Richardson
(Chairperson), Dieter Wemmer and Jeanette Wong; at the AGM, Fred Hu joined the committee replacing Dieter Wemmer,
who stepped down from the BoD. The function of the Compensation Committee is to support the Board in its duties to
set guidelines on compensation and benefits, to oversee implementation thereof, to approve certain compensation and
to scrutinize executive performance.
Risk Committee
In 2024, the Risk Committee consisted of four independent BoD members, Mark Hughes (Chairperson), William C.
Dudley, Nathalie Rachou, Julie G. Richardson and the Vice Chairman, Lukas Gähwiler. Immediately after the AGM,
Nathalie Rachou stepped down from this committee. The function of the Risk Committee is to oversee and support the
Board 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; and
(ii) balance sheet, treasury and capital management, including funding, liquidity and equity attribution.
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.
Annual Report 2024 |
Corporate governance 121
With respect to the BoD, Jeremy Anderson, Fred Hu, Mark Hughes and Julie G. Richardson all have expertise in technology
and cybersecurity. Mr. Anderson is 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. Mr. Hu has a master’s degree in engineering science from Tsinghua University and has
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. Mr. Hughes gained substantial experience overseeing cybersecurity risk as the Group Chief
Risk Officer at Royal Bank of Canada.
As current chair of the Global Risk Institute, he brings additional know-how as a
risk specialist to the BoD. Finally, Ms. Richardson has spent significant time with both incumbent and new technology
companies, including being a board member of a digital knowledge management company, a leading cloud monitoring
firm and a cyber insurance company.
The BoD is supported in overseeing risk at the executive management level by the cybersecurity expertise of Mike Dargan,
who is the Group Chief Operations and Technology Officer, and Markus Ronner, who is the Group Chief Compliance and
Governance Officer. Mr. Dargan is responsible for delivering digital platforms, technology services, infrastructure, and
operations, including cybersecurity and information security. Previously, he was Group Chief Digital and Information
Officer, after leading our Group Technology function since joining UBS in 2016. In addition to this remit, he was also UBS
Group AG’s Group Executive Board (GEB) sponsor for our digital assets strategy and a sponsor of artificial intelligence
and our agile transformation, which were integrated into his area of responsibility in 2023. 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. Mr. Ronner has been with UBS for more than 40 years and held various positions across the firm,
including manager of 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. In his
current position, he is responsible for overseeing compliance, financial crime prevention and operational risk control, as
well as regulatory and governance functions at the Group level.
›
Refer to “Non-financial risk” in the “Risk management and control” section of this report for information about cybersecurity
Important business connections of independent members of the Board of Directors
As a global financial services provider and a major Swiss bank, we enter into business relationships with many large
companies, including some in which BoD members have management or independent board responsibilities.
Our Organization Regulations require one-third of UBS AG BoD members to be independent. For this purpose,
independence is determined in accordance with FINMA Circular 2017/1 “Corporate governance – banks” and the 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.
All relationships and transactions with UBS 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.
Checks and balances: Board of Directors and 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 EB is clearly defined in the Organization Regulations. The BoD decides on the strategy of
UBS AG, upon recommendations by the President of the EB, and exercises ultimate supervision over management;
whereas the EB, headed by the President of the EB, has executive management responsibility. The functions of Chairman
and President of the EB are assigned to two different people, 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 UBS
AG, for which responsibility is delegated to the EB, under the leadership of the President of the EB. No member of one
board may simultaneously be a member of the other.
Supervision and control of the EB remain with the BoD. The authorities and responsibilities of the two bodies are governed
by the AoA and the Organization Regulations.
Although the recruiting process for BoD and EB 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.
Annual Report 2024 |
Corporate governance 122
Executive Board
The BoD delegates the management of the business to the Executive Board (the EB).
Responsibilities, authorities and organizational principles of the Executive Board
At UBS AG, management of the business is also delegated, and its EB, under the leadership of the President of the EB,
has executive management responsibility for UBS AG and its business. All members of the EB are members of the GEB.
Sabine Keller-Busse, who serves as President UBS Switzerland AG, and Ulrich Körner, who served as CEO of Credit Suisse
AG until 30 June 2024, are both not members of the EB. In 2024, the EB held 31 combined meetings with the GEB and
four UBS AG standalone meetings.
UBS AG EB has two permanent committees: the Asset and Liability Committee (the ALCO) and the Finance and Risk
Committee (the FRC).
The ALCO is responsible for managing UBS AG’s assets and liabilities in line with the UBS AG and Group strategy and
regulatory requirements. In 2024, the ALCO held 11 meetings.
The FRC is responsible for supervising and controlling UBS AG’s business, financial and risk profile of the overall UBS AG
standalone as well as the entity’s business activities in Switzerland and cross-jurisdictional branch-related matters, in line
with the UBS AG and Group strategy and regulatory requirements. The FRC is also responsible for ensuring the financial
and risk profile of UBS AG standalone complies with the agreed risk appetite, by ascertaining that appropriate and timely
actions are taken. In 2024, the FRC held four meetings.
Executive Board
Position
Initial
appointment
to the EB
Step-down
date
UBS business address
Sergio P. Ermotti
President of the Executive Board
(also from 2011 to 2020)
2023
Bahnhofstrasse 45, 8001 Zurich, Switzerland
George
Athanasopoulos
Co-President Investment Bank
1.7.2024
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Michelle Bereaux
Integration Officer
2023
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Michael Dargan
Chief Operations and Technology Officer
2021
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Aleksandar Ivanovic
President Asset Management
1.3.2024
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Robert Karofsky
Co-President Global Wealth Management
and President UBS Americas
2018
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Iqbal Khan
Co-President Global Wealth Management
and President UBS Asia Pacific
2019
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Barbara Levi
General Counsel
2021
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Beatriz Martin
Jimenez
Head Non-core and Legacy and
President UBS Europe, Middle East and
Africa
2023
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Markus Ronner
Chief Compliance and Governance Officer
2018
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Stefan Seiler
Head Human Resources & Corporate
Services
2023
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Todd Tuckner
Chief Financial Officer
2023
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Marco Valla
Co-President Investment Bank
1.7.2024
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Damian Vogel
Chief Risk Officer
1.7.2024
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Christian Bluhm
Chief Risk Officer
2016
1.7.2024
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Suni Harford
President Asset Management
2019
1.3.2024
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Naureen Hassan
President UBS Americas
2022
1.7.2024
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Edmund Koh
President UBS Asia Pacific
2019
1.9.2024
Bahnhofstrasse 45, 8001 Zurich, Switzerland
The following biographies provide information about the EB members in office on 31 December 2024.
Annual Report 2024 |
Corporate governance 123
Sergio P. Ermotti
President of the Executive Board,
member of the EB
from 2011 to 2020 and since 2023
Nationality:
Year of birth:
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
–
Group CEO of
UBS Group 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
Annual Report 2024 |
Corporate governance 124
George Athanasopoulos
Co-President Investment Bank,
member of the EB since July 2024
Nationality:
Year of birth:
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 Group Executive Board of
UBS Group AG
Michelle Bereaux
Integration Officer,
member of the EB since 2023
Nationality:
Year of birth:
Michelle Bereaux was appointed Group Integration Officer, UBS Group
AG, and Integration Officer, UBS AG in 2023. Working closely with all
Group Executive Board (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 Group Executive Board of
UBS Group AG
Annual Report 2024 |
Corporate governance 125
Mike Dargan
Chief Operations and Technology Officer, member of the EB since
2021
Nationality:
Year of birth:
Mike Dargan was appointed Group Chief Operations and Technology
Officer for UBS Group AG and Chief Operations and Technology Officer
for UBS AG 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 Group Executive Board of
UBS Group 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 EB since March 2024
Nationality:
Year of birth:
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 EB, 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 Group Executive Board of
UBS Group AG
–
Chairman of UBS Asset Management AG
Annual Report 2024 |
Corporate governance 126
Robert Karofsky
Co-President Global Wealth Management and
President UBS Americas, member of the EB since 2018
Nationality:
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 Group Executive Board of
UBS Group AG
–
Member of the Board of UBS Americas Holding LLC
–
Member of the Board of UBS Optimus Foundation
Iqbal Khan
Co-President Global Wealth Management and
President UBS Asia Pacific, member of the EB since 2019
Nationality:
Year of birth:
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 Group Executive Board of
UBS Group AG
–
Member of the Board of UBS Optimus Foundation
Annual Report 2024 |
Corporate governance 127
Barbara Levi
General Counsel, member of the EB since 2021
Nationality:
Year of birth:
Barbara Levi has been Group General Counsel, UBS Group AG
and
General Counsel, UBS AG
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 Group Executive Board of
UBS Group 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
Beatriz Martin Jimenez
Head Non-core and Legacy and President UBS Europe,
Middle East and Africa, member of the EB since 2023
Nationality:
Year of birth:
Beatriz Martin Jimenez became Head Non-core and Legacy, as well as
President UBS Europe, Middle East and Africa of UBS Group AG and
UBS
AG
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 Group Executive Board of
UBS Group 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
Annual Report 2024 |
Corporate governance 128
Markus Ronner
Chief Compliance and Governance Officer, member of the EB
since 2018
Nationality:
Year of birth:
Markus Ronner has served as Group Chief Compliance and Governance
Officer and
Chief Compliance and Governance Officer, UBS AG
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 Group Executive Board of
UBS Group AG
Stefan Seiler
Head Human Resources & Corporate Services, member of the EB
since 2023
Nationality:
Year of birth:
Stefan Seiler has been
Head Group Human Resources & Corporate
Services, UBS Group AG and Head Human Resources & Corporate
Services, UBS AG
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 Group Executive Board of
UBS Group 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
Annual Report 2024 |
Corporate governance 129
Todd Tuckner
Chief Financial Officer, member of the EB since 2023
Nationality:
Year of birth:
Todd Tuckner was appointed to the EB of UBS AG in 2023 and became
Group CFO, UBS Group AG and CFO, UBS AG
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 President of the EB. 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 Group Executive Board of
UBS Group AG
Marco Valla
Co-President Investment Bank, member of the EB since July 2024
Nationality:
Year of birth:
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 Group Executive Board of
UBS Group AG
–
Member of the Board of Directors of Good Shepherd Services
–
Member of the Board of the Mount Sinai Department of Urology
Annual Report 2024 |
Corporate governance 130
Damian Vogel
Chief Risk Officer, member of the EB since July 2024
Nationality:
Year of birth:
Damian Vogel was appointed
Group Chief Risk Officer, UBS Group AG
and Chief Risk Officer, UBS AG
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 Group Executive Board of
UBS Group AG
–
Member of the Board of UBS Switzerland AG
–
Member of Foundation Board of the International Financial Risk
Institute
Annual Report 2024 |
Corporate governance 131
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.
Clauses on change of control
Neither the terms regulating the BoD members’ mandate nor any employment contracts with EB members contain
change of control clauses.
All employment contracts with EB members stipulate a notice period of six to twelve months. During the notice period,
EB 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.
Auditors
Audit is an integral part of corporate governance. While safeguarding their independence, the external auditors closely
coordinate their work with Internal Audit (IA). The Audit Committee and, ultimately, the BoD supervise the effectiveness
of audit work.
›
Refer to “Board of Directors” in this section for more information about the Audit Committee
External independent auditors
The 2024 AGM re-elected Ernst & Young Ltd (EY) as auditors for UBS AG 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
lead 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 AG audit engagement
Forvis Mazars has been appointed as auditors of UBS Europe SE, a subsidiary of UBS AG, as EU rules require UBS Europe
SE 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 UBS AG 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.
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. In addition, EY received USD 52m in 2024 (USD 27m in 2023) for services performed on
behalf of our investment funds, many of which have independent fund boards or trustees.
Annual Report 2024 |
Corporate governance 132
Audit work includes all services necessary to perform the audit for UBS AG 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.
Fees paid to EY
UBS AG and its subsidiaries paid the following fees (including expenses) to EY.
For the year ended
USD m
31.12.24
31.12.23
Audit
Global audit fees
Additional services classified as audit (services required by law or statute, including work of a non-recurring nature mandated by regulators)
Total audit
Non-audit
Audit-related fees
of which: assurance and attestation services
of which: control and performance reports
of which: consultation concerning financial accounting and reporting standards
Tax fees
All other fees
Total non-audit
Special auditors for potential capital increases
At the AGM on 23 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.
Internal Audit
IA performs the internal auditing role for UBS AG. 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.
IA 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, IA independently, objectively and systematically assesses the:
(i)
soundness of UBS AG’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 UBS AG’s constitutional
documents and contracts.
Annual Report 2024 |
Corporate governance 133
Audit reports that include significant issues are provided to the President of the EB, relevant EB 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, IA 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. IA also cooperates closely
with risk control functions and internal and external legal advisors on investigations into major control issues.
To ensure IA’s independence from management, the IA Executive UBS AG reports to the Chairman of the BoD and to the
Audit Committee, which assesses annually whether IA has sufficient resources to perform its function, as well as its
independence and performance. In the Audit Committee’s assessment, IA is sufficiently resourced to fulfill its mandate
and complete its auditing objectives. IA’s role, position, responsibilities and accountability are set out in UBS AG’s
Organization Regulations and the Charter for IA
.
IA 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. IA also conducts special audits at the request of the Audit Committee, or other BoD members, committees
or the President of the EB in consultation with the Audit Committee.
IA enhances the efficiency of its work through coordination and close cooperation with the external auditors.
Information policy
We provide regular information to our shareholder and to the wider financial community.
Financial reports for UBS AG are expected to be published on the following dates:
First quarter 2025
8 May 2025
Second quarter 2025
8 August 2025
Third quarter 2025
4 November 2025
The annual general meetings of the shareholders of UBS AG will take place on the following dates:
2025
8 April 2025
2026
14 April 2026
›
Refer to the corporate calendar available at
ubs.com/investors
dates
Our annual and quarterly publications are available in fully online and .pdf formats at
ubs.com/investors
, under “Financial
information”.
Financial reporting policies
We report UBS AG’s results for each financial quarter, with the exception of the fourth 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. With the exception of the fourth quarter, each quarter we publish quarterly financial
reports for UBS AG.
The consolidated financial statements of UBS AG are prepared in accordance with IFRS Accounting Standards as issued
by the International Accounting Standards Board.
›
Refer to “Note 1 Summary of material accounting policies” in the “Consolidated financial statements” section of this report for
more information about the basis of accounting
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 President of the Executive Board and the
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
Annual Report 2024 |
Financial statements | Consolidated financial statements 134
Financial statements
Consolidated financial statements
Table of contents
135
136
137
142
142
142
143
144
145
147
148
150
150
1
167
2
169
3a
172
3b
173
173
4
173
5
174
6
174
7
174
8
175
9
178
178
10
182
11
184
12
184
13
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14
187
15
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16
188
17
189
18
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19
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21
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22
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34
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Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial information 135
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 AG are responsible for establishing and maintaining adequate internal
control over financial reporting. UBS AG’s internal control over financial reporting is 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 AG’s internal control over financial reporting includes 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 AG management; and
–
provide reasonable assurance regarding 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 AG management has assessed the effectiveness of UBS AG’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 AG’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.
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. For
the year ended 31 December 2023, UBS AG concluded that its internal control over financial reporting was effective.
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.
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.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial information 136
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 report of the independent registered public accounting firm on the consolidated financial statements
Report of independent registered public accounting firm on the consolidated financial statements
of UBS AG is included
in our filing on 17 March 2025 with the Securities and Exchange Commission on Form 20-F pursuant to US reporting
obligations.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial information 137
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial information 138
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial information 139
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial information 140
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial information 141
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 142
UBS 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
31.12.22
Interest income from financial instruments measured at amortized cost and fair value through
other comprehensive income
4
Interest expense from financial instruments measured at amortized cost
4
(29,745 )
(19,643 )
(6,696 )
Net interest income from financial instruments measured at fair value through profit or loss and other
4
Net interest income
4
Other net income from financial instruments measured at fair value through profit or loss
4
Fee and commission income
5
Fee and commission expense
5
(2,369 )
(1,790 )
(1,823 )
Net fee and commission income
5
Other income
6
Total revenues
Credit loss expense / (release)
20
Personnel expenses
7
General and administrative expenses
8
Depreciation, amortization and impairment of non-financial assets
12, 13
Operating expenses
Operating profit / (loss) before tax
Tax expense / (benefit)
9
Net profit / (loss)
Net profit / (loss) attributable to non-controlling interests
Net profit / (loss) attributable to shareholders
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 143
Statement of comprehensive income
For the year ended
USD m
Note
31.12.24
31.12.23
31.12.22
Comprehensive income attributable to shareholders
Net profit / (loss)
Other comprehensive income that may be reclassified to the income statement
Foreign currency translation
Foreign currency translation movements related to net assets of foreign operations, before tax
(2,629 )
(869 )
Effective portion of changes in fair value of hedging instruments designated as net investment hedges, before tax
(912 )
Foreign currency translation differences on foreign operations reclassified to the income statement
Effective portion of changes in fair value of hedging instruments designated as net investment hedges reclassified to
the income statement
(12 )
(28 )
(4 )
Income tax relating to foreign currency translations, including the effect of net investment hedges
(17 )
Subtotal foreign currency translation, net of tax
(1,261 )
1
(519 )
Financial assets measured at fair value through other comprehensive income
Net unrealized gains / (losses), before tax
(440 )
Net realized (gains) / losses reclassified to the income statement from equity
Reclassification of financial assets to Other financial assets measured at amortized cost
2
Income tax relating to net unrealized gains / (losses)
(3 )
Subtotal financial assets measured at fair value through other comprehensive income, net of tax
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
(1,198 )
(36 )
(5,758 )
Net (gains) / losses reclassified to the income statement from equity
(159 )
Income tax relating to cash flow hedges
(74 )
(309 )
Subtotal cash flow hedges, net of tax
(4,793 )
Cost of hedging
25
Cost of hedging, before tax
(87 )
(19 )
Income tax relating to cost of hedging
Subtotal cost of hedging, net of tax
(87 )
(19 )
Total other comprehensive income that may be reclassified to the income statement, net of tax
(714 )
(5,260 )
Other comprehensive income that will not be reclassified to the income statement
Defined benefit plans
26
Gains / (losses) on defined benefit plans, before tax
(106 )
(103 )
Income tax relating to defined benefit plans
(33 )
Subtotal defined benefit plans, net of tax
(86 )
(136 )
Own credit on financial liabilities designated at fair value
21
Gains / (losses) from own credit on financial liabilities designated at fair value, before tax
(861 )
Income tax relating to own credit on financial liabilities designated at fair value
(10 )
(71 )
Subtotal own credit on financial liabilities designated at fair value, net of tax
(790 )
Total other comprehensive income that will not be reclassified to the income statement, net of tax
(21 )
(927 )
Total other comprehensive income
(735 )
(4,383 )
Total comprehensive income attributable to shareholders
Comprehensive income attributable to non-controlling interests
Net profit / (loss)
Total other comprehensive income that will not be reclassified to the income statement, net of tax
(48 )
(14 )
Total comprehensive income attributable to non-controlling interests
Total comprehensive income
Net profit / (loss)
Other comprehensive income
(783 )
(4,396 )
of which: other comprehensive income that may be reclassified to the income statement
(714 )
(5,260 )
of which: other comprehensive income that will not be reclassified to the income statement
(69 )
(924 )
Total comprehensive income
1 Mainly reflects a strengthening of the US dollar against the Swiss franc and the euro. 2 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 AG consolidated financial statements 144
Balance sheet
USD m
Note
31.12.24
31.12.23
Assets
Cash and balances at central banks
Amounts due from banks
10
Receivables from securities financing transactions measured at amortized cost
10, 22
Cash collateral receivables on derivative instruments
10, 22
Loans and advances to customers
10
Other financial assets measured at amortized cost
10, 14a
Total financial assets measured at amortized cost
Financial assets at fair value held for trading
21
of which: assets pledged as collateral that may be sold or repledged by counterparties
Derivative financial instruments
11, 21, 22
Brokerage receivables
21
Financial assets at fair value not held for trading
21
Total financial assets measured at fair value through profit or loss
Financial assets measured at fair value through other comprehensive income
21
Investments in associates
28b
Property, equipment and software
12
Goodwill and intangible assets
13
Deferred tax assets
9
Other non-financial assets
14b
Total assets
Liabilities
Amounts due to banks
15a
Payables from securities financing transactions measured at amortized cost
22
Cash collateral payables on derivative instruments
22
Customer deposits
15a
Funding from UBS Group AG measured at amortized cost
15b
Debt issued measured at amortized cost
17
Other financial liabilities measured at amortized cost
19a
Total financial liabilities measured at amortized cost
Financial liabilities at fair value held for trading
21
Derivative financial instruments
11, 21, 22
Brokerage payables designated at fair value
21
Debt issued designated at fair value
16, 21
Other financial liabilities designated at fair value
19b, 21
Total financial liabilities measured at fair value through profit or loss
Provisions
18a
Other non-financial liabilities
19c
Total liabilities
Equity
Share capital
Share premium
Retained earnings
Other comprehensive income recognized directly in equity, net of tax
Equity attributable to shareholders
Equity attributable to non-controlling interests
Total equity
Total liabilities and equity
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 145
Statement of changes in equity
USD m
Share
capital
Share
premium
Retained
earnings
Balance as of 31 December 2021
Premium on shares issued and warrants exercised
(14 )
2
Tax (expense) / benefit
Dividends
(4,200 )
Translation effects recognized directly in retained earnings
Share of changes in retained earnings of associates and joint ventures
New consolidations / (deconsolidations) and other increases / (decreases)
Total comprehensive income for the year
of which: net profit / (loss)
of which: OCI, net of tax
Balance as of 31 December 2022
Premium on shares issued and warrants exercised
(19 )
2
Tax (expense) / benefit
Dividends
(6,000 )
Translation effects recognized directly in retained earnings
Share of changes in retained earnings of associates and joint ventures
(1 )
Share capital currency change
(48 )
New consolidations / (deconsolidations) and other increases / (decreases)
3
Total comprehensive income for the year
of which: net profit / (loss)
of which: OCI, net of tax
(927 )
Balance as of 31 December 2023
Equity recognized due to the merger of UBS AG and Credit Suisse AG
4
(18,848 )
Premium on shares issued and warrants exercised
(20 )
2
Tax (expense) / benefit
Dividends
(3,000 )
Translation effects recognized directly in retained earnings
(33 )
Share of changes in retained earnings of associates and joint ventures
(3 )
New consolidations / (deconsolidations) and other increases / (decreases)
(431 )
5
Total comprehensive income for the year
of which: net profit / (loss)
of which: OCI, net of tax
(21 )
Balance as of 31 December 2024
1 Excludes other comprehensive income related to defined benefit plans and own credit, which is recorded directly in Retained earnings. 2 Includes decreases related to recharges by UBS Group AG for share-based
compensation awards granted to employees of UBS AG or its subsidiaries. 3 Includes an increase of USD
m related to the issuance of high-trigger loss-absorbing additional tier 1 capital with an equity conversion
feature. 4 Refer to Note 2 for more information. 5 Mainly reflecting effects from transactions between Credit Suisse AG and its subsidiaries and UBS AG and its subsidiaries prior to the merger in May 2024.
