Swiss internationally active UBS 3Q21 net profit of USD 2.3 billion, 20.8 % return on CET1 capital

We are executing relentlessly for our clients

Our clients continued to put their trust in us, as was evident from the continued momentum in flows and volume growth throughout the year to-date. Together with favorable market conditions and investor sentiment, this led to growth across the firm. During 9M21, GWM saw USD 80bn of net new fee-generating assets with inflows in all regions, and there was USD 23bn in net new lending across GWM and P&C Personal Banking, while strong client activity drove YoY increases of 8 % in transaction-based income in GWM and 44 % in Global Banking income.

We are delivering on our strategic initiatives to drive growth and efficiency

During 9M21, we facilitated USD 26 billion of investments into private markets from private and institutional investors, helping our private clients benefit from our scale to receive institutional-like access and pricing. Sustainability remains an important topic for our clients and for us, and sustainability-focused and impact investments grew an annualized 63 % year-to-date and reached USD 207bn. Our integrated SMA offering in the US continues to attract inflows, as do our mandates through My Way.

We are committed to driving higher returns by unlocking the power of UBS

3Q21 PBT was USD 2,865m (up 11% YoY), including net credit loss releases of USD 14m. The cost/income ratio was 68.7%, 1.7 percentage points lower YoY. Operating income increased by 2% YoY, while operating expenses decreased by 1%. Net profit attributable to shareholders was USD 2,279m (up 9% YoY), with diluted earnings per share of USD 0.63. Return on CET1 capital1 was 20.8%. The quarter-end CET1 capital ratio was 14.9% (guidance: ~13%) and the CET1 leverage ratio was 4.31% (guidance: >3.7%), both up QoQ. We repurchased USD 2.0bn of shares in 9M21. We intend to repurchase up to USD 0.6bn of shares during 4Q21.

“Our business momentum, our focus on fueling growth, on disciplined execution and on delivering our full ecosystem to clients – all of this led to another strong quarter across all of our business divisions and regions, resulting in a pre-tax profit of USD 2.9bn.” Ralph Hamers, Group CEO

Ralph Hamers, UBS’s Group CEO

“Our business momentum, our focus on fueling growth, on disciplined execution and on delivering our full ecosystem to clients – all of this led to another strong quarter financially across all of our business divisions and regions.

The market and economic backdrop were broadly positive in the third quarter; although there has been some uncertainty recently. Regardless of the backdrop, we have continued and will continue to provide our clients with valuable advice and quality execution, enabling them to navigate volatility and capture opportunities.

We made tremendous progress last quarter in delivering on our client promise by putting clients at the center of all we do – whether it be by working across the firm to provide new investment opportunities, further developing targeted offerings based on client preferences so we can offer a more personalized experience, or partnering externally to develop the largest dedicated impact investment fund in biotech history.

Today, we are seeing the benefits of delivering our full ecosystem to clients in a seamless way as One UBS. And there is so much more we can and must do.

This will be key to the success of our strategy. And we’re looking forward to presenting to you what this means for clients and for shareholders with our strategic update on February 1, 2022.”

Third quarter 2021 performance overview

Group PBT USD 2,865m, +11% YoY

PBT was USD 2,865m (up 11% YoY), including net credit loss releases of USD 14m. The cost/income ratio was 68.7%, 1.7 percentage points lower YoY. Operating income increased by 2% YoY, while operating expenses decreased by 1%. Net profit attributable to shareholders was USD 2,279m (up 9% YoY), with diluted earnings per share of USD 0.63. Return on CET1 capital1 was 20.8%.

Global Wealth Management (GWM) PBT USD 1,516m, +43% YoY

Global Wealth Management (GWM) PBT USD 1,516m, +43% YoY

GWM delivered double-digit PBT growth in all regions. Operating income increased by 17 % YoY. Recurring net fee income increased by 23 %, primarily driven by higher average fee-generating assets, reflecting positive market performance and net new fee-generating assets. Net interest income increased by 15 %, on higher loan revenues from higher volumes and margins, as well as higher deposit revenues. Transaction-based income rose 4 %, mainly driven by high levels of client activity in the Americas, EMEA and Switzerland. Net credit loss releases were USD 11million, compared with net credit loss releases of USD 22m in 3Q20. The cost/income ratio improved to 69.8 %, down 5.8 percentage points YoY, as income increased by 17 % and operating expenses increased by 8 % driven by financial advisor variable compensation. Loans increased to USD 231billion, with USD 3 billion of net new loans, driven by the Americas. Invested assets decreased by 1 % sequentially to USD 3,198 billion. Fee-generating assets2 were slightly down sequentially to USD 1,412 billion. Net new fee-generating assets2 were USD 18.8bn, supported by inflows in nearly all regions, and represented an annualised growth rate of 5 % in the quarter.

Personal & Corporate Banking (P&C) PBT CHF 439m, +44% YoY

Operating income increased by 18 % with increases across recurring net fee, net interest, and transaction-based income lines, with a benefit from net credit loss releases of CHF 6m compared with net credit loss expenses of CHF 84m in 3Q20. Recurring net fee income increased by 18 %, primarily reflecting higher custody, mandate and investment fund fees. Net interest income was up 5 % mainly driven by proactive deposit management that led to a decrease in liquidity and funding costs. Revenue from credit card and foreign exchange transactions was the main driver of the 7 % improvement in transaction-based income, reflecting a continued increase in travel and leisure spending by clients as pandemic restrictions ease. The cost/income ratio was 56.6 %, an improvement of 1.7 percentage points YoY, as income increased by 6 % and operating expenses increased by 3 %.