6 Includes an increase of USD
m in the second quarter of 2024 due to the merger of UBS AG and Credit Suisse AG.
Annual Report 2024
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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
(7 )
(14 )
(14 )
(4,200 )
(9 )
(4,209 )
(69 )
(69 )
(3 )
(3 )
(7 )
(3 )
(5,260 )
(519 )
(4,793 )
(5,260 )
(519 )
(4,793 )
(4,383 )
(14 )
(4,396 )
(133 )
(4 )
(4,234 )
(19 )
(19 )
(6,000 )
(4 )
(6,004 )
(127 )
(127 )
(1 )
(1 )
(31 )
(2,961 )
(291 )
(291 )
(20 )
(20 )
(3,000 )
(30 )
(3,029 )
(3 )
(3 )
(405 )
6
(51 )
6
(714 )
(1,261 )
(714 )
(1,261 )
(735 )
(48 )
(783 )
(2,585 )
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 147
Share information and earnings per share
Ordinary share capital
As of 31 December 2024, UBS AG had
. The
shares were entirely held by UBS Group AG.
Conditional capital
As of 31 December 2024, the following conditional capital was available to the Board of Directors (the BoD) of UBS AG:
–
Conditional capital in the amount of USD
, for the issuance of a maximum of
registered shares with a nominal value of USD
conversion rights and / or warrants granted in connection with the issuance of bonds or similar financial instruments
on national or international capital markets. This conditional capital allowance was approved at the Extraordinary
General Meeting 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.
Conversion capital
As of 31 December 2024, UBS AG had conversion capital in the amount of USD
, for the issuance of a
maximum of
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 AG. The creation
of this conversion capital was approved at the AGM held on 23 April 2024.
Capital band and reserve capital
As of 31 December 2024, UBS AG has not introduced a capital band or any reserve capital.
Earnings per share
In 2015, UBS AG shares were delisted from the SIX Swiss Exchange and the New York Stock Exchange. As of 31 December
2024,
% of UBS AG’s issued shares were held by UBS Group AG and therefore were not publicly traded. Accordingly,
earnings per share information is not provided for UBS AG.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 148
Statement of cash flows
For the year ended
USD m
31.12.24
31.12.23
31.12.22
Cash flow from / (used in) operating activities
Net profit / (loss)
Non-cash items included in net profit and other adjustments:
Depreciation, amortization and impairment of non-financial assets
Credit loss expense / (release)
Share of net (profit) / loss of associates and joint ventures and impairment related to associates
(73 )
(32 )
Deferred tax expense / (benefit)
(1,106 )
(222 )
Net loss / (gain) from investing activities
(225 )
(1,515 )
Net loss / (gain) from financing activities
(3,643 )
(16,587 )
Other net adjustments
1
(10,383 )
Net change in operating assets and liabilities:
1,2
Amounts due from banks and amounts due to banks
(708 )
(10,093 )
3
(1,088 )
Receivables from securities financing transactions measured at amortized cost
(19,580 )
(4,993 )
Payables from securities financing transactions measured at amortized cost
(1,247 )
Cash collateral on derivative instruments
(6,132 )
Loans and advances to customers
Customer deposits
(13,407 )
(9,409 )
Financial assets and liabilities at fair value held for trading and derivative financial instruments
(27,623 )
(16,017 )
Brokerage receivables and payables
(6,101 )
Financial assets at fair value not held for trading and other financial assets and liabilities
(4,661 )
Provisions and other non-financial assets and liabilities
(437 )
Income taxes paid, net of refunds
(1,500 )
(1,541 )
(1,495 )
Net cash flow from / (used in) operating activities
(27,065 )
4
(28,202 )
Cash flow from / (used in) investing activities
Cash and cash equivalents obtained due to the merger of UBS AG and Credit Suisse AG
5
Purchase of subsidiaries, business, associates and intangible assets
(64 )
(4 )
(3 )
Disposal of subsidiaries, business, associates and intangible assets
6
Purchase of property, equipment and software
(1,512 )
(1,283 )
(1,478 )
Disposal of property, equipment and software
Net (purchase) / redemption of financial assets measured at fair value through other comprehensive income
(3 )
(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
Net cash flow from / (used in) investing activities
(4,924 )
(12,283 )
Table continues below.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 149
Statement of cash flows (continued)
Table continued from above.
For the year ended
USD m
31.12.24
31.12.23
31.12.22
Cash flow from / (used in) financing activities
Repayment of Swiss National Bank funding
7
(10,304 )
Net issuance (repayment) of short-term debt measured at amortized cost
(6,163 )
(12,249 )
Distributions paid on UBS AG shares
(3,000 )
(6,000 )
(4,200 )
Issuance of debt designated at fair value and long-term debt measured at amortized cost
8
Repayment of debt designated at fair value and long-term debt measured at amortized cost
8
(118,286 )
(85,541 )
(67,670 )
Inflows from securities financing transactions measured at amortized cost
9
Outflows from securities financing transactions measured at amortized cost
9
(2,688 )
Net cash flows from other financing activities
(965 )
(501 )
(595 )
Net cash flow from / (used in) financing activities
(32,137 )
(5,257 )
Total cash flow
Cash and cash equivalents at the beginning of the year
Net cash flow from / (used in) operating, investing and financing activities
(13,435 )
(6,911 )
Effects of exchange rate differences on cash and cash equivalents
1
(10,315 )
(5,645 )
Cash and cash equivalents at the end of the year
10
11
of which: cash and balances at central banks
12
of which: amounts due from banks
12
of which: money market paper
12,13
Additional information
Net cash flow from / (used in) operating activities includes:
Interest received in cash
Interest paid in cash
Dividends on equity investments, investment funds and associates received in cash
14
1 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. 2 Excludes non-cash items
arising from the accounting for the merger of UBS AG and Credit Suisse AG. Refer to Note 2 for more information. 3 Mainly reflects funding provided to Credit Suisse. 4 Includes cash receipts from the sale of
loans and loan commitments of USD
m within Non-core and Legacy. 5 Refer to Note 2 for more information about the merger of UBS AG and Credit Suisse AG. 6 Includes dividends received from associates.
7 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. 8 Includes funding from UBS Group AG
measured at amortized cost (recognized on the balance sheet in Funding from UBS Group AG) and measured at fair value (recognized on the balance sheet in Other financial liabilities designated at fair value). 9
Reflects cash flows from securities financing transactions measured at amortized cost that use UBS debt instruments as the underlying. 10 As of 31 December 2024, the balance includes USD
m (31 December
2023: USD
m; 31 December 2022: USD
m) of Cash and cash equivalents not available for general use by the UBS AG, which consisted of USD
m (31 December 2023: USD
m; 31 December
2022: USD
m) considered by UBS AG as restricted (refer to Note 23 for more information) and USD
m (31 December 2023: USD
m; 31 December 2022: USD
m) placed at central banks to
meet local statutory minimum reserve requirements. 11 The balance includes USD
bn related to cash held in Assets of disposal groups held for sale, recognized within Other non-financial assets. 12 Includes
only balances with an original maturity of three months or less. 13 Money market paper is included in the balance sheet under Financial assets at fair value not held for trading (31 December 2024: USD
m;
31 December 2023: USD
m; 31 December 2022: USD
m), Other financial assets measured at amortized cost (31 December 2024: USD
m; 31 December 2023: USD
m; 31 December 2022:
USD
m) and Financial assets at fair value held for trading (31 December 2024: USD
m; 31 December 2023: USD
m; 31 December 2022: USD
m). 14 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
Debt issued
designated
at fair value
Swiss
National
Bank
funding
4
Over-the-
counter debt
instruments
5
Funding
from UBS
Group AG
6
Total
Balance as of 31 December 2022
Cash flows
(122 )
Non-cash changes
of which: foreign currency translation
(50 )
of which: fair value changes
of which: hedge accounting and other effects
Balance as of 31 December 2023
Changes arising upon the merger of UBS AG and Credit
Suisse AG
7
Cash flows
(10,590 )
(6,163 )
(4,427 )
(10,059 )
(10,304 )
(2,601 )
(28,172 )
Non-cash changes
(2,610 )
(613 )
(1,997 )
(146 )
(326 )
(1,487 )
(4,166 )
of which: foreign currency translation
(2,045 )
(613 )
(1,432 )
(146 )
(2,328 )
(104 )
(2,558 )
(7,117 )
of which: fair value changes
(207 )
(66 )
of which: hedge accounting and other effects
(565 )
(565 )
(221 )
(14 )
Balance as of 31 December 2024
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 Reflects securities financing transactions measured at amortized cost that use UBS debt instruments as the underlying. 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 Includes funding from UBS Group
AG measured at amortized cost (refer to Note 15b) and measured at fair value (refer to Note 19b). 7 Refer to Note 2 for more information about the merger of UBS AG and Credit Suisse AG.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 150
Notes to the UBS AG consolidated financial statements
Note 1 Summary of material accounting policies
The following table provides an overview of information included in this Note.
151
a)
151
151
1)
152
2)
152
a.
152
b.
156
c.
156
d.
156
e.
157
f.
157
g.
160
h.
161
i.
161
j.
162
3)
162
4)
163
5)
163
6)
164
7)
164
8)
164
9)
165
10)
165
11)
165
12)
166
b)
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 151
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 AG and its subsidiaries (UBS AG). On 6 March 2025, the Financial Statements were
authorized for issue by the 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 AG 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 AG’s estimates, which could result in significant losses to UBS AG, 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:
–
determination of carrying amounts of assets and liabilities and treatment of reserves for business combinations under common control (refer to item 1 in
this Note and 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 UBS AG and its subsidiaries, presented as a single economic
entity; intercompany transactions and balances have been eliminated. UBS AG 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 UBS AG 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 AG has power over the entity. As the nature and extent of UBS AG’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
Transactions with subsidiaries of UBS Group AG that are outside of the consolidation scope of UBS AG are accounted for
and presented as transactions with third parties. This may lead to differences in presentation between the financial
statements of UBS Group and those of UBS AG, e.g. personnel expenses incurred by UBS Business Solutions entities and
recharged to UBS AG entities are presented by UBS AG in
General and administrative expenses
.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 152
Note 1 Summary of material accounting policies (continued)
Business combinations
Business combinations are accounted for using the acquisition method. 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.
Business combinations under common control
A business combination in which the combining entities or businesses are ultimately controlled by UBS both before and
after the business combination and where that control is not transitory is considered to constitute a business combination
under common control as defined by IFRS 3,
Business Combinations
. Business combinations under common control are
outside the scope of IFRS 3.
Critical accounting estimates and judgments
UBS AG accounts for business combinations under common control using the historic carrying values of assets and liabilities of the transferred entity or
business as of the date of the transfer, determined under IFRS Accounting Standards. The balances of each of the equity reserves of the transferred entity,
accumulated after that entity becomes part of the UBS Group, are combined with the corresponding equity reserves (
Share premium
,
Retained earnings
Other comprehensive income recognized directly in equity, net of tax
) of UBS AG. The difference between the aggregate carrying value of the assets and
liabilities and equity reserves is recognized as an adjustment to
Share premium
, net of any consideration that may be payable. Comparative periods prior to
the date of the business combination under common control are not restated, because such transactions are accounted for prospectively.
2) Financial instruments
a. Recognition
UBS AG generally recognizes financial instruments when it becomes a party to contractual provisions of an instrument.
However, UBS AG 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 AG applies
settlement date accounting to all standard purchases and sales of non-derivative financial instruments . UBS AG 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 AG’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 AG 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 AG 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, UBS AG 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.
Financial liabilities
Financial liabilities measured at amortized cost
Financial liabilities measured at amortized cost include
Debt issued measured at amortized cost
Funding from UBS
Group AG
measured at amortized cost
. The latter includes contingent capital instruments issued to UBS Group AG 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.
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Note 1 Summary of material accounting policies (continued)
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 AG 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. Financial instruments acquired
through business combinations under common control are initially measured using the historic carrying values of financial
assets and financial liabilities of the transferred entity or business as of the date of the transfer, determined under IFRS
Accounting Standards.
After initial recognition, UBS AG 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
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.
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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 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.
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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;
–
obligations against funding from UBS Group AG; 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 AG 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 AG’s own credit risk is presented in
Other
comprehensive income
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;
–
obligations against funding from UBS Group AG
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.
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Note 1 Summary of material accounting policies (continued)
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 AG 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.
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 AG 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 AG
does not retain a portion of the syndicated loan or where UBS AG 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
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 AG 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 AG 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 AG 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
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Note 1 Summary of material accounting policies (continued)
f. Fair value of financial instruments
UBS AG 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
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 AG’s governance framework over fair value measurement is described in Note 21b, and UBS AG 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, including those acquired through a
business combination under common control. ECL are also recognized on the undrawn portion of committed
unconditionally revocable credit lines, which include UBS AG’s credit card limits and master credit facilities, as UBS AG is
exposed to credit risk because the borrower has the ability to draw down funds before UBS AG 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
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.
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 AG 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
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.
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Note 1 Summary of material accounting policies (continued)
For the purpose of determining the ECL -relevant parameters, UBS AG 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 AG’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 AG 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 AG 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 AG’s key ECL-relevant portfolios.
For UBS AG, 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 AG’s corporate rating tools.
›
Refer to Note 20 for more information
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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 AG 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 AG 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 AG’s exposure to credit risk to the contractual notice period, as the
client has the ability to draw down funds before UBS AG can take risk-mitigating actions. In such cases UBS AG is required
to estimate the period over which it is exposed to credit risk. This applies to UBS AG’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 AG’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 AG 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 AG 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 AG 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 AG 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 AG’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.
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 AG’s internal rating system
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Note 1 Summary of material accounting policies (continued)
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 transferred 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 AG’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 AG 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 AG 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 AG’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
h. Restructured and modified financial assets
When payment default is expected, or where default has already occurred, UBS AG 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 AG’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.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 161
Note 1 Summary of material accounting policies (continued)
i. Offsetting
UBS AG 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 AG 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 AG’s financial assets and liabilities, even though they may be subject to enforceable netting
arrangements. Repurchase arrangements 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
UBS AG 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
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
Equity
Interest income
from financial instruments measured at amortized cost and fair value through other comprehensive income
Interest
expense from financial instruments measured at amortized cost
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
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
the entity
is reclassified to
Other income
.
›
Refer to Note 25 for more information
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 162
Note 1 Summary of material accounting policies (continued)
3) Fee and commission income and expenses
UBS AG 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 AG 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 AG’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 AG 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 AG does not recognize performance fees related to management of clients’ assets or fees
related to contingencies beyond UBS AG’s control until such uncertainties are resolved.
UBS AG’s fees are generally earned from short-term contracts. As a result, UBS AG’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 AG has not capitalized any material costs to obtain or fulfill a contract or generated
any significant contract assets or liabilities.
UBS AG 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
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 AG acts as an agent), UBS AG 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 AG 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
UBS Group AG is the grantor of and maintains the obligation to settle share-based compensation plans that are awarded
to employees of UBS AG. As a consequence, UBS AG classifies the awards of UBS Group AG shares as equity-settled
share-based payment transactions. UBS AG recognizes the fair value of awards granted to its employees by reference to
the fair value of UBS Group AG’s 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.
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.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 163
Note 1 Summary of material accounting policies (continued)
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 AG‘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 AG 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 AG is subject to the income tax laws of Switzerland and those of the non-Swiss jurisdictions in which UBS AG has
business operations.
UBS AG’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.
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) unrealized gains or losses on financial instruments that are classified
at FVOCI; (iii) changes in fair value of derivative instruments designated as cash flow hedges; (iv) remeasurements of
defined benefit plans; or (v) certain foreign currency translations of foreign operations. Amounts relating to points (ii)
through (v) above are recognized in
Other comprehensive income
Equity
.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 164
Note 1 Summary of material accounting policies (continued)
UBS AG 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 AG 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 AG’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 AG 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 AG 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 UBS AG’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
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 AG tests goodwill for impairment annually, irrespective
of whether there is any indication of impairment.
Business combinations under common control do not result in recognition of goodwill or other intangible assets incremental
to those already recognized by the acquired entity prior to the date of transfer. Goodwill assumed is subsequently allocated
to respective cash-generating units and tested for impairment.
An impairment charge is recognized in the income statement if the carrying amount exceeds the recoverable amount of a
cash-generating unit.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 165
Note 1 Summary of material accounting policies (continued)
Critical accounting estimates and judgments
UBS AG‘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 AG 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 AG.
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 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 AG’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 UBS AG no longer controls the foreign operation.
Share capital issued and share premium 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 reported as
Share premium.
amounts recognized in
Other comprehensive income
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
12) 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 are not available for the use by UBS AG, 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 depositor protection schemes.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 166
Note 1 Summary of material accounting policies (continued)
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,
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 AG will first apply these
new requirements in the Annual Report 2027 and, for interim reporting, in the first quarter 2027 interim report. UBS AG
is assessing the impact of the new requirements on its reporting but expects it to be limited. UBS AG 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 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 AG 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 AG when they are adopted.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 167
Note 2 Accounting for the merger of UBS AG and Credit Suisse AG
Merger of UBS AG and Credit Suisse AG
The merger of UBS AG and Credit Suisse AG effected on 31 May 2024 with no consideration payable by UBS AG
constitutes a business combination under common control accounted for based on the accounting policies set out in
Note 1 to these financial statements.
Assets and liabilities
UBS AG accounted for the merger with Credit Suisse AG using the historic carrying values of the assets and liabilities of
Credit Suisse AG as at the date of the transaction (31 May 2024), determined under IFRS Accounting Standards.
–
No fair value adjustments were made to assets and liabilities (which is different to the UBS Group AG consolidated
financial statements where acquisition method accounting was required under IFRS 3,
Business Combinations
, on
31 May 2023 for the acquisition of Credit Suisse Group AG).
–
UBS AG has elected to retain historic accumulated depreciation and impairment of non-financial assets arising since
31 May 2023, i.e. the date on which Credit Suisse AG came to be under the common control of UBS Group AG.
–
Expected credit loss allowances and provisions for performing and credit-impaired exposures were recognized under
IFRS 9.
–
No new goodwill, intangible assets or contingent liabilities have been recognized as a result of the merger of UBS AG
and Credit Suisse AG.
–
Uniform accounting policies for like transactions and events have been applied throughout UBS AG and Credit
Suisse AG as of 31 May 2023 (the date of the acquisition of Credit Suisse Group AG by UBS Group AG).
Equity reserves
UBS AG has taken on the carrying amount of the total IFRS equity of Credit Suisse AG as of 31 May 2024. This was
allocated to the individual components of equity for UBS AG as follows:
–
The individual equity reserve balances of Credit Suisse AG recorded from 31 May 2023 to 31 May 2024 have been
added to the corresponding equity reserves of UBS AG, with the exception of the foreign currency translation reserve.
–
UBS AG has elected to reset the foreign currency translation reserve. As a result, the net investment hedge accounting
reserve has been added to
Retained earnings
Suisse. The remaining balance of the foreign currency translation reserve was then added to
Share premium
.
–
Equity reserve balances of Credit Suisse AG recorded prior to 31 May 2023 (i.e. the date on which Credit Suisse AG
came under the common control of UBS Group AG) have not been individually retained.
–
The difference between the net carrying value of the Credit Suisse AG assets and liabilities as of 31 May 2024 and the
individual equity reserve balances established as outlined above has been recognized as an adjustment to
Share premium
UBS Group AG).
Comparability
Income statement, statement of comprehensive income and statement of cash flows for the year ended 31 December
2024 include seven months of consolidated data following the merger of UBS AG and Credit Suisse AG (June to
December 2024) and five months of pre-merger UBS AG data only (January to May 2024). Statement of changes in
equity includes seven months of consolidated data, following the addition of the equity reserve balances of Credit Suisse
AG recorded from 31 May 2023 to 31 May 2024 as described above, and five months of pre-merger UBS AG data only.
Comparative information for the years ended 31 December 2023 and 31 December 2022 includes pre-merger UBS AG
data only.
Balance sheet information as at 31 December 2024 includes post-merger consolidated information. Balance sheet
information as at 31 December 2023 reflects pre-merger UBS AG information only.
The comparative periods prior to the merger date have not been restated , as the transaction has been accounted for
prospectively since 31 May 2024, i.e. the date on which the merger of UBS AG and Credit Suisse AG was effected.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 168
Note 2 Accounting for the merger of UBS AG and Credit Suisse AG (continued)
The table below presents the assets, liabilities and equity of Credit Suisse AG that were recognized by UBS AG on 31 May
2024 as a result of the merger.
Credit Suisse AG assets, liabilities and equity transferred to UBS AG on the merger date
USD m
Assets
Cash and balances at central banks
Amounts due from banks
Receivables from securities financing transactions measured at amortized cost
Cash collateral receivables on derivative instruments
Loans and advances to customers
Other financial assets measured at amortized cost
Total financial assets measured at amortized cost
Financial assets at fair value held for trading
Derivative financial instruments
Brokerage receivables
Financial assets at fair value not held for trading
Total financial assets measured at fair value through profit or loss
Financial assets measured at fair value through other comprehensive income
Investments in associates
Property, equipment and software
Goodwill and intangible assets
Deferred tax assets
Other non-financial assets
Total assets
Liabilities
Amounts due to banks
Payables from securities financing transactions measured at amortized cost
Cash collateral payables on derivative instruments
Customer deposits
Funding from UBS Group AG measured at amortized cost
Debt issued measured at amortized cost
Other financial liabilities measured at amortized cost
Total financial liabilities measured at amortized cost
Financial liabilities at fair value held for trading
Derivative financial instruments
Brokerage payables designated at fair value
Debt issued designated at fair value
Other financial liabilities designated at fair value
Total financial liabilities measured at fair value through profit or loss
Provisions
Other non-financial liabilities
Total liabilities
Equity
Equity attributable to shareholders
1
Equity attributable to non-controlling interests
Total equity
1 Refer to the Statement of changes in equity in this report for more information.
Transactions between UBS AG and Credit Suisse AG have been eliminated from the balances presented in the table
above. They amounted to USD
bn of assets and USD
bn of liabilities of Credit Suisse AG.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 169
Note 2 Accounting for the merger of UBS AG and Credit Suisse AG (continued)
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 AG has also entered into the agreements to sell Select Portfolio
Servicing, the US mortgage servicing business of Credit Suisse, and its
% interest in Swisscard AECS GmbH.
›
Refer to Note 29 for more information
Note 3a Segment reporting
UBS AG’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 Group functions and qualify as reportable segments for the purpose of segment reporting. Together with
Group functions, the five business divisions reflect the management structure of UBS AG.
–
Global Wealth Management
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
retirement, financing, investments and strategic transactions, in Switzerland, through its branch network and digital
channels.
–
Asset Management
across all major traditional and alternative asset classes, as well as advisory support to institutions, wholesale
intermediaries and wealth management clients.
–
The
Investment Bank
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
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
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 AG consolidated financial statements 170
Note 3a Segment reporting (continued)
Financial information about the five business divisions and Group Items is presented separately in internal management
reports to the Executive Board, which is considered the “chief operating decision-maker” pursuant to IFRS 8,
Operating
Segments
.
UBS AG’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 UBS AG 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 AG’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 management. 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 AG’s reporting structure and organizational setup, in the first quarter of
2024 certain changes to Group Treasury allocations were made with an impact on segment reporting for UBS AG’s
business divisions and Group Items. Prior-period information has been adjusted for comparability.
UBS AG 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. In parallel with these changes, UBS AG has increased the allocation of balance sheet
resources from Group Treasury to the business divisions.
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
m for Global Wealth
Management and USD
m for Personal & Corporate Banking, and increases in Operating profit / (loss) before tax of
USD
m for Group Items, USD
m for the Investment Bank and USD
m for Asset Management, with no change to
Non-core and Legacy.
Prior-period information as of 31 December 2023 has also been restated, resulting in increases of Total assets of
USD
bn in Global Wealth Management, USD
bn in Personal & Corporate Banking and USD
bn in the
Investment Bank, with a corresponding decrease of assets of USD
bn in Group Items.
These changes had no effect on the reported results or financial position of UBS AG.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 171
Note 3a Segment reporting (continued)
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group
Items
UBS AG
For the year ended 31 December 2024
Net interest income
(54 )
(3,484 )
(12 )
(1,708 )
Non-interest income
Total revenues
Credit loss expense / (release)
(1 )
Operating expenses
Operating profit / (loss) before tax
(3,392 )
(935 )
Tax expense / (benefit)
Net profit / (loss)
Additional information
Total assets
Additions to non-current assets
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group
UBS AG
For the year ended 31 December 2023
1
Net interest income
(37 )
(2,586 )
(1,238 )
Non-interest income
Total revenues
Credit loss expense / (release)
(1 )
Operating expenses
Operating profit / (loss) before tax
(952 )
(914 )
Tax expense / (benefit)
Net profit / (loss)
Additional information
Total assets
1
Additions to non-current assets
USD m
Global Wealth
Management
Personal &
Corporate
Banking
Asset
Management
Investment
Bank
Non-core and
Legacy
Group
Items
UBS AG
For the year ended 31 December 2022
Net interest income
(19 )
(241 )
(690 )
Non-interest income
2
Total revenues
(267 )
Credit loss expense / (release)
(12 )
Operating expenses
Operating profit / (loss) before tax
(1,091 )
Tax expense / (benefit)
Net profit / (loss)
Additional information
Total assets
Additions to non-current assets
1 Comparative-period information has been restated for Group Treasury allocations. 2 Includes an USD
m gain in Asset Management related to the sale of UBS AG‘s shareholding in Mitsubishi Corp.-UBS Realty
Inc.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 172
Note 3b Segment reporting by geographic location
The operating regions shown in the table below correspond to the regional management structure of UBS AG. 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
The geographic analysis of non-current assets is based on the location of the entity in which the given assets are recorded.
For the year ended 31 December 2024
Total revenues
Total non-current assets
USD bn
Share %
USD bn
Share %
Americas
1
Asia Pacific
Europe, Middle East and Africa (excluding Switzerland)
Switzerland
Global
Total
For the year ended 31 December 2023
Total revenues
2
Total non-current assets
USD bn
Share %
USD bn
Share %
Americas
1
Asia Pacific
Europe, Middle East and Africa (excluding Switzerland)
Switzerland
Global
Total
For the year ended 31 December 2022
Total revenues
Total non-current assets
USD bn
Share %
USD bn
Share %
Americas
1
Asia Pacific
Europe, Middle East and Africa (excluding Switzerland)
Switzerland
Global
Total
1 Predominantly related to the US. 2 Comparative-period information has been restated for changes in Group Treasury allocations.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 173
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
Other net income from financial instruments measured at fair value through profit or loss
1
Total net income from financial instruments measured at fair value through profit or loss and other
Net interest income
Interest income from loans and deposits
2
Interest income from securities financing transactions measured at amortized cost
3
Interest income from other financial instruments measured at amortized cost
Interest income from debt instruments measured at fair value through other comprehensive income
Interest resulting from derivative instruments designated as cash flow hedges
(1,943 )
(1,898 )
Total interest income from financial instruments measured at amortized cost and fair value through other comprehensive income
Interest expense on loans and deposits
4
Interest expense on securities financing transactions measured at amortized cost
5
Interest expense on debt issued
Interest expense on lease liabilities
Total interest expense from financial instruments measured at amortized cost
Total net interest income from financial instruments measured at amortized cost and fair value through other comprehensive income
(777 )
Total net interest income from financial instruments measured at fair value through profit or loss and other
Total net interest income
1 Includes net losses from financial liabilities designated at fair value of USD
m (net losses of USD
m in 2023 and net gains of USD
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
m (net losses of USD
m and net gains of USD
m in 2023 and 2022, respectively) from financial liabilities related to unit-linked investment
notes issued by UBS AG’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, customer deposits, and funding from UBS Group AG measured at amortized cost, 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 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
m to USD
m, mainly driven by the consolidation of Credit Suisse AG revenues.
Note 5 Net fee and commission income
For the year ended
USD m
31.12.24
31.12.23
31.12.22
Underwriting fees
M&A and corporate finance fees
Brokerage fees
Investment fund fees
Portfolio management and related services
Other
Total fee and commission income
1
of which: recurring
of which: transaction-based
of which: performance-based
Fee and commission expense
Net fee and commission income
1 For the year ended 31 December 2024, reflects third-party fee and commission income of USD
m for Global Wealth Management, USD
m for Personal & Corporate Banking, USD
m for Asset
Management, USD
m for the Investment Bank, USD
m for Non-core and Legacy and negative USD
m for Group Items (for the year ended 31 December 2023: USD
m for Global Wealth Management,
USD
m for Personal & Corporate Banking, USD
m for Asset Management, USD
m for the Investment Bank, USD
m for Non-core and Legacy and negative USD
m for Group Items; for the year
ended 31 December 2022: USD
m for Global Wealth Management, USD
m for Personal & Corporate Banking, USD
m for Asset Management, USD
m for the Investment Bank, USD
m for
Non-core and Legacy and USD
m for Group Items).
Net fee and commission income increased by USD
m to USD
m, mainly driven by the consolidation of Credit
Suisse AG revenues.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 174
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
Net gains / (losses) from disposals of investments in associates and joint ventures
2
Share of net profits of associates and joint ventures
3
(163 )
Total
(138 )
Net gains / (losses) from disposals of financial assets measured at fair value through other comprehensive income
(1 )
(1 )
Income from properties
4
Net gains / (losses) from properties held for sale
(16 )
Income from shared services provided to UBS Group AG or its subsidiaries
Other
5
6
7
Total other income
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 AG’s acquisitions
and disposals of subsidiaries and businesses. 2 Includes an USD
m gain related to the sale of UBS AG’s shareholding in Mitsubishi Corp.-UBS Realty Inc. 3 2024 includes a loss of USD
m due to UBS's share
of proportionate impairment losses reflected in the profit and loss of an associate (2023: loss of USD
m). 4 Includes rent received from third parties. 5 2024 includes gains of USD
m related to the repurchase
of UBS AG‘s own debt instruments (compared with a gain of USD
m in 2023 and a gain of USD
m in 2022). 6 Includes USD
m net gains in Asset Management from the sale of the Brazilian real estate fund
management business. 7 Mainly relates to a portion of the total USD
m gain on the sale of UBS AG’s domestic wealth management business in Spain of USD
m (with the remaining amount disclosed within
Net gains / (losses) from acquisitions and disposals of subsidiaries) and income of USD
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
Variable compensation
2
of which: performance awards
of which: financial advisors
3
of which: other
Contractors
Social security
Post-employment benefit plans
4
of which: defined benefit plans
of which: defined contribution plans
Other personnel expenses
Total personnel expenses
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
m for the year ended 31 December 2024 (for the year ended 31 December 2023: USD
m; for the year ended 31 December 2022: USD
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
m to USD
m, mainly driven by the consolidation of Credit Suisse AG
expenses.
Note 8 General and administrative expenses
For the year ended
USD m
31.12.24
31.12.23
31.12.22
Outsourcing costs
Technology costs
Consulting, legal and audit fees
Real estate and logistics costs
Market data services
Marketing and communication
Travel and entertainment
Litigation, regulatory and similar matters
1
Other
of which: shared services costs charged by UBS Group AG or its subsidiaries
Total general and administrative expenses
1 Reflects the net increase, including recoveries from third parties, in provisions for litigation, regulatory and similar matters recognized in the income statement. Refer to Note 18 for more information. In 2024, in
accordance with the applicable contractual arrangements, UBS AG received a reimbursement of USD 177m from a direct subsidiary of UBS Group AG.
General and administrative expenses increased by USD
m to USD
m, which included the effect of
consolidating Credit Suisse AG expenses.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 175
Note 9 Income taxes
For the year ended
USD m
31.12.24
31.12.23
31.12.22
Tax expense / (benefit)
Swiss
Current
Deferred
(106 )
(22 )
Total Swiss
Non-Swiss
Current
Deferred
(1,000 )
(262 )
Total non-Swiss
Total income tax expense / (benefit) recognized in the income statement
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 benefit mainly related to a net upward revaluation of deferred tax assets (DTAs) of USD
m.
The non-Swiss current tax expenses included USD
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
m in
respect of other taxable profits of non-Swiss subsidiaries and branches.
The net non-Swiss deferred tax benefit included benefits of USD
m related to the aforementioned deferred tax
benefit, USD
m in respect of a net upward revaluation of DTAs and USD
m in respect of an increase in deferred
tax asset recognition for UBS AG’s US branch. These benefits were partly offset by an expense of USD
m that primarily
related to the amortization of DTAs previously recognized in relation to tax losses carried forward and deductible
temporary differences.
For the year ended
USD m
31.12.24
31.12.23
31.12.22
Operating profit / (loss) before tax
of which: Swiss
of which: non-Swiss
Income taxes at Swiss tax rate of
% for 2024,
% for 2023 and
% for 2022
Increase / (decrease) resulting from:
Non-Swiss tax rates differing from Swiss tax rate
(66 )
(43 )
Tax effects of losses not recognized
Previously unrecognized tax losses now utilized
(454 )
(401 )
(217 )
Non-taxable and lower-taxed income
(232 )
(165 )
(316 )
Non-deductible expenses and additional taxable income
Adjustments related to prior years, current tax
(35 )
(15 )
(33 )
Adjustments related to prior years, deferred tax
(27 )
Change in deferred tax recognition
(608 )
(273 )
(217 )
Adjustments to deferred tax balances arising from changes in tax rates
Other items
Income tax expense / (benefit)
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 176
Note 9 Income taxes (continued)
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 UBS AG 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
m was recognized in
Other comprehensive income
m) and
a net tax benefit of USD
m was recognized in
Share premium
m).
Deferred tax assets and liabilities
UBS AG 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 UBS AG 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.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 177
Note 9 Income taxes (continued)
USD m
31.12.24
31.12.23
Deferred tax assets
1
Gross
Valuation
allowance
Recognized
Gross
Valuation
allowance
Recognized
Tax loss carry-forwards
(17,594 )
(8,496 )
Unused tax credits
Temporary differences
(2,594 )
(579 )
of which: related to real estate costs capitalized for US tax
purposes
of which: related to compensation and benefits
(503 )
(205 )
of which: related to cash flow hedges
of which: other
(2,090 )
(374 )
Total deferred tax assets
(20,188 )
2
(9,076 )
2
of which: related to the US
of which: related to other locations
Deferred tax liabilities
Total deferred tax liabilities
1 After offset of DTLs, as applicable. 2 As of 31 December 2024, UBS AG recognized DTAs of USD
m (31 December 2023: USD
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
From 2 to 5 years
From 6 to 10 years
From 11 to 20 years
No expiry
Total
of which: related to the US
1
of which: related to the UK
of which: related to other locations
1 Related to UBS AG’s US branch.
Pillar Two top-up taxes under Global Anti-Base Erosion rules
Certain countries in which UBS AG 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 AG entities during 2024. These include Switzerland, the UK, Japan, Canada and most
EU Member States. Moreover, Switzerland and, also, 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 UBS AG’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.
UBS AG’s current tax expenses for 2024 do not include a material expense in relation to top-up taxes because, to the
extent that UBS AG’s profits arose in entities to which top-up taxes applied, these were almost all in countries that had
effective tax rates of 15% or more.
An assessment of UBS AG’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 UBS AG entities that are expected in future years.
This assessment indicated that UBS AG’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-
taxes. Consequently, UBS AG 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 AG consolidated financial statements 178
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 AG’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
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 AG consolidated financial statements 179
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
Total
Stage 1
Stage 2
Stage 3
Cash and balances at central banks
(186 )
(186 )
Amounts due from banks
(42 )
(1 )
(5 )
(36 )
Receivables from securities financing transactions measured at amortized cost
(2 )
(2 )
Cash collateral receivables on derivative instruments
Loans and advances to customers
(2,830 )
(276 )
(323 )
(2,230 )
of which: Private clients with mortgages
(166 )
(46 )
(70 )
(50 )
of which: Real estate financing
(100 )
(24 )
(27 )
(49 )
of which: Large corporate clients
(828 )
(72 )
(123 )
(632 )
of which: SME clients
(963 )
(55 )
(47 )
(860 )
of which: Lombard
(107 )
(6 )
(101 )
of which: Credit cards
(41 )
(6 )
(11 )
(25 )
of which: Commodity trade finance
(122 )
(9 )
(113 )
of which: Ship / aircraft financing
(31 )
(14 )
(16 )
of which: Consumer financing
(137 )
(15 )
(19 )
(102 )
Other financial assets measured at amortized cost
(135 )
(25 )
(7 )
(103 )
of which: Loans to financial advisors
(41 )
(4 )
(1 )
(37 )
Total financial assets measured at amortized cost
(3,195 )
(304 )
(521 )
(2,369 )
Financial assets measured at fair value through other comprehensive income
Total on-balance sheet financial assets in scope of ECL requirements
(3,195 )
(304 )
(521 )
(2,369 )
Total exposure
ECL provisions
Off-balance sheet (in scope of ECL)
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Guarantees
(61 )
(16 )
(24 )
(22 )
of which: Large corporate clients
(18 )
(6 )
(9 )
(2 )
of which: SME clients
(27 )
(5 )
(15 )
(7 )
of which: Financial intermediaries and hedge funds
(1 )
(1 )
of which: Lombard
(4 )
(1 )
(3 )
of which: Commodity trade finance
(1 )
(1 )
Irrevocable loan commitments
(192 )
(105 )
(61 )
(26 )
of which: Large corporate clients
(155 )
(91 )
(54 )
(10 )
Forward starting reverse repurchase and securities borrowing agreements
Committed unconditionally revocable credit lines
(75 )
(59 )
(17 )
of which: Real estate financing
(6 )
(4 )
(2 )
of which: Large corporate clients
(22 )
(14 )
(7 )
(2 )
of which: SME clients
(34 )
(28 )
(6 )
of which: Lombard
of which: Credit cards
(8 )
(6 )
(2 )
Irrevocable committed prolongation of existing loans
(3 )
(3 )
Total off-balance sheet financial instruments and other credit lines
(332 )
(183 )
(102 )
(48 )
Total allowances and provisions
(3,527 )
(487 )
(623 )
(2,417 )
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 AG consolidated financial statements 180
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
ECL allowances
Financial instruments measured at amortized cost
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Cash and balances at central banks
(26 )
(26 )
Amounts due from banks
(7 )
(6 )
(1 )
Receivables from securities financing transactions measured at amortized cost
(2 )
(2 )
Cash collateral receivables on derivative instruments
Loans and advances to customers
(935 )
(173 )
(185 )
(577 )
of which: Private clients with mortgages
(156 )
(39 )
(89 )
(28 )
of which: Real estate financing
(46 )
(20 )
(25 )
(1 )
of which: Large corporate clients
(241 )
(34 )
(32 )
(174 )
of which: SME clients
(262 )
(34 )
(24 )
(204 )
of which: Lombard
(22 )
(5 )
(17 )
of which: Credit cards
(42 )
(6 )
(11 )
(24 )
of which: Commodity trade finance
(119 )
(7 )
(111 )
Other financial assets measured at amortized cost
(87 )
(16 )
(5 )
(66 )
of which: Loans to financial advisors
(49 )
(4 )
(1 )
(44 )
Total financial assets measured at amortized cost
(1,057 )
(197 )
(217 )
(643 )
Financial assets measured at fair value through other comprehensive income
Total on-balance sheet financial assets within the scope of ECL requirements
(1,057 )
(197 )
(217 )
(643 )
Total exposure
ECL provisions
Off-balance sheet (within the scope of ECL)
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Guarantees
(40 )
(14 )
(7 )
(19 )
of which: Large corporate clients
(10 )
(3 )
(2 )
(6 )
of which: SME clients
(7 )
(1 )
(1 )
(5 )
of which: Financial intermediaries and hedge funds
(12 )
(8 )
(3 )
of which: Lombard
(1 )
(1 )
of which: Commodity trade finance
(1 )
(1 )
Irrevocable loan commitments
(95 )
(55 )
(38 )
(2 )
of which: Large corporate clients
(76 )
(45 )
(28 )
(2 )
Forward starting reverse repurchase and securities borrowing agreements
Committed unconditionally revocable credit lines
(49 )
(39 )
(10 )
of which: Real estate financing
(4 )
(3 )
(1 )
of which: Large corporate clients
(6 )
(4 )
(3 )
of which: SME clients
(21 )
(17 )
(3 )
of which: Lombard
of which: Credit cards
(10 )
(8 )
(2 )
of which: Commodity trade finance
Irrevocable committed prolongation of existing loans
(4 )
(3 )
Total off-balance sheet financial instruments and credit lines
(188 )
(111 )
(56 )
(21 )
Total allowances and provisions
(1,244 )
(308 )
(272 )
(664 )
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 AG consolidated financial statements 181
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
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) is insignificant;
–
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 at
points higher than the ratio as of 31 December 2023. The combined stage 1 and 2 ratio of
compared with the ratio as of 31 December 2023; the stage 3 ratio was
%,
as of 31 December 2023.