Asset Management (AM) PBT USD 214m, (71%) YoY

Excluding a gain of USD 571 million from the sale of a majority investment in Fondcenter AG (now Clearstream Fund Centre AG) in 3Q20, PBT would have increased by 27 %. Excluding this gain, operating income would have been broadly flat YoY, as an increase in net management fees offset a decrease in performance fees. The cost/income ratio was 63.9 %, a 7.4 percentage point improvement YoY when excluding the aforementioned gain, with income flat YoY and 10 % lower operating expenses. Invested assets decreased by 2 % sequentially to USD 1,154bn. Net new money was USD 1.5 bn (USD 1.1bn excluding money market flows).

Investment Bank (IB) PBT USD 837m, +32% YoY

Operating income increased by 1 % YoY, or 11% excluding a USD 215million gain from the sale of intellectual property rights associated with the Bloomberg Commodity Index family in 3Q20. Global Banking revenues increased by 22 %, or USD 141m, driven by Advisory and Capital Market revenues, outperforming the overall global fee pool. Global Markets revenues decreased by 7 % or USD 126m. Excluding the aforementioned gain, revenues would have increased by 5%, primarily driven by higher revenues in equity derivatives, cash equities, prime brokerage and capital market financing. Net credit loss expenses were USD 5m, compared with net credit loss expenses of USD 15m in 3Q20. The cost/income ratio was 66.5 %, a 7.6 percentage point improvement YoY, as income increased by 1 % and operating expenses decreased by 10 %, as 3Q20 included USD 229m of expenses relating to the modification of certain outstanding deferred compensation awards. Annualised return on attributed equity was 26.4 %.

Group Functions PBT USD (180)m, compared with USD (184)m in 3Q20

Sustainable finance has been a firm-wide priority at UBS for years. UBS’s aim is to continue to help private and institutional clients meet their investment objectives through sustainable finance, making it a critical component of UBS’s strategy. In addition, the firm wants to be the provider of choice for clients who wish to mobilize capital toward the achievement of the United Nations 17 Sustainable Development Goals.

Tailored advice on sustainable investing topics

According to the UBS Investor Sentiment survey, published in July 2021, business owners see an array of potential benefits in sustainability over the next three years. Of those surveyed, 61 % believe sustainability could generate more revenue, 57 % believe it could improve client relationships and 55 % believe it could do the same for employee relationships.

In July, UBS announced its next step in providing personalized, tailored sustainable investing advice for its wealth management clients. With the new offering, clients can tailor the advice they receive along six sustainable investing topics: Climate change, Water, Pollution and waste, People, Products and services, and Governance. These have been identified by UBS Global Wealth Management’s Chief Investment Office as being those that are most important to drive businesses and industries to a sustainable future.

For the second time in a row, UBS Group ranked 1st out of 78 firms in the 2021 Global Association of Risk Professionals Climate Risk Survey. This reflects UBS’s well-established climate governance, strategy, risk management and disclosure. UBS is making good progress in developing its climate action plan, which will be communicated in the firm’s climate reporting in March 2022.Extending UBS’s leadership in sustainable finance.

UBS has also become a member of the Taskforce on Nature-related Financial Disclosures (the TNFD). The TNFD brings together experts in biodiversity, data, metrics, standards and disclosure frameworks into a single collaborative endeavor that aims to create a practical framework for nature-related risks. Its goal is to accelerate the shift in global financial flows from nature-negative to nature-positive outcomes.

Investing with impact

In September, UBS launched the India chapter of its independent philanthropic arm, UBS Optimus Foundation. For more than two decades, UBS Optimus Foundation has been at the forefront of impactful philanthropy, delivering scalable solutions for social and environmental issues.

The new chapter will give philanthropists and UBS clients a direct channel to participate in some of the ground-breaking work achieved by UBS Optimus Foundation in India and elsewhere. It also deepens UBS’s commitment to the region and to clients seeking to alleviate social inequality and its root causes. These programs have benefited four million children and helped train nearly 240,000 professionals since 2015.

To harness the power of collective philanthropy, in October, UBS Collectives was announced. This innovative social-impact initiative connects UBS’s philanthropic clients, bringing together their expertise and mobilizing their capital to address the issues that matter most to them in the areas of child protection, climate change, health and education.

UBS Global Wealth Management clients have also invested USD 650m in MPM Capital’s Oncology Impact Fund 2 (OIF 2), an impact investing initiative that invests in private and public companies developing innovative treatments for cancer. This represents more than 75% of the total USD 850m raised for the fund. The total sum raised makes OIF 2 the largest dedicated impact investment fund in biotech history.

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

1 Return on CET1 capital is calculated as annualized net profit attributable to shareholders divided by average common equity tier 1 capital.

2 New performance measure for our Global Wealth Management business: Beginning with the first quarter of 2021, we introduced net new fee-generating assets as a new performance measure for our Global Wealth Management business. The new measure captures the growth in clients’ invested assets from net flows related to mandates, investment funds with recurring fees, hedge funds and private markets investments, combined with dividend and interest payments into mandates, less fees paid to UBS by clients. The underlying assets and products generate most of Global Wealth Management’s recurring net fee income and a portion of its transaction-based income. Compared with net new money, net new fee-generating assets exclude flows related to assets that primarily generate revenues when traded in the form of commissions and transaction spreads, or borrowed against in the form of net interest income, and also exclude deposit flows that generate net interest income, and custody positions that generate custody fees. We will no longer report net new money for Global Wealth Management in our quarterly reports, but will continue to disclose this measure in our annual reports.

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