31.12.24
Gross carrying amount (USD m)
ECL coverage (bps)
On-balance sheet
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
Private clients with mortgages
Real estate financing
Total real estate lending
Large corporate clients
SME clients
Total corporate lending
Lombard
Credit cards
Commodity trade finance
Ship / aircraft financing
Consumer financing
Other loans and advances to customers
Loans to financial advisors
Total other lending
Total
1
Gross exposure (USD m)
ECL coverage (bps)
Off-balance sheet
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
Private clients with mortgages
Real estate financing
Total real estate lending
Large corporate clients
SME clients
Total corporate lending
Lombard
Credit cards
Commodity trade finance
Ship / aircraft financing
Consumer financing
Financial intermediaries and hedge funds
Other off-balance sheet commitments
Total other lending
Total
2
Total on- and off-balance sheet
3
1 Includes Loans and advances to customers and Loans to financial advisors, which are presented on the balance sheet line Other financial assets measured at amortized cost. 2 Excludes Forward starting reverse
repurchase and securities borrowing agreements. 3 Includes on-balance sheet exposure, gross and off-balance sheet exposure (notional) and the related ECL coverage ratio (bps).
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 182
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
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
Private clients with mortgages
Real estate financing
Total real estate lending
Large corporate clients
SME clients
Total corporate lending
Lombard
Credit cards
Commodity trade finance
Other loans and advances to customers
Loans to financial advisors
Total other lending
Total
1
Gross exposure (USD m)
ECL coverage (bps)
Off-balance sheet
Total
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 1&2
Stage 3
Private clients with mortgages
Real estate financing
Total real estate lending
Large corporate clients
SME clients
Total corporate lending
Lombard
Credit cards
Commodity trade finance
Financial intermediaries and hedge funds
Other off-balance sheet commitments
Total other lending
Total
2
Total on- and off-balance sheet
3
1 Includes Loans and advances to customers and Loans to financial advisors, which are presented on the balance sheet line Other financial assets measured at amortized cost. 2 Excludes Forward starting reverse
repurchase and securities borrowing agreements. 3 Includes on-balance sheet exposure, gross and off-balance sheet exposure (notional) and the related ECL coverage ratio (bps).
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 AG
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 UBS AG’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. UBS AG 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 AG consolidated financial statements 183
Note 11 Derivative instruments (continued)
Risks of derivative instruments
The derivative financial assets shown on the balance sheet can be an important component of UBS AG’s credit exposure;
however, the positive replacement values related to a respective counterparty are rarely an adequate reflection of
UBS AG’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 UBS AG 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
of which: forwards (OTC)
4
of which: swaps (OTC)
of which: options (OTC)
of which: futures (ETD)
of which: options (ETD)
Credit derivatives
of which: credit default swaps (OTC)
of which: total return swaps (OTC)
Foreign exchange
of which: forwards (OTC)
of which: swaps (OTC)
of which: options (OTC)
Equity / index
of which: swaps (OTC)
of which: options (OTC)
of which: futures (ETD)
of which: options (ETD)
of which: client-cleared transactions (ETD)
Commodities
of which: swaps (OTC)
of which: options (OTC)
of which: futures (ETD)
of which: forwards (ETD)
of which: client-cleared transactions (ETD)
Other
5
Total derivative instruments,
based on netting under IFRS Accounting Standards
6
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 AG 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.
On a notional amount basis, approximately
% of OTC interest rate contracts held as of 31 December 2024
(31 December 2023:
%) mature within one year,
% (31 December 2023:
%) within one to five years and
%
(31 December 2023:
%) after five years.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 184
Note 11 Derivative instruments (continued)
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
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 increased by USD
trn compared with 31 December 2023,
mainly reflecting the merger of UBS AG and Credit Suisse AG, and higher business volume in the Investment Bank, partly
offset by unwinding activities in Non-core and Legacy.
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
Balance recognized upon the merger of UBS AG and Credit Suisse AG
3
Additions
Disposals / write-offs
4
(464 )
(118 )
(357 )
(940 )
(1,449 )
Reclassifications
5
(12 )
(1,388 )
(158 )
Foreign currency translation
(597 )
(112 )
(212 )
(34 )
(955 )
Balance at the end of the year
Accumulated depreciation
Balance at the beginning of the year
Accumulated depreciation recognized upon the merger of UBS AG and
Credit Suisse AG
3
Depreciation
Impairment
6
Disposals / write-offs
4
(462 )
(118 )
(357 )
(937 )
(1,445 )
Reclassifications
5
(32 )
(3 )
(5 )
(40 )
Foreign currency translation
(407 )
(69 )
(118 )
(594 )
Balance at the end of the year
Net book value
Net book value at the beginning of the year
Net book value at the end of the year
7
1 Includes leasehold improvements and IT hardware. 2 Represents right-of-use assets recognized by UBS AG as lessee. UBS AG 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
m (2023: USD
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 merger of UBS AG and Credit Suisse AG. 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
m for Group Items. The recoverable amount based on a value-in-use approach was determined to be zero. 7 Consists of USD
m related to software and
USD
m related to Owned properties and equipment.
Note 13 Goodwill and intangible assets
Introduction
UBS AG performs an impairment test on its goodwill assets on an annual basis or when indicators of impairment exist.
UBS AG 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 AG 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.
Upon the merger of UBS AG and Credit Suisse AG in May 2024, an existing goodwill balance of USD
bn in Personal
& Corporate Banking was transferred to UBS AG. This goodwill balance was included in the impairment test as of
31 December 2024.
›
Refer to Note 2 for more information about the merger of UBS AG and Credit Suisse AG
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 185
Note 13 Goodwill and intangible assets (continued)
As of 31 December 2024, total goodwill recognized on the balance sheet was USD
bn, of which USD
bn was
carried by the Global Wealth Management Americas CGU, USD
bn was carried by the Global Wealth Management
Switzerland and International CGU, USD
bn was carried by Asset Management and USD
bn was carried by Personal
& Corporate Banking. Based on the impairment testing methodology described below, UBS AG 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 UBS’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 UBS AG’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
%, the
discount rates were changed by
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 UBS AG’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
Global Wealth Management Switzerland and International
Asset Management
Personal & Corporate Banking
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 186
Note 13 Goodwill and intangible assets (continued)
USD m
Goodwill
Intangible
assets
1
2024
2023
Historical cost
Balance at the beginning of the year
Balance recognized upon the merger of UBS AG and Credit Suisse AG
2
Additions
Disposals
3
(1 )
(1 )
(40 )
Reclassifications
4
(384 )
(384 )
Foreign currency translation
(52 )
(61 )
(113 )
Balance at the end of the year
Accumulated amortization and impairment
Balance at the beginning of the year
Balance recognized upon the merger of UBS AG and Credit Suisse AG
2
Amortization
Impairment / (reversal of impairment)
Disposals
3
(30 )
Reclassifications
4
(96 )
(96 )
Foreign currency translation
(23 )
(23 )
Balance at the end of the year
Net book value at the end of the year
of which: Global Wealth Management Americas
of which: Global Wealth Management Switzerland and International
of which: Personal & Corporate Banking
of which: Asset Management
of which: Investment Bank
of which: Non-core and Legacy
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 merger of UBS AG and Credit Suisse AG. 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
2026
2027
2028
2029
Thereafter
Not amortized due to indefinite useful life
Total
Note 14 Other assets
a) Other financial assets measured at amortized cost
USD m
31.12.24
31.12.23
Debt securities
Loans to financial advisors
Fee- and commission-related receivables
Finance lease receivables
Settlement and clearing accounts
Accrued interest income
Other
1
Total other financial assets measured at amortized cost
1 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
bn (the Portfolio) to
Other financial assets measured at
amortized cost
.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 187
Note 14 Other assets (continued)
The Portfolio’s cumulative fair value losses of USD
m pre-tax and USD
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
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
Deposits and collateral provided in connection with litigation, regulatory and similar matters
1
Prepaid expenses
Current tax assets
VAT, withholding tax and other tax receivables
Properties and other non-current assets held for sale
Assets of disposal groups held for sale
2
Other
Total other non-financial assets
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, customer deposits, and funding from UBS Group AG
a) Amounts due to banks and customer deposits
USD m
31.12.24
31.12.23
Amounts due to banks
Customer deposits
of which: demand deposits
of which: retail savings / deposits
of which: sweep deposits
of which: time deposits
1
Total amounts due to banks and customer deposits
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.
Customer deposits increased by USD
bn, with the increase of USD
bn in May 2024 relating to the merger of
UBS AG and Credit Suisse AG. Excluding the effects of the merger, there was a decrease of USD
bn, driven by
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.
b) Funding from UBS Group AG measured at amortized cost
USD m
31.12.24
31.12.23
Debt contributing to total loss-absorbing capacity (TLAC)
Debt eligible as high-trigger loss-absorbing additional tier 1 capital instruments
1
Debt eligible as low-trigger loss-absorbing additional tier 1 capital instruments
Other
2
Total funding from UBS Group AG measured at amortized cost
3,4
1 For 31 December 2024, includes USD
bn (31 December 2023: USD
bn) that are, upon the occurrence of a trigger event or a viability event, subject to conversion into ordinary UBS shares. 2 Includes debt
no longer eligible as TLAC having a residual maturity of less than one year and high-trigger loss-absorbing additional tier 1 capital instruments that ceased to be eligible when UBS Group AG issued notice of
redemption. 3 The Total funding from UBS Group AG measured at amortized cost consists of subordinated debt of UBS AG and its subsidiaries toward UBS Group AG. 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 instruments contributing to TLAC are subordinated
since 1.1.2020. 4 UBS AG has also recognized funding from UBS Group AG that is designated at fair value. Refer to Note 19b for more information.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 188
Note 15 Amounts due to banks, customer deposits, and funding from UBS Group AG (continued)
UBS AG uses interest rate and foreign exchange derivatives to manage the risks inherent in certain debt instruments held
at amortized cost. In some cases, UBS AG 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
Funding
from UBS Group AG measured at amortized cost
bn as of 31 December 2024 and a decrease
of USD
bn as of 31 December 2023. The movement was mainly the result of the merger of UBS AG and Credit Suisse
AG.
Of the
Total funding from UBS Group AG measured at amortized cost
bn
pays a fixed interest rate and USD
bn pays a floating rate of interest.
›
Refer to Note 24 for maturity information
Note 16 Debt issued designated at fair value
USD m
31.12.24
31.12.23
Issued debt instruments
Equity-linked
1
Rates-linked
Credit-linked
Fixed-rate
Commodity-linked
Other
Total debt issued designated at fair value
2
of which: issued by UBS AG with original maturity greater than one year
3
of which: issued by Credit Suisse International standalone with original maturity greater than one year
3
1 Includes investment fund unit-linked instruments issued. 2 As of 31 December 2024,
% of Total debt issued designated at fair value was unsecured. 3 Based on original contractual maturity without
considering any early redemption features.
Note 17 Debt issued measured at amortized cost
USD m
31.12.24
31.12.23
Short-term debt
1
Senior unsecured debt
of which: issued by UBS AG with original maturity greater than one year
Covered bonds
Subordinated debt
of which: eligible as non-Basel III-compliant tier 2 capital instruments
Debt issued through the Swiss central mortgage institutions
Other long-term debt
Long-term debt
2
Total debt issued measured at amortized cost
3,4
1 Debt with an original contractual maturity of less than one year, includes mainly certificates of deposit and commercial paper. 2 Debt with an original contractual maturity greater than or equal to one year. The
classification of debt issued into short-term and long -term does not consider any early redemption features. 3 Net of bifurcated embedded derivatives, the fair value of which was not material for the periods
presented. 4 Except for Covered bonds (
% secured), Debt issued through the Swiss central mortgage institutions (
% secured) and Other long-term debt (
% secured),
% of the balance was unsecured
as of 31 December 2024.
UBS AG uses interest rate and foreign exchange derivatives to manage the risks inherent in certain debt instruments held
at amortized cost. In some cases, UBS AG 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
measured at amortized cost
bn as of 31 December 2024 and a decrease of USD
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
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 189
Note 18 Provisions and contingent liabilities
a) Provisions
The table below presents an overview of total provisions.
USD m
31.12.24
31.12.23
Provisions other than provisions for expected credit losses
Provisions for expected credit losses
1
Total provisions
1 Refer to Note 10 for more information about ECL provisions recognized for off-balance sheet financial instruments and credit lines.
The following table presents additional information for provisions other than provisions for expected credit losses.
Litigation,
regulatory and
similar matters
1
Restructuring
2
Real estate
3
Other
4
Total 2024
Balance at the beginning of the year
Provisions recognized upon merger of UBS AG and Credit Suisse AG
5
Increase in provisions recognized in the income statement
6
Release of provisions recognized in the income statement
(199 )
(167 )
(3 )
(78 )
(448 )
Reclassifications
6
Provisions used in conformity with designated purpose
(1,580 )
6
(472 )
(17 )
(34 )
(2,103 )
Foreign currency translation and other movements
(99 )
(1 )
(19 )
(115 )
Balance at the end of the year
1 Consists of provisions for losses resulting from legal, liability and compliance risks. 2 Consists of USD
m of provisions for onerous contracts related to real estate as of 31 December 2024 (31 December 2023:
USD
m); USD
m of personnel-related restructuring provisions as of 31 December 2024 (31 December 2023: USD
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 Refer to Note 2 for more information about the merger of UBS AG
and Credit Suisse AG. 6 Mainly relating to the funding by UBS AG 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 AG increased the IAS 37 Provisions related to litigation, regulatory and similar matters by USD
m with a corresponding impact on the income statement, as the probability of an outflow of resources increased,
bringing the total IAS 37 provision for this matter to USD
m. The provision has been used to recognize the funding obligation, which was accounted for as a derivative liability with a fair value of USD
m.
Post the expiry of the offer, USD
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 and personnel-related provisions. Onerous contracts for property are recognized
when UBS AG 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.
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
UBS 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 is involved in various disputes and legal proceedings, including
litigation, arbitration, and regulatory and criminal investigations. “UBS”, “we” and “our”, for purposes of this Note,
refer to UBS AG and / or one or more of its subsidiaries, as applicable.
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 UBS 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 UBS 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. UBS 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 UBS 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 UBS, but are nevertheless expected to be, based on UBS’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.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 190
Note 18 Provisions and contingent liabilities (continued)
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 UBS due to potential financial,
reputational and other effects. The amount of damages claimed, the size of a transaction or other information is provided
where available and appropriate in order to assist users in considering the magnitude of potential exposures.
In the case of certain matters below, we state that we have established a provision, and for the other matters, we make
no such statement. When we make this statement and we expect disclosure of the amount of a provision to prejudice
seriously our position with other parties in the matter because it would reveal what UBS believes to be the probable and
reliably estimable outflow, we do not disclose that amount. In some cases we are subject to confidentiality obligations
that preclude such disclosure. With respect to the matters for which we do not state whether we have established a
provision, either: (a) we have not established a provision; or (b) we have established a provision but expect disclosure of
that fact to prejudice seriously our position with other parties in the matter because it would reveal the fact that UBS
believes an outflow of resources to be probable and reliably estimable.
With respect to certain litigation, regulatory and similar matters for which we have established provisions, we are able to
estimate the expected timing of outflows. However, the aggregate amount of the expected outflows for those matters
for which we are able to estimate expected timing is immaterial relative to our current and expected levels of liquidity
over the relevant time periods.
The aggregate amount provisioned for litigation, regulatory and similar matters as a class is disclosed in the “Provisions”
table in Note 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 are in the range of USD
bn to
USD
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.
Provisions for litigation, regulatory and similar matters by business division and in Group Items
1
USD m
Global Wealth
Manage-
ment
Personal &
Corporate
Banking
Asset
Manage-
ment
Investment
Bank
Non-core
and
Legacy
Group
Total
Balance at the beginning of the year
Provisions recognized upon merger of UBS AG and Credit Suisse AG
2
Increase in provisions recognized in the income statement
3
Release of provisions recognized in the income statement
(18 )
(9 )
(171 )
(2 )
(199 )
Reclassifications
3
Provisions used in conformity with designated purpose
3
(55 )
(20 )
(20 )
(1,481 )
(4 )
(1,580 )
Foreign currency translation and other movements
(69 )
(10 )
(11 )
(10 )
(99 )
Balance at the end of the year
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 and 11 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, Noncore 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 Refer to Note 2 for more information about the merger of UBS AG and Credit Suisse AG. 3 Mainly relates to the funding by UBS AG 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 AG increased the IAS 37 Provisions related to litigation, regulatory and similar matters by USD
m with a corresponding impact
on the income statement, as the probability of an outflow of resources increased, bringing the total IAS 37 provision for this matter to USD
m. The provision has been used to recognize the funding obligation,
which was accounted for as a derivative liability with a fair value of USD
m. Post the expiry of the offer, USD
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 AG consolidated financial statements 191
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
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
bn on
UBS AG and UBS (France) S.A. and awarded EUR
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
m, the confiscation of
EUR
bn, and awarded civil damages to the French state of EUR
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
bn, the penalty of EUR
m and the EUR
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
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
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
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
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 AG consolidated financial statements 192
Note 18 Provisions and contingent liabilities (continued)
3. Foreign exchange, LIBOR and benchmark rates, and other trading practices
Foreign-exchange-related regulatory matters:
concerning possible manipulation of foreign exchange markets and precious metals prices. As a result of these
investigations, UBS entered into resolutions with Swiss, US and 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
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:
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:
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:
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 AG consolidated financial statements 193
Note 18 Provisions and contingent liabilities (continued)
Government bonds:
European Union antitrust rules between 2007 and 2011 relating to European government bonds. The European
Commission fined UBS EUR
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
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
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
(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
% 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
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 AG consolidated financial statements 194
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
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
m.
An action by Home Equity Asset Trust 2007-1 alleges damages of not less than USD
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
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
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
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
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
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
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
%. In December
2023, USD
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 AG consolidated financial statements 195
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
m. In addition, the court seized certain client assets in the
amount of approximately CHF
m and ordered Credit Suisse AG to pay a compensatory claim in the amount of
approximately CHF
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
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
.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 196
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
% of the SCFFs’ net
asset value were tendered in the offer and accepted. Fund units accepted in the offer were redeemed at
% 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.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 197
Note 19 Other liabilities
a) Other financial liabilities measured at amortized cost
USD m
31.12.24
31.12.23
Other accrued expenses
Accrued interest expenses
Settlement and clearing accounts
Lease liabilities
Other
Total other financial liabilities measured at amortized cost
b) Other financial liabilities designated at fair value
USD m
31.12.24
31.12.23
Financial liabilities related to unit-linked investment contracts
Securities financing transactions
Over-the-counter debt instruments and other
Funding from UBS Group AG
1
Total other financial liabilities designated at fair value
1 The Funding from UBS Group AG consists of subordinated debt of UBS AG and its subsidiaries toward UBS Group AG. 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.
c) Other non-financial liabilities
USD m
31.12.24
31.12.23
Compensation-related liabilities
of which: financial advisor compensation plans
of which: cash awards and other compensation plans
of which: net defined benefit liability
of which: other compensation-related liabilities
1
Current tax liabilities
Deferred tax liabilities
VAT, withholding tax and other tax payables
Deferred income
Liabilities of disposal groups held for sale
2
Other
Total other non-financial liabilities
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 AG consolidated financial statements 198
Additional information
Note 20 Expected credit loss measurement
a) Expected credit losses in the period
Total net credit loss expenses were USD
m in 2024, reflecting net credit loss releases of USD
m related to stage 1
and 2 positions and net credit loss expenses of USD
m related to credit-impaired (stage 3) positions, predominantly
in the corporate lending portfolios.
›
Refer to Note 20b for more information regarding changes to expected credit loss 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
Total
For the year ended 31.12.24
Global Wealth Management
(49 )
(1 )
Personal & Corporate Banking
(61 )
Asset Management
Investment Bank
Non-core and Legacy
(5 )
Group Items
Total
(63 )
For the year ended 31.12.23
Global Wealth Management
(2 )
Personal & Corporate Banking
Asset Management
(1 )
(1 )
Investment Bank
Non-core and Legacy
Group Items
Total
For the year ended 31.12.22
Global Wealth Management
(5 )
Personal & Corporate Banking
Asset Management
Investment Bank
(18 )
(12 )
Non-core and Legacy
Group Items
Total
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
m increase in ECL allowances. This included
an increase of USD
m in the Investment Bank related to large corporate clients and a USD
m decrease in Global Wealth
Management related to lending for ship financing.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 199
Note 20 Expected credit loss measurement (continued)
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.
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 (the GMGC), 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
m as of 31 December 2024 and included post-model
adjustments of USD
m (31 December 2023: USD
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.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 200
Note 20 Expected credit loss measurement (continued)
Economic scenarios and weights applied
Assigned weights in %
ECL scenario
31.12.24
31.12.23
Asset price appreciation / inflation
Baseline
Mild debt crisis
Stagflationary geopolitical crisis
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
(1.4 )
(4.8 )
(4.4 )
Eurozone
(1.7 )
(5.6 )
(0.1 )
(5.7 )
Switzerland
(1.1 )
(4.8 )
(4.9 )
Consumer price index (percentage change)
United States
Eurozone
Switzerland
(0.2 )
Unemployment rate (end-of-period level, %)
United States
Eurozone
Switzerland
Fixed income: 10-year government bonds (change in yields, basis
points)
USD
(137 )
(77 )
EUR
(113 )
(68 )
CHF
(4 )
(22 )
(1 )
Equity indices (percentage change)
S&P 500
(28.1 )
(56.5 )
(14.0 )
(51.2 )
EuroStoxx 50
(0.6 )
(27.9 )
(56.6 )
(18.3 )
(52.7 )
SPI
(0.6 )
(26.0 )
(56.6 )
(13.0 )
(52.7 )
Swiss real estate (percentage change)
Single-Family Homes
(4.3 )
(18.5 )
(3.0 )
(28.6 )
Other real estate (percentage change)
United States (S&P / Case–Shiller)
(7.6 )
(20.2 )
(5.2 )
(30.5 )
Eurozone (House Price Index)
(6.1 )
(8.4 )
(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
(1.6 )
(4.8 )
(4.4 )
Eurozone
(1.7 )
(5.6 )
(0.1 )
(5.7 )
Switzerland
(1.2 )
(4.8 )
(4.9 )
Consumer price index (percentage change)
United States
(0.1 )
Eurozone
(0.2 )
Switzerland
(0.4 )
Unemployment rate (end-of-period level, %)
United States
Eurozone
Switzerland
Fixed income: 10-year government bonds (change in yields, basis
points)
USD
(82 )
(215 )
(78 )
(155 )
EUR
(90 )
(185 )
(78 )
(140 )
CHF
(41 )
(73 )
(34 )
(28 )
Equity indices (percentage change)
S&P 500
(26.6 )
(51.5 )
(12.2 )
(45.6 )
EuroStoxx 50
(26.4 )
(51.6 )
(16.6 )
(47.2 )
SPI
(24.5 )
(51.6 )
(11.2 )
(47.2 )
Swiss real estate (percentage change)
Single-Family Homes
(1.5 )
(4.4 )
(18.5 )
(3.0 )
(28.6 )
Other real estate (percentage change)
United States (S&P / Case–Shiller)
(8.6 )
(20.0 )
(5.2 )
(30.2 )
Eurozone (House Price Index)
(5.9 )
(8.4 )
(5.2 )
(12.9 )
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 201
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 in 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
Balance as of 31 December 2023
(1,244 )
(308 )
(272 )
(664 )
Merger with Credit Suisse AG
(2,114 )
(322 )
(268 )
(1,523 )
Net movement from new and derecognized transactions
1
(16 )
(6 )
(21 )
of which: Private clients with mortgages
(7 )
of which: Real estate financing
of which: Large corporate clients
(46 )
(21 )
(36 )
of which: SME clients
of which: Other
(2 )
Remeasurements with stage transfers
2
(453 )
(31 )
(445 )
of which: Private clients with mortgages
(3 )
(3 )
of which: Real estate financing
(9 )
(5 )
(5 )
of which: Large corporate clients
(73 )
(7 )
(82 )
of which: SME clients
(318 )
(9 )
(312 )
of which: Other
(50 )
(8 )
(46 )
(1 )
Remeasurements without stage transfers
3
(26 )
(175 )
of which: Private clients with mortgages
(2 )
of which: Real estate financing
of which: Large corporate clients
(17 )
of which: SME clients
(94 )
(100 )
of which: Other
(59 )
(28 )
(65 )
(9 )
(21 )
(3 )
(1 )
(6 )
Model changes
4
(49 )
(14 )
(35 )
Movements with profit or loss impact
5
(544 )
(55 )
(608 )
Movements without profit or loss impact (write-off, FX and other)
6
(28 )
Balance as of 31 December 2024
(3,527 )
(487 )
(623 )
(2,417 )
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.
–
Movements with profit or loss impact
:
Stage 1 and 2 ECL allowances and provisions increased on a net basis by
USD
m.
–
Merger with Credit Suisse AG portfolios
:
Expected credit loss (ECL) allowances and provisions of USD
m for
performing loans were recognized as of the merger date.
–
Net movement from new and derecognized transactions
m and stage 2 increases
of USD
m. Stage 2 increases are predominantly driven by expenses on the corporate lending portfolios.
–
Remeasurements with stage transfers
m increases in stage 2, following a number of 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 increased by USD
m. Stage 3 and PCI allowances
decreased by USD
m, mainly driven by net write-offs.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 202
Note 20 Expected credit loss measurement (continued)
Development of ECL allowances and provisions
USD m
Total
Stage 1
Stage 2
Stage 3
Balance as of 31 December 2022
(1,091 )
(260 )
(267 )
(564 )
Net movement from new and derecognized transactions
1
(11 )
(27 )
of which: Private clients with mortgages
(5 )
(8 )
of which: Real estate financing
(2 )
(4 )
of which: Large corporate clients
(8 )
of which: SME clients
(3 )
(3 )
of which: Other
(4 )
(4 )
(1 )
(1 )
Remeasurements with stage transfers
2
(140 )
(7 )
(142 )
of which: Private clients with mortgages
(1 )
of which: Real estate financing
(2 )
(5 )
of which: Large corporate clients
(76 )
(3 )
(76 )
of which: SME clients
(56 )
(1 )
(55 )
of which: Other
(10 )
(11 )
Remeasurements without stage transfers
3
of which: Private clients with mortgages
(5 )
(3 )
of which: Real estate financing
(1 )
of which: Large corporate clients
(8 )
of which: SME clients
(1 )
of which: Other
(34 )
(2 )
(14 )
(18 )
(15 )
(15 )
(7 )
(8 )
Model changes
4
(27 )
(18 )
(9 )
Movements with profit or loss impact
5
(143 )
(30 )
(120 )
Movements without profit or loss impact (write-off, FX and other)
6
(10 )
(18 )
(13 )
Balance as of 31 December 2023
(1,244 )
(308 )
(272 )
(664 )
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.
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 )
(1 )
Loans to financial advisors
(1 )
(1 )
Credit cards
(12 )
(12 )
Consumer financing
(19 )
(12 )
(7 )
Commodity trade finance
(1 )
Other
(201 )
(189 )
(10 )
(1 )
On- and off-balance sheet
(623 )
(420 )
(131 )
(72 )
d) Maximum exposure to credit risk
The tables below provide UBS AG’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.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 203
Note 20 Expected credit loss measurement (continued)
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
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
Amounts due from banks
4
Receivables from securities financing transactions
measured at amortized cost
Cash collateral receivables on derivative instruments
5,6
Loans and advances to customers
Other financial assets measured at amortized cost
Total financial assets measured at amortized cost
Financial assets measured at fair value
through other comprehensive income – debt
Total maximum exposure to credit risk
reflected on the balance sheet within the scope of ECL
Guarantees
7
Irrevocable loan commitments
Forward starting reverse repurchase and securities
borrowing agreements
Committed unconditionally revocable credit lines
Total maximum exposure to credit risk not
reflected on the balance sheet within the scope of ECL
31.12.23
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
Amounts due from banks
4
Receivables from securities financing transactions
measured at amortized cost
Cash collateral receivables on derivative instruments
5,6
Loans and advances to customers
Other financial assets measured at amortized cost
Total financial assets measured at amortized cost
Financial assets measured at fair value
through other comprehensive income – debt
Total maximum exposure to credit risk
reflected on the balance sheet within the scope of ECL
Guarantees
7
Irrevocable loan commitments
Forward starting reverse repurchase and securities
borrowing agreements
Committed unconditionally revocable credit lines
Total maximum exposure to credit risk not
reflected on the balance sheet within the scope of ECL
1 Of which: USD
m for 31 December 2024 (31 December 2023: USD
m) relates to total credit-impaired financial assets measured at amortized cost and USD
m for 31 December 2024 (31 December
2023: USD
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 AG 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 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, inventory, mortgage loans, 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.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 204
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 UBS AG’s internal credit
rating system and year-end stage classification. Under IFRS 9, the credit risk rating reflects UBS AG’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 regarding UBS AG’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
(186 )
of which: stage 1
of which: stage 2
(186 )
Amounts due from banks
(42 )
of which: stage 1
(1 )
of which: stage 2
(5 )
of which: stage 3
(36 )
Receivables from securities financing transactions
(2 )
of which: stage 1
(2 )
Cash collateral receivables on derivative instruments
of which: stage 1
Loans and advances to customers
(2,830 )
of which: stage 1
(276 )
of which: stage 2
(323 )
of which: stage 3
(2,230 )
Other financial assets measured at amortized cost
(135 )
of which: stage 1
(25 )
of which: stage 2
(7 )
of which: stage 3
(103 )
Total financial assets measured at amortized cost
(3,195 )
On-balance sheet financial instruments
Financial assets measured at FVOCI – debt instruments
Total on-balance sheet financial instruments
(3,195 )
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.
Financial assets measured at FVOCI – debt instruments
Total on-balance sheet financial instruments
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
(61 )
of which: stage 1
(16 )
of which: stage 2
(24 )
of which: stage 3
(22 )
Irrevocable loan commitments
(192 )
of which: stage 1
(105 )
of which: stage 2
(61 )
of which: stage 3
(26 )
Forward starting reverse repurchase and securities borrowing agreements
Total off-balance sheet financial instruments
(253 )
Credit lines
Committed unconditionally revocable credit lines
(75 )
of which: stage 1
(59 )
of which: stage 2
(17 )
of which: stage 3
Irrevocable committed prolongation of existing loans
(3 )
of which: stage 1
(3 )
of which: stage 2
of which: stage 3
Total credit lines
(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 AG consolidated financial statements 205
Note 20 Expected credit loss measurement (continued)
Financial assets subject to credit risk by rating category
USD m
31.12.23
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
(26 )
of which: stage 1
of which: stage 2
(26 )
Amounts due from banks
(7 )
of which: stage 1
(6 )
of which: stage 2
(1 )
of which: stage 3
Receivables from securities financing transactions
(2 )
of which: stage 1
(2 )
Cash collateral receivables on derivative instruments
of which: stage 1
Loans and advances to customers
(935 )
of which: stage 1
(173 )
of which: stage 2
(185 )
of which: stage 3
(577 )
Other financial assets measured at amortized cost
(87 )
of which: stage 1
(16 )
of which: stage 2
(5 )
of which: stage 3
(66 )
Total financial assets measured at amortized cost
(1,057 )
On-balance sheet financial instruments
Financial assets measured at FVOCI – debt instruments
Total on-balance sheet financial instruments
(1,057 )
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
31.12.23
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
(40 )
of which: stage 1
(14 )
of which: stage 2
(7 )
of which: stage 3
(19 )
Irrevocable loan commitments
(95 )
of which: stage 1
(55 )
of which: stage 2
(38 )
of which: stage 3
(2 )
Forward starting reverse repurchase and securities borrowing agreements
Total off-balance sheet financial instruments
(134 )
Credit lines
Committed unconditionally revocable credit lines
(49 )
of which: stage 1
(39 )
of which: stage 2
(10 )
of which: stage 3
Irrevocable committed prolongation of existing loans
(4 )
of which: stage 1
(3 )
of which: stage 2
of which: stage 3
Total credit lines
(53 )
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 AG consolidated financial statements 206
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, 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 the “UBS AG consolidated supplemental disclosures required under SEC regulations” section of this report for more
information about the maturity profile of UBS AG’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 AG consolidated financial statements 207
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%
Stagflationary
geopolitical crisis
100% Mild debt
crisis
Weighted average
Change in key parameters
Fixed income: Government bonds (absolute change)
–0.50%
(5 )
(6 )
(124 )
(15 )
+0.50%
+1.00%
Unemployment rate (absolute change)
–1.00%
(6 )
(10 )
(117 )
(18 )
–0.50%
(3 )
(5 )
(63 )
(9 )
+0.50%
+1.00%
Real GDP growth (relative change)
–2.00%
–1.00%
+1.00%
(24 )
(44 )
(49 )
(27 )
+2.00%
(48 )
(80 )
(83 )
(55 )
House Price Index (relative change)
–5.00%
–2.50%
+2.50%
(6 )
(14 )
(102 )
(20 )
+5.00%
(9 )
(23 )
(188 )
(33 )
Equity (S&P500, EuroStoxx, SMI) (relative change)
–10.00%
–5.00%
+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.
The forecasting horizon is limited to three years, with a model-based mean reversion of PD and LGD assumed thereafter.
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 9)
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
(295 )
(246 )
(370 )
(283 )
(395 )
Total
(1,110 )
(818 )
(2,381 )
(1,116 )
(2,234 )
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 208
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 9)
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
(133 )
(43 )
(521 )
(63 )
(368 )
Real estate financing
(52 )
(34 )
(200 )
(36 )
(125 )
Large corporate clients
(152 )
(108 )
(252 )
(146 )
(234 )
SME clients
(103 )
(85 )
(186 )
(96 )
(164 )
Other segments
(140 )
(126 )
(162 )
(151 )
(302 )
Total
(580 )
(396 )
(1,322 )
(492 )
(1,193 )
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
m (31 December
2023: USD
m) instead of USD
m (31 December 2023: USD
m) if ECLs had been determined solely on the
baseline scenario
. The weighted-average ECL therefore amounted to
% (31 December 2023:
%) of the baseline
value. The effects of weighting each of the four scenarios 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
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
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 SMEs and Real estate financings 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 AG consolidated financial statements 209
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 AG
applies valuation adjustments at an individual instrument level, consistent with that unit of account. However, if certain
conditions are met, UBS AG 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 AG’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 AG’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 AG consolidated financial statements 210
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, and for Credit-Suisse-related assets and liabilities for the period between the merger date and 31 December
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. As of 31 December 2024, Level 3 assets and Level 3 liabilities increased by
USD
bn and USD
bn, respectively, compared with 31 December 2023, following the merger of UBS AG and Credit
Suisse AG.
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
of which: Equity instruments
of which: Government bills / bonds
of which: Investment fund units
of which: Corporate and municipal bonds
of which: Loans
of which: Asset-backed securities
Derivative financial instruments
of which: Foreign exchange
of which: Interest rate
of which: Equity / index
of which: Credit
of which: Commodities
Brokerage receivables
Financial assets at fair value not held for trading
of which: Financial assets for unit-linked investment contracts
of which: Corporate and municipal bonds
of which: Government bills / bonds
of which: Loans
of which: Securities financing transactions
of which: Asset-backed securities
of which: Auction rate securities
of which: Investment fund units
of which: Equity instruments
Financial assets measured at fair value through other comprehensive income on a recurring basis
Financial assets measured at fair value through other comprehensive income
of which: Commercial paper and certificates of deposit
of which: Corporate and municipal bonds
Non-financial assets measured at fair value on a recurring basis
Precious metals and other physical commodities
Non-financial assets measured at fair value on a non-recurring basis
Other non-financial assets
2
Total assets measured at fair value
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 211
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
of which: Equity instruments
of which: Corporate and municipal bonds
of which: Government bills / bonds
of which: Investment fund units
Derivative financial instruments
of which: Foreign exchange
of which: Interest rate
of which: Equity / index
of which: Credit
of which: Commodities
of which: Loan commitments measured at FVTPL
Financial liabilities designated at fair value on a recurring basis
Brokerage payables designated at fair value
Debt issued designated at fair value
Other financial liabilities designated at fair value
of which: Financial liabilities related to unit-linked investment contracts
of which: Securities financing transactions
of which: Funding from UBS Group AG
of which: Over-the-counter debt instruments
and others
Total liabilities measured at fair value
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 AG 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.
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 AG
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 UBS AG incorporate the funding and credit characteristics of the instruments to which they are applied.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 212
Note 21 Fair value measurement (continued)
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.
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.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 213
Note 21 Fair value measurement (continued)
Product
Valuation and classification in the fair value hierarchy
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 AG’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.
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.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 214
Note 21 Fair value measurement (continued)
Derivative product
Valuation and classification in the fair value hierarchy
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.
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
the transaction is closed out.
The table below summarizes the changes in deferred day-1 profit or loss reserves during the respective period.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 215
Note 21 Fair value measurement (continued)
Deferred day-1 profit or loss reserves
USD m
2024
2023
2022
Reserve balance at the beginning of the year
Profit / (loss) deferred on new transactions
(Profit) / loss recognized in the income statement
(215 )
(275 )
(295 )
Foreign currency translation
(6 )
Reserve balance at the end of the year
Own credit
Own credit risk is reflected in the valuation of UBS AG’s fair value option liabilities where this component is considered
relevant for valuation purposes by UBS AG’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
Retained earnings, with no reclassification to the income
statement in future periods.
statement, as UBS AG 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 AG’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
Realized gain / (loss)
(50 )
Unrealized gain / (loss)
(891 )
(869 )
Total gain / (loss), before tax
(941 )
(861 )
of which: recognized during the period and disclosed in the Statement of comprehensive income
(861 )
of which: recognized upon the merger of UBS AG and Credit Suisse AG
(1,016 )
1 Refer to Note 2 for more information about the merger of UBS AG and Credit Suisse AG.
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 )
(312 )
of which: debt issued designated at fair value
(780 )
(208 )
of which: other financial liabilities designated at fair value
(385 )
(105 )
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,
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.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 216
Note 21 Fair value measurement (continued)
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 AG’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 UBS AG 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, UBS AG 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
Credit valuation adjustments
1
(125 )
(37 )
Funding and debit valuation adjustments
(96 )
(82 )
Other valuation adjustments
(1,206 )
(730 )
of which: liquidity
(746 )
(308 )
of which: model uncertainty
(460 )
(423 )
1 Amounts do not include reserves against defaulted counterparties.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 217
Note 21 Fair value measurement (continued)
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 UBS AG’s
estimates and assumptions, but rather the different underlying characteristics of the relevant assets and liabilities held by
UBS AG. 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.
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
Relative value to
market comparable
Bond price equivalent
points
Discounted expected
cash flows
Discount margin
basis
points
Traded loans, loans
designated at fair value
and guarantees
Relative value to
market comparable
Loan price equivalent
points
Discounted expected
cash flows
Credit spread
basis
points
Market comparable
and securitization
model
Credit spread
basis
points
Asset-backed securities
Relative value to
market comparable
Bond price equivalent
points
Investment fund units
3
Relative value to
market comparable
Net asset value
Equity instruments
3
Relative value to
market comparable
Price
Debt issued designated at
fair value
4
Other financial liabilities
designated at fair value
Discounted expected
cash flows
Funding spread
basis
points
Derivative financial instruments
Interest rate
Option model
Volatility of interest
rates
basis
points
IR-to-IR correlation
%
Discounted expected
cash flows
Funding spread
basis
points
Credit
Discounted expected
cash flows
Credit spreads
basis
points
Credit correlation
%
Recovery rates
%
Option model
Credit volatility
%
Equity / index
Option model
Equity dividend yields
%
Volatility of equity
stocks, equity and
other indices
%
Equity-to-FX
correlation
(65 )
(40 )
%
Equity-to-equity
correlation
%
Loan commitments
measured at FVTPL
Relative value to
market comparable
Loan price equivalent
points
1 The ranges of significant unobservable inputs are represented in points, percentages and basis points. Points are a percentage of par (e.g. 100 points would be 100% of par). 2 Weighted averages are provided
for most non-derivative financial instruments and were calculated by weighting inputs based on the fair values of the respective instruments. Weighted averages are not provided for inputs related to Other financial
liabilities designated at fair value and Derivative financial instruments, as this would not be meaningful. 3 The range of inputs is not disclosed, as there is a dispersion of values given the diverse nature of the
investments. 4 Debt issued designated at fair value primarily consists of UBS structured notes, which include variable maturity notes with various equity and foreign exchange underlying risks, as well as rates-linked
and credit-linked notes, all of which have embedded derivative parameters that are considered to be unobservable. The equivalent derivative instrument parameters for debt issued or embedded derivatives for over-
the-counter debt instruments are presented in the respective derivative financial instruments lines in this table.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 218
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 AG can fund itself on an unsecured basis but
provide an estimate of where UBS AG 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.
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.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 219
Note 21 Fair value measurement (continued)
Input
Description
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, UBS AG 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
(143 )
(19 )
Securities financing transactions
(24 )
(24 )
Auction rate securities
(6 )
(21 )
Asset-backed securities
(28 )
(22 )
Equity instruments
(308 )
(178 )
Investment fund units
(181 )
(23 )
Loan commitments measured at FVTPL
(42 )
(10 )
Interest rate derivatives, net
(70 )
(18 )
Credit derivatives, net
(117 )
(5 )
Foreign exchange derivatives, net
(2 )
(4 )
Equity / index derivatives, net
(617 )
(285 )
Other
(161 )
(39 )
Total
(1,700 )
(648 )
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. 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.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 220
Note 21 Fair value measurement (continued)
Movements of Level 3 instruments
USD bn
Balance at
the
beginning
of the
period
Effect from
merger of
UBS AG
and Credit
Suisse AG
1
Net gains /
losses
included in
compre-
hensive
income
2
of which:
related to
instruments
held at the
end of the
period
Purchases
Sales
Issuances
Settlements
Transfers
into
Level 3
Transfers
out of
Level 3
Foreign
currency
translation
Balance
at the end
of the
period
For the twelve months ended 31 December 2024
3
Financial assets at fair value held for
trading
(0.0 )
(0.3 )
(4.2 )
(3.1 )
(0.4 )
(0.1 )
of which: Equity instruments
(0.1 )
(0.1 )
(0.2 )
(0.0 )
(0.0 )
(0.0 )
of which: Corporate and municipal
bonds
(0.1 )
(0.1 )
(0.3 )
(0.0 )
(0.0 )
(0.0 )
of which: Loans
(0.1 )
(3.5 )
(3.0 )
(0.4 )
(0.1 )
Derivative financial instruments –
assets
(0.1 )
(0.7 )
(0.4 )
(0.0 )
of which: Interest rate
(0.1 )
(0.1 )
(0.0 )
of which: Equity / index
(0.0 )
(0.3 )
(0.3 )
(0.0 )
of which: Credit
(0.1 )
(0.0 )
(0.0 )
(0.1 )
(0.0 )
(0.0 )
Financial assets at fair value not held
for trading
(0.4 )
(1.9 )
(0.4 )
(0.1 )
of which: Loans
(0.4 )
(0.3 )
(0.1 )
of which: Auction rate securities
(0.0 )
(1.1 )
of which: Equity instruments
(0.0 )
(0.2 )
(0.0 )
(0.0 )
of which: Investment fund units
(0.0 )
(0.1 )
(0.0 )
(0.0 )
of which: Asset-backed securities
(0.1 )
(0.1 )
Derivative financial instruments –
liabilities
(0.0 )
(2.0 )
(0.6 )
(0.1 )
of which: Interest rate
(0.0 )
(0.0 )
(0.0 )
of which: Equity / index
(0.0 )
(1.8 )
(0.4 )
(0.1 )
of which: Credit
(0.1 )
(0.1 )
(0.0 )
(0.1 )
(0.0 )
(0.0 )
of which: Loan commitments
measured at FVTPL
(0.2 )
(0.0 )
(0.0 )
(0.1 )
(0.1 )
(0.0 )
Debt issued designated at fair value
(0.0 )
(3.5 )
(2.9 )
(0.3 )
Other financial liabilities designated
at fair value
(0.1 )
(0.1 )
(0.0 )
(1.1 )
(0.1 )
(0.0 )
For the twelve months ended 31 December 2023
Financial assets at fair value held for
trading
(0.1 )
(0.1 )
(0.8 )
(0.3 )
of which: Equity instruments
(0.1 )
(0.1 )
(0.1 )
(0.0 )
of which: Corporate and municipal
bonds
(0.0 )
(0.0 )
(0.3 )
(0.0 )
of which: Loans
(0.1 )
(0.1 )
(0.4 )
(0.2 )
Derivative financial instruments –
assets
(0.3 )
(0.3 )
(0.0 )
(0.5 )
(0.3 )
of which: Interest rate
(0.0 )
(0.2 )
(0.1 )
(0.0 )
of which: Equity / index
(0.2 )
(0.2 )
(0.1 )
(0.2 )
of which: Credit
(0.1 )
(0.1 )
(0.1 )
(0.0 )
Financial assets at fair value not held
for trading
(0.7 )
(0.0 )
(0.1 )
of which: Loans
(0.0 )
(0.0 )
(0.1 )
(0.0 )
of which: Auction rate securities
(0.1 )
of which: Equity instruments
(0.2 )
of which: Investment fund units
(0.0 )
(0.0 )
(0.1 )
(0.0 )
Derivative financial instruments –
liabilities
(0.0 )
(0.6 )
(0.2 )
of which: Interest rate
(0.1 )
(0.0 )
of which: Equity / index
(0.4 )
(0.2 )
of which: Credit
(0.0 )
(0.1 )
(0.0 )
Debt issued designated at fair value
(3.2 )
(2.6 )
Other financial liabilities designated at
fair value
(0.2 )
(0.0 )
1 Refer to Note 2 for more information about the merger of UBS AG and Credit Suisse AG. 2 Net gains / losses included in comprehensive income are recognized in Net interest income and Other net income from
financial instruments measured at fair value through profit or loss in the Income statement, and also in Gains / (losses) from own credit on financial liabilities designated at fair value, before tax in the Statement of
comprehensive income. 3 Total Level 3 assets as of 31 December 2024 were USD
bn (31 December 2023: USD
bn). Total Level 3 liabilities as of 31 December 2024 were USD
bn (31 December 2023:
USD
bn).
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 221
Note 21 Fair value measurement (continued)
h) Maximum exposure to credit risk for financial instruments measured at fair value
The tables below provide UBS AG’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
Derivative financial instruments
4,5
Brokerage receivables
Financial assets at fair value not
held for trading – debt instruments
6
Total financial assets measured at fair value
Guarantees
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
Derivative financial instruments
4,5
Brokerage receivables
Financial assets at fair value not
held for trading – debt instruments
6
Total financial assets measured at fair value
Guarantees
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
m (31 December 2023: USD
m) fair values of loan
commitments and USD
m (31 December 2023: USD
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
bn (31 December 2023: USD
bn) and derivative loan commitments (mostly secured) of USD
bn, of which USD
bn has been sub-participated (31
December 2023: USD
bn, of which USD
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 AG consolidated financial statements 222
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
Fair value
USD bn
Total
Carrying
amount
approximates
fair value
1
Level 1
Level 2
Level 3
Total
Total
Carrying
amount
approximates
fair value
1
Level 1
Level 2
Level 3
Total
Assets
Cash and balances at central banks
Amounts due from banks
Receivables from securities financing
transactions measured at amortized cost
Cash collateral receivables on derivative
instruments
Loans and advances to customers
Other financial assets measured at amortized
cost
Liabilities
Amounts due to banks
Payables from securities financing
transactions measured at amortized cost
2
Cash collateral payables on derivative
instruments
Customer deposits
Funding from UBS Group AG measured at
amortized cost
Debt issued measured at amortized cost
Other financial liabilities measured at
amortized cost
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 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 AG’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 AG’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 AG consolidated financial statements 223
Note 22 Offsetting financial assets and financial liabilities
UBS AG 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.
UBS AG 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
(13.3 )
(3.1 )
(95.0 )
Derivative financial instruments
(2.6 )
(135.6 )
(27.1 )
Cash collateral receivables on
derivative instruments
4
(25.9 )
(2.4 )
Financial assets at fair value
not held for trading
(87.1 )
(1.8 )
(23.3 )
of which: reverse
repurchase agreements
(87.1 )
(1.8 )
(20.6 )
Total assets
(103.0 )
(166.4 )
(147.7 )
As of 31.12.23, USD bn
Receivables from securities financing
transactions measured at amortized cost
(12.2 )
(1.5 )
(55.2 )
Derivative financial instruments
(2.5 )
(99.3 )
(23.4 )
Cash collateral receivables on
derivative instruments
4
(20.4 )
(2.5 )
Financial assets at fair value
not held for trading
(89.6 )
(1.8 )
(4.9 )
of which: reverse
repurchase agreements
(89.6 )
(1.8 )
(3.7 )
Total assets
(104.3 )
(122.9 )
(85.9 )
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 AG consolidated financial statements 224
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
(11.5 )
(1.1 )
(12.4 )
4
Derivative financial instruments
(2.6 )
(135.6 )
(30.8 )
Cash collateral payables on
derivative instruments
5
(20.2 )
(2.4 )
Other financial liabilities
designated at fair value
(88.9 )
(3.8 )
(4.1 )
of which: repurchase agreements
(88.9 )
(3.8 )
(2.0 )
Total liabilities
(103.0 )
(160.7 )
(49.7 )
As of 31.12.23, USD bn
Payables from securities financing
transactions measured at amortized cost
(12.1 )
(0.8 )
(3.2 )
Derivative financial instruments
(2.5 )
(99.3 )
(24.5 )
Cash collateral payables on
derivative instruments
5
(17.2 )
(3.4 )
Other financial liabilities
designated at fair value
(89.8 )
(2.5 )
(4.8 )
of which: repurchase agreements
(89.8 )
(2.5 )
(4.4 )
Total liabilities
(104.3 )
(119.7 )
(36.0 )
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
bn for securities financing transactions measured at amortized cost that use UBS AG 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.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 225
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 are mainly pledged as collateral in securities lending transactions, in repurchase transactions and in
relation to mortgage loans, which serve as collateral 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
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
bn). Existing liabilities against Swiss central mortgage
institutions and US Federal Home Loan Banks and for existing covered bond issuances were USD
bn as of 31
December 2024 (31 December 2023: USD
bn).
Repurchase and securities lending arrangements 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.
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
Financial assets at fair value held for trading
Loans and advances to customers
Financial assets at fair value not held for trading
Debt securities classified as Other financial assets measured at amortized cost
Total financial assets pledged as collateral
Other restricted financial assets
Amounts due from banks
Financial assets at fair value held for trading
Cash collateral receivables on derivative instruments
Loans and advances to customers
Other financial assets measured at amortized cost
2
Financial assets at fair value not held for trading
Financial assets measured at fair value through other comprehensive income
Other
Total other restricted financial assets
Total financial assets pledged and other restricted financial assets
3
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
bn; 31 December 2023: USD
bn).
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 226
Note 23 Restricted and transferred financial assets (continued)
In addition to restrictions on financial assets, UBS AG and its subsidiaries are, in certain cases, subject to regulatory
requirements that affect the transfer of dividends and capital within UBS AG, 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.
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
Financial assets at fair value not held for trading that may be sold or repledged by
counterparties
Debt securities classified as Other financial assets measured at amortized cost that may be
sold or repledged by counterparties
Total financial assets transferred
Transactions in which financial assets are transferred but continue to be recognized in their entirety on UBS AG’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 AG’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
% and
% 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 AG.
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 AG’s balance sheet, as the risks and rewards
of ownership are not transferred to UBS AG. 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
UBS AG’s continuing involvement were not material as of 31 December 2024 and as of 31 December 2023.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 227
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 AG’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
of which: sold or repledged
1 Includes securities received as initial margin from its clients that UBS AG 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
bn; 31 December 2023: USD
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 AG to pay.
Derivative financial instruments and financial assets and liabilities at fair value held for trading are presented in the
Due
within 1 month
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
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
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
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 AG consolidated financial statements 228
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
Amounts due from banks
Loans and advances to customers
Other financial assets measured at amortized cost
Total financial assets measured at fair value through profit or
loss
Financial assets at fair value not held for trading
Financial assets measured at fair value through other
comprehensive income
Total non-financial assets
Total assets
Liabilities
Total financial liabilities measured at amortized cost
Customer deposits
Funding from UBS Group AG measured at amortized cost
Debt issued measured at amortized cost
of which: non-subordinated
of which: subordinated
Total financial liabilities measured at fair value through
profit or loss
1
Debt issued designated at fair value
Total non-financial liabilities
Total liabilities
Guarantees, loan commitments and forward starting transactions
2
Irrevocable loan commitments
Guarantees
Forward starting reverse repurchase and securities borrowing
agreements
Irrevocable committed prolongation of existing loans
Total
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
Assets
Total financial assets measured at amortized cost
Amounts due from banks
Loans and advances to customers
Other financial assets measured at amortized cost
Total financial assets measured at fair value through profit or
loss
Financial assets at fair value not held for trading
Financial assets measured at fair value through other
comprehensive income
Total non-financial assets
Total assets
Liabilities
Total financial liabilities measured at amortized cost
Customer deposits
Funding from UBS Group AG measured at amortized cost
Debt issued measured at amortized cost
of which: non-subordinated
of which: subordinated
Total financial liabilities measured at fair value through
profit or loss
1
Debt issued designated at fair value
Total non-financial liabilities
Total liabilities
Guarantees, loan commitments and forward starting transactions
2
Irrevocable loan commitments
Guarantees
Forward starting reverse repurchase and securities borrowing
agreements
Irrevocable committed prolongation of existing loans
Total
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.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 229
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 AG 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
,
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
Payables from securities financing transactions
Cash collateral payables on derivative instruments
Customer deposits
Funding from UBS Group AG measured at amortized cost
2
Debt issued measured at amortized cost
2
Other financial liabilities measured at amortized cost
Total financial liabilities measured at amortized cost
Financial liabilities at fair value held for trading
3,4
Derivative financial instruments
3,5
Brokerage payables designated at fair value
Debt issued designated at fair value
6
Other financial liabilities designated at fair value
Total financial liabilities measured at fair value through
profit or loss
Total
Guarantees, loan commitments and forward starting transactions
Irrevocable loan commitments
7
Guarantees
Forward starting reverse repurchase and securities
borrowing agreements
7
Irrevocable committed prolongation of existing loans
Total
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
Payables from securities financing transactions
Cash collateral payables on derivative instruments
Customer deposits
Funding from UBS Group AG measured at amortized cost
2
Debt issued measured at amortized cost
Other financial liabilities measured at amortized cost
Total financial liabilities measured at amortized cost
Financial liabilities at fair value held for trading
3,4
Derivative financial instruments
3,5
Brokerage payables designated at fair value
Debt issued designated at fair value
6
Other financial liabilities designated at fair value
Total financial liabilities measured at fair value through
profit or loss
Total
Guarantees, loan commitments and forward starting transactions
Irrevocable loan commitments
7
Guarantees
Forward starting reverse repurchase and securities
borrowing agreements
7
Irrevocable committed prolongation of existing loans
Total
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
bn due within 1 month
(31 December 2023: USD
bn), USD
bn due between 1 month and 1 year (31 December 2023: USD
bn) and USD
bn due between 1 and 5 years (31 December 2023: USD
bn). 5 Includes USD
m
(31 December 2023: USD
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
bn (31 December 2023: USD
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 AG consolidated financial statements 230
Note 25 Hedge accounting
Derivatives designated in hedge accounting relationships
UBS AG 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 UBS AG
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 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, funding from UBS Group AG, 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
UBS AG 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
UBS AG, 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
UBS AG 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.
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.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 231
Note 25 Hedge accounting (continued)
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
Notional
amount
Carrying amount
Changes in
fair value of
hedging
instruments
1
Changes in
fair value of
hedged
items
1
Hedge
ineffectiveness
recognized in the
income statement
USD m
Derivative
financial
assets
Derivative
financial
liabilities
Interest rate risk
Fair value hedges
(718 )
(43 )
Cash flow hedges
(1,458 )
(5 )
Foreign exchange risk
Fair value hedges
2
(749 )
(28 )
Hedges of net investments in foreign operations
(1,340 )
As of or for the year ended
31.12.23
Notional
amount
Carrying amount
Changes in
fair value of
hedging
instruments
1
Changes in
fair value of
hedged
items
1
Hedge
ineffectiveness
recognized in the
income statement
USD m
Derivative
financial
assets
Derivative
financial
liabilities
Interest rate risk
Fair value hedges
(2,195 )
Cash flow hedges
(35 )
Foreign exchange risk
Fair value hedges
2
(151 )
(19 )
Hedges of net investments in foreign operations
(910 )
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 AG consolidated financial statements 232
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
of which: accumulated amount of fair value hedge adjustment
(508 )
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
(348 )
(109 )
Customer deposits
Carrying amount of customer deposits
(18 )
Funding from UBS Group AG and its subsidiaries
Carrying amount of designated debt instruments
(5,820 )
(3,174 )
Debt issued measured at amortized cost
Carrying amount of designated debt issued
(412 )
1 In addition, as of 31 December 2024 UBS AG designated in fair value hedges of FX risk USD
bn (31 December 2023 USD
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
Cross-currency swaps
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
Cross-currency swaps
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 )
(2,349 )
Amounts related to hedge relationships for which hedge accounting is no longer applied
(714 )
(1,331 )
Total other comprehensive income recognized directly in equity related to cash flow hedges, on a pre-tax basis
(3,228 )
(3,680 )
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
(690 )
Amounts related to hedge relationships for which hedge accounting is no longer applied
Total other comprehensive income recognized directly in equity related to hedging instruments designated as net investment hedges, on a pre-tax
basis
(424 )
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 233
Note 26 Post-employment benefit plans
a) Defined benefit plans
UBS AG 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 AG in Switzerland and employees of companies in Switzerland that have close economic or financial ties with
UBS AG, and exceed the minimum benefit requirements under Swiss pension law. A significant number of employees
are employed by UBS Business Solutions AG and Credit Suisse Services AG, which are subsidiaries of UBS Group AG.
UBS AG, UBS Business Solutions AG and Credit Suisse Services AG each are legal sponsors of the Swiss plans. The
sponsoring entities apply proportionate defined benefit accounting, i.e. the net pension cost and the net pension asset /
liability of the Swiss pension plans are allocated proportionally between UBS AG, UBS Business Solutions AG and Credit
Suisse Services AG based on the aggregated net pension cost and defined benefit obligations related to their employees.
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
(USD
), 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.
Savings contributions to the Swiss plans are paid by both the employer and the employee. For the UBS AG Swiss plan,
depending on the age of the employee, UBS AG pays a savings contribution that ranges between
% and
% of
the contributory base salary and between
% and
% of the contributory variable compensation. Employees can
choose the level of savings contributions paid by them, which vary between
% and
% of the contributory base
salary and between
% and
% 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 AG pays a savings
contribution that ranges between
% and
% of the contributory base salary and
% of the contributory variable
compensation. Employees can choose the level of savings contributions paid by them, which vary between
% and
% of the contributory base salary and between
% and
% of the contributory variable compensation, depending
on age and choice of savings contribution category. UBS AG also pays risk contributions that are used to fund disability
and survivor benefits.
The plans offer to members at the normal retirement age of
lump sum payment. Participants can choose to draw early retirement benefits starting from the age of
, but they can
also continue employment and remain active members of the plan until the age of
. 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
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
% of the additional contributions required. As of 31 December 2024, the technical funding ratio in
accordance with Swiss pension law was
% at a
% technical interest rate for the UBS Swiss plan and
% at
a
% technical interest rate for the Credit Suisse Swiss plan (UBS Swiss plan 31 December 2023:
% at a
%
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.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 234
Note 26 Post-employment benefit plans (continued)
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
m for the UBS Swiss plan
and USD
m for the Credit Suisse Swiss plan (UBS Swiss plan 31 December 2023: USD
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 therefore no net defined benefit asset was recognized on
the balance sheet; as of 31 December 2024 a net defined benefit asset of USD
m was recognized by UBS AG for
prepaid contributions held at the Credit Suisse Swiss plan.
The regular employer contributions in 2025 are estimated at USD
m for the UBS Swiss plan and USD
m for the
Credit Suisse Swiss plan.
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 incom
e.
Net asset / liability of defined benefit plans
USD m
Major Swiss plans
31.12.24
1
31.12.23
Defined benefit obligation at the beginning of the year
Defined benefit obligation recognized upon the merger of UBS AG and Credit Suisse AG
2
Current service cost
Interest expense
Plan participant contributions
Remeasurements
of which: actuarial (gains) / losses due to changes in demographic assumptions
of which: actuarial (gains) / losses due to changes in financial assumptions
of which: experience (gains) / losses
3
Curtailments
(71 )
(3 )
Benefit payments
(1,420 )
(662 )
Foreign currency translation
(1,257 )
Defined benefit obligation at the end of the year
of which: amounts owed to active members
of which: amounts owed to deferred members
of which: amounts owed to retirees
of which: funded plans
of which: unfunded plans
Fair value of plan assets at the beginning of the year
Fair value of plan assets recognized upon the merger of UBS AG and Credit Suisse AG
2
Return on plan assets excluding interest income
Interest income
Employer contributions
Plan participant contributions
Benefit payments
(1,420 )
(662 )
Administration expenses, taxes and premiums paid
(15 )
(8 )
Other movements
Foreign currency translation
(1,527 )
Fair value of plan assets at the end of the year
Surplus / (deficit)
Asset ceiling effect at the beginning of the year
Asset ceiling effect recognized upon the merger of UBS AG and Credit Suisse AG
2
Interest expense on asset ceiling effect
Asset ceiling effect excluding interest expense and foreign currency translation on asset ceiling effect
(955 )
(1,332 )
Foreign currency translation
(270 )
Asset ceiling effect at the end of the year
Net defined benefit asset / (liability) of major Swiss plans
Other plans
Net defined benefit asset / (liability) of other plans
4
(105 )
Total net defined benefit asset / (liability)
(105 )
of which: Net defined benefit asset
of which: Net defined benefit liability
5
(691 )
(487 )
1 Including Credit Suisse AG from 31 May 2024. 2 Refer to Note 2 for more information about the merger of UBS AG and Credit Suisse AG. 3 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. 4 Mainly relates to UK, US and German plans. 5 Refer to Note
19c.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 235
Note 26 Post-employment benefit plans (continued)
Income statement – expenses related to defined benefit plans
1
USD m
Major Swiss plans
31.12.24
2
31.12.23
Current service cost
Interest expense related to defined benefit obligation
Interest income related to plan assets
(369 )
(393 )
Interest expense on asset ceiling effect
Administration expenses, taxes and premiums paid
Curtailments
(71 )
(3 )
Other movements
Net periodic expenses recognized in net profit for major Swiss plans
Other plans
Net periodic expenses recognized in net profit for other plans
3
Total net periodic expenses recognized in net profit
1 Refer to Note 7. 2 Including Credit Suisse AG from 31 May 2024. 3 Includes differences between actual and estimated performance award accruals.
Other comprehensive income – gains / (losses) on defined benefit plans
USD m
Major Swiss plans
31.12.24
1
31.12.23
Other comprehensive income recognized upon the merger of UBS AG and Credit Suisse AG
2
Remeasurement of defined benefit obligation
(2,657 )
(1,901 )
of which: change in discount rate assumption
(2,102 )
(1,332 )
of which: change in rate of salary increase assumption
(168 )
(42 )
of which: change in rate of pension increase assumption
of which: change in rate of interest credit on retirement savings assumption
of which: change in life expectancy
of which: change in other actuarial assumptions
(17 )
(46 )
of which: experience gains / (losses)
3
(628 )
(688 )
Return on plan assets excluding interest income
Asset ceiling effect excluding interest expense and foreign currency translation
Total gains / (losses) recognized in other comprehensive income for major Swiss plans
(56 )
Other plans
Total gains / (losses) recognized in other comprehensive income for other plans
4
(83 )
(47 )
Total gains / (losses) recognized in other comprehensive income
(53 )
(103 )
of which: attributable to other comprehensive income recognized upon the merger of UBS AG and Credit Suisse AG
2
of which: attributable to other comprehensive income recognized for defined benefit plans during the period
5
(106 )
(103 )
1 Including Credit Suisse AG from 31 May 2024. 2 Refer to Note 2 for more information about the merger of UBS AG and Credit Suisse AG. 3 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. 4 Mainly relates to UK, US and German plans. 5 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
Maturity analysis of benefits expected to be paid
USD m
Benefits expected to be paid within 12 months
Benefits expected to be paid between 1 and 3 years
Benefits expected to be paid between 3 and 6 years
Benefits expected to be paid between 6 and 11 years
Benefits expected to be paid between 11 and 16 years
Benefits expected to be paid in more than 16 years
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 AG 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 AG consolidated financial statements 236
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
In %
31.12.24
1
31.12.23
Discount rate
Rate of salary increase
Rate of pension increase
Rate of interest credit on retirement savings
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
Life expectancy at age 65 for a female member currently
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
(1,667 )
(857 )
Decrease by 50 basis points
Rate of salary increase
Increase by 50 basis points
Decrease by 50 basis points
(167 )
(117 )
Rate of pension increase
Increase by 50 basis points
Decrease by 50 basis points
–
2
–
2
Rate of interest credit on retirement savings
Increase by 50 basis points
Decrease by 50 basis points
(252 )
(144 )
Life expectancy
Increase in longevity by one additional year
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
% 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 AG consolidated financial statements 237
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
Equity securities
Bonds
Real estate / property
Domestic
Foreign
Investment funds
Equity
Domestic
Foreign
Bonds
1
Domestic, AAA to BBB–
Domestic, below BBB–
Foreign, AAA to BBB–
Foreign, below BBB–
Real estate
Domestic
Foreign
Other
Other investments
Total fair value of plan assets
31.12.24
31.12.23
Total fair value of plan assets
of which: Investments in UBS Group AG
instruments
2
Bank accounts at UBS Group AG
UBS Group AG debt instruments
UBS Group AG shares
Securities lent to UBS Group AG
3
Property occupied by UBS Group AG
Derivative financial instruments, counterparty UBS Group
AG
3
(83 )
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 AG encompass accounts in the name of the Swiss pension funds. The other
positions disclosed in the table encompass both direct investments in UBS AG instruments and UBS Group AG shares and indirect investments, i.e. those made through funds that the pension fund invests in.
3 Securities lent to UBS AG and derivative financial instruments are presented gross of any collateral. Securities lent to UBS AG were fully covered by collateral as of 31 December 2024 and 31 December 2023. Net
of collateral, derivative financial instruments amounted to negative USD
m as of 31 December 2024 (31 December 2023: negative USD
m).
b) Defined contribution plans
UBS AG sponsors several defined contribution plans, with the most significant plans in the US and the UK. UBS AG’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
m in 2024 and USD
m in 2023.
›
Refer to Note 6 for more information
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 238
Note 26 Post-employment benefit plans (continued)
c) Related-party disclosure
UBS AG is the principal provider of banking services for the pension funds of UBS and Credit Suisse in Switzerland. In this
capacity, UBS AG 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 UBS AG pension funds do not have a similar banking relationship with UBS AG. During 2024, UBS AG
received USD
m in fees for banking services from the major UBS AG plans (2023: USD
m). As of 31 December 2024,
the Swiss, UK and US post-employment benefit plans held USD
m in UBS shares (31 December 2023: USD
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 AG and UBS Group AG instruments held by the major Swiss pension funds
Note 27 Employee benefits: variable compensation
a) Plans offered
UBS 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. For the majority of variable compensation awards granted under such plans to
employees of UBS AG, the grantor entity is UBS Group AG. Expenses associated with these awards are charged by UBS
Group AG to UBS AG. For the purpose of this Note, refere nces to shares refer to UBS Group AG shares.
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 whose deferral is not
within the scope of the LTIP. 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, previously named AM EOP). 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
% of DCCP awards for each loss-making year during the vesting period.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 239
Note 27 Employee benefits: variable compensation (continued)
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
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.
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
% in cash (in general vesting
% 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.
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
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
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 240
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
(59 )
Deferred compensation awards
of which: Equity Ownership Plan
of which: Deferred Contingent Capital Plan
of which: Long-Term Incentive Plan
of which: Fund Ownership Plan
Variable compensation – performance awards
Variable compensation – financial advisors
2
of which: non-deferred cash
(1 )
of which: deferred share-based awards
of which: deferred cash-based awards
of which: compensation commitments with recruited financial advisors
Variable compensation – other
3
Total variable compensation
4
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
m in expenses related to share-based compensation (performance awards: USD
m; other variable compensation:
USD
m; financial advisor compensation: USD
m). A further USD
m in expenses related to share-based compensation was recognized within other expense categories included in Note 7 (salaries: USD
m
related to role-based allowances; social security: USD
m; other personnel expenses: USD
m related to the Equity Plus Plan).
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
(36 )
Deferred compensation awards
of which: Equity Ownership Plan
of which: Deferred Contingent Capital Plan
of which: Long-Term Incentive Plan
of which: Fund Ownership Plan
Variable compensation – performance awards
Variable compensation – financial advisors
2
of which: non-deferred cash
(4 )
of which: deferred share-based awards
of which: deferred cash-based awards
of which: compensation commitments with recruited financial advisors
Variable compensation – other
3
Total variable compensation
4
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 replacement payments, forfeiture credits, severance payments, retention plan payments and interest expense related to the Deferred Contingent Capital Plan. 4 Includes USD
m in expenses related
to share-based compensation (performance awards: USD
m; other variable compensation: USD
m; financial advisor compensation: USD
m). A further USD
m in expenses related to share-based
compensation was recognized within other expense categories included in Note 7 (salaries: USD
m related to role-based allowances; social security: USD
m; other personnel expenses: USD
m related to the
Equity Plus Plan).
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 241
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
(9 )
Deferred compensation awards
of which: Equity Ownership Plan
of which: Deferred Contingent Capital Plan
of which: Long-Term Incentive Plan
of which: Fund Ownership Plan
Variable compensation – performance awards
Variable compensation – financial advisors
2
of which: non-deferred cash
of which: deferred share-based awards
of which: deferred cash-based awards
of which: compensation commitments with recruited financial advisors
Variable compensation – other
3
Total variable compensation
4
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
m in expenses related
to share-based compensation (performance awards: USD
m; other variable compensation: USD
m; financial advisor compensation: USD
m). A further USD
m in expenses related to share-based
compensation was recognized within other expense categories included in Note 7 (salaries: USD
m related to role-based allowances; social security: USD
m; other personnel expenses: USD
m related to the
Equity Plus Plan).
c) Outstanding share-based compensation awards
Share and performance share awards
Movements in outstanding share -based awards granted by UBS AG and its subsidiaries 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
Share obligations assumed at merger with Credit Suisse AG
Awarded during the year
Distributed during the year
(1,202,448 )
(132,770 )
Forfeited during the year
(219,425 )
(4,043 )
Outstanding, at the end of the year
of which: shares vested for accounting purposes
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
m and USD
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 AG consolidated financial statements 242
Note 28 Interests in subsidiaries and other entities
a) Interests in subsidiaries
UBS AG defines its significant subsidiaries as those entities that, either individually or in aggregate, contribute significantly
to UBS AG’s financial position or results of operations, based on a number of criteria, including the subsidiaries’ equity
and contribution to UBS AG’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 table below lists UBS AG’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 UBS AG and the proportion
of ownership interest held is equal to the voting rights held by UBS AG.
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 AG as of 31 December 2024
1
Company
Registered office
Primary business
Share capital in million
Equity interest accumulated in %
USD
USD
2
USD
CHF
USD
EUR
USD
USD
3
CHF
1 Includes direct and indirect subsidiaries of UBS AG. 2 Consists of common share capital of USD
bn. 3 Consists of common share capital of USD
and non-voting preferred share capital of USD
bn.
Other subsidiaries
The table below lists other direct and indirect subsidiaries of UBS AG that are not individually significant but contribute
to UBS AG’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 %
BRL
GBP
USD
USD
USD
JPY
USD
GBP
USD
USD
CHF
EUR
AUD
1
HKD
JPY
JPY
1 Includes a nominal amount relating to redeemable preference shares.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 243
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 AG has no individually significant subsidiaries that are SEs.
In 2024 and 2023, UBS AG did not enter into any contractual obligation that could require UBS AG to provide financial
support to consolidated SEs. In addition, UBS AG did not provide support, financial or otherwise, to a consolidated SE
when UBS AG was not contractually obligated to do so, nor does UBS AG currently have any intention to do so in the
future. Furthermore, UBS AG did not provide support, financial or otherwise, to a previously unconsolidated SE that
resulted in UBS AG 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 UBS AG.
Also, there were no significant restrictions on the ability of associates or joint ventures to transfer funds to UBS 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 UBS AG.
Investments in associates and joint ventures
USD m
2024
2023
Carrying amount at the beginning of the year
Balance recognized upon the merger of UBS AG and Credit Suisse AG
1
Additions
Disposals
(6 )
Share of comprehensive income
(180 )
of which: share of net profit / (loss)
2
(163 )
of which: share of other comprehensive income
3
(17 )
Share of changes in retained earnings
(3 )
(1 )
Dividends received
(31 )
(35 )
Foreign currency translation
(73 )
Carrying amount at the end of the year
of which: associates
of which: SIX Group AG, Zurich
4
of which: other associates
of which: joint ventures
5
1 Refer to Note 2 for more information about the merger of UBS AG and Credit Suisse AG. 2 For 2024, consists of USD
m from associates and USD
m from joint ventures (for 2023, consists of negative
USD
m from associates). 3 For 2024, consists of USD
m from associates (for 2023, consists of negative USD
m from associates). 4 In 2024, UBS AG’s legal equity interest amounted to
% (for 2023,
UBS AG’s legal equity interest amounted to
%). UBS AG is represented on the Board of Directors. 5 In October 2024, UBS AG entered into an agreement to sell its
% interest in Swisscard AECS GmbH. Refer
to Note 29 for more information.
c) Unconsolidated structured entities
UBS AG 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, UBS AG 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 AG did not consolidate as of 31 December
2024 because it did not control them.
Interests in unconsolidated structured entities
The table below presents UBS AG’s interests in and maximum exposure to loss from unconsolidated SEs, as well as the
total assets held by the SEs in which UBS AG 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 AG’s interest as of year-end has been disclosed.
As a consequence of the merger of UBS AG and Credit Suisse AG and the resulting increase in interests in structured
entities, interests in client vehicles sponsored by UBS AG are presented separately to other vehicles sponsored by third
parties, to clearly distinguish the different types of entities that UBS AG is involved with.
Sponsored unconsolidated structured entities in which UBS AG did not have an interest at year-end
During 2024 and 2023, UBS AG did not earn material income from sponsored unconsolidated SEs in which UBS AG did
not have an interest at year-end.
During 2024 and 2023, UBS AG and third parties did not transfer any assets into sponsored securitization vehicles created
in the year. UBS AG and third parties transferred assets, alongside deposits and debt issuances (which are assets from the
perspective of the vehicle), of USD
bn and USD
bn, respectively, into sponsored client vehicles created in 2024
(2023: USD
bn and USD
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
bn in 2024
(2023: USD
bn).
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 244
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 AG
2
Investment
funds
Other vehicles
sponsored by
third parties
3
Total
Maximum
exposure to loss
4
Financial assets at fair value held for trading
Derivative financial instruments
Loans and advances to customers
Financial assets at fair value not held for trading
Financial assets measured at fair value through other
comprehensive income
Other financial assets measured at amortized cost
Total assets
Derivative financial instruments
Total liabilities
Assets held by the unconsolidated structured entities in which UBS
AG had an interest (USD bn)
5
6
7
8
31.12.23
USD m, except where indicated
Securitization
vehicles
1
Client vehicles
sponsored by
UBS AG
2
Investment
funds
Other vehicles
sponsored by
third parties
3
Total
Maximum
exposure to loss
4
Financial assets at fair value held for trading
Derivative financial instruments
Loans and advances to customers
Financial assets at fair value not held for trading
Financial assets measured at fair value through other
comprehensive income
Other financial assets measured at amortized cost
Total assets
Derivative financial instruments
Total liabilities
Assets held by the unconsolidated structured entities in which UBS
AG had an interest (USD bn)
5
6
7
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 AG and third parties. 2 Client vehicles sponsored by UBS AG 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 AG and the carrying amount of UBS AG’s interests in the investment funds not sponsored by UBS AG. 8 Represents the carrying amount of UBS AG’s interest in other vehicles
sponsored by third parties.
UBS AG 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. UBS AG’s maximum exposure to loss is
generally equal to the carrying amount of UBS AG’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 UBS AG is exposed to.
The maximum exposure to loss disclosed in the table above does not reflect UBS AG’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, UBS AG did not provide support, financial or otherwise, to any unconsolidated SE when not
contractually obligated to do so, nor does UBS AG 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
AG-sponsored funds.
Interests in securitization vehicles
As of 31 December 2024 and 31 December 2023, UBS AG 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, UBS AG 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, as a result of the merger of
UBS AG and Credit Suisse AG, 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 vehicles was USD
bn as of 31 December 2024 and has been excluded
from the table above.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 245
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,
synthetic securitizations transacted with entities that are not SEs and transactions in which UBS AG 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 UBS AG 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 AG
UBS AG-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 AG 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, UBS AG retained interests in client vehicles sponsored by UBS AG 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.
UBS AG 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, UBS AG 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 UBS AG’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 were USD
bn and USD
bn as of
31 December 2024 and 31 December 2023, respectively, and has been excluded from the table above. UBS AG 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.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 246
Note 29 Changes in organization and acquisitions and disposals of subsidiaries and businesses
Disposals of subsidiaries and businesses
Agreement to sell Select Portfolio Servicing
On 13 August 2024, UBS AG 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 customary closing conditions. As of 31 December 2024, the associated assets and
liabilities were presented as
Assets of disposal groups held for sale
Liabilities of disposal groups held for sale
,
respectively, and amounted to USD
m and USD
m, respectively. UBS AG does not expect to recognize a
material profit or loss upon completion of the transaction.
Agreement to sell Swisscard AECS GmbH
In October 2024, UBS AG entered into an agreement to sell to American Express Swiss Holdings GmbH (American Express)
its
% interest in Swisscard AECS GmbH (Swisscard), a joint venture in Switzerland between UBS AG and American
Express, subject to certain closing conditions. Also in October 2024, UBS AG entered into an agreement with Swisscard
to transition the Credit Suisse-branded card portfolios to UBS AG. In January 2025, UBS AG 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 AG. In the fourth quarter of 2024, UBS AG recorded an expense of USD
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.
›
Refer to Note 2 for more information about the merger of UBS AG and Credit Suisse AG
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.
Note
30 Related parties
Related parties of UBS AG are:
–
entities within UBS Group, i.e. the parent entity, UBS Group AG, and fellow subsidiaries consolidated within
UBS Group (including Credit Suisse subsidiaries from the date of the acquisition of the Credit Suisse Group);
–
associates (entities that are under the significant influence of UBS AG or other group entities consolidated within
UBS Group);
–
joint ventures (entities in which UBS AG or other group entity consolidated within UBS Group shares control with
another party);
–
post-employment benefit plans for the benefit of UBS AG’s employees or employees of entities related to UBS AG;
–
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. UBS AG considers the members of the Board of Directors (the BoD) and
the Executive Board (the EB) of UBS AG and the members of the Board of Directors (the BoD) and the Group Executive
Board (the GEB) of UBS Group AG 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 EB and GEB members (as
defined above) is included in the table below.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 247
Note 30 Related parties (continued)
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
Incentive awards – cash
2
Annual incentive award under DCCP
Employer’s contributions to retirement benefit plans
Benefits in kind, fringe benefits (at market value)
Share-based compensation
3
Total
Total (CHF m)
4
1 For 2023 and 2022, may include role-based allowances in line with market practice and regulatory requirements. For 2024, role-based allowances for EB/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 EB/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
; 2023: USD / CHF
; 2022: USD / CHF
).
The independent members of the BoD, including the Chairman, do not have employment or service contracts with
UBS AG, 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
m (CHF
m) in 2024, USD
m
(CHF
m) in 2023 and USD
m (CHF
m) in 2022.
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, EB and parties closely linked to them
2
1 No options were held in 2024 and 2023 by non-independent members of the BoD or any EB 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 EB 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 members of the BoD and EB 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
Balance at the end of the year
2
Balance at the end of the year (CHF m)
2
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, there were outstanding deposit balances with key management personnel that amounted to USD
m
(CHF
m) as of 31 December 2024 and USD
m (CHF
m) as of 31 December 2023.
d) Other related-party transactions with entities controlled by key management personnel
In 2024 and 2023, UBS AG did not enter into transactions with entities over whom 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 AG and therefore did
not receive any fees from UBS AG. UBS AG also did not provide services to such entities in 2024 and 2023 and therefore
also received no fees.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 248
Note 30 Related parties (continued)
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
Additions¹
Reductions
(440 )
(716 )
Foreign currency translation
(34 )
Carrying amount at the end of the year
of which: unsecured loans and receivables
1 Additions in 2024 include balances of USD
m recognized upon the merger of UBS AG and CS AG.
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
Fees received for services provided to associates and joint ventures
Liabilities to associates and joint ventures
In addition to the items in the table above, transactions with associates and joint ventures also include off-balance sheet
exposures of USD
bn, which are provided on an arm’s length basis.
›
Refer to Note 28 for an overview of investments in associates and joint ventures
f) Receivables and payables from / to UBS Group AG and other subsidiaries of UBS Group AG
USD m
31.12.24
31.12.23
Receivables
Amounts due from banks
1
Cash collateral receivables on derivative instruments
Loans and advances to customers
Other financial assets measured at amortized cost
Financial assets at fair value held for trading
Derivative financial instruments
Payables
Amounts due to banks
Cash collateral payables on derivative instruments
Customer deposits
Funding from UBS Group AG measured at amortized cost
Other financial liabilities measured at amortized cost
Derivative financial instruments
Other financial liabilities designated at fair value
2
1 Reflects funding provided to Credit Suisse. 2 Mainly represents funding recognized from UBS Group AG that is designated at fair value. Refer to Note 19b for more information.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 249
Note 31 Invested assets and net new money
The following disclosures provide a breakdown of UBS AG’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 AG 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 UBS AG 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 AG 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 AG’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 AG by new and existing clients,
less those withdrawn by existing clients and clients who terminated relationships with UBS AG.
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 AG 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 AG.
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
Discretionary assets
Other invested assets
Total invested assets
1
of which: double counts
Net new money
1,2
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
31.12.24
31.12.23
Total invested assets at the beginning of the year
1,2
Net new money
Market movements
3
Foreign currency translation
(126 )
Invested assets recognized upon the merger of Credit Suisse AG with UBS AG
4
Other effects
(23 )
(37 )
of which: acquisitions / (divestments)
(4 )
(25 )
Total invested assets at the end of the year
1,2
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. 4 Invested assets
recognized upon the merger of UBS AG and Credit Suisse AG were measured and reported as of 31 May 2024, the merger effective date, in alignment with UBS AG’s accounting policies.
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 250
Note 32 Currency translation rates
The following table shows the rates of the main currencies used to translate the financial information of UBS AG’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 EUR
1 GBP
100 JPY
1 Monthly income statement items of operations with a functional currency other than the US dollar are translated into US dollars using month-end rates. Disclosed average rates for a year represent an average of
twelve month-end rates, weighted according to the income and expense volumes of all operations of UBS AG with the same functional currency for each month. Weighted average rates for individual business divisions
may deviate from the weighted average rates for UBS AG.
Note 33 Main differences between IFRS Accounting Standards and Swiss GAAP
The consolidated financial statements of UBS 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
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
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
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 AG consolidated financial statements 251
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
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. Goodwill and intangible assets
Under IFRS Accounting Standards, goodwill acquired in a business combination is not amortized but tested annually for
impairment. Intangible assets with an indefinite useful life are also not amortized but tested annually for impairment.
Under Swiss GAAP, goodwill and intangible assets with indefinite useful lives are amortized over a period not exceeding
, unless a longer useful life, which may not exceed
, can be justified. In addition, these assets are tested
annually for impairment.
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.
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).
Annual Report 2024
| Consolidated financial statements | UBS AG consolidated financial statements 252
Note 33 Main differences between IFRS Accounting Standards and Swiss GAAP (continued)
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
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 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.
Note 34 Supplemental guarantor information
In 2015, the Personal & Corporate Banking and Wealth Management businesses booked in Switzerland were transferred
from UBS AG to UBS Switzerland AG through an asset transfer in accordance with the Swiss Merger Act. Under the
terms of the asset transfer agreement, UBS Switzerland AG assumed joint liability for contractual obligations of UBS AG
existing on the asset transfer date, including the full and unconditional guarantee of certain SEC-registered debt securities
issued by UBS AG. The joint liability of UBS Switzerland AG for contractual obligations of UBS AG decreased in 2024 by
USD
bn to USD
bn as of 31 December 2024. The decrease substantially relates to a combination of contractual
maturities, fair value movements and foreign currency effects.
UBS AG, together with UBS Group 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
m maturing in July 2032. Credit Suisse (USA) LLC is an indirect, wholly owned subsidiary of UBS AG.
UBS AG assumed Credit Suisse AG’s obligations under the guarantee as of 31 May 2024 (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 p
roceeding against Credit Suisse (USA) LLC.
Annual Report 2024
| Consolidated financial statements | Comparison between UBS AG consolidated and UBS Group AG consolidated 253
Comparison between UBS AG consolidated and
UBS Group AG consolidated
The table below provides a comparison of selected financial and capital information of UBS AG consolidated and of
UBS Group AG consolidated.
UBS AG and UBS Group AG both prepare consolidated financial statements in accordance with IFRS Accounting
Standards. UBS Group AG has applied acquisition accounting as defined by IFRS 3,
Business Combinations
, to the
acquisition of the Credit Suisse Group. The merger of UBS AG and Credit Suisse AG on 31 May 2024 has been accounted
for as a business combination under common control, as defined in IFRS 3, using the historic carrying values of the assets
and liabilities of Credit Suisse AG as at the date of the transaction (31 May 2024), determined under IFRS Accounting
Standards. Therefore, differences exist between the accounting treatments applied at the UBS Group AG and UBS AG
consolidated levels. There are also certain scope and presentation differences, as noted below.
›
Refer to Note 2 for more information about the accounting for the merger of UBS AG and Credit Suisse AG
Assets, liabilities, revenues, operating expenses and tax expenses / (benefits) relating to UBS Group AG and its directly
held subsidiaries, including UBS Business Solutions AG, are reflected in the consolidated financial statements of UBS
Group AG but not in those of UBS AG. UBS AG’s assets, liabilities, revenues and operating expenses related to
transactions with UBS Group AG and its directly held subsidiaries, including UBS Business Solutions AG and other shared
services subsidiaries, are not subject to elimination in the UBS AG consolidated financial statements, but are eliminated
in the UBS Group AG consolidated financial statements.
In 2024, UBS AG consolidated recognized a net profit of USD 1,533m, while UBS Group AG consolidated recognized a
net profit of USD 5,146m. The USD 3,613m difference was mainly due to certain purchase price allocation (PPA) effects
recognized at the UBS Group AG level upon the acquisition of the Credit Suisse Group. These resulted in net accretion
income at the UBS Group AG level, net of tax effects, whereas UBS AG has not applied acquisition accounting and does
not have the PPA effects or the corresponding net income. UBS Group AG also has lower expenses for litigation,
regulatory and similar matters than UBS AG as a result of the PPA effects recognized at the UBS Group AG level. Other
differences in net profit mainly arise as Credit Suisse AG was merged into UBS AG on 31 May 2024, whereas UBS Group
AG included the results of the former Credit Suisse AG for the full year, and as UBS Business Solutions AG and other
shared services subsidiaries of UBS Group AG charge other legal entities within the UBS AG consolidation scope a markup
on costs incurred for services provided.
The equity of UBS Group AG consolidated was USD 9.1bn lower than the equity of UBS AG consolidated as of
31 December 2024. This difference was mainly driven by PPA effects of USD 5.1bn recognized at the UBS Group AG level
upon the acquisition of the Credit Suisse Group that did not impact UBS AG consolidated, primarily related to loans and
loan commitments measured at amortized cost and contingent liabilities recognized under IFRS 3 for litigation, as well as
consolidation scope differences of USD 3.9bn.
The going concern capital of UBS Group AG consolidated was USD 1.9bn lower than the going concern capital of
UBS AG consolidated as of 31 December 2024, reflecting the common equity tier 1 (CET1) capital of UBS Group AG
being lower by USD 2.4bn, partly offset by its going concern loss-absorbing additional tier 1 (AT1) capital being
USD 0.5bn higher.
The USD 2.4bn lower CET1 capital of UBS Group AG consolidated was primarily due to UBS Group AG consolidated IFRS
equity being USD 9.1bn lower, compensation-related regulatory capital accruals at the UBS Group AG level of USD 2.8bn
and a USD 0.8bn effect from eligible deferred tax assets on temporary differences, partly offset by a USD 10.2bn
difference in dividend accruals between UBS Group AG and UBS AG.
Annual Report 2024
| Consolidated financial statements | Comparison between UBS AG consolidated and UBS Group AG consolidated 254
Comparison between UBS AG consolidated and UBS Group AG consolidated
As of or for the year ended 31.12.24
USD m, except where indicated
UBS AG
consolidated
UBS Group AG
consolidated
Difference
(absolute)
Income statement
Total revenues
Credit loss expense / (release)
Operating expenses
Operating profit / (loss) before tax
Net profit / (loss)
Balance sheet
Total assets
Total liabilities
Total equity
Capital information
Common equity tier 1 capital
Going concern capital
Risk-weighted assets
Common equity tier 1 capital ratio (%)
Going concern capital ratio (%)
Total loss-absorbing capacity ratio (%)
Leverage ratio denominator
Common equity tier 1 leverage ratio (%)
Liquidity coverage ratio (%)
1
Net stable funding ratio (%)
1 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. Refer to the “Capital, liquidity and
funding, and balance sheet” section of this report for more information.
Annual Report 2024 |
Additional regulatory information 255
Additional regulatory
information
Table of contents
256
256
256
256
257
257
257
258
258
258
260
262
262
263
263
263
es
Annual Report 2024 |
Additional regulatory information | UBS AG consolidated supplemental disclosures required under SEC regulations 256
UBS AG consolidated supplemental disclosures
required under SEC regulations
A
–
The following pages contain supplemental UBS AG disclosures that are required under US Securities and Exchange
Commission (SEC) regulations. UBS 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.
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. The merger effected with
no consideration payable by UBS AG constitutes a business combination under common control accounted for based on
the accounting policies set out in “Note 1 Summary of material accounting policies” in the “Consolidated financial
statements” section of this report.
›
Refer to “Note 2 Accounting for the merger of UBS AG and Credit Suisse AG” in the “Consolidated financial statements” section of
this report for more information about the accounting for the merger of UBS AG and Credit Suisse AG
B – Selected financial data
Dividends received from investments in subsidiaries and associates
In 2024, UBS AG received dividends of USD 6,275m (2023: USD 5,430m; 2022: USD 6,465m) from its subsidiaries and
associates. This includes dividends received from its Credit Suisse subsidiaries since the merger of UBS AG and Credit
Suisse AG in 2024. 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 AG consolidated supplemental disclosures required under SEC regulations 257
Balance sheet data
USD m
31.12.24
31.12.23
31.12.22
Assets
Cash and balances at central banks
Amounts due from banks
Receivables from securities financing transactions at amortized cost
Cash collateral receivables on derivative instruments
Loans and advances to customers
Other financial assets measured at amortized cost
59,279
54,334
53,389
Total financial assets measured at amortized cost
Financial assets at fair value held for trading
of which: assets pledged as collateral that may be sold or repledged by counterparties
38,532
Derivative financial instruments
Brokerage receivables
Financial assets at fair value not held for trading
Total financial assets measured at fair value through profit or loss
Financial assets measured at fair value through other comprehensive income
Investments in associates
Property, equipment and software
Goodwill and intangible assets
Deferred tax assets
Other non-financial assets
Total assets
Liabilities
Amounts due to banks
Payables from securities financing transactions at amortized cost
Cash collateral payables on derivative instruments
Customer deposits
749,476
555,673
527,171
Funding from UBS Group AG measured at amortized cost
Debt issued measured at amortized cost
Other financial liabilities measured at amortized cost
21,762
12,713
10,391
Total financial liabilities measured at amortized cost
Financial liabilities at fair value held for trading
Derivative financial instruments
Brokerage payables designated at fair value
Debt issued designated at fair value
Other financial liabilities designated at fair value
Total financial liabilities measured at fair value through profit or loss
Provisions
Other non-financial liabilities
Total liabilities
Equity attributable to shareholders
Equity attributable to non-controlling interests
Total equity
Total liabilities and equity
C – Information about the company
Property, plant and equipment
As of 31 December 2024, UBS AG operated in about 725 business and banking locations worldwide, of which
approximately 40% were in Switzerland, 44% in the Americas, 8% in the rest of Europe, the Middle East and Africa,
and 8% in Asia Pacific. Of the business and banking locations in Switzerland, 25% were owned directly by UBS AG, with
the remainder, along with most of UBS AG’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 AG consolidated supplemental disclosures required under SEC regulations 258
D – Information required by Subpart 1400 of Regulation S-K
Selected statistical information
The tables below set forth selected statistical information regarding UBS AG’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 2024 to 31 December 2024, the calculation
includes the effect of the merger of UBS AG with Credit Suisse AG. 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
Foreign
Amounts due from banks
Domestic
Foreign
Receivables from securities financing transactions measured
at amortized cost
1
Domestic
Foreign
Loans and advances to customers
Domestic
Foreign
Financial assets at fair value
1,2
Domestic
Foreign
Other interest-earning assets
Domestic
Foreign
Total interest-earning assets
3
Net interest income on swaps
Interest income on off-balance sheet securities and other
Interest income and average interest-earning assets
4
4
4
Non-interest-earning assets
5
Total average assets
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 AG consolidated supplemental disclosures required under SEC regulations 259
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
Foreign
Payables from securities financing transactions measured at
amortized cost
1
Domestic
Foreign
Customer deposits
Domestic
of which: demand deposits
of which: savings and sweep deposits
of which: time deposits
Foreign
of which: demand deposits
of which: savings and sweep deposits
of which: time deposits
Funding from UBS Group AG
Domestic
Foreign
Commercial paper
Domestic
Foreign
Other short-term debt issued measured at amortized cost
Domestic
Foreign
Long-term debt issued measured at amortized cost
Domestic
Foreign
Financial liabilities at fair value (excluding debt issued
designated at fair value)
1,2
Domestic
Foreign
Debt issued designated at fair value
Domestic
Foreign
Other interest-bearing liabilities
Domestic
Foreign
Total interest-bearing liabilities
Swap interest on hedged debt instruments and other
swaps
Interest expense on off-balance sheet securities and other
Interest expense and average interest-bearing liabilities
3
3
3
Non-interest-bearing liabilities
4
Total liabilities
Total equity
Total average liabilities and equity
Net interest income
Net yield on interest-earning assets
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 55% for 2024 (2023: 61%;
2022: 61%). The percentage of total average interest-bearing liabilities attributable to foreign activities was 59% for
2024 (2023: 61%; 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 AG consolidated supplemental disclosures required under SEC regulations 260
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 with 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
Foreign
Amounts due from banks
Domestic
Foreign
Receivables from securities financing transactions measured at amortized cost
Domestic
Foreign
Loans and advances to customers
Domestic
Foreign
Financial assets at fair value
Domestic
Foreign
Other interest-earning assets
Domestic
Foreign
Interest income
Domestic
Foreign
Total interest income from interest-earning assets
Net interest income on swaps
Interest income on off-balance sheet securities and other
Total interest income
1 Currency effect is included within the variances disclosed in this table.
Annual Report 2024 |
Additional regulatory information | UBS AG consolidated supplemental disclosures required under SEC regulations 261
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
Foreign
Payables from securities financing transactions measured at amortized cost
Domestic
Foreign
Customer deposits
Domestic
of which: demand deposits
of which: savings and sweep deposits
of which: time deposits
Foreign
of which: demand deposits
of which: savings and sweep deposits
of which: time deposits
Funding from UBS Group AG
Domestic
Foreign
Commercial paper
Domestic
Foreign
Other short-term debt issued measured at amortized cost
Domestic
Foreign
Long-term debt issued measured at amortized cost
Domestic
Foreign
Financial liabilities at fair value (excluding debt issued designated at fair value)
Domestic
Foreign
Debt issued designated at fair value
Domestic
Foreign
Other interest-bearing liabilities
Domestic
Foreign
Interest expense
Domestic
Foreign
Total interest expense on interest-bearing liabilities
Swap interest on hedged debt instruments and other swaps
Interest expense on off-balance sheet securities and other
Total interest expense
1 Currency effect is included within the variances disclosed in this table.
Annual Report 2024 |
Additional regulatory information | UBS AG consolidated supplemental disclosures required under SEC regulations 262
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 87,497m as of 31 December 2024 (31 December 2023: USD 60,596m; 31 December 2022: USD 59,897m).
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
Time deposits
Total domestic
Foreign
Demand deposits
Time deposits
Total foreign
Total due to banks
1
Customer deposits
Domestic
Demand deposits
Savings and sweep deposits
Time deposits
Total domestic
Foreign
Demand deposits
Savings and sweep deposits
Time deposits
Total foreign
Total customer deposits
1
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 570bn (31 December 2023: USD 415bn; 31 December 2022: USD 365bn). Uninsured deposits are
deposits that are in excess of local deposit insurance or protection scheme limits in the key locations in which UBS AG
operates, calculated based on the respective local regulations, as well as deposits in uninsured accounts. The main deposit
insurance schemes applicable to UBS AG 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, which 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
1
Within 3 months
3 to 6 months
6 to 12 months
Over 12 months
Total uninsured time deposits as of 31 December 2024
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 AG consolidated supplemental disclosures required under SEC regulations 263
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
Subtotal as of 31 December 2024
Debt securities measured at amortized cost
Asset-backed securities
Government bills / bonds
Corporate and other
Subtotal as of 31 December 2024
Total as of 31 December 2024
Loan portfolio
The table below provides the maturity profile of UBS AG’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
Real estate financing
Large corporate clients
SME clients
Lombard
Credit cards
Commodity trade finance
Ship / aircraft financing
Consumer financing
Other loans and advances to customers
Loans to financial advisors
Total
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 AG’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 380m (31 December 2023: USD 77m, 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 264
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 265
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 the
UBS Group Annual Report 2024 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 the
UBS Group Annual Report 2024 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 266
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 (%)
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 the
UBS Group Annual Report 2024 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 267
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 includes seven months (June to December 2024) of post-merger consolidated data and five months of pre-merger UBS AG data only (January to May 2024). Profit or loss information
for 2023 includes pre-merger UBS AG data only.
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.
Annual Report 2024 |
Appendix 268
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 269
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 270
Information sources
Reporting publications
Annual publications
UBS AG Annual Report
: Published in English, this report provides descriptions of: the UBS AG (consolidated) performance;
the strategy and performance of the business divisions and Group functions; risk, treasury and capital management;
corporate governance; and financial information, including the financial statements.
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
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 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
Annual Report 2024 |
Appendix 271
Cautionary statement regarding forward-looking statements |
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 |
disclosed in text and tables are calculated on the basis of unrounded figures. Absolute changes between reporting periods disclosed in the text, which can be
derived from numbers presented in related tables, are calculated on a rounded basis.
Tables |
available as of the relevant date or for the relevant period. Zero values generally indicate that the respective figure is zero on an actual or rounded basis. Values
that are zero on a rounded basis can be either negative or positive on an actual basis.
Websites |
of any such websites into this report.
UBS AG
P.O. Box, CH-8098 Zurich
P.O. Box, CH-4002 Basel
ubs.com